Schmidt v Ebada Property Investments Limited

[2012] NZHC 2437

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-001793 [2012] NZHC 2437

BETWEEN  TAYLOR JADE SCHMIDT First Plaintiff

ANDANTHONY MIKHAL SCHMIDT Second Plaintiff

ANDEBADA PROPERTY INVESTMENTS LIMITED

First Defendant

ANDBRIAN PATRICK GARRITY Second Defendant

ANDROBERT NOEL HAIR Third Defendant

Hearing:         17 September 2012

Appearances: T J Schmidt in person, the First Plaintiff

R S Pidgeon for the Second Plaintiff
I Razak for the First and Second Defendants
N W Woods for the Third Defendant

Judgment:      20 September 2012

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

20.09.12 at 4:30 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors/Counsel:

R Pidgeon, Pidgeon Law, Auckland –  [email protected]

I Razak, Smith and Partners, Henderson –  [email protected]

N Woods, Rice Craig, Papakura –  [email protected]

Copy to: T Schmidt – [email protected]

TAYLOR JADE SCHMIDT, ANTHONY MIKHAL SCHMIDT V EBADA PROPERTY INVESTMENTS LIMITED, B P GARRITY AND R N HAIR HC AK CIV 2012-404-001793 [20 September 2012]

[1]      This judgment concerns applications by Ebada Property Investments Limited (Ebada)  and  Mr  Garrity  a  principal  of  Ebada,  and  separately  by  Mr  Hair,  for summary judgment and/or strike out of the proceeding brought against them by Mr and Mrs Schmidt.

[2]      A related adjudication application against Mr Schmidt was initiated with the filing of a bankruptcy notice on 16 December 2011.  The bankruptcy notice required payment of the sum of $6,764.37 for costs ordered to be paid by Mr Schmidt in the outcome of a High Court proceeding dealt with on 3 May 2011.

[3]      Service of that bankruptcy notice was effected on Mr Schmidt on 16 February

2012 at the High Court at Auckland by Mr L Proctor, a process server.

[4]      In a brief memorandum to the High Court dated 2 March 2012 Mr Schmidt

indicated he would oppose Mr Hair’s application for bankruptcy.

[5]      In a further brief memorandum dated 30 March 2012 Mr Schmidt advised that he had that day filed a claim against Mr Hair “and two others” which claim, Mr Schmidt indicated, was related to the matter of Mr Hair’s adjudication application.

[6]      Subsequently on 9 May 2012 Mr Hair’s adjudication application, together

with associated documents, was served upon Mr Schmidt.

[7]      Mr Schmidt has filed a notice of opposition to the adjudication application. His grounds are:

(a)       The bankruptcy notice is defective.

(b)      Service of the bankruptcy notice occurred “on a questionable basis”. (c)       The bankruptcy notice was filed to thwart or at least impact upon his

ability to pursue the claim that he and Ms Schmidt filed under CIV

1793 on 2 April 2012.

(d)      That CIV 1793 contains a valid counterclaim for $145,000.

(e)       He is able to make payment of any undisputed portion of the amount claimed owing for costs.

Background

[8]      The background to issues between the Schmidt’s and Ebada/Garrity and Hair have been described in length in the judgments of Miller J dated 3 May 2011 [1], and Heath J dated 25 November 2011 [2].

[1] Schmidt v Hair, CIV 2002-404-6804.

[2] Schmidt v Ebada, Garrity and Hair, CIV 2011-404-4752.

[9]      In  the  former  the  Schmidt’s  appealed  a  judgment  of  the  District  Court upholding a decision of the Tenancy Tribunal to terminate their tenancy of 11 Bell Road, Mangatawhiri (11 Bell Road).  In the latter the Schmidts filed just the same form of proceeding as herein wherein they applied for the return of the title of 11

Bell Road to them because they alleged it was fraudulently obtained from them.

The appeal matter

[10]     In about November 2006, 11 Bell Road was transferred by Schmidt Trustee Limited to Mr Garrity’s company, Ebada.  At the time the Schmidts were apparently under pressure from their Bank to repay debt.

