Lauder v Walmsley
[2023] NZHC 2710
•29 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-002046
[2023] NZHC 2710
BETWEEN ROBERT GLEN LAUDER, ERICA JANE LAUDER and RICHARD CAMERON
DREW as trustees of the TUSCANY TRUST
Plaintiff
AND
MICHAEL WALMSLEY and JESSICA WALMSLEY
Defendant
CIV-2023-404-000167 BETWEEN
MICHAEL ARTHUR WALMSLEY and JESSICA LAUREN WALMSLEY
First Plaintiffs
MICHAEL ARTHUR WALMSLEY, JESSICA LAUREN WALMSLEY and WYLIE MCDONALD TRUSTEE
(WALMSLEY) LIMITED as trustees of the Calliope Trust
Second PlaintiffsAND
ROBERT GLEN LAUDER, ERICA JANE LAUDER and RICHARD CAMERON
DREW as trustees of the Tuscany Trust Defendants
Hearing: 27 June 2023 Appearances:
K P McDonald and M Pursey for the Plaintiffs P Cogswell and S J Tee for the Defendants
Judgment:
29 September 2023
JUDGMENT OF ASSOCIATE JUDGE GARDINER
LAUDER v WALMSLEY [2023] NZHC 2710 [29 September 2023]
This judgment was delivered by me on 29 September 2023 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Kevin McDonald & Associates, Auckland Morton Tee Ltd, Auckland
Introduction
[1] The trustees of Tuscany Trust (Tuscany Trustees) agreed to sell a residential property on Calliope Road to Michael and Jessica Walmsley (the Walmsleys). They also agreed to provide vendor finance of $450,000 until the Walmsleys sold their existing property. The Walmsleys have refused to repay the vendor finance because they claim the Tuscany Trustees carried out unconsented building work on Calliope Road in breach of their vendor warranty.
[2] The Tuscany Trustees apply for summary judgment for the $450,000 due and owing by the Walmsleys under the vendor loan, plus interest.
[3] The Walmsleys oppose summary judgment on the grounds that they have an arguable defence based on their claim for breach of vendor warranty which they maintain provides an equitable set-off. Alternatively, they asked the Court to exercise its residual discretion not to grant summary judgment.
[4] The Tuscany Trustees say that the Walmsleys do not have standing to bring a claim for breach of warranty because they nominated a trust to complete the Calliope Road purchase, and that trust owns the property so has sustained the loss (if any). Alternatively, the claim for repayment of the loan and cross-claim for breach of warranty are not sufficiently interdependent to qualify for equitable set-off.
[5]The issues are:
(a)Do the Walmsleys have standing to bring the cross-claim for breach of vendor warranty?
(b)If the Walmsleys do have standing, are the claim and cross-claim so interdependent that it would be unjust to allow summary judgment without bringing the cross-claim into account?
(c)If the answer is no to [5(b)], should the Court exercise its residual discretion to refuse summary judgment?
Background
[6] On 9 April 2022, the Tuscany Trustees and the Walmsleys entered into an agreement for the sale and purchase of a property on Calliope Road, Devonport. The agreement was the standard ADLS/REINZ Agreement for Sale and Purchase of Real Estate.1 The purchase price was $3,850,000. The settlement date was 20 May 2022. As the Walmsleys did not have enough funds to pay the full purchase price before selling their existing home, the Tuscany Trustees agreed to lend them the shortfall of
$450,000, interest-free.
[7] The agreement for sale and purchase recorded that the balance of the purchase price (after payment of the deposits) was to be paid “in cleared funds on settlement date of 20 May 2022, in the sum of $3,400,000, with the balance of $450,000 to be paid in accordance with the terms of cl 22.”
[8]Clause 22 stated:
The balance of the Purchase Price, being the sum of $450,000, shall be paid by the purchaser to the vendor 9 months from the date of settlement, or the settlement date of the sale of the purchaser’s property, at … Norwood Road, whichever shall first occur.
1 Eleventh edition, 2022.
[9] A loan agreement setting out the terms of the loan was attached to the agreement for sale and purchase. The agreement was a standard ADLS ‘Term Loan Agreement’.2 The loan agreement was initialled, but not executed by the parties. The loan agreement recorded the Tuscany Trustees as the lender, and the Walmsleys as the borrower.
[10] The agreement for sale and purchase was subject to finance and a building report. On an unknown date the Walmsleys declared the agreement for sale and purchase to be unconditional.
[11] On 3 May 2022, the Walmsleys settled the Calliope Trust. The Walmsleys are the trustees of the Trust, along with a corporate trustee, Wylie McDonald Trustees (Walmsley) Ltd. The Walmsleys and their children are discretionary beneficiaries of the trust.
[12] On 9 May 2022, the solicitor for the Tuscany Trustees wrote to the solicitor for the Walmsleys attaching a settlement statement and asking for confirmation of the full names of the Walmsleys so the term loan agreement could be finalised. The settlement statement recorded the purchase price of $3,850,000, less the deposit paid of $192,500, the “vendor finance as per Term Loan Agreement” of $450,000, and the balance required to settle on 20 May 2022 of $3,208,232.45.
[13] On 16 May 2022, the Walmsleys and trustees of the Calliope Trust (Calliope Trustees) executed a suite of documents. One, a Deed of Nomination by which the Walmsleys nominated the Calliope Trustees as the purchaser under the agreement for sale and purchase of Calliope Road. The Deed states:
1.The Nominator nominates the Nominee as the purchaser under the Agreement, and acknowledges that all the rights, interests and benefits of the purchaser pursuant to the Agreement shall pass to the Nominee.
2.The Nominee accepts the nomination specified in clause 1.
3.The Nominee covenants and agrees to fulfil all of the Nominator’s obligations as purchaser under the Agreement, and to keep the Nominator indemnified against all claims, demands, costs, actions and proceedings of any kind arising out of the Nominees’ default in any
2 Release date: 12 November 2018.
payment or future observance or performance of the terms and conditions of the Agreement.
[14] Two, a Deed of Acknowledgement of Debt. The Deed recorded that the sum of $3,850,000 advanced by the Walmsleys to the Calliope Trustees to complete the purchase would remain outstanding as a debt payable by the trustees to the Walmsleys on demand.
