Moeke v Eparaima
[2024] NZHC 1767
•4 July 2024
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2023-463-30
[2024] NZHC 1767
BETWEEN FORD BENJAMIN MOEKE
Plaintiff
AND
VANESSA EPARAIMA, CONSTANCE HUI, JOHN SPENCER and JONATHAN MICHAEL STOKES
First Defendants
JENNY SHATTOCK, JEFF GASH, MARIN GLUCINA, BILL MACHEN, ARAMA NGAPO-LISCOMBE, PETER SCHULTE, HERMAN VAN ROOIJEN and ADRIENNE BELL
Second Defendants
BENJAMIN ERIC SMIT
Third Defendant
HAMISH DOUCH
Fourth DefendantMICHAEL BRACKEN
Fifth Defendant
Hearing: 12 June 2024 Appearances:
Garry Judd KC for the Plaintiff
Paul Fisher for the Third-named and Seventh-named Second Defendants James Gurnick for the fourth-named and seventh-named Second Defendant
Judgment:
4 July 2024
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for leave pursuant to Rule 12.9 of the High Court Rules 2016]
This judgment was delivered by me on 4 July 2024 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
MOEKE v EPARAIMA [2024] NZHC 1767 [4 July 2024]
TABLE OF CONTENTS
Introduction
Paragraph
[1]
Background [2]
Mr Moeke’s application for summary judgment [6] Leave applications by third, fourth and seventh-named second defendants [7] Legal principles [12]
Mr Machen’s application [14]
Does a substantial defence exist? [18]
Was the delay reasonably explained? [19]
Irreparable injury/prejudice to Mr Moeke? [20]
Mr Glucina and Mr van Rooijan’s applications [22]
Was the delay reasonably explained? [25]
Irreparable injury/prejudice to Mr Moeke? [26]
Mr Moeke’s opposition [27]
The applicants are joint tortfeasors [29]
Is Said v Butts inapplicable? [32]
Res judicata estoppel [34]
Result [39]
Mr Machen’s application [39]
Why leave should be granted [41]
Orders [43]
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Introduction
[1] The plaintiff, Mr Ford Benjamin Moeke (Mr Moeke) seeks summary judgment for liability against the first defendants Vanessa Eparaima, Constance Hui, John Spencer, and Johnathan Michael Stokes, the directors of Raukawa Iwi Development Ltd (RIDL), the second defendants Jenny Shattock, Jeff Gash, Marin Glucina, Bill Machen, Arama Ngapo-Lipscomb, Peter Schulte, Herman Van Rooijen and Adriene Bell, councillors of the South Waikato District Council (SWDC), the third defendant Benjamin Eric Smit, the former chief executive officer of SWDC, the fourth defendant Hamish Douch, the solicitor for RIDL and the fifth defendant, Michael Bracken, the solicitor for SWDC.
Background
[2] By an agreement for sale and purchase dated 2 October 2018 (the First Agreement), RIDL agreed to sell 10 Dumfries Road, Tokoroa – a freehold section with buildings being Lot 10 DP 2883 in Certificate of Title SA468/142 (the Property) – to Mr Moeke. Settlement date was agreed to be 7 December 2018. On the day of settlement, RIDL’s solicitors advised Mr Moeke that it had elected not to sell the Property.
[3] By an agreement for sale and purchase dated 6 December 2018, RIDL agreed to sell the Property to SWDC (the Second Agreement). On 7 December 2018, the Second Agreement was settled, and a transfer of the property from RIDL to SWDC was registered.
[4] Mr Moeke successfully obtained summary judgment (the Liability Judgment) against RIDL and SWDC in earlier proceedings.1 SWDC admitted that it had knowledge of Mr Moeke’s binding contract with RIDL. The Court found that no matter how good the respondents considered their intentions to be, the respondents had notice of Mr Moeke’s interest in the land and had acted to defeat it. The Court concluded that the respondents did not have a reasonably arguable defence to Mr Moeke’s claim for tortious conspiracy.
