IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE	
CIV-2019-463-000009
[2019] NZHC 1344	

BETWEEN	KATHLEEN RONA JENKINS and MARK NICOLAS NOYON JENKINS
Plaintiffs	
AND	JUDITH ANNE MILES
First Defendant

WILLIAM ANTHONY DUNCAN and ANTHONY MARTIN FORTUNE
Second Defendants	

Hearing:	23 May 2019
(Heard at Hamilton)	
Counsel:	T J Conder and S A Law for the Plaintiffs P C Murray for the Defendants	
Judgment:	14 June 2019	

JUDGMENT OF EDWARDS J

This judgment was delivered by me on 14 June 2019 at 11.30 am pursuant to r 11.5 of the High Court Rules.

Deputy Registrar

 Counsel:	P C Murray, Auckland

 Solicitors:	Holland Beckett, Tauranga

JENKINS v MILES [2019] NZHC 1344 [14 June 2019]

[1]	This proceeding is set down for trial in early August. There are three interlocutory applications before the Court. The plaintiffs, Kathleen and Mark Jenkins (the Jenkins), apply for an order that a caveat not lapse, and an interim injunction preventing them from being evicted from the house that is the subject of the dispute. The second defendants, the executors of the estates of Brenda Miles and Judith Miles (together the Estates), apply for security for costs. I refer to each of the former friends by their first names for ease of reference.

[2]	Although each of the applications is subject to its own legal test, the merits of the claim, and what may be broadly described as “balance of convenience” factors, are common to all. Counsel for the parties have marshalled their submissions under these two broad headings, and I do the same. Disposition of each application is then determined in light of those assessments.

Background

[3]	The substantive dispute concerns a property in Tablelands Rd, Opotiki (the Tablelands property). The Estates are the registered proprietors. The Jenkins, who are both retired, currently live in the house. The Jenkins claim that there was an oral agreement with Brenda and Judith (or at least, the latter) to purchase the property which has been part-performed.

[4]	The narrative that follows  is  taken  largely  from  the  affidavits  of  Kathleen Jenkins on behalf of the plaintiffs, and William Duncan, an executor of both Estates and close personal friend of both Brenda and Judith. As explained further on in this judgment, many essential facts are disputed. The following background should be read with that in mind.

[5]	Mr Duncan explains that Brenda and Judith were life-long companions and the closest of friends. Although they share the same last name, he does not believe they were related. In 1993, when they were both nearing their sixties, Brenda and Judith moved from Auckland to Opotiki and purchased a property there as tenants in common. The following year they executed wills that provided life interests to each other over that property.

[6]	After nine years in that property, Mr Duncan says that Brenda and Judith decided to purchase the Tablelands property, which they did in 2003. He describes the property as much smaller than the first property they owned together.

[7]	The Jenkins have lived in Opotiki for most of their lives, apart from a stint in the United Kingdom. Kathleen says they first met Judith and Brenda in the early 1980s. Both Judith and Brenda were nurses and Kathleen met Brenda when she went into hospital for minor surgery. Kathleen also says that Judith and Brenda were regular customers at a hotel where Kathleen worked and would come in for meals about once a month.

[8]	In 1995, the Jenkins bought a house in Nelson St, Opotiki (the Nelson St property). Then, in December 1998, they decided to move to the United Kingdom. Kathleen says they were in regular contact with both Judith and Brenda throughout this time, and around 1999, Judith agreed to manage the Nelson St property on behalf of the Jenkins while they were overseas.

[9]	The Nelson St property was sold in 2004 for the sum of $74,000. Kathleen says that she and Mark agreed to allow the sale proceeds to be invested, but she does not have any details about the investment. The Jenkins say that the proceeds of the Nelson St property were paid to Judith and Brenda as part of the purchase price for the Tablelands property.

