Renner v Renner
[2014] NZHC 2262
•17 September 2014
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV-2013-470-569 [2014] NZHC 2262
BETWEEN IAN RODNEY RENNER
Plaintiff
AND
CATHERINE MARY RENNER Defendant
Hearing: 17 September 2014 Counsel:
Appearance:
CT Gudsell QC (by telephone) and C Murphy for Plaintiff
DT Weaver and KE Cotter for DefendantI Dustin in person
Judgment:
17 September 2014
ORAL JUDGMENT OF ASSOCIATE JUDGE BELL
Solicitors: Mackenzie Elvin, Tauranga
Lyon O’Neale Arnold Lawyers Ltd, Tauranga
And to: I Dustin
Renner v Renner [2014] NZHC 2262 [17 September 2014]
[1] The close of pleadings date for this proceeding was 28 July 2014. The case has been set down for hearing for three days beginning 20 October 2014, just over four weeks away. Notwithstanding that, Mrs Renner filed an application on
8 September 2014 to have Mr Ian Dustin joined as a defendant. The application is under r 4.56 of the High Court Rules, which says:
A Judge may, at any stage of a proceeding, order that—
…
(b) the name of a person be added as a plaintiff or defendant because—
(i) the person ought to have been joined; or
(ii) the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
[2] This proceeding is a contribution claim between guarantors. There were, in fact, three guarantors. However, Mr Renner, who has paid more under the guarantee than Mrs Renner, has chosen to sue Mrs Renner alone and has not asked for contribution from Mr Dustin. At the outset, there seemed to be good reason for that as the parties agreed Mr Dustin was adjudicated bankrupt in March 2012.
[3] In my summary judgment decision of 5 March 2014, I said:1
It is common ground that Mr Dustin is insolvent. He is an undischarged bankrupt. No one looks to him for contribution.
[4] On 30 April 2014 I had a case management conference. My minute of that date said:
There are no proposals to join other parties.
[5] It turned out, however, that while Mr Dustin had been adjudicated bankrupt, he obtained an annulment of his bankruptcy later in 2012. His annulment was apparently under s 309(1)(b) of the Insolvency Act 2006. That provides that a bankruptcy may be annulled once the bankrupt has paid his debts and has met the
fees and expenses of the Official Assignee.
1 Renner v Renner [2014] NZHC 352 at [4].
[6] Because Mr Dustin’s bankruptcy was annulled, there was no discharge from bankruptcy and, accordingly, Mr Dustin has not been discharged from any liability under his guarantee. In other words, the annulment has revived his potential liability to a claim for contribution.
[7] The parties only became aware of this state of affairs in early August 2014, after the close of pleadings date. Mr Renner’s lawyers initially entertained the idea that it might be worth pursuing Mr Dustin and they made demand on him. They have since given up on that. They believe that Mr Dustin is not worth suing and that any attempt at recovery would be hopeless.
[8] Initially Mrs Renner’s lawyers understood that Mr Renner was also to pursue Mr Dustin. Mr Weaver says that once they became aware that Mr Renner was not going to join Mr Dustin in the proceeding, Mrs Renner took steps to have Mr Dustin joined.
[9] I note that the information that Mr Dustin’s bankruptcy had been annulled has come to both parties late. It should have been possible for both Mr Renner and Mrs Renner to establish Mr Dustin’s status earlier than they did. The information was available to both parties from the insolvency website.2 In my view, both sides must share responsibility for not learning about Mr Dustin’s status until very late. Both sides have to bear the consequences of that delay.
[10] The question is: what difference does it make that Mr Dustin is no longer a bankrupt and can be sued? In contribution claims amongst guarantors it is standard practice that all guarantors be joined in one proceeding so that all contributions can be determined together at one time, and all issues of liability can be settled once and
for all. That is a point made by Orde JA in Tucker v Bennett:3
A court of equity was peculiarly adapted to deal with the rights of sureties inter se because all might be joined as parties and it was immaterial who were plaintiffs and who defendants. A complete account could be taken of the amounts paid by each, whether to the creditor or by way of partial contribution as among themselves, and the amounts still to be contributed by
2 It is possible to search the Insolvency Register on the website of the Insolvency and Trustee
Service, v Bennett [1927] 2 DLR 42 (ONSC) at 47.
those who had paid less than their due proportion and to whom such contribution should be made could all be dealt with in one decree...
[11] The authors of Equity: Doctrines & Remedies4 have cited that passage to show the efficiency of courts of equity deciding contribution claims, as opposed to common law courts.
