Humphries v Carr

[2010] NZCA 238

IN THE COURT OF APPEAL OF NEW ZEALAND

CA616/2009
[2010] NZCA 238

BETWEENRODNEY JOHN HUMPHRIES
Appellant

ANDEWAN ROBERT CARR
Respondent

Hearing:17 May 2010

Court:O'Regan, Priestley and Ronald Young JJ

Counsel:A R Gilchrist and L M Nicholson for Appellant
S P Rennie for Respondent

Judgment:8 June 2010 at 2.30 pm

JUDGMENT OF THE COURT

A        The appeal is allowed.

B        The High Court judgment dated 4 September 2009 is quashed.

C        The proceeding is remitted to the High Court.

DThe respondent must pay the appellant costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Priestley J)

Introduction

[1]       The issue on this appeal arises out of something of a procedural morass. 

[2]       On 4 September 2009 Fogarty J refused the appellant’s application for a permanent stay of a High Court judgment for specific performance which had been made against him in 2006.  This appeal focuses entirely on whether the Judge’s decision is correct.

Background

[3]       The major events along the procedural pathway of the parties protracted dispute are as follows:

·In November 2006 Associate Judge Christiansen made a summary judgment order against the appellant (who did not appear) for specific performance of various obligations under a deed of assignment.  The order was for the appellant to transfer specific property to the respondent.  The appellant lodged an appeal.

·In May 2007 the parties executed an amended settlement agreement (referred to in various judgments as the ASA) which was intended to resolve a number of outstanding issues between the parties, including the specific performance judgment.

·For various reasons the ASA was not implemented.  The appellant cancelled it.  Litigation ensued.  In September 2008 this Court held on appeal (amongst other things) that the ASA had indeed been validly cancelled and was at an end.[1]

·The appellant’s consistent stance throughout has been that the respondent should not be permitted to enforce the specific performance order when that dispute had been resolved by the cancelled ASA.  He thus made an application to set aside Associate Judge Christiansen’s November 2006 judgment.  The application was decided by Associate Judge Osborne in April 2009.  He declined to set aside the summary judgment.

·Faced with this set back, the appellant lodged an appeal against Associate Judge Osborne’s April 2009 judgment.  That appeal was to be heard in conjunction with the long-pending appeal from Associate Judge Christiansen’s 2006 judgment.

·In May 2009 the appellant lodged an application seeking a permanent stay of Associate Judge Christiansen’s 2006 judgment, which application was decided by Fogarty J.

·In addition to seeking a permanent stay the appellant abandoned his appeals against the decisions of both Associate Judges.

·Faced with Fogarty J’s adverse decision the appellant both lodged this appeal and also sought leave from this Court to set aside his notices of abandonment.  On 17 February 2010 the appellant’s application in respect of the notices of abandonment was declined.[2]

[1]      Carr and Ors v Frost and Ors [2008] NZCA 391.

[2]      Humphries v Carr [2009] NZCA 608.

[4]       Thus the only outstanding matter between the parties is this appeal from the refusal to grant a permanent stay which, from the appellant’s standpoint, represents the last shot in his locker.

High Court judgments

[5]       Critical to this appeal is the fact that Associate Judge Osborne and Fogarty J were determining separate applications.  The application before the Associate Judge was to set aside the summary judgment entered against the appellant in the High Court in November 2006.  This application was made under r 12.14 of the High Court Rules which permits the High Court to set aside a judgment against a non-appearing party if a miscarriage of justice is apparent.  The Associate Judge also had a stay application before him, but it was limited to a stay of execution pending determination of the appeal from the 2006 judgment.  The application before Fogarty J was for a permanent stay. 

[6]       Although from the parties’ standpoint a successful outcome for the appellant on either application would have brought about an identical practical result, the applications are qualitatively different and require scrutiny of different considerations.  We say no more on this topic.

[7]       Much of the argument before Fogarty J centred on neat issues of res judicata.  The respondent’s position, both before the Judge and before us, was that, in effect, Associate Judge Osborne had finally determined matters against the appellant.  Particular emphasis was placed on the following portion of the Associate Judge’s judgment.  Counsel endeavoured to analyse whether the passages were obiter or part of the ratio decidendi of Associate Judge Osborne’s decision refusing to set aside the summary judgment entered against the appellant by Associate Judge Christiansen.

[19]     The defendant’s submissions filed for this hearing (dated 22 January 2009) contained an additional matter of defence.  That ground was put in these terms (paragraphs [50] – [51]):

50.THE ASA that was executed in March 2007 has as one of its recitals an agreement under which the parties agreed to settle their disputes including the settlement of the Styx transaction on agreed terms (paragraph 15).  Mr Carr agreed that settlement of the Styx transaction would not proceed unless the big Sky settlement proceeded (paragraph 16).  The agreement was in full and final settlement of all issues between the parties (paragraph 17).

51.IT is submitted that there is a further argument under terms of the settlement.  The plaintiff is stopped in any event seeking to enforce the terms of the judgment.

…

[34]     I have recited above (paragraph [19]) the settlement/estoppel argument.  Central to the settlement argument is the provision of paragraph 25 of the ASA.  Paragraph 25 provided:

This agreement shall be in full and final settlement of all issues between the parties, their contractors and advisers.

Counsel for the defendant noted several provisions of the ASA (including the Background) which referred to the Styx Lodge property, and indicated that the issues over that property were being dealt with in the ASA.

…

[37]     It is plain from a reading of the ASA that the references to “on settlement” are to the event of the subsequent settlement of the obligations under the ASA.  Clause 21 for example refers to a number of conveyancing and other matters that are to occur “on settlement”.

