Prescott v Auckland Council
[2013] NZHC 1799
•17 July 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-000718
CIV-2013-404-000973 [2013] NZHC 1799
BETWEEN PETER RICHARD PRESCOTT
Appellant
AND
AUCKLAND COUNCIL Respondent
Hearing: 4 July 2013 Appearances:
Appellant in person
J Hilario for RespondentJudgment:
17 July 2013
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Wednesday 17 July 2013 at 4.00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
PRESCOTT v AUCKLAND COUNCIL [2013] NZHC 1799 [17 July 2013]
Introduction
[1] On 21 January 2013, Judge A A Sinclair dismissed Mr Prescott’s claim against the Auckland Council to recover rates paid by the mortgagee of a property situated at 14A Target Road, Totara Vale, Auckland, in the sum of $3,824.54, together with a further sum described as accounting fees. On 14 February 2013, Judge AA Sinclair ordered Mr Prescott to pay costs to the Council in the sum of
$5,347.50. He now appeals against both decisions.
Factual background
[2] On 4 April 2011, the Auckland Council issued a rates invoice for the period 1
July 2010 to 30 June 2011 addressed to Commercial Logistics Limited and JA Aston as trustees of the Capricorn Trust, the owner of a property situated at 14A Target Road, Totara Vale. The invoice was for the sum of $3,417.41. The invoice stated that the rates as shown were due and payable by Commercial Logistics Limited and JA Aston as the ratepayer to the Auckland Council and had to be paid on or before the due date shown to avoid a 10 per cent penalty. The last day for payment was specified as 10 May 2011.
[3] Peter Richard Prescott is a director of Commercial Logistics Limited. He sent the rates invoice back to the Auckland Council with both a $1.00 and five cent stamp attached. He had stamped (using a printed stamp) the words “NOT NEGOTIABLE NON-TRANSFERABLE WITHOUT RECOURSE” on the invoice. In addition, he had also stamped the invoice with the following printed stamp:
INCHOATE INSTRUMENT ACCEPTED FOR VALUE RETURNED COMPLETE
PAY the sum certain of ONE NEWZEALAND DOLLAR EXACTLY PAYABLE AT: 14A Target Road, Totara Vale, Auckland
AT 17.00 hrs without delay on the 28 day of April 2011
P.P.Law Public Acts: 1908 Number 15 s9(1)(2), s 20(1)(2), s39 (1)(2)(4) &
s42, s54(a) s68(7) and 1971 Number 51 s78(2), s54(2)
Mr Prescott had signed his name next to the initials “P.P.”.
[4] The Council took the view that, notwithstanding the return of the rates invoice with the postage and printed stamps affixed, the rates had not been paid.
Accordingly, the Council made demand of Sovereign Limited, the mortgagee of the property, pursuant to s 62(1)(c) of the Local Government (Rating) Act 2002, which provides that where an owner defaults in paying rates, the local authority may recover the amount of the unpaid rates as a debt from the first mortgagee. The outstanding rates were accordingly paid by Sovereign Limited and debited to the owner’s account. In the District Court, Mr Prescott sought recovery of the money paid by the mortgagee in the sum of $3,824.54 and debited to the owner’s account together with a further sum described as accounting fees.
District Court decision
[5] After reciting the factual background, Judge A A Sinclair firstly considered whether Mr Prescott had standing to bring the claim. Although Judge Sinclair accepted that Mr Prescott was entitled to pay the rates, she was of the view that the claim for recovery of the rates paid by the mortgagee was one properly to be pursued by the parties suffering the loss, being the ratepayer (Commercial Logistics Limited and JA Aston as trustees of the Capricorn Trust) from whose account the rates were deducted by the mortgagee and not by Mr Prescott in his personal capacity. In those circumstances, Judge Sinclair found that Mr Prescott had no authority to pursue the claim in his own name.
[6] The Judge then stated that if she was wrong in her finding as to Mr Prescott’s standing, she would consider whether, as alleged by Mr Prescott, the rates had been paid in full by the return of the rates invoice with the postage and printed stamps affixed.
