SARGON CAPITAL PTY LTD (IN REC AND IN LIQ) v COMPLECTUS LTD [2020] NZHC 2370

SARGON CAPITAL PTY LTD (IN REC AND IN LIQ) v COMPLECTUS LTD [2020] NZHC 2370 [11September 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-1345[2020] NZHC 2370BETWEEN SARGON CAPITAL PTY LIMITED (INRECEIVERSHIP AND IN LIQUIDATION)Plaintiff/RespondentAND COMPLECTUS LIMITEDDefendant/ApplicantHearing: 10 September 2020Appearances: M Kersey for the ApplicantNo appearance by or for the RespondentJudgment: 11 September 2020JUDGMENT OF GAULT JThis judgment was delivered by me on 11 September 2020 at 3:30 pmpursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarSolicitors:Mr M Kersey and Mr S Dymond, Russell McVeagh, Auckland[1] The defendant's application to dismiss this proceeding for want of prosecutionwas listed in the Duty Judge list yesterday.[2] No documents in opposition have been filed. Since the proceeding wascommenced the plaintiff, an Australian incorporated company, has been subject to theappointment of receivers, voluntary administrators and, on 8 April 2020, liquidators.Its former solicitors have been given leave to withdraw. The Australian solicitors forthe liquidators and receivers have confirmed that their client does not intend to defendthe application.[3] Despite the absence of opposition, I consider that the substantive nature of theapplication means that the Court must be satisfied that the grounds for dismissing theproceeding are made out before making the order sought.Approach to dismissal for want of prosecution[4] The application is made under r 15.2 of the High Court Rules 2016, whichprovides that:15.2 Dismissal for want of prosecutionAny opposite party may apply to have all or part of a proceeding orcounterclaim dismissed or stayed, and the court may make such order as itthinks just, if—(a) the plaintiff fails to prosecute all or part of the plaintiff's proceedingto trial and judgment; or(b) the defendant fails to prosecute all or part of the defendant'scounterclaim to trial and judgment.[5] The three main requirements are well settled. As Eichelbaum CJ said in Loviev Medical Assurance Society New Zealand Ltd:1 the applicant must show that the plaintiff has been guilty of inordinatedelay, that such delay is inexcusable, and that it has seriously prejudiced thedefendant. Although these considerations are not necessarily exclusive, and atthe end one must always stand back and have regard to the interests of justice,in this country, ever since New Zealand Industrial Gases Ltd v Andersons Ltd[1970] NZLR 58 it has been accepted that if the application is to be successful,the applicant must commence by proving the three factors listed.1 Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 248.Discussion[6] The proceeding concerns the circumstances leading up to and following theexecution of an agreement between the parties that allowed the plaintiff a number ofexclusive rights to negotiate with the defendant for the sale of 100 per cent of its sharesin Covenant Trustee Services Ltd and the New Zealand Guardian Trust Company Ltdfor a non-refundable exclusivity fee of $1,250,000.[7] The plaintiff has taken no substantive step in the proceeding since theappointment of receivers on 29 January 2020. Case management conferences and aninterlocutory fixture have been vacated. The delay amounts to seven months. In thecircumstances of this case, that is materially longer than acceptable. It is inordinate.[8] While the explanation for the delay is the plaintiff's financial difficultiesculminating in appointment of receivers, voluntary administrators and liquidators, thatdoes not excuse the delay. Indeed, its agents do not seek to do so but rather haveindicated they do not intend to defend the application. They have effectivelyabandoned the proceeding.[9] The most important factor is whether there is serious prejudice to thedefendant. Here, prejudice results from the passage of time. The defendant's evidencedoes not point to any special prejudice but Mr Kersey referred to the costs. They maywell be irrecoverable given the plaintiff's liquidation. The defendant has already hadto come back to court several times since January 2020. Such costs will continue.[10] Generally, the Court will not exercise its r 15.2 power before the claim isstatute barred,2 since no res judicata results from dismissal under r 15.2.3 Here, it isnot suggested that the causes of action in the amended statement of claim would bestatute barred. In Roe v Cullinane Turnbull Steele & Partners,4 Savage J said thatwhere the limitation period had not expired, the proceedings should not be struck out"save in rare and exceptional cases", referring to Birkett v James.52 Roe v Cullinane Turnbull Steele & Partners [1985] 1 NZLR 33 (HC) at 36, approved in Mead vDay [1985] 1 NZLR 100 (CA).3 Pople v Evans [1969] 2 Ch 255 at 267-268.4 Roe v Cullinane Turnbull Steele & Partners at 35.5 Birkett v James [1978] AC 297 (HL).[11] As Mr Kersey submitted, in Birkett v James Lord Diplock said:6For my part, for reasons that I have already stated, I am of opinion that thefact that the limitation period has not yet expired must always be a matter ofgreat weight in determining whether to exercise the discretion to dismiss anaction for want of prosecution where no question of contumelious default onthe part of the plaintiff is involved; and in cases where it is likely that if theaction were dismissed the plaintiff would avail himself of his legal right toissue a fresh writ the non-expiry of the limitation period is generally aconclusive reason for not dismissing the action that is already pending.[12] I accept that this reference to non-expiry of the limitation period generallybeing a conclusive reason for not dismissing the action applies in cases where it islikely that if the action were dismissed the plaintiff would issue a fresh proceeding.Mr Kersey submitted that in this case it is not likely that the plaintiff will start again.I accept that is the reasonable inference in the circumstances here. Whethercharacterised in that way, or as an exceptional case, I consider that dismissal withinthe limitation period may occur in this case. Although the plaintiff has not formallyconsented to the application, and the result could have been achieved more efficientlyby way of discontinuance of the claim, it is clear from its agents' correspondence thatit does not intend to defend the application and does not intend to pursue the claim.Therefore, the fact that no res judicata results from dismissal under r 15.2 is academic.[13] Standing back, I consider the interests of justice favour dismissal. It wouldlikely be different if the liquidators were opposing, explaining the delay and seekingto pursue the claim.[14] Finally, Mr Kersey indicated that the defendant intends to discontinue itscounterclaim rather than seek default judgment, while reserving its position on costsrelating to the counterclaim.Result[15] The proceeding is dismissed. The defendant is entitled to costs on a 2B basis.________________________________Gault J6 Birkett v James [1978] AC 297 (HL) at 322.