Ravensdown Fertiliser Co-operative Limited v McVitty

[2012] NZHC 130

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2011-454-363 [2012] NZHC 130

BETWEEN  RAVENSDOWN FERTILISER CO- OPERATIVE LIMITED

Plaintiff

ANDROBERT JULIAN MCVITTY First Defendant

ANDMARGARET HELEN MCVITTY Second Defendant

Hearing:         9 December 2011

(Heard at Palmerston North)

Counsel:         G.T. Carter - Counsel for Plaintiff

First Defendant in person
Second Defendant in person

Judgment:      27 January 2012 at 3:00 PM

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 27 January 2012 at 3.00 pm under r 11.5 of the High Court Rules.

Solicitors:           Chapman Tripp, Solicitors, PO Box 2510, Christchurch 8140

RAVENSDOWN FERTILISER CO-OPERATIVE LIMITED V RJ & MH MCVITTY HC PMN CIV-2011-454-

363 27 January 2012

Introduction

[1]     This is an application for summary judgment brought by the plaintiff, Ravensdown Fertiliser Co-operative Ltd, against the defendants, Mr and Mrs McVitty.   The plaintiff is a fertiliser supplier.   The defendants are farmers who reside in the Feilding area.   The plaintiff’s claim in this proceeding relates to an unpaid account for fertiliser which the defendants hold with the plaintiff.

[2]      The present application is opposed by the defendants.

[3]      Around  28  May  2002  the  defendants  signed  an  application  for  a  credit account with the plaintiff (the Credit Application) and the plaintiff opened a credit account in their names.   Between 2002 and 2010 the plaintiff supplied goods (fertiliser and  related products) and services to  the defendants and invoiced the defendants accordingly.

[4]      The defendants failed to pay over 30 of the invoices for goods and services supplied  during  the  period  November  2009  to  August  2010.     Following  an unsatisfied demand for payment, the plaintiff brought this present application for summary judgment.

[5]      Originally, the plaintiff sought summary judgment here for:

(a)       $296,084.55 in respect of the unpaid fertiliser invoices; (b)    contractual interest on the unpaid amounts; and

(c)       costs on a solicitor/client basis in accordance with the terms of the

Credit Application.

[6]      Initially, the defendants did not appear to challenge in any real way the quantum of the plaintiff’s claim.   The defendants have filed only a Notice of Opposition dated 17 August 2011.   This alleges that they are not liable to the plaintiff as the purchaser of the goods in question was not the defendants, but was one of their companies, McVitty Properties Limited (now in receivership), and thus the fertiliser accounts here have been “misallocated” to them.

Preliminary Matter

[7]      At the commencement of the hearing of this application before me on 9

December 2011 a preliminary matter arose.

[8]     The defendants Mr and Mrs McVitty were present at that hearing but unrepresented.  They indicated to the Court at the commencement of the hearing that they had only just consulted a lawyer, Mr GA Paine, with respect to this matter but that he was unavailable for the hearing on 9 December 2011.

[9]      Accordingly at that point, in the interests of allowing the defendants every possible opportunity to put before the Court their defence to the present application, I offered the defendants the opportunity to proceed and have the matter part-heard on

9 December 2011 with the defendants then having a further 5 working days to provide  any  additional  submissions  in  writing  from  Mr  Paine  or  themselves  in support of their opposition.  The plaintiff would then have a further 2 working days to provide any submissions but strictly only in reply.  My decision on the application would then follow after consideration of those further submissions.

[10]     The first and second defendants considered that offer at the time and then advised the Court that it was declined as they wished in their words to “get the matter  over  with  now”.    They said  they  would  simply rely on  their  Notice  of Opposition and the submissions to the Court they were then to make.

[11]     The hearing of the present summary judgment application then proceeded on that basis.

[12]     At this point I should note also, however, that the 9 December 2011 date for hearing of the opposed summary judgment application had been set at an earlier call of this matter in the High Court at Palmerston North on 25 August 2011 with both counsel for the plaintiff and the first defendant being present and agreeing to that date.   A Minute I issued on 25 August 2011 after discussion with the parties also provided  an  opportunity  for  the  defendants  to  file  and  serve  any  affidavit  or affidavits in support of their opposition to the summary judgment application.  These were to be filed and served by 15 September 2011, with any reply affidavit or affidavits  from  the  plaintiff  to  be  filed  and  served  by  6  October  2011.    As  it

transpired, no affidavit or affidavits in support of their opposition were filed by the first defendant or the second defendant.  As I have noted, they simply relied upon their earlier Notice of Opposition, the documents which accompanied that Notice and their oral submissions before me.

