Sim v Moncrieff Pastoral Ltd HC Palmerston North CIV-2011-454-343
[2011] NZHC 2003
•13 December 2011
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV-2011-454-343
BETWEEN SHIRLEEN SHIA LING SIM Plaintiff
ANDMONCRIEFF PASTORIAL LTD First Defendant
ANDCOOPER RAPLEY Second Defendant
ANDJOHN WILLIAM MAASSEN Third Defendant
ANDHUNTER DOIG Fourth Defendant
Hearing: 17 November 2011
(Heard at Palmerston North)
Counsel: A. Lau - Attorney for Plaintiff
P.J. Reardon - Counsel for Defendants
Judgment: 13 December 2011 at 3:30 PM
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment of Associate Judge Gendall was delivered on 13 December 2011 at
3.30 pm under r 11.5 of the High Court Rules.
Solicitors: Cooper Rapley, Lawyers, PO Box 1945, Palmerston North
Introduction
SSL SIM & ORS V MONCRIEFF PASTORIAL LTD HC PMN CIV-2011-454-343 13 December 2011
[1] For decision are two applications. The first is an application for summary judgment brought by the plaintiff (Ms Sim), but advanced by her Attorney, Augustine Ee Kuoh Lau (Mr Lau).1 The second is an application to strike-out the plaintiff’s statement of claim brought by the defendants.
[2] Following the hearing of those two applications on 17 November 2011, I reserved my decision. At the conclusion of that hearing, the plaintiff’s attorney, Mr Lau, sought further time to respond to the defendants’ submissions, which he maintained he had only just received on the morning of the hearing. In a minute I issued at the time I allowed the plaintiff until 22 November 2011 to file and serve a further Memorandum with submissions in response to those of the defendants. The defendants were then to have a right to file and serve a reply Memorandum.
[3] I have since received the plaintiff’s supplementary submissions, dated 22
November 2011 and the defendants’ reply, dated 29 November 2011. Despite having no authority to do so, the plaintiff then chose to file a further Memorandum of submissions on 30 November 2011. Notwithstanding this, I have now read and considered all three sets of submissions and had regard to them in coming to my decision outlined in this judgment.
Background
[4] As I understand the position, this is the ninth hearing the plaintiff has had regarding claims over this particular sale transaction. The plaintiff’s claims relate to a Sale and Purchase Agreement dated 18 March 2003 (the Agreement) whereby the first defendant, Moncrieff Pastoral Ltd (wrongly described in the statement of claim as Moncreiff Pastorial Limited – but this is of little moment here) as vendor purported to sell to Ms Sim or nominee as purchaser a 202 hectare farm property in the Canterbury region for $2.9m. The fourth defendant (Mr Doig) was Moncrieff
Pastoral Ltd’s real estate agent and the third defendant (Mr Maassen) that company’s
1 Mr Lau has been married to the plaintiff Ms Sim since 1999, but I am told they have been separated since March 2006. Mr Lau has held a power of attorney for Ms Sim since 11 November 2000 I note however that currently, proceedings have been brought against him and a lawyer in the Auckland High Court by the present plaintiff, Sim v Lau HC Auckland CIV-2011-404-4358, filed 8 July 2011, claiming damages with regard to his actions over the transaction at issue in the present proceeding.
solicitor in the sale. Mr Maassen is a partner of the second defendant firm, Cooper Rapley. The driving force behind this farm purchase by Ms Sim was, however, her husband and attorney, Mr Lau.2 For reasons which will become apparent, I set out the background to this matter only briefly, limited to the aspects salient to the present applications. More detail can be obtained from the various other related proceedings referred to in this judgment.
[5] In the course of negotiations for the purchase of the farm property in question, clause 20 was inserted into the Agreement. Clause 20 reads:
IRRIGATION WELLS The vendor has established three 12‖ wells (70-200 metres) static water level approximately 20 metres, and guarantees production of at least 800 gallons per minute, as at 1st November 2003.
[6] This clause 20 effectively provided a guarantee that the three wells which were either on or to be established on the property would produce at least 800 gallons of water per minute. In fact, the first defendant as vendor did not yet have a resource consent to draw that much water. It stood by its position however which was that that guarantee related to the minimum potential total productive capacity. The plaintiff’s position as purchaser however was that this guarantee was properly interpreted as referring to the minimum amount of water immediately able to be drawn.
[7] In August 2004, shortly before settlement date, in the course of tendering the property for resale, the plaintiff realised that there was no resource consent giving the right to draw water from the wells referred to in clause 20. The plaintiff refused to settle.
[8] Settlement of the sale and purchase thus did not proceed. The parties, individually, purported to cancel the Agreement. The vendor cancelled for failed performance of settlement. The purchaser cancelled on the basis of alleged
misrepresentation of an essential term.
2 See, for example, the finding of Keane J in Moncrieff Pastoral Ltd v Sim HC Auckland CIV-2004-
404-5603, 31 August 2007 at [1] and [11].