[11]     The Schmidts did not pay rent regularly and Mr Garrity contacted Mr Hair who  was  leasing  some  of  the  farm  land,  apparently  by  arrangement  with  the Schmidts, to advise Mr Hair not to continue to pay rent to the Schmidts.  As Miller J noted, that led to an agreement between Ebada and Mr Hair under which Mr Hair acquired the property, taking possession in January 2009.  Because the property was not sold with vacant possession Mr Hair then applied for an order terminating the tenancy on the grounds that rent was at least 21 days in arrears and the tenants had abandoned the premises.  Before the matter came before an adjudicator outstanding

rent had been paid. The Schmidts remained in possession of the dwelling as tenants.

[12]     Eventually in December 2009 Mr Hair gave notice of termination on the footing of the tenancy was periodic in nature and as such could be determined on 90 days notice.

[13]     The Schmidts maintain that from the time of the formation of the Excel Estate Trust in October 2002 Schmidt Trustee Limited held 11 Bell Road on trust for it.  The Schmidts say that when Ebada acquired ownership of 11 Bell Road, it did so as trustee of the Excel Estate Trust and at the time there existed a fixed term tenancy agreement with the Excel Estate Trust, and that that tenancy in turn was subject to a pre-existing 2004 – 2005 tenancy.

[14]     Mr Garrity denied any knowledge of the alleged agreement.  He maintained there was an oral periodic tenancy agreed to when he purchased the property from the Schmidts.  The Schmidts position was that they occupied the land subject to a fixed term tenancy.

[15]     The matter before the Tenancy Tribunal focussed upon notices delivered on behalf of Ebada terminating the tenancy and seeking to recover possession of 11 Bell Road from the Schmidts.

[16]     The Tenancy Tribunal rejected the Schmidts claim of an existing valid fixed term tenancy and held that the notices of termination delivered on behalf of Ebada were valid.

[17]     On appeal to the District Court the Schmidts raised a number of issues but those did not include taking issue with the service or timeliness of the notices of termination.

[18]     Before the District Court the Schmidts disputed Mr Hair’s ownership of the

11 Bell Road.  In short the District Court held that the Tribunal had correctly rejected the Schmidts argument that there was a fixed term tenancy agreement.

[19]     In the appeal filed by the Schmidts Miller J noted that the Schmidts raised:

... A myriad of points; fraud by Mr Garrity in acquiring the property and failing to acknowledge that he holds it on trust for the Schmidts; validity of the tenancy agreement which is said to have existed originally between the Schmidts  and  a family trust of theirs; bias  and  predetermination by the Tenancy  Tribunal...  unfairness  in  the  District  Court...  and,  lastly,  the invalidity of the notice of termination.

[20]     As to the Schmidts challenge to Mr Hair’s title Miller J noted:

[42]     It has never been in dispute that the Schmidts were tenants of the property, or that Ebada became the registered proprietor and landlord, or that Mr Hair has since become the registered proprietor.   It is immaterial for present purposes that the Schmidts may maintain that Mr Hair’s title was in some way affected by fraud by Mr Garrity.  Mr Hair’s title has not yet been impeached and the Tenancy Tribunal was not the right place in which to do it.  Nor was any foundation laid for staying the Tribunal proceedings while Mr Hair’s status as registered proprietor was settled in the High Court...

[21]     In the outcome the Schmidts appeal was dismissed.

[22]     Ms Schmidts appealed to the Court of Appeal.  That appeal was based on a number of grounds including an allegation of bias in the High Court.  The Court of Appeal  dismissed  the  appeal  holding  that  there  were  no  questions  of  law  or otherwise that merited consideration.

The fraud claim

[23]     This was filed subsequent to the hearing upon the tenancy appeal.

[24]   In conjunction with it Mr and Mrs Schmidt filed an interim injunction application “to restrain the registered owner of a property situated at 11 Bell Road... from “selling, transferring or disposing” of the property.

[25]     In response Mr Hair sought an order for summary judgment in his favour on grounds that the claims against him have no prospect of success.  He also applied to strike out the claim.

[26]     These matters were heard before Heath J on 1 November 2011 and recounted the Schmidts’ evidence regarding purchase of 11 Bell Road and of the Schmidt’s ownership of it through various trusts and entities.   Heath J recorded that Ebada

disputed those claims of ownership and control of the property, in particular, the claim that from the time of the formation of the Excel Estate Trust in October 2002 ownership of 11 Bell Road was held on trust for it.

