Haines v Carter
[2001] NZCA 16
•12 February 2001
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA286/99 |
| BETWEEN | R D HAINES |
| Appellant |
| AND | L V CARTER |
| Respondent |
| Hearing: | 1 February 2001 |
| Coram: | Keith J Blanchard J McGrath J |
| Appearances: | M J McCartney for the Appellant R B Stewart QC for the Respondent |
| Judgment: | 12 February 2001 |
| JUDGMENT OF THE COURT DELIVERED BY MCGRATH J |
Introduction
The appellant applies for conditional leave to appeal to the Privy Council against a judgment of this Court delivered on 19 December 2000. That judgment dismissed an appeal against the summary judgment entered by Randerson J on 26 November 1999 against the appellant who was ordered to pay the respondent $1,500,000 together with interest at 10.5% calculated from 14 May 1999. The appellant also applies for a stay of execution of the judgment of this Court pending the determination of his proposed appeal by the Privy Council.
Background
As is more fully recorded in the earlier judgment of this Court the appellant and the respondent, who had respectively owned businesses that were in competition with each other, lived together between 1993 and February 1999. In 1997 they merged their business interests. Their personal relationship broke up in February 1999 and, following a mediation process, on 11 March 1999 they entered into an agreement as to the division between themselves of their assets.
In the agreement the parties specified the manner of division of their property which included shares in a number of companies. The parties also agreed that the appellant and respondent were to execute all documentation to give effect to the terms of their agreement within four days of presentation of it to them.
It was a further term of the agreement that, no later than 9 March 2000 that is twelve months after the date of the agreement, the appellant was to pay the respondent a sum provisionally fixed at $1,700,000 but which might be the subject of adjustment by decision of the persons who had acted as mediators. Pending that final payment the appellant was required by the agreement to continue to meet certain outgoings in respect of property of the respondent. Should the appellant default on any such payments the final adjusted sum would become immediately payable by the appellant, who also would be liable to penalty interest for late payment at the BNZ prime first mortgage rate plus 4%.
The sum payable by the appellant to the respondent was on 14 April 1999 adjusted from $1,700,000 to $1,500,000. Also under the agreement, on or shortly after 14 April, the respondent resigned as a director of the various companies ownership of which was to be vested in the appellant and signed share transfers, thereby relinquishing to the appellant a position of considerable strength and indeed legal control. Until this point the respondent had been the sole director of certain key companies in the group. These acts substantially implemented her obligations under the agreement.
On 23 April 1999 the appellant indicated for the first time that he was taking advice concerning the terms of the agreement and signalled an intention to try to have it set aside. Within a month the respondent complained through solicitors of defaults in payment of outgoings required under the agreement From this point the differences between the parties became heated and this was reflected both in their dealings with each other and to a considerable extent in the content of their affidavits.
The High Court and Court of Appeal judgments
Randerson J in his first judgment held that it had been proved that the appellant was in default and had thereby accelerated the due date of the payment of $1.5million. He entered summary judgment for the respondent on the issue of liability (CP248/99, Auckland, 10 November 1999). The case came back to him for further argument on 24 November and Randerson J delivered his second judgment on 26 November 1999. In that judgment he dealt with a rectification issue which he had earlier overlooked, but otherwise he declined an application to recall his earlier judgment. He also declined leave to raise a rectification defence. He determined quantum giving summary judgment in favour of the respondent for $1.5million together with interest at 10.75% from 14 May 1999 to the date of payment.
In the judgment that is the subject of the application for conditional leave to appeal to the Privy Council this Court upheld the orders made by Randerson J. In rejecting an argument based on duress the judgment of the Court said that from the outset the appellant felt able to ignore parts of the agreement which did not suit him. For present purposes it is unnecessary to say more about this Court’s judgment which speaks for itself. The decision of the Court was that the appeal should be dismissed with costs.
Application for conditional leave
As the appeal is against a final judgment of this Court and the matter in dispute amounts to more than $5000 an appeal to the Privy Council lies as of right under the New Zealand (Appeals to the Privy Council) Order 1910. Conditional leave to appeal is accordingly granted to the appellant The conditions are, first, that within three months of 12 February 2001 he enter into a good and sufficient security to the satisfaction of the Registrar in the sum of $2000 for the due prosecution of the appeal and the payment of all such costs as may become payable to the respondent in the event of the appellant not obtaining an order granting him final leave to appeal or of the appeal being dismissed for non-prosecution or of the Privy Council ordering the appellant to pay the respondent’s costs of the appeal. The second condition is that within the same three months period the necessary steps be taken by the appellant for the purpose of procuring the preparation of the record and its dispatch to England.
