Tuake v Toeta [2010] CKHC 4; Plaint 11 of 2010 (9 September 2010)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CIVIL DIVISION)

PLAINT NO. 11/2010

IN THE MATTER of Rule 120 of the Code of Civil Procedure of the High Court 1981

BETWEEN

JULIA TUAKE
Plaintiff

AND

TUAKANA TOETA
Defendant

AND

REGISTRAR OF THE LAND COURT
Third Party

Hearing: 9 September 2010
Counsel: C Little for Plaintiff

S L Inder for Defendant to oppose

Judgment 13 September 2010

JUDGMENT OF HUGH WILLIAMS J

Solicitors:

Charles Little PC, Avarua, Rarotonga
S L Inder, Browne Harvey & Associates PC, Rarotonga

Issues

[1] The plaintiff commenced this proceeding on 12 May 2010. She brought the proceeding on her own behalf but it appears it was intended to be a representative action on behalf of the plaintiff and her six siblings.

[2] On 28 June 2010 the defendant, Mr Toeta, filed a statement of defence and counterclaim.

[3] On 21 July 2010 Ms Tuaka applied to strike out the counterclaim on the basis, broadly put, that the issues raised by way of counterclaim were Statute barred, and that the ambit of the counterclaim disclosed no cause of action.

[4] This judgment deals with that application.

Law

[5] Rule 131 of the Code of Civil Procedure of the High Court gives the Court power to strike out proceedings if they disclose no "reasonable cause of action".

[6] The body of law which governs applications to strike out is well settled.

[7] Applicants to strike out proceedings on the basis they disclose no reasonable cause of action must show the pleading is so clearly untenable, where as a matter of law or incontrovertible fact, that it cannot possibly succeed. The jurisdiction is exercised sparingly and only in clear cases where the Court can reach a settled conclusion. That applies even in complex cases. The hurdle to striking out proceedings is deliberately set high so as not to impinge on citizens' rights of access to the Court. Successful striking out proceedings are more often based on assertions that the claim is incapable of success as a matter of law rather than a matter of fact, because Courts, on striking out proceedings, do not and cannot embark on any consideration of disputed factual issues. Finally, if a proceeding can be satisfactorily amended, the Courts will almost always follow that course and give the party whose claim is under attack an opportunity to amend rather than the proceeding being struck out.¹

Claim and defence

[8] In order to put the counterclaim in context, it is appropriate to begin by reviewing the issues between these parties as disclosed by the statements of claim and the defence.

[9] Ms Tuake's claim says that she and her six siblings and the defendant are the sole land owners of a 1.6160 hectare property known as Matarangi 83H1, Arorangi. Although the claim does not say as much, other available material suggests the plaintiff and her siblings succeeded to the interests of their mother in the land, their mother being the defendant's sister. The plaintiff and her siblings accordingly own half the land with the defendant owning the other half.

[10] All the land owners leased the property on 19 January 1995 to the defendant by way of a Deed of Lease with that lease being assigned by the defendant to Go Kart Enterprises (Cook Islands) Limited on 17 February 1995. The lease to the defendant was at an annual rental of $1.00 but that payable by Go Kart Enterprises was, as a result of the reviews in August 1999 to August 2004 and August 2009, fixed at $4,000.00, $4,800.00 and $5,600.00 per annum. The land was never sub-leased to Go Karl Enterprises.

[11] The claimant asserts that Go Kart Enterprises paid the rents under the reviewed lease of $40,804.00 plus arrears of $5,600.00 to the Trust Division of the High Court; that Mrs Tuake and her siblings are entitled to half of that rent; but that between 1995-2010 the $40,804.00 was wholly paid to Mr Toeta. They claim half that sum, $20,402.00, from him.

[12] Mr Toeta's defence admits most of the allegations including his receipt of the $40,804.00 from the Court² but he says he was unaware that he was not entitled to half that sum until the Court wrote to him on 14 April 2010.

[13] That notwithstanding, he denies Ms Tuake and her siblings are entitled to the sum they claim because of amounts to which he claims he is entitled by way of set-off. The sum he asserts he is entitled to set-off exceeds the rents he received by $6,701.16 being the costs incurred by him "in relation to the family and family land".

[14] On those pleadings, therefore, the claim is essentially one in contract for non-payment by a recipient of rents due under a lease.

[15] The counterclaim, however, particularises the payments by the defendant totalling $6,701.16. They comprise:

a) Expenses establishing the grave sites for his parents and costs relating to their care. He pleads he requested his sister to contribute to these costs and "she agreed" but made no payment. "At least $10,000.00" is claimed with particulars given.

b) Legal costs "to protect ownership of the various properties ... for himself and ... the plaintiff's late mother" by obtaining Succession and Partition Orders plus lease administration costs.

c) Providing food and money when attending family meetings. "At least $10,000.00 over this 20 year period" is sought.

d) A contribution to the upkeep and protection of properties secured for the plaintiff and her siblings by Mr Toeta for which he used rent.

e) He asserts the plaintiff and her siblings should pay half the costs in securing Succession Orders for the property.

