Antons Trawling Ltd v Dawson & Associates Ltd

[2016] NZHC 980

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV 2014-442-070 [2016] NZHC 980

BETWEEN

ANTONS TRAWLING LIMITED

Plaintiff

AND

DAWSON & ASSOCIATES LIMITED Defendant

Hearing:	21 April 2016 (via teleconference)
Counsel:	C M Meechan QC for Plaintiff M C Harris and O Ostrovsky for Defendant
Judgment:	16 May 2016

JUDGMENT OF BROWN J

[1]      This proceeding was heard in Nelson over a two week period in February this year. At the conclusion of the hearing on 18 February 2016 I reserved my judgment.

[2]      On 2 March 2016 the plaintiff filed an application in reliance on ss 98 and 99 of the Evidence Act 2006 for an order granting leave to adduce further evidence subsequent to the trial, namely a digital recording of a telephone conversation between Mr Barbarich,  Mr Dawson  and Mr Baker of ASB Bank  Limited which occurred on 8 September 2009.

[3]      The evidence which the plaintiff seeks to adduce relates to the third particular of claim in para 14 as amended, namely the allegation that the defendant misadvised Antons as to its (Dawson’s) obligations to release the vendor finance funds, advising Antons that it had given an undertaking to do so and there was no legal basis upon

which Dawsons could retain the funds.

ANTONS TRAWLING LTD v DAWSON & ASSOCIATES LTD [2016] NZHC 980 [16 May 2016]

[4]      At the trial Mr Barbarich had given evidence that Mr Dawson advised him in the course of a telephone discussion on or about 29 September that Mr Dawson had given an undertaking to pay certain funds away.

[5]      Although Mr Dawson had not directly engaged with that contention in his brief of evidence, in the course of cross examination he said that he had no recollection of using those words.  Indeed he said that the allegation that he would have used that terminology struck him as so unusual that he did not think it needed to be commented on.  He stated that he would be surprised if he had used the word “undertaking”.

[6]      In his affidavit in support of the application Mr Barbarich explained how he had a practice of recording telephone conversations using the function on his computer which was linked to the telephone system.  The hard drive on the computer that he had at the time had become corrupted in about March 2009 and it was removed and a new hard drive installed.

[7]      He said that in preparing his evidence he had been aware of the potential significance of the 29 September 2008 conversation and had made a search of the office  and  archives  for  the  hard  drive  but  had  been  unable  to  find  it.    On

3 February 2016 he had located three hard drives which were sent to a firm called Computer Forensics to investigate whether there was any way of recovering data from them.  On his return to Auckland after the first week of the trial he was advised that it had been possible to restore the data from the hard drive but there was nothing for the date in question, namely 29 September 2008.

[8]      Subsequent to the completion of Mr Dawson’s evidence on 17 February 2016

Mr Barbarich had listened to all of the recordings on the restored hard drive.  He had found a recording of a conversation between himself, Mr Dawson and Mr Baker on

8 September 2008 which was 42 minutes long.  In the conversation they talked about the letter of credit and the fact that it was a little unusual and presented a number of difficulties  in  terms  of  presentation  and  negotiation.     In  the  course  of  that conversation Mr Dawson made a comment which included the phrase “then disburse it as per a solicitor’s undertaking”.

[9]      It  was  the  plaintiff’s  submission  that  the  recording  of  the  telephone conversation was cogent and went to a critical issue in the case, namely whether Mr Dawson told Mr Barbarich in the telephone conversation on 29 September 2008 that  Mr Dawson  had  given  “an  undertaking”.     The  plaintiff  emphasised  that Mr Dawson used the very word which he said had struck him as “so unusual” that he would have used it.  It was submitted that the way in which Mr Dawson rejected the proposition  that  he  used  the  word  “undertaking”  in  the  29 September  2008 conversation made the fact that he had used it in an earlier conversation so cogent.

[10]     There was common ground as to the applicable principles.  Ms Meechan QC drew attention to the recent judgment in Jackson v Te Rangi where Duffy J accepted that in the application of the statutory provisions, the common law principles for the admission of additional evidence still provide helpful guidance.1    Her Honour then referred to the following summary of the relevant common law principles in Equiticorp Industries Group Ltd (In Statutory Management) v Hawkins:2

1The discretion should be exercised sparingly once the cases on both sides have closed and leave should only be given in exceptional circumstances;

2Only if the failure to call evidence at the proper time is adequately explained should the discretion be exercised;

3        The justice of the case must require the admission of the additional

evidence …;

4Leave will be refused if the evidence would have been available had due diligence been exercised;

5        If the party is taken by surprise, leave will be more readily granted;

and

6The distinction between a failure to tender evidence, and an election not to, can be important.

