Property Sales Direct Ltd v Hawken Lane Development LP

[2021] NZHC 3119

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1435

[2021] NZHC 3119

BETWEEN

PROPERTY SALES DIRECT LTD

Plaintiff/First counterclaim Defendant

AND

HAWKEN LANE DEVELOPMENT LP

Defendant

AND

STEPHEN JOHN DAVIES

Second counterclaim Defendant

Hearing:	11 November 2021 (via VMR)
Counsel:	P J K Spring and H G Holmes for Plaintiff S P Maloney for Defendant
Judgment:	18 November 2021

JUDGMENT OF BREWER J

This judgment was delivered by me on 18 November 2021 at 4 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Keegan Alexander (Auckland) for Plaintiff Heritage Law (Auckland) for Defendant

Robertsons (Auckland) for Second counterclaim Defendant

PROPERTY SALES DIRECT LTD v HAWKEN LANE DEVELOPMENT LP [2021] NZHC 3119 [18

November 2021]

Introduction

[1]        The plaintiff applies to strike out an amended counterclaim filed by the defendant.

[2]        By an amended statement of claim dated 24 September 2020, the plaintiff sues the defendant:

(a)For the return of deposits totalling $522,129.98 paid to a stakeholder in respect of six lots of land pursuant to an agreement for sale and purchase (“the agreement”). The purchase of the lots did not proceed and the plaintiff pleads it is entitled to the deposits.

(b)Damages for loss of profit on one of the lots (lot 22) in the sum of

$56,523.

(c)Damages for further loss of profits to be assessed at trial.

[3]        The defendant filed a statement of defence and counterclaim on 15 October 2020. The counterclaim alleges the plaintiff breached the agreement by failing to pay monies as required. The defendant claims $588,013.05.

[4]        On 30 June 2021, the defendant filed an amended statement of defence and counterclaim (“the second counterclaim”). It named Mr Davies as second counterclaim defendant. The counterclaim adds a cause of action against the plaintiff and against Mr Davies for loss due to the lodging of a caveat claiming an interest in lot 22. Mr Davies, the plaintiff’s solicitor, lodged the caveat in that capacity and is sued as the plaintiff’s agent.1 The amount sought is $200,000 and “further damages to be particularised at trial”.

1      Section 148 of the Land Transfer Act 2017 is relied on by the defendant. It provides: “(1)A person, including the agent of a person, who lodges a caveat against dealings without reasonable cause is liable to pay compensation to a person who suffers loss or damage as a result; (2) A claim for compensation must be heard and determined by the court; (3) A caveat against dealings lodged in contravention of section 146 is lodged without reasonable cause.”

[5]        The plaintiff filed  a statement  of defence to the second  counterclaim  on     4 August 2021.

[6]Mr Davies filed his statement of defence on 6 August 2021.

[7]        The timetable for trial of the case on the pleadings described in [2] and [3] was directed, on the papers and by consent, by Sussock AJ on 20 May 2021:

[4]I direct:

(a)the close of pleadings date is 30 June 2021;

(b)the plaintiff is to serve its briefs of evidence together with its nominations of documents for the common bundle and a draft chronology by 30 September 2021;

(c)the defendant is to serve its briefs of evidence together with its nominations of documents for the common bundle and comments on the draft chronology by 12 November 2021;

(d)the common bundle and combined chronology (with comments where not agreed) are to be filed and served by  14 March 2022;

(e)the plaintiff’s synopsis of opening submissions is to be filed and served by 28 March 2022;

(f)a five  day  hearing is allocated  to  commence  on Monday, 4 April 2022 at 10 am;

(g)leave is reserved to the parties to request a pre-trial conference by joint memorandum.

[8]        As is evident, the defendant filed the second counterclaim on the close of pleadings date.

[9]        On 5 October 2021, the plaintiff filed an omnibus interlocutory application seeking, inter alia, strike out of the second counterclaim.

[10]Mr Davies abides the decision of the Court on the application for strike out.

Discussion

[11]      The parties agree that the defendant requires leave to file the second counterclaim. That is because of r 5.57(1), which stipulates that the filing of a counter claim must be made within the time allowed for the filing of a statement of defence.

[12]      Whether or not leave is required, the issue for me is whether the second counterclaim can be heard fairly within the scheduled fixture.

[13]The plaintiff relies on r 5.57(6):

The court may at any time order that a counterclaim to which subclause (1) applies be struck out, upon such terms as it thinks just, if it appears—

(a)that, by reason of the counterclaim, the plaintiff is likely to be unduly delayed in obtaining relief; or

(b)that the trial (if a trial is necessary) is to be held at a place where it could not be held if a counterclaim defendant had been made defendant to an independent proceeding by the defendant in respect of the subject matter of the counterclaim; or

(c)that the relief sought in the counterclaim is not related to or connected with the original subject matter of the proceeding.

