Kerridge v Kerridge

[2009] NZCA 14

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA498/2007
CA738/2008
[2009] NZCA 14

BETWEENROLAND MICHAEL KERRIDGE

Appellant

ANDKAREN PHYLLIS KERRIDGE

First Respondent

ANDCLIVE ROBERT CARTER AND KEITH DAVID HERBERT AS TRUSTEES OF THE ROLAND KERRIDGE TRUST

Second Respondent

ANDBROOKFIELDS

Third Respondent

Hearing:26 January 2009

Court:O'Regan, Robertson and Arnold JJ

Counsel:A E Hinton QC and D J G Cox for Appellant

K G Davenport for First Respondent

Judgment:16 February 2009 

Reasons:18 February 2009

JUDGMENT OF THE COURT

A        THE APPEAL IS DISMISSED.

BThe first respondent’s claims (other than those which were struck out in the High Court) may be tried in the High Court.

CThe appellant must pay the first respondent costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Robertson J)

Table of Contents

Para No

INTRODUCTION  [1]
BACKGROUND  [5]
THE PLEADINGS  [16]
THE HIGH COURT PROCEEDINGS  [28]
         ASSOCIATE JUDGE DOOGUE’S JUDGMENT  [29]
         HEATH J’S REVIEW  [33]
ISSUES ON APPEAL  [37]
         THE SCOPE OF S 4 OF THE PRA  [39]
         SECTION 51 OF THE ACT  [54]
         SECTION 28(A) OF THE LIMITATION ACT 1950  [60]
RESULT  [66]

Introduction

[1]       This is an appeal from a decision of Heath J (Kerridge v Kerridge HC AK CIV 2006-404-1393 31 October 2008 – leave to appeal having been granted by the Judge on that day) dismissing an application to review part of a judgment delivered by Associate Judge Doogue declining to strike out all causes of action against the appellant (Kerridge v Kerridge [2008] NZFLR 30).

[2]       Mr Kerridge filed an appeal against the decision of the Associate Judge refusing to strike out all claims against him or, in the alternative, to grant him summary judgment.  While there is a right of appeal to this Court against the decision of an Associate Judge on a summary judgment application, there is no such right in respect of an Associate Judge’s decision on a strike-out application.  In the latter case, a review must be sought in the High Court: see s 26P of the Judicature Act 1908 and Talyancich v Index Developments Ltd [1992] 3 NZLR 28 (CA). When this matter came before this Court in October 2008, there was no jurisdiction to hear a material part of the appeal. The matter was returned to the High Court, where Heath J reviewed the Associate Judge’s decision on the strike-out application. The present appeal encompasses both the appeal against Heath J’s review decision and the appeal against the Associate Judge’s refusal to grant summary judgment.

[3]       The current legislative framework, which creates a dichotomy in respect of appeals from decisions of Associates Judges, demands amendment to harmonise the appellate path.

[4]       The principal issue now is whether Associate Judge Doogue and Heath J were correct to conclude that s 4 of the Property (Relationships) Act 1975 (“PRA”) does not preclude the first respondent from maintaining these proceedings in the High Court.

Background

[5]       The parties were married in September 1983 and separated in October 2003.  Their marriage was dissolved in January 2006.

[6]       In 1996, a property was acquired in Mt Maunganui and owned as tenants in common by Mr and Mrs Kerridge as to one half, and the trustees of the Roland Kerridge Trust (“the Trust”) as to the other.

[7]       The Trust was settled on 9 December 1988.  It was a common form of discretionary trust, with the discretionary beneficiaries being Mr Kerridge, any spouse of his, any child of his (this class also to be the final beneficiaries), any husband, wife, widow or widower of a final beneficiary, and any child or remoter issue of a final beneficiary.

[8]       In 1998 the Mt Maunganui property was sold.  A couple of months later, Mr and Mrs Kerridge entered into an agreement to purchase an apartment in Coates Avenue, Orakei, Auckland (“the property”).  Under a power of nomination, the property was in fact acquired wholly by the Trust (which paid for it entirely from its funds).  Mr and Mrs Kerridge lived in the property until their separation in October 2003.

