Pawson v Claridge HC Auckland CIV 2009-404-4367
[2010] NZHC 1298
•25 June 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-4367
BETWEEN PHILLIP MINTON PAWSON Plaintiff
ANDBRYAN GEORGE OWEN CLARIDGE First Defendant
ANDSUSAN KAY CLARIDGE Second Defendant
ANDARCHETYPE LIMITED Third Defendant
Hearing: 12 March 2010
Counsel: D Chisholm, R Enright and M Davenport for Plaintiff
M Dillon for Defendants
Judgment: 25 June 2010 at 12 pmat 12 pm
RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON (Summary Judgment Application)
This judgment was delivered by me on 25 June 2010 at 12 pm pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date ..........................
Solicitors:
Kirkland Enright, Auckland
Martelli McKegg Wells & Cormack, Auckland
PAWSON V CLARIDGE AND ORS HC AK CIV-2009-404-4367 25 June 2010
Introduction
[1] The plaintiff, Dr Phillip Pawson, applies for summary judgment to enforce a judgment of the US Federal Court for US$364,000 (equivalent at the time of judgment to NZ$629,975.77) together with interest and costs.
[2] The defendants oppose the application on grounds that, first, the US judgment is unenforceable in New Zealand as the US Court lacked jurisdiction to give judgment and, secondly, that the US judgment is unenforceable in New Zealand as it was obtained by fraud.
Background and pleadings
[3] The plaintiff is a barrister and medical doctor. Sometime prior to February
2004 he arrived at an idea for a book. It was to be on the health benefits of chocolate. He decided to engage the services of a ghost writer and it was to this end that he first approached Mrs Susan Claridge
[4] Mrs Claridge and her husband, Mr Bryan Claridge, are directors of and shareholders in Archetype Limited. All three are named as defendants. Archetype provides services that include research, writing and editing services. Mrs Claridge is a professional writer and is employed by Archetype as a researcher, writer and editor. Mr Claridge is a survey consultant for Global Survey Limited.
[5] There is a dispute as to whom of the defendants the plaintiff had business dealings with. The dispute is essentially this. The plaintiff claims that he had business dealings with “the defendants” who contracted to ghost write the book. This is expressed without qualification but without any greater degree of specificity. The inference is that it extends to Mr Claridge. The defendants contend that any business and contracted dealings were with Mrs Claridge and Archetype, and never extended to Mr Claridge.
[6] In any event, business relationships soured later that year. It became apparent that the contract was at an end. A copyright dispute ensued.
[7] The parties’ evidence as to the facts giving rise to and comprising this dispute differs markedly. The plaintiff was, at around this time, in at least some degree of communication with the US confectionery manufacturer Mars, Inc regarding opportunities for sponsorship and pre-purchase of the book. The defendants notified Mars of the copyright dispute and these opportunities, whatever they may have consisted of, evaporated.
[8] The plaintiff also alleges that he became aware at around this time that the defendants had published magazine articles on the health benefits of chocolate.
[9] The plaintiff contends that he fulfilled his obligations under the contract (to provide the requisite research material), that he co-authored the book, that their contract constituted a written assignment of contract, that a real probability of substantial economic advantage existed from his economic relationship with Mars, that the defendants induced the plaintiff to enter into a contract with them by fraud, and that the defendants acted “in concert” throughout.
[10] The defendants, on the other hand, say that the plaintiff failed to fulfil his obligations under the contract (and that 80% of the work was based on Mrs Claridge’s independent research from materials independently sourced), that Mrs Claridge authored the book, that the contract was silent as to copyright, that there was likely no economic relationship between the plaintiff and Mars, that there was patently no such inducement in respect of the contract and that Mr Claridge has never had any contractual relationship or any relevant involvement with the plaintiff.
[11] On 2 October 2006 the plaintiff commenced summary judgment proceedings against Mrs Claridge in this Court alleging copyright infringement. This was opposed by notice dated 20 October 2006. The application for summary judgment was ultimately withdrawn and the matter continued as a substantive proceeding.
[12] In late 2007 the plaintiff filed a second amended statement of claim. This alleged copyright infringement, misleading conduct and fraudulent representations under the Fair Trading Act 1986, misleading representations under the Contractual Remedies Act 1979, breach of contract, breach of confidential information, loss of
business chance, unjust enrichment, and equitable ownership of copyright and authorship against Mrs Claridge, Archetype and Mr Claridge.
[13] The New Zealand proceedings continued. They were significant and doubtless costly proceedings.
[14] On 9 July 2008, and while the New Zealand proceedings were ongoing, the plaintiff commenced proceedings in the US Federal Court arising out of the same facts, but this time alleging copyright infringement in the US as opposed to New Zealand, tortious interference with prospective economic advantage and fraud. The originating documents were served on the defendants in New Zealand.
[15] On 29 August the defendants filed a motion in the US proceeding requesting an extension of time. This motion assumes some importance in the present case and I set it out in full:
DEFENDANTS’ MOTION FOR AN EXTENSION OF TIME
The Summons in a Civil Action served on the defendants on Thursday the
14th Day of August 2008 at 79 Albert Road, Devenport, Auckland, New Zealand requires that an answer to the complaint be submitted within 20 days, exclusive of the day of service.
The Defendants seek an extension of time of 60 days until the 3rd day of November 2008 to submit an answer to the complaint on the following grounds:
1.The Defendant Archetype Limited is a New Zealand registered limited liability company with its offices in New Zealand and undertakes no work outside New Zealand territory.
2.The Defendants Susan Kay Claridge and Bryan George Owen Claridge are New Zealand citizens at all times resident in New Zealand.
3.None of the three defendants have previously engaged a US attorney for any purpose.
4.The Defendants’ New Zealand legal representatives, James and Wells Solicitors, cannot provide advice to the defendants on the action filed in the United States District Court, Central District of Illinois.
5.None of the defendants have any contacts, affiliations or associates in the United States of America and currently have no knowledge of
or any relationship with any US attorney that may represent them in responding to the complaint served on them in the Summons.
6.It would take some time to find a legal representative sufficiently versed in United States law that would be suitable to represent the Defendants’ interests in the action brought against them in the United States District Court, Central District of Illinois.
7.The physical distance between the United States District Court in the Central District of Illinois and the requirement that all papers be submitted by post rather than through electronic means (email) or facsimile introduces considerable delays of up to ten days to two weeks in submitting the required answer to the complaint to both the Plaintiff and the Clerk of the Court.
8.It is customary in New Zealand when providing time frames to specify whether the number of days listed are working days or calendar days. The time frame provide in the summons served is unclear on whether or not an answer to the complaint is required in
20 working days or 20 calendar days.
9.The Defendants request that an acknowledgement of receipt of this motion for an extension of time in which to answer the complaint be provided either by email to [email protected] or by facsimile to fax number 64 9 445 2967.
[16] The motion was unsigned. It was rejected by the US Court and struck from the file on 2 September 2008. On legal advice, the defendants took no further steps in the US proceedings.
[17] On 31 October the plaintiff filed a motion for entry of default. This was served on the defendants. The US Court granted the motion on 21 November, which was determinative as to liability. That left for determination the issue of damages. On 3 December the plaintiff requested a hearing date for final court default judgment (or that the Court render final adjudication on the papers) with an accompanying memorandum and affidavit evidence in support. These were served on the defendants. On 18 March 2009 the US Court held an evidentiary hearing in respect of damages. The defendants were sent notice of the hearing.
[18] On 8 April 2009 final judgment was entered against the defendants in the amount of US$150,000 for wilful copyright infringement, US$200,000 for intentional interference with business expectancy/fraud and US$14,000 in attorney’s fees. The plaintiff calculates that the total was equivalent to NZ$629,975.77 at the exchange rate prevailing at the time of judgment.
[19] Meanwhile, on 5 March 2009, the plaintiff discontinued the New Zealand proceedings.