1 Moeke v Raukama Iwi Developments Ltd [2019] NZHC 3166.
[5] Mr Moeke now seeks to claim against individuals at RIDL and SWDC, and their respective solicitors involved in that resale and applies for summary judgment as to their alleged liability as co-conspirators with RIDL and SWDC to defraud him. Mr Moeke relies on the Liability Judgment against RIDL and the SWDC as the basis for this liability and alleges the individuals are estopped by res judicata from raising any defences to liability.
Mr Moeke’s application for summary judgment
[6] In an application dated 10 May 2023, pursuant to r 12.3 Mr Moeke seeks, in summary, orders:2
(a)Granting summary judgment on the issue of liability on the plaintiff’s claim as set out in the statement of claim; and directing a trial on the issue of amount.
(b)Directing that the trial on the issue of amount be at the time and place of the trial of the issue of amount in the Liability Judgment proceedings (CIV-2019-463-46).
Leave applications by third, fourth, and seventh-named second defendants
[7] By notice dated 14 May 2024, the third-named second defendant, Marin Glucina (Mr Glucina), and the seventh-named second defendant, Herman van Rooijen (Mr van Rooijen), applied for leave for an order granting Mr Glucina and Mr van Rooijen leave to be heard in opposition to Mr Moeke’s application for summary judgment.
[8] By notice dated 26 February 2024, the fourth-named second defendant, Bill Machen (Mr Machen), applied for an order granting leave for Mr Machen’s notice of opposition and supporting affidavit in respect of Mr Moeke’s summary judgment application to be filed.
2 Notice of interlocutory application by plaintiff for summary judgment on issue of liability against defendants dated 10 May 2023 at [1].
[9] Mr Glucina, Mr van Rooijen and Mr Machen (together the applicants), apply for leave pursuant to r 12.9(3) of the High Court Rules 2016.
[10] By notice of opposition dated 14 March 2024, Mr Moeke opposes the orders sought by Mr Machen, and by notice dated 17 May 2024 opposes the orders sought by Messrs Glucina and van Rooijen.
[11]Applications for leave were heard at the Rotorua High Court on 12 June 2024.
Legal Principles
[12]Rule 12.9 of the High Court Rules 2016 provides that:
12.9 Notice of opposition and affidavit in answer
(1)A party who intends to oppose an application for judgment under rule
12.2 or 12.3 must, at least 3 working days before the date for hearing the application, file in the court and serve on the applicant –
(a)a notice of opposition in form G 33; and
(b)an affidavit by or on behalf of the party intending to oppose the application in answer to the affidavit by or on behalf of the applicant.
(2)For the purposes of subclause (1), in answer to means, -
(a)in the case of a defendant, setting out the defence to the cause or causes of action that are subject to the summary judgment application; or
(b)in the case of a plaintiff, setting out the reasons why the defendant’s defences do not succeed against the plaintiff’s cause or causes of action.
(3)If an opposing party does not file and serve the documents required by subclause (1), the party may not be heard in opposition to the application without the leave of the court.
(4)Rule 7.24(2) and (3) apply, with all necessary modifications, to a notice of opposition filed under subclause (1)(a).
[13] In Chappel Carriers Ltd v Chappel Properties Ltd,3 the Court considered the predecessor to r 12.9. In setting out the principles relevant to the exercise of a discretion to set aside a judgment, guidance was provided as to when leave should be
3 Chappel Carriers Ltd v Chappel Properties Ltd, HC Hamilton CP15/97, 12 August 1997.
granted. The Court noted that the dominant consideration is “to avoid a possible miscarriage of justice”.4 Further relevant considerations include:
(a)whether a substantial ground of defence exists;
(b)whether the delay was reasonably explained; and
(c)whether the plaintiff would suffer irreparable injury if the judgment was set aside.
Mr Machen’s application
[14] Mr Gurnick, for Mr Machen, made an initial submission that because of the procedural irregularities, Mr Machen should be granted leave. He sets out the procedural history of the matter at [2] to [17] of his submissions, which can be summarised as follows:
(a)Mr Moeke filed the summary judgment application on 17 May 2023. The proceedings were served on Nielsen Law, solicitors acting for the first-named and fifth-named second defendants and the third defendant on 12 June 2023;
(b)the application for summary judgment served on Nielsen Law had not been endorsed by the Court to record on the date of the first call of the proceedings and on 17 July 2023 Nielsen Law wrote to the solicitor for Mr Moeke noting that:
(i)the application for summary judgment that had been served was not endorsed by the Court, setting the date for the first call; and
(ii)the notice of proceeding was not in Form G13 as required by r 12.6.
