Moore v Guardian Tree and Landscape Limited [2016] NZHC 1720 (27 July 2016)

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BETWEEN	PETER JOHN MOORE AND BEVERLEY ANNE MOORE First Appellants JACKEYTOWN BLOOMS 2011 LIMITED Second Appellant
AND	GUARDIAN TREE AND LANDSCAPE LIMITED First Respondent DARRYL ANDREW JUDD and JONAS MULLER _{Second Respondents}

Hearing:	13 July 2016
Counsel:	K P Sullivan for appellants P J Drummond for respondents
_Judgment:	_{27 July 2016}

Introduction ........................................................................................................... [1] The parties ............................................................................................................. [3] Chronology of proceedings ................................................................................... [7] The strike out/stay decision................................................................................. [23] Nature of appeal .................................................................................................. [30] No reasonable opportunity to be heard ............................................................... [34] The threshold test for strike out for non-compliance .......................................... [40] Was Jackeytown Blooms represented at the strike-out/stay hearing? ................. [52] The effect of stay................................................................................................. [60] Service of counsel’s memorandum ..................................................................... [63] Conclusion .......................................................................................................... [67] Costs .................................................................................................................... [69] Orders .................................................................................................................. [71]

[1] This is an appeal from a decision of Judge G M, striking out the first appellants’ statement of defence, entering judgment in favour -of the respondents, staying the second appellant’s counterclaim and awarding costs against the appellants for non-compliance with orders of the District Court for discovery.¹

[3] In 2011, Guardian Tree and Landscape Limited (Guardian Tree) carried out hedge cutting and pruning work for Mr and Mrs Moore (the Moores) at their commercial hydrangea business, Jackeytown Blooms 2011 Limited (Jackeytown

_{Blooms). Guardian Tree was the plaintiff, now first respondent in this
appeal.}

$18,000 of Guardian Tree’s invoices for their pruning work by 20 December 2011, leaving an unpaid balance of $17,029.

[5] Guardian Tree filed proceedings against the Moores for the unpaid balance and the Moores filed a notice of defence. Jackeytown Blooms, as counterclaim plaintiff, now second appellants in this appeal, filed a counterclaim for $186,181 in negligence against Mr Judd and Mr Muller, the directors of Guardian Tree. Mr Judd and Mr Muller were the first and second counterclaim defendants and are the second respondents in this appeal.

[6] In this judgment, the Moores and Jackeytown Blooms, will be collectively referred to as the Moores. Mr Judd and Mr Muller and Guardian Tree will be collectively referred to as Guardian Tree.

[7] On 26 March 2012, Guardian Tree filed its claim for $17,029 against the Moores and the Moores filed their statement of defence and counterclaim against Mr Judd and Mr Muller on 8 May 2012. Guardian Tree filed its response to the counterclaim on 19 June 2012, but thereafter matters progressed more slowly. There were numerous disputes about the filing of briefs of evidence, with timetabling directions being issued on 23 September 2013.

[8] On 17 December 2013, Guardian Tree applied to strike out the Moores’ defence and counterclaim, on the grounds that the Moores had failed to comply with a direction to file briefs of evidence.

[9] On 24 December 2013, the Moores filed and served their expert’s brief of evidence, and on 13 January 2014, the strike out application by Guardian Tree was dismissed.

[10] On 4 April 2014, the Moores filed a memorandum of counsel, noting that no brief of evidence had been filed on behalf of Guardian Tree and seeking an unless order from the Court, that Guardian Tree’s briefs of evidence be filed, failing which

Guardian Tree’s claim and defence to the counterclaim should be struck out. Shortly after, Guardian Tree filed the relevant evidence, so the Moores’ application did not proceed.

[11] On 17 June 2014, mutual discovery orders were made by consent against each of the parties, with a direction that affidavits of documents were to be filed within 21 days. Importantly, Guardian Tree’s initial disclosure request of 26 May

2014 was limited to the hydrangea business of the Moores, in respect of all categories of documents requested by Guardian Tree. Neither the Moores nor Guardian Tree complied with the discovery orders within 21 days.