[10]	Brenda passed away in 2005. In her first affidavit in support of the applications, Kathleen said that Brenda passed away in 2008, although she corrected that date in a later affidavit. The relevance of that apparent discrepancy is that Kathleen also said that it was in 2007 that the Jenkins returned to New Zealand for a holiday, and it was during this holiday that the parties reached an alleged oral agreement to purchase the property.

[11]	Kathleen says that Judith suggested that the Jenkins purchase the Tablelands property so that eventually she and Brenda could move into a smaller home. She says the agreement was that they would purchase the property for $450,000 to be paid by way of instalments. The money from the proceeds of the sale of the Nelson St property

was to be put towards the purchase price. In addition, Kathleen says she received the sum of $17,000 as an inheritance from her parents and that also was paid towards the purchase price.

[12]	The Jenkins returned to the United Kingdom where they say they began to make regular payments towards the house of £200 per month, which Kathleen says was roughly equivalent to $600 per week during this time. The Jenkins say that initially these instalments were paid in cash but were later made by direct credit into Judith’s bank account.

[13]	Mr Fortune, a joint executor of the Estates, has also sworn an affidavit in this proceeding. He says that in May 2012, Judith, together with Mr Duncan and himself (in their capacities as executors of Brenda’s estate), obtained a loan in the sum of
$59,757 from Sentinel Custodians Ltd, now Heartland Bank (the Heartland mortgage). A reverse equity mortgage was granted in the lender’s favour over the Tablelands property. The terms of that mortgage are relevant to the balance of convenience factors considered later in this judgment.

[14]	The Jenkins returned to New Zealand in 2014. Just prior to their return, Kathleen says there was a discussion with Judith about all three friends living together in the Tablelands property while they continued to make payments pursuant to the agreement to purchase. The Jenkins moved in to the Tablelands property in 2014.

[15]	According to Kathleen, the relationship was good for the first two years, but in 2016, the relationship began to sour. By late 2016, Mark and Kathleen were living on one side of the house and had set up a kitchen in a small bedroom with a small gas cooker. They had very little contact with Judith, but Kathleen says they continued to make monthly payments of approximately $600, in addition to payments towards power, the phone bill, and water rates.

[16]	In conversations that Mr Duncan had with Judith in October 2018, he says that she denied agreeing to sell the house to the Jenkins and did not know anything about the payments they had purportedly made to her. The admissibility of this evidence, if

given at trial, will clearly be in issue, but for present purposes I relay it as part of the narrative put forward by both parties.

[17]	In November 2018, Mr Duncan prepared a new will for Judith, under which she left her interest in the Tablelands property to her niece. In late 2018, Mr Duncan says Judith’s mental health deteriorated and she was subsequently diagnosed with dementia. She left the Tablelands property and moved into a secure facility at a rest home. Judith passed away in March of this year.

[18]	The Jenkins lodged a caveat over the Tablelands property on 12 November 2018. An application to lapse that caveat was filed on 21 December 2018, and the Jenkins’ application to sustain was filed, together with this proceeding, on 30 January 2019.

[19]	On 30 November 2018, the Jenkins were also served with a 90-day notice to vacate. They responded by filing an application for an interim injunction seeking an order allowing them to remain in possession and occupation of the Tablelands property pending determination of the proceeding.

[20]	The Estates’ application for security for costs was filed on 22 March of this year. They seek security in the sum of $20,000 and an order that the proceeding be stayed until that security is paid.

The merits of the claim

[21]	The statement of claim includes four causes of action: specific performance, breach of contract, estoppel, and unjust enrichment. The Jenkins’ primary claim focuses on establishing that there was an oral agreement for sale and purchase of the Tablelands property that had been part-performed.

[22]	To recap, the Jenkins say that the oral agreement was formed in around 2007 when they returned from the United Kingdom on holiday. The terms of the alleged agreement are pleaded as follows:

(a)	The price for the Property was to be $450,000 (the Price);

(b)	The Proceeds [of the Nelson St property] were to be paid towards the purchase of the Property.

(c)	The balance of the Price was to be paid by instalments.

(d)	The instalments were to be at least £200 per month while the Plaintiffs remained in the United Kingdom.