[27]     Towards the end of 2005 Ebada was incorporated.   Mr and Ms Schmidt alleged that Mr Garrity formed the company “with the intention of using it to hold the property”.  They say it was agreed, at that time, that Ebada would become the trustee of the Excel Estate Trust and that 11 Bell Road, along with other properties, would be transferred into Ebada’s name.

[28]     On 20 November 2006 Schmidt Trustee Limited transferred 11 Bell Road to Ebada.   At the time Mr and Mrs Schmidt claimed the property had a registered valuation of $740,000.   They allege Mr Garrity instructed lawyers to act for both Schmidt Trustee Limited and Ebada in relation to the transfer of the property, as part of a concerted attempt to deprive the Schmidts of their rightful interest in the land.

[29]     Heath J recorded in detail the scope of the Schmidts allegations in this regard. Those allegations contained a suggestion that Mr Garrity and Ebada did not fully account to the Schmidts for the price paid for the property.

[30]     Heath J noted that Mr Hair purchased the property from Ebada in December

2008 for $700,000; that he took title on 13 January 2009; and that a few days later on

21 January 2009 Schmidt Trustee Limited was struck off the Register of Companies.

[31]     Regarding Mr Hair’s purchase of 11 Bell Road, His Honour recorded:

[16]     Mr and Mrs Schmidt said that Mr Hair acquired the property with knowledge  of  the  frauds  committed  by  Ebada  and  Mr  Garrity.    The injunction is sought to preserve their interests while Mr and Mrs Schmidt pursue a substantive claim to impeach Mr Hair’s otherwise indefeasible title to the land.

[17]     Mr Hair denies having any knowledge of impropriety on the part of Ebada or Mr Garrity at the time of purchase.  He asserts he had no reason to believe that Ebada had no right to sell the property to him.

[18]     As registered proprietor of the Bell Road property, Mr Hair has an indefeasible  title.     In  the  absence  of  fraud,  his  interest  as  registered proprietor is paramount.  From Mr and Mrs Schmidt to impeach Mr Hair’s title, they must demonstrate that he had actual knowledge of dishonesty on

the part of Ebada and/or Mr Garrity at the time the property was transferred into his name or perhaps that he had cause to suspect a competing claim but he deliberately refrained from making further enquiries.

[19]      Mr and Mrs Schmidt allege that Mr Hair entered into the transaction to acquire Bell Road on 15 December 2008 in full knowledge that

54.1     [Mr    and   Mrs    Schmidt]   (by   Trusteeship   and   Trust

arrangement) were the rightful owners of ‘Bell Road’; and

54.2Mr Hair was contractually obliged to notify [Mr and Mrs Schmidt] of any significant changes or impending changes with   his   contractual   arrangements   with   [Mr   and   Mrs Schmidt] in direct relation to ‘Bell Road’ (but avoided doing so); and

54.3     Mr Hair was in Breach of his contract with [Excel Estate

Trust] under Clauses [4.1], [5.1] and [5.2]...; and

54.4     Mr Garrity was a Trustee regarding the ownership of ‘Bell

Road’ with [Mr and Mrs Schmidt], and not the owner; and

54.5Mr Hair was duty bound to contact [Mr and Mrs Schmidt] and enquire what the implications were with the impending transaction with Mr Garrity and Ebada, but avoided doing so for fear of exposing the transaction prior to Settlement.

[20]      For  the  present  purposes,  I  assume  (in  favour  of  Mr  and  Mrs Schmidt) that they could establish a case of fraud against Ebada and Mr Garrity.  The issue is whether, on the allegations made in the Statement of Claim or the affidavit evidence provided by Mr and Mrs Schmidt on their interim injunction application, there are primary facts from which an inference of fraud on the part of Mr Hair might be drawn, if no evidence to the contrary were to be given at trial.

Tenancy proceedings

[21]     This is not the first occasion on which Mr and Mrs Schmidt have joined battle with Mr Hair over rights of ownership or occupancy of the Bell Road property.  The allegations made in the present proceeding are coloured by what has happened in the past.  A short summary of the history of earlier tenancy proceedings is required.

