Zwarst v Saxton
[2015] NZHC 1888
•11 August 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2014-409-000896 [2015] NZHC 1888
BETWEEN RONALD JOHN ZWARST, LISA
TRACY ZWARST and CHRISTOPHER JOHN SAXTON as Trustees of the RJ and LT Zwarst Family Trust
Plaintiffs
AND
DAVID ANTHONY SAXTON Defendant
Hearing: 3 August 2015 Appearances:
J P Forsey for Plaintiffs
M Smyth for DefendantJudgment:
11 August 2015
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
Background
[1] The defendant is the owner of the land in Certificate of Title WS8C/1370. In November 2001 he signed an agreement to sell this property to Heliventures Limited, a company of which he was then the sole director. At that time the land had not been subdivided from a larger area, but subdivision was underway. Mr Saxton agreed to sell the other two allotments in the subdivision to the M D Saxton Family Trust and L T Saxton Family Trust, respectively. New titles were issued in May
2004. The three purchasers registered caveats against the titles to the land they had bought. In December 2011 Mr Saxton took steps to lapse the caveats, but on
15 March 2012 the Court issued a judgment sustaining the caveats. This was followed by an application for specific performance by each of the trusts, and in March 2013 orders for specific performance were made. The sales to the trusts were
then settled.
RJ ZWARST, LT ZWARST and CJ SAXTON as Trustees of the RJ and LT Zwarst Family Trust v DA SAXTON [2015] NZHC 1888 [11 August 2015]
[2] In August 2010 Heliventures Limited was put into liquidation. Although the liquidators took steps to sustain the caveat in favour of Heliventures, they did not take steps to obtain specific performance of the contract. In August 2014 they assigned the company’s interest as purchaser under the contract to the plaintiff trust and in September gave notice of assignment to Mr Saxton. The Trust then sought to settle the agreement, but the defendant declined to do so. In December 2014 the Trust filed this proceeding, seeking an order directing specific performance of the agreement.
[3] The Trust applies for summary judgment, as the other two trusts had done for their respective lots in June 2012. The principles the Court is to apply on an application for summary judgment are summarised in Krukziener v Hanover Finance Ltd:1
[26] 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 (CA) at 3. 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 331 (PC) at 341. 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).
[4] In Auckett v Falvey, Eichelbaum J said:2
On a summary judgment application, the onus is on the plaintiff to show that there is no defence. On the present facts, the plaintiffs are able to pass an evidential onus to the defendants by exhibiting the contract which on its face, entitles them to the remedy they now seek. The defendants are then in a position of having to demonstrate a tenable defence. However, the overall position concerning onus on the application is that at the end of the day the question is whether the plaintiffs have satisfied the Court as to the absence of a defence.
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.
2 Auckett v Falvey HC Wellington CP296/86, 20 August 1986 at 2.
[5] I take from these authorities that the correct approach of the Court to the analysis of the case is:
(a) Does the evidence for the plaintiff establish a position which on its face would entitle them to the remedies they now seek?
(b) If so, has the defendant demonstrated a tenable defence?
(c) The onus which shifts to the defendant is an evidential one only; the burden of proving that the defendant does not have a defence rests throughout with the plaintiff.
[6] If this case were to proceed to trial, the Court would consider whether the plaintiff had established the requisite elements of its claim on the balance of probabilities, the civil standard of proof. It will be immediately apparent from r 12.2 of the High Court Rules and from the passages quoted from Krukziener v Hanover Finance Ltd and Auckett v Falvey that the onus on the plaintiff, on an application for judgment on a summary basis, is substantially greater. The reason is also self evident. Entering judgment on a summary basis deprives those against whom allegations are made of a full trial at which both the plaintiff’s and the defendant’s versions of events would be fully aired in oral evidence, including cross- examination.
[7] The position of the plaintiff Trust in this case is straight-forward. It says that it has a valid assignment of a binding agreement for sale and purchase of the land described in the agreement, that it is ready, willing and able to settle, that it wishes to do so, and that Mr Saxton is in breach of contract in failing to settle.
[8] Mr Saxton, acting on his own behalf at the time this proceeding was served on him, filed a notice of opposition raising two defences. First, he said that the application was based on a forgery. He alleges that he did not sign the agreement for sale and purchase as vendor, and that his signature was forged by his daughter, the second-named plaintiff, Lisa Zwarst. Secondly, Mr Saxton said the delay in bringing this proceeding had been “far too long” and had caused him significant problems in
defending it. He also alleged that he had changed his position as a result of the delay and claimed that the doctrine of laches applied.
