RHIND v STEVENSON [appeal] [2022] NZHC 1594

RHIND v STEVENSON [appeal] [2022] NZHC 1594 [6 July 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV 2022-404-000376[2022] NZHC 1594BETWEEN CHERIE BERYL RHIND (previouslyknown as CHERIE BERYL EDWARDS)AppellantAND IAN LESLIE STEVENSONRespondentSTEVENSON ACCOUNTING LIMITEDSecond RespondentHearing: 21 June 2022Appearances: M J Fisher for the AppellantN C King for the RespondentJudgment: 6 July 2022JUDGMENT OF TAHANA JThis judgment was delivered by me on 6 July 2022 at 2.30pmPursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors/Counsel:Jones Howden, Barrister & Solicitors, MatamataNoel King Barrister, AucklandErskine Chambers, AucklandIntroduction[1] This is an appeal against the decision of Judge G M Harrison not to strike outMr Stevenson's (the Respondent's) amended claim to recover a debt owed byMs Rhind (the Appellant).1 Judge Harrison found that Ms Rhind was obliged to repaythe debt on 14 August 2015 when the property of Edwards Family Trust was sold.2Mr Stevenson filed his amended claim on 12 April 2021, which was within the sixyear statutory time frame.3[2] Ms Rhind appeals and says the Judge erred because on a proper constructionof the agreement, the debt was due on 18 January 2007 so that the amended claim istime barred.[3] I therefore need to determine when the debt was payable and whether theamended claim was filed within six years of that date.Background[4] Mr Stevenson made various loans to Ms Rhind prior to January 2007.[5] On 18 January 2007, Mr Stevenson and Ms Rhind (who was then known asCherie Beryl Edwards) signed a document entitled "Settlement, Acknowledgment andGuarantee Agreement" (the Agreement). The parties to the Agreement were CherieBeryl Edwards (CBE), Edwards Family Trust (EFT) and Ian Leslie Stevenson (ILS).[6] Ms Rhind signed the Agreement in two capacities:(a) personally as borrower and guarantor; and(b) as trustee of the Edwards Family Trust as "property owner, borrowerand guarantor."1 Stevenson v Rhind [2022] NZDC 3071.2 At [28].3 At [28].[7] The Agreement expressly referred to a first agreement for repayment of$40,000 and a second agreement for repayment of $70,000 (plus interest) if the$40,000 was not paid by 31 May 2007. The Agreement included the followingrelevant clauses:CBE and EFT agree (on a joint and severally irrevocable basis) to pay ILS themonies as follows (The first agreement): -3. CBE and EFT will not at anytime act in such a way that the securityof ILS will be jeopardized such that loss is caused to ILS, delay inpayment, CBE will complete all such things, instructions or otherwiseso that the obligations under this agreement will be met on a timelybasis.4. All parties agree and acknowledge that this agreement is not intendedor construed to secure a better position for ILS.7. Should for any reason this agreement be disputed, overturned andremain unpaid for any reason then the original amount owed will bethe debt owned and payable. This agreement will not and can nottherefore be used as a means to mitigate in any degree the originaldebt.8. Full and final payment of all amounts due or payable to the date ofthis agreement.9. Paid from the proceeds of sale of your / trust property in TamihanaStreet, Matamata, and10. You agree that until paid that the amount outstanding ranks as a firstcharge against the property and/or proceeds of sale save only as to theexisting mortgage to Westpac which I understand from you previouslyto be in the region of $109,000 or so.11. Interest will accrue at 7% per annum from the date of signing if andonly if payment has not been made by the dates specified in the firstagreement except if payment is made by due date12. At date of settlement of the property13. Without delay, time being of the essence14. Without deduction15. Or by raising mortgage finance16. Or by 31 May 2007 (due date)17. Items included in this agreement are:-Total amount agreed and due. $40,000[8] Clause 18 then provided:In the event that the first agreement is not completed on time then the secondagreement will replace it.You agree to keep me informed as to progress on listing, sale, offers andgenerally as is reasonably required so as both parties are well involved as toprogress.In the event if neither sale or mortgage funds being available by the datespecified above then the second agreement will replace it as follows: -• The second agreement is not in addition to the first agreement.