LAUDER v WALMSLEY [2023] NZHC 2710

LAUDER v WALMSLEY [2023] NZHC 2710 [29 September 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2022-404-002046[2023] NZHC 2710BETWEEN ROBERT GLEN LAUDER, ERICA JANELAUDER and RICHARD CAMERONDREW as trustees of the TUSCANYTRUSTPlaintiffAND MICHAEL WALMSLEY and JESSICAWALMSLEYDefendantCIV-2023-404-000167BETWEEN MICHAEL ARTHUR WALMSLEY andJESSICA LAUREN WALMSLEYFirst PlaintiffsMICHAEL ARTHUR WALMSLEY,JESSICA LAUREN WALMSLEY andWYLIE MCDONALD TRUSTEE(WALMSLEY) LIMITED as trustees of theCalliope TrustSecond PlaintiffsAND ROBERT GLEN LAUDER, ERICA JANELAUDER and RICHARD CAMERONDREW as trustees of the Tuscany TrustDefendantsHearing: 27 June 2023Appearances: K P McDonald and M Pursey for the PlaintiffsP Cogswell and S J Tee for the DefendantsJudgment: 29 September 2023JUDGMENT OF ASSOCIATE JUDGE GARDINERThis judgment was delivered by me on 29 September 2023 at 11.30 a.m.pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate.......................................Solicitors:Kevin McDonald & Associates, AucklandMorton Tee Ltd, AucklandIntroduction[1] The trustees of Tuscany Trust (Tuscany Trustees) agreed to sell a residentialproperty on Calliope Road to Michael and Jessica Walmsley (the Walmsleys). Theyalso agreed to provide vendor finance of $450,000 until the Walmsleys sold theirexisting property. The Walmsleys have refused to repay the vendor finance becausethey claim the Tuscany Trustees carried out unconsented building work on CalliopeRoad in breach of their vendor warranty.[2] The Tuscany Trustees apply for summary judgment for the $450,000 due andowing by the Walmsleys under the vendor loan, plus interest.[3] The Walmsleys oppose summary judgment on the grounds that they have anarguable defence based on their claim for breach of vendor warranty which theymaintain provides an equitable set-off. Alternatively, they asked the Court to exerciseits residual discretion not to grant summary judgment.[4] The Tuscany Trustees say that the Walmsleys do not have standing to bring aclaim for breach of warranty because they nominated a trust to complete the CalliopeRoad purchase, and that trust owns the property so has sustained the loss (if any).Alternatively, the claim for repayment of the loan and cross-claim for breach ofwarranty are not sufficiently interdependent to qualify for equitable set-off.[5] The issues are:(a) Do the Walmsleys have standing to bring the cross-claim for breach ofvendor warranty?(b) If the Walmsleys do have standing, are the claim and cross-claim sointerdependent that it would be unjust to allow summary judgmentwithout bringing the cross-claim into account?(c) If the answer is no to [5(b)], should the Court exercise its residualdiscretion to refuse summary judgment?Background[6] On 9 April 2022, the Tuscany Trustees and the Walmsleys entered into anagreement for the sale and purchase of a property on Calliope Road, Devonport. Theagreement was the standard ADLS/REINZ Agreement for Sale and Purchase of RealEstate.1 The purchase price was $3,850,000. The settlement date was 20 May 2022.As the Walmsleys did not have enough funds to pay the full purchase price beforeselling their existing home, the Tuscany Trustees agreed to lend them the shortfall of$450,000, interest-free.[7] The agreement for sale and purchase recorded that the balance of the purchaseprice (after payment of the deposits) was to be paid "in cleared funds on settlementdate of 20 May 2022, in the sum of $3,400,000, with the balance of $450,000 to bepaid in accordance with the terms of cl 22."[8] Clause 22 stated:The balance of the Purchase Price, being the sum of $450,000, shall be paidby the purchaser to the vendor 9 months from the date of settlement, or thesettlement date of the sale of the purchaser's property, at Norwood Road,whichever shall first occur.1 Eleventh edition, 2022.[9] A loan agreement setting out the terms of the loan was attached to theagreement for sale and purchase. The agreement was a standard ADLS 'Term LoanAgreement'.2 The loan agreement was initialled, but not executed by the parties. Theloan agreement recorded the Tuscany Trustees as the lender, and the Walmsleys as theborrower.[10] The agreement for sale and purchase was subject to finance and a buildingreport. On an unknown date the Walmsleys declared the agreement for sale andpurchase to be unconditional.[11] On 3 May 2022, the Walmsleys settled the Calliope Trust. The Walmsleys arethe trustees of the Trust, along with a corporate trustee, Wylie McDonald Trustees(Walmsley) Ltd. The Walmsleys and their children are discretionary beneficiaries ofthe trust.[12] On 9 May 2022, the solicitor for the Tuscany Trustees wrote to the solicitor forthe Walmsleys attaching a settlement statement and asking for confirmation of the fullnames of the Walmsleys so the term loan agreement could be finalised. The settlementstatement recorded the purchase price of $3,850,000, less the deposit paid of $192,500,the "vendor finance as per Term Loan Agreement" of $450,000, and the balancerequired to settle on 20 May 2022 of $3,208,232.45.[13] On 16 May 2022, the Walmsleys and trustees of the Calliope Trust (CalliopeTrustees) executed a suite of documents. One, a Deed of Nomination by which theWalmsleys nominated the Calliope Trustees as the purchaser under the agreement forsale and purchase of Calliope Road. The Deed states:1. The Nominator nominates the Nominee as the purchaser under theAgreement, and acknowledges that all the rights, interests and benefitsof the purchaser pursuant to the Agreement shall pass to the Nominee.2. The Nominee accepts the nomination specified in clause 1.3. The Nominee covenants and agrees to fulfil all of the Nominator'sobligations as purchaser under the Agreement, and to keep theNominator indemnified against all claims, demands, costs, actions andproceedings of any kind arising out of the Nominees' default in any2 Release date: 12 November 2018.payment or future observance or performance of the terms andconditions of the Agreement.[14] Two, a Deed of Acknowledgement of Debt. The Deed recorded that the sumof $3,850,000 advanced by the Walmsleys to the Calliope Trustees to complete thepurchase would remain outstanding as a debt payable by the trustees to the Walmsleyson demand.[15] Three, a Deed of Release of Debt by way of Gift. This Deed records that theCalliope Trustees owed the Walmsleys $3,850,000, being the amount owing under theDeed of Acknowledgement of Debt executed on the same day. By the Deed ofRelease, the Walmsleys forgave this debt, and the Calliope Trustees accepted theforgiveness of debt.[16] On 18 May 2022, the Walmsleys' solicitor informed the Tuscany Trustees'solicitor that the Walmsleys had nominated the Calliope Trust to complete the purchaseof the property. She attached a copy of the Deed of Nomination.[17] In response, on 18 May 2022, the Tuscany Trustees' solicitor emailed the termloan agreement to the Walmsleys' solicitor. This version of the loan agreement wasidentical to the unexecuted version attached to the agreement for sale and purchase,except the borrower was named as the trustees of the Calliope Trust rather than theWalmsleys.[18] Shortly thereafter on the same day, the Walmsleys' solicitor responded, statingthat "the loan should remain to Jessica and Michael personally". They attached a copyof the signed term loan agreement and undertook to forward the original on completionof settlement.