Stone v Newman
[2002] NZCA 48
•21 March 2002
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA3/02 |
| BETWEEN | IAN HENRY STONE AND JOHN ARTHUR KELLY |
| Applicants |
| AND | JONATHAN NEWMAN, PETER HEFFERING AND LOU DAMIANO |
| First Respondents |
| AND | JOHN DANIEL CURTIN |
| Second Respondent |
| Hearing: | 11 March 2002 |
| Coram: | Gault J Blanchard J McGrath J |
| Appearances: | M S Cole for the Appellant A D Banbrook for the Respondents |
| Judgment: | 21 March 2002 |
| JUDGMENT OF THE COURT DELIVERED BY MCGRATH J |
Introduction
This is an application for leave to appeal against a judgment of the High Court (Williams J, CL11/01, Auckland, 25 October 2001) rejecting an application to dismiss the proceeding. The application is brought by Mr Stone and Mr Kelly (the applicants) who are two members of what is described in the statement of claim as a racing partnership (which we shall refer to in this judgment as the partnership without making any findings as to its legal status). The partnership has four members and is the first defendant in the proceeding. The applicants, who reside in New South Wales Australia, have objected to the jurisdiction of the High Court of New Zealand to hear and determine the proceeding.
The first respondents to the present application are three North American businessmen who are investors in bloodstock. The second respondent is Mr Curtin who is their New Zealand based agent. They are the plaintiffs in the proceeding who have sued the partnership, and Mr Anthony Butt, who they say is its authorised agent, alleging breach of contract to sell a pacer named Pocket Me. Other members of the partnership, in addition to the applicants, are Mrs Karen Butt, who has a 40% share, and Mr Barrett. Mrs Butt is the wife of Anthony Butt who is the regular driver of Pocket Me. Mr and Mrs Butt and Mr Barrett are all residents of Christchurch.
In their proceeding the respondents allege that on 20 April 2001, through their authorised agent Mr Curtin, the first respondents entered into a written contract with Mr Butt, who was acting on behalf of the partnership with its authority, for the purchase of Pocket Me for $250,000. They allege that the contract provided that if the purchase were completed, as contemplated by the contract, during the imminent Inter Dominion Harness Racing carnival at Brisbane, all stakes won during the carnival by Pocket Me would be divided equally between the racing partnership and the North American respondents. The respondents say the partnership has repudiated the contract of 20 April 2001 and seek specific performance. Alternatively they claim damages from Mr Butt for misrepresentations as to his authority to sell the horse.
The present application for leave to appeal is brought under s24G(2) of the Judicature Act 1908, the proceeding being one in the Commercial List. The High Court has itself refused leave to appeal (Williams J, CL11/01, Auckland, 17 December 2001). In this appeal Mr Butt and Mrs Butt abide the decision of the Court.
Background facts
Pocket Me is a six year old New Zealand bred pacer, registered by the Harness Racing Association of New Zealand, and trained at premises in Templeton, Christchurch, by a brother of Mr Butt. He has trained the horse since it was a yearling.
In comprehensive affidavits he has filed in opposition to the application to dismiss the proceeding Mr Curtin has alleged that he first had contact with Mr Butt concerning Pocket Me in September 2000, when Mr Butt advised Mr Curtin that the pacer was for sale and that the asking price was $150,000 in New Zealand currency. There were thereafter, according to Mr Curtin, ongoing discussions between them about the sale of the horse which continued into 2001. The form of the horse improved over the latter part of this period and in the course of their discussions Mr Butt increased the asking price from $150,000, initially to $180,000, and then to $200,000. Finally, as the Inter Dominion carnival in Brisbane approached, the price was raised to $250,000.
