Rocket Surgery Ltd v Goodwin

[2012] NZHC 2752

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2012-412-000335 [2012] NZHC 2752

BETWEEN  ROCKET SURGERY LIMITED Plaintiff

ANDWAYNE ERNEST GOODWIN AND MARY ELIZABETH GOODWIN Defendants

Hearing:         8 and 10 October 2012 (Heard at Dunedin)

Appearances: D P Robinson for Plaintiff

T J Shiels for Defendant

Judgment:      19 October 2012

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [as to summary judgment]

Introduction

[1]      The forum of equity was in Chancery.

[2]      In 1615, Lord Ellesmere LC in the Earl of Oxford’s Case[1] said of it:

[1] Earl of Oxford’s Case (1615) 1 Ch Rep 1;21 E.R. 485 at 486.

The Cause why there is a Chancery is, for that Mens Actions are so divers and infinite, That it is impossible to make any general Law which may aptly meet with every particular Act, and not fail in some Circumstances.

This complementary role which equity still bears to the common law was recognised almost 300 years later by the great jurist Professor F W Maitland, when he observed:

We ought not to think of common law and equity as of two rival systems. Equity has come not to destroy the law but to fulfil it, to supplement it, to explain it.

ROCKET SURGERY LIMITED V GOODWIN HC DUN CIV-2012-412-000335 [19 October 2012]

[3]      Trusts, creatures of equity, were designed to last for a long time and to cope with uncertainties.[2]

[2] For this characterisation I am obliged to Fogarty J, speaking extra-judicially to the Trusts Special

Interest Group, 25 September 2012

[4]      For reasons I will now discuss, this case illustrates the ability of equity to deal comprehensively with the relationship between parties when the common law, and in particular the law of contract, may not.

The plaintiff ’s application

[5]      Rocket Surgery as the plaintiff seeks orders directing the sale and terms of sale of a property of which it is registered proprietor.  Rocket Surgery acknowledges that it had previously entered into arrangements with the Goodwins (the defendants) concerning the property.

The mortgagors are helped out

[6]      Mr and Mrs Goodwin were facing a mortgagee sale of their Mosgiel property. They had no hope from their own resources of averting a sale.   Their son-in-law, Campbell Harvey, stepped in.  A company (Rocket Surgery) owned by Mr Harvey and some colleagues would try to purchase the property from the mortgagee.  They would borrow money to do so.  The plan was that they might hold the property for approximately a year.  This would give the Goodwins a chance to get back on their financial feet and to buy the property back either in their own name or through a nominee.   In the meantime Rocket Surgery would cover the finance costs.   The parties referred to Rocket Surgery as “the financier”.   The Goodwins would have some right of occupation, although exactly what was not spelt out.   Nor was the position of another family who resided effectively as guests in the property.   But there was an understanding that they would “manage” the property.  If and when the Goodwins bought the property they would pay all Rocket Surgery’s finance and other expenses relating to the holding of the property.

[7]      There  was  an  understanding  that  Rocket  Surgery should  get  some  other reward for undertaking its financing role.   A package of $20,000 or as much as

$40,000 was discussed but, again, not spelt out.  Mr and Mrs Goodwin on a sale to a third party would receive any balance equity.   If the Goodwins did not buy the property back, it was to be sold for market value.   Rocket Surgery would in that situation also recoup all its holding expenses.

[8]      The plan initially worked.   Rocket Surgery reached an agreement with the mortgagee for the purchase of the property.  It then settled the purchase.  This was back in April 2010.

