COMMERCIAL FACTORS LIMITED v SCENIC CIRCLE HOTELS LIMITED [2019] NZHC 3243

COMMERCIAL FACTORS LIMITED v SCENIC CIRCLE HOTELS LIMITED [2019] NZHC 3243 [13December 2019]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2016-409-001141[2019] NZHC 3243BETWEEN COMMERCIAL FACTORS LIMITEDPlaintiffAND SCENIC CIRCLE HOTELS LIMITEDFirst DefendantAND SCENIC HOTELS LIMITEDSecond DefendantHearing: via telephone conferenceAppearances: P J Dale QC and A J Steel for PlaintiffJ B M Smith QC and J L W Wass for DefendantsJudgment: 13 December 2019JUDGMENT OF OSBORNE J(recall of judgment – [2019] NZHC 2370)Introduction[1] The defendants seek the recall and/or clarification of a judgment I gave on 19September 2019 in relation to litigation between the parties.1 The defendants seek tohave recalled para [265](b). In the alternative the defendant seeks clarification inrelation to the correct interpretation of para [265](b).[2] Counsel have also drawn to the attention of the Court to two minor correctionsthat are required to earlier paragraphs in the judgment – it is common ground that those1 Commercial Factors Ltd v Scenic Hotel Group Ltd [2019] NZHC 2370should be corrected under the slip rule (r 11.10 High Court Rules), which will beattended to at the conclusion of this judgment.[3] The application for recall and/or clarification is resisted by the plaintiff.Background[4] The litigation arises out of dealings which the parties had over a hotel propertyin Tonga. The plaintiff, a financier, had come to own the hotel. The first defendant(the only relevant defendant) ("Scenic") is a hotel operator. The parties entered intodiscussions over a possible joint venture and the hotel subsequently began to operatein the context of that intended joint venture. The parties ceased to work together inthat regard from early 2015, with a subsidiary of the Scenic continuing to operate thehotel thereafter until closing it in March 2019.[5] By the plaintiff's amended statement of claim on which it went to trial theplaintiff sued the defendants on three causes of action, namely:(a) an estoppel precluding Scenic from denying the existence in terms of ajoint venture; or(b) entitlement pursuant to a concluded joint venture agreement, by whichthe plaintiff and Scenic were joint venture partners in the acquisition ofthe hotel; or(c) entitlements in relation to a partnership, dissolved by notice in 2015.[6] By the Court's judgment the plaintiff's claim was found to fail in relation toeach of those causes of action, the Court instead finding that the relationship betweenthe parties had been in the nature of a pre-contractual joint venture.[7] In refusing relief to the plaintiff on its three identified causes of action, theCourt nevertheless declared (at [265](a) of the judgment) that a pre-contractual jointventure between the plaintiff and the Scenic was terminated with effect from 26 March2015. The appropriateness of that declaration is not challenged by either party.[8] Scenic however takes issue with the order at [265](b) of the judgment whichreads:The plaintiff and first defendant are to procure the taking of accounts of PacificHotels Ltd, as their pre-contractual joint venture vehicle, for the period fromincorporation to 26 March 2015, upon the basis that all receipts from anyinsurance policy in relation to the hotel (whether received before or after 26March 2015) shall be brought into account.Submissions[9] For the plaintiff Mr Smith seeks recall of para [265](b) particularly havingregard to the Court's stipulation of the basis upon which certain receipts should bebrought into account. He identifies the argument which the defendant would advancein relation to how that accounting should take place and in particular in relation towhat period accounting for receipts should apply. Mr Smith confirms that the Scenicwould prefer clarification of the paragraph in the defendant's favour but alternativelyseeks recall.[10] For the plaintiff, Mr Dale opposes recall and submits there is no power in theCourt to "clarify" an interpretation of the judgment. Mr Dale submits that in relationto the accounting for insurance proceeds the Court's order was "logical andappropriate".[11] Mr Dale further emphasised what he submitted was an unfairness to theplaintiff if this litigation were to be extended by a re-opening of the issue of relief. Hereferred especially to the very late stage before trial at which the plaintiff becameinformed as to the insurance arrangements which were in part the subject of paragraph[265](b).[12] In reply, Mr Smith restated the arguments which the defendant would advancein relation to the correct approach to accounting. He further noted that the Court hadawarded relief on a claim which had neither been pleaded nor specifically sought bythe plaintiff.[13] Although submissions were advanced in somewhat more detail than that, thatis a sufficient summary as the appropriate outcome here is clear.Analysis[14] Given the way in which the parties had identified the concept of a pre-contractual joint venture as a more appropriate description of the parties' relationshipthan those pleaded by the plaintiff, it was appropriate that the Court (in dismissing thethree pleaded claims) identified in the judgment the correct characterisation of therelationship.[15] Beyond that, however, I accept as submitted by Mr Smith that the plaintiff hadnot identified in its pleadings a claim for relief either in the terms covered by para[265](b) or at all.[16] I accept that the defendant was not put on notice that an order of the natureidentified in [265](b) might be in the Court's contemplation and that therefore thedefendant (or the plaintiff for that matter) did not have the opportunity to address intheir submissions the nature of arguments now addressed by Mr Smith in support ofthis application. This is not a matter of the substantive strengths or weaknesses of theargument each party might advance – it is a matter of each party having the properopportunity to respond to a remedy articulated by the other or identified by the Court.[17] The power to recall a judgment is contained in r 11.9 High Court Rules. Itprovides as follows:11.9 Recalling judgmentA Judge may recall a judgment given orally or in writing at any timebefore a formal record of it is drawn up and sealed.[18] The leading authority in this area is Horowhenua County v Nash (No 2), inwhich Wild CJ stated:2Generally speaking, a judgment once delivered must stand for better or worsesubject, of course, to appeal. Were it otherwise there would be greatinconvenience and uncertainty. There are, I think, three categories of cases inwhich a judgment not perfected may be recalled - first, where since the hearingthere has been an amendment to a relevant statute or regulation or a newjudicial decision of relevance and high authority; secondly, where counselhave failed to direct the Court's attention to a legislative provision or2 Horowhenua County v Nash (No 2) NZLR 632 (SC) at 633.authoritative decision of plain relevance; and thirdly, where for some othervery special reason justice requires that the judgment be recalled.[19] This approach to the Court's jurisdiction has been applied by the SupremeCourt,3 and by the Court of Appeal.4[20] In my view, this case clearly falls within the third category identified inHorowhenua County v Nash. There is a very special reason that requires thatparagraph [265](b) be recalled, namely to afford the parties the opportunity to presentsubmissions both as to whether there should have been a grant of relief at all and, ifso, in what terms.Orders[21] I direct:(a) paragraph [265](b) of the judgment is recalled and deleted;(b) paragraph [16] of the judgment is amended in lines 3 and 4 so as torefer to "PHL" instead of "SHIL".(c) paragraph [28] of the judgment is amended so as to read: "Mr Taylor"instead of "Mr Thompson".[22] I adjourn the proceeding to a further hearing at 10.00 am, Tuesday, 21 April2020 for any supplementary evidence and final submissions on the question of relief.Case management directions for that hearing will be dealt with in a separate Minute.Osborne JSolicitors:Neilsons Lawyers, AucklandMeares Williams, Christchurch3 Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 122, [2010] 1 NZLR 76.4 Unison Networks Ltd v Commerce Commission [2007] NZCA 49.This judgment was delivered by me on 13 December 2019 at pursuant to Rule 11.5of the High Court RulesRegistrar/Deputy RegistrarDate: