Rhind (pka Edwards) v Stevenson
[2022] NZHC 1594
•6 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2022-404-000376
[2022] NZHC 1594
BETWEEN CHERIE BERYL RHIND (previously known as CHERIE BERYL EDWARDS)
Appellant
AND
IAN LESLIE STEVENSON
Respondent
STEVENSON ACCOUNTING LIMITED
Second Respondent
Hearing: 21 June 2022 Appearances:
M J Fisher for the Appellant N C King for the Respondent
Judgment:
6 July 2022
JUDGMENT OF TAHANA J
This judgment was delivered by me on 6 July 2022 at 2.30pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Jones Howden, Barrister & Solicitors, Matamata Noel King Barrister, Auckland
Erskine Chambers, Auckland
RHIND v STEVENSON [appeal] [2022] NZHC 1594 [6 July 2022]
Introduction
[1] This is an appeal against the decision of Judge G M Harrison not to strike out Mr Stevenson’s (the Respondent’s) amended claim to recover a debt owed by Ms Rhind (the Appellant).1 Judge Harrison found that Ms Rhind was obliged to repay the debt on 14 August 2015 when the property of Edwards Family Trust was sold.2 Mr Stevenson filed his amended claim on 12 April 2021, which was within the six year statutory time frame.3
[2] Ms Rhind appeals and says the Judge erred because on a proper construction of the agreement, the debt was due on 18 January 2007 so that the amended claim is time barred.
[3] I therefore need to determine when the debt was payable and whether the amended claim was filed within six years of that date.
Background
[4]Mr Stevenson made various loans to Ms Rhind prior to January 2007.
[5] On 18 January 2007, Mr Stevenson and Ms Rhind (who was then known as Cherie Beryl Edwards) signed a document entitled “Settlement, Acknowledgment and Guarantee Agreement” (the Agreement). The parties to the Agreement were Cherie Beryl Edwards (CBE), Edwards Family Trust (EFT) and Ian Leslie Stevenson (ILS).
[6]Ms Rhind signed the Agreement in two capacities:
(a)personally as borrower and guarantor; and
(b)as trustee of the Edwards Family Trust as “property owner, borrower and guarantor.”
1 Stevenson v Rhind [2022] NZDC 3071.
2 At [28].
3 At [28].
[7]The Agreement expressly referred to a first agreement for repayment of
$40,000 and a second agreement for repayment of $70,000 (plus interest) if the
$40,000 was not paid by 31 May 2007. The Agreement included the following relevant clauses:
CBE and EFT agree (on a joint and severally irrevocable basis) to pay ILS the monies as follows (The first agreement): -
…
3.CBE and EFT will not at anytime act in such a way that the security of ILS will be jeopardized such that loss is caused to ILS, delay in payment, CBE will complete all such things, instructions or otherwise so that the obligations under this agreement will be met on a timely basis.
4.All parties agree and acknowledge that this agreement is not intended or construed to secure a better position for ILS.
…
7.Should for any reason this agreement be disputed, overturned and remain unpaid for any reason then the original amount owed will be the debt owned and payable. This agreement will not and can not therefore be used as a means to mitigate in any degree the original debt.
8.Full and final payment of all amounts due or payable to the date of this agreement.
9.Paid from the proceeds of sale of your / trust property in Tamihana Street, Matamata, and
10.You agree that until paid that the amount outstanding ranks as a first charge against the property and/or proceeds of sale save only as to the existing mortgage to Westpac which I understand from you previously to be in the region of $109,000 or so.
11.Interest will accrue at 7% per annum from the date of signing if and only if payment has not been made by the dates specified in the first agreement except if payment is made by due date
12.At date of settlement of the property
13.Without delay, time being of the essence
14.Without deduction
15.Or by raising mortgage finance
16.Or by 31 May 2007 (due date)
17.Items included in this agreement are:-
…
Total amount agreed and due. $40,000
[8]Clause 18 then provided:
In the event that the first agreement is not completed on time then the second agreement will replace it.
You agree to keep me informed as to progress on listing, sale, offers and generally as is reasonably required so as both parties are well involved as to progress.
In the event if neither sale or mortgage funds being available by the date specified above then the second agreement will replace it as follows: -
·The second agreement is not in addition to the first agreement.
·For the record the full amount owed and agreed as “the debt” will be as follows if payment is not made by 31-May-2007.
…
Total amount agreed and due.$70,000.
Terms of payment will be as per the above for the first agreement, except as to the amount and due date.
[9] The trust deed dated 4 August 2004 for EFT has Ms Rhind as settlor and trustee. The other trustee was Karen Maree Osbaldiston. Ms Osbaldiston did not sign the Agreement.
[10] The certificate of title for the Tamihana Street property lists Cherie Beryl Edwards and Karen Maree Osbaldiston as owners as from 17 December 2004.
