R B Road 391 Limited v Johnstone HC Auckland CIV 2009-404-7048
[2010] NZHC 1788
•31 August 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-404-007048
BETWEEN R B ROAD 391 LIMITED Plaintiff
ANDM JOHNSTONE & ORS Defendants
CIV 2009-404-002126
AND BETWEEN M JOHNSTONE & ORS Plaintiffs
ANDHESKETH HENRY Defendant
Hearing: 30 August 2010
Appearances: N Penman-Chambers for R B Road 391 Limited and Hesketh Henry
G J Kohler for the Defendants, M Johnstone & Ors
Judgment: 31 August 2010
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
31.08.10 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors/counsel:
M Penman-Chambers, Hesketh Henry, Auckland – nicola[email protected]z /
al[email protected]
W Endean, Dawsons, Manukau – [email protected]G Kohler, Barrister – [email protected]
R B ROAD 391 LIMITED V M JOHNSTONE & ORS HC AK CIV 2009-404-007048 31 August 2010
Issues
[1] On behalf of the defendants Mr Kohler raises a jurisdictional issue in connection with the plaintiff’s intention of pursuing a hearing upon its damages claim in the outcome of a judgment upon a summary judgment claim in which I held the defendants did not have an arguable defence to the plaintiff’s claim. After the hearing on 5 July 2010 and before my judgment issued the following day the plaintiff advised it no longer required an order for specific performance and, assuming liability was found in its favour, it wished to pursue relief by its damages claim as pleaded in the alternative in both its statement of claim and in its summary judgment application.
[2] In the process of my making timetable orders to hear the plaintiff’s quantum claim Mr Kohler has challenged my ability to direct a hearing on a quantum claim. He submits the High Court rules prevent what he describes as a second summary judgment application where the first has, he says, already been determined. Finally he says this Court is functus because the Court of Appeal is now seized of the case determined by my judgment of 6 July 2010.
The judgment dated 6 July 2010
[3] On 5 July 2010 I heard cross applications for summary judgment. On 6 July
2010 I awarded judgment to R B Road 391 Limited against M Johnstone & Ors upon the cross claims. In that judgment, as I do in this, I will refer to R B Road 391
Limited as the plaintiff and M Johnstone & Ors as the defendants. I signed that judgment off at 2:15pm. A few minutes later and before the judgment was released at 4:00pm the plaintiff advised it no longer required an order for specific performance because earlier that afternoon it had on sold the subject property. Instead it sought to pursue a damages claim in its place.
[4] For the purpose of dealing with this event, I added an addendum to my judgment prior to the release of that judgment noting that the intended order granting specific performance to the plaintiff be cancelled. My addendum then noted the following:
[57] It follows in the outcome of my judgment:
a)The defendants have not validly avoided the agreement on the basis claimed by them;
b) The order for specific performance referred to in para [53] of my judgment is cancelled;
c) The Court awaits details of the plaintiff’s amended claim.
[5] The matter was then adjourned to a Chambers list for call on 22 July 2010. Mr Kohler appeared and advised he had recently received instructions to appeal my judgment as to liability.
[6] At that time I also made timetable orders requiring the plaintiff to file and serve an amended statement of claim, an amended summary judgment application and affidavits in support of that application. The matter was then adjourned to a Chambers list call on 19 August 2010 for mention and to schedule a fixture upon the amended summary judgment application.
[7] On 29 July 2010 the plaintiff filed a ‘first amended statement of claim’.
[8] On 6 August 2010 the plaintiff filed a ‘first amended application for summary judgment’ together with an affidavit in support containing the plaintiff’s quantum evidence.
[9] On 5 August 2010 the High Court received a copy of the defendants’ appeal filed with the Court of Appeal on 2 August 2010. The appeal was advanced on two broad grounds:
a) That I erred in granting summary judgment to the plaintiff;
b)Alternatively, having decided to order specific performance I permitted the plaintiff to amend its claim to substitute an alternative claim.
[10] In summary the defendants’ position upon its appeal is that my having heard the summary judgment application and having determined the issue of liability in
favour of the plaintiff and having initially been prepared to award specific performance in favour of the plaintiff I should not then have cancelled that order and permitted the process by which the claim for damages would be heard in lieu of the grant of an order for specific performance.
Background to dispute determined by my judgment dated 6 July 2010
[11] The parties had entered into an agreement for sale and purchase of a commercial development property. The parties’ written agreement anticipated conditions of consent being issued which would affect the development process. The defendants acknowledged it would be bound by conditions of consent which were likely or could reasonably have been anticipated being imposed.