[9]      Between agreement to purchase and the completion of the purchases, Mr Harvey sent to Mr Goodwin a draft Memorandum of Understanding in order to get something documented.   Emails were exchanged.   Mr Harvey sent further drafts. The drafts and emails clearly indicate that the parties were proceeding on the basis of an arrangement of the kind I have summarised.  Mr Goodwin’s responses indicate a broad measure of agreement, but with some details never finalised.   Mr Harvey’s drafting exercise was abandoned in April 2010.  In May 2010 Mr Goodwin had an attempt at a drafting exercise.  His draft, which he sent to Mr Harvey, involved many points of similarity with earlier drafts but also some significant differences, such as a provision suggesting that Mr and Mrs Goodwin would be able to unilaterally require that the arrangement run on longer than the originally discussed period of approximately one year.    Mr Goodwin’s drafting exercise met a similar, unconsummated fate.

[10]     So the parties left themselves and the Court with no written agreement by which to govern their relationship.   They have an equal responsibility for that unsatisfactory situation, although  the Court appreciates that in the urgency of a mortgagee sale all focus may have been on bringing together a recovery package rather than on documenting it.

[11]     The first anniversary of Rocket Surgery’s purchase passed in April 2011 without the Goodwins taking the property over.  In the meantime finance which the directors  of  Rocket  Surgery  had  obtained  had  to  be  extended  or  refinanced. Mr Harvey could not get Mr Goodwin to settle.  Another anniversary then came and went in April 2012.

[12]     Eventually, the directors of Rocket Surgery with their own financial liabilities running on commenced this proceeding in May 2012, just over two years after they had completed the purchase of the property.

How does Rocket Surgery put its claim?

[13]     For obvious reasons, Rocket Surgery wanted summary judgment so as to

bring an end to the parties’ commercial relationship on a date certain.

[14]     Rocket Surgery’s pleadings reflect the difficulty felt by counsel in putting an

accurate legal description to the parties’ relationship.

[15]     Initially Rocket Surgery pleaded in contract.  By the nature of an unwritten agreement relating to land, with as many imprecise features as this arrangement had, Mr  Robinson  for  Rocket  Surgery  recognised  in  the  course  of  his  submissions (without conceding that the contractual cause of action could not succeed) that a contract claim would not lead to summary judgment.

[16]     The  focus  of  Rocket  Surgery’s  case  shifted  to  an  analysis  in  trust  law. Mr Robinson had, with leave, filed an amended statement of claim which asserted that a trust had come into existence of which Rocket Surgery was trustee and the Goodwins beneficiaries.   In an ironical twist, this approach resonated with the Goodwins’ own notice of opposition which had asserted that the Goodwins had a beneficial interest.

[17]     By a process of identifying what the real issues in this litigation are, counsel had happily arrived at an identification of the strength of equity to fulfil the parties’ mutual expectations where a focus on contractual principles might have left them, most unsatisfactorily, to continuing litigation lasting months if not longer.

The solution is in the law of trust

[18]     The relationship between Rocket Surgery and the Goodwins proceeded as a relationship of trust.  The Goodwins trusted Rocket Surgery to purchase the property

if it could and to then hold and deliver back the property.  Rocket Surgery trusted the Goodwins to take the opportunity of a year’s breathing space, to get themselves into a position to buy the property back, to manage the property in the meantime, and if they could not buy the property back, then to let Rocket Surgery proceed to the market so that its shareholders could get their investment back, with any remaining equity belonging to the Goodwins.

What is the particular solution in this case?

[19]     Rocket Surgery, as trustee, must be able to dispose of the property for its market value now through a proper sale process.

[20]     Rocket Surgery by the trust arrangement committed to holding the property for approximately one year.  It has more than fulfilled its obligation in that regard. In the light of the parties’ initial agreement that the property would be held for approximately one year, equity would imply a term that Rocket Surgery’s responsibility to hold the land would come to an end within a reasonable period after the expiry of 12 months.  The 18 months since April 2011 represent much more than a reasonable period.  Although, after the property was purchased by Rocket Surgery, the Goodwins had suggested that they should have a right to unilaterally veto a sale, such on the evidence was never part of the understanding reached.  Responsibly in his submissions for the Goodwins, Mr Shiels did not suggest that the law would imply any right on the part of the Goodwins now to have the sale of the property further deferred.

