Greys Avenue Partners LLC v Theyers
[2023] NZHC 327
•28 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-45
[2023] NZHC 327
BETWEEN GREYS AVENUE PARTNERS LLC
Plaintiff
AND
COLIN DOUGLAS THEYERS
Defendant
Hearing: 27 September 2022 Appearances:
MJ Crawford and A Van Ammers for the Plaintiff RJ Hollyman KC and SR Carey for the Defendant
Judgment:
28 February 2023
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 28 February 2023 at 4pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors/Counsel:
Cook Morris Quinn, Auckland
M Crawford, Mills Lane Chambers, Auckland A Van Ammers, Mills Lane, Auckland
RJ Hollyman KC, Shortland Chambers, Auckland SR Carey, Auckland
GREYS AVENUE PARTNERS LLC v THEYERS [2023] NZHC 327 [28 February 2023]
Introduction
[1] The plaintiff seeks summary judgment of its claim for recognition of a USD 2.087 million judgment of the United States District Court for the District of Hawaii dated 5 October 2021.
[2] A plaintiff who has obtained a judgment in a foreign court may either seek to enforce that judgment in New Zealand or sue on the original claim (or both in the alternative). The plaintiff in this case is seeking to enforce the Hawaiian judgment.
[3] It is common ground between the parties that because there is no treaty between New Zealand and the United States of America providing for the reciprocal enforcement of judgments, common law principles apply. The common law principles are relatively settled. The question is the application of those rules to the facts in this case.
[4] The Hawaiian judgment was ultimately obtained by default following the defendant’s participation in and then withdrawal from the proceedings in Hawaii. While he was participating, the defendant did engage on the merits to a certain extent. The primary issue is therefore whether he adequately reserved his position to avoid being found to have voluntarily submitted to the jurisdiction of the foreign court.
[5] If Mr Theyers is found to have voluntarily submitted to the jurisdiction, Mr Theyers submits that he has the following defences available:
(a)the judgment was not on the merits;
(b)the judgment is incompatible with a prior judgment; and
(c)enforcement of the judgment would be contrary to New Zealand public policy or to natural justice.
Preliminary matter – affidavit of Damien Grant
[6] An affidavit was filed in support of the defendant by Damien Grant, the liquidator of Greys Avenue Investments Ltd, on or around 2 September 2022. The
plaintiff says it should not be read, that it was hopelessly late and there was no application to have it admitted out of time. Furthermore, the plaintiff says it is hopelessly irrelevant, at best providing evidence on matters that are not in dispute.
[7] Counsel for the defendant sought leave for the affidavit to be admitted. They say it is relevant background and that the plaintiff had almost four weeks to respond if they wished to do so.
[8] I consider that the further evidence included in Mr Grant’s affidavit, except for his evidence as to the availability of documents to the defendant which had already been provided by other witnesses, is not sufficiently relevant for it to be admitted. I therefore direct that it is to be removed from the Court file and confirm that I did not take it into consideration in this decision.
Recognition and enforcement of a foreign judgment
[9] There are three prerequisites before a Court will order recognition of a foreign judgment at common law. They are that the foreign judgment must:1
(a)have been issued by a foreign court that has jurisdiction, as recognised under New Zealand law, over the judgment debtor;
(b)be for a debt or definite sum of money; and
(c)be final and conclusive.
[10] Once those requirements are established, there are three settled exceptions to enforcement:2
(a)the foreign judgment was obtained by fraud on the part of the successful party;
(b)enforcement would be contrary to New Zealand’s public policy; or
1 David Goddard The Laws of New Zealand Conflict of Laws: Jurisdiction and Foreign Judgments (online ed, LexisNexis) at [66].
2 At [70].
(c)the proceedings in which the foreign judgment was obtained involved a breach of natural justice.
Summary judgment principles
[11] The plaintiff seeks to enforce the Hawaiian judgment by way of summary judgment. The principles applying to summary judgment are settled. The question is whether the defendant has no reasonably arguable defence to the claim, that is, there is no real question to be tried. The Court will not normally resolve material conflicts of evidence and should not accept uncritically evidence that is inherently lacking in credibility, for example, where it is inconsistent with undisputed contemporaneous documents. The Court must exercise its judgment and may take a robust and realistic approach where the facts warrant it.3
Issues
[12]The issues are therefore whether it is reasonably arguable that:
(a)Mr Theyers did not submit to the jurisdiction of the Hawaiian Court;
(b)the Hawaiian judgment was not final and conclusive as it was not on the merits;
(c)enforcement would be contrary to public policy either because the judgment is incompatible with a prior judgment or on other grounds; or
(d)enforcement would involve a breach of natural justice.
