Lusty v Thorburn
[2021] NZHC 2045
•9 August 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-2593
[2021] NZHC 2045
UNDER The Contract and Commercial Law act 2017 and the Declaratory Judgments Act 1908 IN THE MATTER
of an application for specific performance
BETWEEN
ĀILEEN BERYL LUSTY, RONALD HUNT LUSTY and WARWICK JAMES ROLAND
BROWNE as executors of the Estate of Kenneth Richard Lusty
Plaintiffs
AND
CRAIG MAXWELL THORBURN, and
CARLY EVE THORBURN as trustees of the THORBURN TRUST
Defendants
Hearing: On the papers at Auckland Appearances:
M J Matthew for the Plaintiffs A A H Low for the Defendants
Judgment:
9 August 2021
JUDGMENT (No. 2) OF POWELL J
[Application to Recall]
This judgment was delivered by me on 9 August 2021 at 11 am pursuant to R 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Lusty & Ors v Thorburn & Ors [2021] NZHC 2045 [9 August 2021]
[1] By judgment dated 15 July 2021, I dismissed various applications by the plaintiffs, Aileen Lusty, Ronald Lusty and Warwick Browne, as executors of the estate of Kenneth Lusty (“the executors”) seeking various types of relief arising out of a lease dated 29 March 1990 (“the lease”), and awarded costs against the executors.1
[2] The executors have now requested that the judgment be recalled pursuant to r 11.9 of the High Court Rules 2016. This application is opposed by the defendants, Craig Thorburn and Carly Thorburn, as trustees of the Thorburn Trust (“the trustees”).
The application
[3] The executors submit that the judgment should be recalled on the basis that the Court failed to determine issues that were properly put to it in the executors’ second amended statement of claim dated 19 February 2020 (“the claim”). Specifically the executors contend:
(a)The judgment makes finding regarding whether specific performance should be ordered under the executors’ first cause of action, however, fails to address or consider the executors’ claim for damages for breach of contract in the alternative.
(b)The judgment fails to address or consider the executors’ cause of action for damages, as the judgment does not contain the word “compensation” and the word “damages” appears only in the text of a quoted judgment.
(c)The judgment fails to consider the executors’ application for declaratory relief, as the word “declaratory” appears only on the cover page, the word “declaration” does not appear in the judgment, and the declarations sought are not considered or addressed in the judgment.
[4] In response, the trustees submit that this is not a case where recall is appropriate or required, as the Court has made clear findings which deal with all aspects of the relief pleaded. They contend that it was inherent in the decision of the Court with respect to specific performance that a claim to damages for breach of contract could
1 Lusty v Thorburn [2021] NZHC 1774.
not succeed, and that the declaratory relief sought was considered in the judgment even if not expressly referred to.
Recall
[5] The starting point in any application for recall under r 11.9 of the High Court Rules is the general rule that once a judgment is delivered, it must, subject to limited exceptions, stand for better or worse.2 The executors rely on the third limited ground for recall expressed in Horowhenua County v Nash (No 2) that an unperfected judgment may be recalled where “for some other very special reason justice requires that the judgment be recalled”.3
[6] One such reason may be that the Court has failed to determine an issue that was properly put to it.4 However, this reason for recall applies only to situations where the Judge has not averted to a matter at all, and does not encompass those where the Judge adverts to the matter but makes an erroneous determination.5 It is also relevant that there is no basis for recall in cases where the Court has considered a point but has decided either not to deal with it, or to deal with it on a narrower basis than argued.6 As Wild CJ stated in R v Nakhla, the Court is not obliged in its reasons for judgment to discuss every aspect of argument.7
Discussion
[7] Before addressing the specific matters identified in the application it is noted that in opening, counsel for the executors, Ms Matthew, identified the matters at issue in the following terms:
2 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633; as cited in Craig v Williams
[2019] NZSC 60 at [10].
3 Horowhenua County v Nash (No 2), above n 2, at 633.
4 Brake v Boote (1991) 4 PRNZ 86 (HC).
5 See Clark v Central Lakes Homes Limited [2016] NZHC 2164 at [10]; and Roc Mac Ltd v Boxton
HC Christchurch CIV-2006-409-2062, 12 October 2007.
