Copland v Goodwin HC Dunedin CIV 2004-412-346

[2010] NZHC 952

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV 2004-412-000346

BETWEEN  BRIAN STEWART COPLAND Plaintiff

ANDWAYNE ERNEST GOODWIN Defendant

Hearing:         9 June 2010

Counsel:         JCD Guest for plaintiff

LA Andersen for defendant

Judgment:      11 June 2010 at 2:30pm

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for order setting aside judgment]

This judgment was delivered by me on 11 June 2010 at 2:30pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Downie Stewart, PO Box 1345, Dunedin for plaintiff

Scholefield Cockroft Lloyd, PO Box 116, Dunedin for defendant

COPLAND V  GOODWIN HC DUN CIV 2004-412-000346  11 June 2010

The application

[1]      The defendant applies to set aside a judgment  entered in reliance on  an admission.  The judgment was entered on 11 October 2006.  Consequential orders are sought if the judgment is set aside.

[2]      The application is made in reliance on r 15.16.  Rule 15.16 provides:

15.16   Admission of cause of action

(1)At  any  time  after  a  party  has  been  served  with  a  notice  of proceeding, that party may file and serve (separately from the party's pleadings) an admission of all, some, or part of the alleged causes of action on all other parties to the proceeding.

(2)      An admission can be withdrawn only with the leave of the court.

(3)When an admission is filed and served under subclause (1), a party on whom the admission is served may seal judgment on the cause of action admitted, without prejudice to that party's right (if any) to proceed on any other cause of action.

(4)An admission under subclause (1) relating to any cause of action in which  a  sum of  money  is  claimed  must  state  the  exact  amount admitted.

(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.

(7)      This rule does not affect rule 8.15.

The grounds relied upon

[3]      The defendant alleges that the plaintiff is in breach of a settlement.   The admission was made as a term of the settlement.   The defendant pleads that the

plaintiff breached a term of the settlement by not permanently removing documents from the fraudsandscams.com website describing the defendant as a fraudster.

The opposition

[4]      The plaintiff opposes the making of the orders sought and advances the following matters in opposition:

a)       It is pleaded that neither ground in r 15.16 in the High Court Rules applies;

b)The factual ground relied upon by the defendant is incorrect in that the  plaintiff  did  what  was  required  of  him  under  the  deed  of settlement; and

c)       The defendant has, throughout, been in breach of the judgment despite promises made to pay.

The settlement

[5]      The parties reached settlement of a proceeding filed in 2004.  They entered into a document described as “Memorandum of terms of settlement” and which appears to have been executed as a deed.  The operative clauses of that document provide:

Operative clauses

1.THE Company will pay the Plaintiff on or before the 29th  day of September 2006 the sum of US$465,000.   Payment will be by depositing that sum to a US dollar bank account to be nominated by the Plaintiff.

2.THE Company and the Defendant jointly bind themselves to pay the Plaintiff the sum of New Zealand$30,000 towards the Plaintiff’s costs, on or before the 31st day of August 2006.

3.THE Defendant will sign an admission of claim in the form attached to this memorandum.  The admission will be held by the Plaintiff’s

counsel  on  his  undertaking  not  to  file  the  admission  unless  the

Company defaults in its obligations under this memorandum.

4.THE Plaintiff and Defendant through their respective counsel, will execute a notice of discontinuance of the Plaintiff’s proceeding in the   form   attached   to   this   memorandum.      The   notice   of discontinuance will be held by the Defendant’s counsel and filed with the Court on payment of the claim and costs being made by the Company and/or the Defendant, in accordance with this memorandum.

5.        THE  Mareva   injunction   over   the   Defendant’s   assets   will   be discharged on the filing of the notice of discontinuance.

6.THE Plaintiff will cause the present reference to the Defendant on the website of Bill Escar Branscum, “fraudsandscams.com”, together with all accompanying documents, to be removed immediately as soon as reasonably practicable.

7.THE terms of settlement of the proceeding will remain confidential to the parties to this memorandum and their professional advisors, but the fact that the proceedings have been settled may be made public.

[6]      The memorandum of terms of settlement was signed on 1 May 2006.   It coincided with a minute made by Justice John Hansen on that day in relation to the proceeding  which  led  to  the  settlement.    For  completeness  sake  I  set  out  his Honour’s minute:

1.The parties have effected settlement of this proceeding and have entered into a deed of settlement date 1 May 2006.