[15] Three, a Deed of Release of Debt by way of Gift. This Deed records that the Calliope Trustees owed the Walmsleys $3,850,000, being the amount owing under the Deed of Acknowledgement of Debt executed on the same day. By the Deed of Release, the Walmsleys forgave this debt, and the Calliope Trustees accepted the forgiveness of debt.
[16] On 18 May 2022, the Walmsleys’ solicitor informed the Tuscany Trustees’ solicitor that the Walmsleys had nominated the Calliope Trust to complete the purchase of the property. She attached a copy of the Deed of Nomination.
[17] In response, on 18 May 2022, the Tuscany Trustees’ solicitor emailed the term loan agreement to the Walmsleys’ solicitor. This version of the loan agreement was identical to the unexecuted version attached to the agreement for sale and purchase, except the borrower was named as the trustees of the Calliope Trust rather than the Walmsleys.
[18] Shortly thereafter on the same day, the Walmsleys’ solicitor responded, stating that “the loan should remain to Jessica and Michael personally”. They attached a copy of the signed term loan agreement and undertook to forward the original on completion of settlement.
[19]After taking instructions, the Tuscany Trustees’ solicitor responded:
As Mr & Mrs Walmsley have nominated their trust to complete the purchase, the loan should be in the names of the trustees of the Trust. Alternatively, we are willing to accept the loan in the name of Mr & Mrs Walmsley with the Trust guaranteeing the loan.
[20]On 19 May 2022, the Walmsleys’ solicitor emailed, stating:
Further to our telephone call of yesterday, are you able to send through the amended Term Loan Agreement, noting the Guarantor as the Trustees of the Calliope Trust? Please also note that Wylie McDonald Trustees (Walmsley) Ltd is a limited liability trustee. I will then circulate for re-execution by the signatories.
[21] That same day, the Tuscany Trustees’ solicitor sent a further version of the term loan agreement which recorded the Walmsleys as borrowers and the Calliope Trustees as guarantors and added a new clause cl 13(d) which acknowledged that Wylie McDonald Trustees (Walmsley) Ltd was a limited liability trustee.
[22] The Term Loan Agreement records that the lenders (Tuscany Trustees) agree to lend the borrowers (the Walmsleys) “the amount of the total advances referred to in the attached Annexure Schedule”. The Annexure Schedule records the principal sum of $450,000, a lower interest rate of 0 per cent per annum, and that the principal sum was repayable in one sum together with interest and all other monies then outstanding, “on the earlier of the sale of the Borrower’s property at … Norwood Avenue, Devonport, or nine months from the date of this Loan Agreement”. Interest at the higher rate of 10 per cent per annum was payable from the repayment date.
[23] On 20 May 2022, the Term Loan Agreement was executed by the Walmsleys as borrowers, and, with the corporate trustee, as guarantors in their capacity of trustees of the Calliope Trust.
[24] On 20 May 2022, the sale and purchase settled, and title to the Calliope Road property was registered in the names of the Calliope Trustees.
[25] The Walmsleys depose that in July 2022 they experienced leaks through the ceiling of the internal garage at Calliope Road. On 10 August 2022, Mr Walmsley sent a text message to Rob Lauder, one of the Tuscany Trustees, asking whether they had carried out the garage extension, or whether that work was done by the prior owners. Mr Lauder replied, confirming that they had undertaken the garage extension, adding the two rooms comprising the office and storeroom.
[26] On 11 August 2022, Mr Walmsley sent Mr Lauder an email asking whether they had received building consent for the work. Mr Lauder responded by stating that their builder had advised them that consent was not required for the work.
[27] On 7 September 2022, the Walmsleys’ solicitor wrote to the Tuscany Trustees’ solicitor confirming that the sale of Norwood Road was due to settle on 30 September 2022. They alleged that the Tuscany Trustees had breached the vendor warranty in respect of building works in the agreement for sale and purchase, as they had carried out unconsented building works on the property. They said that a quantity surveyor had been instructed to provide an estimate of the costs to demolish and rebuild the garage, and to do the necessary work to the bathrooms to obtain building consent. They asserted that this cost could be set off from the sum of $450,000 otherwise payable to the Tuscany Trustees on the sale of Norwood Road.
[28] On 3 September 2022, the sale of Norwood Avenue settled. The Walmsleys did not pay the $450,000 due under the Term Loan Agreement.
[29] On 3 October 2022, the Tuscany Trustees’ solicitor sent a letter of demand to the Walmsleys’ solicitor.
[30] On 14 October 2022, the Tuscany Trustees filed their application for summary judgment of the outstanding amount under the Term Loan Agreement.
[31] On 31 January 2023, the Walmsleys and the Calliope Trustees as first and second plaintiffs respectively filed a proceeding against the Tuscany Trustees alleging breach of their vendor warranty because of the unconsented works on the property. They seek relief in the form of the cost to remedy the works, estimated to be at least
$294,280, and consequential losses including rental of alternative accommodation and storage costs, of at least $355,720. Alternatively, they seek damages for diminution in value of the property in the sum of $700,000 including $355,720 of consequential losses.
[32] On 22 May 2023, the Walmsleys and Calliope Trustees as first and second plaintiffs in the breach of warranty proceeding applied for consolidation of the two
proceedings, or alternatively a stay of the loan proceeding pending determination of the breach of warranty proceeding.
[33] By direction on 29 March 2023, Associate Judge Lester directed that the application for consolidation would receive its first call at the summary judgment hearing.
Legal principles
[34]Rule 12.2(1) of the High Court Rules 2016 provides:
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.
[35] The relevant principles governing a summary judgment application are well established:3
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
Do the Walmsleys have standing to bring the vendor warranty claim?
Right of action assigned?
[36] The Tuscany Trustees claim that the Walmsleys do not have standing to sue on the agreement, because they absolutely assigned their interest in the agreement for sale and purchase to the Calliope Trustees by cl 1 of the Deed of Nomination. They submit that this assignment constitutes an absolute statutory assignment in terms of s 50(1) of
3 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
the Property Law Act 2007. Further, the requirements that the assignment must be in writing, and notice given to the Tuscany Trustees, are met. Accordingly, that the benefit of the vendor warranty contained in the agreement for sale and purchase is now the sole property of the Calliope Trustees, and the Walmsleys have no right to sue in reliance on it.
