AFFCO NEW ZEALAND LIMITED V AOTEAROA COOLSTORES LIMITED HC PMN CIV-2007-454-597

AFFCO NEW ZEALAND LIMITED V AOTEAROA COOLSTORES LIMITED HC PMN CIV-2007-454-597 28 September 2007IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY CIV-2007-454-597BETWEEN AFFCO NEW ZEALAND LIMITED Plaintiff AND AOTEAROA COOLSTORES LIMITED Defendant Hearing: 24 September 2007 Appearances: G.P. Malone for Plaintiff A. Bell for Defendant Judgment: 28 September 200728 September 2007JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLThis judgment was delivered by Associate Judge Gendall on 28 September 2007 at 10.30 am pursuant to r540(4) of the High Court Rules 1985.Solicitors: Mr G P Malone, Solutions Law Office, Richmond Mr A.R. Bell, Fitzherbert Rowe Lawyers, Palmerston NorthIntroduction[1] This is an application by the Plaintiff for summary judgment against the Defendant. The application is opposed by the Defendant. [2] A preliminary matter arises, however. The Defendant's Notice of Opposition to the present application was filed out of time. Before me the issue arose as to whether the Defendant should be granted leave for the late filing of its Notice of Opposition and Affidavit in Support. The application for leave was opposed by the Plaintiff. [3] On this question of leave, Master Faire (as he then was) set out the Court's overriding concern in leave applications of this sort in Chappel Carriers Limited v.Chappel Properties Limited (High Court Hamilton CP15/97 12 August 1997) in the following way: "the Court is concerned to avoid a possible miscarriage of justice" [4] In addition in the Chappel Carriers Limited decision Master Faire noted at page 2:". Although the Court is not limited in the considerations to which it may have regard (in applications for leave) three have been considered important. They are that a substantial ground of defence exists, second, that the delay is reasonably explained and third that the Plaintiff will not suffer irreparable injury if the judgment is set aside".[5] Taking these grounds into consideration, in the present case I am satisfied that this is an appropriate case for leave to be granted to the Defendant. [6] An order is now made granting leave to the Defendant for the late filing of its opposition to the Plaintiff's summary judgment application. [7] I now turn to consider the substantive application before the Court.Background Facts[8] The Plaintiff is a meat processor and exporter carrying on business in the North Island of New Zealand. [9] On 10 December 2004 the Plaintiff and the Defendant entered into a contract described as an "Agreement as to Termination of 4 March 2003 Agreement". ("the Agreement") which related, amongst other things, to a debt owing by the Defendant and other parties to the Plaintiff. [10] Pursuant to the Agreement, the Defendant made available to the Plaintiff a cheque which was ultimately dated 1 August 2007 and made out for the sum of $435,663.89. [11] Earlier, this cheque had been provided by the Defendant to the Plaintiff as a blank cheque. It was to be completed with an agreed amount and lodged for payment on 1 August 2007. [12] The Plaintiff's position is that the cheque was completed for the agreed sum, $435,663.89, and properly presented for payment on 1 August 2007. [13] When it was presented for payment the cheque was dishonoured by the Defendant's bank. [14] The Plaintiff now sues the Defendant on the cheque for $435,663.89 together with interest and costs. [15] The Defendant's opposition to the present summary judgment application is effectively that the Plaintiff acted outside the authority given to it by the Defendant to complete the cheque by making it out for an erroneous amount. [16] The Defendant does acknowledge that a debt of some $418,000.00 (approximately) is due from it to the Plaintiff. The Defendant contended, however, that the amount for which the cheque was drawn included overstated interest to the extent of some $19,339.22. Accordingly it is the Defendant's position that summaryjudgment on the cheque should not be granted here as a portion of the debt which is included in the $435,663.89 cheque amount is disputed.Counsels' arguments and my decision.[17] The jurisdiction to grant summary judgment is found in Rule 136 (1) of the High Court Rules, which states: (1) The Court may give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to a claim in the statement of claim or to a particular part of any such claim. [18] Under Rule 136 (1) the onus is clearly on the Plaintiff to satisfy the Court that the Defendant has no defence to the claim – McGechan on Proceedure paragraph HR 136.04. [19] In Pemberton v. Chappell [1987] 1NZLR1 Somers J said at page 3: At the end of the day Rule 136 requires that the Plaintiff "satisfies the Court that a defendant has no defence". In this context the words "no defence" have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example no bona fide defence, no reasonable ground of defence, no fairly arguable defence. [20] As I have noted, in the present case the Plaintiff sues the Defendant upon the dishonoured cheque. An affidavit of Karen Forrest ("Ms. Forrest") dated 21 September 2007 is filed in support of the Defendant's opposition to the summary judgment application. The Defendant in this seems to acknowledge that authority was given to the Plaintiff to complete the cheque for the balance owing by the Defendant at 1 August 2007. The evidence of Ms. Forrest however, is that the amount for which the cheque was ultimately drawn ($435,663.89) was overstated by the sum of $19,339.22 being a miscalculation of the interest invoiced by the Plaintiff to the Defendant.