[32]     Heath J then briefly reviewed the history of the Schmidts claims and noted in relation to those the High Court’s rejection of two applications to sustain caveats registered by the Schmidts over the property.   In the second of those Judge Bell noted that there may have been room to challenge the way in which Ebada had exercised its power of sale.  Heath J continued with his summary:

[27]      I proceed on a footing that is more generous to Mr and Mrs Schmidt, by assuming that they can prove their allegation of fraud against Ebada and Mr Garrity.  Nevertheless, I agree with Judge Bell’s subsequent analysis of

why Mr Hair’s title ought not to be impeached for fraud.   The Associate

Judge said:

[59]   In my judgment, the position is governed by s 182 of the Land

Transfer Act:

182    Purchaser from registered proprietor not affected by notice

Except in the case of fraud, no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered estate or interest shall be required or in any manner concerned to inquire into or ascertain the circumstances in or the consideration for which that registered owner or any previous registered owner of the estate or interest in question is or was registered, or to see to the application of the purchase money or of any part thereof, or shall be affected by notice, direct or constructive, of any trust or unregistered interest, any rule of laws or equity to the contrary notwithstanding, and the knowledge that any such trust or unregistered is in existence shall not of itself be imputed as fraud. (Emphasis added)

[60]   Section 182 protects Mr Hair. The information he had may be more extensive than he lets on in his affidavit.  He may well have known that [Ebada] owned the property under arrangements which gave the Schmidts or trusts associated with them beneficial interests in the property (even if he did not know exactly what trusts were).  But s 182 makes it clear that it was not his job to check whether the sale by the trustee was authorised in terms of the trust or to make sure that the vendor accounted to beneficiaries for the purchase money.  In my judgment, Mrs Schmidt’s case does not take the matter to the stage where Mr Hair’s knowledge falls outside the protection of s 182.   His title is not impeachable for fraud. (Judge Bell’s emphasis)

[28]     I have considered whether the allegations of fact on which Mr and Mrs Schmidt rely (in this proceeding) to establish a foundation for a finding of fraud against Mr Hair take the point any further..   The evidence does not go far enough to establish either that Mr Hair knew Mr and Mrs Schmidt were (in any capacity) “rightful owners” of the Bell Road property at the time he acquired it.  Nor does it establish grounds to allege that Mr Hair had some contractual obligation to notify Mr and Mrs Schmidt, as tenants, of his dealings with Mr Garrity.

[29]      Any suggestion of breach of grazing lease is irrelevant.  There was no legal duty for Mr Hair to contact Mr and Mrs Schmidt to obtain their views on the legitimacy of his proposed contact with Ebada.  None of those facts (if proved) individually or cumulatively, has any prospect of founding an allegation of fraud.  It follows that Mr and Mrs Schmidt cannot establish a foundation for an inference of fraud on the part of Mr Hair.  His title cannot be impeached.

Conclusions

[30]      My finding that there is no foundation for an allegation that Mr Hair was complicit in fraudulent activity allegedly undertaken by Ebada and Mr Garrity is sufficient to dispose of all three applications:

(a)     On the application by Mr Hair for summary judgment, Mr Hair has discharged the onus of demonstrating that Mr and Mrs Schmidt cannot succeed, in any of their causes of action on the best view of the case from their perspective.   I am satisfied  that  there  is  no  reason  to  provide  Mr  and  Mrs Schmidt with further time to repair their claim.   They have had ample opportunity to put irrelevant claims and evidence forward.  In my view, their case against Mr Hair is irreparable.

21.

(b)     My finding on the summary judgment application is sufficient to dispose of the need to address the strike-out or particulars’ applications.

(c)     There is no basis on which I could grant an interim injunction in favour of Mr and Mrs Schmidt.  The irrelevant principles are  set out in  Klissers  Farmhouse  Bakeries  Ltd  v Harvest Bakeries Ltd. There is no seriously arguable case of a fraud in which Mr Hair was complicit, and the balance of convenience and  overall  interests  of  justice  favour  Mr  Hair,  as  the registered proprietor of the property since January 209... The application for an interim injunction fails.

(Citations omitted)

[33]     Heath  J  then  awarded  summary  judgment  in  favour  of  Mr  Hair  and  he

dismissed the Schmidts’ application for an interim injunction.

