Pierce v Tripp Rolleston & Co
[2025] NZHC 557
•18 March 2025
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE
CIV-2023-476-011
[2025] NZHC 557
BETWEEN KATHERINE ANN PIERCE and HILARY
JANE STUBBS as trustees of the BIDWILL STUBBS TRUST
Plaintiffs
AND
TRIPP ROLLESTON & CO
First Defendant
ALFRED JAMES HENRY WILLIAMSON
Second Defendantcontinued over
Hearing: 3 March 2025 Appearances:
S M Grieve KC and V P Kenworthy for Plaintiffs M E Parker for First Defendant
G K Riach and N M G Wilson for Second, Third and Fourth Defendants
Judgment:
18 March 2025
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 18 March 2025 at 3.30 pm
Registrar/Deputy Registrar Date:
PIERCE v TRIPP ROLLESTON & CO [2025] NZHC 557 [18 March 2025]
ALFRED JAMES HENRY WILLIAMSON, JAMES MATTHEW WILLIAMSON, DONNA LEE WILLIAMSON and
LEANNE MAREE WILLIAMSON as
trustees of the JM WILLIAMSON FAMILY TRUST
Third Defendants
JAMES MATTHEW WILLIAMSON and THEA ANNE WILLIAMSON
Fourth Defendants
[1] The plaintiffs are the present trustees of the Bidwill Stubbs Trust (the Trust).1 The Trust held a second mortgage over a property securing advances made to the third defendants. As a result of transactions that occurred in 2012, the mortgage was extinguished and the advances secured by it have not been repaid.
[2] Related to those transactions, the Trust brings claims against the first defendant (Tripp Rolleston) alleging breaches of fiduciary duty. It also claims against the second and third defendants that they dishonestly assisted in and/or induced the breach of equitable and statutory duties owed to the Trust, and against the fourth defendants that they knowingly received property in breach of those duties.2
[3] The first, third and fourth defendants seek leave to apply for summary judgment pursuant to r 12.4 of the High Court Rules 2016 (the Rules). They say none of the causes of action against them in the statement of claim can succeed as they are time-barred under the Limitation Act 2010 (the Act).3
[4] The Trust opposes the application and says the defendants should not be granted leave to apply for summary judgment because:
(a)the defendants have no prospect of establishing the Trust’s claims cannot succeed; and
(b)granting the defendants leave to apply for summary judgment would risk a miscarriage of justice as the Trust intends to seek further discovery, make further interlocutory applications and amend its pleadings, and it should not have to answer a summary judgment application at this time.
[5]The primary issues arising are:
(a)What are the acts or omissions upon which the Trust’s claims are based for the purposes of ss 11 and 14 of the Act?
1 For convenience I refer throughout this judgment to the plaintiffs as “the Trust”.
2 A claim against the third defendants to recover the advances as a debt is not pursued.
3 Limitation Act 2010, ss 11 and 14.
(b)Did the Trust have late knowledge of its claims, and if so when did the Trust gain or ought reasonably to have gained knowledge of the acts and omissions upon which the claims are based for the purposes of s 14(1)(a) of the Act?
(c)Did the Trust commence this proceeding three years after the late knowledge dates, such that its claims are time-barred under s 11(3)(a) of the Act?
(d)Would the granting of leave to apply for summary judgment risk causing a miscarriage of justice?
Background
[6] The Trust was established in 1998 by Mr John Stubbs, then a partner in the first defendant law firm, Tripp Rolleston, and father of the plaintiffs. Mr Stubbs died in 2009. Tripp Rolleston acted for the Trust until 2015.
[7] At material times the trustees of the JM Williamson Family Trust (the third defendants) were the registered owners of a property at 88 Kerrytown Road, Timaru. Tripp Rolleston’s nominee company (TRNL) held a first registered mortgage and the Trust held a second registered mortgage over the Kerrytown Road Property. The Trust’s mortgage secured advances made under a term loan contract of October 2005.
[8] TRNL’s mortgage fell due for repayment in February 2010 but was not repaid. In September 2011, Tripp Rolleston issued a notice under s 119 of the Property Law Act 2007 in respect to the default under the mortgage. The default was not remedied.
