Sia-Fox v Jubilee Management Limited (in liq) HC Palmerston North CIV-2010-454-771
[2011] NZHC 433
•20 April 2011
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV-2010-454-771
BETWEEN BOON KEE SIA-FOX Plaintiff
ANDJUBILEE MANAGEMENT LIMITED (IN LIQUIDATION)
Defendant
Hearing: 1 April 2011
(Heard at Palmerston North)
Counsel: P.S.J. Withnall - Counsel for Plaintiff
D.I. Sheppard - Counsel for Defendant
Judgment: 20 April 2011 at 3:30 PM
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment was delivered by Associate Judge Gendall on 20 April 2011 at 3.30 pm under r 11.5 of the High Court Rules.
Solicitors: Todd Whitehouse, Solicitors, PO Box 34, Levin
Fitzherbert Rowe, Lawyers, Private Bag 11016, Palmerston North
BK SIA-FOX V JUBILEE MANAGEMENT LIMITED (IN LIQUIDATION) HC PMN CIV-2010-454-771 20
April 2011
Introduction
[1] The plaintiff, Ms Sia-Fox, has brought these proceedings against the defendant, Jubilee Management Limited (in liquidation). The plaintiff was a director and joint shareholder of the defendant, along with her former husband, Mr Graeme Fox (Mr Fox). The defendant was placed into liquidation on 6 March 2009. Subsequently, the plaintiff entered into negotiations with the liquidator of the company, Mr Roderick Thomas McKenzie (Mr McKenzie) and in December 2009, a conditional agreement for the purchase of land owned by the defendant was duly signed (“the Agreement”). Dispute ensued regarding the settlement of this Agreement and on 24 February 2010 the plaintiff and defendant entered into a further agreement known as the Interim Agreement (“the Interim Agreement”) by which the defendant agreed not to exercise any purported right to cancel the Agreement in consideration of the plaintiff paying mortgage payments and rates owing in respect of the land, and liquidator‟s expenses. On 3 March 2010 the defendant gave notice to the plaintiff that unless the rates arrears and liquidator costs were paid by 4 March 2010 the Interim Agreement would no longer be of any further force and effect.
[2] The plaintiff seeks a declaration from the Court to the effect that she is not required to settle the Agreement until resolution of the plaintiff‟s relationship property dispute with Mr Fox. The plaintiff‟s second cause of action seeks a declaration from the Court that the defendant was not entitled to renounce the force and effect of the Interim Agreement. This judgment relates to that second cause of action.
[3] The defendant now applies to strike out the plaintiff‟s second cause of action. This application is based on the doctrine of estoppel per rem judicatam. It is asserted that the plaintiff is estopped from claiming the defendant wrongfully renounced the Interim Agreement because that claim has been finally determined in earlier caveat proceedings between the parties decided in this Court in August 2010.
Background Facts
[4] Following negotiations between the plaintiff and Mr McKenzie on behalf of the defendant on 9 December 2009, the plaintiff and defendant entered into the Agreement providing for the purchase by the plaintiff of three separate properties at Otaki (the land) owned by the defendant. A deposit of $3000 was to be paid on the plaintiff signing the Agreement, and this was duly paid. The Agreement provided for a settlement date of 18 December 2009 but the plaintiff now asserts settlement was to be delayed and to take place only upon resolution of a relationship property dispute between the plaintiff and Mr Fox. The defendant in response asserts the Agreement was to be settled on 18 December 2009, as it provided specifically, and as the plaintiff had defaulted, on 21 December 2009 it purported to issue a settlement notice requiring settlement within 12 working days. The plaintiff failed to comply with the notice and consequently on, 18 May 2010, the defendant cancelled the Agreement.
[5] The plaintiff, however, refused to accept the defendant‟s repudiation of the Agreement. Negotiations ensued and the Interim Agreement was entered into on or about 24 February 2010. Under the terms of this Interim Agreement, the defendant agreed not to exercise a purported right to cancel the Agreement in consideration for the plaintiff paying mortgage loan arrears and instalments, rates and insurance due and owing in respect of the land and liquidator costs and expenses. For a time, the plaintiff paid the loan instalments owing. However, on 3 March 2010 the defendant gave notice to the plaintiff that unless arrears of rates which were still outstanding and the liquidator costs were paid by 4 March 2010, the Interim Agreement was of no further force and effect. The plaintiff now contends that reasonable notice was not given, and accordingly the defendant was not entitled to renounce the force and effect of the Interim Agreement. The defendant asserts two week long extensions from 4 March 2010 were provided to remedy the plaintiff‟s breaches under the Interim Agreement, which the plaintiff failed to do. It was only then the defendant contends that the Agreement was renounced.
