Mudajaya Corporations Berhad v Keng

[2019] NZHC 1693

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-281

[2019] NZHC 1693

IN THE MATTER

of the Reciprocal Enforcement of Judgments Act 1934

IN THE MATTER

of a Judgment of the High Court of Malaya at Shah Alam, Malaysia

BETWEEN

MUDAJAYA CORPORATIONS BERHAD

Applicant

AND

MICHAEL CHUA KHIAN KENG

First Respondent

TAN KAH LUAN

Second Respondent

CRUX INTERNATINAL LIMITED
Non-Party/Third Respondent

MIKE MOTORSPORT LIMITED
Fourth Respondent

MIKE RACING LIMITED

Fifth Respondent

Hearing:	On the papers
Counsel:	BD Gray QC, MHL Morrison, HMZ Ford and J Zwi for applicant RJ Hollyman QC and AJB Holmes for first to fifth respondents
Judgment:	18 July 2019

JUDGMENT OF FITZGERALD J

[On application for leave to appeal]

This judgment was delivered by me on 18 July 2019 at 4pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar ………………………………..  Date………………………….

Mudajaya Corporations Berhad v Chua [2019] NZHC 1693 [18 July 2019]

Introduction and background

[1] On 21 June 2019, I delivered a judgment in these proceedings granting the respondents’ application to rescind freezing and other orders made against them in February 2019 on a without notice basis (my Substantive Judgment).1 Save for the matter discussed at [3] below, I was satisfied there was a proper basis for the freezing orders to continue.

[2]    The applicant’s underlying claim to which the freezing orders relate is an impending application to register in New Zealand a default judgment obtained by it in Malaysia. The application for rescission of the freezing orders required me to determine, among other matters, whether the applicant has a good arguable case for registration, and whether the applicant would successfully resist any application to set aside registration.

[3]    The one aspect of the applicant’s claim on which I did not consider it had a good arguable case was whether the applicant could successfully defend an application to set aside registration of the Malaysian default judgment on the basis of s 6(1)(c) of the Reciprocal Enforcement of Judgments Act 1934 (the Act). Section 6(1)(c) requires the Court to set aside registration of a foreign judgment if the defendant to the foreign proceedings did not have notice of the proceedings in sufficient time to enable him or her to defend them and did not appear. I held that as a matter of law, s 6(1)(c) requires a defendant to have actual notice of the foreign proceedings (after they have been commenced and prior to judgment). I found that on the evidence before the Court on the application to rescind the freezing orders, there was not a tenable argument that the defendants to the Malaysian proceedings had such notice. I noted that while a (1996) High Court decision and a number of overseas courts (predominantly in Australia) have concluded s 6(1)(c) requires actual notice, it has not received any appellate court attention in this jurisdiction.

[4]    The applicant submits I erred in coming to the conclusions I did on s 6(1)(c) of the Act, both as a matter of fact and law. It accordingly seeks leave to appeal this aspect of my Substantive Judgment to the Court of Appeal. Given my Substantive

1      Mudajaya Corporation Berhad v Chua [2019] NZHC 1436.

Judgment was a determination of an interlocutory application, pursuant to s 56(3) of the Senior Courts Act 2016, the applicant requires leave to appeal.

[5]    The respondents oppose the granting of leave. The primary basis of their opposition is that the proposed appeal has no prospects of success.

[6]    Given the underlying matter concerns freezing orders, the current application needs to be dealt with urgently. Given this, the reasoning set out in this judgment is necessarily brief. While additional time may have permitted a more detailed exposition of my reasons, it would not have altered my conclusions.

Approach to applications for leave to appeal

[7]    The legal principles are not in dispute. In Finewood Upholstery Ltd v Vaughan, I stated the following:2

The requirement for leave to appeal should serve as a “filtering mechanism”, to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.

[8]    In Li v Chief Executive, Ministry of Business, Innovation and Employment, Palmer J identified the following factors for consideration on an application for leave to appeal:3

[21]      Pulling all these strands together, I consider the text, purpose, context and case law of s 56 suggests an application to appeal an interlocutory decision under s 56(3) is likely to be granted if:

(a)the appeal is not likely to be overtaken by the substantive hearing or cannot otherwise be considered as effectively in the context of an appeal of the substantive decision; or

(b)the appellant is likely to be prejudiced by a postponement to the substantive appeal; or

(c)the appeal may be dispositive of the case in law or as a practical matter; and

2      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679, at [13].

3      Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171, [2018] NZAR 1134, at [21]–[22].

(d)the arguments in the appeal are capable of bona fide and serious argument; and

(e)the issue on appeal concerns a decision of sufficient significance to the parties or a question of law or general principle of sufficient importance as to outweigh the cost and delay of the appeal.