[37] The Walmsleys reject that the Deed of Nomination constitutes a statutory assignment. They maintain that they merely nominated the Calliope Trustees to be purchaser under the sale and purchase agreement, and that they, as the original contracting purchasers, remain privy to the contract and can enforce its terms and remain bound by them.
Nomination versus assignment
[38] It is a matter of judicial notice that it is common for a purchaser of real estate to nominate another party to complete the purchase and take title to the property. The standard ADLS/REINZ provides for this scenario, with the words “and/or nominee” in the “Purchaser” section of the agreement.4
[39] A nominee wishing to enforce the benefit of a contract to which they are nominated obtains privity through ss 12 and 17 of the Contract and Commercial Law Act 2017 (CCLA). Where the requirements laid down by the Act are satisfied, the nominee can sue for and recover a benefit under the contract.5
[40]Section 12 provides:
12 Deed or contract for benefit of person who is not party to deed or contract
(1) This section applies to a promise contained in a deed or contract that confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract.
(2) The promisor is under an obligation, enforceable by the beneficiary, to perform the promise.
4 See also cl 1.5(2).
5 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) 173 at [15.2.3] [The Law of Contract in New Zealand].
(3) This section applies whether or not the person referred to in subsection
(1)is in existence when the deed or contract is made.
[41]Section 17 provides:
17 Enforcement by beneficiary
(1) The obligation imposed on a promisor by section 12 may be enforced by the beneficiary as if the beneficiary were a party to the deed or contract.
(2) Relief in respect of the promise may not be refused on the ground—
(a)that the beneficiary is not a party to the deed or contract in which the promise is contained; or
(b)that, as against the promisor, the beneficiary is a volunteer.
(3) In subsection (2), relief includes damages, specific performance, or an injunction.
[42] In Laidlaw v Parsonage, Mr and Mrs Laidlaw agreed to sell a residential property to Mr Parsonage “and/or nominee”. 6 Mr Parsonage nominated the trustees of a family trust and the property was duly transferred to the trustees. The house leaked, and the trustees sought summary judgment for breach of the warranty in the contract for sale that the building had been completed according to building consents and the Building Act 1991. The Laidlaws opposed summary judgment on the basis that the trustees were not named as parties to the agreement and that s 4 of the Contractual Privity Act 1982 (the predecessor to s 12 of the CCLA) did not assist a bare nominee.
[43] Ellen France J, delivering the judgment of the Court of Appeal, held that the promise relied on by the trustees was made to the purchaser and the purchaser included the trustees as nominee. The description of a purchaser in an agreement for sale as “[named person] or nominee” was sufficient to meet the requirement of s 4 that the recipient of the contract be designated by name, description, or class. Therefore, the nominee was entitled to the benefit of the agreement for sale and purchase. The Supreme Court declined leave to appeal, stating that the reasoning of the Court of Appeal was entirely convincing.
6 Laidlaw v Parsonage [2009] NZSC 98, [2010] 1 NZLR 286.
[44] So, once a nomination has been made, the nominee is able to complete a contract in place of the nominating party and is entitled to the full benefit of the contract and to enforce its terms.7 But the nominee is not the contracting party and is not contractually bound.8 Action can still be brought against the nominator, being the original contracting party, by the other party.9 The ADLS/REINZ standard form agreement for sale and purchase of real estate provides for this at cl 1.5(2):
Where the purchaser executes this agreement with provision for a nominee, or as agent for an undisclosed, or disclosed but unidentified principal, or on behalf of a company to be formed, the purchaser shall at all times remain liable for all obligations on the part of the purchaser.
[45] Equally, the nominating party can sue on the contract after nomination. In Rivette v Atrax Group Ltd,10 Rivette was the purchaser under an agreement for the sale and purchase of Atrax’s business. Prior to settlement, Rivette nominated a company to purchase the business and pay for the stock. Rivette later claimed that the actual value of stock in trade was less than the value attributed to it by Atrax and sought damages. Atrax argued that, because of that nomination, Rivette lost his right to sue under the agreement, and/or that there was no evidence that Rivette had suffered any loss. Venning J held:
[12] The start point must be that the plaintiff, as the original purchaser and a party to the contract, has contractual rights. There does not seem to be any principled reason why the fact of nomination should lead to the loss of those rights. That is not the purpose or effect of the Contracts (Privity) Act. Rather, the purpose of that Act is remedial, to ensure that the nominee, in addition to the original contracting party, can enforce rights under the agreement. As the learned author observed in Blanchard, A Handbook on Agreements for Sale and Purchase of Land (4th ed, 1988) at [519] in relation to land, the Contracts (Privity) Act does not make the nominee a party to the contract but “merely allows him to take the benefit of it and he obtains an equitable interest in the land”. The original contracting party remains liable under the contract. In those circumstances there is nothing inherently objectionable in both the original contracting party and the nominee having rights under the contract. Often they will be the same rights, but they need not be, depending on the terms of the contract and the stage of the nomination. The effect of s 4 of the Contracts (Privity) Act is to create additional rights in the nominee, not to extinguish the original plaintiff’s rights. I note that s 14(a) of the Act would operate to preserve the plaintiff’s existing rights.
7 Broughton v Wyatt Family Trust Holdings Ltd HC Auckland CIV-2010-404-4303, 20 October 2010 at [30].
8 Cowan v Martin [2014] NZCA 593, [2015] NZAR 1197 at [28].
9 The Law of Contract in New Zealand, above n 5, at [15.2.3].
10 Rivette v Atrax Group New Zealand Ltd (2010) 11 NZCPR 723.
[13] The wording of the particular contractual provision creating the nomination may be important. In this case the purchaser is said to be the plaintiff and/or nominee. Framed that way, the and/or is not to be read as meaning it is mutually exclusive so that it must be either the purchaser or nominee. It may be both. I conclude that either the purchaser under the contract or the purchaser’s nominee may enforce the benefit of the contract. Even in a situation where the purchaser has nominated another party to settle the purchase as in the present case, the plaintiff as original purchaser retains the right to call for performance of the defendant’s obligations under the contract. The plaintiff would only lose such right in the event of a novation. There has been no novation in the present case.