[9] On 27 September 2004 the first defendant filed an application in the High Court at Auckland for summary judgment, seeking damages from Ms Sim. Its application failed.3 Associate Judge Sargisson found that Ms Sim had made out arguable grounds for claims in misrepresentation, mistake and breach of the Fair Trading Act 1986. The first defendant appealed that decision to the Court of Appeal. That appeal was unsuccessful.4 However, the Court largely concurred with Moncrieff Pastoral Ltd’s construction of the critical contractual provision guaranteeing Ms Sim as purchaser access to water. Following the Court of Appeal’s decision, Ms Sim counter claimed for return of the deposit which she had paid under the Agreement and, as recorded at [6] of Keane J’s 31 August 2007 decision, reframed her case into four causes of action:
contending that Moncrieff: (i) breached the agreement, principally cl 20; (ii) made material misrepresentations to induce her to enter the agreement; (iii) was aware that she had entered the agreement influenced by a material mistake going to the worth of the bargain to her; and (iv) invalidly cancelled.
[10] The matter then went to trial, essentially on three discrete issues. These were whether a breach of clause 20 had occurred, whether there was material misrepresentation and whether Moncrieff Pastoral Ltd’s cancellation of the Agreement was valid. Keane J upheld the validity of the notice of Moncrieff Pastoral Ltd’s cancellation of the Agreement at [58] and dismissed Ms Sim’s counterclaim for an order directing the return of her deposit on the basis that there
was no breach of clause 20 and there was no misrepresentation.5 For completeness, I
record his Honour’s comments at [55] and [58]:
[55] Moncrieff is not to be held accountable for Mr Lau’s want of care. Moncrieff was never in breach of the agreement. It made no representation beyond what was said in the agreement. The agreement was comprehensive. Moncrieff is entitled to the benefit of it. But to be complete, I need to refer finally to Moncrieff’s decision to cancel under cl 9.4(1), relying on its two settlement notices given under cl 9.1(1).
[58] Moncrieff was, I find, at all material times ready, able and willing to settle in compliance with the contract and its decision to cancel was valid.
3 Moncrieff Pastoral Ltd v Sim HC Auckland CIV-2004-404-5603, 28 April 2005.
4 Moncrieff Pastoral Ltd v Sim CA79/05, 28 September 2006.
5 Moncrieff Pastoral Ltd v Sim HC Auckland CIV-2004-404-5603, 31 August 2007 at [31] and [55].
[11] Ms Sim filed an appeal against this decision of Keane J in the Court of Appeal. However, she failed to file her case on appeal in the required time. From that point on, Mr Lau has prosecuted these proceedings on behalf of Ms Sim. Subsequently, he brought an application to extend time to file a case on appeal. Extension of time however was not granted by the Court.6 Ms Sim then sought the leave of the Supreme Court to appeal the decision of the Court of Appeal. The Supreme Court denied leave.7 In declining leave, the Supreme Court said at [2]:
Further, although the applicant claims to rely on new evidence, the basis upon which she wishes to challenge the August 2007 judgment of Keane J is simply a reiteration of an argument which has previously been convincingly rejected.
[12] The argument to which the Court was referring was Ms Sim’s argument as to the construction of clause 20 of the Agreement. The Supreme Court said in a footnote to that decision:
The respondent had unsuccessfully sought summary judgment and although its appeal against the refusal of summary judgment was unsuccessful, the Court of Appeal directly addressed and convincingly rejected the proposed argument, which concerned the construction of a contractual provision see Moncrieff Pastoral Limited v Sim CA
79/05 28 September 2006.
[13] Moncrieff Pastoral Ltd has also engaged enforcement processes against Ms Sim in this Court. Ms Sim applied in June 2011 to have a charging order discharged. The application was dealt with by Keane J.8 His Honour said at [7]-[9]:
On 10 June 2011 Moncrieff confirmed that it was content to rely on the interim order and Ms Sim has since made three applications seeking to discharge that order and earlier charging orders. In an attempt to revisit the two judgments adverse to her she has also sought leave to introduce new evidence and indeed to claim the relief she was then denied.
Ms Sim raises nothing to suggest the interim order ought to be discharged. Her continued challenges to the judgments adverse to her are futile. They are completely definitive as to the issues she seeks to resurrect. Those judgments entitle Moncrieff to charge the sum paid into the Court of Appeal on account of costs, a sum held in her name. I dismiss Ms Sim's applications.
I direct the Registrar, in the future, only to receive any application from Moncrieff seeking to enforce its judgments and any related response from Ms Sim. I direct the
6 Sim v Moncrieff Pastoral Ltd [2011] NZCA 21.
7 Sim v Moncrieff Pastoral Ltd [2011] NZSC 48, (2011) 20 PRNZ 326.
8 Moncrieff Pastoral Ltd v Sim HC Auckland CIV-2004-404-5603, 20 July 2011.
Registrar not to receive anything further from Ms Sim, in reality Mr Lau, the purpose or effect of which is to put in issue the judgments now beyond challenge.
[14] The present claim re-visits most of the four causes of action alleged before
Keane J, recorded above at [9]. In short, the present statement of claim claims:
(i)a declaration that Moncrieff Pastoral Ltd is in breach of the Agreement, in other words, that Keane J’s judgment was based on illegal settlement notices and so should be set aside;
(ii)that the second and third defendants made material misrepresentations in a letter dated 21 September 2003 and changed the Agreement date in two settlement notices;
(iii)that the fourth defendant did not disclose the condition of the property;
(iv) specific performance of the Agreement; (v) interest on the deposit paid; and
(vi)-(viii) repayment of the deposit along with other heads of damage from each of the defendants.