(e)	The Plaintiffs were able to make further contributions to the Price when they wished.

(f)	The Plaintiffs would be entitled to occupy the Property when they returned from the United Kingdom.

(g)	 In the alternative the agreement was varied before the Plaintiffs returned to New Zealand to allow them to occupy the Property.

[23]	The Jenkins say that the agreement has been part performed and the following is pleaded as particulars of that part performance:

(a)	Judith received the Proceeds [of the Nelson St property].

(b)	In the period prior to about 2014, while they remained  in  the  United Kingdom, the Plaintiffs paid instalments of at least £200 per month.

(c)	Since approximately 2014, once they returned to New Zealand, the Plaintiffs paid instalments of around $600 per month.

(d)	In about 2008, the Plaintiffs made further contributions of at least
$17,000 from other sources towards the Price.

(e)	In 2014, the Plaintiffs occupied the Property when they returned from the United Kingdom.

(the Part Performance)

[24]	The Estates say that the Jenkins cannot show a seriously arguable case. On the primary claim for specific performance, the Estates say that there is simply insufficient evidence of an oral contract, and the documentary evidence does not support the Jenkins’ claim to part-performance.

[25]	In addition, the Estates say that the other causes of action cannot succeed either. There can be no breach of contract if a contract cannot be established. The evidential deficiencies also affect the estoppel claim, and there can be no unjust enrichment if the payments made by the Jenkins were not to purchase the house, but for rent.

[26]	There is real force in the Estates’ submissions, at least on the affidavit evidence as filed. The terms of the contract alleged by Kathleen appear somewhat open-ended. For example, there is no end date by which the payments were to cease and title was to be transferred. Similarly, even if it is shown that the payments that Kathleen says were made were in fact received (which is disputed) it would take 56 years to pay off the purchase price at a rate of £200 per month. Given the age of the respective parties, the Estates’ submission that such an agreement lacks a sense of realism has a great deal of merit. The fact that Judith entered into a reverse mortgage in 2012 is also at odds with an agreement to sell to the Jenkins.

[27]	There are also difficulties with the evidence relied on by the Jenkins to prove part-performance. Bank records show that payments were either marked with the reference “rent” or made to the Jenkins’ own bank account. There is an insufficient documentary trail to show that the $17,000 Kathleen says was made towards the purchase of the house was actually received by either Judith or Brenda.

[28]	Nevertheless, the proceeding is still at an interlocutory stage. Mr Conder, for the Jenkins, submits that some of the discrepancies in the affidavit evidence can be explained by the hurried circumstances in which the affidavit was prepared and the difficulty in recalling with precision events that took place many years ago now.

[29]	In addition, there is some evidence before the Court corroborating the Jenkins’ position. For example, the Jenkins rely on the affidavit of Barbara Englebresten. She knew both Brenda and Judith, and, from 2005 to 2016, was involved in a local embroidery group with Judith. She has also known Kathleen Jenkins for a very long time. She recalls Judith telling her that the Jenkins were  going to come back  to  New Zealand and purchase the property, and that some payments were made into a bank account, but she does not know how much.

[30]	In terms of the evidence of payments having been received by Brenda and Judith, the Jenkins will say that Judith had access to their account.   They rely on   Ian McKeage’s evidence in support of that claim.

[31]	It is plain from the above that this case involves significant disputed fact. Resolution of the claim will depend on how the evidence comes out at trial. Much will turn on the trial Judge’s assessment of the credibility and reliability of the witness accounts given at trial. That is not a determination that I am able to make at this preliminary stage.

[32]	For the purposes of determining the interlocutory applications, I accept that the claim is arguable, but, based on the affidavit evidence currently before the Court, the merits appear very weak.

Balance of convenience

[33]	The assessment of the balance of the convenience involves weighing the respective prejudices to the parties.

[34]	In the absence of an interim injunction and an order preserving the caveat pending determination of the substantive proceeding, there will be nothing to prevent the Estates evicting the Jenkins and selling the Tablelands property.