[20] On 4 June 2009 the plaintiff’s then solicitors sent each of the defendants a copy of the US judgment and a demand for payment of the judgment sum. The defendants by their solicitors acknowledged this by letter of 15 June 2009, but declined to make payment. There followed the application to this Court for summary judgment to enforce the US judgment as a debt owed.
Enforcement of foreign judgments at common law
[21] It is common ground that the Reciprocal Enforcement of Judgments Act 1934 does not apply to the US judgment. The plaintiff seeks to enforce it at common law.
[22] At common law a judgment in personam of a foreign Court of competent jurisdiction is regarded as creating a debt owed by the judgment creditor to the judgment debtor on which an action may be brought in the High Court: Von Wyl v Engeler [1998] 3 NZLR 416 (CA) at 420.
[23] The Court of Appeal confirmed in Reeves v OneWorld Challenge LLC [2006]
2 NZLR 184 at [36] that in general terms an order for a foreign judgment will be enforceable in New Zealand subject to three basic requirements: the foreign Court must have had jurisdiction to give judgment, the foreign judgment must be for a definite sum of money, and the foreign judgment must be final and conclusive. It is accepted that the second and third of these requirements have been satisfied.
[24] There are limited exceptions. They are set out in Kemp v Kemp [1996] 2
NZLR 454 (HC) at 458:
The three exceptions which constitute the recognised grounds for impeachment are first that the judgment was obtained by fraud, secondly where its enforcement would be contrary to local public policy and thirdly that the proceedings in which the judgment was obtained were contrary to natural justice. For completeness it should also be noted that a foreign judgment is not generally enforceable if it relates to taxes or penalties.
[25] It is not in dispute that the second and third of these exceptions do not apply. It is the fraud exception, plus a challenge to the basic requirement as to jurisdiction, that the defendants rely on for their opposition to summary judgment.
[26] A common law action based on a foreign judgment is of course amenable to summary judgment: Inada v Wilson Neill Ltd (1993) 7 PRNZ 246 (HC) at 250. The legal principles applying to applications for summary judgment were succinctly expressed by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26]:
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ
84 (CA).
[27] To these I would add that on summary judgment the Court should be prepared to determine, on adequate argument, even difficult questions of law: International Ore & Fertilizer Corporation v East Coast Fertiliser Co Ltd [1987] 1
NZLR 9 (CA) at 16. However, the summary judgment procedure should not be allowed to stultify natural development of the law which otherwise would occur through normal trial process: BNZ v Maas-Geesteranus (1991) 4 PRNZ 689 (CA) at
697. In a similar vein, the Court of Appeal in Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298 in upholding a decision of a Master declining summary judgment, concluded at 317 that the claims were:
… so inherently dependent on evidence and full legal argument based upon such evidence relating to complex and uncertain questions of law that we do not consider an application under R 136(2) was at all appropriate.
[28] The issues for determination in the present case are whether, contrary to the defendants’ contention, the plaintiff can satisfy the Court that:
a) the US Court had jurisdiction to give judgment; and, if so, b) the foreign judgment is unimpeachable for fraud.
[29] During the course of the hearing, I raised with counsel whether there is another issue as to abuse of process arising from the plaintiff’s continuation of two substantially similar proceedings in the two jurisdictions. At my request further submissions were filed, but as will become apparent it is not necessary to deal with the issue further.
Jurisdiction
[30] The foreign court must have had jurisdiction as determined by the New Zealand rules of conflict of laws, rather than according to the foreign court’s own law: Von Wyl at 420. This point was forcefully put by Staughton LJ in Jet Holdings Inc v Patel [1990] 1 QB 335 (CA) at 344:
Where the objection to enforcement is based on jurisdiction … it is to my mind plain that the foreign court's decision on its own jurisdiction is neither conclusive nor relevant. If the foreign court had no jurisdiction in the eyes of English law, any conclusion it may have reached as to its own jurisdiction is of no value. To put it bluntly, if not vulgarly, the foreign court cannot haul itself up by its own bootstraps.
[31] The relevant New Zealand rules were stated by the Court of Appeal in Von
Wyl at 420 – 421:
Jurisdiction in personam exists where the debtor was present in the foreign country at the time the proceedings were instituted; or where the judgment debtor was plaintiff or counterclaimed in the foreign Court; or where, being defendant in the foreign Court, submitted to the jurisdiction of that Court by voluntarily appearing in the proceedings; or before the commencement of the proceedings agreed in respect of the subject-matter of the proceedings to submit to the jurisdiction of that Court or of the Courts of that country …; and an agreement to submit may take the form of an agreement to accept service at a designated address ….
(Emphasis added)
[32] The parties agree that in filing a motion for extension of time the defendants voluntarily appeared in the US proceedings. The question for this Court is whether, as it is submitted for the plaintiff, the defendants thereby submitted to the jurisdiction of the US Court.
[33] A similar question arose in Pickett (t/a Pickett Racing) v Pulman HC Auckland CIV-2003-404-5263, 11 June 2004. The plaintiff in that case sought summary judgment on a foreign judgment. The defendant had taken no action in the proceedings to which the foreign judgment directly related but made three unsuccessful attempts to have it set aside subsequently. The question for the Court was whether, at common law, by taking those steps he submitted voluntarily to the jurisdiction of the foreign Court for the purposes of enforcement of the foreign judgment in New Zealand.
[34] Associate Judge Lang summarised the authorities as follows:
[24] Several prominent commentators suggest that, where a party appears in a foreign Court to challenge its jurisdiction, that appearance will not be treated as a voluntary submission to its jurisdiction. Mr Morley referred me to the following passage from Halsbury's Laws of England, Conflict of Laws, Vol 8(1), para 1001:
The defendant may also be held to have submitted where he voluntarily appeared in the foreign action. But if the purpose of that appearance was any or all of the following, namely:
(1) to contest the jurisdiction of the Court;
(2) to seek dismissal or stay of the proceedings on the ground that the dispute should be submitted to arbitration or to the determination of the Courts of another country; or ...
then the appearance will not amount to a submission. It appears that it is the purpose of the appearance, rather than the form which it actually took, which is the determining factor.
[25] In Laws NZ (supra) the learned authors point out (at para 67, note 4) that an appearance made to persuade the foreign court to exercise a discretion not to accept jurisdiction may constitute a submission to the jurisdiction of that court. They suggest, however, that there are "strong arguments that any form of challenge to the jurisdiction of a foreign court should not be recognised as a submission to the jurisdiction of that court."
[26] In England, the law is not finally settled on this point. In Re Dulles' Settlement (No 2) [1951] Ch 842 Denning L.J. (as he then was) was adamant
that an appearance to protest jurisdiction would not amount to a submission to the foreign court's jurisdiction. He said (at p 850):
I cannot see how anyone can fairly say that a man has voluntarily submitted to the jurisdiction of a Court, when he has all the time been vigorously protesting that it has no jurisdiction. If he does nothing and lets judgment go against him in default of appearance, he clearly does not submit to the jurisdiction. What difference in principle does it make, if he does not merely do nothing, but actually goes to the court and protests that it has no jurisdiction? I can see no distinction at all.
[27] The judgment of the Court of Appeal in Dulles has been credited with freeing the courts from the shackles of the earlier decision of the English Court of Appeal in Harris v Taylor [1915] 2 K.B. 580. Passages from the judgments in Harris v Taylor suggested that a defendant who appeared in a foreign court solely to protest against the jurisdiction of that court to hear the case thereby submitted to the jurisdiction of the Court: see the judgments of Buckley LJ at p 587, Pickford LJ at pp 589-590 and Bankes LT at p 591.
[28] In Henry v Geoprosco International Ltd [1976] 1 QB 726 the Court of Appeal re-examined comprehensively the bases upon which both Harris v Taylor and Dulles had been decided. It concluded (at pp 742-746) that the Court of Appeal in Dulles had wrongly distinguished Harris v Taylor and that that case continued to bind the Court of Appeal. The Court set out (at pp
746-747) the propositions that it considered were established by the earlier authorities.
