Oxborough v MacDonald
[2018] NZHC 2817
•31 October 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2018-404-001054
[2018] NZHC 2817
BETWEEN STEPHEN OXBOROUGH and LYNDA SUSAN OXBOROUGH and DVA 2009
TRUSTEES LIMITED as trustees of the OXBOROUGH FAMILY TRUST
Plaintiffs
AND
SCOTT STEWART MacDONALD and VALLANT HOOKER TRUSTEES
LIMITED as trustees of the MacDONALD FAMILY TRUST
Defendants
Hearing: 15 October 2018 Appearances:
DJG Cox for the Plaintiffs
B Murray for the Defendants
Judgment:
31 October 2018
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
This judgment was delivered by me on
31.10.18 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Rennie Cox, Auckland
Vallant Hooker & Partners, Auckland
OXBOROUGH v MacDONALD [2018] NZHC 2817 [31 October 2018]
Introduction
[1] The parties are neighbours of adjoining lands at Rangitāwhiri, Motu Aotea (Tryphena, Great Barrier Island). They are also trustees of their respective family trusts. At issue is what the plaintiffs claim to be a binding boundary adjustment agreement relating to the encroachment by the plaintiffs’ carports over the defendants’ land (the Boundary Agreement).
[2] The plaintiffs seek summary judgment requiring the defendants to specifically perform the Boundary Agreement by executing the relevant Auckland Council and Land Information New Zealand documentation.
[3] The terms of the boundary agreement are in dispute. The defendants say that this is not a boundary adjustment involving a transfer of land, but simply an informal agreement in which the plaintiffs paid $15,000 compensation to the defendants for an encroachment.
[4] The Boundary Agreement was not signed by Vallant Hooker Trustees Ltd (VHTL), one of the defendant trustees. The defendants say that for summary judgment there must be unequivocal evidence that all trustees have been bound by an agreement to transfer land, whether by signature or holding out. They submit that there is no such evidence in this case.
[5] The critical issues I must determine are twofold and arise in the context of summary judgment where the plaintiffs must establish that the defendants have no defence to the claim: was there a boundary adjustment agreement for the transfer of land (that is, what were the terms of the agreement); and have both defendant trustees become bound by that agreement?
Background
[6] The two properties share a common boundary along the south-west boundary of the plaintiffs’ property. A portion of two carport buildings, located on the plaintiffs’ south-west boundary, encroach over the boundary of the plaintiffs’ property and onto the defendants’ land. The area of encroachment, according to a survey, is 173 m².
[7] In June 2006 the plaintiffs commissioned a surveyor to prepare a survey plan of the property in order to address the encroachment issue.
[8] On 12 January 2013 a meeting took place between the plaintiff, Mrs Oxborough, and the defendant, Mr MacDonald. They discussed the survey plan that Mrs Oxborough had brought with her. The plaintiffs allege that a verbal agreement in principle was reached at that meeting. That agreement provided that:
(a)The plaintiffs would purchase the minimum possible area from the defendants so as to ensure that the encroaching structures were contained in the title to their property;
(b)The plaintiffs would pay $15,000 to resolve the encroachment;
(c)The transaction would be undertaken by way of a boundary adjustment; and
(d)The plaintiffs would meet all the surveying and legal costs associated with the implementation of the boundary adjustment.
[9] At the meeting on 12 January 2013, Mr MacDonald made handwritten annotations to the copy of the survey plan. These annotations included:
(a)In blue pen, the length of the strip of the minimum area possible needed to regularise the encroaching structures;
(b)The words “45° and minimum clearance” on both ends of the encroaching structures;
(c)The words “parallel and min clearance” on the boundary line of the boundary adjustment – mid-way in between each structure; and
(d)The name of Mr MacDonald’s family trust (“MacDonald Family Trust”) and law firm’s name (“Vallant Hooker & Assoc”) is written at the bottom of the plan.
[10] On 14 January 2013 Mrs Oxborough sent an email to Mr MacDonald stating, “I have attached the plan, according to Steve.” The plan attached to that email was a survey plan on which Mr MacDonald had made handwritten annotations on the 12 January 2013 meeting, with the longest strip in blue pen drawn by Stephen Oxborough.
[11] On 23 January 2013 Mr MacDonald responded to the email from Mrs Oxborough, attaching the survey plan sent to him on 14 January 2013. In the return email Mr MacDonald stated:
Lyn, Steve,
Attached is the boundary adjustment as discussed and agreed on site 12.01.2013. We accept the sum of $15K to allow this adjustment. My bank details are ...
Scott
[12] On the same day, the plaintiffs paid $15,000 to the bank nominated by Mr MacDonald in his email.
[13] In 2017 the plaintiffs engaged AB Matthews & Associates Ltd (AB Matthews) to prepare a plan to show the area of the boundary adjustment reflecting the area drawn on the survey plan by Mr MacDonald at the meeting on 12 January 2013. In an affidavit in reply, filed by the plaintiffs and dated 28 September 2018, Mr Matthews, a principal of AB Matthews, confirms that his survey plan of 2017 was prepared to replicate as closely as possible the handwritten amendments and dimensions that the plaintiffs say were made by Mr MacDonald at the January 2013 meeting. Mr Matthews says that the area of the encroachment in his plan is the minimum area possible needed to remove the encroachment caused by the two carports.
[14] The plaintiffs say that in January 2018, Mr MacDonald made it clear to them that he had decided not to honour the agreement reached on 12 January 2013.
[15] By letter dated 19 January 2018, the plaintiffs’ lawyers wrote to Vallant Hooker & Partners seeking to have the Boundary Agreement executed.
[16] Mr MacDonald says that because he was not happy about the proposed survey plan in 2017, which he says was more than the minimum clearance he was prepared
to accept, neither he nor his fellow trustee, VHTL, agreed to sign the executing documents sent in the plaintiffs’ letter of 19 January 2018.
Relevant legal principles
[17]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.
[18]The principles are summarised in Krukziener v Hanover Finance Ltd:1
[26] 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).
Analysis and decision
Was there a boundary adjustment agreement?
[19] Mr Murray, for the defendants, placed primary emphasis on the issue of whether all defendant trustees had become bound by an agreement to transfer land. The question of the terms of the agreement were dealt with in both his written and oral submissions as a second issue.
[20] For the purposes of my analysis, the question of the terms of the agreement is the logical starting point; what did the parties agree?
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.
[21] It is not in dispute that the plaintiffs paid Mr MacDonald $15,000 in January 2013. In dealing with that issue, Mr MacDonald says in his affidavit that the payment of $15,000 was agreed to be “compensation for the encroachment into my trust’s property, being the building costs for my sleepout on my trust property. It was not the purchase price for Mr Oxborough and his wife to acquire any of my trust’s land”.
[22] Mr MacDonald further states in his affidavit that the plan alleged by the plaintiffs to form part of the Boundary Agreement was not the survey plan he sent to Mrs Oxborough in January 2013:
I do not accept that the plan I sent to Mrs Oxborough with my email is the plan which is now exhibit D to Mr Oxborough’s affidavit. At least, that is what I believe having seen the copy of the plan attached to the affidavit.
[23] Mr MacDonald accepts that he did write the words “45° and min clearance” and “parallel and min clearance” on the survey plan.
[24] Mr Murray submitted that viewed objectively there was a straightforward verbal agreement between Mr and Mrs Oxborough on the one hand, and Mr MacDonald on the other, as individuals, whereby the Oxborough’s carports and driveway could remain over the boundary because Mr MacDonald had received
$15,000 which he had applied to build a sleep-out on his trust’s land. Nothing further needed to be done. There appears to have been a concluded agreement which the parties accepted was informal and there was no particular documentation beyond the exchange of emails. It was submitted that this kind of informal arrangement is not unusual on Great Barrier Island.
[25] However, I reject Mr Murray’s submissions. This is a case in which it is necessary to take a robust view of what I find to be implausible assertions by Mr MacDonald and to focus on the unequivocal contemporary documentation.
