Copland v Goodwin
[2012] NZHC 3211
•30 November 2012
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2004-412-000346 [2012] NZHC 3211
BETWEEN BRIAN STEWART COPLAND Plaintiff
ANDWAYNE ERNEST GOODWIN Defendant
Hearing: 6 November 2012 (Heard at Dunedin)
Appearances: T J Shiels for Defendant/Applicant
J C D Guest and C S N Gardner for Plaintiff/Respondent
Judgment: 30 November 2012
JUDGMENT OF ASSOCIATE JUDGE OSBORNE [as to application to set aside judgment]
Introduction
[1] The defendant, Mr Goodwin, applies to set aside a judgment entered, on his own admission, on 11 October 2006. In 2010 he failed on an application to have the judgment set aside under r 15.16(5) High Court Rules. Mr Goodwin now, instead, invokes the Court’s inherent jurisdiction. He asserts that there would be a miscarriage of justice if the judgment is not set aside. He says that Mr Copland defaulted on terms of the settlement which gave rise to the judgment on admission.
The history
The 2006 settlement agreement
[2] From September 2000 until October 2001 Mr Copland made a number of investments with a company controlled by Mr Goodwin. The company failed and
COPLAND V GOODWIN HC DUN CIV-2004-412-000346 [30 November 2012]
did not repay Mr Copland. Mr Copland sued the company and Mr Goodwin for the
$1,131,119.08 he had lost.
[3] After an unsuccessful summary judgment application, the proceeding was to have come to trial in May 2006. Instead, the parties reached a settlement agreement.
[4] Mr Goodwin’s company joined in the settlement memorandum. The company undertook to pay Mr Copland US$465,000 by 29 September 2006. Mr Goodwin and the company agreed to pay an additional NZ$30,000 towards Mr Copland’s costs by 31 August 2006.
[5] Mr Goodwin had been concerned about an article which had appeared on a website about his dealings with Mr Copland. The parties agreed in the settlement memorandum (in what I will call the “removal requirement”) that:
The Plaintiff [Mr Copland] will cause the present reference to the Defendant [Mr Goodwin] on the website of [name of the website deleted for the purposes of this judgment] together with all accompanying documents to be removed
immediatelyas soon as reasonably practicable.
[6] In Court, on 1 May 2006, counsel advised Hansen J of the settlement. His Honour adjourned the proceeding for implementation of the settlement. In doing so, his Honour noted:
Counsel assured the Court that there will be no questions arising as to liability and quantum if the settlement agreement stalls.
[7] Mr Goodwin executed an admission of claim including in relation to the US$465,000. It was agreed by the memorandum that the admission would be held by Mr Copland’s counsel on an undertaking not to file the admission unless Mr Copland and the company defaulted on their settlement obligations.
[8] Neither the company nor Mr Goodwin subsequently paid the required settlement sums.
The judgment of 11 October 2006
[9] The Court entered judgment for Mr Copland on Mr Goodwin’s admission on
11 October 2006.
[10] Through subsequent enforcement proceedings, Mr Copland has recovered part of the judgment sum. Early attempts by Mr Copland to obtain satisfaction of the judgment through resort to properties in which Mr Goodwin had an interest were frustrated when it transpired that they were mostly financed to their entire value. The mortgagee sale of one property owned by Mr Goodwin rendered net proceeds of
$88,249.99 which Mr Copland received pursuant to a charging order.
Mr Goodwin’s unsuccessful 2010 setting aside application
[11] In March 2010, Mr Goodwin applied for an order setting aside the judgment (which had been entered almost three-and-a-half years earlier). His ground was that he had just been alerted to an entry about him on the website. (He has subsequently come to understand that the entry was on the website by 21 January 2009 at the latest). Mr Goodwin asserted that the entry on the website amounted to a breach of the removal requirement.
[12] Mr Copland’s application to set aside the judgment was heard by Associate Judge Faire on 9 June 2010.1 The Court found that Mr Goodwin had not established the grounds for setting aside contained in r 15.16(5) High Court Rules. The relevant time for assessing conduct in relation to the entry of judgment is at the time of entry of judgment.2
[13] Mr Copland gave evidence that the offending article was no longer on the website on the day judgment was entered. It was common ground that there was no evidence that the offending article was on the website at that date.
