Ecosse Afrique Enterprises Limited v DB Breweries Limited HC Wellington CIV 2008-485-1761
[2010] NZHC 724
•18 May 2010
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2008-485-1761
BETWEEN ECOSSE AFRIQUE ENTERPRISES LIMITED
Plaintiff
ANDDB BREWERIES LIMITED Defendant
Hearing: 11 May 2010
Appearances: L. Pratley - Counsel for Plaintiff
J. Shackleton - Counsel for Defendant
Judgment: 18 May 2010 at 3.45 pm
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment was delivered by Associate Judge Gendall on 18 May 2010 at 3.45 pm pursuant to r 11.5 of the High Court Rules.
Solicitors: LH Pratley, Solicitor, PO Box 1064, Wellington
Simpson Grierson, Solicitors, PO Box 2402, Wellington
ECOSSE AFRIQUE ENTERPRISES LIMITED V DB BREWERIES LIMITED HC WN CIV-2008-485-1761
18 May 2010
Introduction
[1] The defendant applies for an order that the proceeding be struck out for failure to comply with an unless order. The unless order required the plaintiff to file and serve a further verified supplementary list of documents by 19 March 2010. Although the plaintiff responded to this order by filing an affidavit of documents on 18 March 2010, the defendant claims that the affidavit does not comply with the requirements of the order and that the proceeding should thus be struck out.
Facts and Background
[2] The plaintiff is a property developer and the defendant a large New Zealand brewery enterprise. The parties entered into a lease of bar premises at Blair Street and Cambridge Terrace in Wellington (the lease). The defendant sublet the premises to Blair Street Sports Bar Limited, which operated a bar there known as the Temperance Bar until 7 January 2009. Under the lease, the plaintiff was obliged to carry out certain works to ready the premises for fit-out as a bar. Both the plaintiff and Blair Street Sports Bar Limited retained Hawkins Construction Limited (Hawkins) to carry out the relevant works.
[3] The plaintiff claims $1,069,638.96 from the defendant, being an amount invoiced to the plaintiff by Hawkins for works which the plaintiff contends should be paid for by the defendant. The defendant says that it did not instruct the works. In addition, the plaintiff claims $127,968.75 as alleged non-payment of rent by the defendant based upon a commencement date under the lease of 15 August 2007. The defendant disputes this.
[4] In separate proceedings before the Court between Hawkins and the plaintiff, Hawkins obtained summary judgment for $200,797.15 plus interest.
[5] In a letter dated 9 October 2009, the defendant’s counsel requested further discovery from the plaintiff, including documents relating to the proceeding between the plaintiff and Hawkins. A direction was made on 14 October 2009 that the plaintiff respond to the defendant’s request for further documents by filing and serving any affidavit deemed appropriate. The plaintiff subsequently advised that some of the documents requested by the defendant were missing due to a computer “crash” some months earlier. On 28 October
2009, the plaintiff filed and served a first supplementary affidavit of documents, but it seems failed to respond to the defendant’s request for documents relating to the proceeding between the plaintiff and Hawkins. On 7 December 2009, the plaintiff advised that it had already discovered these documents, but stated that there were “a few documents relating to
an arbitration decision which may not have been discovered”. Hawkins provided non-party discovery on 20 November 2009.
[6] On 9 December 2009, the defendant was ordered to file and serve a further supplementary list of documents in the following terms:
In so far as the defendant’s complaint that the plaintiff’s own discovery to date is inadequate (and on this the plaintiff has acknowledged that there are more documents to come), a direction is now made that by 15 January 2010 the plaintiff is to file and serve a further verified supplementary list of documents relating to these discoverable documents (and to provide details of any discoverable documents which are no longer available and the reason for this).
[7] On 23 February 2010, the plaintiff’s former solicitor, Mr Kevin Smith, was granted leave to withdraw. He informed the Court that the plaintiff was about to appoint new counsel to act.
[8] On the same day, the defendant sought an “unless order” with regard to the plaintiff’s continuing default to provide discovery in accordance with the minute of 9
December 2009. After considering that request, I then made an “unless order” in the following terms, giving the plaintiff three and a half weeks to arrange its representation by new counsel and to provide supplementary discovery:
Unless the plaintiff by 19 March 2010 files and serves a further verified supplementary list of documents relating to the discoverable documents which the defendants have complained on a number of occasions have not been discovered (and provides details of any discoverable documents which are no longer available and the reason for this) as discussed between the parties then this proceeding shall be struck out.
(“the Unless Order”)
[9] On 18 March 2010, Mr Donald MacRitchie, a director of the plaintiff, himself filed and served an affidavit in this proceeding headed “Affidavit of Verified Supplementary List of Documents” (the Supplementary Affidavit). The defendant complained that the supplementary affidavit did not meet the terms of the “unless order”, referring to three key areas that Mr MacRitchie had failed to address: the loss of documents following the computer “crash”; the further arbitration documents referred to by the plaintiff’s memorandum dated 7 December 2009; and “any additional documents held by the plaintiff in relation to the 9 October 2009 request not already discovered by Hawkins”. Further, and in any event, the defendant complained that Mr MacRitchie was not entitled to file the affidavit without proper representation for the plaintiff company being established.
[10] It appears that the plaintiff has been unable here to instruct new counsel to replace
Mr Smith until 19 April 2010. An affidavit by Mr Jan Schnetler, who is also a director of the
plaintiff, was filed on 22 April 2010. In that affidavit, Mr Schnetler referred to the computer “crash”, and claimed that he had “previously given evidence on this topic”. He stated that he was told by a specialist that the documents on the computer were irretrievably lost. On 10
May 2010, Mr Schnetler filed an affidavit confirming his belief that the plaintiff had fully complied with its discovery obligations.
Principles on Strike-Out following Non-compliance with “Unless Order”
[11] The principles that govern the approach to “unless orders” were considered in Ko v Ko (2000) 14 PRNZ 289. In that case, the plaintiff applied for relief from the effect of an “unless order”. The Court stated that the decision of whether to grant relief was an exercise of judicial discretion and should include consideration of the following matters, as set out in Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 (CA) at 1974-
5:
(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 satisfies 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.
[12] It is of course a draconian step to strike out a claim for failure to comply with procedural orders of the Court, as it involves dealing with a case otherwise than on the merits: Commonwealth Reserves v Chodar HC Auckland CP 73-SW/00, 18 July 2000 at [25]. Because of this, a Court should only strike out a claim if there is “contumelious conduct”. The Court of Appeal in Anderson v Mainland Beverages Ltd (2005) 17 PRNZ 757 referred to the following passage from Re Jokai Tea Holdings Ltd [1992] 1 WLR 1196 at
1203 relating to unless orders:
The basis of the principle is that orders of the court must be obeyed and that a litigant who deliberately and without proper excuse disobeys such an order is not allowed to proceed. The rationale of such penalty being that it is contumelious to flout the order of court, if a party can explain convincingly that outside circumstances account for the failure to obey the peremptory order and that there was no deliberate flouting of the court’s order, his conduct is not contumelious and therefore the consequences of contumely do not flow.
[13] The Court of Appeal continued that “unless orders” were generally to be reserved for cases where breach or continued breach is objectively measurable and unchallengeable, and that the essential question was whether failure to comply with the order could be described as showing perverse and obstinate resistance of authority. In Anderson v Mainland Beverages Ltd, the Court found the appellant’s “continued attempts” to comply with the respondent’s requests showed that he was not exhibiting such “perverse and obstinate resistance of authority”, and it was wrong, therefore, to strike out the proceeding for non- compliance with the unless order.
[14] It is clear too that the Court has jurisdiction to extend time even after an “unless order” has not been complied with although this is only to be exercised cautiously – Samuels v Linzi Dresses Ltd (1981) 1 QB115.
[15] And in Jarden v Lawlor (1998) 12 PRNZ 516 the Court even held that it has jurisdiction to reinstate a proceeding after it may have been struck out under an “unless order”.
