Westenra v Westenra

[2018] NZHC 762

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2015-409-000840 [2018] NZHC 762

BETWEEN

CONSTANCE LOUISE WESTENRA

Plaintiff

AND

JOHN PARKER WESTENRA

Defendant

Hearing:	17 April 2018
Appearances:	H C Matthews for Plaintiff (Applicant for summary judgment) No appearance by Defendant
Judgment:	20 April 2018

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

on plaintiff’s summary judgment application

Introduction

[1]    This judgment marks a further step in the unravelling of a long association between the Westenra family and the Grasmere and Craigieburn Stations in Canterbury. Members of the family held leasehold interests in the stations. Arrangements have been put in place in recent years for the sale of those interests. John Westenra (the defendant) who had farmed on the stations agreed in July 2014 that he would sell the two properties and pay his mother, Constance Westenra, (the plaintiff) $3,200,000 in full and final settlement of all claims.

[2]    The defendant did not effect a sale of either property. Eventually Craigieburn was sold at mortgagee sale and the plaintiff sold Grasmere. From the Grasmere sale, the plaintiff has received $2,100,000.

WESTENRA v WESTENRA [2018] NZHC 762 [20 April 2018]

Summary judgment application

[3]    On this application, the plaintiff seeks judgment for the balance ($1,100,000) of the sum which the defendant agreed to pay, together with interest. The plaintiff also seeks ancillary orders designed to have some sums of money currently held in different places aggregated under the control of the Registrar of this Court.

This proceeding

[4]    The plaintiff commenced this proceeding in December 2015. She pleaded the settlement. She pleaded also that the stations remained unsold by reason of breaches of the settlement agreement on the part of the defendant. She claimed damages of

$3,200,000 together with interest. At the same time, she applied for summary judgment.

[5]    The defendant filed a statement of defence, a notice of opposition and evidence in opposition.

[6]    By reason of a number of subsequent developments in relation to the sale of the properties and other matters, the proceeding was then adjourned for lengthy periods. Upon the sale of the properties, the plaintiff obtained directions to enable her summary judgment application to be amended and heard.

[7]    The plaintiff’s amended application is supported by a supplementary affidavit in which the plaintiff gives evidence as to the sale of Grasmere. She provides updated detail and calculations in relation to the calculation of interest in the intervening period. She also deposes as to funds held or likely to be held by others for the benefit of the parties.

[8]    The summary judgment application was adjourned to a hearing on 17 April 2018. Counsel for the plaintiff filed and served the amended application and updating affidavit after the timetable date directed by the Court. The defendant has not taken issue with the slippage in timetable. The defendant did not appear at the hearing.

[9]    At the commencement of the hearing, I made an order abridging the time for service of the amended application and supporting affidavit so that they are deemed to have been served in time before the hearing.

The history

[10]   Craigieburn and Grasmere were farmed by the plaintiff and her late husband (“Fenton”). The plaintiff and Fenton together owned a leasehold interest in Grasmere while Fenton owned a leasehold interest in Craigieburn. On Fenton’s death in 1998, the leasehold interest in Craigieburn passed to Fenton’s Estate while the leasehold interest in Grasmere vested in the plaintiff by survivorship. From the 1980’s to 2010, the defendant farmed the two properties. After Fenton’s death, issues arose between the defendant, the plaintiff and Fenton’s executors as to expectations which the defendant had in relation to the farming operations. There was a period from 2010 to 2013 when the defendant did not manage the two properties. He moved back to farm the properties from mid-2013.

[11]   In the meantime, the plaintiff obtained two loans to finance the farming operations, one from a bank and one privately.

[12]   In 2013, the plaintiff was looking to sell her leasehold interest in Grasmere. The defendant sought an interim injunction restraining the sale on the basis that there was a family arrangement which entitled him to relief on the basis of either a constructive trust or an estoppel.

[13]   By a judgment dated 12 November 2013,1 Fogarty J granted the defendant an interim injunction restraining the plaintiff from selling her leasehold interest (and from taking some other steps). As a condition of the interim injunction, the defendant was required to agree to service the plaintiffs’ debts by payment of interest (on both loans) at the rate fixed under the bank loan.

[14]   In 2014, the Court convened a settlement conference between these parties and others. A settlement agreement was reached in the form of a “Deed of Family

1      Westenra v Westenra [2013] NZHC 2980.

Arrangement” (DFA). Thereby, the parties settled the injunction proceedings and other litigation which had arisen. The parties agreed that Craigieburn was to be transferred to the defendant. The DFA then provided for the sale of both the properties and a payment by the defendant to the plaintiff as follows:

Sale of the properties

5.3 Unless as otherwise agreed by the parties it is agreed that both Craigieburn and Grasmere are to be marketed and sold together in the autumn of 2015.

…

Lou

6.4On the sale of the two properties Johnny is to pay Lou $3,200,000.00 (plus GST if any) in full and final settlement of all claims.

[15]   Thus DFA, (unless otherwise agreed by the parties) required that both Craigieburn and Grasmere were to be marketed and sold in the Autumn of 2015, with the defendant to then pay the plaintiff $3,200,000.

[16]   Aspects of the DFA were the subject of correspondence between the parties through their solicitors and memoranda filed in Court. Certain matters were clarified or confirmed by the solicitors:

(a)On 4 September 2014, in a memorandum to the Court, it was recognised that the defendant was the person who would attend to the marketing and sale of both properties in the Autumn of 2015;

(b)In correspondence from the defendant’s solicitors on 7 October 2014, it was confirmed that the defendant was to meet the costs of the sale process and that the plaintiff was due the sum of $3,200,000 on the sale of the properties, irrespective of the price of which the properties sold;

(c)In correspondence exchanged between the solicitors on 19 December 2014, it was confirmed that the $3,200,000 which the plaintiff was to receive would be paid directly from the sale proceeds of Grasmere and/or Craigieburn.

[17]   The stations were marketed for sale beginning in February 2015. Conditional offers were received by May 2015 but unconditional contracts for sale did not result.

[18]   The defendant made some payments of interest but failed to make all the interest payments required under the conditions attaching to the interim injunction.

[19]   In mid-2017, the stations remained unsold. The plaintiff applied to discharge the interim injunction on the grounds that the defendant had failed to comply with the obligations under the DFA and that the plaintiff was prejudiced by the defendant’s failure to sell the Grasmere property in particular.

[20]   The Court discharged the interim injunction on 26 July 2017, finding that the defendant had not complied with the conditions as to the payment of interest and the sale of Grasmere by the autumn of 2015.

[21]   In the meantime, the first mortgagee of the Craigieburn Station had initiated a mortgagee sale. The plaintiff was also concerned that there was a risk of the defendant’s dissipating broader farm assets such as stock.

[22]   On 5 October 2017, the Court on the plaintiff’s application imposed a freezing order over the defendant’s assets, including any funds held by the mortgagee or receivers appointed and payable to the defendant.

[23]   On 7 November 2017, the Court granted ancillary orders in relation to stock owned by the defendant on the stations, including the appointment of a receiver.

[24]   The plaintiff proceeded with the marketing and sale of Grasmere Station. She accepted the best offer available on the market which was $2,100,000. The sale settled on 21 February 2018.

[25]   In the meantime, Craigieburn was sold at mortgagee sale in December 2017. The plaintiff understands that out of the mortgagee sale and receivership associated with Craigieburn, PWC (accountants) may be holding a small balance through having acted as receivers and Grove Darlow (solicitors) are holding the surplus of funds

following the mortgagee sale. No payment has been made from either of those sources to the plaintiff.

[26]   Additionally, the plaintiff understands that Rodgers Reidy (accountants) (who were appointed receiver under the ancillary orders granted by this Court) may hold some funds from that receivership. Meredith Connell, the solicitors who acted for the receiver on that receivership are also understood to be holding, as stakeholder, funds paid into their trust account from the receivership. The plaintiff has not received funds from those sources.

The balance owing and the amended application

[27]   Of the $3,200,000 which the defendant was to pay to the plaintiff under the DFA, the plaintiff has received only $2,100,000. Through her amended summary judgment application, the plaintiff seeks judgment for that balance on the basis it represents the damages caused by the defendant’s failure to effect a sale of both properties.