[19] After taking instructions, the Tuscany Trustees' solicitor responded:As Mr & Mrs Walmsley have nominated their trust to complete the purchase,the loan should be in the names of the trustees of the Trust. Alternatively, weare willing to accept the loan in the name of Mr & Mrs Walmsley with theTrust guaranteeing the loan.[20] On 19 May 2022, the Walmsleys' solicitor emailed, stating:Further to our telephone call of yesterday, are you able to send through theamended Term Loan Agreement, noting the Guarantor as the Trustees of theCalliope Trust? Please also note that Wylie McDonald Trustees (Walmsley)Ltd is a limited liability trustee. I will then circulate for re-execution by thesignatories.[21] That same day, the Tuscany Trustees' solicitor sent a further version of the termloan agreement which recorded the Walmsleys as borrowers and the Calliope Trusteesas guarantors and added a new clause cl 13(d) which acknowledged that WylieMcDonald Trustees (Walmsley) Ltd was a limited liability trustee.[22] The Term Loan Agreement records that the lenders (Tuscany Trustees) agreeto lend the borrowers (the Walmsleys) "the amount of the total advances referred to inthe attached Annexure Schedule". The Annexure Schedule records the principal sumof $450,000, a lower interest rate of 0 per cent per annum, and that the principal sumwas repayable in one sum together with interest and all other monies then outstanding,"on the earlier of the sale of the Borrower's property at Norwood Avenue,Devonport, or nine months from the date of this Loan Agreement". Interest at thehigher rate of 10 per cent per annum was payable from the repayment date.[23] On 20 May 2022, the Term Loan Agreement was executed by the Walmsleysas borrowers, and, with the corporate trustee, as guarantors in their capacity of trusteesof the Calliope Trust.[24] On 20 May 2022, the sale and purchase settled, and title to the Calliope Roadproperty was registered in the names of the Calliope Trustees.[25] The Walmsleys depose that in July 2022 they experienced leaks through theceiling of the internal garage at Calliope Road. On 10 August 2022, Mr Walmsleysent a text message to Rob Lauder, one of the Tuscany Trustees, asking whether theyhad carried out the garage extension, or whether that work was done by the priorowners. Mr Lauder replied, confirming that they had undertaken the garage extension,adding the two rooms comprising the office and storeroom.[26] On 11 August 2022, Mr Walmsley sent Mr Lauder an email asking whetherthey had received building consent for the work. Mr Lauder responded by stating thattheir builder had advised them that consent was not required for the work.[27] On 7 September 2022, the Walmsleys' solicitor wrote to the Tuscany Trustees'solicitor confirming that the sale of Norwood Road was due to settle on 30 September2022. They alleged that the Tuscany Trustees had breached the vendor warranty inrespect of building works in the agreement for sale and purchase, as they had carriedout unconsented building works on the property. They said that a quantity surveyorhad been instructed to provide an estimate of the costs to demolish and rebuild thegarage, and to do the necessary work to the bathrooms to obtain building consent.They asserted that this cost could be set off from the sum of $450,000 otherwisepayable to the Tuscany Trustees on the sale of Norwood Road.[28] On 3 September 2022, the sale of Norwood Avenue settled. The Walmsleysdid not pay the $450,000 due under the Term Loan Agreement.[29] On 3 October 2022, the Tuscany Trustees' solicitor sent a letter of demand tothe Walmsleys' solicitor.[30] On 14 October 2022, the Tuscany Trustees filed their application for summaryjudgment of the outstanding amount under the Term Loan Agreement.[31] On 31 January 2023, the Walmsleys and the Calliope Trustees as first andsecond plaintiffs respectively filed a proceeding against the Tuscany Trustees allegingbreach of their vendor warranty because of the unconsented works on the property.They seek relief in the form of the cost to remedy the works, estimated to be at least$294,280, and consequential losses including rental of alternative accommodation andstorage costs, of at least $355,720. Alternatively, they seek damages for diminution invalue of the property in the sum of $700,000 including $355,720 of consequentiallosses.[32] On 22 May 2023, the Walmsleys and Calliope Trustees as first and secondplaintiffs in the breach of warranty proceeding applied for consolidation of the twoproceedings, or alternatively a stay of the loan proceeding pending determination ofthe breach of warranty proceeding.[33] By direction on 29 March 2023, Associate Judge Lester directed that theapplication for consolidation would receive its first call at the summary judgmenthearing.Legal principles[34] Rule 12.2(1) of the High Court Rules 2016 provides:The court may give judgment against a defendant if the plaintiff satisfies thecourt that the defendant has no defence to a cause of action in the statement ofclaim or to a particular part of any such cause of action.[35] The relevant principles governing a summary judgment application are wellestablished:3The principles are well settled. The question on a summary judgmentapplication is whether the defendant has no defence to the claim; that is, thatthere is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1at 3 (CA). The Court must be left without any real doubt or uncertainty. Theonus is on the plaintiff, but where its evidence is sufficient to show there is nodefence, 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 normallyresolve material conflicts of evidence or assess the credibility of deponents.But it need not accept uncritically evidence that is inherently lacking incredibility, as for example where the evidence is inconsistent with undisputedcontemporary documents or other statements by the same deponent or isinherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341(PC). In the end the Court's assessment of the evidence is a matter ofjudgment. The Court may take a robust and realistic approach where the factswarrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).Do the Walmsleys have standing to bring the vendor warranty claim?Right of action assigned?[36] The Tuscany Trustees claim that the Walmsleys do not have standing to sue onthe agreement, because they absolutely assigned their interest in the agreement for saleand purchase to the Calliope Trustees by cl 1 of the Deed of Nomination. They submitthat this assignment constitutes an absolute statutory assignment in terms of s 50(1) of3 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].the Property Law Act 2007. Further, the requirements that the assignment must be inwriting, and notice given to the Tuscany Trustees, are met. Accordingly, that thebenefit of the vendor warranty contained in the agreement for sale and purchase is nowthe sole property of the Calliope Trustees, and the Walmsleys have no right to sue inreliance on it.[37] The Walmsleys reject that the Deed of Nomination constitutes a statutoryassignment. They maintain that they merely nominated the Calliope Trustees to bepurchaser under the sale and purchase agreement, and that they, as the originalcontracting purchasers, remain privy to the contract and can enforce its terms andremain bound by them.Nomination versus assignment[38] It is a matter of judicial notice that it is common for a purchaser of real estateto nominate another party to complete the purchase and take title to the property. Thestandard ADLS/REINZ provides for this scenario, with the words "and/or nominee"in the "Purchaser" section of the agreement.4[39] A nominee wishing to enforce the benefit of a contract to which they arenominated obtains privity through ss 12 and 17 of the Contract and Commercial LawAct 2017 (CCLA). Where the requirements laid down by the Act are satisfied, thenominee can sue for and recover a benefit under the contract.5[40] Section 12 provides:12 Deed or contract for benefit of person who is not party to deed orcontract(1) This section applies to a promise contained in a deed or contract thatconfers, or purports to confer, a benefit on a person, designated by name,description, or reference to a class, who is not a party to the deed orcontract.(2) The promisor is under an obligation, enforceable by the beneficiary, toperform the promise.4 See also cl 1.5(2).5 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in NewZealand (7th ed, LexisNexis, Wellington, 2022) 173 at [15.2.3] [The Law of Contract in NewZealand].(3) This section applies whether or not the person referred to in subsection(1) is in existence when the deed or contract is made.[41] Section 17 provides:17 Enforcement by beneficiary(1) The obligation imposed on a promisor by section 12 may be enforced bythe beneficiary as if the beneficiary were a party to the deed or contract.(2) Relief in respect of the promise may not be refused on the ground—(a) that the beneficiary is not a party to the deed or contract inwhich the promise is contained; or(b) that, as against the promisor, the beneficiary is a volunteer.(3) In subsection (2), relief includes damages, specific performance, or aninjunction.[42] In Laidlaw v Parsonage, Mr and Mrs Laidlaw agreed to sell a residentialproperty to Mr Parsonage "and/or nominee". 6 Mr Parsonage nominated the trusteesof a family trust and the property was duly transferred to the trustees. The houseleaked, and the trustees sought summary judgment for breach of the warranty in thecontract for sale that the building had been completed according to building consentsand the Building Act 1991. The Laidlaws opposed summary judgment on the basisthat the trustees were not named as parties to the agreement and that s 4 of theContractual Privity Act 1982 (the predecessor to s 12 of the CCLA) did not assist abare nominee.[43] Ellen France J, delivering the judgment of the Court of Appeal, held that thepromise relied on by the trustees was made to the purchaser and the purchaser includedthe trustees as nominee. The description of a purchaser in an agreement for sale as"[named person] or nominee" was sufficient to meet the requirement of s 4 that therecipient of the contract be designated by name, description, or class. Therefore, thenominee was entitled to the benefit of the agreement for sale and purchase. TheSupreme Court declined leave to appeal, stating that the reasoning of the Court ofAppeal was entirely convincing.6 Laidlaw v Parsonage [2009] NZSC 98, [2010] 1 NZLR 286.[44] So, once a nomination has been made, the nominee is able to complete acontract in place of the nominating party and is entitled to the full benefit of thecontract and to enforce its terms.7 But the nominee is not the contracting party and isnot contractually bound.8 Action can still be brought against the nominator, being theoriginal contracting party, by the other party.9 The ADLS/REINZ standard formagreement for sale and purchase of real estate provides for this at cl 1.5(2):Where the purchaser executes this agreement with provision for a nominee, oras agent for an undisclosed, or disclosed but unidentified principal, or onbehalf of a company to be formed, the purchaser shall at all times remain liablefor all obligations on the part of the purchaser.[45] Equally, the nominating party can sue on the contract after nomination. InRivette v Atrax Group Ltd,10 Rivette was the purchaser under an agreement for the saleand purchase of Atrax's business. Prior to settlement, Rivette nominated a companyto purchase the business and pay for the stock. Rivette later claimed that the actualvalue of stock in trade was less than the value attributed to it by Atrax and soughtdamages. Atrax argued that, because of that nomination, Rivette lost his right to sueunder the agreement, and/or that there was no evidence that Rivette had suffered anyloss. Venning J held:[12] The start point must be that the plaintiff, as the original purchaser anda party to the contract, has contractual rights. There does not seem to be anyprincipled reason why the fact of nomination should lead to the loss of thoserights. That is not the purpose or effect of the Contracts (Privity) Act. Rather,the purpose of that Act is remedial, to ensure that the nominee, in addition tothe original contracting party, can enforce rights under the agreement. As thelearned author observed in Blanchard, A Handbook on Agreements for Saleand Purchase of Land (4th ed, 1988) at [519] in relation to land, the Contracts(Privity) Act does not make the nominee a party to the contract but "merelyallows him to take the benefit of it and he obtains an equitable interest in theland". The original contracting party remains liable under the contract. Inthose circumstances there is nothing inherently objectionable in both theoriginal contracting party and the nominee having rights under the contract.Often they will be the same rights, but they need not be, depending on theterms of the contract and the stage of the nomination. The effect of s 4 of theContracts (Privity) Act is to create additional rights in the nominee, not toextinguish the original plaintiff's rights. I note that s 14(a) of the Act wouldoperate to preserve the plaintiff's existing rights.7 Broughton v Wyatt Family Trust Holdings Ltd HC Auckland CIV-2010-404-4303, 20 October2010 at [30].8 Cowan v Martin [2014] NZCA 593, [2015] NZAR 1197 at [28].9 The Law of Contract in New Zealand, above n 5, at [15.2.3].10 Rivette v Atrax Group New Zealand Ltd (2010) 11 NZCPR 723.[13] The wording of the particular contractual provision creating thenomination may be important. In this case the purchaser is said to be theplaintiff and/or nominee. Framed that way, the and/or is not to be read asmeaning it is mutually exclusive so that it must be either the purchaser ornominee. It may be both. I conclude that either the purchaser under thecontract or the purchaser's nominee may enforce the benefit of the contract.Even in a situation where the purchaser has nominated another party to settlethe purchase as in the present case, the plaintiff as original purchaser retainsthe right to call for performance of the defendant's obligations under thecontract. The plaintiff would only lose such right in the event of a novation.There has been no novation in the present case.(emphasis added)[46] Applying these principles to the present case, if the Walmsleys merelynominated the Calliope Trustees to complete the purchase and take title to the Calliopeproperty, the Walmsleys retain the right to sue for breach of the agreement for sale andpurchase. They remain the contracting party.[47] However, the Tuscany Trustees argue that the Walmsleys expressly assignedthe right to sue for breach of contract to the Calliope Trustees. Assignment is adifferent legal concept to nomination. I will briefly explain.