[12] A judicial settlement conference was “pencilled in” for 7 November 2014 but, in the absence of confirmation, Guardian Tree’s representatives were unavailable and the judicial settlement conference was adjourned to 2 March 2015.²

[13] Counsel for Guardian Tree understood, as a result of “an inadvertent diary record”, his belief that former counsel for the Moores had withdrawn, and that there had not been compliance with an early discovery order, that the settlement conference was not to proceed and did not attend. At this time, the Moores were not represented by counsel and still had not completed discovery. The Judge “converted

[14] Counsel for Guardian Tree, although not available at the commencement of the conference, appeared later and made clear to the Judge the significance of a number of the listed documents, which counsel had sought by way of disclosure. The request for full disclosure had been sent to the Moores’ previous counsel and the Judge recorded in his minute of 2 March 2015 that “they claimed not to be aware of the contents of the request”. A copy of the disclosure request was given to the Moores in person and the Judge ordered that the Moores had a further 21 days to comply. The minute of 2 March 2015 records:

[15] Provision of the initial disclosure request of 26 May 2014 from Guardian Tree’s counsel, and the requirement for the Moores to comply with the terms of the request, overlooked the limited discovery direction made by the Judge in his minute of 17 June 2014, in which the discovery was only to relate to the hydrangea part of the operation conducted by the Moores.

[16] On 27 March 2015, the Moores made an informal request by email to the Court Registry for more time to prepare the financial information, and this was granted.

[17] On 20 July 2015, Guardian Tree filed a second application to strike out the Moores’ defence and for a stay of their counterclaim, as a result of the Moores’ non- compliance with their discovery obligations. Counsel for Guardian Tree, in filing by email the application for strike out/stay, with an affidavit in support, requested the Registrar to place the matter in the Judge’s List on 27 July 2015. He advised that the application would be served with this date inserted.

[18] On 22 July 2015, the Moores filed a report by their expert, an accountant, dated April 2015. The report assessed the loss of income and damages to the Moores, on the assumption that there is an adverse finding of liability against Guardian Tree for the loss. The report was entitled “Calculation of Quantum of Damages” and canvasses the performance of the Moores’ company after he had reviewed the “long list of documents requested by Guardian Tree”. The report did not, however, attach or provide the documents that were the subject of the Court’s discovery order.

[19] In filing the accountant’s report with the Court, Mr Moore apologised for the delay in sending the information requested by the Court, advising that he had Crohn’s disease and that he had been recently hospitalised, followed by a long course of medication. He explained that one of the symptoms that regularly accompanies Crohn’s disease is memory loss and he had forgotten to send the accountant’s report to the Court and to counsel for Guardian Tree. Mr Moore also advised the Court that the accountant had acted as an expert witness in cases such as this many times, and that the opinion proffered in the report was a more effective

way of showing the performance of a company than simply providing copies of bank statements and GST returns. He believed that the report calculating a quantum of damages would be more constructive as a discussion document at a settlement conference rather than the GST returns, bank statements and other documents requested by Guardian Tree.

[20] The matter was heard on 27 July 2015, four working days after the email filing and service on the Moores. The Moores had not filed a notice of opposition to the strike out application, but were present at the hearing and were heard on the application.

[21] Three weeks after the hearing, on 19 August 2015, counsel for the Moores filed a memorandum, explaining that he now acted for the Moores; that the solicitor on the record was still Mr Lyall of Powell Lyall but a new notice could be filed if one is required, and seeking further time to be heard on the strike out application, including attending a telephone conference at short notice, if the Court wished. The memorandum was served on counsel for Guardian Tree.

[22] On 16 September 2015, counsel for Guardian Tree filed a memorandum in response to the memorandum filed on behalf of the Moores, but this was not served on either the Moores or their counsel. No further hearing was convened and the strike out and stay decision was delivered on 19 November 2015.

[23] Observing that the proceedings have been messy and convoluted, as a function of the on again, off again nature of the Moores’ representation, the Judge found that the material filed by the Moores in response to the court-ordered discovery was “an unsatisfactory and unanswering response” to the order of the

Court.⁴He also observed that it is not for a party to re-cast the orders made and

[24] The Judge noted that the strike-out application was not the first interlocutory application to strike out the Moores’ pleadings and to stay their counterclaim. Such an application was made as far back as 19 December 2013, where there was a failure by the Moores to comply with a direction of the Court that briefs of evidence in support of their claim and in opposition to Guardian Tree’s claim were to be filed by

