Herron v Wallace [2016] NZHC 2426 (12 October 2016)

Last Updated: 4 November 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-1806 [2016] NZHC 2426

BETWEEN	STUART WALTON HERRON Plaintiff
AND	WAYNE ANDREW WALLACE First Defendant SHADES OF AUTUMN LIMITED Second Defendant BELMONT LIFESTYLE VILLAGE LIMITED Third defendant

Hearing:	21 September 2016
Counsel:	CT Patterson and DW Grove for plaintiff JE Hodder QC and CF Fife for first and third defendants
Judgment:	12 October 2016

JUDGMENT OF FAIRE J [On application for stay/recall]

This judgment was delivered by me on 12 October 2016 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date...............

Solicitors: Skeates Law, Auckland (G Skeates) Chapman Tripp, Auckland

Herron v Wallace [2016] NZHC 2426 [12 October 2016]

Table of Contents

Introduction ............................................................................................................[1] The applications .....................................................................................................[2] The Court’s jurisdiction to recall its own (sealed) judgment and order a

^{rehearing.................................................................................................................[4]}

Appeal and new proceedings .................................................................................[7] Recall and rehearing application ..........................................................................[10] The defendants’ submissions................................................................................ [11] The plaintiff’s submissions ..................................................................................[13]

Does the Court have jurisdiction to recall or rescind a perfected judgment? ......[16] Do the circumstances of the case require the Court to exercise its inherent jurisdiction? [35]

Result....................................................................................................................[43] Application for stay pending appeal ....................................................................[44]

^{The application analysed [49]}

Orders ...................................................................................................................[52] Costs .....................................................................................................................[53]

Introduction

[1] On 27 May 2016, I delivered a reserved judgment in which I entered judgment for the plaintiff against the first and third defendants for $966,531.93.¹ I reserved costs and gave directions covering that aspect of the matter.

The applications

[2] The first and third defendants apply by an amended application for orders that:

¹ Herron v Wallace [2016] NZHC 1129.

(a) My judgment be recalled or rescinded in part;

(b) A new trial be ordered on certain findings and issues relating to the proposed Queenstown apartments, known as Apartment 401 and Apartment 403; and

(c) A new trial or, alternatively, the applicant’s new proceeding (founded on the issue of the Herron/Bryers settlement relating to a proposed free style apartment identified as Apartment 403), be the subject of directions for an expedited trial.

[3] In addition, the first and third defendants seek orders that execution of my judgment be stayed pending:

(a) Either determination by the Court of Appeal of the first and third

defendants’ appeal against the judgment; or

(b) A rehearing or retrial of the judgment of 27 May 2016 following its recall.

The Court’s jurisdiction to recall its own (sealed) judgment and order a

rehearing

[4] Counsel are agreed that, in summary, the Court’s jurisdiction to consider a recall of its judgment and order a rehearing is covered by the following matters of principle:

(a) The Court has an inherent jurisdiction to act effectively, in particular by ensuring that its processes are used to secure justice and not misused to result in injustice. The inherent jurisdiction may be

_{invoked whenever the justice of the case so requires;}²

² Taylor v Attorney-General [1975] 2 NZLR 675 (CA) at 680 and 682; R v Moke [1996] 1 NZLR

263 at 267.

(b) This jurisdiction permits limited exceptions to the finality of judgment principle, subject to appeal processes;³

(c) In most cases which discuss the inherent jurisdiction, reference has been made and an endorsement given to the analysis in Master Jacob’s, “The Inherent Jurisdiction of the Court”;⁴

(d) New Zealand courts have concluded that the inherent jurisdiction to recall or rescind a judgment and to order a rehearing or retrial in whole or in part extends to cases where the judgment has been perfected;⁵

(e) The removal of the former High Court Rules 494 and 495, which provided explicitly for the direction of a new trial on the ground of a miscarriage of justice, did not remove the Court’s inherent jurisdiction or implied powers to do so;⁶

(f) Cases in which the inherent jurisdiction may properly be applied to recall or rescind a sealed judgment after a full trial must be truly exceptional. The Court must be satisfied on the circumstances in their totality, that “there has been a miscarriage of justice that justifies a

new trial”;⁷ and

(g) If the grounds advanced in support of the recall or rescission application include identification of relevant documentary evidence not reasonably available for use at the trial, the respondent’s discovery omissions may be relevant. The evidence must be such that it would

_{probably have had an important influence on the result.}⁸

³ Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013]

_{1 NZLR 804 at [28].}

⁴ _{IH Jacob “The Inherent Jurisdiction of the Court” (1970) CLP 23.}

5. Farquhar v Property Restoration Ltd CA186/89, 27 May 1991 at 5; Society of St Vincent de Paul v Wanganui Ozanam Villa Trust [2006] NZHC 861; [2007] NZAR 77 (HC) at [56]- [59].