[48] A right created by a contract is a "chose in action". This term comprisespersonal property rights which can only be enforced by action, and not by takingphysical possession, such as debts, shares, negotiable instruments, rights under a trust,legacies, policies of insurance, patents, copyright, and rights of action arising out oftort or breach of contract.11 A right arising out of a contract is a "legal chose in action".An "equitable chose in action" is a right enforceable in equity.[49] If an assignment of a legal (or equitable) chose in action meets therequirements of s 50(1) of the Property Law Act, all the rights and remedies of theassignor pass to the assignee (subject to ss 50(3) and 51). The assignee may bring anaction to enforce the legal chose in their own name, without joining the assignor. Theconditions are that the assignment must be absolute, not conditional or by way ofcharge only; it must be written; and signed by the assignor. If there is a failure tocomply with these requirements there is no statutory assignment. In that case, the11 The Law of Contract in New Zealand, above n 5, at [17.1].assignee must rely on the concept of equitable assignment and join the assignor asco-plaintiff or co-defendant to any action.12[50] While there is a rule against the bare assignment of a right of action, anassignment of a right of action to sue for breach of contract is valid if the right isattached to a property interest or the assignee has a "genuine commercial interest" intaking the assignment.13[51] Did the Walmsleys absolutely assign their right to sue on the agreement forsale and purchase to the Calliope Trustees or was this a typical nominee arrangement?[52] For the most part, the Deed of Nomination appears to record a simplenomination of the Calliope Trustees as purchaser. It is described as a nomination. TheWalmsleys are described as the 'Nominator' and the Calliope Trustees are describedas the 'Nominee'. The recitals record that the agreement for sale and purchase ofCalliope Road "allows for the Nominator to nominate another as purchaser under theAgreement", that "The Nominator wishes to nominate the Nominee as the purchaserunder the Agreement" and that "The Nominee wishes to accept the nomination aspurchaser under the Agreement". Then, under cl 1 of the Deed, "the Nominatornominates the Nominee as the purchaser under the Agreement." And "the Nomineeaccepts the nomination specified in clause 1."[53] However, also under cl 1 "the Nominator acknowledges that all the rights andinterests and benefits of the purchaser pursuant to the Agreement shall pass to theNominee." This part of the Deed reads more like an assignment of the Walmsleys'right to sue on the contract to the Calliope Trustees.[54] Yet the Walmsleys did not notify the Tuscany Trustees that they had assignedtheir rights under the agreement for sale and purchase. When their solicitor informedthe Tuscany Trustees' solicitor of the arrangement, they said: "Our clients havenominated the trustees of the Calliope Trust to complete the purchase" and attached acopy of the Deed of Nomination. While written notice is no longer required for an12 At [17.1.2].13 At [17.1.8].effective statutory assignment, it is important to impose obligations on the debtor topay the assignee (or perform obligations) and to establish priorities.14[55] Overall, the contemporaneous evidence, viewed objectively, is more consistentwith the Walmsleys having simply nominated the Calliope Trustees to complete thepurchase and take title to the property. The name of the Deed, the description of theparties as nominator and nominee, cl 1 of the Deed and the words of the Walmsleys'solicitor when giving notice all point in that direction.[56] On that basis, I conclude that the Walmsleys, as the nominating purchaser,retained the right to sue for breach of contract themselves.[57] For completeness, I record that the Tuscany Trustees did not argue that thenomination constituted a novation. In my view that is a sound position to take.Novation takes place where contracting parties agree that a third party, who must alsoagree, is to take the place of one of them. There is a new contract, and it is thereforeessential that the consent of all parties is obtained.[58] In this case, the Deed of Nomination makes no mention of novation.Furthermore, it records at cl 3 that the Calliope Trustees agree to fulfil all theWalmsleys' obligations as purchaser under the agreement for sale and purchase and tokeep them indemnified against any claims arising out of the Calliope Trustees' defaultin performance of the agreement. That is consistent with the contract between theTuscany Trustees and the Walmsleys continuing to exist. Further, there is no evidenceof the Tuscany Trustees consenting to the agreement for sale and purchase beingnovated to the Calliope Trustees.No standing because no loss?[59] Alternatively, the Tuscany Trustees submit that the Walmsleys have nostanding to make the cross-claim because they have not suffered any loss to support aclaim for breach of warranty in the agreement for sale and purchase. They say that as14 Dairy Solutionz (NZ) Ltd v Pacific Dairy Holdings Ltd (In Liq) [2021] NZHC 3054 at [33],referencing Roger Fenton Garrow & Fenton's Law of Personal Property in New Zealand (7th ed,LexisNexis, Wellington, 2010) at [9.35].the Calliope Trust paid the full purchase price for the property, any losses incurredbecause of the alleged breach of warranty have been incurred by the Calliope Trust,and not the Walmsleys.[60] The Tuscany Trustees rely on Rivette. Venning J considered that the party thatsettled the purchase and paid $450,000 for the stock was the party that suffered theloss, in that case by paying too much for the stock. Venning J observed that theevidence as to who paid the purchase price was confusing, but overall suggested thatthe party that had lost money was the nominated purchaser, rather than Mr Rivette.Even if Mr Rivette advanced funds to the nominee company to enable it to settle thepurchase, he considered that the company, not he, suffered the loss by paying too muchfor the stock.[61] The Walmsleys say that they have suffered loss personally, as they funded theproperty purchase by borrowing from the bank and the Tuscany Trustees, which wasonly required due to the premium price paid on account of the Tuscany Trustees'alleged non-disclosure and breach of warranty.[62] They also submit that Rivette is distinguishable because the nominee in thatcase was a company, which is a legal entity. A trust, they submit, is not a legal entityseparate from its trustees. They say that there is no legal distinction between them intheir personal capacity and as trustees of the Calliope Trust in terms of their ability toenforce the warranties and claim the loss.[63] In my view the place to start is with the breach of warranty statement of claim.This claim, filed in this Court in January 2023, is brought by the Walmsleys as firstplaintiffs "as party to the Agreement as purchasers" and the Calliope Trustees assecond plaintiffs "as the registered proprietors of [the property]".[64] The Walmsleys/Calliope Trustees claim that the Tuscany Trustees breached thevendor warranty by undertaking building works without a building consent or resourceconsent and by failing to obtain a code compliance certificate. They claim that had abuilding consent and/or a resource consent been obtained, the work would have beensubject to an inspection regime by Auckland Council, met the requirements of theBuilding Act 1991, Building Act 2004 and the Building Code, received a codecompliance certificate, and the property would be free from leaks and other defects.