(f) He pleads he has spent a total of $54,206.31. The plaintiff should be liable for half. Following set-off, the plaintiff owes Mr Toeta $6,701.16.

Limitation

[16] Both parties claim parts at least of the other's claims and counterclaims are Statute barred.

[17] For the plaintiff, Mr Little acknowledged the plaintiffs claim was one under a Deed and was accordingly subject to a limitation period of 12 years from the date when the cause of action accrued .³

[18] He submitted the plaintiff was debarred from claiming any sums which fell due more than 12 years prior to the commencement of the proceeding, i.e. sums which fell due prior to 12 May 1998, but, with respect, that may not be an accurate assessment of when the plaintiffs cause of action accrued. Strictly, every time the defendant received rent for 50 percent of which he did not account to the plaintiff, there would appear to have been a cause of action accruing. Since the period of payment to the defendant is pleaded as being 1995-2010, the plaintiff will accordingly - as Mr Little accepted - need to review her claim to ensure the claims she brings are not Statute barred .⁴

[19] As far as the defence is concerned, s 30 of the Limitation Act 1950 provides that set-offs or counterclaims are deemed separate actions commenced on the same date as the action of which they are pleaded. The limitation period for the set-off would accordingly commence on the day the claim was filed, 12 May 2010.

[20] As it will obviously take some time for the plaintiff to conduct the inquiries which are required for her to amend her claim so that all amounts sought are within time, the Court directs the plaintiff to file and serve an amended claim within 42 days of delivery of this judgment, with the defendant filing and serving any amended defence claiming set-off within a further 28 days.

[21] As far as limitation relating to the counterclaim is concerned, there is support for Mr Little's submissions that the pleading of the current counterclaim is seriously deficient as far as timing is concerned. Mr Little gave evidence from the Bar that many of the payments made by the defendant were decades ago but, even judging the matter from the counterclaim as currently pleaded, it would appear many of the payments by the defendant for which he seeks half reimbursement are at least 20 years old.

[22] That notwithstanding, Ms Inder for Mr Toeta submitted the counterclaim should not be struck out on limitation grounds as it was possible to amend the pleading so as not to infringe limitation requirements. It is appropriate to give the defendant that opportunity, though noting substantial amendments would appear to be required.

[23] The same timetable as it applies to the defence is to apply.

No reasonable cause of action

[24] Mr Little submitted that, whatever moral or customary obligations might arise, there was no legal basis pleaded under which Mr Toeta could claim at law that he was entitled to reimbursement of half the sums expended by him.

[25] Ms Inder accepted the counterclaim needs substantial amendment in that respect.

[26] The current counterclaim merely asserts the plaintiff (and, presumably, her siblings) are liable for half the amounts expended by Mr Toeta, but pleads no legal basis to support that pleading apart from the suggestion that Ms Tuake agreed to pay half the cost of caring for his parents - the plaintiffs grandparents.

[27] Whilst it is for the defendant, on advice, to amend his counterclaim so as to plead a recognised cause of action, it would appear that, apart from the possibility of a contract claim concerning the defendant's parent care, the only possible basis which might conceivably arise which would give rise to a cause of action would be in trust or equity law, but it is, of course, for Mr Toeta, on advice, to decide how he pleads the matter from this point onwards.

[28] Any further pleadings by him are also to be subject to the timetable order previously made.

Third Party Notice

[29] Mr Toeta has applied for leave to issue and serve a Third Party Notice directed to the Registrar of the Land Court at Rarotonga claiming the Registrar had a duty of care to ensure that rentals paid into the Court were only paid out to persons entitled. He asserts a breach of that duty of care by the Registrar paying him the entire rentals instead of dividing and distributing the same in accordance with the lease.

[30] The application for leave to issue and serve a Third Party Notice was served on the Registrar but, although the Registrar apparently intends to defend the proceedings, instructions had not been given to Crown Law in time for an appearance.

[31] In an accompanying affidavit Mr Toeta said that because he was the sole lessee of the property and assignor to Go Kart Enterprises that he was entitled to all proceeds of the lease.

[32] That explanation is somewhat difficult to accept. Mr Toeta must have known that both the plaintiff and her siblings as to half and he as to the other half were the lessors of the land and thus entitled to payment of the rental from whoever happened to be the lessee, with the rental being distributed between the lessors according to their entitlement. It is of importance to note that Mr Toeta assigned the lease to Go Kart Enterprises. It was not a sub-lease, which might have gone some way towards justifying his stance but, as with the striking out application, the Court is required to treat the factual assertions as provable unless they are patently wrong.

[33] The application for leave to issue and serve the Third Party Notice is accordingly granted, leaving it to the Registrar to take such action as seems appropriate.

Hugh Williams J

______________________

1. Marshall Features Ltd (In Liq) v Marshall [1992] 5 NZLR 316.
2. He says he and the plaintiff shared the $5,600.00 arrears.
3. Limitation Act 1950 s 4(3).
4. As limitation bars the remedy not the right, it can be assumed the defendant would plead a limitation defence if such was available to him: Matai Industries Ltd v Jensen [1988] NZHC 205; [1989] 1 NZLR 525