Correspondence between the parties
[11] On 5 May 2010, Stevenson Accounting Limited wrote to WHK accountants regarding Ms Rhind and EFT. It appears WHK accountants were requesting copies of files to be able to advise Ms Rhind and EFT. Stevenson Accounting Limited indicated there were outstanding issues requiring a response prior to any transfer. These included payment of an outstanding account and various outstanding debts and loans owed by Ms Rhind and EFT. No further correspondence has been provided until 2012.
[12] On 27 April 2012, Ms Rhind’s solicitors wrote a “without prejudice” letter to Mr Stevenson’s solicitors. In a subsequent letter dated 25 May 2012 the claim for privilege was withdrawn.
[13] The 27 April 2012 letter refers to matters in dispute including outstanding accounting fees of $12,021.40 and the “outstanding loan balance pursuant to Loan Agreement dated 18 January 2007.” The letter requested information from Mr Stevenson including a breakdown of the operation of the loan pursuant to the “Loan Agreement dated 18 January 2007.”
[14] The 27 April 2012 letter also raised concerns as to Mr Stevenson’s conduct as an accountant and stated:
Whilst Cherie does not dispute that there is a debt owing, we wish to quantify the amount of the debt before proceeding. If this is not forthcoming, we may elect to pursue the reopening of the Loan Agreement.
Procedural history
[15] On 16 April 2018, Mr Stevenson filed a claim against Ms Rhind (both in her personal capacity and as trustee of the Edwards Family Trust) seeking recovery of the debt owing under the Agreement. The claim alleged that Ms Rhind had acknowledged the debt was owing in the letter dated 27 April 2012.
[16] Ms Rhind applied to strike out the claim saying it was statute barred given it was filed more than six years after the date of the Agreement. Mr Stevenson opposed the strike out.
First District Court decision
[17] On 25 March 2021, Judge M-E Sharp struck out the claim finding that the acknowledgement of debt was not sufficiently certain and granting leave for Mr Stevenson to file an amended claim.4
4 Stevenson v Rhind [2021] NZDC 5744.
[18] On 12 April 2021, Mr Stevenson filed an amended claim against Ms Rhind in her personal capacity only with a new cause of action as follows:5
[Mr Stevenson] says that the terms of the agreement were that the debt would be repaid upon the sale or refinance of the Tamihana Street property or by the 31st of May 2007.
[19] Ms Rhind applied to strike out the amended claim maintaining that the cause of action accrued on 18 January 2007 so the claim was time barred.
Second District Court decision
[20] Judge Harrison found that the cause of action accrued on 14 August 2015 when the Tamihana Street property was sold so was within the six-year limitation period.6 In reaching this conclusion, Judge Harrison considered that Ms Rhind had given a contractual warranty that she would repay the debt on the sale of the property. It was that omission in 2015 Mr Stevenson relied on in filing his amended claim and the Judge therefore considered it was within time.
Relevant law
[21]Section 11(1) of the Limitation Act 2010 provides:
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).
[22] Mr Stevenson argues that the omission is Ms Rhind’s failure to repay the monies when the Tamihana Street property was sold on 14 August 2015.
[23] Ms Rhind says the Limitation Act 1950 applies because the debt was due when the Agreement was signed on 18 January 2007. Section 4(1) of that Act provides that an action founded on simple contract shall not be brought after the expiration of 6 years from the date on which the cause of action accrued.
5 Amended Statement of Claim (dated 12 April 2021) at [23].
6 Judge Harrison applied the Limitation Act 2010 as this is the relevant act for causes of action accruing on or after 1 January 2011. See Limitation Act, ss 2 and 59.
[24] The test and timeframe under each of the 1950 and 2010 Limitation Act are effectively the same. The key issue is what is the date of the breach of contract (ie, by act or omission) giving rise to a claim.
[25] On appeal, I must determine whether Judge Harrison erred in finding that the date of the omission is the date of sale of the Tamihana Street property. This issue turns on the interpretation of the terms of the Agreement.
When was the debt required to be paid?
Approach to contract interpretation
[26] Counsel for Ms Rhind helpfully set out the Court’s approach to contract interpretation and relied on the Supreme Court’s decision in Firm PI 1 Ltd v Zurich Australian Insurance Ltd, where the majority summarised the approach: 7
… proper approach is an objective one, the aim being to ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”.8 This objective meaning is taken to be that which the parties intended.9
…
While context is a necessary element of the interpretive process and the focus is on interpreting the document rather than particular words, the text remains centrally important. If the language at issue, construed in the context of the contract as a whole, has an ordinary and natural meaning, that will be a powerful, albeit not conclusive, indicator of what the parties meant.
[27] I start by considering the language of the Agreement to determine whether the objective intentions of the parties can be ascertained.
7 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60] and [63].