[65] The Walmsleys/Calliope Trustees claim expectation damages in the form ofthe cost to remedy the works and obtaining a code compliance certificate, estimatedto be $294,280.76. They claim consequential losses including rental of alternativeaccommodation and storage costs of $355,720.00. The Walmsleys personally claimgeneral damages for stress and inconvenience of $25,000. Alternatively, theWalmsleys/Calliope Trustees claim the diminution in value of the property said to becaused by the breach of warranty of $344,280 together with consequential losses.[66] In terms of damages to compensate for diminution in value of the property, Iconsider that the Calliope Trustees are the appropriate plaintiff and recipient of anydamages award. I am not attracted to the submission that there is no distinctionbetween the Walmsleys personally and as trustees of the Calliope Trust in this context.A person acting as a trustee of a trust is acting in a different capacity from that trustee'spersonal capacity.15 A trustee is obliged to hold and deal with trust property for thebenefit of the beneficiaries in accordance with the terms of the trust.16 While a trusteeis the legal owner of the property, the trustee is required to keep the trust assetssegregated from their own personal estate.17 A trustee has no right to the beneficialenjoyment of the trust property.18[67] Accordingly, the Calliope Trustees hold the Calliope Road on trust for thebeneficiaries, in accordance with the terms of the trust. If the value of the property thetrustees received is diminished because of the breach of warranty, that is a loss to theasset of the trust. Any recovery of damages from the Tuscany Trustees to compensatefor that loss will be a recovery that the Walmsleys will receive in their capacity astrustees of the Calliope Trust, and for the benefit of the beneficiaries. It follows thatthe Walmsleys cannot bring a claim for this type of loss in their personal capacity.15 Chris Kelly and Greg Kelly Garrow and Kelly Law of Trusts and Trustees (8th ed, LexisNexis,Wellington, 2022) at [3.46].16 Trusts Act 2019, s 26.17 Paul Matthews and others Underhill and Hayton Law of Trusts and Trustees (20th ed, LexisNexis,London, 2022) at [1.1].18 At [1.1].[68] However, the alternative measure of loss, the costs to remediate the property,raises different considerations. It is unclear, on the evidence before me, who will bearthese costs. There is no evidence from the Walmsleys on this point. If the CalliopeTrust does not have independent funds, it may be necessary for the Walmsleys to payfor the remediation work or to advance funds to the trust to pay for the work. That isa reasonable inference to make, given Mr Walmsley's evidence that he andMrs Walmsley funded the trust to complete the purchase:To settle the purchase, the trust was dependent on funds being advanced to itby Jess and I personally, including the amounts we borrowed personally fromBank of New Zealand (which the trust also guaranteed and allowed to besecured by a mortgage over the property).[69] Additionally, the alternative accommodation and storage costs for whichconsequential damages are claimed are losses likely to be sustained by the Walmsleyspersonally.[70] Although the evidence from the Walmsleys on this point is thin, I consider itreasonably arguable that they personally will sustain a loss from the alleged breach ofwarranty, in the form of the cost to remediate and/or consequential losses.[71] I find therefore that the Tuscany Trustees have not established that theWalmsleys do not personally have standing to bring the breach of warranty crossclaim.Do the two claims have the necessary interdependence to give rise to the defenceof equitable set-off?[72] Before discussing the submissions, it is helpful to review the general principlesconcerning equitable set-off. The Court of Appeal summarised these in Hamilton IceArena Ltd v Perry Developments Ltd.19 Tipping J, delivering the judgment, said:[3] Before examining the facts of the present case, we will identify thegeneral principles which apply to equitable set-off. A set-off is a right vestedin a defendant facing a money claim by a plaintiff to use its own money claimagainst the plaintiff to absolve itself wholly or partially from its obligation tothe plaintiff. A set-off is different from a counterclaim which, if established,gives the defendant a right to an independent judgment against the plaintiff,19 Hamilton Ice Arena Ltd v Perry Developments Ltd [2002] 1 NZLR 309 (CA).but no ability to reduce or extinguish the plaintiff's claim against thedefendant. Common law set-off originated in statutes passed early in theeighteenth century. Essentially the common law right was to set off mutualliquidated debts. Equity intervened to allow set-off on a wider basis than thatavailable at law. Cross-claims were allowed by way of defence, and the Courtsof equity would also restrain a plaintiff from proceeding at law if the defendantcould show a cross-claim which had the effect of impeaching the plaintiff'stitle to make the claim at law. It is helpful to remember this historical originwhen examining claims of equitable set-off today.[4] Equity would intervene only if the defendant in the suit at law couldshow some cross-claim for a sum of money which, in the eyes of equity,undermined the right of the plaintiff in the suit at law to enforce his legal claimeither at all, or to the extent of the cross-claim. Equity always acknowledgedthe defendant's right to counterclaim but took the view that in somecircumstances such right was not sufficient to do justice. The Courts of equitywould not readily interfere with the proceedings at law and confinedthemselves to cases where the claim at law and the defendant's cross-claimwere so closely interrelated that it would be unconscionable for the plaintiffto seek judgment at law without bringing the defendant's cross-claim toaccount.[5] The need for such close interrelationship was and still is underscoredby the fact that an equitable set-off extinguishes the plaintiff's right tojudgment, either entirely or pro tanto, according to the amount which thedefendant is entitled to set off. There is a detailed discussion of the principlespertaining to equitable set-off in the judgment of this Court delivered bySomers J in Grant v NZMC Ltd [1989] 1 NZLR 8. His Honour discussed thehistorical background and referred to a number of cases which have markedthe development of this area of the law. It is unnecessary in the present caseto say any more about equitable set-off generally, save to note this Court'sstatement of principle in Grant's case at pp 12 – 13:"The defendant may set-off a cross-claim which so affects theplaintiff's claim that it would be unjust to allow the plaintiff to havejudgment without bringing the cross-claim to account. The link mustbe such that the two are in effect interdependent: judgment on onecannot fairly be given without regard to the other; the defendant'sclaim calls into question or impeaches the plaintiff's demand. It isneither necessary, nor decisive, that claim and cross-claim arise out ofthe same contract."[6] Penlington J reviewed the authorities and consistently with them saidthat "the equity claimed must go to the very root of the plaintiff's claim". Hethereby adopted the way Forbes J put the matter in British Anzani (Felixstowe)Ltd v International Marine Management (UK) Ltd [1980] QB 137 at p 145.[73] More recently, in Herring v Herring, the Court of Appeal confirmed that therelevant principles concerning equitable set-off were those discussed in Grant v NZMCLtd and Hamilton Ice Arena Ltd.20 The Court emphasised the distinction drawn by20 Herring v Herring [2010] NZCA 500, [2011] 2 NZLR 433 at [15].Tipping J between set-off and counterclaim. Namely, that the latter gives rise to a rightto independent judgment but "no ability to reduce or extinguish the plaintiff's claimagainst the defendant".21 The Court in Herring said that it is this result whichunderscores the need for a particularly close interrelationship as outlined in the excerptfrom Grant.22Submissions[74] The Tuscany Trustees submit that even if the Walmsleys suffered loss, theirclaim under the Term Loan Agreement and the Walmsleys'/Calliope Trustees' claimfor breach of vendor warranty contained in the agreement for sale and purchase arenot interdependent. They emphasise that the Walmsleys deliberately separated theparty taking the burden of the loan from the entity taking the benefit of the purchase,after receiving independent legal advice. They say they relied on the Term LoanAgreement, that the Calliope Trustees have had the benefit of occupation of theproperty since settlement, and it is unfair that the loan remains unpaid. They rely onauthorities (discussed below) where this Court has found that sale and purchaseagreements and vendor loan agreements are not interdependent to give rise to equitableset off.[75] The Walmsleys maintain that the contracts are interdependent because therewould be no requirement for the vendor loan without the agreement for sale andpurchase. They say that the Term Loan Agreement has no independent existence tothe agreement for sale and purchase, to which it was attached. They argue that no loanwas advanced, rather they received "a credit on account of the purchase price." Theyargue that the Tuscany Trustees' demand is impeached by their own conduct. Theysay that the authorities relied on by the plaintiffs can be distinguished on the facts asthey did not involve an established breach of contract by the vendor.21 At [15], referencing Hamilton Ice Arena Ltd, above n 19, at [3].22 At [15].Discussion[76] The Walmsleys' submission that the Term Loan Agreement has no independentexistence to the agreement for sale and purchase is not persuasive. Of course, the loanwas only necessary because the Walmsleys had agreed to buy the property, but it doesnot follow that the two contracts have no independent existence.[77] The form of and context for the Term Loan Agreement do not support thatcharacterisation. The Term Loan Agreement is a formal, legal document. It recordsthat the lenders (Tuscany Trustees) agree to lend the borrowers (the Walmsleys) "theamount of the total advances referred to in the attached Annexure Schedule". TheAnnexure Schedule contains the loan details including principal amount, date forrepayment and interest rates. Part 2 of the agreement sets out the loan conditions. Itis a standalone agreement that is not dependent for its existence on the agreement forsale and purchase.[78] Furthermore, the parties conducted themselves as if this agreement existedindependently to the agreement for sale and purchase. While an earlier version of theagreement was attached to the agreement for sale and purchase, that version was notexecuted. One month later, the solicitors for Tuscany Trustees wrote to the solicitorsfor the Walmsleys asking for confirmation of the full names of the Walmsleys so theterm loan agreement could be finalised. The Walmsleys' solicitors did not object orsuggest that the agreement was unnecessary or that all relevant matters had beenagreed already as part of the agreement for sale and purchase. Rather, theycorresponded with the Tuscany Trustees' solicitor about who the borrower should befollowing the Walmsleys' nomination of the Calliope Trust as purchaser. Thisculminated on 19 May 2022 with the following email:Further to our telephone call of yesterday, are you able to send through theamended Term Loan Agreement, noting the Guarantor as the Trustees of theCalliope Trust? Please also note that Wylie McDonald Trustees (Walmsley)Ltd is a limited liability trustee. I will then circulate for re-execution by thesignatories.[79] As noted earlier, the Tuscany Trustees' solicitor sent a further version of theTerm Loan Agreement which recorded the Walmsleys as borrowers and the CalliopeTrustees as guarantors and added a new clause cl 13(d) which acknowledged that thecorporate trustee was a limited liability trustee. The agreement was then executed bythe Walmsleys as borrowers, and, with the corporate trustee, as guarantors in theircapacity of trustees of the Calliope Trust.[80] Accordingly, I consider that the claim and cross claim arise out of two separateand distinct contracts: the former out of the agreement for sale and purchase and thelatter out of the Term Loan Agreement.[81] That is not fatal to the defence of equitable set-off, as Grant made clear.23 Thequestion is whether judgment on the claim under the loan agreement cannot fairly begiven without regard to the cross-claim for breach of vendor warranty. Putting itanother way: does the alleged breach of warranty call into question or impeach theloan demand?[82] For context, it is helpful to consider the facts involved in the Grant case.Mr and Mrs Grant leased premises from NZMC and opposed an application forsummary judgment of unpaid rent. They asserted that they had been induced to enterinto the lease by promises made by NZMC of referrals of panel-beating work for theirpanel-beating business, promises which were not kept. The Grants alleged thatbecause of the breach by NZMC of that collateral contract, their company had sufferedsubstantial losses, which they sought to set off against the rent.[83] The Court of Appeal held if the collateral contract and its breach areestablished, the case was one in which NZMC was endeavouring to enforce a promiseby the Grants to pay rent while itself in breach of its own undertaking which gave riseto the lease on which it relied. The Grants' cross claim qualified as a set-off and, beingclearly arguable, prevented summary judgment.[84] Here, the facts are quite different. The Walmsleys do not claim to have beeninduced to enter into the Term Loan Agreement by a misrepresentation by the TuscanyTrustees. There is no cross-claim of any nature concerning their entry into the TermLoan Agreement. The cross-claim concerns the agreement for sale and purchase only,and it is for breach of a term of the agreement: the warranty concerning building work.23 Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) at 12–13.[85] The Court of Appeal considered the issue of interdependence again inHamilton Ice Arena.24 Hamilton Ice Arena agreed to sell its premises to PerryDevelopments, with a lease back to Hamilton Ice, and loan of $80,000 from PerryDevelopments to Hamilton Ice. In a separate contract, the Speirs, shareholders ofHamilton Ice, agreed to refurbish other premises for Perry by a stated date forcompletion, and Perry agreed to pay the Speirs $500 per week and a further $25,000as performance bonus.