Counsels’ Submissions and My Decision
[15] As noted above, for determination are two applications. For the reasons which follow, I consider that the defendants’ application for strike out must succeed here. Given that conclusion, it is unnecessary for me to deal with the plaintiff’s application for summary judgment. I now turn to set out the parties’ submission with respect to the defendants’ application for strike out and the reasons for my decision.
[16] Under r 15.1(1) High Court Rules this Court may strike out all or part of a pleading if it—
(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b) is likely to cause prejudice or delay; or
(c) is frivolous or vexatious; or
(d) is otherwise an abuse of the process of the court.
[17] The authors of McGechan on Procedure provide the following helpful summary of the principles relevant to r 15.1(1):9
The established criteria for striking out was summarised by the Court of Appeal in A- G v Prince [1998] 1 NZLR 262, (1997) 16 FRNZ 258, [1998] NZFLR 145 (CA) at
267, and endorsed by the Supreme Court in Couch v A-G [2008] NZSC 45 at [33], perElias CJ and Anderson J:
(a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.
(b) The cause of action for defence must be clearly untenable. In Couch Elias CJ and Anderson J, at [33], said: ―It is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed.‖
(c) The jurisdiction is to be exercised sparingly, and only in clear cases. This
reflects the Court’s reluctance to terminate a claim or defence short of trial.
(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.
(e) The Court should be particularly slow to strike out a claim in any developing area of the law, perhaps particularly where a duty of care is alleged in a new situation. In Couch, at [33], Elias CJ and Anderson J said: ―Particular care is required in areas where the law is confused or developing.‖ There is considerable authority that developments in negligence need to be based on proved rather than hypothetical facts.
[18] In addition, in order to succeed in striking out a cause of action as statute- barred, the defendant must satisfy the Court that the plaintiff’s cause of action is so clearly statute-barred that the plaintiff’s claim can properly be regarded as frivolous, vexatious or an abuse of process. Tipping J went on to say in Murray v Morel & Co
Ltd Murray v Morel & Co Ltd:10
In the end the judge must assess whether, in such a case, the plaintiff has presented enough by way of pleadings and particulars (and evidence, if the plaintiff elects to produce evidence), to persuade the court that what might have looked like a claim which was clearly subject to a statute bar is not, after all, to be viewed in that way, because of a fairly arguable claim for extension or postponement. If the plaintiff demonstrates that to be so, the court cannot say that the plaintiff’s claim is frivolous, vexatious or an abuse of process. The plaintiff must, however, produce something by
9 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at
[HR15.1.02(1)].
10 Murray v Morel & Co Ltd Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721 at [33].
way of pleadings, particulars and, if so advised, evidence, in order to give an air of reality to the contention that the plaintiff is entitled to an extension or postponement which will bring the claim back within time.
[19] Mr Reardon, for the defendants, advanced three grounds in support of his application for strike out. First, that the plaintiff’s claims are barred by the doctrine of res judicata. Secondly, that the second to fourth defendants are privies to the first defendant in the sense that they are only liable if the first defendant is liable. And thirdly, that this proceeding has been brought out of time by reason of the Limitation Act 1950.
Res Judicata
[20] Turning now to the first res judicata ground, the defendants contend the Court should strike out the proceeding brought by Ms Sim against the defendants on the ground that Ms Sim’s claim is estopped because it is res judicata. A final decision has already been made by the High Court in its decisions of 31 August 2007 and 1
October 2010. This proceeding is an attempt by Ms Sim to reopen the issues that were finally and definitively adjudicated by Keane J.
[21] The statement of claim seeks the same remedies against the same party over the same Agreement that constituted the issues traversed by the High Court in 2007 and 2010. This can be seen when one consider the prayers in the statement of claim:
(a) Prayer one seeks a declaration that the vendor is in breach of the
Agreement;
(b) Prayer two alleges misrepresentation on behalf of the vendor; (c) Prayer six seeks a refund of the deposit.
[22] The only substantive change between this proceeding and the proceeding of
2007 is that Ms Sim has now added other defendants, namely Cooper Rapley, the solicitors acting for the vendor; a Cooper Rapley principal, Mr Maassen; and the real estate agent who acted for Moncrieff Pastoral Limited on the sale, Mr Doig. All three additional defendants were acting as agents of the vendor, Moncrieff Pastoral Limited.
[23] The Court of Appeal addressed the rule of res judicata in Shiels v Blakeley
[1986] 2 NZLR 262. Somers J, giving judgment for the Court, said at 266 line 24:
.... that where a final judicial decision has been pronounced by a New Zealand Judicial Tribunal of competent jurisdiction over the parties to, and the subject matter of the litigation, party or privy to such litigation, as against any other party or privy thereto, is estopped in any subsequent litigation from disputing or questioning the decision on the merits. The reasons for the existence of the rule are not in doubt. They were stated by Lord Blackburn in Lockyer v Ferryman (1877) 2 App Cas 519,530: The object of the rule of res judicata is always put upon two grounds – the one public policy, that it is in the interest of the state that there should be an end of litigation, and the other, the hardship on the individual, that he should not be vexed twice for the same cause.
In one branch of the law of res judicata the cause of action put in suit in the first proceeding passes into judgment so as no longer to have an independent existence. There is both a merger of the cause of action in the judgment and a cause of action estoppel.
