IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2020-404-000932
[2020] NZHC 2565	

UNDER	the Partnership Act 1908, Property Law Act 2007, Mortgage Sale Property Law Act 2007, Inland Revenue Act 2007, Part 18 of the High Court Rules 2016 and the Companies Act 1993	
IN THE MATTER	of breach of duty and damages, failure to adhere to the proper filing of Partnership Inland Revenue Returns and accounting for assessable income	

BETWEEN	
WARREN WILLIAM DENIS TAYLOR
Plaintiff	
AND	PAUL HARRIS VICTOR BRAVO
Defendant	

Hearing:	28 September 2020	
Appearances:	Plaintiff in person
PL Rice for Defendant	
Judgment:	1 October 2020	

JUDGMENT OF DOWNS J

This judgment was delivered by me on Thursday, 1 October 2020 at 10.30 am
pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel: Sanderson Weir, Auckland. PL Rice, Auckland.

Copy to: Plaintiff.

TAYLOR v BRAVO [2020] NZHC 2565 [1 October 2020]

The case

[1]	Paul Bravo applies to strike out a claim against him by Warren Taylor, a former business partner. Mr Bravo contends the causes of action are not seriously arguable; out of time; and belong to the Official Assignee. Mr Taylor is 80, in poor health, and unrepresented. For these reasons, Ewen Groves, an accountant, made written and oral submissions on Mr Taylor’s behalf (with the Court’s permission).

Background

[2]	Mr Taylor and Mr Bravo developed property together. In 2005, they did so in Waihi, first in Martin Road, then 22–24 Walker Street.1 Mr Bravo provided finance through Ingleside Trust;2 Mr Taylor, design and construction.

[3]	Walker Street was a large, cross-leased property. Mr Taylor redeveloped it to four titles: three held by Ingleside; the fourth an existing owner. Mr Taylor wanted to build new homes on two lots and renovate a home on the third. Mr Bravo wanted something else; to sell  his  Ingleside-held lots.  So, Mr Taylor  bought them from  Mr Bravo on 13 July 2007 through a family trust, the Moresby Trust.3 The settlement statement records a purchase price of $500,000. Ingleside provided vendor-finance of
$147,356. The Bank of New Zealand provided a loan of $284,945. The balance was met by a credit to Mr Taylor’s construction business of $67,654. In December 2007, Ingleside advanced a further $85,000 to Moresby.

[4]	Mr Taylor did not meet his Bank of New Zealand commitments. In 2012, it sold two lots as mortgagee. Mr Taylor was adjudicated bankrupt 16 October 2013. Mr Taylor did not meet his commitments to Ingleside either. In 2017, it sold the remaining lot after Gilbert J declined to injunct a mortgagee sale.4

[5]	On 20 June 2018, Mr Taylor filed  a statement  of claim against  Ingleside.  On 5 July 2018, Woodhouse J struck out that claim as “materially deficient”.5

1	Walker Street.
2	Ingleside.
3	Moresby.
4	Taylor v Ingleside Trust HC Auckland CIV-2017-404-961, 6 June 2017 (Minute).
5	Taylor v Ingleside Trust HC Auckland CIV-2017-404-961, 5 July 2018 at [7] (Minute).

Mr Taylor filed an appeal in the Court of Appeal but failed either to pay the filing fee or meet security for costs. This meant his appeal was treated as abandoned; and dismissed.

[6]	On 25 June 2020, Mr Taylor filed this claim.

The claim

[7]	Mr Taylor’s statement of claim is difficult to follow. It takes the form of a narrative and does not identify discrete causes of action.  But, in short,  it appears  Mr Taylor alleges Mr Bravo repeatedly breached the partnership agreement between them and incorrectly accounted for profits; or failed to account for profits.

[8]	The first alleged breach occurred in 2007 when Mr Bravo did not reimburse Mr Taylor for approximately $65,000. Mr Taylor says he spent this amount on contractors, and Mr Bravo failed to pay him the same sum. Implicit to this aspect of the claim is a contention the pair had agreed Mr Bravo would pay Mr Taylor for the services provided by the contractors.

[9]	Mr Taylor then says Mr Bravo “reneged” on the partnership by wanting to sell the lots held by Ingleside. Mr Taylor says he was forced to borrow money from the Bank of New Zealand.

[10]	The third alleged breach occurred the same year when Mr Bravo required a mortgage to secure vendor finance. Mr Taylor says he was “reluctantly forced to accept Bravo’s ultimatum”.

[11]	All three breaches appear to underlie Mr Taylor’s claim for “incorrect accounting”. This is bolstered by a contention the December 2007 increase in lending was somehow improper.

[12]	Mr Groves filed what is described as an “affidavit”. Mr Groves says his accountancy expertise supports his opinion Mr Taylor has  a  good  claim  against  Mr Bravo. Mr Groves refers to “incorrect accounting” traceable to 2007. Mr Groves says Mr Taylor “is adamant” he was not properly informed about the mortgage to

Ingleside that year. Mr Groves says the related loan amount of $147,356 was “plucked out of the blue”. Mr Groves says the same is true of the December 2007 increase. Finally, Mr Grove says the correct position is that Mr Bravo owed Mr Taylor a lot of money, not the other way around.6

Principle

[13]	Strike out principles are well known.7 Pleaded facts, whether or not admitted, are assumed to be true (other than entirely speculative allegations). The cause of action must be clearly untenable.

