WILLEM ROBERT MARSMAN, UTA BLEIDISTEL AND THK TRUSTEES LIMITED V ROLAND JOHANNES NIJKRAKE CA CA267/2008

WILLEM ROBERT MARSMAN, UTA BLEIDISTEL AND THK TRUSTEES LIMITED V ROLAND JOHANNES NIJKRAKE CA CA267/2008 23 February 2009IN THE COURT OF APPEAL OF NEW ZEALAND CA267/2008 [2009] NZCA 30BETWEEN WILLEM ROBERT MARSMAN, UTA BLEIDISTEL AND THK TRUSTEES LIMITED Appellants AND ROLAND JOHANNES NIJKRAKE Respondent Hearing: 3 February 2009 Court: Glazebrook, Hammond and O'Regan JJ Counsel: D J King and C N King for Appellants S A Barker and B R Balderstone for Respondent Judgment: 23 February 2009 at 4.00 pmJUDGMENT OF THE COURT A The appeal is dismissed. B The appellants must pay the respondent costs for a standard appeal on a Band A basis and usual disbursements. We certify for second counsel. C The appellants must pay the respondent costs (with regard to each of our decisions in [2008] NZCA 104 and [2008] NZCA 249) for a standard application on a Band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Glazebrook J)Introduction[1] In 1994, Dr Marsman and Mr Nijkrake formed a company in British Columbia called Rowi Meat Packers Inc (Rowi), to operate a slaughterhouse in that province. The venture failed and Dr Marsman left the operation around May 1995. Both Dr Marsman and Mr Nijkrake are Dutch, although Dr Marsman has been based in New Zealand since about 1997. [2] Mr Nijkrake alleges that Dr Marsman misappropriated funds from Rowi and claims to be able to trace those funds to a property near New Plymouth owned by Dr Marsman's family trust. The appellants are the trustees of that trust. In January 2007, Mr Nijkrake commenced an action in the Netherlands against Dr Marsman seeking recovery of the funds allegedly misappropriated. Shortly afterwards he lodged a caveat on the New Plymouth title. [3] The trustees initiated the procedure under s 145A of the Land Transfer Act 1952. On 26 September 2007 Mr Nijkrake successfully obtained an order sustaining his caveat in the New Plymouth High Court from Associate Judge Gendall. The trustees now appeal against that decision and seek to have the caveat lapse.The parties' arguments[4] The parties agree that, in order to have the caveat lapse, the trustees must show that Mr Nijkrake does not have a reasonably arguable case in support of his caveat. The parties also agree that the applicable law is the law of British Columbia. [5] Against that background, the trustees argue that Mr Nijkrake's caveat over the trust's property near New Plymouth cannot stand because: (a) Mr Nijkrake's underlying claim to a constructive trust over monies alleged to have been misappropriated by Dr Marsman has effectively been statute-barred and extinguished under the governing law of British Columbia.(b) There is little or no evidence of an assignment by Rowi of its misappropriation claims against Dr Marsman to Mr Nijkrake, which is necessary in order for Mr Nijkrake to proceed against Dr Marsman and to maintain the caveat over the trust's property. [6] Mr Nijkrake argues that the caveat should be maintained pending the outcome of the substantive proceeding in the Netherlands because: (a) It is arguable that Mr Nijkrake is not yet "fully aware" of the extent of the fraudulent conduct carried out by Dr Marsman. It would be inconsistent with British Columbian jurisprudence, in the absence of discovery, evidence and cross-examination, to make a final ruling on the question of whether Mr Nijkrake is "fully aware" of the extent of any fraud by Dr Marsman. (b) Even if Dr Nijkrake was fully aware of the fraud in 1995 when it was first investigated and the limitation period had commenced, the limitation period was refreshed by Dr Marsman making payments in respect of the cause of action that confirmed the trust cause of action. (c) It is arguable that an assignment of the claims from Rowi to Mr Nijkrake occurred and that such assignment was valid. There is evidence before the Court that the assignment took place, as well as evidence that both Dr Marsman and Mr Nijkrake have acted consistently with accepting that the assignment was valid. [7] For the purposes of the appeal, the trustees appear to accept that it is reasonably arguable that Mr Nijkrake has an arguable case for tracing funds from Rowi to the New Plymouth property.When did the limitation period begin?