[35]	The Jenkins are both in their 70s, and both are retired. Their only source of income is the pension. They have lived in the Tablelands property for the last five years and do not have anywhere else to live. I accept their evidence that if they are evicted from the Tablelands property they will have to call on the generosity of friends to provide them with a roof over their heads. If the Tablelands property is sold before trial, their claim for specific performance will be rendered nugatory. I accept that damages will be inadequate in the circumstances of this case.

[36]	For the purposes of the security for costs application, the Jenkins accept that they are impecunious. They are unable to post any security themselves with the result that any order staying the proceeding pending the payment of security for costs is likely to bring the proceeding to an end. Following the hearing, and in response to a query from the Court, counsel for the Jenkins filed a memorandum stating that a third- party family member is prepared to post the sum of $10,000 as security for costs on behalf of the Jenkins if required.

[37]	On the other side of the scales, the Estates say they will also suffer prejudice if they are prevented from selling the Tablelands property. In particular, they point to the possibility that a demand may be made under the Heartland mortgage, and, without the ability to sell the property, the Estates may become liable for default interest under the terms of that mortgage. The Jenkins’ impecuniosity means that any undertaking as to damages is likely to be worthless in meeting this potential loss should the Jenkins be unsuccessful at trial.

[38]	The prospect of a demand under the Heartland mortgage requires further scrutiny. The terms of that mortgage allow the lender to make demand for the total amount due six months after the last nominated resident ceased to reside in the house, or after the death of that nominated resident. Judith is the last nominated resident. She ceased to reside in the house in November 2018 and died in March this year. The six- month period expired in May this year, or it will expire in September 2019.

[39]	As at the date of the hearing, the Estates had not received a demand from the lender and there was no indication that such a demand was imminent. Even if a demand was made, the terms of the mortgage provide the lender with a discretion to extend the period on such terms and conditions as it considers appropriate. The trial is only a few months away. Should a demand be made now, it may be possible to negotiate a short extension pending resolution following trial. Although the prospect of a demand being made remains a technical possibility, it is not presently a crystallised risk.

[40]	Furthermore, the Jenkins are currently paying the sum of $300 per fortnight into a solicitors’ trust account to be held pending determination of the proceeding. That provides a source of funds which the Trust may use to pay the outgoings on the property if necessary. It may be appropriate that these funds be paid directly to the Trust rather than being held pending trial. As the claim is currently framed, there is no dispute that these payments belong to the Trust. The only question is whether they are to be characterised as rent, or as part-payment of the purchase price of the property. This is a matter I leave to counsel to resolve in the interim.

Should the applications be granted?

Application to sustain the caveat

[41]	To obtain an order sustaining the caveat, the Jenkins must satisfy the Court that there is a reasonably arguable case that it holds a caveatable interest.1 Even then, the Court retains a discretion to remove the caveat, but this discretion must be exercised cautiously.2

[42]	Although their claim appears weak, I am satisfied that the Jenkins have a reasonably arguable case that there was an oral agreement for the purchase of the Tablelands property that has been part-performed. That is sufficient to show a reasonably arguable case for a caveatable interest in the Tablelands property. The discretionary factors weigh in the Jenkins’ favour, and there is no reason for the Court to order removal of the caveat in this case.

[43]	The application to sustain the caveat is accordingly granted.

Application for interim injunction

[44]	The principles to be applied to the determination of an application for an interim injunction are well settled. The Court will consider whether there is a serious question to be tried, where the balance of convenience lies, and the overall justice of the case.3

[45]	There are different formulations of the “serious question to be tried” threshold. It has been described as requiring a plaintiff to “adduce sufficiently precise factual evidence to satisfy the court that [there is] a real prospect of succeeding” at trial.4 It has also been described as a claim that “is not vexatious or frivolous”.5   The strength

1	Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 (CA) at 106; and DW McMorland and others Hinde McMorland & Sim Land Law in New Zealand (online ed, LexisNexis) at [10.020(b)].
2	Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656; and DW McMorland and others Hinde McMorland & Sim Land Law in New Zealand (online ed, LexisNexis) at [10.020(c)].
3	NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12]; and American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 406.
4	Re Lord Cable (deceased) [1977] 1 WLR 7 (Ch) at 19.
5	NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12].

of the Jenkins’ case will depend heavily on the evidence called at trial. Despite the apparent inconsistencies and incongruities in the affidavit evidence, I am satisfied that whatever formulation of the threshold is adopted, there is a serious question to be tried.