• For the record the full amount owed and agreed as "the debt" will beas follows if payment is not made by 31-May-2007.Total amount agreed and due. $70,000.Terms of payment will be as per the above for the first agreement, except asto the amount and due date.[9] The trust deed dated 4 August 2004 for EFT has Ms Rhind as settlor andtrustee. The other trustee was Karen Maree Osbaldiston. Ms Osbaldiston did not signthe Agreement.[10] The certificate of title for the Tamihana Street property lists Cherie BerylEdwards and Karen Maree Osbaldiston as owners as from 17 December 2004.Correspondence between the parties[11] On 5 May 2010, Stevenson Accounting Limited wrote to WHK accountantsregarding Ms Rhind and EFT. It appears WHK accountants were requesting copies offiles to be able to advise Ms Rhind and EFT. Stevenson Accounting Limited indicatedthere were outstanding issues requiring a response prior to any transfer. Theseincluded payment of an outstanding account and various outstanding debts and loansowed by Ms Rhind and EFT. No further correspondence has been provided until 2012.[12] On 27 April 2012, Ms Rhind's solicitors wrote a "without prejudice" letter toMr Stevenson's solicitors. In a subsequent letter dated 25 May 2012 the claim forprivilege was withdrawn.[13] The 27 April 2012 letter refers to matters in dispute including outstandingaccounting fees of $12,021.40 and the "outstanding loan balance pursuant to LoanAgreement dated 18 January 2007." The letter requested information fromMr Stevenson including a breakdown of the operation of the loan pursuant to the"Loan Agreement dated 18 January 2007."[14] The 27 April 2012 letter also raised concerns as to Mr Stevenson's conduct asan accountant and stated:Whilst Cherie does not dispute that there is a debt owing, we wish to quantifythe amount of the debt before proceeding. If this is not forthcoming, we mayelect to pursue the reopening of the Loan Agreement.Procedural history[15] On 16 April 2018, Mr Stevenson filed a claim against Ms Rhind (both in herpersonal capacity and as trustee of the Edwards Family Trust) seeking recovery of thedebt owing under the Agreement. The claim alleged that Ms Rhind had acknowledgedthe debt was owing in the letter dated 27 April 2012.[16] Ms Rhind applied to strike out the claim saying it was statute barred given itwas filed more than six years after the date of the Agreement. Mr Stevenson opposedthe strike out.First District Court decision[17] On 25 March 2021, Judge M-E Sharp struck out the claim finding that theacknowledgement of debt was not sufficiently certain and granting leave forMr Stevenson to file an amended claim.44 Stevenson v Rhind [2021] NZDC 5744.[18] On 12 April 2021, Mr Stevenson filed an amended claim against Ms Rhind inher personal capacity only with a new cause of action as follows:5[Mr Stevenson] says that the terms of the agreement were that the debt wouldbe repaid upon the sale or refinance of the Tamihana Street property or by the31st of May 2007.[19] Ms Rhind applied to strike out the amended claim maintaining that the causeof action accrued on 18 January 2007 so the claim was time barred.Second District Court decision[20] Judge Harrison found that the cause of action accrued on 14 August 2015 whenthe Tamihana Street property was sold so was within the six-year limitation period.6In reaching this conclusion, Judge Harrison considered that Ms Rhind had given acontractual warranty that she would repay the debt on the sale of the property. It wasthat omission in 2015 Mr Stevenson relied on in filing his amended claim and theJudge therefore considered it was within time.Relevant law[21] Section 11(1) of the Limitation Act 2010 provides:It is a defence to a money claim if the defendant proves that the date on whichthe claim is filed is at least 6 years after the date of the act or omission onwhich the claim is based (the claim's primary period).[22] Mr Stevenson argues that the omission is Ms Rhind's failure to repay themonies when the Tamihana Street property was sold on 14 August 2015.