Mr Curtin also referred to receiving a facsimile from Mr Butt on 19 April 2001, which was the day before Mr Butt left Christchurch to travel to Brisbane, giving him the number of the bank account into which Mr Curtin was to pay Mrs Butt’s share of the proceeds of the sale if it proceeded. The facsimile also gave mobile telephone numbers and email contact addresses for Mr Butt while he was overseas. Mr Curtin said he had recently arranged the purchase of another horse through Mr Butt who on that occasion was acting for a syndicate of owners. He has also said Mr Butt has regularly acted as agent for sale of horses in which he or his wife has an interest. The particular purchase referred to by Mr Curtin, according to him, was completed some 10 days before the Inter Dominion competition. The facsimile of 19 April has notations on it referring to both that horse and to Pocket Me. Mr Curtin has said he had detailed discussions with Mr Butt about the possible sale of Pocket Me. He also had agreed with Mr Butt’s brother that if the sale were arranged Pocket Me would be inspected by an equestrian veterinarian engaged by Mr Curtin after the horse had returned to New Zealand following completion of the Inter Dominion carnival on 5 May 2001. If the examination were successful the horse would then be delivered to him as agent for the respondents.
Mr Curtin’s version of the events on 20 April 2001 is that, first, he faxed from Auckland to Mr Butt in Brisbane a written offer setting out terms on which the clients of Mr Curtin were prepared to purchase Pocket Me. In response Mr Butt telephoned Mr Curtin’s personal assistant to indicate that the owners wished to retain a half share in any stakes won by Pocket Me in the Inter Dominion competition which was to commence the following day. Mr Curtin says that he then recast his earlier offer to incorporate the new requirement and faxed the revised document back to Mr Butt in Brisbane. Very soon after the revised document was faxed back to him signed by Mr Butt. In its signed form the document read:
The owners of POCKET ME
Mrs KL Butt
IH Stone
J Kelly &
MJ BarrettRE: “POCKET ME”
JC International has procured a purchaser for “Pocket Me” who is an American interest.
It is the understanding of JC International that “Pocket Me” is to participate in the Inter Dominions for the duration of the forthcoming four nightly events. In light of this, the prospective purchaser with due respect, requests that the owners agree on the following:
•The agreed price for the sale of “Pocket Me” will remain at $250,000.00 (Two Hundred and Fifty Thousand Dollars) irrespective of the outcome of the participation of “Pocket Me” in the forthcoming Inter Dominion events.
•The owners are agreeable to the prospective purchaser ensuring payment in the amount of $250,000.00 (Two Hundred and Fifty Thousand Dollars), being the agreed full and final purchase price for “Pocket Me” at any time during the course of the Inter Dominion event.
•If “Pocket Me” is purchased during the course of the Inter Dominion event, this is conditional upon, all stakes won by “Pocket Me” from the date of payment of purchase shall be divided equally between the parties at a 50% share to the Present Owners and a 50% share.
JC International on behalf of the Purchaser Agrees to the above.
Dated the 20th April 2001-04-20 (sic)
John Curtin
The owners agree to the above and acknowledge agreement by dating and signing this agreement below:
Dated the day of April 2001.
Signed and Acknowledged by the Owners of “Pocket Me” namely:
“pp. A M Butt”
Mrs K L Butt“pp. A M Butt”
IH Stone“pp. A M Butt”
J Kelly“pp. A M Butt”
MJ Barrett
Mr Butt had initialled each of the bullet points and, as indicated above, had signed the document four times above the names of each member of the racing partnership.
Mr Curtin has also said that in the course of their telephone discussions Mr Butt confirmed to him he had the authority of the owners (one of whom of course was his wife) to sign the agreement for sale of the horse on their behalf.
On 21 April 2001, the day following signing by Mr Curtin and Mr Butt of the document concerning the sale, Pocket Me raced in the first heat of the Inter Dominion Championships and won the heat in an Australian record time for the metric mile distance. The performance was it seems unexpected by the industry and it was widely reported in the racing media. Immediately following the winning performance, however, according to Mr Curtin, he began to receive signals that the owners were having second thoughts about completing the sale.
In the version he gives in his affidavits of the background to the signing of the document Mr Butt has said that he and Mr Curtin had their first specific discussions concerning Pocket Me in mid April 2001. Mr Curtin asked whether Pocket Me was for sale. Mr Butt also denies ever stipulating the price of Pocket Me to Mr Curtin or telling him the horse was for sale.
Mr Butt has denied being or ever holding himself out to be professionally engaged in the sale or purchase of bloodstock. He is only a harness racing driver. In relation to Pocket Me he was only the driver of the horse who helped with its training. He has said that he faxed bank account details to Mr Curtin so that Mrs Butt could be paid her entitlement on the sale of a different horse, which his brother and Mrs Butt had leased, to a party for whom Mr Curtin was acting.
Mr Butt said that Pocket Me was transported to Australia in mid April 2001 in order to race at the Inter Dominion Championship. Mr Butt himself flew to Brisbane on 20 April to drive the horse at the carnival. He received a message on arrival to telephone Mr Curtin in Auckland, and did so, later receiving the first faxed offer. Mr Butt has said he did not understand that a binding agreement for the sale of the horse would result from his signing the amended offer. He was assured by Mr Curtin at the time in a telephone conversation that signing the document did not mean the deal was set in concrete as it was an introduction only, which would lead to a binding agreement if Mr Curtin’s principal decided to proceed. Mr Butt had also expressly told Mr Curtin he had no authority to act on behalf of the owners. On that basis he signed the final document he was sent and faxed it back to Mr Curtin. Mr Butt has said there is an independent witness to his end of the crucial telephone conversation on 20 April which he has described. He has also said the request for a veterinary inspection was not made by Mr Curtin until 1 May.
High Court Judgments
The proceeding was issued in the High Court at Auckland by the respondents on 16 May 2001 and a notice of appearance of Mr Stone and Mr Kelly to object to the jurisdiction of the Court was filed on 7 June 2001. That matter came on before Williams J, sitting in the Commercial List, on 25 October 2001. In his oral judgment Williams J found that on the affidavits before him the respondents had made out a good arguable case against the members of the partnership on the basis that the affidavits filed on behalf of the respondents indicated that the partnership had permitted Mr Butt to represent he had authority to act on the partnership’s behalf in negotiating the sale of Pocket Me. The Judge recognised that what might well be pivotal in due course was the extent to which the partners had permitted it to be represented that Mr Butt had authority to act on its behalf, not just in relation to driving and training Pocket Me, but in relation to the sale of the horse. At trial the plaintiffs would need to demonstrate that the members of the partnership had permitted Mr Butt to be represented as having that particular authority. On the material before the Court, however, that possibility could not be dismissed. Williams J held that the respondents had a good arguable case, on their affidavits, accordingly. The Judge was also satisfied that the respondents had been entitled to serve the applicants outside of New Zealand without leave under Rule 219. It appeared that the case concerned a contract which was to be performed by delivery of the horse in New Zealand. The failure to do so, in breach of the contract, would mean it had been breached in New Zealand. It was also arguably shown the parties intended the contract to be governed by New Zealand law and had been entered into in New Zealand. In terms of Rule 219 of the High Court Rules it had accordingly been open to the respondents to serve Messrs Stone and Kelly as members of the partnership outside of the jurisdiction without leave. In the Judge’s view this met the requirements for the High Court to assume jurisdiction.
On the issue of forum non conveniens Williams J took the view overall that the claim had a more real and substantial connection with New Zealand than with Queensland, and that New Zealand was the natural forum for the case. He accordingly dismissed the notice of protest of jurisdiction and application to stay or dismiss the proceedings against the partnership. He also allowed an application by the respondents for change of venue, requiring that it be tried in the High Court Registry at Christchurch.
In his subsequent judgment refusing leave to appeal against his decision on jurisdiction Williams J referred to Meates v Taylor (Leave) (1992) 5 PRNZ 524 where this Court indicated that there is a high threshold for the grant of leave to appeal under s24G of the Judicature Act from an interlocutory decision concerning a matter in a Commercial List. The test requires an applicant for leave to show real detriment or that there is an important question of law of general or public importance which would be determined on the appeal. On the other hand, as the Judge also acknowledged, in Kuwait Asia Bank EC v National Mutual Life Nominees Limited (Leave) (1989) 3 PRNZ 558-559 this Court had observed that while service abroad is a matter of domestic law it is an area in which the New Zealand Courts think it right that a foreigner should have the fullest available opportunity of contesting jurisdiction.
