NAVARATNAM v HG METAL MANUFACTURING LIMITED [2021] NZCA 704

NAVARATNAM v HG METAL MANUFACTURING LIMITED [2021] NZCA 704 [20 December 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA545/2021 [2021] NZCA 704BETWEEN VASHIHARAN NAVARATNAMFirst Applicant SHERINE NAVARATNAM Second ApplicantAND HG METAL MANUFACTURING LIMITEDRespondentCourt: Kós P and Courtney JCounsel: First Applicant in person No appearance for Second Applicant T B Fitzgerald and B J Dominikovich for RespondentJudgment:(On the papers)20 December 2021 at 10.30 amJUDGMENT OF THE COURTA The application for an extension of time to file a notice of appeal is declined.B The first applicant is to pay the respondent costs for a standard application on a band A basis, with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Courtney J)Introduction[1] In 2020 HG Metal Manufacturing Ltd (HG Metal) obtained an arbitral award from a Singaporean arbitrator requiring Mr and Mrs Navaratnam to pay HG MetalSGD 404,736.10 and USD 1,230,187.73, plus interest. The award arose from their guarantee of Gayathri Steels Pte Ltd (September Guarantee). Mr and Mrs Navaratnam did not meet the award.[2] Mr and Mrs Navaratnam now live in New Zealand. HG Metal applied to the High Court for recognition and enforcement of the arbitral award pursuant to art 35 of sch 1 of the Arbitration Act 1996. Katz J granted HG Metal's application, finding that Mr Navaratnam had not made out any of the grounds under art 36 of sch 1 on which the Court might refuse enforcement (enforcement judgment). 1[3] Mr Navaratnam wishes to appeal Katz J's judgment. He did not file a notice of appeal within the prescribed time and has applied for an extension of time under r 29A of the Court of Appeal (Civil) Rules 2005 (Rules). HG Metal opposes the application. It says that Mr Navaratnam has consistently sought to delay and frustrate HG Metal's application, causing unnecessary cost to HG Metal; and that the proposed appeal has no realistic prospect of success.[4] The ultimate question when considering the exercise of discretion under r 29A is what the interests of justice require. 2 The following factors are relevant:(a) the length of delay;(b) the reasons for the delay;(c) the conduct of the parties, particularly the applicant;(d) any prejudice or hardship to the respondent or others with a legitimate interest in the outcome; and(e) the significance of the issues raised by the proposed appeal to the parties and generally.1 HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 1920 [Enforcement judgment]. Katz J's decision related only to Mr Navaratnam; the Judge noted that judgment had already been entered against Mrs Navaratnam and that judgment was under appeal: see n 1.2 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].[5] The merits of a proposed appeal may also be relevant in the sense that it may not be appropriate to extend the time to allow the filing of an appeal that is clearly hopeless.3Procedural history[6] An understanding of the procedural history of this matter will assist in considering a number of the relevant factors. 4[7] The significant steps in the progress of the proceeding to date have been:(a) 22 October 2020: HG Metal's application for recognition and enforcement of the arbitral award was set down for hearing on 10 December 2020 and Mr Navaratnam was directed to file his application for an order for refusal of recognition and enforcement and any affidavits by 5 November 2020. He failed to do so.(b) 29 October 2020: Mr Navaratnam applied to "rescind" the timetable orders made. The matter was listed for mention on 5 November 2020. Mr Navaratnam's request for a later date was refused. On 5 November 2020 Palmer J extended the time for Mr Navaratnam to file his application to refuse recognition and enforcement to 9 November 2020 and warned that he must comply with that timetable.(c) 10 November 2020: Mr Navaratnam failed to comply with the timetable. Instead he filed a memorandum seeking to vary the timetable to an unspecified time after his proposal for filing and service of documents had been resolved. On 11 November 2020 Mr Navaratnam filed his application, but did not serve it on HG Metal. We note that, not infrequently, Mr Navaratnam declined to serve documents on HG Metal's solicitors because of his view that they were not authorised to accept service.3 At [39].4 The details of the procedural history are drawn from the affidavit of Ms Crichton filed on behalf of HG Metal.