Kiwi Deposit Building Society v Scanprojects ApS

[2015] NZHC 533

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004853 [2015] NZHC 533

BETWEEN

KIWI DEPOSIT BUILDING SOCIETY

Applicant

AND

SCANPROJECTS ApS First Respondent

SCOTT CAMPBELL MACAW Second Respondent

Hearing:	20 March 2015
Attendances:	S O McAnally and B M Hojabri for Applicant D G Hurd and S Burnett for Respondents
Judgment:	20 March 2015

ORAL JUDGMENT OF VENNING J

Solicitors:           Keegan Alexander, Auckland

Dawson Harford & Partners, Auckland

Copy to:            D G Hurd, Auckland

KIWI DEPOSIT BUILDING SOCIETY v SCANPROJECTS ApS [2015] NZHC 533 [20 March 2015]

[1]      Kiwi Deposit Building Society (KDBS) seeks leave to apply for summary judgment against the first defendant Scanprojects ApS (Scanprojects).

[2]      At  various  dates  between  2  September  2009  and  23  February  2010

Scanprojects deposited substantial sums with KDBS.  Between 2 January 2012 and

19 October 2012, again on various dates, various deposits were broken (or closed) with interest added or transferred to other accounts held with KDBS by Scanprojects. This is in the context of the situation where Mr Macaw, a director of Scanprojects was the chairman of KDBS, and there was a close relationship between KDBS and Scanprojects.   I am told by counsel that effectively Scanprojects was a principal financier or source of funds for KDBS.

[3]      On 18 April 2013 KDBS was placed into dissolution.  On 15 August 2013 the trustees appointed to the dissolution sought clarification from Scanprojects about the deposit accounts.  Absent any satisfactory response from the trustees’ point of view, on 12 November 2013 these proceedings were commenced to recover the sums related to the deposit accounts.  The plaintiff, KDBS, initially sought judgment for

€8,789,939.   On 7 April 2014 both defendants were served in  the Kingdom of

Denmark.

[4]     On 4 November 2014 the defendants filed a statement of defence and counterclaim and on 11 November 2014 filed and served their list of documents.  On

2 February 2015 KDBS filed and served an amended claim, reducing its claim to

€485,478.50, which represented the interest it says was paid to Scanprojects (and to which it was not entitled) because the deposits were broken or terminated early.

[5]      The present claim was part of and included in the original claim, but as Mr McAnally explained it was not thought appropriate to pursue summary judgment in relation to that aspect of the claim at that earlier stage.

[6]      KDBS seeks repayment of the interest on a number of bases.  At the same time as filing the amended statement of claim KDBS brought this application for leave to apply for summary judgment.  It relies on two of the four causes of action to support the application for summary judgment:

(a)       money had and received;  and

(b)      money paid by mistake.

Principles

[7]      Rule 12.4(2) applies.   Leave is required to bring the application as it is outside the time prescribed for bringing the application as of right.

[8]      In exercising its discretion in such an application the Court will consider: (a)           the delay and reasons for it;

(b)the merits of the proposed application for summary judgment insofar as it is able to on such an interlocutory application;

(c)       whether there is any prejudice to the defendant;  and

(d)      the overall interests of justice.

Delay

[9]      In the present case the delay is significant, the application being brought some 10 months after the defendants were served with the proceedings.   KDBS seeks to explain the delay on the basis that it was only once discovered documents were obtained from the defendants and the full statement of defence filed that the trustees were in a position to review the position on behalf of KDBS, amend their pleading and seek summary judgment.

[10]     I acknowledge the difficulties the trustees have coming into the control of a company in dissolution as the plaintiff was.  Nevertheless the delay is significant in context.  The context is that the case has in the meantime progressed to the stage where it is has a substantive fixture scheduled to commence on 10 August 2015. The fixture was allocated at a conference on 14 August 2014 and confirmed by the Registry on 18 August 2014.  The close of pleadings date has well passed, it having

passed on 16 February 2015.   The case is subject to a timetable to ready it for hearing on 10 August 2015.