Background facts
[13] The foreign judgment in issue is a judgment obtained by the plaintiff, Greys Avenue Partners LLC (GAP), and a related party, Castle Resorts and Hotels Inc
3 Krukziener v Hanover Finance Limited [2008] NZCA 187, [2010] NZAR 307 at [26]. See generally: Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HHR12.1]–[HHR12.9] and Matthew Casey and others Sim’s Court Practice (online ed, LexisNexis) at [HCR12.1]–[HCR12.2.3]. In the context of enforcement of foreign judgments, see Reeves v OneWorld Challenge LLC [2006] NZLR 184 (CA) at [70]–[75].
(Castle), against the defendant, Mr Theyers, from the United States District Court for the District of Hawaii dated 5 October 2021.
[14] The Hawaiian judgment relates to commercial dealings between GAP, Castle and two New Zealand companies, Greys Avenue Investments Ltd (GAIL) and Ascent Industries No 33 Ltd (Ascent). Mr Theyers was the sole director for both GAIL and Ascent. Between 2017 and 2019 these entities were involved to varying degrees in a joint venture to convert a building in Greys Avenue, Auckland into a hotel.
[15] GAIL owned the Greys Avenue building. Mr Aaron Coupe was and is the 100% shareholder of GAIL. GAP and GAIL entered into a binding heads of agreement in February 2018 under which Ascent was to be incorporated as the vehicle for the joint venture; GAP would provide funding of NZD $4 million and take a 50 per cent shareholding in Ascent and the building would be transferred from GAIL to Ascent once refinancing had occurred (to clear the title to GAIL’s building).
[16] GAP, GAIL and Ascent entered into a supplementary agreement on 10 June 2018 confirming that of the NZD $4 million funding to be provided by GAP,
$2.9 million was still to be provided. The agreement also confirmed that the date for the transfer of the property was to be 8 February 2019 and that the agreement was governed by and to be construed under the laws of New Zealand.
[17] Mr Theyers’ evidence is that GAP received the 50 per cent shareholding in Ascent but did not fund all of the NZD $4 million – it only funded NZD $1.95 million. The initial joint venture failed. Evidence was provided as to the reasons for the failure but that is not relevant to whether the foreign judgment should be enforced. A foreign judgment that meets the prerequisites set out above, and that cannot be impugned on the basis of the settled exceptions, cannot be impugned on the basis that it was given as a result of an error of fact or law.4
4 Goddard, above n 1, at [70]; referring to Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 and Godard v Gray (1870) LR 6 QB 139.
[18] A revised joint venture agreement was subsequently concluded under which a new company, Liberte Investments Ltd (Liberte), would buy the building from GAIL. GAP was a 60 per cent shareholder in Liberte, and Mr Coupe was a 40 per cent shareholder. Mr Theyers was not a shareholder or director or otherwise involved in Liberte from the evidence filed.
[19] Liberte defaulted on the sale and purchase agreement and GAIL was placed first into receivership and later into liquidation, with the Greys Avenue building sold by GAIL’s mortgagee.
[20] GAP alleged that it had been induced to enter into the various agreements through misrepresentations and sued both Mr Coupe and Mr Theyers in Hawaii (at first in the same proceedings but later in two separate proceedings in two different courts). These culminated in default judgments against Mr Coupe on 11 March 2020 and against Mr Theyers on 22 July 2021.
Is it reasonably arguable that the Hawaiian Court’s jurisdiction ought not to be recognised by New Zealand law?
[21] To enforce the Hawaiian judgment in New Zealand the plaintiffs must establish that the Hawaiian Court had jurisdiction to give judgment over Mr Theyers.
[22] Whether the Hawaiian Court had jurisdiction over the defendant is determined according to New Zealand’s conflict of laws rules, rather than according to the laws applying in Hawaii. In Von Wyl v Engeler5 the Court of Appeal summarised the circumstances where jurisdiction will arise:
(a)if the judgment debtor was, at the time the proceedings were instituted, present in the foreign country;
(b)if the judgment debtor was a plaintiff or counterclaimed in the proceedings in the foreign Court;
5 Von Wyl v Engeler [1998] 3 NZLR 416 (CA) at 420–421.
(c)if the judgment debtor (being a defendant in the foreign Court) submitted to the jurisdiction of that Court by voluntarily appearing in the proceedings; or
(d)if the judgment debtor (being a defendant in the foreign Court) had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that Court or the courts of that country (the agreement must be expressed not implied).
