Pomeroy v Belasco
[2023] NZHC 2606
•20 September 2023
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2023-442-10
[2023] NZHC 2606
BETWEEN KERRYANN ELLENBERGER POMEROY
and RPFT TRUSTEES LIMITED as trustees of the ROBYN POMEROY FAMILY
TRUST
PlaintiffsAND
ROBYN EVELYN BELASCO
First Defendant
GARI LEWIS BELASCO
Second Defendant
Called: 1 September 2023 Appearances:
Mark L Broad for the Trust
R D J Fitchett for the Defendants
Judgment:
20 September 2023
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for summary judgment]
This judgment was delivered by me on 20 September 2023 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
C & F Legal Limited (Mark Broad), Nelson, for the Plaintiff
Rout Milner Fitchett (RDJ Fitchett), Nelson, for the Defendants
POMEROY v BELASCO [2023] NZHC 2606 [20 September 2023]
Introduction
[1] The plaintiffs, Kerryann Ellenberger Pomeroy and RPFT Trustees Limited, as trustees of the Robyn Pomeroy Family Trust (the Trust), filed an interlocutory application dated 6 April 2023 for an order for summary judgment against the first defendant, Robyn Evelyn Belasco (Ms Belasco) and Gari Lewis Belasco (Mr Belasco) the second defendant. The orders sought in the application are:
(a)summary judgment against the defendants in the sum of $402,337.10;
(b)interest in accordance with clause 4 of the Deed of Acknowledgment of Debt at the rate of 8 per cent per annum from 3 January 2023 (14 days after the date of demand being 19 December 2022, excluding the date of delivery of the demand) until the date on which the judgment is paid, provided no interest shall be payable if the judgment sum is paid in full by 19 June 2023 (being six months after the date of demand);
(c)costs.
[2] Mr Belasco filed a notice of opposition dated 29 August 2023 opposing only the order sought for costs.
[3] The matter was called before the Court on 1 September 2023. This judgment deals with granting summary judgment in respect of the debt owing by the first and second defendants to the Trust together with interest, being the orders sought at [1](a) and (b), and with costs.
Background
[4] On or about 11 January 2018, Ms Belasco and Mr Belasco, as debtors, and the then trustees of the Trust, as creditor, entered into a Deed of Acknowledgment of Debt (the Deed) for an advance of $402,337.10 by the Trust to Ms Belasco and Mr Belasco. The material terms of the Deed as far as is relevant were:
(a)Ms Belasco and Mr Belasco (the debtors) acknowledged they were indebted to the Trust in the sum of $402,337.10 (the debt);
(b)the debtors would repay the debt on demand, provided that demand shall not be made prior to the death of Ms Belasco or the separation of Ms Belasco and Mr Belasco;
(c)the debt is interest-free;
(d)if the debtors failed to make any payments on demand being made by the Trust to the debtors and the default continues for a period of 14 days, the debtors shall pay the Trust penalty interest at the rate of 8 per cent per annum on the debt until the date of repayment in full of the debt, such penalty interest to be calculated on a daily rate. Provided that the Trust agreed to waive all interest payable in respect of the amount demanded if payment of the amount demanded is received by the Trust within six months of demand having been made;
(e)where more persons than one are covenanting parties under the Deed the covenants are to bind them jointly and each of them separately;
(f)the Deed is subject to New Zealand law.
[5] On or about 11 January 2018, the Trust made the advance to Ms Belasco and Mr Belasco. On about 17 June 2022 Ms Belasco and Mr Belasco separated and have remained separated.
[6] On 19 December 2022 the Trust and their solicitors made written demand on Ms Belasco and Mr Belasco by email for repayment of the debt. The debt remains outstanding.
[7] It is not disputed by either Ms Belasco or Mr Belasco that the debt is repayable in terms of the Deed, and has not been repaid. Ms Belasco and Mr Belasco own a family home in the United Kingdom (the property) and the proceeds of sale of this property are required to enable them to repay the debt to the Trust.
[8] The Trust’s application for summary judgment in respect of the debt, together with interest, is unopposed. Summary judgment is given as sought at [25](a) of this judgment.
[9] Counsel for Ms Belasco has made a submission as to costs dated 31 August 2023, seeking a costs order against Mr Belasco for scale 2B costs of $10,994 together with disbursements. Counsel for Mr Belasco has made a submission as to costs dated 1 September 2023 seeking an order that costs should lie where they fall.
Ms Belasco’s submissions
[10] Mr Broad, for the Trust, submits that as summary judgment is to be given in favour of the Trust, costs should follow the event ordered on a 2B basis. He submits that Ms Belasco has taken no steps in the proceedings, Mr Belasco admits he owes the debt and the Trust is therefore the successful party in the proceeding. He submits the usual principle that a party who is unsuccessful with respect to a proceeding on an interlocutory application should pay the costs to the party who succeeds should apply in this case.
