Yingling v Gifford [2018] NZHC 53 (5 February 2018)

Last Updated: 7 March 2018

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY

CIV-2015-416-000026 [2018] NZHC 53

BETWEEN	RANDY YINGLING Plaintiff
AND	KENNETH JOHN GIFFORD First Defendant
AND	DEAN JOHN WITTERS Second Defendant

Hearing:	15 August 2017
Appearances:	G Thwaite for the Plaintiff A M Simperingham and S Taylor for the Defendants
Judgment:	5 February 2018

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 5 February 2018 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Woodward Chrisp, Gisborne G Thwaite, Auckland

Copy to:

Rishworth Wall & Mathieson, Gisborne Burnard Bull & Co, Gisborne

YINGLING v GIFFORD [2018] NZHC 53 [5 February 2018]

Introduction

[1] The plaintiff, Randy Yingling, seeks to enforce a foreign judgment in New Zealand. This is his second attempt.

[2] He unsuccessfully applied for summary judgment in 2016.¹ I declined the application because I considered the defendants had an arguable defence that the foreign judgment might be impeachable for fraud. Fraud is one of the limited grounds on which a foreign judgment can be impeached.²

[3] Now Mr Yingling brings fresh interlocutory applications seeking orders:³

(a) striking out the defence of fraud; or alternatively

(b) granting him leave to bring another application for summary judgment, and then for judgment to be entered on his claim.

[4] The applications are declined. My reasons follow.

Background

[5] The defendants, Ken Gifford and Dean Witters, owned a California-based business in drum lines. They retained Mr Yingling as their salesman. Disputes soon arose.

[6] Mr Yingling filed proceedings in California alleging breach of contract and fraud. He contended that the defendants took his customer lists in order to make arrangements behind his back to sell to prospective clients directly. In so doing they deprived him of commission under his contract with the defendants.

[7] After briefly opposing the action, the two defendants eventually gave up the defence and did not appear at the hearing. They returned to New Zealand. On

¹ Yingling v Gifford [2016] NZHC 1556.

2. Kemp v Kemp [1996] 2 NZLR 454 (HC) at 458. I do not propose to rehearse the legal principles on the enforcement of foreign judgments, which are set out in my earlier judgment.
3. The plaintiff’s notice of application dated 18 April 2007 also sought other orders, including an order recalling my judgment of 11 July 2016. These additional orders have since been retracted.

26 April 2012, the California Court ultimately found in Mr Yingling’s favour, entering judgment for breach of contract and fraud. Mr Yingling was awarded actual and punitive damages as well as costs.

[8] Mr Yingling’s application for enforcement in New Zealand came before me on 3 May 2016. The defendants opposed the application, alleging fraud in Mr Yingling’s failure to bring key facts to the California Court’s attention. Specifically, Mr Yingling is said to have misled the Court by omitting to mention that there were actually no sales for which he was owed commission. This omission prevented the Court from entertaining an alternative possibility in which the defendants had no intention to defraud: that the defendants would have paid Mr Yingling but had no occasion to.

[9] My decision issued on 11 July 2016 found that Mr Yingling could have obtained summary judgment if he had provided evidence adequate to establish that he did, in fact, raise the fact that no sales had been made. But no such evidence was provided; in particular, Mr Yingling failed to adduce the trial transcript of the California Court or even an affidavit narrating the case. In those circumstances the possibility of fraud — plausibly established from the defendants’ affidavit evidence
— could not safely be excluded.⁴

Current applications

[10] In these fresh applications, however, Mr Yingling has now provided the transcript in his affidavit evidence. The transcript makes plain that Mr Yingling did communicate to the California Court that there were no actual sales, and no money had been received. The defendants have conceded the point.

[11] Yet the defendants still allege fraud, but the defence has been repackaged. The defendants’ statement of defence and notice of opposition are unsatisfactory in spelling out the grounds relied upon. When read in conjunction with the defendants’ submissions and the affidavit evidence filed in support, such grounds become a little clearer.

⁴ Yingling v Gifford [2016] NZHC 1556 at [19].

