Lendich v Codilla
[2022] NZHC 1655
•13 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-000566
[2022] NZHC 1655
BETWEEN DANILO STANISLAV LENDICH
First Plaintiff
LENDICH CONSTRUCTION LIMITED
Second PlaintiffAND
ADRIAN CAMPANA CODILLA
Defendant
Hearing: 12 July 2022 Appearances:
P H Thorp for Plaintiffs
S Anthony for Defendant on behalf of N P Tetzlaff
Judgment:
13 July 2022
JUDGMENT OF VENNING J STAY APPLICATION
This judgment was delivered by me on 13 July 2022 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Davenports West Lawyers Ltd, Auckland
Connell & Connell, Auckland
Counsel: P H Thorp, Auckland
LENDICH v CODILLA [2022] NZHC 1655 [13 July 2022]
[1] The plaintiffs seek a declaration that a block of land containing a house (the caretaker’s property) is held by Mr Codilla for them, pursuant to a resulting trust.
[2] Mr Codilla has filed a statement of defence and counterclaim. In addition he has filed an application for summary judgment.
[3] The plaintiffs have responded with an application to stay primarily directed at the application for summary judgment.
[4] The issues between the parties have recently been considered by this Court on an application by the first plaintiff Mr Lendich, for an order sustaining the caveat lodged over the caretaker’s property.1
[5] Some time ago the caretaker’s property was transferred to Tihomir Posa, a long-term employee of Mr Lendich. Mr Posa has died. The defendant, Mr Codilla, is his executor. The plaintiffs in the present proceeding, Mr Lendich and Lendich Construction Limited (Lendich Construction) claim an interest in the caretaker’s property under a resulting trust. They say the caretaker’s property was transferred to Mr Posa to allow him to obtain a mortgage in respect of the property, but that it was never intended that he would have the right to sell or deal with the property as his own.
[6] Although the caveat was lodged in Mr Lendich’s name personally, the evidence filed in the caveat proceeding showed the caretaker’s property was transferred to Mr Posa by Lendich Heavy Equipment Ltd, the shares of which were owned by Mr Lendich and his wife. That company ceased trading in 1988 and was struck off the Companies Register in 1990.
[7] In a judgment delivered on 12 April 2022 Associate Judge Sussock determined that the caveat registered by Mr Lendich against the caretaker’s property was to lapse.
1 Lendich v Codilla [2022] NZHC 758.
[8] Associate Judge Sussock concluded that the resulting trust Mr Lendich claimed was not reasonably arguable. She considered it was patently clear the caveat could be not maintained on that basis.2
[9] The Judge went on to note, obiter, that even if the presumption of resulting trust was not rebutted by the evidence, Mr Lendich had not established it was reasonably arguable that he personally had an interest pursuant to a resulting trust.3 The caretaker’s property was transferred to Mr Posa by Lendich Heavy Equipment Ltd. Although it was suggested on behalf of Mr Lendich that Lendich Construction took an assignment of the assets and liabilities of Lendich Heavy Equipment Ltd before it was removed from the register, there was insufficient evidence of that before the Court. The Court rejected Mr Thorp’s argument that form should not triumph over substance. For those reasons also the caveat could not be sustained.
[10] In the circumstances it was unnecessary for the Judge to deal with the further grounds relied on by Mr Codilla, namely the doctrine of laches, and the Limitation Act 2010.
[11] Two days after delivery of Associate Judge Sussock’s decision on the caveat application, the plaintiffs filed this proceeding. They also lodged an appeal against the decision of the Associate Judge with the Court of Appeal.
[12] As noted, Mr Codilla’s response to these proceedings was to file and serve a statement of defence and counterclaim and also apply for a defendant’s summary judgment.
[13]Mr Codilla’s application for summary judgment is pursued on the basis:
(a)the causes of action in the plaintiffs’ claim cannot succeed;
(b)there is no reasonably arguable basis to support Mr Lendich’s or Lendich Construction’s alleged interest in the caretaker’s property;
2 At [66].
3 At [71].
(c)any interest in the caretaker’s property was owed to Lendich Heavy Equipment Ltd, which was not a party to the proceedings and had been removed from the register;
(d)the balance of the purchase price for the property transferred by Lendich Heavy Equipment Ltd to Mr Posa was a perfected gift;
(e)laches;
(f)the Limitation Act 2010.
[14] Mr Codilla also raises a counterclaim. The summary judgment application does not apply to the counterclaim. The grounds for the summary judgment are restricted to responding to the plaintiffs’ claim.
[15] The point raised by the application for stay is a short one. Should the Court direct a stay of these proceedings pending the hearing of the appeal from Associate Judge Sussock’s decision?