[28]   In her evidence in support of the amended application, the plaintiff has updated the position in relation to interest. She claims interest to 17 April 2018 in the sum of

$398,291.64. The interest calculations are set out in an attachment to a reporting letter from her accountants, Moore Stephens Markhams Christchurch Ltd (Markhams), which explains the four periods of calculation adopted and the basis of each calculation. Gross interest for the period from 10 September 2014 totals $534,441.85. The plaintiff recognises credit to the defendant for payments made on account of interest he has paid in the sum of $136,150.21. Those figures produce the balance of interest ($398,291.64) now claimed. The letter of Markhams dated 26 March 2018 and attached calculations are attached as Schedule A to this judgment.

[29]By her amended application, the plaintiff also seeks further ancillary orders:

3.1Directing that all funds held by any party or entity that are subject to the terms of:

·      the Freezing Order dated 5 October 2017, and/or

·      the Ancillary Orders dated 7 November 2017

are to be paid forthwith by those parties, without deduction, to the Registrar of the High Court at Christchurch, (by paying those monies to the Ministry of Justice, to the account number to be provided by the Registrar).

3.2Immediately after making payment of those funds to the Registrar, such parties shall email the Registrar [email protected] such email being copied to the plaintiff’s solicitors,

[email protected], advising of the date and amount paid to the Registrar.

[30]   Those additional orders sought by the plaintiff may properly be viewed either as orders ancillary to the freezing order and ancillary orders previously made or as ancillary orders to the principal relief sought by the plaintiff.

Plaintiff’s summary judgment application – the principles

[31]   The starting point for a plaintiff’s summary judgment application is r 12.2(1) High Court Rules, which requires that the plaintiff satisfies the Court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.

[32]I summarise the general principles which I adopt in relation to this application:

(a)Commonsense, flexibility and a sense of justice are required.2

(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.3

(c)The Court will not hesitate to decide questions of law where appropriate.4

(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.5

2      Haines v Carter [2001] 2 NZLR 167 (CA) at [97].

3      Pemberton v Chappell [1987] 1 NZLR 1 (CA).

4      European Asian Bank AG v Punjab & Sind Bank [1983] 2 All ER 508 (CA) at 516.

5      Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21.

(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.6

(f)In assessing a defence, the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.7

(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.8

(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.9

(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.10

6      Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC).

7      Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA).

8      Jowada Holdings Ltd v Cullen Investments Ltd CA 248/02, 5 June 2003 at [28].

9      Bilbie Dymock Corporation Ltd v Patel & Bajaj (1987) 1 PRNZ 84 (CA).

10     Pemberton v Chappell, above n 3.

Grounds of opposition

The defendant’s documents

[33]   The defendant filed a notice of opposition to the plaintiff’s original application for summary judgment. In his affidavit sworn at that time (23 February 2016) the defendant set out his evidence in opposition.

[34]   The defendant has not amended his opposition to take account of the amended interlocutory application or the plaintiff’s updating evidence. Nor did he appear at the hearing.

[35]   It is appropriate to consider the defendant’s grounds of opposition by reference to the documents he has filed. I gather this discussion under headings.

Timing of sale

[36]   The defendant asserted that the DFA did not require the settlement of any sale of Craigieburn or Grasmere to occur by 31 May 2015. It is unclear from this stated ground whether the defendant was drawing a distinction between sale and settlement. The DFA clearly required that the sale occur in the autumn of 2015. It was also a term of the agreement that it would be the defendant who would market the properties for sale (as subsequently confirmed by the parties through their solicitors).

[37]   The defendant failed in his obligation to effect a sale of the properties in the stipulated period. When settlement would have had to occur under any sale agreement is irrelevant given that the defendant failed to effect any sale.

Implied terms

[38]   The defendant asserted that there were implied terms of the DFA requiring that the marketing and sale of the properties would occur after levels of rental had been settled in respect of Craigieburn and Grasmere and leases in registerable form in respect of Craigieburn and Grasmere had been executed. At the time the DFA was entered into, the defendant had seen previous negotiations and arbitration with the

University of Canterbury (the University) over the lessees’ interests in Grasmere and Craigieburn.