[86] Hamilton Ice went into arrears in its rent, and Perry re-entered the premisesand forfeited the lease. Hamilton Ice sought relief against forfeiture, based on anequitable set-off for payments owed by Perry to the Speirs. In the first instance, theJudge held that Hamilton Ice had no set-off against Perry.[87] On appeal, the Court of Appeal agreed. The Court adopted the Grant approach,which allows a set-off even if the cross-claim does not arise out of the relationship oflandlord and tenant, provided there is a "sufficiently close connection" between thetwo claims.25 The Court of Appeal said:[40] While in this case the Speirs brothers' claim for wages and Perry'sclaim for rent can be seen as related in a general way in that they both aroseout of a series of transactions which the parties entered into at the same time,and in their mutual interests, there is not in our judgment such interdependencebetween the claims that it can fairly be said the existence of the wages claimshould be regarded as impeaching the claim for rent. While, as was said inGrant, the fact that the claims arise out of different contracts is not decisive,if that is so there must be such a link between the different contracts as tojustify their effectively being treated as one. In Grant's case that was sobecause the contract represented by the lease was induced by the contractconcerning supply of business to the company which was going to take thelease.[41] The two contracts here – the lease and the refurbishment contract –concerned different premises in different cities. One involved rent, the otherwages. They really have no practical or conceptual linkage at all. The factthat the money due to the Speirs brothers was intended by them to be used todischarge Hamilton Ice's obligations under the lease is by no means sufficientfor equitable set-off. In almost all cases of money cross-claims one party cansay to the other, if you had paid me I would have been able to pay you. If thatwere a sufficient justification for set-off, the difference between set-off andcounterclaim would be blurred almost to the point of extinction. An issue suchas the present is in the end one which turns on a combination of analysis and24 Hamilton Ice Arena, above n 19.25 At [39].impression. The trial Judge came to the view that the claims were notsufficiently linked. We cannot say he was wrong; indeed we agree with hisconclusion. This ground of appeal must therefore fail.(emphasis added)[88] The facts of this case are similar to those in in Wright-Stow v Elvidge.26 Theplaintiffs agreed to sell the business to the defendants, with the plaintiffs retainingownership of the land and buildings, and the defendants leasing the premises fromthem. In addition, the plaintiffs agreed to provide vendor finance of $80,000. Thedefendants entered into the agreement as purchasers, and subsequently nominated acompany operated by them to purchase the business. A lease agreement was executed,as was a term loan contract between the plaintiffs, the purchasing company, and thedefendants as guarantors. The company did not pay the loan advance, and theplaintiffs demanded payment from the company and the defendants.[89] The defendants claimed that they were induced to enter into the variousagreements, namely the agreement for sale and purchase, the agreement to lease, andthe term loan agreement, by misrepresentations entitling them to cancel and seekdamages by way of counterclaim. They sought to raise the misrepresentation claimsas an equitable set-off.[90] Master Venning (as he then was) held that the allegations raised by thedefendants were too general and made without the necessary evidentiary support tomake out grounds of defence and set-off.27 Relevantly, the defendants failed toestablish a set-off for a more fundamental reason. The plaintiff's claim for summaryjudgment was based on the loan advance of $80,000 by them to the company,guaranteed by the defendants. Pursuant to the loan advance, the defendants wereeffectively principal debtors. He held that none of the matters referred to by thedefendants related directly to the loan advance.28 All the matters raised by thedefendants arose, at best, out of the agreement for sale and purchase and/or the lease.26 Wright-Stow v Elvidge HC Christchurch CP74/99, 15 October 1999.27 At [47].28 At [51].[91] He emphasised that the obligation to pay the advance of $80,000 arose as adirect result of the loan document. It was related to the purchase of the business bythe defendants, but that in itself was not determinative. He considered it determinativethat the parties had chosen to regulate their relationship by several quite separatecontracts. He concluded:[55] The loan contract is a separate contract. The loan contract itself is notimpugned or attacked in any way by the matters raised by the Defendants.Any cross-claims the Defendants may have against the Plaintiffs in relation tothe agreement for sale and purchase and/or the lease do not impugn thePlaintiffs' right to recover the loan advance made by them.[56] Put another way, the matters the Defendants wish to raise are notinterdependent with the Plaintiffs' claim for payment of the loan advance. Inmy view judgment can fairly be given by the Plaintiffs on the claim forrepayment of the loan advance without regard, whatever claims the defendantsmay have against the plaintiffs in their capacity as vendors. The defendantsare not deprived of the opportunity to pursue those claims against theplaintiffs. The practical effect is, however, that the Defendants will have tomeet their obligations under the loan agreement to the Plaintiffs in the firstinstance.[57] As Mr Parker relied heavily upon the principle espoused by SummersJ in Grant v NZMC Limited, it is worth recording that the facts of that case aresomewhat different to the facts of this case.[58] In the Grant v NZMC Limited case, the claim was for rental. TheCourt of Appeal held that the defendant was induced to enter into the leaseagreement by reason of misrepresentations by the plaintiff as to the businessthe plaintiff would give to the defendant's company. That was effectively acollateral contract to induce the defendant into the lease. In the present casethere was an agreement for sale and purchase. Any relevantmisrepresentations that the defendants may establish relate to the inducementto enter that agreement for sale and purchase. The defendants were notinduced to enter the loan agreement with the plaintiff by reason of anymisrepresentations by the plaintiff. The defendants could have borrowedmonies from a bank, but rather borrowed the money from the plaintiff becauseof the advantageous terms of the loan agreement itself, not because of anymisrepresentation in relation to the business.[92] I reach the same conclusion here. Any non-disclosure by the Tuscany Trusteesabout the building work they carried out on the property relates to the agreement forsale and purchase, not the loan agreement. There is no allegation in the breach ofwarranty statement of claim that the Walmsleys were induced to enter into the TermLoan Agreement by the Tuscany Trustees' warranty that all building work had beenconducted with a building consent or resource consent. That breach of warranty, ifproven, impugns the agreement for sale and purchase, but not the Term LoanAgreement. The Walmsleys borrowed money from the Tuscany Trustees onadvantageous terms because they did not have enough funds to purchase the propertyoutright, not because of the Tuscany Trustees' warranty about building work.