Skelton v Nair
[2015] NZHC 832
•24 April 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-001796 [2015] NZHC 832
UNDER the Trustee Act 1956 AND UNDER
the Receiverships Act 1993
IN THE MATTER
of a claim to set aside a settlement agreement and for damages
BETWEEN
BEVIN HALL SKELTON Plaintiff
AND
DARAN NAIR Defendant
Hearing: 17 April 2015 Appearances:
Plaintiff in person
EJ Werry for DefendantJudgment:
24 April 2015
JUDGMENT OF ASHER J
This judgment was delivered by me on Friday, 24 April 2015 at 3pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
S McDonald, Auckland.
EJ Werry, Auckland.
Copy to: Plaintiff.
SKELTON v NAIR [2015] NZHC 832 [24 April 2015]
Introduction
[1] The defendant Daran Nair applies to strike out this claim brought by Bevin Hall Skelton. He relies on r 15.1(c) and (d) of the High Court Rules, namely that the proceeding is frivolous or vexatious, or is an abuse of the process of the court.
[2] The original statement of claim, undated but filed on 17 July 2014, ran to 17 pages and contained hundreds of clauses and subclauses. Mr Skelton has throughout been self-represented.
[3] On 28 August 2014 Mr Nair applied to strike out Mr Skelton’s statement of claim, asserting amongst other things that the statement of claim was prolix, vexatious and an abuse of process.
[4] When the case was called it was adjourned to give the plaintiff an opportunity to file an amended statement of claim. An amended statement of claim was filed and served on 3 November 2014, and it is that which is the subject of this application to strike out.
[5] The ground relied on is that the allegations of fact which the claim is based on were the subject of a full and comprehensive settlement in earlier proceedings in this court filed under CIV-2006-404-2924 and CIV-2007-404-5247. It is stated that the terms of the settlement are a complete bar to the claim and accordingly it is frivolous and vexatious and an abuse of process.
[6] It appears that in 2006 Mr Skelton and his wife at the time were involved in litigation. Mr Nair is a chartered accountant and he was ultimately appointed as a receiver of a partnership known as the Urban and Country Partnership (UCP) which was in effect a partnership of the respective trusts of Mr and Mrs Skelton.
[7] Mr Nair commenced proceedings in his name as receiver of UCP, against Mr Skelton’s trust and another associated trust, seeking recovery against the trustees of $439,000.
[8] There was a settlement conference on 4 August 2008 before an Associate Judge. Settlement was reached and a heads of agreement was executed by the parties. There were then two later deeds of settlement on 30 August 2008 and in February 2009. There were complete settlement clauses in the August and February agreements. It is submitted for Mr Nair that in the light of the settlements that were reached and the agreement that all claims were at an end, this proceeding must fail as it is an attempt to relitigate matters already resolved.
Approach to strike out
[9] The criteria to be applied in a strike out application are well settled. In
Attorney-General v Prince and Gardner the Court of Appeal held:1
A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed; the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material; but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction.
[10] Although facts are generally assumed to be true, this does not mean that every statement in a pleading must be accepted without examination. Provided the challenge to a pleading is based on uncontested or uncontestable material the Courts will engage with the facts more freely. In this case certain background factual material has been placed before the Court without objection.
[11] In certain circumstances uncontested affidavit evidence can be filed and relied on by a Court considering a strike out application. It was stated in Attorney- General v McVeagh:2
The Court is entitled to receive affidavit evidence on a striking out application, and will do so in a proper case. It will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking out application is dealt with on the footing that the pleaded facts can be proved. But there may be a case
1 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267 (citations omitted).
2 Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566 (citations omitted, emphasis added).
where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.
The amended statement of claim
[12] Mr Skelton’s amended statement of claim sets out the background to Mr Nair’s involvement and then refers to an apartment in Australia in which the Skelton interests owned a half share. The statement of claim pleads that on 18 May
2007 Mr Nair entered into an agreement to sell to one of the other owners, Mr Howcroft, and his spouse, the one half share in the apartment. It is alleged that Mr Nair did not disclose the existence of the agreement to Mr Skelton. Mr Skelton then refers to the settlement agreement of 4 August 2008 as a “heads of agreement” and asserts that at the time of signing the head of agreement he was “of the impression that the sale of the one half share in the apartment had not yet occurred but was still an offer only”. He pleads that unbeknown to him the sale to Mr Howcroft had been completed and the proceeds of sale distributed. He pleads:
The defendant had a duty to disclose to the plaintiff, trustee of the ROT, all material information in relation to his activities, including in relation to the sale of the one-half share in the apartment and the two subsequent variations of the Agreement.
The defendant failed to disclose any of the foregoing information to the plaintiff.
Had the plaintiff been aware of the above state of affairs, he would not have signed the heads of Agreement settling all claims that he had or may have had against the other parties, including the defendant, particularly as one of the beneficiaries of the ROT was an infant.
The plaintiff signed that document because of the defendant’s failure to disclose to him information which he had a duty to disclose, and while subject to extreme psychological pressure exerted on him to do so by the defendant, in concert with others, including C M Howcroft, the purchaser from the defendant of the one-half share in the Australian apartment owned by the ROT and the OTT.
