Pinto v Tindall HC Auckland CIV-2011-404-001335

[2011] NZHC 1780

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-001335

UNDER  the Reciprocal Enforcement of Judgments

Act 1934

BETWEEN  GEORGE RICHARD PINTO Judgment Creditor

ANDDENNIS WALTER TINDALL Judgment Debtor

Hearing:         7 December 2011

Appearances: A Horne and G Church for Judgment Creditor

A Malone for Judgment Debtor

Judgment:      7 December 2011

ORAL JUDGMENT OF WHATA J

Solicitors:

Minter Ellison Rudd Watts, PO Box 3798, Shortland Street, Auckland 1140

Duncan Cotterill, PO Box 5326, Wellesley Street, Auckland 1141

PINTO V TINDALL HC AK CIV-2011-404-001335 7 December 2011

[1]      A foreign judgment against Mr Tindall has been registered as a judgment of the High Court of New Zealand.  The effect of this is that Mr Tindall may now be subject to enforcement proceedings in respect of that judgment sum of £134,301.37. Mr Tindall wants an order setting aside the registration of that judgment.  He says he will be seeking to have the foreign judgment set aside and that he should be allowed to undertake that process before enforcement of the judgment here.

[2]      The problem for Mr Tindall is that more than a year has elapsed since the judgment was entered against him in England and on its face the judgment relates to a simple contractual debt owed by Mr Tindall.  The issue for me is whether or not I should nevertheless preserve Mr Tindall’s position while he pursues a remedy in the English Courts.

Facts

[3]      Mr Tindall was the former director and chief executive officer of a company, Waipuna Holdings Ltd (an off shore company based in Jersey) (“Waipuna”).  The company was set up to develop a home gardening weeding product.  In an agreement dated 29 March 2007, Mr Pinto agreed to advance the sum of £100,000.   The agreement records that Mr Pinto is the lender, Mr Tindall is the borrower, Agricorp International Ltd is the shareholder and a legal firm is a stakeholder.

[4]      The agreement provides for a loan of £100,000 to Mr Tindall secured by three million shares in Waipuna.   The agreement also provides for a remedy for default in the following terms:

4.3In  the  event  of  default  in  terms  of  repayment  of  the  loan,  the stakeholder shall thereafter act solely on the lenders instructions to realise sufficient value from the shares, to satisfy all amounts owing to the lender.

[5]      The loan was duly paid and was applied by Waipuna as working capital.  At the time of the agreement Waipuna was in negotiations with a German based company for the sale and distribution of the weeding product.  Those negotiations

did not produce the desired outcome and Waipuna was not in a position to repay the loan advanced by Mr Pinto.  Mr Tindall says that Waipuna’s financial circumstances were discussed with Mr Pinto who, he says, agreed to a variation of the term of repayment under the agreement.   Mr Tindall says in consideration for Mr Pinto agreeing to an extension of the term for repayment under the agreement, he agreed not to draw sums owed to him personally by Waipuna and also to provide cash for the company on an unsecured basis.  Ultimately, the negotiations with the German company fell over and no deal was realised.  Waipuna therefore fell into financial difficulty and was not able to repay Mr Pinto’s loan.  Waipuna has now been struck off the Jersey company’s register.

[6]      Mr Pinto did not make demand on Mr Tindall or the company for repayment of the loan on the due date for payment (30 June 2007) and he did not exercise his remedy under clause 4.3 of the agreement.   Instead, after a period of three or so years, Mr Pinto commenced proceedings against Mr Tindall in the High Court of Justice, Queens Bench.

[7]      The original statement of claim was served on Mr Tindall on 30 June 2010. Mr Tindall says he filed an acknowledgement of service on 13 July 2010 and noted on the form a United Kingdom address where correspondence relating to the case was to be sent.

[8]      Instead  of sending  a response to  that  address,  the Court  sent  a letter  to Mr Tindall’s New Zealand address stating that the acknowledgement of service form had been completed incorrectly and that the Court was not able to  receive that document.  Mr Tindall was not in New Zealand to receive that letter.

[9]      When Mr Tindall found about this, he telephoned the Court but could not reach the author of the letter.

[10]     Mr Tindall returned to the United Kingdom on 1 September 2010 and sought clarification in respect of the letter on 3 September 2010.   He was introduced to Master Eyre, who agreed that the acknowledgement of service filed by him was valid and set aside the judgment.  Master Eyre then reinstated that judgment on the

basis that Mr Tindall had not filed a statement of defence within the relevant time constraint.  The Judge however ordered that enforcement of the judgment in default of defence be stayed  pending further order.   On 20 October 2010 the stay was removed and replaced with an order stating that Mr Tindall was at liberty in seven days after service of the order to apply for an order varying or setting aside the judgment by default.  After seeking legal advice, Mr Tindall prepared an application to set aside the judgment of the High Court.  That application was sent to the Court on 25 October 2010, within the requisite time.

