Robinson v Whangarei Heads Enterprises Ltd
[2015] NZHC 1147
•27 May 2015
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IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2012-488-000185 [2015] NZHC 1147
BETWEEN JOHN CLIFFORD WALTER ROBINSON
Plaintiff
AND
WHANGAREI HEADS ENTERPRISES LIMITED
First Defendant
VICTOR LEONARD FREAKLEY Second Defendant
Hearing: 16, 17 February 2015
(Submissions: 9, 10 March 2015)
Appearances:
M Corlett for Plaintiff
S R Ebert for DefendantsJudgment:
27 May 2015
JUDGMENT OF GILBERT J
This judgment is delivered by me on 27 May 2015 at 11.30 am pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
ROBINSON v WHANGAREI HEADS ENTERPRISES LTD & ANOR [2015] NZHC 1147 [27 May 2015]
Introduction
[1] On 21 March 2012, Whangarei Heads Enterprises Limited (the Company) applied without notice and under extreme urgency for an order pursuant to s 55 of the Judicature Act 1908 for the arrest of Mr Robinson after he took possession of a number of items of contracting equipment belonging to the Company. The order was duly made and executed that day. Mr Robinson was arrested as he was about to board an aircraft bound for Vanuatu. He was taken to Mt Eden Prison and held in custody for approximately 20 hours before being released.
[2] Mr Robinson claims that there were no reasonable and proper grounds for his arrest and that the application was made to force him to return the contracting equipment, a purpose outside the scope of s 55. He also claims that the Company and its sole director, Mr Freakley, acted with malice in bringing the application. He sues the Company and Mr Freakley for abusing the process of the Court and for malicious prosecution of civil proceedings against him. Mr Robinson seeks general damages to compensate for discomfort, embarrassment and the damage to his reputation he suffered as a result of his arrest and detention in custody. He also seeks exemplary damages.
[3] In the event that Mr Robinson fails on both of his causes of action, he seeks an order requiring the Company to pay damages pursuant to the undertaking as to damages it filed in support of its application for arrest.
[4] The defendants deny making the application for Mr Robinson’s arrest for an improper purpose or with malice. They maintain that there were reasonable and proper grounds for the application. They deny that they abused the process of the Court or procured the order maliciously.
Background
[5] It is necessary to set out the background circumstances which led to the arrest application.
[6] Mr Robinson and Mr Freakley formed the Company in November 2009 as equal shareholders and co-directors. The Company sold roading metals, undertook landscape works and hired out plant and equipment. Mr Robinson continued to operate a 40 hectare quarry in Opua through his company, Robinson Group Limited, as well as an exporting business. He also frequently travelled to Vanuatu where he had other business interests.
[7] By early 2011, Mr Robinson was facing serious financial difficulties as a result of the general economic downturn, particularly in Northland. Mr Robinson wished to explore ways of trying to protect his assets in the event of Robinson Group Limited being placed in liquidation and him being made bankrupt. It was in this context that Mr Robinson transferred his shares in the Company to Mr Freakley for a notional consideration of $250,000. This was satisfied by a deed recording a reduction of $250,000 to an outstanding term loan of $750,000 Mr Freakley had made to Robinson Group Limited which Mr Robinson had guaranteed. Because the shares were owned by Mr Robinson, a further deed was prepared recording an advance of $250,000 by him to Robinson Group Limited. These documents were prepared by Mr Robinson’s solicitor and executed in about October 2011 but back-dated to 31 March 2011.
[8] Mr Robinson remained a director despite the transfer. He claims that the shares were transferred to Mr Freakley on the basis that he would hold them for Mr Robinson in trust until agreement was reached on which party would buy the other out and on what terms. Mr Freakley says that the transfer was absolute and there was no discussion of any trust. I accept Mr Freakley’s evidence on this issue. The contemporaneous documents, including the transaction documents prepared by Mr Robinson’s solicitor, are inconsistent with any trust arrangement. The agreement that Mr Robinson would continue as a director simply recognised that he had not been paid for his shares.