[9]       Mr and Mrs Kerridge’s share of the proceeds of sale of the Mt Maunganui property were paid to them and substantially used in the acquisition of an interest in a business, Australasian Furniture Ltd.  The remainder was used by Mr and Mrs Kerridge for general living purposes.

[10]     The events surrounding the acquisition of the property in 1998 form the basis of Mrs Kerridge’s first series of allegations of negligent misstatement, breach of duty of care and deceit.  With the exception of the deceit claim, both Associate Judge Doogue and Heath J found that the 1998 based claims were barred by the Limitation Act 1950. 

[11]     Mrs Kerridge has filed two statements of claim, in both of which she alleges that she understood that the property was to be owned on the same basis as the Mt Maunganui property had been, namely half by Mr and Mrs Kerridge as tenants in common on the one hand, and half by the Trust on the other.  However in an earlier affidavit, Mrs Kerridge had stated that she knew that the Trust was to acquire the whole of the property but believed that she would have some control over or interest in the Trust, and that she did not learn the real nature of the Trust structure until 2000.  In respect of this inconsistency, both Associate Judge Doogue and Heath J found that Mrs Kerridge was aware in 1998 of the true purchaser of the property (see below at [61]).   

[12]     Mrs Kerridge alleges in addition a second series of wrongs by Mr Kerridge, arising from events in 2000.  She claims that in November 2000 she inadvertently discovered that she had no interest in the property when she was asked to act as a personal guarantor for Australasian Furniture Ltd.  She then claims that, after this discovery, Mr Kerridge said that he would arrange for the property’s transfer from the Trust to he and Mrs Kerridge.  This allegation is supported by a letter sent in December 2000 by the trustees to the family bankers stating that “the current situation is that Mr and Mrs Kerridge have instructed that they have decided to transfer the … property from the … Trust into their joint names.”  However, the transfer did not take place.  Mr Kerridge instructed the Trust’s lawyer (who was also one of the trustees) not to proceed with the transfer.

[13]     Shortly after her separation from Mr Kerridge, Mrs Kerridge applied to the Family Court for orders dividing relationship property.  She claimed a 50 per cent interest in, and registered a notice of claim against, the title to the property. 

[14]     In her supporting affidavit, the property was listed as relationship property, although Mrs Kerridge now admits that she was previously aware that the property was in fact owned entirely by the Trust.

[15]     The proceedings in the Family Court have not been determined and are currently stayed. 

The pleadings

[16]     By a statement of claim dated 16 March 2006, Mrs Kerridge sought relief against her husband, the Trustees and the solicitors who had been involved in dealings with the property. 

[17]     In her claim of negligent misstatement, she alleged that in 1998 Mr Kerridge and the Trustees had negligently misstated that the property would be acquired in 50 per cent shares by the Trust and Mr and Mrs Kerridge personally, and that in 2000 Mr Kerridge agreed to arrange for the trustees to transfer the property to him and Mrs Kerridge personally, but the transfer was never completed and he did not inform her that it had not happened.  

[18]     In her claim of breach of duty of care, she alleged that in 1998 Mr Kerridge owed her a duty of care to advise her of the true purchaser of the property, which he failed to do and that in 2000 he again breached his duty by failing to implement his alleged agreement to transfer the property from the Trust to himself and Mrs Kerridge.  Finally, in her claim of deceit, she alleged that in 1998 she was deceived both as to the true purchaser of the property and as to her interest in the Trust and that in 2000 she again was deceived that the property would be transferred from the Trust’s ownership to that of she and Mr Kerridge personally.

[19]     In her claim against Mr Kerridge for the 1998 deceit, she sought damages to the value of 25 per cent of the property (representing half of the 50 per cent share that she had believed she owned jointly with Mr Kerridge).  In her claims based on the 2000 events she sought damages to the value of 50 per cent of the property (representing half of the property’s total value, which Mr Kerridge said would be transferred from the Trust to the couple).  Against the Trustees, she sought a declaration that a 50 per cent share of the property is held on Trust for her free of any charge.

[20]     There was also a claim against the third respondents (Mr and Mrs Kerridge’s solicitors) for breach of the professional duty that they owed to Mrs Kerridge over the transactions.

