Commercial Factors Limited v Scenic Circle Hotels Limited

[2019] NZHC 3243

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-409-001141

[2019] NZHC 3243

BETWEEN

COMMERCIAL FACTORS LIMITED

Plaintiff

AND

SCENIC CIRCLE HOTELS LIMITED

First Defendant

AND

SCENIC HOTELS LIMITED

Second Defendant

Hearing:

via telephone conference

Appearances:

P J Dale QC and A J Steel for Plaintiff

J B M Smith QC and J L W Wass for Defendants

Judgment:

13 December 2019

JUDGMENT OF OSBORNE J

(recall of judgment – [2019] NZHC 2370)

Introduction

[1]    The defendants seek the recall and/or clarification of a judgment I gave on 19 September 2019 in relation to litigation between the parties.1 The defendants seek to have recalled para [265](b). In the alternative the defendant seeks clarification in relation to the correct interpretation of para [265](b).

[2]    Counsel have also drawn to the attention of the Court to two minor corrections that are required to earlier paragraphs in the judgment – it is common ground that those

1      Commercial Factors Ltd v Scenic Hotel Group Ltd [2019] NZHC 2370

COMMERCIAL FACTORS LIMITED v SCENIC CIRCLE HOTELS LIMITED [2019] NZHC 3243 [13

December 2019]

should be corrected under the slip rule (r 11.10 High Court Rules), which will be attended to at the conclusion of this judgment.

[3]The application for recall and/or clarification is resisted by the plaintiff.

Background

[4]    The litigation arises out of dealings which the parties had over a hotel property in Tonga. The plaintiff, a financier, had come to own the hotel. The first defendant (the only relevant defendant) (“Scenic”) is a hotel operator. The parties entered into discussions over a possible joint venture and the hotel subsequently began to operate in the context of that intended joint venture. The parties ceased to work together in that regard from early 2015, with a subsidiary of the Scenic continuing to operate the hotel thereafter until closing it in March 2019.

[5]    By the plaintiff’s amended statement of claim on which it went to trial the plaintiff sued the defendants on three causes of action, namely:

(a)an estoppel precluding Scenic from denying the existence in terms of a joint venture; or

(b)entitlement pursuant to a concluded joint venture agreement, by which the plaintiff and Scenic were joint venture partners in the acquisition of the hotel; or

(c)entitlements in relation to a partnership, dissolved by notice in 2015.

[6]    By the Court’s judgment the plaintiff’s claim was found to fail in relation to each of those causes of action, the Court instead finding that the relationship between the parties had been in the nature of a pre-contractual joint venture.

[7]    In refusing relief to the plaintiff on its three identified causes of action, the Court nevertheless declared (at [265](a) of the judgment) that a pre-contractual joint venture between the plaintiff and the Scenic was terminated with effect from 26 March 2015. The appropriateness of that declaration is not challenged by either party.

[8]    Scenic however takes issue with the order at [265](b) of the judgment which reads:

The plaintiff and first defendant are to procure the taking of accounts of Pacific Hotels Ltd, as their pre-contractual joint venture vehicle, for the period from incorporation to 26 March 2015, upon the basis that all receipts from any insurance policy in relation to the hotel (whether received before or after 26 March 2015) shall be brought into account.

Submissions

[9]    For the plaintiff Mr Smith seeks recall of para [265](b) particularly having regard to the Court’s stipulation of the basis upon which certain receipts should be brought into account. He identifies the argument which the defendant would advance in relation to how that accounting should take place and in particular in relation to what period accounting for receipts should apply. Mr Smith confirms that the Scenic would prefer clarification of the paragraph in the defendant’s favour but alternatively seeks recall.

[10]   For the plaintiff, Mr Dale opposes recall and submits there is no power in the Court to “clarify” an interpretation of the judgment. Mr Dale submits that in relation to the accounting for insurance proceeds the Court’s order was “logical and appropriate”.

[11]   Mr Dale further emphasised what he submitted was an unfairness to the plaintiff if this litigation were to be extended by a re-opening of the issue of relief. He referred especially to the very late stage before trial at which the plaintiff became informed as to the insurance arrangements which were in part the subject of paragraph [265](b).

[12]   In reply, Mr Smith restated the arguments which the defendant would advance in relation to the correct approach to accounting. He further noted that the Court had awarded relief on a claim which had neither been pleaded nor specifically sought by the plaintiff.

[13]   Although submissions were advanced in somewhat more detail than that, that is a sufficient summary as the appropriate outcome here is clear.

Analysis

[14]   Given the way in which the parties had identified the concept of a pre- contractual joint venture as a more appropriate description of the parties’ relationship than those pleaded by the plaintiff, it was appropriate that the Court (in dismissing the three pleaded claims) identified in the judgment the correct characterisation of the relationship.

[15]   Beyond that, however, I accept as submitted by Mr Smith that the plaintiff had not identified in its pleadings a claim for relief either in the terms covered by para [265](b) or at all.

[16]   I accept that the defendant was not put on notice that an order of the nature identified in [265](b) might be in the Court’s contemplation and that therefore the defendant (or the plaintiff for that matter) did not have the opportunity to address in their submissions the nature of arguments now addressed by Mr Smith in support of this application. This is not a matter of the substantive strengths or weaknesses of the argument each party might advance – it is a matter of each party having the proper opportunity to respond to a remedy articulated by the other or identified by the Court.

[17]   The power to recall a judgment is contained in r 11.9 High Court Rules. It provides as follows:

11.9     Recalling judgment

A Judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed.

[18]   The leading authority in this area is Horowhenua County v Nash (No 2), in which Wild CJ stated:2

Generally speaking, a judgment once delivered must stand for better or worse subject, of course, to appeal. Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in which a judgment not perfected may be recalled - first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel have failed to direct the Court’s attention to a legislative provision or

2      Horowhenua County v Nash (No 2) NZLR 632 (SC) at 633.

authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.

[19]   This approach to the Court’s jurisdiction has been applied by the Supreme Court,3 and by the Court of Appeal.4

[20]   In my view, this case clearly falls within the third category identified in Horowhenua County v Nash. There is a very special reason that requires that paragraph [265](b) be recalled, namely to afford the parties the opportunity to present submissions both as to whether there should have been a grant of relief at all and, if so, in what terms.

Orders

[21]I direct:

(a)paragraph [265](b) of the judgment is recalled and deleted;

(b)paragraph [16] of the judgment is amended in lines 3 and 4 so as to refer to “PHL” instead of “SHIL”.

(c)paragraph [28] of the judgment is amended so as to read: “Mr Taylor” instead of “Mr Thompson”.

[22]   I adjourn the proceeding to a further hearing at 10.00 am, Tuesday, 21 April 2020 for any supplementary evidence and final submissions on the question of relief. Case management directions for that hearing will be dealt with in a separate Minute.

Osborne J

Solicitors:

Neilsons Lawyers, Auckland Meares Williams, Christchurch

3      Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 122, [2010] 1 NZLR 76.

4      Unison Networks Ltd v Commerce Commission [2007] NZCA 49.

This judgment was delivered by me on 13 December 2019 at         pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: