BARONI FOODS LIMITED v P K WHOLESALE SUPPLIES LIMITED [2016] NZHC 676

BARONI FOODS LIMITED v P K WHOLESALE SUPPLIES LIMITED [2016] NZHC 676 [13 April 2016]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2014-409-000702[2016] NZHC 676BETWEEN BARONI FOODS LIMITEDPlaintiffAND P K WHOLESALE SUPPLIES LIMITEDDefendantHearing: 13 April 2016Appearances: G J Ryan for PlaintiffG Jones for DefendantJudgment: 13 April 2016ORAL JUDGMENT OF DUNNINGHAM J[1] On 15 March 2016, I made an unless order specifying that unless thedefendant's evidence was served by 5.00 pm on 29 March 2016, the defendant'sdefence would be struck out. That order was made in light of the chequered progress of this matter to a substantive hearing, the previous default by the defendant, and an absence of explanation for the current default by the defendant.[2] The defendant then failed to file its evidence by 29 March and, on 31 March 2016, I confirmed that the defence was struck out and I scheduled the proceeding for a formal proof hearing today, 13 April 2016. However, yesterday theCourt received a letter from the radiation oncologist who is treating the defendant's director's wife. It appears that she has been extremely unwell, with debilitating spinal compression and, on 21 March 2016, was diagnosed with metastatic breast cancer.[3] An application for leave to defend the formal proof hearing and a supporting affidavit, although filed on 8 April 2016, was only brought to my attention thismorning. That affidavit explains that the defendant's director's wife has been suffering significant ill health for some time, with severe back pain developing last October and, by January 2016, the defendant's director, Mr Solotti, explains that his wife was fully dependent on him. He explains that on 20 March 2016, she lost all feeling in one leg and lost it in the other the following morning. That necessitated an ambulance being called and 48 hours later, scans revealed tumours on the spine. That also then led to the diagnosis of breast cancer.[4] Mr Solotti says that the strain and stress on him since November 2015 has been enormous. He had been trying to cope with looking after his wife, running the business and dealing with the litigation. He says that all of this has somewhat overwhelmed him over the last few months and he has been unable to focus on whatneeds to be done to prepare the defendant's case for trial.[5] The plaintiff has also filed affidavit evidence. It expresses some scepticismabout the impact of Mrs Solotti's ill health on preparation for the hearing, saying that she has suffered from ill health for a long time and yet this has not affected Mr Solotti's ability to run his business, while he is caring for her. It is pointed out that Mrs Solotti has been under the care of her radiation oncologist since October 2011, and so the ill health that Mr Solotti speaks of, has been an issue which has been ongoing. This may be so, but it is clear to me that there has been some genuine ill health since mid-March when Mrs Solotti was hospitalised. That certainly on the face of it explains to me the failure to comply with the unless order.[6] In SM v LFDB, 1 the Court of Appeal, in discussing the principles applying to unless orders, acknowledged that "justice may require that the party in default should be relieved of the consequences of default where the Court is satisfied that the breach resulted from something which that party should not be held responsible for".21 SM v LFD [2014] NZCA 326.2 At [31].[7] I am satisfied that the present circumstances are circumstances that were outof Mr Solotti's control and it would be contrary to the interests of justice to proceedwith an undefended hearing in those circumstances. I accept that if the formal proof hearing proceeded, it would be likely to lead to a subsequent application to set aside that judgment and that would be counter-productive and lead to the same kind of delay that the plaintiff is concerned about at present.[8] However, I do need to be conscious of the plaintiff's interests in this matterand I think it is appropriate that if I make orders to reinstate the defence, that the matter is progressed to a hearing at the soonest possible opportunity. I have explained to counsel that a three day hearing could proceed commencing on 20 June 2016. I think that is soon enough to both allow Mr Solotti to get through the current difficulties while still accommodating the plaintiff's desire to proceed to ahearing at the earliest practical opportunity.Orders[9] I therefore record that the unless order is rescinded. I reinstate thedefendant's defence and I vacate today's formal proof hearing and adjourn the matter to a three day defended hearing commencing 20 June 2016.[10] The following timetabling orders will apply:(a) the defendant's evidence is to be served by 3 June 2016;(b) the plaintiff's reply evidence is to be served by 14 June; and(c) the plaintiff's opening submissions are to be filed and served on 14 June 2016.[11] The plaintiff has sought that those timetabling directions are made as unless orders in respect of the defendant. I am reluctant to do so. I think that while Mr Solotti has confirmed his willingness to endeavour to comply with those orders, I do not think that I can preclude the possibility of issues with Mrs Solotti's health intervening. Had I known about the situation with Mrs Solotti's health it is unlikelythat I would have made an unless order in the first place. However, the defendant cannot expect that I would treat any default lightly. It would have to be extremely serious, unanticipated circumstances arising for me to consider, yet again, shifting this hearing.Costs[12] I turn now to the issue of costs. The health issues which Mrs Solotti has suffered were all matters which could have been explained to the Court during the case management conference when the unless orders were made.3 It is clear that Mrs Solotti's health at that stage was sufficiently bad that it would have been unreasonable to expect Mr Solotti to focus on preparing for the litigation in a tight timeframe. Had the Court been aware of that explanation for the non-compliance with timetabling orders to that point, I consider it is almost certain that an unless order would not have been made. Instead, both the plaintiff and the Court were leftto assume that the defendant's default was wilful and justified the defence being struck out, and the case proceeding to a formal proof hearing.[13] The plaintiff has taken a number of steps in reliance on the unless order beingmade. The plaintiff's counsel has prepared for that and provided further affidavitevidence and a memorandum of counsel in anticipation of the formal proof hearing proceeding. He has also had to file a notice of opposition and affidavit evidence in respect of this application and appear at today's hearing of that application.[14] Had the defendant fully appraised the Court of the circumstances, the plaintiff would not have needed to prepare those materials for a formal proof hearing. Furthermore, the plaintiff has sought, what is in effect, an indulgence today and it is normal that costs follow that event.[15] However, I accept Mr Jones' submission that this was not a wilful default, and in the circumstances I think it is appropriate that 2B costs should be awarded to the plaintiff for:3 In saying this, I do not criticise counsel, who simply did not have instructions from his client as to the reasons for the defendant's inaction.(a) all steps taken in preparation for the formal proof hearing;(b) preparing the opposition to the application for leave to defend the proceeding and, in effect, rescind the unless order; and(c) appearing on the application today.[16] I therefore award 2B costs for all those steps to be paid by the defendant to the plaintiff. Again, I will not make those an unless order at this stage, but I expect them to be paid within 14 days.Solicitors:White Fox & Jones, ChristchurchBishopdale Law, Christchurch