[6] On 4 June 2010 the plaintiff applied for an order that caveats she had lodged against the titles to the land owned by the defendant be sustained. This application
was opposed by the defendant‟s liquidator. The proceedings (the caveat proceedings) were heard by Joseph Williams J on 2 August 2010, with his decision being delivered on 11 August 2010.[1] There, the plaintiff had argued the caveats should not lapse on the grounds the plaintiff had a reasonably arguable case that she had an interest as purchaser under the Agreement, settlement of which had been deferred, and further that the liquidator was not entitled to treat the Interim Agreement between the parties as at an end.
[1] Sia-Fox v Jubilee Management Ltd HC Wellington CIV-2010-454-377 11 August 2010.
[7] Joseph Williams J held the plaintiff had an arguable case that an agreement for delayed settlement had been reached.[2] Significantly, His Honour also held that the plaintiff had no reasonably arguable case that the defendant‟s liquidator was not entitled to treat the Interim Agreement as at an end.[3] It is this latter conclusion which founds the basis of the defendant‟s present estoppel claim.
Principles on Strike Out
[2] At [32].
[3] At [42].
[8] In order to succeed in its application for strike out the defendants must show that the plaintiffs claim cannot succeed. The Court may strike out all or part of a pleading if the pleading discloses no reasonably arguable cause of action, if it is likely to cause prejudice or delay, if it is frivolous or vexatious, or if it is otherwise an abuse of the process of the Court: r 15.1(1). The criteria for striking out were summarised as follows by the Court of Appeal in Attorney-General v Prince [1998]
1 NZLR 262:
A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed (R Lucas & Son (Nelson Mail) Ltd v O'Brien [1978]
2 NZLR 289 at pp 294 – 295; Takaro Properties Ltd (in receivership) v Rowling [1978] 2 NZLR 314 at pp 316 – 317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR
37 at p 45; Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2
NZLR 641); but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction (Gartside v Sheffield, Young & Ellis).
[9] These principles were endorsed by the Supreme Court in Couch v Attorney- General [2008] NZSC 45 at [33], where it was said that it is “inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed”. It is evident, therefore, that an applicant faces a high threshold to strike out a cause of action.
[10] Where a defective cause of action is capable of effective repair by amendment, the Court will usually permit amendment rather than striking the pleading out: see Marshall Futures Ltd v Marshall [1992] 1 NZLR 316. For example, where the statement of claim fails to sufficiently inform the Court and the defendants of the plaintiff‟s cause of action, as required by r 5.26, because the factual basis for the plaintiff‟s claimed relief is unclear, the Court may order that a more explicit pleading be filed: r 5.21.
[11] The defendant‟s present application asserts the plaintiff‟s second cause of action is not reasonably arguable, is likely to cause prejudice or delay, and/or is an abuse of process of the court.
Estoppel per rem judicatam
[12] Where a final judicial decision has been pronounced by a New Zealand judicial tribunal of competent jurisdiction over the parties to, and the subject-matter of any litigation, any party or privy to that litigation, as against any other party, is estopped in any subsequent litigation from disputing or questioning the decision on the merits.[4]
[4] Shiels v Blakely [1986] 2 NZLR 262 at 266.
[13] The rule is justified on public policy grounds, namely it promotes the finality of litigation, and as a corollary the prevention of further needless and pointless waste of resources. As the effect of the estoppel denies a litigant access to justice the Courts have adopted a cautious and flexible approach to the doctrine.[5] Care must be taken not to allow the doctrine, designed to prevent injustice to one litigant, from
causing greater injustice to the other.[6]
[5] Arbuthnot v CE of Department of Work and Income [2008] 1 NZLR 13 (SC) at [30].
[6] Joseph Lynch Land Co v Lynch (1994) 7 PRNZ 605 (CA) at 611; Arbuthnot at [31].
[14] The essential question to be determined is whether in the circumstances it is reasonable to regard the earlier decision as a final determination of the issue which one of the parties now wishes to raise.[7] This is a matter of judgment, to be formed following a close examination of the context in which the earlier decision was given, and the impact on the parties of allowing the litigation to continue.[8]
[7] Joseph Lynch, at 611.
[8] McGaveston v New Zealand Permanent Trustees Ltd CA23/02 11 December 2002 at [40].
[15] The caveat proceedings in issue in this case were of an interlocutory nature. In principle a sufficiently final and certain conclusion can be found in an interlocutory judgment so as to found the basis of the estoppel.[9] Caution is called for, however, when the estoppel is said to arise out of a judgment given in interlocutory proceedings. Applications to remove or to hold a caveat will not ordinarily be regarded as finally determining the rights of parties. However, the position is more
difficult when the ruling is that the caveator has no arguable case for the interest in the land asserted, as was the decision here.[10]
[9] Joseph Lynch at 610; McGaveston at [38].
[10] Joseph Lynch at 610.
