Paget v Station Properties Limited
[2011] NZCA 570
•11 November 2011
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA36/2010 [2011] NZCA 570 |
| BETWEEN SHANE ARTHUR PAGET |
| AND STATION PROPERTIES LIMITED |
| Hearing: 15 August 2011 |
| Court: Arnold, Winkelmann and Andrews JJ |
| Counsel: P J Shamy for Appellant |
| Judgment: 11 November 2011 at 10.30 am |
JUDGMENT OF THE COURT
AThe applications for leave to amend the grounds of appeal and to file further evidence are granted.
BThe appeal is allowed. The order for summary judgment in favour of the respondent is quashed and the matter is remitted to the High Court for trial.
CThe appellant must pay the respondent costs for a standard appeal on a band A basis plus usual disbursements.
REASONS OF THE COURT
(Given by Arnold J)
Introduction
The appellant, Mr Paget, appeals against a decision of Associate Judge Sargisson granting the respondent, Station Properties Ltd (Station), summary judgment and ordering him to specifically perform an agreement for sale and purchase of an apartment.[1] Mr Paget also applies for leave to amend his grounds of appeal and to adduce further evidence. Station opposes these applications.
Background to respondent’s application for summary judgment
[1] Station Properties Ltd (in rec) v Paget HC Auckland CIV-2009-404-664, 22 December 2009.
Station is a property development company. It went into receivership in April 2009. Mr Paget is a real estate agent and was the sole director of a company known as Shaq Holdings Ltd (Shaq), which went into liquidation in May 2010.
On 19 September 2006 Station and Mr Paget entered into an agreement for the sale and purchase of an apartment in a development that Station was undertaking in Queenstown. When the development was completed, Station called on Mr Paget to settle but he failed to do so. In February 2009, Station issued proceedings against him seeking specific performance of the agreement and applied for summary judgment. Station’s application was supported by an affidavit from a director, Mr Robert McEwan, who controlled Station at the relevant time.
Mr Paget opposed Station’s application, arguing that summary judgment should not be granted as he had a potential defence to the claim. He said that the agreement was essentially an underwrite agreement to enable Station to obtain finance for the development. Accordingly, Mr Paget argued, the agreement was subject to an implied term that Station would use its best endeavours to find another purchaser before calling on him to settle.
Associate Judge Sargisson rejected Mr Paget’s contention. She found that there was no room to imply such a term into the agreement and ordered specific performance. Mr Paget filed an appeal against that decision, on the basis that the Associate Judge had erred in ruling out the possibility of a defence based on the implied term.
Developments since summary judgment granted
Mr Paget now says that after the appeal was filed, he was assisting Shaq’s liquidator, Mr Brady, with information about the liquidation. While searching through Shaq’s files looking for some documentation in relation to a car lease, he came across a file in which he found a copy of a document effecting a novation of the agreement for sale and purchase from him to Shaq. The document is dated 25 September 2006 and appears to have been signed by Mr Paget in two capacities (for himself and as a director of Shaq) and by Mr McEwan for Station. Mr Paget says that with the document he found a copy of a letter (undated) from him to Mr McEwan enclosing the novation document for his signature.
Once Station’s receivers learnt of this development, they caused a search to be made of Station’s files, but that produced neither the original nor a copy of the document. Nor was anything relevant found in the files of either Station’s or Shaq’s then solicitors. As far as Shaq’s solicitors are concerned, Mr Paget says that, although they would normally have handled such a transaction, he did not involve them on this occasion because of the straightforward nature of the underwrite arrangement. He says that as a real estate agent he was familiar with the concept of novation and had a standard document that he used on such occasions. He says that he forgot about the novation until he found the documents, at which point he recalled entering into it. He says that the novation was probably undertaken because the arrangement was in the nature of an underwrite.
Mr Paget’s appeal is now based solely on the novation document and the accompanying letter, hence his application for leave to amend his grounds of appeal. Mr Paget argues that, if admitted, the documents indicate that he may have a complete defence to Station’s claim.
As we have said, Station opposes the application to adduce further evidence. It filed an affidavit from Mr Pravin Bhana, who is employed by KordaMentha, Station’s receivers. Mr Bhana confirms that no copy or record of the novation has been found in Station’s files or in those of its then solicitors. He notes that the receivers do not have contact details for Mr McEwan. Mr Bhana says that he knows of no reason why Station would have agreed to such a novation, particularly because it would have been a breach of Station’s funding arrangements with its financiers. The receivers, Mr Bhana says, hold serious doubts about the authenticity of the novation. He claims that if leave is given the receivers will be prejudiced given Shaq’s liquidation and the receivers’ inability to fully investigate the matter at this late stage.