[21]     An amended statement of claim was filed in October 2006 and it was this pleading which was considered by both Associate Judge Doogue in the first instance, and then Heath J on review.

[22]     In summary, the amended statement of claim alleges (in a manner inconsistent with some of Mrs Kerridge’s earlier pleading):

(a)a constructive trust in respect of the whole of the property in favour of Mr and Mrs Kerridge, which was binding on the Trustees;

(b)negligent misstatement (one instance of which is alleged to have occurred in 1998, and one in 2000) by both Mr Kerridge and the Trustees;

(c)negligence (one instance of which is alleged to have occurred in 1998, and one in 2000) by Mr Kerridge;

(d)deceit (one instance of which is alleged to have occurred in 1998, and one in 2000)  by Mr Kerridge and one of the Trustees; and

(e)negligence by the solicitors in the conduct of their professional relationship with Mrs Kerridge.

[23]     Except for the action in deceit, the claims arising from events in 1998 were struck out on limitation grounds, and are not subject to appeal.  All claims arising from events in 2000 as well as the deceit claim arising from the 1998 events remain alive.   It was held in both High Court proceedings that the claim in deceit arising from the 1998 events survived by virtue of s 28(a) of the Limitation Act 1950.

[24]     The pre-trial proceedings in the High Court have involved only Mr and Mrs Kerridge.  The Trustees and the solicitors have not participated.  There is a fixture for five days in the High Court at Auckland, which involves all parties, commencing on 2 March 2009.

[25]     When Mrs Kerridge filed and served her statement of claim, Mr Kerridge sought to strike out all the proceedings against him personally, and applied for summary judgment against Mrs Kerridge on the basis that the pleaded causes of action were, by virtue of s 4 of the PRA, within the exclusive purview of the Family Court.

[26]     Both Associate Judge Doogue and Heath J concluded (although for slightly different reasons) that s 4 did not bar Mrs Kerridge from filing proceedings in the High Court.  Given that all the claims based on 1998 events (except the deceit claim) have been struck out on limitation grounds, the necessary first question in this appeal is whether the remaining claims in the High Court are precluded by s 4.  If they are not, a second issue needs to be addressed: should the 1998 deceit claim have been struck out on limitation grounds?

[27]     By the time the matter was heard by Heath J, a second amended statement of claim had been drafted, but it has not yet been filed.  It was mentioned by Heath J, but we decide this case on the basis of the existing pleadings.

The High Court proceedings

[28]     The heart of the matter is the scope and application of s 4 of the PRA, which provides:

4Act a code

(1)       This Act applies instead of the rules and presumptions of the common law and of equity to the extent that they apply -

(a)to transactions between spouses or [partners] in respect of property; and

(b)in cases for which this Act provides, to transactions –

(i)between both spouses or [partners] and third persons; and

(ii)between either spouse or [partner] and third persons.

(2)       Subsection (1) does not apply where this Act expressly provides to the contrary (such as in subsection (5)).

(3)       Without limiting the generality of subsection (1) -

(a)the presumption of advancement does not apply between husband and wife;

(b)      the presumption of resulting trust does not apply between husband and wife [, civil union partners,] or de facto partners;

(c)       the presumption that the use of a wife’s income by her husband with her consent during the marriage is a gift does not apply between husband and wife.

(4)       Where, in the proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or [partners], or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act.

(5)       This section does not apply if the de facto partners have lived in a de facto relationship for less than 3 years.

(6)       However, if the Court makes an order under s 25(1)(a) in respect of any relationship property of de facto partners to whom subsection (5) applies, and any question relating to relationship property arises between those de facto partners in any subsequent proceedings that are not proceedings under this Act, then -

(a)       subsection (5) does not apply; and

the question must be decided as if it had been raised in proceedings under this Act.