[23] The plaintiff proceeds on the basis of (c) above, that the defendant voluntarily submitted to the jurisdiction of the Hawaiian Court.
[24] In Gordhan v Kerdemelidis Chisholm J, after considering New Zealand and United Kingdom authorities, summarised the principles to be applied to voluntary submission as follows:6
[74]On my analysis of those decisions the following principles need to be applied in this case:
(a)The onus rests on the plaintiff to establish that the defendant voluntarily submitted, or agreed to submit, to the jurisdiction of the State Court: Von Wyl.7
(b)Whether there has been a submission is to be determined by reference to the New Zealand rules of conflict of laws rather than the foreign Court’s own law: Von Wyl.8
(c)A person who appears merely to contest the jurisdiction of the Court does not thereby submit to that jurisdiction. It must be shown that person has taken some step which is only necessary or useful if the objection has been waived or never been entertained at all: Von Wyl.9
(d)When determining the significance or otherwise of an individual step taken by a defendant the Court needs to realistically consider that step within the overall context: Williams & Glyn’s Bank.10 Thus, a defendant objecting to the jurisdiction can seek other orders provided they do not give rise to a waiver of the protest to jurisdiction: Equiticorp Industries.11
6 Gordhan v Kerdemelidis [2013] NZHC 566.
7 Von Wyl v Engeler, above n 5, at 421.
8 At 420.
9 At 421.
10 Williams & Glyn's Bank PLC v Astro Dinamico Compania Naviera SA [1984] 1 WLR 438 (HL) at 443.
11 Equiticorp Industries Group Ltd v Hawkins [1991] 3 NZLR 700 (HC).
(e)There is no principle that a defendant who relies on the ground of forum non conveniens and loses, has thereby submitted to the jurisdiction: Williams & Glyn’s Bank.12 Whether that is the case will depend on the facts of the particular case and, in particular, whether the foreign Court is being asked to adjudicate the substantive merits.
(f)A voluntary submission to the jurisdiction can arise even though the defendant did not subjectively intend that outcome. It is for the Court to objectively assess whether the steps taken by the defendant produced that result: Pickett.13 I decline to apply the observation of Scott J in Adams that a voluntary submission or an agreement to submit is based on consent, and actual consent is, in principle, necessary.14
(g)Evidence from an expert about the foreign law may be helpful in assisting the Court to determine the significance or otherwise of steps taken by the defendant.
Was there a voluntary submission in this case?
[25] The plaintiff pleads that Mr Theyers voluntarily submitted to the jurisdiction as follows (“Complaint” referring to the equivalent of a New Zealand statement of claim):
10.The Complaint originally included an additional Plaintiff and Defendant, respectively, Castle and Mr Aaron Coupe.
11.The Complaint was amended as follows:
a.A First Amended Complaint ("lAC") was filed and served on 26 June 2019 which removed Mr Coupe as Defendant and included Greys Avenue Investments Limited ("GAIL"), a New Zealand company, as an additional Defendant;
b.A Second Amended Complaint ("2AC") was filed on 30 January 2020 which removed GAIL as a Defendant because it had been placed into liquidation in New Zealand;
c.A Third Amended Complaint ("3AC") was filed and served on 13 April 2020 against only the Defendant which provided further particulars of the claims by the Plaintiff and Castle against the Defendant.
12.On 15 October 2019, the Defendant, by his Hawaiian attorneys from the firm of Damon Key Leong Kupchak Hastert based in Honolulu, filed a Motion to Dismiss ("Jurisdiction Challenge") the lAC based on an objection to the Federal Court's personal jurisdiction over the Defendant.
13.The Jurisdiction Challenge was denied by the Federal Court on 3 January 2020.
12 Williams & Glyn's Bank PLC v Astro Dinamico Compania Naviera SA, above n 10, at 442.
13 Pickett v Pulman HC Auckland, CIV-2003-404-5263, 11 June 2004 at [31].
14 Adams v Cape Industries Plc [1990] 1 Ch 433 (CA) at 458.
14.Thereafter, the following steps, individually or collectively, constituted the Defendant's voluntary submission to the Federal Court's jurisdiction:
a.The Defendant filing a Motion to Dismiss (“MTD”) the 3AC on 14 May 2020 preceded by the filing of related applications on 4 May 2020 which were consolidated into the MTD;
b.On 6 August 2020, the Defendant filing a reply brief in relation to the MTD.
c.On 20 August 2020, the Defendant attending a hearing of the MTD, which was denied by the Federal Court on 3 September 2020;
d.On 20 October 2020, the Defendant filing an Answer to the 3AC setting out his substantive defences;
e.The Defendant participating in the discovery process by his responses and objections to the Plaintiff's request for discovery dated 14 September 2020;
f.The Defendant participating in judicial settlement conferences with the Federal Court on 21 September 2020 and 8 March 2021 and filing associated papers on 5 March 2021; and
g.The Defendant engaging in other procedural steps in the litigation including attending Scheduling Conferences on 13 April and 4 May 2020, the filing of a Scheduling Conference Statement on 6 March 2020, and participation in "meet and confer" discussions regarding case management including on 27 February and 29 April 2020.
[26] A statement of defence has not yet been filed responding to the claim as it is not required to be until after the application for summary judgment is determined. The defendant’s position however is that although he took procedural steps, he maintained his protest to jurisdiction throughout and he withdrew from the proceedings on the basis that the Hawaiian Court had no jurisdiction. The defendant submits that at no time did he withdraw his objection to jurisdiction and that if there is any question that he did so, that question is not suitable for determination on a summary judgment application.
[27]Mr Theyers relies on the following timeline:
(a)On 15 October 2019, Mr Theyers filed a motion to dismiss GAP’s amended claim for lack of jurisdiction.
(b)The motion to dismiss was denied on 3 January 2020.
(c)On 6 March 2020, in his “scheduling conference statement”, Mr Theyers stated that despite the Hawaiian Court’s rejection of his protest to jurisdiction he did not waive his arguments regarding jurisdiction.
(d)Mr Theyers deposes that his objection to jurisdiction was maintained at the scheduling conference itself.
(e)On 6 August 2020, in a reply memorandum to a further motion to dismiss, Mr Theyers advised the Hawaiian Court that it had been misled by GAP when deciding the question of jurisdiction. Mr Theyers submitted that in the first motion to dismiss, the plaintiffs emphasised that Mr Theyers had made the alleged misrepresentations while visiting Honolulu, leading to the Court denying Mr Theyers’ jurisdiction challenge. Mr Theyers claimed that the plaintiffs then “proffer[ed] a new set of facts” adding a number of further misrepresentations made while Mr Theyers was present in New Zealand, therefore misleading the Hawaiian Court in the jurisdiction challenge.
(f)In Mr Theyers’ “Answer” to the third amended complaint of 20 October 2020 Mr Theyers expressly preserved his objection to jurisdiction.
(g)On 7 April 2021, Mr Theyers again advised the Hawaiian Court in a letter that he did not accept that it possessed jurisdiction over him. The Hawaiian Court treated that letter as a “Motion to Transfer Venue to New Zealand” and denied it on 8 April 2021.
(h)On 27 April 2021, Mr Theyers submits that GAP was aware that Mr Theyers “continued to contend” that the Court lacked personal jurisdiction as it stated in its pre-trial statement under the heading “Points of Law”:
It appears that [Mr] Theyers continues to contend that this Court does not have personal jurisdiction over him, which contention was fully briefed in connection with [Mr] Theyers’ Motion to Dismiss filed October 15, 2019, was denied by this Court.
(i)The plaintiff concludes the pre-trial statement by commenting under the heading “Miscellaneous”:
If [Mr] Theyers intends to rely on his contention that this Court does not have personal jurisdiction over him and therefore does not intend to appear at trial (despite the plain and indisputable fact that this argument has already been rejected by this Court), [Mr] Theyers should be required to promptly so advise the Court and plaintiff GAP. Plaintiff GAP is not aware of any other subjects or matters relevant to the trial of this action or proceeding or material to its just, efficient and economical determination.
[28] Counsel for the defendant submits that if GAP considered that Mr Theyers had already participated on the merits, counsel would have expected GAP to say so in its pre-trial statement. But GAP’s pre-trial statement does not go that far. Counsel for Mr Theyers submits that GAP clearly thought that Mr Theyers was still disputing jurisdiction at this point.
[29] Mr Theyers took no further steps after sending the letter on 7 April 2021 referred to above.