⁶ _{Smallbone v London [2015] NZCA 391, (2015) 22 PRNZ 768 at [30]- [43].}

⁷ _{Smith v Coker HC Hamilton CP70/90 at 10-12.}

⁸ Smith v Coker above n 7 at 42-49; Commonwealth Bank of Australia v Quade (1991) 178 CLR

134 (HCA) at 142-143; Gillingham v Gillingham [2001] EWCA Civ 906, [2001] CP Rep 89 at

[18]-[21].

[5] I will comment further on this brief summary of principle when I analyse the application.

[6] The recall application and the application for stay pending appeal are inter- related. It is appropriate that I consider the recall application first as the outcome of that application will affect whether the defendants are applying to have the judgment stayed pending retrial or pending appeal. Therefore, I will delay an examination of the Court’s jurisdiction to grant a stay pending appeal pending an examination of the recall and rehearing application.

Appeal and new proceedings

[7] An appeal against the decision of 27 May 2016 by the defendants was accepted by the Court of Appeal for filing on 17 June 2016. Mr Herron has cross- appealed.

[8] The defendants have also filed new proceedings against Mr Herron and

Central Auckland Properties Ltd in this Court on 21 June 2016 alleging: (a) Breach of an implied term;

(b) Breach of contract by derogation (a variation of the implied term cause of action);

(c) Breach of the Fair Trading Act 1986;

(d) Oppression contrary to the Credit Contracts and Consumer Finance

Act 2003; and

(e) Abuse of court procedure.

[9] The defendants have filed a statement of defence.

Recall and rehearing application

[10] The recall and rehearing application relates to that part of my judgment concerning the issue of whether the defendants are entitled to a $675,000 deduction from the Sidmouth Settlement Deed debt in relation to a proposed Queenstown apartment, known as “Apartment 401” and “Apartment 403”.

The defendants’ submissions

[11] The special circumstances advanced by the defendants are that during pre- trial discovery, the defendants repeatedly sought disclosure of documents relating to the plaintiff’s dealings with Mr Bryers relating to the CAPL apartments and the plaintiff informed the defendants that the documents were not relevant, were not in his possession, and that his discovery was complete. The defendants say that they became aware of the existence of the 6530 proceeding only by reference to its file number in a 2006 heads of agreement discovered by the plaintiff on 30 March 2016. This, they say, set them on a course of enquiry which led them to discover the 6530 proceeding documents from this Court’s registry in several tranches, with the critical documents only being obtained on the afternoon of Tuesday 5 April 2016, which was part way through the resumed hearing.

[12] The defendants say that the 6530 claim documents and the 6530 settlement would have affected the outcome of the proceeding. They say that had those documents been discovered and in evidence:

(a) the plaintiff’s new evidence about the purpose and effect of the 2006 heads of agreement could have been properly tested (including by cross-examination);

(b) the defendants could have made submissions regarding counterclaims and/or defences based on:

(i) breach of an implied term not to take steps to prevent the defendants from achieving the $675,000 deduction under the

Sidmouth Settlement Deed (and/or relevant derogation from grant under that Deed);

(ii) an estoppel against the plaintiff denying the existence of circumstances precluding that deduction;

(iii) and other matters which are referred to in [8] of this judgment;

and

(c) the Court could have fully considered the consequences of the 6530 settlement for findings on Apartment 401 and Apartment 403, including the effect of the settlement on the defendants’ entitlement to a $675,000 deduction from the Sidmouth Settlement Deed debt attributable to Apartment 403.