Application to suspend execution of judgment
The application for an order suspending execution of the judgment appealed from pending determination of the appeal by the Privy Council is made under Rule 6 of the 1910 Order. The Rule confers on the Court the discretionary power, when granting leave to appeal, either to direct that the judgment appealed from shall be carried into execution or that execution shall be suspended “as to the Court shall seem just”. When the application was initially before the Court on 21 December 2000, there appeared to be no immediate urgency; the Court accordingly made an interim order suspending execution of the judgment until the hearing of this application on 1 February 2001.
A useful starting point in considering the appellant’s application is the judgment of Williams J in McLeod v NZ Pine Company (1892) 11 NZLR 493. Williams J said at page 494:
The right of the plaintiff in the present case is an absolute right to have his money at once. The right of defendants is the right of appeal, and the right in some way or other to have it made certain by this Court that the appeal shall not be fruitless. The duty of this Court is, I think, to reconcile as far as possible the conflicting rights of the plaintiff and the defendants.
In that case Williams J saw the reconciliation of the competing rights as achieved by saying that an order staying the proceedings would be made only on payment by the defendants to the plaintiff of the money in question subject to the plaintiff giving security for the repayment in the event of the appeal being successful. That approach by the High Court is not uncommon in cases in which, faced with an appeal to this Court, the successful plaintiff seeks immediate payment of the judgment sum. Indeed where there are grounds to believe a successful party may not be able to repay or otherwise restore the position if the appeal succeeds, security is ordinarily required by the High Court Julius Harper Limited v F W Hagedorn & Sons [1989] 2 NZLR 471,501 per Tipping J. Nevertheless each case must be decided on its own circumstances within which sufficient justification must always be found before the Court acts to protect the defendant’s position by granting a stay or imposing conditions on a successful plaintiff who wishes to execute a judgment. The same approach is appropriate when this Court is asked to decide whether a judgment may be carried into execution or should be suspended pending an appeal to London.
In the present case the judgment sum, with interest, is now of the order of $1.77million. The affidavit of the respondent has satisfied us (despite the criticisms made in the affidavit of the appellant) that the respondent’s present net worth is in the order of $1,980,000. That figure includes her interest in a company she retains pursuant to the agreement but takes no account of her entitlement to the judgment sum. Nor does it take into account certain beneficial interests she has independently under certain trusts. Furthermore the respondent is not in a situation in which she appears to carry undue debt. Overall although the judgment is for a large sum relative to the respondent’s worth we see force in Mr Stewart’s submission there is little basis for the contention that the respondent may not be able to repay the appellant if he is successful on appeal. In particular we see no basis for the appellant’s suggestion there may be a deliberate dissipation of assets by the respondent.
There is moreover a further unusual factor, already referred to, which is of relevance to the present case. The appellant by 23 April 1999 had secured a substantial benefit from the respondent’s performance of the agreement which the appellant thereafter challenged in these proceedings. As a result he has gained registered ownership and control of core companies in the group which, but for those acts of performance, would still largely be in the respondent’s hands. The appellant has in other words already had his own position better secured and that of the respondent diminished. There is conflicting evidence from the parties as to the extent to which this is so, however we are satisfied that considerable advantage relative to the judgment sum has been obtained by the appellant in this way.
Decision
The Court will often be assisted in applications such as the present by an undertaking from the party wishing to execute its judgment to deal in a particular way with the proceeds pending resolution of the appeal. In the present case we have concluded that such a formal undertaking is not necessary. We conclude that in the unusual circumstances of this appeal no sufficient justification is shown for a stay or the imposition of conditions on execution of the judgment to protect the rights of the appellant to the fruits of a successful appeal. We bear in mind that if the appellant succeeds on his appeal the outcome will do no more than set aside the summary judgment so that the issues between the parties go to trial. Their rights, whether under the agreement or otherwise, would ultimately be determined by a judgment of the High Court with rights of appeal. Whatever the ultimate decision if that process eventuates we are satisfied that there is no sound basis for impeding the respondent from fully exercising the rights she has established in terms of the present judgment of this Court. It is of importance that the appellant’s position has already been at least partially secured by steps taken by the respondent; the circumstances do not warrant further restraint or conditions.
Accordingly the application under Rule 6 of the 1910 Order to suspend execution of judgment is refused. We award costs on that contested application in favour of the respondent in the sum of $2500 together with all reasonable disbursements including travel and accommodation costs to be fixed if necessary by the Registrar.
Solicitors
Murdoch Hall and Co, Auckland, for appellant
Rudd Watts & Stone, Auckland, for respondent
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