8 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912 per Lord Hoffmann. See also Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101 at [14] per Lord Hoffmann.
9 Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988 at [16] per Lord Hoffmann delivering the judgment of the Privy Council.
Terms of the Agreement
[28] The due date for the first agreement is specified as “31 May 2007 (due date).” For the second agreement, the Agreement states:
· Terms of payment will be as per above for the first agreement,
except as to the amount and due date. (emphasis added)
[29] The use of “except” indicates the due date for the debt is different to 31 May 2007, being the due date for the $40,000. There is no due date specified. The only other date is the date the Agreement was signed, on 18 January 2007.
[30] Counsel for Ms Rhind says that the “due date” is reference to 18 January 2007 as this is the date implied by the phrase “the total amount agreed and due,” in that a sum that is “due” is an amount that is already payable or acknowledged to be payable from an identifiable point in time. This argument has some merit except that the date of 18 January 2007 must be read together with the other terms of the Agreement to determine whether the parties intended that a claim accrued as from this date or a later date.
[31] Judge Harrison held that the debt was due as of 18 January 2007 (being the date from when interest accrued) and not payable until the sale of the property.10 This interpretation is consistent with Ms Rhind’s argument that the debt is “due” or “owing” from 18 January 2007. The other terms of the Agreement however, state that Ms Rhind will pay on the settlement of the property or refinance so these terms are to be read together.
[32] I accept that interest is payable as from 18 January 2007 but there is no obligation to repay the principal or interest until 31 May 2007 and only if the $40,000 is not paid. This is plain from the words “[f]or the record the full amount owed and agreed as the ‘debt’ will be as follows if payment is not made by 31 May 2007.” At the earliest, the debt is not payable until there is a failure to pay the $40,000 by 31 May 2007. This is the first date that the debt could be paid as $70,000 (plus interest) was
10 Stevenson v Rhind, above n 1, at [27].
not owing until then. The question is whether the terms of the Agreement also allowed Ms Rhind to pay at a later date.
[33] Mr Stevenson claims the debt is due on the sale of the Tamihana Property, on refinance or by 31 May 2007. The Agreement specifies when Ms Rhind and EFT agree to pay the debt as follows:
CBE and EFT agree (on a joint and severally irrevocable basis) to pay ILS the monies as follows (The first agreement):-
…
9.Paid from the proceeds of sale of your / trust property in Tamihana Street, Matamata, …
…
12At the date of settlement of the property
13Without delay, time being of the essence
15 Or by raising mortgage finance
[34] On the plain meaning of the above, the parties agreed to pay the monies at the date of settlement or by raising mortgage finance. Each clause must be read to follow from the heading sentence. All of the above clauses also apply to the second agreement.
[35] Counsel for Ms Rhind relies on cl 13 as indicating urgency so that the parties cannot have intended to require repayment on an undefined date. I also note that cl 3 requires Ms Rhind and EFT not to act in a way to cause delay in payment. Clauses 3 and 13 can be read as requiring Ms Rhind to act to sell and/or refinance without delay. Ultimately the purpose of the Agreement was for Ms Rhind to repay Mr Stevenson so cl 3 and 13 should be read consistently with that purpose. Clauses 9, 12 and 15 indicate that the parties intended the property to be the source of the funds to enable payment so linking payment to the sale is consistent with that intention.
[36] Ms Rhind also says that the due date cannot be linked to sale or finance because those events were outside the control of the parties to the Agreement because the property was owned by the Edwards Family Trust and only one trustee had signed.
[37] Even accepting that the Agreement is not binding on Edwards Family Trust (defined as EFT in the Agreement) because only Ms Rhind signed, the Agreement appears to have been drafted on the assumption that EFT was bound by its terms.11 EFT is named as a party and alongside Ms Rhind agrees to all terms on a “joint and severally irrevocable basis.” The language indicates that there was an intention that EFT would be bound by its terms. Enforceability is not relevant to the objective meaning of the terms of the Agreement, from which the parties’ intentions at the time of signing can be inferred.
[38] Practically, Ms Rhind was the settlor, a trustee, the appointor and the primary beneficiary of EFT. Taking these factors together, it is not unreasonable for the parties (and Mr Stevenson in particular) to have assumed that Ms Rhind had some degree of control over the property. At the least she had a beneficial interest so it was reasonable for Mr Stevenson to assume she may receive some or all of the proceeds of sale. For these reasons, the enforceability of the Agreement against EFT does not override the plain meaning of cls 9, 10, 12 or 15 or change the objective intention of the parties.
[39] Judge Harrison was incorrect in assuming that the Tamihana property was owned by Ms Rhind then transferred to the EFT. This incorrect assumption, however, does not change the plain terms of the Agreement or change the fact that Ms Rhind was settlor, trustee and the principal beneficiary of EFT so that requiring payment on sale of the EFT property is not absurd.