6 Unison Networks Ltd v Commerce Commission [2007] NZCA 49 at [28] – [29].
7 R v Nakhla (No 2) [1974] 1 NZLR 453 (CA) at 456; as cited in Unison Networks Ltd v Commerce Commission, above n 6, at [29].
(a)Are the plaintiffs entitled to specific performance of the lease? This requires consideration of the defendants' second to fifth affirmative defences.
(b)Are the plaintiffs entitled to enforce the A&I which was signed by the defendants as a deed, or alternatively, are they estopped from relying on it, other than in relation to the first renewal period?
Breach of trust / breach of conveyance no. 155844 allegations:
(c)Is the lease unable to be renewed because it is inconsistent with the caveat/conveyance no. 155844 (the Thorburn Trust Deed), because it purports to lease the burial ground/and it requires surplus rent to be applied to the maintenance of the foreshore, walls and jetty?
(d)Was the lease entered into by Fred Thorburn a breach of trust?
(e)If there was a breach of trust, was it fraudulent, to the knowledge of Mr Lusty?
(f)Are the plaintiffs in "knowing receipt", by reason of the original lessee, Kenneth Lusty having knowingly participated in a breach of trust?
Alternatively: alleged breaches of the Lease
I
(g)Were the plaintiffs in breach of the lease at the renewal date (due to non-payment of rent, or breach of their maintenance obligations) and therefore not entitled to specific performance?
(h)Are the plaintiffs presently in breach, due to being in arrears of rent, or having committed other breaches of the lease which remain unremedied as at the hearing date?
(i)Have the defendants acted in breach of their obligations under the lease?
[8] Quite clearly each of these issues was dealt with in the course of the judgment. The executors were found to be not entitled to specific performance of the lease,8 nor were they entitled to enforce the lease variation instrument (being the “signed A&I” referred to by the executors) because the lease had expired at the time it was executed.9 The lease was unable to be renewed, not because of the caveat referred to in the issues identified, but because it would have breached the terms of the Thorburn Trust.10 It was not necessary to determine if the breach was fraudulent or that there was knowing receipt because s 22 of the Trustee Act 1956 did not apply in relation to whether there should have been specific performance of the renewal of the lease,11 notwithstanding the executors were not in breach.12 Finally, the only possible breach by the trustees identified was their refusal to execute the renewal as sought by the executors, and on that issue I concluded they were correct.13
[9] I now turn to the specific issues raised by the executors: whether the claims for damages and declaratory relief as pleaded were addressed in the judgment. As is clear from the treatment of the issues identified by the executors at the hearing and from the discussion below, the judgment addressed the issue of damages and the declaratory relief sought to the extent that they were relevant. For the reasons set out below, this is not a situation where the Court either overlooked or did not avert to the claims pleaded , but rather one where the Court considered the claims within the context of the proceeding as a whole but found no basis for them.
Damages
[10] In paragraphs 36-38 of the claim the executors sought damages for breach of contract, primarily on the basis that the trustees had not facilitated a renewal of the lease or signature of a new lease, and that the notice of breach of lease was served on the executors in breach of the covenant of quiet enjoyment.
8 Lusty v Thorburn, above n 1, at [82] – [86].
9 At [79] – [81].
10 At [65] – [70] and [85].
11 At [83] – [84].
12 At [59] – [64].
13 For example at [85].
[11] This claim was substantively dealt with in the judgment. Specific performance was refused on the basis that to grant a new lease on the same terms would frustrate the Thorburn Trust’s sole charitable purpose.14 In those circumstances, there could be no basis for finding a breach of contract and, accordingly, no basis on which the Court could consider damages for that alleged breach.
