Rent Plus Ltd v Sorenson (No.2)
[2013] NSWSC 67
•13 February 2013
Supreme Court
New South Wales
Medium Neutral Citation: Rent Plus Ltd v Sorenson (No.2) [2013] NSWSC 67 Hearing dates: 07/12/2011 Decision date: 13 February 2013 Jurisdiction: Common Law Before: Garling J Decision: (1) Order that the plaintiff provide to the defendants and to the Court the short minutes of order contended for within seven days of the date of delivery judgment.
(2) Order that the defendants provide to the Court within seven days thereafter, an indication of whether or not those orders are agreed, and if not agreed, the short minutes of order for which they contend.
(3) Stand proceedings over to 26 February 2013.
Catchwords: PRIVATE INTERNATIONAL LAW - foreign judgments - validity of judgment - second application under the Foreign Judgments Act 1991 - whether plaintiff has a sufficient interest to permit registration of judgment. CORPORATIONS - constitution and replaceable rules - execution of documents - appointment of a power of attorney by a company's directors Legislation Cited: Civil Procedure Act 2005
Companies Act 1992 (NZ)
District Court Rules 1992 (NZ)
Foreign Judgments Act 1991 (Cth)
Uniform Civil Procedure Rules 2005Cases Cited: McDonald v Simmons (1994) 8 PRNZ 12
Rent Plus Ltd v Sorenson [2010] NSWSC 564
Royal British Bank v Turquand (1856) 119 ER 886Category: Principal judgment Parties: Rent Plus Ltd (P)
Mark Sorenson (D1)
Deanna Anita Sorenson (D2)Representation: Counsel:
A Combe (P)
M W Sneddon (D1 & 2)
Solicitors:
Sally Nash & Co (P)
Spooner & Hall (D1 & 2)
File Number(s): 2011/275461
Judgment
Posed for determination in this case is whether Rent Plus Limited is entitled to register in this Court a judgment in the sum of NZD $161,876.68 together with interests and costs which it obtained in the New Zealand District Court at Wellington against the defendants, Mark Sorenson and Deanna Sorenson.
The application of Rent Plus, which is made by summons, seeks registration under the provisions of Part 2 of the Foreign Judgments Act 1991 (Cth) ("FJ Act"). This is the second attempt by Rent Plus to enforce a New Zealand judgment against Mr and Mrs Sorenson. The first attempt was unsuccessful: Rent Plus Ltd v Sorenson [2010] NSWSC 564
For the reasons which follow, I am of the opinion that the orders sought by Rent Plus ought to be made.
Background of commercial dealings
The background of the various commercial dealings between the parties to this litigation and other companies is rather complex, but needs to be set out in some detail so that the various submissions made in these proceedings can be readily understood.
The initial commercial arrangements are uncontroversial. They all took place in New Zealand where the Sorensons, who were then resident in New Zealand, were operating a business.
On 5 May 2005, the Sorensons' business, Absolutely Flawless Ltd, entered into a rental agreement with Leasing Solutions Ltd for the rental of two spray tanning booths. That agreement commenced on 11 May 2005, and continued for a term of 60 months. The agreement obliged Absolutely Flawless to make monthly rental payments of NZD$3,431.77.
Mr and Mrs Sorenson guaranteed the performance of Absolutely Flawless. The active term of that guarantee provided that Mr and Mrs Sorenson:
"... unconditionally and irrevocably guarantee ... the due and punctual payment by [Absolutely Flawless Ltd] of all monies from time to time payable ... under the agreement ..."
On 10 September 2005, the agreement between Leasing Solutions and Absolutely Flawless was varied so that the monthly rental payments were NZD$3,628.69. No new guarantee was entered into with respect to that variation. On 14 September 2005, Leasing Solutions changed its name to Finance Portfolio Ltd. The rental agreement, as varied, continued.
On 7 September 2007, Absolutely Flawless was placed into liquidation. The rental agreement fell into default and the tanning booths were reclaimed by Finance Portfolio and sold.
On 13 May 2008, Finance Portfolio having earlier commenced proceedings, obtained a summary judgment against Mr and Mrs Sorenson for an amount of NZD$161,876.68 together with interest and costs in the New Zealand District Court at Wellington. It will be convenient to refer to this as the New Zealand judgment.
On 31 May 2008, Finance Portfolio and another associated company, United Finance Ltd, entered into an agreement with Rent Plus, the present plaintiff, for the sale to Rent Plus of the residual leasing book of each of the two companies. A schedule to that agreement contained specific reference to the agreement which Absolutely Flawless had entered into in 2005, and which had given rise to the New Zealand judgment. However, it made no reference to the fact of, or the existence of, the New Zealand judgment.