4 Chappel Carriers Ltd v Chappel Properties Ltd, above n 3 at 2.
(c)to preserve the first, fifth and sixth-named second defendants and the third defendant’s position, Nielsen Law filed a statement of defence on their behalf, dated 17 July 2023;
(d)on 26 July 2023, counsel for the first, fifth and sixth-named second defendants and the third defendant, together with counsel for the fourth defendant, filed a joint memorandum noting that the proceedings had not been filed in accordance with r 12.4 and that it was unclear whether the proceedings had been served on all named parties;
(e)the first call of the proceedings occurred on 1 August 2023 and on 3 August 2023 the Court directed that:
(i)Mr Moeke was to serve a notice of proceeding on the defendants in compliance with r 12.4; and
(ii)the defendants were to file any notice of opposition by 12 September 2023.
(f)on 4 August 2023, a notice of proceeding in compliance with r 12.4 was served on Nielsen Law for the first, fifth and sixth-named second defendants and the third defendant.
(g)on 15 August 2023, Nielsen Law filed a memorandum as to representation and address for service of the eighth-named second defendant;
(h)on 12 September 2023 the first, fifth, sixth and eighth-named second defendants and the third defendant filed a notice of opposition to Mr Moeke’s summary judgment application;
(i)Mr Machen was served with the proceedings on 14 September 2023. He initially sought to rely on the notice of opposition filed on behalf of the first, fifth, sixth and eighth-named second defendants and the third defendant dated 12 September 2023, or sought to file a notice of
opposition broadly on the same terms. By memorandum dated 18 January 2024, Mr Moeke opposed this approach, submitting that Mr Machen was required to seek leave under r 12.9(3).
(j)By minute dated 12 February 2024, the Court directed Mr Machen to make a formal application for leave and file a notice of opposition.
[15] Mr Gurnick submits that the High Court Rules do not define, for the purposes of r 12.9, whether the “date for hearing of the application” is the first call specified in the notice of proceeding (in this case, 1 August 2023) or the date set for the substantive hearing (in this case, 12 June 2024).
[16]Mr Gurnick submits:
(a)The proceedings were not properly filed and served at the date of the first call, being 1 August 2023;
(b)Mr Machen was not served until 14 September 2023, after the first call and after the date for filing notices of opposition as directed by the Court’s minute of 3 August 2023. As such, Mr Machen could not comply with r 12.9(1);
(c)if the Court considers that “the date for the hearing of the application” provided in r 12.9(1) refers to the first call date of 1 August 2023, there can be no basis for leave being required given Mr Machen had not been served by that date. If the Court considers the “date for hearing the application” is the date of the substantive hearing rather than the date of the first call, Mr Machen would have three working days before 12 June 2024 to file a notice of opposition and the notice of opposition was in fact filed on 7 December 2023. Consequently no leave would be necessary.
(d)the “date for hearing of the application” in r 12.9(1) is 1 August 2023, and there should be no issue with leave being granted due to
Mr Machen not having been served with the proceedings until 14 September 2023.
Mr Gurnick submits that accordingly depending on the interpretation of “the date for hearing the application”, either Mr Machen did not require leave or if he does, then leave should be granted because he could not comply with r 12.9(1) because he was not served until 14 September 2023.
[17] Mr Gurnick then addressed the other factors which he submits are in favour of the granting of leave, if leave was required.
Does a substantial defence exist?
