Yingling v Gifford
[2016] NZHC 1556
•11 July 2016
IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY
CIV-2015-416-000026 [2016] NZHC 1556
BETWEEN RANDY YINGLING
Plaintiff
AND
KENNETH JOHN GIFFORD First Defendant
AND
DEAN JOHN WITTERS Second Defendant
Hearing: 3 May 2016 Appearances:
G Thwaite for the Plaintiff
R Donnelly for the First DefendantJudgment:
11 July 2016
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 11 July 2016 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Rishworth Wall & Mathieson, Gisborne
G Thwaite, Auckland
YINGLING v GIFFORD & Anor [2016] NZHC 1556 [11 July 2016]
[1] This is an application for summary judgment on a claim for the enforcement of a judgment entered in the US Superior Court of California in June 2011. The claim arose out of events between 2007 and 2010, and related to a commission the plaintiff says he is entitled to. The plaintiff says the defendants took his customer lists in order to make arrangements to sell to prospective clients directly, thereby depriving him of commission. The Superior Court found that that was the case, and entered judgment for the plaintiff on causes of action of breach of contract and fraud.
[2] The defendants oppose the application. No limitation defences are raised. The defendants’ sole claim is that the judgment is impeachable for fraud because there was fraud on the part of the plaintiff when seeking judgment in that he failed to draw a key fact to the court’s attention; they say they had no intention to defraud the plaintiff, and would have paid him, but there were no sales. The plaintiff says that the defendants conducted a full defence at trial and the Court was aware of all the relevant evidence.
Summary judgment principles
[3] Rule 12.2 of the High Court Rules states:
12.2 Judgment when there is no defence or when no cause of action can succeed (1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to [a cause of action in the statement of
claim or to a particular part of any such cause of action].
…
[4] In Krukziener, the Court of Appeal explained the applicable principles on an application for summary judgment as follows:1
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26].
resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331at 341 (PC). In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
Principles on enforcement of foreign judgment
[5] It is common ground that the Reciprocal Enforcement of Judgments Act 1934 does not apply, and therefore this case is governed by the common law. At common law, a judgment in personam of a Court of competent jurisdiction is regarded as creating a debt owed by the judgment debtor to the judgment creditor.2 The requirements for enforceability are that the foreign Court must have had jurisdiction to give judgment; the judgment must be for a definite sum of money; and the foreign judgment must be final and conclusive.3 An action for enforcement of such a debt may be brought in the High Court.4 No issue is taken with any of the requirements for enforceability.
[6] Once the requirements for enforceability are met, the foreign judgment cannot be impeached except on limited grounds. Those are where the judgment was obtained by fraud; where enforcement would be contrary to local public policy; and where the proceedings in which the judgment was obtained were contrary to natural justice.5 Only the first of these exceptions is in issue.
Background
[7] At the relevant time, the defendants had a business in California which dealt in drum lines, operated through a company known as K-Pack USA. They retained the plaintiff as a salesman. According to the agreement, he was to receive a commission of 15% for any buyers he secured. The defendants also apparently had
their own contacts in the industry.
2 Von Wyl v Engeler [1998] 3 NZLR 416 (CA) at 420.
3 Reeves v One World Challenge LLC [2006] 2 NZLR 184 at [36].
4 Von Wyl v Engeler, above n 2, at 420.
5 Kemp v Kemp [1996] 2 NZLR 454 (HC) at 458.
[8] The plaintiff and another salesman, Ed Smith, made contact with a number of people and companies in California, and although some of these contacts appeared promising initially, they all fell through. In 2010 there was a meeting at which the basis for commission was altered, but the defendants say that the intention was always to pay on a fair and agreed basis. Later, the second defendant began looking to set up a stand-alone drum operation, still intending, the defendants say, to pay commission on any sales on the agreed basis.
[9] Unfortunately, it appears that the business never took off. The defendants say that there were, in fact, no sales. Because no sales ever occurred, nothing was owed to the plaintiff, and he was never defrauded of anything. Both defendants attest that they always intended to pay the plaintiff commission in the event of any sales, even after they re-structured their drum sales operation.
[10] The plaintiff filed proceedings in California, alleging that the defendants had failed to pay a debt they owed to him in breach of contract, and had acted fraudulently by entering the contract without intent to fulfil it. Both defendants initially resisted the action, but ultimately gave up, and did not defend it at the hearing. They say that that was because of the cost and difficulty of appearing, given that they were both based in New Zealand. Judgment was ultimately entered for the plaintiff.