The plaintiff ’s submissions

[13] The plaintiff agrees with the majority of the defendants’ submissions with regard to the ability of the Court to recall a perfected judgment under its inherent jurisdiction. However, the plaintiff submits that it is not clear that the courts have considered, and approved, the bringing of a simultaneous appeal and a recall application which rest upon the same foundation.

[14] In relation to the merits of the grounds on which recall is being sought, the plaintiff submits that the defendants, in essence, raise two grounds. First, that the Court was unaware that the heads of agreement related to Apartment 403 and, consequently, did not consider the legal consequences. Second, that the defendants were unaware that the heads of agreement related to Apartment 403 and were prejudiced by being unable to make submissions to that effect, and its ramifications, at trial.

[15] The plaintiff submits that both grounds relied on by the defendants are meritless. The first ground is meritless because the Court did consider the heads of agreement related to the Queenstown apartment and made findings favourable to the defendants in that regard. The second ground sought to rely on matters allegedly

raised by Mr Hodder in final submissions. A dispute was identified as to precisely what Mr Hodder referred to in final submissions in relation to the heads of agreement. For reasons which I will explain, I do not need to resolve that difference between counsel.

Does the Court have jurisdiction to recall or rescind a perfected judgment?

[16] This application relies on the Court’s inherent jurisdiction. It is accepted that r 11.9 of the High Court Rules, which provides “[a] Judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed” cannot apply in this case. A formal record of the judgment was drawn up by the plaintiff and was sealed. Rule 11.9 has no application. The defendants rely on the inherent jurisdiction of the Court which enables the Court to act effectively and to ensure that its processes are not abused, which results in injustice.

[17] The inherent jurisdiction of the Court was considered by the Court of Appeal in Taylor v Attorney General, which concerned the Court’s inherent jurisdiction to make suppression orders. In that case, Wild CJ cited with approval the following words of Master Jacob in “The Inherent Jurisdiction of the Court”:⁹

". . . the term 'inherent jurisdiction of the court' is not used in contradistinction to the jurisdiction conferred on the court by statute. The contrast is not between the common law jurisdiction of the court on the one hand and its statutory jurisdiction on the other, for the court may exercise its inherent jurisdiction even in respect of matters which are regulated by statute or by rule of court, so long as it can do so without contravening any statutory provision."

[18] Justice Richmond also cited with approval the words of Master Jacob, quoting:¹⁰

The jurisdiction which is inherent in a superior court of law is that which enables it to fulfil itself as a court of law. The juridical basis of this jurisdiction is therefore the authority of the judiciary to uphold, to protect and to fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner.

⁹ _{Taylor v Attorney General, above n 2, at 680.}

¹⁰ At 682.

[19] There is a general principle in the law of finality of litigation. As summarised by McGrath J for the Supreme Court in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd:¹¹

The principle of finality in litigation gives rise to a rule of law that makes conclusive final determinations reached in the judicial process:

“Unless a judgment of a Court is set aside on further appeal or otherwise set aside or amended according to law, it is conclusive as to the legal consequences it decides.”

The rule reflects both the public interest in there being an end to litigation and the private interest of parties to court processes in not being subjected by their opponents to vexatious relitigation. The rule recognises, however, that a policy of absolute finality is unsafe. It accommodates exceptional situations by allowing final determinations to be revisited but within prescribed limits. For example, where there is no abuse of process involved, an application for recall of the judgment of a court can be made on grounds, which include “where counsel have failed to direct the Court's attention to a legislative provision or authoritative decision of plain relevance”. Limitations on the exceptions ensure that they do not subsume the general rule of finality and conclusiveness of judgments. The need for this was recognised by Lord Wilberforce in the leading case on the availability of the particular exception which Redcliffe relies on in this case:

“For a policy of closure to be compatible with justice, it must be attended with safeguards: so the law allows appeals: so the law, exceptionally, allows appeals out of time: so the law still more exceptionally allows judgments to be attacked on the ground of fraud: so limitation periods may, exceptionally, be extended. But these are exceptions to a general rule of high public importance, and as all the cases show, they are reserved for rare and limited cases, where the facts justifying them can be strictly proved.”