(emphasis added)
[46] Applying these principles to the present case, if the Walmsleys merely nominated the Calliope Trustees to complete the purchase and take title to the Calliope property, the Walmsleys retain the right to sue for breach of the agreement for sale and purchase. They remain the contracting party.
[47] However, the Tuscany Trustees argue that the Walmsleys expressly assigned the right to sue for breach of contract to the Calliope Trustees. Assignment is a different legal concept to nomination. I will briefly explain.
[48] A right created by a contract is a “chose in action”. This term comprises personal property rights which can only be enforced by action, and not by taking physical possession, such as debts, shares, negotiable instruments, rights under a trust, legacies, policies of insurance, patents, copyright, and rights of action arising out of tort or breach of contract.11 A right arising out of a contract is a “legal chose in action”. An “equitable chose in action” is a right enforceable in equity.
[49] If an assignment of a legal (or equitable) chose in action meets the requirements of s 50(1) of the Property Law Act, all the rights and remedies of the assignor pass to the assignee (subject to ss 50(3) and 51). The assignee may bring an action to enforce the legal chose in their own name, without joining the assignor. The conditions are that the assignment must be absolute, not conditional or by way of charge only; it must be written; and signed by the assignor. If there is a failure to comply with these requirements there is no statutory assignment. In that case, the
11 The Law of Contract in New Zealand, above n 5, at [17.1].
assignee must rely on the concept of equitable assignment and join the assignor as co-plaintiff or co-defendant to any action.12
[50] While there is a rule against the bare assignment of a right of action, an assignment of a right of action to sue for breach of contract is valid if the right is attached to a property interest or the assignee has a “genuine commercial interest” in taking the assignment.13
[51] Did the Walmsleys absolutely assign their right to sue on the agreement for sale and purchase to the Calliope Trustees or was this a typical nominee arrangement?
[52] For the most part, the Deed of Nomination appears to record a simple nomination of the Calliope Trustees as purchaser. It is described as a nomination. The Walmsleys are described as the ‘Nominator’ and the Calliope Trustees are described as the ‘Nominee’. The recitals record that the agreement for sale and purchase of Calliope Road “allows for the Nominator to nominate another as purchaser under the Agreement”, that “The Nominator wishes to nominate the Nominee as the purchaser under the Agreement” and that “The Nominee wishes to accept the nomination as purchaser under the Agreement”. Then, under cl 1 of the Deed, “the Nominator nominates the Nominee as the purchaser under the Agreement.” And “the Nominee accepts the nomination specified in clause 1.”
[53] However, also under cl 1 “the Nominator acknowledges that all the rights and interests and benefits of the purchaser pursuant to the Agreement shall pass to the Nominee.” This part of the Deed reads more like an assignment of the Walmsleys’ right to sue on the contract to the Calliope Trustees.
[54] Yet the Walmsleys did not notify the Tuscany Trustees that they had assigned their rights under the agreement for sale and purchase. When their solicitor informed the Tuscany Trustees’ solicitor of the arrangement, they said: “Our clients have nominated the trustees of the Calliope Trust to complete the purchase” and attached a copy of the Deed of Nomination. While written notice is no longer required for an
12 At [17.1.2].
13 At [17.1.8].
effective statutory assignment, it is important to impose obligations on the debtor to pay the assignee (or perform obligations) and to establish priorities.14
[55] Overall, the contemporaneous evidence, viewed objectively, is more consistent with the Walmsleys having simply nominated the Calliope Trustees to complete the purchase and take title to the property. The name of the Deed, the description of the parties as nominator and nominee, cl 1 of the Deed and the words of the Walmsleys’ solicitor when giving notice all point in that direction.
[56] On that basis, I conclude that the Walmsleys, as the nominating purchaser, retained the right to sue for breach of contract themselves.
[57] For completeness, I record that the Tuscany Trustees did not argue that the nomination constituted a novation. In my view that is a sound position to take. Novation takes place where contracting parties agree that a third party, who must also agree, is to take the place of one of them. There is a new contract, and it is therefore essential that the consent of all parties is obtained.
[58] In this case, the Deed of Nomination makes no mention of novation. Furthermore, it records at cl 3 that the Calliope Trustees agree to fulfil all the Walmsleys’ obligations as purchaser under the agreement for sale and purchase and to keep them indemnified against any claims arising out of the Calliope Trustees’ default in performance of the agreement. That is consistent with the contract between the Tuscany Trustees and the Walmsleys continuing to exist. Further, there is no evidence of the Tuscany Trustees consenting to the agreement for sale and purchase being novated to the Calliope Trustees.
No standing because no loss?
[59] Alternatively, the Tuscany Trustees submit that the Walmsleys have no standing to make the cross-claim because they have not suffered any loss to support a claim for breach of warranty in the agreement for sale and purchase. They say that as
14 Dairy Solutionz (NZ) Ltd v Pacific Dairy Holdings Ltd (In Liq) [2021] NZHC 3054 at [33], referencing Roger Fenton Garrow & Fenton’s Law of Personal Property in New Zealand (7th ed, LexisNexis, Wellington, 2010) at [9.35].
the Calliope Trust paid the full purchase price for the property, any losses incurred because of the alleged breach of warranty have been incurred by the Calliope Trust, and not the Walmsleys.
[60] The Tuscany Trustees rely on Rivette. Venning J considered that the party that settled the purchase and paid $450,000 for the stock was the party that suffered the loss, in that case by paying too much for the stock. Venning J observed that the evidence as to who paid the purchase price was confusing, but overall suggested that the party that had lost money was the nominated purchaser, rather than Mr Rivette. Even if Mr Rivette advanced funds to the nominee company to enable it to settle the purchase, he considered that the company, not he, suffered the loss by paying too much for the stock.
[61] The Walmsleys say that they have suffered loss personally, as they funded the property purchase by borrowing from the bank and the Tuscany Trustees, which was only required due to the premium price paid on account of the Tuscany Trustees’ alleged non-disclosure and breach of warranty.
[62] They also submit that Rivette is distinguishable because the nominee in that case was a company, which is a legal entity. A trust, they submit, is not a legal entity separate from its trustees. They say that there is no legal distinction between them in their personal capacity and as trustees of the Calliope Trust in terms of their ability to enforce the warranties and claim the loss.
