Williams v Cameron DC Nelson CIV-2009-042-544 [2012] NZDC 601 (30 April 2012)

Last Updated: 5 January 2020

IN THE DISTRICT COURT AT NELSON

CIV-2009-042-000544

BETWEEN PETER ANTHONY WILLIAMS WILLIAMS TURBOCHARGERS LIMITED Plaintiffs

AND TREVOR NELSON CAMERON ROBIN WHALLEY Defendants

AND RICHARDS WOODHOUSE Third Party

Hearing: 30 April 2012

Appearances: S J Grey for the Plaintiffs J A Maslin-Caradus for the Defendants J A Maslin-Caradus for the Third Party

Judgment: 30 April 2012

ORAL JUDGMENT OF JUDGE C N TUOHY

[1] This is an application under r 3.73.2 District Courts Rules 2009 for an order for the decision of a question separately from any other question before any further trial in the proceeding. The question, as formulated in the application, is:

Did the parties agree to settle all issues in late 2007/2008, and are the proceedings barred as a result?

[2] In terms of the pleadings, this question is better formulated in terms of paragraph (53) of the statement of defence, that is:

Were all of the plaintiffs’ claims arising out of the sale of the marine business settled by agreement on or after 19 December 2007?

I have added the words, “Or after,” to paragraph (53) because, it seems to me, from the scope of the arguments on the strike out application, that the defendants’ case

WILLIAMS & ANOR V CAMERON & ORS DC NEL CIV-2009-042-000544 [30 April 2012]

may have an alternative leg to it, not simply that the proceeding was settled on 19 December 2007 but possibly also was settled by conduct, in effect, in the following period.

[3] The plaintiffs’ claims have been pleaded, in proper legal form, in their statement of claim filed on 16 December 2011. Essentially there are four causes of action: breach of fiduciary duty, breach of contract, negligence, and negligent statement. All those causes of action do arise out of the sale of the second plaintiff’s marine business in 2004.

[4] The defendants have filed a statement of defence which, as well as denying breach of the various obligations alleged to bind them, also pleads in paragraph (53) the affirmative defence which I have referred to, which is sometimes called “accord and satisfaction”. On the basis of this defence, the defendants mounted an application to strike out the original claim of the first plaintiff against the first and second defendants. This was successful in the District Court, but the District Court’s decision was reversed on appeal in the High Court. I refer to both the judgments insofar as they set out the factual basis of the defendants’ claim of accord and satisfaction, and the plaintiffs’ arguments against it. I do not need to repeat them again in this judgment.

[5] Rule 3.73.2 provides:

The court may, whether or not the decision will dispose of the proceeding, make orders for—

(a) the decision of any question separately from any other question, before, at, or after any trial or further trial in the proceeding; and

(b) the formulation of the question for decision and, if thought necessary, the statement of a case.

The rule copies the analogous rule in the High Court which is r 10.15. Because of that, all the High Court authorities are relevant and applicable, and there are many of them. They are discussed and summarised in the standard texts.

[6] The Courts, and particularly the High Court, have distilled various principles when applying this rule. The first is that the assumption is that all matters in issue

are to be determined in one trial, so there is an onus on a party seeking a separate decision, in this case the defendants. That onus is a not insignificant one. In other words, the assumption is that all matters shall be decided at one trial unless it can be clearly shown that a separate question should be decided first.

[7] There are many cases in which the relevant criteria have been discussed. Perhaps the most succinct is the case of Rio Beverages Ltd v The Golden Circle Cannery (HC Auckland CL30/91, 14 February 1992). Barker J laid down the following factors that he considered relevant to the exercise of the discretion to grant an order:

• (a) The delay in finally resolving the proceeding.
  
• (b) The length of the hearing of a preliminary question.
  
• (c) Whether a decision, one way or other, would result in the end of the litigation.
  
• (d) The length of any subsequent hearing, in particular whether any subsequent hearing time would be shortened by a preliminary question.
  
• (e) A balancing of the advantages to the parties and the public interest in shortening litigation as against any disadvantage asserted.
  
• (f) A further practical factor is the availability of Court time.
  

[8] Here, the factors I consider important are these. A determination of the question in favour of the defendants will result in the end of the litigation or substantially the end of it. Although the claim has been expanded somewhat since the decisions of the District Court and High Court on the strike out application, essentially all the claims arise out of alleged breach of obligations by the defendants arising from the sale of the marine business.

[9] The decisions of the District Court and High Court, although they were the opposite in result on the strike out application, show that a decision in favour of the defendants is, at the very least, a real possibility in this case. That distinguishes this case from many where an application for a separate question is made, where the prospects of the applicant on the separate question are poor. Here, the decisions in the Courts on the strike out application show that the defendants are not just flying a kite in relation to this defence. It has real prospects. I say no more about it, but as I say, it has real prospects and it has the potential to a large, or a total, extent resolve the proceeding if decided in the defendants’ favour.

