Sargon Capital Pty Limited (in receivership and in Liquidation) v Complectus

[2020] NZHC 2370

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1345

[2020] NZHC 2370

BETWEEN

SARGON CAPITAL PTY LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)

Plaintiff/Respondent

AND

COMPLECTUS LIMITED

Defendant/Applicant

Hearing:

10 September 2020

Appearances:

M Kersey for the Applicant

No appearance by or for the Respondent

Judgment:

11 September 2020

JUDGMENT OF GAULT J

This judgment was delivered by me on 11 September 2020 at 3:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Mr M Kersey and Mr S Dymond, Russell McVeagh, Auckland

SARGON CAPITAL PTY LTD (IN REC AND IN LIQ) v COMPLECTUS LTD [2020] NZHC 2370 [11

September 2020]

[1]                  The defendant’s application to dismiss this proceeding for want of prosecution was listed in the Duty Judge list yesterday.

[2]                  No documents in opposition have been filed. Since the proceeding was commenced the plaintiff, an Australian incorporated company, has been subject to the appointment of receivers, voluntary administrators and, on 8 April 2020, liquidators. Its former solicitors have been given leave to withdraw. The Australian solicitors for the liquidators and receivers have confirmed that their client does not intend to defend the application.

[3]                  Despite the absence of opposition, I consider that the substantive nature of the application means that the Court must be satisfied that the grounds for dismissing the proceeding are made out before making the order sought.

Approach to dismissal for want of prosecution

[4]                  The application is made under r 15.2 of the High Court Rules 2016, which provides that:

15.2     Dismissal for want of prosecution

Any opposite party may apply to have all or part of a proceeding or counterclaim dismissed or stayed, and the court may make such order as it thinks just, if—

(a)the plaintiff fails to prosecute all or part of the plaintiff's proceeding to trial and judgment; or

(b)the defendant fails to prosecute all or part of the defendant's counterclaim to trial and judgment.

[5]                  The three main requirements are well settled. As Eichelbaum CJ said in Lovie v Medical Assurance Society New Zealand Ltd:1

… the applicant must show that the plaintiff has been guilty of inordinate delay, that such delay is inexcusable, and that it has seriously prejudiced the defendant. Although these considerations are not necessarily exclusive, and at the end one must always stand back and have regard to the interests of justice, in this country, ever since New Zealand Industrial Gases Ltd v Andersons Ltd [1970] NZLR 58 it has been accepted that if the application is to be successful, the applicant must commence by proving the three factors listed.

1      Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 248.

Discussion

[6]                  The proceeding concerns the circumstances leading up to and following the execution of an agreement between the parties that allowed the plaintiff a number of exclusive rights to negotiate with the defendant for the sale of 100 per cent of its shares in Covenant Trustee Services Ltd and the New Zealand Guardian Trust Company Ltd for a non-refundable exclusivity fee of $1,250,000.

[7]                  The plaintiff has taken no substantive step in the proceeding since the appointment of receivers on 29 January 2020. Case management conferences and an interlocutory fixture have been vacated. The delay amounts to seven months. In the circumstances of this case, that is materially longer than acceptable. It is inordinate.

[8]                  While the explanation for the delay is the plaintiff’s financial difficulties culminating in appointment of receivers, voluntary administrators and liquidators, that does not excuse the delay. Indeed, its agents do not seek to do so but rather have indicated they do not intend to defend the application. They have effectively abandoned the proceeding.

[9]                  The most important factor is whether there is serious prejudice to the defendant. Here, prejudice results from the passage of time. The defendant’s evidence does not point to any special prejudice but Mr Kersey referred to the costs. They may well be irrecoverable given the plaintiff’s liquidation. The defendant has already had to come back to court several times since January 2020. Such costs will continue.

[10]              Generally, the Court will not exercise its r 15.2 power before the claim is statute barred,2 since no res judicata results from dismissal under r 15.2.3 Here, it is not suggested that the causes of action in the amended statement of claim would be statute barred. In Roe v Cullinane Turnbull Steele & Partners,4 Savage J said that where the limitation period had not expired, the proceedings should not be struck out “save in rare and exceptional cases”, referring to Birkett v James.5

2      Roe v Cullinane Turnbull Steele & Partners [1985] 1 NZLR 33 (HC) at 36, approved in Mead v Day [1985] 1 NZLR 100 (CA).

3      Pople v Evans [1969] 2 Ch 255 at 267-268.

4      Roe v Cullinane Turnbull Steele & Partners at 35.

5      Birkett v James [1978] AC 297 (HL).

[11]As Mr Kersey submitted, in Birkett v James Lord Diplock said:6

For my part, for reasons that I have already stated, I am of opinion that the fact that the limitation period has not yet expired must always be a matter of great weight in determining whether to exercise the discretion to dismiss an action for want of prosecution where no question of contumelious default on the part of the plaintiff is involved; and in cases where it is likely that if the action were dismissed the plaintiff would avail himself of his legal right to issue a fresh writ the non-expiry of the limitation period is generally a conclusive reason for not dismissing the action that is already pending.

[12]              I accept that this reference to non-expiry of the limitation period generally being a conclusive reason for not dismissing the action applies in cases where it is likely that if the action were dismissed the plaintiff would issue a fresh proceeding. Mr Kersey submitted that in this case it is not likely that the plaintiff will start again. I accept that is the reasonable inference in the circumstances here. Whether characterised in that way, or as an exceptional case, I consider that dismissal within the limitation period may occur in this case. Although the plaintiff has not formally consented to the application, and the result could have been achieved more efficiently by way of discontinuance of the claim, it is clear from its agents’ correspondence that it does not intend to defend the application and does not intend to pursue the claim. Therefore, the fact that no res judicata results from dismissal under r 15.2 is academic.

[13]              Standing back, I consider the interests of justice favour dismissal. It would likely be different if the liquidators were opposing, explaining the delay and seeking to pursue the claim.

[14]              Finally, Mr Kersey indicated that the defendant intends to discontinue its counterclaim rather than seek default judgment, while reserving its position on costs relating to the counterclaim.

Result

[15]The proceeding is dismissed. The defendant is entitled to costs on a 2B basis.

Gault J

6      Birkett v James [1978] AC 297 (HL) at 322.