Apark Ltd v Nero Noctis Private Wealth Pty Ltd Hc Ak

• Jurisdiction: New Zealand
• Judge: Abbott
• Judgment Date: 11 March 2013
• Neutral Citation: [2013] NZHC 468
• Docket Number: CIV 2011–404–006981
• Court: High Court
• Date: 11 March 2013

BETWEEN

Apark Limited

Plaintiff

and

Nero Noctis Private Wealth Pty Limited

First Defendant

Grant Thomas

Second Defendant

[2013] NZHC 468

CIV 2011–404–006981

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Protest to jurisdiction and application to dismiss claims for breach of the Fair Trading Act 1986 (“FTA”) and breach ofcontract — plaintiff used services of defendants when seeking to raise finance to complete property transactions in New Zealand — plaintiff claimed it invested approximately $4.5 million upgrading properties it had agreed to purchase, in reliace on oral and written representations, statements and promises made by defendants that overseas funds would be available in time to settle the purchases — agreements were subsequently cancelled by receiver of vendor — defendants resided in Australia and were therefore foreign parties — whether there was an arguable case that leave to serve overseas was not required for the claims of breach of the FTA, negligent misstatement, promissory estoppel and breach of contract — whether court should assumejurisdiction having regard to merits of causes of action and appropriate forum for the dispute — if leave required, whether it would have been granted (had it been sought) — whether plaintiff's failure to apply should be excused in the interests of justice.

M Kan for plaintiff

K Harkess for defendants

JUDGMENT OF ASSOCIATE JUDGE Abbott

Abbott

1 The plaintiff, Apark Ltd, is a New Zealand registered company that acts as the trustee of Apark Trust, a trust that trades in property.

2 The first defendant is the trustee of a unit trust that operates from an office in Adelaide, South Australia, and carries on business as a mortgage and finance broking company (under the trading name Adelaide Finance Agency). The second defendant is a director of the first defendant, and is also employed by the unit trust as a finance broker.

3 The plaintiff used the services of the defendants when seeking to raise finance to complete property transactions in New Zealand. It claims that it invested approximately $4.5 million upgrading properties that it had agreed to purchase and agreed to vary the agreements (including payment of additional deposits), before settling the purchases, in reliance on oral and written representations, statements and promises made by the defendants that overseas funds would be available in time to settle the purchases. The plaintiff says that it lost the full amount of its investment when the vendor was placed into receivership, and the receiver cancelled the agreements. It contends that the defendants are liable to it under several causes of action.

4 The defendants have filed a protest to the jurisdiction of the Court, and have applied to dismiss the proceeding, on the grounds that they reside in Adelaide, that the claims pleaded do not come within any of the categories that can be commenced against them without leave, and that the Court should not exercise its discretion to assume jurisdiction as New Zealand is not the appropriate forum for determination of these claims.

5 The plaintiff opposes the defendants' application, and cross-applies for dismissal of their notice of appearance in protest to jurisdiction. It contends that the claims do come within the categories of claims that can be served outside New Zealand without leave, but says that if any claims cannot be brought without leave, and the Court does not exercise its discretion to permit them to proceed, it should be entitled to amend its claim so as to proceed only with claims that can proceed without the need for leave.

Change of name

6 At the time of commencing this proceeding, the plaintiff named the first defendant as ([a-z]+)” the Trustee of the AFA Unit Trust trading in the name of Adelaide Finance Agency”. At the hearing, counsel for the plaintiff sought leave to amend the name of the defendant to Nero Noctis Private Wealth Pty Ltd. That application was not opposed. An order was made, accordingly, in the hearing. However, for ease of reference when referring to the name of the first defendant in this judgment I will use the description AFA.

Background

7 It is necessary to give a brief account of the background to, and history of, the parties' relationship as context for the parties' contentions.

8 Between 18 August and 2 September 2009 the plaintiff agreed to buy three properties at Karapiro, in the North Island of New Zealand, from Tony Tay Group Ltd and related entities (TTG). The properties were, at that point, part of what was known as the Karapiro Resort project. At that time TTG was in financial difficulty, facing a mortgagee sale of the properties. The director of TTG (Mr Tay) was a personal friend of the director of the plaintiff, Mr Shu. The parties agreed on a combined price for the three properties of $13 million. The agreements were subject to finance being obtained by 26 August 2008, with settlement due on 22 September 2008.