[14] The setting aside application failed.
1 Copland v Goodwin HC Dunedin CIV-2004-412-000346, 11 June 2010, Associate Judge Faire.
2 Ibid, at [16]-[19].
[15] Mr Goodwin did not appeal that decision.
[16] In the course of dismissing the setting aside application, Associate Judge Faire noted an invitation by Mr Andersen (appearing for Mr Goodwin) to consider setting aside the judgment pursuant to the Court’s inherent jurisdiction. The application and evidence had not been put forward on that basis. On the material placed before the Court, his Honour found that there was no justification for setting aside pursuant to the inherent jurisdiction. His Honour additionally observed that if Mr Copland had breached the removal requirement, it was then open to Mr Copland to bring a case by way of a proceeding alleging breach of contract. The Associate Judge referred to the judgment of Barker J in Bay Automotive Supply Co Ltd v Fuji
Auto Parts Ltd.3 In that case, judgment debtors had sought an order setting aside a
judgment obtained by admission on the ground that there had been a breach of a confidentiality term in the settlement agreement. In declining the application, Barker J observed:
The defendants’ only right in my view, if the confidentiality agreement was
breached, is to sue the plaintiff for damages in an appropriate Court.
That comment was informed by the fact that the confidentiality clause itself contained a liquidated damages provision ($10,000) for any breach of confidentiality.
[17] In the period immediately following Associate Judge Faire’s decision, Mr Goodwin did not commence any fresh attack on the judgment whether based on the inherent jurisdiction or otherwise.
[18] At some point – Mr Goodwin does not say exactly when but “only recently”
– Mr Goodwin says he became aware that the continued publication of material on the website probably gave him grounds to cancel the 2006 settlement. He says that he was not aware at the time of his unsuccessful 2010 application to set aside the judgment that the publication of the offending article constituted a ground for
cancelling the 2006 settlement agreement.
3 Bay Automotive Supply Co Ltd v Fuji Auto Parts Ltd HC Auckland, CL 22/90, 19 April 1991.
[19] Mr Goodwin’s solicitors wrote to Mr Copland’s solicitors on 30 April 2012 giving notice pursuant to the Contractual Remedies Act 1979 that Mr Goodwin cancelled the 2006 settlement agreement. The letter made reference to the pending sale of a property at Te Anau in which Mr Goodwin had an interest. The Registrar was in the course of effecting a sale of that property pursuant to a summary judgment order which Mr Copland had obtained in a separate proceeding.
[20] The purported cancellation drew an immediate response from Mr Copland’s solicitors. They said that they saw no substance in the points raised and that specific matters would be responded to in any proceeding or application.
[21] Off to the side was a proceeding in which Mr Copland had obtained an unopposed summary judgment ordering the Registrar to sell a property at Te Anau in which Mr Goodwin had an interest. In early 2012 the Registrar’s sale of that property was coming to a head. An auction was to take place on 12 May 2012.
[22] The reply from Mr Copland’s solicitors and the pending Te Anau auction elicited a two-pronged litigation response from Mr Goodwin. On 7 May 2012 he filed two applications. The first was an application for stay of execution (of the summary judgment as to the Te Anau sale). The second was an application to set aside the 2006 judgment pursuant to the Court’s inherent jurisdiction.
Mr Goodwin’s unsuccessful 2012 stay application
[23] The two proceedings came before Gendall J on 11 May 2012 when his Honour dismissed the stay application and adjourned this present application for allocation of a fixture.4
[24] Gendall J heard argument as to the merits of this application (to set aside the
2006 judgment) and recognised (as had counsel) that that was a matter for final
4 Copland v Goodwin [2012] NZHC 996.
argument.5 His Honour added:
But the position as advanced by Mr Shiels on behalf of the defendant as to his claims is very tenuous, to say the least, and unlikely to succeed.
[25] In relation to the inherent jurisdiction the test his Honour adopted was that the onus was on the applicant to show that a substantial miscarriage of justice was probable and that there was a real and substantial risk [of a miscarriage of justice]. A balancing exercise was required to recognise the conflicting interests of both parties.6
[26] His Honour weighed the injury to Mr Copland as plaintiff (having been kept out of his entitlements to money since 2006). He noted Mr Goodwin’s failure to give a satisfactory explanation or reasons for his delay. In relation to Mr Goodwin’s assertion that Mr Copland had breached the 2006 settlement agreement, his Honour noted the right of Mr Copland to bring proceedings for damages or to enforce that
part of the judgment.7 His Honour concluded:8
I am satisfied by a wide margin that this attempt is a collateral last-gasp attack on the entry of judgment on the same basis that was asserted and failed before Associate Judge Faire.
