Lakes International Golf Management Ltd v Vincent
[2013] NZHC 2901
•4 November 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-003387 [2013] NZHC 2901
BETWEEN LAKES INTERNATIONAL GOLF MANAGEMENT LIMITED Plaintiff
ANDHARTLEY CLENDON VINCENT Defendant
Hearing: 3 October 2013
Appearances: C C Mansell for the Plaintiff
M Fisher and H L Hui for the Defendant
Judgment: 4 November 2013 at 5pm
RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON (Summary Judgment Application)
This judgment is delivered by me on 4 November 2013 at 5pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
Solicitors/Counsel:
Castle/Brown, Newmarket, Auckland
Martelli McKegg, Auckland
M Fisher, Barrister, Auckland
LAKES INTERNATIONAL GOLF MANAGEMENT LTD v VINCENT [2013] NZHC 2901 [4 November 2013]
Introduction
[1] At issue in this proceeding is the question of the defendant’s liability for
$5,070 that the plaintiff says the defendant owes to it for membership fees for the golf club at Pauanui, near Coromandel. Both parties claim summary judgment. .The plaintiff, Lakes International Golf Management Limited, contends that Mr Vincent has no arguable defence to the sole cause of action in its statement of claim and claims judgment for the disputed membership fees, plus interest and costs. The defendant, Mr Vincent, contends there is no arguable basis upon which the cause of action in the plaintiff ’s statement of claim can succeed and claims judgment dismissing the plaintiff’s claim.
Background
[2] In its statement of claim, the plaintiff sets out the essential facts that it relies upon as follows:
1.It is a duly incorporated company ... and carries on business as a golf club ...
2.The Defendant is the registered proprietor of the property described as Lot 75, Deposited Plan South Auckland 88978, Identifier SA70C/464 (the Property). The Defendant became the registered proprietor ... on 24 December 2007.
3.The Property is part of a subdivision in the vicinity of the Lakes International Golf Course which is situated on Certificate of Title SA71C/273 formerly Certificate of Title section 1-2 survey office plan 443 897 and Lot 2 Deposited Plan 452487.
4.The Plaintiff operates the golf club which provides playing rights for the golf course.
The Covenant
5.On 17 November 2003, a land covenant 5800996.1 was registered against the Property ...
6. The Covenant states that:
The transferee will:
Upon becoming registered as a proprietor of any estate in the Land, including an estate arising from a subdivision of the Land, immediately join as a member of the Golf Club, remain a member of the Golf Club in good standing throughout the transferee’s ownership of the Land and meet
all levies and other lawful [impositions] levied by the Golf
Club.
7. The Covenant defines the following terms:
Golf club means the golf club to be incorporated as an incorporated society to provide [for] playing rights on the golf course.
Land means the land transferred by this transfer.
Golf course means the Golf Course being developed on the land in Certificate of Title SA71C/273.
8. The Plaintiff is the golf club referred to in the covenant.
9.The Plaintiff is a party which is conferred a benefit under a deed pursuant to section 4 of the Contracts (Privity) Act 1982.
Failure to Pay Membership Fees
10.Under the membership rules of the Plaintiff, members are required to pay annual membership fees which are set by the golf club (membership fees).
11. From 24 December 2007 to date, the Plaintiff has rendered to the Defendant the following invoices totalling a sum of $5,070 for membership:
11.1 29/08/2011 - $1,690;
11.2 15/05/2012 - $1,690; and
11.3 13/05/2013 - $1,690.
(the outstanding membership fees)
12.The Plaintiff has made demand for payment of the outstanding membership fees through its solicitor’s letter of 7 June 2013. The Defendant has refused or neglected to pay the outstanding membership fee.
13.The Plaintiff seeks to enforce the benefit conferred to by the covenant, being the right to receive unpaid membership fees.1
[3] It is common ground that the dispute concerns the proper construction of the covenant. The issue is whether the plaintiff is the golf club referred to in the covenant registered against Mr Vincent’s property and thus is entitled to the benefit
of the covenant. Counsel for the plaintiff submits that the plaintiff is entitled to the
1 The statement of claim contains some typographical omissions, which have been corrected in the above extract.
benefit of the covenant pursuant to s 4 of the Contracts (Privity) Act 1982, and should, therefore, be permitted to enforce the benefit conferred by the covenant “being the right to receive unpaid membership fees”.