[25] He noted further that the particular grounds relied upon for the second strike out application and associated applications were the failure of the Moores to make discovery in terms of the Court order of 16 June 2014. He observed that an immediate consequence of the Moores’ failure was the adjournment of the judicial settlement conference in November 2014, which was adjourned to 2 March 2015, when the parties were acting for themselves. The earlier discovery order had not been complied with, and the Court made further orders requiring the Moores’ compliance with the orders for discovery within a period of 21 days. Of note, the

By now, a stern warning accompanied the further extension of time, that in the light of the overall history of the proceedings, failure to comply could result in the defence and the counterclaim being struck out, and that they would not be able to defend the claim or bring a counterclaim.

[26] The Judge acknowledged that the Moores were at the time acting for themselves and may not have understood the distinction between the discovery that was ordered and what was then provided. However, he observed that the Moores had by that time engaged four different barristers and, on the occasions they were unrepresented, had been urged to obtain competent legal advice. Moreover, it was apparent from their counsel’s memorandum of 19 August 2015 that the Moores had contact with counsel from early July and did not seek advice or give instructions once they were notified of the strike-out application. The Judge recorded that there was no solicitor on the record, because of his order of 19 April 2013, declaring that Mr Lyall had ceased to be the solicitor on the record for the Moores. Thus, he concluded Mr Sullivan had no standing but this would be treated as a technicality which, if necessary, could be corrected.

[27] The Judge also took into account the long-standing illness of Mr Moore but concluded that “none of the directions made have been so rigorous that he could not have complied with them”. He concluded:

The [appellants] cannot continue to play out these proceedings and to delay and prolong matters heedless of the directions of the Court, and to their own timetable. I am conscious, as I am sure they are, of the consequences of making orders in terms of the application. It is only in rare circumstances that a party is to be prevented the opportunity to actually oppose a claim or to argue the issue in the cross-claim. But over time, delay, non-compliance, and in the context of the circumstances which I have set out above, I regret to say that I find this to be one such case.

[28] The Moores’ statement of defence was struck out and the counterclaim was stayed, in accordance with r 7.41 of the District Court Rules 2014 (DCR), which provides:

(1) If a party (the party in default) fails to comply with an interlocutory order or any requirement imposed by or under subpart I (case management), a Judge may, subject to any express provision of these rules, make any order that the Judge thinks just.

(a) that any pleading of the party in default be struck out in whole or in part:

(e) if any property in dispute is in the possession or control of the party in default, that the property be sequestered:

(3) An order must not be enforced by committal unless the order has been served personally on the party in default or that party had notice or knowledge of the order within sufficient time for compliance with the order.

$17,029, together with interest at a rate of 8.4 per cent from the date of filing the

claim until the date of entry of judgment, together with disbursements and costs in favour of the plaintiff on a category 1A basis. Costs were also awarded against Jackeytown Blooms, on a 2B basis, together with disbursements.

[30] The first question to be addressed is whether the appeal was a general appeal or an appeal against the exercise of a discretion.

[31] Rule 7.41 of the DCR enables a judge to make any order that the judge thinks just, where a party fails to comply with an interlocutory order. Counsel were agreed that the Judge’s strike out and stay decision was an exercise of a discretion. The Supreme Court in Kacem v Bashir distinguished a general appeal from an appeal

against a decision made in the exercise of a discretion.⁶In the latter case, the criteria

[32] Counsel for the Moores submitted that the Judge erred by failing to give the Moores a reasonable opportunity to properly oppose the ultimate sanction of the Court. He submitted that the first and third Kacem v Bashir criteria applied, namely that the Judge made an error of law or principle and failed to take account of a relevant consideration.

[33] The grounds of appeal by the Moores are grouped and dealt with under the following headings:

(i) the Moores were given no reasonable opportunity to be heard at the strikeout / stay hearing.

(ii) the threshold test for striking out for non-compliance was not met. (iii) Jackeytown Blooms was not represented at the hearing.

(iv) the stay decision affecting the Moore’s counterclaim had the same effect as a strikeout.

[34] The first ground of appeal relates to the compressed time between the email filing and service of the strike-out application on 20 July 2015, and the hearing four working days later on 27 July 2015.

