Jew v Jew

[2020] NZHC 2085

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2716

[2020] NZHC 2085

BETWEEN

CHRISTOPHER GEORGE JEW

First Plaintiff

AMANDA MARIE McLAUGHLIN, DAVID JEW and
PHILLIP JEW
Second Plaintiffs

AND

DAVID GEORGE WETHERELL MICHAEL WETHERELL NICHOLAS WETHERELL and RICHARD WETHERELL

Second Defendants

KANUKA ROAD DEVELOPMENTS LIMITED

Third Defendant

Hearing:

13 August 2020

Appearances:

M J Fisher and T J Yoon for the Plaintiffs

R J Hollyman QC and A J Steel for the First and Third Defendants

Judgment:

18 August 2020

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on  18 August 2020  at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

Solicitors:

…………………………. Registrar/Deputy Registrar

Claymore Partners Limited (James D Ryan), Auckland, for the Plaintiffs

Lodder Law Limited (Nick Lodder), Auckland, for the First and Third Defendants

Counsel:

Michael J Fisher/Josh Yoon, Auckland, for the Plaintiffs

R J Hollyman QC/A J Steel, Auckland, for the First and Third Defendants

JEW v WETHERELL [2020] NZHC 2085 [18 August 2020]

[1]    This is a decision about particulars. The plaintiffs seek particulars of two paragraphs of the first and third defendants’ amended statement of defence and counterclaim. The first and third defendants seek particulars of one small part of the plaintiffs’ statement of defence to their counterclaim.

[2]    Christopher and Patricia Jew are the children of the late Zeta Mary Jew. They and David Wetherell, Patricia’s husband, are the trustees of the Jew Family Trust. The trust is the sole shareholder of Kanuka Road Developments Ltd, the third defendant. Mr Wetherell is Kanuka’s sole director. Both the trust and Kanuka Road Developments Ltd own properties in the northern Waikato, in the Hopuhopu- Ngāruawahia area.

[3]    After Mrs Jew’s death, there was litigation regarding her estate, the trust and Kanuka Road Developments Ltd. The case was resolved by a deed of settlement dated 13 August 2019. For this decision, it is not necessary to go into the provisions of the deed of settlement in detail. It is enough to say that the properties owned by the trust and Kanuka Road Developments Ltd were to be sold, with real estate agents (Bayleys) appointed to market and negotiate the sales of the properties. The Kanuka Road land was to be sold by 30 November 2019. The land owned by the trust was to be sold by 1 February 2020. The deed also provided that the plaintiffs could buy properties owned by the trust and the company and no real estate agent’s commission would be paid on the sale. The deed also provided for the allocation of the proceeds of sale between Mr Jew and Patricia.

[4]    Carrying out the deed of settlement has not, however, gone smoothly, with each side blaming the other. In this proceeding, the plaintiffs seek the removal of Patricia Jew and Mr Wetherell as trustees, substituting them with trustees appointed by the court, plus consequential orders. The plaintiffs allege breaches of the deed of settlement by the first and third defendants. In paraphrase, paragraph 11 of the statement of claim alleges:

(a)Mr Wetherell engaged Bayleys, real estate agents, on terms that required commission to be paid on any sale to the plaintiffs;

(b)he did not provide full transparency to the plaintiffs in his dealings with Bayleys in connection with marketing and selling the Kanuka land;

(c)he instructed Bayleys to cancel the auction scheduled for 25 November;

(d)he refused to accept Mr Christopher Jew’s offers to buy two of the Kanuka properties, even though they were the highest bids received by 30 November 2019;

(e)Mr Wetherell and Patricia, his wife, did not accept Mr Jew’s offer to purchase the trust property at 5275 Great South Road, at a price equal to a market value assessed by Bayleys Valuation Ltd, less commission and related costs.

(f)they refused to take any steps to market the Jew Road property beyond engaging Bayleys as agents to sell the Jew Road block and 5275 Great South Road on terms requiring commission to be paid on any sale to the plaintiffs.

(g)They did not provide full transparency in their dealings with Bayleys in relation to selling the Jew Road block.

