Dong Nam Co Ltd v Mikruss Holdings Ltd HC Auckland AP 168-Sw/00

[2001] NZHC 430

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY AP 168-SW/00

BETWEEN DONG NAM CO LTD
Appellant

AND MIKRUSS HOLDINGS LTD
Respondent

Hearing: 3 May 2001

Counsel: R J Towns for the Appellant
D L Brown for the Respondent

Judgment: 1 June 2001

RESERVED JUDGMENT OF PATERSON J

[1] This is an application by the appellant (Doug Nam) for leave to appeal a judgment of Salmon J given on 19 March 2001. The application is opposed by the respondent (Mikruss).

Background

[2] Mikruss commenced proceedings in the Auckland District Court in November 1996 claiming US$58,115 said to be losses arising as a result of a failure by Dong Nam to supply squid to agreed specifications.

[3] In a minute dated 24 January 2000, District Court Judge Hole declined to strike out Mikruss’ pleading. The application to strike out was on the basis of breaches of two “unless” orders.

[4] In the same minute, the Judge ordered Mikruss to file and serve a completely new and composite list of documents prepared in compliance with r 320 of the District Court Rules and to prepare a bundle of documents readily identifiable by 18 February 2000. That order was one of the orders referred to in the following “unless” order made at the same time:

“Unless orders 1-4 inclusive are complied with strictly, time being of the essence, the proceeding will be dismissed on the application by second defendant unless the plaintiff can show cause.”

[5] The necessary list of documents was provided by 18 February 2000 but an amended list was filed and served on 20 March 2000 after Dong Nam had objected to the form of the earlier list. At that stage both parties were satisfied that the orders made on 24 January 2000 had been complied with.

[6] In June 2000, Mikruss provided Dong Nam with copies of some additional 22 pages of documents which should have been included in the list of documents filed on 18 February 2000. A further amended verified list of affidavits was then filed on 3 June 2000. Dong Nam applied for an order that Mikruss’ claim be dismissed because of its failure to comply with the “unless” order made on 24 January 2000.

[7] District Court Judge Lockhart QC considered the strike out application and declined to make it. Dong Nam appealed to this Court and in a judgment given on 19 March 2001, Salmon J dismissed the appeal.

The judgment

[8] It was noted the only excuse that Dong Nam could proffer for the non inclusion of the documents in the original affidavit was lack of care on the part of its solicitors. The additional 22 pages of handwritten notes had been in the possession of the solicitors at the time the list of documents was completed but for some reason, which was unexplained, the documents were not listed. An officer of Mikruss stated in his affidavit he had assumed these documents had been included in the company’s original list of documents.

[9] Salmon J, in declining the appeal, found that the Judge directed himself properly in the exercise of his discretion. He noted the degree of fault on the part of Mikruss’ solicitors was not such that the interests of justice require the proceedings to be struck out. He then dealt particularly with several points raised on behalf of Dong Nam.

[10] In coming to his decision, Salmon J took into account the submission that the Judge had wrongly exercised his discretion and that the applicant in that Court relied upon the English decision of Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 166 and Ko v Ko (2000) 14 PRNZ 362. His Honour accepted the approach in the Hytec decision and summarised the principles determined in that case.

[11] Salmon J cited the following extract from the judgment of Ward LJ at p 1674 of Hytec:

“(1) An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party’s last chance to put his case in order. (2) Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed. (3) This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure. (4) It seems axiomatic that if a party intentionally or deliberately (if the synonym is preferred) flouts the order then he can expect no mercy. (5) A sufficient exoneration will almost inevitably require that he satisfied the court that something beyond his control has caused his failure to comply with the order. (6) The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice. (7) The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weighs very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two.”

His Honour also noted other observations from both the judgment of Ward LJ and other Judges in the Hytec. These observations noted that the points made by Ward LJ must be given great weight but are not conditions; they should not be applied blindly; it is necessary to consider the circumstances of each case; and if anyone is to suffer from the failure of a solicitor it is better to be the client than the other party. As Salmon J noted, the exercise of the discretion is without statutory fetters.