Associate Judge Doogue’s judgment

[29]     Associate Judge Doogue found that none of Mrs Kerridge’s three tortious causes of action against Mr Kerridge were barred by s 4.  In respect of the scope of s 4, he followed the decision of this Court in Mosaed v Mosaed [1996] 15 FRNZ 15 (CA) and concluded:

[30]     The judgment in Mosaed requires the Court to have regard to the broad objectives of the Act.  So, for example, a promise by one party to another to transfer an interest in property to the other party, would be a transaction between the parties.  Because the Act makes provision for such a matter (in s 21) the provisions of the Act would have effect in place of the “rules” of common law.  The rule that common law recognises the enforceability of an informal contract, which lacks the formalities required for an enforceable agreement under the Act, must defer to the requirements of the Act.

[31]     However, the plaintiff’s case does not involve a transaction between the parties.  It is the very absence of a transaction, in the sense of an arrangement that transferred to her an interest in the property, that she complains of.  The fact that such an arrangement did not come into being, she says caused her harm.  She claims that the defendant committed torts against her. The wrong that he did her was to breach obligations imposed not by agreement between the parties, but by common law.  The claim is not concerned with rules of common law, that apply to transactions between the parties.  She seeks the usual remedy for loss caused by negligence, namely, damages.  The substance of the claimed wrong and the remedy that she seeks for it are not matters that the Act provides for. And it is only in the circumstance where the Act contains provisions that cover the same ground as the rules and presumptions of common law and equity that it can displace them.

[30]     As Richardson P in Mosaed was prepared to distinguish an equitable enquiry into accounting for a profit from an enquiry into the just division of matrimonial property, Associate Judge Doogue was prepared to separate Mrs Kerridge’s tortious claims against her husband from the relationship property matrix of the PRA.  Working from the principle in Mosaed, he found that it is possible for some claims over what is in effect relationship property to be rooted not in the (just) division of that property, but in alleged wrongdoing by one spouse against the other.  Therefore, he was satisfied that the essence of Mrs Kerridge’s claims was tortious. 

[31]     The Associate Judge considered that there had not been a bona fide “transaction” between Mr and Mrs Kerridge, but rather a charade of a promise on Mr Kerridge’s part.  Therefore, s 4(1)(a) did not apply to exclude the jurisdiction of the High Court. 

[32]     However, the Associate Judge found that, although not barred by s 4 of the PRA, Mrs Kerridge’s claims in negligent misstatement and negligence based on events that occurred in 1998 were nonetheless barred by the Limitation Act.  The claims based on events that occurred in 2000, being neither precluded by s 4 nor time-barred, survived strike out.  He found that the claim in deceit survived undisturbed since although the aspects of that claim arising from 1998 events were out of time, they were based on fraud, and so could come within the exception to the six-year rule: s 28(a) of the Limitation Act. 

Heath J’s review

[33]     Heath J upheld the substance of Associate Judge Doogue’s judgment.  In relation to s 4, he noted that Mosaed was a case involving alleged fiduciary duties, whereas Mrs Kerridge’s claims are based in tort.  Heath J invoked s 51 of the PRA, which expressly allows tortious claims to be brought.  He considered that s 51 prevails over s 4, and therefore that there was no need to consider the application of Mosaed to the circumstances of this case.  He was satisfied that s 51 preserved the right of Mrs Kerridge to sue her husband in tort. 

[34]     On the limitation point, Heath J applied Murray v Morel & Co Ltd [2006] 2 NZLR 366 (SC), in which Tipping J stated that:

[33]     I consider the proper approach, based essentially on Matai [Industries v Jensen [1989] 1 NZLR 525 (HC)], is that in order to succeed in striking out a cause of action as statute-barred, the defendant must satisfy the Court that the plaintiff’s cause of action is so clearly statute-barred that the plaintiff’s claim can properly be regarded as frivolous, vexatious or an abuse of process. If the defendant demonstrates that the plaintiff’s proceeding was commenced after the period allowed… the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable case for an extension or postponement which would bring the claim back within time.

[35]     Heath J had regard to the affidavits sworn by Mrs Kerridge, as well as her draft second amended statement of claim that had not been before Associate Judge Doogue and which contained a new allegation of concealment, which had been added to meet Associate Judge Doogue’s limitation concerns. 