[14]	Strike out is to be exercised sparingly, and only in clear cases.

Analysis

[15]	The first alleged breach of the partnership was in 2007, some 13 years ago. Subject to a topic I return to, any cause of action would be  barred  by  the  Limitation Act 1950.

[16]	No obvious cause of action arises in relation to the second alleged breach— the need to obtain the Bank of New Zealand loan. Even if one did, the loan was made in 2007. Again, any cause of action would be barred by the Limitation Act.

[17]	The third alleged breach concerns vendor finance. Mr Taylor appears to allege this was the product of duress. In Pharmacy Care Systems Ltd v Attorney General, Hammond J for the Court of Appeal summarised the elements of duress:8
First, there must be a threat or pressure. Secondly, that threat or pressure must be improper. Thirdly, the victim’s will must have been overborne by the improper pressure so that his or her free will and judgment have been displaced. Fourthly, the threat or pressure must actually induce the victim’s manifestation of assent. Fifthly, the threat or pressure must be sufficiently grave to justify the assent from the victim, in the sense that it left the victim no reasonable alternative. Sixthly, duress renders the resulting agreement voidable at the instance of the victim. This may be addressed either by raising duress as a defence to an action, or affirmatively, by applying timeously to a

6	Allegedly $173,272.90.
7	Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725.
8	Pharmacy Care Systems Ltd v Attorney General CA198/03, 16 August 2004 at [98].

court for avoidance of the agreement. Seventhly, the victim may be precluded from avoiding the agreement by affirmation.

[18]	The claim falls well short of disclosing these elements. In any event, it too would be barred by the Limitation Act.

[19]	The claim for incorrect accounting relies in part on the same sequences. These, obviously, attract the same problems. This claim appears to be bolstered by a contention Mr Taylor was not properly informed of the money loaned by Ingleside, or about the December 2007 increase. As observed, the latter is said to be somehow improper.

[20]	This brings me to the foreshadowed topic: fraud. Section 28 of the  Limitation Act says a claim based on a defendant’s fraud “shall not begin to run” until the plaintiff has discovered the fraud, or the fraud, with reasonable diligence, could have been discovered. Mr Taylor’s claim does not explicitly refer to fraud. It does, however, say more than once that Mr Bravo “deceived” him. I asked Mr Groves about this at the hearing. Mr Groves explicitly disavowed reliance on fraud.9 In any event, Mr Groves’ written submissions record “Mr Bravo’s poor and incorrect accounting came to light in 2007”.10 So, even if fraud were part of the claim, any cause of action would also be time-barred.

[21]	For completeness, the claim contends Mr Taylor was unaware of Ingleside’s mortgagee sale. This is unquestionably wrong. Mr Taylor sought to injunct the sale. Gilbert J dismissed the application on 6 June 2017. Mr Taylor represented himself. The claim also contends Ingleside wrongly claimed interest. This complaint was not raised with Gilbert J. It is contradicted by a written agreement, apparently signed by Mr Taylor “as settlor of the Moresby Trust”. Moreover, it is not clear how this aspect of the claim helps Mr Taylor. Ingleside recovered $295,815. It was owed much more:
$543,748.

9	Mr Taylor sat next to Mr Groves during the hearing, at counsel’s table. The two frequently conferred. Mr Groves did say Mr Bravo’s behaviour was not too far removed from fraudulent.
10	Emphasis added.

[22]	Mr Groves appeared to argue Mr Taylor’s claim is not time-barred because time ran from 17 July 2017. Mr Groves said Mr Taylor filed a claim in this Court on that date. I cannot find anything on file in relation to this date. Mr Taylor did lodge an application for an interim injunction on 17 May 2017—the application dismissed by Gilbert J on 6 June 2017. However, even if Mr Taylor did lodge some application 17 July 2017, this does not advance his case. Time runs from the underlying event; for example, a breach of contract runs from the date of the breach, not when the allied claim is lodged in court. On Mr Taylor’s case, the breaches occurred 2007, or at the latest, 2009. The Limitation Act bars all.

[23]	Mr Groves’ evidence that Mr Taylor has a good claim is inadmissible. This is a legal question, not amenable to expert evidence.11 Moreover, Mr Groves has no legal qualifications.

[24]	On behalf of Mr Bravo, Mr Rice contended the claim required the permission of the Official Assignee given Mr Taylor had been made bankrupt. Mr Rice argued potential claims remain vested in the Official Assignee even when bankruptcy has ended. I need not decide this. It is sufficient to observe the few possible causes of action that could arise are unquestionably time-barred by some years.

[25]	This leaves one thing. As observed, in 2018, Mr Taylor filed a claim against Ingleside. This Woodhouse J struck out.  I asked the Registry to obtain that claim so I could compare it with this. The file could not be found. Whether this claim is also an abuse of process is, therefore, not something I can determine.

Result

[26]	Mr Taylor’s claim against Mr Bravo is struck out.

……………………………..
Downs J

11	At least when the question arises domestically.