The Court had reached the view that the claim had a more real and substantial connection with New Zealand than Queensland. That aspect of the judgment would not however be challenged if an appeal were permitted. On that basis, and in light of submissions that there was no evidence of their giving Mr Butt the requisite authority to sign the contract, Williams J considered whether leave to appeal should be given against his finding that the plaintiffs had demonstrated a good arguable against the personal defendants. There were, however, disputed allegations of a course of conduct, involving discussions between Mr Curtin and Mr Butt over a number of months prior to signing the document of 20 April 2000. Of significance also was the provision of Mr and Mrs Butt’s bank account details, and the suggestion of prior involvement by Mr Butt in selling a horse on behalf of owners. This provided some indication, at least, that the partnership had permitted Mr Butt to make representations as to his authority to sell. The Judge reaffirmed his conclusion that there was a good arguable case. Such a case was one in a somewhat better position than a case which might be successful. He did not consider the necessary threshold for leave had been reached and he dismissed the application for leave to appeal.
Decision
In general, the jurisdiction of this Court to hear appeals from interlocutory decisions of the High Court under s66 of the Judicature Act 1908 is unrestricted. Under s24G of the Act, however, an appeal from an interlocutory decision of the High Court on a matter entered on the Commercial List is only by leave. The exceptional requirement reflects a statutory policy aimed at securing the expeditious completion of the interlocutory stages of cases entered on the Commercial List in order to minimise delays in completion of that litigation. In terms of that policy leave to appeal under s24G is granted only where the particular circumstances of a case warrant incurring the delay involved in the hearing and determination of an appeal. A high threshold is generally set in terms of either injustice or real detriment to the party seeking to appeal, if it is not permitted to do so, or of the general or public importance of the question to be raised: Meates v Taylor (1995) 5 PRNZ 524 CA.
In this case Mr Banbrook, for the respondents, argued that the threshold for leave has not been reached. There is however in this case, as Mr Cole emphasises, a well recognised competing principle that a foreign citizen resident abroad is not lightly made subject to what, for him, is a foreign jurisdiction. For this reason and because of the finality of the Court’s decision on jurisdiction, which is invariably made at an early stage of a proceeding, we consider both the High Court and this Court should more readily entertain an application for leave to appeal against a Judge’s interlocutory decision on a matter in the Commercial List where it concerns a protest as to jurisdiction under Rule 131. This is consistent with the view taken by this Court on granting leave to appeal to the Privy Council to a foreign company, whose protest as to jurisdiction had been dismissed in the leading New Zealand case: Kuwait Asia Bank v National Mutual Life Nominees Limited (Leave) (1989) 5 PRNZ 558. At p559 the Court said:
Where the New Zealand Courts have accepted jurisdiction over a foreigner and considerable sums are at stake we think that it is right that the foreigner should have the fullest available opportunity of contesting the jurisdiction.
We approach the present application for leave to appeal accordingly.
In New Zealand a statement of claim may be served out of the jurisdiction without leave in the cases specified by Rule 219. In the present case so far as relevant the Rule provides:
219.When allowed without leave - Where in any proceeding a statement of claim or counterclaim and the relevant notice of proceeding or third party notice cannot be served in New Zealand under those rules, they may be served out of New Zealand without leave in the following cases:
(a)Where any act or omission for or in respect of which damages are claimed was done or occurred in New Zealand:
(b)Where the contract sought to be enforced or rescinded, dissolved, annulled, or otherwise affected in any proceeding, or for the breach whereof damages or other relief is demanded in the proceeding-
(i) Was made or entered into in New Zealand; or
(ii) Was made by or through an agent trading or residing within New Zealand; or
(iii) Was to be wholly or in part performed in New Zealand; or
(iv) Was by its terms or by implication to be governed by New Zealand law:
(c)Where there has been a breach in New Zealand of any contract, wherever made:
(h)Where any person out of New Zealand is a necessary or proper party to a proceeding properly brought against some other person duly served or to be served within New Zealand.