[93] The Walmsleys seek to distinguish Wright-Stow on two grounds. First, that theCourt in Wright-Stow was influenced by the express pre-settlement agreement reachedthat the two contracts were entirely separate. Second, that the Court found no fault inthe vendor's conduct and claims of misrepresentation were rejected as not beingsupported by any evidence.[94] It is correct that the express agreement that the two contracts were separate wasconsidered relevant by Venning J. However, even without that factor, I am clear thaton the facts of this case the agreement for sale and purchase and the Term LoanAgreement were distinct contracts for the reasons I have given at [77]–[80].[95] With respect to the second point, I do not overlook that in this case theWalmsleys have filed substantial evidence to support their arguable breach of warrantyclaim. I have assumed for the purposes of this application that it is reasonably arguablethat the Tuscany Trustees breached the vendor warranty. That does differentiate thiscase from Wright-Stow. But Venning J held that even if the vendors had misrepresentedthe business, the defence of set-off was not available because those misrepresentationsimpugned the agreement for sale and purchase, not the separate loan agreement.29 Thesame reasoning holds true here.[96] Associate Judge Gendall (as he then was) reached the same conclusion inJungwon Ltd v Splitrock Ltd.30 This case also involved an application for summaryjudgment to enforce a loan under a term loan agreement associated with an agreementfor sale and purchase of a business. Of the $300,000 purchase price, $100,000 waspaid on possession date, and the balance of $200,000 was secured by way of a termloan agreement and guarantees. The parties entered into a separate term loanagreement setting out the loan arrangement between the plaintiff and the firstdefendant as borrower, and the second and third defendants as guarantors. Settlement29 At [58].30 Jungwon Ltd v Splitrock Ltd HC Wellington CIV-2007-485-1515, 8 November 2007.took place, the first defendant took possession of the premises, but no payments weremade under the loan agreement by any of the defendants.[97] Following demand, the defendants contended that the first defendant had aproper claim against the plaintiff for an alleged breach of warranty ormisrepresentation with respect to the agreement for the purchase of the business. Itwas claimed that the amount of the first defendant's claim exceeded the plaintiffs'claim against the defendants and constituted an equitable set-off. Associate JudgeGendall held:[52] At the outset it is clear to me that none of the matters referred to bythe defendants outlined in paras [13] to [17] inclusive above relate directly tothe loan agreement or the guarantee. All of the matters raised by thedefendants arise out of the agreement for the purchase of the business.[53] The obligations to pay the outstanding $200,000 purchase price withinterest are those directly resulting from the loan agreement and guarantee.[56] In the present case, the misrepresentations alleged by the firstdefendant which, in any event, appear on their face rather thin, relate to allegedacts on the part of the plaintiffs which it says induced it to enter into theagreement for the purchase of the business. The obligation to repay theprincipal sum of $200,000.00 plus interest arose under the Loan Agreementand the Guarantee, which are separate documents, and quite independent ofthe [Agreement for Sale and Purchase]. There is a direct similarity, as I see it,between the situation in the present case and that which prevailed in Wright-Stow v Elvidge. In my view, the defendants here cannot raise the defence ofequitable set-off pursuant to the alleged breach of warranty andmisrepresentation on the part of the plaintiff which are independent matters tothose under the Loan Agreement. I reject this defence advanced by thedefendants.[98] I consider the approach taken in Wright-Stow and Jungwon Ltd to be correct.The breach of warranty claim does not call into question the claim for the moniesowing under the Term Loan Agreement. Judgment can fairly be given on the TermLoan Agreement without taking the breach of warranty claim into account. It isrelevant that the Walmsleys have been able to take possession of the property on thesettlement date because of the vendor finance on favourable terms. It would be unjustfor the Tuscany Trustees to be denied that debt while the Walmsleys/Calliope Trusteespursue the breach of warranty claim.Residual discretion[99] If the defence of equitable set-off is rejected, the Walmsleys ask the Court toexercise its residual discretion to refuse to enter summary judgment. Theyalternatively ask the Court to dismiss the application or stay the application pendingdetermination of the breach of warranty claim, pursuant to r 12.12(2) of the High CourtRules.[100] The Court has a residual discretion not to award summary judgment evenwhere the plaintiff has established that the defendant has no defence to the claim.31The learned authors of McGechan on Procedure conclude that having regard to thevarious authorities, the position is:32(a) The discretion implied by the use of the word "may" is to berestrictively applied. In a great majority of cases, once the court issatisfied the defendant has no defence, there is no room for theexercise of discretion.(b) The residual discretion may be invoked to avoid oppression orinjustice to the defendant where:(i) The proceeding involves the actions or possible liability of athird party which is not before the court;(ii) The proceedings are such that the opportunity should be givento allow discovery or other interlocutory applications to beconcluded;(iii) The circumstances of the case disclose very unusual features,the presence of which leads the court to conclude that theentry of summary judgment would be oppressive or unjust; or(iv) The combination of complex issues of fact and law justify thedismissal of the application for summary judgment, either asa matter of discretion or because the court cannot be satisfiedthat the defendant has no defence.(c) Even where the court is not satisfied that a defence has been made out,in exceptional circumstances the application may be adjourned toallow for other processes to be followed.[101] I do not consider there to be any sound reason for the Court to exercise itsresidual discretion and refuse summary judgment. Relevantly, it would not be unjust31 High Court Rules 2016, r 12.2(1).32 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at[HR12.2.11].or oppressive to enter summary judgment before the Walmsleys' breach of warrantyclaim is determined. To the contrary, because the issues they raise do not attack theloan agreement, and as they have had the benefit of possession of Calliope Road sincesettlement, it would be unfair to deny the Tuscany Trustees the debt while the breachof warranty claim is pursued.[102] For the same reasons, I am not persuaded to dismiss or stay the applicationunder r 12.12(2) of the High Court Rules.Result[103] I enter summary judgment for the plaintiffs for the sum of $450,000, andinterest on this amount from 1 October 2022 at the contractual rate of 10 per centper annum, compounding monthly.[104] The Tuscany Trustees are entitled to their costs. They seek solicitor/clientcosts. If agreement cannot be reached on costs the parties may file submissions of notmore than four pages within 20 working days._____________________Associate Judge Gardiner