[7] Judge Sinclair noted Mr Prescott’s submission that the rates invoice, which he sent back to the Council, was an offer to settle the outstanding rates by payment of the sum of $1. The Judge also noted Mr Prescott’s submission that the Council accepted the offer in that it did not return the document or otherwise refuse the offer or make a counter offer. Judge Sinclair noted, however, that no covering letter accompanied the rates invoice sent back to the Council and nowhere on the document was it recorded that it was an offer of payment of $1.00 in full and final settlement of the invoice. Judge Sinclair held that for an offer to be capable of
acceptance, the terms of that offer had to be clear and unequivocal. In this case, Judge Sinclair was satisfied that the terms of the offer were unclear and were not capable of acceptance.
[8] Judge Sinclair then referred to Mr Prescott’s submission that the rates invoice with the postage and printed stamps affixed was a valid and enforceable bill of exchange. Judge Sinclair noted s 7(1) of the Bills of Exchange Act 1908, which specifically provided that:
7 Certainty required as to payee
(1) Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty.
...
Judge Sinclair found that, in this case, the bill of exchange consisted of the wording added by virtue of the printed stamps and did not include the name of the payee. Furthermore, the document stated “Inchoate Instrument Accepted for Value Returned Complete”. Judge Sinclair noted that an inchoate stamped instrument is a paper signed and stamped which is either wholly blank or contained an incomplete negotiable instrument. She found that the receiver of such an instrument is prima facie entitled to complete the document making it into a proper negotiable instrument up to the value mentioned on the instrument or up to the value covered by the stamp affixed to it. In this case, Judge Sinclair found that the Council never completed the document (presumably by completing its name) and it was never converted into a bill of exchange.
[9] Furthermore, Judge Sinclair was satisfied that even if there was a clear offer capable of acceptance and that offer was accompanied by an enforceable bill of exchange, the offer was not in fact accepted by the Council. Judge Sinclair found that silence by an offeree in general will not of itself amount to an acceptance. The general rule is that the offeree’s acceptance of an offer must be unequivocally communicated to the offeror before there is a contract. In this case, Judge Sinclair found that there was no oral or written acceptance of the offer and furthermore, there was no conduct by the Council evidencing acceptance of the offer. Indeed, the Council’s conduct reflected the very opposite. In particular, the Council did not
present the document for payment at the stated time and address and it subsequently sought payment of the outstanding rates from the mortgagee. Judge Sinclair was therefore satisfied that the plaintiff’s claim must fail and it was dismissed accordingly.
[10] As to costs, Judge Sinclair noted that Mr Prescott’s claim was completely without merit and she was not persuaded that there should be any departure from the ordinary rule that costs should follow the event. The Council sought costs on a category 2B basis. Judge Sinclair considered that category 2 was the appropriate allocation, being a proceeding of average complexity requiring counsel of average skill and experience. However, she considered that a comparatively small amount of time was required to deal with the matter and she therefore allocated band A. The Council also claimed costs on preparing a reply to Mr Prescott’s notice to admit facts which Judge Sinclair disallowed. She therefore calculated the costs payable to the Council as $5,347.50 and ordered Mr Prescott to pay those costs.
Discussion
Preliminary issues
[11] At the outset, Mr Prescott queried whether I could hear the appeal because Judges were the third arm of government and accordingly we were part of “the same family” as the Council. Mr Prescott believes, from what he was told by one High Court Judge, that Judges were ordered to rule certain ways in certain circumstances. He took it from this comment that Judges were not impartial. I told Mr Prescott that I would not be recusing myself from hearing the appeal as he had not persuaded me that an objective bystander would have a reasonable apprehension of bias if I did hear his appeal.
[12] Mr Prescott also asked for a jury to hear his appeal, claiming it was his right under the Magna Carta and the New Zealand Bill of Rights Act. I explained to him that a jury was not able to hear the appeal from a Judge alone case in the District Court and that he would have to settle for me.
