JIAO & ORS V BARGE CA CA236/05

JIAO & ORS V BARGE CA CA236/05 19 July 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA236/05BETWEEN YI HUA JIAO & ORS Appellants AND IVAN BARGE Respondent Hearing: 21 June 2006 Court: Glazebrook, Robertson and Ellen France JJ Counsel: A C Beck for Appellants M J Fisher for Respondent Judgment: 19 July 2006JUDGMENT OF THE COURT A Appeal is dismissed. B The respondent is to have costs in respect of this hearing and the hearing on 31 May 2006 of $9,000 together with usual disbursements against all the appellants jointly and severally.____________________________________________________________________REASONS OF THE COURT(Given by Robertson J)Table of ContentsPara NoIntroduction [1]The participants [5]Factual scenario [6]The appellants' case [50]Evidential matters [51]The elements of the alleged wrong(a) Inducing breach of contract [55](b) Unlawful means conspiracy [68]Consequential Remedies [78]Result [88]Introduction[1] The appellants appeal against some of the orders made by Priestley J in the High Court at Auckland on 27 October 2005 following a hearing which had extended over 12 days in February and March of that year. [2] The heart of that case was an application for specific performance of an agreement for the sale and purchase of a property at 45 Anzac Avenue, Auckland. The building was owned by Freeport Developments Limited ("Freeport") and the purchaser under the contract was the respondent Ivan Barge. The order made for performance of the contract and matters consequential on the transfer are now not in contention. [3] In addition, however, Priestley J found that (in an endeavour to avoid that agreement for sale and purchase being effected) the current appellants wrongly induced and procured Freeport to breach its contract with Mr Barge, and that all the defendants in the Court below were involved in an unlawful means conspiracy causing loss to Mr Barge. Freeport has since been placed into liquidation in somewhat unusual circumstances, but that does not impact on this appeal. [4] The appeal relates solely to issues of inducement and an unlawful means conspiracy involving the present appellants.The participants[5] Priestley J at [5] to [13] described the parties to the proceedings. Following his approach, but adapting them to reflect the position on appeal, we identify the relevant people in the dispute:(a) The respondent Mr Barge Mr Barge was the stipulated purchaser in an agreement for sale and purchase dated 4 March 2002 ("the agreement") between himself and Freeport to purchase the building in Anzac Avenue for $1.1m. (b) Freeport (not a direct party to the appeal) (i) Freeport was at all material times the registered proprietor of the building. (ii) Freeport was initially a shelf company, incorporated by the Auckland solicitors, Knight Coldicutt, for use by that firm's clients. In July 2000 Yen Fa Chen ("Mrs Chen") sought advice from Knight Coldicutt about the best mechanism to use for property development in New Zealand. As a result Mrs Chen and Ta Wen Lin became the owners of 67.5 and 12.5 of Freeport's shares respectively, with four other shareholders each of whom held five shares each. Freeport's registered office was at all times Mrs Chen's residential address. (iii) On 20 October 2000 Freeport executed a power of attorney in favour of Vivien Chu, Mrs Chen's daughter. That power of attorney was, in general terms, unrestricted. It specifically authorised the attorney "to perform any contract in relation to property or affairs present or future which [Freeport] might enter into personally", and "to purchase any real property". It was executed on Freeport's behalf by both Mrs Chen and Ta Wen Lin who were Freeport's directors. (c) Shou-Lung Chiao (not a direct party to the appeal) (i) Shou-Lung Chiao resides in Hong Kong. He is the brother the first appellant, Yi Hua Jiao (Mrs Jiao). (ii) Shou-Lung Chiao, took an assignment of a mortgage registered against Freeport's building's title and then, in purported exercise of the mortgagee's power of sale, sold the building to the second appellants. (d) Yi Hua Jiao – (the first appellant) Mrs Jiao is the sister of both Shou-Lung Chiao and of the third named second appellant (Shou Chen Chiao). She lives in New Zealand. She is also the wife of the second named second appellant, Hseuh Wi Huang (Dr Huang) who lives in Taiwan. (e) Mrs Jiao, Dr Huang and Shou Chen Chiao – (the second appellants) Mrs Jiao, Dr Huang and Shou Chen Chiao are the trustees of the Harsono Family Trust established pursuant to a Deed of Trust dated 29 July 2002. They purported to purchase the building from Shou- Lung Chiao pursuant to his mortgagee's power of sale.Factual scenario[6] For the purposes of the appeal, the factual background can be summarised in conformity with the findings of Priestley