[36]     Heath J was not satisfied that the pleaded particulars formed an evidential basis for the allegation of concealment.  He noted that the new allegation was inconsistent with Mrs Kerridge’s earlier affidavit and that none of the particulars evidenced wrongdoing on the part of Mr Kerridge himself.  The Judge concluded that Mrs Kerridge’s pleading did not form a “fairly arguable” case to support postponement of the limitation period for those parts of the negligent misstatement and breach of duty of care claims based on the events that occurred in 1998.  Like Associate Judge Doogue, he found that s 28(a) of the Limitation Act applied to the 1998 deceit claim. 

Issues on appeal

[37]     From the submissions before us and the judgments of Associate Judge Doogue and Heath J, the following issues require consideration:

(a)Were the alleged exchanges between Mr and Mrs Kerridge, and upon which Mrs Kerridge’s remaining claims are based, collectively a transaction between them in respect of property for the purpose of s 4(1)(a) of the PRA?;

(b)Do Mrs Kerridge’s remaining claims against Mr Kerridge in substance seek relief that is available only in the Family Court, thereby making them duplicitous?;

(c)Does s 51 of the PRA have application in this case, thereby avoiding the question of s 4 at all?; and

(d)Were Associate Judge Doogue and Heath J correct when they found that the aspects of Mrs Kerridge’s claim in deceit based on events that occurred in 1998 survive strike out by virtue of s 28(a) of the Limitation Act?

[38]     It was common ground that the principles upon which a strike-out application must proceed are those that were affirmed by this Court in Attorney-General v Prince & Gardner [1998] 1 NZLR 262 at 267:

A striking out application proceeds on the assumption that the facts pleaded in the statement of claim are true.  That is so even although they are not or may not be admitted.  It is well-settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed… the jurisdiction is to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material… but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction.

The scope of s 4 of the PRA

[39]     Each of the remaining particulars of Mrs Kerridge’s three causes of action falls to be considered in terms of s 4 of the PRA.  

[40]     Ms Davenport submitted that Mrs Kerridge’s claims in tort are precisely the kind of claim that the PRA cannot address and does not purport to address.  Mrs Kerridge seeks damages, not a share of relationship property.  It is a coincidence that the quantum of damages sought is measured against the value of the Coates Avenue property, but that should not be allowed to distort the true nature of Mrs Kerridge’s claim.

[41]     Ms Davenport acknowledged that s 44C of the PRA provides for compensation for relationship property that is disposed of to a trust.  However, she argued that since the property in this case was never relationship property, s 44C had no application.  The pith of her submission on this point was that the Coates Avenue apartment is property that should have been relationship property, and that Mrs Kerridge was deceived at the time of the property’s purchase into thinking it was relationship property when it was in fact acquired by the Trust.  She contended that as a consequence of the 1998 deceit there is no property upon which the provisions of the PRA can operate, and that that state of affairs came about because of Mr Kerridge’s deceit.

[42]     We were directed to various Employment Court authorities in which the High Court has held that its jurisdiction to hear claims that are substantially tortious or equitable is not excluded by s 161 of the Employment Relations Act 2000 (see for example Transnet NZ Ltd v Dulhunty Power (NZ) Ltd [2007] 1 ERNZ 379).  Section 161 of that Act provides that the Employment Relations Authority has “exclusive jurisdiction to make determination about employment relationships problems generally”. 

[43]     Mrs Hinton submitted that Mrs Kerridge’s claims based on events that occurred in 2000 rely on the agreement she alleges Mr Kerridge made to transfer the property from the Trust to Mr and Mrs Kerridge.  She contended that the alleged agreement is precisely the kind of “transaction” that Associate Judge Doogue had in mind when he said that a promise by one spouse to transfer an interest to the other spouse would be within s 4(1)(a).

[44]     In respect of Associate Judge Doogue’s reliance upon Mosaed, Mrs Hinton submitted either that the case should be viewed as limited to its particular facts or that it was wrongly decided, evincing the Court’s desire that Mrs Mosaed be allowed to circumvent the onerous Family Court procedure in circumstances where Mr Mosaed had clearly acted dishonestly and to her detriment. 

