Vincent Street Trustee Limited v Mason HC Auckland CIV 2009-404-008269
[2011] NZHC 287
•4 April 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-404-008269
BETWEEN VINCENT STREET TRUSTEE LIMITED Plaintiff
ANDJOHN MASON AND ALISON MASON Defendants
Hearing: 4 November 2010
Counsel: B M Hojabri for plaintiff
J H Olphert for defendants
Judgment: 4 April 2011 at 2:30 PM
JUDGMENT OF ASSOCIATE JUDGE ABBOTT
This judgment was delivered by me on 4 April 2011 at 2:30pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Keegan Alexander, PO Box 999, Auckland 1140 for plaintiffOlphert & Associates, PO Box 1717, Rotorua 3040 for defendants
VINCENT STREET TRUSTEE LIMITED V MASON HC AK CIV 2009-404-008269 4 April 2011
[1] This proceeding concerns a dispute over an agreement for sale and purchase of a residential apartment. The plaintiff Vincent Street Trustee Limited (VSTL) is the developer of an apartment block in Vincent Street, Auckland. The defendants were introduced to the development by OPM Financial Solutions Limited (OPM). It appears that OPM had a role in the marketing and selling of the development, although the extent of that role is unclear.
[2] As a result of OPM’s introduction, the defendants, Mr and Mrs Mason, agreed to purchase one of the apartments “off the plans”. The agreement was not made conditional on finance as Mr and Mrs Mason had previously engaged OPM to arrange finance for them, and understood from OPM that it would be available. OPM also made arrangements for them to be legally represented in the transaction by Campbell Law.
[3] There was a gap of more than two years between signing the agreement and settlement. After receiving notice that the development was complete and title was available, the Masons learned that OPM had not arranged finance. They were unable to settle. VSTL sought and obtained an order for specific performance, but when it became obvious that the Masons were unable to comply with that order (because they could not obtain the finance), VSTL obtained orders for rescission of the order for specific performance and cancellation of the contract, allowing it to resell.
[4] VSTL now seeks summary judgment for its losses following resale.
[5] The Masons initially opposed summary judgment on two grounds. The first, and primary, ground was that it has an arguable defence that OPM was acting as VSTL’s agent when it represented that the Masons would qualify for the necessary finance and that OPM would arrange it, and subsequently when it arranged legal representation by Campbell Law. They contend that, on the basis of this agency, they have a potential counterclaim against VSTL arising out of alleged breaches of duty by OPM (and, indirectly, by Campbell Law). The Masons initially advanced, as a second basis for an arguable defence, that the agreement was oppressive, having regard to all the circumstances of the case. In the course of the hearing, their counsel
accepted (appropriately in my view) that the Masons would not be able to succeed against VSTL on this claim, and did not pursue it.
[6] In the alternative, the Masons sought a stay of any judgment that might be entered. Their counsel did not pursue this point in argument, accepting that that was a matter that was better left for a separate formal application, should it become necessary.
[7] As a consequence, there is one issue for determination on this application:
whether the Masons have an arguable defence based on the alleged agency of OPM.
Background
[8] The Masons live near Rotorua. They reside in their own home. Between early and mid 2007 they attended an investment seminar run by OPM, held in Rotorua. They had been attracted to the seminar by an advertisement which posed the question “Are you sick of paying tax?” They were told at the seminar of the possibilities of buying an apartment as an investment property, and that the cost of doing so could be offset against tax. They left their name and address with the organisers.
[9] Subsequently, the Masons were contacted by OPM and asked to attend a meeting. The meeting took place on 2 July 2007. They gave OPM details of their financial position (Mr Mason had a fluctuating income as he was self-employed; Mrs Mason had a regular salary as a teacher). The Masons say that OPM assessed their financial position and told them they could afford to buy an apartment. OPM took them, that day, to a site in Vincent Street, Auckland where an apartment block was to be built.
[10] The Masons were encouraged by what they had been told and expressed continued interest in purchasing an apartment. They signed a document headed “Terms of engagement/authority to disperse funds at settlement”, under which they engaged OPM (inter alia) to arrange a loan on mortgage to enable them to complete
the purchase. The following extract from that document give the tenor of the arrangement:
OPM Financial Solutions Limited (hereafter defined as OPM) hereby agrees to managing fully all matters associated with arranging the loan and other ancillary financial services, through its trade partner relationship network. The party/parties identified in Item 1 of the Schedule (the Applicant), and if more than one, hereby jointly and severally agree as follows:
1. The applicant hereby engages OPM, to the exclusion of all others, to arrange for mortgage loan funds through a broker, which will enable the applicant to complete the purchase of the property/properties referred to in Item 3 of the Schedule and (if applicable) the refinance of the property/properties referred to in Item 4 of the Schedule (the loan).
