Exportrade Corporation v Irie Blue New Zealand Limited
[2016] NZHC 500
•23 March 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2008-404-7130 [2016] NZHC 500
BETWEEN EXPORTRADE CORPORATION
Plaintiff
AND
IRIE BLUE NEW ZEALAND LIMITED First Defendant
EDITH SHELLEY ROZANNE GRIBBLE
aka ROZANNE GRIBBLE Second Defendant
SCOTT GEOGGREY GRIBBLE aka
SCOTT GRIBBLE Third Defendant
Hearing: 22 March 2016 Appearances:
G J Thwaite for plaintiff
H Fulton for first and third defendantsJudgment:
23 March 2015
JUDGMENT OF LANG J [on interlocutory applications]
This judgment was delivered by me on 23 March 2016 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
EXPORTRADE CORPORATION v IRIE BLUE NEW ZEALAND LTD [2016] NZHC 500 [23 March 2015]
[1] This proceeding was filed in 2008 and has what might be charitably described as an unfortunate history. It has been the subject of numerous interlocutory hearings in this Court, and one appeal to the Court of Appeal. Although more than eight years have now passed since the proceeding was filed, the parties are not yet in a position to seek a substantive fixture. Remarkably, they have not yet even commenced the discovery process.
[2] The other notable feature about the case is that it does not involve a claim for a great deal of money, at least in comparison with most cases that are determined in this Court. The plaintiff seeks to recover approximately US$160,000 together with interest. Both parties have undoubtedly spent significant sums of money dealing with a range of interlocutory issues. Determination of the issues raised by the present application will hopefully advance them to the point where they can concentrate on the substantive matters in dispute.
[3] The present application, filed by the first and third defendants on 11
November 2015, seeks the following orders and directions:
(a) An order striking out the first cause of action in the fourth amended statement of claim dated 23 December 2015.
(b)An order removing the second defendant from the proceeding on the basis that she is now deceased.
(c) An order directing the plaintiff to file an amended statement of claim providing the particulars set out in a schedule annexed to the defendants’ application.
(d)An order determining that the issues raised by the proceeding are to be determined in accordance with the law of Barbados.
(e) Confirmation that New Zealand law is to apply to the case management and trial of this proceeding.
(f) An order requiring the plaintiff to pay indemnity costs in relation to the present applications.
Background
[4] The proceeding was filed on 30 September 2008. Subsequently, on 24
October 2008, the plaintiff filed an application for summary judgment in respect of the first cause of action alone. This sought to enforce a judgment that the plaintiff had obtained against the defendants in a court in Florida (the Florida judgment). The second and third causes of action in the original statement of claim were based on alleged breach of contract and an attempt to enforce a guarantee against the third defendant. All causes of action sought judgment against the defendants in respect of goods and services that the plaintiff had delivered to them or entities with which they were associated between January 2000 and August 2005. During this period the plaintiff was based in Florida and the defendants were based predominantly in Barbados.
[5] The plaintiff did not serve the first and third defendants with the proceeding until 8 October 2009. On 28 October 2009 all three defendants filed appearances under protest to jurisdiction in relation to the first cause of action (the first protest to jurisdiction). The plaintiff responded on 18 December 2009 by filing an application to set aside the appearances. The defendants duly filed documents in opposition to the plaintiff’s application on 22 January 2009.
[6] On 9 April 2010, the plaintiff filed an amended statement of claim adding two further causes of action against the second and third defendants. These allege breaches of statutory duties owed by them in their capacities as directors of the company with which the plaintiff dealt when it supplied the goods and services that have given rise to the claim. The statutory duties in question were imposed by the Barbados counterpart of the Companies Act 1993 in New Zealand.
[7] The plaintiff ’s application to set aside the first protest to jurisdiction was heard by Associate Judge Christiansen on 19 April 2010. In a judgment delivered on
28 April 2010, the Associate Judge granted the plaintiff’s application and set aside the first protest to jurisdiction.1
[8] The defendants then applied for an order reviewing the Associate Judge’s decision.2 Two months later, on 8 July 2010, the defendants filed further appearances under protest to the jurisdiction of the Court in respect of the remaining causes of action (the second protest to jurisdiction).