For the reasons expressed in his judgment of 2 June 2010, R S Hulme J found that this agreement did not assign to Rent Plus any benefit of the New Zealand judgment: see Rent Plus Ltd v Sorenson [2010] NSWSC 564.
On 26 June 2009, Finance Portfolio and United Finance Ltd amalgamated under Part XIII of the Companies Act 1992 (NZ) to become known as United Finance Ltd.
As a result of the decision of R S Hulme J, the now amalgamated United Finance, and Rent Plus, set about effecting an assignment of the benefit of the New Zealand judgment from United Finance to Rent Plus.
On 29 July 2010, United Finance entered into a power of attorney, appointing Mr Kerry Finnigan as the company's attorney. That power of attorney contained clauses which:
(a) gave the attorney power in the company's name, and on the company's behalf to do all acts, matters and things including entering into and executing documents which the attorney considered desirable;
(b) provided that no body corporate dealing with the company's attorney needed to enquire as to the propriety or expediency of anything which the attorney did in the company's name by virtue of the power of attorney; and
(c) provided that the power was to be interpreted according to the laws of New Zealand.
On 17 August 2010, United Finance and Rent Plus executed a Deed of Confirmation of Assignment. The terms of this Deed made it plain that the benefit of the New Zealand judgment had been, or else was, assigned by United Finance to Rent Plus. The Deed was executed on behalf of United Finance by Mr Finnigan, who indicated that he was doing so "by way of power of attorney". His signature was witnessed by Ms Rachel Beer, an Auckland property manager.
On 10 November 2010, Rent Plus made an application to the New Zealand District Court in the proceedings which had resulted in the New Zealand judgment, to have itself substituted as plaintiff in lieu of Finance Portfolio.
The application was made in reliance on r 103 and r 108 of the District Court Rules 1992 (NZ), which still applied to the proceeding although new rules, namely the District Court Rules 2009 (NZ), had been introduced after the proceedings had commenced. The application was determined, ex parte, by Tuohy J of the New Zealand District Court, who on 25 November 2010, ordered that the name of the plaintiff, which was the judgment creditor, be changed from Finance Portfolio to Rent Plus.
Present litigation
On 26 August 2011, Rent Plus filed a summons in this Court in which it sought the following orders:
"1. The judgments dated 13 May 2008 and varied on 25 November 2010 by the District Court at Wellington, New Zealand by which it was adjudged that the First Judgment Debtor and Second Judgment Debtor pay money to the Judgment Creditor be registered under Part 2 of the Foreign Judgments Act 1991 of the Commonwealth for:
(a) Judgment against the First Judgment Debtor and Second Judgment Debtor in the sum of NZD$161,876.68;
(b) Interest on the sum of NZD$161,876.68 at the rate of 18% per annum from the date of judgment until the date of payment to the Judgment Creditor pursuant to Clause 4.3 of the Rental Agreement; and
(c) The costs of and incidental to the application for this order and of registration of the judgment.
2. An order under Rule 53.2(4) of the Uniform Civil Procedure Rules that Order 1 be made in the absence of the public and without any attendance by or on behalf of the Judgment Creditor.
3. The First Judgment Debtor and Second Judgment Debtor may, within 28 days after service upon each of them of the notice of registration, apply to set aside the registration.
4. The judgment may be enforced to the full extent of the terms that are to be registered.
5. The judgment may also be enforced for the interest and costs for which judgment is registered."
The usual process under the FJ Act is that registration of a foreign judgment occurs without any hearing, providing that the requirements of s 6 of the FJ Act are satisfied, but a person affected by the registration can apply within a limited time to set aside the judgment on the grounds set out in s 7 of the FJ Act.
However, in this case, as the submissions of the parties make clear, particularly in light of the fact that this is the second time Rent Plus has attempted to register the judgment, it is convenient for the Court to proceed to hear all of the objections of the Sorensons prior to the judgment being registered, as if they were applying under s 7 of the FJ Act to set aside the judgment.
It is correctly submitted by the Sorensons that the Court would not register a judgment if it was to be set aside upon registration, if an application was made, as this would not fulfil the overriding purpose of the Civil Procedure Act 2005. Such a course would only result in the parties incurring unnecessary and additional expense.
Accordingly, a hearing was conducted on whether the judgment ought be registered. Although evidence was tendered, the facts were not in dispute. The relevant facts upon which the application and the Sorensons' opposition to the registration are based, are as I have earlier set out.
Foreign Judgments Act 1991 (Cth)
It is necessary to set out the various provisions of the FJ Act, in order to see the context in which the submissions are made.
The principal provisions of the Act are to be found in Part 2 of the FJ Act. Section 5(3) of the FJ Act applies Part 2 to money judgments of any inferior court of a country specified by regulations. Regulation 5(1) of the Foreign Judgment Regulations 1992 (Cth) applies to judgments of the District Court of New Zealand.