[11] Mr Broad outlines the sequence of events leading up to the issue of the proceedings as follows:
(a)on 19 December 2022 the plaintiffs through their solicitors made demand on Ms Belasco and Mr Belasco for repayment of the debt;
(b)on 6 January 2023, Mr Belasco wrote to the Trust’s solicitors advising that: “There is a financial hearing in May. Once that has been heard then all the parties will know more information and hopefully finances can be dealt with from that point”;
(c)on 18 January 2023 the Trust’s solicitors wrote to Mr Belasco in response to his 6 January 2023 email. No further correspondence was received from Mr Belasco regarding the demand;
(d)as Ms Belasco and Mr Belasco failed to repay the debt and the proceedings were issued on 6 April 2023. At the time of issue of the proceedings, the Trust was not satisfied with the steps taken by Ms Belasco and Mr Belasco to address repayment of the debt and there was an acrimonious unresolved relationship breakdown between them;
(e)Mr Belasco did not correspond with the Trust’s solicitor or offer a mortgage over the property until Mr Belasco was served with these proceedings.
[12] Mr Broad submits the Trust is entitled to elect its remedies, and the Trust has no confidence that Mr Belasco will grant a mortgage over the property or co-operate with the Trust in that regard and accordingly it was necessary to issue the proceedings.
[13] Mr Broad submits that there is a problem with a mortgage being granted over the property. The terms of the Deed provide for the granting of a mortgage to be an on-demand mortgage, prepared by solicitors in Auckland. He makes the point that how the usual terms of an on-demand mortgage is prepared by solicitors in Auckland translate into usual terms for English on-demand mortgages appears to be uncertain and the interplay between New Zealand law (which governs the Deed) and English law (which governs any mortgage) would need to be factored into any mortgage as the property is situated in England and would at the very least appear to require negotiation and settlement of the terms between the parties.
[14] Mr Broad submits that the financial matters between Ms Belasco and Mr Belasco has no bearing on the fact the debt is owed to the Trust and is repayable immediately.
[15] Mr Broad rejects Mr Belasco’s allegations that the Trust, with Ms Belasco, manipulated the situation unfairly to financially disadvantage Mr Belasco and the Trust is using these proceedings for an improper purpose. He submits the Trust is an entirely separately entity from Ms Belasco and is controlled by two trustees, the first being Ms Belasco’s mother, Mrs Pomeroy, and an independent trustee, RPFT Trustees
Limited. He submits the trustees are required to act in the best interests of all beneficiaries of the Trust.
[16] Mr Broad submits that the Trust has made a reasonable offer to settle the proceedings and relies on the letter from the Trust’s solicitors to Mr Belasco of 24 July 2023. He submits the offer was open for acceptance until 28 July 2023, but Mr Belasco declined to settle on those terms.
[17] In summary, Mr Broad submits that no settlement agreement has been reached between Ms Belasco and Mr Belasco regarding their financial affairs, or between the Trust and Ms Belasco and Mr Belasco regarding repayment of the debt. He submits that the financial matters between Ms Belasco and Mr Belasco have no bearing on the fact the debt is owed to the Trust and is repayable immediately.
[18] Mr Broad submits therefore that the proceedings were properly issued and the Trust is entitled to costs on a 2B basis.
Mr Belasco’s submissions
[19] Mr Fitchett, for Mr Belasco, submits that rather than costs following the event, costs should lie where they fall. He submits that the Trust is using these proceedings for an improper purpose and to obtain a collateral advantage and exert financial pressure in respect of the United Kingdom proceedings between Ms Belasco and Mr Belasco. As evidence of the improper purpose, Mr Fitchett points to the following:
(a)the Trust had alternative and more cost-effective measures to it to resolve the matter and secure a financially better outcome. Judgment in these proceedings will constitute an event of default under Ms Belasco and Mr Belasco’s mortgage, resulting in the Trust being unsecured creditors;
(b)Mr Belasco offered a mortgage but it appears that Ms Belasco (who, together with Ms Belasco and Mr Belasco’s infant son, is the sole
beneficiary of the Trust) refused. The Trust sought to proceed with the claim regardless of Mr Belasco having so offered a mortgage;
(c)the Trust admitted that it sought $50,000 in costs to resolve these proceedings;
(d)the Trust made the claim against Ms Belasco and Mr Belasco severally rather than jointly, even though the Deed was entered into in a joint capacity;
(e)the Trust is seeking that Mr Belasco alone be responsible for the costs in these proceedings and additional interest, despite being the only party to have taken steps and, on the evidence of the Trust, engage with the Trust in trying to resolve these proceedings;
(f)improperly seeking to have Mr Belasco accepts its proposed factual findings to better protect the Trust (and Ms Belasco as sole adult beneficiary of the Trust) from a claim under s 182 of the Family Proceedings Act 1990.