[20] The defendants submit that the inherent jurisdiction of the Court can be used to recall or rescind a judgment and to order a rehearing or retrial in whole or in part, including in cases where the judgment has been perfected. The first case the defendants rely on is Farquhar v Property Restoration Ltd, in which the Court of Appeal considered an application for leave to appeal a decision of that Court and, relevantly, an application for rehearing of the appeal in relation to one particular aspect of the case. The application for rehearing was made on the basis that the Court of Appeal did not have relevant facts brought to its attention by counsel and that the respondents were disadvantaged in the way that the matter was dealt with, with the

_{result that they did not receive a fair hearing.}

11. Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd above n 3 at [28] (footnotes omitted).

[21] The appeal heard by the Court of Appeal in Farquhar was originally brought against a judgment of Doogue J. However, at the hearing, later judgments were also put in issue. The respondent’s counsel was not prepared to deal with the new material. The appellant’s counsel was heard on the new issues and counsel for the respondent was permitted to file further written submissions on those matters, with the appellant having a right of reply. The application for a rehearing was made on the basis that a certain fact had not been brought to the attention of the Court and that had that fact been brought to the Court’s attention it would have reached a different conclusion. The Court concluded that the evidence had been before the Court, but the case was not run in such a way that made the fact relevant and that it was for “...

counsel, not the Court, to formulate their respective cases.”¹²

[22] The Court considered whether it had the power to grant a rehearing when the judgment had been formally sealed and concluded that it did not have the power to do so in that case because it did not fall within the recognised exceptions. However, Hardie Boys J summarised the general principles:¹³

It is clearly settled law that once a judgment is sealed it must stand, for better or worse, subject of course to any further rights of appeal. There are certain recognised exceptions: for example an accidental slip or omission may be rectified; a judgment may be set aside, usually by separate action, where it was obtained by fraud; a case may sometimes be reopened where fresh evidence not previously available has come to light; in some cases a judgment obtained by consent may be reopened; and in some circumstances a supplementary judgment may be given to cover a matter not previously dealt with. The present case does not fall within any of these exceptions.

The authorities which show that except where these exceptions apply there is no power to reopen a case once judgment is sealed, or otherwise perfected, are numerous and of long standing. Thus in In re Suffield and Watts, ex parte Brown (1888) 20 QBD 693, 697, Fry LJ said that “when an order or judgment of the High Court has once been perfected, the Court has no jurisdiction to alter it”. More modern English authority may be found in In re Harrison's Share [1955] Ch 260. Further English cases are collected in 26

Halsbury's Laws of England 4ed para 556. The same principles apply in New

Zealand: Carson v Fox [1919] NZGazLawRp 161; [1920] NZLR 3, 6and R v Nakhla (No 2) [1974] 1

NZLR 453, 457. The cases are in the main concerned with High Court judgments, but R v Nakhla, which followed the decision of the English Court of Appeal in R v Cross [1973] QB 937, 941dealt with decisions in this Court, holding that the same principles apply. It follows that we have no power to order a rehearing.

¹² _{Farquhar v Property Restoration Ltd above n 5, at [4].}

¹³ At [5]–[6].

[23] Counsel for the defendants also refers to the decision in Society of St Vincent de Paul v Wanganui Ozanam Villa Trust.¹⁴ In that case, the trustees of the Wanganui Ozanam Villa Trust had made an originating application to the Court for orders winding up the Trust. The orders were made by the Court. The Society was unaware of the hearing, although the date was publically advertised. It applied to the Court for orders rescinding or recalling the orders made by the Court on the basis that the

society had a proper interest in the subject matter of the Trust’s application which was not disclosed to the Court and that the Trust had failed to draw the Court’s attention to Part 3 of the Charitable Trusts Act 1957. The Court held that the Trust was obliged to bring to the Judge’s attention Part 3 of the Act and the position of the Society in relation to the Trust.¹⁵ Accordingly, Allan J held that the proceeding had

miscarried.¹⁶

[24] The Judge then outlined several cases in which the recall or rescission of sealed judgments was discussed:

[57] In Charter Financial Services Ltd v STL Linehaul Ltd HC WN M433/98, 25 February 1999, the Court rescinded an order for liquidation (even though the winding-up orders had been sealed) upon the ground that the company had been unaware of the liquidation proceedings and that there was evidence to show that it was solvent. Wild J said:

“I draw upon the residual power source to which Master Jacob there refers to achieve what I consider is just and equitable, and will prevent an injustice, here.”