9 The finance condition was not satisfied. Nevertheless, Mr Tay asked Mr Shu to have the plaintiff declare the agreement unconditional, apparently to avoid a mortgagee sale. On 4 September 2008, after further negotiations, the parties agreed to vary the terms of the agreements by reducing the purchase price to $11 million. At the same time the plaintiff entered into an agreement to purchase two more properties at Maungataroto for a further $3 million. The plaintiff agreed to make all agreements unconditional, and paid a deposit of $100,000. The purchase price was payable partly in cash and partly by goods referred to as Drapac products.

10 The plaintiff claims that up to 30 April 2009 it spent a provable $2,500,000 (exclusive of GST) upgrading the properties (with a view to operating them eventually as a health resort). It has identified specific expenditure of $1,250,000 (exclusive of GST) after 19 December 2008.

11 The plaintiff was unable to obtain finance in New Zealand to allow it to settle the purchases on 22 September 2008. It started looking overseas, and engaged two Australian agents, CreditAble Pty Ltd and Matrix Mortgage, to assist. CreditAble approached the first defendant in mid November 2008 and enlisted its services. From that point until 18 December 2008, the first defendant acted as intermediary between the plaintiff's agents and J W Capital Corporation Pty Ltd (JWCL), the (local) agent of several financial institutions, including a Spanish bank, Banco Santander.

12 On 18 December 2008 Matrix Mortgage told the second defendant that Mr Shu wished to deal directly with the first defendant. Mr Shu made contact with the second defendant the following day, and from that time most if not all communications were direct between them.

13 Initially the defendants tried to facilitate a loan from Santander. Santander issued a conditional approval letter, but later withdrew it when a local bank (CBA) through which the loan was to be made could not meet regulatory requirements. In March 2009, the defendants started work on securing finance (again through JWCC) from another overseas lender, UBI Assets Sdn Bhd (UBI). A conditional loan offer was obtained from UBI but did not proceed because security properties did not reach required valuation. UBI then suggested (on 30 April 2009) that finance could be provided under a complicated transaction involving additional forms of security including an insurance bond. After taking professional advice, the plaintiff instructed the defendants to pursue that prospect.

14 The settlement date for the transaction was extended on several occasions, but no firm offer of finance was ever made. Throughout this period the defendants relayed information about the financier's requirements, and encouraged the plaintiff to keep pursuing the finance. On 29 September 2010 TTG was put into receivership, following which the receiver cancelled all agreements.

15 The plaintiff served this proceeding on the defendants in Adelaide, without seeking leave of the Court. The defendants filed a notice protesting jurisdiction and brought their application to dismiss.

Contentions underlying the plaintiff's claims

16 The plaintiff contends that from that time the second defendant made statements to it, both orally and in writing, representing and promising that finance would be available within a short period of time, and that it acted in reliance on those statements:

• (a) On 2 March 2009 the plaintiff and TTG entered into a further agreement under which the plaintiff covenanted to settle all purchases on or before 30 March 2009, to pay TTG a further non-refundable deposit of $50,000 on or before 4 March 2009, and to transfer to TTG ownership of Drapac products having an alleged value slightly in excess of $4.5 million as a further non-refundable deposit. The plaintiff also agreed to pay penalty interest of $3,987 per day from 6 March 2009 until the date of settlement, in a lump sum at time of settlement. The plaintiff says it paid the cash deposit and transferred Drapac products to a value of $1,250,000 (exclusive of GST).

• (b) On 16 October 2009 the plaintiff and TTG entered into yet another agreement (which the plaintiff describes as the master agreement) under which the agreements on all properties were made interdependent, the settlement date was changed to 27 November 2009, and all agreements were to come to an end if settlement did not occur by that date. In that latter event, TTG agreed to provide the plaintiff with 5000 vouchers for the Karapiro resort, with a face value of $100 (i.e. to a face value of $500,000).

• (c) Finance was not available to allow the plaintiff to settle on or before 27 November 2009. On that date the second defendant sent an email to Mr Shu with a letter from UBI to the...