[9] In addition to his own affidavit, Mr Saxton filed an affidavit from Mr B R Waterland, who is an aviation consultant. He produced a number of documents relating to the Civil Aviation Authority’s requirements for Heliventures, which should have been signed by Mr D A Saxton on the company’s behalf, but which Mr Waterland says were signed in his presence by Ms Zwarst, using Mr Saxton’s name.
[10] An extensive exchange of affidavits then ensued. The allegation of forgery was denied by Ms Zwarst. Late in the piece, just three weeks before the fixture, Mr Saxton (who was then represented by solicitors) filed an amended notice of opposition (for which leave was granted) in which the first ground of opposition did not reappear. By this document, Mr Saxton opposes the making of an order by way of summary judgment on two grounds. First, he relies on what he sees as the delay by the plaintiff Trust in making this application. Secondly, he says the Trust does “not approach the Court with clean hands”.
[11] The issues in this case are whether Mr Saxton has established a tenable defence to this application, on either of these two bases.
First issue: has there been such a delay in making this application that the doctrine of laches applies, and the Court should not order specific performance?
[12] A period of 10 and a half years passed between the issue of a new title in May
2004 for the land being purchased by Heliventures, and the issue of this proceeding in December 2014. At the time the titles were issued, Mr Saxton was under suspicion of theft of greenstone. He was arrested and charged in October 2004 and at the end of that month the Crown registered a restraining order against the new titles to the three properties which resulted from the subdivision, including the title sold to Heliventures. That restraining order was not released until June 2011. Heliventures would not have been able to settle the purchase at any point prior to that. Therefore the relevant period to be considered, for the purposes of the doctrine
of laches, is from June 2011 to December 2014, a period of three years and six months.
[13] Ten months before the restraining order was released in June 2011, Heliventures was placed into liquidation by Mr Saxton. Settlement of its purchase was therefore in the hands of the liquidators. Later that year the two Saxton trusts sought settlement of their agreements, resulting in Mr Saxton seeking lapse of the caveats lodged by both the trusts and by Heliventures Limited in December 2011. In March 2012 the caveats were upheld. The two trusts then applied for specific performance of their agreements, and orders were made in March 2013. The liquidator did not take this step. It seems as though it would have been open to him to do so, and his reasons for not doing so are not explained.
[14] There is a period of one year from March 2012, when orders were made that the caveats not lapse until March 2013 when specific performance was granted in favour of the trusts, when steps could have been taken to proceed with this contract. Five months after that, however, the liquidators assigned the contract to the present plaintiffs, and a month later gave notice of assignment to Mr Saxton. In that month he finally settled the sales to the two trusts, but did not settle, or seek to settle, the sale of the Heliventures block title to the plaintiff trustees. Indeed, in October 2014, he refused to do so. This resulted in the plaintiff trustees filing this proceeding in December 2014.
[15] Although over 10 years has passed since the agreement was originally signed, there has been virtually no delay by the purchasers of the land in taking steps to obtain title. As indicated, there is a period of a year when the liquidator could have pressed for settlement, and the liquidator could have participated in the specific performance proceedings undertaken by the two trusts, as he had in the caveat proceedings. Whatever the liquidator’s reasons for not doing so may have been, they were not the reasons of the present plaintiffs. After they took an assignment of the Heliventures’ agreement in August 2014, Mr Saxton did settle (under court order) his sales to the two Saxton trusts (of whom Mr Zwarst and Ms Zwarst, two of the present plaintiffs, were also trustees) but declined to settle the Heliventures sale, leading to the issue of these proceedings two months later. Mr Saxton cannot blame
the liquidator or the present plaintiffs for not settling when he did not request either to do so, and refused the request of the latter.
[16] It follows that the defendant has not made out an evidentiary foundation on which the Court could realistically consider that the doctrine of laches might be applied and, on that basis, decline an application for specific performance.
[17] Further, laches is an equitable defence, and to obtain the relief which it affords, a defendant must have an equity which, on balance, outweighs the plaintiff’s right.3 In Eastern Services4 the Supreme Court described the following passage from
Lindsay Petroleum Company v Hurd as the classic exposition of the doctrine:5
Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or whereby his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.