[63] In my view the place to start is with the breach of warranty statement of claim. This claim, filed in this Court in January 2023, is brought by the Walmsleys as first plaintiffs “as party to the Agreement as purchasers” and the Calliope Trustees as second plaintiffs “as the registered proprietors of [the property]”.
[64] The Walmsleys/Calliope Trustees claim that the Tuscany Trustees breached the vendor warranty by undertaking building works without a building consent or resource consent and by failing to obtain a code compliance certificate. They claim that had a building consent and/or a resource consent been obtained, the work would have been subject to an inspection regime by Auckland Council, met the requirements of the
Building Act 1991, Building Act 2004 and the Building Code, received a code compliance certificate, and the property would be free from leaks and other defects.
[65] The Walmsleys/Calliope Trustees claim expectation damages in the form of the cost to remedy the works and obtaining a code compliance certificate, estimated to be $294,280.76. They claim consequential losses including rental of alternative accommodation and storage costs of $355,720.00. The Walmsleys personally claim general damages for stress and inconvenience of $25,000. Alternatively, the Walmsleys/Calliope Trustees claim the diminution in value of the property said to be caused by the breach of warranty of $344,280 together with consequential losses.
[66] In terms of damages to compensate for diminution in value of the property, I consider that the Calliope Trustees are the appropriate plaintiff and recipient of any damages award. I am not attracted to the submission that there is no distinction between the Walmsleys personally and as trustees of the Calliope Trust in this context. A person acting as a trustee of a trust is acting in a different capacity from that trustee’s personal capacity.15 A trustee is obliged to hold and deal with trust property for the benefit of the beneficiaries in accordance with the terms of the trust.16 While a trustee is the legal owner of the property, the trustee is required to keep the trust assets segregated from their own personal estate.17 A trustee has no right to the beneficial enjoyment of the trust property.18
[67] Accordingly, the Calliope Trustees hold the Calliope Road on trust for the beneficiaries, in accordance with the terms of the trust. If the value of the property the trustees received is diminished because of the breach of warranty, that is a loss to the asset of the trust. Any recovery of damages from the Tuscany Trustees to compensate for that loss will be a recovery that the Walmsleys will receive in their capacity as trustees of the Calliope Trust, and for the benefit of the beneficiaries. It follows that the Walmsleys cannot bring a claim for this type of loss in their personal capacity.
15 Chris Kelly and Greg Kelly Garrow and Kelly Law of Trusts and Trustees (8th ed, LexisNexis, Wellington, 2022) at [3.46].
16 Trusts Act 2019, s 26.
17 Paul Matthews and others Underhill and Hayton Law of Trusts and Trustees (20th ed, LexisNexis, London, 2022) at [1.1].
18 At [1.1].
[68] However, the alternative measure of loss, the costs to remediate the property, raises different considerations. It is unclear, on the evidence before me, who will bear these costs. There is no evidence from the Walmsleys on this point. If the Calliope Trust does not have independent funds, it may be necessary for the Walmsleys to pay for the remediation work or to advance funds to the trust to pay for the work. That is a reasonable inference to make, given Mr Walmsley’s evidence that he and Mrs Walmsley funded the trust to complete the purchase:
To settle the purchase, the trust was dependent on funds being advanced to it by Jess and I personally, including the amounts we borrowed personally from Bank of New Zealand (which the trust also guaranteed and allowed to be secured by a mortgage over the property).
[69] Additionally, the alternative accommodation and storage costs for which consequential damages are claimed are losses likely to be sustained by the Walmsleys personally.
[70] Although the evidence from the Walmsleys on this point is thin, I consider it reasonably arguable that they personally will sustain a loss from the alleged breach of warranty, in the form of the cost to remediate and/or consequential losses.
[71] I find therefore that the Tuscany Trustees have not established that the Walmsleys do not personally have standing to bring the breach of warranty cross claim.
Do the two claims have the necessary interdependence to give rise to the defence of equitable set-off?
[72] Before discussing the submissions, it is helpful to review the general principles concerning equitable set-off. The Court of Appeal summarised these in Hamilton Ice Arena Ltd v Perry Developments Ltd.19 Tipping J, delivering the judgment, said:
[3] Before examining the facts of the present case, we will identify the general principles which apply to equitable set-off. A set-off is a right vested in a defendant facing a money claim by a plaintiff to use its own money claim against the plaintiff to absolve itself wholly or partially from its obligation to the plaintiff. A set-off is different from a counterclaim which, if established, gives the defendant a right to an independent judgment against the plaintiff,
19 Hamilton Ice Arena Ltd v Perry Developments Ltd [2002] 1 NZLR 309 (CA).
but no ability to reduce or extinguish the plaintiff’s claim against the defendant. Common law set-off originated in statutes passed early in the eighteenth century. Essentially the common law right was to set off mutual liquidated debts. Equity intervened to allow set-off on a wider basis than that available at law. Cross-claims were allowed by way of defence, and the Courts of equity would also restrain a plaintiff from proceeding at law if the defendant could show a cross-claim which had the effect of impeaching the plaintiff’s title to make the claim at law. It is helpful to remember this historical origin when examining claims of equitable set-off today.
[4] Equity would intervene only if the defendant in the suit at law could show some cross-claim for a sum of money which, in the eyes of equity, undermined the right of the plaintiff in the suit at law to enforce his legal claim either at all, or to the extent of the cross-claim. Equity always acknowledged the defendant’s right to counterclaim but took the view that in some circumstances such right was not sufficient to do justice. The Courts of equity would not readily interfere with the proceedings at law and confined themselves to cases where the claim at law and the defendant’s cross-claim were so closely interrelated that it would be unconscionable for the plaintiff to seek judgment at law without bringing the defendant’s cross-claim to account.