[23] Ms Rhind says the Limitation Act 1950 applies because the debt was due whenthe Agreement was signed on 18 January 2007. Section 4(1) of that Act provides thatan action founded on simple contract shall not be brought after the expiration of 6years from the date on which the cause of action accrued.5 Amended Statement of Claim (dated 12 April 2021) at [23].6 Judge Harrison applied the Limitation Act 2010 as this is the relevant act for causes of actionaccruing on or after 1 January 2011. See Limitation Act, ss 2 and 59.[24] The test and timeframe under each of the 1950 and 2010 Limitation Act areeffectively the same. The key issue is what is the date of the breach of contract (ie, byact or omission) giving rise to a claim.[25] On appeal, I must determine whether Judge Harrison erred in finding that thedate of the omission is the date of sale of the Tamihana Street property. This issueturns on the interpretation of the terms of the Agreement.When was the debt required to be paid?Approach to contract interpretation[26] Counsel for Ms Rhind helpfully set out the Court's approach to contractinterpretation and relied on the Supreme Court's decision in Firm PI 1 Ltd v ZurichAustralian Insurance Ltd, where the majority summarised the approach: 7 proper approach is an objective one, the aim being to ascertain "themeaning which the document would convey to a reasonable person having allthe background knowledge which would reasonably have been available tothe parties in the situation in which they were at the time of the contract".8This objective meaning is taken to be that which the parties intended.9While context is a necessary element of the interpretive process and the focusis on interpreting the document rather than particular words, the text remainscentrally important. If the language at issue, construed in the context of thecontract as a whole, has an ordinary and natural meaning, that will be apowerful, albeit not conclusive, indicator of what the parties meant.[27] I start by considering the language of the Agreement to determine whether theobjective intentions of the parties can be ascertained.7 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]and [63].8 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL)at 912 per Lord Hoffmann. See also Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38,[2009] 1 AC 1101 at [14] per Lord Hoffmann.9 Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988 at [16] perLord Hoffmann delivering the judgment of the Privy Council.Terms of the Agreement[28] The due date for the first agreement is specified as "31 May 2007 (due date)."For the second agreement, the Agreement states:• Terms of payment will be as per above for the first agreement,except as to the amount and due date.(emphasis added)[29] The use of "except" indicates the due date for the debt is different to 31 May2007, being the due date for the $40,000. There is no due date specified. The onlyother date is the date the Agreement was signed, on 18 January 2007.[30] Counsel for Ms Rhind says that the "due date" is reference to 18 January 2007as this is the date implied by the phrase "the total amount agreed and due," in that asum that is "due" is an amount that is already payable or acknowledged to be payablefrom an identifiable point in time. This argument has some merit except that the dateof 18 January 2007 must be read together with the other terms of the Agreement todetermine whether the parties intended that a claim accrued as from this date or a laterdate.[31] Judge Harrison held that the debt was due as of 18 January 2007 (being thedate from when interest accrued) and not payable until the sale of the property.10 Thisinterpretation is consistent with Ms Rhind's argument that the debt is "due" or "owing"from 18 January 2007. The other terms of the Agreement however, state that Ms Rhindwill pay on the settlement of the property or refinance so these terms are to be readtogether.[32] I accept that interest is payable as from 18 January 2007 but there is noobligation to repay the principal or interest until 31 May 2007 and only if the $40,000is not paid. This is plain from the words "[f]or the record the full amount owed andagreed as the 'debt' will be as follows if payment is not made by 31 May 2007." Atthe earliest, the debt is not payable until there is a failure to pay the $40,000 by 31 May2007. This is the first date that the debt could be paid as $70,000 (plus interest) was10 Stevenson v Rhind, above n 1, at [27].not owing until then. The question is whether the terms of the Agreement also allowedMs Rhind to pay at a later date.