Rocket Surgery Limited v Goodwin
[2013] NZHC 2648
•10 October 2013
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2013-412-000406 [2013] NZHC 2648
BETWEEN ROCKET SURGERY LIMITED
Plaintiff
AND
WAYNE ERNEST GOODWIN
and MARY ELIZABETH GOODWIN
First DefendantsAND
JAMES PATON and JESSIE PATON
Second Defendants
| Hearing: | 24 September 2013 |
Appearances: | D P Robinson for Plaintiff A Beck for First Defendants No appearance for Second Defendants |
Judgment: | 10 October 2013 |
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on plaintiff’s summary judgment application
Introduction
[1] The plaintiff, Rocket Surgery Ltd, (RSL), is the registered proprietor of a Dunedin property. The first defendants, Wayne and Mary Goodwin (the Goodwins), are in occupation of the property. The second defendants, James and Jessie Paton, were at one time also in occupation of the property but are no longer. RSL considers it no longer needs orders against Mr and Mrs Paton and a hearing of the claim against them is accordingly not required.
What RSL seeks
[2] RSL applies for an order for possession of the property, by summary judgment.
ROCKET SURGERY LIMITED v GOODWIN [2013] NZHC 2648 [10 October 2013]
What Goodwins seek
[3] The Goodwins oppose the RSL application. They have cross-applied for orders striking out or staying RSL’s proceeding.
The issue for the Court
[4] On the Goodwins’ cross-application the Court must determine:
(a)Does RSL’s present proceeding constitute an abuse of process because:
(i)RSL commenced the proceeding when an earlier proceeding seeking substantially the same relief remained extant; and/or
(ii)RSL, having subsequently discontinued the earlier proceeding, has not paid costs on the discontinuance.
(b)If so, should RSL’s present claim be struck out or stayed?
[5] If the Goodwins’ application is unsuccessful, then RSL, to succeed on a claim for possession, must establish that the Goodwins have no arguable defence in relation to the propositions that:
(a)RSL has an interest in the property as registered proprietor; and
(b)The Goodwins are not in lawful occupation of the property.
The background
Factual background
[6] The substantive rights of the parties have previously been considered by this Court in my judgment on a summary judgment application1 and by the Court of
1 Rocket Surgery Ltd v Goodwin [2012] NZHC 2752.
Appeal which allowed the Goodwins’ appeal, setting aside summary judgment and consequential relief which have been ordered in the High Court.2
[7] The history is reflected in the following summary from the judgment of the Court of Appeal:3
The Goodwins owned a residential property at Mosgiel, near Dunedin, known as “Chelmsford”. They fell into financial difficulties and faced a sale by the mortgagee, Westpac Banking Corporation.
The Goodwins’ son-in-law, Campbell Harvey, agreed to assist in saving Chelmsford from sale. Mr Harvey and some colleagues were shareholders in RSL, a small private company. RSL agreed to borrow a sufficient sum to buy the property at the mortgagee’s sale and to cover financing costs for a year after purchase while the Goodwins recovered financially. The ultimate purpose was to enable the Goodwins to buy Chelmsford back in their own names or through a nominee.
It was agreed in principle that RSL would derive some reward for providing the finance. Apart from an understanding that when repurchasing the Goodwins would repay RSL all outgoings spent on the property, they were also to pay a fee for providing the finance. That fee was never settled but the parties discussed figures ranging between $20,000 and $40,000. If the Goodwins were unable to repurchase, Chelmsford would be sold and RSL would recover its expenditure. Unfortunately the parties never settled the terms and conditions of an agreement.
In accordance with this informal arrangement RSL purchased the property at sale by Westpac in April 2010. But thereafter relations between the parties gradually deteriorated. Attempts to settle written terms of an agreement were unsuccessful. Proposals and counter proposals were exchanged in an environment of increasing acrimony. The Goodwins did not repurchase the property within a year. In the event, in May 2012, more than two years after the acquisition, RSL filed a proceeding against the Goodwins in the High Court. The company sought summary judgment for a range of remedies on the grounds that the Goodwins had no right of occupation or interest in the property and no defence to RSL’s claim.