[18] Mr Gurnick submits that Mr Machen intends to rely on the grounds of opposition advanced by the first, fifth, sixth and eight-named second defendants and the third defendant as set out in the notice of opposition in the summary judgment application dated 12 September 2023. He submits that Mr Machen’s position and interests are substantially the same as the other second-named defendants and, in summary, that:
(a)Mr Moeke’s claim is that because SWDC was found liable to him in the Liability Judgment, the second defendants, as individual councillors of the SWDC, should also be liable;
(b)Mr Moeke, in support of the summary judgment application, has not filed any evidence to support his claim that the second defendants are liable for the conduct of SWDC;
(c)the fact that SWDC was found liable to Mr Moeke in the Liability Judgment, does not mean that liability should automatically extend to the second defendants. There are material facts in dispute in relation to the alleged conspiracy and the knowledge or involvement of each of the second defendants.
Was the delay reasonably explained?
[19] Mr Gurnick submits that Mr Machen’s affidavit dated 26 February 2024 sets out that Mr Machen understood that SWDC was arranging representation for the second defendants and as such he did not apprehend that he was required to take any steps personally. Mr Gurnick submits that when Mr Machen became aware of the need to separately instruct the solicitors to act, he took prompt steps to do so.
Irreparable injury/prejudice to the plaintiff
[20] Mr Gurnick submits that there is no irreparable injury or prejudice to Mr Moeke for the following reasons:
(a)to date, no fixture has been allocated for the substantive hearing;
(b)given Mr Machen’s intention to adopt the positions of the first, fifth, sixth and eighth-named defendants and the third defendant, Mr Moeke has had adequate notice of the position to be taken by Mr Machen;
(c)Mr Moeke will be required to meet the opposition to the other named second defendants at the hearing and, as such, it is submitted there is no additional cost or disadvantage to Mr Moeke in leave being granted for Mr Machen to file his opposition;
[21] In contrast, Mr Gurnick submits if leave is not granted to Mr Machen to file the opposition, allowing Mr Moeke to obtain summary judgment in his absence would unfairly prejudice Mr Machen and potentially the other second defendants given their related interest.
Mr Glucina and Mr van Rooijen’s applications
[22] Mr Fisher, for Mr Glucina and Mr van Rooijen, submits that those applicants have substantial grounds of defence as follows:
(a)Mr Moeke’s application for summary judgment is not supported by any admissible evidence and there is merely a verification by Mr Moeke of the allegations;
(b)the applicants have a substantive defence in that at all material times they acted in good faith within the scope of their authority as SWDC members;
(c)the applicants are not estopped by the Liability Judgment from defending the allegations in the statement of claim, as estoppel would not produce a fair and just result in the light of the following matters:
(i)Mr Glucina and Mr van Rooijen’s defence is not one available to SWDC in the Liability Judgment;
(ii)there is not the necessary union or nexus or community or mutuality of interest or identity between SWDC and the applicants as SWDC members;
(iii)a finding against SWDC of “land transfer fraud” and therefore dishonesty was made without the benefit of detailed submissions from counsel in relation to the content of “unlawful means” for the purposes of the tort of conspiracy;
(iv)the Liability Judgment did not consider the question of the states of mind of the applicants as members of SWDC and the applicants had no opportunity to respond to the allegations of dishonesty.
[23] Expanding on the defence, Mr Fisher refers to the principle in Said v Butt5 and submits that at all material times Mr Glucina and Mr van Rooijen acted in good faith and within the scope of their authority as SWDC members. He submits that the principle in Said v Butt must logically apply to council members in the same way as it
5 Said v Butt [1920] KB 497.
applied to company directors as the scheme in the Local Government Act 2002 (LGA) is predicated on a local authority and its council members being separate legal personalities (see, for example, ss 43, 46 and 47 of the LGA).