[9] Mr Freakley and Mr Robinson subsequently agreed on a value for the company of $900,000. On this basis, Mr Freakley would have to pay $316,940 for Mr Robinson’s shares taking into account that Mr Freakley had invested more money in the business. Mr Freakley was not able to pay the agreed price at that
stage but he agreed to pay interest on the sum of $316,940 at the rate of 4 per cent per annum. This amounted to $1,056.47 per month and was to be paid in cash.
[10] Mr Freakley arranged for the Company to make two interest payments, both by cheque. The first payment was made on 12 December 2011 and the second on
16 January 2012. Mr Freakley ceased making payments at this time because he discovered that Mr Robinson had invoiced Whangarei District Council for contract works which Mr Freakley believed had been undertaken by the company. The failure to make further interest payments exacerbated Mr Robinson’s already precarious financial position.
[11] According to Mr Robinson, matters came to a head on 16 March 2012 when Mr Freakley advised him that he was not going to pay for his shares and was not going to make any further interest payments. In an attempt to secure his position and force Mr Freakley to reconsider, Mr Robinson uplifted four items of equipment belonging to the Company and hid these items in various locations over the weekend of 17 and 18 March 2012.
[12] A neighbour alerted Mr Freakley that equipment was being removed from the Company’s yard. Mr Freakley went to the yard and found that some equipment was missing. He reported the matter to the Police that day but was advised that they could not assist because Mr Robinson remained a director of the Company. The Police considered that this was a civil matter and suggested that Mr Freakley seek advice from his solicitor.
[13] Mr Robinson also contacted the Police and informed them of what he had done. He prepared two documents setting out his position and arranged for a constable to hand these to Mr Freakley on 19 March 2012. The first of these was headed “Statement” and the second, “Notification of Trespass”. The statement relevantly reads:
John Robinson
19 March 2012
Victor Leonard Freakley
STATEMENT
As a Director of Whangarei Heads Enterprises and Co-Owner of the business, I have taken certain steps to protect my equity in Whangarei Heads Enterprises.
Your statement that you no longer intend to honour your agreement with me with regard to the transfer of my shares into your name and the failure by you to make the agreed monthly payment has forced me to uplift plant and machinery to be held in storage until this matter can be resolved.
…
You have accounts outstanding to JVJ Holdings and product held on site that is either the property of John Robinson or the Robinson Group.1 This stock or items were to be paid for as sold. Unless payment is made today of the outstanding invoice, as well as the invoice up to date, proceedings will be issued to reclaim the debt.
As I am aware that technically you are a 100% share holder in Whangarei Heads Enterprises until such time as the share transfer can be made null and void by the Courts, I will be resigning as a Director until such time as the Courts reinstate my rightful shares.
If you wish to avoid the disruption so as both of us can get on with things, then you are free to contact me and discuss the matter.
“John Robinson”
John Robinson
Copy to: Thomson Wilson2
[14] The trespass notice read as follows:
John Robinson
19 March 2012
Victor Leonard Freakley
NOTIFICATION OF TRESPASS
You are not to enter the property at 2412 Whangarei Heads Road, or the Kauri Yard situated on Vinegar Hill Road, or any storage facility or land on which machinery or equipment is being stored as listed.
1 JVJ Holdings was a joint venture partnership between Mr Robinson and Mr and Mrs Freakley.
2 Thomson Wilson were Mr Robinson’s solicitors.
John Deere Tractor
Hitachi LX70
Komatsu 1.8 tonne Digger and Trailer
Log Splitter
This is a notice handed to you by John Robinson.
“John Robinson”
Copy to: Thomson Wilson
[15] Mr Freakley took advice from his solicitors who advised that he could remove Mr Robinson as a director of the Company because Mr Freakley held all of the shares. Mr Freakley signed the necessary resolution on 18 March 2012 and instructed his solicitor to register the transfer the following day.
[16] On the evening of 19 March 2012, at a local club where Mr Freakley and Mr Robinson were both members, Mr Robinson spoke to Mr Freakley and offered to return the equipment the following day. Mr Freakley told Mr Robinson that he would be trespassing if he attempted to enter the Company’s premises and that he would have to leave the equipment at the gate or arrange for someone else to bring it back.
[17] Mr Robinson claims that he was unable to arrange for anyone else to return the equipment on 20 March 2012. Mr Freakley was aware that Mr Robinson was due to travel to Vanuatu the next day. He knew that Mr Robinson had personal and business interests in Vanuatu and frequently travelled there for short periods.
[18] Early on 20 March 2012, Mr Freakley’s solicitors wrote to Mr Robinson’s solicitors demanding the immediate return of the equipment. They advised that if this did not occur by noon that day, they were instructed to “obtain a writ of arrest” from the High Court.
The arrest application
[19] On 21 March 2012, without further notice to Mr Robinson or his solicitors, Mr Freakley arranged for the Company to apply for an order directing that Mr Robinson be arrested, taken to Mt Eden Prison and kept there for a period of one
day. The application was made in reliance on s 55 of the Judicature Act which relevantly provides:
55 Power under certain circumstances to arrest defendant about to quit New Zealand
…
(2) Where in any civil proceedings in the High Court in which, if brought before the first day of October, 1874 (being the date of the coming into operation of the Imprisonment for Debt Abolition Act 1874), the defendant would have been liable to arrest, the plaintiff proves at any time before final judgment, by evidence on oath to the satisfaction of a Judge of the court, that the plaintiff has good cause of action against the defendant to the amount of $100 or upwards, and that there is probable cause for believing that the defendant is about to quit New Zealand unless he is apprehended, and that the absence of the defendant from New Zealand will materially prejudice the plaintiff in the prosecution of those proceedings, such Judge may, in the prescribed manner, order such defendant to be arrested and imprisoned for a period not exceeding 6 months, unless and until he has sooner given the prescribed security, not exceeding the amount claimed in those proceedings, that he will not go out of New Zealand without the leave of the High Court.
[20] Section 55 is concerned only with the situation where, after proceedings have been filed, a defendant threatens to quit New Zealand in circumstances where his or her absence will materially prejudice the plaintiff in prosecuting its claims and obtaining judgment. Such prejudice will only arise if the defendant’s evidence is required to prove the claims. The section is not designed to enable a plaintiff to obtain security for its claim prior to judgment, recover property or otherwise obtain
the fruits of any judgment.3
[21] The company relied on the following grounds in its application:
a)The respondent has taken, and failed to return, significant items of plant and equipment belonging to the applicant and has also taken, and failed to return, the applicant company’s cheque book (the “Company Property”);4 and
b) The applicant has made demand for the Company Property; and
c) The Company Property has not been returned to the applicant; and
3 R Sutton The Law of Creditors’ Remedies in New Zealand (Butterworths, Wellington, 1978) at
18-19; McGechan on Procedure (looseleaf ed, Brookers) at [55.01].
4 Mr Freakley acknowledges that Mr Robinson did not take the company cheque book and that this was later found in the drawer of a desk that Mr Robinson worked from at the Company’s premises.
d)There is good cause of action against the respondent for an amount of money exceeding $100; and
e) The respondent has expressed his intentions to leave New Zealand at
1:05pm today; and
f) The applicant has no other reasonable way of securing the value of the Company Property or recovery of the Company Property once the applicant has left New Zealand; and
g) Significant prejudice will be caused to the applicant if the respondent leaves New Zealand without first returning the Company Property or providing security for the value of the Company Property; and
h)The respondent’s absence from New Zealand will materially prejudice the applicant from prosecuting its claim, and obtaining judgment, against the respondent; and
i) As appears in the Affidavit of Victor Leonard Freakley dated
21 March 2012 filed herein.
[22] I will address later whether there were reasonable and proper grounds for the application and whether it was made for a purpose within the scope of the section. However, I note at this stage that only ground (h) is directed to the requirement for the Company to demonstrate that Mr Robinson’s absence from New Zealand would materially prejudice the prosecution of proceedings against him.