[5]    In response, in their amended statement of defence, Mr Wetherell, his wife and Kanuka Road Developments Ltd plead:

11.In relation to the allegations in paragraph 11 they:

(a)admit that in or about October 2019 the first-named first defendant, David Wetherell (Dave), as sole director of Kanuka, in accordance with the Deed of Settlement, engaged Success Realty Ltd (trading as Bayleys) (Bayleys) on terms requiring commission to be payable on a sale to the plaintiffs of 144 Driver Road and/or 11 Kanuka Road (the Kanuka Land), and further say that:

(i)the first plaintiff, Christopher Jew (Chris), approved of Bayleys’ appointment;

(ii)the auction date was set for 20 November 2019;

(iii)until 5 November 2019, at the earliest, they understood that neither Chris nor his family wished to acquire the Kanuka land;

(iv)the plaintiffs were aware that (i) the first and third defendants believed that neither Chris nor his family wished to acquire the Kanuka land, and that (ii) the first and third defendants took steps in reliance on that understanding by advertising the Kanuka land and proceeding towards auction with Bayleys; but the plaintiffs took no steps to correct that understanding, knowing that the first and third defendants were acting in reliance upon it, and are accordingly estopped from acting to the contrary;

The defendants’ understanding that the first plaintiff did not wish to acquire the Kanuka land arises from the following:

1.The fact that Chris had the opportunity to purchase the land in the settlement, as he did other land, but did not do so;

2.The fact that in the course of discussing the appointment of Bayleys in respect of the land in accordance with and in pursuance of the settlement the plaintiffs only ever sought to purchase 5275 Great South Road;

3.The fact that the plaintiffs did not correct the first and third defendants’ understanding as recorded above.

The defendants rely upon the following correspondence:

(Nine emails and letters passing between the parties and their lawyers are listed);

(b)deny sub-paragraph 11(b);

(c)admit sub-paragraph 11(c) and further say that the auction of the Kanuka Land was cancelled because Chris, acting in concert with the second plaintiffs, Amanda McLaughlin (Amanda), David Jew (David) and Phillip Jew (Phillip), undermined the sales and marketing of the Kanuka Land to their own advantage, as alleged in paragraph 16 below;

(d)admit that Chris’s non-cash conditional offers to purchase the Kanuka Land were not accepted by Kanuka, and further say that:

(i)the non-cash offers included terms that the purchase prices would be paid to Kanuka by way of set off against part of Chris’ family’s entitlement under the Deed of Settlement;

(ii)any right to set off entitlements under the Deed of Settlement had not arisen and could not arise until all costs and expenses, including, but not limited to, all sale expenses, and other liabilities of Kanuka had been paid or otherwise provided for such that there was no bar to its removal from the Register of Companies and then receipt of the balance of the proceeds of sale by the Trust and subsequent distribution from the Trust;

(iii)acceptance of the non-cash offers would have resulted in the insolvency of Kanuka (meaning it would have been unable to meet its debts as and when they fell due) because:

(A)The offers made by the first plaintiff to purchase the Kanuka Road were “non-cash” insofar as they provided by way of the further terms of sale that the purchase price due would be “sett [sic] off against part of Chris Jew’s family’s entitlement under clause 4(g)(ii) of the deed of settlement dated 13 August 2019”;

(B)The offers were made on the conditions contained in the sale and purchase agreements provided under cover of claim of Claymore’s letter of 21 November 2019;

(C)Immediately before the proposed transaction Kanuka had insufficient cash, but net assets, to meet its tax obligations arising from the remission of income in the order of $150,000 to 200,000, legal fees, fees due to Deloitte, and commission due to Bayleys, as estimated and advised by Kanuka’s (and the Trust’s) accountants, Deloitte;

(D)Kanuka was required to meet all of its obligations prior to distributing the proceeds of sale of its properties, so that it could be wound up. Had the transaction proposed by the first plaintiff proceeded, Kanuka would have had insufficient cash to meet those debts;

(iv)the offers included a term that no commission would be payable in connection with the sale;

(v)the offers were not made at a public auction.

(e)admit that:

(i)they have not accepted Chris’ offer to purchase the 5275 Great South Road (5275 Great South Road);

(ii)5275 Great South Road has not been marketed by Bayleys (as anticipated in the Deed of Settlement);

(iii)5275 Great South Road should have been marketed by Bayleys in accordance with their advice, in terms of clauses 4(b) and (f) of the Deed of Settlement dated 13 August 2019;

(iv)Bayleys advised that the highest and best price would be achieved by marketing Lots 1 to 6 and 5275 together, in particular  by  email  to  James   Ryan   of   Claymore,   on 18 September 2019; and

(v)Bayleys has advised that the highest and best price for the balance of the Jew Family Trust Land (the Jew Road Block) would be obtained by marketing all of the land together which provided the opportunity for any purchaser of the balance of the Jew Road Block to also acquire a dwelling and also to provide access to that balance via State Highway 1 (as opposed to just via Jew Road).

(f)deny sub-paragraph 11(f) and further say that Bayleys have not been engaged to sell the Jew Road Block and 5275 Great South Road, as Bayleys’ appointment is not finalised until such time as:

(i)a listing agreement is signed by Chris; and

(ii)Chris provides information required to Bayleys to meet anti- money laundering requirements.