[24] Mr Fisher submits that the Liability Judgment does not raise an issue estoppel preventing Messrs Glucina and van Rooijen defending the allegations in the statement of claim for the reason that the estoppel would not produce a fair and just result:
(a)The applicants’ defence, based on Said v Butt, was not available to SWDC in the Liability Judgment and the Liability Judgment did not consider the state of mind of the applicants as members of SWDC;
(b)a finding of dishonesty against SWDC was made without the benefit of detailed submissions from counsel in relation to the content of the “unlawful means” for the purposes of the tort. He submits that it is reasonably arguable that although land transfer fraud will always involve some form of “unlawful means” such as a breach of contract or a tort (for example, procuring a breach of contract or deceit or forgery), it is itself not an actionable civil wrong and was not a necessary finding in order for Mr Moeke to have succeeded in establishing a conspiracy by unlawful means against SWDC. Mr Fisher submits that it was sufficient for Mr Moeke to rely on a breach of contract by RIDL / or the procurement by SWDC of that breach to establish the necessary unlawful means for the purposes of the tort;
(c)there is not the necessary union or nexus or community or mutuality of interest or identity between SWDC and the applicants as SWDC members. The relationship between a local authority and its council members is quite different from the relationship which exists between a company and its shareholders/directors in connection with the conduct of the business of a company, as the shareholders/directors have a financial interest in the affairs of the company and its prospects; and
(d)the applicants have had no opportunity to respond to the allegations of dishonesty against them and there is a risk of a substantial miscarriage of justice if they are deprived of the opportunity to be heard.
Was the delay reasonably explained?
[25] Mr Fisher submits that Mr van Rooijen, in his affidavit dated 14 May 2024, has adequately explained the reasons for the delay in filing his notice of opposition. He submits that Mr Glucina in his affidavit of 9 May 2024 has adequately explained the delay in filing his notice of opposition. Alternatively, he submits that there is merit in the applicants’ proposed defences, so leave should not be denied on the account of delay.
Irreparable injury/prejudice to Mr Moeke
[26] Mr Fisher submits that granting leave will not create any prejudice to Mr Moeke.
Mr Moeke’s opposition
[27] Mr Judd KC, for Mr Moeke, submits that the applicants do not have a substantial defence to Mr Moeke’s claim for summary judgment for, in summary, the following reasons:
(a)SWDC and its councillors are joint tortfeasors in the tort of conspiracy;
(b)the decision in Said v Butt does not provide a ground for defence to the applicants;
(c)relying on the authority of Shiels v Blakeley,6 under the doctrine of res judicata estoppel, the applicants are estopped from denying liability as they are privies to the Liability Judgment.
6 Shiels v Blakeley [1986] 2 NZLR 262.
[28]Mr Judd expands on each of these points of opposition as discussed below.
The applicants are joint tortfeasors
[29] Mr Judd submits that SWDC and its councillors, the second defendants, are joint tortfeasors in the same way as directors of a company and the company itself may be joint tortfeasors. Accordingly, the second defendants are individually liable under the tortious conspiracy finding that the Court made against SWDC in the Liability Judgment. Mr Judd relies on the decision in Brooks v New Zealand Guardian Trust Co Limited7 where the Court said:8
Where directors acting on behalf of and within the scope of their authority from the company committed a tort for which they were personally liable, the company would be liable as joint tortfeasor much as in other cases of principal and agent. The present was a typical case where the board of directors were not mere agents for whom the company was liable on the footing of respondeat superior, but persons for whom the company was liable because their actions were treated as the very actions of the company itself. They were identified with the company because they represented its directing mind and will. (See p 140 line 25, p 140 line 43 and p 141 line 1).
[30] Mr Judd submits the same principle must apply to a statutory corporation such as a local authority. He refers to ss 12(1) and 41(2) of the LGA as establishing the proposition that SWDC is a corporation sole and is governed by its body of elected councillors. He submits the second defendants, as councillors, voted to enter into the Second Agreement and represented SWDC’s “directing mind and will” within the description used in Brooks.
[31] For further authority for the proposition that the second defendants are joint tortfeasors with SWDB in respect of the tortious conspiracy, Mr Judd points to the English decisions of Wah Tat Bank Ltd & Another v Chan Cheng Kum,9 Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd,10 and the Canadian decision of ADGA Systems International Ltd v Valcom Ltd et al,11 all supporting the proposition
7 Brooks v New Zealand Guardian Trust Co Ltd [1994] 2 NZLR 134.
8 Above n 7 at 140.
9 Wah Tat Bank Ltd & Another v Chan Cheng Kum [1975] 2 All ER 257 at 260.
10 Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 14, 15.
11 ADGA Systems International Ltd v Valcom Ltd et al 3 O.R. (3rd) 101.
that individuals who procure or direct the tortious conduct of a corporation can be personally liable for the tortious conduct of that corporation.
Is Said v Butt inapplicable?