[16] Mr Thorp submits that the issues that will be determined by the Court of Appeal on Mr Lendich’s appeal from the caveat decision, will be determinative of the plaintiffs’ claim in this proceeding. He accepted that if the appeal was unsuccessful that would be determinative of the plaintiffs’ position in this case and the current proceedings would not be pursued. On the other hand, if the appeal succeeds, then the merits of the plaintiffs’ claim in this proceeding and the other defences raised by Mr Codilla will be live issues.
[17] I observe that, like the Associate Judge I doubt that the defences of laches and Limitation Act could be satisfactorily resolved on the affidavit evidence. The focus is on whether the defendant can defeat the plaintiffs’ claim based on the resulting trust.
[18] Mr Thorp argued that the issues in the caveat appeal were the same as the issues raised in these proceedings. He noted that in Mr Codilla’s affidavit in support of the application for defendant’s summary judgment, he said:
47. The interest that the caveat was lodged to protect is the same interest
that is being claimed by Mr Lendich, and his company in the alternative, in the current proceedings.
And:
51.
As the parties and issues are the same between these cases, I am seeking leave to use the affidavits filed in the Caveat Case in this proceeding (with the exception of my affidavit, as I have substantially repeated the content sin this affidavit).
[19] Mr Thorp noted that he understands Mr Codilla’s counsel has no concerns regarding the proposed contents of the case on appeal and agrees to the suggested length of hearing required for the appeal so that all preparatory steps for the case on appeal will be completed by the end of this week. All that will remain will be the allocation of a hearing before the Court of Appeal. If the defendant’s application for summary judgment was to be allocated a fixture by this Court it would be 17 October 2022. It is likely that date would be before the hearing in the Court of Appeal.
[20] Mr Thorp submitted it would be invidious if the defendant’s application for summary judgment is not stayed pending the outcome of that appeal as this Court might come to a decision on the defendant’s application for summary judgment which is ultimately inconsistent with the Court of Appeal decision. He also noted the duplication of cost and effort.
[21] The defendant’s position is that there are distinct and different legal issues between the caveat proceedings and these proceedings (despite what Mr Codilla said in his affidavit). Importantly there is an additional plaintiff in these proceedings, Lendich Construction. The position of Lendich Construction will be unaffected by the determination by the decision of the Court of Appeal. That appeal only involves Mr Lendich and Mr Codilla.
[22] Further, the defendant says the caveat proceedings were only concerned with whether there was an arguable case in support of the interest. Determination of the appeal may not determine the ultimate validity of the claimed interest.
[23] Next, the defendant notes the plaintiffs can file additional evidence over and above that relied on by Mr Lendich in the caveat proceeding. The application for summary judgment is not a duplicate of the caveat proceedings and is not an abuse of process.
[24] The plaintiffs rely upon r 10.12. I observe that it is a rather novel proposition for a plaintiff to suggest their own proceeding should be stayed. Further, the wording of the rule does not comfortably fit the current situation where one of the proceedings is a separate appeal to the Court of Appeal. However, the Court undoubtedly has inherent jurisdiction to grant a stay if that is the appropriate outcome even if r 10.12 is not directly applicable.
[25] I agree with the defendant’s submission that the interest of Lendich Construction is a quite different interest to that of Mr Lendich. However, I understood from Mr Thorp’s submissions that he accepted if the appeal was determined against Mr Lendich on the basis there was no resulting trust then Lendich Construction would not seek to pursue the matter. The resulting trust is the only basis that Lendich Construction relies on for an interest (in the alternative) in the caretaker’s property.
[26] As a compromise, the defendant had offered not to seal the orders for removal of the caveat pending prompt determination of these substantive proceedings if the appeal was discontinued.
[27] Mr Thorp’s concern about that proposal was that, if the appeal was abandoned the Court in these current proceedings would have to deal with an adverse finding from Associate Judge Sussock’s decision that there was no resulting trust. That raises the issue of whether the plaintiffs would face an issue estoppel.
[28] The leading authority is Joseph Lynch Land Co Ltd v Lynch.4 In that case Joseph Lynch Land Co Ltd (the company) had sought to sustain a caveat on two grounds: first, that it had advanced money to Mr Lynch on the basis he had agreed to mortgage the land to support repayment; and second, alleging an implied or constructive trust. Master Williams concluded that neither the first nor second caveat
4 Joseph Lynch Land Co Ltd v Lynch CA160/93, 29 August 1994.
could be sustained. The company then took proceedings against Mr Lynch. A cause of action based on constructive trust was struck out in the High Court on the basis that it could not be maintained because the point sought to be raised had earlier been determined by the judgment of the Master.
