Sampson Property Investments Limited v DMST Internationals Limited
[2024] NZHC 555
•15 March 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-483
[2024] NZHC 555
BETWEEN SAMPSON PROPERTY INVESTMENTS LIMITED
PlaintiffAND
DMST INTERNATIONALS LIMITED
Defendant
Hearing: 6 March 2024 Appearances:
M R C Wolff for Plaintiff P A Morten for Defendant
Judgment:
15 March 2024
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 15 March 2024 at 3.15 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
SAMPSON PROPERTY INVESTMENTS LIMITED v DMST INTERNATIONALS LIMITED [2024] NZHC 555 [15 March 2024]
[1] The plaintiff sues the defendant seeking specific performance of an agreement for sale and purchase of a property at Wigan Street, Te Aro, Wellington. The defendant has applied for summary judgment, but the application presently before me is by the defendant for an order under r 9.75 of the High Court Rules 2016 that Mark Walker, who acted as the plaintiff’s real estate agent on the sale of the property, appear and be examined on oath before the Court and produce documents. The application is opposed by the plaintiff.
[2] The principal issue that arises is whether the Court should exercise its discretion to order that Mr Walker be examined on oath.
Context
[3] The plaintiff was the registered owner of adjoining unit title properties at 9-11 Wigan Street, Te Aro, Wellington.
[4] On 10 May 2022, the parties entered into an agreement pursuant to which the plaintiff was to cancel the unit plan and subdivide the land into two freehold titles. Once titles issued the defendant was to purchase unit 1, which was a block of bare land, for $2.2 million.
[5] The property had been marketed for sale by Capital Commercial (2013) Ltd and Mr Walker was a licensed real estate agent employed by that agency. He showed the property to the defendant’s director, Jibin Zhang.
[6] The agreement between the parties was conditional on due diligence by the defendant and also upon what was cl 23. The terms of the agreement, and relevantly cl 23, was the subject of further negotiation between the parties’ solicitors as part of the due diligence process. Relevantly for present purposes, the final terms of the agreement contained cls 23.8 and 23.10, which were in the following terms:
23.8 It is not expected that any easements, covenants, encumbrances, rights or interests will be necessary to enable the New Titles to issue. Should this not be the case, the purchaser reserves the right to approve the Title within 5 working days of notice of any requirement of any easements, covenants or encumbrances, rights or interests required to be registered over the new Titles. The purchaser will not unreasonably withhold their approval if such
easements, covenants, encumbrances, rights or interests will not affect the purchasers proposed project on the land. This condition is inserted for the benefit of the purchaser. For the avoidance of doubt and notwithstanding anything to the contrary, if the Title has no easements, covenants, encumbrances or rights or interests registered on the Title, the purchaser has no right of approval and is deemed to have accepted the Title. The vendor will meaningfully consult with the purchaser during the cancellation of unit title and subdivision process, including providing the purchaser with the resource consent and draft survey plan.
…
23.10 The Vendor and Purchaser agree that clause 23 is an essential term of the agreement.
[7] On 19 October 2022, the Wellington City Council issued its resource consent decision on the plaintiff’s application to subdivide the property. It contained a requirement for registration of a consent notice upon the title of unit 1 (the terms of which had been suggested by the plaintiff) as follows:
Lot 1 is not intended for further development at this stage and is un-serviced for water, wastewater and stormwater. When the development of the site is undertaken in the future, it will be the developer’s responsibility to provide the Lot with connections appropriate for the nature of the development.
Advice Note: The work to install the services at development shall be in accordance with the Wellington City Council’s Code of Practice for Land Development. All costs associated with this work will be borne by the developer.
Note:
Upon the issue of the certificate pursuant to section 224 or at such earlier time as may be required, a Consent Notice pursuant to section 221 will be issued. The Consent Notice will specify condition (i) and advice note above to be registered against the Record of Title to issue in respect of Lot 1 of this subdivision.
[8] The defendant’s position is that it was not until 19 April 2023 that the plaintiff’s solicitors provided the defendant’s solicitors with a copy of the resource consent decision and that there had been no consultation, meaningful or otherwise, with it during the resource consent and subdivision process.