Bill of exchange
[13] I then queried Mr Prescott about the rates invoice, which he says was converted into a bill of exchange. He confirmed to me that he was the drawee of the bill of exchange and that the payee was the Auckland Council. He said that there were two benefits conferred on Auckland Council by the document. The first was an unused $1.00 stamp, which he had stuck on the rates invoice. He advised me that the Council was able to cut it off and cellotape it on an envelope of its own if need be, in order to receive that benefit. He also told me that the second benefit was the $1.00 which would have been paid to the Council if a Council officer had presented himself at 14A Target Road, Totara Vale, at 5.00 pm on 28 April 2011. Mr Prescott says that he would have supplied $1.00 to a Council officer on demand at that time, date and place.
[14] Mr Prescott further explained that the five cent stamp was stamp duty. He said he had cancelled the five cent (as required by the legislation) stamp by stamping the date, 17 April 2011, on top of it.
[15] As to the words, NOT NEGOTIABLE NON-TRANSFERABLE WITHOUT RECOURSE, this meant that the Council could not transfer the benefits of the bill of exchange to anyone else.
[16] As to the words “INCHOATE INSTRUMENT ACCEPTED FOR VALUE RETURNED COMPLETE”, Mr Prescott explained that the words “inchoate instrument” meant that the rates invoice was not complete or was deficient in some way. He explained that the rates invoice was deficient because it did not refer to the amount payable. The figure of 3,417.41 could refer to Australian Dollars, US Dollars, or even apples. The words “accepted for value” meant that he had accepted the invoice which had some unspecified value, while the words “returned complete” meant that the document was now for a sum certain, being the $1.00 which was to be paid to a Council officer who presented himself at 14A Target Road, Totara Vale, at
5.00 pm on 28 April 2011.
[17] I asked Mr Prescott where he got the idea of a bill of exchange from. He told me that he got it from a friend who used it unsuccessfully. He said he had had a look
at the legislation and thought he had now got it right. He did admit, however, that he could be wrong.
[18] In my view, Mr Prescott has got it wrong. The $1.00 and five cent postage stamps and the words stamped on the rates invoice did not transform the invoice into a bill of exchange. A bill of exchange is defined in s 3 of the Bills of Exchange Act
1908 as follows:
(1) A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.
A cheque drawn on a trading bank is a common type of bill of exchange.
[19] On its inception, a bill of exchange requires three parties: the drawer, the drawee and the payee. The drawer is the person who draws the bill and gives the order to pay money to a third party. I can accept that Mr Prescott is the drawer because he has signed the document next to the initials “P.P.”. The drawee is the person upon whom the bill is drawn. He is the person to whom the bill is addressed and who is ordered to pay. The drawee need not be different to the drawer. Thus, the drawer may draw on himself payable to his own order.
[20] In this case, Mr Prescott said he was the drawee as well as the drawer. However, on my reading of the document, I am not able to identify Mr Prescott as the drawee. This is fatal to Mr Prescott’s case. Section 6 of the Bills of Exchange Act states that the drawee must be named or otherwise indicated in a bill with reasonable certainty.
[21] The third party required on inception of a bill of exchange is the payee. The payee is the party in whose favour the bill is drawn or is payable. However, again, on my reading of the document, the payee is not certain. Mr Prescott submits that because the rates invoice was issued by the Auckland Council, the addition of the printed stamps made it obvious that the payee of the bill of exchange was the Auckland Council. It is my view that this is not so. Again, this is fatal to Mr Prescott’s case. Section 7 of the Bills of Exchange Act states that when a bill is
not payable to bearer, the payee must also be named or otherwise indicated therein with reasonable certainty.
[22] When the rates invoice was returned to the Auckland Council, the Council did nothing. I suspect that was because Council officers did not recognise it as an attempt by Mr Prescott to pay the outstanding rates by a bill of exchange conferring a total of $2.00 of benefits on the Council. The so called benefits were in fact illusory. The $1.00 stamp was not realistically able to be re-used. The Council would also have spent much more than $1.00 in both time and transport costs if a Council officer had presented himself at 14A Target Road, Totara Vale at the time and date specified in order to receive $1.00 from Mr Prescott.