[58] Bridon New Zealand Ltd v Tent World Ltd [1992] 3 NZLR 725 was a similar case. The company had been unaware of a notice given pursuant to s 218 of the Companies Act 1955 and of subsequent winding-up proceedings. Again, there was evidence of solvency. Thomas J ordered that the winding-up order be rescinded, despite the existence of a body of authority to the effect that a winding-up order once perfected could not be rescinded. At p 730, Thomas J said:

“The Court's inherent jurisdiction to set aside a winding-up order which has been procured by fraud or other improper means or where there is a miscarriage of justice has already been recognised: see Re Kim Maxwell Ltd per Tipping J at p 72; and

¹⁴ _{Society of St Vincent de Paul v Wanganui Ozanam Villa Trust [2006] NZHC 861; [2007] NZAR 77 (HC).}

¹⁵ _{At [50]–[51].}

¹⁶ At [55].

KW & LM Powell Ltd per Thorp J at p 98,705, (although Tipping J does not expressly mention miscarriage of justice, he refers to Thorp J's judgment which does). To my mind, however, the Court's jurisdiction to rescind a winding-up order should also extend to cases which do not involve fraud or impropriety or where there cannot necessarily be said to be a miscarriage of justice. An inherent power to this effect would seem implicit in the strictures of Master Jacob, approved by the Court of Appeal in Champtaloup v Northern Districts Aero Club Inc [1980] 1 NZLR 673, at p

676. In his lecture the distinguished Master said that

‘the inherent jurisdiction of the court may be defined

as being the reserve or fund of powers, a residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so

...’.

As I apprehend it, the Court's powers under its inherent jurisdiction are not limited to cases where there would otherwise be an impropriety or a miscarriage of justice. Indeed, unless there is some good reason to the contrary, they may be equated with the need to do justice.”

[59] Ben View Farms Ltd v GE Capital Returnable Packaging Systems Ltd [2002] 1 NZLR 698, was an unusual case in which original counsel for the appellant advised the Court that the appeal should be withdrawn. It later transpired that counsel was suffering from a mental illness and that he had no instructions to withdraw the appeal. In those circumstances, Fisher J held that this Court has inherent jurisdiction to protect the effectiveness of its own processes in order to avoid a miscarriage of justice, at least in circumstances where remedial steps would not expressly or impliedly conflict with legislation to the contrary. His Honour expressly referred to Master Jacob's article as authority for the existence of an inherent jurisdiction to reinstate the appeal.

[25] The Judge then stated that the inherent jurisdiction of the Court to rescind its orders should not be invoked as a matter of routine, but that such an approach was necessary in this case ‘in order to do justice’.¹⁷ The judge rescinded all the orders that had been made. In that case, the Judge did not consider the judgment of Hardie Boys J in Farquhar.

[26] Neither of these cases considered an application to rescind or recall a judgment on which an appeal had already been accepted by an appeal court. In

¹⁷ At [60].

Farquhar v Property Restoration Ltd,¹⁸ the application to recall/rescind was made at the same time as an application for leave to appeal. However, that is a different situation to the present where the Court of Appeal is already seized of the matter. The cases cited by the defendants for this point are Smith v Coker,¹⁹ and Aubit Industries Ltd v Cable Price Corp Ltd.²⁰

[27] In Aubit Industries Ltd, Anderson J considered an application for recall of a sealed judgment or, alternatively, an order for a new trial pursuant to (the now repealed) r 494 of the High Court Rules. In that case, the plaintiff had also filed an appeal of the judgment. The Judge stated:²¹

These arguably inconsistent courses represent a prudent response by the plaintiff to the fact that within days of delivery of judgment I began a sabbatical leave for a term greater than the period of appeal. Accordingly the present applications may be dealt with on their merits.

[28] It is also relevant that in Aubit Industries Ltd, Anderson J said that the exceptions identified by Hardie Boys J in Farquhar v Property Restoration Ltd are:²²

...more restricted in scope than the recognised exceptions noted by Wild C.J. in Horowhenua County v Nash (No 2) [1968] NZLR 632. The broader scope of the exceptions noted therein is explicable on the basis that as a matter of policy a judgment regularly obtained and perfected by sealing ought be relied upon as final save for the exigencies of appeal or an order for retrial. I do not accept that once a judgment has been sealed a litigant may avail itself of the broader grounds obtaining before sealing by arguing that the availability of such broader grounds before sealing justifies the recall of the judgment. It is of course the fact of sealing which justifies the restricting of grounds.

