O'Neil v Beattie
[2022] NZHC 3504
•20 December 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2019-409-339
[2022] NZHC 3504
BETWEEN ANDREW JAMES O’NEIL
First Plaintiff
MOBY TRUSTEES LIMITED
Second PlaintiffAND
ANDREW ROSS BEATTIE and LOUIS PETRUS DIRKZWAGER
Defendants
Hearing: 9 December 2022 Appearances:
M J Wallace for Plaintiffs
P J Shamy and S B Henry for Defendants
Judgment:
20 December 2022
JUDGMENT OF ASSOCIATE JUDGE LESTER
O’NEIL v BEATTIE [2022] NZHC 3504 [20 December 2022]
[1] This proceeding commenced in 2019. It has already been subject to several interlocutory applications, some of which have progressed to hearing with others withdrawn.
[2] The judgments record substantial common ground. Notwithstanding that, Messrs Beattie and Dirkzwager seek further and better particulars of the first amended statement of claim seeking, at least in part, details of what in my view was apparently common ground.
[3] Messrs Beattie and Dirkzwager issued a notice requiring further particulars on 3 June 2022. Many paragraphs of that notice read more as interrogatories than a notice for particulars. Nonetheless, Mr O’Neil provided answers to many of the particulars sought. The answers were not considered satisfactory hence Messrs Beattie and Dirkzwager’s present application. By the time of the hearing, the particulars sought had been narrowed to those in Messrs Beattie and Dirkzwager’s written submissions and it is those particulars only which are addressed in this Judgment.
The history between the parties
[4] The parties entered into a joint venture, referred to in the amended statement of claim as a joint enterprise, in late 2013 to develop commercial units on what was then bare land. It is common ground the joint venture lasted to the end of 2017. At the heart of this proceeding is whose breach led to the end of joint venture.
[5] In August 2014, Mr O’Neil made his required cash contribution to the joint venture. He sourced those funds from Moby Trustees Limited (Moby) and thereafter Mr O’Neil made monthly payments to the joint venture also sourced from Moby. It seems reasonably clear the joint venture was intended to be undertaken through a company called Hickory Ltd, as it was incorporated on 23 April 2015 with Moby, Mr Beattie and Mr Dirkzwager being directors and equal shareholders.
[6] The land on which the development was to occur was at Hickory Place, Christchurch and owned by Hickory Investments (2013) Limited of which Messrs Beattie and Dirkzwager were directors and indirectly owners of its shares.
[7]Paragraph [10] of the amended of statement of claim reads:
The parties originally agreed that the Hickory Development would be completed within Hickory Investments (2013) Limited which owned the land but upon completion of the development the land and buildings on Unit numbers 3 to 11 and Lot 100 would be transferred to a new company: Hickory Limited.
[8] This pleading also appears in the original statement of claim. In the original statement of defence, the pleading is admitted with Messrs Beattie and Dirkzwager going on to say the pleading reflected an initial agreement and although Hickory Ltd was incorporated, the idea of transferring the Units to that company was abandoned because of potential tax issues.
[9] Messrs Beattie and Dirkzwager plead that the initial agreement was replaced with an agreement that the Units would remain in Hickory Investments (2013) Ltd and that Mr O’Neil would instead take a one-third shareholding in that company. Messrs Beattie and Dirkzwager say Mr O’Neil is not entitled to his one-third shareholding as he firstly failed to provide information in a timely manner and, more importantly, failed to provide his share of funds the company’s financier, Bank of New Zealand (BNZ), required of all parties.
[10] Messrs Beattie and Dirkzwager counterclaim saying Mr O’Neil failed to provide just over $500,000 required by the BNZ to facilitate the development. Mr Beattie says he had to contribute Mr O’Neil’s share at a cost to him that he counterclaims to recover. It is common ground Mr O’Neil did not contribute the funds required by the BNZ.
[11] Mr O’Neil accepts as an equal joint venturer that he was obliged to contribute an equal one-third share to development costs of the subdivision and the construction costs of the commercial buildings forming the Hickory development.