[45]     A transaction is an instance of conducting business, and may be simply the formation of an agreement or a contract.  Clear examples of transactions between spouses in respect of property include the purchase of a house or chattels, or the acquisition of shares.  But in this case what Mrs Kerridge contends, in respect of the events that occurred in 2000, is not that she and Mr Kerridge reached an agreement that he later failed to effect, but that there was never any genuine agreement on the part of Mr Kerridge at all.  She claims, in her allegation of deceit, that Mr Kerridge deceitfully led her to believe in 2000 that he would transfer the property from the trust to their joint names when he never intended to do so.

[46]     This aspect of the claim of deceit is evidentially problematic.  To succeed, Mrs Kerridge will have to establish that Mr Kerridge made a representation of fact to her knowing it to be false at the time he made it.  Associate Judge Doogue found that, in a letter to the family bankers, the Trustees stated that Mr and Mrs Kerridge had instructed that the property be transferred from the Trust into their joint names.  Mrs Kerridge’s allegation is that her husband later instructed the Trustees not to proceed with the transfer.  If Associate Judge Doogue’s evidential finding is correct and Mr Kerridge had (at least at one stage) communicated to the trustees that he wished the property to be transferred from the Trust to Mr and Mrs Kerridge, it will be difficult to prove that at the time of the alleged deceit Mr Kerridge made a false representation to his wife knowing it to be false. 

[47]     Prior to that hurdle is the difficulty that the alleged false representation made by Mr Kerridge in 2000 was a representation about the future: Mrs Kerridge alleges that her husband represented that something would later happen.  It is an element of the tort of deceit that the misrepresentation relied upon by the plaintiff must be as to past or existing fact (see Amaltal Corporation v Maruha Corporation [2007] 1 NZLR 608 at [47] (CA)). By the very nature of that aspect of her claim that there was deceit as to future conduct, Mrs Kerridge will face difficulties at trial establishing that Mr Kerridge’s allegedly deceitful representation was false at the time he made it.  But those are issues of proof, and do not inform the strike-out question.

[48]     Mrs Hinton submitted that despite having couched her claim in terms of tortious causes of action, in substance Mrs Kerridge seeks to enforce an alleged agreement so as to avoid the application of s 21 of the PRA.  Counsel emphasised before us that s 4(1)(a) is simple in its purport, requiring only the presence of a transaction between the parties and that the alleged promise made by Mr Kerridge to Mrs Kerridge was an instance of such a “transaction”. 

[49]     Mrs Hinton also pointed out that the words of s 4(1)(a) are general rather than specific: the expression used is “in respect of property”, not “in respect of relationship property” (cf s 4(4)).   Section 4(1)(a), she submitted, was deliberately drafted in broad terms and intended to cover any and all claims that arise between spouses in respect of property.  She maintained that the fact that such a broad interpretation would mean that plaintiffs like Mrs Kerridge – who have no valid claim under the PRA – were without a remedy is not a good reason to read s 4(1)(a) down.  There are, she contended, many claims that people may wish to bring under the PRA but cannot, and that is not a sufficient reason to circumvent the PRA on an ad hoc basis whenever an aggrieved party finds him or herself without a remedy.

[50]     We do not see this as a simple breach of contract case masquerading as a more insidious claim.  Mrs Kerridge does not claim that her husband made an agreement that he later broke, but that he knowingly and deliberately deceived her at the very moment that he purported to agree to the property’s transfer from the Trust or negligently failed to ensure the transfer occurred, having indicated to her that it would.  The two kinds of claim are different, and allege different kinds of wrongs.  

[51]     That is not to say that a claim based on negligence can be made out on the present facts.  We have some sympathy for Mrs Hinton’s argument that the 2000 negligence claims are somewhat contrived, given the underpinning as the alleged agreement by Mr Kerridge to procure the transfer of the property from the Trust to Mr and Mrs Kerridge jointly.  But we see that as a matter affecting the likelihood of success of the claim, which will now be a matter for assessment at the trial. 

