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High Court of New Zealand Decisions |
Last Updated: 9 February 2023
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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
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CIV-2022-043-017
[2022] NZHC 3440 |
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BETWEEN
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ICL CONSTRUCTION (2016) LIMITED
Appellant
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AND
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IAN ROEBUCK CRANE HIRE LIMITED
Respondent
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On the papers:
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Counsel:
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T J Rainey for Appellant
I D Matheson for Respondent
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Judgment:
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19 December 2022
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JUDGMENT OF CHURCHMAN J
[Leave to appeal – reissued after recall]
[1] On 4 November 2022, I dismissed an appeal by ICL Construction (2016) Limited (ICL) against a decision of the District Court.1 The respondent in that appeal was Ian Roebuck Crane Hire Limited (Roebuck).
[2] On 2 December 2022, ICL filed an application for leave to appeal my judgment of 4 November 2022. In a further judgment of 15 December 2022, I dismissed that application.
[3] I recalled that judgment on 16 December 2022 as it had been issued without me being aware that the applicant for leave to appeal had intended to file submissions in reply to those filed by the respondent.2 I have now had the opportunity to review those reply submissions.
1 ICL Construction (2016) Limited v Ian Roebuck Crane Hire Limited [2022] NZHC 2899; and
Ian Roebuck Crane Hire Limited v ICL (2016) Limited [2021] NZDC 16806.
2 ICL Construction (2016) Limited v Ian Roebuck Crane Hire Limited [2022] NZHC 3492.
ICL CONSTRUCTION (2016) LIMITED v IAN ROEBUCK CRANE HIRE LIMITED (LEAVE TO APPEAL – REISSUED AFTER RECALL) [2022] NZHC 3440 [19 December 2022]
The District Court decision
[4] On the basis that there had been non-compliance with the District Court Rules 2014, the District Court set aside briefs of evidence filed by ICL in an attempt to dispute the quantum of a liability the Court had already determined. I confirmed the District Court decision.
[5] ICL now seeks leave to appeal my decision of 4 November 2022. It requires leave because an appeal to the Court of Appeal would constitute a second appeal. ICL’s application is opposed by Roebuck, which submits that it should be dismissed. ICL have retained new counsel, and are now represented by Mr Rainey.
[6] For the reasons below, I am of the view that the application for leave to appeal should be dismissed.
The application
[7] ICL seeks leave to appeal on the following grounds:
(a) The intended appeal raises a question of law or fact capable of bona fide and serious argument. The issues are:
(i) Whether the District Court has the power under Rule 1.8(2) of the District Court Rules to “strike out” relevant and admissible evidence that a party proposed to call in support of a pleaded defence?
(ii) Whether it was appropriate to set aside the service of briefs of evidence challenging the quantification of the loss [claimed] by the respondent in circumstances where:
(iii) Whether the District Court had the power to debar the applicant from raising a defence as to quantum in circumstances where:
(iv) Whether it was appropriate to order an interim payment under Rules 7.62 and 7.63 of the District Court Rules in circumstances where the respondent had not provided any evidence to substantiate the loss claimed in the statement of claim?
(v) Whether it was appropriate for the District Court to order the applicant to pay interest under the Interest on Money Claims Act other than in issuing judgment following trial?
(vi) Whether it was appropriate for the District Court to make the combined orders which in substance granted judgment in favour of the respondent in circumstances where the respondent (1) would not be entitled to summary judgment and (2) would not be entitled to strike out the applicant’s defence?
(b) The intended appeal is, in substance, an appeal against a final order determining the liability of the applicant and is, accordingly, a matter of particular importance to the applicant.
(c) The intended appeal raises issues of general public importance and in particular whether the District Court has the power to summarily determine the merits of [a] defence other than at trial or through summary [judgment].
...
Positions of the parties
[8] Mr Rainey on behalf of ICL submits that a grant of leave is appropriate in the circumstances because of the unusual nature of the orders made by the District Court. He says that the effect of the decision is to prevent ICL from defending the claim against it, without the District Court entering judgment following a trial or by way of summary judgment. He submits that this is the case despite a clear understanding between the parties that the quantum of the claim remained in dispute. He says that it is arguable that the orders made by the District Court were ultra vires.
[9] Mr Rainey says:
[10] Mr Rainey says that there is a bona fide argument that ICL did not breach the District Court Rules, and that in any case, the Rules are remedial in nature, providing that any irregularity will not invalidate a proceeding. He submits that the alleged non- compliance is a “failure to provide particulars of the applicant’s denial of the claimed quantum in its statement of defence”. He says that the statement of defence was not evasive, and that it is at least arguable that it is compliant. He says that the most that could be said that the statement of defence was not supported by detailed particulars, and that there is a real sense that the District Court decision conflated pleadings with evidence. He says a party is not permitted to plead evidence. He submits that Roebuck never took issue with the statement of defence and did not apply to strike it out.
[11] Mr Rainey submits that there is a bona fide argument r 1.8(2) does not apply, because ICL did not invoke r 1.8(1) to regularise any alleged non-compliance with the Rules – its position was that the pleading was adequate. He says that the Court’s discretionary power to set aside steps taken in the proceeding only arises where there has been a failure to which r 1.8(1) applies.
[12] Mr Rainey submits that the evidence does not depend on any amendment to the pleading for its admissibility. He says that the onus was on Roebuck to prove the quantum of the claim, and that the evidence goes to challenging the quantum of the claim. He submits further that r 1.8(2) is not a substitute for strike out or summary judgment. He says that “it is extremely unusual for a procedural default to prevent a party from having the substance of their dispute determined on the merits”. He says that even if an amendment to the statement of defence was required, it was not proper to summarily dismiss ICL’s defence, but rather provide an opportunity for that amendment.
[13] Mr Rainey submits that ICL’s position is that the issues regarding the evidence also bear on the interim payment awarded by the District Court, and also whether the District Court could award interest under the Interest on Money Claims Act 2016.
Roebuck
[14] Mr Matheson on behalf of Roebuck submits that ICL is attempting to relitigate all issues determined in both the District Court and the High Court. He says that this is not appropriate, and that ICL has no standing, being that it ceased trading on 1 April 2021, being insolvent and without any assets of significance. He says that there is third party funding involved in this attempted appeal, but that there are extant costs and interest to be paid by ICL that are the subject of liquidation proceedings.
[15] Mr Matheson says that ICL has no legitimate interest in the outcome of its intended second appeal, as it will not receive any benefit from a successful second appeal. He submits that ICL is akin to a bankrupt person wanting the Courts to spend their limited time adjudicating the validity of a debt that will never be recovered. He says that if leave is granted then it will be a substantial injustice to Roebuck, because it will incur significant costs which will not be able to be recovered from ICL. He
says that it is not appropriate for an insolvent litigant to utilise the Court where the only practical outcome is the incurring of irrecoverable cost.
[16] Mr Matheson submits that there is no prospect of success on appeal. He says that it is untenable for ICL to argue that the statement of defence incorporated the defences sought to be advanced in the quantum evidence. He does not accept Mr Rainey’s submission that a bare denial of liability is enough to comply with its pleading obligations. He says that ICL’s position continues to be directly contrary to its original position at the time the statement of defence was filed. He submits that Roebuck has never objected to the statement of defence, merely the fact that the evidence in question raised matters that were not pleaded.
[17] Finally, Mr Matheson submits that the costs and interest awarded against ICL were well within the jurisdiction of the District Court, and remain owing. He seeks that the application for leave to appeal be dismissed and costs of $5,019. Since the filing of Mr Matheson’s submissions it seems that some of the outstanding costs and interest payments have been made by third parties on behalf of ICL.
ICL reply
[18] In his reply submissions, Mr Rainey submitted that:
(a) ICL is solvent;
(b) ICL has a real interest in the proposed appeal;
(c) Mr Matheson’s assertions as to the purpose of ICL seeking the proposed appeal are incorrect:
(d) ICL made it clear to the Court and Roebuck that it was reserving its position on quantum until after the liability hearing in the District Court; and
(e) ICL is only seeking to be heard on what Roebuck must prove as to the quantum of its loss.
Analysis
[19] Section 60 of the Senior Courts Act 2016 provides:
60 Appeals against decisions of High Court on appeal from District Court, Family Court, or Youth Court
[20] There was no dispute between the parties as to what standard to apply on an application for leave to appeal pursuant to s 60. The test is a restrictive one. Second appeals are uncommon. The time and resources of the Court of Appeal are not to be wasted.3 Both parties cited Waller v Hider, in which the Court of Appeal stated:4
The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal....
...Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.
[21] The primary focus is whether the question of law is worthy of consideration.5 But before address that, I will deal with the issues raised by Mr Rainey in reply.
[22] I first address the disputed question of the solvency of ICL. The respondent refers to the fact that it has not traded since April 2021 and all its assets were sold to Construction Group HQ Limited, which is directed by ICL’s former director, Mr Cole Wenmouth.6 Mr Rainey acknowledges that it has ceased to trade. However, he refers to the fact that it has not yet been struck off.
[23] He asserts that ICL is able to meet its debts as they fall due although he does not explain how that might be so. The only asset he refers to is “the funds it has paid to Roebuck pursuant to the order made in the District Court requiring [it] to make an interim payment pending the District Court making a final decision on the question of any claim.”
[24] The fact that this is the only “asset” referred to by Mr Rainey in support of his claim that the company can pay its debts as they fall due supports the inference that the company has no assets at all.
[25] Mr Rainey says that ICL has ongoing support from its shareholders in the conduct of this litigation. That is of little comfort to Roebuck. Roebuck has no remedy against the shareholders of ICL should they choose not to put the company in funds to pay any future costs award. Any funds advanced by the shareholders to ICL will also only increase the company’s indebtedness.
[26] On any conventional financial analysis, if a company has not traded in nearly two years and its only significant asset is a sum that it has already paid to another company as a result of a Court decision, the term insolvent is not an unreasonable description of its affairs.