[22]      More pithily, perhaps, an application to appeal an interlocutory decision under s 56(3) is likely to be granted where: (a) there is good reason to consider it before, or separately to, the substantive appeal; and (b) it is sufficiently meritorious in substance and relates to a sufficiently important issue as to outweigh the cost and delay of appeal.

[9]    In Ngai Te Hapu Inc v Bay of Plenty Regional Council, the Court of Appeal determined an application for leave to appeal, observing:4

We agree that leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.

Discussion

[10]   In my Substantive Judgment, I concluded it was not arguable that s 6(1)(c) of the Act permits something less than actual notice. As noted, however, this has not been the subject of appellate authority in this jurisdiction. I nevertheless accept counsel for the respondents’ submission that the absence of any appellate authority does not itself mean the point is capable of bona fide argument.

[11]   Given the approach taken in the authorities referred to in my Substantive Judgment, it could be said the proposed appeal has low prospects of success. Nevertheless, I do not consider the grounds of appeal are of a frivolous or vexatious nature which would otherwise weigh against leave being granted.5 Moreover, the applicant’s appeal will also address an alleged error in determining, in the context of r 32.2 of the High Court Rules, whether the applicant had a good arguable case that the respondents did not receive actual notice for the purposes of s 6(1)(c) of the Act. None of the authorities on s 6(1)(c) were dealt with in the context of an application for freezing orders, which requires only a tenable argument on those matters.

4      Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17].

5      Finewood Upholstery Ltd v Vaughan, above n 2, at [15](a).

[12]   Accordingly, while I do not consider the prospects of success on the appeal to be strong, nor do I consider them non-existent.

[13]   Turning to the other factors to be considered on an application for leave to appeal. An appeal of my Substantive Judgment will not be overtaken by the substantive hearing or could be considered effectively in the context of a substantive appeal. The issue in  this case is  whether there is a tenable argument  in  relation  to s 6(1)(c) of the Act. As the applicant submits, if leave to appeal is refused, the freezing orders will be rescinded. In my Substantive Judgment, I concluded there was a real risk of dissipation of assets. If the applicant were to proceed to the substantive hearing on registration and is not successful in registering the Malaysian judgment under the Act in the High Court, but succeeds on appeal, its success in the appeal may well be moot, because the assets against which the registered judgment would have been enforced may have been dissipated. The respondents do not challenge the applicant’s submissions on this point.

[14]   In terms of the second factor identified in Li v Chief Executive, Ministry of Business, Innovation and Employment, the applicant is likely to be prejudiced by a postponement to the substantive appeal, for the same reasons outlined above at [13]. Similarly, the appeal may be dispositive of the case in law or as a practical matter. If the Court of Appeal agrees with the conclusions reached in my Substantive Judgment, then the application to register that Malaysian judgment under the Act will effectively be disposed of.

[15]   Finally, the matter is of sufficient significance both to the applicant and more generally that I consider it appropriate for leave to be granted. The issue is plainly of real significance to the applicant, as counsel for the respondents accept. Further, I accept there is some significance to the point more generally, in that the notice requirements under s 6(1)(c) of the Act have not been directly considered in this jurisdiction, other than briefly in a High Court judgment some 20 years ago. Counsel for the respondents notes that the fact the issue has not arisen directly in this jurisdiction more frequently suggests it has not created any difficulties in the past. I see merit in that submission. But equally, as counsel for the applicant notes, New Zealand is an increasingly “international country”. It is therefore not fanciful to

suggest that applications for registration of foreign judgments will become more common. The requirements for registration are an aspect of New Zealand’s domestic law which has cross-border importance. It is of wider importance and benefit that these requirements are clear.

[16]   I accept that granting leave to appeal, coupled with any stay of enforcement of my Substantive Judgment that may be granted pending determination of the appeal (on which I express no view), will lead to further cost and delay from the respondents’ perspective. In my view, any direct prejudice to the respondents in this context is more appropriately addressed on the application to stay the Substantive Judgment pending the appeal. I simply observe that the proposed appeal is on a discrete topic and given the underlying context of freezing orders, the applicant/appellant would presumably seek a priority fixture (which this Court would support). In the context of this application, I do not consider any resulting delay in the substantive hearing in this matter is sufficient to warrant leave being declined.

Result

[17]The applicant’s application for leave to appeal is granted.

[18]   As the applicant has been successful, costs ought to follow the event in the ordinary way. A 2B basis would be appropriate. I do not certify for second counsel on the present application.

[19]   The parties are obviously encouraged to agree costs. If, despite what should be a straightforward exercise, they are unable to do so, the applicant may file and serve a costs memorandum within 10 working days of the date of this judgment. The respondents may file a memorandum in response within a further 5 working days. I will thereafter determine costs on the papers.

Fitzgerald J

Solicitors: Morrison Mallett, Auckland

Loo & Koo, Auckland (K Koo)