[30] Mr Theyers therefore submits that at the time he withdrew, he had not waived his objection to jurisdiction and that even GAP considered that he was still continuing to contend that the Court lacked personal jurisdiction. Counsel for Mr Theyers therefore submits that it is reasonably arguable that Mr Theyers did not abandon his objection to jurisdiction and, in fact, to the contrary he repeatedly advanced it before ceasing to participate altogether. On this basis the defendant submits he did not voluntarily submit to jurisdiction.
[31] Counsel for Mr Theyers refers to a passage from Dicey Morris and Collins on The Conflict of Laws (Dicey) where the learned authors state:15
The real question for the … court should not be whether the defendant has taken a step in proceedings which prepare for the trial on the merits, but whether he has chosen to abandon his challenge to the jurisdiction.
15 Lord Collins (ed) Dicey, Morris and Collins on The Conflict of Laws (15th ed, Sweet and Maxwell, London, 2012) [Dicey] at [14-073].
[32] Counsel for the defendant submits that an express reservation of the defendant’s objection to jurisdiction does not appear to be required, referring to:
(a)Hook and Wass where the authors state that “there should be no absolute requirement that defendant expressly reserve jurisdiction, but that will be a factor to be considered in context”;16 and
(b)Dicey where the authors make the point that in Adams v Cape Industries Plc,17 the steps taken in the proceeding were accompanied “expressly or impliedly” by a reassertion of the objection to jurisdiction.18
[33] Counsel for the defendant in this case points out that the defendant in Adams v Cape Industries Plc participated in discovery on the merits, while “expressly or impliedly” maintaining an objection to jurisdiction, yet the defendant was found not to have submitted to jurisdiction. Here Mr Theyers submits that he expressly reserved his position on jurisdiction, as was clearly understood by the plaintiff and expressed in its pre-trial statement, and so counsel submits there is no basis to find that he has voluntarily submitted.
[34]Counsel for the defendant refers to two further examples cited in Dicey:19
(a)Elefanten Schuh GmbH v Jacqmain20 where a defendant pleading on the merits (as an alternative to a protest to jurisdiction) was not a submission to jurisdiction; and
(b)Marc Rich & Co AG v Soc Italiana Impianti PA (No. 2)21 in which the defendant filed a defence on the merits whilst also objecting to
16 Maria Hook and Jack Wass The Conflict of Laws in New Zealand (LexisNexis, Wellington, 2020) at [5.131].
17 Adams v Cape Industries Plc [1990] Ch 433 (CA).
18 Dicey, above n 15, at [14-073].
19 Dicey, above n 15, at [14-073].
20 Elefanten Schuh GmbH v Jacqmain, Case 150/80 [1981] ECR 1671, ECJ>
21 Marc Rich & Co AG v Soc Italiana Impianti PA (No. 2) [1992] 1 Lloyd’s Rep. 624 (CA).
jurisdiction and this again was deemed not to be a submission to jurisdiction.22
[35] In addition, counsel for Mr Theyers refers to Gordhan v Kerdemelidis (also referred to by GAP)23 and Equiticorp Industries Group Ltd v Hawkins24 where the maintaining of a protest to jurisdiction was the basis for a finding of non-submission in two non-summary judgment cases.
[36] Finally, counsel for the defendants refer to the following summary of the position in Dicey:25
… so long as the defendant asserted, and is obviously still asserting, as his primary defence that the court has no jurisdiction over him in relation to the merits of the claim, then even if he also takes steps that are purposeful in relation to the merits of the claim, his doing so should not be taken to mean he has submitted to the jurisdiction for the purposes of the common law of submission….
[37] If there is any question, Mr Theyers submits it is not a matter that ought to be determined on summary judgment referring to the following passage in Hook and Wass:26
Where the judgment debtor has appeared to defend the foreign proceedings on the merits without protesting jurisdiction, then this will plainly be sufficient to confer foreign jurisdiction on the foreign court. However, the courts have struggled to identify what kind of conduct, short of that, is sufficient to constitute submission.
[38] The plaintiff submits in response that the Court is required objectively to assess what Mr Theyers did, submitting that a voluntary submission can occur regardless of the defendant’s subjective intent, relying on Gordhan.27
22 Following this, the Italian Court ruled that it had jurisdiction over the merits of the dispute. The defendants then lodged a second defence on the merits (with no protest to jurisdiction), and this was deemed to be a submission to the jurisdiction of the Italian Court.