[27] Turning to whether it has a real interest in the proposed appeal, Mr Rainey claims that the relevant interest is that, if ICL is allowed to rely on the evidence that the Judge refused to allow it to file, Roebuck would obtain judgment for a sum of less than $3,000 and would have to refund part of the interim payment. That outcome would seem to be speculation.
6 Above n 1, at [18].
[28] Mr Rainey also submits that there is no evidence to support the claims in [20] of Mr Matheson’s submissions which impute a motivation for the leave to appeal application being the appellant’s instructing solicitors trying to make amends for the way they conducted the appellant’s case in the District Court. I agree with that submission. It is not a matter I have any regard to.
[29] Mr Rainey also complains about Mr Matheson having referred to an email from Mr Ebert dated 24 July 2021 and he refers to the affidavit evidence of Mr Ebert filed in the District Court. This material was before the District Court and the Judge was able to assess it. It is too late now to try and challenge the Judge’s finding by way of a second appeal.
[30] The same comments apply to the fifth matter raised by the applicant in the reply submissions. This is a challenge to the findings of both Courts. There is nothing stopping ICL from asking the Registrar in the District Court to set the matter down for a final hearing on quantum. The reason that is chooses not to do that is because, on the basis of the District Court’s findings, it will not receive anything.
[31] I return to the question of whether there is a question of law worthy of consideration.
[32] The sum sought by Roebuck in its statement of claim is $64,098. That is a relatively modest sum. As such, it is questionable whether the appeal itself is of significant importance to ICL or bona fide. ICL have already had two hearings regarding its liability for the debt alleged. The outcome of both of those hearings were findings that ICL’s claimed defences were implausible and improper. Given the high threshold that is applied to second appeals, in such circumstances, it does not appear to be appropriate to grant leave.
[33] Secondly, no seriously arguable question of law of general importance has been identified by ICL. While the District Court Judge did use some novel language in his decision, essentially, he would not allow ICL to resile from the terms of its pleaded defence or the representations its counsel had made to the Court as to what matters were in issue. He declined to admit further evidence that was not relevant to the
matters that were pleaded or that counsel had not indicated were disputed. He did so on an appropriate and lawful basis.
[34] The District Court Judge had the power to exclude or ‘strike-out’ the evidence sought to be admitted for the purpose of disputing quantum on the basis that the defence it was directed to establishing was not pleaded. Pursuant to r 1.8(2)(b), the Judge had the power to make an order dealing with the proceeding generally as he thought just, including setting aside a step taken in the proceeding which was non- compliant with the Rules. Despite the language used by the Judge, that is not a genuinely arguable point of law of broader precedential value. Nor is there a requirement in r 1.8 that non-compliance be raised against the non-compliant party before the Court’s ability to take action in respect of that non-compliance arises. The evidence filed by ICL was clearly inconsistent with its pleadings, and the Court was entitled to take notice of that, when Roebuck brought that to its attention.
[35] Further, it was clearly appropriate for the Judge to exercise that power in the circumstances. As submitted by Mr Matheson, it was not sufficient for ICL to merely deny liability in its statement of defence, and then advance what was essentially an entirely inconsistent defence as to quantum, once its initial denial of liability was found to be lacking in merit. I remain of the view that to attempt to do so was improper. It is true that the parties understood that quantum was yet to be determined, but not in the manner that would have been necessary on the basis of the evidence sought to be filed by ICL. ICL represented to both Roebuck and the Court that the primary issue was one of liability, which ICL denied in its entirety, and that the resolution of quantum issues would be relatively simple. I agree with Mr Matheson that ICL’s position continues to be contrary to its statement of defence.
[36] In my view it remains inappropriate for ICL to allege that either that Roebuck is at fault for failing to seek further particulars, or that it was inappropriate to exclude the evidence because Roebuck is required to prove the quantum of its loss. Neither of those arguments truly bear upon whether it was appropriate for ICL to dispute quantum in the manner that it did. Nor did the District Court ‘debar’ ICL from raising a defence as to quantum, but rather excluded evidence that was inconsistent with ICL’s pleadings and representations to the Court. Nor did the District Court judgment strike out or
summarily determine ICL’s defence. ICL’s claim is extant, as is the issue of quantum. Roebuck has as yet been denied the opportunity to prove its loss, because the quantum hearing is yet to take place. If ICL is unable to defend quantum without reference to evidence that is inconsistent with its pleadings, then its defence as to quantum is likely to be as meritless as its defence as to liability.
[37] I note for completeness that I am of the view that the imposition of an interim payment and interest in the circumstances was appropriate, and does not raise an issue of law that justifies a second appeal. An interim payment is subject to adjustment as at the time of final judgment or discontinuance.7 Therefore, it remains open to ICL to seek a final hearing as to quantum in the District Court, taking as an issue the interim payment order.
Result
[38] The application for leave to appeal is dismissed. Roebuck is entitled to the costs of opposing the application. It seeks costs of $5,019. Mr Rainey has accepted that figure is appropriate and I award it.
Churchman J
C&M Legal, New Plymouth for Appellant
Connect Legal Taranaki, New Plymouth for Respondent
7 District Court Rules 2014, r 7.67.
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