[29] In Smith v Coker, the application was for a new trial pursuant to r 494. In that case, both counsel had accepted that there was no procedural impediment to a party appealing to the Court of Appeal against an adverse judgment and at the same

_{time applying for a new trial.}²³

¹⁸ _{Farquhar v Property Restoration Ltd, above n 5.}

¹⁹ _{Smith v Coker, above n 7.}

²⁰ _{Aubit Industries Ltd v Cable Price Corp Ltd HC Auckland CP1698/90, 2 April 1993.}

²¹ _{At 2.}

²² _{At 2–3.}

²³ Above n 7, at 10.

[30] As already stated, the Court previously had the ability to order a new trial pursuant to r 494 of the High Court Rules. That rule stated:

(1) A new trial may be ordered only where, in the opinion of the Court, there has been a miscarriage of justice that justifies a new trial.

(2) An order under subclause (1) may be made on such terms as the

Court thinks fit.

(3) Without limiting the circumstances in which the Court may hold that there has been a miscarriage of justice that justifies a new trial, it is hereby declared that the Court may hold that there has been such a miscarriage of justice if—

(a) The Judge has misdirected the jury on any material point of law, or, if the action is tried without a jury, has during the course of the trial decided any point of law erroneously; or

(b) The Judge has admitted improper evidence, or rejected evidence which ought to have been admitted; or

(c) The damages are excessive or too small; or

(d) The verdict has been obtained by any unfair or improper practice of the successful party to the prejudice of the opposite party; or

(e) Material evidence has been discovered since the trial which could not reasonably have been foreseen or known before the trial; or

(f) The jury or any juror has been guilty of misconduct, if such misconduct can be proved by extrinsic evidence; but the verdict cannot be impugned on the evidence of any of the jurors; or

(g) A special verdict or other finding of the jury is so defective that the Judge cannot give judgment upon it; or

(h) Any witness has been guilty of such misconduct as to affect the result of the trial; or

(i) The verdict is against the weight of evidence.

(4) If it appears to the Court that the miscarriage of justice affects part only of the matter in dispute, the Court may give final judgment as to the part not so affected, and direct a new trial as to the affected part only:

Provided that no new trial shall be ordered as to the affected part if the amount of damages awarded in respect thereof can be separately ascertained, and the plaintiff consents to reduce the whole sum awarded to him by that amount.

(5) A new trial may be ordered on any question in a proceeding, whatever be the grounds on which a new trial is applied for, without interfering with the decision upon any other question.

(6) Where there is more than one defendant, a new trial may be ordered against any one or more of them.

[31] This rule was not carried through into the new High Court Rules 2008. The exclusion of the rule was considered by Miller J for the Court of Appeal in Smallbone v London, in which he said:²⁴

Nothing in the legislative history suggests that the Rules Committee or the legislature intended to remove a trial judge's ancillary or implied power to order a retrial. Had the Rules Committee intended to eliminate an existing jurisdiction, one would expect to find some discussion of the topic in the explanatory material and possibly some positive amendment to preclude the very controversy that has now arisen.

[32] However, as that case was a civil jury trial for defamation, Miller J did not consider on what basis a new trial might be ordered in a judge alone trial, only stating “[c]ircumstances in which the necessity arises are likely to be uncommon.”²⁵

[33] From these cases, in my view, the principles may be extracted in the following way:

(a) The starting point must be the finality of litigation which reflects the public interest in there being an end to litigation, and the private interests of the parties in not being subject to vexatious litigation; however

(b) absolute finality of litigation is unsafe There are circumstances in which the Court may invoke its inherent jurisdiction. There are some established categories of exception to the finality of litigation:

(i) a slip or omission may be rectified;

(ii) a judgment may be set aside, usually by separate action, where it was obtained by fraud;

²⁴ _{Above n 6, at [38].}

²⁵ At [42].

(iii) a case may be reopened where fresh evidence not previously available has come to light which is material to the outcome of the case;

(iv) a judgment obtained by consent may be reopened; and

(v) a supplementary judgment may be given to cover a matter not previously dealt with.