[38]     Without such settlement under the ASA, the obligations in clauses 18 and 24 in terms of the agreement did not arise.  Had the parties intended that the ASA was a “full and final settlement” in the sense that existing rights and obligations (either entirely or in part) immediately came to an end, then the agreement could have simply stated as much, without providing that stated matters were to occur “on settlement”.

[39]     It became clear in the course of submissions for the defendant that the estoppel submission was an alternative formulation of the “full and final settlement” submission.  It fails for parallel reasons.  When the ASA is read in its entirety, the plaintiff is not stopped from enforcing the summary judgment.

[8]       As is apparent, Mr Gilchrist had presented written submissions to the Associate Judge contending that, in addition to there being grounds to set aside the 2006 summary judgment, there was a further argument that the respondent was estopped from enforcing the terms of the judgment.

[9]       Fogarty J set out the core submissions made to him by the parties.  The respondent’s submission was the Associate Judge’s findings in respect of the ASA were sufficiently fundamental to his decision as to give rise to an issue of estoppel.  The appellant’s submission was that the Associate Judge’s comments were not fundamental to his decision, which could stand without reference to the estoppel issue.  Thus there is no res judicata issue and the Judge’s comments on estoppel were clearly obiter.

[10]     Fogarty J correctly addressed rule 12.14 of the High Court Rules and this Court’s comments in Equiticorp Finance Group v Cheah,[3] with the focus on miscarriage of justice and a court’s refusal to allow its processes to be used in such a way as to result in an injustice.[4]

[3]      Equiticorp Finance Group v Cheah [1989] 3 NZLR 1, 8.

[4]      At [33]-[35].

[11]     The Judge then said:

[36]     Once Mr Humphries relied on the ASA as an accord and satisfaction to contend that Mr Carr was estopped from opposing Mr Humphries’ application to set aside the judgment, Associate Judge Osborne had to consider that argument.  It was a threshold argument.  It essentially contended that it would be manifestly unjust for the Court to even hear Mr Carr in opposition to the application to set aside the judgment, for by doing so Mr Carr would be avoiding the accord and satisfaction he had freely entered into when entering into the ASA. 

[37]     In my view Associate Judge Osborne did not have a discretion whether or not to consider the estoppel argument.  Therefore, it was necessary for him to decide it.  It was necessary as part of the ground work of the decision itself as a threshold point before considering the consideration made relevant by the terms of r 12.14.

[12]     Fogarty J stated that the estoppel point raised by counsel was “fundamental” because, by deploying the issue of estoppel, counsel had been seeking to persuade the Associate Judge not to examine the merits of any argument under rule 12.14 because the ASA estopped the respondent from “speaking against an application to set aside the 2006 judgment”.[5] 

[5] At [46].

[13]     The Judge was further of the view that, in the context of the appellant’s decision to abandon his appeal, (above [3], such abandonment being after the permanent stay application was filed) the appellant was effectively seeking to challenge the interpretation of the ASA twice.  Thus the doctrine of interest reipublicae ut sit finis litium (it is in the interest of the state that litigation be brought to an end), was ranged against the appellant.[6] 

[6]      At [47]-[51].

[14]     The Judge’s conclusion was that the stay application should be dismissed because it was:[7]

…founded upon an interpretation of the ASA which was rejected by Associate Judge Osborne as part of the ground work of his decision to refuse to set aside the 2006 judgment.

[7] At [54].

Discussion

[15]     We do not see that portion of Associate Judge Osborne’s decision relating to counsel’s estoppel argument as fundamental to his decision.  The reasons that the Associate Judge gave for refusing to set aside the 2006 summary judgment did not depend, in any fundamental way, on the estoppel argument and an interpretation of the ASA.  Associate Judge Osborne was dealing solely with a r 12.14 application to set aside a summary judgment.  He was not, as Fogarty J suggests, dealing with an argument that the respondent was estopped from opposing the application under r 12.14.  Rather, the argument put to Associate Judge Osborne was that the respondent would be estopped from enforcing Associate Judge Christiansen’s judgment.  That argument was not relevant to the consideration of the r 12.14 application and did not need to be dealt with in order to resolve that application.

[16]     The Judge has overstated the centrality of the estoppel issue, and in particular counsel’s submissions before Associate Judge Osborne.[8]  The appellant had never contended that it would be “manifestly unjust” for the Court to hear the respondent in opposition to the application to set aside the judgment because to do so would be to permit the respondent to avoid the terms of the ASA.

[8] At [36].

[17]     The basis on which the appellant was properly seeking a permanent stay of the High Court’s summary judgment was qualitatively different and gave rise to different considerations from those which had to be considered in the context of an application to set aside the 2006 summary judgment.  Failure to appreciate that critical distinction has resulted in Associate Judge Osborne’s judgment being given impermissible centrality.

[18]     In our view, Associate Judge Osborne’s finding on the estoppel argument that was put to him was not fundamental to his decision and therefore not part of the ratio decidendi of his decision.  It did not therefore give rise to a res judicata.  We respectfully disagree with Fogarty J’s finding to the contrary.

Result

[19]     For the reasons we have stated the appeal is allowed.  The High Court judgment dated 4 September 2009 is quashed. 

[20]     The parties agreed that, if we allowed the appeal, the matter would need to be remitted to the High Court for resolution of the merits of the stay application.  We remit the proceeding to the High Court for that purpose.

Costs

[21]     The respondent must pay the appellant costs for a standard appeal on a band A basis and usual disbursements.

Solicitors:
Dyer Whitechurch, Auckland for Appellant
Rhodes & Co, Christchurch for Respondent