23 Gordhan v Kerdemelidis, above n 6.
24 Equiticorp Industries Group Ltd v Hawkins [1991] NZLR 700 (HC).
25 Dicey, above n 15, at [14-073].
26 Hook and Wass, above n 16, at [5.115].
27 Gordhan v Kerdemelidis, above n 6, at [74(f)] and Pickett v Pulman, above n 13, at [31]. This proposition was referred to with apparent approval in Hook and Wass, above n 16, at [5.122]:“The question is not whether the defendant subjectively intended to submit to the jurisdiction, but whether they voluntarily took the steps that are said to have constituted submission”.
[39] The plaintiff submits the facts relevant to an objective assessment are as follow:
(a)Firstly, following the rejection of the defendant’s application challenging the Hawaiian Court’s jurisdiction, the defendant reached a crossroads; either take no further steps in the case or proceed to defend on the merits. The plaintiff submits that Mr Theyers chose the latter path and that had he chosen the former, a judgment would not have been enforceable in New Zealand because the jurisdictional threshold could not have been met.
(b)Secondly, the plaintiff submits that following the filing of the third amended complaint on 14 May 2020, the defendant filed a strike out application without any reservation or mention of a jurisdictional challenge and on 3 September 2020, the defendant’s application was granted in part (with three counts struck out) but otherwise denied.
(c)Thirdly, on 20 October 2020, Mr Theyers filed a substantive defence (his “Answer” to the third amended complaint). The plaintiff refers however to the fact that [4] states “the defendant preserves his objection to the exercise of personal jurisdiction,” and at [52] that one of his defences is that the “plaintiff’s complaint fails for lack of personal jurisdiction and/or improper venue”.
[40] In addition, Mr Ogomori’s affidavit refers to numerous examples of Mr Theyers participating in general case management (mainly involving ‘meet and confer’ meetings and scheduling conferences), discovery applications and judicial settlement conferences. The plaintiff says that none of these actions were taken for the purpose of advancing a jurisdictional challenge.
[41] The plaintiff submits that the only proper inference to be drawn from the above is that the defendant was fighting the case in substance and on the merits, emphasising that he filed no appeal in relation to the dismissal of his protest to jurisdiction. The plaintiff therefore says that there can be no suggestion that a jurisdiction challenge was being advanced as his primary defence.
[42] I do not consider that the defence needs to be advanced as his primary defence in the sense suggested by the plaintiff. The cases and commentary make it clear that the plaintiff has to show that the filing of a step was only useful if the objection to jurisdiction has been waived or never been entertained at all. The reference in Dicey to it being a “primary defence”, in order to be consistent with the cases and other commentary, must mean “primary” in the sense of “initial” rather than “main” as the plaintiff appears to interpret it. The question of jurisdiction will always be a matter to be determined first. If there is no jurisdiction there is no need to determine the merits. If it is reasonably arguable that Mr Theyers continued to maintain his objection to jurisdiction throughout, then that is sufficient to withstand summary judgment, without any need to show that it was Mr Theyers’ “main” defence.
[43] In my view it is clearly reasonably arguable that Mr Theyers maintained his objection to jurisdiction, both from the timing of his withdrawal and from the plaintiff’s own pre-trial statement, filed more than six months after the settlement conferences.
[44] The substantive defence filed expressly maintained Mr Theyers’ objection, as referred to by the plaintiff. Following the filing of the pretrial statement by the plaintiff, Mr Theyers failed to file his own pre-trial statement or attend the final pre- trial conference on 4 May 2021. On 6 May 2021, the Hawaiian Court issued an order directing Mr Theyers to “show cause” as to why he had failed to file a final pre-trial statement or attend the pre-trial conference. Mr Theyers did not respond and on 14 May 2021 the Hawaiian court issued an “Order Entering Default against the Defendant Colin Theyers.” A copy of this was sent to Mr Theyers by the Federal Court. Mr Ogomori deposes that this allowed the plaintiff to apply for default judgment. There was no further engagement by Mr Theyers therefore after the plaintiff filed its pre-trial statement in which the plaintiff said Mr Theyers “continued to contend that the Court lacked jurisdiction.
[45] From all of the above, even if I am wrong in my interpretation of “primary” and it does mean “main” defence, it is reasonably arguable that Mr Theyers maintained his objection to jurisdiction as his “main” defence. It is not a matter that can be determined in the context of this summary judgment application. The question needs
to be considered in the context of all the evidence. The plaintiff has therefore failed at the first hurdle as it is reasonably arguable the defendant did not voluntarily submit to the jurisdiction of the Hawaiian Court.