Section 5(4) provides that Part 2 of the FJ Act will apply to a final money judgment in the New Zealand District Court.
Section 6 is the operative provision dealing with registration. It relevantly provides:
"Application for, and effect of, registration of foreign judgments.
(1) A judgment creditor under a judgment to which this Part applies, may apply to the appropriate court at any time within six years after:
(a) the date of the judgment; or
(b) ...
to have the judgment registered in the court.
(2) For the purposes of subsection (1), the appropriate court is:
(a) ...;
...
(c) in any other case - the Supreme Court of the State or Territory.
(3) Subject to this act, and to proof of the matters prescribed by the applicable rules of Court, if an application is made under this section, the Supreme Court of a State or Territory, or the Federal Court of Australia, is to order the judgment to be registered.
...
(6) A judgment is not to be registered if at the date of the application:
(a) it has been wholly satisfied; or
(b) it could not be enforced in the country of the original court.
...
(11) Subject to subsection (12), if the amount payable under a judgment that is to be registered, is expressed in a currency other than Australian currency, the judgment is to be registered:
(a) if the judgment creditor has stated in the application that the judgment creditor wishes the judgment to be registered in the currency in which it is expressed - in that currency; or
(b) in any other case - as if it were for an equivalent amount in Australian currency based on the rate of exchange prevailing on the second business day (from the conversion day) before the day on which the application for registration is made.
...
(15) A judgment registered under this section is to be registered for:
(a) the reasonable costs of and incidental to registration, including the cost of obtaining a certified copy of the judgment from the original court and the cost of obtaining from foreign exchange dealers evidence of the rates of which Australian dollars may be bought in the currency in which the judgment is expressed; and
(b) where an amount of money is payable under the judgment - any interest which, by the law of the country of the original court, becomes due under the judgment up to the time of registration."
Section 7 is the section which provides for the basis upon which a registered judgment may be set aside. It provides, relevantly, as follows:
"Setting aside a registered judgment
1. A party against whom a registered judgment is enforceable, or would be enforceable but for an order under s 8, may seek to have the registration of the judgment set aside by duly applying for the court in which the judgment was registered, ... to have the registration of the judgment set aside.
2. Where a judgment debtor duly applies to have the registration of a judgment set aside, the court:
(a) must set the registration of the judgment aside if it is satisfied:
(i) ...
...
(v) that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) to receive notice of those proceedings in sufficient time to enable the judgment debtor to defend the proceedings and did not appear; or
...
(viii) that the rights under the judgment are not vested in the person by whom the application for registration was made.
...
(b) may set the registration of the judgment aside if it is satisfied that the matter in dispute in the proceedings in the original court had, before the date of the judgment in the original court, been the subject of a final and conclusive judgment by a court having jurisdiction in the matter."
Section 12 deals with the general effect of judgments after registration. It is in the following terms:
"General effect of certain judgments
1. Subject to this section, a judgment to which Part 2 applies, or would have applied if it were a money judgment, must, whether or not it is or can be registered, be recognised in any Australian court as conclusive between the parties to it in all proceedings founded on the same cause of action, and may be relied on by way of defence or counterclaim in any such proceedings.
....
3. Nothing in this section prevents any Australian court from recognising a judgment as conclusive of any matter of law or fact decided in the judgment, if that judgment would be recognised as conclusive under the common law."
Uniform Civil Procedure Rules
The Uniform Civil Procedure Rules 2005 ("UCPR"), which are the rules under which this Court operates, make specific provision with respect to matters brought before it under the FJ Act.
Part 53 of the UCPR contains, relevantly, the following rules:
53.3 Evidence
(1) The evidence in support of an application for registration of a judgment must include the following:
(a) the judgment or a verified or certified or otherwise duly authenticated copy of the judgment,
(b) ...,
...,
(d) if it is a money judgment, evidence showing the amount originally payable under the judgment,
...
(f) evidence showing the name and trade or business, and the usual or last known residential or business addresses, of the judgment creditor and judgment debtor,
(g) evidence showing that the judgment creditor is entitled to enforce the judgment,
(h) evidence showing:
(i) that, at the date of the application, the judgment can be enforced by execution in the country of the original court, and
(ii) that, if the judgment were registered in the Supreme Court, the registration would not be liable to be set aside under section 7 of the Foreign Judgments Act 1991 of the Commonwealth,
(i) if interest is payable by the law of the country of the original court on any money which is payable under the judgment, evidence showing:
(i) the rate of interest, and
(ii) the amount of interest which has become due under the judgment up to the time of application for registration, and
(iii) the daily amount of interest which, subject to any future payment on account of the judgment, will accrue after the date of the application,
(j) evidence showing the extent to which the judgment is unsatisfied,
....
