Perry Developments Limited v Gatley HC Hamilton CIV 2003-419-1684

[2005] NZHC 1673

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2003-419-1684

BETWEEN

PERRY DEVELOPMENTS LIMITED

Appellant

AND

G H GATLEY TRUSTEE OF THE CATLEY FAMILY TRUST OF HAMILTON

Respondent

Hearing:         18 March 2005

Appearances: P J Morgan QC for appellant

M C Black for respondent Judgment:   13 April 2005

RESERVED JUDGMENT OF PRIESTLEY J

Counsel

P J Morgan QC, P O Box 19021, Hamilton

M C Black, Waterloo Towers, 20 Waterloo Quadrant, Auckland Solicitors:

Morrison Kent, P O Box 222, Auckland

David Nielsen, Solicitor, Level 3, 586 Victoria Street, Hamilton

Delivered at 3.30 pm on Wednesday 13 April 2005.

PERRY V GATLEY HC HAM CIV 2003-419-1684 [13 April 2005]

Background

[1]    On 28 September 2004 I delivered a judgment allowing an appeal from a judgment delivered in the respondent’s favour in the Hamilton District Court in August 2003.

[2]    In paragraph [56] of my judgment I ordered that the appellant was to provide the respondent with a satisfactory indemnity. I further ordered my judgment was to lie in Court until that indemnity had been provided.

[3]    Leave was reserved to the parties to seek further directions if they were unable to agree on the form of the indemnity. The respondent has sought an indemnity cast in much wider terms than the appellant is prepared to give. Thus the leave provision has been invoked.

[4]    Additionally the respondent, apparently oblivious to the provisions of s 67 of the Judicature Act 1908, lodged an appeal in the Court of Appeal. That error has  now been rectified and leave is thus sought from this Court to appeal my judgment.

The Indemnity

[5]    It is unnecessary for me to repeat the background and context which led me  to order the indemnity. All is apparent from my 28 September 2004 judgment. The purpose of the indemnity was to give the respondent protection if Mr Goodwin, who was not a party to the District Court proceeding, decided to raise a claim of contribution should he and the respondent be involved in litigation over their respective rights and claims as guarantors and principal debtors.

[6]    Whether or not the respondent and Mr Goodwin will ever embroil themselves in a dispute of that nature (arising out of the factual background of the District Court proceeding) and indeed whether they are at arms’ length, are problematic. If the procedural history of the proceeding and its evidence are accurate predictors of the

future, there  will be  no  litigation between the couple.    The theoretical possibility, however, remains against which the indemnity was designed to guard.

[7]    The appellant proposes an indemnity cast in terms identical to paragraph [56] of my judgment. The respondent seeks a much wider indemnity which would oblige the appellant to indemnify the respondent should he claim contribution from Mr Goodwin but fail because a court held the two agreements central to the District Court claim constituted a legal bar to the respondent claiming contribution.

[8]    As is apparent from my judgment, particularly paragraphs [49] and [50], I consider the legal position is that the 26 June 2001 agreement between the appellant and respondent, and the subsequent 31 July 2001 agreement between the appellant and Mr Goodwin, left the respondent’s right to seek contribution from Mr Goodwin totally unaffected. That right, subject only to Limitation Act considerations, is alive and operative.

[9]    The 31 July 2001 appellant/Goodwin agreement certainly exposes the respondent to a claim by Mr Goodwin for contribution. Mr Morgan QC’s submissions at the appeal hearing suggested that the sum involved might be small. That was not an issue in the District Court and there was no direct evidence on quantum.

[10]   The purpose of the indemnity in the context of my judgment was thus to protect the respondent in two areas. The first was if Mr  Goodwin  sought contribution from him. The second was if Mr Goodwin raised the 31 July 2001 settlement as a defence to any contribution claim the respondent chose to bring. The indemnity was not designed to oblige the appellant to indemnify the respondent if he sued Mr Goodwin for contribution (which he has not as yet done) and failed because the District Court declined to apply what I understand to be the law.

[11]   For these reasons therefore I unhesitatingly direct that the appellant is to provide the respondent with an indemnity in terms of the draft attached to Mr Morgan QC’s submissions to the Court dated 16 March 2005.