[21]     Accordingly, to fulfil its obligations as trustee, Rocket Surgery needs to see the property either bought back by the Goodwins or sold on the market.

[22]     Through   the   very   helpful   discussions   which   I   received   from   both Mr Robinson and Mr Shiels, I have been able to move quickly to the practicalities of a sale.  Before I deal with those, I pause to identify the jurisdiction upon which the Court proceeds.

The Court’s jurisdiction under s 64 Trustee Act 1956

[23]     The Court is empowered by s 64 Trustee Act 1956 to authorise a range of dealings with trust property.  The section expressly applies whether or not there is an instrument creating the trust in question.

[24]     Section 64(1) provides:

64Power of Court to authorise dealings with trust property and variations of trust

(1)   Subject to any contrary intention expressed in the instrument (if any) creating the trust, where in the opinion of the Court any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, retention, expenditure, or other transaction is expedient in the management or administration of any property vested in a trustee, or would be in the best interests of the persons beneficially interested   under   the   trust,   but   it   is   inexpedient   or   difficult   or impracticable to effect the same without the assistance of the Court, or the same cannot be effected by reason of the absence of any power for that purpose vested in the trustee by the trust instrument (if any) or by law, the Court may by order confer upon the trustee, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions (if any) as the Court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne, and as to the incidence thereof between capital and income:

Provided that, notwithstanding anything to the contrary in the instrument (if any) creating the trust, the Court, in proceedings in which all trustees and persons who are or may be interested are parties or are represented or consent  to  the  order,  may  make  such  an  order  and  may  give  such directions as it thinks fit to the trustee in respect of the exercise of any power conferred by the order.

[25]     Counsel appropriately noted that both s 64 and s 64A of the Act are very often considered in the context of the Court’s power to vary the provisions of trusts. That is the way in which sections are often discussed by the text writers.[3]   That said, s 64 has a broader purpose and authorises a broader approach on the part of the Court, which is reflected in Equity and Trusts in New Zealand,[4]  where the writer

(Malcolm Wallace) notes:

The  object  of  s  64  is  to  ensure  the  trust  property  is  managed  as advantageously as possible in the interests of the beneficiaries.

[3] See for instance Malcolm Wallace “Variation and Resettlement of Trusts” in Andrew Butler (ed)

Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) 235 at [9.5].

[4] Ibid, at [9.5.1(2)].

[26]     I turn to the specific provisions of s 64(1) of the Act.   I find established beyond argument that:

1.   The sale of the property is expedient in the administration of this trust.

2.It is difficult or impracticable for Rocket Surgery, given the impasse which developed with the Goodwins who continue to occupy the property, to effect a sale of the property without the assistance of the Court.

3.There are a number of terms, provisions and conditions which as a matter of the trust arrangement itself and of equitable considerations more generally, should be attached to the sale process, which the parties themselves did not spell out in the initial arrangements.

[27]     I was referred by Mr Shiels also to the provisions of s 50 of the Act.  Section

50 deals with “custodian trustees”.  Section 50(2)(c) defines the sole function of a custodian trustee as being to get in and hold the trust property in accordance with the directions of managing trustees.  The reference to the concept of custodian trustees came from a mention “custodial trustees” in the draft memorandum prepared by Mr Goodwin in May 2010.   There is no suggestion that any part of the previous discussions (at the time the property was being purchased) involved the concept of custodian trusteeship.   Nor can that concept appropriately be applied to the arrangement which the parties put in place in this case.  The precise way in which Rocket  Surgery acquired,  financed  and  mortgaged  the property was  beyond  the functions of a custodian trustee as defined in s 50 of the Act.  Section 50 of the Act is not applicable and does not apply to limit the Court’s jurisdiction under s 64 of the Act.

