Morison v Saha

[2020] NZHC 3123

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1456

[2020] NZHC 3123

IN THE MATTER

of an appeal against summary judgment under s 124 of the District Court Act 2016 and Part 20 of the High Court Rules 2016

BETWEEN

RICHARD HUGH MORISON

Appellant

AND

GOVIND PRASAD SAHA

Respondent

Virtual hearing:	18 November 2020
Appearances:	CEM Agnew-Harington for the appellant SRG Judd for the respondent
Date of judgment:	25 November 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 25 November 2020 at 3.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

M R Heron QC, Auckland SRG Judd, Barrister, Auckland Greenwood Roche, Auckland Morrison Kent, Auckland

MORISON v SAHA [2020] NZHC 3123 [25 November 2020]

[1]        Mr Morison appeals against the decision of Judge M-E Sharp in the District Court at Auckland on 6 August 2020,1 granting Mr Saha summary judgment of his claim against Mr Morison in the sum of $195,000.

Background

[2]        Mr Morison was one of nine people in partnership together.2 Disputes between the partners were resolved in terms of a settlement deed dated February 2019, by which the partnership’s dissolution also was concluded. The deed’s recitals included:

All partners agree that the indebtedness of Morison shown in the accounts at Schedule One is recoverable by Saha as creditor personally and have agreed to an assignment of that debt to Saha.

The accounts at Schedule One shows Mr Morison’s debt to the partnership on dissolution in the amount of $389,376 at 31 March 2018.3

[3]        The partners and partnership all agreed to the accounts set out at Schedule One. Clause 1 of the deed provided for three partners to “make no payment whatsoever” to the partnership, and another four partners to “make a settlement payment” to Mr Saha in terms of collateral deeds between them. Neither Mr Morison nor Mr Saha was one of those seven partners. Mr Saha then accepted personal liability to pay the partnership’s creditors and costs of dissolution, and indemnified the other eight partners (including Mr Morison) against such claims against the partnership.

[4]        On execution of the deed, subject to the collateral deeds, clause 2 settled any claims between the seven partners (excluding Mr Morison and Mr Saha) and the partnership. In relation to Mr Morison, clause 1.4 provided:

Notwithstanding clause 2, [i]t is further agreed that any claim that the Partnership and/or the partner have against Morison for the debt shown in the accounts in Schedule One specifically survives completed execution and is assigned to Saha personally to pursue recovery.

1      Saha v Morison [2020] NZDC 15506.

2      The background to the partnership and the disputes conveniently is summarised in earlier judgments between the partners: Saha v Reardon [2015] NZHC 638; Houghton v Saha [2015] NZCA 553; Saha v Reardon [2017] NZHC 831. I do not underestimate the effort reflected by the disputes’ resolution.

3      An incomplete copy of the deed was included in the case on appeal. On my enquiry, Mr Saha’s counsel supplied a full copy of the deed as exhibited to Mr Saha’s affidavit sworn 9 July 2019 and filed in the District Court.

[5]        Clause 4 of the deed then provided Mr Morison’s agreement and consent to the settlement between the partnership and the other partners in terms of the deed, and the other partners’ agreement and consent to “any settlement that may be agreed between Saha and Morison in respect of any claims the Partnership has against Morison”.

[6]        By separate deed also dated February 2019 between Mr Morison and Mr Saha, they agreed:

Conditional on Morison executing the Settlement Deed and the parties to the Settlement Deed achieving completed execution (as defined in the Settlement Deed), Saha agrees that notwithstanding the actual amount shown as the net liability of Morison pursuant to the Financial Statements, any claim for recovery or proceedings issued by Saha pursuant to the rights provided to him in the Settlement Deed, shall be limited to a maximum liability under those Financial Statements of $195,000.

Judgment under appeal

[7]        The judge granted summary judgment on Mr Saha’s claim against Mr Morison for that sum. She held “the settlement of accounts is sufficient consideration for an implied promise by the partners to each pay the balance found to be due”.4 She rejected Mr Morison’s contentions for his alternative earlier agreement with Mr Saha as overcome by the settlement deed’s express precedence and completeness.5 She declined to consider settlement correspondence between the parties, such being privileged.6 Even if admissible, she considered the correspondence “could not justify a departure from the plain and unambiguous wording of the Deed of Settlement”.7

[8]        On appeal, for Mr Morison, Charlotte Agnew-Harington argues the judge was wrong not to admit the settlement correspondence into evidence, and wrong to conclude Mr Morison had no defence to Mr Saha’s claim. She asserts Mr Morison’s defences of his prior agreement with Mr Saha; the settlement correspondence’s misrepresentation inducing his entry into the deeds; and his qualifying unilateral mistake as to the deeds’ effect.

