Hall v Robinson
[2013] NZHC 2476
•19 September 2013
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2010-409-001378 [2013] NZHC 2476
BETWEEN TERENCE MICHAEL HALL
Plaintiff
AND
PERCY RODERICK ROBINSON MARIE THERESE JOHNSEN
Defendants
| Hearing: | 18 September 2013 |
Appearances: | K T Dalziel and D A Uka for the Plaintiff P N Allan for the Defendant |
Judgment: | 19 September 2013 |
JUDGMENT OF PANCKHURST J
Introduction
[1] The plaintiff Mr Hall seeks judgment for a little over $350,000 plus interest against the second defendant Mrs Johnsen. Previously summary judgment was refused. However, it was granted against the first defendant Mr Robinson. The two were joint directors and equal shareholders in the company Southern Link Coaches Limited (the Company). That Company is now in liquidation. Mr Robinson is bankrupt. It is not in dispute that advances of about $350,000 were made, but the first and major issue is whether they were advances to the Company, or advances to Mr Robinson and Mrs Johnsen in their personal capacities.
[2] Mr Hall maintains the latter, that they were advances to the individuals, whereas Mrs Johnsen, supported by Mr Robinson, contends that the advances were made to the Company.
[3] Mr Hall also relies on an acknowledgment of debt signed after the event, some time after the series of advances had been made. This acknowledgment was
HALL v ROBINSON AND JOHNSEN [2013] NZHC 2476 [19 September 2013]
signed by both the defendants. Mr Hall contends it provides confirmation of his evidence and of his viewpoint in general. The acknowledgment of debt is also relied upon to found a claim for recovery based upon estoppel. This is one of a number of related legal issues which will require resolution. I turn now to the evidence, an evaluation of which is critical to what I have termed the first major issue - whether the advances were made by Mr Hall to the Company or to the individuals.
The factual background
[4] Commencing in early 2004 the defendants commenced to operate the Company. They had acquired the business from the estate of the previous proprietor. The business comprised the provision of scheduled bus services from a base in Christchurch. The services covered Nelson, including Abel Tasman Park to the north, the West Coast, and south as far down as Queenstown and Dunedin. The Company employed a number of drivers, and owned and operated a significant number of buses. The business was promoted as operating an economy service.
[5] The defendants were shown as equal shareholders and joint directors of the Company from January 2004 in the Companies Office. I note that Mr Robinson and Mrs Johnsen also live together in a de facto relationship.
[6] The business was never profitable. By mid 2006 there was a need for an urgent injection of capital. As it happened Mr Robinson knew Mr Hall through a friendship with Mr Hall’s father, who died at about this time. He made an approach to Mr Hall seeking a loan. This was agreed to. An advance of $52,000 was made on 17 August 2006 at an interest rate of 12 percent. A deed of acknowledgment of debt was drawn up and signed showing Mr Robinson as the borrower and Mr Hall as the lender. Hence this was a personal loan. Consistent with that, the money was paid into Mr Robinson’s personal account and $2,000 of it approximately went to repayment of an overdraft which he then had. The balance however, was immediately transferred from the personal account into the Company’s account. This, the first loan, was one of six which totalled $357,000, the amount of the present claim before interest.
[7] In September 2006 Mr Robinson made a further approach to Mr Hall seeking money. An email he wrote contained the following:
As you know through your help we put in $50,000 a few weeks ago and we have also put in a further $60,000 on our own account. However this still leaves us short of our desired equity level by $140,000. Marie and I have therefore decided to sell 20 percent of our shares in our company to outside shareholders. We would like to offer you a 10 percent shareholding in Southern Link Coaches Limited for the price of $75,000. The other money that you have advanced will still be seen as a loan to me and will be repayable as we discussed. In fact, if we have a good summer season it may be possible to repay part or all of it before the end of the financial year.