[46] Because of the view I have reached, I do not need to go on to consider the remaining issues but I comment briefly below given the parties made submissions on those points.
Is it reasonably arguable that the judgment was not final and conclusive because it was not on the merits?
[47] Mr Theyers submits that the judgment should not be enforced on the basis that it was not determined on the merits. It is not in dispute that the judgment that the plaintiff seeks to enforce is a default judgment – the judgment itself records that “default judgment is entered against Defendant Colin Theyers”.
[48] The plaintiff denies that there is a requirement that the judgment be on the merits before it will be considered final and conclusive. In the plaintiff’s submission a default judgment has long been considered to be final and conclusive for the purposes of enforcement relying on a passage from Dicey:28
Otherwise, the clearer the claimant’s case, the more useless his judgment would be. The test has been stated as whether the default judgment was “entirely floating as a determination, enforceable only as expressly provided and in the course of that enforcement subject to revision”, in which case it will not be final, or “given the effect of finality unless subsequently altered”, in which case it will be final.
[49] I do not consider that it is reasonably arguable that it is a pre-requisite to enforcement for the judgment to be on the merits. In Schnabel v Lui the Judge considered that such a submission was better considered in the context of “whether the judgment was arrived at in a mode which is according to our notions unjust or offensive to substantive justice”.29
[50] I consider that is the appropriate approach and consider this issue further in the context of whether a defence of breach of natural justice is reasonably arguable.
28 Dicey, above n 15, at [14-023].
29 Schnabel v Lui [2002] NSWSC 15 at [117]; referring to Ainslie v Ainslie (1927) 39 CLR 381.
Are there reasonably arguable defences available?
[51] Mr Theyers submits that there are a number of matters that support the availability of a reasonably arguable defence to enforcement. Some of these matters are categorised under the settled exceptions to enforcement identified above,30 and others are advanced separately:
(a)the Hawaiian judgment is incompatible with a prior judgment;
(b)Mr Theyers had no access to or control over GAIL’s documents;
(c)the Hawaiian Court did not have the ability to assume criminal jurisdiction;
(d)the claimed basis for personal liability of Mr Theyers did not and could not apply to him;
(e)the relationship between GAP and Mr Coupe; and
(f)GAP’s pressuring of Mr Theyers.
[52] Added to these is the issue of the judgment not being on the merits as discussed above.
[53] Even if I had found that Mr Theyers did submit to the jurisdiction, I would have found that he had a reasonably arguable defence available at least in respect of his lack of access to GAIL’s documents, which is relevant to the natural justice defence as follows.
[54] It is settled law that a foreign judgment will not be recognised or enforced in New Zealand if the proceedings in which it was given were contrary to New Zealand conceptions of natural justice, as for example, where the defendant is denied a fair opportunity to present a defence.31
30 See [10] above.
31 Goddard, above n 1, at [75].
[55] Mr Theyers submits that he was denied this opportunity because GAIL entered into liquidation before GAP’s claims were served on Mr Theyers, and from that point on he did not have control over GAIL’s documents. In his affidavit Mr Theyers lists a number of GAIL’s documents that he would have used in his defence if he had not been prevented from doing so, including email correspondence discussing the joint venture, due diligence material supplied to GAP’s lawyer and financial documents.
[56] Mr Theyers asked the liquidator of GAIL for permission to use GAIL’s documents in the Hawaiian litigation and this request was denied, as confirmed in the letter from the liquidator attached to the affidavit of Mr Ogomori.
[57] Mr Theyers deposes that he told the plaintiff on three occasions that he was not able to utilise GAIL documents and twice advised the Hawaiian Court of this fact. In its pretrial statement of 27 April 2021, however, GAP addressed the question of whether there were any “disputed facts” in the case and advised the Hawaiian Court that Mr Theyers had “refused to produce any of the documents requested by Plaintiffs”. Based on the claimed “refusal” of Mr Theyers to provide documents, GAP said it was unable to determine if there were any disputed facts in the case.
[58] Mr Ruthruff deposes for GAP that Mr Theyers’ “advancement of a proposition” that he could not provide documents did not make it true. Counsel for Mr Theyers submits that this is disingenuous as:
(a)GAP was aware, but did not advise the Court, that Mr Theyers had said that he was unable to provide the documents as the liquidator had refused to provide access.
(b)It was not only Mr Theyers who claimed that he could not access the documents, this was confirmed by the liquidator of GAIL.