Offer and acceptance
[23] If the rates invoice had been returned with a cheque drawn on a trading bank in the sum of $1.00 (being a common type of bill of exchange), a Council officer would have recognised it for what it was and would, presumably, have banked the cheque and at some later stage issued an amended invoice in the sum of $3,416.41, rather than $3,417.41. By banking a cheque for a $1.00, no reasonable person would understand that the Council had accepted the cheque in full and final settlement of all the rates outstanding without there being some other indicia of acceptance of the cheque in full and final settlement. Nonetheless, Mr Prescott further submits that by doing nothing, the Council accepted the $1.00 stamp and his offer to pay $1.00 in full and final settlement of all the rates outstanding on the property. It is, however, my view that the Council’s silence or inaction following receipt of the rates invoice back from Mr Prescott with the postage and printed stamps affixed does not mean that the Council, by law, is deemed to have accepted Mr Prescott’s so called offer. I use the words “so called offer” because its terms were, in any event, unclear and not capable of acceptance.
[24] Upon receipt of the rates invoice, Mr Prescott says that the Council had four options:
(a) Accept the offer and the benefits; or
(b) Return the bill of exchange identifying a defect; or (c) Refuse acceptance of the offer and the benefits; or (d) Make a counter offer.
[25] Mr Prescott submits that by doing nothing the Council accepted the offer and the benefits contained therein. He justifies this on the basis of what a reasonable man would have believed in the circumstances, quoting a Canadian textbook – “The Law of Contract in Canada” by CHL Fridman (4th Edition) at p 51. Fridman states:
Whether or not there has been an acceptance depends upon whether the offeree has so conducted himself that a reasonable man would believe that he has accepted or is accepting the offer in question at least as long as the offeror has acted on such belief. The generally adopted theory of offer and acceptance is the parties’ behaviour must be viewed objectively in terms of how a reasonable man, if he were a bystander, would describe the effect of what he had seen or heard.
[26] On the basis of this authority, Mr Prescott accepted that it was not his opinion that counted and that he could not pull something out of the air.
[27] With respect to Mr Prescott, he has tried to pull something out of the air. In my view there is no conceivable possibility that a reasonable bystander would think that the Council had accepted a $1.00 stamp and Mr Prescott’s offer to pay another
$1.00 in full and final settlement of all the rates outstanding through their silence and inaction, upon receipt of the rates invoice with the postage and printed stamps affixed.
[28] There was in fact a fifth option available to the Council upon receipt of the rates invoice and that was to do nothing because the terms of the offer were unclear and not capable of acceptance.
Summary
[29] Mr Prescott’s submissions on appeal were 177 paragraphs and 38 pages in length. At the hearing he then produced another document entitled “Applicant’s oral submissions”. This was another 80 paragraphs and 13 pages in length. He has
raised many factual and legal issues. Notwithstanding Mr Prescott’s diligence and ingenuity, I am of the opinion that the appeal can be disposed relatively quickly by reference to principle and without even considering the question of his standing to bring the claim. As I explained to Mr Prescott, if a Judge is able to deal with the matter promptly as a matter of principle, it was not necessary to refer to or rule on the myriad of other factual and legal issues raised by him.
[30] In summary, I am of the view that Mr Prescott’s appeal should be dismissed
for the following reasons:
(a) The rates invoice with the postage and printed stamps affixed was not a bill of exchange.
(b)The document cannot be seen as an offer because the terms of the offer were quite unclear and were not capable of acceptance.
(c) Even if it was an offer to pay $1.00 in full and final settlement of all the rates outstanding, the Council’s silence and inaction cannot be construed as acceptance.
[31] As to the costs awarded against him by Judge Sinclair, Mr Prescott’s written submissions were focused on substantive issues, which were also the focus of the hearing of the appeal. In all the circumstances, I am not persuaded that Judge Sinclair was wrong to award costs against Mr Prescott. His claim was, and is, completely without merit and he must pay costs in this Court as well.
Result
[32] The appeal against Judge Sinclair’s substantive judgment and her costs
judgment are dismissed. Mr Prescott is to pay costs of this appeal on a 2A basis.
Woolford J
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