Angland v Mower HC Christchurch CIV-2008-409-001990
[2010] NZHC 2344
•17 December 2010
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2008-409-001990
BETWEEN JOHN SHEARER ANGLAND First Plaintiff
ANDTREVOR JOHN BURT Second Plaintiff
ANDMICHAEL TONG CHEE CHIN Third Plaintiff
AND THOMAS ELWIN MOWER Defendant
ANDPHILLIP BOYD WILSON First Counterclaim Defendant
ANDRONALD W ANGLAND & SON Second Counterclaim Defendant
Hearing: 8 December 2010
Judgment: 17 December 2010
RESERVED JUDGMENT OF ASSOCIATE JUDGE DOHERTY Defendant’s application to strike out counterclaim
by second counterclaim defendant
Introduction
[1] The second counterclaim defendant (as the firm of solicitors of which the first plaintiff is the principal) has counterclaimed against the defendant for damages caused by alleged innocent and/or negligent misstatement and/or deceit in proceedings in the United States of America wherein the defendant obtained
judgment by default against the first plaintiff. The second counterclaim defendant
ANGLAND AND ORS V MOWER AND ORS HC CHCH CIV-2008-409-001990 17 December 2010
claims that the defendant mislead the US Court to ensure that that Court would assume jurisdiction and enter judgment against the first plaintiff.
[2] The defendant seeks to strike out that counterclaim (r 15.1 High Court
Rules).
[3] Since the original counterclaim was filed (2 September 2010), and in response to this application, the second counterclaim defendant has proffered a draft amended statement of counterclaim seeking redress for abuse of process, malicious civil proceedings, equitable fraud and fraudulent misrepresentation
Strike out principles
[4] The principles to be applied are set out in cases such as Attorney-General v
McVeagh [1995] 1 NZLR 558, Attorney-General v Prince & Gardner [1998] 1
NZLR 262 (CA) and Couch v Attorney-General [2008] 3 NZLR 725 (SC). They are trite: a claim is not to be struck out unless it is so clearly untenable that it could not succeed (even after amendment), and in the assumption that all facts alleged in the statement of claim (and uncontroverted facts in relevant affidavits) can be proved to be true.
[5] I intend to deal with the application on the basis that the second counterclaim defendant intends to file the draft amended counterclaim as that is how the matter was argued.
The application
[6] The defendant’s application is based on the simple proposition that the causes of action (in either the counterclaim or intended amended counterclaim) contravene the principle that there is no cause of action against a witness for statements made in the ordinary course of any proceeding (see Paragon Services v Stiassny HC Auckland CIV-2006-404-000593, 9 August 2006, Associate Judge Doogue and Dentice v Valuers Registration Board [1992] 1 NZLR 720).
[7] The overarching principle is the public interest (as Eichelbaum CJ put it in
Dentice at 724):
As a matter of policy in order to ensure the free and unfettered availability of witnesses in any cause, they are provided with an absolute immunity from civil action, regardless of the nature of the proceeding, and irrespective of whether the evidence was true or false, or given in good faith or with malice.
[8] The difference between the counterclaim and the amended counterclaim is that the causes of action are recast. The content of the pleading is the same. It relies upon the fact of and content of the defendant’s pleadings in claims against the first defendant (and others) in two proceedings: one filed in the District Court of the State of Utah, another in the District Court of the State of Nevada (collectively referred to as “the US proceedings”). Further, the counterclaims (both the original and the amended) identify what the second counterclaim defendant says are conflicts between the pleadings in the separate Nevada and Utah proceedings which the second counterclaim defendant says show the intention of the defendant to do whatever was necessary to convince the Nevada court it had jurisdiction. The second counterclaim defendant and also expounds the “correct position” from the second counterclaim defendant’s point of view. The counterclaim attempts to correct what the second counterclaim defendant says is fraudulent, malicious and misleading about the US proceeding.
[9] The amended counterclaim specifically refers to the contents of an affidavit filed in the District Court of the State of Nevada and alleges the defendant has perjured himself in the affidavit and that it deliberately misrepresents the true position so as to lead the Nevada Court to assume jurisdiction.
[10] Paragon Services was a case similar to this. In that case the plaintiffs alleged the first defendant perjured himself and misrepresented the true position by failing to put the true facts forward in injunction proceedings. The Court helpfully summarised the law applicable. I adopt Associate Judge Doogue’s analyses which, as they apply to this case, may be summarised as:
i)There is no cause of action against the witness for anything said by way of affidavit in the ordinary course of any civil proceeding (Halsbury’s Laws of England 17(1) (4th ed, 2002)).
ii)This is so even if what was said was said falsely and maliciously without any reasonable or probable cause (Dawkins v Lord Rokeby (1873) LR 8 QB 255, 263). The rationale for the rule is public interest (Dentice).
iii)The public interest and thus witness immunity is not limited to statements actually given in Court and also extends to statements or documents made for the purpose of
contemplated litigation (B v Attorney-General [1999] 2 NZLR
296).
The amended counterclaim pleading
[11] Each cause of action refers to the pleadings and analysis (referred to in [8]
and [9] above) in the amended counterclaim.