[8] Mr Hall took up the proposal and on 15 September 2006 he paid a sum of
$75,000 into the Company account. Two days earlier on 13 September 2006 Mr Robinson and Mrs Johnsen had signed a shareholders’ resolution which recorded their decision to sell 10 percent of the shares for $75,000 to be contributed as to five percent by each of them. That same day, Mr Hall signed a document whereby he agreed to take the 10 percent shareholding in the Company.
[9] On 27 October 2006 there was a further advance, this time of $10,000. This amount was also paid direct into the Company’s account. It was to be the last payment made by Mr Hall from his own personal resources.
[10] The fourth advance was made in November 2006. To raise the money required for the advance Mr Hall approached a lending company, Finance and Leasing Limited. He provided a first mortgage over his home in support of an advance of $75,000 at 16 percent. Over a short period there were draw-downs from the finance company of an amount which on my arithmetic totalled something over
$80,000. With reference to these separate amounts, I note Mr Hall said in cross- examination that the money comprised a personal loan to Mr Robinson and Mrs Johnsen. He added:[1]
There was never any discussion at that stage about any further shareholding being taken in the Company, so yes my assumption was it was a personal loan to them.
A little later he made a similar comment saying that this was “simply my assumption”.
[1] Page 29, notes of evidence.
[11] In April 2007 the Company was again in bother. Mr Robinson on this occasion arranged a meeting at Mrs Johnsen’s home. It occurred on 19 April and was attended by the three parties. After the meeting Mr Robinson prepared some notes, or what might be termed minutes, and these were posted to Mr Hall. At page 2 of the notes was this:
I think it is accepted by all three of us that it would be a pity after all the hard work, money and time that has been put into this Company to just give up, so what I am proposing is as follows, that Marie and I reduce our shareholding in favour of Terence by a significant amount. That the Company agrees to pay for a mortgage to be arranged on Terence’s house. The funds from this mortgage be used to release the short-term overdraft funding from Finance and Leasing and that the remainder of the funds be injected into the Company by Terence to provide trading capital.
The notes went on to confirm that it was also proposed to sell a number of the Company’s vehicles and pay the proceeds into a capital account.
[12] I note that Mr Hall in giving evidence yesterday made extra comments concerning that meeting. He said that the three participants talked while sitting around the table and he continued:[2]
They both said that they would give me a one third shareholding if I borrowed the money and invested it in the Company.
[2] Page 5, notes of evidence.
[13] Consistent with the notes prepared by Mr Robinson, an arrangement was made for Mr Hall to approach the Southland Building Society where there was an acquaintance known to Mrs Johnsen in particular. This resulted in a loan offer to Mr Hall of $170,000 at 8.8 percent for a term of 25 years. The loan proceeded and on 31 May he drew $95,000 from that facility and paid the money into the Company account. On 3 October 2007 there was a further draw down of $35,000 upon which the interest rate was 9.49 percent per annum.
[14] I note that in the meantime Mr Robinson had prepared a letter on the Company letterhead which stated:
To Whom It May Concern
This letter is to confirm that Mr Terence Hall of 56 Cowes Street, Christchurch is a working shareholder in the above company and is entitled to draw a weekly salary of $560 net per week.
This was signed by Mr Robinson in his capacity as a director of the Company and dated 8 May 2007.
[15] Finally, in November 2007 further advances totalling $10,000 were made. Payments on this occasion were rather different. The Company was apparently desperate for money to pay wages. Mr Hall was a reasonably frequent visitor at the business premises in Coleridge Street. On two occasions he provided his visa card so that Mrs Johnsen could transfer funds from his account into the Company account. There was a sum of $3,000 on 21 November and a further amount of
$7,000 on 29 November. Mrs Johnsen processed the transactions using a visa terminal on her desk.
[16] Moving into 2008 the business was in no better shape. Over a considerable period, Mr Robinson was intent upon obtaining investment in the Company from another coach Company in the context of some form of joint business arrangement. Initially at least, there were no takers. This pattern of seeking investment from another experienced operator continued.
