McLeans Rural Holdings Limited (in liquidation) v Bullock

[2020] NZHC 2825

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2014-409-000351

[2020] NZHC 2825

BETWEEN

MCLEANS RURAL HOLDINGS LIMITED (IN LIQUIDATION)
Plaintiff

AND

LISA MARIE BULLOCK

First Defendant

AND

ALAN MICHAEL RHODES

Second Defendant

Hearing:

1 October 2020

Appearances:

D M Jackson for Plaintiff

(Memorandum filed on 5 October 2020) No Appearance for Defendants

Judgment:

29 October 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 29 October 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

MCLEANS RURAL HOLDINGS LTD (IN LIQUIDATION) v BULLOCK [2020] NZHC 2825 [29 October 2020]

[1]        This ruling concerns an unopposed application for orders:

(a)carrying into effect the terms of a Tomlin Order;

(b)entering judgment for the plaintiff against the defendants under the Tomlin Order; and

(c)awarding the plaintiff costs.

The facts

[2]        The plaintiff commenced this proceeding in June 2014. The nature of the claims made is not directly relevant to this application as the parties entered into a Deed of Settlement dated 18 August 2014. The terms of settlement were attached to a Tomlin Order made by Associate Judge Osborne on 26 August 2014.

[3]The terms of the Tomlin Order recorded the Court ordered by consent:

a.The plaintiff and the first and second defendants having agreed to the terms set forth in the attached Schedule, it is ordered that all further proceedings in this action be stayed, except for the purpose of carrying such terms into effect.

b.Leave is granted to the plaintiff to apply as to carrying such terms into effect.

[4]        The Deed of Settlement was attached as the schedule to the Tomlin Order. Under it, the defendants agreed to pay the plaintiff on a joint and several basis the sum of $450,000. The relevant terms were as follows:

2.      THE Debtors shall pay the sum of $450,000.00 as follows:

(a)      The sum of $50,000.00 in cleared funds shall be paid to the Liquidators trust account within 5 working days of execution of this deed.

(b)      The sum of $50,000.00 in cleared funds shall be paid to the Liquidators trust account on 11 September 2014.

(c)      The balance of the debt payable being $350,000.00 shall be paid in cleared funds within 4 months of execution of this deed to the Liquidators trust account.

(d)      The proceedings (CIV 2014-409-351) are adjourned until all settlement payments are made, once made the proceedings will be at an end and a notice of discontinuance will be filed in Court by counsel for the liquidators with costs to lie where they fall.

(e)      This deed is in full and final settlement of all matters between McLeans, the Liquidators and the Debtors.

3. IN the event that the Debtors do not make payment to the Liquidators  trust account as provided for in this Deed, including the non-payment or late payment of any instalment required to be paid, then without the need for notice the following shall apply:

(a)      The whole of the remaining balance shall become owing and payable immediately from the time of such breach.

(b)      Interest shall start accruing from the time of such breach at the rate of 10% per year calculated on a simple basis from that date down to the date of payment.

(c)      The legal costs of any enforcement action taken by the Liquidators as a result of such default in payment shall be paid by the Debtors to the Liquidators in full on a solicitor client basis.

[5]        The first and second defendants have made some but not all payments required under the terms of Deed of Settlement. The amount owing as at the end of August 2020 was $298,641.10. A full spreadsheet setting out the payments made and the interest claimed resulting in the unpaid balance is attached to the application.

[6]        The plaintiff now seeks to have the Tomlin Order carried into effect by the entry of judgment against the defendants for the unpaid balance.

[7]        The application came before me on 1 October 2020. No counsel appeared for the defendants. I reserved my decision. I was not able to deal with the matter immediately but upon considering the application I was not satisfied the application had been properly served. I issued a minute on 16 October 2020 asking counsel to address the issue.

[8]        An affidavit has been filed by Iain Andrew Nellies, who is a liquidator of the plaintiff. He has had discussions with the defendants concerning the application. They are aware of the application. Mr Nellies states the defendants agreed that service of the application could be made by email upon their solicitor, Mr Ross Keenan of Corcoran French.

[9]In an email of 1 September 2020 the first named defendant advised that:

This email is to confirm our solicitor, Ross Keenan of Corcoran French will accept service of these documents on our behalf.