[5] The need for such close interrelationship was and still is underscored by the fact that an equitable set-off extinguishes the plaintiff’s right to judgment, either entirely or pro tanto, according to the amount which the defendant is entitled to set off. There is a detailed discussion of the principles pertaining to equitable set-off in the judgment of this Court delivered by Somers J in Grant v NZMC Ltd [1989] 1 NZLR 8. His Honour discussed the historical background and referred to a number of cases which have marked the development of this area of the law. It is unnecessary in the present case to say any more about equitable set-off generally, save to note this Court’s statement of principle in Grant’s case at pp 12 – 13:
“The defendant may set-off a cross-claim which so affects the plaintiff’s claim that it would be unjust to allow the plaintiff to have judgment without bringing the cross-claim to account. The link must be such that the two are in effect interdependent: judgment on one cannot fairly be given without regard to the other; the defendant’s claim calls into question or impeaches the plaintiff’s demand. It is neither necessary, nor decisive, that claim and cross-claim arise out of the same contract.”
[6] Penlington J reviewed the authorities and consistently with them said that “the equity claimed must go to the very root of the plaintiff’s claim”. He thereby adopted the way Forbes J put the matter in British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137 at p 145.
[73] More recently, in Herring v Herring, the Court of Appeal confirmed that the relevant principles concerning equitable set-off were those discussed in Grant v NZMC Ltd and Hamilton Ice Arena Ltd.20 The Court emphasised the distinction drawn by
20 Herring v Herring [2010] NZCA 500, [2011] 2 NZLR 433 at [15].
Tipping J between set-off and counterclaim. Namely, that the latter gives rise to a right to independent judgment but “no ability to reduce or extinguish the plaintiff’s claim against the defendant”.21 The Court in Herring said that it is this result which underscores the need for a particularly close interrelationship as outlined in the excerpt from Grant.22
Submissions
[74] The Tuscany Trustees submit that even if the Walmsleys suffered loss, their claim under the Term Loan Agreement and the Walmsleys’/Calliope Trustees’ claim for breach of vendor warranty contained in the agreement for sale and purchase are not interdependent. They emphasise that the Walmsleys deliberately separated the party taking the burden of the loan from the entity taking the benefit of the purchase, after receiving independent legal advice. They say they relied on the Term Loan Agreement, that the Calliope Trustees have had the benefit of occupation of the property since settlement, and it is unfair that the loan remains unpaid. They rely on authorities (discussed below) where this Court has found that sale and purchase agreements and vendor loan agreements are not interdependent to give rise to equitable set off.
[75] The Walmsleys maintain that the contracts are interdependent because there would be no requirement for the vendor loan without the agreement for sale and purchase. They say that the Term Loan Agreement has no independent existence to the agreement for sale and purchase, to which it was attached. They argue that no loan was advanced, rather they received “a credit on account of the purchase price.” They argue that the Tuscany Trustees’ demand is impeached by their own conduct. They say that the authorities relied on by the plaintiffs can be distinguished on the facts as they did not involve an established breach of contract by the vendor.
21 At [15], referencing Hamilton Ice Arena Ltd, above n 19, at [3].
22 At [15].
Discussion
[76] The Walmsleys’ submission that the Term Loan Agreement has no independent existence to the agreement for sale and purchase is not persuasive. Of course, the loan was only necessary because the Walmsleys had agreed to buy the property, but it does not follow that the two contracts have no independent existence.
[77] The form of and context for the Term Loan Agreement do not support that characterisation. The Term Loan Agreement is a formal, legal document. It records that the lenders (Tuscany Trustees) agree to lend the borrowers (the Walmsleys) “the amount of the total advances referred to in the attached Annexure Schedule”. The Annexure Schedule contains the loan details including principal amount, date for repayment and interest rates. Part 2 of the agreement sets out the loan conditions. It is a standalone agreement that is not dependent for its existence on the agreement for sale and purchase.
[78] Furthermore, the parties conducted themselves as if this agreement existed independently to the agreement for sale and purchase. While an earlier version of the agreement was attached to the agreement for sale and purchase, that version was not executed. One month later, the solicitors for Tuscany Trustees wrote to the solicitors for the Walmsleys asking for confirmation of the full names of the Walmsleys so the term loan agreement could be finalised. The Walmsleys’ solicitors did not object or suggest that the agreement was unnecessary or that all relevant matters had been agreed already as part of the agreement for sale and purchase. Rather, they corresponded with the Tuscany Trustees’ solicitor about who the borrower should be following the Walmsleys’ nomination of the Calliope Trust as purchaser. This culminated on 19 May 2022 with the following email:
Further to our telephone call of yesterday, are you able to send through the amended Term Loan Agreement, noting the Guarantor as the Trustees of the Calliope Trust? Please also note that Wylie McDonald Trustees (Walmsley) Ltd is a limited liability trustee. I will then circulate for re-execution by the signatories.
[79] As noted earlier, the Tuscany Trustees’ solicitor sent a further version of the Term Loan Agreement which recorded the Walmsleys as borrowers and the Calliope Trustees as guarantors and added a new clause cl 13(d) which acknowledged that the
corporate trustee was a limited liability trustee. The agreement was then executed by the Walmsleys as borrowers, and, with the corporate trustee, as guarantors in their capacity of trustees of the Calliope Trust.
[80] Accordingly, I consider that the claim and cross claim arise out of two separate and distinct contracts: the former out of the agreement for sale and purchase and the latter out of the Term Loan Agreement.
[81] That is not fatal to the defence of equitable set-off, as Grant made clear.23 The question is whether judgment on the claim under the loan agreement cannot fairly be given without regard to the cross-claim for breach of vendor warranty. Putting it another way: does the alleged breach of warranty call into question or impeach the loan demand?
[82] For context, it is helpful to consider the facts involved in the Grant case. Mr and Mrs Grant leased premises from NZMC and opposed an application for summary judgment of unpaid rent. They asserted that they had been induced to enter into the lease by promises made by NZMC of referrals of panel-beating work for their panel-beating business, promises which were not kept. The Grants alleged that because of the breach by NZMC of that collateral contract, their company had suffered substantial losses, which they sought to set off against the rent.
[83] The Court of Appeal held if the collateral contract and its breach are established, the case was one in which NZMC was endeavouring to enforce a promise by the Grants to pay rent while itself in breach of its own undertaking which gave rise to the lease on which it relied. The Grants’ cross claim qualified as a set-off and, being clearly arguable, prevented summary judgment.