[16] The defendant submits the issue of whether the liquidator was entitled to cancel the Interim Agreement was distinctly put before the High Court in the caveat proceedings. Further, extensive evidence, including affidavits and submissions, and argument was directed to this issue on the hearing of that caveat application. They submit His Honour Joseph Williams J made a clear and unconditional determination against the plaintiff, reflected in his emphatic language, concluding it was not reasonably arguable that the liquidator was not entitled to treat the settlement under the Interim Agreement as at an end.
[17] The plaintiff, in response, argues that the statutory timeframes for the caveat application were tight, and that all the evidence was not before the Court. Due to the interlocutory nature of the proceedings, which were brought by originating application, there were no pleadings or discovery. I am of the view, however, that this point is, in itself, unconvincing considering the case law which has clearly determined that an estoppel can be founded on an interlocutory judgment. The
proceedings, as commonly occurs, did not proceed according to those statutory
timeframes. Further, in this case, an extensive affidavit from the plaintiff had been filed in the caveat proceedings in this Court, in addition to specific argument being advanced on the matter of the Interim Agreement from both parties. This affidavit of the plaintiff was 49 paragraphs long. Paras [41]-[49] deal with the Interim Agreement. In addition 100 pages of supporting documents, including letters and faxes are included. Paras [12]-[23] of the plaintiff‟s written submissions dealt with the Interim Agreement. Paras [35]-[41] of the defendant‟s written submissions to the Court dealt with the Interim Agreement.
[18] The plaintiff further suggests that the caveat proceedings were of a limited purpose, namely for determining whether the plaintiff had a reasonably arguable case that she had a caveatable interest in the land. She argues that as caveator she need only prove a tenable case, and proceedings of this nature ought not to finally determine the rights of parties, unless the facts are not in dispute and the law has been fully argued. In this context she suggests it was, therefore, not right to say all the evidence was before the Court and that the issue was „fully argued‟. Neither the parties, nor the Court, were required to direct their minds at that point to the issue.
[19] The plaintiff also submits the Court‟s comments in the caveat proceedings on the Interim Agreement are obiter dicta, in that the Judge decided the caveat was sustained on the basis the plaintiff had a reasonably arguable case on its first cause of action. On this aspect, I am not convinced, however, that the Judge‟s decision in this regard was obiter. It is clear the Judge considered it necessary to turn his mind to the issue of the interim settlement, and in his conclusion at [44] His Honour makes it clear this determination was essential in his judgment:
[44] In light of the foregoing, I would conclude as follows:
a) As from 12 May 2010, the Interim Settlement was at an end.
b) We must therefore return to the position under the second agreement. c) That has the effect of re-awakening the parties‟ respective
contentions in relation to the second agreement.
d) Because the question of what if anything was agreed between Ms Sia-Fox and Mr McKenzie on 1 December is a question of fact, and because the subsequent written communications between the parties
do not completely discount the possibility that the liquidators agreed not to enforce the 18 December settlement date, Ms Sia-Fox has an arguable case in that regard.
[20] On balance, I consider that in these circumstances it is reasonable to regard the earlier decision as a final determination of the issue. I agree the robust language of the Judge must be regarded in the context of the decision. And, I consider the language used is indicative in suggesting the Court was determining the issue on a
definitive basis.[11] I am satisfied this issue was put directly to the Court, it was
subject to extensive argument, in which Joseph Williams J was able to definitively conclude that the defendant‟s were able to treat the Interim Agreement as at an end. The interlocutory nature of the proceedings does not preclude the estoppel. His Honour‟s judgment went further than merely determining whether the plaintiff had an arguable case for a caveatable interest and as I see it fully disposed of the plaintiff‟s argument regarding the Interim Agreement.
[11] McGaveston, at [41].
[21] In addition, I do not consider that injustice will be caused to the plaintiff here if the estoppel acts to preclude her second cause of action. There is still an arguable case for the first cause of action, as indicated in the earlier judgment.
[22] In those circumstances, it is reasonable, in my view, to regard the decision in the caveat proceedings as a „final determination‟ of the issue as to whether the Interim Agreement was at an end. The plaintiff therefore is precluded from bringing her second cause of action, that cause of action being to the effect that the liquidator was not entitled to renounce the force and effect of the Interim Agreement.
[23] For these reasons, in my view, the plaintiff ‟s second cause of action discloses no reasonably arguable cause of action, and it would be an abuse of process to re- litigate the matter. Further, I am satisfied there would be undue delay and prejudice in allowing the second cause of action to remain in that it would unnecessarily increase the time, complexity and cost required for a hearing, with further witnesses, preparation and hearing time required. In accordance with r 15.1, I am satisfied
there are good grounds on which to strike out this cause of action.
Result
[24] For these reasons, the application to strike out the plaintiff‟s second cause of
action is successful.
[25] As to costs, the defendant has succeeded in this application and I see no reason why costs should not follow the event in the usual way. Costs on this application are therefore awarded to the defendant on a 2B basis together with disbursements (if any) as fixed by the Registrar.
‘Associate Judge D.I. Gendall’
0