Reid v Wilkins CA271/90 [1999] NZCA 375; (1999) 13 PRNZ 119 (27 May 1999)

Last Updated: 10 February 2019

IN THE COURT OF APPEAL OF NEW ZEALAND CA271/90


BETWEEN PETER SINCLAIR REID

Appellant

AND RONALD STEWART WILKINS

Respondent


Hearing: 20 May 1999

Coram: Gault J
Henry J Tipping J

Appearances: M E Casey for the Appellant
R D C Hindle for the Respondent

Judgment: 27 May 1999

JUDGMENT OF THE COURT DELIVERED BY HENRY J

[1] On 27 July 1990 Master Towle granted the respondent’s application for summary judgment against the appellant. Judgment was duly sealed on 3 September 1990 in the sum of $35,765.08, which included interest down to judgment and an allowance for a set off of $5000 held to be available to the appellant. A notice of motion on appeal was filed on 18 October 1990. The appeal was not set down for hearing until 23 December 1998, which perhaps not surprisingly has now resulted in the respondent applying to have the appeal dismissed for want of prosecution.

[2] The claim in the High Court was based on a deed dated 24 April 1985 recording the terms of repayment of a loan from the respondent to the appellant’s son, Graeme Clyde Reid, in the sum of A$18,000. Repayment was expressed as being due on 1 April 1987, and interest was to accrue at the rate of 18% per annum. The appellant executed a form of guarantee which was contained in the same
document. Default having been made, the respondent instituted summary judgment proceedings against the borrower and the appellant. Prior to the High Court hearing, the borrower was adjudicated bankrupt and the application against him was accordingly withdrawn. The defence was that the terms of the deed in question had been varied by an oral agreement between the borrower and the respondent, said to be unknown to the appellant. The agreement was said to have been reached at the end of July 1986, under which the borrower advanced a sum in excess of $38,000 to a goatfarming partnership venture between him and the respondent. It was claimed that as a consequence, repayment of the original loan of A$18,000 would be delayed, and to an extent be dependent upon the eventual success of the venture. The respondent denied any such agreement had been reached. In a reasoned judgment, Master Towle did not find as credible the evidence put forward to show there had been any variation which could operate to discharge the guarantee. The Master also held that it was reasonably arguable that the appellant was entitled to a set off in the sum of NZ$5000, and made an allowance accordingly when entering judgment.

[3] The relevant intervening chronology between the filing of the appeal in October 1990, and the seeking of a fixture in December 1998¸ can be summarised. The respondent endeavoured to execute the judgment by instituting proceedings in bankruptcy on 20 October 1990, which were stayed by Master Gambrill on 16 July 1991 pending determination of the appeal. On 12 July 1991 the case on appeal was filed, in conjunction with an application to call further evidence to support the allegation of an oral variation agreement. On the same day a praecipe was sent to the respondent’s solicitors. The praecipe was not returned, and following an earlier request made on 16 August 1991, on 18 February 1992 the appellant’s solicitor again asked for its return, advising that unless the request was met within 28 days the praecipe would be filed unilaterally. Nothing further transpired until 6 July 1998, when vacation of the summary judgment was requested to enable the appellant to uplift the security for costs paid into Court. The response indicated an intention to enforce the judgment, which was confirmed in early December 1998. The prosecution of the appeal therefore followed less than two months short of seven years after the previous preliminary step in the appeal process, and more than eight years after sealing of the judgment.
[4] Rule 26 of the Court of Appeal (Civil) Rules 1997 is expressed in wide terms. It provides:

Application to strike out for want of prosecution – The Court may, on the application of the respondent or any other party to an appeal, order that the appeal be struck out for want of prosecution.

[5] The reasons for not prosecuting the appeal during the relevant period of time are contained in an affidavit from Mr Booth, who had been instructed as counsel for the appellant in respect of the appeal. He had not appeared in the High Court hearing. Mr Booth deposes that in June 1992 he formed the view that the respondent must have accepted the “correctness” of the additional evidence sought to be adduced on appeal. This view was based on the failure to respond to the request for the return of the praecipe, the absence of denials to the further factual allegations, and the failure to seek to bring the bankruptcy proceedings on for hearing. He reported accordingly to his instructing solicitors, concluding that the respondent’s position was presently “fully protected”, and it would be appropriate to let matters rest. He was then instructed to take no further steps. The appellant was legally aided.