[9] The defendant’s solicitors purported to cancel the agreement on its behalf on 23 May 2023. The grounds for doing so were stated as:
We are instructed to advise there has been no meaningful consultation between the parties during the cancellation of the Unit Title and the subdivision process including providing our client with a draft resource consent.
We are further advised our clients proposed project on the land is severely impacted by the Consent Notice deeming the Developer responsible in providing the Lot with connections to install services at the development.
Our client entered into the contract with the understanding that Lot 1 will be a fully serviced Fee Simple property, not a piece of land with no services. …
Therefore pursuant to Clause 23.8 of the above agreement, our client does not approve the Consent Notice to be registered over the new Title and the contract is at an end.
[10] There was correspondence between the parties’ solicitors concerning the validity of the defendant’s cancellation of the agreement prior to these proceedings being issued, but the parties maintained conflicting views on the matter. The plaintiff commenced this proceeding on or around 23 August 2023.
[11] The defendant responded on 27 September 2023 with a statement of defence and a counterclaim (for return of a deposit) as well as an application for summary judgment. The summary judgment application was accompanied by the application under r 9.75, which is being dealt with as a preliminary matter before the summary judgment application is set down for hearing.
Rule 9.75 and the summary judgment application
[12]Rule 9.75 provides:
9.75 Person refusing to make affidavit
(1)If a person having information relevant to a proceeding or an interlocutory application refuses to make an affidavit as to that information, a party may apply for an order directing the person to appear and be examined on oath before the court, or any person the court appoints, as to that information.
(2)The court may—
(a)make any orders the court thinks just for the attendance of that person before the court, or before the person named in the order, for the purpose of being examined, and for the production of any documents specified in the order; and
(b)impose any terms the court thinks just, as to the examination and the costs of and incidental to the application and examination.
[13] The defendant’s application must be considered in the context of the law that applies to a defendant’s summary judgment application. The relevant principles are not in dispute. Such an application is made under r 12.2(2). The court may give judgment against a plaintiff if the defendant satisfies it that none of the causes of action in the plaintiff’s statement of claim can succeed. Summary judgment in favour of a defendant will not be appropriate where it is possible for a plaintiff to amend its claim so as to remedy defects relied upon by the defendant; it should only be used where the defendant has a clear answer to the plaintiff’s claim which cannot be contradicted.1
[14] Mr Morten referred me to Jones v Attorney-General,2 where Lord Bingham quoted and approved principles set out by the Court of Appeal in Westpac Banking Corporation v M M Kembla New Zealand Ltd as follows:3
[62] Application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated procedure and affidavit evidence will sufficiently expose the facts and the legal issues. …
…
[64] The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.
1 Robert Osborne and others (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.07].
2 Jones v Attorney-General [2003] UKPC 48, [2004] 1 NZLR 433 at [5].
3 Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298, (2000) 14 PRNZ 631 (CA).
Mr Walker’s role
[15] The plaintiff has pleaded in its statement of claim that between October 2022 and April 2023 it orally updated the defendant as to progress on the cancellation of the unit title and subdivision process through its real estate agent, Mr Walker. There is no suggestion that anyone other than Mr Walker updated the defendant.
[16] I should note here that Mr Wolff submitted there is an issue whether Mr Walker acted throughout as the agent of the plaintiff or whether, in respect to consulting with the defendant on the resource consent and subdivision process, he was acting for the defendant. I understood Mr Wolff accepted there was no evidential foundation for a submission that Mr Walker could be anything other than the plaintiff’s agent and I do not need to deal with this further.
[17] The defendant, in its statement of defence, denies the pleaded allegation that there was consultation.
[18] In his affidavit in support of the summary judgment application, Mr Zhang deals with these matters in some detail and says there was no consultation. There is a significant amount of information concerning the resource consent process which supports that contention.
[19] Mr Zhang also says that he has spoken to Mr Walker who has confirmed he did not orally update him on the cancellation of the unit title and subdivision process, contrary to the plaintiff’s pleading. He says:
106.Since the proceedings were issued, I have checked all emails and messages between Mark Walker and me. There are no emails or messages from him regarding the subdivision resource consent progress.
107.I have spoken to Mr Walker on a number of occasions since DMST cancelled the SPA. He has told me that he did not orally update me as to progress on the cancellation of unit title and subdivision progress [sic], contrary to the pleading in paragraph 10 of the statement of claim.
[20] There is also an affidavit of Constantine Varuhas, the defendant’s current solicitor. Mr Varuhas says that, in a meeting with Mr Walker on 28 August 2023,
Mr Walker told him that he did not update Mr Zhang as to progress on the cancellation of the unit title and subdivision process. He again spoke to Mr Walker on 4 September 2023, at which time Mr Walker declined to provide a factual affidavit for this proceeding. He followed up on several occasions, and on 12 September 2023 Mr Walker refused on advice to provide an affidavit.
[21] In opposition to the summary judgment application, the issue of whether there was consultation with the defendant is dealt with curtly in an affidavit of the plaintiff’s director, Ari Chait, who says only:
29. … I understood [Mr Walker] was relaying this information on to [the defendant] as he was having ongoing discussions on separate projects too and had been having in-person meetings with the director of [the defendant].
[22] Mr Chait also refers to an email sent by the plaintiff’s solicitors to the defendant’s solicitors on 19 April 2023, which stated “We understand that our clients have been liaising regarding progress of the unit plan via the agent”.
The submissions
The defendant
[23] Mr Morten took me carefully through the evidence in support of the defendant’s position there was no consultation, and what I understand he considers to be an absence of any admissible evidence to suggest otherwise.
[24] It is a primary argument of the defendant’s summary judgment application that the plaintiff’s claim cannot succeed because the defendant validly cancelled the agreement for breach by the plaintiff of the essential term that it would meaningfully consult during the cancellation of unit title and subdivision process. The defendant considers this is a complete answer to the claim, although I understand Mr Morten reserves the defendant’s position as to other possible avenues to the same result.
[25] Mr Morten submits the first pre-condition to the making of an order under r 9.75 is that the person concerned has knowledge of information relevant to the issues. He submits Mr Walker can clearly give relevant evidence directly going to the issue
of whether there was consultation with the defendant or a breach by the plaintiff of cl 23.8 entitling the defendant to cancel the agreement.4
[26] Mr Morten then submits the next issue is whether Mr Walker has refused to make an affidavit and, based on Mr Varuhas’s affidavit (which is uncontradicted), there is no doubt that he has done so.
[27] He then submits the next issue, and the real issue on this application, is whether the Court should exercise its discretion to make the orders sought. Mr Morten relies on Dyer Whitechurch & Bhanabhai v Pauanui Publishing Ltd.5 There, a plaintiff applied for summary judgment alleging it had been defamed. The defendant applied for an order that the liquidators of certain companies appear for examination. The application was made under what was then r 509 of the High Court Rules (but is now r 9.75). Master Faire noted there were practical difficulties with the procedure under r 509 and said:
[19] … Clearly the circumstances where the jurisdiction under Rule 509 should be exercised are limited. Once again, the best expression of the limitation that should apply, in my view, is that the application will only be appropriate in that relatively narrow band of marginal cases where an outline defence is made out, and the Court encounters genuine difficulty in determining whether or not there is a defence and has a substantial reason to believe that the evidence sought to be adduced will or may assist that determination.
[28] The defendant’s position is that the same principles will apply to a defendant’s summary judgment application. Mr Morten submits that in circumstances where the Court may have difficulty in determining whether the defendant has a complete answer to the plaintiff’s claim, Mr Walker’s evidence will assist to determine that issue.
[29] Mr Morten also referred me to Auckland City Council v Auckland Electric Power Board, where Barker ACJ expressed the view that the examination procedure was unsatisfactory because the party seeking the evidence does not necessarily know what the witness will say, and it is difficult to mould the evidence into an appropriate
4 Mr Morten dealt with the relevant law that applies to cancellation for breach of essential terms, but it is unnecessary for me to set that out here.
5 Dyer Whitechurch & Bhanabhai v Pauanui Publishing Ltd (2000) 14 PRNZ 568 (HC).
sequence of time and topic.6 Mr Morten argues those concerns do not apply here because the defendant knows exactly what Mr Walker is going to say.
[30] Overall, I understand Mr Morten’s submission is that given the absence of relevant evidence from the plaintiff, the importance of the issue to the summary judgment application, and the fact that Mr Walker will clearly know what steps (if any) were taken to consult with the defendant, the interests of justice favour granting the order sought.