[12] It is also relevant to record that, in the context of a lengthy hearing, the executors’ losses alleged at paragraph 36 of the claim were never quantified, nor were they raised at any point in the hearing before me. Instead, and as reflected at [4] of the judgment,15 the discussion of damages by the executors was limited to an argument that the total costs incurred by the executors enforcing the lease should be ordered by way of damages. Ultimately however the executors expressed indifference as to whether their costs were paid in full through damages or an award of indemnity costs.16
[13] Accordingly, the way in which damages were considered in the judgment provides no basis for recall. With respect to the submissions of counsel for the executors, it is simply not correct to suggest that because the judgment is not replete with the words “compensation” and “damages” these matters have not been considered by the judge.
Declaratory Relief
[14] At paragraphs 39–40 of the claim the executors sought declaratory relief under s 4 of the Declaratory Judgments Act 1908 in order to resolve questions of law in relation to the caveat, the Thorburn Trust deed, the judgment of Sinclair J, the agreement and the lease. A range of interpretive declarations were sought set out in paragraphs 40.1–40.8, and the executors now say that the specific declarations sought
14 At [85].
15 At [4].
16 At [85]; and set out at paragraph 141 of the opening submissions on behalf of the executors.
in paragraphs 40.417 and 40.818 in particular were neither considered nor addressed in the judgment.
[15] Declaratory relief is discretionary. It was open to the Court to consider that there was no basis for such relief, as it did, without directly addressing each specific declaration sought. In any event, where it is alleged that the Court has failed to consider an application for declaratory relief, a substantive reason for making a declaration is necessary to trigger a recall.19
[16] In this case it is clear that all eight of the declarations sought at paragraph 44 arise out of the first declaration sought at paragraph 40.1:
That the lease is valid, binding and enforceable by the lessor and his assigns against the lessee and his assigns.
[17] This was clearly dealt with in the judgment when it was held that the lease was not “valid, binding and enforceable” as it was in breach of the terms of the Thorburn Trust.20 As a result there is no “substantive reason” for recalling the judgment, and the executors have not identified such a reason in their submissions. All of the interpretations sought were premised on the validity of the lease. Therefore, as a result of my conclusion with regards to the declaration sought at 40.1, none of the other specific declarations sought were ultimately relevant to the matters at issue and, in any event, the executors have implicitly noted that the declarations sought at 40.2–
40.3 and 40.5–40.7 were all substantively considered. Likewise, both 40.4 and 40.8 were addressed by the same substantive conclusion that the lease was granted in breach of the terms of Thorburn Trust and that precluded granting specific performance of the renewal.
17 “[T]hat as a matter of interpretation, because the leasehold estate granted to Kenneth Lusty by Frederick Thorburn under the lease was expressly made "subject to Caveat X13640", which prohibited any dealings inconsistent with the provisions of the Thorburn trust deed, any terms in the lease which were inconsistent with the provisions of the Thorburn trust deed would not apply, to the extent of inconsistency”.
18 “[S]uch other declarations as may be necessary to determine the correct interpretation of the lease, having regard to the wording of the cave yet and before being trusted, including identifying any wording in the lease which does not apply, as a matter of interpretation, by reason of being inconsistent with the terms of the caveat and the Thorburn trust deed”.
19 Bushline Trustees Limited v ANZ Bank New Zealand Ltd [2017] NZHC 829 at [18] and [22]; and
Unison Networks Ltd v Commerce Commission, above n 6, at [41].
20 At [65] – [70] and [85].
[18] Overall it is difficult to see how there could be any benefit for either party in granting the interpretative declarations sought on the terms of the now defunct lease. As stated in Unison Networks Ltd v Commerce Commission, where a party is seeking a declaration as a matter of convenience, that is not a sufficient basis for recall.21
Future steps?
In their submissions in opposition, the trustees noted in relation to [87] – [89] of the judgment that it would be helpful if the executors could signal whether they wish to discuss a new lease, so that issues and costs in respect of the proceeding can be progressed. This would be a sensible course.
Decision
[19]The application for recall is dismissed.
[20] The trustees are entitled to costs on the recall application on the same basis as set out at [91] of the judgment.22
Powell J
21 Unison Networks Ltd v Commerce Commission, above n 6, at [41].
22 Lusty v Thorburn, above n 1, at [91].
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