[24] An additional reason for the res judicata rule must be that it is undesirable to have two conflicting court judgments on the same issue between the same parties. Which judgment is to be enforced?
[25] The issues Ms Sim seeks to address in these proceedings have been the subject of numerous court hearings since 2005. They have been to the Court of Appeal twice and the Supreme Court once already. The definitive decision on liability was given by the High Court in August 2007. Despite this, Ms Sim has sought to challenge the merits of that decision in numerous interlocutory applications, including one application in the High Court when Keane J ordered that nothing more should be accepted by the Auckland High Court from Ms Sim if the effect or purpose of it was to bring into question his August 2007 decision.
[26] Furthermore, substantial costs have been awarded against Ms Sim at each stage of the Auckland High Court proceeding and the Court of Appeal and the Supreme Court appeals. To date, as I understand it, Ms Sim has declined to pay any of those costs. Instead, the first defendant has had to bear those costs and, if this summary judgment application is permitted to proceed, the first defendant will not only be ―vexed twice for the same cause‖, but, it is submitted, will likely have to continue bearing the cost of litigation. As Cooke J said in New Zealand Social Credit Political League Inc v O’Brien [1984] 1 NZLR 84:
I am satisfied that the present action is simply another effort to reopen the same general issues and obtain the same type of redress that he [Mr O’Brien] unsuccessfully strove for in the defamation actions. There must come a time when it
is overwhelmingly in the interest of all parties and of the community that there should be an end to litigation, and I have no doubt that point has been passed.
[27] Given the time and money that has already been spent on the issues that Ms
Sim seeks to reopen with these proceedings, I am satisfied it is now
―overwhelmingly in the interest of all parties‖ that there should be an end to this
litigation. I will now expand on this conclusion further.
[28] There are two relevant elements of the doctrine of res judicata in this case. The first is that it will apply where the earlier case determines the same question raised in the later litigation, or in some way involved the same question. The second element is that it is only the parties to the earlier decision or their ―privies‖ who are bound by it.
Same question?
[29] The matter must have been directly at issue in the previous proceedings and the relevant determinations must be ones which are fundamental to the earlier determination and without which it cannot stand.11
[30] In Mr Reardon’s submission, the plaintiff’s present claim is merely rehashing matters which were determined by Keane J and the Court of Appeal. Mr Reardon submitted that this can be seen in the claims brought by the plaintiff, as recorded at [14] above.
[31] The plaintiff’s first claim seeks a declaration that the vendor is in breach of the Agreement. The plaintiff’s fourth claim seeks specific performance of the Agreement as for breach of clause 20 is concerned. As outlined above, the Court of Appeal has already considered the issue of the proper interpretation of that clause, ruling in favour of the first defendant’s interpretation. There can be no argument here in my view that any issue as to the proper interpretation of clause 20 does not amount to a re-litigation of that issue. It is a matter that has been squarely before the Court of Appeal and decided.
[32] Mr Lau also endeavoured to argue before me that even on the Court of Appeal’s interpretation of the Agreement, the plaintiff breached its obligations. He contended that is because the wells could not produce 800 gallons of water per minute. While that might be so, that issue was also squarely before Keane J in his August 2007 judgment. At [19] his Honour concluded that the yield of the wells was more than 800 gallons per minute. Therefore, the plaintiff must be estopped from bringing that argument again here.
[33] Further, in support of the specific performance claim, in the hearing before me Mr Lau raised another claim against the defendants, that being a suggested breach of s 9 of the Fair Trading Act 1986 for not disclosing a letter from Environment Canterbury dated 7 April 2003. Mr Lau argued that the first defendant was required to disclose that letter under clause 6.3(2) of the Agreement. He cited a decision of this Court in support: Hieber v Barfoot & Thompson.12
[34] On this question, Williams J recently considered the general issue of res judicata in Reid v Cottle.13 In that case, the plaintiff issued proceedings against the defendant with regard to a sale and purchase agreement. The plaintiff had earlier been unsuccessful in a claim against Ms Cottle in earlier proceedings before this Court. He appealed out of time, and the Court of Appeal declined but gave some advice as to how the claim could have been better brought. Mr Reid sought to take on that advice and initiate proceedings afresh, alleging claims under different heads to those taken earlier. In that case, Williams J concluded at [21]:
The fact is these proceedings amount to a re-litigation of the issues and evidence in the first litigation involving all of the same witnesses. It is true that Cooper Rapley have been added as respondents but no claim against that firm can be successful without first succeeding against Mrs Cottle herself. To that extent the claims against Cooper Rapley are derivative only and therefore repetitive. The ratio in Thompson v Ross applies.
[35] I consider that this would amount to a re-litigation of the same issue. As established in Henderson v Henderson14 if a point ought properly to have been put
12 Hieber v Barfoot & Thompson HC Auckland HC174/95, 19 July 1996.
before a court which is the subject of litigation, a party may not subsequently at a later date re-open old wounds to raise a matter. To permit such a course would be contrary to the principle of finality in litigation.15 Knowledge of the existence of the letter in question here was available to the plaintiff, at the latest, on 21 June 2007 (by way of an email from Environment Canterbury to Mr Shean, on behalf of the plaintiff). I consider that such an argument was open to the plaintiff in her counter claim before Keane J. In those circumstances, she must be estopped from arguing this issue here. As for Mr Lau’s contention that Keane J’s judgment ought not to be
followed as it was based on illegal settlement notices, that argument is dealt with below.