[23] The assertion of material prejudice in ground (h) was not supported by Mr Freakley’s affidavit. He did not explain why Mr Robinson’s evidence might be required to prove any claim that the company might bring against Mr Robinson for wrongly removing the company’s equipment.
[24] Mr Freakley said in his affidavit that Mr Robinson had advised him “about a week ago” that he was intending to fly to Vanuatu on 21 March 2012. Mr Freakley ascertained that the only flight leaving New Zealand for Vanuatu was at 1:05pm that day. He stated, without giving reasons, that he believed that once Mr Robinson left New Zealand he would not be back for a long time and it was his “firmly held view” that Mr Robinson intended to sell the equipment for his personal gain, or have someone else sell the equipment on his behalf, or attempt to move it out of New Zealand. Mr Freakley stated that the Company “will want to take proceedings against Mr Robinson” to recover the equipment but would have difficulty serving
him with the proceedings after he left New Zealand. Mr Freakley concluded his affidavit by stating:
The only way I can adequately secure the Company’s position is to prevent Mr Robinson from leaving New Zealand until he returns the Equipment to me or the Company.
In order to recover the Equipment prior to Mr Robinson leaving
New Zealand I have no other option than to seek this order from the Court.
[25] Mr Ebert, who prepared the Court documents and certified that the application complied with the rules, filed written submissions in support of the arrest application which relevantly stated:
The orders sought are required in order to assist the applicant to obtain judgment against the respondent for the return of its property. Without the orders now sought the applicant will not be able to prosecute their case. In the affidavit the applicant’s evidence is that they will likely be unable to find the respondent overseas to serve him with any legal process.
The respondent’s evidence will be required in such legal process because the respondent knows where the plant and equipment is; the applicant does not know where that property is. The applicant just knows that it has been taken from the possession of the company (the applicant). The whereabouts of the plant and equipment is vitally important if the applicant is to have the property returned to it in specie. It would cost much more than the value of the plant and equipment - $140,000 approx (to replace it with new or second-hand equivalent plant). The case for the applicant (to recover the property in specie) cannot be proved without examining the respondent. The respondent has knowledge of where the property is or where it may be from time to time. At present, and without the return of the property, the applicant is unable to earn an income from the plant and equipment that has been taken by the respondent and not returned.
[26] The application was filed on the morning of 21 March 2012 and the order was made shortly thereafter. Mr Robinson was arrested and taken into custody in the circumstances I have described. When he was brought before the Court the following day, he disclosed the location of the equipment and it was promptly returned.
[27] It appears that Mr Ebert did not inquire into the reasons why Mr Robinson might have uplifted the equipment. As a result, the Court was not informed about the background to the dispute including Mr Freakley’s refusal to pay for Mr Robinson’s shares or the agreed interest. For the same reason, the Court was not informed of the statement and trespass notice dated 19 March 2012 which explained
why Mr Robinson had taken the equipment and provided compelling evidence to prove any claim by the company in conversion or detinue. Nor was the Court informed about Mr Robinson’s continuing business interests in New Zealand.
[28] The Court was also not informed that Mr Robinson needed to return to New Zealand shortly to undergo surgery. Mr Freakley knew that Mr Robinson required an operation because he had fielded a call from the doctor’s surgery concerning this. Mr Freakley recalled receiving this telephone call but did not remember taking a note of it. However, in his affidavit sworn on 25 July 2012, Mr Freakley stated that he did prepare a telephone note although he maintained that he was unaware of the details of the proposed operation. Raewyn Bowyer, an employee who worked for the company, recalled that Mr Freakley advised her following this telephone call that the proposed date of the operation was
23 April 2012. I accept Mrs Bowyer’s evidence about this. In any event, whether or not Mr Freakley was aware of the exact date, he knew that Mr Robinson required surgery in New Zealand in the near future. This was also not disclosed to the Court.
