Cooper-Davies Trustees Number 6 Limited v Cooper Trustees Number 11 Limited

[2014] NZHC 335

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-000409 [2014] NZHC 335

BETWEEN  COOPER-DAVIES TRUSTEES NUMBER 6 LIMITED

Plaintiff

AND  COOPER TRUSTEES NUMBER 11

LIMITED

First Defendant

LILLY JESSICA COOPER Second Defendant

Appearances:           Dealt with on the papers

Judgment:                28 February 2014

JUDGMENT OF GENDALL J

Background

[1]      This judgment concerns an application for recall of my 20 December 2013 judgment  in  this  proceeding  Cooper-Davies  Trustees  Number  6  Ltd  v  Cooper Trustees Number 11 Ltd1  (the judgment).  The judgment has not been sealed I am told.  This case essentially dealt with an acrimonious dispute between members of the Cooper family over a share transaction in a jointly owned company, Madras Street 323 Limited (the company).  In my decision, I gave judgment in favour of the

plaintiff under s 149 Companies Act 1993 and made an order that the defendant was to pay to the plaintiff the sum of $313,582.00 representing the difference between what was paid to the plaintiff for its 50% shareholding in the company and the fair

value of those shares.

1      Cooper-Davies Trustees Number 6 Ltd v Cooper Trustees Number 11 Ltd [2013] NZHC 3526.

[2]      The present recall application is made by the plaintiff.  In addition, however, the  plaintiff  has  appealed  the  judgment  itself  to  the  Court  of Appeal  and  the defendant has cross-appealed.  The plaintiff’s appeal as I understand it relates to two matters.     First,  it  concerns  risk  factors  associated  with  the  share  valuation calculations and secondly, the plaintiff ’s fiduciary duty cause of action and damages for the alleged breach of fiduciary duty.

[3]      The cross-appeal as I understand it relates to the operative date on which to assess the information known to the second defendant (Ms Cooper) as director of the company; the share valuation; the risk factors; and the fiduciary duty cause of action.

The plaintiff ’s recall application

[4]      Here, the plaintiff requests that I recall the judgment essentially on three grounds.    These  are  first,  to  consider  and  if  thought  fit  award  interest  on  the judgment amount; secondly, to make a formal determination in relation to its sixth cause of action alleging breach of fiduciary duty; and thirdly, to make a formal determination as to the damages which would follow in the event that the plaintiff did succeed on the sixth cause of action.  There is also a request to rule on one aspect of costs which the parties had been unable to agree on, being an allowance which should be made for non-party discovery/inspection which the plaintiff was required to undertake.

[5]      As to the first issue of interest, the plaintiff refers to the power to award

interest in s 87 Judicature Act 1908 and the Court’s discretion to award interest.

[6]      It is submitted that interest should have been awarded due to a number of factors.  These are, the commercial nature of the parties; the amount involved in the claim is substantial; no excessive delay occurred here; it was not necessary to plead a claim  for  interest;  and  that  the  Court  should  always  consider  interest  whether pleaded or not.

[7]      There is also the contention that the Court did not make a final determination in relation to the fiduciary duty cause of action, having found that the plaintiff’s cause of action under s 149 Companies Act 1993 was made out. The plaintiff seeks a

final determination on whether it has succeeded on this sixth cause of action alleging breach of fiduciary duty and whether and to what extent the plaintiff is entitled to compensation in equity.

[8]      Finally, the Court is also asked to determine an appropriate allowance for non-party discovery and inspection in relation to the five non-parties.

The defendants’ position

[9]      The defendants oppose the application for recall and consider that none of the situations in which recall has been successful in the past apply in this case.   See Rainbow Corporation Ltd v Ryde Holdings Ltd.2

[10]     It is accepted that the Court had a discretion to award interest.  The lack of a claim for interest in the plaintiff’s prayer for relief however is suggested as a factor weighing against the exercise of that discretion.

[11]     It is submitted that if nevertheless it is found appropriate to award interest in this case, such an award should not be from the date of settlement of the share sale on 26 May 2011.  Rather, the defendants suggest the appropriate starting date should be  no  later  than  10  September  2013  which  is  when  the  final  quantum  of  the plaintiff’s claim was set.

[12]     And, the defendants say that it is unnecessary here to recall the judgment to make specific findings under the breach of fiduciary duty cause of action.