[12] About a year later and after the sub-division consent conditions were issued by the Auckland City Council the defendants avoided the agreement claiming it was not satisfied with the conditions of the resource consent. Before me on the plaintiff’s summary judgment application it was argued whether the subdivision consent conditions were not likely or could not reasonably have been anticipated being imposed. The defendants’ position was that the resource consent conditions were tied to contamination issues. I disagreed. I accepted the evidence that contamination issues had been eliminated prior to the issue of resource consent conditions. I rejected the worth of evidence on behalf of the defendants’ supporting claims that consent conditions could not have been expected.
The defendants’ jurisdictional challenge
[13] In summary it has two elements:
1.That after my summary judgment decision the High Court was functus and is now all the more so because of the appeal that has been lodged.
2.The Court cannot entertain a second application either as an amended application or as a new application because the rules
do not provide for it but in any event because the Court is functus.
[14] Mr Kohler comments upon the plaintiff’s original summary judgment application as one which in the conventional sense applied first for an order for specific performance. Mr Kohler submits that a contemporaneous application for damages in an amount to be quantified prior to trial was not as conventional for by the words used it contemplates an application for judgment upon liability alone, before there is a later trial to deal with quantum issues. By Mr Kohler’s assessment the plaintiff is not initially pleading that it wants the damages fixed at the hearing stage but later, ‘prior to trial’.
[15] Mr Kohler highlights what he suggests is a dichotomy of approach and comments that it appears from information he has been given (because he was not counsel at the hearing) that the plaintiff’s case was only advanced on the basis of an order for specific performance being granted.
[16] This dichotomy is further emphasised by the wording of the plaintiff’s ‘first amended application for summary judgment’. By that the plaintiff relies on my earlier finding of liability and nominates the sum it seeks judgment for and no longer requires, as originally it did, that those damages be “quantified prior to trial”.
[17] Mr Kohler’s point is that the character of the amended summary judgment application shows sufficient differences to indicate it is in essence a second summary judgment application and further that it is made after the first summary judgment application was determined. The rules do not provide for it he says and the only case authorities that come close to allowing it are readily distinguished on the facts. Further, Mr Kohler submits I did not, in the addendum, purport to keep the judgment alive.
[18] Mr Kohler submits that from the delivery of my decision and the lodgement of the appeal, this Court is functus. Although some authorities have permitted the Court to deal with minor supplementary issues such as costs or timetable directions anything more is not permitted. Mr Kohler submits the plaintiff was not entitled to
informally amend its claim and the Court was not entitled to proceed as it did by its addendum to cancel the intended order for specific performance and permit a claim for damages to be substituted.
[19] Mr Kohler submits that whether the plaintiff’s current application is an amended application or is a second application, it matters not. The rules do not contemplate a second application. Nor does any rule permit a plaintiff to amend its application post judgment. Further and because of the appeal the Court of Appeal is now seized of the very application at issue.
Considerations
[20] By its original statement of claim the plaintiff sought an order for specific performance and in the alternative damages in an amount to be quantified prior to trial. The pleadings identified an issue over the defendants’ purported avoidance of the agreement. In its application for summary judgment notification was given of an application for orders for specific performance or in the alternative for damages in an amount to be quantified prior to trial. In respect of its application for specific performance the application notifies that order would be sought, inter alia, if damages might not constitute an adequate remedy.
[21] Mr Kohler refers to Rule 12.3 as if it is an alternative process available to that prescribed in Rule 12.4. Rule 12.4 refers to the requirements of filing summary judgment applications. Rule 12.3 refers to a process that enables a Court to give judgment on the issue of liability and to defer the issue of quantum to a later date. Mr Kohler refers to the use of 12.3 as if it should only be adopted by an applicant seeking a determination as to liability. Respectfully I disagree. I agree with Ms Penman-Chambers that it is a permissive provision enabling the Court to enter judgment for liability only. In practice a summary judgment application is seldom filed for the purpose only of determining liability. Rather in the course of the process, be it because of the opposition filed or otherwise, an applicant may elect, or the parties may agree, that the hearing should continue on a liability only basis. Rule
12.3 enables that to be done. It enables a judgment on the issue of liability and
permits the later scheduling of a trial (hearing) with the sole question for determination being the amount for which judgment should be entered.
[22] It has been submitted that this Court is functus because the issue before me was determined by me on 6 July 2010, and also because my judgment has been appealed. But what has been appealed is the judgment as to liability. The Court is yet to hear evidence to assist it in quantifying the amount for which judgment should be entered. My judgment issued at 4:00pm on 6 July 2010. By it I determined liability. I intended to award specific performance but did not, instead deferring to a later time to determine the extent of damages to be awarded.