(c)GAP had New Zealand counsel, and so if GAP considered Mr Theyers’ statement to have been false it would have been a simple matter for GAP to check.
(d)Mr Ruthruff is not able to contend as he does that “Mr Theyers’ defence was not necessarily or solely founded on documentary discovery” because Mr Ruthruff was not qualified to make such a statement or to contradict Mr Theyers’ unequivocal evidence about his own case. Mr Ruthruff cannot know what Mr Theyers would have required to properly present his defence.
[59] I consider that a defence may be reasonably arguable on this basis. Further complexity is added by GAP’s reporting to the Court that Mr Theyers had “refused” to provide the documents requested when that did not accurately describe the position. The Hawaiian judgment is based on a report entitled “Findings and Recommendation to Grant [GAP’s] Motion for Default Judgment.” This report carefully goes through what are referred to as the “Eitel factors”32 to determine whether default judgment should be entered. At the beginning of the report it states:
The Court has the discretion to grant or deny a motion for default judgment.
… Default judgments are ordinarily disfavoured, and cases should be decided on their merits if reasonably possible. … Courts may consider the following factors in deciding whether to grant a motion for default judgment (collectively “Eitel factors”):
(1) the possibility of prejudice to the plaintiff, (2) the merits of the plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.
[60] The Findings and Recommendations report states in respect of the fifth factor, “the possibility of a dispute concerning material facts”:
Theyers originally appeared and defended this case. Theyers, however, has since abandoned this defence. Thus, though there is a possibility of a dispute over material facts, the Court cannot resolve these disputes because, despite having a fair opportunity to defend against plaintiffs’ claims, Theyers has not done so. This factor therefore weighs in favour of default judgment.
[61] Although, the plaintiff submits that Mr Theyers could have had access to the documents, this is a matter that cannot properly be determined in the context of this summary judgment application.
32 Eitel v McCool 782 F.2d 1470, 1472 (9th Cir. 1986).
[62] The Findings and Recommendations Report states at the outset that the findings and recommendation are made “[a]fter carefully considering the memoranda and record in this case”. The fact that GAP stated that Mr Theyers “refused” to provide documents requested in its pretrial statement rather than the memorandum filed just prior to the Findings and Recommendations Report does not therefore change the position.
[63] As stated above, I do not consider that it is a pre-requisite to enforcement for the foreign judgment to be on the merits, and default judgments are therefore generally enforceable on this basis. However, in cases where the proceedings in which the default judgment was obtained involved a breach of natural justice, a defence is available. This is potentially the case here, as it is reasonably arguable that Mr Theyers was denied a fair opportunity to present a defence by virtue of his inability to access important and relevant documents to support his defence. In addition, the plaintiff reported that Mr Theyers had “refused” to provide documents which may not have been a fair representation of the position. This may in turn have impacted on the obtaining of the default judgment from the court.
[64] In these circumstances even if the jurisdictional prerequisite had been met, this summary judgment application would have been declined on the basis that Mr Theyers has a reasonably arguable defence.
[65] I record that there may be reasonably arguable defences available on the other grounds raised but I do not need to discuss these further as there are already grounds for declining the summary judgment application from a jurisdictional and available defence perspective.
Result
[66]The plaintiff’s application for summary judgment is declined.
Directions
[67] The defendant has not yet filed a statement of defence. I make directions below extending the period in r 12.13 of the High Court Rules 2016 within which a
statement of defence is required to be filed and for the future conduct of the proceedings.
[68]I direct:
(a)The defendant is to file and serve a statement of defence within
20 working days of this judgment.
(b)The parties are to file a joint memorandum, with any differences set out, within a further 15 working days addressing the matters referred to in r 7.3(2) of the High Court Rules.
(c)Further directions will then be made on the papers or a case management conference will be allocated.
Costs
[69] The usual position where a plaintiff is unsuccessful in a summary judgment application is for costs to be reserved until after determination of the substantive claim.33 I record however that costs have been awarded where a plaintiff ought to have realised summary judgment was not appropriate.34
[70] I ask the parties to confer and try to reach agreement. If that is not possible, memoranda may be filed of no more than five pages (not including schedules), on behalf of the applicant within 20 working days of receipt of this judgment and on behalf of the respondent within a further 10 working days. Any application for costs will then be determined on the papers.
Associate Judge Sussock
33 High Court Rules 2016, r 14.8(3).
34 See for example Mason v Dodd [2020] NZHC 2005 at [2] and [12].
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