[4] Mr Vincent acknowledges as a matter of law that he is under an obligation, by reason of the lodgement of the covenant on the title to his property, to join a golf club on that land once there is an incorporated society formed to operate a golf club on the land, but he says that in the circumstances of this case, he has no obligation that is presently enforceable against him under the covenant. Any obligation to join as a member of the golf club and to remain a member and to meet levies imposed by the golf club applies to a golf club as defined in the covenant. Relevantly, the meaning given to the term “golf club” in the covenant is a golf club that is incorporated as an incorporated society to provide for playing rights on the golf course, and it is a matter of incontrovertible fact that the plaintiff is not an incorporated society.
[5] For reasons that I turn to presently, I am not satisfied that either side is entitled to summary judgment. I pause momentarily to set out the law surrounding summary judgment.
Summary judgment – relevant legal principles
[6] The plaintiff applies for summary judgment under r 12.2(1) of the High Court
Rules. Relevantly, r 12.2(1) provides:
12.2Judgment when there is no defence or when no cause of action can succeed
(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
…
[7] The question on an application for summary judgment is “whether the defendant has no defence to the claim; that is, that there is no real question to be
tried.”2 On summary judgment the Judge will not resolve material conflicts of evidence of assess credibility but it can take a robust approach to the facts if appropriate.3
[8] Mr Vincent relies on r 12.2(2). It provides:
12.2 Judgment … where no cause of action can succeed
(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.
[9] Defendant summary judgment allows a defendant who has a complete defence which cannot be contradicted, to put such evidence forward so the proceedings can be summarily dismissed.4 The onus is on the defendant, to prove, “on the balance of probabilities, that the plaintiff cannot succeed.”5 Defendant summary judgment will not be appropriate where there is a dispute as to the material facts or where the Court needs to ascertain the material facts.6 If there is a “theoretical possibility” on the evidence that the plaintiff’s claim could succeed, then summary judgment will be unsuccessful.7
Discussion
[10] Both parties have proceeded on the basis that Mr Vincent is bound by the covenant and that any possible claim by the plaintiff arises under the Contracts (Privity) Act. Counsel for Mr Vincent acknowledged that Mr Vincent concedes he is bound by the covenant. His dispute is whether the plaintiff is a person entitled to the benefit of the covenant. Without wishing to be seen to decide the point, this appears
to be a realistic approach.
2 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26]; affirming
Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA).
3 At [26].
4 Jones v Attorney-General [2004] 1 NZLR 433 at [5]; the discussion relates to the former rule, r
136(2). It is however equally applicable to the new rule, r 12.2(2).
5 At [5].
6 At [5].
7At [10]. It further states; “The appellant may, or may not, succeed in establishing his version of events at trial. It cannot, however, be said at this stage that he cannot do so, and if the outcome of the action is potentially dependent on the facts found it is inappropriate to give summary judgment for the defendant.”
[11] Section 4 of the Contracts (Privity) Act states:
4 Deeds or contracts for the benefit of third parties
Where a promise contained in...a contract confers ... a benefit on a person, designated by ... description ... who is not a party to the deed or contract (whether or not the person is in existence at the time when the deed or contract is made), the promisor shall be under an obligation, enforceable at the suit of that person, to perform that promise:
Provided that this section shall not apply to a promise which, on the proper construction of the deed or contract, is not intended to create, in respect of the benefit, an obligation enforceable at the suit of that person.
(emphasis added)
[12] At the time Mr Vincent purchased his land the covenant was lodged against the title of the property.8 The contract between Mr Vincent and the vendor was therefore for the fee simple subject to the burden of the covenant.9 Thus it appears that Mr Vincent took ownership of the property on the condition that he, as registered proprietor, would pay the annual membership fee to the golf club; and that in terms of s 4, Mr Vincent’s sale and purchase agreement is the relevant contract
pursuant to which he is the promisor and the benefit is the receipt of an annual membership fee.