[20] Mr Fitchett submits that the Trust issued these proceedings notwithstanding they had real or constructive knowledge that the property was on the market thus satisfying the criteria, originally stipulated by the Trust, to avoid proceedings.
[21] In relation to the Trust’s offer of 24 July 2023 to resolve the proceedings, Mr Fitchett submits:
(a)the offer was not communicated to counsel but was instead sent direct to the United Kingdom representatives, which accordingly is evidence that these proceedings are being used as a tool in the United Kingdom proceedings to pressure Mr Belasco;
(b)the offer was onerous to Mr Belasco, including:
(i)Mr Belasco alone being responsible for costs on a 2B basis;
(ii)Mr Belasco being responsible for “additional interest”.
[22] Mr Fitchett submits that equity requires that costs lie where they fall. In support of this, he makes the following submissions:
(a)The Trust is not truly independent of Ms Belasco, as evidenced by:
(i)the Trust paying her UK legal fees;
(ii)the Trust should be inferred to have full knowledge of all facts known to Ms Belasco as evidenced by:
A.the Trust knowing that Mr Belasco was unrepresented when demand for repayment of the debt was made;
B.the Trust’s counsel corresponding direct with the UK representation; and
C.on the Trust’s own evidence, Ms Belasco has taken no steps to defend the proceedings.
(b)Ms Belasco, as the Trust’s sole adult beneficiary, has refused to reduce the sale price of the property, making viewings difficult and, with assistance of representations made by or on behalf of the Trust, has succeeded in having the property taken off the market and now lives there, refusing to have the property re-listed. This is in the context of the Trust initially requiring the property to be sold and subsequently seeking interest and costs in addition to the debt owed.
(c)Ms Belasco is the sole beneficiary of all costs and interest incurred by Mr Belasco and Ms Belasco, and has taken steps to ensure that interest and costs have continued to accrue, knowing that Mr Belasco does not have the resources to satisfy the debt without recourse to the property.
Accordingly, to allow Ms Belasco to benefit from her own actions is inequitable.
[23] Mr Fitchett submits that while the remedies open to the Trust remain at their discretion, there has been no indication the Trust intends to obtain an order for sale of the property and has not sought to obtain Ms Belasco’s consent to the sale of the property. Mr Fitchett points to the fact that the Trust has agreed in principle to forgive the debt in respect of Mr Belasco on the basis that he compromise his claim to relationship property in the United Kingdom, and submits that these proceedings are not about recovery of the debt from Ms Belasco and Mr Belasco, but are about securing for Ms Belasco a more favourable settlement of the relationship property in the United Kingdom by exploiting inconsistencies between the jurisdictions.
Result
[24] I am of the view that costs in this matter should lie where they fall. The reasons for this are as follows:
(a)It must have been obvious to the Trust that funds to repay the debt needed to come from sale of the property. Under the Deed, the Trust had a right to require a memorandum of mortgage to be registered over the property and, while Mr Broad points out there may have been some work to do to settle the final terms of that mortgage given the differences between New Zealand and English law, the Trust did not seek to investigate this possibility. Nor did the Trust investigate the possibility of registering the United Kingdom equivalent of a caveat over the property. This may have resulted in a more cost-effective solution in terms of securing the debt, rather than seeking to obtain summary judgment against Ms Belasco and Mr Belasco.
(b)Mr Belasco has never denied liability for repayment of the debt. Ms Belasco has not taken any steps in relation to the proceeding. While I do not make a finding that the proceedings are for an improper purpose as alleged by Mr Fitchett, there is clearly a link between the Trust, whose trustees are Ms Belasco’s mother and an independent trustee, and the beneficiaries of which are Ms Belasco, and Ms Belasco and Mr Belasco’s infant son. Proposals that Mr Belasco bear all the
costs of the proceedings when the debt was jointly incurred, point to the relationship between the Trust and Ms Belasco as influencing the proceedings.
(c)The equities of the situation suggest costs should lie where they fall. Mr Belasco is in the invidious position that, as a result of this judgment, summary judgment will be given against him and Ms Belasco for the debt plus interest. The source of repayment of the debt is the property, the sale of which Ms Belasco appears to be impeding. Accordingly, interest under the debt continues to accrue and the ultimate beneficiary of that interest is Ms Belasco as the only adult beneficiary of the Trust.
Orders
[25]I make the following orders:
(a)judgment is given in favour of the Trust against the defendants for:
(i) the debt of $402,337.10;
(ii)interest in accordance with clause 4 of the Deed, at the rate of 8 per cent per annum from 3 January 2023 (being 14 days after delivery of the demand for repayment on 19 December 2022) until the date on which the judgment debt is paid;
(b)the application for an award of costs in favour of the Trust is dismissed, and costs in respect of the Trust’s application shall lie where they fall.
…………………………….. Associate Judge Taylor
0
0
1