The plaintiff
[31] The plaintiff’s position is that the defendant’s interpretation of cl 23.8 is erroneous, and the case will not be determined on whether Mr Walker did or did not consult with the defendant.
[32] Mr Wolff also submits the application should be dismissed because orders under r 9.75 are generally inappropriate in summary judgment proceedings as they are likely to give rise to contentious evidence which is unable to be readily resolved in a summary judgment hearing.7
[33] Mr Wolff referred to Host Catering Ltd v Air New Zealand Ltd, which concerned a plaintiff’s application for summary judgment where the plaintiff applied for a witness to give evidence orally on an essential issue arising on the application of whether an agreement to supply sandwiches at $1.25 related to the supply of one sandwich or a unit of sandwiches.8 McGechan J declined the application and said:9
… The summary judgment procedure is designed not to resolve on affidavits and without crossexamination contested issues of fact but rather to deal with cases which on affidavits and without crossexamination are sufficiently plain. The attempt here is to bring in further evidence on a point which at best could only remain still controversial and as such is not a procedure designed to serve the purposes of the summary judgment regime.
6 Auckland City Council v Auckland Electric Power Board (1993) 7 PRNZ 74 (HC) at 76.
7 Host Catering Ltd v Air New Zealand Ltd (1989) 2 PRNZ 126 (HC) at 127.
8 Host Catering Ltd v Air New Zealand Ltd, above n 7.
9 At 127.
[34] Mr Wolff also referred to Chen v Xi, which was a caveat case where Associate Judge Lester expressed disinterest in making an order under r 9.75 on the basis it would convert the summary hearing to a substantive hearing.10
[35] Mr Wolff also submits it is insufficient for an applicant under r 9.75 to show that a person refusing to make an affidavit may have knowledge of facts relevant to the proceeding or interlocutory application. He argues that, here, the defendant does not actually know what Mr Walker will say.
[36] Mr Wolff also submits it is critical that, if an order is made, the evidence of Mr Walker is tested through cross-examination as, if it is not, the status the evidence can reasonably have for the purposes of the summary judgment application will be in doubt.
My analysis
[37] I am satisfied for the purpose of r 9.75 that Mr Walker does have information relevant to the defendant’s interlocutory application and that he refuses to make an affidavit as to that information. I am not, however, satisfied that in the exercise of my discretion the order sought should be made.
[38] Neither counsel could refer me to any decision where an order under r 9.75 has been made in connection with a summary judgment application, although I note that in Dyer Whitechurch & Bhanabhai v Pauanui Publishing Ltd Master Faire did not dismiss the application before him but adjourned it to be called alongside the summary judgment application.11 The absence of any such authority does not, of course, prevent me making an order as sought because, as Mr Morten submitted, the power to do so is clearly provided for.
[39] However, the decisions to which I have been referred show the general reluctance of the court to make orders allowing witnesses to be examined on oath in relation to applications which, in the ordinary course, will be determined on affidavit evidence. Summary judgment applications are intended to be resolved on affidavit
10 Chen v Xi [2019] NZHC 2509 at [49].
11 Dyer Whitechurch & Bhanabhai v Pauanui Publishing Ltd, above n 5, at [24].
evidence alone. I agree with the comments of Master Faire in Dyer Whitechurch, that in the summary judgment context such orders should only be made in a very narrow band of marginal cases. The circumstance he contemplated was where the court would encounter genuine difficulty in determining whether or not there was an arguable defence and had substantial reason to believe the evidence sought to be adduced would assist that determination.12 Clearly, however, the evidence will not assist if it is unlikely to resolve a controversy between the parties or would turn what should be a summary hearing into a substantive one.
[40] Turning to this case, it is unnecessary to make the order sought because, on my assessment, the plaintiff has not advanced anything apart from the bald assertion of Mr Chait as to his “understanding” that the plaintiff did consult with the defendant, as required by cl 23.8.
[41] Mr Chait’s understanding is not evidence of the fact that consultation occurred and nor is the statement of the plaintiff’s lawyer made well after the resource consent decision had been made as to his understanding that the respective clients had been liaising via the plaintiff’s agent, Mr Walker.