Leave to Appeal

[12]   The principles governing whether a court should grant leave to appeal from one of its decisions are well settled. Any view I may have on the merits  of appeal are obviously irrelevant. The Court of Appeal has stated the approach is to assess whether a second appeal raises some question of law (or rarely fact) capable of serious argument, involving an issue of some importance which transcends the mere interest of the parties. (See generally Cuff v Broadlands Finance Limited [1987] 2 NZLR 343;).

[13]   In Waller v Hider [1998] 1 NZLR 412, 413, Blanchard J thus summarised the approach.

The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal: Rutherfurd v Waite [1923] GLR 34; Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343 at pp 346 – 347. In the latter case the Court also remarked that in the end the guiding principle must be the requirements of justice. Further authorities of this Court are cited in McGechan on Procedure, para J 67.05.

Notwithstanding frequent reminders of the test, applications continue to be made which have little or no prospect of success. Counsel are of course to be commended for making all reasonable efforts to advance the cause of their clients but after a first appeal they must draw back and appraise the state of the case dispassionately, asking whether in truth the disputed matter contains the requisite element of sufficient importance. The scarce time and resources of the High Court and of this Court are not to be wasted, nor additional expense for an unsuccessful client incurred without realistic hope of benefit.

Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a court.

[14]   The submissions of Mr Black, with respect, were in large measure repetition of the arguments he ran during the appeal hearing last year. He additionally submitted that the relevant facts, being two settlement agreements between the appellant and co-debtors, coupled with a breach of one of those arguments by the appellant, were sufficiently unique to raise an important matter of principle.

[15]   Mr Black referred to paragraph [16] of my judgment where I acknowledged that the principles relating to a creditor’s release of joint and several debtors were “…subtle but of enormous commercial importance”. He also observed that my decision appeared in abstract form under the heading “ contract, guarantee, right contribution” in the 16 November 2004 edition of Capital Letter.

[16]   Mr Black also advanced as an arguable issue whether I had any jurisdiction, in the context of my determining an appeal from the District Court, to direct the indemnity designed to protect the respondent. In general terms Mr Black advanced arguments suggesting that the indemnity direction highlighted various flaws in my judgment and its reasoning process.

[17]   I do not consider that the circumstances surrounding the proceeding, or the legal issues thrown up by it, comprise important matters of policy or principle which justify granting to the respondent the indulgence of a second right of appeal. The respondent entered into an agreement with the appellant almost four years ago to pay

$200,000 to the appellant, in full and final settlement of the appellant’s claim for greater sums. These were claims to which the respondent was undoubtedly exposed, with no apparent defence. That sum has been paid by the respondent to  the appellant, $100,000 of it under protest.

[18]   The appellant, quite wrongly in my view, attempted to improve on this negotiated settlement by entering into a second agreement with the co-debtor and co- guarantor Mr Goodwin. The respondent seized on that agreement as a reason to avoid payment of the second $100,000 instalment of the settlement figure to which he had agreed.

[19]   Central to the respondent’s arguments in the District Court was the assertion that the appellant, by settling with Mr Goodwin, had ipso facto destroyed the respondent’s rights to contribution. That issue was not directly determined by the District Court. It was by me. But, on the basis of the authorities cited to me and the relevant legal principles, the point did not appear to be novel or complex.

[20]   Taking the necessary step back, and considering the parties’ respective circumstances and the factual matrix, I cannot see a question of law of sufficient seriousness or importance to justify granting leave. Nor do I consider the issues raised are of sufficient importance to the parties, or to the public, or to New Zealand’s jurisprudence generally, to justify a second appeal. Accordingly I decline leave.

Result

[21]   The indemnity is to be provided by the appellant in terms of paragraph [11]  of this judgment.

[22]   The respondent’s application for leave to appeal to the Court of Appeal is declined.

Costs

[23]   I have not heard counsel on costs. I declined to award costs in favour of the appellant on the appeal hearing for reasons which are apparent in my judgment. I would for similar reasons be reluctant to award costs in respect of the leave  I reserved over the indemnity. I am unclear whether there is any convention  or practice relating to costs awards where leave is sought under s 67 of the Judicature Act 1908. Accordingly I reserve costs.

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Priestley J