[29] In particular, the Court concluded (at p 747) that the English Courts "will enforce the judgment of a foreign Court against a defendant over whom that Court has jurisdiction by its own local law (even though it does not possess such jurisdiction according to the English rules of conflict of laws), if that defendant voluntarily appears before the foreign Court to invite that Court in its discretion not to exercise the jurisdiction which it has under its own local law".
[30] The Court noted, however, (at p 747) that it has never been authoritatively decided whether the judgment of the foreign Court will be enforced where the defendant appears in the foreign Court solely to protest against the jurisdiction of that Court (whether or not by its own local law that Court possesses such jurisdiction) and the protest is unsuccessful, resulting in judgment being entered against the defendant.
[35] It is not wholly correct to state that the law in England is not finally settled on this point. Section 33 of the Civil Jurisdiction and Judgments Act 1982 (UK) provides that:
33 Certain steps not to amount to submission to jurisdiction of overseas court
(1) For the purposes of determining whether a judgment given by a court of an overseas country should be recognised or enforced in England and Wales or Northern Ireland, the person against whom the judgment was given shall
not be regarded as having submitted to the jurisdiction of the court by reason only of the fact that he appeared (conditionally or otherwise) in the proceedings for all or any one or more of the following purposes, namely—
(a) to contest the jurisdiction of the court;
…
[36] A similar situation prevails in Australia by virtue of the Foreign Judgments
Act 1991 (Cth):
11 Judgments to which Part 2 does not apply
For the purposes of proceedings brought in Australia for the recovery of an amount payable under a judgment given in an action in personam by a court of a country, not being a judgment to which Part 2 applies, the court is not taken to have had jurisdiction to give the judgment merely because the judgment debtor:
(a) entered an appearance in proceedings in the court; or
(b) participated in proceedings in the court only to such extent as was necessary;
for the purpose only of one or more of the following:
…
(d) contesting the jurisdiction of the court;
(e) inviting the court in its discretion not to exercise its jurisdiction in the proceedings.
[37] No such provision applies to the present case. The above legislation was prompted by the unsatisfactory position at common law that, absent an equivalent legislative change, might at least arguably be said to prevail in New Zealand. That position is discussed by the learned authors of James Fawcett and Janeen Carruthers Cheshire, North & Fawcett Private International Law (14th ed, Oxford University Press, New York, 2008) at 522 – 523:
The case that for many years caused difficulty was where a defendant entered an appearance with the sole object of protesting against the jurisdiction of the foreign court.
At common law an illogical distinction was drawn between a protest as to the existence of jurisdiction and as to the exercise of a discretion in relation to jurisdiction. In Henry v Geoprosco International Ltd:
The defendant, a company registered in Jersey, appeared before a court in Alberta and argued, unsuccessfully, that service out of the jurisdiction should be set aside, on the ground, inter alia, that the court was not the forum conveniens.
When it came to enforcement of the Alberta judgment in England, the Court of Appeal held that an appearance, such as this, to ask the court to use its discretion not to exercise its jurisdiction constituted submission. However, the court left open the question of whether an appearance solely to protest against the existence of the jurisdiction of a foreign court constituted submission. Not only was the above distinction unjustifiable, but also its application led to the absurd result that, in certain circumstances, a defendant who appeared before a foreign court to protest that it had no jurisdiction over him would be deemed to have submitted to that court’s jurisdiction.
The old law has been replaced by section 33 of the Civil Jurisdiction and
Judgments Act 1982, which is designed to get rid of this absurdity ….
[38] In Pickett, Associate Judge Lang assessed whether the defendant’s appearances were, as he contended, solely to protest against the jurisdiction of the foreign Court. He held that they were not. One of those appearances involved an application for an order that default judgment be vacated and leave granted to file and serve an answer, on grounds that included some apparently directed towards the issue of jurisdiction, but others making clear that he was seeking not only to vacate judgment but also to file a document. “If Mr Pulman’s application was a protest against the Michigan court’s jurisdiction, it is difficult to see why he would want to file any further documents in that proceeding” (at [37]).
[39] The facts of Pickett may be distinguished. The application in question was clearly referable to the merits of that case. For example, it contradicted statements made in the complaint as to the relationship between the parties. The defendants’ motion in this case was for an extension of time the purpose for which was to seek legal advice without losing the opportunity to file an answer. It is not referable to the merits of the case.
[40] A possible qualification, and one that counsel for the plaintiff has invited me to accept, is the reference to an answer, which of course assumed some importance in Pickett. Counsel for the plaintiff explained that an answer is the defendants’ first substantive pleading. It is the equivalent of a statement of defence. It may be contrasted with an assertion of a lack of personal jurisdiction by motion, which is to be made before an answer. This is the equivalent of an appearance and objection to
jurisdiction. It appears, however, that in each jurisdiction a defendant may object to jurisdiction in their substantive pleading (whether an answer or statement of defence) either as a standalone ground or with submissions as to the merits in the alternative. I am content to proceed on the basis, then, that the motion was not inconsistent with a protest to jurisdiction.
[41] This was not, however, the test applied in Pickett. I do not think it can be said that the defendants’ appearance was “solely to protest against the jurisdiction of that Court”. It made, for one thing, no reference to a protest to jurisdiction. And even if it was confined solely thereto it is less than clear whether under the common law prior to the enactment of s 33 of the Civil Jurisdiction and Judgments Act 1982 (UK) (given no such legislative provision was made here) it might not have still constituted a submission, illogical as that might be said to be, as a corollary of the reasoning in Henry v Geoprosco International Ltd [1976] 1 QB 726 (CA).
[42] The position is further complicated by the leading New Zealand authority on submission to jurisdiction, Von Wyl. The Court of Appeal in that case stated at 421 that:
The principle underlying the concept of submission to the jurisdiction is that a person who would not otherwise be subject to the jurisdiction of the Court may preclude himself or herself by his or her own conduct from objecting to the jurisdiction and thus giving the Court an authority over that person which, but for that submission, it would not possess …. Accordingly, the onus is on the party seeking to enforce the foreign judgment to establish that the non-resident accepted the jurisdiction of the foreign Court to determine the proceeding. It follows that a person who appears merely to contest the jurisdiction of the Court does not thereby submit:
“In order to establish that the defendant has, by his conduct in the proceedings, submitted or waived his objection to the jurisdiction, it must be shown that he has taken some step which is only necessary or only useful if the objection has been waived or never been entertained at all'' ….
[43] I am prepared to accept that on the test espoused in Von Wyl and the analysis above the defendants may not be said to have, by their conduct in the proceedings, submitted to the jurisdiction of the US Court. Their motion for an extension of time was not only useful had they never entertained an objection to jurisdiction. The grounds on which the motion was sought are to the essential effect that the
defendants required time to obtain legal advice. The defendants’ evidence is that the letter was written in the absence of legal advice and was not intended to operate as a submission to jurisdiction. I do not express any view on the relevance of that evidence to this enquiry, but do accept that the motion itself raises a clear inference that it was not intended to be a submission to jurisdiction. The motion was made to obtain legal advice and that advice was plainly being sought before a decision could be made on what to do with respect to an answer. Such a decision would inevitably involve consideration on whether to submit to or to resist jurisdiction.
[44] This is not, however, the end of the matter, as I ought not to overlook two factors. First, the Court of Appeal in Von Wyl adopted the above test from Lawrence Collins (ed) Dicey and Morris on the Conflict of Laws (12th ed, Sweet & Maxwell, London, 1993) vol 1 at 311 whose authors add at 312 that:
The clear trend of the modern authorities is that the defendant will not be regarded as having submitted by making an application in the proceedings, provided that he has specifically reserved his objection to the jurisdiction.
