Lewis Holdings Limited v Steel & Tube Holdings Limited

[2016] NZHC 42

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-6104 [2016] NZHC 42

Under

Part 18 of the High Court Rules

In the matter

of ss 272(1)(a) and 272(1) of the
Companies Act 1993

BETWEEN

LEWIS HOLDINGS LIMITED First Plaintiff

BORIS VAN DELDEN AND PERI MICAELA FINNIGAN

Second Plaintiff

AND

STEEL & TUBE HOLDINGS LIMITED Defendant

Counsel:

K J Crossland for Plaintiffs

S Barker for Defendant

Judgment
(On thepapers):

2 February 2016

Reissued:

1 March 2016

JUDGMENT OF CLARK J

Introduction

[1]      The first plaintiff, Lewis Holdings Ltd (Lewis) and the second plaintiffs, the liquidators of Stube Industries Ltd, a wholly-owned subsidiary of the defendant Steel & Tube Holdings Ltd, seek clarification or correction of part of MacKenzie J’s final judgment in this proceeding.1  The “typographical error”, as it is characterised by the plaintiffs, is in MacKenzie J’s award of interest from the date of judgment rather

than from the date of liquidation.

1      Lewis  Holdings Ltd  v  Steel  and  Tube  Holdings Ltd  [2015] NZHC 2189. The relationship between the parties is characterised in more detail in Lewis Holdings Ltd v Steel and Tube Holdings Ltd [014] NZHC 3311.

LEWIS HOLDINGS LIMITED v BORIS VAN DELDEN AND PERI MICAELA FINNIGAN [2016] NZHC 42 [2 February 2016]

[2]      I do not agree that the judgment requires clarification or contains error or that there is any basis for recall.  The plaintiffs’ application is declined for the reasons that follow.

MacKenzie J’s final judgment

[3]      Lewis leased premises to Stube Industries Ltd (Stube), a wholly-owned subsidiary of the defendant Steel and Tube Holdings Ltd (STH).  Stube was put into liquidation by shareholder resolution.  The lease from Lewis was disclaimed by liquidators as onerous property.

[4]      Section 271(1)(a) of the Companies Act 1993 allows a court to order a related company to pay to the liquidator the whole or part of any claims made in liquidation if it is just and equitable to do so.  As a related company in the liquidation Lewis sought  damages  from  STH  for   loss   arising  from  disclaimer  of   the  lease. Paragraph [101] of the final judgment delivered 11 September 2015 sets out the result:

[101]    For the reasons I have given, I determine that the amount of Lewis’s claim in the liquidation of Stube consequent upon the liquidator’s disclaimer of the lease of 15 Fisher Crescent is $750,000, plus interest on that sum from the date of this judgment at the rate prescribed under s 87 of the Judicature Act 1908.

The application for correction or recall

[5]      The plaintiffs filed a brief memorandum on 25 September 2015 seeking clarification of paragraph [101] and, if there had been a typographical error, recall of the judgment to amend the error.

[6]      The plaintiffs say paragraph [101] is in error because it provides for interest from the date of judgment when it should have provided for interest from the date of liquidation. The reasons why it is said paragraph [101] should read “from the date of liquidation” are twofold:

(a)      because judgment from the date of liquidation is what the plaintiffs sought in their prayer for relief; and

(b)r 11.27 of the High Court Rules makes it unnecessary to order interest after the date of judgment.

[7]      Three memoranda were filed following the plaintiffs’ informal application.

(a)      The  defendant  filed  a  detailed  memorandum  opposing  recall  or variation because there were no grounds for either.  The defendant contended also that the final judgment could not, in any event, be varied in the manner sought because the effect of ss 271 and 311 of the Companies Act 1993 is to disentitle Lewis to post-liquidation interest. (I call this the Companies Act argument.)

(b)The plaintiffs’ memorandum in reply disputed the Companies Act argument and emphasised that unless MacKenzie J intended to award interest from the date of liquidation under the Judicature Act 1908, there was no need to refer to interest: post-judgment interest arises as of right.

(c)      The defendant filed a memorandum in succinct response articulating the two jurisdictional bases for amendment of the final judgment by the Court and submitting that the circumstances of the case fitted neither.

Is there a basis for correction or recall?

Accidental slip?

[8]      High Court Rule 11.10, known as the “slip rule”, empowers the Court or Registrar to correct a judgment or order if it contains a clerical mistake or error arising from an accidental slip or omission or if the judgment or order is drawn up so that it does not express what was decided and intended.

[9]      Even  without  the  authority conferred  by  r 11.10  the  Court  has  inherent jurisdiction to correct at any time an error arising from a slip or accidental omission2 although the rule as to the finality of judgments will not be lightly displaced.3

[10]     The slip rule may not be invoked to vary an order in a fundamental way.4

Nor is it to be used by a litigant to improve the judgment that has been obtained.5

[11]     What the plaintiffs seek goes beyond the correction of a clerical mistake or error.  The proposed “correction” would substantially vary the value of the interest awarded. To vary the final judgment in the fundamental manner sought by the plaintiffs cannot be described as the correction of a slip.