The Judge’s implicit finding that the case was covered by (a) and (b)(i) and (iv) was not challenged before us. Despite the broad terms of Rule 219, however, the Privy Council has confirmed that the High Court under Rule 131 retains a discretionary power to decline jurisdiction: Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990] 3 NZLR 513.
Under Rule 131(1) and (3) a defendant objecting to the Court’s jurisdiction may file and serve an appearance stating his objection and the grounds of it. This must be done within the time limited for filing a statement of defence and instead of taking that step. Thereafter the defendant may apply to the Court to dismiss the proceeding, and by implication any of the defendants from it, on the grounds of lack of jurisdiction in relation to that defendant. That is what the applicants have done in the present case. The principle which the High Court Judge was required to apply in determining the application to dismiss is that stated in the substantive decision of this Court in Kuwait Asian Bank EC v National Mutual Life Nominees Limited (No. 2) [1989] 2 NZLR 50, 54. In delivering the judgment of the Court Cooke P referred to a recent statement of the principles applied in England to applications for leave to serve outside of the jurisdiction, which, by analogy, should be applied to applications to dismiss under the New Zealand procedure. The Court said:
…the two-fold tests posed by the English Court of Appeal, a good arguable claim on the merits and a strong probability that the claim falls within the letter and spirit of the rule about service abroad, relate to questions that at least under Rule 219(a) merge into one in the present case. At least under that paragraph, on which the argument in this Court was mainly centred, whether the New Zealand Court has jurisdiction depends on the strength of the plaintiff’s case against the bank on the merits.
There would be some danger in treating any one formula as an invariable touchstone. The various speeches in the House of Lords in The Brabo [1949] AC 326 confirm that view; the question is not a semantic one but one of judgment on the facts. The ultimate issue under R131 is whether the Court is satisfied that there are sufficient grounds for it properly to assume jurisdiction. The strength of the plaintiff’s case against the party served abroad and all the circumstances of the case have to be weighed. Where, as here, the action has a strong New Zealand association and arises from business or investment undertaken by a foreign company in New Zealand, we think that it is enough to show a good arguable case against the foreigner within (a) or (h). If the dispute has little connection with New Zealand and it could be seen as exorbitant to assert jurisdiction over the foreigner, a stricter standard may well be appropriate.
In the present case Mr Cole for the applicants focussed his submissions on the requirement for a good arguable case and said, in relation to the cause of action against the partnership of which the applicants are members, that it is plain from the affidavits there is no evidence available indicating that the partners held out Mr Butt as having authority to sell Pocket Me.
The requirement that there be a good arguable case on the merits is in part directed at ensuring that a claim against a foreign resident defendant is not speculative. It must be borne in mind, however, in assessing that factor that, as the Court pointed out in its substantive decision in Kuwait Asia Bank (p51), Rule 131 makes no explicit provision for trial of issues of fact or discovery in relation to questions raised under the rule. Indeed a trial of the jurisdiction issue in most cases would subvert the purpose of the policy behind Rule 131. The general expectation is rather that protests concerning jurisdiction under Rule 131 are to be decided at the outset of the case on affidavit evidence. To some extent the picture the Court has of the case may accordingly at this stage be incomplete in important respects.
In that context the focus of the Court in considering an application to dismiss for want of jurisdiction under Rule 131 must be on the allegations made in the statement of claim and the affidavit evidence the plaintiff has put forward in support of them. The Judge will of course have regard to the plausibility of that evidence, in light of all the material before the Court, including that in the defendant’s affidavits. But in considering whether the plaintiff’s account meets the required standard the Court should take into account the inability of the plaintiff to obtain for discovery at this stage especially in relation to matters that might be within the exclusive knowledge of the foreign defendant. On the other hand where the principal documentary evidence in the case appears to be available and the plaintiff’s assertions contradicting it vague or improbable, a Judge is certainly not required to accept uncritically the factual assertions on which it is submitted on behalf of a plaintiff that there is a good arguable case.