(Emphasis added)
[45] It appears that this is also the situation in Australia. See Martin Davies, Andrew Bell and Paul Le Gay Brereton Nygh’s Conflict of Laws in Australia (8th ed, LexisNexis, 2010) at 811: “The mere filing of an unqualified appearance amounts to a submission” citing Victorian Phillip Stephan Photo Litho Co v Davies (1890) 11
LR (NSW) 257 (though comparing Von Wyl). As counsel for the plaintiff has been at pains to emphasise, the defendants did not, in their motion for an extension of time, specifically reserve their objection to jurisdiction. It arguably matters not that this was precisely because of their lacking legal advice, extra time for which constituted the ground for the motion.
[46] Secondly, and perhaps more fundamentally, the test adopted in Von Wyl governs whether a voluntary appearance in an English proceeding constitutes a submission to that jurisdiction. It appears in a chapter entitled “Jurisdiction in Actions in Personam” which addresses the jurisdiction of the English courts. It is drawn from Rein v Stein (1892) 66 LT 469 at 471 as it appears in Williams & Glyn’s Bank Plc v Astro Dinamico Compania Naviera SA [1984] 1 WLR 438 (HL) at 444.
Those cases concerned submission to the jurisdiction of the English courts. It is a later chapter entitled “Foreign Judgments” that, at 472, discusses the jurisdiction in personam of foreign courts at common law for the purposes of their domestic enforcement. It is the latter with which this Court is presently concerned (and indeed with which the Court of Appeal in Von Wyl was concerned). The two are at least conceptually distinct.
[47] I would therefore regard Von Wyl as perhaps not constituting an accurate statement of the position at, at least, English common law, though I do not take issue with the merit in the approach. If it operates to bind this Court on the issue with which I am faced, and it likely does, then arguably it ought to be read with the attendant qualification that an objection to jurisdiction be specifically reserved.
[48] The law is, to adopt the words of the Court of Appeal in Westpac Banking Corp, complex and uncertain, and I have not had the advantage of full legal argument on these points. The common law is in much need of clarification. Legislative change to ameliorate some of the common law’s absurdities has not occurred in New Zealand as it has in England and Australia. That it not to say that the common law may not be changed, indeed it is in patent need of it, but not by this Court (particularly in light of the ambiguous import of Von Wyl) and not on summary judgment. Were it necessary for the disposition of this case to determine this point on summary judgment I would, on this basis, not be inclined to. In the event it is not. For reasons I turn to presently I find that the plaintiff has failed to satisfy the Court that the defendants do not have a defence on the ground that the judgment was fraudulently obtained and I dispose of the plaintiff’s application for summary judgment on this primary ground.
Fraud
[49] Counsel for the defendants submits that the defendants have a defence to the plaintiff’s action on the US judgment on the ground that the US judgment was obtained by fraud.
[50] In an action on a foreign judgment the foreign judgment cannot be re- examined on its merits: Godard v Gray (1870) LR 6 QB 139. It is conclusive as to any matter adjudicated upon and cannot not be impeached for any error either of fact or of law. See, generally, Lawrence Collins (ed) Dicey, Morris and Collins on the Conflict of Laws (14th ed, Sweet & Maxwell, London, 2006) vol 1 at 14R-109.
[51] This rule is subject to the “special defence” that the foreign judgment was obtained by fraud: Owens Bank Ltd v Bracco [1992] 2 AC 443 (HL) at 484. A foreign judgment will not be enforced in New Zealand if it was obtained by fraud. The fraud may be either fraud on the part of the party in whose favour the judgment is given (as is alleged here) or fraud on the part of the Court pronouncing the judgment. See, generally, Dicey, Morris and Collins at 14R-127 and SHC Corporation v O’Brien (1991) 3 PRNZ 1 (HC).
[52] The defence may be raised even though that may involve retrying on the same evidence questions already adjudicated on by the foreign court: Abouloff v Oppenheimer & Co (1882) 10 QBD 295 (CA) and Vadala v Lawes (1890) 25 QBD
310 (CA) as expressed in Svirskis v Gibson [1977] 2 NZLR 4 (CA) at 9. It is not only not essential that the facts supporting the allegations of fraud should have been discovered since the foreign judgment, but also immaterial that the defendants may not have defended the action in the foreign jurisdiction: Syal v Heyward [1948] 2 KB
443 (CA) as expressed in Svirskis at 9.
[53] The scope the defence accords the defendant is considerable as is evident in the following per Staughton LJ in Jet Holdings Inc v Patel [1990] 1 QB 335 at 344:
The defendant may have been served in the foreign country, entered an appearance, given evidence, been disbelieved, and had judgment entered against him. If he asserts that the plaintiff’s claim and evidence were fraudulent that issue must be tried all over again in enforcement proceedings. The lesson for the plaintiff is that he should in the first place bring his action where he expects to be able to enforce a judgment.
[54] Needless to say, this approach stands in marked contrast to the approach the New Zealand courts adopt to applications to set aside domestic judgments on the grounds that they were obtained by fraud. Stringent requirements attach to such applications to give effect to the principle of finality of litigation. Those
requirements were definitively addressed by the Court of Appeal in Shannon v Shannon (2005) 17 PRNZ 587. Before such an application will be allowed to proceed there must be (see [104], [119] and [124]):
a) evidence newly discovered since the trial;
b)evidence that could not have been found by the time of trial by exercise of reasonable diligence (subject to a discretion of the Court to allow actions to proceed though they do not meet this test, see [125]);
c) evidence so material that its production at the trial would probably have affected the outcome; and, when the fraud charged consists of perjury, then
d)the evidence must be so strong that it would reasonably be expected to be decisive at a rehearing, and if unanswered must have that result.
[55] The common law approach to the defence of fraud to an action on a foreign judgment has been subject to what the Privy Council in Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44 at 48 termed “widespread and long standing academic criticism”. Stuart-Smith LJ in House of Spring Gardens Ltd v Waite [1991] 1 QB 241 (CA) at 251 observes that the cases “were decided at a time when our courts paid scant regard to the jurisprudence of other countries”. I refer also to J G Collier, “Fraud still unravels foreign judgments” (1992) Cambridge Law Journal
441. Collier describes the rule as to fraud as being universally condemned by writers and having no real justification; a chauvinistic rule continuing to disfigure the law.
[56] For the purposes of this application, however, I need only observe that, disfiguring or not, the rule continues to apply. Abouloff, Vadala and Syal are authorities that have been repeatedly upheld and cannot but be said to continue to represent the common law as it must be applied by this Court in New Zealand. This approach was most recently upheld by the Court of Appeal in Jet Holdings and by the House of Lords, albeit with some reluctance, in Owens Bank Ltd v Bracco. It
was applied in New Zealand by the Court of Appeal in Svirskis. I proceed on that basis.
[57] I turn then to the notion of fraud. Counsel for the defendants invited me to accept the following statement of law as applying to fraud in this context (per Viscount Dilhorne in DPP v Humphrys [1977] AC 1 (HL) at 21 quoting with approval Spencer Bower and Turner, Res Judicata (2nd ed, 1969) at 323):
The fraud necessary to destroy a prima facie case of estoppel by res judicata includes every variety of mala fides and mala praxis whereby one of the parties misleads and deceives the judicial tribunal.
[58] To that statement, Staughton LJ in Jet Holdings said at 347 that:
Although that was said in the context of estoppel by res judicata, I cannot see that it is any the less applicable in the context of enforcement of a foreign judgment; nor apparently did Viscount Dilhorne, since in that passage he also cited Abouloff v. Oppenheimer & Co., 10 Q.B.D. 295 and Vadala v. Lawes, 25 Q.B.D. 310.
[59] I respectfully concur, as did Master Williams in SHC Corporation (in the context of an application for summary judgment on a foreign judgment at common law).