[17] In July and August of that year, Mr Robinson was in negotiation with a director of Ritchies Transport Holdings Limited. He proposed that this company take a significant shareholding in his Company. He advocated that there would be mutual benefits in such an arrangement. Mr Robinson said in giving evidence that he was told by the director that a meeting of the Ritchies board was imminent, at which he would raise the proposal to take an interest in Southern Link Coaches Limited. However, it was essential to clarify the situation of Mr Hall prior to the board meeting.
[18] Mr Robinson said that he consulted his solicitor and received advice that the best way forward was to prepare an acknowledgment of debt whereby Mr Robinson and Mrs Johnsen acknowledged that the amounts advanced by Mr Hall were personal debts payable by them.
[19]A very simple document was prepared. It reads as follows:
Acknowledgment of Debt
We, Percy Roderick Robinson and Marie Therese Johnsen, hereby confirm and acknowledge that we are personally indebted to Terence Hall in the sum of $358,000 as at the date of this document.
It was signed by both Mr Robinson and Mrs Johnsen and dated 13 August 2008. I note that the amount of the indebtedness was interpolated in handwriting and initialled by Mr Robinson.
[20] A second document was signed at the same time but by Mr Hall. Its contents are curious to say the least. It said:
I, Terence Hall of Christchurch hereby declare and acknowledge that the loan provided by me at the request of Mr Robinson and Mrs Johnsen was advanced to the said Mr Robinson and Mrs Johnsen and it is to them that I look for repayment. What they have done with the funding is unknown to me, but I believe they used it to assist in the operation of their company known as Southern Link Coaches Limited. I do not look to Southern Link Coaches Limited for repayment of the said loan and I hold Mr Robinson and Mrs Johnsen personally liable for the repayment.
It was signed Terence Hall and dated 13 August 2008.
[21] As to the circumstances in which these two documents were signed, Mr Hall said that he went to the business premises and initially had a discussion with Mr Robinson. The reason and the need for the two documents was explained to him, and then Mrs Johnsen was called into the room. She, in giving evidence yesterday, said that she had been told that there was no option but to sign the acknowledgment of debt in favour of Mr Hall because without it an investment from Ritchies would be doomed. She felt she had no option but to sign the document, and did so without any apparent dissention.
[22] With reference to the confirmatory declaration signed by Mr Hall, a dispute emerged in the course of evidence yesterday. On the one hand, Mr Hall said that this document had been pre-prepared by Mr Robinson alongside the acknowledgment of debt. He said it was produced for his signature, and in light of the signing of the
acknowledgment of debt, he acknowledged that he no longer looked to the Company for a repayment, but to the individuals.
[23] When Mr Robinson gave evidence, however, he disputed this version of events. He maintained only one document was prepared on his behalf. The acknowledgment signed by Mr Hall he only saw after the event, when matters had soured as between the parties and proceedings were afoot, or at least imminent.
[24] I prefer the evidence of Mr Hall in relation to this aspect. The plaintiff, Mr Hall, was not cross-examined on this point; and it seemed to me Mr Robinson’s evidence in which he raised this explanation came somewhat out of the blue, and unexpectedly.
[25] Mr Hall impressed me as a straight-forward if naive man. For reasons which will become evident shortly, I did not consider Mr Robinson to be an impressive witness. Thirdly, the content of the document is, to my mind, more consistent with Mr Hall’s version. It was Mr Robinson who was the proponent of the acknowledgment of debt idea. It would seem to make sense to have a pair of documents, an acknowledgment of debt signed by Mr Robinson and Mrs Johnsen on the one hand, and an acknowledgment from Mr Hall that he would look to them for repayment on the other. The second document could be seen as protective of the Company’s position. By contrast I cannot see that signing it was of any personal benefit to Mr Hall. This indicates to me it is more likely that Mr Robinson was the proponent of that document as well.
[26] The following year, 2009, matters rather came to a head. Mr Robinson continued his efforts to obtain an equity investment in the Company. In late June Mr Hall, however, consulted solicitors and instructed them to demand repayment of the full amount outstanding.
