Fulcrum Securities Limited v Tracey John Lake

[2009] NSWSC 1202

CITATION:	FULCRUM SECURITIES LIMITED v Tracey John LAKE [2009] NSWSC 1202
HEARING DATE(S):	23 October 2009
JUDGMENT DATE :	12 November 2009
JUDGMENT OF:	Hidden J
DECISION:	Motion dismissed with costs.
CATCHWORDS:	PRACTICE AND PROCEDURE - whether cross-claim available in proceedings for enforcement of a foreign judgment
LEGISLATION CITED:	Foreign Judgments Act 1991 (C'th) Civil Procedure Act 2005
CATEGORY:	Procedural and other rulings
PARTIES:	FULCRUM SECURITIES LIMITED (Plaintiff) Tracey John LAKE (Defendant)
FILE NUMBER(S):	SC 2008/16111
COUNSEL:	C T Patterson (Plaintiff) B DeBuse (Defendant)
SOLICITORS:	Rockliffs Solicitors and IP Lawyers(Plaintiff) McCooe Raves Poole Solicitors (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HIDDEN J

Thursday 12 November 2009

2008/16111 FULCRUM SECURITIES LIMITED
v
Tracey John LAKE
JUDGMENT

1 HIS HONOUR: The plaintiff, Fulcrum Securities Limited, is a New Zealand company. In August 2008 it instituted proceedings in the District Court at Auckland against the defendant, Tracey John Lake, for money due under what was described as a deferred purchase agreement. Mr Lake is a resident of Sydney. Put shortly, the plaintiff is a commercial lender which financed the defendant’s purchase of shares in another New Zealand company, ICP Biotechnology Ltd. By virtue of the deferred purchase agreement the plaintiff retained title in the shares until settlement at a later date. Unfortunately, ICP Biotechnology went into receivership and the shares became valueless.

2 The defendant was served with the process initiating the New Zealand proceedings, but did not enter an appearance and filed no defence. The plaintiff obtained judgment by default in September 2008.

3 In January 2009, for the purpose of enforcing the Auckland judgment, the plaintiff secured the registration of the judgment in this Court pursuant to Pt 2 of the Foreign Judgments Act 1991 (C’th). The history of the proceedings thereafter need not be recounted in detail. It is sufficient to say that in May 2009 the defendant lodged an application in the District Court at Auckland to set the default judgment aside. That application was refused on 27 July 2009, and the defendant did not appeal against that decision.

4 Before me is a motion by the defendant for leave to file a cross-claim in this Court, together with an order staying execution of the registered judgment until that cross-claim is determined. The cross-claim would seek damages for breach of contract and in negligence, on the basis that the defendant instructed the plaintiff to sell the shares at a time when they would have realised enough to cover his indebtedness but the plaintiff failed to do so.

5 Some of the argument on the motion was directed to discretionary considerations related to delay occasioned by inactivity on the part of the defendant and prejudice to the plaintiff through further delay in the enforcement of its judgment. However, the central and, in my view, decisive issue is whether it is now possible for the defendant to file a cross-claim.

6 The researches of counsel on both sides found no case where a cross-claim had been filed in proceedings for the enforcement of a foreign judgment under the Commonwealth Act. Counsel for the defendant, Mr DeBuse, referred to the provision for a cross-claim in s 22(1) of the Civil Procedure Act 2005. By that subsection, a court may grant to the defendant in any proceedings “such relief against any person (whether or not a plaintiff in the proceedings) as the court might grant against that person in separate proceedings commenced by the defendant for that purpose”.

7 He submitted that the term “proceedings” in that subsection is broad enough to encompass the enforcement proceedings in this Court. He accepted that it would be open to the defendant to institute fresh proceedings to pursue the matter the subject of the cross-claim, but noted that the question might then arise whether New Zealand would be the appropriate forum for such proceedings. As the plaintiff had instituted enforcement proceedings in this Court, he argued, justice would be served by the defendant being able to pursue his interests by way of cross-claim.

8 The position of counsel for the plaintiff, Mr Patterson, was that New Zealand almost certainly would be the appropriate forum for any fresh proceedings instituted by the defendant and, if that were the view taken after such proceedings were instituted, so be it. However, his principal submission was that, as a matter of law, a cross-claim in the proceedings in this Court is simply not available. I agree.

9 As Mr Patterson pointed out, while s 22 of the Civil Procedure Act uses the term “proceedings”, there is a significant distinction between proceedings seeking judgment, on the one hand, and proceedings to enforce a judgment, on the other. The cross-claim procedure is apt for the former, but not the latter. Its purpose is to enable a court to determine the rights and liabilities of parties for the purpose of arriving at a judgment. It has no place once those rights and liabilities have been determined by judgment and the only proceedings outstanding are for the enforcement of that judgment.

10 It follows that the defendant’s motion cannot succeed. If he wishes to pursue his claim against the plaintiff, he must do so by instituting fresh proceedings. I might add that, although I have decided the motion upon a question of law, the defendant’s conduct and the resultant prejudice to the plaintiff provide powerful discretionary reasons for refusing it.

11 The motion is dismissed. The defendant must pay the plaintiff’s costs.

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