There is one further development to mention. When Mr Paget did not comply with the order for specific performance, Station applied to have it set aside and sought leave to cancel the agreement and seek damages instead. Orders to this effect were made on 13 April 2011.
Admission of fresh evidence
The approach to be adopted to applications for leave to adduce further evidence is set out in this Court’s judgment in Rae v International Insurance Brokers.[2] Tipping J, speaking for the Court, stated the general rule that to be admissible the further evidence must be fresh, credible and cogent. Evidence is fresh if it could not, with reasonable diligence, have been produced at trial. However, the absence of freshness is not an absolute disqualification for admission. Evidence which is not fresh may still be admitted where there are exceptional circumstances and compelling grounds to justify it. Such evidence must still pass the tests of credibility and cogency.[3]
[2] Rae v International Insurance Brokers [1998] 3 NZLR 190 (CA).
[3] Rae at 192–193.
For Mr Paget, Mr Shamy submitted that the evidence was fresh as it had been forgotten by the time of the fixture. Accordingly, it could not with reasonable diligence have been found. If he was wrong about this, Mr Shamy submitted, there were exceptional circumstances which justified the admission of the evidence. He noted that, unlike many other fresh evidence cases, this case involved a document rather than oral evidence. The document, which spoke for itself and had decisive effect, was cogent and credible having been executed by three parties. It was the decisive effect of the document (if ultimately accepted as genuine) that Mr Shamy said creates the exceptional circumstances.
For Station, Ms Cooper argued that the evidence was not fresh as it was available to Mr Paget at the time of the hearing. Moreover, she submitted that it was not credible. She pointed out that it had not been mentioned in the correspondence between the parties concerning the possibility of settlement, Mr McEwan had not referred to it in his affidavit in support of Station’s application for summary judgment and Mr Paget had raised it very late in the piece, after the filing of his appeal. Ms Cooper argued that it is inherently unlikely that both men would have forgotten about the novation given its significance. She also noted that there was no particular reason that Station would have entered into such an arrangement, at least without a personal guarantee from Mr Paget. Ms Cooper relied particularly on the Supreme Court’s decision in Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 2).[4]
[4]Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 2) [2007] NZSC 1, [2007] 2 NZLR 124.
In that case Paper Reclaim Ltd sought to add a new ground of appeal to the grounds in respect of which the Supreme Court had granted it leave and also sought leave to call fresh evidence. The fresh evidence was a two page contract between the parties, which was directly relevant to the issues at trial. Paper Reclaim said that an employee had discovered the document in an attic in the company’s main office building after the trial had concluded. The Supreme Court declined leave to admit the evidence. Delivering the judgment of the Court, McGrath J noted that there were real doubts over the authenticity of the document, which could only be resolved by full cross-examination of the relevant personnel. He pointed to the difficulties of resolving such issues on appeal after trial.[5] However, McGrath J went on to consider the position on the basis that the document was genuine. He noted that “[t]here are strong policy reasons why the Courts should take a restrictive approach to applications by parties to litigation who seek to alter the basis of the case that they presented at trial after judgment has been given”.[6] These included in particular the need for finality. Ms Cooper submitted that there was no material difference between the present case and Paper Reclaim.
[5] At [14].
[6] At [15].
We accept that the evidence is not fresh. If Mr Paget’s account is true, the documents could have been discovered with reasonable diligence prior to the hearing of the summary judgment application. The fact that Mr Paget forgot that the novation had been implemented does not assist.
However, as we have said, the absence of “freshness’ is not an absolute disqualification for the admission of new evidence. The Supreme Court in Rae allowed for the introduction of such evidence where there were exceptional circumstances and compelling grounds to justify admission. We consider that those requirements are met in the present case. We can give our reasons shortly.
If, after they had been advised of the discovery of the documents, the receivers had found in the files of Station or its lawyers material which tended to support Mr Paget’s account (for example, the original or a copy of the novation and/or the covering letter), Station could not properly have opposed the granting of leave. In those circumstances, Station would have failed in its obligation as a party seeking summary judgment to place all relevant material before the Court.[7] This would, in our view, be sufficient to bring the case within the exceptional category identified by the Supreme Court.