(Footnote omitted)
The previous arguments and judgments
[8] In its judgment allowing the Goodwins’ appeal, the Court of Appeal summarised the parties’ competing allegations and the outcome of the summary judgment application as follows:4
2 Goodwin v Rocket Surgery Ltd [2013] NZCA 172.
3 At [3] – [6].
4 At [9] – [11] and [13].
RSL’s statement of claim alleged the existence of an oral agreement between Messrs Harvey and Goodwin entered into for the parties prior to RSL’s purchase of the property on 7 April 2010. The agreement as pleaded alleged eight material terms and conditions which the Goodwins breached by failing to purchase the property from RSL by March 2011. RSL sought orders cancelling the oral agreement and directing the Goodwins to give vacant possession of the property; a declaration that the Goodwins had no interest in the property; judgment in a sum equivalent to the holding costs incurred by RSL during the Goodwins’ unlawful possession; and interests and costs.
The Goodwins filed a notice of opposition. Significantly, they alleged that the relationship between the parties relating to RSL’s acquisition of Chelmsford was one whereby RSL held legal title to the property on trust for the Goodwins’ beneficial interest. Allegations of consequential breach were made. Alternatively, the Goodwins asserted that if there was a contract, which was denied, then its terms were materially different from those alleged by RSL.
Messrs Harvey and Goodwin filed affidavits in support and opposition to RSL’s application for summary judgment. The affidavits were extensive, covering a large amount of argumentative and irrelevant territory. But they disclosed a direct conflict between Messrs Harvey and Goodwin on the terms and extent of what was agreed between them. In the normal course, that evidential conflict could only be resolved by findings of fact made by the High Court following a trial.
…
Mr Robinson apparently filed an amended statement of claim seeking the alternative remedy for breach of trust at the Associate Judge’s instigation. In essence RSL’s amended pleading alleged that it held Chelmsford on trust for the Goodwins or their nominee for a period of one year to 31 March 2011 for the specific purposes of enabling the Goodwins to purchase the property from RSL on terms or procure the sale to a third party; that the purpose of the trust had failed; and that in the result the parties held Chelmsford as tenants in common in unequal shares reflecting their respective contributions to the purchase price.
[9] In granting summary judgment to RSL, I found that the parties were bound by a trust arrangement5 and I made an order of sale with a series of consequential orders.6
[10] On the appeal, the Court of Appeal found the factual inconsistencies both between the competing parties and internally within the evidence of Mr Harvey for RSL so inconsistent that summary judgment was not available.7
5 Rocket Surgery Ltd v Goodwin, above n 1, at [18] – [20].
6 At [23] – [38].
7 Goodwin v Rocket Surgery Ltd, above n 2, at [17] – [20].
RSL’s alternative formulations of its cause of action
[11] The Court of Appeal held that the allegation of the breach of contract was unsustainable on summary disposition because its terms were in dispute.8 The Court found the alternatively formulated cause of action trust unavailable, stating:9
There was no evidence of a clear intention to create an express trust. The alternatives of a constructive or resulting trust are plainly unavailable. In essence this was an informal family arrangement which was never properly documented. The facts as pleaded do not support the existence of a trust.
[12] The Court of Appeal then made observations, strictly obiter in terms of the summary judgment application, but clearly intended to express the Court’s considered views for the benefit of the parties:10
We add that this litigation was unnecessary from the outset. RSL is the registered proprietor of Chelmsford. It had an absolute right to exercise its powers of sale whenever it asserted that it was no longer obliged to retain the property. The Goodwins could have lodged a caveat against the title if they wished to oppose sale, alleging the existence of an equitable interest in the property. The Goodwins, not RSL, would have carried the burden of proving the nature and extent of their interest.
Assuming the Goodwins did lodge a caveat, a Court would likely have discharged it on terms requiring RSL to pay any net proceeds of sale after settlement of all indebtedness into a solicitor’s trust account pending determination of the Goodwins’ claim. The evidence of Chelmsford’s value and the compounding amounts charged against it would have dictated a direction for sale. If a surplus was available, which seems unlikely, its amount would have fallen within the jurisdiction of the District Court. Even now, despite the wasted efforts of the past year, there is nothing to prevent RSL from taking steps to sell the property.
The Goodwins caveat the title to the property
[13] The Court of Appeal gave its judgment on 22 May 2013. On 6 June 2013, the Goodwins registered a caveat against the title to the property claiming an interest:11
By virtue of a cestui que trust created between the Registered Proprietor described herein as trustee and the Caveator as beneficiary under the trust, the Caveator has an entitlement to the surplus equity in the property should the Registered Proprietor conduct a sale of the property.