[60] Counsel presented me with not wholly consistent authorities as to the evidentiary foundation by reference to which a Court may properly recognise a defence of fraud as genuinely arguable. Some of these authorities were decided in the context of applications to set aside registration of foreign judgments under the Reciprocal Enforcement of Foreign Judgments Act 1934. Some were decided at common law. The thresholds at which the Courts have determined that allegations of fraud are worthy of trial have varied. They have ranged from feelings of unease to requiring an evidential foundation sufficient to establish a prima facie or arguable case. It is unnecessary for me to adopt one or other of these for the purposes of this application. This is because, as will become apparent, I am satisfied the latter threshold is met. But counsel raised them in argument and I address them here.
[61] The leading decision of the Court of Appeal in Svirskis provides an appropriate starting point (at 10):
Section 6(1)(d) of the New Zealand Act of 1934, which corresponds to s
4(1)(a)(iv) of the English Act of 1933, provides that, on an application in that behalf duly made by any party against whom a registered judgment may
be enforced, the registration shall be set aside if the Supreme Court is
satisfied that the judgment was obtained by fraud. We do not think we would be justified in limiting this mandatory provision by imposing on it any gloss requiring new or newly discovered evidence as an essential condition of jurisdiction. On the other hand, it would be only in the rarest of cases, if ever, that the court would be satisfied on contested affidavit evidence that fraud had been proved. The power under r 23 to direct an issue is discretionary. In deciding whether a case strong enough to justify such a direction has been made out, the court would be entitled, we think, to have regard to all the circumstances of the case: including whether the defendant is merely seeking to try again on substantially the same evidence issues already adjudicated on in the overseas court; and whether the defendant deliberately refrained from appearing in that court. If he did so refrain, another relevant consideration must be what he should have foreseen as the probable consequences. If a defendant had adequate notice of the nature of the evidence likely to be given by the plaintiff yet did not avail himself of the opportunity of contradicting it, he may have difficulty in persuading the New Zealand court to exercise the discretion in his favour. In Syal v Heyward [1948] 2 KB 443, 450; [1948] 2 All ER 576, 580, it was said that in proceedings under the Act of 1933 the court is not bound to direct an issue and should not do so in the case of an application based on alleged fraud unless satisfied that a prima facie case of fraud on the foreign court is established. We do not regard this general statement as proposing any mechanical or rigid test or as excluding the kind of considerations just mentioned.
[62] On the evidence in that case, the Court determined at 11 that:
Considering the various points on which we have touched, however, we
cannot avoid the conclusion that an issue should be directed. Perhaps an
affidavit by the plaintiff in reply to the defendant's charges could have dispelled uneasiness; but there has been none and in these circumstances the plaintiff should not be permitted to avoid an issue merely by pointing to what happened and what was deposed to in the Queensland action.
[63]
Two relevant decisions of the High Court have applied this approach.
The
first is James Meikle Pty Ltd v Noakes HC Auckland A823/90, 25 July 1983. Prichard J states at 8 – 9 that:
The judgment of the Court of Appeal in Svirskis v. Gibson (1977) 2
N.Z.L.R. 4 makes it clear that to succeed on this ground the judgment debtor is not necessarily required to show a prima facie case of fraud – the whole
circumstances must be looked at and if the Court is then left with a feeling of
uneasiness as to the manner in which, or the evidence on which, judgment in the original Court was obtained, this is sufficient to call for a direction that
an issue be tried under R.23(2) of the Reciprocal Enforcement of
Judgements Rules 1935. I have no such qualms in the present case.
[64] The second is Richards v Cogswell (1995) 8 PRNZ 383. Barker J interprets the two cases above at 386:
As to the meaning of the word “fraud”. In the leading New Zealand case Svirskis v Gibson [1977] 2 NZLR 4, the Court of Appeal set out guidelines regarding the approach to be taken to setting aside registration generally and specifically on the ground that judgment had been obtained by “fraud”. In considering whether to exercise discretion under r 745 which gives the option of directing an issue between the judgment debtor and the judgment creditor to be stated and tried, the Court must have regard to all the circumstances, such as whether the defendant is merely seeking a retrial on the same evidence as that adjudicated upon by the foreign Court and whether the defendant deliberately refrained from appearing in the foreign Court; it is not essential that a prima facie case of fraud be shown.
Prichard J in James Meikle Pty Ltd v Noakes unreported, 25 July 1983, HC Auckland A823/80 indicated that the whole circumstances must be looked at and “if the Court is then left with a feeling of uneasiness as to the manner in which, or the evidence on which judgment in the original Court was obtained, this is sufficient to call for a direction that an issue be tried under r
23(2) of the Reciprocal Enforcement of Judgments Rules 1935.” It is clear from 31 Halsbury, para 1059 that fraud does not necessarily have the
pejorative connotation of wilful deception.
[65] His Honour then holds that:
The statement of claim appears to have been drawn negligently, in that it did not reflect what is now agreed to be the proper basis of the parties' dealings; the word “fraud” could cover the situation such as the present where the Judge in Queensland was asked to give judgment on the basis of a statement of claim which alleged facts which really bore little reality to the dealings between the parties. In my view, if the plaintiff elected to proceed by way of a statement of claim which did not reflect the true situation and which contained clearly demonstrated inaccuracies, then the plaintiff is not entitled to hold a judgment given in good faith by a Judge on the basis of that inaccurate statement of claim.
The plaintiff has to bear the consequence of not preparing proper pleadings. The fact that the defendant did nothing is not relevant, whether his excuse is appropriate or not. The advice that was initially tendered the defendant both in Taupo and in Queensland does not seem to have been well-grounded; certainly there was not the research put into the defendant's cause as has now been invested on his behalf by Mr Orsborn as counsel.
In the words of Prichard J, I have the feeling of “uneasiness” as to the manner in which the judgment was obtained.
[66] Counsel for the plaintiff has sought to distinguish Svirskis, and by necessary implication James Meikle and Richards, as having been decided under the statutory regime rather than at common law. Strictly, of course, this is correct. They arise
under the Reciprocal Enforcement of Judgments Act 1934. Section 6 of that Act provides that:
6 Cases in which registered judgments must, or may, be set aside
(1) On an application in that behalf duly made by any party against whom a registered judgment may be enforced, the registration of the judgment shall be set aside if the High Court is satisfied—
…
(d) That the judgment was obtained by fraud
[67] Rule 23.30 of the High Court Rules applies to applications under that Act and provides that:
23.20 Application to set aside registration
(1) An application to set aside the registration of a foreign judgment must be made by interlocutory application.
(2) On any such application, the court may direct that an issue between the judgment creditor and the judgment debtor must be stated and tried and may give such directions in relation to the trial of the issue as may be necessary.
[68] The rule is substantially unchanged from r 745 of the High Court Rules 1993 (with which this Court was concerned in James Meikle and Richards) and also r 23 of the Rules of Court under the Reciprocal Enforcement of Judgments Act 1934 (with which the Court of Appeal was concerned in Svirskis).
[69] I incline, nevertheless, to the view that the defence of fraud to an action on a foreign judgment at common law is in terms identical to the defence of fraud by which a judgment registered pursuant to the Reciprocal Enforcement of Judgments Act 1934 may be set aside under s 6(1)(d) of that Act. That is the approach taken in England in respect of the defence at common law, under s 9(2)(d) of the Administration of Justice Act 1920 (UK) and under s 4(1)(a)(iv) of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) (on which our s 6(1)(d) is based): Owens Bank Ltd v Bracco at 487 and 488. See also Halsbury’s Laws of
England (4th ed, LexisNexis, 2003) vol 8(3) at [176] n 8. It is also the approach
implicit in the Court of Appeal’s reasoning in Svirskis.