[26] I find that the plaintiffs have established for the purposes of a summary judgment application that there was a clear and unequivocal boundary adjustment agreement. The contentions by Mr MacDonald that the payment was “compensation” and was not a payment for the boundary adjustment is clearly contradicted by the contemporaneous documentation. This includes:
(a)The email dated 23 January 2013 from Mr MacDonald to the plaintiffs which was headed in the subject line “Re: Boundary adjustment” and stated “We accept the sum of $15K to allow this adjustment”; and
(b)The BNZ internet banking record of the plaintiffs, which shows a transfer in the amount of $15,000 to Mr MacDonald. That internet banking record records that on both the payer’s and payee’s statements the words “boundary adjustment” are used.
[27] As counsel for the plaintiffs, Mr Cox, submitted, it is implausible that the words “boundary adjustment” would have been used if the parties were in fact agreeing about compensation for a sleep-out. There is no reference at all in the critical contemporary documentation to a sleep-out. I find that what was clearly contemplated and agreed was the transfer of land. That is why the plaintiffs commissioned a survey and why Mr MacDonald drew on the survey plan. An informal agreement about a sleep-out would not require a formal survey plan.
[28] I find that Mr MacDonald agreed to a boundary adjustment which would involve the transfer of some of his land in exchange for the payment of $15,000. The plaintiffs have clearly proven the terms of that boundary adjustment agreement. They included:
(a)That the plaintiffs would purchase the minimum possible area from the defendant so as to ensure that the encroaching structures were contained in the title to their property;
(b)The plaintiffs would pay the sum of $15,000 to Mr MacDonald to purchase the land in order to resolve the encroachment;
(c)The transaction would be undertaken by way of a boundary adjustment; and
(d)The plaintiffs would meet all the surveying and legal costs associated with the implementation of the boundary adjustment.
[29] I accept that it is somewhat unusual for the payment of money to be made in advance of the transfer of the land and that there was no valuation obtained for the part of the defendants’ land that was to be transferred. However, in the context of a relatively small amount of land and a clear mutual decision to keep costs to a minimum (virtually none in the case of the defendants) this was entirely understandable.
[30] I also find the claim by Mr MacDonald that the survey plan exhibited to Mr Oxborough’s affidavit was not the plan he sent to Mrs Oxborough in January 2013, to be implausible. Again, the Court need not accept uncritically evidence that is inherently lacking in credibility.2 My reasons for this finding are as follows:
(a)The survey plan upon which Mr MacDonald made handwritten annotations at the meeting of 12 January 2013 was attached to the email dated 14 January 2013 from Mrs Oxborough to Mr MacDonald. Mr Oxborough’s evidence is that the same plan was attached to Mr MacDonald’s email of 23 January 2013 sent back to Mrs Oxborough;
(b)Mr MacDonald has not produced in his evidence a copy of his email of 23 January 2013 attaching a different version of the plan to the one exhibited to the affidavit of Mr Oxborough or stated that he is unable to locate or has destroyed physical and/or electronic copies of his email of 23 January 2013 attaching the plan;
(c)Strictly speaking, Mr MacDonald’s claim is that he did not write the words “on both ends of each encroaching structure”. However, that is rather beside the point. There cannot in substance be any doubt that Mr MacDonald wrote “45° and min clearance” on two different places on the plan (around each carport). He also accepts that he wrote the words “parallel & min clearance”.
(d)Mr MacDonald’s contention that he did not write the extended line past the 45 degrees at each end of the proposed area, back to the Oxborough boundary, and his acknowledgement that Mr Oxborough accepts that
2 Krukziener v Hanover Finance Ltd at [26].
he added a “longer strip in blue pen” does not provide any answer or explanation for the claim that the plan he sent back to Mr Oxborough in January 2013 is not the survey plan attached to Mr Oxborough’s affidavit. If Mr MacDonald really is claiming that Mr Oxborough’s additional “longer strip in blue pen” means that the Oxboroughs are seeking to take more land than was agreed, he should have said so. He did not, despite having the opportunity to do so.