Abuse of process
[12] The first cause of action pleads:
20.The defendant has an ulterior purpose for ensuring the US Courts assume jurisdiction.
21.The defendant intended to exert financial and emotional pressure on Angland by the wrongful use of a lawful process. In order for the defendant to exert that pressure the defendant misled the US Courts in order for the US Courts to assume jurisdiction.
Malicious civil proceeding
[13] The second cause of action pleads:
22.The defendant had no reasonable and probable cause for issuing proceeding in the US Courts against Angland personally and he did so maliciously believing that Angland had defrauded him and that Angland should be held to account for his fraud.
23.The defendant had an improper purpose for issuing proceedings against Angland in the US Courts. The defendant wanted to harm Angland both financially and professionally.
24.The defendant did not issue proceedings against the first counterclaim defendant who was at all material times a director and shareholder with Angland in Game Ranch International Limited (GRI). The defendant was well aware that GRI was the relevant entity. He refers to this knowledge in his US affidavit (see paragraph 11(a) (item 6 above).
25.The defendant was engaged in various business-related activities with the first counterclaim defendant and therefore pursued Angland personally as opposed to GRI. The defendant’s dealings relating to his purchase of shares in HSL were conducted through GRI at all material times.
26.The defendant’s misrepresentations made to the US Courts caused the Nevada District Court to assume jurisdiction and to enable the defendant to pursue his wrongful malicious claim against Angland.
Equitable fraud
[14] The third cause of action pleads:
27.The defendant’s misrepresentations, whether made innocently or recklessly, amounted to a fraud in equity.
28.The defendant’s fraud in equity caused the Nevada District Court to assume jurisdiction and enabled the defendant to obtain a judgment by fraud against Angland.
29.The defendant’s fraud in equity perpetrated a defective and unconscionable legal process in the US Courts.
Fraudulent misrepresentation
[15] The fourth cause of action pleads:
30.The defendant’s misrepresentations were made recklessly and/or intentionally and amount to a fraud.
31.The defendant’s misrepresentations caused the Nevada District Court to assume jurisdiction and enabled the defendant to obtain a judgment by fraud against Angland.
32.The defendant’s fraud perpetrated a defective and unconscionable legal process in the US Courts.
[16] Each cause of action relies on the affidavit evidence of the defendant and the pleadings in the US proceedings and seeks an inference to be drawn from proof of the existence of the contents of the affidavit and the pleadings. The only reference to extraneous factors is an allegation that the first counterclaim defendant was (at least initially) involved with the defendant in assisting him with the US litigation. The second counterclaim defendant says: the first counterclaim defendant visited the defendant in prison, made numerous visits and calls to the defendant’s US attorneys and New Zealand solicitors, knew all the material dates and details relating to relevant meetings between the parties in both the US and New Zealand, and knew the details of discussions relating to the defendant’s purchase of the shares the subject of the current litigation. There is also motive attributed to the first counterclaim defendant.
[17] All of the causes of action are hinged on the concepts of ulterior purpose and malice on the part of the defendant in issuing the US proceedings, and seek to prove that malice by reference to the pleadings and affidavit evidence used in the US proceedings.
[18] The tort of malicious civil proceedings is as yet unrecognised in New Zealand. The closest it has come to fruition is reflected in the observations of Hammond J in Rawlinson v Purnell, Jenkinson and Roscoe [1991] 1 NZLR 479. In Rawlinson the Court observed that there was at least some possibility that New Zealand law might recognise such a tort, and his Honour set out what he considered would be the elements of such a tort as:
a) The defendant must have advanced a civil cause against the plaintiff.
b)The application must have been ultimately resolved in the plaintiff’s favour.
c) The defendant must have had no reasonable or probable cause for bringing the civil proceeding.
d)The defendant must have acted maliciously in instituting or continuing the civil proceeding.
e) Damage of a kind for which the law will allow recompense must have been caused to the plaintiff.
[19] I agree with counsel for the defendant that even if a cause of action in malicious civil proceedings exists, if the elements identified in Rawlinson are the correct ones the second counterclaimant could not succeed because element b) has not occurred. Also, in this case the second counterclaim defendant is not the defendant in the US proceedings. The second counterclaim defendant is the firm of solicitors of which the first plaintiff (defendant in the US proceedings) is a principal. Therefore the tort (if it exists) has not been committed against the second counterclaim defendant. There might be an argument that in such a case as this the second counterclaim defendant is the alter-ego of the plaintiff. My view is that that would be too remote, as the relationship between the first plaintiff and the second counterclaim defendant is founded in the contractual (partnership) obligations between the two of them and in the context of the US proceedings that is an irrelevancy. But I am conscious of the observation of the Supreme Court in Couch that the Court should be particularly slow to strike out a claim in any developing area of the law.
[20] The other causes of action are merely other facets of the same concept. The fact that the causes of action are founded in other court proceedings would ordinarily lead me to the view that the witness immunity policy means the counterclaim cannot succeed and should be struck out in its entirety.
