Attorney-General v Mallard Productions Ltd CA297/98 [1999] NZCA 365; (1999) 12 PRNZ 603 (11 March 1999)

Last Updated: 14 January 2019

IN THE COURT OF APPEAL OF NEW ZEALAND CA297/98


BETWEEN THE ATTORNEY-GENERAL

Appellant

AND MALLARD PRODUCTIONS LTD

First Respondent

AND JOHN EARNSHAW

Second Respondent


Hearing: 11 March 1999

Coram: Henry J Blanchard J Tipping J

Appearances: M T Parker for the Appellant
G Bogiatto for the Respondents

Judgment: 11 March 1999

JUDGMENT OF THE COURT DELIVERED BY HENRY J

[1] In the High Court Morris J was faced with an unusual application, namely a strike out, where there had already been a full hearing on liability before Elias J with a finding adverse to the defendant, the present appellant, in a judgment delivered as long ago as 25 October 1996. The basis of the application was a contention that in the light of the findings on liability, the pleading does not disclose a causal connection between the established breach of contract and the claimed loss. This despite Elias J expressly observing in her judgment that the question of causation could not sensibly be addressed except in the context of the damages part of the claim, which she is still to hear.
[2] The relevant background can be stated quite briefly. The respondents entered into a licence agreement with the Crown allowing them to search the Auckland North Head Reserve area for hidden tunnels, their excavation, and the possible location in them of old aircraft, aircraft parts and other military items. At trial, Elias J held that the Crown had breached a provision of the agreement which obligated it to provide reasonable assistance for the purpose of locating excavating and entering the tunnels. In fact the tunnels were never accessed.

[3] The amended pleading now in issue, after alleging breach of that term of the agreement, alleges that the breach was causative of losses sustained by the respondents. It is alleged that had the agreement not been breached, access would have been gained to the tunnels and to aircraft, aircraft parts, or military items located with consequential financial benefits to the respondents. The lost benefits are now quantified.

[4] We must say at the outset that the particular interlocutory procedure adopted here is quite inappropriate. The present appeal is an example of the overemployed strike out procedure being taken to, and arguably beyond, the extreme. Seldom, if ever, could it be used when a proceeding is part heard, let alone when still under the auspices of the trial Judge to whom the application is not referred. The unsatisfactory nature of the whole exercise is also highlighted by the necessity to embark on a consideration of Elias J’s trial findings, something quite foreign to the concept of a strike out based, as here, on the ground that no reasonable cause of action is disclosed by the pleading. Although abuse of process is also raised, Mr Parker accepts that it adds nothing to the first ground. Nevertheless we turn to the substantive argument.

[5] Understandably Morris J was not satisfied the respondents could not succeed, and observed that the question of loss would be a matter of evidence. Any contention that he misdirected himself or applied wrong principles in refusing the strike out has no substance. Clearly Morris J was right in his conclusion. On its face the pleading avers that the failure to assist caused an identified loss of a kind which could flow from the breach. Whether that causal link exists is a trial issue,
and is not necessarily negated by the fact that the respondents did not excavate the tunnels. Although it may be that on final analysis the claim will be seen to be one based on the loss of a chance and therefore grossly inflated, that does not render it untenable at law on the pleading, which is still capable of further amendment by leave. Apparent difficulties of proof and mitigation issues are of course not presently relevant.

[6] The strike out application is misconceived. The appeal is dismissed with costs to the respondents in the sum of $4,000 together with disbursements including reasonable travelling and accommodation expenses of counsel, those to be settled by the Registrar if necessary.

Solicitors

Crown Law Office, Wellington, for Appellant George Bogiatto, Auckland, for Respondents