2.        It will take some time for the terms of the settlement to be effected.

Counsel assured that Court that there will be no questions arising as to liability and quantum if the settlement agreement stalls.

3.For that end, there is to be a telephone conference in the second week of October before me to review progress.  If by that date the terms of the deed of settlement have been complied with and a notice of discontinuance filed the telephone conference may be vacated.

4.        There will be an order that this file is not to be searched without leave of the parties.

5.The mareva injunction presently in place is to be discharged upon the filing of the discontinuance.

6.In terms of an undertaking in a filed brief of evidence, all reference to the Defendant on the website   are to be immediately deleted and not to reappear.

7.        There will be liberty to apply on three days notice.

Entry on website

[7]      The plaintiff has sworn an affidavit in which he says the offending words were, to the best of his knowledge, not on the website on the day the judgment was entered, namely, 11 October 2006.  The defendant did not check the website at that time and has no evidence to suggest that the offending words were on the website at that time.

[8]      A  legal  secretary  employed  by  the  defendant’s  barrister  has  sworn  an affidavit in which she says that she searched the website on 19 March 2010.   A printout of the website was produced.   Certainly,  it contains a reference to the defendant as a fraudster.  The affidavit does not assist on the issue of whether the present entry on the website was on the website on 11 October 2006.

[9]      Mr Andersen, in submissions before me, accepted that there was no evidence that the offending words were on the website on 11 October 2006.

The defendant’s complaint

[10]     The defendant complains that the existence of the words on the website, to quote from his affidavit,

would have affected my ability to raise money and may explain why I have not been able to raise the funds necessary to buy the plaintiff’s investment or refinance the Westpac mortgage.

[11]     The  defendant’s  reference  to  the  Westpac  mortgage  is  a  reference  to  a mortgage over a property formerly owned by the defendant and his wife at 212 Bush Road, Mosgiel.  That property was sold by the mortgagee in the exercise of its power of sale.

[12]     The defendant’s reference to raising funds to buy the plaintiff’s investment is not well explained in the material before me.   Certainly, some documents were

signed by the plaintiff in 2009.   What is clear is that there is no reference to the buying of investments in exchange for the payment which the defendant agreed to make in the memorandum of terms of settlement.  Mr Andersen did not submit that there was any breach of the memorandum of terms of settlement in respect of this matter.

The defendant’s breach of the memorandum of terms of settlement

[13]     It is common ground that the company, Corporate Capital Investment Co Ltd, which  is  the  company referred  to  in  clause  1  of the  memorandum  of  terms  of settlement, did not make the payments which were due to be made on 31 August

2006 and 29 September 2006.  That default released the plaintiff’s counsel from his undertaking not to file the admission.

The basis for the entry of judgment

[14]     The entry of judgment by admission was analysed in United Building Society v Mills.[1]When an admission is signed as part of a settlement a plaintiff may take judgment on the formal admission even though it is not a formal admission of one of the causes of action set out in the original statement of claim.   This follows the common practice where a proceeding is settled for the admission to be held in escrow as security by a plaintiff.  If a settlement is not completed, the plaintiff will

[1] United Building Society v Mills [1991] 2 NZLR 484 at 490.

file the admission and obtain judgment.  In this way, the plaintiff in is not required to set the case down for trial in respect of the admitted claim.   This position was recognised in Rhodes v Reid Development Co Ltd.[2]  The Court of Appeal was there considering the predecessor to the current rule.

[2] Rhodes v Reid Development Co Ltd [1981] 2 NZLR 721 (CA).

The applicable rules

[15]     There is some doubt as to whether this application should properly be an application under the current rule 15.16 or its predecessor r 471(4) of the High Court

Rules 1985.  The question depends upon the application of the transitional provisions contained in the Judicature (High Court Rules) Amendment Act 2008, s 9.  Counsel did not specifically address on the point when I raised it.  As it happens it is of no practical significance in this case because the wording of the former rule, that is r 471(4), is, for all intents and purposes, identical with the current rule.

Has a case been made out for the setting aside of the judgment pursuant to r 15.16?