(g)deny sub-paragraph 11(g),

and otherwise than as expressly admitted, deny each and every allegation in paragraph 11.

[6]    David Wetherell, Patricia Jew and Kanuka Road Developments Ltd’s counterclaim of nine causes of action includes allegations of breach of the deed of settlement by Christopher Jew and his children, the second plaintiffs. They rely on terms of the deed of settlement requiring the plaintiffs to co-operate in achieving the highest and best price obtainable for the Kanuka and trust properties. Paragraph 16 pleads:

16. In breach of the terms pleaded in paragraph 15 above Chris, Amanda, David and Philip sought to frustrate the proper implementation of the Deed of Settlement by:

(a)operating a live firing at the gun range on the Kanuka Land during the first open home and inspection by prospective purchasers, notwithstanding that they had been expressly told that the gun club’s licence had been revoked and that all activity at the range was to cease;

(b)renumbering the Kanuka Land to confuse prospective purchasers;

(c)placing the sales process for the Kanuka Land under undue time pressure, in that the first plaintiff placed the sales process for the Kanuka Land under time pressure by:

(i)delaying in signing the listing agreements;

(ii)failing to provide information sought and required by Bayleys;

(d)failing to provide the first-named first defendant and Bayleys with information in relation to the Kanuka Land necessary to market the Kanuka Land, as set out in the email from the first-named first defendant to the plaintiffs’ solicitors dated 27 September 2019, and the letter from the defendants’ solicitors to the plaintiffs’ solicitors dated 18 November 2019, and in particular:

(i)failing to provide complete, accurate and clear information regarding the chattels to be excluded from the auction terms and removed from the property; and

(ii)failing to provide complete, accurate and clear information regarding fixtures to be excluded from the auction terms and removed from the property.

(e)claiming, including on behalf of Carl Merrie, ownership of chattels and fixtures on the Kanuka Land immediately prior to the arranged auction, despite repeated requests to do so earlier and without providing sufficient detail as to the items claimed or proof of ownership of the same, thereby preventing the auction terms from being finalised in timely manner;

(f)knowingly allowing the plaintiffs and Bayleys to proceed in the belief that they had no interest in purchasing the Kanuka Land.

[7]The plaintiffs seek particulars of paragraph 11(a)(iv) and paragraph 16.

Paragraph 11(a)(iv)

[8]    The plaintiffs understand paragraph 11(a)(iv) to plead a form of estoppel. The defendants say that they listed the Kanuka Road properties with Bayleys on terms requiring commission to be paid, believing that the plaintiffs were not interested in buying the Kanuka Road property. The plaintiffs submit that to run this estoppel defence, the defendants will have to prove that the plaintiffs were aware of the defendants’ beliefs. They submit that the pleading does not sufficiently plead the plaintiffs’ awareness of the defendants’ understanding. In response, Mr Hollyman QC referred to the correspondence between the parties’ lawyers listed at the end of

paragraph 11(a)(iv) and cited parts of that correspondence to show that the defendants had made the plaintiffs aware of their understanding.

[9]    Mr Fisher submitted that the correspondence did not establish what the defendants had pleaded. He referred to letters showing the plaintiffs taking issue with commission being paid even if the Kanuka Road property was sold to them. That demonstrated their intention to buy the properties for themselves. The plaintiffs’ objection is that the correspondence cannot be used to support the plea that the plaintiffs were aware of the defendants’ belief. That is not, however, a pleading objection. Instead, the plaintiffs want to debate the merits of the pleading.1 They are asking the court to reject the particulars the defendants have given as untenable and to make them come up with something better, if they can. The substantive merits of the plea are, however, a matter for trial. Subject to one matter, the pleading is adequate to inform the plaintiffs of the case against them and to prepare their defence.

[10]   Mr Hollyman’s written submissions set out the passages in the letters relied on, whereas the counterclaim identifies the letters without setting out the passages. For clarity it would be helpful for the defendants to inform the plaintiffs of the passages they rely on. An amended pleading is not required. Instead, the defendants may give the plaintiffs a notice identifying the relevant passages in the letters. I expect the defendants to do that within two weeks.

Paragraph 16

[11]   As to paragraph 16, the plaintiffs say that the defendants allege that the plaintiffs had a particular state of mind, but they have not specified the facts relied on to prove that state of mind. The plaintiffs rely on r 5.17(2) of the High Court Rules 2016:

If a party alleges a state of mind of person, that party must give particulars of the facts relied on in alleging that state of mind.