2.The applicant acknowledges that this engagement shall be irrevocable until the earlier of:
(a) completion of the purchase of the property/properties or
(b) the rejection by the lending source or institution chosen by
the mortgage broker, of the applicant’s loan application.
3.The applicant hereby further engages OPM, to the exclusion of all others, for the purposes of providing an on-going Property Coaching and Mentoring Programme entitled “Pathway to Prosperity”, to enable the applicant/client to increase their level of financial intelligence, and build a portfolio of investment properties.
4.The applicant acknowledges that this engagement shall be for a period of two to three years, and will include twelve personal coaching sessions as well as attendance at any or all of OPM’s group seminar presentations and course as they occur. A one-off fee of
$4,750 (Item 2) will be charged for these services.
5.The property coaching and mentoring fee shall be paid contemporaneously with advance being made to the applicant for the purchase and/or refinance of the property/properties ....
7.OPM is to keep all parties concerned informed of the progress of the finance application by liaising with the mortgage broker, (and the providers of any ancillary services), insofar as to ensure that any contractual obligations of the applicant/s are strictly performed in accordance with any terms (where applicable) of any contract of sale executed by the applicant/s hereby hold OPM and its trade partners indemnified in respect of any consequential loss. The applicant/client also authorises OPM to request finance extensions on their behalf if these are required and to bring forward settlements as required.
....
[11] At some point, it is not clear whether it was at the meeting on 2 July 2007 or subsequently, the Masons also signed a form headed, “Payment option form and acknowledgment of services to be provided”, which was part of a document described as “Client prepping checklist”. In that form the Masons agreed to Campbell Law acting for them in a proposed purchase. The form referred to purchase of “the Federal Street apartment”, rather than the Vincent Street development shown to them, but nothing turns on this. It suggests, however, that OPM was introducing clients to other apartments also.
[12] The following day (3 July 2007) OPM wrote to the Masons congratulating them on their decision “to purchase an Investment Property using our Services”. The writer (described as Finance Coordinator) set out the names of a number of persons who would be working on the Mason’s behalf, including:
Your Tax & Financial Services Consultant Charlie Nicholls will be responsible for preparing your loan application & arranging the necessary finances.
Your Property Consultant on the day was Karl Schitko. She will be dealing with the vendor & any information in relation to your purchase.
Our solicitor Charlotte Rose will be making all legal arrangements for you.
Ms Rose was a solicitor in the employ of Campbell Law at that time.
[13] There is no evidence before the Court as to what communications took place between the Masons and OPM between 3 July 2007 and 2 August 2007, but on the latter date VSTL and the Masons entered into an agreement for the sale and purchase of Unit 2, Eclipse Apartments, being VSTL’s Vincent Street development. The agreement provided for payment of a deposit of $1,000 on signature, and for payment of a further amount to bring the deposit to 10% of the purchase price within
21 days, either by a cash payment or by provision of a guarantee for that amount. The balance of the purchase price was to be paid on settlement. The agreement was not made subject to finance.
[14] The agreement named the solicitor for the Masons as Charlotte Rose of Campbell Law, and named the real estate agent acting on sale as G K Baker Real Estate, sales person Karl Schitko.
[15] The agreement was conditional on approval of the Masons’ solicitor to be given within 5 working days. On 6 August 2007 Campbell Law wrote to the Masons with advice on legal aspects of the agreement (the letter was signed by Ms Rose). The letter commenced by asking the Masons to note that Campbell Law was not able to provide financial advice on the purchase. The Masons were advised that they would be obliged to go ahead with the purchase once the solicitor’s approval clause was satisfied, and suggested that there were clauses in the agreement which could be amended (Campbell Law commented that it had been able to negotiate such amendments with VSTL on other agreements in the development).