(3) The evidence referred to in subrule (1) (g)-(j) may be evidence to the best of the information or belief of the deponent or witness giving the evidence.
(4) All amounts of money referred to in this rule must be expressed:
(a) in the currency in which the judgment is expressed, and
(b) if the judgment creditor has not made a statement under section 6 (11) (a) of the Foreign Judgments Act 1991 of the Commonwealth, as an equivalent amount in Australian currency calculated in accordance with section 6 (11) (b), (11A) and (11B) of that Act. "
Issues in the proceedings
The Sorensons submit that there are three reasons why the Court would not register the judgment. They are in short:
(a) there has not been a valid assignment of the judgment debt obtained on 13 May 2008 from United Finance to Rent Plus ("the assignment issue");
(b) the substitution on 25 November 2010 of Rent Plus as the plaintiff, by order of the New Zealand District Court, was not effective to vest any rights under the judgment in Rent Plus ("the judgment issue"); and
(c) the absence of any appeal or challenge to the New Zealand District Court judgment, including the variation order, is not a bar to the refusal of registration ("the no appeal issue").
The Sorensons submit that the determination of each of these issues in their favour would have the result that the Court would not be satisfied that Rent Plus is not entitled to the benefit of the New Zealand judgment, and hence, applying s 7(1)(viii) of the FJ Act, this Court ought to refuse to register the judgment.
It will be convenient to examine each of the three issues separately.
The assignment issue
The Sorensons submit that there has not been a valid assignment of the original judgment debt obtained on 13 May 2008 by United Finance to Rent Plus.
The basis of this submission is that the Deed of Confirmation of Assignment was executed by Mr Finnigan solely in reliance upon his authority conferred by the power of attorney. The Sorensons submit that the power of attorney was invalid and ineffective to confer authority on Mr Finnigan as the donee because it was required to be executed by two directors of United Finance, but it was in fact only executed by one director.
Section 181 of the Companies Act (NZ) provides that, subject to the company's constitution, a company may by written instrument appoint a person as its attorney. It also provides that the written instrument must be executed in accordance with the provisions of s 180(1)(a) of the Companies Act (NZ).
Section 180(1)(a) of the Companies Act (NZ) provides that if there is more than one director, the execution of any document must be by two or more directors of the company, or else, in accordance with the constitution of the company. It says:
"180. Method of contracting
1. A contract or other enforceable obligation may be entered into by a company as follows:
(a) An obligation which, if entered into by an actual person would, by law, be required to be by deed, may be entered into on behalf of a company in writing, signed under the name of the company by -
(i) two or more directors of the company; or
(ii) if there is only one director, by that director whose signature must be witnessed; or
(iii) if the constitution of the company so provides, a director or other person or class of persons whose signature or signatures must be witnessed; or
(iv) one or more attorneys appointed by the company in accordance with s 181."
The evidence reveals that at the time the power of attorney was executed, there were two directors of United Finance. They were, at that time, Mr Mark Hotchin and Mr David Henry.
Accordingly, to comply with s 180(1)(a), the power of attorney had to be signed by both directors unless the alternative set out in s 180(1)(a)(iii), namely that a provision of the constitution of the company, allowed some other form of execution, of the kind specified in the section.
It is necessary therefore to examine the constitution of United Finance to see what it provided with respect to execution of documents.
Clause 50 of the constitution provides that the company may appoint one or more persons as its attorney so long as it does so by an instrument in writing "... executed in accordance with clause 49.1".
Clause 49, which relates to execution of contracts, is in the following form:
"49. Manner of execution
A contract or other enforceable obligation may be entered into by the Company as follows:
49.1 an obligation which, if entered into by a natural person, would, by law, be required to be by deed, may be entered into on behalf of the Company in writing signed under the name of the Company by -
(a) two or more Directors; or
(b) if there is only one Director, that Director, whose signature must be witnessed; or
(c) a Director or any other person authorised by the Board whose signature must be witnessed; or
(d) one or more attorneys appointed by the Company in accordance with this constitution."
The power of attorney was executed by Mr Hotchin, who, as I have pointed out, was a director of United Finance. His signature was witnessed by Ms Amanda Hotchin who gave her occupation as "Mother" and provided her address.
Thus, Rent Plus argues that the power of attorney has been validly executed because its execution is in compliance with clause 49.1(c) of the constitution, namely, it has been executed by a director whose signature has been witnessed.
I am satisfied that this submission is correct.
The proper interpretation of clause 49.1(c) of the constitution provides for an alternative execution process, but requires in respect of each alternative that the signature must be witnessed. The alternatives are either:
(a) a director; or
(b) any other person authorised by the Board.