Representation
[16] Before me, the defendant’s first submission was that the affidavit did not comply with the “unless order” because a company litigant cannot file documents without representation. It argued that a considerable period of time had passed between Mr Smith’s withdrawal on 23 February 2010 and instruction of new counsel on 19 April 2010. Referring to Re G J Mannix Ltd [1984] 1 NZLR 309 (CA), the defendant submits that it is well settled that a company must be represented by a solicitor at all stages of a proceeding, and that it cannot initiate proceedings, appear in court or file documents without representation unless there are exceptional circumstances. The principle was phrased as follows by Cooke J at
310-311:
It is well settled in this country, and in England, Australia and Ireland, that a company has no right to be represented in the conduct of a case in Court except by a barrister; or by a solicitor in Courts or proceedings where solicitors have
the right of audience - as they usually have in Courts which are not superior
Courts.
The rule may have originated in early seventeenth century metaphysical reasoning that a corporation has no soul, is invisible and cannot do homage. But the modern rationale is simply that a corporation is not a natural person and so cannot appear in person; and that, apart from statutory exceptions, no one has a right to present a case in any Court unless in person or by a qualified lawyer.
There is a cognate rule that, apart from statutory exceptions, a corporation has no right to bring or carry on proceedings in a Court except by a solicitor. This refers to the filing of documents - writs, statements of defence, notices of appeal, etc. It is this rule which is now contained in England in RSC Ord 5, r
6(2). There is no express New Zealand equivalent in the Code of Civil Procedure in the High Court, but the general understanding is that the English rule embodies the former practice and that the New Zealand practice is the same. Arguably there might perhaps be more ground for relaxing this practice at the present day; but the present case does not involve that question and no opinion on it is called for. What this case is concerned with is the conduct of the case at hearings in Court or Chambers.
[17] Exceptions to this rule were to be reserved for “emergency situations when counsel is not available”, or “straightforward matters where the assistance of counsel is not needed by the Court or where it would be unduly technical or burdensome to insist on counsel”: at
314.
[18] This principle was confirmed by Williams J in Churchill Group Holdings Ltd v Aral
Property Holdings Ltd HC Auckland CIV-2001-404-2302, 17 August 2004 at [22]:
... companies which are litigants must be represented in all aspects of the litigation including filing documents and appearing in court by solicitors and counsel unless there are exceptional circumstances which rarely warrant a court granting leave to a director to represent that company. Any derogations from that principle appearing in the cases are mere glosses on the principle itself. Though open to be granted, the authorities show the rarity with which leave is granted: it has occurred only in emergency situations or those dealing with minor, straightforward matters.
[19] In Petersons Global Sales Ltd v Peterson [2010] NZCA 56 at [21] to [24], the Court of Appeal recently acknowledged that Re G J Mannix Ltd continues to apply.
[20] Here, the defendant submits that no exceptional circumstances exist, and that this is not an emergency situation where counsel was simply unavailable, given that the plaintiff had almost four weeks to instruct new counsel. Moreover, the plaintiff submits that compliance with an “unless order” is not a minor or straightforward matter.
[21] The plaintiff, however, attempts to distinguish the principle in Re G J Mannix Ltd from the present case on the basis that Mr MacRitchie did not seek “audience”, or did not seek to “appear”, in this Court on behalf of the plaintiff. However, the Court of Appeal
clearly considered that a company must be represented “in the conduct of a case”, which includes the filing of documents. It would be inconsistent with the purposes of this general principle that a company be represented by counsel if no representation was required for the filing of an affidavit in purported compliance with an order for discovery.
[22] Nevertheless, I agree with the plaintiff that under the circumstances prevailing in this case there is no basis for striking out the plaintiff’s proceeding simply because the affidavit was not filed by counsel. The lack of representation in my view meant that the filing of the affidavit was an “irregularity”, but it clearly did not render the document a “nullity”. In Time Ticket International Ltd v Broughton [1996] 2 NZLR 176, the High Court considered that proceedings issued by a company director were irregular rather than a nullity and, on that basis, dismissed an application for strike-out. The Court agreed to stay the proceedings until they were “regularised” by a solicitor entering upon the record, and referred to the following statement by Somers J in Re G J Mannix Ltd at 316:
But I consider the superior Courts have a residual discretion in this matter arising from the inherent power to regulate their own proceedings. Cases will arise where the due administration of justice may require some relaxation of the general rule. Their occurrence is likely to be rare, their circumstances exceptional or at least unusual, and their content modest. Such cases can confidently be left to the good sense of the Judges.
