Moodie v Strachan [2014] NZCA 260 (23 June 2014)

Last Updated: 4 July 2014

IN THE COURT OF APPEAL OF NEW ZEALAND
CA871/2013 [2014] NZCA 260
BETWEEN	ROBERT ALEXANDER MOODIE Appellant
AND	ELIZABETH GRACE STRACHAN Respondent

Court:	Miller, R Young and S France JJ
Counsel:	Appellant in person P Churchman QC for Respondent
Judgment: (On the papers)	23 June 2014 at 10.00 am

JUDGMENT OF THE COURT

1. The appeal is struck out for failure to pay security for costs.
2. The appellant must pay the respondent’s costs for a standard application on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Miller J)

Introduction

[1] Mr Moodie has appealed against a decision of Associate Judge Osborne dismissing his application to set aside a bankruptcy notice.^[1] The appeal was entered on the fast track and given a fixture on 1 July 2014.
[2] The rules of this Court required that Mr Moodie pay security for costs within 20 working days after filing his appeal on 20 December last.^[2] He asked the Registrar to defer payment until 25 April 2014 on grounds of ill health, but without adequate evidence of his financial position. The Registrar declined. On review Harrison J directed that he pay the prescribed sum by 31 March 2014.^[3] That decision was not appealed. He still has not paid.
[3] This judgment responds to Ms Strachan’s application for an order striking the appeal out.^[4] By consent, the application has been dealt with on the papers.

Background

[4] Mr Moodie and Ms Strachan are both lawyers. Mr Moodie employed Ms Strachan early in 2005, and late in 2007 he constructively dismissed her. She successfully challenged her dismissal in the Employment Court, resulting in a judgment debt of $222,239.18 payable by Mr Moodie together with judgment interest.^[5]
[5] Mr Moodie failed to pay and Ms Strachan issued a bankruptcy notice. Mr Moodie applied to set the notice aside, relaying on an equitable cross-claim which takes the form of an action in defamation. He alleges that Ms Strachan made defamatory comments to one person, the features editor of the New Zealand Listener.^[6] The comments were not further published. The damages sought, $325,000, exceed the judgment debt.

The law

[6] The Court may, on application, make an order striking out an appeal if security is not paid by the time payment is due.^[7]
[7] In the ordinary course an appellant who has not paid security will not be able to apply for a fixture, which must be done within three months after filing, and the appeal will in due course be deemed abandoned. In most cases, then, the respondent need not go to the trouble of applying to have the appeal struck out. The application has been made in this case only because the appeal already has a fixture. We note in passing that a timetable was set for filing the case on appeal and submissions, as well as for paying security. Mr Moodie is now in default not only on security but also on filing the case and his submissions.
[8] Rule 37(1) provides:

The Court may, on application, make an order striking out an appeal if security for costs is not paid by the time payment is due.

Security is normally due 20 working days after filing.

[9] The application may ask the Registrar, or a single Judge on review, to dispense with security or reduce the amount.^[8] Any such application must be made within the same 20-day period.
[10] The Supreme Court recently considered this Court’s approach to applications for dispensation. In Reekie v Attorney-General the Supreme Court held that the Registrar (or a single Judge on review) should dispense with security only if it is right to require the respondent to defend the judgment under appeal without the protection as to costs that security supplies.^[9] As to whether it is right to so require, the discretion should be used to preserve an impecunious person’s access to the Court for an appeal that a solvent person would reasonably wish to prosecute. The Court observed that a reasonable and solvent person would not try to prosecute a hopeless appeal. The Court also confirmed that decisions of a single judge as to security cannot be reviewed by a panel of three Court of Appeal judges: rather, an appeal lies to the Supreme Court.^[10]
[11] Turning to r 37, the cases point to reasons why an appeal might not be struck out:

• (a) The appellant may show that the failure to pay was a genuine mistake or oversight or the fault of some intermediary, such as a courier.^[11]
• (b) The appellant may satisfy the Court that security will be paid.^[12]

[12] However, the cases diverge on whether the Court will take the appeal’s merits into account when deciding a strike out application under r 37. Some cases say that an application will be granted if security was not paid when required and the appeal has “no realistic prospect of success”.^[13] Other cases say that strike-out is an “inevitable consequence” of failure to pay.^[14]
[13] As just outlined, an appellant may seek dispensation before security otherwise falls due. If that has not been done, or dispensation has been refused, the amount must normally be taken to have been properly fixed, meaning that he or she can pay, or if he or she is impecunious, the appeal is not one which a solvent person would reasonably pursue. It follows that, all other things being equal, non-payment should normally result in the appeal being struck out on application.^[15]
[14] However, the jurisdiction is discretionary in nature and its exercise must always depend on the circumstances. There may be cases in which an appellant can nonetheless satisfy the Court that strike-out should be refused because he or she ought not be required to pay security. Of course this is a dispensation in all but name, so the test must be the same; the appellant must normally be impecunious and the appeal one which a solvent person would reasonably want to pursue. As the Supreme Court observed in Reekie, a solvent person would not pursue a hopeless appeal. Further, dispensation must be sought soon after filing, before the respondent is likely to have incurred significant costs. We have also drawn attention to the appeal pathway where dispensation is sought and refused. For all of these reasons, it is difficult to envisage circumstances in which the Court might refuse strike-out on this ground where dispensation has been earlier sought and refused and nothing has changed.^[16]