J in [26] to [69] of his judgment. There was no challenge before us to the findings of historical facts. There is, however, a serious challenge as to the inferences to be drawn from these. [7] Freeport owned a building in Anzac Avenue in Auckland which was subject to a mortgage to the Bank of New Zealand. [8] In September 2001 Freeport entered into a conditional contract to sell the property to Whitaker Properties Limited ("Whitaker"). For the vendor, this agreement was signed by Mrs Chen's daughter Vivien Chu. Whitaker lodged a caveat to protect its equitable interest in the property. Before the Whitaker contract had been confirmed, Freeport entered into a further conditional contract to sell the property to Mr Barge. Vivien Chu again signed for the vendor. Payment of a deposit was required by 11 March 2002. [9] In March 2002, the first appellant Mrs Jiao approached the agent acting for Freeport wanting to acquire urban commercial real estate. She was told of and shown the Freeport property. She was advised that there were already two agreements on the table. She asked how long it was before the first of those agreements was due to go unconditional and whether she could get the property if she offered more money. [10] Mrs Jiao made it clear that she was prepared to pay $122,222 more than Mr Barge's contract. The Barge contract became unconditional on 18 March 2002. Whitaker still had a caveat on the title in respect of its earlier contract. The Whitaker contract never became unconditional. Freeport's then solicitors, Knight Coldicutt lodged a dummy mortgage on the title to trigger the removal of the caveat by Whitaker. The Whitaker caveat lapsed on 9 May 2002. After that date, there was no impediment to settlement of the Freeport to Barge contract.[11] On 13 May, Knight Coldicutt on behalf of Freeport offered Mr Barge $30,000 to walk away from his deal. He did not accept this offer. [12] On or about 24 May, Freeport instructed John Dorbu, an Auckland Barrister, to act for it with regard to the sale of its Anzac Avenue building in substitution for its previous solicitors, Knight Coldicutt. [13] This new representative wrote to Mr Barge on 29 May asserting that Vivien Chu did not have authority to sign an agreement for Freeport. The letter suggested that Vivien Chu had mistakenly thought she was acting under a power of attorney from her mother and that this was not efficacious to effect a sale by Freeport. Mr Dorbu asserted that Freeport had no intention of selling the property. Further he recorded that the shares in Freeport itself were subject to a sale and purchase agreement entered into in 2001 in favour of Dr Whan-Shue Wu, a medical practitioner resident in Taiwan. This appears to be an alternate name for Dr Huang, the second named second appellant. [14] Subsequent discovery has established that the assertion of lack of authority of Vivien Chu was not true. She had a valid power of attorney from Freeport. [15] On 7 June 2002, a letter was written in English by Mrs Chen to Shou-Lung Chiao. This is surprising as Mrs Chen's evidence in the High Court was that she only ever communicated in Mandarin. [16] In the letter, which was written on behalf of Freeport, she sought a loan for three or four months from Shou-Lung Chiao who was Mrs Jiao's brother. She said the Bank of New Zealand was not prepared to wait until there could be a transfer of the shares in Freeport to have its mortgage paid. [17] On subsequent discovery from the Bank of New Zealand, there is no documentary evidence which supports that assertion. In fact there is nothing which suggests that the Bank of New Zealand received any inquiry about the repayment of Freeport's mortgage.[18] On 10 June 2002 Freeport entered into a loan agreement with Shou-Lung Chiao. Its preamble recorded that Freeport was in financial difficulties and was desirous that the Bank of New Zealand mortgage be assigned to the lender pending settlement of an agreement for sale and purchase of shares in Freeport on 31 July 2002. Priestley J found that in fact on 10 June 2002 Freeport had paid its monthly loan repayments to the Bank of New Zealand and still had a credit balance of almost $15,000. Freeport could have paid at least three more monthly loan repayments of $3,679.49 from its bank account. [19] The loan with Shou-Lung Chiao provided that Freeport pay interest immediately on 10 June, even though the loan was not to be drawn down until 11 July 2002. The rate of interest was 11% whereas the rate on the Bank of New Zealand mortgage, which was to be repaid from this advance, was only 7.95%. [20] On 19 June 2002 the Harsono Family Trust entered into an agreement with Freeport to buy the Freeport shares for $1.2m. The agreement was probably unenforceable as, first, Freeport did not own any of the shares in itself, secondly, a trust is not a legal person and cannot be a party to a contract, and, thirdly, the Harsono Family Trust, of which the second appellants were the trustees, was not settled until 29 July 2002. The purported agreement for purchase was conditional on a variety of matters including clearance of all caveats from the title. [21] On 21 June 2002, Shou-Lung Chaio's Hong Kong solicitors signed a document purporting to be a default notice under s 92 of the Property Law Act 1952 in respect of Freeport's mortgage to the Bank of New Zealand. [22] Mr Dorbu, as Freeport's legal adviser, deposed in an affidavit filed in the interlocutory stages of the proceedings, that he received the notice by facsimile. The default notice was dated 11 days after the loan agreement had been signed on 10 June and before Shong-Lung Chiao had taken assignment of the mortgage. At that time, the loan agreement of 10 June 2002 was not secured by the Bank of New Zealand mortgage. Whatever the document was, it could not have been a valid notice under s 92 of the Property Law Act.[23] Mr Dorbu deposed that, on 21 June 2002, he attempted to cause a same-day courier package to be delivered to Mr Barge at the residential address shown on the intituling to an application dated 1 May 2002 filed by Mr Barge to sustain the caveat he had lodged on 21 March 2002. As it transpired, Mr Barge had moved from that address. The courier package was not delivered. It was returned to Mr Dorbu on 28 June 2002. No endeavour was made to serve the solicitors who had lodged the proceedings. It was their address which was the address for service specified by Mr Barge in his caveat. That was the address to which any notice for the purposes of s 92(4) of the Property Law Act should have been delivered. [24] Mr Dorbu suggested in his affidavit that his reasons for not advising the relevant solicitors was because they had said they would not communicate with him in connection with the caveat proceedings until he had provided an address for service of solicitors in New Zealand who were acting for Freeport. Mr Dorbu is only a barrister of the High Court of New Zealand. As such he is limited in his activities on conveyancing matters. [25] Mr Fisher wished to contend that it was an available inference that there was never any s 92 notice in the courier pack. The Judge did not make a finding in that regard and we do not find it necessary to consider the point on the appeal. [26] There was a clear finding that no notice of the default was ever drawn to Mr Barge's attention. Section 92 of the Property Law Act was not complied with and action based on it could not be advanced. [27] On 27 June 2002, Master Gambrill ruled as part of Mr Barge's caveat proceedings that Freeport was required to provide an address for service of a New Zealand solicitor, as solicitor on the record for Freeport. No further steps were permitted to be taken by Freeport in the proceedings until the Master's ruling had been complied with. Freeport did not take further steps on the caveat proceedings. [28] On 2 July 2002 Vivien Chu swore an affidavit in which she deposed that she did not have a power of attorney, or any other form of authority, from Freeport to sell the property. This affidavit was filed and served in October 2002 when Freeportapplied to set aside a summary judgment for specific performance which was applied for by Mr Barge on a default basis on 20 September 2002. This assertion is not in conformity with the documentary evidence. It is one of the matters which Priestley J, in his judgment, specifically referred to the Solicitor-General. [29] Similarly, in an affidavit filed by Mrs Chen on 4 July 2002 she also deposed that Freeport had never given a power of attorney to Vivien Chu. That affidavit has also been referred to the Solicitor-General for further consideration. [30] On 11 July 2002, Mrs Jiao as an authorised signatory withdrew: (a) $250,005.00 from her brother Shou-Lung Chiao's ANZ Bank account in New Zealand. She used those funds to purchase an ANZ bank cheque for $250,000.00 payable to the Bank of New Zealand. (b) $150,147.15 from Shou-Lung Chiao's ANZ bank account which was used to purchase an ANZ bank cheque for $150,143.15 payable to the Bank of New Zealand. [31] On 11 July 2002, Mr Dorbu deposited $480,997.15 into Freeport's bank account at the Bank of New Zealand and directed the bank pursuant to s 82 of the Property Law Act to assign its mortgage to Shou-Lung Chiao. This deposit included the two ANZ cheques together with two other bank cheques from parties unconnected to the proceeding, and $855 in cash. [32] Notwithstanding the fact that he is not a solicitor, Mr Dorbu certified as correct for the purposes of the Land Transfer Act 1952 a memorandum of transfer assigning the mortgage from the Bank of New Zealand to Shou-Lung