[27] Gendall J accordingly dismissed the stay application, with costs.
Some realisations for Mr Copland
[28] The sale of the Te Anau property proceeded. From it, the net equity paid to
Mr Copland was $109,584.
[29] Mr Copland appropriated both payments9 he had received to that part of the judgment debt expressed in United States currency. At 1 July 2012 the balances left
owing under the judgment, with interest, were US$518,227.34 and NZ$42,943.56.
5 Ibid, at [13].
6 Ibid, at [14].
7 Ibid, at [15].
8 Ibid, at [15].
9 Above at [10] and [29].
COPLAND V GOODWIN HC DUN CIV-2004-412-000346 [30 November 2012]
Setting aside a judgment – the procedure under the rules
[30] The High Court Rules provide a procedure specifically dealing with the setting aside of judgments entered on an admission. In particular r 15.16(5)-(6) provide:
15.16 Admission of cause of action
...
(5) Any judgment entered on an admission filed and served under subclause (1) may, upon application, be set aside by the court if—
(a) the plaintiff, being under a duty or obligation to the defendant not to enter judgment on the admission, acted contrary to that duty or obligation in entering judgment; or
(b) the plaintiff, in entering judgment, acted fraudulently, unconscionably, or in wilful or reckless disregard of the defendant's rights.
(6) Upon an application under subclause (5), the court may direct that a proceeding be brought to determine whether judgment was wrongfully entered.
Where the Rules specifically provide for a situation, as in this case, the Court will generally expect the parties to follow that procedure rather than invoking the Court’s inherent jurisdiction.
[31] In relation to the present setting aside application, Mr Goodwin is unable to invoke the procedure for setting aside under r 15.16. That procedure is unavailable because, as Associate Judge Faire found, Mr Goodwin seeks to rely on events after the time judgment was entered.10
[32] Accordingly, to succeed in the present application, Mr Goodwin must invoke the inherent jurisdiction.
10 Above at [11]-[12].
Setting aside a judgment – the principles
[33] The Court, within its inherent jurisdiction, may set aside a judgment if the interests of justice require it: Waitemata City Council v MacKenzie11 and Auckland Regional Services Trust v Lark.12
[34] The nature of the inherent jurisdiction is equitable.13
[35] The Court’s approach in relation to orders obtained on admission is analogous to that in the more common situation of orders obtained by consent: Bank of New Zealand v Norcross.14
[36] Resort to the inherent jurisdiction may be justified where the Court’s procedures. (designed to further the ends of justice) may be transformed into instruments of injustice or oppression. The importance of upholding the indefeasibility of sealed orders (reflected through the concept of res judicata) does
not require that sealed orders be inviolate Waitemata City Council v MacKenzie.15
[37] It will generally be insufficient for an applicant to show merely that the original order was unjust or unreasonable: Jones v Borrin.16 The ultimate question in the exercise of the jurisdiction is whether the interests of justice, in the circumstances of the case, require setting aside: Waitemata City Council v MacKenzie.17 In Aplin v Lagan18 Fisher J described the jurisdiction as involving the correction of errors which might otherwise have perpetuated a miscarriage of justice. In New v New, a further judgment of Fisher J, his Honour suggested that there may
need to be a serious miscarriage of justice.19 In Keeble v Guardian Trust &
11 Waitemata City Council v MacKenzie [1988] 2 NZLR 242.
12 Auckland Regional Services Trust v Lark [1994] 2 ERNZ 135 (CA) at 139; see also Bullivant v
ENZA Ltd [2001] 1 NZLR 498 per Rodney Hansen J.
13 Carrell v Carrell [1975] 2 NZLR 441 (SC) per Cooke J at 446.
14 Bank of New Zealand v Norcross HC Auckland CP 117-SD02, 28 July 2003, per Heath J at [6].
15 Above n 11, per Casey J at 249.
16 Jones v Borrin [1989] 3 NZLR 227 (HC) per Fisher J at 253.
17 Above n 11 at 249.
18 Aplin v Lagan (1993) 10 FRNZ 562 (HC) per Fisher J at 569; followed in New v New [2002] NZFLR 901, per Fisher J at [17].