[32] Mr Judd submits that Said v Butt is inapplicable to the present situation. He submits that Said v Butt was concerned with allegations that a managing director had procured a breach of contract between his company and the plaintiff, and that it is settled law that a director will not be liable for his company’s breach of contract (as the director is acting as agent for the company) unless the director has manifested an intention to be bound by it (where such intention is demonstrated, the director is personally a contracting party and may be personally liable for its breach). He submits the principle is based on a director’s agency and cannot be circumvented by employing the tort of procuring or inducing a breach of contract, and he refers to the extract from Company Law in New Zealand:12
Finally, a point should be made about liability for inducing breach of contract. It has long been held that an agent cannot be liable for this tort, even with intention, when it is a breach of the principal’s contract which he or she has induced. Otherwise, the promise would always have two defendants where a breach of contract was deliberately committed or counselled by an agent. This principle applies equally to companies and their agents. However, it must be remembered that it applies only where the contract is between the third person and the agent’s principal. It does not apply, for example, where the director of company A induces company B to breach its contract with a third person. [footnotes omitted]
[33] Mr Judd submits the tortious conspiracy involved the second defendants causing SWDC to induce breach a contract between two third persons, namely a contract between Mr Moeke and RIDL. It therefore follows that the Said v Butt principle is inapplicable because, according to the above extract from Company Law in New Zealand, it does not apply where the director of company A induces company B to breach its contract with a third person.
12 Company Law in New Zealand, ed. Watts, Hare and Campbell (2nd ed 2016, 3.13.3, p 90, 216 and 217).
Res judicata estoppel
[34] Mr Judd submits the defendants are estopped from denying liability in respect of the tortious conspiracy to defeat Mr Moeke’s interests by the doctrine of res judicata estoppel by virtue of the Liability Judgment. He submits that the Liability Judgment found SWDC liable for a tortious conspiracy to defeat Mr Moeke’s interests.
[35] Mr Judd submits that the second defendants are privies to the Liability Judgment relying on the judgment of the Court in Shiels v Blakeley:13
We conclude that there must be shown such a union or nexus, such a community or mutuality of interest, such an identity between a party to the first proceeding and the person claimed to be estopped in the subsequent proceeding, that to estop the latter will produce a fair and just result having regard to the purposes of the doctrine of estoppel and its effect on the party estopped.
[36] Mr Judd submits that the second defendants activated the tortious conspiracy against Mr Moeke by causing SWDC to enter into the Second Agreement and accordingly the second defendants are privies to the Liability Judgment decision against SWDC.
[37] Lastly, Mr Judd considers whether it is fair and just that the second defendants should be estopped from raising defences to the tortious conspiracy allegation. He submits that before Mr Moeke could be denied the benefit of estoppel, it would be necessary for the second defendants to advance a cogent case demonstrating that SWDC did not put before Associate Judge Sargisson in the Liability Judgment something which would, or at the very least might, have produced a different result, or that there was something special about the second defendants and their position which means they should not be held liable, despite the corporate entity they directed being itself liable. Mr Judd rejects the proposition that the principle in Said v Butt provides a valid argument, and submits that it is fair and just that the second defendants should be estopped. He submits that it would bring the administration of justice into disrepute if the issue were to be relitigated with a different result for SWDC’s “directing mind and will” than for SWDC itself.
13 Shiels v Blakeley, above n 6, at 268.
Result
[38] I am of the view that leave should be granted to the applicants to file notices of opposition to Mr Moeke’s summary judgment application and affidavits in support. The reasons for this view are as set out below.
Mr Machen’s application
[39] In my view, the correct interpretation of “date for the hearing the application” under r 12.9(3) should refer to the substantive hearing. Given that Mr Machen filed his notice of opposition and affidavit in support not later than three working days before this date, leave was not required for his application.
[40] However, if I am incorrect in this view, I continue on to consider whether there are grounds to grant Mr Machen’s leave application, along with the consideration of the leave applications of Mr Glucina and Mr van Rooijen.