(d) 30 November 2020: Mr Navaratnam filed submissions for the substantive hearing set down for 10 December 2020. In addition, he: filed a notice to provide further and better particulars; sought the production of documents from HG Metal; raised objections to the pleadings; raised objections to the evidence; and sought a variation to the timetable. HG Metal responded on 2 December 2020. Mr Navaratnam filed a further memorandum reframing the issues, renewing his objections and raising more questions. The hearing date was vacated.(e) 12 February 2021: Mr Navaratnam applied for an order staying the proceeding pending progress in Mrs Navaratnam's appeal against the judgment that had been entered against her by default. The application was declined.(f) 29 March 2021: The substantive hearing proceeded. Katz J delivered the enforcement judgment on 28 July 2021.5(g) 25 August 2021: Mr Navaratnam applied to set aside the enforcement judgment. That was opposed and, in the context of that application, Mr Navaratnam filed a notice to answer interrogatories and requested a transcript of the hearing.(h) 1 September 2021: Before the High Court had dealt with the application to set aside the enforcement judgment, Mr Navaratnam filed the application to extend time to appeal that is presently before this Court. The application was filed five working days outside the time for filing a notice of appeal. 6 The stated grounds for the application was that Mr Navaratnam had discovered that HG Metal had not complied with the requirements of art 35(2) of sch 1 of the Arbitration Act and with5 Enforcement judgment, above n 1.6 The last day for filing was 25 August 2021. The notice of appeal itself, dated 21 October 2021, was filed 41 working days out of time, after a direction by Goddard J in a minute dated 15 October 2021.the relevant laws of Singapore. No proposed notice of appeal was filed with the application.7(i) 22 September 2021: Katz J treated the application to set aside the enforcement judgement as a recall application, which she declined (first recall judgment)8 and, in a separate decision delivered the same day, made an order for indemnity costs and disbursements against Mr Navaratnam (costs judgment). 9(j) 28 September 2021: Mr Navaratnam filed an application to recall the first recall judgment and the costs judgment. A hearing date was allocated for 7 October 2021.(k) On 6 October 2021 Mr Navaratnam requested that Katz J recuse herself. On 7 October 2021 Mr Navaratnam requested an adjournment of the hearing. He did not appear at the hearing. Katz J delivered a lengthy decision on 8 October 2021 declining the adjournment, dismissing the application that she recuse herself and dismissing the recall application (second recall judgment). 10(l) 11 October 2021: Mr Navaratnam filed a memorandum seeking to have the second recall judgment recalled so that he could be heard on the applications, having mistakenly believed that the hearing would not proceed until he had been advised of the outcome of the adjournment request. In a minute of the same day Katz J noted that the costs judgment had already been sealed so that the Court was functus officio in relation to that decision.7 See [7(m)] below.8 HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 2497. See [7(g)] above.9 HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 2498.10 HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 2701 [Second recall judgment]. Mr Navaratnam has since has filed a separate appeal against the first recall judgment and the costs judgment (CA623/2021). The notice of appeal was rejected for filing by the Registry in this Court and a review of the Registrar's decision was declined: Navaratnam v HG Metal Manufacturing Ltd [2021] NZCA 571.(m) 15 October 2021: Goddard J convened a telephone conference in relation to Mr Navaratnam's application in this Court for an extension of time to appeal the enforcement judgment. Mr Navaratnam was directed to file a proposed notice of appeal together with an affidavit in support of the application and submissions.(n) 21 October 2021: Mr Navaratnam filed his proposed notice of appeal in relation to the enforcement judgment.(o) 1 November 2021: Mr Navaratnam filed an affidavit and submissions for his application for an extension of time to appeal the enforcement judgment.[8] It is notable that during the course of the proceeding in the High Court Mr Navaratnam was warned several times of the need for compliance with timetable directions.Consideration of factors relevant to the extension of timeLength and reasons for delay[9] Mr Navaratnam says that his delay in filing the notice of appeal is directly related to HG Metal's failure to comply with the High Court Rules 2016, art 35(2) of sch 1 of the Arbitration Act and the provisions of the Singaporean International Arbitration Act ch 143A (IAA 143A). This is, in fact, one of the substantive grounds of the proposed appeal. It does not explain the failure to file the appeal within time. To the contrary, in his (unsworn) affidavit Mr Navaratnam says that he discovered the relevant legislative provisions on 29 July 2021, the day after the enforcement judgment was released. 