[42] While the defendant bears the onus of establishing that the plaintiff’s claim cannot succeed, in circumstances where it has provided compelling evidence that there was no consultation the plaintiff will generally be required to respond with credible evidence to the contrary if it wishes to invite the Court to find there is an arguable issue.
[43] Mr Morten referred me to my decision in Primary Services New Zealand Ltd v Colombo Projects Ltd where the defendant resisted summary judgment, alleging that misrepresentations had been made to him by the plaintiff’s agent.13 I noted there was almost nothing in the surrounding circumstances, contemporaneous correspondence, the terms of the parties’ agreements or evidence from other persons that the misrepresentations had been made.14 I found:15
12 Dyer Whitechurch & Bhanabhai v Pauanui Publishing Ltd, above n 5, at [19].
13 Primary Services New Zealand Ltd v Colombo Projects Ltd [2020] NZHC 549.
14 At [56].
15 See also to Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2008] NZAR 307 at [29].
[59] A realistic approach to the evidence is warranted. There is no correspondence, no file note, no minutes of any meeting, indeed, no written record of any type, which records the representations. … There is no evidence from Mr Fonagy’s lawyers that the representations had been made although they were present at the 25 October 2015 meeting. Mr Fonagy does not explain why the [agreements between the parties] are not consistent with the representations. An explanation is called for. As Mr Fonagy is still represented by the same lawyers it could be expected that they would make an affidavit to support his case if they considered they could do so. Their failure to do so is also not explained. A need for explanations is so vital that the only inference that can be drawn from their absence is that the representations were not made.
[44] Those comments apply equally here given the absence of evidence on the issue presented by the plaintiff, the fact that Mr Walker was its agent, and there being no explanation as to why he has not made an affidavit to support the plaintiff’s position if he could do so.
[45] Related to this is that calling Mr Walker to give evidence on oath may in fact do little to assist the Court but instead may simply lead to unnecessary confusion, delay and expense. The case law contains several statements to the effect that the r 9.75 procedure (or its antecedents) is not plain or straightforward. In Host Catering Ltd v Air New Zealand Ltd, McGechan J was concerned as to whether under r 509 an examination was restricted to evidence-in-chief, without the balance cross-examination could provide.16 He also noted the potential for something of a mismatch between evidence presented by affidavit and evidence presented under deposition conditions as “viva voce can often be a much more stumbling affair and at times is not given with the same care and consideration”.17
[46] If I had been minded to grant the application difficult procedural issues would arise that risk the smooth passage of the application to hearing. Mr Morten argues that, if an order is made, Mr Walker should not be cross-examined whereas Mr Wolff argues cross-examination is necessary. If there is no cross-examination, the question arises whether the parties should be given leave to file further affidavit evidence in response. Mr Morten argues it is necessary that Mr Walker be ordered to produce documents, but it is unclear what documents he would produce or what assurance the
16 Host Catering Ltd v Air New Zealand Ltd, above n 7.
17 At 128.
Court can have that Mr Walker will have made all reasonable searches and produced all relevant documents bearing on the issue. In short, it appears to me that to allow the examination of Mr Walker may simply create controversy where none should exist.
[47] I make two further points. It is my understanding that the evidence of the parties for the summary judgment application has been finalised. Should further evidence be filed, the Court might well look leniently upon a further application. Second, I do not make any comment on the strength of the argument the defendant advances as to its entitlement to summary judgment, which raises legal issues for determination by the Judge who hears the application.
Result
[48] The application by the defendant to have Mr Walker examined on oath is dismissed.
[49] My initial view is that costs on this application should be reserved pending hearing of the summary judgment application. However, if notwithstanding that indication any party wishes to seek costs they may apply within 14 days, with seven days for any reply. Submissions should be no longer than six pages.
[50] The Registrar should confer with counsel to set the summary judgment application down for hearing. The defendant’s synopsis of argument, an agreed common bundle and a bundle of authorities (in respect of the contents of which restraint should be exercised) shall be filed and served 10 working days prior to the hearing. The plaintiff’s synopsis and bundle of authorities shall be filed and served five working days prior to the hearing.
O G Paulsen Associate Judge
Solicitors:
Morrison Kent, Wellington
Costa Varuhas & Co, Wellington
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