CBL Insurance Limited v Skordakis
[2013] NZHC 3447
•18 December 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-003311 [2013] NZHC 3447
IN THE MATTER of the Reciprocal Enforcement of
Judgments Act 1934
BETWEEN
CBL INSURANCE LIMITED Plaintiff
AND
NICHOLAS SKORDAKIS Defendant
Hearing: 29 November 2013 Appearances:
G J Turner and A C N de Hamel for the Applicant
R A Edwards and J Woods for the RespondentJudgment:
18 December 2013
JUDGMENT OF GILBERT J
This judgment was delivered by me on 18 December 2013 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:………………
CBL INSURANCE LIMITED v SKORDAKIS [2013] NZHC 3447 [18 December 2013]
Introduction
[1] CBL Insurance Limited (CBL) has applied to set aside the registration of a foreign judgment pursuant to s 6 of the Reciprocal Enforcement of Judgments Act 1934 on the grounds that the judgment is not a judgment to which Part 1 of the Act applies or, alternatively, that the judgment was obtained by fraud. Mr Turner advises that CBL no longer pursues the first of these grounds.
[2] Rather than arguing the merits of the application, CBL seeks an adjournment of it pending the disposal of its appeal to the Supreme Court of Victoria. This is because CBL accepts that the outcome of its appeal will be determinative of the matter. It will not pursue its application to set aside the registration of the judgment if its appeal fails.
[3] CBL’s concern is that if the judgment is enforced before the appeal is determined, it may not be able to recover the money from Mr Skordakis if its appeal succeeds. The adjournment is sought as a way of staying execution of the judgment against CBL’s assets, which are all in New Zealand, pending disposal of the appeal.
[4] Mr Skordakis opposes the application for an adjournment. He says that CBL has twice applied unsuccessfully in Australia for a stay of execution pending appeal. CBL did not exercise its right of appeal against the second of these decisions. The stay was refused primarily because Mr Skordakis needs to enforce the judgment so that he can pay the legal costs he has incurred to date and the further costs required for the appeal. Mr Skordakis obtained an adjournment of the appeal to enable him to enforce the judgment in New Zealand. Ms Edwards submits that the present application for an adjournment should not be granted because it would defeat the intent of the two Australian decisions declining a stay and the further decision granting an adjournment of the appeal.
Statutory basis for the application
[5] Section 7(1) of the Act provides:
If, on an application to set aside the registration of a judgment, the applicant satisfies the High Court either that an appeal is pending, or that he is entitled and intends to appeal, against the judgment, the court, if it thinks fit, may, on such terms as it may think just, either set aside the registration or adjourn the application to set aside the registration until after the expiration of such period as appears to the High Court to be reasonably sufficient to enable the applicant to take the necessary steps to have the appeal disposed of by a competent tribunal.
[6] The Court has a broad discretion under s 7 of the Act to grant an adjournment of an application to set aside the registration of a foreign judgment pending an appeal. In Hunt v BP Exploration Company (Libya)1 Barker J described the discretion as being “very wide indeed”. His Honour considered that the appropriate course in that case was to adjourn the application pending disposal of an appeal which he accepted was being pursued in good faith. The Judge considered that there was no need to set aside the registration of the judgment pending the appeal and that
justice was best served by simply adjourning the application, which operated as a stay of execution.2
Mr Skordakis’ claim
[7] On 1 May 2007, Mr Skordakis entered into a contract with a builder for the construction of two units in Victoria for AUD 705,000 (the first contract). On
22 May 2007, the parties entered into a second contract for the construction of the same two units at a price of AUD 438,000 (the second contract).
[8] On 31 May 2007, CBL issued two certificates of insurance, one for each unit. The declared contract price for each unit was AUD 250,000. The insurance covered non-completion of the building works and defective building work. CBL contends that the insurance related to the second contract although the certificate in each case referred to a building contract dated 31 May 2007.