[36] The plaintiff’s second prayer alleges misrepresentation on the part of Cooper
Rapley and Mr Maasen, a partner at Cooper Rapley, arising out of a letter dated 21
September 2003 and from ―illegally‖ changing the Agreement date in two settlement notices for the sole benefit of the first defendant. Further, the third prayer for relief alleges misrepresentation on the part of the fourth defendant, the real estate agent involved in the sale of the land to the plaintiff.
[37] As Keane J discussed, in order to found a successful claim for misrepresentation the alleged misrepresentation must have induced Ms Sim to have entered into the contract. Keane J in my view made his crucial finding as to the reasons for Ms Sim entering into the Agreement at [54] of his August 2007 judgment in these terms:
Everything that then happened springs from this. Mr Lau, I find, had been so intent in March 2003 on securing the purchase within an impossibly short period of time that he dispensed with every usual precaution. His understanding of what he was purchasing for his Chinese investors remained highly abstract. He was not interested in the detail. He only ever turned his mind to whether there was a right to take water from the wells when he tried on behalf of his investors to turn the investment to account. Then a potential purchaser asked the question that he should have asked. By then it was far too late.
[38] This Court said in Thompson v Ross:16
In my opinion, facts upon which the plaintiff would have to rely in order to establish the giving to them of the verbal warranty which they now desire to allege were put in issue by them and were found against them at the previous trial, and such finding was fundamental to the judgment then given.
[39] Williams J followed that dicta in his recent decision in Reid v Cottle, and in my view it also applies directly in the present case.17
[40] Mr Lau argued that the settlement notices issued were illegal as they relied on an Agreement said to be dated 18 April 2003. The Agreement at issue here was dated 18 March 2003. Mr Lau maintained that Cooper Rapley did this in order to avoid the first defendant’s obligation under clause 6.3(2) of the Agreement to provide any notices issued by the local authority to the plaintiff after the signing of the Agreement. Such notice was received on 7 April 2003, but it was said that it was not provided to the plaintiff. Mr Lau endeavoured to suggest that this was because the first defendant altered the date of the Agreement in some way. Further, Mr Lau argued, because that error in the date of the Agreement he said rendered the settlement notices illegal, the Agreement could not have been validly cancelled by the first defendant.
[41] As to the second of those arguments, the issue of valid cancellation was clearly before Keane J. That cannot be revisited. As to the former, Mr Reardon submitted that no objection was ever raised before any of the previous courts as to
―illegal‖ settlement notices and so the plaintiff should now be estopped from raising it. I agree. That issue if anything is properly a matter for appeal. As the Court of Appeal said in relation to related proceedings, both the first defendant and the community have a legitimate interest in the timely determination of proceedings.18
For the reasons discussed above, this is an argument which was reasonably open to
the plaintiff to bring at an earlier stage, and she did not do so.
16 Thompson v Ross [1943] NZLR 712 (SC).
[42] Mr Lau also alleges misrepresentation on the part of the second and third defendants with respect to a statement in a fax sent by them to the plaintiff’s solicitor on 21 September 2004. Mr Reardon advised that this fax was sent in response to, a question as to why there was no resource consent issued to comply with clause 20. Mr Maasen’s response, in that 21 September 2004 fax, was that ―There is no resource consent to take water in respect of [bore no 3]‖. Mr Lau argued that that statement was incorrect as Environment Canterbury confirmed, following his own enquiries made on 2 November 2011, that there was consent to remove water at a rate of five litres per second, up to 100 cubic metres per day. Mr Lau said that if he had known that there was some form of consent then his potential purchaser investors may have been willing to engage in settlement negotiations more constructively. Mr Reardon in response submitted that this issue is clearly dealt with at [38] and [40] of the Court of Appeal’s 2006 decision and I agree. In those
paragraphs the Court records:19
Under [the Resource Management Act 1991], a resource consent was needed for the drilling of the wells and a further resource consent was needed for the ongoing use of water (above any amount permitted as of right under the relevant regional plan). That resource consent would have addressed the volume of water that could be taken on a daily or weekly basis and the rate at which it could be taken. Plainly this would be relevant to development possibilities. The general requirements of the Resource Management Act as they impact on rural land intended to be developed for dairying, viticulture or similar purposes are, in terms of Lord Hoffman’s second principle,
―reasonably available to the parties‖ and influence the way in which the language of
clause 20 would be understood by a reasonable person.
…
Third, Mr Lau said that he advised Mr Doig that his overseas investors had in mind developing the land for dairying, for viticulture or for subdivision. He deposes that he understood that clause 20 provided him with a guarantee of the ongoing use of water for development purposes. But any resource consent authorising extraction of water on an ongoing basis would necessarily have related to a specific use, and Mr Lau and his investors were not committed to a specific use as at the date of the agreement.