8 At [25].
9 At [25].
10 At [26] – [27].
11 Goodwin v Rocket Surgery Ltd [2013] NZHC 2046 at [8].
[14] Caveat lapsing proceedings followed, which were determined by Associate Judge Abbott on 13 August 2013.12
[15] As the Court of Appeal had foreshadowed was likely, Associate Judge Abbott dismissed the Goodwins’ application for an order that the caveat not lapse but imposed terms as to the holding of the balance of proceeds of sale (after payment of specified items) in a trust account.13
[16] The stakeholding term imposed by the Associate Judge was to protect the interests of the Goodwins should the judgment prove to have been wrong (that is on appeal).14 The term did not arise because of a finding that the Goodwins had a beneficial interest which was supportable by caveat. The interest claimed (to “surplus equity in the property”) was a claim to an interest in the proceeds of sale and not in the land.15 The Associate Judge further found that the Goodwins’ evidence did not establish either a subsisting express trust or the factual basis for a constructive trust. In relation to the express trust argument, his Honour found:16
Even if some latitude was possible (and it appears that the respondent did not start pressing for sale and recovery of its contributions for another year), there can no longer be any basis for the applicants’ case that the respondent still holds the property under that express trust. This finding does not require a determination of the dispute over the precise terms of the arrangement: it is based on the evidence provided by the applicant.
[17] On the constructive trust argument, his Honour recorded the absence of evidence from the applicants as to contributions either towards the purchase of the property or towards payment of the mortgage or outgoings (although it was accepted, if recorded by his Honour, that the Goodwins had met the term imposed by the Court of Appeal on granting a stay pending appeal, namely that the Goodwins pay $4,700 per month towards outgoings pending appeal).17 The Associate Judge referred to the need for the Court to be able to evaluate both the fact and the level of contribution in
12 Goodwin v Rocket Surgery Ltd [2013] NZHC 2046.
13 At [36].
14 At [35].
15 At [21] – [22].
16 At [27].
17 At [28].
deciding whether it should recognise a contribution by imposing a constructive trust.18 His Honour then concluded:19
Although I do not need to determine this point (given the decision I have already reached that the caveat is invalid because it does not claim an interest in the land) I consider that there is no need to impose a constructive trust on the land to protect the applicants’ claimed interest.
This proceeding
RSL’s claim
[18] Some three weeks after the Goodwins lodged their caveat over the property, RSL commenced this proceeding for orders as to possession of the property and mesne profits (referred to in the statement of claim as “mesne rent” for the Goodwins’ occupation from 17 January 2012). RSL, as registered proprietor of the property, intended to exercise its power of sale. It wanted vacant possession of the property for that purpose.
[19] In commencing this proceeding, RSL had not discontinued or otherwise brought to an end its earlier High Court proceeding which had also sought vacant possession of the property.
The Goodwins’ application for an order striking out of staying RSL’s claim
[20] The Goodwins applied for an order striking out or staying this proceeding.
[21] It was agreed that the Court would deal with that application on the same date as the hearing of RSL’s summary judgment application. I heard argument at the commencement of the Goodwins’ application at the commencement of the hearing. At the conclusion of the argument, I indicated that I would be dismissing the application, with reasons to follow. I now incorporate those reasons in this judgment.
[22] The Goodwins relied on the following history:
18 At [28], referring to Lankow v Rose [1995] 1 NZLR 277 (CA).
19 At [28].
27 June 2013 – new timetable directions made in RSL’s 2012 proceeding;
28 June 2013 – this proceeding was commenced;
21August 2013 – RSL discontinued the 2012 proceeding without payment of any costs.
[23] In their application for strike out or stay, the Goodwins invoked three particular provisions of the High Court Rules namely:
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
15.23Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
15.24Restriction on subsequent proceedings
A plaintiff who discontinues a proceeding (proceeding A) against a defendant may not commence another proceeding (proceeding B) against the defendant if proceeding B arises out of facts that are the same or substantially the same as those relating to proceeding A, unless the plaintiff has paid any costs ordered to be paid to the defendant under rule 15.23 relating to proceeding A.
[24] Mr Beck submitted that the Courts have held that it is an abuse of process to conduct proceedings at the same time in respect of what is essentially the same matter.
[25] The basis of the defendants’s application was succinctly summarised by Mr Beck in his written synopsis in three propositions:
(a)The plaintiff had previously instituted the proceeding against the first defendants seeking substantially the same relief as in this proceeding.
(b)The plaintiff commenced this proceeding without discontinuing the previous proceeding paying the costs of that proceeding.
(c)In the circumstances, this proceeding by the plaintiff constitutes an abuse of process.