4      Saha v Morison, above n 1, at [21]–[22], citing Holdgate v Holdgate [2002] 3 NZLR 609 (CA) at [40]–[41].

5      At [28]–[29].

6      At [35]–[36], citing Evidence Act 2006, s 57.

7 At [40].

Approach on appeal

[9]        Appeals to this Court from the District Court are general appeals conducted by way of rehearing,8 in which Mr Morison bears the onus of satisfying me I should differ from the District Court’s decision. I only am justified in interfering with that decision if I consider the decision is wrong – in other words, the Judge erred.9

[10]      I then am to come to my own assessment of the merits of the case afresh, without deference to the District Court (save for some caution in differing on witness credibility, if I have not had the advantage of observing witnesses).10 I may rely on the Judge’s reasons in reaching my own conclusions, but the weight I give those reasons is a matter for me.11

[11]      After hearing the appeal, I may make any decision I think should have been made, or (with reasons) direct the District Court to rehear the proceeding or to consider and determine any matter or enter judgment for  any party,  or make any other order  I consider appropriate.12

Relevant law

[12]      Summary judgment is available “if the plaintiff satisfies the court that the defendant has no defence to any cause of action in the statement of claim”.13 By “no defence” is meant the “absence of any real question to be tried”.14 It is long-accepted “summary judgment will be inappropriate where there are factual disputes and, in particular, credibility issues that cannot be resolved on the basis of the affidavit evidence”.15

8      District Court Act 2016, ss 124 and 127; High Court Rules 2016, r 20.18.

9      Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13].

10 At [13].

11     Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [31].

12     District Court Act 2016, s 128; High Court Rules 2016, r 20.19.

13     District Court Rules 2014, r 12.2(1); Pemberton v Chappell [1987] 1 NZLR 1, (1986) 1 PRNZ 183 (CA).

14     Pemberton v Chappell, above n 13, at 185.

15     Sandman v McKay [2019] NZSC 41, [2019] 1 NZLR 519 at [97], citing A C Beck and others

McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR12.2.03].

[13]      In Long Capital Holdings NZ Ltd v Jacks Point Village Holdings No 2 Ltd, the Court of Appeal identified the question as:16

… whether the defendant has no defence to the claim and the court must be left without any real doubt or uncertainty.

… The onus is on the plaintiff, but where the plaintiff’s evidence sufficiently shows there is no defence, the defendant must respond if the application is to be defeated.

… Conflicts of evidence ought generally not to be resolved in a summary judgment application, but the court may take a robust approach and need not accept uncritically evidence that inherently lacks credibility.

[14]The Court added:17

Where a central issue is the proper construction of a contract …, the focus must be on the meaning the relevant provisions would convey to a reasonable person with all the background knowledge reasonably available to the parties at the time they entered into it. The factual matrix in which the contract is situated is therefore relevant. That raises the question of whether it will be appropriate on a summary judgment application for the court to reach a concluded view on the meaning of the contract when the facts have not been fully tested.

The existence of a factual dispute about the context in which the contract was entered into does not preclude the court from entering summary judgment in a contract claim, but caution is required. The court must be satisfied that resolution of the factual dispute is “not necessary to provide the court with such contextual background as is necessary to resolve the claim”. Summary judgment may be appropriate, therefore, where, on an objective assessment, the interpretation contended for is plainly the correct one regardless of the factual dispute.

[15]The court’s discretion if to grant summary judgment then truly is residual, to:18

… only be invoked in limited cases, such as to avoid oppression or injustice, or where the proceeding involves the actions or possible liability of a third party not before the Court, or if the proceedings are of a particular nature that opportunity should be given to allow discovery, or where the circumstances of the case disclose very unusual features which support a conclusion that the entry of summary judgment would be oppressive or unjust.

16 Long Capital Holdings NZ Ltd v Jacks Point Village Holdings No 2 Ltd [2020] NZCA 102 at [29], citing Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

17 At [30]–[31], citing Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60], and Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [29].

18 Monnery v Convendium Ltd (in liq) [2020] NZCA 345 at [44], citing Bromley Industries Ltd v Martin and Judith Fitzsimons Ltd [2009] NZCA 382, (2009) 19 PRNZ 850 at [65].

Discussion

[16]      The partnership was dissolved with effect from 1 December 2010.19 At that point, s 42 of the Partnership Act 1908 had effect:20

42 Rights of partners as to application of partnership property

On the dissolution of a partnership every partner is entitled as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners of the firm; and for that purpose any partner or his or her representatives may, on the termination of the partnership, apply to the court to wind up the business and affairs of the firm.