[33] Mr Stevenson claims the debt is due on the sale of the Tamihana Property, onrefinance or by 31 May 2007. The Agreement specifies when Ms Rhind and EFTagree to pay the debt as follows:CBE and EFT agree (on a joint and severally irrevocable basis) to pay ILS themonies as follows (The first agreement):-9. Paid from the proceeds of sale of your / trust property in TamihanaStreet, Matamata, 12 At the date of settlement of the property13 Without delay, time being of the essence15 Or by raising mortgage finance[34] On the plain meaning of the above, the parties agreed to pay the monies at thedate of settlement or by raising mortgage finance. Each clause must be read to followfrom the heading sentence. All of the above clauses also apply to the secondagreement.[35] Counsel for Ms Rhind relies on cl 13 as indicating urgency so that the partiescannot have intended to require repayment on an undefined date. I also note that cl 3requires Ms Rhind and EFT not to act in a way to cause delay in payment. Clauses 3and 13 can be read as requiring Ms Rhind to act to sell and/or refinance without delay.Ultimately the purpose of the Agreement was for Ms Rhind to repay Mr Stevenson socl 3 and 13 should be read consistently with that purpose. Clauses 9, 12 and 15 indicatethat the parties intended the property to be the source of the funds to enable paymentso linking payment to the sale is consistent with that intention.[36] Ms Rhind also says that the due date cannot be linked to sale or finance becausethose events were outside the control of the parties to the Agreement because theproperty was owned by the Edwards Family Trust and only one trustee had signed.[37] Even accepting that the Agreement is not binding on Edwards Family Trust(defined as EFT in the Agreement) because only Ms Rhind signed, the Agreementappears to have been drafted on the assumption that EFT was bound by its terms.11EFT is named as a party and alongside Ms Rhind agrees to all terms on a "joint andseverally irrevocable basis." The language indicates that there was an intention thatEFT would be bound by its terms. Enforceability is not relevant to the objectivemeaning of the terms of the Agreement, from which the parties' intentions at the timeof signing can be inferred.[38] Practically, Ms Rhind was the settlor, a trustee, the appointor and the primarybeneficiary of EFT. Taking these factors together, it is not unreasonable for the parties(and Mr Stevenson in particular) to have assumed that Ms Rhind had some degree ofcontrol over the property. At the least she had a beneficial interest so it was reasonablefor Mr Stevenson to assume she may receive some or all of the proceeds of sale. Forthese reasons, the enforceability of the Agreement against EFT does not override theplain meaning of cls 9, 10, 12 or 15 or change the objective intention of the parties.[39] Judge Harrison was incorrect in assuming that the Tamihana property wasowned by Ms Rhind then transferred to the EFT. This incorrect assumption, however,does not change the plain terms of the Agreement or change the fact that Ms Rhindwas settlor, trustee and the principal beneficiary of EFT so that requiring payment onsale of the EFT property is not absurd.[40] Counsel for Ms Rhind also says that the date of sale or refinance cannot be thedue date because this would suspend the obligation to repay indefinitely. While cls 3and 13 indicate an intention to pay without delay, that intention is coupled withobligations on Ms Rhind to act accordingly. Clauses 3 and 13 are to be read withclauses 12 and 15, which indicate an intention that payment would occur on sale orrefinance. Those clauses were not removed from the second agreement and are11 The two earlier District Court decisions accept that the agreement would not be binding upon theEdwards Family Trust, see Stevenson v Rhind, above n 1, at [14] and Stevenson v Rhind, aboven4, at [2]. I do accept that Ms Rhind was the only trustee to sign the Agreement. This issue wasnot challenged by Mr Stevenson and I am not required to determine it for the purposes of thisappeal.consistent with the purpose of ensuring payment occurred by linking payment to anevent where it was reasonable to assume Ms Rhind would have funds to pay.