[40] Counsel for Ms Rhind also says that the date of sale or refinance cannot be the due date because this would suspend the obligation to repay indefinitely. While cls 3 and 13 indicate an intention to pay without delay, that intention is coupled with obligations on Ms Rhind to act accordingly. Clauses 3 and 13 are to be read with clauses 12 and 15, which indicate an intention that payment would occur on sale or refinance. Those clauses were not removed from the second agreement and are
11 The two earlier District Court decisions accept that the agreement would not be binding upon the Edwards Family Trust, see Stevenson v Rhind, above n 1, at [14] and Stevenson v Rhind, above n4, at [2]. I do accept that Ms Rhind was the only trustee to sign the Agreement. This issue was not challenged by Mr Stevenson and I am not required to determine it for the purposes of this appeal.
consistent with the purpose of ensuring payment occurred by linking payment to an event where it was reasonable to assume Ms Rhind would have funds to pay.
[41] Further, Ms Rhind was obliged to progress matters without delay (time being of the essence) (cl 13) and to keep Mr Stevenson appraised of developments (cl 18) so those terms indicate that the parties did not intend that Ms Rhind was entitled to delay payment indefinitely. If there were delays, this would be compensated by the interest payable of seven per cent per annum as from the date of the Agreement.
[42] In the absence of a specified due date by which the debt had to be repaid, it is open on the plain meaning of cls 12 and 15 to find that payment is to be made after 31 May 2007, on sale or refinance. Certainly, it was open to Ms Rhind to raise as a defence to any demand for payment that she was not obliged to pay until the property was sold or finance raised. It was not an error for Judge Harrison to refer to this defence as this flows directly from the clauses that expressly say the parties agree to pay Mr Stevenson the monies at the date of settlement or by refinancing. If Ms Rhind’s submissions are to be accepted, the plain meaning of those clauses would need to be ignored as those clauses would serve no purpose as they would impose no obligation on Ms Rhind.
[43] The date on which the property is sold or finance raised is ascertainable. It is the date on which either of those events occur. This is not ambiguous or uncertain. The only uncertainty is when this might occur. There were obligations imposed on Ms Rhind to ensure this was not delayed. It would be contrary to the terms of the Agreement for Ms Rhind to now rely on those delays to avoid payment.
Subsequent conduct
[44] Counsel for Ms Rhind also argues that Judge Harrison ignored the subsequent correspondence between the parties in 2012 which shows that both parties considered the debt was due in 2012, which is before any sale or refinance.
[45] While demanding payment prior to sale or finance is inconsistent with payment being due on either of those dates, there is no evidence that Mr Stevenson had knowledge that neither had occurred by 2012. It was not therefore inconsistent for
him to demand payment. Equally, it was open to Ms Rhind to assert that she was not required to pay until sale (or refinance) occurred.
Sale as act or omission
[46] Counsel for Ms Rhind says the sale cannot be the act or omission as the property is not Ms Rhind’s so she has no control over its sale. The omission is the failure to pay at the date of settlement of the property as this is what the Agreement required of Ms Rhind and EFT as the named parties. As set out at paragraph [38] above, given Ms Rhind was the principal beneficiary and a trustee of EFT, it was reasonable for Mr Stevenson to assume that Ms Rhind would have funds available to her personally if EFT sold the property. If payment did not occur on the date of settlement, then it is open to Mr Stevenson to demand payment from Ms Rhind because the obligation in cl 12 of the Agreement has been breached.
Business common sense
[47] Counsel for Ms Rhind says that it does not make business common sense for the repayment to be linked to a property that is not owned by Ms Rhind.
[48] As set out at [38] above, Ms Rhind is not a detached third party. She is the settlor, the appointor, a trustee and the principal beneficiary of the Edwards Family Trust. She has a beneficial interest. Further, the terms of the Agreement infer that the parties assumed that EFT was bound by the Agreement. EFT is listed as a party and there are obligations on EFT. Given those plain terms, it makes business sense for Mr Stevenson to link repayment to sale or refinance of a property owned by a trust where Ms Rhind is the primary beneficiary and a trustee.
[49] Linking payment of the debt to the sale of the property is not dissimilar to a reverse mortgage, where the obligation to repay is triggered if the property is sold. This interpretation is consistent with business sense.
[50] I do not accept that the terms of the Agreement need to be constrained to reach the conclusion reached by Judge Harrison. Rather, the conclusion flows directly from the plain meaning of the terms of the Agreement.
[51] For these reasons, payment of the debt was due when there was settlement of the sale of the Tamihana property on 14 August 2015. The filing of the amended claim on 12 April 2021 was therefore within six years from the date that Ms Rhind failed to make payment. The Limitation Act 2010 applies and Mr Stevenson’s amended claim is within time.
Result
[52]The appeal is dismissed.
Tahana J
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