READY MARK LTD V GRANT HC AK CIV-2010-404-008264

READY MARK LTD V GRANT HC AK CIV-2010-404-008264 [9 May 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2010-404-008264[2012] NZHC 970BETWEEN READY MARK LIMITEDPlaintiffAND JILL GRANTDefendantHearing: 2 May 2012Appearances: T A Chubb for PlaintiffM W Vickerman for DefendantJudgment: 9 May 2012JUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtneyon 9 May 2012 at 4:00 pmpursuant to R 11.5 of the High Court RulesRegistrar / Deputy RegistrarDate..Solicitors: Foley & Hughes, P O Box 6829, Auckland 1141Fax: (09) 379-9182Dyer Whitechurch, P O Box 5547 Wellesley Street, Auckland 1141Fax: (09) 309-6389Counsel: T A Chubb, P O Box 1128 Shortland Street, Auckland 1140Fax: (09) 368-1025 – Email: tracy@tracychubb.co.nzM W Vickerman, P O Box 105270, Auckland 1143Fax: (09) 30- 6973[1] Ready Mark Limited (RML) applied unsuccessfully for summary judgmentagainst Jill Grant for the cost of building work carried out to Ms Grant's property in2005.1 It has appealed Associate Judge Christiansen's refusal of the summary judgment application. Associate Judge Christiansen also struck out RML's statementof claim which included two other causes of action.2 However, Venning J reinstated the claim for the building work on a review of that decision.3 Ms Grant seeks leaveto appeal Venning J's decision.[2] Under s 26P(1AA) Judicature Act 1908 a decision on review of an AssociateJudge's decision is final unless this Court gives leave (or refuses leave but the Courtof Appeal gives special leave). There is no specific indication as to the basis on which a leave application is to be determined but it seems to be generally accepted4that the principles are those set out in Waller v Hider.5 These are that the proposed appeal must raise some question or law or fact capable of bona fide and serious argument or involves some interest (public or private) of sufficient importance to outweigh the cost and delay of a further appeal. Generally leave will be less readily granted where the proposed second appeal relates to an interlocutory matter which does not determine the rights and liabilities of the parties. The over-arching principle, however, must be the requirements of justice.[3] The substantive issue between the parties is whether RML's pursuit of thisdebt is an abuse of process. RML is controlled by Ms Grant's former husband, JohnGrant. Ms Grant maintains that the debt fell within the overall determination of relationship property issues by the Family Court.6[4] In his decision Judge Ryan was faced with the problem of valuing a number of entities associated with Mr and Ms Grant, including RML. Mr Grant adducedevidence from a forensic accountant, Mr McLoughlin. Based on Mr McLoughlin'sevidence about the value of the various entities the Judge eliminated all inter-entity1 Ready Mark Ltd v Jill Grant HC Auckland CIV-2010-404-008264 17 June 2011.2 The statement of claim asserted three causes of action but onl the claim for building work is stillbeing pursued.3 Ready Mark Ltd v Jill Grant HC Auckland CIV-2010-404-008264, 18 November 2011.4 See e.g. Gregory v Gollan HC Auckland CIV-2005-404-3485, 4 July 2007.5 Waller v Hider [1998] 1 NLZR 412.6 Family Court North Shore, 13 July 2010.debts to reach a net residual value for the entities. Ms Grant was entitled to be paid half of that value with the various entities declared to be the separate property of Mr Grant:[76] Monies are due from various of the trust entities to [Mr Grant]. As Mr McLoughlin asserts the inter entity account balances offset each other to produce a negative sum of $34,941. In paragraph 46 of his second affidavit he provides the details of those account balances and observes that the residual related party balance of $28,129 is unlikely to be settled and as a result does not take it into account.[77] Applying that approach to the amended schedule produced by Mr McLoughlin I conclude that the net residual value of the trust entities if $369,000. I exclude the $63,000 deduction as set out in that schedule for the same reason Mr McLoughlin excluded it in his second affidavit. He appears to have overlooked that he had excluded it in his earlier calculation.[78] I am satisfied that this is the most practical and realistic way of valuing the package of rights being enjoyed now by [Mr Grant]. It recognises the practicalities of the circumstances applicable to the trust entities and it applies a commonsense approach to the valuation of the package of rights.[79] I find that the package of rights is relationship property.[89] I summarise my findings and make orders as follows:(a) That [Mr Grant] is to pay to [Ms Grant] the sum of $362,000 within 60 days of the date of delivery of this judgment. This figure is calculated by taking $195,000 as the value of [the boat] and $369,000 as the value of the package of rights to be retained by [Mr Grant] in the trust entities. A half share is$282,000(b) All interests in the trust entities however they arise are declared to be the sole and separate property of [Mr Grant].[5] One of RML's assets was, of course, the debt owed to it by Ms Grant.Because this was a debt between Grant entities it was included in the amount eliminated by Mr McLoughlin in his valuation of trust entities, although not specifically referred to in his evidence and not specifically referred to by the Judge in his decision.[6] Mr Grant's counsel filed a memorandum after the delivery of the decisionseeking direction from the Judge regarding this debt. The memorandum referred toevidence from Ms Grant that she had previously told Mr Grant that the debt would be paid upon settlement of the relationship property issues.[7] In a minute the Judge said:[4] I agree with Mr Templeman's submission that the evidence establishes a clear agreement between the applicant and Ready Mark Limited to the effect that she will meet the costs of the renovations to the property at 306 Lake Road, Takapuna upon resolution of the proceedings. The difficulty however that I have in making the order sought by Mr Templeman is that Ready Mark Ltd is not a party to these proceedings. This is really an issue between a third party and the applicant concerning an outstanding debt. I do not consider that I have jurisdiction to make the order sought in these proceedings. The claim should be between Ready Mark Ltd and the applicant by way of summary judgment in the civil jurisdiction.[8] In resisting RML's application for summary judgment Ms Grant argued,amongst other things, that the status of the debt for the building work had already been determined by Judge Ryan in his decision because it was taken into account in valuing RML (and the other trust entities) and treated as being irrecoverable. Further, the extent of her entitlement of the relationship property assumed a value of RML assessed without taking account of that debt. If the debt were treated as recoverable the consequence would be that the value of RML was higher than the assessment made by Mr McLoughlin and accepted by Judge Ryan and that Ms Grant would be entitled to half of that increase. To allow RML to pursue the debt now would (notwithstanding the view expressed by the Judge in his minute) cut acrossJudge Ryan's decision and amount to an abuse of process.[9] Ms Chubb, for Mr Grant, resisted any suggestion of abuse of process, maintaining that the debt was one acknowledged by Ms Grant in her evidence asbeing owing to RML and that the Family Court's decision did not affect its status.[10] Mr Vickerman, for Ms Grant, accepted that the specific prerequisites forleave to appeal Venning J's decision are unlikely to be satisfied. Acknowledging the difficulties in obtaining leave for a second appeal from an interlocutory decision, Mr Vickerman argued that it was, nevertheless, in the interests of justice for leave to be granted. He maintained, first, that the scope of the RML appeal againstChristiansen AJ's decision would not be enlarged by allowing Ms Grant to appeal Venning J's decision because the same issues arise. I accept that this is correct.[11] Venning J considered the question whether Judge Ryan had determined the status of the debt and whether pursuing it was an abuse of process. This is also an issue raised by RML in the appeal from Associate Judge Christiansen's decision; itsnotice of appeal in the appeal asserts the following errors (among others): The Associate Judge erred factually and in his interpretation of theevidence of the acknowledgement of the debt by the respondent and the effect that this acknowledgement had on the hearing in the Family Court The Associate Judge erred factually and in his interpretation of Judge Ryan's minute of 9 August 2010 The Associate Judge erred in holding that the renovation debt was taken into account in the judgment of the Family Court [12] Secondly, Mr Vickerman's concern is that if, at the conclusion of the appealhearing, summary judgment is still refused the matter will return to this Court and Ms Grant will be put to the cost of a further hearing solely because the Court of Appeal does not have the power to strike out the claim. The purpose of Ms Grant'sapplication is to avoid that cost by providing a mechanism by which the Court of Appeal can strike out the statement of claim if it considers it untenable.[13] Self-evidently, Ms Grant's application assumes that the Court of Appeal doesnot have the power to strike out a claim if it reaches the same view as Christiansen AJ. Although opposing the application Ms Chubb did not resist the assertion that the Court of Appeal would not be able to strike out the claim if it appeared that both the summary judgment application and the underlying substantive cause of action could not succeed. However, I do not believe this to be the correct position.[14] Under r 12.2 of the High Court Rules:The court may give judgment against a plaintiff if the defendant satisfies thecourt that none of the causes of action in the plaintiff's statement of claimcan succeed.[15] Plainly, this is the power that Associate Judge Christiansen exercised in striking out the statement of claim following the hearing of the summary judgmentapplication. It is particularly relevant where the substantive issue turns on a question of law which can readily be determined even at the summary judgment stage. This power is one that can be exercised by the Court of Appeal on an appeal from theAssociate Judge's decision. Under r 48 of the Court of Appeal (Civil) Rules 2005:(2) The Court has all the powers and duties of the court of first instance concerning procedure, including amendment of pleadings (4) The Court may give any judgment and make any order which ought to have been given or made, and may make any further or other orders that the case may require.(5) The powers of the Court may be exercised(c) Despite any interlocutory ruling or order that has not been appealed.[16] If the Court of Appeal agrees that the status of the debt was not determined in the Family Court then the issue Ms Grant seeks to argue on a second appeal would already be determined. If, however, the Court of Appeal were to reach the same view as the Associate Judge, it would have the power to strike out the cause of action as being untenable. There is no need for an appeal on foot from Venning J's decisionto provide the mechanism to strike out the statement of claim. As a result, it would be inappropriate to grant leave to appeal against Venning J's decision.[17] The application is refused. Costs are reserved. They can be fixed following the outcome of the appeal.____________________P Courtney J