[18] In Wellington City Council v New Zealand Law Society,6 Cooke P said:
The issues arising under the Society’s defences of estoppel, laches and acquiescence, and the contention that Davison CJ exercised his discretion wrongly can conveniently be considered together. Essentially they require consideration of the equities and can be summed up in the question whether it would be unconscionable to grant relief in the light of the reasonable expectations of the parties. As to laches, whichi on the facts here is the most promising defence from the Society’s point of view, it has been accepted in this Court in Neylon v Dickens [1987] 1 NZLR 420, 407-409, that the length of the delay and the nature of the acts done during the interval are always important in laying down a balance of justice or injustice between the parties, and that in some cases an inference may be drawn as a matter of commonsense that delay in making a claim has prejudiced the defendant.
3 Eastern Services Limited v No 68 Limited [2006] NZSC 42, [2006] 3 NZLR 335 at [13] citing
Nwakobi v Nzekwu [1964] 1 WLR 1019 (PC).
4 Eastern Services Limited v No 68 Limited above n 3 at [34].
5 Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221,239-241.
6 Wellington City Council v New Zealand Law Society [1990] 2 NZLR 22, 26.
[19] It will be seen that, quite apart from the question of the passing of time between the availability of title and the filing of this action, it is also necessary to consider what has occurred in the meantime in order to decide whether it would be unconscionable to grant relief. For most of the first seven years after issue of title, settlement could not take place due to Mr Saxton’s own actions and consequent prosecution, followed by the liquidation of Heliventures, which he too brought about. He also opposed the applications for orders that the caveats not lapse, opposed the orders for specific performance of the sales to the trusts, and even after judgment was entered on those applications, did not settle the sales to the trusts for almost seven further months. By then he knew that the sale to Heliventures had been assigned to the plaintiff Trust and could have settled it at the same time, but did not, and shortly afterwards refused to do so. He took this course notwithstanding the fact that in the judgment issued in March 2013 granting specific performance of the sales to the trusts, he had failed to raise an arguable defence that he had not entered binding agreements for sale of land to either of the trusts, a position which occupies the greater part of the evidence he has put in on the present application.
[20] The relevance of this in the context of his claim to relief on the basis of laches is that he has known throughout this period that Mr Zwarst and Ms Zwarst did not accept his assertion that he was not bound by the agreements for sale and purchase, all of which were entered by him at the same time. This is not a case where it could possibly be said that an attempt to enforce the Heliventures’ contract has suddenly arisen after a long period of inactivity. As well, to Mr Saxton’s knowledge, considerable sums of money have been spent building a hangar and workshop on the subject land, steps which are consistent with an overall intention that in due course the sale would settle, if necessary over Mr Saxton’s opposition.
[21] I find that it would not be unconscionable to require Mr Saxton to settle the contract. For these reasons, I find that Mr Saxton has not demonstrated that he has an arguable defence of laches.
Second issue: is there an arguable defence on the basis of the plaintiff Trust applying to the Court without clean hands?
[22] This defence is based on a maxim of equity described in the Laws of New
Zealand in the following terms:7
One who comes to equity must do so with clean hands. In any proceedings in equity under its inherent jurisdiction, a Court will examine the conduct, in the transaction or arrangement which is the subject of the suit, of the party seeking relief. Should a petitioner be guilty of any impropriety, in the legal sense, in a matter pertinent to the suit then equity may refuse the decree sought. The impropriety must be direct and immediately related to the equity relied on ... “Unclean hands” is not an absolute bar to relief in equity and the whole circumstances must be taken into account before deciding whether the plaintiff’s claim is defeated by a lack of clean hands.
[23] Mr Saxton’s assertion that the plaintiff Trust should be denied relief by the application of this principle is based on evidence given by Ms Zwarst in an affidavit filed in support of this application. As noted earlier, Mr Saxton filed an affidavit from Mr Waterland asserting that Ms Zwarst had forged Mr Saxton’s signature several times on a Civil Aviation Authority document. Ms Zwarst responded with an affidavit in which she denied this allegation. As a result, Mr Saxton then filed an affidavit by Ms L W K Morrell, a forensic document examiner and handwriting expert of over 20 years experience. She was asked to examine the Civil Aviation Authority documents referred to by Mr Waterland. Having done so, she said in her affidavit:
In my opinion I find no evidence that DA Saxton has completed any of the eight signatures in his name on the CAA documents and consider that they have been completed by another writer attempting to copy or simulate the natural genuine signature of DA Saxton.
[24] Based on this evidence, counsel for Mr Saxton says that it is clear that Ms Zwarst was not truthful in her affidavit. Whilst accepting that the Court may be unwilling to make a finding of fact to that effect without cross-examination, counsel says that the Court must have grave doubts as to the veracity of Ms Zwarst. As a result, her testimony should be the subject of proper scrutiny at a full hearing, and
the plaintiff trust comes to the court on this application without clean hands.
