Small (2005) Limited v Mahon
[2022] NZHC 1762
•21 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-002333
[2022] NZHC 1762
BETWEEN SMALL (2005) LIMITED
Plaintiff/Applicant
AND
NEVILLE CHRISTOPHER MAHON
Defendant/Respondent
Hearing: 21 July 2022 (by telephone) Appearances:
M Lenihan for Plaintiff/Applicant
R B Hucker and R F Selby for Defendant/Respondent
Judgment:
21 July 2022
Reasons:
21 July 2022
REASONS JUDGMENT OF VENNING J APPLICATION TO ADJOURN TRIAL
This judgment was delivered by me on 21 July 2022 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Brown Partners, Auckland
Hucker & Associates, Auckland Counsel: D Chisholm QC/M Lenihan, Auckland
SMALL (2005) LIMITED v MAHON [2022] NZHC 1762 [21 July 2022]
Application
[1] The plaintiff, Small (2005) Limited (Small) has filed an application seeking to adjourn the eight day trial scheduled to commence on 1 August 2022. The application is opposed by the defendant Mr Mahon.
[2]The plaintiff seeks to vacate the fixture primarily on the grounds that:
(a)the main issues in the proceeding arise out of Mr Mahon’s counterclaim;
(b)the pleading of the defendant’s counterclaim is sparse;
(c)the particulars of the counterclaim were only disclosed or made apparent to the plaintiff with the defendant’s briefs of evidence which were exchanged on 17 and 18 July 2022; and
(d)The plaintiff and its counsel do not have adequate time to respond to the matters raised in those briefs, particularly to respond to the evidence of Mr Aldridge (the expert real estate evidence), and the expert accounting evidence of Mr Hussey.
Background
[3] In June 2014 the plaintiff sold a property at 117 Coronation Road, Mangere Bridge to Coronation Gardens Ltd (Coronation Gardens) for $11.6 million. The purchase price was financed by vendor finance. The plaintiff pleads that Mr Mahon guaranteed the obligations of Coronation Gardens. Coronation Gardens defaulted under the loan. The property was ultimate sold with a shortfall, including interest, of in excess of $6.5 million. The plaintiff seeks judgment against Mr Mahon under his guarantee.
[4] By way of counterclaim Mr Mahon alleges the plaintiff breached the duty of care it owed to Coronation Gardens and him to obtain the best price reasonably obtainable. Further, the plaintiff effectively procured the property by directing the sale
of a property to a related entity in breach of s 176(2) of the Property Law Act 2007. As a result, Mr Mahon has suffered loss.
Plaintiff’s submissions
[5] Mr Lenihan noted that Mr Mahon accepted he had provided a guarantee but denied liability under the guarantee based on the matters raised in the counterclaim. The focus of the proceeding was always going to be on Mr Mahon’s counterclaim.
[6] Mr Lenihan submitted that, when the initial evidence of the plaintiff’s witnesses of fact were exchanged on 6 May 2022, the defendants were advised that a valuer’s brief was to come but it was only on the limited issues of the value of two townhouses that had been sold in October and November 2017.
[7] When the matter was before the Court on 11 July 2022 in the duty Judge list the Court extended the time for the defendant to serve evidence to 15 July 2022 with the plaintiffs having until 26 July to respond. At the time the plaintiff expected that would be sufficient to enable it to respond to the defendant’s evidence.
[8] However, Mr Lenihan submitted that the plaintiff was caught by surprise by the extent and detail of the evidence, particularly the expert evidence and is now unable to respond to the evidence of Mr Aldridge and Mr Hussey (in particular) before trial.
[9] Mr Aldridge gives evidence in relation to the practice of and standards of a reasonable real estate agent, including as to:
(a)requiring a non-refundable deposit;
(b)back-up offers;
(c)failure to procure the payment of a deposit; and
(d)what a reasonable agent should have done before cancelling the Coronation Project Limited tender.
[10] Although Mr Bedford is a real estate agent he is a witness of fact and would have been unable to respond to those matters. An independent expert will have to be identified and briefed.
[11] In addition, the pleadings contain no quantification of the counterclaim or the basis for claiming damages. Mr Hussey’s evidence is particularly detailed as to the calculation of damages sought by Mr Mahon in the counterclaim. A response from a suitably qualified person will be required.
[12] Mr Lenihan also noted that it appears Mr Mahon and Ms Loo suggest that a loan of $3 million from the plaintiff to Coronation Gardens may be invalid when it was admitted in the pleadings. Further evidence will be needed to respond to that matter. However, he did accept that, if that were the sole matter, the plaintiff would have been able to respond.