[14]The plaintiff submits:

8.The basis of the plaintiff’s position on the Second Counterclaim is:

(a)It will unduly delay the plaintiff in obtaining relief:

(i)The hearing is set down for 4 April 2021;

(ii)There is insufficient time to accommodate the provision of discovery;

(iii)There is insufficient time to accommodate any necessary interlocutory applications;

(iv)To accommodate the Second Counterclaim, the trial commencing 4 April will almost certainly have to be vacated; and

(v)In light of the delays occasioned by the pandemic, the next available trial is likely to be into 2023.

(b)The Second Counterclaim will unduly complicate the current proceeding:

(i)There are difficult questions of legal privilege considering the Second Counterclaim is brought against the plaintiff and its solicitor who acted for the plaintiff in relation to aspects of the proceeding; and

(ii)The defendant will, by the date of the hearing on this matter, have already filed its briefs of evidence (at the insistence of the defendant).

(c)The Second Counterclaim is not, in any real sense, related to the substantive dispute.

[15]      I agree with Mr Spring for the plaintiff that if, by reason of the second counterclaim, the 4 April 2022 fixture must be adjourned then that would constitute undue delay. With current backlogs, any adjournment would be to a date well into 2023.

[16]      However, I have reached the view that the second counterclaim should continue as part of this proceeding. My reasons are:

(a)The catalyst for the filing of the second counterclaim was a reasons judgment of Katz J on 15 June 20212 which followed her results judgment of 8 June 20213 ordering the removal of the caveat in question because there were no grounds to support the plaintiff’s claim to a caveatable interest in lot 22. The caveat was not lodged by the plaintiff until 30 March 2021 and was not discovered by  the defendant until  29 April 2021. This explains the amendment to the counterclaim.

(b)Neither the plaintiff nor Mr Davies took issue with the filing of the second counterclaim. They both filed statements of defence. Neither took steps to amend the timetable.

(c)It is in the interests of justice for all matters in dispute between the parties to be determined in the scheduled hearing if that can be done fairly.

2      Hawken Lane Development LP v Property Sales Direct Ltd [2021] NZHC 1410.

3      Hawken Lane Development LP v Property Sales Direct Ltd [2021] NZHC 1340.

(d)I do not accept that there is insufficient time between now and 4 April 2022 to timetable the pre-trial matters necessary for the hearing of the second counterclaim. The subject of the second counterclaim is straightforward. Discovery should be limited. Mr Maloney for the defendant emphasises that the defence does not want to risk the trial date. He submits:

37. However, the hearing is set down for five days, which should be more than sufficient to accommodate additional evidence relating to the Second Counterclaim. The plaintiff intends to call three witnesses (including Mr Davies), and the defendant only intends to call two. No expert evidence is to be called in relation to either claim.

(e)I do not accept that there are difficult questions of legal privilege. There may well be issues of privilege. But, these can be identified and resolved pre-trial if necessary.

(f)In my view the relief sought in the counterclaim is, in a real sense, related to or connected with the subject-matter of the proceeding. The subject-matter of the proceeding is the agreement and how the actions of the plaintiff and the defendant are to be construed having regard to their obligations under the agreement. The caveat in question was filed by the plaintiff as a result of the plaintiff’s participation in the agreement. There is a clear common factual matrix going to the construction and performance of the agreement and going to whether there was reasonable cause to lodge the caveat.

(g)Given the judgment of Katz J, there are credible and substantial grounds for the second counterclaim.

Decision

[17]If leave is required for the filing of the second counterclaim, then I grant leave.

[18]The application for strike out is dismissed.

[19]      The plaintiff’s omnibus interlocutory application included matters which were not opposed by the defendant or Mr Davies. Accordingly, the following applications are granted:

(a)Particular discovery.

(b)Leave to file an amended statement of claim.

(c)Varying the timetable set by Sussock AJ on 20 May 2021.

[20]      The defendant in its submissions suggested timetabling directions to accommodate the second counterclaim. These were not discussed at the hearing. I direct:

(a)The parties are to confer and try to reach an agreement on an amended timetable to accommodate the second counterclaim.

(b)The registry is to list the case for call in the next civil list to set the amended timetable.

Costs

[21]      If there is an issue as to costs then the plaintiff may file a memorandum by  16 December 2021. The defendant may file a memorandum in response by 2 February 2022.

Brewer J