[12] The defendants appear to locate instances of fraud in the following:

(a) Mr Yingling’s allegedly false representation that the defendants had a finalised agreement with their main customer, Olam International Ltd;

(b) Mr Yingling’s allegedly false representation that he was deliberately kept in the dark about the defendants’ intentions to explore other options in selling the drum lines, when he was in fact kept fully abreast of their plans;

(c) Mr Yingling’s allegedly deliberate omission of the fact that the commission payable to Mr Yingling was linked to the contractual terms, and became payable only upon the defendants receiving funds from a completed sale.

[13] Mr Yingling denies fraud of any kind. He submits there is no evidence that he misled the court by presenting incomplete information or facts he knew to be false.

[14] Before turning to the merits of these arguments, I first address a preliminary issue relating to jurisdiction.

Jurisdiction

[15] The defendants contend that this Court lacks jurisdiction to hear a second summary judgment application.

[16] There is some apparent tension between the case authorities and a plain reading of the High Court Rules on this issue.

[17] Mr Yingling’s application is brought pursuant to r 12.4, which provides:

12.4 Interlocutory application for summary judgment

(1) Application for judgment under rule 12.2 or 12.3 must be made by interlocutory application.

(2) An application by a plaintiff may be made either at the time the statement of claim is served on the defendant, or later with the leave of the court.
[18] The defendants rely on r 7.52:

7.52 Limitation as to second interlocutory application

(1) A party who fails on an interlocutory application must not apply again for the same or a similar order without first obtaining the leave of a Judge.

(2) A Judge may grant leave only in special circumstances.

[19] There is no question r 7.52 is engaged in this case. Both summary judgment applications are brought in the same proceeding (CIV-2015-416-26). This second application is effectively a rehearsal of the first except with two alternations: the transcript is now in evidence, and the defence of fraud has been subtly reframed.

[20] Summary judgment is of course one species of ‘interlocutory applications’, as referred to in r 7.52. At face value, therefore, the Rule prescribes that there is jurisdiction to hear subsequent applications only in “special circumstances”.

[21] But the case law complicates the picture. Two decisions of Master Venning were referred to by both parties. I note that while both are decided under the old Rules, the relevant Rules remain substantially unaltered.

[22] In Post v Ferrall the plaintiff’s application for summary judgment failed on a technicality. In essence, the plaintiff failed to provide adequate affidavit evidence to support its case, so the court never actually addressed the substantive merits of the application. The plaintiff discontinued the proceeding, and issued new proceedings with essentially the same application but now including the necessary evidence. In those circumstances, the Master considered this was one of the rare cases where a second summary judgment was not jurisdictionally barred.⁵

[23] The Master made a more strident statement in Braid Motors Ltd v Scott, a case involving two applications in the same proceeding. The plaintiff’s application was adjourned, initially to permit meditation, and when it finally came to hearing it was declined on the grounds of delay. So the plaintiff filed a second application. The

⁵ Post v Ferrall (1999) 13 PRNZ 687 at 692.

Master gave his interpretation of the Rules, and in particular r 138 (the predecessor to the current r 12.4) as follows:⁶

I doubt whether there is jurisdiction to bring a second application for summary judgment in the same proceeding. The wording of r 138 “an application” contemplates there being one application for summary judgment by the plaintiff or defendant, either at the commencement of the proceeding (in the case of the plaintiff) or later with leave of the Court, or on the filing of the statement of defence (in the case of the defendant), or later with leave of the Court. In either case, however, the rule seems to contemplate only the one application for summary judgment by each party.

As a matter of principle successive applications for summary judgment ought not to be encouraged.

[24] Master Venning concluded that there was no jurisdiction to entertain the application, but even if there was, he did not consider there were any special circumstances justifying leave to bring a subsequent application.

[25] The issue was addressed more decisively by Justice Wild in Air New Zealand Ltd Ltd v Air Nelson Ltd,⁷ a case which neither party brought to the Court’s attention. His Honour agreed with Master Venning’s interpretation of the Rules, and accordingly declined a second application for summary judgment on jurisdictional grounds. As the Court succinctly distilled the ratio of Braid Motors: “In short, the rules permit only one application for summary judgment by each party in any proceeding”.⁸

[26] I note, however, the following concerns which give me some pause in following this line of authorities:

(a) None of the decisions adequately wrestle with the apparent implication in r 7.52 that subsequent summary judgment applications are not jurisdictionally barred (because they only require leave):

(b) I also have reservations as to the interpretative weight that should be placed on the singular tense of “an application” in r 12.4 (or the old r 138);

⁶ Braid Motors Ltd v Scott (2001) 15 PRNZ 508 at [53]-[54].