[12] There is a dispute between the parties as to what prompted the BNZ to call for the introduction of further capital.
[13] Mr O’Neil says the impetus for BNZ’s demand was Mr Dirkzwager transferring one of the joint venture properties out of Hickory Investments (2013) Ltd. Accordingly, Mr O’Neil says the call for funds by the BNZ was not required for the development costs of the subdivision or construction of the commercial buildings but was the result of Mr Dirkzwager altering the BNZ’s security position.
[14] Whether Mr O’Neil was in breach in not meeting a warranted call for funds from the BNZ or whether the call was a consequence of Mr Dirkzwager altering the security position of the BNZ is a key issue in this proceeding.
What the applicants must demonstrate to obtain further particulars
[15] Counsel are agreed on the principles summarised in the submissions of Mr Henry, counsel for the applicants, as follows:
11.High Court Rule 5.26 relevantly provides: The statement of claim—
(a)must show the general nature of the plaintiff's claim to the relief sought; and
(b)must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff's cause of action;
…
12.In commenting on the purpose of particulars, the Court of Appeal has said:1
(a)Pleadings which are properly drawn and particularised are an essential roadmap for the Court and the parties. They are the documents which establish parameters of the case, and against which briefs of evidence are or should be prepared.
(b)Both the Court and opposing parties are entitled to be advised of the essential basis of a claim, and all necessary ingredients of it, so that subsequent processes and the trial itself can be conducted against recognisable boundaries. Neither the Court
1 Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 17-19.
nor opposing parties should be placed in a position of having to deal with a proposition of whose substance adequate notice has not been given in the pleadings.
(c)The object of a statement of claim is to “state” the “claim”, so that the Court knows what it is to rule upon, and the defendant knows the case which it must meet. As a matter of practicalities, this initial “statement” is not at the level of full disclosure of all evidence and documentation. It is of course an abbreviated summary “statement” of the basic facts said to give rise to the claim, and of the relief which is sought.
(d)The Court’s determination of those issues are not greatly assisted by very general labels such as pleading the “general” nature of matters claimed, or mantras such as “what not how”. While they grasp an idea the Court identified that they afford little hard guidance. Nor does it greatly help to talk in terms of “facts” (to be pleaded) and “evidence” (for trial) as if there was some bright-line distinction between the two. There is not such a distinction. “Facts” merge into “evidence” without any clear dividing line.
(e)The pleader and Court simply ask “in the circumstances of this claim, is that statement sufficiently detailed to state a clear issue and inform the opposite party of the case to be met?”. This is intended to supply an outline of the case advanced, sufficient to enable a reasonable degree of pre-trial briefing and preparation. Discovery and interrogatories are only an adjunct, not a substitute for pleading.
(f)As a result, a rather more detailed factual narrative has come to be required than was the case in earlier and simpler times. That does not require the full detail which later will be contained in a brief of evidence. Nor does the modern requirement for pre-trial exchange of briefs dilute the earlier and differently based requirement for sufficiently particular pleading.
(g)A common sense and balanced judgment based on experience as to how cases are prepared, and trials work is required. This is not an area for mechanical approaches or pedantry.
13.The Courts have said that particulars of pleading are important to:2
(a)inform defendants as to the case they have to meet;
(b)limit the scope of matters the plaintiff may put in issue at trial (or in pre-trial settlement discussion);
(c)enable the defendants to know what witnesses it will need to retain and enable them to start preparing evidence ahead of the formal exchange of evidence; and
2 Platt v Porirua City Council [2012] NZHC 2445 at [19].
(d)provide an opportunity for a defendant to seek summary determination on the basis that the claim as pleaded is untenable.
[16] To those principles, Mr Wallace, counsel for Mr O’Neil and Moby, referred to warnings by the courts against over-pleading obscuring rather than clarifying issues.3 Mr Wallace also referred to the following passage from the Fortex case relied on by Mr Shamy that:4
What is required is an assessment based on the principle that a pleading must, in the individual circumstances of the case, state the issue and inform the opposite party of the case to be met.
