Pioneer Insurance Company Limited v White Heron Motor Lodge Limited HC NAP CIV 2007-441-1014

[2008] NZHC 2328

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2007-441-1014

IN THE MATTER OF     Section 290 of the Companies Act 1993

BETWEEN  PIONEER INSURANCE COMPANY LIMITED

Applicant

ANDWHITE HERON MOTOR LODGE LIMITED

Respondent

Appearances: KJ Crossland - Solicitor for the applicant

M Gilbert - Solicitor for the respondent

Decision:        15 May 2008

DECISION OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Stace Hammond, Barristers & Solicitors, PO Box 19-101, Hamilton

Gilbert Walker, Solicitor PO Box 1595, Auckland

PIONEER INSURANCE COMPANY LIMITED V WHITE HERON MOTOR LODGE LIMITED HC NAP CIV 2007-441-1014  15 May 2008

[1]      On 12 May 2008, the applicant filed an “Application for Correction of an Accidental Slip” which was said to have been made in a judgment I issued in this matter dated 21 April 2008 (“the Judgment”).

[2]      The application related to paragraph [75] of the Judgment which provided:

“[75]  I find that the Guarantee Agreement was sufficiently executed to bind the applicant company and the applicant cannot deny liability for the guaranteed sum.  I therefore decline to set aside the respondent’s statutory demand.”

[3]      The grounds advanced by the applicant in the present application are set out in the application in the following way:

“1.The Judgment is predicated on the belief that the “guaranteed sum” referred to in para [75] of the Judgment is one hundred percent of the monies advanced by the respondent to the borrower;

2.The guaranteed sum is 75 percent of the amount of monies advanced by the respondent to the borrower;

3.The error is the result of an accidental omission by counsel to bring this to the attention of the Court.”

[4]      The application for correction is opposed by the respondent who has filed a formal Notice of Opposition dated 13 May 2008.

[5]      Essentially  in  its  opposition  to  the  present  application,  the  respondent contends  that  the  applicant’s  liability  under  the  Guarantee  and  Term  Loan Agreement, which were the subject of the Judgment, is not limited to 75% of the debt as asserted.  The respondent argues substantively that the applicant is liable as a principal debtor under the Term Loan Agreement and thus responsible for 100% of the guaranteed debt.

[6]      In any event, the  respondent’s position is that the Judgment contains no clerical mistake or error which could be said to arise from any accidental slip or omission and therefore the “Slip Rule” in r 12 High Court Rules does not apply here.    The  respondent  contends  that  the  applicant  is  seeking,  impermissibly,  to invoke the “Slip Rule” as a means of advancing (and seeking a determination of) an entirely new argument after this matter had been finally determined.  Counsel goes on to suggest that the only fair and just determination of the proposed new argument if it is to be pursued would require a further hearing and possibly further evidence.

[7]      The “Slip Rule” is contained in r 12 High Court Rules which provides:

“12.    Correction of accidental slip or omission

(1)    If any judgment or order contains a clerical mistake or an error arising from any accidental slip or omission, whether the mistake, error, slip, or omission was made by an officer of the Court or not, or if any judgment or order is so drawn up as not to  express  what  was  actually  decided  and  intended,  the judgment or order may be corrected by the Court, or, where the judgment or order was made by a Registrar, then by the Registrar.

(2)    The correction may be made by the Court or the Registrar, as the case may be, of its or his own motion or on an interlocutory application made for that purpose.

[8]      McGechan on Procedure at paras. HR12.01 and HR12.02 comments upon this rule in the following way:

“HR12.01 Purpose and scope of rule

This rule reflects the Court’s inherent jurisdiction to correct errors in orders as a result of a slip or accidental omission: Milson v Carter [1893] AC 638, at p 640; Nash v Nash (1995) 8 PRNZ 575 (CA). It extends to the correction of omissions resulting from the inadvertence of a legal adviser: Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 All ER 579; Gould v Vaggelas (1985) 62 ALR 527.

What is sought to be corrected must be the result of a slip; the rule may not be used where a more convenient form of order is subsequently thought of:

BNZ v Mulholland (1991) 4 PRNZ 299.  Nor may it be invoked to vary an order in a fundamental way: R v Cripps, ex p Muldoon [1983] 3 All ER 72. A litigant cannot use the rule to improve the judgment that has been obtained: Broadview Investments Co Pty Ltd v Corporate Interiors (NZ) Ltd12/8/98, Neazor J, HC Wellington CP123/92. The jurisdiction will not be invoked where determination of the question at hand would require the calling of further evidence: Brickell v A-G (2002) 16 PRNZ 557.

In Allan Scott Wines & Estates Holdings Ltd v Lloyd (2006) 18 PRNZ 199, the Court declined to change the name of a party in a judgment because the error was not a clerical mistake but a substantive error of misjoinder. HR12.02 Discretion

The Court’s power is discretionary and is sparingly exercised; the general rule as to the finality of judgments is not to be lightly weakened: BNZ v Mulholland (1991) 4 PRNZ 299; Gould v Vaggelas (1985) 62 ALR 527. An order may also be refused where an intervening event would render it inequitable or inexpedient: Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 All ER 579.

[9]      In  the  present  case  the  applicant  acknowledges  at  the  outset  that  the suggested error results from the “accidental omission by counsel to bring to the attention of the Court” what are said to be limitations in the Guarantee documentation.    As  I  have  noted  above,  the  respondent  however  disputes  that liability is so limited and argues that a proper determination of this new argument if it is pursued would require a further hearing and even perhaps further evidence.

[10]     Having  considered  all  these  matters  I  am  satisfied  that  the  suggested correction of the judgment cannot in any way be considered to be an “accidental slip or omission” for which the “Slip Rule” is appropriate.  I accept that what is proposed here is a completely new substantive argument on the part of the applicant. To suggest that the Judgment should be corrected for “an accidental slip or omission” under r 12 would in my view:

“……  go  beyond  expression  of  what  was  decided  and  intended  when judgment  was  given.    There  cannot  be  a  radical  departure  from  that

expression.” – Broadview Investments Co Pty Ltd v Corporate Interiors (NZ) Limited, High Court Wellington, 12 August 1998 CP 12392 per Neazor J.”

[11]     As I see it, what is proposed here by the applicant would be a clear variation of the Judgment or order in a fundamental way – R v Cripps, Ex Parte Muldoon.  I am satisfied this is a new argument on the part of the applicant which cannot be dealt with under the “Slip Rule”.  The appropriate course, if the applicant chooses to adopt it, is to appeal my earlier judgment.

[12]     R 12 High Court Rules in my view does not apply here also because in the present case, if any mistake was made at all, it involved a substantive (and acknowledged) error of judgment and oversight on the part of counsel for the applicant and not merely a clerical or minor slip or mistake – as was the case also in Allan Scott Wines v Lloyd.

[13]     For all these reasons I therefore decline the application for correction under the “Slip Rule” set out in r 12 High Court Rules.  The judgment stands.

[14]     If there may be any issue of costs with respect to this application then that can be the subject of appropriate memoranda from counsel.

‘Associate Judge D.I. Gendall’