[26] Mr Beck referred to Cowley v Shortland Publications Ltd20 and Post v Ferrall21 as decisions which recognise as well established the principle that it is an abuse of process to institute a second proceeding in such circumstances. Although those cases were decided at a time when the High Court Rules did not contain all of
the provisions which now exist to deal with duplicated proceedings, the cited cases continue to be applicable for Mr Beck’s general proposition.
[27] I turn to the subject matter of the present litigation. The central relief sought by RSL in the present proceeding is substantially the same as that in the 2012 proceeding, namely an order for possession of the property. As such, the second proceeding when it was issued offended the principle which stands against duplicated litigation. The defendants should at any one time face only one proceeding for particular subject matter. Had RSL continued to keep the 2012 proceeding alive, the defendants would have had an irresistible basis for the order they seek (either striking out the present proceeding or staying it). However, by discontinuing the 2012 proceeding shortly afterwards, RSL has dealt with that aspect of complaint.
[28] That leaves a second layer of complaint on the part of the Goodwins, namely that RSL has not paid costs in relation to the discontinued 2012 proceeding. I
20 Cowley v Shortland Publications Ltd (1991) 5 PRNZ 76 (HC).
21 Post v Ferrall (1999) 13 PRNZ 687 (HC).
understood Mr Beck in that regard to place more emphasis upon the application for a stay rather than an application for a strike out.
[29] I do not find the circumstances of this case to justify either an order of strike out or stay on the basis that costs have not been paid in relation to the 2012 proceeding. It is a relatively technical point, but an important one, that r 15.24 places a restriction on subsequent proceedings where there has been an order of costs which the plaintiff has not met. There has been no order of costs in this case. Rather, the Goodwins’ application so far as it relies on the costs issue invokes the fallback requirement in relation to costs under r 15.23, namely that a discontinuing plaintiff must pay the costs of the proceeding to the defendant – unless the defendant otherwise agrees or the Court otherwise orders. There has been disagreement between the parties on how the costs of the discontinued proceeding ought to be dealt with and counsels’ submissions had only just been completed at the time of the present hearing. There has therefore been no order as to the costs of that proceeding. RSL in issuing this proceeding is therefore not strictly in breach of the requirements of r 15.24. Had there been a breach of r 15.24 in relation to a costs order, I would have found a stay appropriate.
[30] As there has not been a breach of r 15.24, the application for a stay will be dismissed, as ordered below.
[31] By reason of the 2012 proceeding having now been discontinued, the application for an order striking out the proceeding will be dismissed, and that order is also made below.
[32] It therefore falls to the Court to consider RSL’s summary judgment application.
Plaintiff’s summary judgment application – the principles
[33] The starting point for a plaintiff’s summary judgment application is r 12.2(1) High Court Rules, which requires that the plaintiff satisfy the Court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.
[34] I summarise the general principles which I adopt in relation to this application:
(a)Commonsense, flexibility and a sense of justice are required.22
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.23
(c)The Court will not hesitate to decide questions of law where appropriate.24
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.25
(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal,
imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.26
(f)In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.27
(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual
22 Haines v Carter [2001] 2 NZLR 167 (CA) at [97].
23 Pemberton v Chappell [1987] 1 NZLR 1 (CA).
24 European Asian Bank AG v Punjab & Sind Bank [1983] 2 All ER 508 (CA) at 516.
25 Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21.
26 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC).
27 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA).
matters if the lack of a tenable defence is plain on the material before the Court.28
(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required
for the protection of the integrity of the summary judgment process.29
(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.30
[35] Mr Robinson invoked the principles I have stated as the applicable principles: Mr Beck did not submit otherwise. Mr Robinson submitted that particularly relevant in this case were the judicial observations in two cases:
.
(a)In Pemberton v Chappell, Somers J observed:31
If a defence is not evident on the plaintiff's pleading I am of opinion that if the defendant wishes to resist summary judgment he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue.
and
(b)In Middleditch v NZ Hotel Investments Ltd Gault J, delivering the judgment of the Court of Appeal, said:32
… there must be a proper evidential foundation for a defence put forward as justifying refusal of summary judgment. That is not inconsistent with the onus on the plaintiff to establish that there is no arguable defence to the claim. It is not sufficient for the defendants
28 Jowada Holdings Ltd v Cullen Investments Ltd CA 248/02, 5 June 2003 at [28].
29 Bilbie Dymock Corporation Ltd v Patel & Bajaj (1987) 1 PRNZ 84 (CA).
30 Pemberton v Chappell, above n 23.
31 Pemberton v Chappell, above n 23, at 3.
32 Middleditch v NZ Hotel Investments Ltd, above n 27, at 394.
to assert without more that there is an arguable defence. That must be demonstrated on the pleadings and evidence before the Court.