[9] Duffy J heard the defendants’ application for review of the Associate Judge’s decision in relation to the first protest to jurisdiction on 14 July 2010. In a judgment delivered on 22 December 2010, Her Honour granted the application.3 She held that the courts in New Zealand did not have jurisdiction to determine the first cause of action because the Florida judgment was unenforceable in New Zealand. For that reason she dismissed “the plaintiff’s summary judgment proceeding to enforce the Florida judgment in New Zealand”.4
[10] On 14 January 2011, the plaintiff applied to recall Duffy J’s judgment. In a minute issued on 11 March 2011, Duffy J recalled her judgment and re-issued it to record that the result was that “the plaintiff ’s summary judgment proceeding to enforce the Florida judgment in New Zealand is … dismissed”.
[11] On 6 May 2011, the plaintiff applied for an order setting aside the second protest to jurisdiction. The defendants opposed the application, and Toogood J dismissed it in a decision delivered on 1 November 2012.5 Toogood J made an order staying the proceeding on the ground that New Zealand was not the appropriate forum in which the remaining causes of action should be determined.
[12] The plaintiff appealed against Toogood J’s decision. In a judgment delivered on 19 December 2013, the Court of Appeal allowed the appeal and held that the
1 Exportrade Corporation v Irie Blue New Zealand Ltd HC AK CIV 2008-404-007130, 28 April
2010.
2 Under s 26P of the Judicature Act 1908.
3 Exportrade Corporation v Irie Blue NZ Ltd HC AK CIV-2008-404-007130, 22 December 2010.
4 At [26].
5 Exportrade Corporation v Irie Blue New Zealand Limited HC AK CIV-2008-404-7130, 1
November 2012.
High Court had jurisdiction over the remaining causes of action.6 One of the grounds upon which it reached that decision was that the proceeding had been before the courts in New Zealand for five years. For that reason the plaintiff would suffer prejudice, particularly in relation to limitation issues, if it was required to commence a new proceeding in another jurisdiction.7
The application for an order striking out the first cause of action
[13] Resolution of this issue depends upon the nature and effect of the judgment delivered by Duffy J on 22 December 2010. Relying upon the wording of the order that Duffy J made,8 Mr Thwaite submits that the judgment determined (at most) that the plaintiff could not succeed in its application for summary judgment. The defendants contend that neither the Associate Judge nor Duffy J dealt with the application for summary judgment. Rather, both dealt with the first protest to
jurisdiction. The defendants point out that Duffy J granted the application to review the Associate Judge’s decision. They say that in doing so, Duffy J reversed the Associate Judge’s decision granting the plaintiff’s application to set aside the first protest to jurisdiction. As a result, she upheld the protest, and dismissed the proceeding to the extent that it was based on the first cause of action.
[14] I uphold the defendants’ argument on this point. The Associate Judge’s decision related solely to the plaintiff’s application to set aside the first protest to jurisdiction. It did not, and could not have, determined the application for summary judgment. That application could not be determined until the Court had decided it had jurisdiction to deal with the plaintiff’s claim. That is why, under the heading
“Result”, the Associate Judge stated:9
[71] The applications to dismiss the protest are granted.
[15] The application before Duffy J sought a review of the Associate Judge’s
decision. This did not require Duffy J to consider the application for summary judgment because, for the reason set out above, the Associate Judge had not
6 Exportrade Corporation v Iris Blue New Zealand Ltd [2013] NZCA 675.
7 At [55](a).
8 Set out above at [10].
9 Exportrade Corporation v Irie Blue New Zealand Ltd, above n 4, at 1.
determined that application. Had he done so, any challenge to his decision would have been by way of appeal to the Court of Appeal and not review by a Judge of this Court. Duffy J was therefore concerned solely with the correctness of the Associate Judge’s decision to grant the plaintiff’s application to set aside the first protest to jurisdiction.
[16] Duffy J expressed her conclusion as follows:
Result
[26] The application for review is granted. The Florida judgment is unenforceable by a New Zealand court. The plaintiff’s summary judgment proceeding to enforce the Florida judgment in New Zealand is, therefore, dismissed.
[17] Although the wording that the Judge used in the third sentence is unfortunate, the first sentence makes it clear that she granted the defendants’ application for review of the Associate Judge’s decision. Her subsequent decision to recall and re- issue this paragraph of the substantive judgment did not alter the first sentence, and was obviously intended solely to emphasise that the judgment applied solely to the first cause of action and not to the plaintiff’s other claims. It is difficult to see how there could have been any confusion about that issue, because Duffy J was never required to determine whether the second protest to jurisdiction should be upheld or set aside. That task ultimately fell to Toogood J and the Court of Appeal.
[18] In granting the application for review, the effect of Duffy J’s decision was to reverse the Associate Judge’s decision granting the plaintiff’s application to set aside the appearances under protest to jurisdiction in respect of the first cause of action. Duffy J then dismissed the substantive proceeding to the extent that it was based on the first cause of action.