Present matters for consideration

[34]     Counsel agreed the Court should, before considering Mr Schmidt’s setting aside bankruptcy notice application under CIV 8142, first hear the strike out applications in this proceeding.  In that outcome it was considered the Court could better review some of the matters raised by Mr Schmidt in CIV 8142.

[35]     I then heard submissions in this matter and then in the CIV 8142 matter before adjourning the latter to 21 September 2012 for the purpose then of delivering my judgment upon the CIV 8142 application.

Considerations and comments

[36]     The Schmidts’ statement of claim is a virtual replication of the pleading in the proceeding heard by Heath J.   It covers all those various matters I have already identified and very much more by way of detail that was summarised by Heath J in his consideration of the Schmidts claim.  In both this proceeding and in the matter before Heath J the plaintiffs have provided by their pleadings and their affidavits a full account of the circumstances regarding the ownership of 11 Bell Road by the Schmidt entities, its sale to Ebada and in the on sale of the property to Mr Hair.

[37]     The only thing of any real difference or consequence by way of change in the CIV 1793 statement of claim is the claim that Mr Hair purchased a property which he knew or ought to have known was subject to claims of interests held by the Schmidts.

[38]     In the pleading before Heath J there is almost no difference at all to what is now pleaded in the matter before me.  Indeed those very same claims identified by Heath J in paragraph [19] of his judgment are again pleaded word-for-word against Mr Hair in the present case.  There, as here it is pleaded that Mr Hair participated in “this fraudulent transaction in the full knowledge that he should not have.  Mr Hair was motivated by acquiring the property for $145,000 less than it was valued at.  Mr Hair relied on the rateable value on the ‘Bell Road’ of $840,000.”

[39]     The only discernible difference in pleading is the addition in this proceeding of one sentence, namely:

Mr  Hair  failed  to  show  any  proper  manner  of  enquiry  in  regard  to specifically why he as participating in a haste transaction, or why he was able to obtain the ‘Bell Road’ for at least $140,000 less than what he knew

‘Bell Road’ to be worth. [43]

[40]     In  the  face  of  the  defendant/applicants  predictable  claim  that  the  new proceeding was a virtual duplication of the old, Mr Pidgeon in the course of his submissions, tabled a further draft of a form of statement of claim, for the purpose of submitting to the Court that any deficiencies in the statement of claim filed, can be accommodated by a proper repleading of a ‘new’ claim.

[41]     As  against  Mr  Hair  the  new  draft  amended  statement  of  claim  largely recounts the same detailed pleading of fact and evidence that has been a character of

the pleadings already filed.  However in its conclusion it pleads against Mr Hair that:

He deliberately closed his eyes and mind to the acts and omissions of

the first and second defendants.

He participated in a breach of duty by helping or assisting in some

way with breaches of trust.

He knew or ought to have known that Ebada was a corporate trustee

for Excel Estate Trust.

That  he engaged  solicitors  to  act  for him  on  the purchase of the

property who were at material times his agents.

His solicitor agents ought to have analysed the vendor’s ability to

convey clear title.

He failed to enquire further to ascertain the limits and/or duties he might have to third parties and was a party to a conspiracy to defeat

the interests of the beneficiaries of the said Excel Estate Trust.

That he acted dishonestly (in the equitable sense) in purchasing the

property for the price he did.

[42]     Ms Schmidt is self represented in this matter.  In her notice of opposition she

claims:

There are no compelling legal reasons why the new proceeding should

not proceed or does not have any prospect of success.

Mr Hair has not sufficiently disposed of the allegation of fraud against him in respect of purchasing the property for an amount far less than it

was worth, without sufficient  enquiry to  equitable interest holders who he knew of.

[43]     The notice of opposition filed on behalf of Mr Schmidt asserts:

(a)       The statement of claim discloses a reasonable cause of action that is appropriate to the pleading.

(b)Alternatively, it is capable of amendment which the second plaintiff is willing to make.

[44]     The case of Ebada and Mr Garrity for strike out asserts that the present claim is a duplicate of the proceedings heard by Heath J which proceedings, in respect of the claims against them, are still current, the order for summary judgment only benefitting Mr Hair.