[34] Accordingly, I now consider whether the circumstances of this case require the Court to exercise its inherent jurisdiction and recall and/or rescind the judgment and/or order a new trial.

Do the circumstances of the case require the Court to exercise its inherent jurisdiction?

[35] I consider that the defendants raise two points, although their written submissions advance both points together. The first is that the non-disclosure (or late-disclosure) of the 6530 proceedings and settlement caused the Court to misapprehend the effects of the settlement. On this ground, counsel for the defendants makes clear and concise submissions on what is required for a recall application when the applicant relies on fresh evidence not before the trial court. In making these submissions the defendants appear to have overlooked one material factor. As correctly noted by the plaintiff, the evidence that the defendants now rely on was before the trial court and did influenced the outcome. Accordingly, I do not consider that an application for recall or rescission can properly be advanced on the basis that “fresh evidence not previously available has come to light”.

[36] However, the second point raised by the defendants is that had the 6530 documents been disclosed in advance of trial:

(a) the plaintiff’s new evidence about the purpose and effect of the 2006 heads of agreement could have been properly tested (including by cross-examination);

(b) the defendants could have made submissions regarding counterclaims and/or defences based on;

(i) breach of an implied term not to take steps to prevent the defendants from achieving the $675,000 deduction under the Sidmouth Settlement Deed (and/or relevant derogation from grant under that Deed); and

(ii) an estoppel against the plaintiff denying the existence of circumstances precluding that deduction.

[37] The defendants do not raise this as a separate ground from the ‘new evidence’ ground but I consider that it is best viewed as such. With regard to this point, the plaintiffs argue that if the defendants were prejudiced they could have sought an adjournment of the hearing, or a supplementary hearing, or the opportunity to make supplementary submissions.

[38] I consider that the defendants had the opportunity to take any of the steps above when they discovered the 6530 proceedings and the related documents. They chose not to do so, presumably for strategic reasons, which is their right. However, I do not consider that recall or rescission is appropriate when the position in which the defendants finds themselves is partially of their own making. Although the facts are different, I consider that the words of Hardie Boys J that it is for “... counsel, not the

Court, to formulate their respective cases” apply here.²⁶ The situations in which the

Court will exercise its jurisdiction to recall or rescind a sealed judgment are very limited and have been described as exceptional.

[39] There was some debate between counsel as to whether the 2006 proceedings, and the heads of agreement, effected an actual settlement of the rights in respect of the Queenstown apartment. Suffice to say, that may well be a matter which has to be specifically addressed on the appeal. For the purposes of this application, I record

_{that it was only one of the factors that led me to believe that there had been no}

²⁶ Farquhar v Property Restoration Ltd, above n 5, at [4].

absolute assignment of the contractual rights, which I discussed in [67] through to

[90] of my judgment.

[40] I do not consider that the grounds advanced by the defendants as a basis for recall or rescission fit into an established exception to the finality principle, nor have they been able to convince me that the circumstances require a departure from those established exceptions.

[41] Given this finding, it is not necessary to reach a conclusion on the impact of the filing of an appeal on the application for recall or rescission. However, I recognise that the authorities indicate that the filing of an appeal does not strictly bar an application for recall or rescission.

[42] I note that the findings in this judgment should not be taken to limit or affect the new proceedings which have been filed by the defendants.

Result

[43] I dismiss the defendants’ interlocutory application for recall, rescission and partial rehearing. Having regard to my finding on the recall/rescission application, it is unnecessary to determine whether there should be any stay in relation to that matter. Further, a stay pending the determination of the new proceeding, in the circumstances as I have analysed them, is not justified.

Application for stay pending appeal

[44] Rule 12 of the Court of Appeal (Civil) Rules 2005 gives this Court jurisdiction to deal with an application for stay pending appeal. Of particular significance are subrr 3 and 4 which provide:

(3) Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on application,—

(a) order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or

(b) grant any interim relief.

(4) An order or a grant under subclause (3) may—

(a) relate to execution of the whole or part of the decision or to a particular form of execution:

(b) be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.

