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

JurisdictionNew Zealand
CourtSupreme Court
JudgeElias CJ,McGrath,William Young,Glazebrook,Arnold JJ
Judgment Date19 December 2013
Neutral Citation[2013] NZSC 152
Docket NumberSC 87/2012
Date19 December 2013

[2013] NZSC 152

IN THE SUPREME COURT OF NEW ZEALAND

Court:

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

SC 87/2012

BETWEEN
P (SC 87/2012)
Appellant
and
Bridgecorp Limited (In Receivership and In Liquidation)
Respondent
Counsel:

C R Pidgeon QC and R S Pidgeon for Appellant

No appearance by or for the Respondent

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

The issues were: whether the associate judge had jurisdiction to deal with the application to set aside the admission; whether a plaintiff was entitled to file an admission on behalf of a defendant under r15.16(1) HCR; whether r15.16 HCR permitted the filing of an admission that had been signed in advance of the issue of proceedings.

Held: Under r 15.16(1) an admission could go to “all, some, or part of the alleged causes of action”. Because liability was admitted to the extent of the admission, no judicial determination as to liability was necessary. An application to withdraw an admission was an interlocutory application and accordingly would be heard in chambers unless the court ordered otherwise. An associate judge had jurisdiction to determine the application. If the application was declined, the admission would stand and the plaintiff would be entitled to seal judgment on it.

The HC and CA had considered the question of whether leave to withdraw the admission should be granted by reference to the factors identified in r15.16(5) in relation to an application to set aside judgment. The discretion conferred by r15.16(2) did not limit the court to consideration of the factors identified in r15.16(5). There was nothing in the language of r15.16(2) or in policy to indicate such an intention. Rule 15.16(2) conferred a general discretion to be exercised in the interests of justice. If the court was satisfied that it was in the interests of justice to do so, it was entitled to grant leave to withdraw an admission even though a ground similar to those in r15.16(5) had not been made out.

A debtor could give his or her creditor authority to act on his or her behalf in filing an admission of liability under r15.16 HCR. There was no reason of principle to preclude normal agency principles from applying in respect of the giving of admissions. Given that there were safeguards against oppressive behaviour by creditors in r15.16(2) HCR and r15.16(5) HCR, it was difficult to see why a creditor should not be an agent for a debtor in this context. The ability to enter such conditional settlements was consistent with the purpose of the HCR to secure the just, speedy, and inexpensive determination of proceedings.

Rule 15.16(5)(a), which provided that a court could set aside a judgment entered on an admission where the plaintiff entered judgment contrary to a duty or obligation not to do so, recognised that parties might reach settlement arrangements involving the giving of admissions on which judgment could not be entered immediately but only in specified circumstances.

The HC was correct in ruling that r15.16(1) HCR required that proceedings be filed and served before an admission of liability could be filed.

A pre-action admission of fact could provide a proper basis for the entry of judgment under r15.15 HCR. In principle, provided that r15.16 was otherwise complied with, and given r15.16(2) and (5), there was no reason why the rule should be interpreted as preventing a debtor from giving a pre-action admission of liability on the basis of a draft statement of claim, with authority to file the admission if proceedings were ultimately issued, as part of a settlement of other proceedings.

The fact that a Registrar was entitled to enter judgment on an admission of liability under r15.16 HCR was not a reason for interpreting the rule to require that any such admission be executed by the defendant only after the proceedings were issued. What was important was that the defendant, and later the Registrar, knew the precise effect of the admission of liability.

Bridgecorp could legitimately have applied for the entry of judgment under r15.15 HCR (judgment on admission facts) on the basis of P's admission. The draft statement of claim, the draft admission and the authority to file it were part of the settlement of mortgagee sale proceedings in which P's quarter interest had been realised to meet his debt to Bridgecorp had the settlement not been reached.

Rule 15.16(4) HCR provided that an admission in relation to a cause of action claiming a sum of money had to state the exact amount admitted. It was argued that this supported the argument that an admission had to be executed after the filing and service of the statement of claim as it was only at that point that the defendant would be able to identify the precise sum at issue and determine the amount in respect of which he or she was prepared to admit liability. However, requiring an admission to state the precise sum owing at the time it was filed, notwithstanding that the admission included a mechanism for determining that exact sum, would unduly undermine the utility of the admission process.

Where debt recovery proceedings were settled on the basis that the debtor would have more time to pay but must provide, as security, an admission of liability to a draft statement of claim alleging breach of the settlement agreement and authority to file the admission if necessary, the admission would be sufficient for the purposes of r15.16 HCR provided that it was filed after the proceedings were issued and properly served and set out a mechanism for the identification of, the exact amount in respect of which liability was admitted. That interpretation did not create a risk of oppressive conduct towards debtors that could not be addressed through the discretions conferred by r15.16(2) HCR and r15.16(5) HCR.

Appeal dismissed

  • 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...

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