Evaluation

[15] Mr Moodie has not paid security, and nothing about the appeal justifies declining the strike-out application. We make three points.
[16] First, nothing has changed for the better, so far as Mr Moodie is concerned. He has not shown that illness still precludes payment at this time or taken the opportunity to file evidence of his financial position. Indeed, there does not seem be to any intention to pay security or seek further time to pay. Mr Moodie has indicated that it is not his “intention or desire to abandon this appeal” but the effect of the Registrar and Harrison J declining to dispense with security means the appeal, in Mr Moodie’s words, “cannot be pursued”.
[17] Second, Mr Moodie has now defaulted in filing the case on appeal and the fixture is now imminent. Mr Moodie cannot justify an adjournment. If it is to proceed Ms Strachan must soon incur significant preparation costs.
[18] Third, we consider that the appeal is hopeless. It rests on the proposition that Mr Moodie has an equitable set-off equalling or exceeding a judgment debt that he has admittedly not paid. Ronald Young J declined to strike out Mr Moodie’s remaining cause of action,^[17] but we do not accept that it could produce an award sufficient to meet the judgment debt. Defamation awards are sometime
substantial,^[1] and we will assume that Ms Strachan’s statements were defamatory. However, they were published to just one person on a single occasion.^[19] In Cairns v Modi, the Court of Appeal of England and Wales said:^[20]

The process of assessing damages is not quasi-scientific, and there is rarely a single “right” answer. Nevertheless, it is virtually self-evident that in most cases publication of a defamatory statement to one person will cause infinitely less damage than publication to the world at large, and that publication on a single occasion is likely to cause less damage than repeated publication and consequent publicity on social media.

[19] We do not think there is any realistic prospect that Mr Moodie might win an award exceeding the judgment debt and interest, which amount to more than $239,774.32, or even the sum of $180,772.32 estimated by Mr Moodie after allowing for costs had this appeal been successful.

Result

[20] The respondent’s application is granted. The appeal is struck-out.
[21] Mr Moodie is to pay Ms Strachan’s costs for a standard application on a band A basis and usual disbursements.

Solicitors:
Izard Weston, Wellington for Respondent

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^[1] Strachan v Moodie [2013] NZHC 3312 [High Court decision].

^[2] Court of Appeal (Civil) Rules 2005, r 35 [Civil Rules].

^[3] Moodie v Strachan CA871/2013, 19 March 2013 (Minute of Harrison J) at [5].

^[4] Civil Rules, r 37.

^[5] Strachan v Moodie [2012] NZEmpC 95, (2012) 10 NZELR 216.

^[6] This claim has its origins in defamation proceedings against Ms Strachan, another barrister, and the publisher of the New Zealand Listener. The proceedings were settled in September 2009 but the single cause of action described, solely against Ms Strachan, remained.

^[7] Civil Rules, r 37.

^[8] Rules 35 and 7.

^[9] Reekie v Attorney-General [2014] NZSC 63.

^[10] At [24]–[26].

^[11] He v Hard to Find but Worth the Effort Quality Secondhand Books Ltd (In Liq) [2007] NZCA 565, (2007) 18 PRNZ 757 at [8].

^[12] See Tannadyce Investments Ltd v Commissioner of Inland Revenue [2009] NZCA 136, (2009) 19 PRNZ 305.

^[13] Patterson v Commissioner of Inland Revenue [2013] NZCA 619, (2013) 26 NZTC 21-051 at [4]; Riccarton Construction Ltd v Coljon Ltd [2010] NZCA 430 at [8]. See also Oraka Technologies Ltd v Geostel Vision Ltd [2009] NZCA 411, (2009) 20 PRNZ 1 at [7].

^[14] Corbett v Legal Complaints Review Officer [2011] NZCA 223 at [17]; Rabson v Chapman [2014] NZCA 158 at [3].

^[15] He, above n 11, at [8].

^[16] Reekie, above n 9, at [21].

^[17] Moodie v Strachan [2013] NZHC 1394.

¹⁸ Ursula Cheer and John Burrows “Defamation” in Stephen Todd (ed) The Law of Torts in New Zealand (6th ed, Brookers Ltd, Wellington, 2013) 809 at [16.6.01(1)].

^[19] High Court decision, above n 1, at [30].

^[20] Cairns v Modi [2012] EWCA Civ 1382, [2013] 1 WLR 1015 at [24].