[45]     Ebada and Mr Garrity claim the current proceeding is an abuse of Court and that they have been put to unnecessary expense in defending them.

[46]     The case for Mr Hair upon his strike out application is that it is a mirror of that heard by Heath J.   Therefore it is frivolous and vexatious and amounts to an abuse of the Court’s processes.

[47]     In her submissions in opposition Ms Schmidt highlights those facts which she says can provide a proper inference for the plaintiff’s claims of Mr Hair’s fraudulent association with the activities of Ebada and Mr Garrity.

[48]     Ms Schmidt focuses upon a document entitled Deed of Declaration relating to the property of the Excel Estate Trust.  It bears a date of 12 December 2005.  It was prepared on the Schmidts instructions by Taylor Grant Tesiram, solicitors.   The document describes Ebada as the trustee and the Schmidts and a Ms P M Mindel in various capacities as beneficiaries.  It records that the Excel Estate Trust would from time to time acquire property which was to be held on trust for the beneficiaries.

[49]     Ms Schmidt submits that the existence of the deed undermines Mr Garrity’s position when he says he was never associated with the Excel Estate Trust.  Indeed all of the defendants eschew claims of knowledge of the trust.  The existence of the trust is pivotal to the Schmidts claims that although 11 Bell Road was sold to Ebada it was to be held by Ebada on trust for the Excel Estate Trust.

[50]     There are issues with claims about the existence of the Deed of Declaration. The copy exhibited in evidence in this case is unsigned.  Ms Schmidt informed the Court that she signed it.  Yet, it appears she is unable to produce a signed copy even though it was prepared for the Schmidts by solicitors on their instructions.

[51]     Also,  she  submits  that  the  relief  sought  of  compensatory damage  in  the present proceeding has not previously been pleaded.  This she said occurred because in the proceeding before Heath J the challenge was to Mr Hair’s defeasible title and it sought a return of the property to the plaintiffs.   She said this precluded the plaintiffs’ ability to concurrently seek compensation from the defendants for the financial injury incurred from the undervalued sale.

[52]     Ms Schmidt submitted that in the previous proceeding the claim fell under the ‘Fraud’ exception under s 182 of the Land Transfer Act 1952, in a challenge to the defeasible title.   She submits as much is clear from paragraphs 18 and 27 of Heath J’s judgment – the details of which I have already referred to earlier.  She said Heath J took the matter no further, he having concluded that s 182 protected Mr Hair from the challenge to his title.

[53]     It seems to the Court with respect that Ms Schmidt has not identified reasons why there could not have been filed a claim for compensation concurrently with and in the alternative to the claim challenging title to the property.   In the proceeding before Heath J, as in the present proceeding before me, it is pleaded that Mr Hair financially gained at least $145,000 in equity by the purchase of the property.

[54]     The fact that Ms Schmidt is self represented offers no reason for the failure to anticipate  all  pleadable  causes  of  action  that  may  arise  in  the  circumstances identified already in the case that has failed against Mr Hair.

[55]     Bell AJ may have conceded there ‘”may be room to challenge” the manner in which Ebada had exercised its power of sale.   But no such concession was made concerning Mr Hair’s case and there is nothing, almost nothing, new pleaded concerning Mr Hair’s having taken title, save for a number of invitations to the Court to draw inferences about why Mr Hair ought to have known more about the circumstances of the sale to him.

[56]     Ms Schmidt says the case pleaded was a claim of equitable fraud under s 182 of the Land Transfer Act.  But, the new proceeding contains just the same pleading as did the old with a minor and inconsequential amendment to which I have earlier referred.  Besides, Heath J and Judge Bell were clear that Mr Hair’s title could not be impeached for fraud.   As that was always a likely outcome on the pleading and advance, so too should the plaintiffs been in a position to plead their compensatory claim in the alternative.

[57]     That  same conclusion  is  offered  in  response to  Mr Pidgeon’s  attempt  to replead a case of fraud in circumstances where it is claimed Mr Hair did not do certain things in circumstances where he ought to have because he ought to have known, by himself or through an agent, that the interests of the Excel Estate Trust were being undermined in the process.