[19] It was open to the plaintiff to appeal to the Court of Appeal against Duffy J’s decision. It did not do so and, unless it obtains leave to appeal out of time, there is no longer any means by which to challenge the decision.
[20] It appears that the plaintiff initially accepted that it could no longer pursue the first cause of action. In her Minute dated 11 March 2011 Duffy J observed that “the
parties are now agreed that the 22 December judgment makes the first cause of action redundant”.10 Toogood J also recorded in his judgment delivered on 1
November 2012 that the plaintiff had applied “to set aside so much of the defendant’s protest to jurisdiction as relates to all but the now redundant first cause of action”. Furthermore, in summarising the background to the appeal against Toogood J’s decision, the Court of Appeal observed:11
A decision by Duffy J determining that the judgment obtained by Exportrade against the three respondents in Florida could not be enforced in New Zealand means that, in the absence of any appeal against her decision, the first cause of action is no longer relevant.
It seems that the plaintiff has now altered its stance.
[21] I consider the legal position to be clear. Duffy J upheld the protest to jurisdiction in relation to the first cause of action and dismissed that aspect of the proceeding. The plaintiff did not appeal against that decision. It would be an abuse of process to permit the plaintiff to pursue the same claim in the current version of the statement of claim. The first cause of action in the present statement of claim is accordingly struck out.
[22] I direct the plaintiff to file and serve an amended statement of claim deleting the first cause of action no later than 15 April 2016.
The application for an order removing the second defendant as a party to the proceeding
[23] The second defendant is now deceased. The plaintiff has been aware of this fact for a considerable time, but has been handicapped by the fact that the second defendant does not have any personal representatives. This has prompted the remaining defendants to seek an order removing the second defendant as a party to
the proceeding.
10 Exportrade v Irie Blue New Zealand Ltd HC Auckland CIV-2008-404-7130, 11 March 2011 (Minute of Duffy J) at [5].
11 Exportrade Corporation v Irie Blue New Zealand Limited, above n 6, at [3](b).
[24] The plaintiff does not wish to abandon its claim against the second defendant because it believes she may have transferred assets to a third party before her death. For that reason it has now applied on a without notice basis for an order under rr
4.50 and 4.52 of the High Court Rules appointing a new party to represent the second defendant in this proceeding. It suggests that the Court should appoint either the third defendant, her former husband Mr Scott Gribble, or one of her two daughters.
[25] I accept that the plaintiff should have an opportunity to pursue its claim against the second defendant’s estate. I do not consider it would be appropriate, however, to appoint Mr Gribble to represent his former wife’s interests. As the plaintiff acknowledges, Mr Gribble’s interests may not coincide with those of his former wife. Nor do I consider it appropriate, on the information presently available, to appoint either of the second defendant’s daughters. I am told that they both live in Barbados, but I have not been provided with any further information about them other than that they are the directors of a company that purchased a property in Barbados from Mr and Mrs Gribble in August 2009.
[26] At this stage I leave the plaintiff’s application undetermined. It will be for the plaintiff to place further information before the Court about the second defendant’s daughters or, alternatively, to nominate another person or entity to stand in the shoes of the second defendant.
The application for an order directing the plaintiff to file an amended statement of claim providing further particulars
[27] This application potentially affects the ability of the defendants to file statements of defence to the plaintiff’s claims. I consider, however, that the plaintiff’s claims are sufficiently particularised in the current version of the statement of claim to enable the defendants to take that step. I summarise the remaining claims as follows:
(a) Second cause of action: A claim against the second and third defendant in contract or under the principles relating to unjust enrichment. The claim is based on the premise that the defendants
traded under the name Colourtone Screen Printers Ltd, but no company having that name was in existence when the plaintiff provided the goods and services to the plaintiff. For that reason the plaintiff contends that the second and third defendants are liable to meet the cost of those goods and services.
(b)Third cause of action: A claim against the third defendant based on a written acknowledgement of debt that he allegedly signed on 25 April
2000.
(c) Fourth cause of action: Claims against the second and third defendants in their capacities as directors of Colour Tone Screen Printers Ltd, a company incorporated in Barbados in 1986. The claims are based on alleged breaches of statutory duties of care imposed by s 95 “and other sections of the Companies Act of Barbados”.
(d)Fifth cause of action: Claims against the second and third defendants for further alleged breaches of statutory duties imposed on the defendants by s 95 and other sections of the Companies Act of Barbados.
[28] It is difficult to discern the difference between the claims under the fourth and fifth causes of action. The plaintiff should therefore consider combining these into a single cause of action.