[84] Here, the facts are quite different. The Walmsleys do not claim to have been induced to enter into the Term Loan Agreement by a misrepresentation by the Tuscany Trustees. There is no cross-claim of any nature concerning their entry into the Term Loan Agreement. The cross-claim concerns the agreement for sale and purchase only, and it is for breach of a term of the agreement: the warranty concerning building work.
23 Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) at 12–13.
[85] The Court of Appeal considered the issue of interdependence again in Hamilton Ice Arena.24 Hamilton Ice Arena agreed to sell its premises to Perry Developments, with a lease back to Hamilton Ice, and loan of $80,000 from Perry Developments to Hamilton Ice. In a separate contract, the Speirs, shareholders of Hamilton Ice, agreed to refurbish other premises for Perry by a stated date for completion, and Perry agreed to pay the Speirs $500 per week and a further $25,000 as performance bonus.
[86] Hamilton Ice went into arrears in its rent, and Perry re-entered the premises and forfeited the lease. Hamilton Ice sought relief against forfeiture, based on an equitable set-off for payments owed by Perry to the Speirs. In the first instance, the Judge held that Hamilton Ice had no set-off against Perry.
[87] On appeal, the Court of Appeal agreed. The Court adopted the Grant approach, which allows a set-off even if the cross-claim does not arise out of the relationship of landlord and tenant, provided there is a “sufficiently close connection” between the two claims.25 The Court of Appeal said:
[40] While in this case the Speirs brothers’ claim for wages and Perry’s claim for rent can be seen as related in a general way in that they both arose out of a series of transactions which the parties entered into at the same time, and in their mutual interests, there is not in our judgment such interdependence between the claims that it can fairly be said the existence of the wages claim should be regarded as impeaching the claim for rent. While, as was said in Grant, the fact that the claims arise out of different contracts is not decisive, if that is so there must be such a link between the different contracts as to justify their effectively being treated as one. In Grant’s case that was so because the contract represented by the lease was induced by the contract concerning supply of business to the company which was going to take the lease.
[41] The two contracts here – the lease and the refurbishment contract – concerned different premises in different cities. One involved rent, the other wages. They really have no practical or conceptual linkage at all. The fact that the money due to the Speirs brothers was intended by them to be used to discharge Hamilton Ice’s obligations under the lease is by no means sufficient for equitable set-off. In almost all cases of money cross-claims one party can say to the other, if you had paid me I would have been able to pay you. If that were a sufficient justification for set-off, the difference between set-off and counterclaim would be blurred almost to the point of extinction. An issue such as the present is in the end one which turns on a combination of analysis and
24 Hamilton Ice Arena, above n 19.
25 At [39].
impression. The trial Judge came to the view that the claims were not sufficiently linked. We cannot say he was wrong; indeed we agree with his conclusion. This ground of appeal must therefore fail.
(emphasis added)
[88] The facts of this case are similar to those in in Wright-Stow v Elvidge.26 The plaintiffs agreed to sell the business to the defendants, with the plaintiffs retaining ownership of the land and buildings, and the defendants leasing the premises from them. In addition, the plaintiffs agreed to provide vendor finance of $80,000. The defendants entered into the agreement as purchasers, and subsequently nominated a company operated by them to purchase the business. A lease agreement was executed, as was a term loan contract between the plaintiffs, the purchasing company, and the defendants as guarantors. The company did not pay the loan advance, and the plaintiffs demanded payment from the company and the defendants.
[89] The defendants claimed that they were induced to enter into the various agreements, namely the agreement for sale and purchase, the agreement to lease, and the term loan agreement, by misrepresentations entitling them to cancel and seek damages by way of counterclaim. They sought to raise the misrepresentation claims as an equitable set-off.
[90] Master Venning (as he then was) held that the allegations raised by the defendants were too general and made without the necessary evidentiary support to make out grounds of defence and set-off.27 Relevantly, the defendants failed to establish a set-off for a more fundamental reason. The plaintiff’s claim for summary judgment was based on the loan advance of $80,000 by them to the company, guaranteed by the defendants. Pursuant to the loan advance, the defendants were effectively principal debtors. He held that none of the matters referred to by the defendants related directly to the loan advance.28 All the matters raised by the defendants arose, at best, out of the agreement for sale and purchase and/or the lease.
26 Wright-Stow v Elvidge HC Christchurch CP74/99, 15 October 1999.
27 At [47].
28 At [51].
[91] He emphasised that the obligation to pay the advance of $80,000 arose as a direct result of the loan document. It was related to the purchase of the business by the defendants, but that in itself was not determinative. He considered it determinative that the parties had chosen to regulate their relationship by several quite separate contracts. He concluded:
[55] The loan contract is a separate contract. The loan contract itself is not impugned or attacked in any way by the matters raised by the Defendants. Any cross-claims the Defendants may have against the Plaintiffs in relation to the agreement for sale and purchase and/or the lease do not impugn the Plaintiffs’ right to recover the loan advance made by them.
[56] Put another way, the matters the Defendants wish to raise are not interdependent with the Plaintiffs’ claim for payment of the loan advance. In my view judgment can fairly be given by the Plaintiffs on the claim for repayment of the loan advance without regard, whatever claims the defendants may have against the plaintiffs in their capacity as vendors. The defendants are not deprived of the opportunity to pursue those claims against the plaintiffs. The practical effect is, however, that the Defendants will have to meet their obligations under the loan agreement to the Plaintiffs in the first instance.
[57] As Mr Parker relied heavily upon the principle espoused by Summers J in Grant v NZMC Limited, it is worth recording that the facts of that case are somewhat different to the facts of this case.
[58] In the Grant v NZMC Limited case, the claim was for rental. The Court of Appeal held that the defendant was induced to enter into the lease agreement by reason of misrepresentations by the plaintiff as to the business the plaintiff would give to the defendant’s company. That was effectively a collateral contract to induce the defendant into the lease. In the present case there was an agreement for sale and purchase. Any relevant misrepresentations that the defendants may establish relate to the inducement to enter that agreement for sale and purchase. The defendants were not induced to enter the loan agreement with the plaintiff by reason of any misrepresentations by the plaintiff. The defendants could have borrowed monies from a bank, but rather borrowed the money from the plaintiff because of the advantageous terms of the loan agreement itself, not because of any misrepresentation in relation to the business.