[27] On 2 July he sent an email to Mr Robinson in anticipation of receipt of his solicitor’s letter. He said:
I have instructed a solicitor and a letter of demand is on its way.
The email continued:
I regret having to do this but I am left with no option but to take drastic action to protect my financial position. Things have over the past few months deteriorated into a total shambles and it is now obvious that you have largely lost control of the situation and that Hamish Nuttall is effectively running the show. He has destroyed your business and seems to have you dancing to his tune constantly, even though you are director of a Company in which (Mr Nuttall’s company) owns only a 10 percent shareholding. I obviously can’t trust him to look after my financial interests.
[28] These observations reflected an arrangement which had been concluded some time earlier. Mr Nuttall is apparently the owner, or director, of another coach company and an arrangement had been concluded whereby something in the nature of joint operation was in train.
[29] Mr Hall’s email elicited an immediate response. Mr Robinson responded by saying:
Marie and I have no money. We have put about $800,000 into the company. Mrs Johnsen’s house is subject to a mortgage while Mr Robinson’s car was secured to a finance company.
The email continued to the effect that in the event of the Company’s liquidation, the only people who would benefit would be the Inland Revenue Department and, perhaps, employees who were owed wages.
[30] On 6 July a letter of demand from Mr Hall’s solicitor was posted. It threatened the issue of a summary judgment proceeding if payment was not made within a reasonable time. In due course an application for summary judgment was filed against both Mr Robinson and Mrs Johnsen.
[31] That application was heard before Associate Judge Osborne on 2 August 2010. Mrs Johnsen was then represented by counsel (not Mr Allan). Mr Robinson however, appeared in person. This situation arose because then counsel considered it inappropriate that he should represent both defendants. Mr Robinson was unable to arrange alternative counsel in time for the 2 August hearing. Accordingly, he sought an adjournment so that he could be represented by counsel. This was declined on the
basis that he had no arguable defence to Mr Hall’s claim, and therefore no purpose was to be served by a delay.
[32] The Associate Judge issued a minute by which he granted summary judgment against Mr Robinson for $357,650 plus interest. It is evident from the terms of the minute that the Judge considered the acknowledgments of debt signed in August 2006 and August 2008 of considerable moment. It was these, I think, which persuaded him there was no arguable defence available to Mr Robinson.
[33] The summary judgment application against Mrs Johnsen was not argued that day, but rather on 7 December 2010 before Associate Judge Doherty. He took a rather different view of matters. Following argument he concluded that the first advance of $52,000 was a personal advance to Mr Robinson as confirmed by the contemporaneous acknowledgment of debt. Turning to the 13 August 2008 acknowledgment of debt, the Associate Judge was not satisfied that it was conclusive of liability in relation to Mrs Johnsen. He noted that an acknowledgment of debt will often be important in relation to extending time in terms of limitation provisions, but otherwise he thought it seriously arguable that the acknowledgment did not provide an independent cause of action, meaning it was necessary for the case to be heard with cross-examination.
[34] For these reasons the summary judgment application was dismissed, with the result that the case preceded to a full hearing yesterday.
Two further aspects
[35] There are two further factual aspects which require consideration before I turn to the analysis. The first relates to the records of the Company and the second to the people; my assessment of the three witnesses who gave evidence and were cross-examined at the hearing. Both aspects, to my mind, are important to the resolution of this case.
[36] The record keeping of the Company was grossly deficient. The first advance of $52,000 was duly recorded. As noted there was a contemporaneous acknowledgment of debt between Mr Robinson and Mr Hall. I regard that as
conclusive as between all three parties in confirming this sum is a personal liability of Mr Robinson and not a sum for which Mrs Johnsen can be liable, unless pursuant to the second acknowledgment of debt.