Abuse of process
[29] The tort of abuse of process was first recognised in Grainger v Hill.5 In that case the defendants obtained an order for the arrest of the plaintiff by falsely asserting that he had failed to pay a debt that was in fact not yet due. The defendants had become concerned about the adequacy of their security for a loan they had made to the plaintiff and their objective in seeking a warrant for his arrest was to force him to hand over the ship’s register. This would prevent him from using the ship, thereby pressuring him to make early repayment of the loan. The Sheriff was accordingly instructed by the defendants to advise the plaintiff that he would not be arrested if the register was handed over. Faced with the threat of imprisonment, the plaintiff handed over the register and shortly repaid the loan. The plaintiff succeeded in his subsequent action for damages to compensate for the loss of profits from ship
voyages that could not be undertaken without possession of the register.
5 Grainger v Hill (1838) 4 Bing (NC) 212, 132 ER 769 (Comm Pleas).
[30] Tindall CJ explained the difference between an action for malicious arrest or malicious prosecution and an action founded on abuse of the process of the law. The former requires proof not only that the proceeding was pursued maliciously but also that it was pursued without reasonable and probable cause and that it terminated in the plaintiff’s favour. These are not requirements of the tort of abuse of process which is concerned with the improper use of the Court’s processes to effect an object
outside their scope:6
In the case of a malicious arrest, the sheriff at least is instructed to pursue the exigency of the writ: here the directions given, to compel the Plaintiff to yield up the register, were no part of the duty enjoined by the writ... his complaint being that the process of the law has been abused, to effect an object not within the scope of the process, it is immaterial whether the suit which that process commenced has been determined or not, or whether it not it was founded on reasonable and probable cause.
[31] The Court concluded that the tort of abuse of process was established by proof that the defendants had sought the warrant, not for the purpose of arresting the plaintiff, but to extort the ship’s register to which they had no right by threat of imprisonment. It therefore did not matter whether or not there were reasonable and proper grounds for the arrest.
[32] The distinction between malicious prosecution and abuse of process was also examined by the High Court of Australia in Varawa v Howard Smith Company Ltd.7
In that case the respondents brought proceedings alleging that the appellant had breached a contract for the sale of a ship. At the same time as issuing the proceedings, the respondents obtained an order for the arrest and imprisonment of the appellant pending payment of bail. Before the proceedings were determined in the appellant’s favour, he brought proceedings for malicious prosecution and abuse of process. The High Court of Australia discussed at some length the elements of these torts before concluding that neither cause of action was made out on the facts.
[33] Griffiths CJ summarised the distinction between the two torts as follows:8
As at present advised, I am disposed to think that the true distinction is between cases in which the real complaint is of an act which is within the scope of the process and cases in which the complaint is of an act which
6 At [221].
7 Varawa v Howard Smith Company Ltd [1911] 13 CLR 35.
8 At 56.
would be equally outside the scope or operation of the process itself whether that process was rightfully or wrongfully issued.
[34] In his concurring judgment, O’Connor J explained the difference in the
following terms:9
... the complaint must be that the process of the Court has been abused to effect an object not within the scope of the process. That statement expresses in as few words as possible what is necessary to constitute the cause of action for malicious abuse of process... It follows that, if the ca. re. proceedings were taken in New South Wales merely with the object of more effectively securing payment of the amount claimed by the ordinary processes of the law, there would be no cause of action for malicious abuse of process even though the claim were unfounded to the plaintiff’s knowledge and the application for the order to hold to bail were supported by false affidavits. The cause of action in that case would be for malicious arrest.
[35] Isaacs J explained the term “abuse of process” as follows:10
In the sense requisite to sustain an action, the term “abuse of process” connotes that the process is employed for some purpose other than the attainment of the claim in the action. If the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the Court is asked to adjudicate they are regarded as an abuse of process for this purpose...
[36] The Court concluded that no claim lay for abuse of process because the intended object or purpose of the arrest and imprisonment was within the scope of the Court’s process. The proper claim, if there was one, was for malicious arrest. The appellant failed to establish this alternative claim because it could not show that the respondents maliciously and without reasonable and probable cause obtained his arrest and imprisonment. Isaacs J took the view that any such claim was also premature because the original order had not been set aside and the earlier proceedings had not terminated in the appellant’s favour at the time he issued the present proceeding.