[35] Rule 7.17 of the District Court Rules (DCR) requires that a respondent who intends to oppose an interlocutory application must file and serve a notice of opposition within 10 working days after being served with the application or, if the hearing date for the application is within that period, three working days before the hearing date. The Moores were served by email from counsel for Guardian Tree, and the application for strike-out had the hearing date of 27 July 2015 inserted by counsel. Mr Drummond had requested the Court by email to place the application in the list and informed the Registrar that he would insert the date on the emailed application.

[36] Pursuant to r 7.17, the Moores (being the respondents in the application for strike-out) had to file a notice of opposition on Tuesday, 21 July 2015, together with an affidavit as required by r 7.18, to ensure they were entitled to be heard.

[37] Mr Sullivan submitted it was a breach of natural justice to expect any party, let alone a lay litigant, to respond to a strike-out application by Tuesday, after being served by email the day before. In response, Mr Drummond for Guardian Tree submitted that if the Moores had sought an adjournment or requested an opportunity to seek advice, it was likely that their request would have been granted. In any

event, the matter was treated as though it had been opposed and the Judge gave the Moores an opportunity to be heard. Mr Drummond further submitted that both parties were suffering from the same disadvantage, as Guardian Tree could not file submissions in response to the Moores’ opposition and did not know the nature of the opposition.

[38] Although the Judge correctly recorded that the Moores had on again, off again legal representation, they were lay litigants from 2 March 2015 to the date of hearing the application for strike-out. The emailed application to the Moores, with a date inserted by opposing counsel, did not give a proper or reasonable opportunity for the Moores to file a notice of opposition, in accordance with r 7.17. A 24 hour window to file a notice and evidence in support was woefully inadequate. It is unlikely that a Court Registry would have inserted a date four working days following the filing of an interlocutory application, if the application had been filed physically in the Court Registry.

[39] I am satisfied therefore that the Moores did not have a reasonable opportunity to be heard in the circumstances. I acknowledge that the Judge waived the requirement that a notice of opposition needed to be filed, before they could be heard in opposition, but the fact that the Moores were lay litigants, without the knowledge of pre-trial requirements or an understanding that they could apply for an adjournment of the proceedings, was a factor that was not taken into account.

[40] There were three grounds raised by counsel for the Moores in relation to the threshold test for strike-out:

(a) Inadequate notice: The possibility of the ultimate sanction of strike- out was not adequately conveyed to the Moores by the Judge’s minute of 2 March 2015. Contrary to the Judge’s decision that by 2 March

2014, the Judge had restricted Guardian Tree’s request for discovery orders against the Moores to the records for the hydrangea business only. However, in his minute of 2 March 2015 the Judge overlooks his earlier restricted order and requires the Moores to comply with the full disclosure requested. He specifically records, at [4]:

The requirement is made of them that discovery is to be made in terms of the request within a period of 21 days from today’s date.

(c) The threshold test: Thirdly, the Judge did not refer to the threshold test for striking out or staying proceedings for non-compliance and, if he had, the appropriate course was to make an unless order, if the threshold requirements had been met for the making of such an order.

[41] Mr Drummond in reply submitted that the stern warning was given to the Moores, as he was present when the Judge did so orally. However, there is no written record or notice in writing given to the Moores that failure to comply with the 21 day timeframe would result in their defence being struck out and the counterclaim stayed.

[42] Mr Drummond submitted that the Judge was both generous and lenient to the Moores, given the history of delay and non-compliance, in allowing them to be heard. The Judge had regard to Mr Moore’s illness and had made allowances in the previous directions conference to accommodate the Moores’ need for more time. Mr Drummond also submitted that the Judge took into account that it is only in rare circumstances that a party will be prevented from opposing a claim or from arguing a cross-claim, and that it is a remedy not lightly ordered.

weapons in the court’s arsenal for cases of on-going breach of interlocutory orders is the unless order. An unless order requires a party to take an interlocutory step by a

⁸Civil Procedure: District Courts & Tribunals (online looseleaf ed, Brookers) at [DCR 7.41.01].

specified date, failing which the proceeding will be dismissed or stayed or the defence struck out, without the need for a further application to the court.⁹

[44] The Court of Appeal in SM v LFDB held that an unless order is of last resort. It is properly made only where there is a history of failure to comply with earlier orders. Further, an unless order should be clear as to its terms. It should specify clearly what is to be done, by when and the sanction for non-compliance. The sanction should be proportionate to the default.¹⁰

[45] In McGechan on Procedure, dealing with the practical operation of r 7.48 and the Court’s judicial approach to non-compliance, the learned authors make the following observation on the subject of unless orders:

Unless orders are by now reasonably common but should generally be reserved for cases where breach or continued breach is objectively measurable and unchallengeable, in the light of the serious consequences of failure to comply – striking out, stay or the like.