[16] The Masons did not respond to Campbell Law’s letter immediately. Campbell Law requested extension to the time for solicitor’s approval (to which VSTL agreed). On 14 August 2007 Campbell Law sent the Masons an email (written now by a different solicitor, Ms Song, as Ms Rose had left the firm) that confirmed the extension, noted that the bond for payment of the balance of deposit had been approved, requested a response to the issues and proposed amendments in Campbell Law’s letter of 6 August 2007, and added:
Also if you have any investigations to undertake regarding this property (e.g. to check commercial viability) please do so before 16 August 2007.
Mrs Mason responded by email advising that the Masons were “happy for the issues and proposed amendments to go ahead.”
[17] Campbell Law advised the solicitors for VSTL on 16 August 2007 that the solicitor’s approval condition was satisfied.
[18] Nothing further occurred for two years, whilst the apartment block was being built. Then Campbell Law wrote to the Masons on 14 October 2009, reporting that they could expect settlement to be some time in November. Campbell Law asked the Masons to ensure that their finance was arranged well in advance in preparation for the settlement. At that point the Masons were still under the impression that OPM was arranging finance for them.
[19] Settlement of the agreement was due to take place on 16 November 2009. After the close of business on 16 November 2009 the Masons received an email from a Mr Peter Orr regarding settlement of their purchase. Mr Orr was stated to be a director of Kiwi Property Coaching Limited, a company in which OPM held the majority shareholding. One of its directors (a Mr John Nicholls) was also the sole director of OPM. It is clear from Mr Orr’s email that finance had not been arranged, and that OPM was not in the process of arranging it. Mr Orr mentioned the possibility that another entity (Sax and Partners) was arranging finance on the Mason’s behalf. He commented:
Sax & Partners is working very closely with Campbell Law (who is doing the bulk of the settlements) and the Developer/Vendor company itself to ensure as smooth a process as possible.
[20] Notwithstanding the advice from Mr Orr that they should not panic, and that there was still time to arrange finance, the following day VSTL’s solicitors faxed a settlement notice to Campbell Law, requiring settlement to take place before
24 November 2009. The Masons endeavoured to arrange finance, but found they were not able to do so (they could not borrow the sum required to settle). They were unable to complete the purchase.
[21] VSTL obtained an order for specific performance. The Masons did not oppose the proceeding at that time. They continued to look for finance, but found that they did not qualify for the sum required to settle the purchase. When the Masons failed to comply with the order for specific performance, VSTL obtained rescission of the order and an order cancelling the agreement, and brought their claim for summary judgment after selling the property for a reduced sum.
The Masons’ grounds for opposition
[22] In their notice of opposition the Masons say that at all material times OPM was acting as VSTL’s agent, so that OPM’s acts or omissions and knowledge can be attributed to VSTL. They say that they have an arguable defence in the form of a possible counterclaim against VSTL in respect of those matters. In particular they say that:
[a] OPM acted on VSTL’s behalf in arranging for persons such as the
Masons to purchase VSTL’s apartments;
[b] OPM told them it would arrange finance for the purchase but failed to do so;
[c] OPM failed to inform them as to how the purchase would be financed, or to provide them with “a full appreciation of the risks or consequences of the transaction if finance could not be obtained”;
[d] OPM failed to ensure that they had independent advice as to the effects, implications and risks of the transaction;
[e] They would not have entered into the purchase of the apartment if they had understood that they risked losing their home if the transaction could not be completed for any reason.
[23] The Masons contend that it would be inequitable in the circumstances for summary judgment to be entered against them. They seek the opportunity to obtain discovery to establish the extent of the alleged agency.
[24] VSTL says that these matters do not provide the Masons with an arguable defence. It acknowledges that OPM was its agent for marketing and sale of the Vincent Street apartments, but contends that the Masons have not provided an evidential foundation for their assertion that the agency extended beyond that to include the matters about which the Masons complain. It says that the only evidence before the court is to the effect that OPM’s agreement to arrange finance for the purchase and to provide other services to the Masons was entirely separate to its role for VSTL in the marketing and sale of the apartments. In addition it says that a possible counterclaim does not provide an arguable defence.
Principles for summary judgment
[25] VSTL’s application is made under r 12.2 of the High Court Rules, which provides that the court may give judgment against the defendant if the plaintiff satisfies the court that the defendant has no defence. The principles that the court applies in determining such applications are clear and well established. They have been succinctly stated by the Court of Appeal in Krukziener v Hanover Finance
Ltd:1
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331at 341(PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ
84 (CA).