[70] That does not mean, however, that the thresholds at which a Court will regard a defence of fraud as worthy of trial may not vary between the two. The grounds on which a Court, on an application to set aside the registration of a foreign judgment, may in its discretion direct that an issue be stated and tried differ in some respects from, say, the grounds on which a Court may decline summary judgment where a plaintiff has failed to satisfy the Court that a foreign judgment is unimpeachable for fraud. I do not, for example, consider that circumstances such as whether a defendant is merely seeking to try again on substantially the same evidence issues already adjudicated on in the overseas court properly go the latter inquiry in light of Abouloff and Vadala (though they may go to whether raising the defence may in itself constitute an abuse of process, a point on which I conclude). Conversely, I am not sure that a “feeling of uneasiness” is sufficient to ground an arguable defence so as to resist summary judgment. A more cautious approach, requiring an evidential foundation for a defence that is at least arguable, would be consistent with the established principles attaching to summary judgment.
[71] This more cautious approach is consistent with that taken by Associate Judge
Faire in Vanhoy v Howick Engineering Ltd HC Auckland CIV-2004-404-4428, 23
August 2005. Vanhoy concerned, relevantly, an application to strike out a defence of fraud to an action on a foreign judgment at common law. Associate Judge Faire first quotes the following from Paper Reclaim Ltd v Aotearoa International Ltd HC Auckland CIV-2004-404-4728, 14 February 2005 per Harrison J:
[17] It has been said by many Judges, and on many occasions, that a claim based on fraud is extremely serious. It must be properly particularised and proven to a high standard, commensurate with the severity of the allegation. In the context of an attempt to impeach a judgment on the ground of fraud, the same principles apply - "particulars of the fraud must be exactly given" (Jonesco v Beard (supra) per Lord Buckmaster at 300, applied in Ongley v Brdjanovic [1975] 2 NZLR 242 by Beattie J at 244, and in Shannon v Shannon [2002] 3 NZLR 567 by Potter J at para 51). It follows, in my judgment, that when filing an application to set aside a judgment a plaintiff alleging fraud must have an evidential foundation sufficient to establish a prima facie or arguable case (cf. Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44 (PC) at 51C). The probative value and admissibility of its evidence must be apparent at that stage.
[18] There is no room for a provisional or equivocal claim, based on suspicion, to be bolstered by fishing expeditions through the problematical process of interrogatories and discovery.
[72] Associate Judge Faire then states that:
[25] The principle expressed in the cases referred to clearly applies, but subject to one qualification. That reservation relates to the distinction which applies when a judgment is attacked on the ground of fraud where, on the one hand, the judgment is a domestic judgment and, on the other, it is a foreign judgment. In Abouloff v Oppenheimer & Co (1882) 10 QBD 295 at
306 the Court of Appeal held that where a foreign judgment was obtained by the fraud of a party to the suit in the foreign court it could not be afterwards be enforced by that party in an action brought in an English Court even although the question whether the fraud had been perpetrated was investigated in the foreign court and it was there decided that the fraud had not been committed.
[26] The general proposition was upheld in Vadala v Lawes (1890) 25 QBD
310 at 316-317 and in Svirskis v Gibson [1977] 2 NZLR 4 at 9 (CA).
[27] In respect of the general principles applicable on a strike out of a pleading where fraud is involved and it involves an attack on a foreign judgment, there is a need to provide that degree of particularisation that was referred to by Harrison J in Paper Reclaim Ltd v Aotearoa International Ltd and to which I have made reference at [24] of this judgment. A party is not required to plead further that the attack on the evidence could not be made at the time the judgment was given in the foreign court, having regard to the authorities that I have just referred to.
[73] I accept, analogously, that on an application for summary judgment on a foreign judgment a plaintiff will satisfy the Court that the defendant has no defence if there lacks an evidential foundation sufficient to establish a prima facie or arguable case. It is, of course, for the plaintiff to establish the absence of this. This approach is in contrast to that adopted in Svirskis, James Meikle and Richards, though, as I earlier expressed, these cases may perhaps be distinguished as concerning the Court’s discretion to direct an issue under r 23.20(2) of the High Court Rules. I regard it as consistent with the more cautious reasoning in Vanhoy.
[74] In the event, it is not necessary to reach a firm conclusion as to which approach is to be preferred in the context of an application for summary judgment on a foreign judgment sought to be enforced at common law. That is because, as will become apparent, I am both left with a feeling of profound uneasiness by the defendants’ evidence and regard it as laying an evidential foundation for a prima facie or arguable case.
[75] I turn now to the alleged fraud and the evidence on which the defendants seek to ground it.
The alleged fraud
[76] The relevant portion of the defendants’ notice of opposition is as follows:
3.2 The judgment is unenforceable against the defendants in New Zealand because it was obtained by fraud in that in obtaining the judgment against the defendants in the US Court, the plaintiff gave false and fraudulent evidence/made false and fraudulent representations and generally mislead the US Court including (but not limited to):
3.2.1 That the plaintiff is resident in the State of Illinois.
3.2.2 That the first defendant (“Bryan”) was equally involved in the events that formed the basis of the litigation.
3.2.3 That the plaintiff had fulfilled all his obligations under the terms of the agreement dated 26 February 2004 between the third defendant, (“Archetype”) and the plaintiff (“the Contract”).
3.2.4 That the plaintiff co-authored all the chapters written by the second defendant (“Sue”) by writing some of the text himself and by providing outlines, descriptions and other assistance to the defendants.
3.2.5 That the plaintiff was at all material times the owner of the copyright of the text and that this was agreed in advance with the defendants.
3.2.6 That the defendants wilfully infringed upon the registered
United States copyright of the plaintiff.
3.2.7 That the defendants knew of the alleged prospective economic advantage and economic relationship between the plaintiff and Mars Inc when the defendants interfered with that relationship.
3.2.8 That the defendants had been appraised of the relationship between the plaintiff and Mars Inc by the plaintiff as it was necessary to aid the defendants in writing text potentially acceptable to Mars Inc.
3.2.9 That it was the defendants’ knowledge of the economic relationship that allowed the defendants to contact the specific executive at Mars Inc with whom the plaintiff had been working.
3.2.10 That the plaintiff had told Sue specifically who he had been dealing with at Mars Inc.
3.2.11 That the defendants acted intentionally to interfere with the economic relationship of the plaintiff and Mars Inc.
3.2.12 That the defendants used their knowledge of the field of ghost writing and publishing in an attempt to defraud the plaintiff by deceptive practices regarding the contract and its interpretation.
3.2.13 That the defendants drafted a written contract that varied from the verbal agreement by allowing them to revert from a pre-agreed package price to a per hour fee under certain circumstances.
3.2.14 That the defendants did not initial the changes on their own copy because they said they wanted to redraft the contract so that it would be neater and could then be re-executed.
3.2.15 That the defendants denied that they agreed to the strike out.
3.2.16 That denying the strike out was the defendants’ rationale for claiming copyright ownership.
3.2.17 That the defendants’ actions were false and were designed from the outset to defraud the plaintiff.
3.2.18 That the letter sent to Mars Inc set forth certain false and fraudulent assertions.
3.2.19 That the defendants had a premeditated plan to get out of the contract if the book ever seemed to be heading towards a major financial sponsorship.
3.2.20 That the plaintiff failed to inform the US Court that proceedings had been brought in New Zealand, that the proceedings were still active, that the proceedings were defended by the defendants and the grounds of the opposition advanced by the defendants.
[77] Some of these representations were made by way of written evidence to the US Court and others orally at hearing and recorded in the US judgment. I am satisfied on the evidence that these representations were made.