[92] I reach the same conclusion here. Any non-disclosure by the Tuscany Trustees about the building work they carried out on the property relates to the agreement for sale and purchase, not the loan agreement. There is no allegation in the breach of warranty statement of claim that the Walmsleys were induced to enter into the Term Loan Agreement by the Tuscany Trustees’ warranty that all building work had been conducted with a building consent or resource consent. That breach of warranty, if proven, impugns the agreement for sale and purchase, but not the Term Loan
Agreement. The Walmsleys borrowed money from the Tuscany Trustees on advantageous terms because they did not have enough funds to purchase the property outright, not because of the Tuscany Trustees’ warranty about building work.
[93] The Walmsleys seek to distinguish Wright-Stow on two grounds. First, that the Court in Wright-Stow was influenced by the express pre-settlement agreement reached that the two contracts were entirely separate. Second, that the Court found no fault in the vendor’s conduct and claims of misrepresentation were rejected as not being supported by any evidence.
[94] It is correct that the express agreement that the two contracts were separate was considered relevant by Venning J. However, even without that factor, I am clear that on the facts of this case the agreement for sale and purchase and the Term Loan Agreement were distinct contracts for the reasons I have given at [77]–[80].
[95] With respect to the second point, I do not overlook that in this case the Walmsleys have filed substantial evidence to support their arguable breach of warranty claim. I have assumed for the purposes of this application that it is reasonably arguable that the Tuscany Trustees breached the vendor warranty. That does differentiate this case from Wright-Stow. But Venning J held that even if the vendors had misrepresented the business, the defence of set-off was not available because those misrepresentations impugned the agreement for sale and purchase, not the separate loan agreement.29 The same reasoning holds true here.
[96] Associate Judge Gendall (as he then was) reached the same conclusion in Jungwon Ltd v Splitrock Ltd.30 This case also involved an application for summary judgment to enforce a loan under a term loan agreement associated with an agreement for sale and purchase of a business. Of the $300,000 purchase price, $100,000 was paid on possession date, and the balance of $200,000 was secured by way of a term loan agreement and guarantees. The parties entered into a separate term loan agreement setting out the loan arrangement between the plaintiff and the first defendant as borrower, and the second and third defendants as guarantors. Settlement
29 At [58].
30 Jungwon Ltd v Splitrock Ltd HC Wellington CIV-2007-485-1515, 8 November 2007.
took place, the first defendant took possession of the premises, but no payments were made under the loan agreement by any of the defendants.
[97] Following demand, the defendants contended that the first defendant had a proper claim against the plaintiff for an alleged breach of warranty or misrepresentation with respect to the agreement for the purchase of the business. It was claimed that the amount of the first defendant’s claim exceeded the plaintiffs’ claim against the defendants and constituted an equitable set-off. Associate Judge Gendall held:
[52] At the outset it is clear to me that none of the matters referred to by the defendants outlined in paras [13] to [17] inclusive above relate directly to the loan agreement or the guarantee. All of the matters raised by the defendants arise out of the agreement for the purchase of the business.
[53] The obligations to pay the outstanding $200,000 purchase price with interest are those directly resulting from the loan agreement and guarantee.
…
[56] In the present case, the misrepresentations alleged by the first defendant which, in any event, appear on their face rather thin, relate to alleged acts on the part of the plaintiffs which it says induced it to enter into the agreement for the purchase of the business. The obligation to repay the principal sum of $200,000.00 plus interest arose under the Loan Agreement and the Guarantee, which are separate documents, and quite independent of the [Agreement for Sale and Purchase]. There is a direct similarity, as I see it, between the situation in the present case and that which prevailed in Wright- Stow v Elvidge. In my view, the defendants here cannot raise the defence of equitable set-off pursuant to the alleged breach of warranty and misrepresentation on the part of the plaintiff which are independent matters to those under the Loan Agreement. I reject this defence advanced by the defendants.
[98] I consider the approach taken in Wright-Stow and Jungwon Ltd to be correct. The breach of warranty claim does not call into question the claim for the monies owing under the Term Loan Agreement. Judgment can fairly be given on the Term Loan Agreement without taking the breach of warranty claim into account. It is relevant that the Walmsleys have been able to take possession of the property on the settlement date because of the vendor finance on favourable terms. It would be unjust for the Tuscany Trustees to be denied that debt while the Walmsleys/Calliope Trustees pursue the breach of warranty claim.
Residual discretion
[99] If the defence of equitable set-off is rejected, the Walmsleys ask the Court to exercise its residual discretion to refuse to enter summary judgment. They alternatively ask the Court to dismiss the application or stay the application pending determination of the breach of warranty claim, pursuant to r 12.12(2) of the High Court Rules.
[100] The Court has a residual discretion not to award summary judgment even where the plaintiff has established that the defendant has no defence to the claim.31 The learned authors of McGechan on Procedure conclude that having regard to the various authorities, the position is:32
(a)The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the court is satisfied the defendant has no defence, there is no room for the exercise of discretion.
(b)The residual discretion may be invoked to avoid oppression or injustice to the defendant where:
(i)The proceeding involves the actions or possible liability of a third party which is not before the court;
(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;
(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or
(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the court cannot be satisfied that the defendant has no defence.
(c)Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.
[101] I do not consider there to be any sound reason for the Court to exercise its residual discretion and refuse summary judgment. Relevantly, it would not be unjust
31 High Court Rules 2016, r 12.2(1).
32 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].
or oppressive to enter summary judgment before the Walmsleys’ breach of warranty claim is determined. To the contrary, because the issues they raise do not attack the loan agreement, and as they have had the benefit of possession of Calliope Road since settlement, it would be unfair to deny the Tuscany Trustees the debt while the breach of warranty claim is pursued.
[102] For the same reasons, I am not persuaded to dismiss or stay the application under r 12.12(2) of the High Court Rules.
Result
[103] I enter summary judgment for the plaintiffs for the sum of $450,000, and interest on this amount from 1 October 2022 at the contractual rate of 10 per cent per annum, compounding monthly.
[104] The Tuscany Trustees are entitled to their costs. They seek solicitor/client costs. If agreement cannot be reached on costs the parties may file submissions of not more than four pages within 20 working days.
Associate Judge Gardiner
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