(e)Mr MacDonald agreed to a sum of $15,000 and accepted payment of it on the clear mutual understanding that there was an agreement as to the location of the new boundary, which would be the subject of a formal survey premised on the principle that the minimal amount of land would be transferred from his title. He was not required to do anything more except to execute the formal documentation.
(f)The plaintiffs’ surveyor has sworn an affidavit confirming that a survey plan which he prepared in 2017 (on the instruction of the plaintiffs) exactly matches the drawings that he understood Mr MacDonald to have made on the 2006 plan3 and involves the transfer of the minimal amount of land possible.
Are all trustee defendants bound? – Ostensible Authority
[31] I turn now to address what I treat as the second issue, namely whether all defendant trustees have become bound by an agreement to transfer land.
[32] Clause 19 of the MacDonald Family Trust Deed requires unanimity. Mr Murray contends that one trustee cannot automatically and necessarily bind the respective trusts. He further submits:
(a)Ostensible authority (Mr MacDonald holding out on behalf of the other trustee) is not expressly pleaded or stated in the evidence. In any event,
3 I find that the affidavit of the surveyor, Mr Matthews should be admitted in evidence (albeit filed late). It is a response to Mr MacDonald’s claim that the survey plan exhibited to Mr Oxborough’s affidavit was not the plan that he says he sent to Mrs Oxborough in January 2013.
there is no or insufficient evidence, that at the time of the agreement, Mr MacDonald held out that he could reach agreement on behalf of his trust.
(b)Mr MacDonald’s conduct alone cannot be relied upon. It must be the trust which by its statements or actions represents that Mr MacDonald may commit the trust. The evidence is that the professional trustee company had no knowledge of any boundary issue until the plaintiff’s solicitors letter of 19 January 2018. And it is for the plaintiff to produce the evidence of holding out to satisfy their onus on a summary judgment.
(c)To the contrary, Mr MacDonald by writing in the name of the trust, solicitor and solicitors’ firm on the 2006 plan (done in January 2013) informed the plaintiff that the personal agreements between the Oxboroughs and Mr MacDonald could progress to a state of formality, such as documentation and with the actual involvement and commitment of two trusts.
[33] Mr Murray noted that the plaintiff, Mrs Oxborough is only one trustee of the Oxborough family trust. However, he accepts, rightly so, that there has been ratification by the plaintiff trustees of the Oxborough family trust.
[34] In Niak v MacDonald the Court of Appeal held that it is an established rule of trust law that a trustee must not delegate his or her duties or powers, not even to co-trustees.4 Delegation is, however, allowed where such delegation is specifically permitted by the trust instrument, is specifically permitted by statute, or is practicably unavoidable and is usual in the ordinary course of business and the particular agent is employed in the ordinary scope of his or her business. A trustee has a duty to act personally unless duty requires trustees to be unanimous in any decision they make.
4 Niak v MacDonald [2001] 3 NZLR 334 (CA) at [16].
[35] In a very recent decision of this Court, Fisher v Faafiu, being an appeal from summary judgment granted in the District Court, Gordon J addressed the question of trustees acting unanimously and identified the following principles:5
(a)Subject to the Trust Deed, trustees must act unanimously in the execution of their powers.
(b)However, there are ways in which a transaction entered into by one trustee on behalf of the trust can still be valid.
(c)One such way is where the trustee acts with the ostensible authority of the other trustee or trustees while entering into the transaction. As Associate Judge Gendall explained in Thorpe v Hannam:6
[24] A corollary of the unanimity principle noted above is that the act of one co-trustee, which has the sanction and approval of the other, is binding upon both … given the admonition against delegation of responsibility by trustees, any claimed approval by one trustee to act in a particular way by all trustees must be clearly established …
[25] … Any such ostensible authority is to be inferred from the circumstances, and must be given by the other trustees, not the agent trustee …
(d)Another is where the other trustee or trustees subsequently ratifies the action done on behalf of the trust. As the Court of Appeal explained in Hansard v Hansard:7
[51] …In order to ratify a transaction, the person ratifying must know the essential detail of the act or decision in question. It is not sufficient to show that he or she was aware of a change in the trust’s financial position, even if that change carries with it the necessary implication that some sort of transaction must have occurred. For a trustee to validly ratify a decision, it must be shown that there was more than a passive acquiescence to a decision made by another trustee. The ratifying act must show that the trustee considered the exercise of his or her power as a trustee and consented to the action taken.