The nature of OPM’s engagement
[26] The issue for determination in this case is whether there is an arguable defence available to the Masons that OPM’s acts or omissions in relation to the arranging of finance and other financial services (such as engagement of Campbell Law) can be attributed to VSTL.
[27] Counsel for the Masons submitted that there is an evidential foundation for an argument that OPM was acting as VSTL’s agent at the time that it informed to the Masons that they would qualify for mortgage finance, agreed to arrange that finance, and arranged for Campbell Law to act for the Masons in their transactions with
VSTL. He based this submission on the proposition that at the time of doing these
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187; (2008) 19 PRNZ 162 at [26].
things, OPM was representing, or standing in the shoes of VSTL.2. Alternatively he submitted that it was arguable that OPM was representing VSTL to such an extent that its actions and knowledge could be said to be the actions and knowledge of VSTL.3
Attribution of agent’s action or knowledge to the principal
[28] In general a principal is bound by the acts of an agent undertaken with the principal’s authority (express or implied). Difficulties can arise, however, in deciding whether actions of the agent not clearly within the agent’s authority, or knowledge of the agent, can be attributed to the principal. Whether it is appropriate to attribute an act or knowledge of an agent to the principal comes down, essentially,
to the nature of the agent’s engagement.4 Thus it will be relevant whether the
person whose act or knowledge is said to have created a liability is an employee of the person requesting the service (most likely to be attributed), or is an agent who may be appointed generally or for a specific purpose, or is either an independent contractor with a commercial or economic relationship or a volunteer in a social or family context (where the act or knowledge is unlikely to be attributed).5
[29] For the first of his propositions, counsel for the Masons relied on the view of William Young P in Bartle v GE Custodians that “the undoubted liability of a vendor for misrepresentations made by a real estate agent” was not based, so much on the agent’s specific authority (and ability to affect the vendor’s contractual relationships with third parties) but was:
... simply because that agent is standing in my shoes and representing me in dealing with potential purchasers.
2 Bartle v GE Custodians Ltd [2010] NZCA 174 at [249], citing Colonial Mutual Life Assurance
Society Ltd v Producers and Citizens Co-operative Assurance Co Australia Ltd (1931) 46 CLR 41.
3 Blackburn, Low & Co v Vigors (1887) 12 AC 531at 537 discussing “an agent to know”.
4 See Jessett Properties Ltd v UDC Finance Ltd [1992] 1NZLR 138 (CA), and the discussion of
William Young P in Bartle v GE Custodians Ltd [2010] NZCA 174 at [235]-[251].
5 Bartle v GE Custodians Ltd [2010] NZCA 174 at [235]-[236].
[30] A similar proposition underlay the finding of the High Court of Australia in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd6 that a life insurance company was vicariously liable for defamatory remarks made by its canvassing agent, who was only an agent for the limited purpose of accepting premiums. A critical point appears to have been that the canvassing agent was acting as the insurance company’s representative at the time.
[31] The second proposition of counsel for the Masons derives from dicta of
Halsbury LC in Blackburn, Low & Co v Thomas Vigors:7
“Some agents so far represent the principal that in all respects their acts and intentions and their knowledge may truly be said to be the acts, intentions, and knowledge of the principal. Other agents may have so limited and narrow an authority both in fact and in the common understanding of their form of employment that it would be quite inaccurate to say that such an agent’s knowledge or intentions are the knowledge or intentions of his principal; and whether his acts are the acts of his principal depends upon the specific authority he has received.”
[32] Attribution of knowledge of an agent (as distinct from acts) poses slightly different issues relating to the time of acquisition of the knowledge. In Jessett Properties Ltd v UDC Finance Ltd8 the Court of Appeal had to consider whether the company owner of a property was to be imputed with the knowledge of a fraudster who had been actively involved in the company’s acquisition (the property had been leased to a director of the company notwithstanding that it had been leased by the
vendor and money had been secured against that lease). The Court stated the general proposition that an agent’s knowledge will be imputed to the principal only if the agent was engaged on the principal’s behalf at the time that notice of an event was given to, or knowledge was acquired by, the agent.9 After addressing various reasons for imputing knowledge, as advanced by various legal authorities, the Court
of Appeal stated:10
6 Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of
Australia Ltd (1931) 46 CLR 41.