[43] In that light, there was no resource consent in the sense that the plaintiff’s solicitor requested. Further, I am satisfied that, first, reconsideration of this issue would require re-litigation of the matters before Keane J. Secondly, the plaintiff’s argument before Keane J was that no wells had any legal status and so were in
breach of clause 20.20 A party cannot turn and effectively argue the opposite in subsequent proceedings in an attempt to avoid issue estoppel.21 Thirdly, in order for the plaintiff to succeed she must be able to adduce this fresh evidence. It is clear from the Court of Appeal’s discussion at [16]-[17] of its 2006 judgment that the
plaintiff’s solicitors had undertaken considerable investigations regarding this matter prior to entering into the Agreement. Accordingly, this material could clearly have been uncovered with reasonable diligence, if it was not already known. Therefore, issue estoppel may not be avoided.22
[44] Finally, there is Mr Lau’s argument with regard to the fourth defendant Mr Doig. At paragraphs 10 to 11 of his Notice of Opposition, Mr Lau sets out his issue with Mr Doig’s conduct. Primarily it relates to a fax which was discovered by the defendants on 21 June 2007. That fax is dated 15 May 2002 and was sent by Mr Doig to a prospective purchaser of the land at issue. In that fax Mr Doig wrote: (emphasis in original)
Charles:
Re [Environment Canterbury]: The only other info we can offer from discussions with the vendor they have assured him irrigation will not be a problem, but effluent disposal would be.
[45] Mr Lau’s argument is that Mr Doig misrepresented the state of the land through his silence in not telling the plaintiff of the effluent situation. Mr Lau said that if he had known about this he may have walked away from the property. Of course, silence may be enough to amount to a misrepresentation.23 However, again that evidence was available to the plaintiff at the time of the hearing before Keane J and was not put at issue. Further, both Keane J and the Court of Appeal in its 2006 judgment dealt with the issue of silence and misrepresentation at [55] and [51] respectively. Both courts were satisfied that there were no material matters which
remained unsaid to the plaintiff which constituted misrepresentation.
20 See [16].
21 Otago & Southland Investment Co Ltd v Burns (1874) 1 NZ Jur 165, 2 NZCA 551.
22 See Meates v Taylor [1992] 2 NZLR 36 (CA).
[46] Again, I consider that consideration of whether Ms Sim was induced to enter into the Agreement by a misrepresentation by any agent of the first defendant would also require re-litigation of the issues and evidence considered and heard by Keane J. An issue arises, however, as to whether this present litigation concerns the same parties or their ―privies‖.
Same parties?
[47] The doctrine of res judicata only applies to the parties to the original decision and their privies. The Court of Appeal set out the test for whether a person is a privy in Shiels v Blakeley thus:24
Privy in this sense denotes a derivative interest founded on, or flowing from, blood, estate, or contract, or some other sufficient connection, bond, or mutuality of interest. No case has yet sought to define exhaustively the degree or nature of the link necessary to render a person privy in interest. That this is so is not surprising for the necessary connection may arise in a variety of ways and its existence falls to be tested in the light of the object of the rules about estoppel by res judicata and their effect in preventing the party in the subsequent proceeding from putting his case in suit. ...
...
We conclude that there must be shown such a union or nexus, such a community or mutuality of interest, such an identity between a party to the first proceeding and the person claimed to be estopped in the subsequent proceeding, that to estop the latter will produce a fair and just result having regard to the purposes of the doctrine of estoppel and its effect on the party estopped.
[48] Mr Reardon submitted that the plaintiff’s case is identical against the second, third and fourth defendants to that against the first. Indeed, he argued that the second, third and fourth defendants’ liability is derivative from the first defendant’s in the sense that they are not liable unless the first defendant is. He further submitted that this is borne out by the fact that Ms Sim’s statement of claim does not make any particular allegations in respect of the second, third and fourth defendants except as agents of the first. In Mr Reardon’s submission, the decision of the Court of Appeal
in McLean v Bank of New Zealand provides a useful analogy to the present.25
[49] In that case, Mr and Mrs McLean owned a house in Auckland. Their home was sold by the Bank of New Zealand in exercise of its powers as mortgagee,
24 Shiels v Blakeley [1986] 2 NZLR 262 (CA) at 268.
25 McLean v Bank of New Zealand (1996) 9 PRNZ 473 (CA).
following Mr McLean’s failure to pay under a personal guarantee. The Bank had earlier obtained summary judgment against Mr McLean pursuant to the guarantee, which Mr McLean did not defend. Later he applied, unsuccessfully, to have the summary judgment set aside. Mrs McLean was not a party to either proceeding.
[50] Subsequently, the Bank reviewed the McLeans’ file and it became uncertain as to whether the sum owed under the guarantee (and pursuant to the summary judgment) was in fact secured by the mortgage. It, therefore, issued proceedings to obtain directions from the Court. Mr and Mrs McLean were both parties to that proceeding, and counterclaimed against the Bank, inter alia challenging the validity of the guarantee. The Bank applied to strike out those counterclaims, on the basis that issue estoppel prevented both Mr and Mrs McLean from raising the issue of the validity of the guarantee.
[51] Blanchard J, for the Court, upheld both of the earlier decisions and said:26
[Mrs McLean’s] liability is derivative from his, in the sense that she is not liable unless he is. Whether or not someone subject to a derivative or dependent secondary obligation of this kind is viewed as a privy because of the contractual nexus or mutuality of interest with the person guaranteed, or whether it is simply seen as an abuse that a creditor be put to proof of a debtor's liability a second time, Mrs McLean should not be permitted now to raise a question about her husband’s liability.
