Crow v Calvista Australia Pty Limited HC Auckland CIV 2010-404-2295

[2010] NZHC 1175

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-2295

IN THE MATTER OF     an appeal to the High Court pursuant to s

72 of the District Courts Act 1947

BETWEEN  STEPHEN PETER CROW Appellant

ANDCALVISTA AUSTRALIA PTY LIMITED Respondent

Hearing:         21 June 2010

Appearances: Appellant in Person

M C Brugeyroux for Respondent

Judgment:      1 July 2010

JUDGMENT OF COOPER J

This judgment was delivered by Justice Cooper on

1 July 2010 at 10.00 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Wynyard Wood, PO Box 2217, Auckland

Copy to:

S P Crow, 27 Northwood Avenue, Albany, North Shore City 0632

CROW V CALVISTA AUSTRALIA PTY LIMITED HC AK CIV-2010-404-2295  1 July 2010

[1]      Mr Crow has appealed from a decision of the District Court that set aside on terms a judgment by default that had been obtained by the respondent.  Essentially, Mr Crow’s complaint is about the terms, which required him to pay into Court the capital component of the judgment, a sum of A$39,897.36.   Mr Crow says[1]  that although he has assets that would enable him to meet the amount of any judgment that was eventually obtained against him, in order to satisfy the order that this

amount be paid into Court he would need to sell property.

[1] But see [11] below.

[2]      Consequently, he now seeks a stay under r 20.10 of the High Court Rules which authorises the Court to order a stay of proceedings in relation to the decision appealed  against and  a stay of enforcement of any judgment or order appealed against.   As will be seen, the terms of the judgment subject to appeal effectively mean that a stay is necessary both of proceedings and enforcement.

[3]      The respondent opposes the application for a stay.  In the course of a detailed submission Ms Brugeyroux has referred to the relevant principles and authorities. However, I am satisfied that there should be a stay having regard to the following considerations.

[4]      First, I note that the circumstances in which judgment was originally obtained against Mr Crow by default were that he was one day late in filing a statement of defence.  That followed what the Judge accepted were difficulties of communication between Mr Crow and his solicitors, issues about fees and the consequence that the statement of defence was not filed in time.

[5]      Second,  the  Judge  recorded  that  he  was  satisfied  that  Mr Crow  had adequately explained the delay and had acted promptly in attempting to remedy it. The Judge observed that as soon as judgment was entered Mr Crow immediately took steps to protect his interest, and said that he:

Has performed with a high level of diligence throughout the process of the matter until today’s date.   All affidavits have been filed and the proper procedures have been attended to.

[6]      Third, the Judge was satisfied that there was a potential defence to the claim. Having surveyed the background of the relevant transactions which formed the subject matter of the claim, the Judge said at [23]:

I have no doubt that further details relating to these transactions will be revealed upon discovery, for it is my view that the argument that Mr Crow advances, firstly, might provide him with a defence, secondly is an arguable defence, and thirdly, is something that should be followed as far as the test in Russell v Cox is concerned.

[7]      Russell v Cox[2],to which the Judge referred, was a decision of the Court of Appeal under what was then r 265 of the Code of Civil Procedure which provided that a judgment obtained where a party did not appear at the trial could be set aside by the Court on such terms as might seem fit.  In the present case the District Court Judge was exercising a power under r 473 of the District Court Rules 1992 which read:

Any judgment obtained by default may be set aside or varied by the Court on such terms as it thinks fit if it appears to the Court that there has, or may have been, any miscarriage of justice.

[2] Russell v Cox [1983] NZLR 654.

[8]      In Russell v Cox the Court of Appeal accepted that there were three general considerations applicable to decisions on whether to set aside a judgment in circumstances where the defendant has not appeared:  whether the defendant has a substantial  ground  of  defence,  whether  any  delay  is  reasonably  explained  and whether the plaintiff will not suffer irreparable injury if the judgment is set aside.

[9]      In the present case, in considering what he described as the “third limb of the test”, the Judge noted that it was not unusual for a judgment to be set aside subject to the performance of conditions.   He concluded having regard to the history of the matter that it was proper that “some security be made for the proper performance in the event judgment is entered against Mr Crow”.  He then said that he was prepared to grant the application to set aside judgment subject to the payment into Court;  he said that would “dispense with the irreparable damage problem that I have referred to in Russell v Cox”.   It was a further condition that failure to make the payment

meant that the order to set aside would lapse at 4.00 p.m. on 22 April 2010 and the judgment would remain in force.

[10]     The effect of what the Judge required was that the bulk of the judgment sum would in fact be paid into Court, failing which the judgment originally obtained by default would come back into effect.  The result was to put Mr Crow in a far worse position than he is likely to have been had the defence been filed in time, and the respondent had made a successful application for security for costs.

[11]     Ms Brugeyroux noted that in his affidavit in support of the stay application Mr Crow stated that he did not have the means available to make payment of the judgment and that the only way the plaintiff could enforce its debt would be by way of bankruptcy proceedings.  This was different from the position that he adopted in argument when he indicated that he had assets against which a judgment could be enforced, but that he would be required to realise some of them in order to make the required payment into Court.  However, I do not see that as a compelling reason for declining a stay.  Rather, it suggests that if a stay is not granted the possible defence which the District Court Judge held existed might go by default.

[12]     In  Russell  v  Cox,  McMullin J  emphasised  that  the  three  considerations discussed in that case were simply matters which, as a matter of commonsense and practice, the Court would generally regard as of importance in deciding whether it is just to set aside a judgment.  However, what matters most at the end of the day is the overall interests of justice and whether there are issues that ought to be the subject of a defended hearing.

[13]     Ms Brugeyroux relied on authorities supporting the proposition set out in

Sims Courts Practice at 700,405, namely:

… an order staying proceedings will be granted upon payment by the defendant  to  the  plaintiff of  the  money in  question,  the  plaintiff  giving security for repayment.

However, the cases that support that proposition are cases where there has been a judgment following at least some enquiry into the facts.  The only enquiry that there has been here satisfied the Judge that there was an arguable defence.  In this situation

the argument for requiring the substantial part of the claimed judgment debt to be paid into Court is far less attractive.   Contrary to counsel’s submission it is not appropriate to equate the requirement for payment into Court as the “fruits of the respondent’s litigation”.

[14]     The issue of whether the requirement for payment into Court was properly made is an issue to be determined at the hearing of the substantive appeal.  On the other hand, if a stay is declined the right of appeal might be rendered nugatory. Under the terms of the order, the original default judgment obtained in the District Court would once more become effective and enforcement proceedings could be brought against Mr Crow.

[15]     I do not consider in any event that the respondent can establish irreparable damage if the stay is granted.  Partly that is because the hearing date for the appeal is not far distant;  it is to take place on 25 August 2010.  Ms Brugeyroux contended that the respondent’s ability to execute the District Court judgment would be injuriously affected by a stay which would delay recovery of the judgment sum. During the intervening period Mr Crow might devolve his estate and incur further liabilities, a concern that could be remedied by him paying the amount of the judgment  into  Court  or  providing  adequate  security  for  it.    While  the  latter proposition is correct, the argument overall is speculative.  While Mr Crow has not been consistent about his financial position there is no reason to suppose that there would be a significant deterioration in it between now and the hearing date.

[16]     In all the circumstances, I consider that the grant of a stay will best meet the interests of justice.

Result

[17]     The  application  for  a  stay  is  granted.    There  is  to  be  a  stay of  further proceedings and execution of the District Court judgment pending resolution of the appeal to this Court.

[18]     Costs are reserved, to be dealt with when the appeal is determined.