Method and conditions of sale

[28]     Mr  Robinson,  for  Rocket  Surgery,  helpfully  produced  for  the  adjourned hearing a draft of the order which he submitted the Court might appropriately make

under s 64 of the Act.  In the day’s adjournment which I had granted, the draft had been prepared and put to Mr Shiels and the Goodwins with a view to establishing whether such orders could be made by consent.  The parties were unable to reach a consent position.   Mr Shiels indicated that the Goodwins wished to preserve their primary position that there ought not to be an immediate sale order.  For the reasons I have discussed I find against the Goodwins in that regard.   It therefore became necessary to consider the form of the draft order.

[29]     Mr Shiels then helpfully produced in conjunction with his submissions an amended form of Mr Robinson’s draft order with some suggested alterations.   Mr Shiels emphasised that this was not the order which the defendants sought but that if the Court was to make an order along these lines, then his proposed amendments should be incorporated.   I appreciated that constructive approach and it was very helpful in formulating appropriate orders.

[30]     With reference to the orders which follow, I make the following observations as to the reason for the precise detail of the relevant part of the order.

1(a) – Preparation of the property

It had always been understood between the parties that the Goodwins would to some extent prepare the property for sale if it was being sold on the market.  Whereas Mr Robinson had suggested that marketing commence on

19 November 2012 (after a brief period for the defendants to carry out any work on the property), the Goodwins suggested that marketing commence on

30 November 2012.  In my Order I direct that the marketing is to commence on 19 November 2012 as this is a date which fits with the closing of tenders which I will be directing occurs on 20 December 2012, for the reasons which follow.

1(b) – Advice of real estate agent

Whereas  Mr Robinson  provided a formula  which  required  the parties  to accept and implement the marketing advice of the real estate agent instructed, the Goodwins wished to have a provision which would entitle the parties to consider (and thereby to disagree with) such advice.   I do not consider the

Goodwins’ approach to be workable given the previous impasse between the parties.  An experienced real estate agent will provide appropriate advice.  In the context of this trust it is important that that be implemented promptly. Following submissions from counsel on this subject, I have added an initial provision as to the identification of the real estate agent so that he or she may be appointed independently if there is disagreement on his or her identity.

1(c) – Mode and date of sale

I have retained Mr Robinson’s preference for “sale by tender” as opposed to the Goodwins’ “deadline sale” – sale by tender is a well understood concept. I have also chosen to direct that the tenders close on 20 December 2012 as that is consistent with the marketing advice so far taken by Rocket Surgery as trustee.    The  Goodwins  submitted  that  28  February  2013  would  be  a preferable date.  I conclude that Rocket Surgery as the incumbent trustee is entitled to have weight attached to the advice it has taken to date.   I have added to Mr Robinson’s draft order a provision which will in part meet a possible desire on the part of the Goodwins to have a longer period in the property by providing for the settlement date to be not before 25 January

2013 (some five weeks after the closing of tenders).

1(d) – Payments from proceeds of sale

Mr Robinson’s draft understandably provided for the recouping of all financing and holding costs incurred by Rocket Surgery in relation to the property, as the original arrangement dictated.  The Goodwins would prefer that (apart from payments to Kiwibank and Cargill Trustees Limited) only payments which they agree to should be made.  I have adopted a mechanism (see “New 5” below) which ensures that in the first instance Rocket Surgery can recover its financing and holding costs as originally intended, but with an audit  arrangement  which  would  enable  any  subsequent  contest  to  be ultimately determined by the Court if necessary.

1(e) – There was no dispute as to the appropriateness of a reservation of the right of the trustee not to accept the highest or any tender.

1(f) – There was no dispute as to the requirement for vacant possession to be given to the purchaser of the property.  The Goodwins are entitled, of course, to be the purchaser of the property if they wish, but if they do not purchase the property then their obligation under this order would be to have vacated (along with any guests or tenants) the property prior to the giving of possession to the purchaser – I have included a provision that the Goodwins’ vacating of the property should occur no later than two working days before the completion date of any independent sale.

1(g) – Mr Robinson’s draft provided for a further period of marketing if the

initial marketing did not produce a sale.  It is an appropriate provision.