[17] I now apply those principles to the circumstances of this case. I will refer to each paragraph of the amended statement of claim for which further particulars are sought, set out briefly in Mr Shamy’s submissions in respect of why further particulars are sought and give my decision in relation to each in turn.
Messrs Dirkzwager and Beattie’s counterclaim and what it shows of their understanding of the joint venture
[18]The first two paragraphs of the defendants’ counterclaim plead:
17.The first plaintiff and the defendants as admitted above were parties to a joint venture or joint enterprise inter alia the terms of that joint enterprise were to develop units 3-10 on land owned by Hickory Investments (2013) Limited and hold the same long term for investment purposes.
18.That it was agreed inter alia that between the three parties that they would share all the expenses and costs equally.
[19] I note that in relation to a number of the paragraphs for which particulars are now sought that, when the identical paragraph appeared in the original statement of claim, Messrs Dirkzwager and Beattie responded in detail.
3 BNZ Investments Ltd v Commissioner of Inland Revenue (2008) 23 NZTC 21,821 at [45].
4 Price Waterhouse v Fortex Group Ltd, above n 1, at [19].
First amended statement of claim, paragraph [4]
[20]Paragraph [4] of the first amended statement of claim alleges:
The joint enterprise agreement involved the first plaintiff agreeing to contribute an equal one third share to development costs of land subdivision and construction of commercial buildings to be constructed on the Hickory Development land.
[21] Mr Henry submits that the terms of the joint venture enterprise are in issue and to limit the scope of matters the defendants need to meet, the plaintiffs should provide further details.
[22] A practical difficulty for Mr Henry’s submission is that paragraph [4] of the first amended statement of claim is in the same terms as paragraph [4] of the original statement of claim. In their statement of defence Messrs Beattie and Dirkzwager admit the allegations contained in paragraph [4] of the statement of claim and say the joint venture referred to the construction of units known as Units 3-10 which were to be held as a long term investment. This response to me shows that Messrs Beattie and Dirkzwager understood the case they have to meet in respect of this paragraph. Notwithstanding that, Messrs Beattie and Dirkzwager seek the following particulars, of paragraph [4].
(a)How the parties were to make contributions to the joint venture
Ruling
[23] Denied. I accept Mr Wallace’s submission that paragraph [4] does not put in issue how the parties were to make contributions to the joint venture. Mr O’Neil acknowledges he had to contribute one-third of the development costs. Mr O’Neil admits paragraph [18] of the counterclaim set out above. I do not see the above query as necessary to allow Messrs Beattie and Dirkzwager to understand the claim against them. Given there will be an amended statement of claim, Mr O’Neil should confirm his contribution was to be in cash albeit such is implicit.
[24] At the hearing, Mr Henry sought to add a request that the plaintiffs state when the contributions were to be made. I do not consider this detail is necessary to allow
the defendants to understand the claim they are facing. The counterclaim alleges a failure by the plaintiffs to pay the BNZ contribution. When further contributions were to be made is beside the point as Messrs Beattie and Dirkzwager do not assert Mr O’Neil was in breach of any other payment obligations. The defendants accept there was a joint venture. They do not assert the joint venture did not come into existence because issues such as the timing of contributions were not agreed.
(b)When, and how, profits / losses of the joint venture were to be shared between the parties
Ruling
[25]Approved in part. The response provided by Mr O’Neil in his particulars was:
“… the joint venturers planned that after each of the joint venturers received title to their own unit/s that the remaining buildings/lots would be held by them jointly as investors? (my emphasis)
[26] While it is implicit in this that profits would be shared, that is, the Units would be distributed when title became available, such should be made clear rather than a claim of what the venturers planned. As to how the profits were to be divided, that application is declined as paragraph [11] of the amended statement of claim sets out what Mr O’Neil was to receive.
(c)Whether each of those terms of the joint venture enterprise were expressed or implied and
Ruling
[27] Approved. Messrs Beattie and Dirkswager are entitled to know whether the plaintiffs assert express or implied terms. This detail should be provided.
(d)Whether the first and second plaintiffs performed their obligations under the agreement
Ruling
[28] Denied. Messrs Beattie and Dirkzwager plead in their statement of defence that Mr O’Neil breached the joint enterprise and as noted they have counterclaimed.