[78] Counsel for the defendants in his written submissions contends that the effect of each representation on the US Court was as follows:
a) Regarding residency, the plaintiff may have misled the US Court in order to gain standing to bring his case. In any event it contributes to a general pattern of fraud on the US Court.
b)Regarding Mr Claridge’s involvement, the plaintiff misled the US Court in order to have Mr Claridge held jointly and severally liable for the full amount of the Illinois judgment, presumably so as to heighten the possibility of obtaining full recovery. As a matter of public record, Mr Claridge is the sole registered proprietor of all of the defendants’ real property.
c) Regarding performance of contract and co-authorship, the plaintiff misled the US Court to ensure liability attached to the defendants. The representations contribute to a general pattern of fraud on the US Court.
d)Regarding copyright, the plaintiff’s fraudulent representations were crucial to his allegation of copyright infringement.
e) Regarding Mars, the plaintiff’s fraudulent representations were crucial to his claim for interference with the alleged economic relationship he had with Mars Inc.
f) Regarding the remainder, the plaintiff’s fraudulent representations were crucial for the plaintiff to make out the alleged fraud by the defendants, and for damages for fraud and “business tort damages”.
[79] In the alternative, the representations are said to have at the least failed to represent the true situation and contained clearly demonstrated inaccuracies sufficient to have the judgment impeached for fraud.
[80] I address the categories adopted above in turn. My findings in relation to certain of the categories render it unnecessary that I address the evidence under each head exhaustively.
The plaintiff’s residency in Illinois
[81] The US judgment of 8 April 2009 proceeds on the express basis that the plaintiff was resident in Illinois. It is apparent that this fact went, albeit as a secondary ground, to the Court’s jurisdiction. It was suggested to me by counsel for the defendants that it might have also gone to standing and there was no attempt by counsel for the plaintiff to refute this suggestion.
[82] It was not Mrs Claridge’s understanding that the plaintiff was resident in Illinois. Mrs Claridge deposes that the plaintiff represented himself to her throughout their negotiations (in early 2004) as a permanent resident of New Zealand, living in central Auckland. Indeed, she says, she would not have entered into a contract with him had she not been confident of his residency status. She says she was reassured in this regard by his payment of a deposit with a cheque drawn on a New Zealand bank account.
[83] The plaintiff’s representation to the US Court that he was resident in Illinois is also at odds with his affidavit in support of his notice of opposition to the defendants’ interlocutory application for orders for security for costs sworn 1
November 2007 in the former New Zealand proceeding. In that affidavit the plaintiff deposed that:
1.) I have substantial and enduring ties to New Zealand.
2.) I am a permanent resident of New Zealand holding an unconditional New Zealand permanent resident visa.
3.) My sole place of residence (permanent dwelling) is located in
Auckland, New Zealand.
4.) I do not rent or own a home in the United States.
5.) When I am in the United States, I lodge in hotels.
…
[84] I accept that between these unequivocal and patently contrary representations are periods of some years in which it is at least conceivable that the plaintiff’s residency changed. There was, however, no attempt by the plaintiff to explain the
discrepancies. Were the representations made contemporaneously I would have no hesitation in regarding them alone as sufficient to refuse summary judgment. As they were not contemporaneous, while they may arouse suspicion I am not satisfied that they are sufficient to establish a prima facie or arguable defence of fraud. Nevertheless they are factors to be weighed when looking at other factors said to be indicative of fraud.
The involvement of Mr Claridge
[85] The evidence clearly discloses that the plaintiff represented to the US Court that Mr Claridge was equally involved in the events forming the basis of litigation. It is apparent that this is the basis upon which the Court proceeded. I note the US Court’s finding of fact at [25] that the “Defendants acted in concert in connection with each of the acts to which liability attaches in this case.” The defendants in the US proceedings were as here.
[86] Counsel for the defendants referred me to the following, for example, from the plaintiff’s declaration in support of default judgment dated 2 December 2008:
5. I commissioned the Defendants to ghostwrite a book for me on the topic of the health benefits of chocolate.
a. In early February 2004 I met with the Defendants and agreed verbally with them that they would ghostwrite text for my book and that they would be paid a pre-agreed sum for each chapter completed, on a “per job” basis.
b. The agreement specified that I would be the sole author and copyright owner.
c. On February 26, 2004 they presented me with a written version of the verbal agreement that I understood to mean all the terms to which we had agreed verbally with the exception that they had added a clause allowing them to opt out of the “per job” payment schedule and to revert to an hourly basis if they chose. I rejected this clause, crossed it out and initialed the cross out. The Defendants agreed to the striking out of this clause, and initialed this change. We then executed the contract the same day.
…
13. I notified the Defendants of my economic relationship with
Mars, Inc. prior to them interfering with it.
14. The Defendants informed me on March 31, 2005 via email that they were no longer willing to abide by the contract making the false claims previously described in para 7 above.
…
19. I became aware in 2007 that the Defendants had earlier authored and published magazine articles on the health benefits of chocolate with copies and/or research from the text I copyrighted.
…
22. The Defendants are professional writers and publishers who own two corporations engaged in this business. They are fully aware of the legal intricacies of copyright ownership.
[87] Mr Claridge deposes that he is a survey consultant, a specialist in GPS, who works for Global Survey Limited selling survey equipment and providing equipment training to customers. He says that while he is a joint director of Archetype he does not and has never taken any part in the day-to-day running or management of it. He says that he has never been employed by Archetype or undertaken any paid work for it. He says that he did not have any involvement with the matters and events that comprise the dispute with the plaintiff. He says that he was not (and the evidence makes clear that this was the case) initially named as a defendant in the New Zealand proceedings. He says that he was not involved in the ghost writing that Archetype undertook for the plaintiff, that he did not see the contract between the plaintiff and Archetype, that he did not attend any meetings that took place, and that he did not have any communication with the plaintiff until a judicial settlement conference in December 2008. He says that he has never read the manuscript which is at the heart of the proceedings, nor has he had anything to do with it or anyone associated with it or its creation outside of these proceedings. He says that he was not involved in any of the communications with Mars. He deposes that the plaintiff’s statements and representations in both the previous and current New Zealand proceedings and the US proceedings that he was in any way involved in this matter are completely false and fraudulent.
[88] Counsel for the defendants referred me, next, to the following from the plaintiff’s second amended statement of claim dated 31 October 2007 in the New
Zealand proceedings. Needless to say it is in marked contrast to the plaintiff’s representations to the US Court.
5. Susan Claridge at all material times acted independently, and/or as agent, and/or employee of Archetype.
…
7. The plaintiff engaged Susan Claridge and Archetype as a “ghost writer” on or about February 1, 2004 to write a manuscript with and for the plaintiff to use in his upcoming book.
…
9. The plaintiff and Susan Claridge agreed in writing that the plaintiff would be the sole author of the manuscript in a contract written by Susan Claridge and executed on or about 26 February,
2004 (the contract), in exchange for valuable consideration to be paid by the plaintiff to the defendants.
…
14. Commencing on or about March 1, 2004 and ending on about March 1, 2005, Susan Claridge produced manuscript for the plaintiff per the contract. Susan Claridge used the original creations of the plaintiff including an outline, chapter headings, titles, as well as research and creative direction from the plaintiff to produce the manuscript for the plaintiff. The plaintiff modified the manuscript as it was being written by Susan Claridge, adding new sentences, changing sentences, and deleting text at his sole discretion as per the agreement. The final work product of several chapters of the book was delivered to plaintiff by Susan Claridge in installments. The plaintiff paid the contracted amount to the defendants via personal checks made out to Archetype, Ltd for each installment.
…
16. Susan Claridge is and has at all material times been:
16.1 Naming herself as the author of the manuscript; and or;
16.2 Claiming ownership of the copyright; and or;
16.3 Copied the work; and or;
16.4 Issued copies of the work to the public; and or;
16.5 Made adaptations of the work without a license; and or;
16.6 Publishing portions of the manuscript without permission from the plaintiff; and or;
16.7 Making and holding copies of the work, either permanent and/or temporary or transitional; and or;
16.8 Reproducing the work in one or more forms; and or;
16.7 These acts are continuing notwithstanding a demand for cessation of the infringement by the plaintiff’s solicitor in a letter delivered to Susan Claridge on or about March 17,
2005; and;
16.8 Susan Claridge individually and/or through her legal counsel have begun asserting since the initial filing of this action that Archetype is also the copyright owner of the manuscript. The plaintiff was not aware prior to the initiation of these proceedings that anyone was claiming copyright on behalf of Archetype.