[12]     Nor is this a case where what is sought is mere correction of the manner in which MacKenzie J has expressed his manifest intention.  The plaintiffs rationalise that, as post-judgment interest exists as of right, MacKenzie J must have been in error to specify and order what is available as of right.  I do not accept that by stating the obvious it must be inferred that MacKenzie J in fact meant something different. An alternative explanation, such as the explanation put forward by the defendant, is that MacKenzie J was clarifying the rate of interest.  The rate of interest awarded under r 11.27 is prescribed by s 87 of the Judicature Act 1908 or, a lower rate may be fixed by the Court.

[13]     Even if the defendant acquiesced in the plaintiffs’ application there would be an insufficient basis still for concluding that paragraph [101] did not accurately express the intention of the Court.

[14]     The plaintiffs have not demonstrated that this is a case of a clerical error arising out of an accidental slip or omission.   Nor have they demonstrated that paragraph [101] of the final judgment does not express what MacKenzie J intended

and decided. Consequently, there is no proper basis for invoking the slip rule.

2      Milson v Carter [1893] AC 638 at 640.

3      Bank of New Zealand v Mulholland (1991) 4 PRNZ 299, cited in Creser v Creser [2015] NZCA

579 at [24].

4      R v Cripps, ex parte Muldoon [1983] 3 All ER 72 at 78.

5      Broadview Investments Co Pty Ltd v Corporate Interiors (New Zealand) Ltd HC Wellington

CP123/92, 12 August 1998 at 11.

Recall under r 11.9?

[15]     The plaintiffs seek recall of the judgment to amend the “apparent error”.

[16]     The leading statement in New Zealand as to recall of judgments remains that of Wild CJ in Horowhenua County v Nash (No 2): 6

Generally speaking,  a judgment  once  delivered  must  stand for  better  or worse subject, of course, to appeal.  Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in which a judgment not perfected may be recalled — first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority: secondly, where counsel have failed to direct the Court's attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.

[17]     Recall of a judgment is regarded as a serious step to be taken in the limited categories of case set out in Horowhenua County v Nash (No 2).7    None of the categories is applicable to this case.   There has been no amendment to a relevant enactment; there has been no failure on the part of counsel to direct the Court’s attention to a legislative provision or judgment of plain relevance; nor is there a very special reason such that justice requires the judgment to be recalled.

[18]     It has been observed that this third category of case—where for very special reason justice requires recall—is not defined with particularity in the judgments but:8

…it is quite clear that the discretion to recall must be exercised with circumspection, and it must not in any way be seen as a substitute for appeal. In particular there are some things that it can be said the power to recall does not extend to.  It does not extend to a challenge of any substantive findings of fact and law in the judgment. …  It does not extend to putting forward further arguments, that could have been raised at the earlier hearing but were not.

[19]     The plaintiffs’ ground for recall amounts to a substantive challenge to the

result recorded at paragraph [101] of MacKenzie J’s final judgment and approaches

6      Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633, affirmed in Erwood v Maxted

[2010] NZCA 93, (2010) 20 PRNZ 466 at [3].

7      See the elaboration in McGechan on Procedure (online looseleaf ed, Westlaw) at [HR11.9.01].

8      Faloon v Commissioner of Inland Revenue (2006) 22 NZTC 19,832 (HC), cited in Erwood v

Maxted, above n 6, at [5].

being a substitute for an appeal.  The power to recall may not be invoked in such circumstances.

[20]     MacKenzie J has retired.  As the plaintiffs observe the retirement of the trial Judge is not necessarily an impediment to another judge correcting or recalling the judgment. While the commentary in McCechan on Procedure notes that it is implicit in the categories identified in Horowhenua County v Nash (No 2) that recall will be by the trial judge,9  the power of recall is not explicitly confined to the judge who

delivered the judgment.10   Regardless, the impediment to recall in this case is not the

fact that the trial Judge has retired.  The impediment is that the confined grounds for recall are not met.

Result

[21]     I have found it unnecessary to assess the Companies Act argument in order to determine the plaintiff’s application.  The plaintiffs have not drawn attention to any irregularity.  Rather it is suggested that MacKenzie J did not mean what he wrote. The ground put forward in support of that contention is merely speculative.  Neither the jurisdiction of the  Court to correct error nor the recall jurisdiction may  be invoked in the circumstances of this case.  Subject to successful appeal, MacKenzie J’s judgment must stand.

[22]     The plaintiffs’ application is unsuccessful. The defendant is entitled to costs.

Karen Clark J

Solicitors:

Shieff Angland Lawyers, Auckland, for Plaintiffs

Buddle Findlay, Wellington for Defendant

9      McGechan on Procedure (online looseleaf ed, Westlaw) at [HR11.9.01(7)].

10     Healy Holmberg Trading Partnership v Grant HC Auckland CIV-2009-404-2279, 12 October

2010 at [58].