[37] By contrast, none of the subsequent loans were documented. Mr Hall did not require as much, and Mr Robinson did nothing to formally record the borrowings, let alone establish their status as either advances or payments of share capital. There was one exception, being the payment of $75,000 on 15 September 2006. This was made in the context of the proposal that the plaintiff should take a 10 percent shareholding in the Company and this was at least the subject of a resolution to sell a 10 percent interest, and an agreement on Mr Hall’s part to take that interest. But nothing more was done, no transfer of shares was effected and Mr Hall was never recorded as a shareholder at the Companies Office, or in the in-house records of the Company.
[38] A similar situation prevailed in relation to the Company’s financial statements. Such statements as are in evidence are for the year to March 2007, profit and loss accounts for the following months to August 2008, and a balance sheet for the year to March 2009. In the latter Mr Hall does not feature as an “equity partner”, there being two such persons identified as ‘A’ and ‘B’ in the balance sheet. He is however, shown as a creditor of the Company for $8,388 decreasing to $5,727 at the year’s end. This of course bears no relationship to the reality of the situation given that it is common ground Mr Hall had paid over $300,000 into the Company.
[39] It might be said the absence of any reference to him in the financial statements is consistent with his case, that it confirms the advances were not to the Company, but personal to the defendants. But this cannot be so in relation to the
$75,000 paid in September 2006 or the payments totalling $130,000 in May and October 2007, which were made in the context of offers of a 10 percent shareholding increasing to a 33 percent shareholding, respectively.
[40] I am satisfied that the records of the Company were simply in disarray. They are not supportive of either party’s case because the records, such as they are, are inconsistent with both versions of events.
[41] I turn therefore to the second aspect, my evaluation of the witnesses. I have already described Mr Hall as straight-forward, if naive. He did not have a business background. He works in market research. He said he had studied economics sometime over 20 years ago, that he had undertaken a course of training whereby he had some information technology skills, but no previous involvement with a company. He did not take professional advice, nor for that matter even basic steps to protect and record his advances to the Company. Instead he looked to Mr Robinson to do so, despite mounting evidence that the Company was confronting serious financial problems. In short, I am satisfied that in relation to this foray into the business world Mr Hall was simply out of his depth.
[42] Mrs Johnsen, likewise, was unversed in business matters. She has a background in office administration and that was the role she fulfilled for the Company. She was responsible for administration of the call-centre and payment of wages to employees. But management and financial control of the Company lay with her partner. I considered her genuine in giving evidence, but also out of her depth in relation to particularly the high level responsibilities of a company director.
[43] Mr Robinson had more business experience than the other two, but little more in the way of business wisdom. The picture is of a Company in a downward spiral, coupled with ineffectual initiatives to induce other coach companies to take a share in Southern Link Coaches Limited. Indeed, Mr Robinson accepted that the Company records were deficient and that he was “derelict” in relation to the performance of at least some of his duties as a director. When pushed, he blamed others, in particular the Company accountants, and in one significant respect, the Company solicitor.
[44] This occurred with reference to the acknowledgment of debt signed on 13 August 2008. Mr Robinson claimed it was a “mistake” that Mrs Johnsen was included in that document. His intention, he said, was that he alone would provide an acknowledgment of debt in favour of Mr Hall, but his solicitor in error included both himself and Mrs Johnsen.
[45] I do not regard this explanation as credible. It was only natural that both, as joint directors and equal shareholders in the Company, should sign the document. I do not regard Mr Robinson as a reliable witness, at least with reference to matters of detail which he perceived as prejudicial to his partner.
Were the advances made to the Company or to the individuals?
[46] The initial $52,000 is in a separate category. I have already found that to be a personal advance to Mr Robinson. There is no basis for Mrs Johnsen’s liability for that sum unless the second acknowledgment of debt has that effect, an issue to which I will turn shortly.
[47] The remaining advances I regard differently. The offer of a 10 percent interest in the Company made in September 2006 preceded the next advance, and represents, I think, a watershed in the parties’ relationship. I consider the subsequent advances were all made to the Company.