[36] Mr Robinson submitted that these observations will be particularly relevant to the Court’s consideration of the evidence filed by the defendants.
RSL’s claim to possession
Registered proprietorship
[37] RSL’s registered proprietorship of the property is not in dispute.
[38] A registered proprietor has a peaceable right of entry. If he or she is unable to obtain possession peaceably, the remedy is to apply to the Court for possession. See for example, Official-Assignee v Israel.33
[39] As registered proprietor, RSL has a right of possession and is generally entitled to exclude all other persons from the property: Kelly v Green.34
Right of possession against an unlawful occupier
[40] The High Court Rules provide two forms of proceeding for recovery of the land.
[41] An owner may bring a summary proceeding against an unlawful occupier for recovery of land under Part 13 High Court Rules. That is not the procedure which RSL has adopted.
[42] The alternative procedure, adopted by RSL in this case, is a summary judgment application for recovery of land under Part 12 High Court Rules, a procedure expressly left available by r 13.2. The authors of McGechan on Procedure
note that most plaintiffs will probably choose to seek summary judgment in order to ensure the possibility of a quick judgment.35
33 Official-Assignee v Israel HC Hamilton CIV 2009-419-1065, 2 June 2010 per Clifford J at [10].
34 Kelly v Green HC Tauranga, CIV-2009-470-426, 27 January 2010 at [4] (leave to appeal granted. Green v Kelly [2010] NZCA 398 but not affecting this aspect of the High Court judgment); Zhong v Levi HC Auckland, CIV 2009-404-3190, 31 March 2010 at [12].
35 McGechan on Procedure (online looseleaf ed, Brookers) at HR 13.2.04.
[43] To succeed on an application for an order that the defendants give possession to RSL, RSL as registered proprietor must prove that:
(a)The defendants are in occupation of the property;
(b)Their occupation is unlawful – meaning, in the context of this case, that the defendants have no continuing right of occupation.
[44] The defendants accept that they are in occupation. The only issue on the summary judgment application is whether it is reasonably arguable that the defendants have some continuing right of occupation. The defendants assert that they have such right.
The right claimed by the defendants
The grounds of opposition
[45] The right asserted by the defendants in their notice of opposition is as follows:
(a)The first defendants have lawful grounds for occupation of the property.
(b)The plaintiff holds the property as a trustee for the defendants or their nominee, and is obliged to deal with the property in accordance with the terms of the Trust.
Alternative formulations of an entitlement to occupy the property
[46] The grounds of the Goodwin’s opposition as I have stated them indicate the two alternative bases on which the Goodwins assert an arguable defence, namely-
a continuing right of occupation by reason of a right to occupy;
a right of occupation by reason of a beneficial ownership of the property.
[47] A starting point for analysis lies in the arrangements surrounding RSL’s purchase of the property. It is common ground that when the arrangements were discussed and put in place the Goodwins were to remain in occupation. As the Court of Appeal has previously recorded, RSL agreed to borrow a sufficient sum to buy the property at the mortgagee sale and to cover financing costs for a year after purchase while the Goodwins recovered financially. The goal was to enable the Goodwins to
buy the property back in their own names or through a nominee.36
[48] The Goodwins have not subsequently had the financial means to repurchase the property nor have they been able to find a third party to buy it. The first level of argument is whether their right to occupy the property continued up to the time this proceeding was issued.
[49] For the purpose of this discussion, I assume that the Goodwins do not have a beneficial interest (whether through an express trust or a constructive trust) and that any right of possession does not stem from ownership. (I deal with the Goodwins’ claim of beneficial ownership separately below at [79] to [81]).
[50] RSL accepts that the Goodwins were in lawful occupation of the property in the first year following RSL’s purchase. That was pursuant to the arrangement between the parties. It is common ground the arrangement was to last for approximately twelve months. For instance, Mr Goodwin stated in his 10 July 2012 affirmation that –
RSL was to hold the property for approximately 12 months.
[51] It is also common ground in the evidence that when the Goodwins had not been able to arrange finance to repurchase the property in the first year, matters drifted on from early 2011 to November 2011 with little contact between the parties. RSL accepts that the Goodwins arguably remained in lawful occupation of the property through that period, in that they were not asked or required to leave by RSL.