[12]   They also draw on recognised authorities that when fraud, dishonesty or similar reprehensible conduct is alleged a prima facie case must be pleaded; general

1      Ash v Singh [2019] NZHC 2790 at [24].

allegations are insufficient to amount to a proper allegation of fraud, dishonesty or other reprehensible conduct; and the Court may not infer dishonesty from facts that have not been pleaded or from facts that have been pleaded but are consistent with incompetence or negligence.2

[13]   While I accept the general principle, I do not consider that the defendants’ pleading is inadequate. The defendants have made a general allegation of intentional misconduct by the plaintiffs: seeking to frustrate the proper implementation of the deed of settlement. That general allegation is, however, backed up by particulars, for example, using the gun range to fire guns when an open home was being held for prospective purchasers, and renumbering the address of the Kanuka property.

[14]   It often happens that a party’s intention cannot be proved directly, for example, by evidence that they stated their intentions. Instead it may be inferred from circumstantial evidence as to their conduct. In this case the defendants intend to prove the plaintiffs’ intentions to frustrate the sales of the properties by proving the matters alleged in paragraph 16. No doubt the defendants will submit at trial that even if any of these matters individually might be capable of an explanation consistent with an innocent intention, when they are taken together the Court may infer that the defendants intended to frustrate the sale of the Kanuka land. The short point here is that the pleading is adequate to inform the plaintiffs of the case against them to enable them to prepare a response to it. Indeed, during the hearing, Mr Fisher told me some of the explanations the plaintiffs will give.

[15]   In my view, the defendants have complied with r 5.17(2) as they have adequately pleaded facts to support their allegation that the plaintiffs sought to frustrate the implementation of the deed.

2      For example, Three Rivers District Council v Bank of England (No. 3) [2003] 2 AC 1 (HL) at [184]–[189] per Lord Millett (dissenting, but not on this aspect) and see generally Robert Osborne and others McGechan on Procedure (looseleaf ed, Thompson Brookers, updated to 9 December 2019) at [HR5.26.08(1)].

Kanuka Road Developments Limited’s request for particulars

[16]   Without objection from the plaintiffs, Kanuka Road Developments Limited applied informally without the normal written application on notice. That did not cause any difficulty.

[17]   The defendants’ counterclaims of 17 February 2020 and 12 May 2020 include a cause of action by Kanuka Road Developments Limited against the plaintiffs seeking possession of the Kanuka land. It pleads that its land is occupied by Mr Jew and his company, Hopuhopu Land Company (2004) Limited. It requires vacant possession to be able to sell the land.

[18]   In response to the paragraph pleading that Kanuka is entitled to possession of the land, the plaintiffs gave a bare denial. In later correspondence solicitors for the plaintiffs said that Mr Chris Jew was entitled as a trustee and as a custodian for and on behalf of Kanuka Road Developments to occupy the land until vacant possession is given on a sale of the property, or otherwise as the parties may agree.

[19]   The defendants’ lawyers sought an explanation as to the alleged custodianship. By a letter of 12 June 2020, the plaintiffs’ lawyers narrated facts said to allow Mr Jew to occupy the property. Mr Hollyman accepts that the plaintiffs have informed the defendants of the facts they will rely on to oppose the claim for possession. He submits, however, that “custodianship” is not a concept known under New Zealand’s land law (leaving to one side kaitiakitanga under tikanga Māori). While custodianship is not a term of art it is clear that Mr Jew is relying on a licence to occupy the land coupled with responsibilities based on the facts set out in his lawyer’s letter. Accordingly, it is not necessary to order particulars.

Result

[20]   That deals with the particulars issues.  Counsel did not  address me on costs.  I trust that counsel will confer and agree costs. To assist those discussions I offer these suggestions. The plaintiffs initially served a notice on the defendants to give better particulars. When the defendants did not comply, the plaintiffs made a formal application on 1 May 2020. After that, the defendants filed an amended pleading

which gave many of the particulars that had been missing from the initial statement of defence and counterclaim. To that extent the plaintiffs have been vindicated in applying for particulars and should have costs for launching their application. Once that is allowed for,  neither side can claim to be a clear winner for the hearing on     13 August. It may be appropriate to allow costs for the hearing and preparing for the hearing to lie where they fall.

[21]Accordingly, the outcome is:

(a)The defendants shall advise the plaintiffs of the relevant passages in the correspondence listed in paragraph 11(a)(iv) of the amended counterclaim within the next two weeks.

(b)Aside from that, the defendants are not required to give further particulars to the plaintiffs and the plaintiffs are not required to give further particulars to the defendants.

(c)Costs are reserved. If the parties cannot agree costs, memoranda may be filed and I will decide costs on the papers.

………………………………

Associate Judge R M Bell