7 Laws of New Zealand Equity: The Nature of Equity (online ed) at [12] (footnotes omitted).
[25] I am unable to accept that a proper foundation has been laid for a defence based on the equitable maxim relied on, for two principal reasons. First, it overlooks the further evidence of Ms Morrell which is in the following terms:
The signatures of M Saxton and L Saxton are present within the documents provided to me for this examination. However I find no similarities between each of their respective signatures and these eight questioned signatures to suggest which, if any is the writer. As copied or simulated signatures exhibit few, if any of the writer’s own personal writing habits then it is doubtful that authorship can be attributed to those eight signatures.
[26] The evidence of Ms Morrell, read as a whole, stops short of establishing, even to the extent necessary in defence of this application, that Ms Zwarst has been untruthful in her affidavit as alleged, even when read in conjunction with the evidence of Mr Waterland which, as well, has not been tested by cross-examination.
[27] Secondly, the evidence of Ms Morrell does not relate to the signature of Mr Saxton on the agreement for sale and purchase of which specific performance is now sought. This is understandable, given that Mr Saxton no longer relies on the allegation of forgery he forcefully enunciated in his first affidavit and initially raised as a defence to this application. Rather, the submission now under consideration amounts to a collateral attack on Ms Zwarst. If this issue were raised at a trial, and it were found that Ms Zwarst forged Mr Saxton’s signature on the CAA documents, then necessarily her denial would be wrong. But Mr Saxton seeks to use the disputed evidence about Ms Zwarst’s involvement in the CAA documents to prevent her and her co-trustees from receiving a remedy to which they would otherwise be entitled. There is no suggestion that either of the other two trustees acted without clean hands. Even if it were proved at trial that Ms Zwarst acted unlawfully in respect of other aspects of Heliventures’ affairs by forging Mr Saxton’s signature and that her affidavit on this application was therefore wrong, it is not clear how the trust could be deprived of a remedy on that basis. The beneficiaries of the trust are still entitled to the trust property under the terms of the trust, irrespective of wrongful conduct by one trustee. If her conduct were of sufficient seriousness, Ms Zwarst could resign leaving the remaining trustees with their entitlement to a remedy. The other trustees would not be deprived of a remedy because Ms Zwart’s evidence given by affidavit on this application were proved at trial to be wrong.
[28] Accordingly, it has not been shown that Mr Saxton has a tenable defence based on Ms Zwarst not having clean hands.
Outcome
[29] The plaintiff trustees have established that Mr Saxton does not have any arguable defence to this claim. I order that he specifically perform the agreement for sale and purchase between Heliventures Limited and himself dated 7 November
2001.
Costs
[30] Mr Forsey, for the plaintiffs, applies for costs on an indemnity basis. He says that a very serious allegation of fraud was made and then not pursued, a very serious allegation of dishonesty on the part of Ms Zwarst was made and pursued, as was an allegation of perjury without sufficient foundation. He says that many of the allegations made by Mr Saxton in his evidence in this case had already been determined in earlier proceedings, and Mr Saxton has therefore used the court process for the improper purpose of impugning the reputation of Ms Zwarst and others, and wasted time and expense as a result.
[31] Although this submission is contained in his written synopsis of argument, it was not responded to in the submissions for Mr Saxton. I am reluctant to consider awarding indemnity costs without hearing from counsel on Mr Saxton’s behalf.
[32] My present view, however, is that it is not appropriate to award indemnity costs. At present I am not satisfied that the grounds in r 14.6(4) for taking the extreme step of awarding indemnity costs have been made out. My present view is that Mr Saxton should be directed to pay costs on a 2B basis, but increased by one- third, on the basis that r 14.6(3)(b)(ii) applies to the case presented by Mr Saxton.
[33] Counsel should now discuss costs given this indication; if agreement is not reached, Mr Forsey may notify the Court by memorandum within five working days, and a memorandum may be filed by counsel for Mr Saxton within a further five working days opposing the order for indemnity costs which Mr Forsey seeks. I will
then deal with costs on the papers. If agreement is reached, counsel are to advise immediately. Costs memoranda will not be considered if filed outside the times
stated.
J G Matthews
Associate Judge
Solicitors:
Duncan Cotterill, Christchurch.
Solutions Law Office (G Malone), Stoke.
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