[46]	The balance of convenience weighs in favour of the Jenkins. They will suffer serious and perhaps irreparable prejudice if they are evicted and the property is sold prior to the determination of their claim. Damages is not an adequate remedy in those circumstances. On the other hand, any prejudice the Estates face in not being able to sell the property has not yet crystallised. Further, any prejudice in allowing the Jenkins to remain in the property will be relatively short-lived given the close proximity of trial. The overall justice of the case favours maintaining the status quo.

[47]	The relief sought in the application for an interim injunction is expressed in mandatory terms. I consider it preferable to restrain the Estates from taking any steps to terminate the Jenkins’ occupation of the property pending the determination of the substantive proceeding or other order of the Court. An interim injunction in those terms is set out at the end of this judgment.

Application for security for costs

[48]	The Court may make an order for security for costs  under  r 5.45  of  the High Court Rules 2016. It involves a four-stage analysis.6 First, the defendant must satisfy the Court that the plaintiff will be unable to pay the defendant’s costs if the plaintiff’s claim fails. Second, the Court should consider whether it is just in all the circumstances to make the order sought. Third, the Court should consider quantum, and fourth, the Court should consider whether a stay should be ordered.

[49]	The first threshold step, that of impecuniosity, is conceded in this case. The key question concerns the exercise of the Court’s discretion. Given my assessment that the claim is very weak, the Estates have a very strong claim to security as a form of protection for their costs in the event the Jenkins’ claim fails at trial.

6	Busch v Zion Wildlife Gardens Ltd (in rec and in liq) [2012] NZHC 17.

[50]	Against that, however, is the fact that the Jenkins do not have any resources of their own to post security. An order for security is likely to prevent them from bringing their claim. And, despite the offer, I do not consider it appropriate for the Court to make an order exposing the assets of family members, who have no other interest in the proceeding, to the Jenkins’ litigation risk in this case.

[51]	Accordingly, and on balance, I decline to order security for costs in this case.

Result

[52]	The Jenkins’ applications are granted, and I make the following orders:

(a)	Caveat No 11282406.1   registered   against    the    property    at  306B Tablelands Rd described in certificate of title identifier GS5B/440 is sustained pending further order of the Court.

(b)	The Estates are prohibited from taking steps to terminate the Jenkins’ occupation of the property at 306B Tablelands Rd pending the determination of the substantive proceeding or further order of the Court.

[53]	The Estates’ application for security for costs is declined.

[54]	The Jenkins are the successful party and are accordingly entitled to an order of costs on each of the applications. The presumption is that the costs of interlocutory applications are determined at the time.7 However, my current assessment of the merits of the claim as weak, and the Jenkins’ conceded impecuniosity, provide reason to depart from that general rule. The costs of the applications should be determined once the substantive claim is resolved. I reserve costs accordingly.

[55]	Finally, based on the affidavits filed in the proceeding, there are likely to be admissibility of evidence issues that will need to be considered (for example, the admissibility of Judith’s statements made to witnesses to be called at trial, and the

7	High Court Rules 2016, r 14.8.

admissibility of Mr McKeage’s evidence). Counsel are encouraged to confer about these issues sooner rather than later. If they cannot be resolved by agreement, then a joint memorandum setting out any admissibility challenges to the evidence shall be filed five working days prior to trial. Any issues that cannot be resolved by agreement, will be for the trial Judge to determine at trial.

Edwards J