Background

[13]     The defendants have owned several farms in the Hawke’s Bay and Manawatu regions.  Before me the defendants acknowledged that initially they carried out their farming operations and traded as a partnership in their own names.  The defendants say however, that in about 2008 all this changed.  They maintain that decisions were made then to trade their various farming operations through certain companies, the shares in which they owned personally.   Two such companies were McVitty Properties Te Uri Limited and McVitty Properties Limited (this latter company being placed into receivership on 19 March 2010).

[14]     Turning back to the earlier dealings between the parties here, in May 2002, the defendants completed, and sent to the plaintiff, a contract which took the form of a signed  Credit  Application  for their partnership.    Next  to  the field  “Customer Name” on the form they recorded “MCVITTY RJ & MH”.  On 28 May 2002 the plaintiff then opened the credit account for the benefit of the defendants.   That account  being  for  the  defendants’  partnership  was  given  the  customer  number

518894.     On  that  same  day,  Mr  McVitty  signed  a  copy  of  the  plaintiff’s “AUTOPAY” form which gave the plaintiff authority to directly debit the account of the signatory.   On this form, in the field “Customer Trading Name” Mr McVitty recorded “McVitty RJ + MH”.   In the Customer Number field the same number

518894 is recorded.  A bank account number was then provided.  This was for an account with the Bank of New Zealand at its Palmerston North branch which I understand was the defendants’ partnership bank account.

[15]     On   three  subsequent   occasions   however,   Mr  McVitty  signed   further AUTOPAY forms with the plaintiff and provided copies to the plaintiff to debit other bank accounts for fertiliser supplies.  Details of those forms follow.

[16]     On  20  September  2004  an  AUTOPAY  form  in  the  name  of  McVitty

Properties Te Uri  Ltd  was  signed.    In  the field  “Customer Trading  Name” Mr

McVitty recorded “Te Uri Farm – McVitty RJ + MH”.  Under “Customer Number” Mr McVitty recorded 518894.  The bank account number provided was an account also with the Bank of New Zealand at its Feilding branch.

[17]     On 16 March 2006 a form also in the name of RJ and MH McVitty was signed.   Again the Customer Number provided was 518894.   The bank account number  stipulated,  this  time,  was  an  account  with  the  National  Bank  at  its Palmerston North branch.

[18]     The final AUTOPAY form completed was dated 6 October 2008.  That form was completed in the name of McVitty Properties Ltd.   In the field “Customer Trading Name” Mr McVitty recorded “McVitty Properties Ltd”.   In the field “Customer Number” Mr McVitty again recorded 518894.   The account number provided was an account also with the Bank of New Zealand at the Feilding branch.

[19]     Under the terms outlined in the original credit application and contract, the defendants were required to settle their accounts with the plaintiff by the 20th of the month following the date of any invoice rendered.  A penalty interest rate of 2 per cent per calendar month was stipulated for overdue accounts and the defendants also agreed to pay the plaintiff’s costs in recovering default monies owed.  In addition, however, all of the plaintiff’s customers were entitled to use of what it called its

“Super Plan” payment facility.  That facility provided first for the deferral of interest for up to four months following the date of an invoice.  And secondly, that deferred payment was then to incur interest instead at the lower rate of 1 per cent per calendar month.

[20]     Over 30 invoices in question here were rendered to “RJ & MH McVitty” with

the  Customer  Number  recorded  as  the  partnership  number,  518894.    As  at  21

September 2010,  the defendants  were said  to  owe the plaintiff $321,918.22  for unpaid goods and services (including interest payments).  On some of those unpaid invoices  the  defendants  had  utilised  the  plaintiff’s  “SuperPlan”  and  so  penalty interest was deferred.