I do not read clause 49.1(c) as requiring that the director be authorised by the Board.
I reach this conclusion having regard to the ordinary principles of construction of statutory instruments and documents of this kind. As well, having regard to the fact that a director of a company is by reason of that position ordinarily entrusted by the Board to execute documents on behalf of a company, there is no reason, it seems to me, for a director to be specifically authorised to execute a power of attorney. Had the constitution required the director to be authorised by the Board, then there is no reason for it to have used the expression "a Director or any other person". If what was intended was that the Board could authorise anyone whether a director or not, to execute a document, and have their signature witnessed, then all that the Constitution needed to provide was: "Any person authorised by the Board".
However, the separate use of the word "director", I am satisfied, differentiates between a director and any other person. It is the latter class which must have board authority.
As well, such an interpretation sits coherently with the provisions of s 180(1)(a)(iii) of the Companies Act (NZ), which provides the alternatives of either a director or, alternatively, a person or class of persons. The use in clause 49.1(c) of the description "a person authorised by the Board", sits conformably with the description "class of persons" in the legislation. That is because the class is defined as being all those people authorised by the Board.
As I have noted above in [44], the power of attorney was signed by a Director, Mr Hotchin, and witnessed by Ms Hotchin.
Accordingly, I conclude that the power of attorney was validly executed and Mr Finnigan was validly appointed as an attorney for the company under the power of attorney.
He was therefore authorised in that capacity to execute the Deed of Confirmation of Assignment. The authority came from both the terms of the power of attorney and, as well, the terms of clause 49.1(d) of the constitution of United Finance.
Accordingly, the Sorensons fail on this issue because they have not proved that the Deed of Confirmation of Assignment was invalid and ineffective. On the contrary, I am satisfied that it was valid and effective, and the terms of it were sufficient to assign to Rent Plus the benefit of the New Zealand judgment.
This conclusion means that I do not have to finally determine the arguments of Rent Plus that, even if the power of attorney was invalid and not correctly executed, the provisions of s 17 and s 18 of the Companies Act (NZ) would operate so as to save the assignment and make it valid.
However, against the possibility that I may have fallen into error in the determination of the validity of the power of attorney, it is appropriate that I express my conclusions, although in short form, with respect to these submissions.
Section 17 of the Companies Act (NZ) provides:
"1. No act of a company and no transfer of property to, or by a company is invalid, merely because the company did not have the capacity, the right or the power to do the act or to transfer or to take a transfer of the property."
The reliance on this section by Rent Plus is in my view, entirely misplaced. It is not in issue that United Finance had the capacity and power to enter into the Deed of Confirmation of Assignment with Rent Plus. What is in issue, is whether the Deed of Confirmation of Assignment was a valid and effective deed because the person who signed it was not validly appointed.
So the question of validity or invalidity of the Deed of Confirmation of Assignment is not one which arises "... merely because the company did not have the capacity, the right or the power ...". The question of validity does not rely upon the act of confirmation of the assignment, or effecting the assignment as being beyond power.
The question of validity or invalidity of the Deed arises because of the authority of the individual attorney to execute the document. Accordingly, s 17 has no application to the present circumstances.
The second basis in the submissions of Rent Plus is that if the assignment is ineffective, it would be saved by the provisions of s 18 of the Companies Act (NZ) 1993.
"18 Dealings between company and other persons
(1) A company or a guarantor of an obligation of a company may not assert against a person dealing with the company or with a person who has acquired property, rights, or interests from the company that-
(a) this Act or the constitution of the company has not been complied with:
(b) a person named as a director of the company in the most recent notice received by the Registrar under section 159-
(i) is not a director of a company; or
(ii) has not been duly appointed; or
(iii) does not have authority to exercise a power which a director of a company carrying on business of the kind carried on by the company customarily has authority to exercise:
(c) a person held out by the company as a director, employee, or agent of the company-
(i) has not been duly appointed; or
(ii) does not have authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise:
(d) a person held out by the company as a director, employee, or agent of the company with authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company does not customarily have authority to exercise, does not have authority to exercise that power:
(e) a document issued on behalf of a company by a director, employee, or agent of the company with actual or usual authority to issue the document is not valid or not genuine-
unless the person has, or ought to have, by virtue of his or her position with or relationship to the company, knowledge of the matters referred to in any of paragraphs (a), (b), (c), (d), or (e), as the case may be.
(2) Subsection (1) applies even though a person of the kind referred to in paragraphs (b) to (e) of that subsection acts fraudulently or forges a document that appears to have been signed on behalf of the company, unless the person dealing with the company or with a person who has acquired property, rights, or interests from the company has actual knowledge of the fraud or forgery."