Chiao. Buddle Findlay, acting as solicitors for the Bank of New Zealand, sent the Certificate of Title and the relevant discharged Bank of New Zealand mortgage to Mr Dorbu. This mortgage document was not discovered in the proceeding. [33] On 15 July 2002, Mr Shou-Lung Chiao purportedly acting pursuant to the assignment of the mortgage of the Bank of New Zealand to him four days earlier,entered into an agreement to sell the property as mortgagee to the first appellant and/or her nominee. The agreement did not contain a settlement or possession date. [34] On 18 July Mr Barge's solicitors commenced the specific performance proceedings and sought summary judgment. [35] On 22 July Mrs Chen wrote to Shou-Lung Chiao asserting that Freeport's mortgage payment of 23 June 2002 to the Bank of New Zealand had not been met. This was not correct. [36] It is also asserted in affidavits in the proceedings that, on 27 July 2002, Shou- Lung Chiao executed a document entitled "Receipt" in which he acknowledged that he had received on that day NT$7,755,760 as the first instalment of the purchase money payable on the settlement of the sale and purchase agreement between himself and the Harsono Trustees. [37] That is contrary to the evidence from Mrs Jiao that the Trustees, in purchasing the property from Shou-Lung Chiao as mortgagee, had satisfied the purchase price by: (a) payment to the Bank of New Zealand on 11 July 2002 of $480,997.15; (b) payment to Mrs Chen on 31 July 2002 of NT$5,092,870; and, (c) payment to Mrs Chen on 2 August 2002 of $278,627.20. [38] The Judge preferred the evidence of Mrs Jiao. We note that in purchasing the property the money was paid to Mrs Chen, not to Shou-Lung Chiao as mortgagee. [39] The Judge found that on 29 July 2002 Mr Dorbu was acting for the appellants. His name appeared on the backing sheet of the Deed of Trust settling the Harsono Family Trust on that day. He witnessed the first appellant's signature in her capacity as one of the Trustees. On that same day, acting for Shou-Lung Chiao, hefaxed a letter of instruction to a firm of accountants to prepare a settlement statement in relation to the mortgagee sale. [40] As discussed above, on 31 July 2002, Dr Huang, the second named Harsono trustee, transferred NT$5,092,870 into the bank account in Taiwan of Mrs Chen at the China Trust Bank. [41] On 2 August, Chester Grey (Auckland accountants) prepared a settlement statement in accordance with the instructions from Mr Dorbu. Also on that day Dr Huang caused a bank cheque in the sum of $278,627.20 to be deposited into the New Zealand bank account of Mrs Chen. [42] The same day Shou-Lung Chiao executed a Memorandum of Transfer. What has been discovered is a single page document which does not have the annexed schedule which is required when a mortgagee exercises a power of sale. This incomplete and inadequate document is certified as correct for the purposes of the Land Transfer Act 1952 by Mr Dorbu again purporting to be a solicitor. [43] On 20 September 2002, Mr Barge obtained by way of summary judgment a decree of specific performance in respect of his contract for the sale and purchase of the Anzac Avenue property. Freeport applied to set this decree aside on the basis of various affidavits including those of Vivien Chu (which she swore on 2 July) and Mrs Chen (which she swore on 4 July 2002). An order was made by Master Faire on 11 February 2003 setting aside the decree. [44] On 18 February 2003 Mr Barge filed an amended statement of claim in which he joined Shou-Lung Chiao and the appellants as defendants in the High Court proceedings. He alleged a conspiracy amongst all the defendants. Mr Barge also sought an injunction restraining the appellants from dealing with the property pending any further order of the Court. [45] This application came before Harrison J on 25 February 2003. Mr Dorbu appeared for both Freeport and Shou-Lung Chiao. In response to a question from theBench, Mr Dorbu reported that he had advised the defendants about potential for conflict of interest but his clients had no problem with his acting for all of them. [46] Harrison J issued an injunction restraining dealing with the property. [47] There were various amended pleadings. In February 2005 Mr Beck (who had been counsel for Shou-Lung Chiao), and Ms Beatson (who had been counsel for the appellants) each sought leave to withdraw. Mrs Jiao filed a memorandum stating that the parties (who are now the appellants) would not need any further assistance and that they would all be represented by her in Court. [48] At the High Court hearing, none of the present appellants gave evidence or called any witnesses other than (under subpoena) a bank officer from the Bank of New Zealand (who had already given evidence earlier in the trial) and Mr Brown, the solicitor on the