Tarlton-Kraus v Kraus HC Auckland CIV 2006-004-1059
[2008] NZHC 2408
•10 July 2008
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2006-004-1059
BETWEEN FIONA JOAN TARLTON-KRAUS Plaintiff
ANDPETER FRANZ KRAUS Defendant
Hearing: 18 June 2008
Appearances: P Stevenson for Plaintiff
A Fisher for Defendant
Judgment: 10 July 2008 at 10.30
JUDGMENT OF ASSOCIATE JUDGE ROBINSON
This judgment was delivered by me on 10 July 2008 at 5.15 pm pursuant to Rule 540(4) of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: R Mark, Solicitor, PO Box 172 Kerikeri
Barristers at Chancery, PO Box 1752 Shortland St, Auckland
Foley & Hughes, PO Box 6829, Auckland
WGC Templeton/PJ Stevenson, Barrister, PO Box 5444, Auckland
FIONA JOAN TARLTON-KRAUS V PETER FRANZ KRAUS HC AK CIV 2006-004-1059 10 July 2008
[1] The plaintiff Fiona Tarlton is the wife of the defendant Peter Kraus. The parties were married on 14 September 2002. They commenced living apart in August
2003. Following their separation proceedings for orders under the Property Relationships Act and relating to the care of their child were issued in the Family Court. Proceedings were also issued in the District Court for an order setting aside a property agreement executed by the parties prior to their marriage.
[2] In 2006 in an effort to settle their various disputes the parties and their legal advisors entered into negotiations which resulted in the preparation of a property settlement agreement. By the terms of that agreement, Peter Kraus was to pay Fiona Tarlton the sum of $500,000 in full settlement of the proceedings pending under the Property Relationship Act and for orders setting aside the property agreement. The agreement also provided for the parties to consent to certain orders relating to the proceedings which were at that time pending in the District and Family Courts. Included in the orders was to be a consent order relating to costs in connection with the proceedings relating to the care of their child, together with a consent order relating to any contribution the Family Court may require from the parties towards the costs of counsel for the child and psychologist’s reports.
[3] The parties were able to agree on all matters other than the contribution they could be required to make towards any costs that might be ordered against them with regard to counsel for their child or the preparation of the psychologist’s reports. The agreement as originally drafted required Mr Kraus to indemnify Ms Tarlton in respect of those costs. When Mr Kraus agreed to the settlement, the clause requiring him to indemnify Ms Tarlton in respect of the costs of counsel for the child and the psychologist was deleted and in its place there was a provision for the parties to contribute equally to those costs.
[4] The amendment was not acceptable to Ms Tarlton. By March 2007, the two executed copies of the agreement with the provision as to costs that was not acceptable to Ms Tarlton were in the possession of Ms Tarlton’s solicitors. On 26
March 2007 Mr Dodds, who was the counsel for Mr Kraus, wrote to the solicitor for
Ms Tarlton as follows: -
In an endeavour to get some finality on this issue I suggest the disputed part of the consent memorandum (i.e. paragraph 2) simply be deleted. Each party could then fully reserve the rights against the other and in relation to their position overall in the event the Court considered there should be some consideration of the issue. If this suggestion finds favour please delete the hand-written amendment to paragraph 2 of the consent memorandum and have your client initial that deletion. Please then return the agreement to me for me to arrange for Mr Kraus to initial that deletion.
If the proposal does not find favour with your client then as I understand it
Mr Kraus is quite comfortable about litigating property issues.
[5] On the 11 April 2007 Mr Dodds wrote to the solicitor for Ms Tarlton as follows: -
As I now understand your fax 4 April you accept that the costs issue can be resolved by deleting paragraph 2 of the consent memorandum annexure A to the Property Settlement Agreement. That is the only issue holding up resolution of property issues. I again invite you to delete the amended paragraph 2 to the consent memorandum annexure A to the Property Relationship Agreement. Please have your client then initial the deletion. It would be useful if you could also similarly initial the deletion. Please refer the agreement in duplicate to me for initialling by myself and Mr Kraus. Once execution of the property settlement documentation has been fully completed we can then attend to filing of the consent memorandum. Payment would then be due to your client within 5 working days of orders being made in accordance with the three consent memoranda.
[6] On 2 May 2007, the solicitor acting for Ms Tarlton returned the agreements duly initialled and executed by Ms Tarlton. On 17 May 2007 the solicitor for Ms Tarlton filed the consent memorandum striking-out Ms Tarlton’s proceedings pending in the Family Court for orders under the Property Relationship Act. On 11
June 2007 the Family Court directed that the proceedings pending under the Property
Relationship Act be struck out by consent.