[11]     The application to set aside Mr Pinto’s claim was returned to Mr Tindall by letter dated 29 October 2010.  There was an issue with the filing fee.  It appears that it  may  have  been  addressed  to  the  wrong  payee.    On  or  about  17 November Mr Pinto’s lawyers served copies of the sealed 3 September and 20 October orders on Mr Tindall by post and e-mail.   Mr Pinto also corresponds with Master Eyre seeking clarification as to the progress of his application.  At that time Mr Tindall was in New Zealand receiving medical treatment.

[12]     Mr Tindall  then  returned  to  the  United  Kingdom  in  late  December  and received a copy of the letter from the Court dated 29 October 2010.  In February the following year Mr Tindall then writes to Master Eyre seeking guidance as to his options. Apparently he did not receive a response to that letter.

[13]     Mr Pinto then obtained an order for registration of the foreign judgment in New Zealand on 21 March 2010. An application to set aside that order was made by Mr Tindall in August this year.

Jurisdiction

[14]    I am grateful to the assistance of counsel in providing a framework of assessment for me.   Their respective positions on that framework are sufficiently similar to enable me to deal with the issues briefly.

[15]     The jurisdiction to set aside the registration of a judgment is provided at s 7(1) of the Reciprocal Enforcement of Judgments Act 1934:

(1)       If, on an application to set aside the registration of a judgment, the applicant satisfies the High Court either that an appeal is pending, or that he is entitled and intends to appeal, against the judgment, the Court, if it thinks fit, may, on such terms as it may think just, either set aside the registration or adjourn the application to set aside the registration until after the expiration of such period as appears to the High Court to be reasonably sufficient to enable the applicant to take the necessary steps to have the appeal disposed of by a competent tribunal.

[16]     The “appeal”, in this context, includes any proceeding by way of discharging or setting aside a judgment or an application for a new trial or a stay of execution. The parties agree that an application to set aside a default judgment in the United Kingdom qualifies as an appeal for the purposes of this section.

[17]     The parties also agree that the Court has a very wide discretion under s 7(1) to set aside the registration or to adjourn the application for registration where a pending appeal is brought bona fide.[1]

[1] Refer Hunt v BP Exploration Company (Libya) Ltd [1980] 1 NZLR 104 and Lane v Questnet Ltd

[2009] NZCA 878; [2010] NZAR 210 at [58].

[18]     I accept Mr Horne’s submissions that the following factors are relevant to my assessment:

(a)       Whether  an  appeal  is  pending  or  the  Court  is  satisfied  that  the judgment debtor has a real intention to appeal;

(b)Whether the appeal is being brought by the judgment debtor is bona fide;  and

(c)       Whether the appeal, whether filed or pending, has merit.

[19]     I further accept the basic proposition that the appeal in this case is a reference to the application to set aside the United Kingdom judgment.  Inevitably, however, that involves assessment of the merits of the underlying proceedings and claims by the judgment debtor.

[20]     I now address each of those factors in turn and then arrive at an overall view.

[21]     I  have  before  me  an  affidavit  filed  today  attaching  a  letter  signed  by Mr Tindall  addressed  to  the  High  Court  of  Justice,  Queen’s  Bench  division, enclosing an application to set aside with defence attached.   The letter refers to previous filed documents, letters from a Mr Pocock, an e-mail from Master Eyre, an historical chronology, a sworn affidavit by Mr Tindall and other relevant supporting documentation.   Copies of those documents, however, were not produced together with the affidavit.   For my part, that is a very thin basis upon which to say an “appeal” has been lodged for the purposes of s 7(1).   However, I am prepared to proceed on the basis that an application has been made so that the technical requirements of that section are satisfied.

[22]     Despite affording that to Mr Tindall, he nevertheless must still satisfy me that there is substance to his appeal such that I am able to conclude that it is  bona fide one.

Bona fide

[23]     I consider that the question of whether or not the appeal (application to set aside the United Kingdom judgment) is bona fide turns on two key factors:

(a)       The conduct of Mr Tindall;  and

(b)      The merits of the application to set aside.

