Grant v Camelspace (AKL) Limited

[2024] NZHC 572

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1573

[2024] NZHC 572

IN THE MATTER

of an appeal

BETWEEN

TOBIAS ANTHONY JOHN GRANT

Appellant

AND

CAMELSPACE (AKL) LIMITED

Respondent

Hearing:

18 October 2023

Further submissions received 2 and 10 November 2023

Appearances:

D J G Cox for Appellant

B P Molloy and C A Wooller for Respondent

Judgment:

18 March 2024

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 18 March 2024 at 11 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Solicitors:           Rennie Cox, Auckland

Haigh Lyon, Auckland

GRANT v CAMELSPACE (AKL) LIMITED [2024] NZHC 572 [18 March 2024]

Introduction

[1]                 The appellant, Mr Grant, appeals against a decision of Judge D J Clark in the District Court at Auckland of 25 May 2023.1

[2]                 Mr Grant and his fellow director, Mr Lattimer-Gregory, had applied to the District Court to set aside a default judgment that the respondent, Camelspace, had obtained against them in the District Court in May 2021.

[3]                 The Judge declined  Mr  Grant’s  application  (in  large  part)  but  allowed  Mr Lattimer-Gregory’s application. Camelspace has not appealed the Judge’s decision as regards Mr Lattimer-Gregory.

Background

[4]                 Camelspace’s default judgment followed summary judgment proceedings it brought against Mr Grant and Mr Lattimer-Gregory in 2020. Camelspace sought judgment for sums owed by two “Pop-up Globe” companies, of which both were directors (“the companies”). Mr Grant and Mr Lattimer-Gregory had executed personal guarantees in favour of Camelspace in respect of debts owed by the companies.

[5]                 Neither Mr Grant nor Mr Lattimer-Gregory opposed or sought to defend Camelspace’s proceedings. Accordingly, on Camelspace’s application, in May 2021 the District Court entered judgment against them (on a joint and several basis) for

$265,133.98, and awarded costs against them of $12,927.24.

[6]                 In May 2022, Mr Grant and Mr Lattimer-Gregory applied to the District Court to set aside the default judgment. The application was made pursuant to r 15.10 of the District Court Rules 2014. The Court may set aside or vary the judgment in issue on any terms it thinks just if it appears to the Court that there has been or may have been a miscarriage of justice.

1      Camelspace (AKL) Ltd v Grant [2023] NZDC 8802.

[7]                 The principal issue on the application to set aside was whether Mr Grant and Mr Lattimer-Gregory had a “substantial defence” to Camelspace’s proceedings. Each contended  they  had  defences  of  duress  and/or  undue  influence.  In  addition,  Mr Lattimer-Gregory submitted that his personal guarantee was void as a result of amendments made to the relevant contractual documents after he had executed the guarantee.

[8]                 After a comprehensive review of the affidavit evidence before him, the Judge determined that neither Mr Grant nor Mr Lattimer-Gregory had a substantial defence on the basis of duress and/or undue influence. However, the Judge was satisfied that Mr Lattimer-Gregory did have a possible defence regarding the amendments to the contractual documents.

[9]                 At the conclusion of his judgment, the Judge granted Mr Lattimer-Gregory’s application to set aside  the default judgment.  The Judge  also reserved costs  on   Mr Lattimer-Gregory’s application, pending determination of the substantive proceeding.

[10]As for Mr Grant, the Judge himself identified an issue in relation to the sum of

$46,566 of the Camelspace claim, that issue being whether Mr Grant’s guarantee extended to the obligations of Pop-up Globe International Ltd.

[11]             The Judge sought further submissions on this point. Then, in a further judgment of 5 July 2023, the Judge set aside the default judgment against Mr Grant in part, reducing the judgment sum to $218,567.98.2 The Judge also awarded costs against Mr Grant on a 2B basis, less a 25 per cent reduction to reflect Mr Grant’s partial success.

[12]             Mr Grant now appeals the Judge’s refusal to set aside the default judgment in its entirety.