[16]     Mr Guest  submitted,  correctly  in  my  view,  that  the  application  cannot succeed under the rule because:

a)       The rule relates to a duty or obligation to the defendant about the entry of judgment and acting contrary to that duty or obligation at the time of entry of judgment;

b)The alternative is that it relates to some acting by the plaintiff which is fraudulent, unconscionable or in wilful or reckless disregard of the defendant’s  rights,  but,  once  again,  at  the  time  of  the  entry  of judgment; and

c)       The rule does not address post-judgment matters.   If there are post- judgment breaches of a settlement these cannot be addressed under the rule.

[17]     Mr Guest’s submission is correct because:

a)       R 15.16(5) refers to a plaintiff acting contrary to a duty or obligation in entering the judgment; or

b)Alternatively, that the actions that need to be investigated to see if they  were   fraudulent,  unconscionable  or  in   wilful  or  reckless disregard of the defendant’s rights are those actions which occur at the time of entry of judgment.

[18]     The point is further reinforced by the wording of subrule (6) which refers to judgment being wrongfully entered.

[19]     In Bank of New Zealand v Norcross[3]it was confirmed in a short judgment that the relevant time for consideration of the provisions of the predecessor to the current rule was at the time the judgment was entered.

[3] Bank of New Zealand v Norcross HC Auckland CP 117-sd02 28 July 2003 Heath J.

[20]     Accordingly, I conclude that a case has not been established which would justify setting aside the judgment pursuant to r 15.16 of the High Court Rules and, for that matter, its predecessor.

The court’s inherent jurisdiction

[21]     Mr Andersen invited me to consider setting aside the judgment based on the court’s inherent jurisdiction.   He referred to Bank of New Zealand v Norcross.[4]

[4] Ibid.

Heath J applied the analysis of the position in relation to a consent order undertaken by the court in Bullivant v ENZA Ltd .[5]

[5] Bullivant v ENZA Ltd [2001] 1 NZLR 498 at 501.

[22]     Mr Andersen submitted that the obligation on the plaintiff was a continuing one.  He submitted that the plaintiff is required under the memorandum of terms of settlement to ensure that the reference to the defendant as a fraudster does not reappear  on  the  website.     He  submitted  that,  that  followed  as  a  matter  of interpretation from the memorandum of terms of settlement and is reinforced by the minute made by Justice John Hansen, to which I made reference in [6] of this judgment.

[23]     I am concerned, and told counsel in the course of argument, as to the basis of my concern about this submission.  The plaintiff has answered the case which was put on the basis that the facts justified an order under r 15.16.  The short and correct answer to that case, as I have found, is that at the time of the entry of judgment there was  no  justification  in  terms  of  r 15.16  for  the  application  of  that  rule.    It  is

understandable, in my view, therefore, that the plaintiff’s evidence does not address the issue of whether he authorised or had any control whatsoever over the re-entry of the words on the website.  In addition, whether the entry of the words on the website does amount to a breach of contract seems to me to require a careful consideration of what evidence might be admissible in the interpretation of this memorandum of terms of settlement.   I have not been provided, because of the way this case was placed before the  court,  with material that would enable me to make  any final decision on that question.   Clearly, I would have to determine what evidence was appropriate  applying  the  principles  set  out  in  Boat  Park  Ltd  v  Hutchinson  &

Findlay.[6]

[6] Boat Park Ltd v Hutchinson & Findlay [1999] 2 NZLR 74; (1999) 4 NZ ConvC 192,861.

[24]     Quite apart from the comments made in the preceding paragraph, my view is that if the defendant can mount a case for a breach of the memorandum of terms of settlement, the appropriate way to do that is by way of a proceeding alleging breach of contract.   That was the approach which found favour with the court in Bay Automotive Supply Co Ltd v Fuji Autoparts Ltd.[7]

[7] Bay Automotive Supply Co Ltd v Fuji Autoparts Ltd HC Auckland CL 22-90 19 April 1991 Barker J.

[25]     I therefore conclude that there is no justification for my setting aside the judgment based on the material placed before me on this application.

Orders

[26]     The application to set aside the judgment is refused.

Costs

I did not give counsel the opportunity of addressing on the question of costs.   I record that the hearing took .25 of a day.   This is a Category 2 case.   If counsel cannot agree on costs, memoranda in support, opposition and reply shall be filed and served at seven-day intervals and on receipt of the reply memorandum, the file shall

be referred to me to fix costs on the application.

JA Faire

Associate Judge