[41] Further, Ms Rhind was obliged to progress matters without delay (time beingof the essence) (cl 13) and to keep Mr Stevenson appraised of developments (cl 18) sothose terms indicate that the parties did not intend that Ms Rhind was entitled to delaypayment indefinitely. If there were delays, this would be compensated by the interestpayable of seven per cent per annum as from the date of the Agreement.[42] In the absence of a specified due date by which the debt had to be repaid, it isopen on the plain meaning of cls 12 and 15 to find that payment is to be made after 31May 2007, on sale or refinance. Certainly, it was open to Ms Rhind to raise as adefence to any demand for payment that she was not obliged to pay until the propertywas sold or finance raised. It was not an error for Judge Harrison to refer to thisdefence as this flows directly from the clauses that expressly say the parties agree topay Mr Stevenson the monies at the date of settlement or by refinancing. If Ms Rhind'ssubmissions are to be accepted, the plain meaning of those clauses would need to beignored as those clauses would serve no purpose as they would impose no obligationon Ms Rhind.[43] The date on which the property is sold or finance raised is ascertainable. It isthe date on which either of those events occur. This is not ambiguous or uncertain.The only uncertainty is when this might occur. There were obligations imposed onMs Rhind to ensure this was not delayed. It would be contrary to the terms of theAgreement for Ms Rhind to now rely on those delays to avoid payment.Subsequent conduct[44] Counsel for Ms Rhind also argues that Judge Harrison ignored the subsequentcorrespondence between the parties in 2012 which shows that both parties consideredthe debt was due in 2012, which is before any sale or refinance.[45] While demanding payment prior to sale or finance is inconsistent with paymentbeing due on either of those dates, there is no evidence that Mr Stevenson hadknowledge that neither had occurred by 2012. It was not therefore inconsistent forhim to demand payment. Equally, it was open to Ms Rhind to assert that she was notrequired to pay until sale (or refinance) occurred.Sale as act or omission[46] Counsel for Ms Rhind says the sale cannot be the act or omission as theproperty is not Ms Rhind's so she has no control over its sale. The omission is thefailure to pay at the date of settlement of the property as this is what the Agreementrequired of Ms Rhind and EFT as the named parties. As set out at paragraph [38]above, given Ms Rhind was the principal beneficiary and a trustee of EFT, it wasreasonable for Mr Stevenson to assume that Ms Rhind would have funds available toher personally if EFT sold the property. If payment did not occur on the date ofsettlement, then it is open to Mr Stevenson to demand payment from Ms Rhindbecause the obligation in cl 12 of the Agreement has been breached.Business common sense[47] Counsel for Ms Rhind says that it does not make business common sense forthe repayment to be linked to a property that is not owned by Ms Rhind.[48] As set out at [38] above, Ms Rhind is not a detached third party. She is thesettlor, the appointor, a trustee and the principal beneficiary of the Edwards FamilyTrust. She has a beneficial interest. Further, the terms of the Agreement infer that theparties assumed that EFT was bound by the Agreement. EFT is listed as a party andthere are obligations on EFT. Given those plain terms, it makes business sense forMr Stevenson to link repayment to sale or refinance of a property owned by a trustwhere Ms Rhind is the primary beneficiary and a trustee.[49] Linking payment of the debt to the sale of the property is not dissimilar to areverse mortgage, where the obligation to repay is triggered if the property is sold.This interpretation is consistent with business sense.[50] I do not accept that the terms of the Agreement need to be constrained to reachthe conclusion reached by Judge Harrison. Rather, the conclusion flows directly fromthe plain meaning of the terms of the Agreement.[51] For these reasons, payment of the debt was due when there was settlement ofthe sale of the Tamihana property on 14 August 2015. The filing of the amended claimon 12 April 2021 was therefore within six years from the date that Ms Rhind failed tomake payment. The Limitation Act 2010 applies and Mr Stevenson's amended claimis within time.Result[52] The appeal is dismissed.______________________Tahana J