[46] In Anderson v Mainland Beverages Ltd¹¹the Court of Appeal held that “unless” orders should generally be reserved for cases where breach or continued breach is objectively measurable and unchallengeable. The Court warned that the consequences of failing to comply with unless orders – striking out, or the like – are so significant that, in general they should not be made where the obligations of the party in default are not unmistakeably clear.¹²The Court specifically referred to matters such as particulars, interrogatories and disputes over discoverability that are so commonly the subject of legitimate disputes between parties and counsel, that they should only be the subject of an unless order if the matter has been considered by the Court and a defending party’s obligation is clearly defined.¹³

[47] In Torbay Holdings Ltd v Napier, the test applied to a failure to comply with orders for discovery, was whether there was wilful non-compliance with the orders.¹⁴

_{Fogarty J was satisfied there had been no wilful non-compliance with
court orders by}

⁹_{DCR 7.41.01(2) and refer to SM v LFDB [2014] NZCA
326, (2014) 22 PRNZ 253.}

Further, as “currently lay litigants, they are now entitled to some latitude”.¹⁵

[48] In the present case, by the time of the hearing of the application for strike out on 27 July 2015, the Moores had taken steps, although had not complied strictly with the Court’s discovery orders. The Moores had filed their accountant’s report, in the belief that this was a more effective way of showing the performance of the company than providing copies of bank statements and GST returns, and had informed the Court of Mr Moore’s illness, hospitalisation and medication issues.

[49] The focus was on settlement, not on trial, so the information from the Moores was tailored to assist in settlement. Although the frustration of continued delays in the matter was understandable in the circumstances, the Judge had to have regard to the threshold tests applied to previous cases, to determine whether the sanction to be imposed was proportionate to the default. If he were to consider making an unless order, he had to be satisfied that the order was of last resort before it was imposed. Even on 2 March 2015, it is doubtful that the threshold for making an unless order would have been met. There was delay but not wilful or contumelious disregard of court orders. It is also of note, that Guardian Tree had not complied with the discovery order either.

[50] The difficulty in this case is that there was no unless order made on 2 March

2015, nor was there a written warning advising the Moores of the consequences of their non-compliance.

[51] The strike-out and stay decision had the same result as if the Moores had acted in contumelious disregard of the Court’s orders and were wilfully non- compliant. The evidence before the Court does not support the sanctions imposed,

[52] Under this ground counsel for the Moores submitted that orders were made against Jackeytown Blooms, when they were not represented. This ground was not raised in the notice of appeal, but submissions were heard on this issue by both counsel.

[53] High Court Rule 5.36 requires that a solicitor has the authority to file proceedings on behalf of a party. In Commissioner of Inland Revenue v Chesterfields Preschools Ltd, the Court held that it is implicit from the rule that a solicitor must act for a company in commencing and carrying on a proceeding.¹⁶

The reasons for this restriction are canvassed in GB & JZ Chambers Ltd v AEL Corporation Ltd.¹⁷

[54] Mr Drummond for Guardian Tree submitted that Mr Moore had been acting for he and his wife, as well as Jackeytown Blooms, and was in effect acting on behalf of the company. He submitted further that the Judge gave everyone an indulgence at the strike-out/stay hearing, as all parties were dealing with the matters on foot, not with any forewarning of the likely submissions to be raised.

[55] The authorities reinforce that r 5.36 should be complied with, where proceedings involve a corporation. In Pro Pacific Ltd v Wilson, the Court refused to allow an unqualified director to represent a company in an application for directions under the Receivership Act 1993.¹⁸Exceptional circumstances are required for the Courts to grant leave for a lay person or director to represent a company.