2 – Repayment of sale proceeds

The provision I have included flows directly from my determination in relation to clause 1(d) above.   I have retained Mr Robinson’s proposal that the balance of proceeds be held by the plaintiff’s solicitor on interest bearing deposit as that is plainly a reliable arrangement.   I had not taken up the Goodwins’ suggestion that it be their solicitor who holds the funds.   The plaintiff’s  solicitor  will  be  dealing  with  the  sale  arrangements  and  the ultimate transfer of title.   There is convenience and sense in that solicitor dealing with all aspects.  The balance of clause 2 was not in dispute.

3 – The provisions of clause 3 were not in dispute.

4 – Access to property

Mr Robinson’s draft provided for the plaintiff or its nominee to be permitted access to the property for inspection.  I have accepted Mr Shiels’ submission that, having regard to the strained relationship between the parties, it would be preferable that the real estate agent involved be the party permitted to access the property.   The agent will have full reporting rights back to the plaintiff and its solicitor.

Old 5 – Mr Robinson included a draft provision whereby the Goodwins would  deposit  $10,000  to  be  applied  to  meet  monthly  instalments  to Kiwibank in the period pending sale.   There are matters of record which indicate that the Goodwins may not be able to meet such a requirement.  A deposit would also not fit well with the original understanding which is that the Goodwins would not be involved with the finance and costs through the period of the trust and that such financing costs would be reimbursed to Rocket Surgery from sale proceeds.  With the sale now scheduled, the other directions I have made will deal with that reimbursement.

New 5 – this is the audit mechanism I have referred to.

New  6  –  this  is  a  provision  agreed  to  with  counsel  to  ensure  that  any necessary amendments to the detail of this can be efficiently ordered.

7 and 8 – These are uncontentious provisions dealing with the reservation of costs and leave to apply.

Costs

[31]     I heard from counsel as to costs at the conclusion of the hearing.  In the event I made orders of the kind now being made, they presented competing submissions as follows.

[32]     Both counsel accepted that in the normal course this would have been a case attracting a 2B award with costs to follow the event.  That said, each suggested that a different outcome should apply in this case.

[33]     Mr Robinson referred to a 2012 Calderbank offer – that is to say a written offer without prejudice except as to costs, made pursuant to r 14.10 High Court Rules.   The offer was  in a letter dated 26 April 2012 (three weeks before this proceeding was issued).   It contained a proposal for the marketing and sale of the property by a named, experienced real estate agent and contained terms very similar to those which the Court now makes.  The only potential point of difference between

the plaintiffs’ offer and the outcome through litigation is that the level of fee or reward payable to Rocket Surgery remains at large – in the Calderbank offer it would have been set out at $50,000.  The present reservation as to what the fee or reward should be does not lead me to the view that the outcome achieved by Rocket Surgery will be substantially different to its Calderbank offer.  The parties spoke of a possible fee of at least $20,000, and possibly $40,000 at the time of the arrangement, which was put in place for an expected period of approximately 12 months.  Rocket Surgery has carried the funding and the rest of the property-holding for 30 months instead.  The parties, in the event they cannot themselves agree on the amount of the fee, are unlikely to see a figure much different to the $30,000 in the Calderbank offer.   Mr Shiels referred me to subsequent correspondence from the defendants’ solicitors in which further explanation of the Calderbank offer was sought (without response).    I take that  into  account  although  it  does  not  alter the fact  that  the Calderbank offer and the outcome of this proceeding are very similar.

[34]     Mr Robinson accepted that in terms of r 14.11(1) High Court Rules the effect of the Calderbank offer on costs is at the discretion of the Court.  In other words, the Court’s general discretion under r 14.1 is preserved.