[29] In the course of delivering the judgment of the Court of Appeal, Tipping J noted:
The expression "res judicata" means the matter has been adjudicated. The concept of res judicata is often applied to both cause of action estoppel and issue estoppel. Traditionally its use was confined to the former. Cause of action estoppel is different from issue estoppel which can arise where a plea of res judicata in the strict sense is not open because the causes of action are not the same: see 4 Halsbury's Laws of England volume 16 (Estoppel) at paragraph 977. Cause of action estoppel is more precise than issue estoppel. For there to be cause of action estoppel the cause of action sought to be estopped must be precisely the same as that upon which there has been an earlier adjudication.
Issue estoppel is concerned with the prior resolution of issues rather than causes of action. In the same paragraph of Halsbury as that referred to above, it is said that issue estoppel precludes a party from contending the contrary of any precise point which, having once been distinctly put in issue, has been solemnly and with certainty determined against him.
And later:
In principle a sufficiently final and certain conclusion can no doubt be found in what is effectively an interlocutory judgment so as to found a subsequent issue estoppel. We consider, however, that considerable caution is necessary before coming to such a conclusion. If the parties have clearly accepted that an interlocutory ruling on a point shall be finally decisive between them then no doubt an issue estoppel or even a cause of action estoppel may arise. Applications to remove or to hold a caveat will not ordinarily be regarded as finally determining the rights of the parties. Certainly a ruling that the caveat is to remain in the meantime could seldom, if ever, be regarded as demonstrating that the caveator has the rights which are asserted. The position becomes a little more difficult when the ruling goes the other way, i.e. that the caveator has no arguable case for the interest in land asserted.
[30] That last observation is particularly relevant to the present case. The result of Associate Judge Sussock’s decision is that this Court has held Mr Lendich does not have a caveatable interest based on a resulting trust. That is precisely the basis he (and Lendich Construction in the alternative) seek to rely on in these proceedings. It is the same point at issue in the appeal.
[31] On the particular facts of the case before it the Court accepted in that case that there was no issue estoppel arising on the second point. However importantly, it concluded:
In our judgment the ultimate question is concerned not so much with the character of the earlier decision, i.e. whether it should be regarded as final or interlocutory. The question is rather whether in the circumstances it is reasonable to regard the earlier decision as a final determination of the issue which one of the parties now wishes to raise.
[32] As noted, the plaintiffs’ case in these proceedings is based on precisely the same argument as advanced by Mr Lendich in the caveat proceedings and as will be advanced on appeal before the Court of Appeal.
[33] In those circumstances it is reasonable to regard the caveat decision of Associate Judge Sussock as a final determination of the issue which is sought to be raised by the plaintiffs in the present proceeding. Mr Lendich would be estopped from arguing for a resulting trust in these proceedings. If he is unsuccessful and the Court of Appeal decline to allow the appeal then Mr Lendich would certainly be prevented from pursuing the current proceedings. If not withdrawn, his claim would be struck out as an abuse.
[34] In those circumstances it would be a waste of this Court’s resources for the application for summary judgment to be pursued while the appeal remains on foot. At best from the defendant’s point of view, the defendant would obtain a summary judgment on the basis there was no resulting trust, but that matter would still be before the Court of Appeal for determination in the separate appeal proceedings. Inevitably an adverse decision on the defendant’s summary judgment application would lead to a second appeal on that point and a delay in overall resolution. It would also incur further unnecessary cost for the parties. The interests of justice support a stay.
[35] The only complicating factor is the involvement of Lendich Construction. That company is a separate entity. It was not a party to the caveat proceedings and so cannot strictly be bound by the issue estoppel.
[36] That complication can be resolved on Mr Thorp’s instructions. He acts for both Mr Lendich and Lendich Construction. Mr Thorp has made it clear that they both would accept the outcome of the appeal.
Result/orders
[37]For the above reasons I make the following directions/orders:
(a)the defendant’s application for summary judgment is stayed on condition that:
(i)Mr Thorp files a memorandum within five working days confirming that in the event of the appeal in the caveat proceedings being determined against Mr Lendich, Mr Lendich and Lendich Construction Ltd will discontinue this proceeding; and
(ii)the appeal before the Court of Appeal will be pursued expeditiously, and no adjournments of that appeal will be sought by the appellant;
(iii)in the event the plaintiffs’ claims are discontinued, the defendant will be entitled to pursue its counterclaim.
(b)costs reserved.
[38] The defendant’s application under r 7.32 to have the affidavits filed in the other proceedings read in this proceeding is granted, (although it may ultimately be unnecessary).
Costs
[39] Although the plaintiffs have obtained a stay, it is in part an indulgence. Costs on the stay and hearing before me are reserved.
Venning J
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