[23] In my assessment liability alone had been determined and I accept I was functus and could not revisit that determination. I considered there was no impediment to my continuing to function to deal with the issue of quantum which was not to be determined on 6 July 2010.
[24] I consider the defendants approach is to unnecessarily restrict the summary judgment process, and it misinterprets what in fact occurred. What occurred is that the plaintiff has proved the liability aspects of its claim, and no longer needs one of the two options of relief sought by its summary judgment application. It has sought and I have sanctioned an amendment of the pleadings of the plaintiff in order to prove the alternative form of relief always sought. Mr Kohler alludes to a dichotomy of approach by the plaintiff as evidenced by the difference in the form of relief sought by its separate summary judgment applications. That does not, I think, set the amended application apart from the original application.
[25] We are constantly reminded by other Judges, as well as by ourselves of the robust utility of the summary judgment process. In delivering the judgment of Cegami Investments Ltd v AMP Financial Corporation (NZ) Ltd [1] Casey J observed:
[1] 2 NZLR [1990] 308
There is no justification for holding the summary judgment rules suspect and needing to be strictly confined because they are thought to deprive defendants of the privilege of a full trial. They are aimed at cases in which the plaintiff can establish there is no genuine defence, and they should be approached and applied in a way that will most effectively enable the Court
to reach a conclusion on the question. With this in mind we see no good reason why the ordinary provisions about amendment should not apply to such proceedings if the justice of the case requires it and there is no prejudice to the defendant. It would be a matter for regret if the salutary rules became hedged with restrictive interpretations narrowing the ordinary scope of amendment, regardless of the merits of the application and the position of the parties. In this case AFC’s change of approach was prompted by Cegami’s own action in making it clear that it was not going to honour their contract or accept a share. It really introduced nothing new. Formal application for leave to amend may have been appropriate, but we are satisfied the Master was correct to allow the summary judgment application to proceed on the new basis.
[26] Cegami is arguably distinguishable from the present case, to the extent that an amended pleading was allowed after the hearing but in advance of His Honour’s decision as to liability.
[27] In the case of BNZ Finance Ltd v Smith & Leuchars [2]endorsed the desirability of a justice oriented approach and permitted amendment to a summary judgment case as late as on appeal. The Court added that:
[2] [1991] 3 NZLR 659
... while late appeals (even as late as on appeal) in summary judgment cases are not to be encouraged or lightly allowed, debt-collecting litigation commonly brings new circumstances as time is consumed. The Courts have to deal with this class of case as realistically and untechnically as they can consistently with justice to a defendant.
[28] Mr Kohler submits that authority can be distinguished in this case which he says is not a debt collecting case. In that case there had been a claim for loan repayments unpaid. By the time the matter came to appeal the principle loan amount had become payable. Arguably, for that reason the Court permitted an amendment to a summary judgment case.
[29] Perhaps the present case is not one describable as a debt collecting case because there is a sum certain which has been claimed. On the other hand reduced to its simplest terms this case is about a purchaser failing to honour contractual obligations where it has already been found the purchaser had no proper reason to avoid that obligation.
[30] Mr Kohler submits that no formal application for leave was made by the plaintiff to amend its summary judgment application. In my judgment the summary judgment process should not be inhibited by a lack of formal application for leave unless considerations of prejudice preclude it. In this case formal leave was not required when liability had been determined and the successful party no longer needed one of two relief options originally pleaded.
[31] Finally, Ms Penman-Chambers has raised an issue concerning the nature and purpose of this hearing. She submits that by it the defendants seek to review the process by which I have chosen to timetable the plaintiff’s quantum claim. Ms Penman-Chambers submits that those decisions by myself in chambers are required to be reviewed within five working days but were not. Therefore she submits they are no longer challengeable before the Court of Appeal, that Court being limited to a review of my liability determination.
[32] Probably Ms Penman-Chambers is correct but I note the defendants have appealed the post judgment orders as well and so I do not propose to make any additional ruling upon this submission of Ms Penman-Chambers.
Result
[33] There was no second application but instead an amended application for summary judgment to determine a matter not decided by my judgment of 6 July
2010.
[34] It is desirable to enable upon a summary judgment application which determines liability a process by which quantum can separately and conveniently be subsequently determined. In the current economic climate this Court is deluged by claims from, usually, plaintiff vendors seeking to enforce a contract with/recover losses from defaulting purchasers. It is conventional, and in this respect I disagree with Mr Kohler, for the Court to receive statements of claim and summary judgment applications seeking both specific performance and in the alternative damages. The former is about liability, the latter as well about quantum. Initially plaintiffs seek specific performance expecting an order requiring a defendant to pay the contract
price plus penalties will return more than would be recovered from a damages claim. The latter process usually involves a plaintiff having to resell the contract property, a process which itself is frequently subject to a challenge by defendants. It is an uncertain process, often costly and drawn out.