[9] On 22 August 2012, Kerrytown Holdings Ltd (KHL) was incorporated with the second defendant as its sole director and shareholder. On 7 September 2012, TRNL transferred the first mortgage to KHL for the full amount owing under it of
$408,603. Contemporaneously, KHL purported to exercise its power of sale as mortgagee in favour of the fourth defendants. The sale price was $412,000. KHL was removed from the Register of Companies on 16 December 2013.
[10] The effect of these transactions was to extinguish the Trust’s mortgage and the Trust has not received any payment of the amount owing to it. Its position is that the transactions amounted to an unlawful scheme by the second to fourth defendants using related parties (including KHL) to artificially create a mortgagee sale situation, sell the Kerrytown Road Property at a substantial undervalue and extinguish the second mortgage without any payment being made to the Trust.4 It is said what occurred was not a genuine mortgagee sale by KHL, as its intention was not to recover its debt, but in substance was a sale by the third defendant to a trustee/beneficiary involving deliberate or reckless breaches of legal and equitable duties owed to the Trust.
[11] The Trust was not given notice of the transfer of TRNL’s mortgage or the subsequent sale of the Kerrytown Road Property. The Trust says it did not learn that its mortgage was extinguished until 2018.
[12] In early July 2018 the Trust instructed a local solicitor, Ngaire Smith, who corresponded with Tripp Rolleston on the Trust’s behalf. The correspondence included a letter of 7 September 2018 in which Ms Smith wrote:
On what basis did [TRNL] agree to transfer mortgage A353046.2 to [KHL] in 2012 rather than discharge the mortgage upon receipt of an agreed payment from the Williamsons, bearing in mind that (1) Tripp Rolleston acted for both [TRNL] and the [Trust] at that time, (2) Alfred Williamson was an original borrower in default and a registered proprietor of the secured property, (3) Alfred Williamson was the sole director and shareholder of [KHL], (4) it was reasonably foreseeable that a transfer of a mortgage in default would enable the transferee to do exactly what occurred, namely exercise its power of sale of the property which consequently removed the [Trust’s] second mortgage leaving that lending unsecured, and (5) the purchaser of the property, James Williamson, was also an original borrower in default and registered proprietor of the secured property.
[13] Ms Smith also wrote to the law firm Saunders & Co, which had acted for KHL and the fourth defendants, in respect of the transactions. In a letter of 3 December 2018 Ms Smith wrote:
I note from a historical search of the title that on 7 September 2012, the [TRNL] mortgage was transferred to [KHL]. On the same day [KHL] exercised its power of sale under that mortgage and transferred the property to James and Thea Williamson. As a result of that transaction, the [Trust] mortgage was extinguished. I note that the relevant dealings were signed in Landoline on 7 September 2012 by Peter Hutt of
4 The Kerrytown Road Property had a government valuation as of 7 September 2012 of $880,000.
Tripp Rolleston Lawyers for [TRNL] and David Lang of your office for [KHL] and James and Thea Williamson.
…
In addition, I am advised by Peter Hutt that the first mortgage to [TRNL] was repaid in full on or about 7 September 2012 and so at the time the mortgage was transferred to your client and the power of sale exercised by it, the mortgagor was not in default under the mortgage, and/or the 20 working day notice period under s120 Property Law Act 2007 had not been given. In the circumstances, it appears that the exercise of the power of sale and the resultant extinguishment of the second mortgage was unlawful.
[14] Between May 2019 and November 2021 the Trust pursued Law Society complaints against Mr Hutt of Tripp Rolleston and Mr Lang of Saunders & Co in respect to their involvement in the transactions, but ultimately those complaints were not upheld. In respect to Mr Hutt, the Trust’s email to the Law Society of 8 May 2019 summarised the position as follows:
So in summary “the Bidwill Stubbs Trust lost its second mortgage security over the [Kerrytown Road Property] without apparent notice to the trustees or any advice given to the trustees as to what steps they needed to take to call up the lending secured by the mortgage or take steps to otherwise secure the lending through the actions of Tripp Rolleston and Saunders & Co over the transfer of the [TRNL] first mortgage, as a result of which there is a loss of
$184,500 (+ interest).”