[48] A number of factors prompt this conclusion. They are:
(a)all the payments were made direct to the Company by Mr Hall and therefore with his knowledge,
(b)he understood he had taken a 10 percent stake in the Company in September 2006 and further advances were made following a three- way discussion in which a 33 percent interest was offered. He assumed the shareholding was in place until an on-line search of the Companies Office records revealed otherwise, probably after the last advance was made,
(c)Mr Hall attended the Company’s premises regularly, had numerous discussions with Mr Robinson and endeavoured to the best of his ability to assist with the Company’s operations, particularly in relation to IT matters,
(d)the fact of the signing and the context in which the documents were signed on 13 August 2008 was consistent with the need to convert Company debt into personal debt.
In combination, I see these factors as highly persuasive.
[49] Indeed, at the end of Mr Hall’s cross-examination, I felt constrained to put a direct question to him. I asked:[3]
[3] Page 61, notes of evidence.
QI must say to you that on the basis of your evidence, your own evidence here today, it does appear ... that the background is one of putting money with the Company because you understood that you were a shareholder and indeed were to become a bigger shareholder as time went on. That’s the way your evidence sounds to me?
AYes, well what I was anticipating that I’d get some formally ratified shareholding at some stage.
QAnd is that why you paid money to the Company, into the Company account?
A Um, yes.
[50] For these reasons, I find that save for the first $52,000 the other advances were made to the Company and were not personal advances to the first and second defendants.
Does the subsequent acknowledgment of debt alter matters?
[51] In oral submissions Mrs Dalziel referred to a recent case[4] as illustrative of the propositions that an acknowledgment of debt can give rise to estoppel by deed, estoppel by representation or the acknowledgment can have contractual effect. I am not sure whether all three options were relied upon by counsel, or not. However, I shall briefly consider all three.
Estoppel by deed
[4] Strategic Finance Limited v Henderson HC Christchurch CIV-2009-409-001731, 16 August 2010.
[52] This option can be briefly disposed of as the document in question is not a deed. The required formalities include that the signatures of those sought to be bound by in this instance an acknowledgment of debt must be witnessed, and that the document must state that it is intended to be a deed.[5] Neither of these requirements is met in relation to this document.
Estoppel by representation
[5] Wilken and Ghaly The Law of Waiver, Variation and Estoppel (Oxford University Press, Oxford, 2012) at [12.17].
[53] Where a person makes a representation of fact to another, knowing it is likely to be relied upon, and the other person acts on the representation to their detriment, then the person making such representation cannot subsequently deny it. He will be estopped from doing so. Here, even accepting that Mrs Johnsen and Mr Robinson made a representation that they were indebted to Mr Hall, and assuming he in some way acted on that representation to his detriment, there is no legally enforceable benefit accruing to Mr Hall. This is because the doctrine of estoppel by
representation is a rule of evidence, not of substantive law; it does not give rise to a cause of action.[6]
[6] At [9.03].
[54] In light of my major finding that the advances were made to the Company Mr Hall must rely on the doctrine to create a cause of action if he is to have one at all, and this is simply not possible for the reason just explained.
Does the acknowledgment of debt have contractual effect?
[55] This I apprehend was the main contention. Mr Allan relied on Qiao v Zhou[7] in response. This case concerned an acknowledgment of debt signed in quite different circumstances, but which was similar in relation to the form and content of the acknowledgment itself. The document was relied upon as creating a legally binding obligation upon the signatory.
[7] Qiao v Zhou HC Auckland CIV-2005-404-007123, 2 August 2006.
[56] Relevantly R. Hansen J held:
[22]... I consider that the document does not create a binding obligation which could found a summary judgment. It meets the formal requirements of an acknowledgment of debt, as set out in s 26 of the Limitation Act 1950. It is in writing, addressed to the person to whom the debt is owed and signed by the person making it. But that is not enough to provide the appellant with a right to recover.