[7] See Comalco-CHH Aluminium v Chapman (1992) 5 PRNZ 382 (HC).
An analogous situation occurred in Napier Heights Holdings Ltd v Napier Heights Ltd.[8] In that case, the appellants were ordered on summary judgment to specifically perform an agreement with the respondent for the purchase of the former Napier Hospital site. In conjunction with their appeal against the order, the appellants applied for leave to adduce further documentary evidence. They advanced two principal grounds in support of this application. First, they argued that they had only obtained the documents after the summary judgment hearing despite having requested them from the respondent under the Official Information Act 1982. Second, they submitted that it was clear from the documents that the originals were in the respondent’s possession when the summary judgment application was heard, so that the respondent should have disclosed them as part of its application.[9]
[8]Napier Heights Holdings Ltd v Crown Health Financing Agency [2009] NZCA 420, [2010] ANZ ConvR 10-002 at [25]–[26].
[9] Citing Comalco-CHH Aluminium v Chapman.
This Court accepted these arguments. The appellants were granted leave to adduce the further evidence partly because they had made reasonable efforts to obtain it but partly also because the material should have been disclosed by the respondent as part of its application for summary judgment.[10]
[10] At [26].
We consider that a similar analysis would apply if the circumstances of the present case were as we have postulated at [17] above. That is, the receivers would have been holding material which was relevant to the issues on the summary judgment application and which should have been disclosed as part of that application. In those circumstances, it would be no excuse for the receivers to say that they did not realise that the material existed or had overlooked it. Sensibly, Ms Cooper accepted this.
The fact that the receivers have not been able to locate such material does not alter the principle. Certainly, there must be a real question about the authenticity of the documents, particularly given that no mention was made of the novation in the correspondence between the parties about settlement. But that is not an issue that we can resolve at this stage. Determination of that question will require viva voce evidence from both Mr Paget and Mr McEwan (including cross-examination). Mr Shamy advised us that Mr McEwan is available but was not prepared to file an affidavit at this stage. In addition, there may well need to be expert evidence from a document examiner, although Mr Shamy advised us that such investigations have been inconclusive to date.
Given that we cannot resolve the question of authenticity, we must proceed on the basis that the documents may be genuine. If they are, Station will have been in breach of its obligation to make appropriate disclosure when seeking summary judgment, even if inadvertently. (The apparent signatory to the novation on behalf of Station was Mr McEwan who swore the supporting affidavit on the summary judgment application.) That is, the position will be the same as it would have been if the receivers had found the documents or other relevant material in Station’s files or those of its solicitors.
Because we cannot rule this out as a possible outcome, we consider that there are exceptional circumstances which justify the granting of leave to adduce the further evidence. What distinguishes the present case from Paper Reclaim is that in that case there had been a 22 day trial and the fresh evidence that Paper Reclaim sought to adduce was inconsistent with the extensive evidence that it presented at that trial. Here the application comes after the entry of summary judgment, and the evidence is, arguably at least, consistent with the implied term argument that Mr Paget raised before Associate Judge Sargisson. We acknowledge that this Court has previously emphasised that the need for finality arises in the summary judgment context just as much as it does in the trial context and it is only in exceptional cases that the Court will permit further evidence to be filed on appeal from a summary judgment decision.[11] However, the present case raises the unusual consideration that if Mr Paget’s allegations are true, Station will not have met its disclosure obligations and will have obtained summary judgment on a wrong basis as a consequence of that failure.
[11]Lawrence v Bank of New Zealand (2001) 16 PRNZ 207 (CA) at [18]. It may be that the position in England is a little less restrictive in recognition of the fact that a party against whom summary judgment is sought may have little time to put its case together – see Aylwen v Taylor Joynson Garrett (A Firm) [2001] EWCA 1171, [2002] PNLR 1 at [40]–[41] and [47]–[49].
We propose, then, to receive the evidence and allow the appeal. Normally costs follow the event. However, given the circumstances in which this matter has arisen, we consider that Mr Paget should pay costs and disbursements on the appeal to Station.
Decision
We grant the appellant’s applications for leave to amend his grounds of appeal and to file further evidence. We allow the appeal and quash the order for summary judgment in favour of the respondent. The matter is remitted to the High Court for trial. The appellant must pay the respondent costs for a standard appeal on a band A basis plus usual disbursements.
Solicitors:
Brennan & Brown-Haysom, Auckland for Appellant
Daniel Overton Goulding, Auckland for Respondent
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