Wire by Design Limited (in receivership and in liquidation) v Commercial Factors Limited

[2015] NZHC 2053

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-002699 [2015] NZHC 2053

BETWEEN

WIRE BY DESIGN LIMITED (IN

RECEIVERSHIP AND IN LIQUIDATION)

First Appellant

HADLEY JOHN WRIGHT Second Appellant

HADLEY JOHN WRIGHT, LORRAINE WRIGHT and DAVID SCHNAUER Third Appellants

AND

COMMERCIAL FACTORS LIMITED, COMMERCIAL FACTORS AND FINANCE LIMITED, COMMERCIAL FINANCE AND SECURITIES LIMITED Respondents

Hearing:	(On the papers)
Counsel:	Kalev Crossland for the Appellants Paul Dale for the Respondents
Judgment:	28 August 2015

JUDGMENT OF MOORE J

This judgment was delivered by me on 28 August 2015 at 11:00am pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

WIRE BY DESIGN LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) & ORS v COMMERCIAL FACTORS LIMITED & ORS [2015] NZHC 2053 [28 August 2015]

Introduction

[1]      On 11 May 2015, I dismissed an appeal by Wire By Design Ltd (“WBD”) against a decision of the District Court.1    In that appeal I concluded that the Tawil Group of companies had entered into an agreement with Commercial Factors Ltd (“CFL”) and that WBD was bound by the terms of that agreement as a result of its novation of the agreement.

[2]      WBD now seeks leave to appeal against my decision to the Court of Appeal. It argues that its right to natural justice has been breached, because it says I determined the case on a different basis to that on which it was pleaded.

Second appeals generally

[3]      Second appeals to the Court of Appeal are generally brought under section 67 of the Judicature Act 1908 which provides that appeals against decisions of the High Court on appeal require leave before they may be brought.

[4]      As is generally the case with second appeals, leave will only be granted under this  rule  when  there  is  a  question  of  fact  or  law  which  is  capable  of  genuine argument involving an issue of significant public or private interest.2

[5]      This is not such a case.  The sum in dispute is very small, and the case does not raise any important issues of law.  Therefore WBD is not entitled to leave under this section.

Second appeals on natural justice grounds

[6]      However, WBD argues that this is not the appropriate basis to determine leave in this case.  It says that the ground of appeal, that there has been a breach of its right to natural justice, means that leave should be granted in any event.  In effect

it argues that the appeal is not, truly, a second appeal.

1      Wire By Design Ltd (in rec and in liq) v Commercial Factors Ltd [2015] NZHC 985.

2      Waller v Hider [1998] 1 NZLR 412 (CA) at 413.

[7]      WBD has not provided clear authority for this approach to the question of granting leave.   However, I am satisfied that even if WBD is correct in this submission, leave should nonetheless be declined for the reasons which follow.

[8]      Mr Commons argues that my decision was made on a different basis to the way that the case had been pleaded and that he did not have any opportunity to respond to the conclusions that I ultimately reached in my decision.  In particular, he submits that I made the following errors:

(a)      I determined that the contract was entered into on 3 August, when CFL had pleaded that the agreement was concluded on 27 July.  He says he was not given an opportunity to respond to this finding, and that reaching such a conclusion was therefore unfair;

(b)I determined that the obligations under the contract were passed to WBD by novation.  He says that only an assignment was pleaded, not novation; and

(c)      I  determined  that  WBD  and  related  parties  were  required  to  pay indemnity costs under the guarantees that they had signed.   Mr Commons  argues  that  these  guarantees  had  not  been  pleaded, although they did form part of the evidence in the District Court and also before me.

[9]      I do not accept my decision breached WBD’s right to natural justice.  While my decision differs in several material respects from the approach adopted by the Judge in the decision under appeal, it is based entirely on matters that were live both in the hearing before me and also in the District Court.

[10]     The central issue was whether an enforceable contract had been concluded between the parties.   I determined an agreement was reached between CFL and members of the Tawil Group on the basis of an email sent on 27 July.   While I concluded that agreement was finally reached one week later, WBD and its counsel, Mr Commons were both aware that the question at issue was whether an agreement on these terms was concluded.  The actual date of the agreement was not an essential part of CFL’s argument at any point.  I concluded that the agreement was made either with Mr Hadley or with Faulkner Collins Ltd, but that in any event it contained a term requiring the contract, including its obligations, to be passed on to Faulkner Collins’ successor in title.  This ultimately proved to be WBD.  I concluded that such

a novation occurred3  and that WBD was bound by the terms of the agreement.  On

this basis I interpreted the contract and determined that WBD was obliged to pay both the $20,000 success fee and the $100,000 break fee contained in the contract.  I also concluded that the relevant guarantees required WBD and related parties to pay indemnity costs.

[11]     All of these were issues which were canvassed at length in the hearing before me.  They were challenged by Mr Commons.  In presenting the appeal he developed a number of quite complex arguments attacking, in considerable detail, each step of this reasoning.   Ultimately, I was not persuaded by any of his arguments.   These

(with one exception4) did not depend on the precise timing of the agreement, nor do I

consider that other arguments could have been made on the basis of an agreement entered on 3 August.  That is to say, even if Mr Commons is correct that he had no notice that I might determine the case in this way, I do not consider he was disadvantaged  by  this  fact.     Indeed,  as  the  District  Court  Judge  observed, Mr Commons took every argument that was plausibly open to him at trial.   I am

satisfied no injustice has resulted from the way I decided this case.

3      While the language of “novation” may not have been used in the original pleading, CFL made it very clear that it was referring to the transfer of the burden of the contract.   WBD cannot reasonably argue that it was unaware of this allegation, and indeed responded to this allegation directly in its defences to the claim.

4      Mr Commons did argue that the contract, if agreed, was conditional and that the condition was not fulfilled.  Ultimately I determined that this condition had been removed by the date of the agreement.  However, the balance of Mr Commons arguments continued to apply to the contract as I found it.

[12]     I therefore decline to grant leave to appeal to the Court of Appeal.

Moore J

Solicitors/Counsel:

Mr Crossland, Auckland

Mr Dale, Auckland