We do not think it constructive to be more specific as to what constitutes a good arguable case in this context. In particular we do not regard the gloss that “the plaintiff is probably right upon it”, offered in the judgment of the Court of Appeal in Attock Cement Co Ltd v Romanian Bank for Foreign Trade [1989] 1 WLR 1147 at p1155, as helpful in New Zealand. What is a good arguable case is a straightforward test which comes down to a matter of judgment, in all the circumstances, having regard to the principle of restraint concerning a foreign citizen resident overseas.
Applying this approach, we note that in the present case the document which both Mr Curtin and Mr Butt signed, on its face, lends support the version of events on which the respondents’ claim is based, as it is signed by Mr Butt purportedly on behalf of each of the partners. It may, of course, well be that at a trial the applicants, the partnership and Mr Butt are able to show that entry into contractual relations at that stage was not intended or that the partners did nothing to put Mr Butt in the position in which he is alleged to have represented himself having the authority to sell the horse. As already emphasised we certainly cannot evaluate the conflict in the affidavits on this point. There is nevertheless sufficient in the surrounding circumstances alleged by Mr Curtin, were his version of the facts ultimately to be upheld, to indicate that a Court could well find Mr Butt had ostensible authority. Here we have in mind the allegation of a lengthy prior period of continual discussions between Mr Butt and Mr Curtin over the sale of Pocket Me, the fact that Mrs Butt was a member of the partnership and an indication she may have been in email contact concerning partnership matters with the Australian partners. There is also the coincidence of Pocket Me’s good performance the day following the contract and the alleged swift indication thereafter that the partnership did not wish to sell. Finally the apparent reference to Pocket Me in the facsimile of 19 April sent to Mr Curtin with the details of Mr and Mrs Butt’s bank account is also in point. Having regard to the fact that discovery has not yet taken place, this train of circumstances together with the form of the document of 20 April 2001, sets up a case against the respondents which we categorise as good and arguable on the approach we have discussed. As there is no dispute that the case falls within the letter and we are satisfied it falls within the spirit of the requirements of Rule 219 concerning service without leave, the general test for the Court to accept jurisdiction under Rule 131 is satisfied.
Finally we note that the issue of jurisdiction in this case has been raised by two Australian citizens who have become involved in a partnership the affairs of which concern the training of a horse in New Zealand and its participation in harness racing which in its scope is a Trans Tasman activity. This is highly relevant to the ultimate issue in an application to dismiss under Rule 131 expressed in Kuwait Asia Bank as being “whether there are sufficient grounds for the New Zealand Court properly to assume jurisdiction” under the discretion implicit in Rule 131. It would be very surprising in our view if two Australian residents, who became members of a New Zealand based partnership in a Trans Tasman industry could not be made subject to the New Zealand jurisdiction in what is plainly a genuine dispute arising out of activities taking place in both New Zealand and Australia in relation to partnership property. It is not in our view in point whether the partnership’s affairs and the applicants’ involvement in the affairs are to be characterised as a business or as Mr Cole suggested a hobby.
In any case having such Trans Tasman features, the general expectation is that it should be tried in the Australasian forum that is most appropriate for the trial of the proceeding. This is not to say that the test of a good arguable case against the foreign citizen resident abroad is to be put aside. On the contrary and as we have made plain, it is the area of initial scrutiny and part of the general test. But in situations which on the merits of the case are in balance, involving Trans Tasman jurisdiction questions, it is probable that the ultimate decision on a New Zealand Court assuming jurisdiction will turn on whether New Zealand is clearly the most appropriate forum. Here Williams J found that was so. His finding was not directly or seriously challenged in the present application, nor in our view could it have been.
For these reasons we dismiss the application for leave to appeal. The respondents are entitled to costs of $3,000 together with reasonable disbursements including travel and accommodation expenses to be fixed if necessary by the Registrar.
Solicitors
Simpson Grierson, Auckland, for Applicants
John Holmes, Auckland, for Respondents
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