19 New v New, above n 18 at [17].
Executors Co of New Zealand Ltd,20 White J cited the rule as set out in Halsbury’s
Laws of England, which refers to a threshold of “grave injustice”.
The Court, in relation to grounds such as mistake and misrepresentation which give rise to the setting aside of contracts on common law principles will in the exercise of the inherent jurisdiction draw broad assistance from contractual principles by way of analogy.21
Situations in which the inherent jurisdiction may be invoked
[38] Setting aside a judgment obtained by compromise is not limited to specific categories of case. It is to be determined according to the principles as I have discussed them. A review of cases decided in New Zealand and in other common law jurisdictions indicates a variety of situations which may lend themselves to exercise of the inherent jurisdiction. See, for instance, Halsbury’s Laws of England,
Judgments and Orders, where the authors note:22
A judgment given or an order made by consent may be set aside on any ground which would invalidate a compromise not contained in a judgment or order. Compromises have been set aside on the ground that the agreement was illegal as against public policy, or was obtained by fraud or misrepresentation, or non-disclosure of a material fact which there was an obligation to disclose, or by duress, or was concluded under a mutual mistake of fact, ignorance of a material fact, or without authority. A compromise in ratification of a contract which is incapable of being ratified is not enforceable; and a compromise which is conditional on some term being carried out, or on the assent of the court or other persons being given to the arrangement, is not enforceable if the term is not carried out or the assent is given effectually.
(footnotes omitted)
Relevance of delay
[39] Any delay in application by one who seeks relief from the consequences of a consent order is self-evidently a matter to be taken into account in the interests of
20 Keeble v Guardian Trust and Executors Co of New Zealand Ltd [1976] 2 NZLR 338, at 346.
21 New v New, above n 18 at [17].
22 Halsbury’s Laws of England: Civil Procedure: Judgments and Orders (5th ed, 2009) vol 12 at
[1143].
justice. The authors of Halsbury, having referred to examples of situations in which compromises have been set aside, observe simply:23
The Court may refuse to set aside a compromise when the party seeking to set it aside is guilty in the delay in questioning it.
[40] In Waitemata City Council v MacKenzie, the issue of delay was alive. Casey
J observed that:24
... through the lapse of time which has inevitably occurred they [the defendants] are likely to be severely handicapped in their defence.
Consideration of the features of the case
[41] I fundamentally ask myself whether a refusal to set aside the consent order would render the consent order an instrument of injustice or oppression.
[42] In considering that question, it is convenient to have regard to what might be considered an informal check list of considerations identified by Fisher J in Jones v Borrin at 254, which include:
(a) The gravity of the applicant’s asserted error;
(b) Whether the error was known to the other party; (c) The prejudice the error has caused the applicant; (d) The applicant’s delay in applying for the remedy;
(e) The extent to which the applicant has approbated the order;
(f) The extent of other party’s reliance on the order to their detriment;
(g) The conduct of both parties;
23 Halsbury’s Laws of England above n 22 at [1143].
24 Waitemata City Council v MacKenzie, above n 11, at 251.
(h) The extent to which restoration to the original position is not possible; (i) The effect on innocent third parties.
[43] In my judgment, the combination of three particular factors applying in this constitute a complete answer to Mr Goodwin’s application. Collectively (and arguably individually) they indicate that there will be no injustice through the consent order remaining in full force and effect.
The gravity or substantiality of the removal requirement
[44] It was undoubtedly a matter of importance to Mr Goodwin to obtain in 2006 the removal of the offending article.
[45] The removal requirement in the compromise agreement provided by its terms that Mr Goodwin would cause the website reference together with all accompanying documents to be removed as soon as reasonably practicable. Although Mr Goodwin was not the operator of the website, he could be expected to have had some control or influence over the operator because the operator was to have been an expert witness for Mr Goodwin in the litigation. Accordingly, the removal requirement can be seen as something akin to a guarantee of removal.