[56] The leading case that is often cited for the rule that companies must be represented by counsel is Re G J Mannix.¹⁹There Cooke J explained the rule:²⁰

It is well settled in this country, and in England, Australia and Ireland, that a company has no right to be represented in the conduct of a case in Court except by a barrister; or by a solicitor in Courts or proceedings where

¹⁶_{Commissioner of Inland Revenue v Chesterfields
Preschools Ltd [2013] NZCA 53 at [33].}

¹⁷GB & JZ Chambers Ltd v AEL Corporation Ltd (1994) 7 PRNZ 635 (HC) at 640. See also

solicitors have the right of audience - as they usually have in Courts which are not superior Courts.

The rule may have originated in early seventeenth century metaphysical reasoning that a corporation has no soul, is invisible and cannot do homage. But the modern rationale is simply that a corporation is not a natural person and so cannot appear in person; and that, apart from statutory exceptions, no one has a right to present a case in any Court unless in person or by a qualified lawyer.

Further, while a natural person of sufficient age and capacity cannot be denied the right to present his case in person, it is a right which there are good reasons for not extending by analogy. Occasionally litigants in person have celebrated successes, Wintle v Nye [1959] 1 All ER 552 being the standard example, but it is largely rarity that makes them celebrated. Every Judge knows that a litigant in person is not usually the most effective advocate for himself - from lack partly of knowledge of the law, partly at times of perspective.

In general, and without attempting to work out hard-and-fast rules, discretionary audience should be regarded, in my opinion, as a reserve or occasional expedient, for use primarily in emergency situations when counsel is not available or in straightforward matters where the assistance of counsel is not needed by the Court or where it would be unduly technical or burdensome to insist on counsel. Especially in minor matters, cost-saving could also be a relevant factor. A ‘one-man’ company might be allowed to be represented by its owner if the Judge saw fit in a particular case. But it could not be right, for instance, to issue some sort of tacit continuing or general licence to an unqualified agent to appear in winding up or any other class of proceedings.

[58] More recently the Court of Appeal confirmed that the rule continues to apply, explaining:²²

[27] We have no doubt that the rule remains in operation and to the extent described by Cooke J.... The rule provides an important mechanism by which judges may ensure that the bringing or carrying on of proceedings achieves justice and the appearance of justice for the parties. Here an important aspect in the application of the Mannix rule involves the continuation of the misfeasance proceeding subsequent to the delivery of this judgment.

²²Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013]

[34] We consider that there are sound policy reasons why a solicitor, rather than a lay person such as an officer of a company, should act for the company in commencing and continuing civil litigation. A company is not a natural body and may have a number of officers, each with their own individual concerns and interests. A solicitor is ethically constrained to represent the company's interests, unlike an individual officer who seeks to represent it. Moreover, if a solicitor is involved, the court can generally be satisfied that careful attention has been given to the validity of the proceedings, and that the company's interests will be adequately presented and protected. Similarly, solicitors recognise the duties and responsibilities that are owed to the court and to the defendant in the conduct of litigation, and are less likely to require indulgences in the rules of procedure or to use court processes for vexatious purposes. The court must also have a solicitor on the record as it cannot exercise its disciplinary powers over a company. If a director or shareholder is representing the company there is a heightened risk that the representative will lack the objectivity that an independent solicitor can bring to the case. It is no doubt for these reasons that the current law is that the Mannix rule may be departed from only in exceptional circumstances.

[59] In his decision, the Judge recorded his understanding that there was no solicitor on the record for the Moores, including Jackeytown Blooms. It is correct that Mr Moore, as director, was representing Jackeytown Blooms at the strike- out/stay hearing, but the fact remains that orders were made against Jackeytown Blooms, without it having legal representation or being formally notified of the application. In addition to the compression of time between service of the application and the hearing, the fact that Jackeytown Blooms was not represented at the time of the hearing was a further relevant factor that should have been taken into account.

(a) any breaches of timetabling orders by the Moores could have been dealt with by other sanctions, rather than a stay of the counterclaim;

(b) if the counterclaim was to be stayed, the Court ordered costs against Jackeytown Blooms for the full proceedings, as if the proceeding was finally determined.

[61] Mr Drummond submitted that the decision does not prevent the Moores from continuing with their claim. He accepts that the Moores will need to pay 2B costs, at least up to the strike-out decision, but such costs are relatively modest. He submitted further that the payment from the Moores in respect of the judgment entered may not have to be made, if the appropriate application was filed. In short, the Moores still have a remedy, but they must comply with the Court’s orders for discovery. In the meantime, Guardian Tree have had the counterclaim hanging over their heads since it was filed and no progress has been made in advancing it.

[62] The effect of the stay order against Jackeytown Blooms has the same effect in practical terms as the strike-out application. Mr and Mrs Moore are the directors of Jackeytown Blooms, and they have to pay the judgment sum, together with interest and costs before seeking leave to set aside the stay and proceed with the counterclaim. I accept the submission on behalf of the Moores that they would have to start again, but only after paying substantial sums of money, with only a prospect of receiving costs for the remaining steps of the proceeding, if they were successful on their counterclaim.

[63] As part of their grounds of appeal, the Moores have raised a procedural matter. Following the hearing, when counsel for the Moores was instructed and filed a memorandum on 19 August 2015 seeking timetabling directions for filing an opposition, a memorandum of counsel for Guardian Tree was filed on 16 September

2015 in response, but was not served on either the Moores or their counsel. No opportunity was given to the Moores to address Guardian Tree’s submissions.

[64] In the Judge’s decision of 19 November 2015, reference is made to both counsel’s memoranda. The Judge noted that Mr Sullivan for the Moores had no standing at this time and was unsupported by an instructing solicitor, and he set out the history of the Moores’ representation over the course of the proceedings. The Judge noted Mr Sullivan’s request to be heard at a subsequent hearing on the basis of pre-prepared submissions, but he declined to provide such an opportunity and made

the striking out and stay orders, including costs against the Moores and Jackeytown

[65] In making those orders, the Judge commented specifically in his judgment to the responding memorandum filed by Mr Drummond “who has a detailed and lengthy knowledge of these proceedings, having consistently acted for the plaintiffs”.²³The fact that Mr Drummond’s memorandum had not been served on either the Moores or their counsel was unlikely to be known to the Judge at the time of his decision. It is regrettable that the strike-out/stay decision was not sent to the

[66] It is axiomatic that documents filed by counsel with the Court must be served on the opposing parties or their counsel. Along with the other factors as set out above, this omission reinforces the finding that there has been an error of law and/or principle. Where submissions are adverse to a party, as they were in relation to the Moores, the Moores, through their counsel, must be given an opportunity to address them.

[67] This is an appeal against an exercise of discretion and the four criteria in

[68] The Judge did make an error of law or principle and failed to take into account relevant considerations for the following reasons:

(a) No reasonable opportunity was given to the Moores to be heard in opposition to the application for strike-out and/or stay. They were lay litigants and did not understand the procedure for interlocutory applications, nor the ability to seek an adjournment. Further, the four working days between the filing of the application and the hearing was woefully inadequate for any respondent to file an opposition and

(b) The effect of the strike-out/stay decision was equivalent to an unless order, when the terms of such an order or its consequences were not made clear to the Moores.

(c) The sanctions imposed on the Moores were not proportionate to their default, particularly having regard to: the steps taken to provide a quantum assessment of damages report for the purposes of a settlement conference and the significant illness of Mr Moore; that no adequate warning was given to the Moores; and lesser sanctions were not explored.

(d) In making the order that the Moores comply with the initial request for disclosure dated 26 May 2014, the Judge overlooked the subsequent discovery order of 17 June 2014, confining discovery to the hydrangea business only.

(e) The requirement that companies must be represented by a solicitor pursuant to r 5.36 was a relevant factor in relation to the representation of Jackeytown Blooms at the strike-out/stay hearing, which was not taken into account.

was filed and taken into account by the Court, when opposing counsel and the Moores were not served.

[69] Mr Sullivan sought costs on a 2B basis, in the event the appeal was allowed. He submitted the process was wrong in fact and in law and in the normal course, costs followed the event.

[70] I do not consider there should be a costs order, having regard to the circumstances of this case, the considerable delays in prosecuting the counterclaim by the Moores, and the default by both parties in complying with the Court’s discovery orders. Costs are to lie where they fall.

[72] The District Court judgment of 17 November 2015 is set aside. [73] There will be no order as to costs.

High Court of New Zealand Decisions

Moore v Guardian Tree and Landscape Limited [2016] NZHC 1720 (27 July 2016)

High Court of New Zealand

Moore v Guardian Tree and Landscape Limited [2016] NZHC 1720 (27 July 2016)