36 Goodwin v Rocket Surgery Limited, above n 2.
[52] On 26 November 2011 RSL issued trespass notices to the Goodwins in which RSL required them to stay off the property.
[53] For a period thereafter it appeared that the Goodwins might be able to raise finance to purchase the property but nothing came of that.
[54] In April 2012 RSL instructed solicitors. On 26 April 2012 those solicitors wrote to the Goodwins’ solicitor purporting to cancel the agreement between the parties relating to “an option to purchase the property”. The letter also contained an assertion that the Goodwins had no rights of occupation and must leave the property forthwith, failing which proceedings would be issued.
[55] Since that time RSL’s 2012 proceeding ensued and now this proceeding.
[56] Through 2012 and 2013, the Goodwins have asserted continuing rights both to purchase the property and to remain in occupation. But they have not been able to raise the funds to repurchase the property during that time. Mr Beck accepted that the Court must take it that they are not in a financial position to repurchase the property.
Discussion of the Goodwins’ argument
[57] The Goodwins rely on the evidence filed by Mr Goodwin. In his affidavit, he adopted the evidence he had filed in the 2012 proceeding.
[58] Mr Goodwin has always accepted that RSL was to hold the property for approximately twelve months (that was to say until March 2011). Therein lay the opportunity for the Goodwins to arrange either to repurchase the property themselves or to find a third party purchaser. Failing that, the arrangement was that the Goodwins would receive the net equity remaining after sale by RSL and taking into account holding costs and other debits.
[59] It was Mr Goodwin’s evidence of July 2012, adopted in this proceeding, that that meant –
RSL was to hold the property for ‘approximately one year’ to March 2011. This period could be extended and was.
[60] In his July 2012 affidavit, Mr Goodwin said that he would discuss that statement further at a later point in his affidavit but at the identified point he simply added –
No precise time was stipulated because Mary [Goodwin] and I did not know when we would be in a position to pay RSL out. Campbell [of RSL] knew that.
[61] Mr Goodwin’s assertion that the holding period for the property could be extended is consistent with all the versions of the draft memoranda which were exchanged, containing this clause –
It is anticipated that the Trustee role of RSL will be for a period of approximately one year. However, this aspect is negotiable and may be extended or varied by mutual agreement between the Trustee and the Beneficiary.
The arrangement having been entered into by the parties, it was open to the parties by agreement to extend it.
[62] Mr Robinson described Mr Goodwin’s statement that the holding period was extended in terms of the authorities dealing with summary judgment applications as “bare assertion”. He took me carefully through the subsequent affidavit evidence filed by Mr Goodwin and the documentary trail. At no point does Mr Goodwin explain how the period was extended beyond the first year. Mr Goodwin simply does not elsewhere explain the assertions. There is no evidence before the Court of any discussion let alone agreement as to extension. There is no document which evidences an extension.
[63] The next relevant step after April 2011 lay in the trespass notices of November 2011. To the extent that RSL had done nothing before then to formally exclude the Goodwins from possession, it is arguable the Goodwins were running on in lawful occupation. But from November 2011, at the latest, when the trespass notices were issued, the Goodwins on the evidence had no basis for understanding that the “approximately one year” arrangement was being further extended. RSL in
November 2011 was exercising its right as registered proprietor to move towards sale and was requiring vacant possession.
[64] In response to Mr Robinson’s detailed submissions as to the lack of any evidence of an extension to support Mr Goodwin’s assertion that there had been an extension, Mr Beck did not take me to any evidence supporting that concept of extension.
[65] The thrust of Mr Beck’s submissions as to the Goodwins having a right of occupation which extends to this day lay in such rights as the Goodwins had under the original arrangements.
[66] Specifically relevant to the duration of the arrangement were the following two paragraphs from Mr Beck’s synopsis –
16The intention was that the plaintiff would hold the property for approximately 12 months, but for a longer period if the defendants were not in a position to pay out the plaintiff at that time...
18.The plaintiff was not free to deal with property as it saw fit, but could only dispose of it at the direction of or with the consent of the first defendants.
[67] For the Goodwins’ asserted right of direction, Mr Beck relied on a paragraph in Mr Goodwin’s July 2012 evidence in which Mr Goodwin states –
RSL was not free to deal with the property as it saw fit. It was and is holding the property on trust for us and can only deal with the property at our direction or with our consent.