[9] The builder did not complete the works and went into liquidation on
28 May 2010. It is alleged that there were defects in the building works.
1 Hunt v BP Exploration Company (Libya) [1980] 1 NZLR 104, at 114.
2 At 114 and 123.
[10] Mr Skordakis initiated a claim against CBL in the Victorian Civil & Administrative Tribunal (the Tribunal) for AUD 400,000, being the maximum amount payable under the insurance. When CBL became aware of the first contract during the course of these proceedings, it purported to cancel the insurance on the basis that Mr Skordakis had made a false, fraudulent and misleading claim which exceeded the amount claimable under the second contract and had failed to disclose material facts, including the first contract. The contract of insurance provided that cancellation shall take effect 30 days after written notice is given.
The Tribunal’s decision
[11] In a decision released on 15 November 2012, the Tribunal made an order in favour of Mr Skordakis in the sum of AUD 260,982 plus interest. The Tribunal found that CBL’s purported cancellation of the policy was ineffective because the
30 day period had not expired by the time of the hearing and the loss claimed under the policy had been suffered before the policy was terminated. The Tribunal also rejected CBL’s claim that the units could not have been built for the contract price of AUD 438,000.
The appeal
[12] On 20 December 2012, CBL applied for leave to appeal. On
28 February 2013, the Supreme Court of Victoria granted CBL leave to appeal the Tribunal’s decision on seven questions of law. I accept that CBL is pursuing its appeal in good faith and that its appeal has prospect.
CBL’s first stay application
[13] CBL applied to the Tribunal for a stay of execution pending appeal. This was declined on 17 January 2013. The Tribunal summarised its reasons for declining a stay as follows:3
[16] The Respondent’s concern here is that, if the money is paid over to
Mr Skordakis he might spend it in various ways or dissipate it. There is no
3 Skordakis v Contractors Bonding Limited VCAT D200/2011, 12 February 2013.
reason to suppose that he is going to dissipate it. He owns two units, albeit they are in a condition that require a great deal of money to be spent of them and they are also subject to a mortgage. He owes money to one solicitor and that solicitor has a lien over the proceeds of the litigation and he owes money undoubtedly to his current solicitor.
[17] There is nothing in the material to suggest that he is about to abscond or that he has no assets in the jurisdiction. The prospect that, if a party enjoys the fruits of his judgment, he might dispose of the money before the appeal is heard must be present in any case involving judgment for a monetary sum. In the case of an insolvent person or someone who has no assets within the jurisdiction there might be some basis for that concern but that is not the situation here.
CBL’s second stay application
[14] CBL made a second application for a stay of execution pending the appeal. This was declined by Mukhtar AsJ in the Supreme Court of Victoria at Melbourne on
28 February 2013.4 CBL was entitled to appeal against this decision to a Judge of
the Supreme Court of Victoria. However, it chose not to exercise that right.
Mr Skordakis’ application for stay/adjournment of appeal
[15] CBL’s substantive appeal from the Tribunal’s decision was scheduled to be heard in the Supreme Court of Victoria on 25 July 2013. Mr Skordakis applied for a stay or an adjournment of the appeal to enable him to register the judgment in New Zealand and enforce it against CBL’s assets here. He deposed that he was unable to meet his legal costs without payment of the judgment.
[16] Mr Skordakis’ application was granted by Zammit AsJ on 30 May 2013 for reasons set out in the following passages of his judgment:5
[29] In this case, Mukhtar AsJ refused CBL a stay on the VCAT order. However, by the passage of time and the refusal to pay the VCAT judgment, CBL in effect has its stay. There is no evidence that CBL cannot pay the VCAT judgment. I am satisfied that without payment, Mr Skordakis will have difficulty financing a response to an appeal. Therefore, I consider that CBL is instrumental by its conduct in frustrating the Court’s processes. It seems CBL has made a calculated decision not to pay the judgment order which has the affect (sic) of handicapping Mr Skordakis’ ability to properly respond to the appeal.
4 Contractors Bonding Limited v Skordakis VSC S CI 2012 06974, 28 February 2013.
5 Contractors Bonding Limited v Skordakis VSC S CI 2013 6974, 30 May 2013.
[30] CBL will enjoy the rights of the appeal process but have in a calculating way diminished Mr Skordakis’ right to fully participate in the appeal process.