That section prevents, in the circumstances of this case, United Finance in respect of its dealings with Rent Plus, asserting against Rent Plus, any non-compliance with its own constitution or any invalidity of a document signed by the company, or a director, or an agent of the company with actual or ostensible authority, unless the person dealing with United Finance, here Rent Plus, knew or ought to have known of the relevant deficiency in execution or lack of authority of the signatory.
This section is the most recent statutory provision in New Zealand dealing with the question of internal management of corporations. It seeks to put in statutory form the principles expounded over 150 years ago in Turquand's case (Royal British Bank v Turquand (1856) 119 ER 886).
There is no basis in the evidence in these proceedings which would enable United Finance to deny to Rent Plus the validity of the power of attorney, or of the Deed of Confirmation of Assignment. There is no suggestion in the evidence that Rent Plus knew, or ought to have known, of the lack of authority of Mr Finnigan, if such is the case, to enter into the Deed of Confirmation of Assignment.
However, these provisions, which are effective as between United Finance and Rent Plus, are inapplicable, in the circumstances of this case, as between Rent Plus and the Sorensons. The question, so far as the Sorensons are concerned, is whether as a matter of law, Rent Plus took a valid and effective assignment from United Finance by the Deed of Confirmation of Assignment. The fact that United Finance is precluded by s 18 of the Companies Act (NZ) from denying to Rent Plus, the validity of the Deed of Confirmation of Assignment, having held out Mr Finnigan as its attorney, is unsurprising.
But there is no reason in principle to accept, and the words of the section do not support acceptance of, the submission made by Rent Plus, namely, that such an effect as between United Finance and Rent Plus can be relied upon by Rent Plus against a third party. The section is only directed to preventing the company itself from relying upon some defect in its internal process, when dealing with another party to the transaction.
The issue in these proceedings is whether the assignment was valid and effective or whether it was not. The Sorensons' position is not affected by s 18 of the Companies Act (NZ).
In summary, I have concluded that Mr Finnigan was validly appointed as an attorney of United Finance by the power of attorney executed by Mr Hotchin. I have concluded that the Deed of Confirmation of Assignment was validly executed by United Finance and was valid and effective to assign to Rent Plus the benefit of the New Zealand judgment.
The provisions which Rent Plus would otherwise have relied upon, had this conclusion been different, are not applicable in the circumstances of this case.
The judgment issue
The Sorensons submit that the judgment of Tuohy J in the New Zealand District Court at Wellington on 25 November 2010, by which Rent Plus was substituted as the plaintiff and the judgment creditor, in the proceedings which had been commenced by United Finance, was irregular and erroneous.
The Sorensons submit that, contrary to the submissions made to the New Zealand District Court, the provisions of r 103 of the District Court Rules 1992 (NZ) do not enable the substitution of a plaintiff in proceedings once judgment has been entered.
They further submit that the authority relied upon by Rent Plus in those proceedings, namely McDonald v Simmons (1994) 8 PRNZ 12, especially at [18]-[19] per Anderson J, is not authority for the proposition contended for, namely that the Court is authorised under the rules to substitute a party after judgment.
Rent Plus submits that the issues raised by the Sorensons here, about the irregularity of the judgment, were all matters taken into consideration by the New Zealand District Court when it made its order and that the order having been made, there is no reason to think that it is irregular. Rent Plus further submits that it is not open to this Court to go behind the judgment of Tuohy J.
The Application drawn up by the solicitor for Rent Plus and filed in the New Zealand proceedings made it plain that one of the grounds upon which Rent Plus was seeking to be substituted as the plaintiff was:
"The rights of the plaintiff under the judgment which was entered in favour of Finance Portfolio Ltd against the defendants in this proceeding, on or about 9 May 2008, were assigned from Finance Portfolio Ltd to Rent Plus Ltd on or about 17 August 2010."
In other words, it was made plain that judgment had been entered in the proceedings, and that the claim of right to be substituted arose from the assignment in the Deed of Confirmation of Assignment.
The Application noted that it was made in reliance on r 103 and r 108 of the District Court Rules 1992 "... and the decision of the High Court in McDonald v Simmons (1984) 8 PRNZ 12".
The Application was accompanied by an affidavit of Sarah Meta Johnson, who was the collections manager of Rent Plus. A perusal of her affidavit indicates that she has sufficiently set out all of the facts and matters relating to the commercial dealings between the parties and leading up to, ultimately, the Deed of Confirmation of Assignment. She referred to and appended to her affidavit, a copy of the judgment of R S Hulme J in this Court, and described the acts of Rent Plus and United Finance since that judgment. She concluded her affidavit with a paragraph in the following terms:
"Rent Plus is making the present application to be substituted for Finance Portfolio Ltd as the plaintiff in this proceeding so that it may endeavour to register this Court's judgment in the Supreme Court of NSW and then enforce it against Mr and Mrs Sorenson in Australia".