[52]     We do not accept Mrs Hinton’s submission that this Court’s decision in Mosaed was wrong or limited to its facts.  The effect of Mosaed was not the circumvention or emasculation of the jurisdiction of the Family Court, but recognition of the bounds of the PRA’s application.  While the PRA is a code in respect of transactions between spouses in respect of property, it is not a code in respect of all available remedies between spouses for all possible legal disputes that may arise between them.  As Richardson P stated in Mosaed (at 20):

[The] concern [of s 4] is with the identification and classification of interests in property, their value and division.  The breach of fiduciary duty in this case was… breach of a process obligation which Mr Mosaed owed Mrs Mosaed.  That information failure was not itself a transaction between husband and wife in respect of property.

[53]     Mrs Kerridge’s claims of deceit, negligent misstatement and breach of duty of care, like Mrs Mosaed’s equitable claim for accounting of profits, is not in the category of property transactions caught by s 4 and is therefore not barred by the PRA.

Section 51 of the Act

[54]     Heath J held s 51 of the PRA had primacy over s 4, but we consider that that provision has no application in the circumstances of this case.

[55]     All it does is provide that spouses and civil union partners may sue each other in tort as if they were not married or in a civil union. That section reads as follows:

51       Proceedings in tort

(1)       Subject to this section, each of the parties to a marriage [or civil union] shall have the like right of action in tort against the other as if they were [not married or in a civil union].

(2)       Where one of the parties to a marriage[, civil union,] [or de facto relationship] brings an action in tort against the other during the subsistence of the marriage[, civil union,] [or de facto relationship], the Court may at any stage of the proceedings, on application or of its own motion, stay the action if it appears that—

(a)No substantial benefit, whether material or otherwise, would accrue to either party by the continuation of the proceedings; or

(b)The proceedings are vexatious in character; or

(c)The question or questions in issue could more conveniently be disposed of on an application made under this Act.

(3)       Without limiting the provisions of subsection (2)(c) of this section, the Court may in any such action exercise any power which could be exercised on an application under this Act or give such directions as it thinks fit for the disposal under this Act of any question arising in the proceedings.

(4)       In an action to which this section applies, judgment by default shall not be entered except with the leave of the Court. An application for the grant of such leave must be served on the defendant.

[(5)     In this section the term Court means the High Court, a District Court, or a Family Court; but a District Court shall not exercise any power which could be exercised on an application under this Act unless it is empowered to do so under any enactment (other than this section).]

[56]     In his review of Associate Judge Doogue’s decision, Heath J noted that there are no authorities that deal specifically with s 51 (at [33]).  He concluded that:

[35]     In my view, s 51 had primacy over s 4.  First, 2 4(2) makes it clear that the codification provision applies only if the Act does not expressly provide to the contrary.  The ability to bring a claim in tort is expressly permitted by s 51(1).  Second the term “Court” is defined by s 51(5) itself.  The definition contemplates the tortious proceeding being filed in the High Court or a District Court.  Although the Court in which the proceeding has been filed may stay the proceeding on one or more of the grounds set of in s 51(2) or give a direction that some part of the proceeding be determined under the Act (s 51(3)), those orders cannot be made once the marriage has been dissolved. 

[36]     In those circumstances, it is unnecessary for me to consider whether the Associate Judge was right to follow Mosaed v Mosaed and hold that s 4 did not apply for the reasons given by Richardson P in that case…  I rest my decision on s 51 of the Act.  It is unnecessary to consider authority further as, in my view, the words of the statute are sufficient to dispose of the s 4 point.

[57]     We do not agree that s 51 is the correct statutory portal for Mrs Kerridge’s claim in this case.  The earlier version of section 51 was introduced in 1963 as s 4(1) of the Matrimonial Property Act 1963.  Previously, spouses could not sue each other in tort because they were deemed in law to be a “matrimonial unity” and were treated as one person.  When the PRA was enacted in 1976, s 4(1) was carried over as s 51 of the new Act.

[58]     Section 51 gives married persons all the rights of non-married persons to sue in tort, but it does not constitute an express provision to the contrary of s 4(1).  It does not mean, even if the basis of Mrs Kerridge’s allegations had been a “transaction” between herself and Mr Kerridge, that by virtue only of s 51 she could nevertheless have sued in tort.  The section is not a general override of the otherwise comprehensive codification purport of the Act, but a statutory statement of a modernised conception of marriage.  To read up s 51 to any greater degree is not justified as it was introduced many years before the PRA and its attendant principles. 

