Hosbon Trust Limited v Wallis - [2022] NZHC 1402

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-000919

[2022] NZHC 1402

BETWEEN HOSBON TRUST LIMITED as trustee of the HOSBON TRUST
Plaintiff

AND

RICHARD DIGBY WALLIS

Defendant

Hearing: 1 June 2022

Appearances:

D Beissell for the Plaintiff P Murray for the Defendant

Judgment:

15 June 2022

JUDGMENT OF TAHANA J

This judgment was delivered by me on 15 June 2022 at 2.30pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:
Duncan Cotterill, Auckland
Claymore Partners Limited, Auckland Shortland Chambers, Auckland

HOSBON TRUST LIMITED as trustee of the HOSBON TRUST v WALLIS [2022] NZHC 1402 [15 June 2022]

Introduction

[1] This matter was set down for a formal proof hearing on 1 June 2022. In May 2021, Hosbon Trust Ltd as trustee of Hosbon Trust (Hosbon Trust), filed its claim against Mr Wallis seeking repayment of monies owing under a loan. No defence was filed and on 25 February 2022, Hosbon Trust sought a formal proof hearing.

[2] On the day prior to the formal proof hearing, Mr Wallis filed an application for leave to file a statement of defence. That application was accompanied by an affidavit of Mr Wallis sworn on 31 May 2021 exhibiting, among other documents, an intended statement of defence.

[3] Hosbon Trust opposes the application for leave to file a statement of defence and wishes to proceed with the formal proof hearing.

Application for leave to file a statement of defence

[4] Rule 15.9(3) of the High Court Rules states that once a formal proof hearing has been set down, a statement of defence cannot be filed without the leave of a Judge. The Judge may grant leave if there will, or may, be a miscarriage of justice if judgment by default is entered, and leave will be on terms that the Judge thinks fit.

[5] I must therefore be satisfied that there is no miscarriage of justice if I refuse to grant leave to file a statement of defence and judgment in default is granted. In considering whether there will be a miscarriage of justice, relevant factors include:1

(a)whether the defendant has a substantial ground of defence;

(b)whether the delay is reasonably explained; and

(c)whether the plaintiff will suffer irreparable injury if leave to defend is granted.

1 Russell v Cox [1983] NZLR 654 (CA) as cited in Shoye Venture Ltd v Wilson & Anor [2013] NZHC 2339 at [13]; and Neumayer v Kapiti Coast District Council [2014] NZHC 417 at [7]–[8].

[6]I consider each of the above issues below.

Background

[7] Ms Gagan is the sole director and shareholder of Hosbon Trust Limited, the trustee of Hosbon Trust.

[8] The terms of the loan are alleged to be contained in emails between Ms Gagan and Mr Wallis dated between 27 February and 4 March 2019, as follows:

(a)The amount of the loan was $530,000;

(b)Mr Wallis was to repay $100,000 on or by 31 March…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 1402
Decision Date: 15 June 2022

CaseChat Overview and Summary

In Hosbon Trust Limited v Wallis, the High Court of New Zealand, Auckland Registry, considered an application for leave to file a statement of defence after a formal proof hearing had been set down. The Hosbon Trust, as trustee, filed a claim against Mr. Wallis for repayment of a loan. No defence was filed, and the Trust sought a formal proof hearing. Mr. Wallis applied for leave to file a statement of defence just prior to the hearing, accompanied by an affidavit and an intended statement of defence. The Trust opposed the application, arguing that the delay in filing the defence was unreasonable and that Mr. Wallis did not have a substantial ground of defence.

The court considered the factors relevant to whether there would be a miscarriage of justice if leave to defend was refused, including whether Mr. Wallis had a substantial ground of defence, whether the delay was reasonably explained, and whether the Trust would suffer irreparable injury if leave to defend was granted. The court found that there was a substantial ground of defence, as the identity of the party to the loan agreement required further evidence and cross-examination. The court also found that the delay was not reasonably explained, as Mr. Wallis had ample time to file a defence despite being involved in other legal proceedings. However, the court accepted that if Mr. Wallis paid the costs incurred by the delay, it would compensate the Trust for the delay. Therefore, the application for leave to defend was granted on the condition that Mr. Wallis pay the specified costs within 10 working days, file a statement of defence within the same period, and the Trust file a reply within 10 working days of the defence being served.

In conclusion, the court granted leave to Mr. Wallis to file a statement of defence, subject to conditions, including the payment of costs by Mr. Wallis. The case highlights the importance of meeting court deadlines and the need for substantive determination of complex issues, particularly where there are overlapping legal proceedings.

Orders