[35] The summary judgment Court is familiar with the vagaries of these relief options. Usually plaintiffs choose a specific performance relief oriented approach. The summary judgment Court and the rules that support it should not inhibit a process of enabling a plaintiff to opt for a change of relief outcome where it is appropriate and where no real surprise nor prejudice occurs as a result.
[36] In this case I refuse to review the actions I have prescribed by which this Court can process the plaintiff’s application for its damages claim to be heard – notwithstanding there is an appeal against my determination of liability in favour of the plaintiff.
Application for stay
[37] On 26 August 2010 the defendants filed an application to stay this proceeding pending determination of their appeal. I now need to consider this application because I have ruled that I have jurisdiction to permit the plaintiff to proceed post judgment.
[38] In my judgment the stay application must fail. Upon it I have not received any affidavit evidence. None is required. This morning Ms Penman-Chambers filed a notice of opposition to the stay application. If leave for same is required to be filed then it is accordingly granted.
[39] The brief submissions of counsel indicate there is no dispute regarding applicable principles. This case does not concern third parties, novelty or public interest considerations. There is no evidence to suggest a lack of bad faith by the defendants in advancing their appeal.
[40] As best Mr Kohler can determine, an appeal hearing would not be available before a Court comprised of permanent members before February/March. An appeal before a Court comprising a permanent member and two High Court judges could be available as soon as November this year. Mr Kohler assures the Court of his and his client’s commitment to have the appeal heard as promptly as can be arranged and considers it could be heard before a Court that includes two High Court Judges.
[41] In Mr Kohler’s submission the stay application does not concern the rights of a plaintiff to enjoy the fruits of a judgment, as opposed to the concerns of an appellant whose rights of appeal would be rendered nugatory if required to forthwith make payment of a judgment sum.
[42] Of course, in this case neither consideration applies particularly. The plaintiff does not have judgment for a sum of money it can enforce but must await a hearing before that sum can be quantified. The defendants are not presently obliged to pay up a sum certain to the plaintiff. The purpose of its stay application is to delay the process by which that sum certain will be determined.
[43] Mr Kohler submits, I think correctly, that the stay application is about considerations of practicalities. That said, I do not think those considerations in the balance favour the defendants.
[44] The defendants have not yet filed a case on appeal but that is understandable as the appeal was filed just four weeks ago. The case on appeal must be filed within six months. Realistically that process cannot be hastened unless this Court, as a condition of grant of stay, required the case on appeal to be filed within a certain timeframe. In this case that would require time to be given to deal with the jurisdictional matters raised before me yesterday. Even if this Court was to grant a stay conditionally it could not require a case on appeal to be filed by the end of September 2010. It is very unlikely the Court of Appeal, however comprised, could hear an appeal before next year.
[45] Meanwhile this Court is well placed to schedule an early hearing upon the quantum application. There is a benefit in having that matter determined promptly
so that if this Court’s judgment as to quantum is appealed that appeal can be heard at the same time as the defendants’ appeals already filed.
[46] The defendants complain they will needlessly be put to the cost of obtaining evidence in defence of the quantum claim if they were to succeed on their appeal of my liability finding. Perhaps, but from the beginning of this proceeding that has always been an economic probability.
[47] In the outcome of the quantum hearing both parties of course will have a right of appeal. A reasonable possibility in this case is that the defendants will appeal the decision fixing the quantum of the plaintiff’s claim – regardless of whether or not the Court of Appeal has given its judgment on the other matters in this proceeding before it. Court resources and considerations of justice are better served by ensuring that all matters in issue between the parties are able to be heard by the Court of Appeal at the same time. This Court is confident that the quantum hearing issue can be concluded well before the other matters already before the Court of Appeal can be heard by that Court.
Result
[48] The application for stay is refused.
Other orders
[49] The defendants are to file and serve their opposition and evidence in opposition to the plaintiff’s amended application for summary judgment, by 30
September 2010. The plaintiff’s reply affidavit evidence if any is to be filed and served by 14 October 2010.
[50] I direct the Court schedule a half day hearing upon the plaintiff’s quantum application on 6 December 2010 at 10:00am.
[51] No later than eight working days prior to the scheduled fixture the plaintiff is to file and serve a synopsis of submissions, bundle of authorities and a paginated bundle of pleadings. No later than four workings day prior to the fixture the defendants are to file and serve a synopsis of submissions and a bundle of documents.
Associate Judge Christiansen
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