[68] The concept that the Goodwins, who were to be the recipients of “white knight” help to last approximately one year, would thereafter have a right of control of all decisions as to the sale and possession of the property is commercially absurd, even taking into account the family relationship between the Goodwins and one of the shareholders/directors of RSL. The arrangement was consistently discussed by those involved at the time on the basis of a holding period of approximately one year and thereafter a sale to obtain fair market value. The concept of a negotiated extension or variation (as included in the various draft memoranda of understanding)
is entirely inconsistent with Mr Goodwin’s assertion of his retaining a unilateral right of direction over the future of the property.
[69] Mr Beck submitted that Mr Goodwin’s evidence of a power of direction was supported by a provision which Mr Goodwin included in a further version of the draft memorandum which he sent by email to Mr Harvey in April 2010. In Mr Goodwin’s covering email he said he was attaching the “final version of the Memorandum of Understanding re Chelmsford”. Understandably Mr Beck in his submissions described this as “the final version as far as the defendants were concerned”. In that document, Mr Goodwin had added to the earlier, consistent version of the memorandum which referred to “extension by mutual agreement” a clause which would have stated –
In the event that any matter cannot separately work be mutually agreed upon, the Beneficiary (being a reference to the Goodwins’ nominee) and/or the Beneficiary’s Assigns shall determine the resolution of the matter.
[70] The additional clause proposed to be inserted by the Goodwins would have been inconsistent with a requirement of mutual agreement. The Goodwins or their nominee would have obtained a right unilaterally to extend the period during which RSL must hold the property. It is not a credible proposition to suggest that the parties would have understood that RSL was ceding such unilateral control to the Goodwins.
[71] As it is, the evidence is that the Goodwins’ April redraft was ultimately not the last word of the parties as to their expectations. The Goodwins some two weeks later created a further version of the draft memorandum, in which the clause as to the beneficiary determining resolution of matters not agreed was abandoned with a single clause dealing with extension of the 1 year period as follows –
It is anticipated that the role of RSL will be for a period of approximately one year. However, this aspect is negotiable and may be extended or varied by mutual agreement between the RSL and the Beneficiary.
Conclusion
[72] The documentary evidence does not support Mr Beck’s submission that Mr Goodwin’s April 2010 “unilateral extension” redraft was the last version of any understanding as far as the Goodwins were concerned.
[73] There was no basis on the way matters were left between the parties for the Goodwins to unilaterally extend the period during which RSL was obliged to hold the property and to leave the Goodwins with occupation.
[74] To the extent that the parties had identified an approximate period only (that is “approximately one year”) the period to November 2011 before the trespass notices were issued was more than sufficient to exhaust the Goodwins’ entitlement to occupation (and the retention of the property) for “approximately one year” from March 2010. This conclusion must apply equally to RSL’s right as registered proprietor to sell the property as it does to RSL’s right to enter possession.
[75] The Court of Appeal has already (albeit obiter) recognised RSL’s right to proceed to sale. Harrison J, delivering the judgment of the Court, said:37
RSL is the registered proprietor of Chelmsford. It had an absolute right to exercise its powers of sale whenever it asserted that it was no longer obliged to retain the property. The Goodwins could have lodged a caveat against the title if they wished to oppose sale, alleging the existence of an equitable interest in the property. The Goodwins, not RSL, would have carried the burden of proving the nature and extent of their interest.
[76] It is beyond argument that RSL not only has the right to sell the property but to sell it with vacant possession. I have found it to be beyond argument that RSL was entitled to possession no later than November 2011. A fortiori, RSL has the right when it moves to sell the property more than a year later to have the Goodwins vacate the property so that the property is sold with vacant possession.
Uncertainties and unresolved aspects of the parties’s arrangements
[77] Mr Beck submitted that summary judgment would be inappropriate in this case because the parties’s versions of the arrangements has been so different. Those
differences are exemplified in the judgments already issued in relation to the parties’s disputes. Mr Beck invited the Court to conclude that RSL was simply endeavouring to pick out “common elements” of the differing versions so as create an allegedly “unanswerable case”.
[78] In my judgment, Mr Beck’s criticisms involve a mischaracterisation of RSL’s case in this proceeding. As the Court of Appeal judgment indicates, the difficulties which have beset RSL arose precisely because the parties did not achieve finality and certainty of the terms of an arrangement. But in buying the property and becoming the registered proprietor, RSL has now held the property for more than the period of its commitment. The Goodwins cannot point to an arguable proposition that they are entitled to unilaterally extend the period during which RSL must refrain from selling its property. RSL now embarks on the precise step which the Court of Appeal judgment recorded it was entitled to take on its own initiative.