[59]     We do not agree with Heath J that s 51 trumps s 4 in this case just because Mrs Kerridge’s claim is tortious.  More is required.  We have found that the claims in tort do not hinge upon an alleged transaction between the parties, and therefore that s 4 is no bar to Mrs Kerridge’s claim.  But if the claims in tort had involved a transaction between Mr and Mrs Kerridge relating to property, then s 51 would not have been sufficient on its own to override the s 4 bar.

Section 28(a) of the Limitation Act 1950

[60]     Section 4(1) of the Limitation Act  provides that actions in tort shall not lie after the expiration of six years from the date on which the cause of action accrued.  Applying Murray v Morel & Co Ltd, Associate Judge Doogue struck out those aspects of Mrs Kerridge’s claims in negligent misstatement and negligence based on 1998 events, but considered that her claim in deceit based on 1998 events survived by virtue of s 28(a) of the Limitation Act.  Section 28 provides:

28       Postponement of limitation period in case of fraud or mistake

Where, in the case of any action for which a period of limitation is prescribed by this Act, either—

(a)       The action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent;

…

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it:

Provided that nothing in this section shall enable any action to be brought to recover, or enforce any charge against, or set aside any transaction affecting, any property which—

(d)In the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed; or

(e)In the case of mistake, has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made, by a person who did not know or have reason to believe that the mistake had been made.

[61]     There is nothing in the Limitation Act that can save the claims in negligent misstatement and breach of duty of care arising from 1998 events.  Those particulars were outside the six-year time period, and the finding of both Associate Judge Doogue and Heath J that Mrs Kerridge knew that the Trust had purchased the property meant that s 28(a) could not be invoked to extend the limitation period for those parts of the claims, which involved no allegation of fraud as to the true purchaser. 

[62]     Mrs Kerridge’s claim in deceit based on the other 1998 events, however, is within the scope of s 28(a) because it alleges fraud and concealment: Amaltal Corporation v Maruha Corporation.  The six-year limitation period is, therefore, to be taken from the date at which Mrs Kerridge discovered the material fraud, or at which she could with reasonable diligence have discovered it. 

[63]     Like the alleged 2000 deceit, Mrs Kerridge’s claim of deceit based on her understanding of her entitlement under the Trust is evidentially problematic.  The Associate Judge found that Mrs Kerridge knew, at the time of the property’s purchase, that the Trust was the purchaser.  She will find it difficult to establish, in light of that knowledge, that she was actually deceived in 1998 in the manner she claims.  But, as we noted in respect of the 2000 deceit (at [47]), that is a matter of proof and not germane to the present appeal, where the tenability or otherwise of the claim is not in issue.

[64]     In her first narrative affidavit, sworn in November 2003, Mrs Kerridge stated that she knew at the time of the property’s purchase in 1998 that it was to be placed into the Trust, and that she assumed that she was included in the Trust either as a trustee or a beneficiary. There is no basis to extend the six-year period for a claim of deceit based on ignorance of the true purchaser of the property.  This limb of the alleged deceit is, as the two Judges in the High Court concluded, time-barred under the Limitation Act.

[65]     We are satisfied that if the 1998 deceit claim is taken to be tenable (as it must until it is struck out) then as a matter of logic the s 28(a) argument must be taken as fairly arguable.  So, for the same reasons as given by Heath J, we uphold his decision not to strike out the 1998 deceit claim. 

Result

[66]     We are satisfied that s 4 does not operate as a bar to all the proceedings in the High Court and that Mrs Kerridge is entitled to proceed with it in a limited way.  We also uphold the High Court decisions in relation to s 28(a). 

[67]     We agree (although on a different basis) that Mrs Kerridge’s claim is restricted to the claim in deceit by virtue of an arguable extension of the six-year limitation period under s 28(a) of the Limitation Act.

[68]     The appellant must pay the first respondent costs for a standard appeal on a band A basis and usual disbursements.

Solicitors:
Rennie Cox, Auckland, for Appellant
Jones Young, Auckland for First Respondent