[31] The stay sought by Mr Skordakis is temporary. It is estimated that it will take approximately three months to register the VCAT judgment in New Zealand and take the necessary steps to enforce the VCAT judgment against CBL. Mr Whitten, counsel for CBL, conceded there was no prejudice to CBL if a temporary stay is imposed. Mr Whitten raised the concern that the evidence before the Court suggests that Mr Skordakis had financial difficulties and that in the event that the appeal was successful it could be rendered nugatory (if Mr Skordakis used any funds from the VCAT judgment). However, Mr Woods confirmed that the evidence before Mukhtar AsJ when CBL sought a stay in relation to Mr Skordakis’ financial position reflected his current position. That is, that Mr Skordakis still has some equity in the property which he can access in due course. However, as matters currently stand he has difficulty accessing the necessary cash flow to enable him to pay for legal representation.
[32] … I consider the reason for the adjournment, namely time for Mr Skordakis to enforce the VCAT judgment in New Zealand to obtain funds to properly respond to the appeal, is an appropriate basis for seeking the adjournment. I consider that justice would be impeded if Mr Skordakis is unable to pay for legal representation to properly respond and participate in the appeal.
Should the application to set aside the registration be adjourned?
[17] It is apparent from the passages I have quoted above that CBL’s stay applications were rejected on the basis that its appeal rights will not be rendered nugatory if a stay is declined. Further, Mr Skordakis needs the fruits of his judgment, to which he is entitled, to enable him to pay his legal costs and be properly represented in the appeal. Mr Skordakis’ application for an adjournment and/or stay of the appeal was granted for the same reasons.
[18] CBL’s application for an adjournment of its application to set aside the registration of the judgment is advanced solely on the basis that there should be a stay of execution pending appeal. It is nothing more than a re-run of the same arguments that have already been rejected on three occasions. CBL chose not to exercise its right to appeal against the decision declining its second stay application. The issue as to whether or not a stay should be granted has therefore been finally determined against it.
[19] The question as to whether there should be a stay of execution of the judgment pending an appeal to the Supreme Court of Victoria is appropriately dealt with by that Court. It would be inappropriate for this Court to exercise its discretion under s 7 of the Act in a manner that defeats the object and intent of the Supreme Court’s decisions, particularly when the same grounds are relied on.
[20] Mr Turner endeavours to overcome this problem by referring to recent correspondence between the parties showing that CBL is prepared to release what it considers will be sufficient monies to enable Mr Skordakis to pay the future costs of his appeal. Mr Turner submits that this proposal addresses the concerns expressed by the Supreme Court of Victoria and would justify me coming to a different conclusion.
[21] I do not accept this submission. CBL ought to have made any such proposal in support of its applications for stay and in opposition to Mr Skordakis’ application to stay or adjourn the appeal. Further, CBL is not prepared to release sufficient monies to enable Mr Skordakis to meet all of his legal costs. I do not see why Mr Skordakis’ legal advisers, who have successfully prosecuted his claim to date, should be left unpaid merely because CBL is concerned about recovering its money if it succeeds on its appeal. I can see no justification for requiring Mr Skordakis’ legal advisers to assume this risk for the benefit of CBL.
[22] The sole remaining ground on which CBL seeks to set aside the judgment is that it was allegedly obtained by fraud. The fraud alleged is that Mr Skordakis pursued his claim pursuant to the second contract without any reference to the first enabling him to obtain the benefit of lower premiums and claim a greater sum than could otherwise would have been possible. However, the Tribunal was aware of the first contract and of CBL’s allegations that Mr Skordakis failed to disclose its existence for the purpose of securing lower premiums and pursuing an inflated claim. These allegations were tested in cross-examination at the hearing in the Tribunal. This is not a case where a judgment has been irregularly obtained, nor is it a case where the Tribunal has not had the opportunity of considering the fraud now alleged. This is a further factor weighing against the exercise of my discretion to adjourn the application to set aside registration of the judgment.
[23] For all of these reasons, I consider that CBL’s adjournment application should be declined. Mr Turner advised that if the adjournment is declined, the substantive application to set aside the registration should be dismissed.
Result
[24] CBL’s adjournment application is declined.
[25] CBL’s application to set aside the registration of the judgment is dismissed.
[26] If the issue of costs cannot be resolved, a memorandum on behalf of Mr Skordakis should be filed and served on or before 31 January 2014. Any memorandum on behalf of CBL in response should be filed and served on or before
14 February 2014.
M A Gilbert J
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