[13]     Submissions on the costs questions in issue are also made with the defendant suggesting an additional allowance of 1.5 days to compensate the plaintiff for costs

in relation to discovery from the non-parties would be appropriate.

2      Rainbow Corporation Ltd v Ryde Holdings Limited [1992] 5 PRNZ 493 (CA).

Discussion

[14]     Rule 11.9 provides jurisdiction for a judge to recall a judgment.  It states that “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.”

[15]     Suggestions have been made in the past, however, that once an appeal is lodged, an application to recall a judgment becomes nugatory: r 11.9 High Court Rules.  This may in itself dispose of matters here.   However, in the event that the present application is not rendered nugatory by the plaintiff’s appeal, I will now go on to consider the substance of that application.

[16]     The leading statement in New Zealand on recall of judgments remains that of

Wild CJ in Horowhenua County v Nash (No 2):3

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

[17]     There is a high threshold to meet before a Judge will be satisfied in recalling a judgment.

Grounds of application

[18]     In relation to the grounds for the plaintiff ’s application, I deal first with the breach of fiduciary duty argument.  I do not consider that this argument has merit or substance.

[19]     The claim for a breach of fiduciary duty was addressed in my judgment.  In doing so, I considered that, as the plaintiff was successful on the s 149 Companies Act 1993 cause of action, I was not required to make a final determination in relation to that breach of fiduciary duty cause of action.   And, as the statement of claim

sought the same relief for this cause of action as in relation to each other cause of action (namely a belatedly amended figure of $702,500 this being said to represent one-half of the fair value of the company, less the consideration of $150,000 already paid),  there  was  nothing  before  me  in  the  plaintiff’s  pleadings  or  otherwise  in relation to compensation in equity.

[20]     I consider I was entitled to deal with this cause of action in the way I did.  In addition, as the plaintiff has appealed on this point, the appropriate forum for this matter here in my view is the Court of Appeal.

[21]     And McGechan on Procedure HR 11.9.01(5) notes:

A situation where the Court has considered the point, but decided not to deal with it, or has dealt with it on a narrower or different basis than argued, is not a ground for recall:  R v Nakhla (No 2) [1974] 1 NZLR 453 (CA) at 456; Hobson v Harding CA50/95, 30 June 1997...

[22]     Next, as to the question of interest, there is reference in submissions to the

Court’s inherent jurisdiction and the discretion to award interest.

[23]     Section 87 Judicature Act 1908 is the statutory provision that gives the Court a discretionary power to award interest.

[24]     Reference has been made here to the cases of Brake v Boote4 and Hanmore v Ganley.5   In Brake, the Judge simply did not apply his mind to the issue of an award of interest beyond the settlement date under the sale contract although it had been pleaded in the statement of claim.  In Hanmore, the pleadings also included a claim

for interest that the Judge had not addressed prior to the judgment being sealed.

[25]     In  the  case  before  me  by way of  contrast,  a  claim  for  interest  was  not included in the pleadings (with the plaintiff here filing no less than four statements of claim, the last – with leave granted – only a little over one week before the hearing of this matter) nor was interest requested by way of submission.   In my view no recall of my judgment over this interest issue is justified here. As noted, the plaintiff

has appealed to the Court of Appeal.  Again in my view the proper place for this

4      Brake v Boote (1991) 4 PRNZ 86 (HC).

5      Hanmore v Ganley (No 2) (1996) 9 PRNZ 25 (HC).

issue to be addressed is also in the Court of Appeal, if the plaintiff wishes to pursue it there.

[26]     And, in McGechan on Procedure at 11.9.01(5) dealing with situations not warranting recall, the learned authors state:

Nor is a situation where a matter, such as interest on a judgment sum, is raised as an afterthought [a ground of appeal].  Ashe v Tauranga Marina Soc (1991) 4 PRNZ 89 (HC).

[27]     For all these reasons, I therefore decline the plaintiff’s application for the

recall of my judgment.

[28]     In relation to the costs matter that is in dispute between the parties, in my view an appropriate allowance for the five non-party discoveries is an additional

1½ days, and I now make an order to this effect.

...................................................

Gendall J

Solicitors:

G M Brodie, Christchurch

Harmans Lawyers, Christchurch