[15] In December 2021, the Trust instructed counsel who corresponded with Tripp Rolleston concerning the provision of its file. The Trust’s counsel then wrote to Tripp Rolleston on 27 April 2022, setting out the basis of the Trust’s claim against the firm. After Tripp Rolleston’s lawyers responded denying liability, this proceeding was commenced on 13 June 2023.
[16] The amount owing to the Trust, previously secured by its mortgage, now exceeds $330,000. All causes of action relied upon by the Trust against the first, third and fourth defendants include a claim for monetary compensation in a sum not less than the value of the loans and interest secured by the mortgage as of 7 September 2012.
The requirement for leave
[17] Pursuant to r 12.4(3), a defendant’s application for summary judgment may be made either at the time the statement of defence is served on the plaintiff or later with
leave of the Court. The defendants require leave to apply for summary judgment as they did not make application at the time they served their statements of defence.
[18] In Stephens v Barron the Court of Appeal noted that an application for leave to pursue an application out of time is not merely a formality and must be dealt with as a prior step to the merits of the application for summary judgment.5
[19] The guiding principle on an application for leave to apply for summary judgment is the just, speedy and inexpensive determination of the proceeding.6 Factors relevant to the exercise of the Court’s discretion to the grant of leave have been identified as:7
(a)whether the delay in making the application is satisfactorily explained;
(b)the merits of the applicant’s case for summary judgment deserving determination at a later time than prescribed by the Rules; and
(c)any risk of miscarriage of justice.
[20] It is important to reflect upon what a defendant must establish to obtain summary judgment. The principles that apply to a defendant’s summary judgment application were set out by Elias CJ in Westpac Banking Corporation v MM Kembla New Zealand Ltd as:8
(a)The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually this will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim.
(b)An application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need
5 Stephens v Barron [2014] NZCA 82, (2014) 21 PRNZ 734 at [13].
6 Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 2662 at [16].
7 Tip Top Ice Cream Co Ltd v Polarland Ltd (2002) 7 NZBLC 103,564 (HC) at [28].
8 Westpac Banking Corporation v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA), (2000) 14 PRNZ 631.
to be ascertained by the Court and confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment able to be properly arrived at only after a full hearing of the evidence.
(c)The Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment is not to be arrived at on a fine balance of the available evidence as would be appropriate at trial.
(d)The residual discretion of the Court to refuse summary judgment would be properly invoked to avoid the oppression which would otherwise result if an application by a defendant for summary judgment would pre-empt a plaintiff exercising the right to amend the pleadings.
(e)Summary judgment should not be applied for unless the substantive merits of the case are clear and capable of summary disposal.
The Trust’s pleadings
[21] It is pleaded that Tripp Rolleston breached fiduciary duties as the Trust’s solicitors. The allegations of breach can be summarised as:
(a)Failing to advise the Trust of an allegation made in November 2010 on behalf of the third defendant that Tripp Rolleston had a conflict of interest in acting for both the Trust and the third defendant, and that if the Trust pursued the mortgage a claim would be made against Tripp Rolleston.
(b)Continuing to act for the Trust in respect to the Trust’s loan and mortgage, including in December 2010 advising solicitors who had then been engaged to act for the Trust to refrain from issuing a s 119 Property Law Act notice to the third defendant.
(c)Taking steps in June 2012 to pursue recovery of the loans secured by TRNL’s mortgage.
(d)Preferring its interests over those of the Trust in failing to follow up instructions of the Trust to pursue recovery of its loan to the third defendant.
(e)Failing to advise the Trust:
(i)of the assignment of TRNL’s mortgage to KHL;
(ii)that it had a conflict of interest;
(iii)of the risks to the Trust associated with the transfer of TRNL’s mortgage; and
(iv)that the Trust should take independent advice.
[22] The Trust pleads that the alleged breaches of fiduciary duty by Tripp Rolleston caused it loss arising from the lost opportunity to obtain advice as to steps that could have been taken to prevent the sale of the Kerrytown Road Property and extinguishment of the Trust’s mortgage, or to take immediate steps to recover loss arising from them.
[23] Although the second defendant has not sought leave to apply for summary judgment it is instructive to describe the claim against him. The Trust alleges dishonest breach of fiduciary and statutory duties owed to the Trust and/or dishonest assistance or inducement of breach of duties owed by KHL. Relevantly, the breaches are said to be:
69In selling the Kerrytown Road Property to the fourth defendants (who were a related party of KHL) immediately after it received an assignment of the TRNL First Mortgage, ...
70KHL’s breach of duties pleaded above … occurred as a result of a scheme carried out by the second defendant … in his capacities as a director of KHL and trustee of the [third defendant] and by the fourth
defendant … in his capacities as a trustee of the [third defendant] and personally as purchaser from KHL:
…
[24] The Trust’s claim against the third defendants is also for dishonest assistance and/or inducement of breach of duties owed by KHL, mirroring the claim against the second defendant.
[25] The Trust’s claim against the fourth defendants is receipt of the Kerrytown Road Property with knowledge of the breaches of duty of the first to third defendants. It is pleaded this way:
78 By purchasing the Kerrytown Road Property from KHL at approximately half its market value, the Fourth Defendants received the property with actual knowledge of the breach of fiduciary duty, including through James Williamson’s involvement in the Scheme.
What are the acts or omissions upon which the Trust’s claims are based for the purposes of ss 11 and 14 of the Act?
[26]Sections 11 and 14 of the Act relevantly provide:
11 Defence to money claim filed after applicable period.
(1)It is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least 6 years after the date of the act or omission on which the claim is based (the claim’s primary period).
(2)However, subsection (3) applies to a money claim instead of subsection (1) (whether or not a defence to the claim has been raised or established under subsection (1)) if—
(a)the claimant has late knowledge of the claim, and so the claim has a late knowledge date (see section 14); and
(b)the claim is made after its primary period.
(3)It is a defence to a money claim to which this subsection applies if the defendant proves that the date on which the claim is filed is at least—
(a)3 years after the late knowledge date (the claim’s late knowledge period); or
(b)15 years after the date of the act or omission on which the claim is based (the claim’s longstop period).
...
14 Late knowledge date (when claimant has late knowledge) defined.
(1)A claim’s late knowledge date is the date (after the close of the start date of the claim’s primary period) on which the claimant gained knowledge (or, if earlier, the date on which the claimant ought reasonably to have gained knowledge) of all of the following facts:
(a)the fact that the act or omission on which the claim is based had occurred:
(b)the fact that the act or omission on which the claim is based was attributable (wholly or in part) to, or involved, the defendant:
(c)if the defendant’s liability or alleged liability is dependent on the claimant suffering damage or loss, the fact that the claimant had suffered damage or loss:
(d)if the defendant’s liability or alleged liability is dependent on the claimant not having consented to the act or omission on which the claim is based, the fact that the claimant did not consent to that act or omission:
(e)if the defendant’s liability or alleged liability is dependent on the act or omission on which the claim is based having been induced by fraud or, as the case may be, by a mistaken belief, the fact that the act or omission on which the claim is based is one that was induced by fraud or, as the case may be, by a mistaken belief.
(2)A claimant does not have late knowledge of a claim unless the claimant proves that, at the close of the start date of the claim’s primary period, the claimant neither knew, nor ought reasonably to have known, all of the facts specified in subsection (1)(a) to (e).
(3)The fact that a claimant did not know (or had not gained knowledge), nor ought reasonably to have known (or to have gained knowledge), of a particular fact may be attributable to causes that are or include fraud or a mistake of fact or law (other than a mistake of law as to the effect of this Act).
[27] The Trust’s claims against the first, third and fourth defendants are money claims for the purposes of the Act.
[28] Recently, in Rea v Auckland City Council the Court of Appeal considered the application of ss 11 and 14 of the Act and how those provisions are to be interpreted.9 Rea concerned a claim against a local authority that had issued a code compliance certificate for a residential building later found to have defects. The certificate was
9 Rea v Auckland Council [2024] NZCA 313, [2024] 3 NZLR 242. Leave to appeal to the Supreme Court was refused in Rea v Auckland Council [2024] NZSC 148.
issued in 2013, the primary period expired in 2019 and the proceedings were filed in September 2021.