record for Mr Barge at an earlier stage in the proceedings. [49] We have set out in some detail this factual litany because it almost speaks for itself when consideration is had of the two issues which are now alive on this appeal.The appellants' case[50] The appellants' case is that: (a) There was no basis for concluding that the appellants induced Freeport to breach its contract with Mr Barge and particularly that a deliberate intention to interfere and the element of persuasion were not established; (b) There was no basis for concluding that the appellants were party to an unlawful means conspiracy, and particularly the necessary intention or unlawful means was not established; and, (c) The remedies ordered by the Court were in any event inappropriate.Evidential matters[51] Three preliminary matters were raised by Mr Beck. First he contended (and we agree) the onus was on Mr Barge throughout to show the necessary elements of dishonesty on the part of the appellants. The proper approach is conveniently summarised by Lord Nicholls of Birkenhead in In re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 (HL) where he said at 586:[T]he more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury.[52] Secondly, on the drawing of inferences which, in the specific context of this case involved dishonesty, Mr Beck submitted, and we accept, that the applicable approach has not altered from that enunciated by Lord Wright in Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 (HL) when he said at 169-170:Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish. In some cases the other facts can be inferred with as much practical certainty as if they had been actually observed. In other cases the inference does not go beyond reasonable probability. But if there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture.[53] Thirdly, with regard to witnesses who might have been able to assist but are not called, counsel contended (and we confirm) the position is as summarised by Glazebrook J in a sitting of a Full Bench of this Court in Ithaca (Custodians) Ltd v Perry Corporation [2004] 1 NZLR 731 (CA) when she said at [153]:In our view, it is not helpful to analyse the position in terms of broad and narrow views. Neither is it helpful to refer to the "rule" in Jones v Dunkel. There is no rule. Rather there is a principle of the law of evidence authorising (but not mandating) a particular form of reasoning. The absence of evidence, including the failure of a party to call a witness, in some circumstances may allow an inference that the missing evidence would not have helped a party's case. In the case of a missing witness such an inference may arise only when:(a) the party would be expected to call the witness (and this can be so only when it is within the power of that party to produce the witness); (b) the evidence of that witness would explain or elucidate a particular matter that is required to be explained or elucidated (including where a defendant has a tactical burden to produce evidence to counter that adduced by the other party); and (c) the absence of the witness is unexplained.[54] Mr Beck argued that there was no specific reference to nor elucidation of these important principles by Priestley J. Nor, he argued, was there a clear demonstration that the Judge had them in mind in dealing with the evidence, or that he had rigorously applied them at all relevant times. For reasons which we subsequently explain, we are clear that there is no substance in these criticisms.The elements of the alleged wrong(a) Inducing breach of contract[55] This tort stems from Lumley v Gye (1853) 118 ER 749. [56] The essential elements of the tort are set out in Todd (ed) The Law of Torts in New Zealand (4ed 2005) at para 13.2: (a) a legally enforceable contract; (b) a deliberate intention to interfere with the contract in order to harm or bring pressure to bear on the plaintiff; (c) direct persuasion or indirect interference by unlawful means; (d) interference without lawful justification; and (e) interference causing loss to the plaintiff.[57] The onus, as Priestley J noted at [180], of proving an actual inducement lies with the plaintiff: Northern (except Gisborne) Road Transport Motor and Horse Drivers and Their Assistants Industrial Union of Workers v Kawau Island Ferries Ltd [1974] 2 NZLR 617 at 622 (CA). [58] The Judge's specific finding was:[183] There could be no doubt, and I so find, that all defendants worked in concert in endeavouring to bring about a mortgagee sale in terms of the assigned Bank of New Zealand mortgage to the fourth defendant. As I have stated there was no evidence for the defendants which permits me to construe the relevant documents in any other way. Furthermore all defendants engaged the services of Mr Dorbu to implement their arrangements. [184] In the light of that evidence and my findings, I am satisfied that the tort of inducing breach of contract has been made out. The inducement was clearly the GST (sic) difference between the two competing contracts ($122,222) which I am satisfied led to Freeport, in conjunction with the other defendants working co-operatively together to bring about a purported mortgagee sale of the building.[59] As Mr Beck reminded us, inducing a breach of contract is an intentional tort which requires deliberate conduct. He referred to the discussion of intention by Diplock LJ in Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 (CA) where he said at 704:The element of intent needed to constitute the tort of unlawful procurement of a breach of contract is, in my view, sufficiently established if it be proved that the defendants intended the party procured to bring the contract to an end by breach of it if there were no way of bringing it to an end lawfully.[60] Priestley J had said at [181] of his judgment:The issue here is whether Freeport decided to break its contract with the plaintiff as the result of some operative inducement from the other defendants. The fact that Freeport itself might have been willing to sell the building for a higher price in breach of its contract with the plaintiff does not prevent the tort from being established. In British Motor Trade Association v Salvadori [1949] CH 556, 566, such an argument was rejected by Roxburgh J who stated: The covenantor who offers a car for sale is not unconditionally ready to break his covenant but only if the price offered is high enough and, accordingly, a defendant who offers such a price induces the seller to take the final step towards breaking his covenant by making his willingness to sell unconditional.[61] Mr Beck submitted that the High Court Judge did not make a finding that the other appellants persuaded Freeport to breach its contract with Mr Barge. Counsel accepted that Priestley J found there was no doubt that the defendants had all worked in concert and that the higher price offered was an inducement, but Mr Beck said none of that was evidence of persuasion. The most likely scenario, in Mr Beck's submission, was that the appellants believed there was a legal way of achieving the purchase of the property. [62] Mr Fisher responded by arguing that there was an inferred intention and noted particularly Dugdale (ed) Clerk & Lindsell on Tort (18ed 2000) at para 24-21:Inferred intention imports no desire to injure but it is sufficient that there is deliberate conduct by a defendant who appreciates, or is sufficiently reckless in regard to, the probable consequences on the plaintiff. Where knowledge of the existence of a contract is proved on the part of a defendant who induces one party to break it, his intention to do damage to the other party is readily inferred.[63] We accept that the offering of a higher price by itself does not involve persuasion of Freeport by the appellants to breach its legal obligations. When considered in isolation, such an action would normally be viewed simply as a back- up offer conditional on the other contract lawfully coming to an end. Nor is there anything to suggest an improper involvement by the appellants in the $30,000 offer from Freeport to Mr Barge for him to walk away. Mr Barge was free to accept or reject this offer, but if he had accepted, then the contract would have been at an end and there would have been no contract to interfere with. [64] The only issue for this appeal is whether the Judge was correct to hold that the elements set out in [56](b) and (c) were met. [65] We are satisfied that it was open to the High Court Judge to conclude that there was an operative inducement and actual persuasion in the steps which were taken with regard to the refinancing, and a deliberate intention to interfere with Mr Barge's contract to his detriment. Indeed, we consider this to have been the obvious and inevitable conclusion to be drawn from the established facts. Freeport entered into a commercially inexplicable transaction with Mrs Jiao's brother which, on the evidence, Mrs Jiao was involved in setting up (see, for example, at [30]above). The resulting mortgage was then immediately misused in what was a clearly contrived fashion to achieve what was the mutual (and expressed) aim of defeating Mr Barge's rights under his contract. All of this was implemented by Mr Dorbu who was the agent of all parties. [66] Although there was no onus on the appellants, Mr Barge did not have to disprove every theoretical possibility which counsel ingenuity might imagine. There was no challenge from anyone who had direct and personal knowledge of the dealings which hinted at any other credible or sensible conclusion to be drawn from the total circumstances. There was no evidence that anyone honestly believed that acting in such a way was available, reasonable or lawful. We doubt in any event that mere belief that their actions were a lawful means of ending the contract would have meant that the tort was not made out in the circumstances of this case. [67] We accordingly reject the attack upon the finding that there was an unlawful procurement of a breach of contract.