[58]     In his submissions to the Court Mr Pidgeon argues that the two statements of claim are not identical because:

(a)      There is now one cause of action against all three parties [thereby elevating allegations  of  Mr Hair’s  connection  to  the level  alleged against Ebada and Mr Garrity – albeit in an accessory capacity].

(b)The remedy sought is $145,000 which was not the remedy sought in the proceeding before Heath J.

(c)       There has been no discovery and no evidence has been heard.

[59]     As I hope it appears from my review of the comparisons between the two statements of claim, I do not consider the draft of yet a further statement of claim provides anything distinctly different to what has already been given.

[60]     To the contrary it is clear that the current proceeding contains precisely those same circumstances reviewed in the earlier proceeding.   It is the case that in the proceeding before Heath J it was not anticipated there would be a need to plead for compensation in the event, foreseeable as it was, that the fraud claim against Mr Hair would not and could not be established.

[61]     The plaintiffs want the opportunity to obtain discovery.  They warn against a risk of injustice if strike out is ordered on an interlocutory basis.

[62]     The Court is mindful of those considerations but it is clear that the case against Mr Hair is to be derived from adverse inferences offered by the plaintiffs about what Mr Hair ought to have done.   Also claims that he knew of the Excel Estate Trust’s interest in the property (which all three defendants deny), are not supported at all except by inference drawn from suspicion.

[63]     It is not acceptable to adopt the position that because matters have been pleaded  as  a  fact  they  should  be  accepted.    That  position  is  based  upon  the proposition that the Court should accept as provable those facts pleaded.  It is not an endorsement of a principle to enable parties that have mere suspicions to plead those as the truth.   Besides there is nothing new offered in support of this statement of claim that has not previously been offered or could not previously have been offered. Claims of breach of trust of fraud or of knowing assistance are no clearer now than they have always been.

[64]     In  the  earlier  proceeding  Heath  J  agreed  s  182  protected  Mr  Hair  by confirming it was not his job to check whether the sale by Ebada/Garrity to him was authorised in terms of any trust arrangements, or to make sure that they were accountable to any beneficiaries from the sale proceeds.

[65]     Heath J said claims that Mr Hair’s then current grazing arrangement (with a Schmidt entity) did not give rise to claims that Mr Hair had a legal duty to contact the Schmidts to obtain their views on the legitimacy of his proposed contract with Ebada.

[66]     Heath J concluded:

I am satisfied that there is no reason to provide Mr and Mrs Schmidt with further time to repair their claim.  They have had ample opportunity to put relevant plans and evidence forward.  In my view, their case against Mr Hair is irreparable.

[67]     And later the learned Judge said:

There is no seriously arguable case of a fraud in which Mr Hair was complicit...

[68]     The position is no different now than it was then.

Conclusions

[69]     Mr Woods for Mr Hair is correct.  The present proceeding is a virtual copy of the earlier proceeding.  The identical circumstances were involved.  In the outcome of their proceeding before Heath J they have contrived to replead their case against Mr  Hair.    They  have  not  done  this  by  reference  to  any  factual  changes  of significance.  Instead they have contrived to describe Mr Hair’s connection with the events relating to his purchase of 11 Bell Road, by means that they had not earlier done.

[70]     The Court does not accept this proceeding, or that the proposed amended statement of claim founds the basis for a new case, because it is nothing more than the old case in a new guise and there has always been the previously opportunity to plead the case as the plaintiffs have now attempted to do.

[71]     The claim against Mr Hair is struck out.

[72]     The position of Ebada and Mr Garrity is different – at least in terms of resolving issues relating to their sale of 11 Bell Road to Mr Hair.   But, in every

relevant respect, it seems that CIV 1793 adds nothing that CIV 4752 could not itself achieve.  Therefore the newer proceeding serves no additional purpose that the older proceeding could not.   It follows that as against Ebada and Mr Garrity the newer proceeding amounts to an abuse of process and it too shall be struck out.

[73]     In those outcomes the case against Ebada and Mr Garrity survives, albeit in a pre-existing proceeding. Those claims against Mr Hair do not.

Costs

[74]     The costs of the applicants are to be paid on a category 2B basis together with disbursements as approved.  Those costs will be the joint and several responsibilities

of the plaintiffs.

Associate Judge Christiansen