[37] The High Court of Australia again considered the scope of the tort of abuse of process in Dowling v The Colonial Mutual Life Assurance Society Limited.11 In that case, a creditor sought an order for sequestration as a means of enabling the creditor
to examine the debtor about the identity of persons who had instigated the debtor to
9 At 70.
10 At 91.
11 Dowling v The Colonial Mutual Life Assurance Society Limited [1915] VLR 604 (HCA).
publish defamatory statements concerning the creditor. The Court concluded that there was no abuse of process because it was used for the purpose for which it was designed. The object of the application was an order for sequestration which was the remedy the proceeding was designed to give. The position would have been different if the process of the Court had been used as a means of extorting a benefit
beyond the scope of the process. Isaacs J stated:12
...if, for instance, it had been shown that the Society had simply threatened Dowling that unless he did what they had no right to demand from him – namely, give up certain names – they would proceed to sequestration, and they had proceeded accordingly, there would have been in law an abuse of the process.
[38] The High Court of Australia more recently considered the scope of abuse of process in Williams v Spautz.13 In that case, Dr Spautz commenced over
30 proceedings, most of which were criminal prosecutions, against defendants who had occupied positions of authority at the university from which he had been dismissed. The trial judge found that Dr Spautz’s predominant purpose in issuing and maintaining the criminal proceedings was to pressure the university into reinstating him or agreeing to a favourable settlement of his wrongful dismissal claim. The proceedings were accordingly stayed on the basis that they were an abuse of process. This decision was reversed on appeal to the Court of Appeal but reinstated by the High Court of Australia.
[39] The majority, Mason CJ, Brennan, Dawson, Toohey and McHugh JJ, approved the general rule postulated by Lord Evershed MR in Re Majory:14
... that court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose of which such proceedings are properly designed and exist; and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused.
[40] The majority noted that proceedings might properly be pursued if the immediate object of them is desired, albeit as a step towards achieving some other
end:15
12 At 620.
13 Williams v Spautz (1992) 107 ALR 635 (HCA).
14 Re Majory [1955] Ch 600 (CA) at 623-4.
To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.
Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent’s conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices. The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor’s favour.
[41] The Court concluded that Dr Spautz threatened to use the proceedings for an improper purpose and his commencement and maintenance of them were predominantly undertaken in furtherance of that improper purpose. The proceedings were therefore an abuse of process.
[42] The torts of malicious prosecution and abuse of process were recently considered by the Privy Council in Crawford Adjusters & Ors v Sagicor General Insurance (Cayman) Limited & Anor.16 Lord Wilson confirmed the distinction
between the torts:17
It is hard not to regard abuse of process as a tort distinct from malicious prosecution if only because, apart from the need to establish a purpose not within the scope of the action (ie a “collateral” or, more helpfully, an “improper” purpose), abuse of process requires neither that the action should have been brought without reasonable cause nor that it should have terminated in favour of the alleged victim...
[43] Lord Wilson illustrated the concept of improper purpose in this context by reference to the following examples:18
If the claimant’s intention is that the result of victory in the action will be the defendant’s downfall, then his purpose is not improper: for it is nothing other than to achieve victory in the action, with all such consequences as
15 Williams v Spautz, above n 13, at 646.
16 Crawford Adjusters & Ors v Sagicor General Insurance (Cayman) Limited & Anor
[2013] UKPC 17.
17 At [62].
may flow from it. If, on the other hand, his intention is to secure the defendant’s downfall – or some other disadvantage to the defendant or advantage to himself – by use of the proceedings otherwise than for the purpose for which they are designed, then his purpose is improper.
[44] Lord Sumption, in his dissenting judgment, explained the essential elements of the tort as follows:19
The essence of the tort is the abuse of civil proceedings for a predominant purpose other than that for which they were designed. This means for the purpose of obtaining some wholly extraneous benefit other than the relief sought and not reasonably flowing from or connected with the relief sought. The paradigm case is the use of the processes of the court as a tool of extortion, by putting pressure on the defendant to do something wholly unconnected with the relief, which he has no obligation to do.