[29] The defendants would ordinarily be entitled to require the plaintiff to provide many of the particulars that they seek. There is, however, nothing ordinary about this proceeding. Extraordinary measures are now required to create the momentum necessary for it to proceed to trial within an acceptable timeframe, which I take to be no later than November 2016.
[30] An order requiring the plaintiff to provide the particulars that the defendants seek will create further delay, and will inevitably lead to arguments as to the
adequacy of the plaintiff ’s response. Furthermore, discovery and inspection cannot sensibly be undertaken until such time as the defendants fully understand the nature and scope of the plaintiff’s claims against them.
[31] Rather than require the plaintiff to provide further particulars at this stage, I consider that it should provide the defendants with full details of its claims in the form of draft briefs of evidence. These will include briefs from suitably qualified witnesses who are able to give evidence regarding those aspects of the law of Barbados and/or Florida that are relevant to the plaintiff’s claims. This process will necessarily require the plaintiff to formulate its claims realistically and in far greater detail than it has done to date. If done properly, it will also provide the defendants with the particulars they now seek. Furthermore, it will provide a convenient framework against which the scope of discovery can be assessed.
[32] Both counsel agreed with this proposal when I put it to them during the hearing. Mr Thwaite seeks a month to prepare the briefs and Mr Fulton has no difficulty with that proposal. The plaintiff will therefore serve its draft briefs of evidence on the defendant no later than 29 April 2016. The defendants will then have three weeks to consider the plaintiff ’s evidence and to seek clarification and/or amplification of matters arising from it.
[33] Mr Fulton is to file and serve a memorandum no later than 27 May 2016 setting out any concerns he may have regarding the plaintiff ’s evidence. If necessary, Mr Thwaite is to file a memorandum in response by 3 pm on Monday 30
May 2016. Those memoranda should also provide proposals regarding the timing, nature and scope of discovery. I will then hold a face to face conference with counsel on Tuesday 31 May 2016 at 9 am (one hour allocated).
[34] The plaintiff will not be required to serve its briefs in final form until discovery and inspection have been completed.
[35] At this stage I do not propose to determine the existing application for further particulars. It may provide a convenient means of determining any remaining concerns about particulars once the plaintiff has served its briefs.
The application for an order that the issues raised by the proceeding are to be determined in accordance with the law of Barbados
[36] This aspect of the application effectively seeks the determination of a separate question before trial. The Court has the power under r 10.15 of the High Court Rules to direct that this occur.
[37] The issue arises in the present case because the plaintiff alleges in the second cause of action that the applicable law is that of either Florida or Barbados. The third cause of action does not contain a similar allegation, but the plaintiff seeks interest on the judgment sum in accordance with the law of Florida. The fourth and fifth causes of action are plainly based on the law of Barbados because they allege that the defendants breached their statutory obligations under Barbados legislation that is similar to the Companies Act 1993 in New Zealand.
[38] The parties to a dispute often consider that determination of a separate question before trial will refine the issues in dispute and thereby shorten the substantive trial. In practice, however, that outcome is rarely achieved. The determination of a separate question often results in the parties engaging in a “mini trial” that requires extensive evidence to be called. Much of that evidence will also need to be led at the substantive trial regardless of the outcome of the separate question. The process can therefore cause significant inconvenience to witnesses and add greatly to the overall cost of the proceeding. Furthermore, the determination creates appeal rights that can easily derail the proceeding and add further to its cost. The process may therefore produce the opposite effect to that anticipated by the parties. These concerns lead the Court to exercise the power under r 10.15 in a cautious manner.
[39] I see no discernible benefit in holding a separate trial to determine which law should apply for the purposes of the second and third causes of action. That process would require the parties to call extensive evidence regarding the circumstances in which they came to deal with each other. They will need to call that evidence at the substantive trial regardless of the answer given in respect of the separate question. Determination of the separate question is therefore unlikely to shorten the
substantive trial to any great degree. The prospect that the unsuccessful party may exercise rights of appeal is also extremely unpalatable.
[40] For these reasons I decline to direct that this issue be tried as a separate question.
Confirmation that the trial and case management of this proceeding is to be conducted in accordance with the law of New Zealand
[41] There is no dispute regarding this issue. The proceeding was issued in New Zealand, and it will be managed and tried in accordance with the procedure prescribed by the High Court Rules.
Next event
[42] The next event in this proceeding will be the face to face conference on 31
May 2016 at 9 am.
Costs
[43] Costs at this stage are reserved.
Lang J
Solicitors:
1