Progressive Livestock Limited v Donaldson
[2022] NZHC 2491
•29 September 2022
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE
CIV-2021-476-24
[2022] NZHC 2491
BETWEEN PROGRESSIVE LIVESTOCK LIMITED
Plaintiff
AND
SCOTT JAMES DONALDSON
First Defendant
SLD AGRICULTURE LIMITED
Second Defendant
Hearing: 19 August 2022 (Papers filed 20 September 2022) Appearances:
T G Nation for Plaintiff G A Paine for Defendants
Judgment:
29 September 2022
JUDGMENT OF ASSOCIATE JUDGE LESTER
(strike out following non-compliance with unless orders)
PROGRESSIVE LIVESTOCK LIMITED v DONALDSON [2022] NZHC 2491 [29 September 2022]
[1] In this proceeding the defendants’ compliance with their discovery obligations has been unsatisfactory to say the least. The defendants’ failure to take their discovery obligations and the directions of the Court seriously led to the following unless orders being made.1
[2] The defendants were to file by 16 September 2022 an affidavit of documents covering the following documents:
(a)All documents relating to the transfer, sale or movement of the cows.
(b)NAIT records clarifying the transfer of cows and the person in control.
(c)Financial statements and accounting records showing the treatment of this transaction from an account perspective but specifically details recording the ownership of the cows, liability for payment if any, and proceeds of any sale.
(d)Statements of Position completed between 8 December 2019 and 1 December 2022 and provided to Mr Donaldson’s bank.
(e)NAIT numbers for the 260 cows at the Grey Valley Farm.
(f)Communications between the defendants and their bank after the contracts in issue were made.
(g)The email from Mr van Leeuwen to Mr Donaldson dated 5 July 2019 together with the full email communication and all other documentation relating to the arrangements discussed in the email.
1 Progressive Livestock Ltd v Donaldson [2022] NZHC 2245.
[3]A further order made on an unless basis was:
[27] If any of the documents I have ordered to be discovered are not available, the affidavit is to provide a full explanation as to the efforts taken to recover those documents and to produce copies of correspondence produced by or on behalf of the defendants aimed at recovering copies of those documents …
[4] While the unless orders required compliance by Friday 16 September 2022, Mr Donaldson’s affidavit was not filed until Tuesday 20 September 2022. Had that affidavit fully satisfied the terms of the unless order I would have been inclined to consider the delay would not have warranted striking out the defendants’ defences. However, the 20 September 2022 affidavit was another example of Mr Donaldson brushing over his discovery obligations.
[5] The orders made bound both defendants. Mr Donaldson, as the first defendant, has not provided disclosure in respect of his own financial statements. In his affidavit of 20 September 2022, Mr Donaldson says:
… the only financial statement and accounting record in existence for SLD Agriculture Ltd have been fully disclosed.
[6]The orders required both defendants to provide their financial statements.
[7] The issue in this proceeding is whether the plaintiff contracted with the first defendant personally, or his company, the second defendant. That dispute could not be resolved on the papers leading to the plaintiff’s application for summary judgment, which was dismissed in my judgment of 18 November 2021.2
[8] In my 2021 judgment I referred to the fact the plaintiff first dealt with Mr Donaldson in October and November 2018. Invoices issued to him personally appear to have been paid. The contracts upon which the plaintiff sued in this proceeding were entered into in April, May and June 2019 and so the dealings apparently with Mr Donaldson personally were a little over six months earlier.
2 Progressive Livestock Ltd v Donaldson [2021] NZHC 3112.
[9] Mr Donaldson does not address his personal financial statements nor deny they exist. This is not the only area of non-compliance with the unless orders.
[10] As noted, the contracts in issue in this proceeding were entered into in April, May and June 2019. In respect of Mr Donaldson’s communication with his bank I said in my Minute dated 16 May 2022:
[4] In his email of 27 January 2021 at 6.18pm, Mr Donaldson advises his bankers that between 8 December 2019 and 1 December 2020, he completed statements of position for his bank. That timeframe covers the timeframe after the contracts in issue in this case were made through to after the uplift of stock. What, if anything, those statements of position show in respect of the stock subject to the April, May and June [2019] contracts may be relevant. The defendants are to arrange for copies of those statements of position to be discovered.
…
[6] Communications between the defendants and their bank after the contracts in issue were made will show whether the second defendant was recording as assets or liabilities the stock and amounts payable in relation to the contracts in issue or not.
[11] Despite the unless order at paragraph [3] above and despite Mr Donaldson’s email above recording his further communication with his bankers between December 2019 and 1 December 2020, in his affidavit of 20 September 2022 he says:
[7]There was no communication after the contracts and issues were made, with the bank apart from the fact that Heartland Bank refused to further assist me and I no longer bank with them.
[12] Not only is Mr Donaldson’s evidence irreconcilable with his own email of 27 January 2021 to his bank, he makes no attempt whatsoever to comply with the order set out at [3] above. That order was made because of Mr Donaldson’s poor history of compliance with Court orders for discovery. The discovery orders were made because, based on the 27 January 2021 email, there were grounds to believe statements of position existed. Bare assertions by Mr Donaldson that he does not hold such documents were unacceptable, hence the requirement he demonstrate he had sought copies of the documents. The requirement that he demonstrate he had taken such steps was unambiguous. Again, there is not even a pretence from Mr Donaldson at attempting to comply with this important requirement.
[13] Nor is there any suggestion Mr Donaldson sought copies of the email chain from Mr van Leeuwen. Mr Donaldson does not provide any information about his ability to recover emails from his computer, or phone or email provider. The tenor of the one email provided is that it was part of a proposal – not a one-off. In a similar vein, no correspondence with the defendants’ accountant requesting information was produced. Mr Paine, counsel for the defendants, in a memorandum dated 18 August 2022 advised his instructions were: “… there is an issue with the accountant”. Mr Paine did not identify the issue which meant the accountant was not prepared to assist further “at this stage”.
[14] Given the defendants’ repeated non-compliance with their discovery obligations and their complete failure to deal with important aspects of the unless orders, I strike out the defendants’ defences and I direct that the plaintiff may proceed by way of formal proof. The defendants have been on notice for some time that their approach to their discovery obligations was unacceptable. The making of unless orders signalled the need for the defendants to fully comply with the orders.
[15] Any further affidavit the plaintiff wishes to file addressing the reasons leading to the summary judgment being dismissed is to be filed within 10 workings days of the date of this judgment, along with a comprehensive set of submissions, the intent being the Judge who deals with the formal proof application need not have to refer to the submissions from the summary judgment hearing.
[16] Costs in respect of the latest round of memoranda relating to the striking out of the defendants’ defences and in respect of the proceeding are, for the moment, reserved to be dealt with after the formal proof is determined.
[17] Mr Donaldson noted in his affidavit of 20 September 2022 that SLD Agriculture Limited has been placed in liquidation. As at 29 September 2022 the liquidation is not recorded on the Companies Office records. Once liquidation
occurs, the proceeding will be stayed against the company by virtue of s 248(1)(c) of the Companies Act 1993. Until then, this proceeding against the second defendant remain on foot.
Associate Judge Lester
Solicitors:
Timpany Walton, Timaru (for Plaintiff)
Staley Cardoza Lawyers, Dunedin (for First and Second Defendants)
Copy to counsel:
G A Paine, Barrister, Dunedin (for First and Second Defendants)