7. Air New Zealand Ltd Ltd v V Wellington International Airport Ltd HC Wellington CIV-2007-485- 1756, 18 November 2008.

⁸ At [86]-[88].

(c) The overarching objective of the Rules is to “secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application”.⁹ The relevant consideration here is the timing of applications, not the number.

(d) A subsequent summary judgment might be the best route for enabling a meritorious plaintiff to obtain judgment and so “put an end to the spectacle of a worthless defence being raised and pursued for the purposes of delay”.¹⁰

(e) I agree with Master Venning’s caution that subsequent applications are not to be encouraged as a matter of policy. But the “special circumstances” restriction is already adequate to perform this gatekeeping role without the need for a wholesale jurisdictional bar.

[27] In any event, it is unnecessary to determine the jurisdictional issue at present, or to address the subsidiary issue of whether this case gives rise to “special circumstances”. Both the summary judgment and strike applications are more properly dealt with following a consideration of the merits.

The defence of fraud

[28] To establish fraud in a foreign court, the defendants must show that Mr Yingling misled the court with evidence known to be false, or else by a failure to provide all the relevant evidence.¹¹ Importantly, an allegation of fraud is not an opportunity to revisit and challenge the merits of the California Court’s reasoning.¹²

[29] In my earlier judgment, I addressed the legal test for fraud in the context of summary judgment. I found that summary judgment would not be granted where there

⁹ High Court Rule 1.2.

¹⁰ Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1 at 2-3.

¹¹ Svirskis v Gibson [1997] 2 NZLR 4 at 9.

12. Svirskis v Gibson [1997] 2 NZLR 4 at 9; Reeves v One World Challenge LLC [2005] NZCA 314; [2006] 2 NZLR 184 at [66].

is “some evidence, sufficiently particularised, to ground a realistic suggestion of fraud”.¹³

[30] That statement is equally apt in the strike out context. The threshold for strike out is high. In Couch v Attorney-General, Elias CJ and Anderson J observed that it was “inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed”.¹⁴

[31] I note, however, that in strike out the pleaded facts are assumed to be true. The Court is entitled to received affidavit evidence, as the defendants have produced in this case. But unless a factual allegation is plainly incredible or demonstrably false, the Court will ordinarily steer clear of resolving genuinely disputed facts.¹⁵

[32] In either context, my reading of the available evidence suggests that the defence of fraud is not so clearly untenable so as to justify striking it out or else awarding judgment summarily without the benefit of a full trial.

[33] I give but one example: One of the defendants’ key pleadings is that Mr Yingling presented evidence to the Californian Court that an agreement for the sale of drum lines was entered into between Mr Yingling, the defendants and Olam in July or August 2010. They allege this was misleading because Mr Yingling was well aware that no such agreement was actually entered into.

[34] There is conflicting evidence on this issue, but the key point is that I am not prepared to discount this as a potential grounding for the defence of fraud. It does appear that the California Court was motivated by the existence of such an agreement in deciding that a commission was payable and in determining the quantum of damages. The evidential specifics, including those regarding Mr Yingling’s knowledge of the relevant facts, is better addressed at trial.

¹³ Yingling v Gifford [2016] NZHC 1556 at [16].

¹⁴ Couch v Attorney-General [2008] NZSC 45 at [33].

¹⁵ Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 558.

Result

[35] Both the plaintiff's applications are declined. I am not persuaded the defence of fraud should be struck out or that summary judgment should be awarded.

[36] The defence may ultimately fail (or it may succeed) but it is not so hopeless that it should not be allowed to progress to trial. Nor do I consider the defence frivolous, vexatious, or an abuse of process.

[37] As the primary focus was on summary judgment, I reserve costs in accordance with the decision of the Court of Appeal in NZI Bank Ltd v Philpott [1990] 2 NZLR 403.

[38] Though I heard the applications in Auckland, the proceeding is filed in the Gisborne Registry. The Registrar there is requested therefore to allocate a case management conference in Gisborne.

[39] For completeness, I record that I heard the summary judgment application in open court, and the strike-out application in open court for Chambers.





Associate Judge Sargisson