Haines v Herd

• Jurisdiction: New Zealand
• Judge: R M Bell
• Judgment Date: 22 December 2015
• Neutral Citation: [2015] NZHC 3365
• Docket Number: CIV-2014-488-187
• Court: High Court
• Date: 22 December 2015

BETWEEN

Rodney David Haines and Kathleen Anne Norman

Plaintiffs

and

Robert John Herd

First Defendant

and

Rhumba Holdings Limited

Second Defendant

[2015] NZHC 3365

CIV-2014-488-187

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

Application by the defendants under r5.49(3) High Court Rules (“HCR”) (appearance and objection to jurisdiction) to dismiss the plaintiff's summary judgment application on the grounds that the Vanuatu Supreme Court was more appropriate forum — the plaintiffs had sold a vessel to the first defendant — the second defendant had guaranteed payment — the first defendant had possession of the vessel which was now in Queensland — the first defendant had not paid and the plaintiffs had taken the vessel back — they claimed damages for the losses — the plaintiffs lived in New Zealand and had business interests in Vanuatu — the first defendant was Australian with business interests and land holdings in Vanuatu — the second defendant was a Vanuatu corporation through which the first defendant held interests in land in Vanuatu — the sale agreement contained a non-exclusive jurisdiction clause in favour of Vanuatu — claim was a civil claim under of s12 Trans-Tasman Proceedings Act 2010 (TTPA) (application or Part 2) — what was the test for founding jurisdiction under the TTPA — whether Vanuatu was the appropriate forum non conveniens and the natural forum — whether the plaintiffs would be unable to obtain substantial justice in Vanuatu due to delay — whether the need to take a common law proceeding in Queensland to enforce a Vanuatu judgment was relevant.

Appearances:

R Mark for Plaintiffs

D Bigio for Defendants

David Bigio, Auckland, for Defendants

JUDGMENT OF ASSOCIATE JUDGE R M Bell

TABLE OF CONTENTS

	Paragraph No.
Parties	[3]
Facts	[4]
The appropriate forum non conveniens test	[33]
What is in issue?	[49]
Is there a serious issue to be tried on the merits?	[53]
Alleged repudiation	[56]
Does clause 9 of the variation deed provide an exclusive remedy for the plaintiffs?	[62]
The natural forum	[75]
The non-exclusive jurisdiction clause	[78]
Choice of Vanuatu law	[85]
Contested factual issues	[89]
Summary on natural forum	[95]
Will the plaintiffs be unable to obtain substantial justice in Vanuatu?	[96]
Delay	[96]
Difficulty in enforcing a Vanuatu judgment in Queensland	[106]
Result	[109]

1 Mr Haines and Ms Norman sold their Hatteras launch, It's Time, to Mr Herd. Rhumba Holdings Ltd guaranteed payment by Mr Herd. Mr Herd has not paid for the launch. Mr Haines and Ms Norman have taken the vessel back. They claim damages for the losses alleged to arise from the failure to complete the purchase. They have applied for summary judgment. In response, the defendants protest the jurisdiction. They say that this case should be heard in Vanuatu, not in New Zealand. This is the decision on their application under r 5.49(3) of the High Court Rules to dismiss the proceeding.

2 I have taken much longer to give this decision than I would have wanted. I apologise to the parties for the delay.

Parties

3 Mr Haines and Ms Norman live in Northland, but have business interests in Vanuatu. Mr Herd is a Queensland solicitor who has business interests and land holdings in Vanuatu. Rhumba Holdings Ltd is a Vanuatu corporation through which Mr Herd has interests in land on Espiritu Santo.

Facts

4 In October 2011 Mr Herd and the plaintiffs entered into a written agreement for Mr Herd to buy It's Time for NZD400,000 plus a trade. The sale and purchase agreement used the form approved by the Marine Industries Association of NZ Inc. That form is suitable for the sale of vessels in New Zealand but is not well-adapted for international transactions. It includes a term for default interest at 17 per cent per annum on the unpaid portion of the purchase price.

5 Mr Herd was to transfer to the plaintiffs a 50 per cent interest in the company or companies that owned five islands in Vanuatu — Urelapa, Tuvana, Elia, Urenaheupe and Urenarave. Silver Holdings Ltd and Seascape Four Ltd, Vanuatu companies under the control of Mr Herd (he is director and his family trust is shareholder) own the five islands. Mr Herd says that Urelapa is the largest and most valuable of the islands.