[12] If Mr Dustin’s status had been identified correctly by the parties before the close of pleadings date, I would have had little difficulty in directing that he be joined as a defendant. That could have been done on the plaintiff’s application.
[13] Mr Renner objects that, in this case, the defendant has applied to join another defendant. Mr Renner says that if Mr Dustin is to be in the proceeding at all, he should be a third party. It is for the plaintiff to decide whom he should pursue.
[14] There is, however, authority that a defendant can be joined on an application by another defendant. The matter is discussed in McGechan on Procedure, under the heading “Defendants seeking joinder”.5 A useful example of such a joinder is Duff
v Communicado Ltd.6 That was a case where the question was one of sharing the
benefits amongst potential claimants, whereas this is a case of sharing burdens amongst different obligors. In either case, it is important to have the question of contribution determined amongst all claimants/obligors, not just some of them.
[15] Against that, Mr Renner says that Mr Dustin is not worth suing. Mr Dustin, who has attended in person, also says that he is not worth suing. He says that his position is worse than it was when he was adjudicated bankrupt. He is dependent on his wife’s income to get by. He cannot afford to pay a lawyer. He also says that the Official Assignee examined his affairs and found that there were no assets worth pursuing. Mr Dustin raised that in response to Mr Weaver’s suggestion that preliminary enquiries suggest that there were assets in which Mr Dustin had an
interest which might realise something in a contribution claim.
4 RP Meagher JD Heydon and MJ Leeming Equity: Doctrine & Remedies (4th ed, Butterworths
LexisNexis, Chatswood (NSW), 2002) at [10-015].
5 McGechan on Procedure (online looseleaf ed, Brookers) at [HR4.56.12].
6 Duff v Communicado Ltd [1995] 3 NZLR 739 (HC).
[16] At this stage, those are simply matters of assertion. It remains to be seen whether Mr Dustin is worth pursuing. I have accepted the point that while Mr Dustin was bankrupt, it was entirely in order to leave him out of the proceeding. But now that he is out of bankruptcy and able to work, the possibility remains that some recovery action by the guarantors against him may produce something.
[17] Mr Renner objects that if Mrs Renner thinks Mr Dustin is worth pursuing, she can take her chances. I do not regard that as appropriate in a contribution claim where the Court is required to determine the contributions amongst all guarantors. The risk of non-payment is to be shared equally amongst them.
[18] In my view, Mr Dustin ought to be joined under r 4.56(1)(b)(i) and his presence before the Court is necessary under r 4.56(1)(b)(ii).
[19] I have considered whether there is any way by which the fixture could be kept with the hearing running only between Mr and Mrs Renner. I accept that once Mr Dustin is joined in the proceeding, it would not be possible for the fixture on
20 October to proceed. Mr Dustin would need to be served. He would need time in which to prepare a statement of defence. Ideally he ought to consult a lawyer although he protests that he does not have the money to pay one. Discovery may be required. He apparently has documents which may have some bearing on the issues in the case. A new fixture would be required.
[20] In my view, given the need for Mr Dustin to be before the Court, it would not be possible to have a hearing between Mr and Mrs Renner alone. Mr Gudsell QC pointed out that Mrs Renner is contesting liability and that it should be possible to have a hearing which determines matters of liability. That submission seemed to be leading to a suggestion that it is possible to have a part-hearing. In my view, it is desirable to avoid part-hearings when possible. Part-hearings can result in further appeals and more difficulties. They are often described as “treacherous shortcuts”. The only clean way to deal with the matter is to ensure that there is a hearing in which Mr Dustin is also a defendant and all issues are heard amongst all three parties. That is consistent with the view set out in Tucker v Bennett which I quoted.
[21] It follows from this that even though the close of pleadings date has passed, the late discovery of Mr Dustin’s status means that I should grant leave to the present application and I do grant that leave.
[22] I make an order joining Mr Dustin as a second defendant. [23] I give these directions:
(a) The fixture for 20 October 2014 is vacated.
(b)The plaintiff is to file and serve a new statement of claim showing Mr Dustin as a second defendant and setting out a contribution claim against Mr Dustin.
(c) Mr Dustin will have 25 working days in which to file a statement of defence.
(d)A case management conference is to be fixed once Mr Dustin has filed his statement of defence. At that conference I will give directions for discovery. I hope also at that conference to give fresh directions for a hearing.
Costs
I reserve costs for the present. It may be that matters will become clearer once this case goes to hearing. It may, for example, turn out that Mrs Renner is vindicated because Mr Dustin has been worth pursuing. Alternatively, it may be a time-wasting exercise. That will become apparent later on. There will be costs repercussions
whichever way the case goes.
Associate Judge R M Bell
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