Accompanying the application and the affidavit was a document entitled "Memorandum of Counsel for Rent Plus Ltd in support of ex parte notice of interlocutory application to change the name of the plaintiff".
Relevantly, the memorandum read as follows:
"3. Finance Portfolio Limited was a finance company. Rent Plus Limited purchased a loan book, including the contract which Mr and Mrs Sorenson had guaranteed, from Finance Portfolio Limited on or about 31 May 2008. Rent Plus Limited has tried to enforce the judgment which Finance Portfolio Limited has obtained against Mr and Mrs Sorenson, who now live in Australia, in this proceeding in the Supreme Court of New South Wales by registering the judgment with that Court in the name of Rent Plus Limited. However, the Supreme Court of New South Wales has set aside the registration of the judgment in Rent Plus Limited's name, which was initially granted, on the grounds that Finance Portfolio Limited's rights under the judgment were not assigned to Rent Plus Limited and, furthermore, there were no moneys outstanding under the rental agreement at the time that it was assigned to Rent Plus Limited because any claim under the lease agreement had already merged in the judgment.
4. Rent Plus Limited has since arranged for United Finance Limited, which has amalgamated with Finance Portfolio Limited, to sign a deed confirming that Rent Plus Limited is the party entitled to enforce the plaintiff's rights under this Court's judgment and Rent Plus Limited is now seeking to have itself formally substituted as the plaintiff in this proceeding so that it may endeavour to register this Court's judgment in its name in the Supreme Court of New South Wales.
...
5. This application is made in reliance on Rules 103 and 108 of the District Court rules 1992. It is submitted that the District Court Rules 1992 still apply to this proceeding given that it was commenced prior to the introduction of the District Court Rules 2009, under Rule 17.2.1 of the District Court Rules 2009.
6.It is submitted that the Court has the power to strike out a party, and add another, at any stage of the proceedings, including after judgment has been entered, under Rules 103 and 108 of the District Court Rules. The learned authors of Brookers District Court Procedure state at paragraph DR103.07 that:
'An order striking out or adding a party may be made at any stage of a proceeding. This may include after judgment.'
7. The learned authors cite the decision of the High Court in McDonald v Simmons (1994) 8 PRNZ 12 in support of this proposition.
8. It is further submitted that the Court should make the order sought as Rent Plus Limited has purchased this debt from Finance Portfolio Limited. Finance Portfolio Limited has no interest in endeavouring to enforce the judgment which it has previously obtained in this Court. So, the defendants will effectively be able to escape liability for this debt if this application is not granted as Rent Plus Limited will be unable to register the judgment in its name in the Supreme Court of New South Wales which is necessary to enable it to enforce the judgment against Mr and Mrs Sorenson who now reside there."
The order made by Tuohy J in the District Court of New Zealand, recited that he had read the Application, the affidavit of Ms Johnson and the Memorandum of Counsel. It was upon the basis of these matters that his Honour made the order that the name of the plaintiff in the proceedings be changed to Rent Plus Ltd.
The Sorensons submit in this Court that it is
"nonsensical to suggest ... that r 103 of the District Court Rules 1992 (NZ) entitles after judgment is entered to substitute the name of the judgment creditor for the plaintiff."
In other words, the Sorensons invite this Court to go behind the judgment of Tuohy J in the New Zealand District Court and find as a matter of substance, that Rent Plus had no basis to be substituted as plaintiff and accordingly, ought not be entitled to the registration of the judgment.
I reject this approach. There are a number of reasons for this.
First, the scheme envisaged by the FJ Act is that the judgment of a foreign court which is sought to be registered, can only be attacked in the limited ways set out in s 7(2). These ways are limited to whether or not the foreign court had jurisdiction in the circumstances of the case, whether the judgment was obtained by fraud, whether the rights under the judgment are not vested in the person by whom the application for registration is made (which is the provision relied upon here), and finally a provision relating to lack of service and appearance. It is not said that this last provision is here relevant.
The provision relied upon by the Sorensons is that any rights under the judgment are not vested in the plaintiff in this Court. The difficulty with this submission is that the judgment which is sought to be registered records Rent Plus as the plaintiff. That is a regular judgment which on its face is final and binding. It is not the role of this Court to go behind that judgment except in the manner authorised by s 7.
Secondly, I am not at all persuaded, even if it was appropriate, to go behind the judgment and examine the correctness of it, that the judgment is obviously wrong or obviously irregular. The question of the application of procedural rules is one upon which minds can always differ. But there is nothing from what I have seen and read which would make it obvious to me that Tuohy J was in error in making the order he did.