Grounds for present application

[12] The grounds upon which Dong Nam seeks leave are summarised in the following submission made by its counsel:

“This case raises an important matter of procedural law, namely the proper approach to the exercise of discretion in relation to breaches of “unless” orders. The proper approach to these orders is capable of bona fide and serious argument and is important in relation to the proper management of proceedings before the Courts.”

The submission, in effect, was that while Salmon J stated the correct principles from the Hytec case, he did not apply them.

[13] The application is opposed by Mikruss on the grounds that the interests of justice do not require a second appeal, the findings of both the District Court and this Court are consistent, there is no serious question of law or fact capable of bona fide and serious argument sufficiently affecting Dong Nam’s interests to justify the delay and costs of a further appeal, and the appeal raises issues of concern to the parties only and lacks any public or general importance.

Legal test

[14] This is an application for leave under s 67 of the Judicature Act 1908. The principles upon which leave may be granted are well settled and were not in dispute. As noted in Waller v Hider [1998] 2 NZLR 412, the appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the costs and delay of the further appeal. On a second appeal the Court of Appeal will not be engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court. There is also authority for the proposition that if the District Court and this Court have come to the same conclusion, it is generally harder to obtain leave to bring a second appeal.

Conclusions

[15] The challenge in this case is not to clarify the law but whether the law was correctly applied, both by this Court and the District Court. An appellate Court does not lightly set aside the exercise of a discretion when the Judge has stated the appropriate law and carefully considered the circumstances of the case, even if the appellate Court itself may have come to a different conclusion. I suspect the gravamen of the complaint is that the fault on the part of Mikruss’ solicitors was a fault for which Mikruss should suffer and that the Judge should not have included as one of his considerations the fact that there was no fault on Mikruss itself. The difficulty that Dong Nam has if leave is granted is that Salmon J stated the Hytec principles, which are not conditions, and then fully considered the factual position before he determined that the District Court Judge correctly directed himself. While the default which occurred in this case would ordinarily result in the sanctions being imposed, there were other Hytec principles which pointed in the other direction. There was no evidence of the twin scourges of delay and wasted costs injuring Dong Nam. Nor was there any evidence of any prejudice to Dong Nam or that anyone suffered from the failure of the solicitors to discover the notes. It is difficult to see that any appellate Court would allow an appeal from an exercise against discretion when two Judges have, in effect, determined it would be contrary to justice to punish the voluntary disclosure of documents unintentionally omitted from earlier lists when there is no prejudice of any type. At the core of the exercise of the discretion is service to justice. Is justice being done to strike out a proceeding when there is no prejudice to either the case management system or to the other party? In these circumstances if leave is given, Doug Nam will, in my view, have difficulties in persuading the Court of Appeal to strike out the proceedings.

[16] There are other factors which, in my view, are decisive in this matter. This is an attempt to obtain a second appeal when both the District Court Judge and High Court Judge came to the same conclusion. It is a matter where the amount of the claim is relatively small. The exercise of a discretion when applied to the circumstances of this particular case do not involve some interest, public or private, of sufficient importance to outweigh the costs and delay of the further appeal. The exercise of a discretion to the facts of the particular case, when the principles upon which the Court should exercise that discretion have been correctly stated, and those principles applied to the facts would normally not, in my opinion, warrant a second appeal. This is particularly so when the decision arrived at was open to both Judges on the facts which they considered. They were applying principles not conditions, exercising a discretion not statutorily fettered and came to their conclusions in what they saw as the interests of justice. In my view, this is not a case where the costs and delay of the second appeal are warranted.

[17] The application for leave is therefore dismissed.

Costs

[18] Mikruss is entitled to costs on the application which I fix on the basis of Category 2B of the Second and Third Schedules of the High Court Rules.