Singapore Airlines Ltd v Mistry
[2014] NZHC 1055
•20 May 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-3911 [2014] NZHC 1055
BETWEEN SINGAPORE AIRLINES LIMITED
Plaintiff
AND
JITESH MOHAN MISTRY Defendant
Hearing: 13 May 2014 Appearances:
C Matsis for Plaintiff
J Haig for DefendantJudgment:
20 May 2014
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] At a hearing on 25 November 2013, the plaintiff obtained summary judgment by default against the defendant for a total sum, including interest, costs and disbursements, of $382,440.61. The defendant was not present or represented by counsel at the hearing.
[2] The defendant now applies to set aside the summary judgment.
[3] The defendant relies on r 12.14 of the High Court Rules, which provides as follows:
Setting aside judgment
A judgment given against a party who does not appear at the hearing of an application for judgment under rule 12.2 or 12.3 may be set aside or varied by the court on any terms it thinks just if it appears to the court that there has been or may have been a miscarriage of justice.
SINGAPORE AIRLINES LIMITED v JITESH MOHAN MISTRY [2014] NZHC 1055 [20 May 2014]
(1)Why did the defendant not attend the hearing of the application for summary judgment?
(2)Was service of the summary judgment documents effected in accordance with the High Court Rules?
(3)Should the summary judgment be set aside if it was irregularly obtained?
(4)Should the court go on to consider the merits of the application for summary judgement?
Why did the defendant not attend the hearing of the application for summary judgment?
[5] The Court hearing the application for summary judgment had before it an affidavit of service sworn on 4 October 2013 by Dion Neill, a Wellington private investigator and process server. In his affidavit, Mr Neill deposed that he served the application, with copies of the statement of claim, notice of proceeding, and supporting affidavits, by handing the documents to the defendant personally on Saturday 17 August 2013 at his home in Ontario Street. Mr Neill stated that he believed that it was the defendant he had served because he identified the defendant from previous matters.
[6] The defendant says that he was never served with the application. He says that he only became aware of the summary judgment entered against him when on 3
February 2014 Mr Neill served a bankruptcy notice on him at his place of work. The defendant then obtained copies of the Court documents, and promptly filed the present application.
[7] In his supporting affidavit, the defendant stated that he did not believe Mr Neill had served him with the summary judgment papers at his home, for a number of reasons. First, the claimed date of service was both a Saturday and the
defendant’s birthday. He said that on the day in question he slept in at home until around midday, and left the house at approximately 1pm and did not return home until the following day (having stayed at a hotel). He said that at no time on that day did Mr Neill serve him with any documents.
[8] An affidavit was also filed by the defendant’s father Mr Mohan Mistry. Mr Mistry Snr deposed that the defendant lives at home with him and his wife, at the address at which Mr Neill stated that he had served the summary judgment documents. He confirmed the defendant’s evidence that the defendant, having been out late on the Friday evening, slept in on the morning of Saturday 17 August 2013, and left home that day at about 1pm.
[9] Mr Mistry Snr said that at no time did anyone come to his house on the morning of the alleged date of service, either before or after the defendant left.
[10] There was also an affidavit sworn by one of the defendant’s friends, who stated that the defendant picked him up from his house at around 1pm on
17 August 2013. He stated that the defendant had organised a party for friends and family that day, and confirmed that the defendant checked into a hotel in the course of the afternoon.
[11] Mr Neill provided an affidavit in opposition to the application to set aside summary judgment, sworn on 27 February 2014. He stated that he has known the defendant since about 1996, and has dealt with him on at least ten occasions since then. He stated that he has regularly observed the defendant socialising in Wellington hospitality circles over a number of years, and that the defendant has recognised him on those occasions.
[12] In respect of the service of the summary judgment documents on 17 August
2013, Mr Neill gave a markedly different account from that provided in his affidavit of 4 October 2013, in which he stated that he had personally handed the documents to the defendant.
As I serve a large number of documents, I have tried to recall these events to the best of my knowledge; I went to the Ontario Street property where I understand Jitesh lives with his parents. I parked my car on the side of the road, grabbed the documents to be served, and started to walk up the path towards the house. As I did so, I saw someone watching me from behind the curtains in one of the windows facing out towards the road near the door. I knocked on the front door. A male voice from behind the curtains asked who it was. I said something like “It’s Dion; is that you Jitesh?” He said “No”. Based on my previous dealing with Jitesh, I believed it was his voice. Therefore, I said something like “I think it is you. I have some documents for you”, he still didn’t come to the door despite repeated knocks to the front door and window. I then put the documents in a sealed white envelope and left them on the front doorstep.