[6] We find it difficult to justify this reasoning. The clear position is that there was an existing sealed judgment, carrying interest, which although stayed on terms was still available for execution. A failure to prosecute the appeal expeditiously would clearly form a ground for relief from the stay. Mr Casey’s submission that the respondent had effectively abandoned his judgment is untenable. The position as at 18 February 1992 was that the appellant’s solicitors had written to the respondent’s solicitors in these terms:

Accordingly, in order to save what will otherwise be substantial costs in arguing the appeal and a substantive hearing of your client’s claim, we invite your client to consider settlement on the following basis:-
(i) The summary judgment be vacated by consent
(ii) Your client to discontinue the proceeding
(iii) Your client to withdraw its bankruptcy petition

• (iv) Costs to lie where they fall

These proposals are not available for negotiation. If unacceptable to your client, then we will proceed to set the appeal down for hearing.
On the assumption that the appeal will be successful, it is our intention to make an application to the High Court at Tauranga for an order that your client give security for costs pursuant to Rule 60(1)(a)(I) of the High Court Rules.

There the matter ended. There was no further communication from or conduct by the respondent which could have misled the appellant into believing that the judgment was being vacated, or seen as being so vulnerable to attack as to make it unable to be relied upon. We do not accept the contention that the respondent was under some measure of obligation to take further steps, and the failure to do so therefore somehow justifies the appellant’s lack of action. In essence, the appellant took the risk of not pursuing his appeal.

[7] The appellant could well have anticipated that there were valid reasons for the respondent not immediately assisting in the prosecution of an appeal against his judgment. As it happens, an explanation is now proffered. The respondent obtained a charging order over property owned by the appellant, which was registered on 1 November 1991. It was renewed on 1 February 1995, but has now lapsed. The respondent deposes that his financial position has prevented him from seeking removal of the stay and enforcement of the judgment, but in November 1997 he sought, and has recently been granted, legal aid for that purpose.

[8] Appeals to this Court should be prosecuted with expedition. They are not to be left dormant, in the expectation that should the need arise in the future they can be brought on for hearing. The importance of due diligence is now expressed in the present rule 10, in force since 1 October 1997. Here the delay can be classed as extreme, and in itself sufficient to defeat the appeal. The reasons for delay lack cogency, and in effect represent a decision to hold over the appeal indefinitely in the hope that the judgment would not be enforced and if that did eventuate then and then only to bring the appeal on for hearing. The possible consequences of taking such a risk are obvious.

[9] The appeal seeks the opportunity to challenge a basic finding of fact. Mr Casey placed considerable emphasis on what he termed the merits of the appellant’s case, relying on the contention of an affidavit by the borrower sworn in support of an
application to adduce further evidence on this appeal. Although the affidavit contains material which is no more than an elaboration of evidence given in the High Court, we are prepared to take its content into account. Having done that, and notwithstanding Mr Casey’s forceful argument in this respect, we are not persuaded it has the strength now claimed for it.

[10] There seems to be little doubt that before the Master the defence primarily, if not entirely, relied on was the existence of an oral agreement between the appellant and the borrower under which the terms of repayment were re-negotiated. That, it was said, resulted in a discharge of the appellant as guarantor by operation of law. Even taking into account the fresh evidence, the existence of such an oral agreement is by no means clear. Significantly, the thrust of the present argument is that there was a payment made by the borrower which not only led to the agreement to vary, but also gave a right of set-off thus substantially reducing the original indebtedness. Although there is a relevant reference in the grounds of opposition to the summary judgment, set-off was not expressly pleaded in the statement of defence and clearly did not feature in argument. What is important however is that on any basis there will be a substantial factual dispute if a trial should eventuate. The true nature of the payment made by the borrower, including its availability as a set off against the documented loan, will require an evaluation not confined to undisputed facts and documents. The existence of an oral agreement to vary, and its terms, remain and must be highly relevant to the defence, even as it is now promoted. Those matters will involve oral evidence as to the events of 1986, and it is a legitimate inference that the respondent may well be prejudiced in rebutting the contentions now made.

[11] Taking all matters into account, we are satisfied that it would not be in the overall interests of justice to allow the appeal to continue. Its prosecution at this late stage would be tantamount to an abuse of process. Dismissal of the appeal however is not to be seen as in any way impinging on the discretion of the High Court to grant or refuse the respondent leave to execute the judgment under the provisions of R556 of the High Court Rules if that provision is applicable. Any such application must be dealt with on its own merits.
[12] In the light of our conclusions it is unnecessary to consider whether the appeal was in any event out of time, thus requiring leave. It was filed outside the 28 day time limit allowed under the rules then applicable for appealing an interlocutory judgment. The distinction between interlocutory and final judgments no longer being relevant, there is no cause to embark on an examination of the issue. In the present case if leave were necessary the factors which we have already discussed would lead to the same overall result – leave to appeal would now be inappropriate.

[13] For the above reasons the appeal is dismissed. The respondent is entitled to costs which are fixed in the sum of $4000, together with disbursements including reasonable travelling and accommodation expenses for counsel as approved by the Registrar.

Solicitors

Fenton McFadden, Te Puke, for appellant Yolland Gubb & Co, Auckland, for respondent