[7] Mr Kraus now refuses to accept the amendment to the consent order as to contribution to the costs of counsel appointed for the child or the psychologist’s report. His reason for refusing to agree to the deletion of this provision is as follows:
After reflecting on the matter, however, I was not prepared to agree to clause
2 being deleted in its entirety. I maintain that a fair settlement should require both parties to share equally in any additional future costs. Accordingly I
was not prepared to finalise the agreement by initialling the changes and
return an original of the agreement to Ms Tarlton’s lawyer.
[8] It is contended on behalf of Ms Tarlton that the executed agreement dated 26
February 2007 together with the correspondence of the 26 March 2007, 11 April
2007, and 2 May 2007 results in a binding agreement between the parties. She accordingly seeks specific performance of the agreement by requiring Mr Kraus to pay to her the sum of $500,000 together with interest in terms of the agreement and by requiring Mr Kraus to complete and lodge with the appropriate courts the memoranda referred to in the agreement.
[9] It is submitted on behalf of Mr Kraus that such correspondence does not result in a binding agreement. Counsel for Mr Kraus contends that the letter from Mr Kraus’s counsel Mr Dodds, of 26 March 2007 is a commendable effort by that counsel to negotiate a settlement. It is contended that the offer contained in that letter require the approval of the parties by the parties initialling the variation resulting from that offer. Thus in the letter of 26 March 2007 there is a requirement for Ms Tarlton to initial the variation. Mr Dodds goes on to require that the agreement be returned to him so that Mr Kraus can initial the alteration. On the other hand it is submitted on behalf of Ms Tarlton that the correspondence evidences an offer made by Mr Dodds on behalf of his client to settle the proceedings by the amendment suggested in the correspondence which would be binding once accepted by Ms Tarlton.
[10] In these proceedings the issue for my determination is whether in the correspondence of 26 March 2007 and 11 April 2007 Mr Dodds was making an offer to settle that would be immediately binding on his client once accepted in the manner proposed in that letter, or whether he was making an offer to settle that would be subject to his client initialling the alteration to the documents once accepted by Ms Tarlton.
[11] In the affidavit in opposition to the application for summary judgment, Mr Kraus went into considerable detail as to the reasons for refusing to accept his counsel’s proposal for settlement on the basis that there be no agreement as to contribution towards the costs of counsel for the child or the psychologist’s report. Such evidence is relevant in so far as it establishes an awareness of the offer made by Mr Kraus’s counsel Mr Dodds to finally settle the dispute. The test to be applied in
determining whether the parties have in the circumstances entered into a binding contract is an objective test. As stated by Baragwanath J in Wilmott v Johnson [2003]
1 NZLR 649 at p 657 when applying the decision of Cook J in Boulder Consolidated Ltd v Tangaere [1980] 1 NZLR 560 at 563 “the test whether, viewed as a whole objectively, the [evidence] shows a concluded agreement”.
[12] In Wilmott v Johnson an agreement for sale of land to the Beatrice M Trust was amended by the vendors changing the name of the purchaser to the names of the trustee of the trust. The vendor initialled the amendments and the agreement was then returned to the purchasers to be initialled by the purchasers. The Court of Appeal confirmed the decision of the High Court that there was no binding agreement until the purchasers had initialled the alteration. In coming to that decision Baragwanath J at p 657, paragraph 39 stated:
By their conduct of returning the executed agreement for initialling by Mr Johnson, they signalled that the transaction was not to be treated as concluded as at 30 November, but that the further act of the addition of the initialling by the trustees was required to confirm their willingness to be bound. Their act of initialling and returning the agreement in the circumstances is to be characterised, as it was by the Judge, as a counter- offer rather than as an acceptance.
[13] In Wilmott v Johnson the court was also influenced by evidence of common practice of land agents to the effect that sale and purchase agreements are not considered finally binding until signatures on amendments have been completed by both parties.
[14] In Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd [1981] 2 NZLR
385 the Court of Appeal concluded that in the circumstances of that case, the evidence showed the purpose of the negotiations was to have prepared and executed by both parties an important commercial agreement of some complexity. In such circumstances, the normal inference was the parties would not intend to be bound before the agreement had been drawn up and executed by both parties. In the absence of evidence to displace that inference, there would be no contract as no such agreement had been executed by the parties.