[29] The Council brought a strike out application in the High Court based on a limitation defence. The plaintiffs asserted the claim was not time-barred as it had been brought within the late knowledge period. They argued it was not until March 2019 that they had sufficient knowledge of the defects because previous reports they had received concerning the defects had been negligently prepared. They appealed the decision of the High Court striking out their claim.
[30] The Court of Appeal analysed the history of the Limitation Act 2010 Act and said:
[34] Parliament’s intention was to clarify and simplify the limitation regime. The stated purpose of the current Limitation Act is to encourage claimants to make claims for monetary or other relief without undue delay by providing defendants with a defence to stale claims. The accrual of a cause of action as the mechanism for starting time running was abandoned in favour of a single formula applying to all money claims, namely the act or omission on which the claim is based. The “primary period” of six years ... runs from the date of the act or omission on which the claim is based.
(footnotes omitted)
[31] The Court considered the meaning of the phrase “act or omission on which the claim is based” (which appears in ss 11 and 14 of the Act) and concluded:10
... for the purposes of s 14(1)(a), the words “act or omission on which the claim is based” have their plain and ordinary meaning. There is no reason to add any gloss to include the circumstances in which the act was done. We therefore reject Mr Rainey’s submission that a claimant needs to know all the facts necessary to show that the Council had breached the duty to exercise reasonable skill and care in the performance of its building-control functions under the Building Act. All that was required under s 14(1)(a) in this case was knowledge that the [code compliance certificate] had been issued.
[32] The Court also held there was no requirement for a claimant to have actual knowledge of a causal link between the defendant’s act or omission and their loss or damage as follows:
[67] For the purposes of s 14(1), a claimant will have constructive knowledge of the requisite facts if they have information that would lead a
10 At [56].
reasonable person to begin investigating whether a right to claim exists. They cannot close their eyes to the obvious. They cannot postpone taking action if a reasonable person in their circumstances would take action.
[33] The Court of Appeal held the claim against the Council was time-barred as the plaintiffs had gained late knowledge of all the relevant facts by 23 March 2017, which was the date they received a report as to the extent of remedial work required to the building. The Court said:
[69] We therefore agree with Mr Weston that the information contained in these reports meant that, by 23 March 2017 at the latest, Mr and Mrs Rea had either actual or constructive knowledge of all the relevant facts, namely that: the [code compliance certificate] had been issued on 18 October 2013; the Council had issued the [code compliance certificate]; there was damage to the property that was more than minor; and repairs would be required including, with some specificity, what those repairs would be. We consider it beyond argument that this information would have led a reasonable person to begin investigations, including taking legal advice. Had they sought legal advice, there can hardly be any doubt that they would have learned that the matter required urgent attention because of the limitation period.
...
[71] We conclude that Mr and Mrs Rea gained knowledge of the facts required for late knowledge by 23 March 2017 at the latest. The late knowledge period therefore expired, at the latest, on 23 March 2020 and the claim against the Council is time-barred.
[34] Here, the parties agree that the primary period for the purposes of s 11 of the Act commenced on 7 September 2012 (when the Trust’s mortgage was extinguished) and expired on 7 September 2018, but there is a difference between them as to what the act or omission is upon which the Trust’s claims are based.
[35] Tripp Rolleston argues that upon the Trust’s mortgage being extinguished on 7 September 2012 the essential elements existed for the Trust to bring its claims. It says it is the extinguishment of the mortgage that the Trust pleads caused its loss and that is the act or omission upon which the claims are based.
[36] The third and fourth defendants say the alleged breaches of duty by KHL, in respect of which it is said the third and fourth defendants participated, all occurred upon the sale of the Kerrytown Road Property by KHL on 7 September 2012. They contend the act or omission upon which the claims against them is based is the sale of the property by KHL to them.
[37] The Trust argues the position is more subtle than the defendants allow and the conduct of which the Trust complains, and the acts or omissions upon which the claims are based, are:
(a)in the case of Tripp Rolleston that it acted in its own interest to the detriment of the Trust; and
(b)in respect to the other defendants, that they implemented an unlawful scheme with the purpose of benefitting themselves at the expense of the Trust.