[21]     As I have noted, on 24 September 2010, the plaintiff, by its solicitors, sent a letter of demand to the defendants requiring payment of that sum.  No payment was made.  Instead, the defendants contended that the debt claimed was in the name of

the wrong entity.  They contended that the fertiliser in question was purchased by McVitty Properties Ltd (then in receivership), a company wholly owned by Mr and Mrs McVitty.

[22]     As at 30 April 2011, the sum owed is said now to be $362,767.08 (including interest payments of $66,682.53).   As I have already noted, there did not appear initially to be any real contest as to this quantum claimed.  The defendants’ defence was based simply on their claim that they were not purchasers of the  goods in question and the debt was one due from the company McVitty Properties Limited (in receivership) only.

Summary Judgment Principles

[23]     Rule 12.2(1) of the High Court Rules provides that this Court may give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.  The principles relevant to that assessment were summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd: [2008] NZCA 187, [2010] NZAR 307 at [26]; adopted more recently by the Court of Appeal in Cockburn v CS Development No 2 Ltd [2010] NZCA 373, (2010) 24 NZTC 24,431 at [26] and Mitchell v Trustees Executors Ltd [2011] NZCA 519 at [35]:

The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, 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 normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

Counsels’ Submissions and My Decision

[24]     The  plaintiff’s  evidence  in  support  of  its  present  application  consists  of affidavits dated 31 May 2011 and 6 December 2011 from its Credit Controller Mr Harley Henderson and an affidavit in reply from its General Manager Sales Mr Ross

Aimer dated 29 September 2011.   These set out copies of all the relevant documentation between the parties, the contract and the many tax invoices in question.  The defendants’ evidence before the Court consists solely of its Notice of Opposition in the form of a one-page affidavit dated 17 August 2011.

[25]     The plaintiff’s case is a simple one.  It says that it entered into a contract for the supply of goods on credit with the defendants upon accepting the defendants’ credit application.  Accordingly, the plaintiff says it supplied goods and services on credit to the defendants pursuant to that contract for which now it has not been paid. Mr Carter for the plaintiff further submitted that it had no contractual relationship with  McVitty  Properties  Ltd  and  it  had  not,  prior  to  its  being  placed  into receivership, received or accepted a credit application from that company.

[26]     On its face, it would appear that the plaintiff here has clearly discharged its burden of providing sufficient evidence to show that the defendants have no defence to the plaintiff’s present claim.  The only contract which existed between the parties for the provision of goods and services is that encapsulated in the credit application signed and accepted in May 2002.  At no point did the defendants revoke or vary that application.   All goods and services were supplied in accordance with the credit application.  The invoices for the goods and services supplied were addressed to the RJ & MH McVitty Customer No. 518894 with RJ & MH McVitty stated as the consignee.  As I have noted above, the plaintiff had no contractual relationship with the defendants’ company – it had not entered into a credit application with the plaintiff.  If it had, the plaintiff no doubt in accordance with its usual credit policy would have required the defendants to personally guarantee the company’s obligations.

[27]     The defendants’ main allegation in response as I have noted is that the debt is not due from them but instead from one of their companies.  They say the plaintiff was advised of this and the fact that the defendants had determined to trade through various companies and not to continue through their partnership.  They maintain that the  plaintiff’s  accounts  administration  was  simply  not  “up  to  scratch”  and  the account with the defendants was wrongly recorded as being in their partnership name.   Properly, they say the account should have been in the name of McVitty Properties Ltd.

[28]     Before me, Mr McVitty in his submissions claimed that the plaintiff’s field officers in fact at the relevant times knew how Mr and Mrs McVitty operated and that  this  was  through  their  companies.    Mr McVitty further  contended  that  the plaintiff’s field officers should have informed the defendants that a new credit application was needed in order for the account to be in the name of the company, but that they did not do so.

[29]     Mr McVitty also belatedly took some issue with the amount claimed in the plaintiff’s prayer for relief.  Before me, Mr McVitty tendered what appeared to be a monthly Ravensdown statement, rendered by the plaintiff, dated 30 November 2011. That statement seems to record $246,278.44 as being the amount then due.   In response, Mr Carter, for the plaintiff, conceded that summary judgment should only, therefore, be granted here, if at all, for that reduced sum.