…
18. The infringement by Susan Claridge of plaintiff’s copyright was flagrant. Susan Claridge is a professional writer in New Zealand, was aware of the applicable copyright laws, and was given notice verbally and in writing by the plaintiff and his solicitor of her wrongdoing. Nevertheless she continued the infringement.
…
25. Susan Claridge agreed to removal of the hourly rates provision of the agreement, and initialed the “crossed out” section herself. She then executed the entire resulting contract which had the hourly rates section crossed out.
…
68. Susan Claridge was informed by the plaintiff that he was planning to soon contact a specific potential book sponsor.
69. Soon thereafter, Susan Claridge contacted that potential book sponsor Mars, Inc., and told them that the manuscript was in dispute.
[89] Counsel for the defendants referred me, finally, to the following from the plaintiff’s affidavit dated 14 September 2006 and filed in the former New Zealand proceedings:
1. I personally engaged the services of writer for hire Susan K. Claridge on or about February 1, 2004, for the purposes of producing manuscript for my new book.
2. On or about February 1, 2006 the defendant and I met and agreed orally on the following:
a. Defendant would ghost write book manuscript under my direction;
b. I would provide defendant with my original creative text, including an outline, book title, chapter titles, and on going
guidance, and would provide her with research materials fitting my outline;
c. I would be the sole author and owner of the copyright, no matter whether or not she originated any text on her own.
d. I would have the right to use the book manuscript she produced for me in any way I wished, and would be adding to it, deleting from it, and editing as she wrote it;
e. The defendant would produce a written agreement based on our oral agreement.
3. On or about 26 February 2004 the defendant presented me with the contract she had written, and we executed it that day. A copy of the contract is annexed and marked ‘A’.
…
7. I am aware that the defendant has been claiming to be the author and copyright owner of my book manuscript, and/or copying it, issuing copies of it to the public, and making adaptations and publishing portions of the book manuscript in her own name, all the aforesaid without my permission, since about 1 April 2005.
…
9. On or about July 15, 2005, I became aware that the defendant had called the major potential corporate sponsor and bulk buyer of my book manuscript, claiming to be the author and owner of the copyright. On that day the corporate sponsor told me they would no longer consider sponsoring or buying the book because of the claims made to them by the defendants.
[90] I note for completeness that in his affidavit in support of this application the plaintiff deposes that:
6. During the years 2004 and 2005, I had business dealings with the First, Second and Third Defendants (“Defendants”). The Defendants were to work on my new book regarding the health benefits of chocolate. The Defendants each breached several legal obligations to me regarding this work, resulting in me bringing proceedings against them. The background to the claim in the United States of America is set out in the judgment and order of the United States Federal District Court for the Central District of Illinois (“US Court”) , that I refer to later in this affidavit.
…
20. In October 2006, I had filed proceedings against the same defendants in New Zealand (“New Zealand proceedings”). …
[91] There is no question in my mind that the above constitutes an evidential foundation sufficient to establish a prima facie or arguable case of fraud. These factual inconsistencies cannot be dismissed as simply reflecting “the difference in perspective upon which all litigation is premised” as counsel for the plaintiff submitted. They call for serious explanation and further enquiry. Counsel submitted that there is no evidence to substantiate the allegations contained in the defendants’ affidavit and it fails to pass the credibility threshold. I accept that I am not bound, as it was put in Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341 per Lord Diplock, to:
… accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.
[92] But such is not the case in respect of the defendants’ affidavits. And, that being so, the disputed questions of fact on which a defence of fraud might turn itself suffice for me to decline summary judgment. Of the parties’ evidence in this case, that to which Lord Diplock’s comments might more appropriately attach is that of the plaintiff. His sworn documents contain fundamental inconsistencies, that in the absence of serious explanation appear inexplicable other than by a lack of honest belief in one or other of their truth, and clearly material to the causes of action as they lay against Mr Claridge in the US proceeding. I am quite prepared to decline summary judgment on the basis that the plaintiff has failed to satisfy this Court that the defendants have no defence on the ground that the judgment was fraudulently obtained in respect of this evidence alone. There is at the least a real question to be tried. I am certainly not left without any real doubt or uncertainty.
Other of the plaintiff’s representations
[93] There was a good deal of argument at the hearing about the other alleged instances of fraud. Given my earlier finding there is no reason to discuss these instances in any detail. Suffice it to say that there is a good deal of conflicting evidence. I cannot resolve this conflict in this proceeding for the purposes of ruling out a defence of fraud as unarguable when these conflicts are considered together
with the example I have already discussed. The conflict can only be resolved with the benefit of the full trial process.
Abuse of process
[94] I turn finally to a point raised by counsel for the plaintiff. The effect of the courts’ approach to the defence of fraud to actions on foreign judgments at common law has been extraordinary. I need do no more by way of illustration than return to Staughton LJ’s summation in Jet Holdings at 344:
… this doctrine makes a great inroad into the objective, which is generally desirable, of enforcing judgments where in the eyes of English law the foreign court had jurisdiction. The defendant may have been served in the foreign country, entered an appearance, given evidence, been disbelieved, and had judgment entered against him. If he asserts that the plaintiff’s claim and evidence were fraudulent that issue must be tried all over again in enforcement proceedings.
[95] I have made clear that this is not the appropriate Court, and an application for summary judgment not the appropriate procedure, to revisit the common law. But I do note that in Owens Bank Ltd v Etoile Commerciale the Privy Council at 51, deeming it unnecessary to accede to counsel for the respondents’ desire to “steer his ship through the gap” which the House of Lords was said to have left open in Owens Bank Ltd v Bracco for a reappraisal of the law, found that there was a much shorter answer to that appeal (at 51):
Every court of justice has an inherent power to prevent misuse of its process, whether by a plaintiff or a defendant: see Hunter v. Chief Constable of the West Midlands Police [1982] A.C. 529, 536, per Lord Diplock. This was the alternative ground on which the Court of Appeal decided in the plaintiffs' favour in House of Spring Gardens Ltd. v. Waite [1991] 1 Q.B. 241.
There is nothing in the authorities which precludes a party from obtaining summary judgment or an order striking out a pleading on the grounds of abuse of process where a fraud is alleged. It is axiomatic that where fraud is alleged full particulars should be given. Where allegations of fraud have been made and determined abroad, summary judgment or striking out in subsequent proceedings are appropriate remedies in the absence of plausible evidence disclosing at least a prima facie case of fraud. No strict rule can be laid down; in every case the court must decide whether justice requires the further investigation of alleged fraud or requires that the plaintiff, having obtained a foreign judgment, shall no longer be frustrated in enforcing that judgment.
[96] As a matter of general principle I agree. This is a sensible limit on a defence which is otherwise almost unbounded. But it is an upper limit. And I refer to the note of caution sounded by Adrian Briggs in The Conflict of Laws (2nd ed, Oxford University Press, New York, 2008) at 146:
Too vigorous use of the abuse of process doctrine has the potential to overwhelm much of the fraud defence; there is a need for caution before the fraud defence is altogether swept away.
[97] The present is most assuredly a case in which justice requires the further investigation of alleged fraud. As in Yoon v Song [2000] NSWSC 1147 per Dunford J at [22]:
… the facts of this case demonstrate in my mind good reason for applying a different test of fraud in respect of foreign judgments to that applied in respect of domestic judgments ….
Result
[98] The plaintiff’s application for summary judgment is declined.
[99] I reserve costs in accordance with the decision of the Court of Appeal in NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
[100] The case is to be listed in the chambers list on 25 August 2010 at 2:15 pm
for further directions. Memoranda should be filed at least two days prior with proposed directions.
Associate Judge Sargisson
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