[46] Mr Shiels developed an argument of some force to the effect that the removal requirement was not merely a requirement for removal at the time (2006) but was a requirement to ensure that the offending material was not re-posted. In the 2010 hearing before Associate Judge Faire, counsel for Mr Goodwin (then Mr Andersen) advanced a similar interpretation argument. It was then submitted that the removal requirement was to be interpreted as a requirement to permanently remove the material. Put another way, Mr Andersen had submitted that the obligation was “a
continuing one”.25
[47] Associate Judge Faire did not need to reach a conclusion on the correct interpretation of the removal requirement because the inherent jurisdiction had not
been appropriately invoked prior to the hearing. His Honour further observed that
25 See Copland v Goodwin HC Dunedin CIV-2004-412-000346, 11 June 2010 at [3] and [22].
his consideration of such issues would have required a careful consideration of evidence which might be admissible in the interpretation of the settlement agreement.26 For the reasons which follow, I do not need to make a determination on whether Mr Goodwin can establish either an interpretation or an implied term to the effect that Mr Shiels contends for. As Mr Goodwin may yet choose to pursue a damages claim based on such an interpretation, I leave the final determination of that issue to any trial Court.
[48] There are substantial arguments against the implication of such a term as Mr Goodwin asserts. It is, for instance, difficult to accept that the term contended for is so obvious that it goes without saying. While Mr Copland may be taken to have had some control or influence over the operator of the website in 2006, there could be no safe assumption that after the litigation was resolved in 2006 Mr Copland would continue to have any influence over the website. Certainly, Mr Goodwin has produced no evidence that Mr Copland had such continuing influence. A reasonable bystander would therefore question why Mr Copland should be taken to have intended to be giving a continuing assurance or guarantee that similar material would not be re-posted. Furthermore, the agreement between the parties as to the removal requirement was expressly in relation to the present reference (my emphasis). If the concept of a “present” reference is to be given its normal meaning, as a matter of the language used, it might be taken to have been used in contrast to future references (over which Mr Copland might have no control). Finally, if (as Mr Andersen submitted before Associate Judge Faire) the removal requirement was intended to be a requirement as to permanent removal, the draftperson could easily have included the word “permanently”.
[49] Leaving aside these interpretation difficulties which stand in the path of Mr Goodwin’s argument, there is a more fundamental objection to setting aside the judgment entered on admission on 11 October 2006. Mr Shiels made submissions upon the basis that the removal requirement should be seen as either an essential term of the compromise or a term that came within the substantiality concept used in s 7(4)(b) Contractual Remedies Act 1979. Mr Shiels submitted that the effect of a
breach of the removal requirement was to substantially reduce the benefit of the
26 Ibid, at [23].
compromise to Mr Goodwin or that it made the benefit of the compromise substantially different to that contracted for. Mr Shiels referred to correspondence between Mr Goodwin and his then barrister in the lead-up to the compromise which at least arguably indicated the importance of the removal requirement for Mr Goodwin. The material relied on for that submission, which goes to the subjective view or intention of Mr Goodwin, is not admissible to assist interpretation of the contractual arrangement. That said, it is possible without resort to such material to accept that the removal requirement would have been of some importance to Mr Goodwin. But even if one now makes the two assumptions – both that the removal requirement was a requirement for permanent removal and that a breach of it resulted in a substantial reduction or substantial difference in terms of the Contractual Remedies Act – the reappearance of the offending material on the website is still lacking the gravity which the Court must demand before a judgment is set aside.
[50] It is to be remembered that the parties very shortly before trial were compromising civil litigation. Rather than pursue the matter to trial, Mr Copland was obtaining agreements from both Mr Goodwin’s company and Mr Goodwin himself as to payments which would be made over coming months, failing which judgment would be entered against both. The Court’s record indicates in the clearest terms that liability and quantum were not to be revisited if the settlement agreement stalled. That is precisely what counsel assured the Court, as recorded by Hansen J in
his minute of 1 May 2006.27
[51] In these circumstances the outcome of predominant importance was the abandonment by Mr Goodwin and his company of defences as to liability and quantum on Mr Copland’s claims and the conversion of the admissions into a judgment if the required settlement sums were not paid. Put another way, while it may remain open for Mr Goodwin to say that the removal requirement was important, or indeed very important to him, the parties agreed through the assurance which counsel gave to the Court on 1 May 2006 that none of the other terms of the settlement was as important as Mr Copland’s undeniable right to judgment as to
liability for the agreed quantum.