(b) Unlawful means conspiracy[68] Priestley J found that the tort of an unlawful means conspiracy had been committed by the current appellants which impacted upon Mr Barge. [69] An unlawful means conspiracy occurs when a "combination of persons act in concert so as to intentionally injure the plaintiff in his trade or other legitimate interests by an act which is independently unlawful": SSC & B: Lintas New Zealand Ltd v Murphy [1986] 2 NZLR 436 at 461 (HC). Thus there are three essential elements to this tort: (a) an agreement or combination; (b) an intention to injure the plaintiff; and (c) an unlawful act/means.Mr Beck submitted that Priestley J erred in finding that any of these elements had been established. [70] An unlawful means conspiracy requires an overt act that is independently actionable at the suit of the plaintiff: Lintas. The unlawful means in this case was, first, the commission of the tort of inducing a breach of contract. Secondly, the absence of any sustainable ground that there was any breach of a mortgagee/mortgagor relationship coupled with the failure to give notice to Mr Barge of the mortgagee sale as required by ss 92(4) and (4A) of the Property Law Act. Mr Barge, having lodged a caveat on the title, was entitled to be treated as a subsequent mortgagee (Property Law Act, s 92(4A)), and be served with a copy of the s 92 notice (Property Law Act, s 92(4)). This statutory obligation was breached. [71] We are satisfied that the appellants, Freeport, Shou-Lung Chiao and Mrs Chen all acted in combination to injure Mr Barge. We accept the submission of Mr Beck that an intention to injure is a critical aspect of this tort. Unlike a conspiracy to injure, however, an unlawful means conspiracy does not require a predominant purpose to injure the plaintiff. It is enough that the intent to injure is a concurrent or even subsidiary purpose: Lonrho plc v Fayed [1992] 1 AC 448 at 464- 465 (HL); Swann v Secureland Mortgage Investment Nominees Ltd [1992] 2 NZLR 144 at 147 (CA). [72] Bearing in mind that test as against the actions which were taken, it is not surprising that the Judge found at [195]:It seems a safe inference for me to draw, and particularly having regard to the involvement of Mr Dorbu acting for all defendants, that the clear intention and purpose of [Shou-Lung Chiao and the appellants] they being united by family ties as well as common objectives, was to ensure that they acquired the building for their own purposes without regard to [Mr Barge's] prior claim, thus damaging his interest in the building.[73] In this case there is a spiders web of what, on the face of it, are contrived machinations to create a position which, in reality, never existed to enable the appellants to acquire the Anzac Ave property, thereby defeating Mr Barge's rights to the building. With the active and knowing assistance of the appellants, Mrs Chen, on behalf of Freeport, involved herself in a commercially disadvantageous financingarrangement which was facilitated by the appellants and family members associated with them. Together they used the same legal representative and all purported to engage powers which factually were unavailable. Together they breached the most fundamental obligations in respect of persons with interests in mortgages. The only conclusion, in the absence of any explanation, is that it was a contrivance to subvert the rights which Mr Barge had acquired under his original agreement for sale and purchase. [74] Mr Beck contended that the evidence supplied by the respondent fell well short of the strong proof required to justify a finding of the necessary intent on the part of the appellants. Standing back and looking objectively at the available material, the following is revealed. Once Mr Barge had turned down the $30,000 offer from Freeport to walk away from his contract, and Mr Dorbu had become the legal representative both of Freeport and the appellants, a clear pattern emerged:• The unsustainable denial of the binding nature of the contract which had been signed by Vivien Chu;• Mrs Chen, as the major shareholder and prime operator of Freeport, making contact with Shou-Lung Chiao, who was the brother of the first appellant, to raise funds. Mrs Jiao had an active involvement in this arrangement.