The decision of Anderson J in McDonald v Simmons seems to me to provide clear authority which supports the power of the Court in the application of the Rules of Court, to join parties to litigation although a final judgment has been delivered. The decision did not concern the District Court Rules which were relied upon in the application, but rather specific provisions of the then applicable High Court Rules.
However, there is a consistency between the words used in Rule 77 of the New Zealand High Court Rules, namely "...the Court may, at any stage, order any of such persons to be made parties to the proceedings ...", and the words used in Rule 103 of the New Zealand District Court Rules, namely that "The Court may at any stage of a proceedings ... order ...".
The consistency of use of the phrase "at any stage of a proceedings ..." satisfies me that the submissions by the Sorensons that the order of Tuohy J in reliance on Rule 103 of the New Zealand District Court Rules, substituting Rent Plus as a plaintiff after judgment, is nonsensical, cannot be accepted. To the contrary, it seems to me, if I should be required to separately determine the issue, that there is adequate power in the New Zealand District Court Rules to make the order which Tuohy J made.
Thirdly, if there was any such error, the appropriate forum for it to be corrected is in the District Court of New Zealand or else on appeal from that Court. This Court is not the appropriate forum for correction of such error.
In the result, I reject the Sorensons' submission that the judgment of the New Zealand District Court at Wellington is irregular because it incorrectly names Rent Plus as the plaintiff, and the Court ought refrain from registering it.
It follows from this conclusion that I do not accept the Sorensons' submission that Rent Plus is precluded from relying upon its status as the plaintiff and the judgment creditor in the New Zealand proceedings judgment to demonstrate that it is the person in whom the rights under the New Zealand judgment are vested.
The submission that this Court ought reject the registration of the New Zealand judgment upon the basis of s 7(1)(viii) of the FJ Act is rejected.
The no appeal issue
Rent Plus submitted that this Court was entitled to have regard to the fact that the Sorensons had not sought to appeal against the judgments entered in New Zealand, either the initial summary judgment or the order varying the name of the party, and accordingly, insofar as the summary judgment remains in place and has not been set aside, it is an enforceable judgment in New Zealand and accordingly able to be enforced here.
The Sorensons submit that the absence of an appeal in New Zealand is irrelevant to any consideration.
It is correct as a matter of fact that there has been no appeal against the judgment, nor has there been any other application to set it aside, or prevent it from being enforced in New Zealand.
I do not think that this issue carries great weight in the present analysis. The fact is that the judgment is on its face a regular and enforceable judgment. I have not been satisfied when considering the second issue that there is anything irregular about it. It remains enforceable in New Zealand in the absence of it being set aside. There has been no appeal seeking to set it aside, and no other application so to do.
Possible confusion
Accordingly, there is no reason to refrain from enforcing the judgment, if the other relevant provisions of the FJ Act are fulfilled.
Throughout this judgment, I have referred to the Sorensons, by using that spelling which reflects both the original commercial contract and the spelling used in the New Zealand judgment. As well, that is the spelling used by Mr and Mrs Sorenson on the Notice of Appearance filed in this Court on 7 September 2011.
Various documents in the file, including pleadings, spell their surname differently. There is no confusion about their identity, and the misspelling of their surname ought be seen as nothing more than an accidental slip or spelling error. If the parties wish any of these minor errors to be corrected, then application ought to be made.
Conclusion
In summary, I have concluded:
(a) Rent Plus have taken a valid assignment from Finance Portfolio of the benefit of the New Zealand judgment against the Sorensons;
(b) The judgment by which Rent Plus was substituted as plaintiff was not irregular and there is no reason to refrain from enforcing it;
(c) There is no existing challenge to the enforceability, in New Zealand, of the New Zealand District Court judgment.
This means that I have rejected each of the bases upon which the Sorensons have challenged the registration of the judgment.
There is no other basis upon which the Court would refrain from registering the judgment and that is the course which I propose.
However, having regard to the provisions of Part 53 of the UCPR, it is appropriate that counsel for Rent Plus formulate with precision the applicable orders which are required, and to bring those orders in.
Counsel is to do so within seven days of the delivery of the judgment, and provide those formulated orders to Mr and Mrs Sorenson. If they do not agree with the formulated orders, they are to provide to Rent Plus and the Court within seven days thereafter, the orders for which they contend.
Orders
I make the following orders:
(1) Order that the plaintiff provide to the defendants and to the Court the short minutes of order contended for within seven days of the date of delivery judgment.
(2) Order that the defendants provide to the Court within seven days thereafter, an indication of whether or not those orders are agreed, and if not agreed, the short minutes of order for which they contend.
(3) Stand proceedings over to 26 February 2013.
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Decision last updated: 13 February 2013
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