It is not for Mr O’Neil to plead he has met all his obligations and then have to prove he met obligations not in issue. If the defendants consider Mr O’Neil breached obligations other than as presently alleged then they should amend their counterclaim accordingly.
First amended statement of claim, paragraph [6]
[29]Paragraph [6] of the first amended statement of claim alleges:
[t]he joint enterprise agreement included terms that the first buildings to be constructed would be on land that would be subdivided from the total development and purchased from Hickory Investments (2013) Limited at cost together with an appropriate share of the cost of right of way (Lot 100) and services.
[30] Mr Henry notes that the Hickory Place land is not owned by the defendants and seeks the following particulars:
(a)When, and how, Hickory Investments (2013) Limited agreed to sell the relevant land;
(b)The parties to that agreement; and
(c)The terms of that agreement, including who would purchase the land.
[31]These requests for particulars are dealt with together.
Ruling
[32] Denied. Mr Henry submits that while Mr O’Neil says he is unaware of these details of the transfer of the land, that seems improbable. Mr Henry submits it was unlikely Mr O’Neil would have entered into a joint venture without having knowledge of the proposed transaction. I do not accept that submission.
[33] First, paragraph [6] of the agreement was overtaken by a variation whereby the development would be completed within Hickory Investments (2013) Ltd but, in any event, the mechanics of how a company controlled by Messrs Beattie and Dirkzwager would complete the transfer was a matter for them. As the directors of Hickory Investments (2013) Ltd they will know how they intended to go about completing the
agreed transfer. The mechanics and form of the transfer were of no moment. The practical reality is Hickory Investments (2013) Ltd was within Messrs Beattie and Dirkzwager’s control. No doubt the company would have completed the transfer in the most tax effective way and, as already noted, it was for taxation reasons that the land was not transferred out of Hickory Investments (2013) Ltd.
[34] Having committed land to a joint venture owned by a company they controlled, they could not be heard to say the joint venture could not proceed as their own company would not transfer the land. Such would mean Messrs Beattie and Dirkzwager would be in breach of their agreement that they would make the land available.
The first amended statement of claim: paragraph [10]
[35]Paragraph [10] of the first amended statement of claim alleges:
The parties originally agreed that the Hickory Development would be completed within Hickory Investments (2013) Limited which owned the land but upon completion of the development the land and buildings on Unit numbers 3 to 11 and Lot 100 would be transferred to a new company; Hickory Limited.
[36]Mr Henry seeks the following particulars:
(a)When, and how, that land would be transferred from Hickory Investments (2013) Limited to Hickory Limited
Ruling
[37] Denied in part. This is in substance the same question as (a) of para [30]. It is denied for the reasons in [33] above. In relation to “when”, while it is implicit transfer could only occur upon title for the Units being available, Mr O’Neil should be express as to when transfer was to occur.
(b)When Hickory Investments (2013) Limited agreed to transfer that land to Hickory Limited
Ruling
[38] Denied. As already discussed, the details of when and how the transfer was to occur and how it would be documented/actioned were matters for Messrs Beattie and Dirkzwager as directors of Hickory Investments (2013) Limited.
First amended statement of claim: paragraph [11]
[39]Paragraph [11] of the amended statement of claim alleges:
The agreement pleaded at paragraph 10 was varied whereby it was agreed that the Hickory Development would be completed within Hickory Investments (2013) Limited which owned the land but upon completion of the development the land and buildings on Unit numbers 3, 4, 5, 7, 8, 9 and 10 and Lot 100 would be transferred to a new company: Hickory Limited and:
a. The land at Unit 11 would be transferred to the first-named defendant Andrew Beattie at cost, and if he built a building on that land, he was to pay to Hickory Limited 10% of the cost of that build; and
b. The land and building at Unit 6 were to be transferred to the first plaintiff or his nominee at cost.