[23] I consider that it would be inappropriate to strike out the plaintiff’s proceeding here on the basis of a mere irregularity. The plaintiff argues that, instead of ignoring its obligation to instruct counsel, it was taking time to carefully consider its decision whom to instruct. There was therefore no “deliberate flouting” of the “unless order” or contumelious conduct on its part. In my view, there may be something here in these claims, and striking out the proceedings in those circumstances would be a wholly disproportionate response.
Discovery
[24] The defendant also submits that the affidavit of documents itself did not comply with the requirements of the “unless order” because it failed to address:
(a) the loss of documents following the “crash” of Mr Schnetler’s computer and what efforts have been made to recover these documents;
(b) the further arbitration documents referred to in counsel for the plaintiff’s memorandum dated 7 December 2009; and
(c) any additional documents held by the plaintiff in relation to the 9
October 2009 request not already discovered by Hawkins.
[25] It would appear that the concerns in para [24](a) above were largely answered by Mr Schnetler’s affidavit dated 22 April 2010, although the defendant submits that it is still not clear whether recovery efforts were made at the time of the “crash” or only after the event and as a result of concerns being raised by the defendant. The order did not expressly require disclosure of this information. Mr Schnetler claims that evidence regarding the computer “crash” has already been made available to the defendant, but the defendant disputes this. Mr Schnetler’s affidavit was filed after the time limit prescribed by the “unless order”.
[26] The “further arbitration documents” referred to in para [24](b) were first mentioned by the plaintiff in a Memorandum dated 7 December 2009. Now, the plaintiff says that no such documents exist, and that there has never been any arbitration about the issues in contention between the parties.
[27] Paragraph [24](c) refers to “[a]ny additional documents held by the plaintiff in relation to the 9 October 2009 request not already discovered by Hawkins”. The plaintiff’s position is that there are no additional documents which have not already been discovered. Although the defendant submits that this is the first time the plaintiff has offered such confirmation, it appears that the plaintiff expressed a similar view in its 7 December 2009
Memorandum. However, the defendant notes that documents such as the submissions filed in the Hawkins’ proceeding against the plaintiff have still not been discovered, and that these documents were specifically referred to in the defendant’s letter dated 9 October 2009.
[28] Although I agree with the defendant that Mr MacRitchie’s affidavit neglected to refer to the computer crash or the arbitration documents, I do not think that this failure necessarily amounted to “contumelious conduct”. Moreover, given that these issues have now been largely resolved, albeit with delay, I consider that it would not be appropriate to strike out the present proceeding on that basis alone. The only remaining matter, therefore, is discovery of “any additional documents” as referred to in para [24](c) above. The plaintiff appears to dispute that there are any further discoverable documents, but the defendant refers to documents such as submissions that it says are yet to be discovered.
[29]It is not entirely clear, on the basis of the material available to the Court, whether the plaintiff has fully complied with its discovery obligations. In any case, however, any failure which has occurred in discovering any outstanding documents noted in para [24](c) above before expiration of the “unless order” may have been the result of a simple oversight on the part of Mr MacRitchie and Mr Schnetler who, as submitted elsewhere by the defendant, may not have fully understood their discovery obligations. Moreover, it is possible here that Mr Pratley, newly instructed counsel for
the plaintiff, lacked time to familiarise himself sufficiently with the proceeding to ensure that full and complete discovery was in fact given. In these circumstances, it is my view that the plaintiff probably did not exhibit “perverse and obstinate resistance of authority” here and therefore it would be wrong to strike out the proceeding for non-compliance with the “unless order”.
Conclusion
[30] The defendant’s application to strike out the plaintiff’s claim therefore fails.
[31] The “unless order” is set aside, subject to the plaintiff by 1 June 2010 filing and serving a supplementary affidavit either confirming that there are no additional discoverable documents or providing discovery of any additional documents as requested in paras [24](b) and (c) above.
[32] Costs are reserved. If counsel are unable to agree on the issue of costs between themselves they may file memoranda on this issue (sequentially) which are to be referred to me and, in the absence of either party indicating they wish to be heard in the issue, I will decide the question of costs based upon the material before the Court.
‘Associate Judge D.I. Gendall’
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