[35]     That said, the provision of r 14.11(4)(b) means that if the value or benefit obtained  by  the  Goodwins  under  this  judgment  is  close  to  the  value  of  the Calderbank offer I may take the offer into account.  For the reasons I have given,[5] the present outcome and the Calderbank offer will turn out to be of similar benefit to the Goodwins.  There remains for my consideration the uncertainty of rights which the parties endured by not recording important arrangements in writing.   While

Rocket Surgery is to be commended for the generosity of its attempts to salvage something for the Goodwins, it failed itself (and to some extent the impoverished Goodwins) by not getting signed-off arrangements at the time.   This led, as Mr Shiels emphasised, to this litigation being commenced as a contract claim before maturing to a claim in trust.  I must take into account also that in accepting a role as trustee/financier, Rocket Surgery was looking to recover not simply its financing and holding costs but also had an understanding with the Goodwins as to the fee or

reimbursement it would receive by way of recognition for its involvement generally.

Rocket Surgery now has the opportunity for that to be quantified through the leave reserved  by  the  order  below.     (Mr  Shiels  referred  me  in  the  course  of  his submissions, without developing the point, to the principle in trust law whereby a trustee must not profit from the trusteeship or, to put it positively, must act gratuitously.  That principle does not affect the rights of Rocket Surgery to a fee in this case.   There are a number of well-established exceptions to the principle, including where there is prior agreement between the trustee and beneficiaries and where the Court permits it.  Both those exceptions apply in this case).

[5] Above at [33].

[36]     In these circumstances I do consider in my discretion that there should be an award of costs in favour of Rocket Surgery with some uplift on the 2B scale.  An appropriate uplift would be 25 per cent.

[37]     Mr Shiels submitted that this is a case in which the Court might reduce an award below the 2B scale, having regard to the fact that the trust cause of action on which Rocket Surgery has obtained this judgment involves a different approach to the contractual cause of action with which this litigation began.  Mr Shiels did not refer me specifically to authority.  He might have had in mind a provision such as r

14.7(d) High Court Rules which entitles the Court to reduce costs otherwise payable where the party claiming succeeded overall but failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs.  I do not find in the circumstances of this case that Rocket Surgery’s costs should be reduced on account of the difficulty which it encountered in framing its successful cause of action.  The difficulty was understandable given that neither party had insisted on a written arrangement prior to the mortgagee sale.   As the party holding the land, Rocket Surgery had no choice but to deal with the situation as time passed.  It has acted responsibly in doing so.

Orders

[38]     I order:

1. The   property   situated   at   212   Bush   Road,   Mosgiel,   and   known   as “Chelmsford”  (bearing  the  legal  description  OT187/20)  (“the  property”), shall be sold on the following terms:

a)  Marketing of the property shall commence immediately the property is  prepared  by  the  defendants  for  sale  (at  their  cost)  or  on

19 November 2012 (whichever is the earlier);

b) The parties will accept and implement the advice of the real estate agent to be instructed as to the nature and extent of the marketing to be undertaken, the real estate agent to be the person agreed by the parties within the next two working days or, failing such agreement, to be appointed immediately thereafter by the chairman for the time- being  of  the  Otago/Southland  branch  of  the  New  Zealand  Law Society, the appointee to be an agent practising in the general area of Dunedin;

c)  The property shall (subject to 1(d)) be sold by tender closing on

20 December 2012 on terms allowing negotiation with the highest or any tenderer and on terms providing for a settlement date no earlier than 25 January 2012;

d) The property may earlier be sold by agreement between the plaintiff and the defendants for a sum greater than the aggregate of:

i.     The sum due to Kiwibank;

ii.     The sum due to Cargill Trustees Limited;

iii.All sums otherwise borrowed by the plaintiff to  effect the purchase of the property together with interest thereon;

iv.     All holding costs incurred by the plaintiffs;

e)  The highest or any tender will not necessarily be accepted;

f)   Vacant possession will be given to the purchaser, and the defendant shall cause themselves and any guests or tenants of the property to vacate the property no later than two working days before the completion of the sale of the property;

g)  In the event the property does not sell by tender (or earlier by private treaty), the property shall be further marketed for a period of 28 days from 28 January 2013 with the property to be sold by auction on