7 Blackburn, Low & Co v Thomas Vigors (1887) 12 App Cas 531 at 537-538.
8 Jessett Properties Ltd v UDC Finance Ltd [1992] 1NZLR 138 (CA).
9 Jessett Properties Ltd v UDC Finance Ltd [1992] 1NZLR 138 (CA).10 Jessett Properties Ltd v UDC Finance Ltd [1992] 1NZLR 138 (CA) at 143 at [25].
Whichever be the true basis, it is apparent that knowledge acquired before the agency began, or probably even during its currency but outside the scope of the engagement, should not in general be imputed to the principal.
[33] Two exceptions to this general proposition were then noted. The first was where the principal “purchases the previously obtained knowledge of the agent” in respect of the particular subject matter. The second was where the agent was “an agent to know” (an expression derived from the judgment of Lord Halsbury LC in Blackburn, Low & Co v Thomas Vigors),11 meaning that the knowledge in question was the very matter that the agent had been engaged to ascertain.
[34] VSTL does not dispute the Mason’s contention that OPM was VSTL’s agent for the purpose of marketing and selling its apartments. On its face that is an entirely different matter, however, to being its agent in the provision of financial services, including the arranging of finance for the purchase and the arrangement of the allegedly “tame” solicitor (as counsel for the Masons described the engagement of Campbell Law to represent the Masons).
[35] Whether to attribute OPM’s acts (in particular the alleged representation that the Masons would qualify for mortgage finance, its agreement to arrange that finance and its arranging the engagement of Campbell Law) or its knowledge of the Mason’s financial circumstances and hence the likely availability of finance, must be considered against the evidence as to the nature of the agency.
[36] There is no direct evidence of the arrangement between VSTL and OPM. In an affidavit in support of the application for summary judgment, VSTL’s solicitor referred in general terms to the arrangements that VSTL made with its agents, and commented that this applied to the agreement with the Masons:
The plaintiff’s standard practice is for its agents to negotiate agreements with potential purchasers and then execute a, relatively, standard form agreement. Once executed the agreement is forwarded to us and the conveyancing aspects of the transaction are handled by Keegan Alexander from that point on. The present case was no different. On 2 August 2007 such an agreement was entered into by the parties to this proceeding ....
11 Blackburn, Low & Co v Thomas Vigors (1887) 12 AC 531 at 537-538.
[37] As previously mentioned, this evidence is reflected in an acknowledgment by counsel for VSTL (in both her written and oral submissions) that OPM acted as VSTL’s agent for the marketing and sale of the Vincent Street apartments.
[38] The only other evidence directly addressing OPM’s agency is the evidence of
the Masons that:
[a] On 2 July 2007, after attending a meeting with OPM at which their financial position was assessed and they were told they could afford to buy an apartment, they were taken by OPM to Vincent Street to look at the site for VSTL’s proposed apartment block;
[b] The following day OPM’s financial controller wrote to them confirming the people working on their behalf, including the property consultant Karl Schitko and the solicitor Charlotte Rose; and
[c] They signed the agreement for purchase of the apartment on 2 August
2007 which agreement stated that Charlotte Rose of Campbell Law was the solicitor for the purchaser, and that G K Baker Real Estate was the agent acting on the sale and Karl Schitko was the sales person involved.
[39] The Masons also said the following about the relationship between VSTL
and OPM:
We do not know what is the relationship between the Plaintiff and OPM. However, OPM was clearly and actively involved in the sale of the Vincent Street apartments, we strongly suspect that OPM was the Plaintiff’s agent and authorised to act on behalf of the Plaintiff. We are advised that this may require discovery of documentation held by the Plaintiff.
If OPM was indeed the agent of the Plaintiff, we may well have a
Counterclaim against the Plaintiff based on the actions of its agents.
In all the circumstances, it would be quite inequitable for the Plaintiff to obtain judgment against us when the actions of OPM (as well as CAMPBELL LAW) have resulted in our finding ourselves in the position in which we are now.
[40] The Masons rely on this evidence as a foundation for a defence that OPM was standing in the shoes of VSTL in the transaction, particularly in relation to the arranging of finance. Their counsel relied on the decision in Bartle (where in the Court of Appeal a broker was said to be representing the lender when obtaining credit information, although the point was not dealt with when the case went to the Supreme Court) and Colonial Mutual Life where the insurance agent was said to be representing Colonial when he made the representation.