[45] I am required to balance two principles. First, a successful litigant should not be deprived of the fruits of his or her litigation. Second, an appellant should not be deprived of the fruits of a successful appeal: Duncan v Osborne Building Ltd.²⁷

[46] From a practical point of view, where the subject matter of an application for stay pending the determination of an appeal is a money judgment, a possible approach can be to make an order staying the proceeding upon payment by the defendant to the plaintiff of the money in question, on condition that the plaintiff gives security for repayment. That approach may meet the two principles which have to be considered.

[47] Mr Herron is not able to give security for repayment of the judgment. The responsible position therefore advanced on his behalf is that the judgment, plus interest accrued to date, should be paid into Court to be held in an interest bearing account pending the outcome of the appeal. Mr Herron takes that position having regard to his previous bankruptcy and that if the judgment sum were now paid to him it is possible that he would not be able to pay it back if the appeal is successful in setting aside my judgment.

[48] In balancing the two principles the courts, however, have considered a number of matters. They include:

(a) Whether, if no stay is granted, the appellant’s right of appeal will be

rendered nugatory;

(b) Whether the successful party will be injuriously affected by the stay; (c) The bona fides of the applicants as to the prosecution of the appeal;

²⁷ Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.

(d) The effect on third parties;

(e) The novelty and importance of questions involved; (f) The public interest in the proceeding;

(g) The overall balance of convenience and the status quo; and

(h) Whether the appellant has demonstrated a sufficiently arguable point to be considered on appeal.²⁸

The application analysed

[49] No material has been placed before me by the defendants indicating an ability to pay in the event that the judgment is upheld on appeal. No information was placed before the Court as to the defendants’ ability to raise funds, or to provide some security for them, pending the determination of the appeal. Counsel has advised that because the third defendant is a registered retirement village and must advise its statutory supervisor trustee and all residents and prospective purchasers of the judgment against it that there is a potential for stress, anxiety and harm to uninvolved elderly Belmont residents.

[50] Counsel for Mr Herron notes that the third defendant’s obligation to notify its statutory supervisor and its residents of the judgment was triggered in 2013 when the proceedings were issued, and again when judgment was issued by the operation of Articles 12.2(1), 12.2(p) and 12.3 of the third defendant’s deed of supervision.

[51] Counsel were not able to put before me any acceptable alternative to my ordering payment of the amount of the judgment and interest to the Registrar pending the appeal. That said, there are, no doubt, commercial alternatives that would cover the situation and it is for that reason that I am providing in the order that I make, that if counsel cannot agree on the form of security, the amount is to be paid

_{to the Registrar within 20 working days of this judgment.}

²⁸ Videbeck v Auckland City Council HC Auckland M1053-sw02, 21 October 2002 at [7].

Orders

[52] I order:

(a) The defendants’ interlocutory application for recall, rescission and

partial rehearing is dismissed;

(b) The application for stay pending the determination of the new proceeding is dismissed;

(c) A stay of all relief provided in my judgment delivered on 27 May

2016 is granted until the disposal of the pending appeal to the Court of

Appeal on the following conditions:

(i) That the defendants shall, within 20 working days of this judgment, pay $966,531.93, either to:

(1) A stakeholder who has agreed to hold such sum on terms agreed to by the plaintiff and first and third defendants; or if there is no agreement

(2) The Registrar of this Court to be held by the Registrar in an interesting bearing account pending further order of this Court;

(ii) The first and third defendants take all steps necessary to expedite the hearing of the appeal; and

(iii) Leave is reserved to any party to apply for a variation of the conditions, or for additional conditions, if a significant change of circumstances so requires, for example, final determination of the issue of costs referred to in my judgment on that matter, which is being delivered with this judgment.

Costs

[53] Normally, I would have made an order for costs in favour of Mr Herron based on Category 2 Band B in respect of this application. Counsel for the defendants in submissions requested that costs be reserved and that time be made for the filing of memoranda covering them. There is a further unknown aspect to this, and that is that Mr Herron has, in another cost aspect of this case, sought to rely on a provision in the Sidmouth Settlement Deed, which provides for a contractual obligation to pay his costs on a solicitor/client basis. If they cannot resolve these matters, I reserve costs on the basis that if counsel are unable to agree, memoranda in support,

_{opposition and reply shall be filed and served at five working day intervals.}

JA Faire J