[8] Under the Limitation Act 1996 of British Columbia, the limitation period is ten years. The first issue is when the limitation period began to run. In this case, theanswer to the question depends on the date at which Mr Nijkrake became fully aware of the conduct upon which the action in the Netherlands is based. [9] The trustees' expert witness is Mr Arthur Close QC. His view is that the ten year period began to run in 1995. Mr Nijkrake's own pleading is that the losses now claimed in the Netherlands proceeding were calculated in 1995 by an investigator employed by Mr Nijkrake. Given that time began to run in 1995, the action, which was commenced in the Netherlands in January 2007, was time-barred under the law of British Columbia. [10] Mr Nijkrake's expert witness is Ms Lisa Peters. Ms Peters is of the view that there is not sufficient evidence before the Court to say when Mr Nijkrake became "fully aware" of the alleged wrongful conduct. This means that it is not possible to say that Mr Nijkrake's claim is time-barred. The investigator's report in 1995 made it clear that the list of allegations of misconduct was not complete. Further, the courts in British Columbia have indicated that the question of when a plaintiff became fully aware is ill-suited to summary determination. [11] It is not enough for the trustees to succeed in the appeal to show that the claim is probably time-barred. To succeed in the appeal, they must show that Mr Nijkrake's case is not reasonably arguable. In light of the conflict of expert evidence (which we are not able to resolve on the papers), we cannot characterise Mr Nijkrake's position as not reasonably arguable.Was there confirmation?[12] The next question is whether certain payments made by Dr Marsman amount to "confirmation" of Mr Nijkrake's cause of action so as to start the limitation period running afresh. [13] The view of Mr Close, for the trustees, is that Mr Nijkrake's claim consists of a large number of discrete items of claim, any one of which could form an independent cause of action. The fact that Dr Marsman paid some of those discreteitems cannot amount to confirmation of the remaining claims so as to start the limitation period running afresh. [14] Mr Nijkrake's expert, Ms Peters, disagrees. She considers that the claim has to be considered as a whole. If that is the case, then any partial payment is a confirmation and starts the limitation period running again. [15] Again the two expert witnesses disagree. It is not possible to resolve this conflict of evidence on the papers, and we are certainly unable to hold that Mr Nijkrake's claim is not reasonably arguable.Was the assignment invalid?[16] The alleged misappropriation was of funds belonging to Rowi. Therefore, Rowi ordinarily would have brought the claim against Dr Marsman. Rowi purported to assign its claims to Mr Nijkrake, who commenced the action in the Netherlands in January 2007. The final issue is the validity of this assignment. [17] The only material before the High Court on the issue of the validity of the assignment was a draft opinion from Dr Marsman's solicitor in British Columbia, Mr Scott Cordell, exhibited to Dr Marsman's affidavit. The draft concluded that the assignment was invalid under the law of British Columbia. [18] The trustees concede that this draft letter cannot be regarded as expert evidence. In our view, an unsigned draft opinion cannot be regarded as evidence at all. Even if Dr Marsman's solicitor's letter could be regarded as evidence, however, the opinion as to invalidity rested on other factual premises which we have no means of testing. [19] The trustees argue that Mr Nijkrake should have put evidence of the validity of the assignment before the High Court. We disagree. It was sufficient for Mr Nijkrake to put forward prima facie evidence of an assignment, which he did. If the trustees wished to challenge the validity of the assignment then an evidentialburden rested on them to bring evidence of that invalidity. That evidential burden was not discharged. [20] In the circumstances, we cannot hold Mr Nijkrake's position to be not reasonably arguable.Result and costs[21] The appeal is dismissed. [22] The appellants must pay the respondent costs for a standard appeal on a Band A basis and usual disbursements. We certify for second counsel. [23] In Marsman v Nijkrake [2008] NZCA 104, this Court granted the trustees special leave to appeal out of time. In Marsman v Nijkrake [2008] NZCA 249, this Court granted the trustees' application to adduce further evidence. [24] In both cases, costs were reserved to await the outcome of the appeal. In the circumstances it is appropriate for the appellants to pay the respondent costs with regard to each application for a standard application on a Band A basis plus usual disbursements.Solicitors: Denis King Law, New Plymouth for Appellants Buddle Findlay, Wellington for Respondent