[21] There is a difference between this case and others referred to by the defendant. Paragon Services and Dentice can be distinguished. They are New Zealand cases where the policy protection was for the benefit of parties and witnesses in New Zealand litigation. In this case the protection is sought in respect of evidence given in litigation outside the jurisdiction of the New Zealand Courts. The matter was not argued before me, but there may well be a distinction to be drawn. Should the New Zealand Courts recognise as a matter of policy that overseas
litigants be protected against action in New Zealand which is based on their utterances in the overseas litigation?
[22] In Dawkins v Lord Rokeby (1873) LR8 QB255, 263 (cited in Paragon
Services) the Court said:
These two decisions, Yates v Lansing and Reeves v Smith, are themselves direct authorities that no action lies against the parties or witnesses for anything said or done, although falsely and maliciously and without any reasonable or probable cause in the ordinary course of any proceeding in a Court of Justice. [emphasis mine]
[23] The implication from this extract is that the policy applied in England but in respect of evidence led in the English Courts (“in the or ordinary course of any proceeding in a Court of Justice”). That is, the policy was an internal one. Dawkins, and the two cases referred to in the quotation, were English cases about English litigation.
[24] In Chahoud v Koleda [2008] NSWSC 1060 the Supreme Court of New South Wales found that witness immunity and the finality of judicial proceedings were not necessarily confined to proceedings in New South Wales, nor Australia. In that case a Lebanese national who was a Brazilian resident and who had visited Australia and fallen ill there had appointed the plaintiff (who was his nephew) as his attorney executor and sole beneficiary of his will. A Sunni Court in Lebanon determined a dispute about the validity of the will adversely to the plaintiff on the basis of letters provided to the foreign Court by the defendant. The defendant had been the deceased’s medical practitioner in Australia. The letters expressed the defendant’s opinion that the deceased lacked capacity to execute a will. The plaintiff commenced pleadings in negligence, alleging the letters written by the defendant were negligently mistaken. Amongst other things, Rothman J considered whether “an absolute immunity from suit” operated in favour of the defendant in respect of certain allegations in the statement of claim.
[25] The Court had been asked to answer three preliminary questions (including the immunity issue above) on the basis of facts agreed by the parties for the purpose of that hearing. The Court proceeded to deal with the immunity issue even though
there was no evidence of the law or procedure adopted by the Sunni Courts, although on the assumption “that the legal system is a civil law system through which the ecclesiastical Courts operate and they operate fairly to achieve outcomes in accordance with the law of Lebanon”. Rothman J quoted at length from the decision of the High Court in Australia in D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA
12 which determined for Australia that witness immunity is the same as that which grants immunity to jurors, Judges and advocates. At page 754 of Chahoud, the Court concluded:
“The advancement of public justice” or “considerations of public policy” and the finality of judicial proceedings are not matters that are confined to proceedings in New South Wales, nor in Australia. As a matter of strict theory, if the witness immunity applies to proceedings in another state or jurisdiction, then there is no obvious reason why it does not apply to proceedings in the United Kingdom, the United States or, in this case, Lebanon.
[26] The Court had not been assisted by counsel for the plaintiff, whose submission was determined by Rothman J to have missed the point, as the plaintiff appeared to have rested his argument on privilege rather than witness immunity.
[27] I am not sure that I agree with the conclusion of Rothman J without evidence as to the system of law in the overseas jurisdiction. Rothman J did however recognise that in some circumstances there might be such a need. At p754 he said:
Different issues may arise if there were an allegation of fraud or a procedure so antithetical to the process of judicial proceedings in this State that a court formed the opinion that the proceedings were not of a kind that would be recognised as appropriate for the application of the immunity.
[28] One can understand the policy applying to the local jurisdiction where there is confidence in the judicial system, the judiciary and the rule of law. That confidence extends to the aggrieved litigant obtaining redress through the Courts. That is, malicious litigants being exposed through the hearing, review and appeal procedures of our legal system. But why should the policy extend to Courts and litigation outside the local jurisdiction as a matter of policy itself? Unfortunately, there are other jurisdictions where the judicial system, the judiciary and the rule of law are subjected to the influences of corruption, political pressure and tyranny. A policy to protect litigants and witnesses by providing immunity from civil action
should not in all conscience necessarily extend to jurisdictions outside of our own. There may of course be jurisdictions in which New Zealand Courts might have such confidence so as to apply the policy. But cases would have to be assessed on an individual basis.
[29] Ordinarily I would have called for further submissions, but with the Court closing for the Christmas vacation today and my warrant to exercise this jurisdiction ending on 1 January 2011, there is simply not time to do so.
[30] I am of the view that there is a real argument as to this jurisdictional question and the defendant has not persuaded me the counterclaim should be dismissed. There is also the fact that the second counterclaim defendant relies upon the alleged complicity of the defendant and the first counterclaim defendant, who is a New Zealand resident and whose alleged conduct must be taken to be provable. With evidence, this might well found an inference so as to make the causes of action arguable.
Outcome
[31] The application is dismissed.
Costs
[32] Both counsel agreed that costs should follow the event on a schedule 2B basis. But in view of the fact the parties have not had the full opportunity to argue the jurisdictional policy of witness immunity, I reserve the matter of costs to be
revisited following the outcome of the substantive issue.
Associate Judge Doherty
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