[45] Mr Corlett submits that the arrest application was an abuse of the process of the Court because it was brought for the illegitimate purpose of pressuring Mr Robinson into returning the equipment, a purpose outside the scope of s 55. I accept that Mr Freakley’s objective was to secure return of the Company’s equipment as quickly as he could. This is plain on the evidence. However, I do not consider that this necessarily means that the processes of the Court were abused.
[46] Mr Freakley sought recourse to the Court to vindicate the Company’s right to return of its equipment, not to extort some benefit to which it was not entitled and which was outside the scope of the Court’s process. He acted in accordance with Mr Ebert’s advice that the company was entitled to apply for an order for Mr Robinson’s arrest in the circumstances Mr Freakley had outlined. Mr Freakley expected that if Mr Robinson was arrested and imprisoned, this would result in the equipment being promptly returned to the Company. The fact that this was an expected consequence of the service of an order he genuinely believed the Company was entitled to, does not mean that he was abusing the process of the Court in seeking it.
[47] Unlike the situation in Grainger, the immediate object of the Company’s application was to secure Mr Robinson’s arrest, an outcome wholly within the purpose of the provision invoked. There may not have been reasonable and proper grounds for the application and it may have been misconceived, but that is irrelevant
for the purposes of this cause of action. In my view, the claim based on abuse of process must fail. The appropriate cause of action, if there is one, is for maliciously procuring the warrant for Mr Robinson’s arrest without reasonable and proper cause.
Malicious prosecution
[48] In Rawlinson v Purnell Jenkison & Roscoe, Hammond J recognised the possibility that a tort of malicious prosecution of civil proceedings might exist in New Zealand.20 In Crawford, the Privy Council concluded that such a tort does exist. Lord Kerr summarised his conclusion on the issue as follows:21
The case for recognising the existence of the tort for civil proceedings as well as in criminal proceedings seems to me far more grounded in logic than the case for refusing to extend it. Although the private prosecutor may take on the mantle of the state in criminal proceedings and although the coercive power of the state may be present in the prosecution by the DPP of offences, the central and critical species of wrongdoing is the same in malicious prosecution of civil proceedings. It is the procuring by malice of the discomfiture (at least) or the ruin (not infrequently) of the person against whom the action is taken for reasons disassociated with the professed purpose of the proceedings. Proceedings motivated by nothing more than malice are capable of wreaking devastation whether in pursuit of criminal prosecution or private action. Where it can be demonstrated that the court’s procedures do not provide an adequate remedy (or in this case no remedy at all) there can be no logic for denying the person who has suffered the same harm by the institution of civil proceedings as he who has been the victim of criminal proceedings. Indeed, it is not difficult to envisage cases where the harm will be considerably greater.
[49] I accept that malicious prosecution of civil proceedings should be recognised as a tort in New Zealand.
[50] I also accept Mr Corlett’s submission that there were no reasonable or proper grounds for the arrest application. As noted, s 55 empowers the Court to order the arrest of a defendant who is about to quit New Zealand if the defendant’s evidence is reasonably required to prove the plaintiff’s claim. The section had no application in the present case. The Company did not require Mr Robinson’s evidence to establish any element of the intended cause of action in detinue which simply involves the detention of property in defiance of the rights of the person entitled to possession of
it. Mr Freakley, as the sole director of the company, would have no difficulty
20 Rawlinson v Purnell Jenkison & Roscoe [1999] 1 NZLR 479 (HC).
21 Crawford, above n 16, at [119].
proving that the company had an immediate right to possession of its equipment and that Mr Robinson had not returned it despite demand. These facts were indisputable. Mr Robinson had provided a statement in writing confirming that he had uplifted the specified items of equipment and that he intended to retain them pending resolution of his dispute with Mr Freakley. Nothing further was required to prove a claim by the Company against Mr Robinson in detinue.