Merits

[11]     The plaintiff suggests the essential issue is simply whether the interest was payable on the term deposits that did not reach their agreed maturity dates.   Mr McAnally submitted the issue could be resolved on the basis of the correspondence between the parties which records on the deposit letters, inter alia, that “interest is non compound, applied on a per annum basis but payable only at maturity”.  In those circumstances he submits that when the deposits were broken the defendant Scanprojects  was  not  entitled  to  interest.    He  submits  that  the  evidence  the defendants propose to raise in opposition to the application for summary judgment is evidence of their subjective intentions and understanding of the position which of course is inadmissible.   While he accepts the context and background to the relationship between the parties would be relevant he submits that can be dealt with on the basis of the affidavit evidence and would not require a full hearing.

[12]     He also suggests that such evidence as there is before the Court at present is inconsistent with, and does not address the arguments the defendants intend to raise. He refers to Commissioner of Inland Revenue v Thomas Cook1  in relation to the meaning of the word “payable” for instance and if there was the close relationship Scanprojects argues for then there would be no apparent impediment to the parties making any agreement they saw fit, but there is no documented record of such agreement.

[13]     Against that Mr Hurd refers to the actions of the parties and notes that at least on some occasions when the deposits were broken from one account the moneys were  in  fact  transferred  to  other  accounts  with  KDBS,  thereby maintaining  the benefit to KDBS of the deposit.  He submits that the correct meaning of the “payable only at maturity” references in the deposit letters cannot be determined otherwise

than in a full evidential hearing. The phrase is at the least ambiguous.

1      Commissioner of Inland Revenue v Thomas Cook [2005] 2 NZLR 722.

[14]     He also submits that there are defences that the defendants would wish to raise regarding alteration of position and estoppel.   Mr McAnally submits such defences are not readily available, referring to the decision of the House of Lords in Lipkin Gorman (A firm) v Karpnale Ltd.2

[15]     I accept there are arguments both for and against the plaintiff’s submission as to the interpretation of the meaning to be given to the references on the term deposit letters.  However, I am not persuaded that for present purposes at least the matter is so clear cut that it can be said the defence proposed to be raised is not at least worthy of substantial argument at the summary judgment stage.  I cannot be confident that if leave  were  granted  it  would  be  almost  inevitable summary judgment  would  be granted for the plaintiff.

Prejudice

[16]     As to prejudice, the obvious prejudice to both parties, but to the defendant in particular, is that if leave is granted for the application for summary judgment and it proceeds but is unsuccessful further costs will be incurred.   That is particularly relevant here where the defendant is an overseas entity and evidence would be required from overseas.  Further, additional costs would be associated with preparing for and presenting the summary judgment hearing at the same time as complying with the timetable for the substantive proceeding.

Interests of justice

[17]     Standing back and looking at the matter overall in terms of consideration of the interests of justice I consider a particularly relevant factor in this case is the substantive fixture, which is allocated for 10 August.  The substantive fixture could be dealt with in two, perhaps three days.  The earliest available date for a defended summary judgment hearing if leave were granted, assuming the affidavits in reply were directed to be filed and served, would be towards the end of May or early June. In those circumstances the fact the substantive hearing could be scheduled less than three months or close to two months after any available summary judgment hearing

date counts against the application.

2      Lipkin Gorman (A firm) v Karpnale Ltd [1991] 2 AC 548 at 580.

[18]     For those reasons, on balance, the application for leave to commence the application for summary judgment in this case is declined.

Costs

[19]     The respondent is to have costs on a 2B basis in relation to the application together with any disbursements approved by the Registrar.  That is to be costs of one counsel allowed.

Position of the second defendant

[20]     There is one other issue.  Mr Hurd has raised the issue of the position of the second defendant.  The second defendant initially faced a claim in the original claim. The amended claim does not raise a cause of action seeking relief against the second defendant personally.   At Mr McAnally’s request I grant leave to the plaintiff to either file a notice of discontinuance against the second defendant with costs to be dealt with by way of memoranda or for the plaintiff to file and serve an amended statement  of claim.   The leave  is  granted on  the basis  that  such steps,  i.e. the discontinuance or the amended claim, will be filed and served by Friday, 27 March

2015.

Venning J