5 Fisher v Faafiu [2018] NZHC 2584 at [33]-[36].
6 Thorpe v Hannam (2010) 11 NZCPR 471 (HC). See also the discussion in Niak v Macdonald and
Lang v Southen (2001) 1 NZTR 11-009 (HC).
7 Hansard v Hansard [2014] NZCA 433, [2015] 2 NZLR 158. See also Rownata Holdings Ltd (in liq) v Hildred [2013] NZHC 2435, (2013) 26 NZTC 21-039 at [65]-[70].
(Citations omitted)
[36] There is some force in the submissions of Mr Cox that the existence of a general permission for Mr MacDonald to act and bind the trust, from his co-trustee VHTL, can be inferred from all the circumstances. This includes the email response from Vallant Hooker to the plaintiffs dated 24 January 2018 and subsequent emails from Mr MacDonald to the plaintiffs’ solicitor.
[37] However, I conclude that the plaintiffs have not demonstrated that the defendants have no defence to the claim on the basis that not all trustees are bound by the Boundary Agreement. It is apparent from Fisher v Faafiu that the question of ostensible authority is an intensely factual enquiry. In this case, there is conflicting evidence that goes both ways and I find that this evidence should be tested at trial, if necessary. I cannot resolve the dispute at this interim stage.
[38] The handwritten notes of Mr MacDonald, the reference to the second trustee that he put at the bottom of the survey plan and his email of 23 January 2013 (with reference to “we accept”) all point towards ostensible authority. On the other hand, there is no signature from VHTL and no evidence at all of any communication between Mr MacDonald and VHTL. This lack of evidence of any communication is significant in this, a summary judgment context. As Associate Judge Gendall held in Thorpe v Hannam ostensible authority must be given by the other trustee, not the agent trustee.8 The bare assertion that one trustee held out that he or she was acting with the authority of the other trustee, is thus, without more, of little assistance.
[39] There is no evidence at all before me from VHTL on this issue. Mr MacDonald says in his affidavit that the letter from the plaintiffs to Vallant Hooker dated 19 January 2018 was “the first my lawyers or the trustee company knew about the 2013 conversations and the prospect of a boundary adjustment”. While the plaintiffs have expressed some scepticism about that contention this is an important factual matter which I cannot resolve at this stage.
8 At [25].
[40] I have given some consideration to whether an adverse inference can be drawn against the defendant trustees on the basis of a complete lack of evidence from VHTL. If Mr MacDonald had no general authority or VHTL had no prior knowledge of the boundary adjustment agreement, one might have expected there to be direct evidence from VHTL on that point. However, that is best dealt with as a trial issue where these matters can be fully tested.
[41]For all of these reasons, summary judgment is inappropriate.
[42] The plaintiffs claim, as an alternative cause of action, the equitable doctrine of part-performance. However, that is of no assistance to the plaintiffs. Part-performance is pleaded in the event that the Court were to find that the provisions of s 24 of the Property Law Act 2007 had not been complied with. As Mr Cox properly acknowledged, the issue of ostensible authority applies equally to the part- performance pleading.
Result
[43]The application for summary judgment is dismissed. Costs are reserved.
[44] I note that this is a boundary dispute between neighbours in which money, namely $15,000, has already been paid and some five years ago. I have concluded that there was an agreement for the transfer of land and given the relatively modest matters at issue, the prudent approach would seem to be for the parties to negotiate a settlement.
[45] I direct that the Registry is to allocate a case management conference. At that conference, the parties will need to address the question of whether these proceedings should be transferred to the District Court.
Associate Judge P J Andrew
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