[17]      On dissolution, then, each partner’s “entitlement” to have the firm’s surplus “applied in payment of what may be due to the partners” is defined in net terms: “after deducting what may be due from them as partners of the firm”. Section 47 establishes default rules for “settling accounts between the partners”, subject to any agreement to the contrary.21

[18]      In the partnership at issue here, those settled accounts are set out at Schedule One to the settlement deed, which “[t]he Parties” – defined as each partner and the partnership – agree provide “the settled accounts”, being a negative balance for each partner other than Mr Saha. The agreement between partnership and partners as “Parties” establishes the settled accounts.22 As a matter of law, that is those partners’ (other than Mr Saha) incontrovertible debts to the partnership. The settled accounts are conclusive. They provide “sufficient consideration for an implied promise by each partner to pay the balance found to be due on the taking of the account”.23

[19]      The Judge thus was right to hold Mr Morison indebted to the partnership in the amount of $389,376.24

19     Saha v Reardon [2017] NZHC 831 at [9].

20     Section 76 of the Partnership Law Act 2019 provides the revised text.

21     Sections 82–84 provide the revised text.

22     Lawson v Wenley [2012] NZHC 204 at [65], citing Darthez Bros v Lee (1836) 2 Y & C Ex 5;

Newen v Wetten (1862) 31 Beav 315; Phillips-Higgins v Harper [1954] 1 QB 411.

23     Holdgate v Holdgate, above n 4, at [40].

24     Saha v Morison, above n 1, at [25].

[20]      The Parties’ agreement to the settled accounts is distinct from the settlement agreement’s segregation of Mr Morison from the other partners for the purposes of clause 4’s respective agreements and consents. By that segregation Mr Morison “agrees and consents to the settlement” between the partnership and the other partners

– that is, to the deed’s resolution of the liabilities established by the settled accounts, including  by  assigning  to  Mr  Saha  recovery  of  the  partnership’s  interest  in  Mr Morison’s debt. Correspondingly, the other partners “agree to provide their agreement and consent” to any settlement agreed between Mr Saha and Mr Morison in respect of the latter’s liability to the partnership.

[21]      From that perspective, all Mr Morison’s defences seem self-defeating, because their success would only be to substitute the portion of the liability pursued by Mr Saha with its whole owed to the partnership. But a measure of their success may be in denying Mr Morison’s liability to Mr  Saha.  And  it  is  his  liability  to  Mr  Saha Mr Morison predominantly contests. In opposition to the summary judgment application, Mr Morison expressly accepts the partnership’s developing accounting made it “apparent that my capital balance in the firm had deteriorated from a small surplus to a significant deficit”, but says he orally had agreed with Mr Saha he would not be liable for debts arising from the partnership’s dissolution.

[22]      The individuality of that position means the settlement agreement’s precedence and completeness clauses are immaterial. Both are expressed as being in relation to agreements “between the Parties”, meaning between the partnership and the partners together as a whole, rather than as between any subset. Neither then can Mr Morison’s contended agreement with Mr Saha be excluded as lacking credibility because of its conflict with the deeds’ words: at least so far as the settlement deed is concerned, the contended prior agreement expressly acknowledges such liability to the partnership may arise; and the other deed only allows Mr Saha’s claim is limited to “a maximum liability” of $195,000.

[23]      In these respects, as to the deeds’ controlling nature, the Judge erred. While not determinative in itself, the singularity of Mr Morison’s treatment in the deeds implies a foundation for the distinction and begs an answer. Mr Morison’s explanations in opposition to summary judgment offer the former, but no reply is proffered by

Mr Saha. I am directed to be cautious in disregarding that factual dispute.25 In my view, its resolution is necessary to establish the deeds’ factual context, as may afford a defence, making summary judgment inappropriate.

[24]      Given that conclusion – and the likelihood Mr Morison’s claims as to privilege, misrepresentation, and contractual mistake would be raised again at trial – I need not to make (and resist making) any observation on those claims’ prospects.

Result

[25]      The appeal is upheld. The Judge’s grant of summary judgment to Mr Saha is quashed.

[26]      I direct the substantive proceeding be called in the District Court at Auckland to make arrangements for its trial.

Costs

[27]      In my preliminary view, as the successful party, Mr Morison is entitled to 2B costs and disbursements on steps taken in the appeal. That is because, so far as I can tell, no step in this averagely complex appeal required other than a normal amount of time.

[28]      If that is not accepted by the parties, or they cannot otherwise agree, I reserve costs for determination on short memoranda of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by Mr Morison within ten working days of the date of this judgment, with any response and reply to be filed within five working day intervals after service.

—Jagose J

25     At [14] above.