I left the documents at the house in this way as I was satisfied that Jitesh was the person watching me and talking to me through the curtain. There was advantage or benefit (financial or otherwise), for me in doing this if I wasn’t sure, as I could have easily reported back to the client, through their solicitors to obtain approval for a further attempt at service. This would have been at the cost of the client and I would have gained financially by repeatedly returning to the address enabling me to invoice for my time and mileage.
[14] In the second sentence of the last paragraph of that passage from Mr Neill’s affidavit, Mr Neill presumably meant to say “there was no advantage or benefit…” (the paragraph would make little sense otherwise).
[15] Mr Neill did not attempt in his February 2014 affidavit to reconcile the version of events contained in that affidavit with the statement made in his October
2013 affidavit of service that he handed the documents to the defendant personally.
[16] Mr Haig submitted that, given the disparities between the accounts given by Mr Neill in his two affidavits, the evidence of the defendant, his father, and the defendant’s friend should be preferred on the question of whether service of the summary judgment documents was effected in accordance with the High Court Rules.
[17] However, Mr Haig went on to submit that, even on the account given by Mr Neill in his affidavit sworn in the setting aside application, the delivery of the documents to the Ontario Street address would not have been good service on the
defendant. Mr Haig referred to r 6.11, which prescribes the requirements for personal service as follows:
Personal service
A document may be personally served by leaving the document with the person to be served, or, if that person does not accept it, by putting it down and bringing it to the notice of that person.
[18] Mr Haig then referred to the commentary in McGechan on Procedure on r 6.11, and in particular the following passage:
Service of a document through a crevice of a door of a room where the person to be served is to be situated is not personal service: Christmas v Eicke [1848] 6 D & L 156. Likewise service of a document by leaving it on the doorstep of a building in which the person to be served is situated is not good personal service: Heath v White (1844) 2 Dow & L 40. In this case the defendant was standing at a window on an upper story of a building.
[19] Mr Haig also submitted that delivery of documents in a sealed envelope has been established to be ineffective for personal service, unless the person being served is informed of the nature of the documents.1 In this case, Mr Neill’s evidence in his second affidavit was that he said to a person that he could not see, but whose voice he believed to be that of the defendant: “I think it is you. I have some documents for you”.
[20] Mr Haig submitted that that statement, if it was made, did not sufficiently bring the nature of the documents to the attention of the defendant (assuming, contrary to the defendant’s case, that he was the person behind the curtain).
[21] For the plaintiff, Mr Matsis submitted that the steps described in Mr Neill’s February 2014 affidavit were sufficient to meet the personal service requirements of r 6.11. He submitted that Mr Neill was able to identify the defendant, albeit by voice only, and that there would have been nothing to be gained by Mr Neill in not effecting service at all. He acknowledged that Mr Neill did not identify the nature of the documents inside the sealed envelope in what he said to the person behind the
curtain, but submitted that it would have been apparent to the defendant from his
1 In re a Debtor [1939] 1 Ch 251 at 256, [1938] 41A11 E R 92 at 96;Taylor v Marmaras [1954] VLR 476, 480.
previous dealings with Mr Neill that the documents were of a legal nature and that they related to matters or procedures requiring legal service.
[22] In the event of a finding that the service was deficient, Mr Matsis submitted that the judgment should nevertheless be allowed to stand. He submitted that the defendant has no arguable and substantial grounds of defence to the plaintiff’s claim, and that there would be no miscarriage of justice if the judgment were not set aside.
Was service of the summary judgment documents effected in accordance with the High Court Rules?
[23] In my view, the requirements for personal service set out in r 6.11 of the were not met in this case. The summary judgment documents were not left with the defendant in any ordinary sense of the word “leaving”: the most Mr Neill’s second affidavit could establish is that the documents were left on the front doorstep of a property occupied by the defendant and his parents, in a sealed envelope. If there was service at all under r 6.11, it could only have been under the second possible means of service referred to in that rule, namely putting the document to be served down and bringing it to the notice of the person to be served.
[24] I accept that Mr Neill’s account of his attempt to serve the documents, as set out in his second affidavit, is sufficient to show that the person to whom he spoke who was behind the curtain in the house, did not agree to accept the documents. The questions are whether it was the defendant behind the curtain, and if it was, whether Mr Neill’s actions in saying “I have something for you” and leaving the documents in a sealed envelope on the doorstep, were sufficient to bring the documents to the defendant’s attention.
[25] Even if it was the defendant behind the curtain (a matter which cannot be determined on a summary application such as this) I am satisfied that the documents were neither left with the defendant nor brought to his notice as required by r 6.11. In In re a Debtor, the Court was concerned with service of a bankruptcy petition. A firm of detectives went to the address of the debtor with the petition in a sealed envelope, not containing on its outside any reference to its contents. The Court of Appeal noted that service of a process is always regarded as a matter of great
strictness. The essential thing with service of the bankruptcy notice in question was that the documents should be brought to the personal knowledge of the person whose concern they were. Mere proof of delivery of a sealed envelope containing a writ could not be sufficient service of the writ.
[26] In this case, the relevant documents to be served included the statement of claim and notice of proceeding, being documents of no less importance than the writ referred to in In re a Debtor.
[27] A further point is that Mr Neill did not state in his second affidavit that the sealed white envelope was addressed to, or otherwise marked for the attention of, the defendant.
[28] In In re a Debtor it was submitted that two factors supported an inference that the contents of the bankruptcy petition had actually come to the knowledge of the debtor: first, there was evidence that the envelope was addressed to the debtor. Secondly, there was evidence that it had been opened. In dismissing that submission, the Master of the Rolls stated:2
It would be intolerable, and lead to the gravest injustice, if a litigant who was desirous of bringing his opponent before the Court by proper process could satisfy the requirements of the law as to service by proving facts such as those and asking the Court thereon to draw an inference as to the crucial fact having happened, the crucial fact being the coming of the document into the hand of the person to be served in such manner that the nature of it is brought to his mind. Unless it comes to his hand in that way, and that is established beyond any possibility of doubt, it seems to me that the Court would be departing from the most salutary view of these matters if it indulged in inferences based on evidence which might be quite strong for other purposes but for a purpose such as this, in my judgment ought not to be drawn.
[29] The point which was regarded as critical both in In Re a Debtor and Taylor v Marmaras, was that the “nature of the document” must be brought to the mind of the person to be served. In my view that did not occur in this case, even if the account
given by Mr Neill in his second affidavit is accepted.
2 In re a Debtor, above n 1, at 257.
[30] In the decision of Taylor v Marmaras, the Supreme Court of Victoria held that personal service of an application for a warrant for the possession of premises was sufficiently effected, even though the application was enclosed in an envelope, if the person served was aware that it was an application for such a warrant, notwithstanding that the person rejected the envelope without opening it. Again, the important point appears to have been that the person served must have been aware of
the nature of the documents being served. In that case, O’Bryan J said:3
I accept [counsel for the respondent’s] contention, that if the application was tendered to the respondent enclosed in an envelope, without any intimation of what the contents of the envelope were (still more if it was said to be “a letter from my solicitors”), and if the respondent did not in fact know that he was being handed or served with an application for a warrant for possession of the premises and the respondent refused to accept the document, what was done would not amount to personal service of the application. I am troubled as to two matters about this so called service. The first is, was the notice of application enclosed in an envelope, and the second is, did the respondent know he was being handed a notice of proceedings for a warrant for possession of his property in Nelson Road?
[31] Having come to that view, I agree with Mr Haig’s submission that it is unnecessary for me to make any credibility findings on the question of service, and I refrain from doing so. On any view of it, the service of the summary judgment documents was ineffective. The result is that the summary judgment was irregularly obtained.
Should the summary judgment be set aside if it was irregularly obtained?
[32] The plaintiff says that the judgment should not be set aside, notwithstanding the deficiency in service, because the defendant has no arguable defence. In other words, allowing the judgment to stand will not result in any miscarriage of justice.
[33] The question of whether a summary judgment entered in the defendant’s absence may be set aside in the absence of proof by the defendant that he or she has an available defence, was considered by Duffy J in Pulman v Orix New Zealand
Ltd.4 In that case, Duffy J referred to what she described as a long line of authority
3 Taylor v Marmaras, above n 1 at 480.
4 Pulman v Orix New Zealand Ltd (2008) 18 PRNZ 955 (HC).
for the principle that an irregularly obtained default judgement can be set aside.5
The learned Judge referred to an early formulation of the principle that an irregularly obtained judgment must be set aside ex debito justitiae, in Anlaby v Praetorius.6 The principle operates on the basis that an irregularly obtained judgment must be set aside, the grounds for this being that the plaintiff had no right to obtain the judgment in the first place, and therefore, it cannot stand. As Duffy J put it:
It is implicit within the formulation of this principle that it would be a miscarriage of justice to permit such a judgment to stand7.
[34] And in Broadbank Corporation Ltd v Alexander, Barker J referred to the “longstanding principle that, where a default judgment has been irregularly obtained, the defendant is entitled, ex debito justitiae, to have it set aside.8 Barker J expressed the view that the additional words (in the forerunner for r 12.14) that “if it appears to the Court that there has been or may have been a miscarriage of justice” does not affect the operation of the principle.9
[35] However, there are a number of other decisions of the New Zealand courts which may be regarded as representing an erosion of the principle stated in Anlaby v Praetorius. In Baker v State Insurance Office General Manager, McGechan J was prepared to recognise that even when a judgment has been irregularly obtained there will be occasions when the interests of justice are best served by varying the
judgment and not by setting it aside.10 Similarly, in Korochine 15 Ltd v R P Charans
Investments Ltd, Hammond J took the view that the courts have a wide discretion when it comes to setting aside judgments, and that even an irregularly obtained judgment may stand as a result of the court making an order to validate what had occurred using the power in the forerunner of r 1.5 of the High Court Rules.11 This
rule relevantly provides:
5 At [9].
6 At [11]; citing Anlaby v Praetorius [1888] 20 QBD 764.
7 At [13].
8 Broadbank Corporation ltd v Alexander (1986) 1 PRNZ 117 at 121.
9 At [117].
10 Baker v State Insurance Office General Manager HC Wellington CP282/88, 31 August 1988.
11 Korochine 15 Ltd v R P Charans Investments Ltd HC Hamilton m338/94, 13 December 1994.
1.5. Non-compliance with rules:
(1) A failure to comply with the requirements of these rules –
…
(b) does not nullify –
(i) the proceeding; or
(ii) any step taken in the proceeding; or
(iii) any document, judgment, or order in the proceeding.
[36] Duffy J also referred to the judgment of Gendall J in Arnott v Artisan Holdings Ltd, in which the judge concluded that the procedural rules vest in the court a broad discretionary authority to deal with applications to set aside judgments obtained by default, and that the court’s response to an irregularly obtained judgment hinged on the extent to which the judgment was irregularly obtained.12
[37] Duffy J. preferred the view expressed in Arnott v Artisan Holdings Ltd,
concluding at paragraph [20] of her judgment:
[W]hether a judgment irregularly obtained is set aside ex debito justitiae or an alternative approach, like that in Baker is followed, turns on the degree of irregularity in a particular case. This approach is consistent with the broad discretionary nature of the current relevant procedural rules in both the High Court and District Courts. It pays regard to the principle implicit in Anlaby, and the cases that follow it, that the existence of a miscarriage of justice is inherent in an irregularly obtained judgment. Nonetheless, it provides a better degree of flexibility than is to be found in the Anlaby approach by allowing, where possible, for minor irregularities in the obtaining of a judgment to be cured by varying it.
[38] At paragraph [19] of her judgment in Pulman, Duffy J noted that a substantial irregularity is unlikely to be curable by a variation of the judgment.
[39] In this case, I am satisfied that the irregularity in obtaining the summary judgment is substantial, and was sufficient in and of itself to create a miscarriage of justice when judgment was entered in the defendant’s absence. As the Master of the Rolls noted in In re a Debtor, correct service on a defendant of the documents by which a proceeding is commenced is fundamental to the defendant’s entitlement to
know the case against him, and to have the opportunity to be heard on it. It would in
12 Arnott v Artisan Holdings Ltd (1998) 12 PRNZ 205.
my view set a dangerous precedent if the judgment in this case were allowed to stand.
[40] Accordingly, there will be an order under r 12.14 setting aside the judgment entered on 25 November 2013.
Should the court go on to consider the merits of the application for summary judgement?
[41] In Walter Peak Developments (in Rec and Liq) v Millar, Associate Judge Bell, having set aside a judgment which had been obtained irregularly on account of late service on the defendant, concluded that the defendant was entitled to have the judgment set aside “without further inquiry”.13 However the Associate Judge went on to consider the defences raised by the defendant, saying:14
I do so for two purposes: first, on the basis that as judgment is set aside, I consider the plaintiff’s summary judgment afresh to see whether the plaintiff has established that the defendant has no defence under r 12.2(1). Second, in case I am wrong in finding that judgment was not regularly obtained, the grounds of defence are relevant to the inquiry whether there is or may have been a miscarriage of justice under the approach laid down by the Court of Appeal in Russell v Cox.
[42] In Russell v Cox, the Court of Appeal made it clear that the court’s discretion to set aside a judgment under the rule was unfettered, but three particular factors would commonly be regarded as important in the exercise of the discretion:15
(1) Whether the defendant has a substantial ground of defence. (2) Whether the delay is reasonably explained.
(3)Whether the plaintiff will suffer irreparable injury if the judgment is set aside.
[43] Associate Judge Bell went on in his judgment in Walter Peak to say:16
13 Walter Peak Developments (in Rec and Liq) v Millar HC Auckland [CIV-2009-404-2786], 9
May 2011 at [15].
14 At [16].
15 Russell v Cox [1983] NZLR 654 (CA) at 659; citing Paterson v Wellington Free Kindergarten
Association Inc [1966] NZLR 975 at 983.
If, on reconsidering the summary judgment application, I find that the plaintiff has established that the defendant has no defence, then there will be a fresh order for summary judgment against the defendant. If the judgment had been regularly obtained and under the Russell v Cox approach I find that the defendant does not have a substantial ground of defence, then, there would not be sufficient grounds to set aside the judgment. In short, the enquiry into the grounds of defence is likely to be decisive both ways.
[44] On the other hand, Duffy J in her judgment in Pulman concluded that the irregularity in the case was so great that there was no question of looking beyond that for the purpose of determining if there may have been a miscarriage of justice. In those circumstances, the learned Judge considered it appropriate for the judgment to be set aside ex debito justitiae without the need for the defendant to establish that he had an available defence. As in this case, both parties presented argument on the presence or otherwise of a meritorious defence for Mr Pulman, but the Judge concluded that, since she had found the judgment should be set aside ex debito justitiae on the ground that it had been irregularly obtained, and that the plaintiff’s application for summary judgment would therefore need to be re-heard, it was best if she refrained from commenting on the merits of the defences available to
Mr Pulman.17
[45] In my view, the approach of Duffy J in Pulman is to be preferred. I have found that the procedural irregularity in obtaining the summary judgment was sufficient in and of itself to create a miscarriage of justice, and that the summary judgment is to be set aside on that ground alone. The defendant was entitled to put his case on the setting aside application on that basis alone, and although the defendant did direct some evidence and argument to the issue of whether he has an arguable defence on the merits, I do not believe it is safe to assume that the defendant either:
(1)put forward all the evidence or argument he might have put forward if he did not have the service point available to him; or
16 Walter Peak Developments (in Rec and Liq), above n 13, at [18].
17 Pulman v Orix New Zealand Ltd, above n 4, at [56].
(2)expected that the court would proceed to deal with the summary judgment application afresh, without affording the defendant the opportunity to file further evidence.
[46] In those circumstances, I order that the summary judgment is set aside ex debito justitiae. I refrain for now from making any findings on the merits of the plaintiff’s application for summary judgment.
[47] The costs of the setting aside application are reserved.
Further Directions
[48] As in the Pulman and Walter Peak cases, the plaintiff’s summary judgment application is to be dealt with afresh. It will be heard at 10am on 11 June 2014. I make the following further directions:
(1) The defendant is to file a notice of opposition to the plaintiff’s
application for summary judgment, by not later than Monday 26 May
2014.
(2)By the same date, the defendant is to file and serve any additional affidavits he may wish to rely upon in opposition to the application for summary judgment (affidavits filed by the defendant in the setting aside application may be read in opposition to the application for summary judgment).
(3)Any affidavits the plaintiff may wish to file in reply to any new affidavits filed by the defendant, are to be filed and served by Tuesday 3 June 2014.
(4)Any supplementary submissions the plaintiff may wish to make (in addition to submissions made in opposition to the application to set aside the summary judgment) are to be included in a supplementary synopsis to be filed and served by 3 June 2014.
(5)Any supplementary submissions the defendant may wish to make (additional to submissions made in support of the application to set aside the summary judgment) are to be filed and served by
6 June 2014.
Associate Judge Smith
Solicitors:
Gault Mitchell Law, Wellington for plaintiff
J D Haig for Defendant
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