[40]Mr Henry seeks the following particulars:
(a)The terms of the varied agreement, including;
(i)when it was agreed that the development of the land and buildings on Unit numbers 3 to 5, and 7 to 10, and Lot 100, would be “completed”
Ruling
[41] Denied. As to [40](a), I consider in the context of this claim that paragraph [11] is sufficient. The question is otherwise open-ended. If Messrs Beattie and Dirkzwager had a specific query, it should have been raised. As to the specific question (a)(i), I have read this as asking Mr O’Neil to state whether, at the time of the varied agreement, an anticipated completion date was agreed. No doubt the parties would want the development to proceed as soon as possible. Whether such was agreed or not is not relevant to the matters in issue.
[42] There is no allegation by Mr O’Neil that after what he categorises as his exclusion from the joint venture, the development proceeded too slowly. If the question is aimed at what “completion” mean, that is dealt with at [37] above.
[43] The timing of the completion of the development may have a bearing on the calculated loss. However, the units are now constructed and leased so the actual time frames are known. Depending on how the plaintiffs decide to approach loss, in particular at what date it is to be assessed, this issue may need to be re-addressed.
[44]Mr Henry also seeks the following particulars of paragraph [11]:
(a)(ii) When, and how, that land would be transferred from Hickory Investments (2013) Limited to Hickory Limited
Ruling
[45] Denied. This is the same issue as discussed at [32] above. The reasons in [33] apply.
(b)When, and how, Hickory Investments (2013) Limited agreed to transfer that land to Hickory Limited
Ruling
[46]Denied: This is the same issue addressed at [32] and [33] above.
(c)The parties to that agreement; and
(d)The terms of that agreement
[47]I deal with these two particulars together.
Ruling
[48] Denied. From the pleading as a whole, the parties to the original joint enterprise are clear and its existence is admitted by Messrs Beattie and Dirkzwager. So much is also confirmed by the statement of counterclaim. As to the terms of the agreement again, subject to the limited particulars ordered, such are clear.
[49] Further, I note that it was Messrs Beattie and Dirkzwager in their statement of defence who raised that the idea to transfer the Units to Hickory Ltd was abandoned and that it was agreed the Units would remain within Hickory Investments (2013) Ltd. This conveys that Messrs Beattie and Dirkzwager were fully conversant with the variation to the agreement - they raised it.
[50] However, given an amended claim is to be filed, I suggested that Mr Wallace may include a pleading to the effect that the members of the joint venture at material times were Messrs O’Neil, Beattie and Dirkswager to address any suggestion Hickory Investments (2013) Ltd became a joint venturer.
First amended statement of claim: paragraph [13]
[51]Paragraph [13] of the first amended statement of claim alleges:
The defendants owed a duty of loyalty to the first plaintiff with respect to the Hickory Development and with respect to the joint enterprise agreed between them.
[52] Mr Henry’s submissions note Mr O’Neil does not, in his memorandum of particulars, deal with whether he performed his obligations under the agreement, including discharging his reciprocal duty of loyalty. He says: “… the plaintiffs should confirm their position on those matters”.
Ruling
[53] Denied. This is the same point addressed at [28] above. The defendants assert in their counterclaim that Mr O’Neil was in breach of obligations under the joint venture agreement. Accordingly, they must understand the duties they assert existed and were breached.
First amended statement of claim: paragraph [14]
[54]This is a pleading:
In breach of the joint enterprise and in breach of the duty of loyalty owed by the defendants to the first plaintiff, the defendants terminated the joint enterprise in or about December 2017.
[55] Mr Henry’s submissions on this category are quite brief, saying that it is the same as in the previous category, that is, particulars are sought of whether Mr O’Neil performed his obligations under the agreement.
Ruling
[56]Denied for the same reasons as in paragraph [55].
First amended statement of claim: paragraph [16]
[57]Paragraph [16] of the first amended statement of claim pleads:
In addition, the first plaintiff has provided know-how and project management and building services to the Hickory Development which has added value to the Hickory Development to the benefit of the defendants.
[58]The following particulars are sought:
(a)To whom the first plaintiff provided those services; and
(b)The value of those services.
[59] Mr Wallace notes that Mr O’Neil does not seek damages in respect of the services provided.