[13] He then goes on to assert that at the time of the agreement to sell to Mr Howcroft there was another available buyer who was willing to pay more, and that Mr Nair failed to make an adequate effort to obtain the best sale price and sold it undervalue. Mr Skelton claims that as relief:
i. An order setting aside the Heads of Agreement dated 4 August 2007, signed by the plaintiff;
ii. Damages in the sum of the New Zealand dollar equivalent of A$34,987.50, being one-half of the sum of A$69,975, the difference between the price at which the defendant sold the apartment, and the amount that an available buyer was willing to pay for it;
iii. Damages;
iv. Aggravated and/or punitive damages;
v. Costs of and incidental to this proceeding.
[14] The only particularised failure on Mr Nair’s part set out in this amended
statement of claim is sale at an undervalue, being the sale to Mr Howcroft for
$380,025.
The settlement agreements
[15] I turn to the settlement agreements relied on by Mr Werry for Mr Nair. Mr Skelton did not in his short affidavit or in his submissions seek to contest the fact that he had signed the settlement agreements. This is uncontested evidence and it is properly relied on by Mr Werry in his submissions.
[16] The settlement agreement reached through a judicial settlement conference after the entering into of the agreement to sell to Mr Howcroft, referred in the recitals to the receiver completing the sale and the parties signing all documents and doing all things necessary to facilitate completion. It contained this clause at paragraph 14:
This Agreement and completion of settlement in its terms are accepted by all parties in full satisfaction of all claims and obligations now or in the future inter partes, as between the trusts referred to herein and as between the Receiver, the trusts and parties herein or by Bevin or Marie against any family trust of which the other has been a beneficiary.
And at paragraph 19:
The parties to this deed acknowledge that all claims they may have whether present or future, arising out of the receivership and the Receiver’s entry into this Deed of Settlement are fully and finally settled upon execution of this deed.
[17] It was stated in the variation of 30 August 2008 that the terms and conditions of the earlier agreement would remain in full force and effect. In the agreement of
25 February 2009 there was a new final settlement clause which provided as follows:
This agreement and completion of the settlement in its terms and the subsisting terms of the agreement dated 4 August 2008 and 30 August 2008 are accepted by all parties in full and final satisfaction of all claims and obligations now or in the future as between the trusts referred to herein and as between the receiver, the trusts and parties herein or by either Bevin or Marie against any family trust of which the other is or has been a beneficiary.
[18] These agreements were signed by Mr Skelton “in all capacities”. They unambiguously settled between Mr Nair and Mr Skelton all claims that relate to the sale to Mr Howcroft.
[19] In addition to the settlement agreement referring to the Howcroft agreement, Mr Skelton in an affidavit sworn on 25 March 2008, some months before the first settlement agreement, expressly referred to the Howcroft agreement and stated:
I do not consider that the receiver has sought to obtain the best price for the
Main Beach property.
Strike out
[20] It seems plain then that the very issue that Mr Skelton now complains about, namely impropriety or negligence in the sale to Howcroft, was at issue in the earlier proceedings and expressly settled on a final basis in the settlement agreements. Further, the settlement was expressed in the broadest terms that covered all matters at issue between Mr Nair and Mr Skelton.
[21] In his submissions Mr Skelton argued that he did not understand all the issues that had arisen in relation to the Howcroft agreement. However, with one possible exception that I will refer to, the pleading does not set out any material non- disclosures, and in any event the very wide terms of the settlement clauses expressly cover future claims. The intention was clearly to settle all claims relating to the Howcroft agreement, then existing or arising in the future, and indeed the fact that the settlement is for all claims and obligations “in the future” is spelled out in paragraph 19 of the settlement agreement and paragraph 12 of the agreement of
25 February 2009.
[22] There was a pleading in paragraph 17 of the statement of claim that Mr Nair failed to disclose to Mr Skelton information which he had a duty to disclose.
However, the pleading did not specify any information that should have been disclosed and was not disclosed, and indeed in submissions Mr Skelton did not refer to any such specific information. What he submitted was that he would need discovery to find out the necessary details. However, issuing proceedings in the speculative hope that something in discovery might reveal a cause of action is an abuse of the pleading process and a general allegation lacking any detail or foundation cannot disclose a cause of action.
[23] While it could be said that a notional cause of action was disclosed of sale by Mr Nair at an undervalue, Mr Nair appears to have a defence that is uncontestable and certain to succeed, namely that any claims relating to the Howcroft agreement were settled. It is an abuse of procedure to pursue court claims that have been
compromised by a binding settlement.3
[24] Further, there are various hallmarks indicating this proceeding is a frivolous and vexatious proceeding. The delay in issuing these proceedings was not explained. The first statement of claim was extraordinarily prolix and diffuse. The amended statement of claim was more focused, but it addresses an issue that has already been the subject of litigation which has been settled, and raises speculative and unspecified allegations. Plainly it cannot succeed.
Result
[25] The proceedings are struck out.
Costs
[26] Indemnity costs were sought for Mr Nair. Although I found the proceeding was frivolous and an abuse of process, the application has been brought to hearing quickly and there has been no particular action on Mr Skelton’s part, apart from the filing of the proceedings, which has constituted vexatious or frivolous behaviour.
On the assumption that this was a one-off error of judgment on Mr Skelton’s part I
3 See for example Peterson v Lucas Mills Pty Ltd [2014] NZCA 6 at [6].
have decided I will not order indemnity costs. Mr Skelton will pay standard costs on a 2B basis to Mr Nair, together with reasonable disbursements.
……………………………..
Asher J
6