[21] Accordingly the defence to the present application appears to be that the Plaintiff has exceeded its authority by completing the cheque with an amount exceeding the true balance owing. On this, the Defendant refers to section 20 Bills of Exchange Act 1908 in support of its position that a blank cheque must be completed strictly in accordance with the authority given, and that has not occurred here. [22] In response, the Plaintiffs' position is that despite this bald claim, the Defendant has not raised any proper evidential foundation for the defence which it is endeavouring to advance – Middleditch v. NZ Hotel Investments Ltd (1992) 5 PRNZ392 (CA). The Plaintiff says that where as here the Defendant plainly admits a substantial liability to the Plaintiff, it must do more than merely put forward a vague allegation that the debt in question might be less than the amount claimed –Fletcher Merchants Limited v. Workman and Pullman (25 July 1986 High Court Wanganui CP34/86 Thorp J). [23] Turning to consider the basis of the defence advanced in the affidavit of Ms Forrest, at paragraph 9 she sets out her calculation of the interest payable under the Agreement referring to clause 18 on page 5 of the Agreement. [24] It is clear, however, that clause 18 of the Agreement is only to apply after there has been a default and the Plaintiff has then terminated the partial waiver provided for in the Agreement. [25] In the present case there can be no suggestion that the waiver here was cancelled prior to presentation of the cheque in favour of the Plaintiff. It seems the evidence in fact is to the opposite effect. The oral agreement was effectively to extend the time requirements under the Agreement relating to payment. [26] That being the case then I am satisfied that interest under the Agreement is appropriately charged under clauses 14 and 15 (involving two separate charges of 6%) and not clause 18.[27] And in addition, it would appear that the only clear evidence before the Court from the parties regarding the interest and final payment discussions is a series of emails in early July 2007 between Ms. Forrest on the one hand and Catherine Twidle for the Plaintiff on the other which are annexed to the 8 August 2007 affidavit of Christopher John Joblin filed in support of the current application as exhibit "E". These email exchanges state clearly that the settlement amount to be paid in the 1 August 2007 cheque is $435,663.89. Indeed in her email dated 3 July 2007 to Catherine Twidle, Ms. Forrest states:".I have been asked to request that this be added onto the Affco settlement altering the amount owed to $435,663.89 that is to be settled very soon. Please advise if this is acceptable and we will add it at our end onto the settlement figure". (emphasis added)[28] This was confirmed in a reply email on behalf of the Plaintiff and the 1 August 2007 cheque was completed for the agreed settlement figure of $435,663.89. [29] It was not until the present summary judgment application was filed on 8 August 2007 following dishonour of the cheque that it appears the Defendant raised any issue as to the settlement amount for which the cheque was completed. [30] I am satisfied from the evidence before the Court that this $435,663.89 amount represented the agreed settlement figure in terms of the Agreement. Ms Forrest stated as much in the email exchanges between 3 and 6 July 2007. She confirmed the outstanding figure there. Further, and perhaps surprisingly, she provided no comment or explanation on any of this in her later affidavit dated 21 September 2007. [31] The Court of Appeal in the past has stated that a robust approach is to be taken to summary judgment applications. In Bilbie Dymock Corporation Ltd v.Patel (1987) 1PRNZ84 (CA) it was suggested that affidavits filed in opposition to a summary judgment application must have an aura of credibility.[32] There is no evidence here that the Defendant took the step of stopping payment on the cheque because it was for an incorrect amount. Nor was any issue raised over the interest question prior to the Defendant filing its notice of opposition to the present application on Friday last 21 September 2007. [33] In my view it is reasonable to presume that the cheque was dishonoured simply because there were insufficient funds in the Defendant's account at the time to meet the cheque. [34] In the email exchange between 4 and 6 July 2007 the Defendant through Ms Forrest confirmed the figure outstanding and the settlement amount as $435,663.89. The settlement cheque was drawn for this amount. [35] No explanation regarding this acknowledgement by Ms. Forrest has been provided to the Court. Nor, has there been any reasonable explanation given to support the Defendant's allegation that the interest calculation had been made in error. The argument the Defendant has endeavoured to raise over this interest question in my view can only be seen on the evidence before the Court as fanciful and lacking any merit. [36] That said, as I see the position, the Plaintiff has satisfied the onus upon it to show that the Defendant has no defence to the claim made against it here. [37] The Plaintiff's summary judgment application therefore succeeds.Orders[38] An order is now made granting summary judgment to the Plaintiff against the Defendant in the sum of $435,663.89 together with interest on this sum at 7.5% p.a. ($89.52 per day) from 1 August 2007 down to the date of this judgment. [39] With respect to costs, the Plaintiff has succeeded in this application and is entitled to an award of costs. Costs are therefore awarded to the Plaintiff against the Defendant on a category 2B basis together with disbursements as approved by the Registrar._____________________________Associate Judge D.I. Gendall