P v Bridgecorp Ltd ((in Receivership) and (in Liquidation))

JurisdictionNew Zealand
JudgeElias CJ,McGrath,William Young,Glazebrook,Arnold JJ
Judgment Date19 December 2013
Neutral Citation[2013] NZSC 152
Docket NumberSC 87/2012
CourtSupreme Court
Date19 December 2013
BETWEEN
P (SC 87/2012)
Appellant
and
Bridgecorp Limited (In Receivership and In Liquidation)
Respondent

[2013] NZSC 152

Court:

Elias CJ, McGrath, William Young, Glazebrook and Arnold JJ

SC 87/2012

IN THE SUPREME COURT OF NEW ZEALAND

Appeal from a Court of Appeal decision which held an an admission executed prior to the issue of proceedings complied with the requirements of r15.16 High Court Rules (“HCR”) (admission of cause of action) — appellant was in debt to the respondent — in the context of settling mortgagee sale proceedings for the recovery of the debt, the parties entered into an arrangement under which the appellant agreed to pay the debt by instalments and the respondent would not initiate Court proceedings — respondent provided the appellant with a draft statement of claim (alleging breach of the terms of settlement) and required him to execute an admission of liability and give the respondent irrevocable authority to file it on his behalf should proceedings be issued — whether a proceeding had to be issued and served on the party making the admission before an admission could be filed and acted on — whether the admission had to be filed and served by the person making it, not by the plaintiff

Counsel:

C R Pidgeon QC and R S Pidgeon for Appellant

No appearance by or for the Respondent

  • A The appeal is dismissed.

  • B There is no order for costs.

JUDGMENT OF THE COURT
REASONS

Elias CJ

[1]

McGrath, William Young, Glazebrook and Arnold JJ

[64]

ELIAS CJ
1

Bridgecorp Limited claimed judgment against the appellant for a debt due under a deed of settlement of 21 September 2010. 1 Filed in the High Court at the

same time as the notice of proceeding and statement of claim on 18 March 2011 were an affidavit by the receiver of Bridgecorp (certifying the unpaid debt), an undated admission of claim signed by the appellant at the time the settlement of 21 September 2010 had been entered into, and a draft judgment by admission
2

By paragraph 1 of the terms of the undated admission of claim the appellant admitted the claim by Bridgecorp for the sum of $58,173.99, “together with”:

Paragraph 2 of the admission of claim also provided that the appellant:

… consents to judgment being entered and enforced for the amounts set out at paragraph 1 above, and authorises the plaintiff to file this admission on his behalf pursuant to Rule 15.16 of the High Court Rules.

  • 1.1 interest at the rate of 10% per annum from 8 July 2010 to the date of judgment and from the date of judgment to the date of payment by the defendant;

  • 1.2 real estate agents' charges incurred in relation to the plaintiff's sale of XYZ Street, Auckland; and

  • 1.3 the plaintiff's legal expenses, on a solicitor and own client basis, as certified by the plaintiff's receivers (or either of them).

3

Clause 11 of the settlement deed provided:

In the event that [the appellant] fails to make any payment strictly in accordance with clause 3 above, time being of the essence, Bridgecorp may (without any further notice) file the admission of claim together with a statement of claim in the form annexed to this deed, and immediately enter and enforce judgment, and may seal judgment under the High Court Rules, against [the appellant] for the amount of the Debt then outstanding, plus interest in accordance with clause 6.2 above, less all payments made by [the appellant] pursuant to clause 3 above.

4

Bridgecorp sought to seal judgment for the amount of the claim in the form of the draft judgment supplied, in reliance on r 15.16(3) of the High Court Rules, which permits a plaintiff on whom an admission of some or all of the causes of action is served by the defendant to seal judgment on the cause or causes of action admitted. Rule 15.16 provides:

  • 15.16 Admission of cause of action

  • (1) At any time after a party has been served with a notice of proceeding, that party may file and serve (separately from the party's pleadings) an admission of all, some, or part of the alleged causes of action on all other parties to the proceeding.

  • (2) An admission can be withdrawn only with the leave of the court.

  • (3) When an admission is filed and served under subclause (1), a party on whom the admission is served may seal judgment on the cause of action admitted, without prejudice to that party's right (if any) to proceed on any other cause of action.