[13] This being the case, the outstanding issue is, as counsel concur, whether the plaintiff is the person described in the covenant that is to receive the benefit. The crux of this issue is whether the covenant requires the golf club to be an incorporated society.
[14] Counsel for the plaintiff argues that a covenant should be interpreted in accordance with the ordinary principles of contractual interpretation.10 Counsel refers to Bonnar v Summerland Properties Development Limited11 where it was held that the interpretation of a covenant must occur in the context of the covenant’s
intended purpose. In the current context this means that the words of a commercial
8 The covenant was lodged against the land on 17 November 2003. Mr Vincent purchased the land on
24 December 2007.
9 As per s 62 of the Land Transfer Act 1952 Mr Vincent is deemed to have been aware of and have accepted the covenant that encumbered the land.
10 Investors Compensation Scheme Limited v West Bromich Building Society [1998] 1 WLR 896 (HC); adopted in Big River Paradise v Congreve [2008] 2 NZLR 404 (CA).
11 Bonnar v Summerland Properties Development Limited (2002) 8 NZCR.
document should reflect the commercial environment in which the document operates.
[15] Counsel for the plaintiff submits that the clear purpose of the covenant was to require residents to pay membership to the golf club. The Lakes Resort is a gated community which centres around the golf course. Residents gain an automatic lifelong membership, and in return they are obligated to pay an annual fee.
[16] Although the covenant describes the golf course as an incorporated society, counsel for the plaintiff argues that this is not intended to be binding but is merely indicative of what form the golf club may take. Arguably it cannot have been the intention of the parties to distinguish between different legal forms of the golf club.
[17] The defendant argues to the contrary that the intention was for residents to be bound only if an incorporated society was formed. There is a significant difference between belonging to a golf club that is an incorporated society and a golf club that is set up and controlled by a company. There are two distinguishing features of an incorporated society: first that one of the main purposes of an incorporated society cannot be to make pecuniary gain, and secondly that an incorporated society must be controlled and managed by its members. In contrast the plaintiff is an incorporated company, which is entitled to make a pecuniary gain for its shareholders and is controlled by its directors. In practical terms a key difference is whether there is a golf club controlled by its resident members or a golf club run the non-resident directors of a company.
[18] Counsel for the plaintiff argues that as the current membership rules allow for members to be involved in the management of the golf club, the effect of the different structures is minimal. The reality of this involvement is that members of the club may elect a ‘membership committee’ and that the manager may appoint an advisory board to advise the corporate manager on the best interests of the golf club and its members. However it does not provide members with voting privileges.
[19] In essence the defendant submits that the differences are significant. As a result of such differences the plaintiff is not the person designated by description in
the covenant and the requirement of the club to be an incorporated society was intended to be binding.
[20] To the extent that there is room for ambiguity in the covenant there is room for different interpretations. It is telling that in submissions counsel for each party relies to a degree on the surrounding factual circumstances and intentions of the original covenantor and covenantee to support their opposing interpretations. I am satisfied that it would not be prudent to determine whose approach to interpretation is to be preferred on the limited evidence available to me. It would be more prudent to allow the context of the covenant to be exposed fully at trial as only on further analysis of the facts can the true intention of the original contracting parties, and indeed of Mr Vincent and his vendor, be ascertained. Such an analysis is not appropriate for summary judgment.
Conclusion
[21] I am not satisfied that summary judgment for the plaintiff is appropriate. It has not shown that the defendant has no defence to its claims.
[22] Summary judgment for the defendant cannot succeed as there is a theoretical possibility that at least one of the causes of action may succeed.
Result
[23] The applications of both sides are dismissed.
[24] The Registrar is to allocate an initial case management conference.
[25] In accordance with the Court of Appeal’s decision in NZI v Philpott,12 costs are reserved.
H Sargisson
Associate Judge
12 NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
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