An equitable interest in the property?
The Goodwins’s assertion of a trust
[79] I must also examine the Goodwins’ assertion that RSL holds the property as a trustee for them (or their nominee).
[80] For reasons I come to, I can assume for present purposes that the Goodwins’ assertion as to the creation of a trust is arguable. Two types of trust have been suggested. The first, an express trust, may be difficult to sustain by reason of the
issues relating to formality and clarity of terms identified by the Court of Appeal in its judgment,38 although part performance might arguably assist the Goodwins if the only issue related to an absence of formalities. The second form of trust relied on, a constructive trust, would clearly be difficult to make out for the reasons identified by Associate Judge Abbott in his judgment in Goodwin v Rocket Surgery Ltd.39 The Goodwins have been the recipients of very substantial benefits through RSL’s purchase and retention of the property. Their contributions have been modest when compared to the value of the land and the costs of retention. Their expectations, as
38 Goodwin v Rocket Surgery Ltd, above n 2, at [20].
reflected in the caveat they lodged (claiming “an entitlement to the surplus equity in the property should the registered proprietor conduct a sale of the property”), strongly suggest that their expectations will have been fulfilled should they receive the value of the equity rather than an interest in the land.
[81] The Goodwins assert that there is a trust obligation. Whether there was a trust is problematic. But RSL has a complete answer to the assertion of a continuing trust. That answer is directly parallel to my previous discussion as to the Goodwins’ lawful occupation.
The duration of any obligation
[82] The Court of Appeal has recognised RSL’s right to sell the property. The Court of Appeal anticipated, just as has since happened, that the Goodwins might caveat the title to the property when RSL moves to sell. The Court of Appeal anticipated, again correctly in the event, that the High Court would likely discharge any caveat lodged on terms requiring RSL to pay net proceeds of sale after settlement of all indebtedness into a solicitor’s trust account.
[83] When the parties entered their arrangements in 2010, the parties anticipated two alternative scenarios. On the first the Goodwins (or nominee) would find themselves in a position to repurchase the property. On the second scenario, RSL would sell the property with the net proceeds (if any) falling to the Goodwins. Any arguable beneficial interest came to an end at the point RSL (after the holding period had expired) moved to sell the property. The Goodwins’ own caveat claim recognised, as reinforced by both the High Court caveat judgment and the Court of Appeal judgment, that their interest at this point is no longer beneficial. It is purely in relation to the value of any equity.
[84] Accordingly, any of the incidents of beneficial ownership, whether they relate to possession of the property beneficially owned or otherwise, are irrelevant. The Goodwins have no right to claim a right of occupation or possession by reason of a status of beneficial ownership.
Conclusion as to RSL’s entitlement to exclusive possession
[85] RSL has proved its entitlement to possession of the property. The Goodwins’s contention that they are entitled to continuing occupation of the property is not reasonably arguable. RSL has no continuing obligation to permit the Goodwins to occupy the property RSL owns and wishes to sell.
[86] RSL is entitled to summary judgment.
Orders
[87] I order:
(a)The first defendants’ application for orders dismissing or staying this proceeding is dismissed;
(b)There is an order that the plaintiff have possession of the property situated at 212 Bush Road, Mosgiel, Dunedin known as “Chelmsford” being Part Section 1, Block VIII, East Tairei Survey District, Certificate of Title OT 187/20 (Otago Registry) (the property) to the exclusion of the defendants;
(c)The defendants are required to vacate in a proper and orderly manner and to deliver up possession of the property to the plaintiff by 4.00 pm on 25 October 2013;
(d)Leave is reserved to the plaintiff to apply for further directions in relation to the form of the above order for possession;
(e)The proceeding, in relation to the plaintiff’s remaining claim for compensation for unlawful occupation and the claim against the second defendants, is adjourned for mention in the List at Dunedin at
10.00 am, 18 November 2013;
(f)The plaintiff is to pay to the first defendants the costs of filing their interlocutory application for strike out which I fix at $1,194 together with any disbursement for filing fee;
(g)The first defendants are to pay to the plaintiff the costs of the steps in the proceeding to date (other than in relation to the first defendants’ strike out application) on a 2B basis together with disbursements to be fixed by the Registrar.
Associate Judge Osborne
Solicitors:
Gallaway Cook Allan, Dunedin A C Beck, Barrister, Wellington
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