[52] In Reid v Cottle, the original proceedings were filed by Mrs Barber against Mrs Cottle. In the proceedings before Williams J, the proceedings were filed by Mrs Barber and Mr Reid against Mrs Cottle and Cooper Rapley. With respect to Cooper Rapley’s liability, Williams J said at [28] that firm’s exposure is as a derivative of Mrs Cottle’s because that firm will only be liable if Mrs Cottle is found liable. Therefore, res judicata applies.
[53] In the present case, the claims with respect to the first defendant are clearly mounted against the same party and so the doctrine applies. With regard to those claims against Mr Doig, the real estate agent, I also consider that the doctrine applies. He was clearly acting as a derivative of the first defendant’s in making
representations (if these occurred), as to the state of the property. In making any
26 At 472 - 473.
such representations he was an agent of the first defendant. Therefore, I understand the plaintiff’s claim to be one of contractual misrepresentation against the first defendant and Mr Doig as its agent. The issue of the second and third defendant’s solicitors in the present case is more difficult however.
[54] As discussed above, the existence of a necessary connection falls to be determined by having regard to the purposes of the doctrine of res judicata. With regard to the claim that the second and third defendants illegally issued settlement notices with the wrong date, I consider that the liability is clearly derivative. In order to get any meaningful relief from that claim it would have to be against the first defendant in avoiding cancellation of the Agreement.
[55] As for the claim against the second and third defendants for misrepresentation, the issue is not so clear. In contrast to my understanding of the plaintiff’s claim against the real estate agent Mr Doig, I consider that her claim against the second and third defendants is one in negligence. The plaintiff’s claim against those defendants is for the loss of bargain in not accepting a settlement offer. Whether that would have come to pass is a separate question. However, because the claim is against the defendants individually, it is arguable that liability is not contingent on a concurrent finding against the first defendant.
[56] Halsbury’s Laws of England defines the purposes of res judicata as being to uphold two principles:27
a) Public interest in there being an end to litigation; and
b) That no one should be proceeded against twice for the same cause.
[57] Halsbury further notes that the question of res judicata and privies is generally determined by an examination of the factual identity of the parties and the
fairness of binding them by a decision in which they were not represented.28
27 Halsbury’s Laws of England (5th ed, 2009) vol 12 Civil Procedure at [1168].
28 At [1196].
[58] In the present case, the alleged representation was made by the third defendant Mr Maasen. The claim is brought against him (and his firm) personally. Therefore, it is brought, presumably, in negligence. In those circumstances I do not consider that it would be unfair here to continue proceedings against him (and his firm) as it cannot be said that he will have been proceeded against twice.
Limitations
[59] While I am satisfied that the plaintiff is estopped from bringing all claims except for those against the second and third defendants, there is also here the issue of limitation. The defendants also claim that all of the claims brought by the plaintiff are statute barred under the Limitation Act. I agree.
[60] By the Limitation Act a cause of action in contract or tort must be brought within six years of the date the cause of action arose. A cause of action in negligence does not exist until there is an act or omission of the defendant which breaches a duty of care owed to the plaintiff and, more importantly for the present case, loss or injury is caused by that act or omission. ―The existence of loss or injury is an element without which the cause of action does not exist and accordingly until
it occurs time does not run against the plaintiff for limitation purposes‖.29 As loss is
required it is unjust and unreasonable to expect a plaintiff to commence proceedings before the loss is quantified.30
[61] In New Zealand, the test to determine at what time damage will be actual and quantifiable has been expressed thus:31
Damage will be contingent, and hence not actual for limitation purposes, if the plaintiff will suffer no damage at all unless and until a contingency is fulfilled. That will be so if the damage results from the plaintiff being exposed to a liability which is contingent on the occurrence of a future uncertain event … A reduction in the value of an asset, whether tangible or intangible, constitutes actual damage and exists as soon as the asset becomes less valuable.
29 Thom v Davys Burton [2009] NZSC 65, [2009] 1 NZLR 437 at [38].
30 Wardley Australia Ltd v Western Australia [1992] HCA 55, (1992) 175 CLR 514 at 533.
31 Thom v Davys Burton [2009] NZSC 65, [2009] 1 NZLR 437 at [46].
[62] Therefore, it matters not whether the actual pleaded damage had come into existence. Rather:32
…if it can be shown that a claimant is worse off in terms that can be measured financially at the date of receipt of the advice or the negligent failure, the cause of action will accrue on that date, even though accurate measurement of damage would be difficult and some of the damage may still be contingent.
[63] Indeed, the general approach of the courts in the United Kingdom is that if some measurable loss can be proven at an earlier point in time, quite apart from the contingent loss, the cause of action will accrue at that earlier time, notwithstanding that the full extent of the plaintiff’s financial loss may be incapable of ascertainment until some later date.33 From the test expressed above at [61], I consider that New Zealand authority is in line with the United Kingdom in that respect.
[64] The letter in question here was sent on 21 September 2004. Mr Lau’s argument is that this advice adversely affected his investor’s opinions as to the quality of investing in that land. Therefore, in Mr Lau’s argument, the loss was immediate on hearing of that position: the investors no longer wished to invest. Therefore, the plaintiff’s time expired six years after that date being September 2010. These proceedings were initiated on 27 May 2011. The proceedings were, therefore, brought out of time.
[65] Of course, in the case of fraud, time will be extended. However, on the facts as they are before me, there is no basis on which fraud can be reasonably argued.
[66] For the avoidance of doubt, I also consider that time has expired for the plaintiff to bring the other proceedings.