His email address is: [email protected].

[10]      The application and accompanying documents were then sent by the plaintiff’s counsel by email to Mr Keenan at the correct email address on 1 September 2020.

[11]      No opposition has been filed to the application and it therefore proceeds on an unopposed basis.

Discussion

[12]      I am satisfied in the circumstances described above that the defendants are aware of this application and that service was effected by agreement in accordance with r 6.7 of the High Court Rules 2016.

[13]      Mr Jackson has filed a memorandum setting out the jurisdictional basis for the orders sought. He has helpfully referred me to Re James Davern Ltd,1 and Divett v Skeates.2

[14]In Re James Davern Ltd, Thomas J described a Tomlin Order in this way:3

A Tomlin order attaches the terms of an agreed compromise to the order as a schedule, but it does not make those terms part of the order: see Re Shaw [1918] P 47. The purpose of such an order is to stay the cause of action in the proceeding but nevertheless enable the settlement to be enforced in that proceeding without requiring the parties to issue fresh proceedings pleading a cause of action based on the intervening compromise: see Dashwood v Dashwood [1927] WN 276; Anders Utkilens v Louisa [1985] 2 All ER 669; and McCallum v Country Residences Ltd [1965] 1 WLR 657.

[15]      In Divett v Skeates, Hugh Williams J noted that the rationale for Tomlin Orders and their enforcement is that it is “fundamental to the administration of justice that Court orders be respected”.4 He noted the following:5

1      Re James Davern Ltd (1996) 9 PRNZ 456 (CA).

2      Divett v Skeates (2010) 19 PRNZ 653 (HC).

3      Re James Davern Ltd, above n 1, at 461.

4      Divett v Skeates, above n 2, at [12] (citations omitted).

5 At [17].

Basing what follows on that text and such New Zealand authorities as there are, the present requirements for Tomlin orders and their enforcement appear to be as follows:

(a)The compromise agreement should expressly provide for the making of a consent order or judgment.

(b)The obligations to which the parties submit by way of Court order must be obligations within the jurisdiction of the Court to make. The parties, by a Tomlin Order, cannot confer jurisdiction on the court which it does not otherwise have but the court may make a Tomlin Order if it has reservations as to its jurisdiction to make orders in terms of the compromise.

(c)Proceedings which are compromised in a claim where a Tomlin Order is made should provide for the proceedings to be stayed on the agreed terms other than for effecting the agreed terms, with the terms conventionally incorporated into the order as a schedule or in a separate document clearly identified in the order. There may be a difference of view as to whether attaching the terms of an agreed compromise to the Court order makes those terms part of the order.

(d)If the compromise is incorporated in an order of the Court coupled with a stay, the parties may revive the proceeding to enforce a breach. If not, separate proceedings must be issued based on the agreement itself.

(e)The Court retains a discretion as to whether to make the agreement an order of Court.

(f)It would be prudent for any compromise agreement to state it is an “agreement settling the dispute” so the privilege acknowledged by    s 57 of the Evidence Act 2006 will be inapplicable and cannot be invoked in opposition to any action to enforce the compromise.

[16]      I am satisfied that the defendants have breached the Deed of Settlement and that the amount that is owed by the defendants to the plaintiff is as set out in the application.

[17]      There is no opposition to the application and nothing to suggest the Court should exercise its discretion against making the order sought. In my judgment, the plaintiff is entitled to orders enforcing the Tomlin Order accordingly.

Result

[18]There shall be judgment for the plaintiff in the sum of $298,641.10.

[19]      The plaintiff is entitled to interest from 1 September 2020 until payment calculated in accordance with cl 3(b) of the Deed of Settlement.

[20]      The plaintiff is also entitled to costs on a solicitor/client basis and reasonable disbursements upon the making of this application. Such costs and disbursements are to be fixed by the Registrar.

[21]      This case has been put in the List on 12 November 2020 but in light of this judgment it may be removed from the List and counsel’s appearance is excused.

O G Paulsen Associate Judge

Solicitors:

Young Hunter (Hamish Evans), Christchurch Counsel: David Jackson, Barrister, Christchurch