[15] In Wilmott v Johnson the Court of Appeal analysed the dealings of the parties in terms of offer and acceptance. At p 656 Baragwanath J made the following anaylsis:
It is conventional and frequently decisive to analyse dealings in terms of offer and acceptance. The offer by the Beatrice M Trust could have accepted by the vendors simply by adding their names and executing the agreement. It was at first sight no more than an elaboration of the offer they had received to spell out the names of the trustees and to write those in before adding their own signatures. But in Curruthers v Whitaker [1975] 2 NZLR 667 this Court emphasised the importance of the principle stated by Lord Greene MR in Eccles v Bryant [1984] Ch 93 at p 104:
“Parties become bound by contract when, and in the manner in which, they intend to contemplate becoming bound. That is a question of facts of each case…”
[16] An analysis of the dealings of the parties in this case establishes: -
i)By March 2007 the parties had come to a settlement on all matters other than their potential liability to be required by the Family Court to contribute to the costs of counsel for their child and the psychologist’s reports.
ii)That settlement had been incorporated in an agreement which they had executed. Their execution of the agreement had been in the presence of their legal advisors, who confirmed in writing in the agreement that they had given independent legal advice and explained to the parties the effects and implications of the agreement.
iii)In an effort to settle Mr Dodds, then counsel for Mr Kraus suggested deletion of a provision of a consent memorandum referred to in the agreement. The deletion of that provision meant that there was no agreement between the parties as to their contribution towards the costs of counsel for the child or a psychologist’s report. In making that offer, Mr Dodds required the amendment to the consent order to be initialled by
Miss Tarton. He then required the agreement to be returned so that he could arrange for Mr Kraus to initial the deletion.
iv)On 11 April 2007 Mr Dodds confirmed that his offer to settle had been accepted and required the appropriate amendment to be made to the consent memorandum attached to the agreement which should be initialled by Ms Tarlton. He goes on to say “It would be useful if you could also similarly initial the deletion”. He then requires the agreement to be returned for initialling by himself and Mr Kraus.
v)Counsel for Ms Tarlton when returning the documents duly initialised stated the following in her letter of 2 May 2007:
Further to correspondence and in particular my letter of 4
April and your letters of 26 March and 11 April, concerning those aspects of finalising the costs question in the consent memorandum, I now enclose the agreement duly initialised to finalise the property settlement. One copy will need to be returned to my office.
Please now attend to the filing of the three consent memorandum attached to the agreement and prepared by your office.
vi)In returning the documents, counsel for Ms Tarlton made no requirement for the alterations to be initialled by Mr Kraus or his counsel.
vii)Thus the offer made by Mr Dodds which required amendments to the consent memorandum to be initialled by Ms Tarlton was duly accepted by Ms Tarlton and her counsel. As required, Ms Tarlton initialled the alteration. When accepting that offer, Ms Tarlton and her counsel made no requirement for Mr Kraus and his counsel to initial the alteration.
viii)It follows therefore that the offer by Mr Dodds to “get some finality on this issue” was accepted by Ms Tarlton and her counsel without qualification. Consequently, on such
settlement there was a binding agreement which was not dependant upon Mr Kraus or his counsel initialling the alterations to the documents.
[17] As the evidence establishes a binding property settlement agreement under which Mr Kraus must pay Ms Tarlton $500,000 together with interest at 12% per annum, Ms Tarlton is entitled to judgment for that amount. She is also entitled to an order for specific performance in terms of the statement of claim.
[18] There will therefore be the following orders:
a) That Mr Kraus perform the settlement agreement by making payments of all amounts payable by him to Ms Tarlton pursuant to the terms of the settlement agreement and by filing the two consent memoranda referred to in the agreement which have not yet been filed in court.
b)That Mr Kraus pay interest at the rate of 12% per annum on the said sum of $500,000 payable in terms of the agreement from 2 May 2007 until the date of judgment.
[19] As Ms Tarlton has been successful in this application for summary judgment she is entitled to costs. In determining costs, I take into account the fact that each party has unnecessarily increased the costs by filing affidavits containing a considerable amount of irrelevant evidence. Any claim Ms Tarlton might make for an increase in costs normally awarded can be met by the claim that Mr Kraus’s costs have been increased because of the irrelevant and unnecessary evidence adduced by Ms Tarlton. Mr Kraus’s counsel brought an application to strike-out much of that evidence. There was some merit in that application.
[20] In the circumstances therefore I direct that Mr Kraus pay Ms Tarlton’s costs assessed on a 2B basis and not on a full indemnity basis with disbursements as fixed
by the Registrar.
Associate Judge Robinson
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