[38] In considering the meaning of the act or omission formula, the Court of Appeal in Rea considered the words must have their plain and ordinary meaning and there was no reason to add “any gloss to include the circumstances in which the act was done”.11 The Court of Appeal referred to the limitation provision in s 43(5) of the Fair Trading Act 1986, which uses the same formula and in respect to which the Supreme Court said in Commerce Commission v Carter Holt Harvey:12
Lord Nicholls himself said that to start time running there needed to be “something which would reasonably cause [the plaintiff] to start asking questions about the advice he was given”. That is a very low threshold. Lord Walker spoke narratively of time starting to run when the claimant’s knowledge about his claim was “far from complete”. Both Lord Scott and Lord Brown spoke of the claimant needing to know “the essence of the act or omission” to which his damage was attributable; and “the substance of what ultimately comes to be pleaded as his case in negligence”. Lord Mance said that actual knowledge involved knowing “enough to make it reasonable to [begin to] investigate whether or not there is a claim”.
(footnotes omitted)
[39] I am satisfied there is a strong argument that the act or omission upon which the Trust’s claim against Tripp Rolleston is based is the transfer of the TRNL mortgage to KHL, and in the case of the third and fourth defendants the sale of the Kerrytown Road Property by KHL to the fourth defendants. They are the acts which resulted in the extinguishment of the Trust’s mortgage and to which the Trust’s loss is attributable.
11 Rea v Auckland Council, above n 9, at [56].
12 Commerce Commission v Carter Holt Harvey Ltd [2009] NZSC 120, [2010] 1 NZLR 379 at [37].
[40] Ms Grieve submits that Rea is distinguishable because there the “mere facts” pointed to the Council’s negligence, and it was “obvious” that the Council had approved defective work.13 She submits that here the transactions were complex, and the Trust could not have complained about them had they been executed lawfully.
[41] I do not consider the transactions were complex but that is incidental. None of the complexity of the transactions, that they could in other circumstances have been “executed lawfully”, or that together they might be characterised as a “scheme” alter the fact that the cause of the Trust’s loss, and the matter of which the Trust complains, was the extinguishment of its mortgage.
Did the Trust have late knowledge of its claims, and if so when did the Trust gain or ought reasonably to have gained knowledge of the claims for the purposes of s 14(1)(a)-(e) of the Act?
[42] The Trust relies only upon s 14(1)(a) and says that it had late knowledge of the act or omission upon which its claims are based. Ms Grieve says that upon the expiry of the primary period on 7 September 2018 the Trust had knowledge it had suffered loss, was suspicious of how that had occurred and was making enquires. She submits that it was only later that the Trust became aware of the conduct of Tripp Rolleston and the Williamson parties of which the Trust now complains.
[43] In the case of Tripp Rolleston, the Trust says it was not aware that a threat was made against the firm by the third defendants in 2010 until after the expiry of the primary period, and the significance of that threat was not understood until the Trust obtained counsel’s advice in early 2022. Ms Grieve submits prior to that the Trust could not have known exactly how Tripp Rolleston’s conduct could be impugned.
[44] In the case of the claims against the third and fourth defendants, Ms Grieve argues the Trust required knowledge of the fact that the Kerrytown Road Property had been sold at an undervalue, because the sale at an undervalue was a critical element of the scheme. She says the Trust became aware of the sale price in September 2020 when it was referred to by Mr Hutt in his response to the complaint against him to the Law Society, but the Trust took little notice of it because the Law Society had already
13 Rea v Auckland Council, above n 9.
found in respect to the complaint against Mr Lang that there was no issue with the transactions.
[45] I am unable to accept the Trust’s submissions. I have already found there is a strong case the acts or omissions upon which the claims are based are the transfer of TRNL’s mortgage and the sale of the property to KHL which resulted in the extinguishment of the Trust’s mortgage. The Trust was aware of those transactions by September 2018 at the latest, which is when Ms Smith wrote to Tripp Rolleston identifying the transactions and raising the Trust’s concerns about them.