[39]   There is no basis upon which to imply such terms. Clause 5.3 of the DFA contains the unqualified commitment of the parties to the sale of the properties in the autumn of 2015, unless the parties otherwise agreed. The implied term which the defendant asserts would seek to place upon clause 5.3 a condition to which the parties did not agree. In the subsequent clause the parties expressly addressed the continuing arbitration with the University, making provision for the costs of that arbitration but not making any provision for a consequence should the arbitration proceed or not proceed in a particular manner. The parties recognised the unconditional commitment to a sale in the autumn of 2015 when (through counsel) they filed in Court their joint memorandum of 4 September 2014 (above at [16](a)).

Outside causes of delay

[40]   The defendant asserts that there were causes of delay in achieving a fair rental for Craigieburn which lay outside his control.

[41]   This ground of opposition fails for the same reason as the previous ground, namely that the defendant had unconditionally committed himself to the sale according to the agreed timetable. The risk of an unsuccessful or delayed arbitration outcome lay with him. The defendant was the person who had the conduct of negotiations and arbitration with the lessor and must be taken to have had knowledge of risks associated with the negotiation/arbitration process and delays inherent in it.

[42]   The defendant’s notice of opposition also asserts the absence of a registerable lease of Craigieburn and a failure to “transfer” the same to him. But, as his evidence indicates, any delay in that regard was through the same delay as I have discussed in the arbitration process. The assignment of the Estate’s interest became held up through the arbitration process. Delays in that regard cannot avail the defendant given his unconditional commitment to the sale process and payment to the plaintiff.

Discussion

[43]   The history of the transactions between the parties, following the commitments they entered into in the DFA, is clear:

(a)The defendant was ultimately unable to sell the properties;

(b)The defendant lost control of Craigieburn;

(c)Freezing and ancillary orders had to be granted in respect of his remaining property; and

(d)Grasmere ultimately had to be sold by the plaintiff.

[44]   The DFA has remained in force. That included the obligation of the defendant to pay the plaintiff $3,200,000 The defendant failed to effect the sale of the properties but others have effected the sales. Consequently the plaintiff has received to date from the Grasmere sale $2,100,000 of the $3,200,000 she would have received had the defendant met his contractual obligations.

[45]   The plaintiff is entitled to equitable damages to fairly reflect what the plaintiff has lost by reason of the defendant’s failure to perform the contract. As Mr Matthews submitted, where specific performance cannot be had (as here) a damages claim may be assessed at the date when the contract is lost.11

[46]   Nothing in the grounds of opposition asserted by the defendant identifies an arguable defence to the plaintiff’s claim. Equally there is nothing in the broader (and substantial) evidence filed to indicate the defendant has any defence to the plaintiff’s claim.

[47]The plaintiff is entitled to summary judgment.

11     New Zealand Land Development Co v Porter [1992] 2 NZLR 462.

Orders

[48]I order:

(a)There is judgment for the plaintiff in the sum of $1,100,000 together with interest to the date of judgment in the sum of $398,291.64.

(b)There are directions that:

(i)all funds held by any party or entity that are subject to the terms of:

·     the Freezing Order dated 6 October 2017 issued in Westenra v Westenra [2017] NZHC 2443; and/or

·     the Ancillary Orders dated 7 November 2017 issued in this proceeding

are to be paid forthwith by those parties, without deduction, to the Registrar of the High Court at Christchurch (by paying those monies to the Ministry of Justice).

(ii)prior to making the payment of such funds to the Registrar, such parties shall email the Registrar [email protected] advising of the date and amount to be paid to the Registrar, and shall obtain from the Registrar the account number and reference number to enable the funds to be paid.

(iii)immediately after making payment of such funds to the Registrar, such parties shall email the Registrar

[email protected], such email being copied to the plaintiff’s solicitors, [email protected], and the defendant,

[email protected], advising of the date and amount paid to the Registrar.

(c)The defendant shall pay the plaintiff’s costs of the proceeding on a 2B12 basis together with disbursements to be fixed by the Registrar.

Associate Judge Osborne

Solicitors:

White Fox & Jones, Christchurch Copy to: J P Westenra

12     High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).

SCHEDULE A