[60] Mr Wallace also notes that the above para [16] of the first amended statement of claim is identical to that pleaded at para [14] of the original statement of claim and which was fully answered in the then statement of defence.
[61] I accept Mr Wallace’s submission that it is apparent from the detailed response in the original statement of defence that Messrs Beattie and Dirkzwager have a full understanding of the services that were provided to the joint venture by Mr O’Neil’s company, Jamon Contractors Ltd.
[62] During the hearing I doubted that para [16] of the claim adds anything to Mr O’Neil’s claim. It seems to be a surplus pleading given no relief is sought for the
claimed contributions. There is no application to strike out the pleading but Mr Wallace is to reflect whether para [16] is a distraction.
First amended statement of claim: paragraph [18]
[63]This is a pleading:
The first plaintiff has been denied the opportunity to participate in the profits of the joint enterprises and has suffered loss.
[64]The following particulars are sought:
38.The terms of the joint venture enterprise are in issue. To limit the scope of matters that the defendants need to meet and prepare for in evidence, the plaintiffs should also confirm:
(a)The terms upon which the first plaintiff was entitled to participate in the profits of the joint venture;
(b)Whether the defendants have breached those terms;
(c)If so, when, and how, that breach occurred (including when, and how, the defendants denied the first plaintiff the opportunity to participate in the profits of the joint venture); and
(d)How have the defendants’ actions caused the first plaintiff to suffer loss.
Ruling
[65]I deal with these paragraphs together. The particulars are denied.
[66] Paragraph [14] of the amended statement of claim pleads Messrs Beattie and Dirkzwager breached the agreement by terminating the joint venture in or about December 2017. This deals with when and how the breach occurred. As to how that termination has caused Mr O’Neil to suffer loss, I agree with Mr Wallace that it is self-evident that the loss relied on is that claimed at para [18] of the statement of claim, that is Mr O’Neil has been denied the opportunity to participate in the profits of the joint enterprise.
[67] The question of whether Mr O’Neil has suffered loss or Moby is properly raised by Mr Henry is addressed in the next section.
First amended statement of claim: paragraphs [19] – [24]
[68] Paragraphs [19] to [24] of the first amended statement of claim sets out a cause of action by Moby.
[69] Mr Henry seeks that Moby confirm the capacity in which it is suing Messrs Dirkzwager and Beattie, that is, either in their personal capacity or as directors or shareholders of Hickory Investment (2013) Ltd or Hickory Ltd. The answer to this request is that in the original statement of claim it is pleaded that Mr O’Neil nominated Moby to become the shareholder of Hickory Ltd. As nominee, Moby can seek to enforce the benefit of the joint venture pursuant to pt 2, subpt 1 of the Contract and Commercial Law Act 2017. In doing so Moby does not become a member of the joint venture as such would require novation.
[70] That said, Mr Wallace accepted the amended pleading should be express that Moby’s claim is in the alternative of Mr O’Neil’s – only one of them can have suffered loss. Moby was included as second plaintiff to avoid any suggestion that Mr O’Neil was the wrong plaintiff. The new pleading should also make it express that Moby relies on the privity provisions of the 2017 Act.
Costs
[71] While I have declined the majority of requests for particulars, it did serve the purpose of addressing areas of the pleading that would benefit from clarification.
[72] If either party seeks costs then costs submissions not more than five pages are to be filed within five working days of the date of this Judgment. Given the time of year, if costs are sought the reply of not more than five pages is to be filed by the end of January 2023. If no request for costs is made then the order of the Court will be there is no order as to costs.
[73] The plaintiffs’ amended statement of claim is to be filed by the end of February 2023.
[74] I record Mr Shamy renewed his client’s application for an adjournment of the hearing declined by me on 7 December 2022. The second application was declined essentially for the same reasons as the earlier application.
Associate Judge Lester
Solicitors:
Godfreys Law, Christchurch (for Plaintiffs) Landley Law, Christchurch (for Defendants)
Copy to counsel:
M J Wallace, Barrister, Christchurch (for Plaintiffs) P J Shamy, Barrister, Christchurch (for Defendants)
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