[10] Secondly, if the decision is in favour of the plaintiffs, in my view this will very much increase the likelihood of a settlement of their claim without the necessity for a further trial. I contrast that with the present situation where, in my view, there is no prospect that the defendants will make any offer to settle this proceeding that is worth anything, while this defence is at large. In other words, while the defendants believe that they have a king hit, to use a colloquial term, it is very unlikely that any reasonable or acceptable settlement offer would be made to the plaintiffs. That position, in my view, would be likely to change considerably if the plaintiffs were successful on the preliminary question.

[11] The next consideration which I think is significant is this, that this defence of accord and satisfaction, as I term it, is a question which is quite discrete from the issues on the substantive claims. Substantive claims involved events in 2004. The defence is a very confined issue relating purely to whether or not a settlement took place in late 2007 or shortly thereafter. I do not agree that there will be an overlapping in the evidence to any significant extent. Indeed, I see the evidence as really being, to a large extent, completely separate between the two issues. Obviously, the background for the settlement, if there was one, are the facts of what happened in 2004, but they do not need to be canvassed in any depth to decide the issue of whether there is a settlement of the claims in 2007.

[12] The next factor which I consider is significant is this. To get the separate question to trial is, in my view, relatively straightforward. I would anticipate it would require one to two days of Court time. Neither counsel has actually suggested

an amount, but that is my rough assessment. The relevant issues on the settlement question have already been defined, and the evidence largely prepared and put into affidavit form, in context of the strike out application. So, to a large extent, the preparation work has been done. I think it is likely that an early hearing date could be obtained, given the relatively short time required for a separate question, and the amount of further preparation relatively limited.

[13] In particular, there is no need for any evidence about quantum in a trial of a separate question as to whether there has been a settlement. The opposite is the case if all matters were to be heard at once. It would require much longer hearing time, far wider issues including quantum would need to be covered, far more extensive evidence would be required and, consequentially, far greater preparation. Again, it is just my rough estimate, but I think it likely that a week, at least, of Court hearing time would be required for a full hearing, and the prospect of obtaining that, from my knowledge, within a reasonable time would be quite difficult. While one cannot know for sure, in my view, there is a very great chance that the delay in obtaining one hearing time for one trial of everything would be greater than the delay in obtaining two trials at separate times of say one to two days and three to four days in both matters. So I think that even if the decision is in favour of the plaintiffs, on a preliminary question, it is still more likely to obtain an earlier resolution by dividing the case rather than leaving it together.

[14] So I have come to a fairly firm view that in the interests of efficiency, economy to both sides, and the speediest and most economic route to a resolution of the dispute, is to have a separate hearing of this preliminary question. In reaching that view I have taken heed of the various cautions which have been expressed by Judges over the years. They accord with my own experience. Often the prospect of shortening the proceedings by ordering a hearing of a preliminary question seems very attractive but turns out, in practice, to cause more problems than it solves. I am conscious of that, but I still come to the conclusion that, as far as can be anticipated, in this case it will solve more problems than it causes.

[15] One of the issues which will need to be addressed is that the same Judge would need to be rostered for both trials. I do not think that is insurmountable. It is something which we do quite often in various contexts, including in criminal cases.

[16] Another issue that can cause trouble is the possibility of multiple appeals. In other words, a trial of a preliminary question, then an appeal on that to the higher Court before you even get to the next trial. I am going to make an order which will obviate that potential difficulty.

[17] So, I have come to the conclusion that there should be a trial of the separate question.

[18] The rule enables the Court to formulate the question, and I am going to formulate it because I do not think it is formulated sufficiently clearly in the defendants’ application. I am going to formulate the preliminary question as this:

Were all of the plaintiffs’ claims arising out of the sale of the marine business settled by agreement on or after 19 December 2007?

[19] I order a separate trial of that question. The order is conditional on the postponement of any right of appeal of the defendants, not the plaintiffs, until after determination of all the issues. In other words, if the defendant is successful on the preliminary question then the plaintiff can appeal straight away because if the defendant is successful that will, in my view, more or less resolve the entire proceeding in the defendants’ favour. However, if the plaintiffs are successful on the preliminary question then obviously the substantive issues have to go to trial. I do not think any such trial should be further impeded by allowing the defendants to appeal against a decision adverse to them on the preliminary question. Obviously, both parties would have a right of appeal at the end of the case proper, but the defendants will have to wait to exercise any right of appeal until the whole of the case is dealt with.

[20] So, that is the decision I make.

[21] I reserve costs. I think that they should follow the event, whatever that might be.

ADDENDUM:

[22] Following my decision, we have had an informal judicial directions conference. I have allocated a simplified trial for the hearing of this separate question. The rules relating to simplified trials apply automatically. I assess the likely duration of the trial as one and a half to two days.

[23] Formal pleadings have already been filed. The only matters that need to be attended to from now on are fixing a date for the trial, which will be the registrar’s function in consultation with counsel, for any interlocutory application for disclosure of Mr Barton’s notes to be resolved in case that is necessary, and then for the parties to file their affidavits of evidence-in-chief. It is open to them if they wish to use any of the affidavits already filed in the strike out application for that purpose.

C N Tuohy

District Court Judge