Russell a Firth v Pamela R Eastcott
[2000] NZCA 297
•24 October 2000
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA22/00 |
| BETWEEN | RUSSELL A FIRTH |
| Appellant |
| AND | PAMELA R EASTCOTT |
| Respondent |
| Hearing: | 19 October 2000 |
| Coram: | McGrath J McGechan J Salmon J |
| Appearances: | G L Turkington for the Appellant G Mason for the Respondent |
| Judgment: | 24 October 2000 |
| JUDGMENT OF THE COURT DELIVERED BY MCGRATH J |
Introduction
This is an appeal against a judgment delivered by Wild J in the High Court, at Palmerston North on 10 November 1999, in a proceeding in which the appellant, Mr Russell Firth, was second defendant and the respondent, Ms Pamela Eastcott, was second plaintiff. The proceeding arises from the breakdown of a relationship between the appellant and the respondent of ten years duration. The litigation concerns, first, a property at Newbury Line, Palmerston North, comprising a dwellinghouse and its site and a farm property. It secondly concerns a farming partnership undertaken on the property.
The High Court judgment
The first plaintiff in the proceeding, the Pamela Eastcott Family Trust, in the first cause of action, sought orders for dissolution of the Firth Family partnership of which it was a member. The other partners were the appellant, the Russell Firth Family Trust and the R A Firth Community Trust Board. They are the first defendants in the proceeding.
The second cause of action in the litigation concerns a claim by the respondent, as second plaintiff, in respect of both properties. These properties were acquired in 1989 by Mr Firth as to a one half interest, by the Russell Firth Family Trust and Pamela Eastcott Family Trust, each as to a two tenths interest, and the R A Firth Community Trust Board as to a one tenth interest.
In his judgment on the first cause of action the High Court Judge held, first, that a notice of dissolution of the Firth Family Partnership as from 2 June 1998 was valid and effective. He expressed some preliminary views as to appropriate adjustments to partnership accounts and reserved leave to the parties to apply for any further orders necessary to effect its winding up. On the second cause of action the Court upheld the claim by the respondent concerning the two properties, finding there had been a constructive trust in terms of the principles of this Court’s decision in Lankow v Rose [1995] 1 NZLR 277. Applying the “clean break” principle Wild J awarded damages to the respondent against the appellant, instead of making vesting orders, in the sum of $217,000. This was after making provision of $10,000 for the respondent’s share of a loan that had originally been acquired to purchase the farm property. The Court further ordered the first plaintiff trustees, on payment of the damages awarded to the respondent, to execute a transfer of their interest in the two properties to the appellant or his nominee.
This appeal has been brought solely against the award of damages in favour of the respondent against the appellant. The three Trusts, although parties to the High Court proceeding, are accordingly not parties to this appeal.
Application to Remit matter to High Court
At the outset of the appeal hearing we heard Mr Turkington, counsel for the appellant, in support of an application to adjourn the appeal and remit the matter back to the High Court for taking of accounts in respect of the Firth Family Partnership. He referred in support to a report from the accountant to the partnership purporting to show the financial position of the partners in relation to the partnership following the High Court’s order of dissolution. According to the report a debt of $74,809 was owing by the Pamela Eastcott Family Trust to the partnership.
The reason advanced for seeking that the appeal be adjourned and the High Court’s judgment remitted back was that the trial Judge could then address what Mr Turkington called “the true position between the parties” including the issues of partner indebtedness covered by the accountant’s report. This course, he argued, would enable more appropriate recognition of the appellant’s contributions by either adjustment to the damages or partnership salary. The appellant in particular desired that the Judge reconsider the award of damages in light of the final position of the Pamela Eastcott Family Trust in relation to the farm partnership as the Judge ultimately determined it.
It seems that at the heart of the appellant’s concern is that the respondent is not a partner of the Firth Family Partnership, and that, if the judgment under appeal stands, the appellant will not be able to offset against the judgment against him any indebtedness to the partnership of the Pamela Eastcott Family Trust. The application was opposed by Mr Mason, for the respondent, who submitted that the decision the subject of appeal was very much a separate and distinct matter from continuing issues in the winding up of the farming partnership, including accounting questions and appropriate remuneration for the appellant.
In the course of his argument Mr Turkington indicated that, if the matter were not remitted back to the High Court, he wished to argue the appeal on the basis that the contributions by the appellant had not been properly brought into account in fixing damages. This ground had not been advanced in the grounds of appeal or memorandum of written submissions. The Judge had in his judgment addressed the question of the appellant’s improvements to the properties, holding they had not contributed significantly to the increase in their value over the term of the relationship. Mr Turkington however wished to argue that other contributions had not been taken into account in fixing damages of $217,000.
After hearing counsel we ruled that we would not remit the decision the subject of appeal back to the High Court. Wild J had regarded the constructive trust cause of action as founded on a promise to the respondent by the appellant which was supported by her significant financial contributions to what has become the appellant’s assets. This was, as Mr Mason submitted, plainly distinct from the separate cause of action seeking a dissolution and winding up. To remit the matter back seeking that the Judge dealt with them together would entirely contradict his judgment and be futile. We accordingly dismissed that application.
Application to Add new ground of appeal
We also declined Mr Turkington’s application, made in the course of the hearing, to add an additional ground of appeal against the decision as to damages, concerning failure to make allowance for the appellant’s contributions in fixing the award of damages. We were satisfied that, in the context of the constructive trust claim, and having regard to the pleadings and the course of the litigation in the High Court, allowing introduction of such a new ground of appeal would also be futile. It would necessarily lead to an adjournment of the appeal and pointless delay in finalisation of the appellant’s liability under the judgment appealed from. To allow the amendment in these circumstances would be contrary to the interests of justice. In so holding we make it clear that we are making no judgment on the merits of this point which of course the High Court Judge may be called on to address in the winding up of the Firth Family partnership.
Outcome of Appeal
That left the original two grounds of appeal to be argued before us, one concerning whether a GST liability on sale of the properties should be brought into account, and the other whether it was wrong in principle to award damages against the appellant alone rather than jointly with the land owning trusts. On reflection Mr Turkington concluded he was unable to advance argument to support either of those grounds.
Accordingly the appeal is dismissed. The respondent is entitled to costs of $2500 plus travelling expenses to be fixed if necessary by the Registrar.
Solicitors
Hughes Robertson, Wellington, for appellant
Barltrop Graham, Feilding, for respondent
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