[23]An acknowledgment of debt is effective to extend the period of limitation and (thereby) to confer a right to recover the claim or debt to which it relates. But it does not create a cause of action when none previously existed. ...
[24]The difficulty for the appellant is that no prior right to recover the money is alleged or established. He does not claim that the respondent previously agreed to repay the sum or that a right to recover arose on any basis independently of the document itself. But as an acknowledgment of debt which does not rely on a pre-existing right, it does not found a cause of action.
[25]I have considered whether the document could be construed as a contract. It has many of the trappings of a contract. But it lacks the essential element of consideration. On its face, it makes a promise to pay ... but there is no reciprocal benefit conferred or detriment suffered by the appellant. ...
In my view that case is similar to this one.
[57] I have already found that prior to 13 August 2008, Mr Hall had contractual rights against Mr Robinson and predominantly against the Company, but not against Mrs Johnsen. The acknowledgment which she signed in August 2008 does not create new legal rights, including a cause of action in contract, because no consideration was provided by Mr Hall.
[58] Mrs Dalziel sought to overcome this difficulty through reliance on a recent Court of Appeal decision Teat v Willcocks.[8] The relevant passage concerned a variation to a contract about which the Court said this:
[8] Teat v Willcocks [2013] NZCA 162 at [54].
... we are attracted to the alternative view ... that no consideration at all may be required provided the variation is agreed voluntarily and without illegitimate pressure. This seems to us to reflect the reality of what happened in the present case - a variation was proposed and willingly accepted, and the parties proceeded on that basis. In the context of an existing agreement supported by consideration, that seems to us to be sufficient to constitute a binding variation. (emphasis added)
This case is clearly distinguishable on the basis that here it is not a mere variation to a binding contract which is at stake, but the creation of a new contractual obligation which can be sued upon. For these reasons, I do not find the case of any assistance.
Issue estoppel
[59] In the course of oral submissions there was mention made of this doctrine, perhaps initially by me. This arose in the context of Mrs Dalziel’s reliance upon Associate Judge Osborne’s minute by which he entered judgment against Mr Robinson for the total debt of about $357,000 and interest. As I have already noted the Associate Judge relied upon the 2008 acknowledgment of debt to impose personal liability on Mr Robinson. Given that the proceeding was between the same parties, can it be said that an issue estoppel thereby arises?
[60] In my view that is not the case. A leading New Zealand decision is Joseph Lynch Land Company v Lynch.[9] In it the Court of Appeal said in relation to interlocutory decisions and whether they found an issue estoppel, that the question is whether in all the circumstances it is reasonable to treat the earlier decision as binding. In short, the decision is authority for the proposition that a pragmatic approach is required and a judgment must be reached as to whether it is appropriate
to apply issue estoppel given the circumstances of the particular situation.
[9] Joseph Lynch Land Company v Lynch [1995] 1 NZLR 37 (CA).
[61] I am satisfied that in the circumstances in this case, it would not be reasonable to raise an issue estoppel based on the Associate Judge’s decision. As already noted that decision was reached when Mr Robinson was self-represented. He sought an adjournment of the proceeding. This was refused. There was no effective argument. In reality something in the nature of a default judgment resulted, because Mr Robinson had not filed papers and was not in a position to proceed.
[62] I also accept a point made by Mr Allan that it would be curious to raise an issue estoppel when Associate Judge Doherty, following argument, reached a contrary view with reference to the significance of the second acknowledgment of debt.
[63] I have mentioned this aspect for completeness, but I am not sure that Ms Dalziel pursued the contention in the course of her argument.
Conclusion
[64] For these reasons, the claim against Mrs Johnsen must be dismissed. Like
R. Hansen J, in the case I referred to earlier, I have considerable sympathy for Mr Hall. He has suffered a major loss when in my view he set out to help others. That, regrettably, is not an uncommon peril of becoming involved in a complex business situation such as this.
Costs
[65] Costs are reserved and memoranda may be filed.
Solicitors:
K T Dalziel, Christchurch P N Allan, Christchurch