2      Camelspace (AKL) Ltd v Grant [2023] NZDC 13668.

Current position

[13]             As matters stand presently, Camelspace has filed an amended statement of claim dated 15 August 2023. This is against Mr Grant seeking judgment for the

$46,566 referred to above, and against Mr Lattimer-Gregory for the sum of

$265,133.98.

[14]             Mr Lattimer-Gregory has filed a statement of defence and counterclaim in the proceeding. Notwithstanding Judge Clark’s decision, Mr Lattimer-Gregory has pleaded the defences of duress and undue influence, as well as alleging that the guarantee is void for the reason given above.

[15]             To be fair to Mr Lattimer-Gregory, nothing in the Judge’s decision expressly precludes him advancing these defences. Nor has Camelspace taken any steps to exclude this part of Mr Lattimer-Gregory’s pleading, such as applying to the Judge to recall his decision to address the issue, or applying to strike out the relevant parts of Mr Lattimer-Gregory’s statement of defence.

[16]             In short, Mr Lattimer-Gregory is presently advancing defences which Mr Grant is not permitted to advance.

Appeal

[17]             Mr Grant’s appeal is brought pursuant to s 124 of the District Court Act 2016. His grounds of appeal address the merits of the Judge’s decision but not the inconsistency in the position which now prevails as between the two guarantors.

[18]             At the hearing of the appeal, I raised with counsel the inconsistency referred to in [16] above. It is conceivable that the Judge hearing the renewed proceeding might reach a different decision to Judge Clark on the availability of the defences of duress and/or undue influence, particularly because the parties will be required to give discovery and there will be oral evidence at trial.

[19]             Given this possibility, I asked the parties to file further submissions addressing what might be the appropriate course on the appeal, which they have done.

[20]             Mr  Molloy,  counsel  for  Camelspace,  submits  that  I  should  determine  Mr Grant’s appeal on the merits. If the appeal fails, then Mr Molloy submits that I should direct the District Court to consider of its own volition whether Mr Lattimer-

Gregory’s pleading of duress and/or undue influence should be struck out.3

[21]             Mr Cox, counsel for Mr Grant, proposed that I should allow the appeal, again on the merits.

[22]             I do not accept Mr Molloy’s submission. Mr Lattimer-Gregory is not a party to this appeal and so has not been heard on that submission. Nor would such a course be appropriate in any event.

[23]             Nor do I accept that I should address the merits of the Judge’s decision. The District Court Judge determining the proceedings must be free to do so on the basis of the evidence and submissions presented to them.

Discussion

[24]             No doubt the Judge expected that Mr Lattimer-Gregory would confine his defence to the point relating to his guarantee. However, in setting aside Camelspace’s judgment against  Mr  Lattimer-Gregory,  the  Judge  did  not  confine  or  restrict  Mr Lattimer-Gregory’s pleading in any way. Thus the effect of the judgment is inconsistent between the two guarantors, leading to the possibility of inconsistent outcomes on the same issues.

[25]             In my view, the only way to avoid that possibility is to allow this appeal, and set aside the default judgment against Mr Grant in its entirety, and the costs order also.

[26]             The effect of allowing the appeal is that Mr Grant may file a statement of defence in the District Court. It will then be for Camelspace, if it sees fit, to apply to strike out what it considers to be the offending aspects (if any) of both defendants’ statements of defence. If Camelspace does not make that application, or it is unsuccessful in doing so, the matter will have to proceed to trial in the usual way.

3      Section 128(1)(b)(ii) of the District Court Act 2016 allows the High Court, after hearing an appeal, to direct the District Court to consider any matters the High Court directs.

Result

[27]             I allow this appeal. I set aside the default judgment obtained by the respondent against the appellant in May 2021. I also set aside the order made by the District Court as to costs.

[28]             As with Mr Lattimer-Gregory, costs in the District Court on the matters before Judge Clark are to be determined after the substantive matters are concluded.

Costs

[29]             Although Mr Grant has succeeded on this appeal, my preliminary view is that costs on the appeal should lie where they fall, given the basis on which I have allowed the appeal.

[30]             If, despite that indication, counsel for Mr Grant wishes to advance an application, he may do so, but it must not exceed five pages. Further directions will follow if an application is made.

Peters J