[51] The fact that it might be more difficult to serve proceedings on Mr Robinson in Vanuatu is beside the point. Similarly irrelevant is the fact that the Company may need to interrogate Mr Robinson to find out where the property was located in order to secure its return. These matters, which were referred to in Mr Freakley’s affidavit and counsel’s submissions in support of the application, have nothing to do with proving the claim and obtaining judgment.
[52] However, to succeed with this cause of action, Mr Robinson must also prove malice. Mr Freakley accepted that the arrest would cause discomfort and embarrassment to Mr Robinson but he said that this did not really cross his mind. He said he just wanted the return of the Company’s equipment. I accept his evidence about this. Although he and Mr Robinson were in dispute, I find that Mr Freakley was not motivated by malice in pursuing the application. Rather, he acted honestly and in what he perceived to be the best interests of the Company in seeking a remedy that he understood was available based on the advice of his solicitor. For this reason, the alternative cause of action based on malicious prosecution must also fail.
Should damages be ordered pursuant to the undertaking?
[53] The Company, as the applicant for an order for the arrest and imprisonment of Mr Robinson, filed an undertaking as to damages in the following terms:
Pursuant to High Court Rule 7.54 the applicant undertakes to the Court that it will comply with any order for the payment of damages to compensate the respondent for any damages sustained through the granting of the order to arrest and imprison the respondent as an absconding debtor.
[54] For the reasons I have given, the order for Mr Robinson’s arrest would not have been made had full and proper disclosure been made to the Court at the time. In the light of the evidence now available, and which ought to have been brought to
the attention of the Court at the time, it is clear that there were no reasonable and proper grounds for the order. I can see no reason in these circumstances why an order for damages should not be made pursuant to the Company’s undertaking given in support of its application. Mr Ebert did not contend otherwise.
[55] The damages recoverable pursuant to such an undertaking are those flowing directly from the order and which were reasonably foreseeable when the order was made.22 It was foreseeable when the order was made for Mr Robinson’s arrest and imprisonment that he would suffer considerable inconvenience and loss of liberty. He would be prevented from travelling to Vanuatu as he had planned. He would suffer the embarrassment of being arrested at the airport as he was about to board his plane and he would then suffer the consequences of being deprived of his liberty and imprisoned in Mt Eden prison. He would also suffer injury to his reputation in the
small community in which he and Mr Freakley lived.
[56] In Caie v Attorney-General, Fisher J reviewed the authorities regarding the quantum of compensatory damages available in cases of unlawful arrest and detention.23 He concluded that while every case has to be closely examined on its own facts, in a case where there are no special factors in aggravation or mitigation, damages for a false imprisonment lasting 20 hours could be expected to be in the region of $10,000 before any exemplary damages.24
[57] Mr Corlett submits that a figure of $10,000 would be appropriate as compensation in this case. I accept that submission. In all of the circumstances, I consider that this sum is reasonable, if not conservative.
[58] Mr Corlett also seeks an award of exemplary damages. However, in my view, the case for exemplary damages falls away as a consequence of my findings that Mr Freakley was not motivated by malice and that he acted in accordance with the legal advice he received and in what he believed to be the best interests of the Company. His conduct is not deserving of punishment and it follows that the
Company should not have to pay exemplary damages pursuant to the undertaking.
22 Bonz Group (Pty) Ltd & Anor v Cooke (2000) 9 TCLR 374 (CA).
23 Caie v Attorney-General [2005] NZAR 703 (HC).
24 At [150].
Costs
[59] Mr Robinson has not succeeded with either of his causes of action but he has established his entitlement to damages pursuant to the undertaking. Mr Corlett has filed submissions seeking indemnity costs. It was agreed at the hearing that Mr Ebert should have the opportunity of responding to these submissions in the light of the judgment. Accordingly, if Mr Robinson’s application for indemnity costs in the amount sought is opposed, submissions should be filed and served within 21 days of the date of this judgment. Any submissions from Mr Corlett in reply should be filed and served within 14 days thereafter. I will then determine the question of costs on the papers. I reserve liberty to apply for an extension or variation of this
timetable if it does not prove adequate for reason.
M A Gilbert J
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