  • (4) An admission under subclause (1) relating to any cause of action in which a sum of money is claimed must state the exact amount admitted.

  • (5) Any judgment entered on an admission filed and served under subclause (1) may, upon application, be set aside by the court if-

    • (a) the plaintiff, being under a duty or obligation to the defendant not to enter judgment on the admission, acted contrary to that duty or obligation in entering judgment; or

    • (b) the plaintiff, in entering judgment, acted fraudulently, unconscionably, or in wilful or reckless disregard of the defendant's rights.

  • (6) Upon an application under subclause (5), the court may direct that a proceeding be brought to determine whether judgment was wrongfully entered.

5

There are four issues on the appeal: were the Courts below correct to hold that an admission of claim prepared in advance of proceedings and filed by the plaintiff (instead of the person making the admission) complied with r 15.16? Did the admission of claim for a sum to be determined comply with r 15.16(4)? Were the Courts below right to treat the basis for withdrawal of an admission as the same as the basis on which judgment under r 15.16 can be set aside under r 15.16(5)? And were the Courts below able to conclude on summary assessment that the defences raised by the appellant could not succeed, so that leave to withdraw the admission was properly withheld and judgment on it was rightly sealed?

6

For the reasons given in what follows and in disagreement with the other members of the Court, I have concluded that the procedure adopted by Bridgecorp and the terms of the admission did not comply with the rule. I would treat that non-compliance as fatal to the application to seal judgment. In any event, I consider that the Court of Appeal was in error in treating the approach to leave to withdraw an admission as equivalent to the approach on an application to set aside judgment under r 15.16(5) (and on this point am in agreement with the other members of this Court). In further disagreement, however, I consider that the substantive issues raised by the defences were not suitable for determination on summary process as they were treated in the Courts below and by the other members of this Court. I do not find it possible to conclude that the defences raised were unarguable, justifying peremptory disposal and clearing the way for judgment on summary process.

Background
7

None of the documents filed with the Court were initially served on the appellant. Associate Judge Bell, to whom the Registrar referred the application to seal judgment, directed that the proceedings and the supporting documents be served on him, referring to the interests of natural justice. 2 Judge Bell considered that r 5.70, which requires a statement of claim and notice of proceeding to be served on every defendant, had not been complied with and held there was no authority for dispensing with service under that rule. 3 Recourse could be had to r 15.16 “only after a party has been served with a notice of proceeding”. 4

8

The proceedings and the request for judgment to be sealed on the basis of the admission of claim were then served on the appellant. No additional application for summary judgment was made by Bridgecorp.

9

Upon the service of the documents upon him, the appellant, who acted for himself until the proceedings reached the Court of Appeal, filed a statement of defence. In it, he claimed that the deed on which the claim was based was invalid because of duress, unconscionability, and undue influence. He claimed that at the time he entered into the settlement deed and gave the admission he was suffering

from post-traumatic stress disorder and severe depression. He claimed Bridgecorp was aware of his medical condition
10

The appellant also gave notice of interlocutory application for leave to withdraw the admission of claim (leave being required by r 15.16(2) before an admission of a cause of action under that rule can be withdrawn). In support of his application he filed medical reports relating to his long-standing psychiatric illness and its treatment in 2008 and 2009. This application was opposed by Bridgecorp, which filed evidence in opposition indicating that it believed the appellant to have been independently advised at the time and an affidavit by a consultant psychiatrist who offered the opinion that the medical reports provided by the appellant did not support the contention that his judgment was impaired at the time he entered into the deed of settlement.

11

The psychiatric opinion supplied by Bridgecorp was responded to by the appellant with a further report from a fourth psychiatrist who expressed the opinion that it was “probable” that the appellant was impaired at the time he entered into the settlement agreement in 2010.

12

Associate Judge Christiansen dismissed the application for leave to withdraw the admission on 14 October 2011. 5 In doing so, he held first that the procedure followed by Bridgecorp in obtaining an admission before proceedings was one permitted under the High Court Rules. 6 The Judge treated the application to withdraw the admission as raising the same considerations as an application to set aside a judgment under r 15.16(5). He expressed doubt as to whether the circumstances relied upon by the appellant in support of his application to withdraw the admission (his...

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