[30]   Mr McVitty has also, through correspondence with the plaintiff, made something of the fact that, on behalf of McVitty Properties Ltd, he had signed an AUTOPAY form.  The defendants contend now that this evidences a variation to the contract such that the contract is now between the plaintiff and McVitty Properties Ltd and not the plaintiff and the defendants.  I do not accept this however.  In my view, the AUTOPAY form cannot be treated as such evidence.  For whatever reason a third party may opt to provide consideration for another entity’s obligations, this does not mean that the third party is then liable for the other entity’s future obligations.  Therefore, merely completing and submitting a new AUTOPAY form cannot be sufficient to transfer an account into another name.  The original contract, evidenced by the credit application still stands.

[31]     Further,  all invoices were rendered to RJ  &  MH McVitty.   There is  no evidence that any advice was ever given by the defendants that those invoices were rendered to the wrong payer.   As well, on many occasions previous invoices so addressed were, in fact, paid.

[32]     Also, the customer number being No. 518894 entered as I understand it on all invoices and on all the AUTOPAY forms was the same.  That customer number as I have noted was allocated to the partnership account headed RJ & MH McVitty.  It is

simply not conceivable that the defendants reasonably expected that the AUTOPAY

form they signed would have altered that position.

[33]     Even if the defendants may be correct in their submission that an AUTOPAY form might assign liability for the payment of goods ordered from the plaintiff to the nominated payer under the form, the form at issue here which purports to assign liability  to  McVitty  Properties  Ltd  (that  signed  on  6  October  2008)  states specifically:

AUTHORITY TO ACCEPT DIRECT DEBITS

(Not to operate as an assignment or agreement)

[34]     None of the previous forms it seems had that express provision.  The form which preceded that one (signed on 15 May 2006), if Mr McVitty’s analysis is correct, purported to re-assign liability to RJ + MH McVitty.  Therefore, even if the defendants are correct in their argument here, in my view liability in any event could not have been assigned to McVitty Properties Limited.  It must have remained with the defendants.

[35]     Given that I accept the plaintiff here has done enough to show that on its face there is no real question to be tried and the defendants have no defence to the claim against them as to the $246,278.44 at least  it is now incumbent on the defendants to offer evidence in response: MacLean v Stewart (1997) 11 PRNZ 66 (CA).   The defendants  have  clearly  not  discharged  that  burden  here.    The  only “evidence” provided by the defendants in support of their opposition is that contained in their Notice of Opposition which is woefully inadequate.  As I have noted above, in my

26  August  2011  Minute,  I  directed  that  the  defendants  were  to  have  until  15

September 2011 to file any affidavit/s in support of their opposition but the defendants chose to file no further evidence.  What is before the Court does not in my view assist them in any way.  I am therefore satisfied that there is no arguable defence to the plaintiff’s claim.

[36]     Accordingly, I award summary judgment in favour of the plaintiff for the reduced sum of $246,478.44.   That figure, as I understand it, includes interest for

which the defendants are liable up to 30 November 2011.  I further award interest at the final penalty rate under the contract between the parties (24 per cent per annum) from 1 December 2011 until the date of final payment: Alington Group Architects Ltd v Attorney-General [1998] 2 NZLR 183 (CA). Orders to this effect are now made.

[37]     The issue of costs also arises.  The Credit Application provides:

I/We the defendants agree to pay on demand all collection costs and solicitors fees, charges  and/or  costs  and  enforcement  costs  incurred  or  expended  in  recovering monies owed.

[38]     Under r 14.6(4)(e) High Court Rules, the court may order solicitor - client costs where the party claiming costs is entitled to indemnity costs under a contract or deed: see Tea Custodians (Bluestone) Ltd v Barnett HC Wellington CIV-2011-485-

17, 6 December 2011 for a recent discussion of the relevant principles.  Of course, all rules as to costs are at the discretion of the court: r 14.1.  I am satisfied that in the present case, those provisions entitles the plaintiff to full solicitor client costs on this application, those costs being necessarily incurred in recovering monies owed under the contract.

[39]     I therefore order the defendants to pay the reasonable costs of the plaintiff on a solicitor client basis incidental to this application, as certified by the Registrar.

‘Associate Judge D.I. Gendall’