28 February 2013, with the proceeds of sale to be applied as stated herein.

2.   The proceeds of sale shall be applied to repay:

i.     The sum due to Kiwibank;

ii.     The sum due to Cargill Trustees Limited;

iii.All sums otherwise borrowed by the plaintiff to effect the purchase of the property together with interest thereon;

iv.     The conveyancing costs of the sale;

thereafter the balance shall be held by the plaintiff’s solicitor on interest bearing deposit to be applied to the plaintiff in respect of:

a)    monies paid by it;

b)    contributions to the property;

c)    holding costs;

d)   expenses incurred; and e)         a fee for services

either in accordance with the agreement of the parties, or absent such agreement, in accordance with the direction of the Court.   The balance thereafter will be paid to the defendants.

3. The defendants shall cooperate with the sale by ensuring that the property is well presented at all times and facilitate inspections by the real estate agent nominated and any interested parties.   The defendants shall ensure that, if requested by the agent, the property is vacant for the purpose of up to two open homes (on Sundays) or inspection by an interested party.

4. The real  estate agent  (or someone in  his/her employ) shall  be permitted access to the property including the house on prior reasonable notice for the purposes of inspecting the same or ascertaining the defendants’ compliance with the obligations herein.  The agent will be entitled to fully report on the inspection to the plaintiff’s solicitors.

5. For the purposes of verifying all payments claimed by the defendants in relation to paragraphs 1(d)(i) – (iv) above and the payments referred to in paragraph 2, the plaintiff shall provide to its solicitor a detailed statement of account of all payments previously made (for which reimbursement is required); of all payments pending; and of all payments which will be made to any creditor (be it Kiwibank, Cargill Trustees Limited or otherwise) at or around the settlement date.  The statement of account shall have attached to it the prime records to which the individual items in the statement of account relate.    The  plaintiff  shall  provide  these  documents  to  its  solicitor  by

19 November 2012.   At the same time a copy of the documents shall be provided to the defendants’ solicitor.  If the defendants or their solicitor have any issue with the statement of account, they shall provide written details in explanation  of  that  issue  or  issues  to  the  plaintiff’s  solicitor  within  10 working days after receipt of the statement of account.  The parties shall then seek to reach agreement on a resolution of any such issue, and failing such agreement, shall seek the direction of the Court.  All such steps shall be taken promptly and in any event within such timeframe as enables all issues of the plaintiff’s reimbursement to be resolved before the tender closing date of

20 December 2012.

6.The foregoing orders (1 – 5) are intended to determine in substance the outcome of this proceeding and shall become the final orders in that regard if not varied within 10 working days.  Leave is reserved to the parties within

the said 10 working days to request variation for reasons of detail (as against substance), the parties having first conferred with a view to seeking any necessary detailed variations by consent.

7. The costs of this proceeding are to be paid by the defendants to the plaintiff on the basis of the 2B scale with an uplift of 25 per cent together with disbursements to be fixed by the Registrar.  Such costs and disbursements are to be treated as an expense incurred under paragraph 2(e) above.   To the extent that the plaintiff has incurred other solicitor/client costs and disbursements in relation to this litigation such costs and disbursements are not to be treated as an expense incurred under paragraph 2(e) above.

8.  Leave is reserved to either party to further apply.

Conclusion

[39]     I thank counsel for the precision of their submissions.   I appreciated the realistic way in  which,  without  abandoning  the primary position  of  each  party, counsel focused careful attention on the outcome which I had indicated in a preliminary way was most likely to occur.  That has made for a better formulation of the order which I make below than would have occurred if counsel had not adopted a “what if” approach.

Associate Judge Osborne

Solicitors:

Gallaway Cook Allan , PO Box 143, Dunedin 9054

Ross Dowling Marquet Griffin, PO Box 1144, Dunedin

Counsel: Mr T J Shiels, PO Box 5029, Moray Place, Dunedin 9058