Whitford Properties Limited v Bruce - [2017] NZHC 1674

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1977 [2017] NZHC 1674

BETWEEN
WHITFORD PROPERTIES LIMITED

Plaintiff

AND

ROBERT IAN BRUCE Defendant

AND

COUMAT LIMITED Second Defendant

AND

GREGORY BRUCE HAYHOW Third Defendant

On thepapers: 18 May 2017

Counsel:

M C Black for Plaintiff
First Defendant in absentia
S H Barter and L M Herbke for Second and Third Defendants

Judgment:

19 July 2017

JUDGMENT OF DUFFY J

This judgment was delivered by me on 19 July 2017 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Alexander Dorrington Lawyers, Auckland. Barter Law, Auckland.
MC Black, Auckland.

WHITFORD PROPERTIES LTD v BRUCE [2017] NZHC 1674 [19 July 2017]

[1] On 4 April 2017 I delivered a judgment in which I found that the plaintiff (WPL) had succeeded in its claims against the defendants.1 WPL now seeks interest and costs against the defendants.

Interest

[2] The relevant paragraphs of the judgment for present purposes are:

[151] Accordingly I make declarations as follows:

(a) Mr Bruce has breached the mortgagee’s duty to account for the surplus proceeds of the mortgagee sale of the land, insofar as he accepted payment less than the contract price.

(b) Mr Bruce has breached the mortgagee’s duty to obtain the best price reasonably possible insofar as he sold the land on terms whereby he did not receive good consideration for the full sale price of the land.

(c) Mr Hayhow and Coumat dishonestly assisted Mr Bruce in his breach of trust to account for the surplus proceeds of the sale of the land.

(d) Coumat knowingly received and enjoyed the surplus proceeds of the sale that were held on trust for WPL.

[152] I order as follows:

(a) Mr Bruce is to account to WPL in the sum of $1,310,054 and to pay equitable compensation to WPL in the sum of $1.25 million.

(b) Coumat is to account to WPL in the sum of $2,560,054;

(c) In the alternative, Mr Bruce, Mr Hayhow and Coumat are jointly or severally to pay WPL equitable compensation in the sum of $2,560,054;

(d) WPL’s total recovery from all defendants is limited to the sum of
$2,569,054 together with such interest as the Court may order.

[153] Regarding interest, part of the case against the defendants was based upon breach of trust and accessory liability for such breach. Compound interest is therefore available.

[3] WPL now seeks interest on the money sums I awarded. WPL first seeks interest at the contractual rate of 17 per cent, and in the alternative at the rate provided in the Judicature Act 1908. Further, in reliance on paragraph [153] of the
judgment WPL seeks compound interest.

1 Whitford Properties Ltd (in liq) v Bruce [2017] NZHC 625.

[4] The contractual rate of interest is derived from the agreement for sale and purchase of WPL’s land (the agreement). The land was sold by a private treaty mortgagee sale. The agreement was between the first defendant, Mr Bruce, as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 1674
Decision Date: 19 July 2017

CaseChat Overview and Summary

Whitford Properties Limited (WPL) sought interest and costs from Robert Ian Bruce, Coumat Limited, and Gregory Bruce Hayhow after successfully claiming that they had breached fiduciary duties and acted dishonestly. The dispute centered on a mortgagee sale of WPL's land, where the defendants had accepted less than the contract price, leading to a shortfall in funds that WPL was entitled to receive. The court was required to determine the appropriate rate and type of interest, as well as the costs associated with the proceedings.

The court found that WPL was entitled to interest at the contractual rate of 17 per cent per annum, as this rate was agreed upon by the parties and reflected their intentions regarding late settlement. The court rejected the defendants' arguments that this rate was excessive or punitive, noting that it aligned with the equitable principle that interest runs from the date of the accrual of equitable causes of action. The court also dismissed the claim for compound interest, stating that the agreed rate was sufficient and that compound interest was not warranted. Regarding costs, WPL was awarded scale costs at category 2B, which the defendants did not dispute.

The court's reasoning was grounded in the principles of equity, which allow for interest awards that may exceed statutory rates in appropriate cases. The court emphasized that the defendants' actions were deliberate and dishonest, justifying a higher interest rate. The decision also highlighted the importance of adequate pleading in equitable claims, noting that a request for interest in the prayer for relief was sufficient notice to the defendants.

WPL was awarded interest at the rate of 17 per cent per annum from the date of settlement until the date of judgment, recoverable jointly or severally from the defendants. WPL was also awarded costs in the sum of $62,653.50, recoverable jointly or severally from the defendants. Costs for the preparation of the costs memoranda were to lie where they fell.

Orders