[46] It is also difficult to see how the Trust could not reasonably have known how Tripp Rolleston’s conduct could be impugned. When Ms Smith wrote to Tripp Rolleston in September 2018 the Trust was aware that the firm had acted for both the Trust and the third defendant and Ms Smith asserted:
... it was reasonably foreseeable that a transfer of a mortgage in default would enable the transferee to do exactly what occurred, namely exercise its power of sale of the [Kerrytown Road Property] which consequently removed the [Trust’s] second mortgage leaving that lending unsecured, ...
[47] Similarly, it is difficult to see how the Trust can argue it could not reasonably have been expected to know that the sale of the Kerrytown Road Property was at undervalue when no enquiries were about that. Upon what is presently before me, I do not think there can be any doubt the fact the sale was at an undervalue could readily have been ascertained from information available to the Trust in 2018.
[48] For those reasons, I find it is plainly arguable the Trust had knowledge of the acts or omissions upon which its claims are based by at least 7 September 2018.
Did the Trust file this proceeding three years after the late knowledge dates, such that its claims are statute barred under s 11(3)(a) of the Act?
[49] It follows from what I have said above that the answer to this issue is likely to be yes. If the Trust had knowledge of the acts or omissions upon which the claims are based by 7 September 2018 then it ought to have commenced its proceeding on or before 6 September 2021. The proceeding was not commenced until 13 June 2023 and would on that basis be time-barred.
Would the granting of leave to apply for summary judgment risk causing a miscarriage of justice?
[50] The third and fourth defendants’ position is that this application was not brought earlier because the parties needed to undertake discovery to determine if there was any answer to the limitation defences. There is no submission made that the Trust has been prejudiced by delay in bringing this application. That is not surprising when the Trust’s position is that it should not yet be required to answer a summary judgment application as it requires further discovery, will make further interlocutory applications, and amend its pleadings.
[51] The Trust submits that there is a risk of a miscarriage of justice if the defendants are granted leave to apply for summary judgment, because there has been fraudulent concealment of key aspects of the transactions and the Trust may amend its claims to allege actual fraud on the part of the defendants. Related to this, Ms Grieve argues that it is not sufficient that the defendants show an arguable or even a good case for their limitation defences but they must establish that the Trust’s response to them is clearly untenable. She refers to several decisions as authority that a limitation defence should not be determined on a summary judgment application.14
[52] Several of the authorities to which Ms Grieve referred were decided under the Limitation Act 1950 and are of little assistance for that reason. It is also not uncommon for applications to be made for strike out or summary judgment on the ground a claim is time-barred. Unlike many such cases, here there is clear written evidence of the Trust’s actual or constructive knowledge of all relevant facts by 7 September 2018, which supports the defendants’ contention that the proceeding can be determined upon a summary judgment application.
[53] I do not need to address the Trust’s arguments that aspects of the transactions were concealed, nor do I consider the Trust’s position would be assisted if they amended their claim to allege actual fraud. That is because s 48 of the Act, which
14 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721; Bridgewater Bay Apartments v Far North District Council [2016] NZHC 1506 at [27]–[28]; Parbery v Parbery [2012] NZHC 1319 at [32]; Comfortplus Ltd (in liq) v Portsmouth Investments Ltd (in liq) [2012] NZHC 886 at [36], [54] and [83].
deals with fraudulent concealment, will not assist the Trust if it had knowledge of all the facts necessary to bring its claims in September 2018.
[54]The interests of justice favour granting the defendants’ application because:
(a)the delay in applying for summary judgment has not prejudiced the Trust;
(b)there is merit in the defendants’ position that the claims are time-barred;
(c)I do not see anything in the circumstances of this case or in the Trust’s intention to make further applications or amend its pleading that would suggest the defendants’ applications for summary judgment cannot succeed; and
(d)allowing the defendants to apply for summary judgment will not result in a miscarriage of justice but has the potential to save all parties very significant costs.
Result
[55] The application of the first, third and fourth defendants is successful, and they are granted leave to apply for summary judgment under r 12.4 of the High Court Rules. I direct that any such application should be filed within 15 working days of the release of this judgment.
[56] The first, third and fourth defendants would in the usual course be entitled to costs. If there is any disagreement about that, memoranda (no longer than six pages) may be filed within 14 days and I shall determine costs on the papers.
O G Paulsen Associate Judge
Solicitors:
Anthony Harper, Christchurch Harmans, Christchurch
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