[13] Mr Lenihan also suggested that other documents which had been referred to in the briefs have not yet been discovered.
[14] Cumulatively Mr Lenihan submitted the plaintiff had now been put in a position where it was unable to respond in time.
[15] The claim is important to the plaintiff. The amount now pursued is in excess of $7 million. In the circumstances the plaintiff had no option but to pursue the application for adjournment.
Defendant’s response
[16] On behalf of Mr Mahon, Mr Hucker opposed the application for adjournment. He noted that the plaintiff had not sought particulars of the defence and counterclaim.
[17] Next, the plaintiff should have been aware of its conduct and that of its real estate agent. Further, in separate proceedings the general issues raised in the briefs of evidence had been raised. While Mr Hussey’s brief quantifies the counterclaim he had done so based on the primary figures contained within the plaintiff’s primary evidence of fact.
[18] Mr Hucker also made the point that the cause of the time pressures and subsequently truncated processes were the result of the plaintiff’s failure to exchange its evidence in accordance with the original timetable orders.
[19] The defendant was ready to proceed to trial. For those reasons he opposed the application to adjourn. However, in the event the application was granted the defendant would seek costs.
Analysis
[20] The application is made in reliance on r 10.2. The overriding question for the Court is whether the interests of justice support adjournment of the trial.
[21] If the current trial is vacated the Court will not be able to allocate a further eight day hearing until mid to late 2024. The vacation will also affect other litigants before the Court. As substantive fixtures are being allocated so far in the future timetables are fixed to enable preparation for future trials. It would not be possible at this stage to allocate another eight day trial into the dates allocated for this trial. Some short cause work could be allocated, but that will not assist the Court to clear the lists of substantive long running fixtures. As this Court has said on a number of occasions the impact on other litigants before the Court is a relevant consideration.
[22] Further delay and the associated uncertainty as to their position will prejudice both the plaintiff and Mr Mahon.
[23] However, notwithstanding the points Mr Hucker raised and the impact on other litigants, I accept that, on balance, in this case the interests of justice do support vacation of the fixture.
[24] The sum claimed by the plaintiff against Mr Mahon is a substantial sum. On the basis of the guarantee which is accepted, Mr Mahon would prima facie be liable for $7 million (with interest accruing). The focus of the claim will inevitably be on Mr Mahon’s counterclaim and the plaintiff’s response to it. The plaintiff should be given the opportunity to respond fully to the matters which have been raised in the briefs of evidence (particularly that of Mr Aldridge and Mr Hussey).
[25] For those reasons and somewhat reluctantly, the Court accepts that there is little alternative but to accede to the plaintiff’s request to vacate the fixture and adjourn the trial.
[26] I do not, however, accept the plaintiff’s suggestion that the defendant is responsible for this situation. The plaintiff complains that the counterclaim was not particularised. The plaintiff could have sought further particulars of the counterclaim if it considered the pleading inadequate.
[27] More relevantly, the position has arisen because the plaintiff failed to comply with the original timetable set by Associate Judge Sussock in her minute of 11 May 2021. That timetable required the plaintiff’s evidence to be exchanged by 20 April 2022. The consequent timetable provided for the plaintiff to have over three weeks to respond to the defendant’s counterclaim evidence. The plaintiff’s failure to comply with those directions compressed the time for the remaining exchanges of evidence so that the defendant’s evidence was ultimately directed by the Court to be served by 15 July 2022. While it was served after that adjusted date, the time pressure was created by the plaintiff’s initial failure. The defendant’s delay in serving until 17 and 18 July was, in the circumstances, immaterial.
Result/orders
[28]The Court makes the following orders:
(a)the trial scheduled to commence on 1 August 2022 is vacated;
(b)the Registrar is to allocate an alternative 10 day fixture in 2024;
(c)costs are reserved. The Court’s preliminary view is that the plaintiff should pay the costs of the adjournment. If counsel are unable to agree the defendant is to file and serve submissions in support of any application for costs by 12 August 2022, with the plaintiff to respond by 26 August 2022, and any reply by 2 September 2022. The costs will then be dealt with on the papers;
(d)the plaintiff is to exchange evidence in response to the counterclaim by 30 September 2022;
(e)the Registrar is to allocate a case management conference before an Associate Judge on the first available date after 10 October 2022. At that conference counsel are to confirm the required hearing time for the substantial fixture of 10 days and are to address any other outstanding issues.
Venning J
0
0