[41] In my view it is not commercially plausible that OPM was representing or “standing in the shoes” of VSTL when it represented that the Masons would qualify for mortgage funding for the purchase of this property. A vendor’s agent for marketing and sale would need specific authority to commit the vendor on terms. Thus an agent could not offer vendor finance to assist a purchase, unless the vendor has given the agent specific authority to offer that assistance. If OPM did not have such specific authority, and the evidence of VSTL’s solicitor is that this was an agency to negotiate rather than to agree terms, there is no reason to believe that it would have VSTL’s authority to offer the financial services set out in the terms of engagement issued on the Masons on 2 July 2007, whether ancillary to the Mason’s subsequent agreement with VSTL or otherwise.
[42] The circumstances in this case are quite different from those in Bartle or Colonial Mutual Life. In the former case the broker was required to provide a certificate, giving room for the view that the lender engaged it to carry out credit assessments needed to be able to provide the certificate. In the latter case, the agent made the remarks when it was undertaking what the insurer had engaged it to do, namely procure entry into the life policy. In the present case, OPM is alleged to have made the representation and agreed to provide finance and arrange a solicitor before it embarked on negotiating an agreement between the Masons and VSTL.
[43] There is some evidence of OPM’s role in the letter sent to the Masons on
6 August 2007, but I construe that letter as saying no more than OPM has put together a team of people who are working in conjunction with OPM, to assist the Masons in achieving their purpose of securing an appropriate investment property: the real estate agent from G E Baker, (K Schitko) and the lawyer from Campbell
Law (Ms Rose). There is no suggestion in that letter that OPM put that “team” together at VSTL’s request, and the terms of engagement suggest that the “members” of the team were acting in their own right: OPM is said to be managing them. I find nothing in the report letter linking OPM to VSTL in a way which could support a finding that OPM was “standing in VSTL’s shoes”. In my view this also answers the Mason’s argument that OPM was, in effect acting as VSTL.
[44] The Masons also contended that OPM was “an agent to know”. That could only be in relation to OPM’s knowledge of the Mason’s ability to raise finance, and potentially giving rise to an argument based on the alleged representation that they would qualify. They put this forward as the reason that the agreement was negotiated without a condition as to finance. However, the available evidence provides no support for this. VSTL’s solicitor has described VSTL’s practice with its agents. There is no suggestion in any evidence nor any basis for forming the view, that VSTL selected OPM as its agent to ascertain any information for VSTL.
[45] Counsel for the Masons submitted that it would be unjust to enter judgment without allowing the Masons opportunity to fully explore the nature and scope of OPM’s engagement in discovery.12 He pointed out that VSTL had had the opportunity to put forward evidence of OPM’s engagement in a reply affidavit, but it failed to do so or even to refute the Masons’ conjecture about the agency.
[46] If there was any evidential support for the Masons’ conjecture, there may have been some merit to this point – the Masons have no means of knowing the detail of the relationship between VSTL and OPM. However, there is none - they voice a suspicion which is at odds with the evidence of VSTL’s solicitor that this was a standard agency arrangement. To deny VSTL judgment on this basis would be no more than to allow the Masons to go on a fishing expedition in a pond where there is no trace of fish. It would be inconsistent with the principle that a defendant must establish some evidential basis for the allegations advanced as establishing a defence. It would also overlook clause 16.1 of the agreement in which the Masons acknowledge that they have entered into the agreement in reliance on their own
judgment and not in upon any representation by VSTL or its agents.
12 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 at 395 (CA).
[47] I also give some weight to the fact that the Masons did not oppose VSTL’s claim when it was first brought. They have said that that was the result of a misunderstanding, but even so I would have expected them to have taken some steps before the present application was brought.
[48] I appreciate that this will be a disappointment to the Masons. They appear to have a meritorious case of some nature against OPM, and may have a case against Campbell Law (these are tentative views given that they are not parties to this claim and they may have good defences – particularly Campbell Law). However, in my view that is where any relief should lie. They also have rights to seek stay of enforcement of this judgment pending determination of any further claim they bring (or may have already brought against the other parties) if the enforcement of the judgment would have a severe effect on them, as appears to be the case.
Decision
[49] I grant leave to VSTL to bring its amended application for summary judgment dated 1 July 2010.
[50] I enter judgment for VSTL against the Masons for the sums sought in paragraph 1 (b) of the amended application. If there is any dispute over the reasonableness of the indemnity costs, the parties may file memoranda within 15 working days and I will determine the quantum of those costs on the basis of the
memoranda filed.
Associate Judge Abbott
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