[24]     As to Mr Tindal’s conduct, it appears that he encountered problems with the administration of his papers, at least initially, through no fault of his own.  While I cannot form a view on the processes adopted by the Court in  England (and it is not for me to do so)  it does at least appear that the initial judgment by default should not have been entered against him, it is arguable that the rejection of his first application to set aside judgment by default was based on a minor irregularity, and it would be somewhat disproportionate to deprive Mr Tindall now of an opportunity to seek to set aside that judgment, if the chronology stopped there.

[25]     However, it has been more than a year since default judgment was entered. On Mr Tindall’s own chronology, he discovered the problem with his application in late December and, indeed, communicated with Master Eyre seeking guidance on

2 February 2011.    Mr Tindall  has  made the formal  step  of seeking to  set  aside judgment with the appropriate papers only this week, on 2 December 2011.  That is a remarkably long delay by him in seeking to protect his position.

[26]     Ms   Malone   valiantly   sought   to   persuade   me   that   in   Mr Tindall’s circumstances, this delay was not unreasonable.   She made the strong point that Mr Tindall has suffered from various illnesses and injury, including a battle with prostate cancer.   She also highlights the fact that Mr Tindall is something of an international traveller, making it difficult for him to stay abreast of, and to execute his litigation needs.

[27]     While I have sympathy for Mr Tindall and his circumstances, they do not explain his inordinate delay in taking formal steps to protect his position.  Mr Tindall was able to lodge formal documents seeking to set aside the registration of the foreign judgment in this Court.   It should have been a relatively simple matter to actively progress his applications to set aside the United Kingdom judgments at the same time.   Indeed, the point is well made by Mr Horne that the application was already drafted and it was only a matter of payment of the relevant administration fee to the correct payee.

[28]     All of this, in my view, casts real doubt on the bona fides of Mr Tindall.  It has the unfortunate appearance of Mr Tindall seeking to prolong these matters for as long as possible.  I proceed on the basis that this is a factor against the granting of relief, but as a matter of fairness to Mr Tindall, I approach the analysis on the basis that a strong claim by him would off set this factor.

[29]     I therefore proceed to assess the merits of Mr Tindall’s application.

[30]     Both parties usefully set out the relevant rules empowering the Court to set aside or vary a judgment entered by default in England.   Part 13.3 of the English Civil Procedural Rules provides for setting aside of a default judgment if:

(a)       The defendant has a real prospect of successfully defending the claim;  or

(b)It appears to the Court that there is some other good reason why —

(i)       The judgment should be set aside or varied;  or

(ii)      The defendant should be allowed to defend the claim.

[31]     The  Civil  Procedure  Rules  (“CPR”)  at  13.3(2)  also  provides  that  in considering whether to set aside or vary a judgment entered by default, the matters to which the Court must have regard include whether a person seeking to set aside the judgment made the application to do so promptly.  As Ms Malone helpfully noted, the  overriding  objective  of  the  rule  is  to  ensure  that  cases  are  dealt  with expeditiously and fairly.

[32]     Mr Horne  provided  a  number  of  authorities  dealing  with  the  exercise  of discretion in this context.  A prevailing theme of those authorities is that promptness is a very important factor and anything other than a moderate delay in commencing the application will not be treated favourably.  Illustrative of this is the decision of the Court of Appeal (Civil Division) on appeal from the Chancery Division, Regency Rolls Ltd v Carnall.[2]   In that case, Lord Justice Simon Brown observed that “30 days was altogether too long a delay”.

[2] Regency Rolls Ltd & Anor v Carnall [2000] EWCA Civ 379.

[33]     The point of principle is captured in the judgment of Field J in Standard Bank

Plc & Anor v Agrinvest International Inc & Ors, where he states: [3]

[3] Standard Bank Plc & Anor v Agrinvest International Inc & Ors [2009] EWHC 1692 (Comm).

27.      In my judgment, although promptness may not be the controlling factor under CPR 13.3, it is plainly a very important factor, as is evidence from the fact that it is singled-out in the rule as a matter to which the court

must have regard.   It is a very important factor because there is a strong public interest in the finality of litigation.  Put simply, people are entitled to know where they stand.  In my opinion, the period of twelve months and two weeks is far too long a time in which to have applied to set aside the default judgment entered on 19th February 2008. …

[34]     Against  this  backdrop  of  authority,  I  put  the  prospect  of  Mr Tindall overcoming the hurdle presented at CPR 13.3(2) as small to remote.

[35]     I  nevertheless  examine  the  wider  merits  of  Mr Tindall’s  claim  not  only because this is an element of 13.3, but the requirements of fairness, in my view require that I turn my mind to that before reaching any final decision.

[36]     While I have not seen an appeal, I am prepared to proceed on the basis that the arguments  raised  by Ms Malone will  form  the basis  of  any such  appeal  or application.  Ms Malone contends that Mr Tindall has genuine prospects of success based on the following grounds:

(a)      Mr   Tindall   wishes   to   contend   that   Mr Pinto   is   estopped   by representations made by him to the effect that Mr Pinto was happy not to enforce his rights under the loan agreement until such time as the Waipuna Group was in a position to be able to repay the loan.

(b)The  judgment  sum  includes  a  quantum  for  interest.    Mr  Tindall contends that there is a significant issue to be tried as to Mr Tindall’s liability (if any) for the claimed interest.  Ms Malone argues that the interest should have abated at the time Mr Pinto agreed not to enforce the judgment.  Accordingly, the interest should not have formed part of the judgment sum.

(c)      The terms of the agreement do not provide that Mr Pinto is entitled to seek repayment from Mr Tindall personally, in the event of default. Mr Tindall  contends  that  the  remedy  for  default  is  specifically provided by clause 4.3.  It is further contended that there is no other specific  requirement  for  payment  by  Mr Tindall  in  the  event  of default.

[37]     The evidence relating to the alleged estoppel is, I have to say, sparse.  At its highest it is captured in the following paragraphs of evidence of Mr Tindall:

9.        The  company’s  financial  circumstances  were  discussed  with  the claimant who agreed to a variation of the term for repayment under the agreement.  In consideration for the claimant agreeing to an extension of the term for repayment under the agreement, I agreed not to draw sums owed to me personally by the company, and also to provide cash for the company on an unsecured basis.

[38]     There is also the rebuttal evidence of Mr Tindall at paragraph 24:

The decision making process throughout was guided by Mr Pinto.   Any decisions made were made in consultation with him.  Mr Pinto made it quite clear to me that he did not require the loan to be repaid until such time as Waipuna was in a position to repay it.  I believed Mr Pinto when he told me this and arranged the finances of Waipuna accordingly.

[39]     Ms Malone therefore contended that this wider factual matrix, detailing the relationship  between  Mr Pinto  and  Mr Tindall,  and  the  active  involvement  of Mr Pinto in the affairs of Waipuna, should be put to the Court so that the defence based on estoppel can be properly ventilated.  Her submission has the effect that this Court ought not to pre-emptorily intervene by depriving him of an opportunity to have the judgment set aside.

[40]     Ms Malone may be correct.  There may be evidence that should be put to the Court detailing the nature of the relationship and the representation made.   The difficulty that I am confronted with, is that none of that evidence is before me with any particularity.   There is no independent information supporting the contentions made they are little more than bald assertions.   I can readily understand that arrangements  between  Mr Pinto  and  Mr Tindall  may be  more complex  than the contractual  documentation  suggests.    However,  on  the  basis  of  the  information before me, a claim based on estoppel that is utterly discordant with the express contractual arrangements must be weak.

Interest calculation

[41]     Under the agreement, “interest” is defined as follows:

Is the rate of 10 per cent per annum for the term of the loan until repayment calculated on a daily basis on the loan sum.

[42]     Pursuant to clause 2.3 of the agreement the loan had a term of three months from the commencement date.  The commencement date was the 30th day of March

2007.  On my calculation, the term of the loan extended to 30 June 2007.

[43]     Clause 3 deals with payments, including a payment of interest as follows:

3.1The Borrower shall pay interest to the Lender on the Loan, accruing on a daily basis until the repayment of the Loan sum.

3.2Unless repaid earlier, the Loan shall be repaid to the Lender at the end of the three month term in one sum together with interest due to the date of payment.

3.3      Repayment of the Loan and interest shall be made in GBP to the

Lender’s account (No.10213860) at Lloyds TSB Private Banking, 50

Grosvenor Street, London W1K 3LF (Sort Code 30 16 74).

[44]     The judgment  sum  entered  into  by default  included  a sum  for debt  and interest  to  the  date  of  judgment,  being  the  3rd   day  of  September  2010.    I  am struggling to see any flaw in the entry of judgment based on the default and inclusive of interest.  The agreement is clear about the interest rate, and the calculation of the interest owing is simple.

[45]     The contention made by Ms Malone that the interest should have abated with Mr Pinto’s agreement not to enforce judgment is weak.   First, as I have said, the evidence in support of such representations having that effect is scant and lacking in merit.   Secondly, it really does defy commercial common sense to suggest that Mr Pinto would not only abate the payment of the loan, but would forego the interest that he is entitled to until payment of the loan.   I was invited by Ms Malone to approach the issue of interpretation of contractual rights by reference to Lord Hoffman’s oft quoted principles of contractual interpretation set out in Investment

Compensation Scheme Ltd v West Bromwich Building Society[4]  and adopted by the majority of the Supreme Court in Vector Gas Ltd v Bay of Plenty Energy Ltd.[5]

Applying those principles in this context tends to support the judgment creditor rather than the judgment debtor on this point.   To adopt the judgment debtor’s approach  would,  in  my  view,  flout  business  common  sense.    I  appreciate  that Ms Malone seeks an opportunity for her client to have the debate.   But really the information supplied to me is so sparse as to cast serious doubt to the point of lacking tenability on the judgment debtor’s argument.

Terms of the agreement

[4] Investment Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896.

[5] Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5; [2010] 2 NZLR 444.

[46]     I have set out the payment clause above.  For my part, applying the type of business common sense sought by Lord Hoffman in Investment Compensation Scheme  Ltd,  it  is  highly  implausible  that  the  parties  intended  by  clause  4.3  to preclude a right to sue Mr Tindall personally as the borrower.  The more plausible explanation of the combination of clauses 3 dealing with payment and clause 4.3 dealing with security is that, in addition to the ordinary right to sue the borrower, Mr Pinto was entitled to require the sale of shares to realise sufficient value from that sale to satisfy all amounts owing to the lender.

[47]     Ms Malone says that if the intention had been for Mr Pinto to be able to enforce payment of the loan against Mr Tindall personally, then there would have been no need for inclusion of Agricorp International Ltd and Jeffrey Thompson as parties to the agreement, or indeed, for the inclusion in the agreement of an express security provisions in paragraph 4.  This is supported by evidence from Mr Tindall in the following terms:

13.At paragraphs 8 and 11 Mr Pinto states that the money advanced under the loan agreement dated 29 March 2007 (“the Agreement”) was a personal loan to me, separate from the investments made by him and/or his family members in Waipuna.   I disagree.   In early

2007, the Wolf-Garten project was behind schedule, and Waipuna required some interim funding to tide the group over until a final

deal could be signed with Wolf-Garten.  This led to the transaction

that is the subject of this dispute.  Mr Pinto agreed to lend £100,000 to Waipuna, but wanted security.

14.Because the only security of value in Waipuna was already held by Wolf-Garten, Mr Pinto asked that I provide security for the loan in the form of 3,000,000 ordinary shares owned by the company which controls   my   family   trust,   Agricorp   International   Limited,   in Waipuna  Holdings  Limited.   This  is  recorded  in  the Agreement. Whilst I accept that the Agreement records that I am the borrower under the Agreement, the Agreement was structured in such a way because of my position as a director of Waipuna, and of Agricorp International Limited.   I was therefore in a position to be able to ensure that the loan was repaid, either through the company, or by the share transfer.  It was never intended or contemplated by any of the parties to the Agreement that I would be liable for repayment of the loan.

[48]     Mr Tindall also describes the active role taken by Mr Pinto in the affairs of

Waipuna.[6]

[6] Affidavit of Mr Tindall in reply at [5] to [12].

[49]     While I can understand the general thrust of what Ms Malone is submitting, overall  I  find  it  an  unattractive  proposition.    A  more  obvious  and  plausible conclusion is that Mr Pinto and Mr Tindall expressed their agreement by referring to Mr Pinto as the lendor and Mr Tindall as the borrower, and by providing for express payment conditions, including a term of loan, together with interest.  While it could be said  that  Mr Pinto may have had  a  greater role and  a deeper investment  in Waipuna, his contractual rights are plain.

Overall view

[50]     Stepping back from the precise grounds for the judgment debtor’s defence, I accept that on a detailed review of the factual matrix, there might be a theoretical basis  for  defending  the  judgment  claim,  namely  on  the  basis  that  Mr Tindall significantly compromised his position by investing further sums in Waipuna, but on the basis that Mr Pinto would not then seek to recover his debt under the loan agreement.  In that regard, the argument by Ms Malone was well made.

[51]     But for my part, on the evidence before me, such a claim is purely theoretical and without substance.  Given the delay in taking steps to protect his position, I am

unable to justify exercising my discretion under s 7(1) on Mr Tindall’s behalf.  To do

so would unfairly, in my view, prejudice Mr Pinto in terms of securing payment of a debt long overdue to him.

[52]     Accordingly, the application is dismissed.

Costs

[53]     There shall be costs on a 2B basis in favour of the judgment creditor, together with disbursements as fixed by the Registrar.

Whata J