Why leave should be granted
[41] In my view, as recognised in the Chappel Carriers,14 the overriding consideration as to whether leave should be granted is to avoid any miscarriage of justice. In my opinion, if leave is declined, there is a substantial risk of injustice to the applicants. The applicants were not given the opportunity to be heard in relation to the Liability Judgment, and the Liability Judgment did not consider the question of the individual liability of the applicants as elected members of SWDC. The applicants were not parties to the Liability Judgment proceedings, and the applicants had no ability to appeal that judgment. Accordingly, the applicants should have the opportunity to present their own defences against Mr Moeke’s allegations of tortious conspiracy.
[42] Further, the applicants have arguable substantial grounds of defence to the allegations made in Mr Moeke’s statement of claim:
14 Above, n 3.
(a)the fact that SWDC was found liable to Mr Moeke for tortious conspiracy in the Liability Judgment does not mean that liability should automatically extend to the applicants. As has been pointed out by both Mr Fisher and Mr Gurnick, no evidence has been adduced thus far by Mr Moeke of the state of mind of the applicants in relation to SWDC entering into the Second Agreement, and this evidence needs to be elucidated at trial. The Court in the Liability Judgment did not address the position of the applicants as members of SWDC;
(b)Mr Judd has argued that the applicants are liable as joint tortfeasors, principally on the basis that the applicants were the directing mind and will of SWDC and therefore, on the authority of Brooks v New Zealand Guardian Trust Co Limited and the other decisions cited at [31], would be liable as joint tortfeasors. In my view this is open to argument, as the decisions relating to a company and the liability of its directors as joint tortfeasors with their corporate principals could arguably be distinguished from the present situation. The applicants, as elected councillors of SWDC, do not have any financial interest in the transactions of SWDC, whereas the directors/shareholders do have an interest in the company’s business. In addition, in order for liability to be established, arguably the applicants must be guilty of tortious conduct themselves.15 As the states of mind of the applicants at the time SWDC entered into the Second Agreement has not been the subject of evidence, it is arguable whether or not they are guilty of the tort of conspiracy in their individual capacities;
(c)the applicability of Said v Butt is arguable. Mr Judd argues that Said v Butt has no application because the cause of action by Mr Moeke against the applicants (and the other second defendants) is causing SWDC to enter into the Second Agreement, not causing RIDL to breach the First Agreement. Mr Fisher and Mr Gurnick for the applicants submit that the applicants were acting in good faith within their
15 ADGA Systems International Ltd v Valcom Ltd, above n 11 at p 5.
authority, and the defence of Said v Butt should be available to them, and this defence was not available to SWDC in the Liability Judgment. In my view, at least for the purposes of this leave application, this point remains arguable and therefore should be left to the summary judgment hearing.
(d)Mr Judd has argued that the applicants are estopped from denying liability by operation of res judicata estoppel, by virtue of being privies to the Liability Judgment. In making this submission, Mr Judd relies largely on the authority of Shiels v Blakeley. However, I am of the view that it remains arguable by the applicants that they do not have the community of interest in the outcome of the Liability Judgment as is required to make them privies, on the basis that they are elected members of SWDC and did not have a financial interest in the outcome of the Liability Judgment proceedings;
(e)there is no obvious prejudice to Mr Moeke to allow the applicants to file their notices of opposition and affidavits in support. The applicants are adopting a similar position to the other second defendants. Clearly Mr Moeke has had adequate notice of the positions of the other second defendant. Therefore, there is no element of surprise or additional cost to Mr Moeke in allowing the applicants to proceed with their opposition, as he is already faced with dealing with similar arguments from the other second defendants in any event.
(f)In my view the delay by Mr Machen has been adequately explained in his affidavit and the delays by Mr Glucina and Mr van Rooijen have been adequately explained in their respective affidavits.
Orders
[43]I make the following orders:
(a)Leave is not required for Mr Machen to file his notice of opposition and an affidavit in support or, in the alternative, if that conclusion is wrong and leave is required, leave is granted pursuant to r 12.9 of the High Court Rules.
(b)Leave is granted to Mr Glucina and Mr van Rooijen to file notices of opposition and affidavits in support, pursuant to r 12.9 of the High Court Rules.
(c)Costs are reserved.
……………………………… Associate Judge Taylor