6 In Vanuatu, indigenous owners hold the equivalent of freehold interests in land. Others may acquire interests in land by taking leases. The Land Leases Act [Cap 163] (Vanuatu) established a Torrens system of land registration and ownership for leasehold interests. Silver Holdings Ltd and Seascape Four Ltd had interests in the islands through leases. There was a difficulty with the lease of Urelapa Island. The Director for Lands in Vanuatu cancelled the lease. Mr Herd had to take proceedings in the name of Silver Holdings Ltd in the Vanuatu Supreme Court to have the lease reinstated. The litigation over the Urelapa lease has continued. When Mr Herd swore his affidavit of 17 March 2015 it was ongoing. 1

7 Given the uncertainty as to the Urelapa lease, there was a new agreement, a deed of variation of boat sale agreement made on 5 May 2012. It was signed in New Zealand. As well as the plaintiffs and Mr Herd, Rhumba Holdings Ltd is a party to the deed. In this proceeding the plaintiffs rely primarily on the variation deed. Clause 2.1 provided three ways by which Mr Herd was to pay for the vessel:

• (a) Reinstatement of the Urelapa Island lease and transfer of the 50 per cent interest;

• (b) Payment of AUD400,000 plus transfer of AUD400,000 worth of land. The specification was “AUD400,000 worth of land (as per Vanuatu registered bank panel mortgage valuer valuation) with the preferred Land being Palikula Beachfront or waterfront property.” Palikula is on Espiritu Santo;

• (c) Mr Herd and Mr Haines entering into a joint venture to develop land on Espiritu Santo with the vessel to be consideration or part-consideration for Mr Haines taking an interest in the joint venture land.

8 The reinstatement of the Urelapa Island lease was to occur within 12 months. It is common ground that that did not happen and that Mr Haines and Mr Herd did not enter into a joint venture. That left the second form of consideration -AUD400,000 cash and the transfer of AUD400,000 of land. Clause 4.1 said:

Herd agrees that if the Reinstatement of the Urelapa Island lease has not occurred by the Lease Reinstatement Date or the extended Lease Reinstatement Date (as the case may be), and Herd and Haines have not entered into a Joint Venture as provided for in clause 5 of this Deed then Herd shall, within fourteen days of the Lease Reinstatement Date or the extended Lease Reinstatement Date (if applicable) cause the consideration for the vessel to be paid in terms of clause 2.1(b) of this Deed.

9 Under cl 6.2 legal title and ownership of the vessel would not pass until Mr Herd paid or caused payment of the consideration for the purchase of the vessel.

10 Under cl 6.3 Mr Herd was entitled to take and retain possession of the vessel until default under the deed. The time under which he was entitled to possession of the vessel ran from 5 May 2012.

11 Under cl 6.4 Mr Herd was entitled to remove the vessel at his cost to Australia. He was responsible for insurance and the vessel was at his risk.

12 Under cl 6.8 Mr Herd was to pay a sum equivalent to five per cent of the consideration for the purchase of the vessel from the time that he had the use of the vessel until the consideration payment date, to be considered as interest on the financial accommodation given by Mr Haines and Ms Norman for allowing him to take possession of the vessel before the consideration payment date.

13 The variation deed provided for security. Under cl 7 Mr Herd was to give:

• (a) A first mortgage over lot 58 on SP0034 consisting of approximately 800 metres of Beachfront at Palikula, to be granted by Rhumba Holdings Ltd as the registered owner; and

• (b) A caution to be signed by Haines and consented to by Rhumba to be lodged at the Department of Land Records to secure the interest of Haines under the mortgage over lot 58. 2

14 Under cl 7.2 Mr Herd was to provide a letter from a National Bank of Vanuatu panel valuer stating that the value of lot 58 is no less than AUDI million for mortgage value purposes. These securities were to be released on the consideration being paid.

15 Under cl 1, the boat sale agreement was varied, subject to certain conditions. One of them was that the security documents were to be entered into before the vessel left New Zealand.

16 Clause 9 dealt with default:

• 9. DEFAULT

• 9.1 Where the Consideration for the Purchase of the Vessel has not been made in terms of clause 2.1(a) or (c) by the Lease Reinstatement Date or the Extended Reinstatement Date (as applicable) and Herd has not paid the Consideration for the Purchase of the Vessel in accordance with clause 4.2 of this Deed Herd will be in default of this Deed.

• 9.2 Haines shall give Herd 30 days notice of intention to exercise his rights on default as contained herein prior to exercising any of his rights upon default.

• 9.3 Upon the expiration of the notice given pursuant to clause 9.2 of this Deed-

  • (a) Haines shall take possession of the Vessel and resell it PROVIDED THAT the Vessel is not sold for less than its then market value as determined by a suitably qualified and reputable Valuer; and

  • (b) Herd shall immediately surrender possession of the Vessel to Haines and Herd shall have no further claim on the Vessel.

• 9.4 Where the combined amount of the sale proceeds of the Vessel are greater than

  • (a) the Consideration for the Purchase of the Vessel;

  • (b)...