1      Jackson v Te Rangi [2014] NZHC 2918, [2015] 2 NZLR 351.

2      Equiticorp Industries Group Ltd (In Statutory Management) v Hawkins [1996] 2 NZLR 82 (HC)

at 85, cited in Jackson above n1 at [113].

[11]     In addition Mr Harris cited the three criteria stated by Tipping J in Savill v

Chase Holdings (Wellington) Ltd:3

1.The Court should consider whether the new evidence could with reasonable diligence have been adduced at the trial or whether the party seeking to adduce the further evidence has shown on a reasonable basis that he did not earlier appreciate its significance …

2.The Court should consider whether the new evidence is such as will either (a) be conclusive of the case; or (b) at least be likely to have a substantial bearing on a central issue.

3.The Court should consider from the nature of the new evidence sought to be adduced how credible and reliable it is likely to be.

[12]     The defendant  contended  that  the plaintiff  had  not  offered  a satisfactory explanation for the late production of the recording of the telephone discussion.  It suggested that the explanation for the location of the old hard drives indicated that the initial searches had been carried out with insufficient care.  It further argued that Mr Barbarich’s  practice  of  recording  important  conversations  should  have  been disclosed in Part 4 of the plaintiff’s affidavit of documents and it said that “it beggars belief” that someone who had taken the trouble to develop a practice of recording such  communications  had  no  idea  when  preparing  his  affidavit  of  documents whether he had recorded any of his calls with Mr Dawson.

[13]     I would not decline to admit the evidence for those reasons advanced by the defendant which demand a high standard of compliance with the discovery rules.  I accept as reasonable Mr Barbarich’s evidence that he did not know of the existence of the recording of the earlier conversation and his explanation of the circumstances in which the computer hard drive had been found and the data on it recovered.

[14]     However  the  defendant’s  argument  that  the  new  evidence  will  have  no material bearing on any matter in issue has greater merit.  It makes the point that in the  recording  Mr Dawson  asks  if  the  bank  will  release  the  original  documents required to negotiate the letter of credit because SB Co will need them later to register the vessel.  Mr Baker confirms that the documents will be released.  After

describing one of the ways in which that might occur Mr Dawson says:

3      Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 (HC) at 291–292.

I think the seller might have a, or the buyer might have difficulty with that because he is looking for an intermediary which is me to receive the money and then disburse it as per a solicitor’s undertaking.

[15]     As Mr Harris submitted:

At this stage Mr Dawson is not saying that he has given an undertaking or that he has agreed (or will agree) to give one.  This is not at all surprising. Mr Barbarich had not yet left Busan.  The settlement documents had not yet been drafted, let alone negotiated and executed.

[16]     By contrast the plaintiff contended:

The evidence which the plaintiff seeks to adduce shows that Mr Dawson did indeed use that word when discussing the process involved in presenting the letter of credit for payment and the release of funds. The evidence which the plaintiff seeks to adduce is clearly relevant and should be put on the scale when the Court comes to decide whether it prefers the Barbarich or Dawson recollection of the conversation of 29 September 2008.

[17]     In my view whether the word “undertaking” was used in the course of the alleged 29 September 2008 telephone conversation is not of critical importance to the allegation of negligent advice.   The plaintiff ’s complaint is that the defendant advised that the funds had to be released and could not be retained.  The defendant’s position is that, even if such advice was given, it was not negligent.

[18]     The significance of the reference to an undertaking appears to relate to the legal obligation to release the funds.   It is not the plaintiff’s case, as I understood Ms Meechan to confirm, that Mr Dawson asserted that he had given some form of undertaking over and above the obligation which he said the remittance authority imposed upon him.

[19]     Furthermore I do not consider that the fact that Mr Dawson used the word in a conversation with a banker some three weeks earlier is of particular moment on the issue whether he used it in the telephone conversation with Mr Barbarich, even taking into account the manner in which he rejected the propositions put to him in cross-examination.

[20]     I consider that the significance of the proposed new evidence falls well short of the standard of having a substantial bearing on a central issue and I do not accept that the justice of the case requires its late admission.

[21]     Consequently the plaintiff’s application is declined.   Costs (if any) can be

addressed in the context of the proceeding itself.

Brown J

Solicitors:

Vlatkovich McGowan, Auckland

Gilbert Walker, Auckland