• Mrs Chen asserting that there was a problem with the Bank of New Zealand when there was none;• Freeport entering into a financing arrangement with Shou-Lung Chiao on terms which were significantly less advantageous to those which existed with the Bank of New Zealand and which there was no evidence could not have continued;• Documenting a clearly void sale of shares in Freeport from a vendor which owned no shares to a purchaser which had not been created;• Creating the Harsono Family Trust as the instrumentality for acquiring the property without disclosing the reality of what was happening;• Endeavours to invoke, albeit unsuccessfully, the provisions of s 92 of the Property Law Act by Mr Dorbu acting as the legal representative of both Freeport and the appellants;• The creation of paper trails which were inconsistent and economically and commercially unintelligible;• The mutual orchestrating by Mrs Chen and Mrs Jiao and family members of a funding stream to repay the Bank of New Zealand mortgage which endeavoured to hide the true source of funds;• Requiring an assignment of the existing Bank of New Zealand mortgage to Shou-Lung Chiao rather than discharging and registering a new mortgage;• Mr Dorbu orchestrating activity on behalf of all the parties, notwithstanding the clear conflict between their respective positions and interests but which they all accepted and saw no problem with;• Generally creating an artifice which had no historical or commercial reality and which, in the absence of any challenge or excuse, could only be a dishonest means of subverting Mr Barge's clear rights. [75] No matter how stringently the onus is expressed, or what level of intention is required, when parties who could challenge the inevitable inferences remain silent, the Court is bound to conclude that this was all intended to ensure that Mr Barge's rights were avoided by means which were dishonest and unsustainable. [76] The appellants cannot ask an appellate Court to speculate about theoretical possibilities. They chose not to give evidence. The material which is available from them in affidavits filed at pre-trial stages is contradictory, inconsistent and reeks of adeal to jettison Mr Barge's right. Their determination in this regard knew no bounds. Individually, and collectively, they were prepared to prevaricate and lie. [77] The conclusion reached by Priestley J was the only one available on the evidence and the challenge to the finding of an unlawful means conspiracy is also without merit.Consequential remedies[78] Mr Beck drew to our attention that the Court below had ordered specific performance of the contract between Freeport and Mr Barge, but had not specifically ordered the return of monies already paid to Freeport. The Court ordered that the executed discharge of mortgage from Freeport to the Bank of New Zealand was to be released and that the purported mortgagee sale by Shou-Lung Chiao was invalid. [79] Counsel complained that the Court did not require Mr Barge to pay the purchase price of the property. [80] We do not accept that is what the judgment says. There was a decree for specific performance. Clearly both parties to the initial agreement had duties and responsibilities as well as rights. All must be adhered to in the specific performance of the contract. [81] The High Court did not have to deal with the consequences of the various transactions which were entered into to try and do Mr Barge out of his deal. Nor is it a matter which is before us although we were told from the Bar that the mortgage money had been repaid to Shou-Lung Chaio. Upon payment of the consideration provided for in the agreement, Mr Barge is entitled to have title to the property free of any encumbrances. That is what the High Court required and it is the obligation which we confirm. [82] There is no reason why costs should not follow the event in the ordinary way.[83] There was a hearing in this Court on 31 May 2006 when, together with other incidental matters, an extension of time was granted for lodging the case on appeal. The indulgence was granted on the basis of an additional $30,000 by way of security for costs being lodged. [84] The issue of costs on that hearing was reserved. [85] There is no reason why the respondent should not have costs in respect of both hearings. [86] Mr Fisher had argued that we should, in the circumstances of this case, order indemnity costs because an indulgence was granted in respect of the hearing of the appeal. No authority for such approach was advanced and, in our view, it is without substance. [87] It has not been demonstrated that anything other than the normal approach to costs should apply. We make an order in respect of the two hearings of $9,000 together with usual disbursements.Result[88] The appeal is dismissed with costs of $9,000 in favour of the respondent against the appellants jointly and severally.Solicitors: Murdoch Price, Auckland, for Appellants Castle Brown, Auckland, for Respondent