27 Above at [6].
[52] Any claim which Mr Goodwin might have (and I give Mr Goodwin no encouragement in this regard), would lie only through a claim for damages for breach of the settlement agreement.
Mr Goodwin’s delay
[53] The issue of Mr Goodwin’s delay is in part related to the assertion that the reappearance of the offending article had such substantial consequences for him that he should be relieved from the judgment against him.
[54] Mr Goodwin’s first step towards attacking the judgment which had been entered against him three-and-a-half years earlier came in March 2010. At that time Mr Goodwin stated that he had just been alerted to the re-entry of the offending article on the website. It now appears that he accepts that the offending article had been back on the website by January 2009 at the latest. It is difficult, verging on impossible, to understand why, if the permanent removal of material from the website was as important to Mr Goodwin as he asserts, that he had not at any time in the intervening three-and-a-half years checked the website. Indeed, he must not have conducted even a general internet search for material about himself. Although part of the implication in Mr Shiels’ submissions was that Mr Goodwin would have been affected in his attempts to raise finance to pay off the judgment debt through the reappearance of the website material, there is simply no evidence from Mr Goodwin to indicate that any financier was aware of such material let alone troubled by it. The fact that Mr Goodwin himself was not alerted until 2010 suggests there had been no impact from the reappearance of the article. In the meantime, Mr Copland and his legal advisors had been left to act on the efficacy of the 2006 judgment and to pursue the investigations and endeavours to extract a payment which they undertook.
[55] If that delay were not of sufficient concern on its own, then combined with subsequent delays, it becomes sufficient. Mr Goodwin failed in June 2010 to have the judgment set aide, notwithstanding a last-minute attempt to invoke the inherent jurisdiction. When this present application was filed (at a time when Mr Goodwin was facing bankruptcy proceedings), Mr Goodwin had allowed a further period of almost two years to elapse. In his evidence Mr Goodwin appears to put that down to
a failure to appreciate earlier his purported right to cancel the settlement agreement. The purported cancellation of the settlement agreement is a distraction to the central argument. The problem which Mr Goodwin always had to deal with was the judgment entered on his admission. Any act of cancellation by Mr Goodwin could not directly affect the judgment. If the judgment was to be set aside, it had to be pursued either by appeal from Associate Judge Faire’s June 2010 judgment or by some other available procedure. Mr Goodwin did not take either course until faced with a bankruptcy proceeding and the impending sale of his Te Anau property.
[56] Mr Goodwin has not satisfactorily explained what are unconscionably long periods of delay. On the evidence there can be no satisfactory explanation for the periods of delay.
Prejudice to Mr Copland
[57] If the Court were to set aside the 2006 judgment, it would thereby resuscitate this 2004 ordinary proceeding. It would leave Mr Copland to proceed to trial (if indeed trial eventuated) in relation to matters which occurred between September
2000 and October 2001. Mr Copland would have to hope that his memory of events
11 or 12 years ago permitted him to measure up as a witness at trial at least as well as he would have six years ago.
[58] The Court does not require evidence in this regard to appreciate that there would be an inherent prejudice to Mr Copland if the 2006 judgment were set aside.
[59] There will be other, arguably more practical, aspects of prejudice. For instance, Mr Copland was ready to proceed to trial in 2006 armed with a full brief from an American expert witness. The cost of preparing for trial and reassembling the evidence in 2012 would inevitably add very substantially to the costs which Mr Copland would have incurred had he proceeded to a defended judgment in 2006. Faced with what, on the evidence, is an impecunious judgment debtor, Mr Copland faces this further aspect of prejudice.
Bringing the considerations together
[60] There is no room in this case to justify a conclusion that justice requires the setting aside of the 2006 judgment.
Orders
[61] I order:
(a) The defendant’s application dated 7 May 2012 is dismissed;
(b)The defendant is to pay to the plaintiff ’s costs on a 2B basis together with disbursements to be fixed by the Registrar.
Associate Judge Osborne
Solicitors:
Scholefield Cockroft Lloyd, PO Box 166, Invercargill 9840
Counsel instructed: T J Shiels, Barrister, PO Box 5029, Moray Place, Dunedin 9058
Downie Stewart, PO Box 1345, Dunedin 9054
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