Discussion
Scope of fraud exception
[11] It is now trite that in an action on a foreign judgment, the foreign judgment cannot be re-examined on its merits. The foreign judgment is conclusive as to any matter adjudicated on, whether fact or law.6 Fraud, however, is an exception to the rule, whether that is fraud on the part of the plaintiff seeking to enforce the judgment, as here, or on the part of the original court. This is so even if it involves
traversing questions already adjudicated on by the foreign court, even on the same
6 Godard v Gray (1870) LR 6 QB 139.
evidence; and even if the defendant did not actually defend the original cause of action.7
[12] The result is that – in contrast to allegations of fraud against New Zealand judgments, for which a defendant must meet stringent tests of evidence8 – a defendant in a foreign cause of action effectively receives a second chance to challenge all the evidence. This state of affairs has been widely criticised. In Jet Holdings v Patel, Staughton LJ observed:9
The defendant may have been served in the foreign country, entered an appearance, given evidence, been disbelieved, and had judgment entered against him. If he asserts that the plaintiffs claim and evidence were fraudulent that issue must be tried all over again in enforcement proceedings. The lesson for the plaintiff is that he should in the first place bring his action where he expects to be able to enforce a judgment.
[13] Nonetheless, that remains the state of the law. As to the level of fraud which is required, the standard is as follows:10
The fraud necessary to destroy a prima facie case of estoppel by res judicata includes every variety of mala fides and mala praxis whereby one of the parties misleads and deceives the judicial tribunal.
[14] I consider that in the context of summary judgment, this means that, if it appears that the plaintiff may have led the California Court, by omission, to believe that sales had been made, the required level of fraud will have been established and I should decline summary judgment.
[15] The evidential standard which must be met in order to suggest fraud has been a matter of some debate in the past. Some cases have implied that it is enough that a
Court is left with a “feeling of unease” having looked at all the circumstances.11
7 Svirskis v Gibson [1977] 2 NZLR 4 (CA) at 9, citing Syal v Heyward [1948] 2 KB 443, [1948] 2
All ER 576; Abouloff v Oppenheimer (1882) 10 QBD 295; Vadala v Lawes (1890) 25 QBD 310.
8 Shannon v Shannon (2005) 17 PRNZ 587 (CA).
9 Jet Holdings Inc v Patel [1990] 1 QB 335 at 344.
10 DPP v Humphrys [1977] AC 1 (HL); Pawson v Claridge HC Auckland CIV-2009-404-4367, 25
June 2010; see also Jet Holdings, above n 9.
11 Svirskis v Gibson, above n 7, though that case was decided under the Reciprocal Enforcement of
Judgments Act 1934.
[16] Others, however, particularly in the summary judgment context, have concluded that there must be an appreciable evidential background justifying that impression, so as not to undermine the usability of the summary judgment procedure in enforcement proceedings.12 Combining the principles of summary judgment and fraud on enforcement of foreign judgment, there must be some evidence, sufficiently particularised, to ground a realistic suggestion of fraud.13 In the present case, it is not necessary to delve into the fine details of exactly how much evidence is required, for reasons I will come to.
This case
[17] In the circumstances of this case, I consider that the plaintiff could have made out his claim by showing clear evidence that he did, indeed, raise the fact that no sales were in fact made; or alternatively clear evidence that whether or not sales were made was immaterial under California law for the purpose of establishing liability and ruling on the issue of quantum. However, the plaintiff has not done so. The California Judge’s written reasons have not been provided, only the orders. This may be a result of the way that court transcriptions are conducted in that jurisdiction, but in that case I would have expected clear evidence that the matter had been raised, for example in written submissions or notes of evidence. None has been provided. Nor has the plaintiff provided a narrative affidavit explaining the case he put before the Judge.
[18] In my view, that is enough to dispose of the case. By way of illustration, I note the following extract from Svirkis v Gibson:14
His solicitor's affidavit of 14 October 1974 says that the proof required at the trial involved proof of all the allegations of fact contained in the statement of claim. According to the transcript, however, the plaintiff gave no evidence at all about the partial taking up or possible reinstatement or restoration; nor does the transcript record any reference by his counsel (or by the judge) to that subject. Blameworthy though he apparently was for not taking part in the Queensland trial, the defendant could reasonably have expected that evidence would be given to satisfy the court of the truth of the allegations in the statement of claim. As it is, this allegation, important in relation to
12 Pawson v Claridge, above n 10; Vanhoy v Howick Engineering Ltd HC Auckland CIV-2004-
404-4428, 23 August 2005.
13 See my discussion in Pawson, above n 10, at [86].
14 Above n 7, at 11.
quantum, was evidently never even mentioned at the hearing. Obviously there could be explanations for this omission other than fraud on the part of the plaintiff, but no explanation has yet been given.
[19] Similarly, here, I cannot be certain that complete evidence was given. Had the plaintiff provided adequate evidence establishing that it was, I could have found in his favour. However, as it stands, in the absence of that evidence, I am left in a situation where the judgment is contradicted by the affidavit evidence of the defendants, which does appear plausible, and I have been presented with no documentary evidence to refute their assertions.
[20] The plaintiff simply has not provided enough evidence to convince me that the defendants have no defence to his cause of action. As a result, I am unable to grant summary judgment.
Result
[21] The plaintiff's application for summary judgment is declined.
Costs
[22] I reserve costs in accordance with the decision of the Court of Appeal in
NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
[23] The case is to be listed in the chambers list at a time to be allocated by the
Registrar for further directions. Memoranda should be filed at least two days prior with proposed directions.
Associate Judge Sargisson