[67] An action for breach of contract will accrue upon the breach when every fact exists which it would be necessary for the plaintiff to prove in order to support the
plaintiff’s right to a judgment of the Court.34 Further, the fact that the breach has not
32 Spencer v Secretary of State for Work and Pensions and Moore v Secretary of State for Transport
and Motor Insurers’ Bureau [2008] EWCA Civ 750 at [24].
33 Wardley Australia Ltd v Western Australia [1992] HCA 55, (1992) 175 CLR 514 at 530-531.
34 Williams v Attorney-General [1990] 1 NZLR 646 (CA) at 678;
been discovered is irrelevant, except for some specific circumstances.35 Here I am satisfied that the cause of action accrued upon entering into the contract on 18 March
2003. Therefore, the current proceedings are brought out of time.
Conclusion
[68] In summary and for all the reasons outlined above, the defendants’ application to strike-out the plaintiff’s statement of claim must succeed. An order is now made striking out the plaintiff’s statement of claim here against all four defendants.
[69] As to the issue of costs the defendants here seek solicitor client costs on this application against both the plaintiff and against Mr Lau who has sworn the plaintiff’s affidavit in this proceeding and has prosecuted it on her behalf. That application against Mr Lau is made pursuant to r 14.1 of the High Court Rules, on the basis that he appears to be pursuing this litigation for his own benefit and at his
own expense.36
[70] I note that Mr Lau did not respond to the submissions with regard to costs. [71] Rule 14.1 provides that all matters relating to the costs of and incidental to a
proceeding are at the discretion of the Court. Rule 14.2 sets out the principles applying to the determination of costs. The general principle is that the party who fails should pay costs to the successful party. There is no express reference to costs against a non-party.
[72] The principles relevant to an award of costs against a non-party were recently summarised by Asher J in Asset Building M Pritchard Limited v Hambeg Limited.37
The jurisdiction of courts in this country to award costs against a non-party was
confirmed by the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v
35 Buxton v McKenzie [1960] NZLR 732 (SC).
36 Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145.
37 Asset Building M Pritchard Limited v Hambeg Limited HC Auckland CIV-2008-404-3781, 21
November 2008.
Todd (No 2). But, it is also clear from the authorities that an award of costs against a non-party is exceptional. That award will depend on the facts of the case. The reason for awarding costs against a non-party was summarised by Tompkins J in Carborundum Abrasives Ltd v Bank of New Zealand (No 2) at 156:38
Where proceedings are initiated and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in their result, such as a receiver or manager appointed by a secured creditor, a substantial unsecured creditor or a substantial shareholder, it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail or be discontinued. That will be so whether or not the person is acting improperly or fraudulently.
[73] The question is, therefore, whether the non-party is the ―real party‖ to the
litigation.39
[74] Asher J in Asset Building noted five features which are useful in determining liability in these circumstances:
a) Whether the unsuccessful party is liable for costs;
b) Whether the non-party controlled the litigation;
c) Whether the non-party stood to benefit from the outcome of the litigation;
d)The merits of the litigation under the control or influence of the non- party; and
e) The procedural steps taken under the control or influence of the non- party.
[75] In the present case, Mr Lau was clearly placed on notice of the defendants’
intention to seek costs from him and to undertake this course in their application for strike-out. Therefore, whilst he did not address submissions on the issue of costs
38 Carborundum Abrasives Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757 (HC).
39 Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145 at
[23](3).
before me, I consider that the defendants are entitled to a decision here with regard to the issue.
[76] I am satisfied in this case that Mr Lau is clearly the ―real party‖ to this litigation. Indeed, as I have noted above, Ms Sim has initiated proceedings against Mr Lau with regard to the Agreement and to his bringing proceedings in her name. Further, Mr Lau certainly stood to benefit from the outcome of the litigation. Indeed, most of his arguments were couched in terms which suggested that the outcome was solely his concern. For example, with regard to the real estate agent Mr Doig’s alleged silence as to effluent issues, Mr Lau’s response was that he would have walked away from the property. Further, as noted by the other courts which have considered this matter, culminating in the step taken by Keane J to restrain the plaintiff from filing further proceedings in the High Court at Auckland, Mr Lau has been behind all this litigation from the start. In those circumstances, I am satisfied that costs ought to be ordered against him. An order to this effect is to follow.
[77] Further, the defendants seek full solicitor client costs here. Under r 14.6(4), a court may order a party to pay indemnity costs if:
(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e) the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[78] Given that both Mr Lau and Ms Sim were given a stern warning by Keane J in his 20 July 2011 judgment as well as by the Supreme Court’s earlier this year, I am satisfied that their bringing the present proceeding was clearly vexatious. I have found in this judgment that all of the claims brought by the plaintiff are statute barred and that the plaintiff is also estopped from bringing the vast majority of those claims under the doctrine of res judicata. The defendants have unnecessarily been put to the expense of defending the present claim, the first defendant for the second time (and this not including two appeals).
[79] I accordingly grant the defendants reasonable solicitor client costs and disbursements with respect to this application against both Mr Lau personally and against the plaintiff on a joint and several basis. Those costs and disbursements are to be certified by the Registrar. Opportunity should be afforded to Mr Lau and the plaintiff to comment as to the reasonableness of any costs incurred prior to the sealing of any costs order.
‘Associate Judge D.I. Gendall’
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