11 There was, therefore, plenty of time to file an appeal.11 Mr Navaratnam filed a memorandum with his unsworn affidavit explaining that it was unsworn because of difficulties associated with the (then) COVID-19 Alert Level 4 restrictions and undertook to file a compliant affidavit as soon as circumstances reasonably permitted. Since those restrictions were lifted some weeks ago we would have expected a sworn affidavit to have been filed by now but it has not.[10] The only apparent reason for the delay was Mr Navaratnam's decision to apply to recall Katz J's enforcement judgment rather than file a notice of appeal. However, it is clear from the procedural history of this matter that Mr Navaratnam, although self-represented, understands the rules of court and is capable of navigating them.[11] We consider that the delay has not been satisfactorily explained. It is, however, a short delay of five working days and, in itself, would not justify refusing leave.Conduct of the parties and prejudice to HG Metal[12] As noted, Mr Navaratnam says that the delay is directly related to HG Metal's failure to comply with the High Court Rules, art 35(2) of sch 1 of the Arbitration Act and the provisions of the IAA 143A. He says that because of this HG Metal cannot be prejudiced by the delay.[13] We do not accept this submission. Rather, we accept HG Metal's submission that Mr Navaratnam has done everything possible to delay judgment and frustrate its attempts to enforce the arbitral award and this has increased HG Metal's costs. We are satisfied from the procedural history outlined earlier that Mr Navaratnam has taken every opportunity to impede progress in this matter. Such conduct prevents the efficient disposal of court business and increases the costs for other parties. We approach Mr Navaratnam's application on the basis that it follows a history of unjustifiable delay on his part.Public importance[14] Mr Navaratnam submits that the proposed appeal is of public importance in relation to recognising the interests, rights and obligations of parties to an arbitration agreement, as well as New Zealand's international obligations regarding international arbitrations. We do not accept this. The basis on which international arbitral awards are to be enforced in New Zealand and the (limited) circumstances in which such enforcement can be challenged are the subject of clear legislative provisions and settled law. The proposed appeal would turn on its own facts.The apparent merits of the proposed appeal[15] Mr Navaratnam's proposed notice of appeal and affidavit disclose a number of grounds of appeal. Some are plainly not tenable because they lack any specific assertion of error and we disregard them. 12 Otherwise, Mr Navaratnam proposes two broad grounds of appeal. The first is that HG Metal has failed to discharge the onus required under art 35(2) of sch 1 of the Arbitration Act to provide proper authentication of the award and the arbitration agreement. This issue does not appear in the notice of appeal but is raised in Mr Navaratnam's affidavit and submissions. The second proposed ground is that the Judge failed to properly address his argument that arbitration of liability under the September Guarantee was precluded by an earlier decision of the High Court of Singapore in related litigation between the parties.13[16] There is a low threshold for the recognition and enforcement of arbitral awards under the Arbitration Act. This reflects the purposes of the Arbitration Act, which include facilitating the recognition and enforcement of arbitration agreements and arbitral awards. 14 Under art 35(1) of sch 1 an arbitral award must be recognised as binding and, upon application in writing, must be enforced by entry as a judgment in terms of the award, or by action, subject only to the limited grounds specified in art 36 for refusing recognition and enforcement. Article 35(2) simply requires that the party relying on an award or applying for its enforcement supply the duly authenticated original award or a duly certified copy and, for an award recorded in writing, the original or duly certified copy of the arbitration agreement (and, if not in English, a duly certified translation).[17] In his affidavit Mr Navaratnam explains that on 29 July 2021, after receiving the enforcement judgment and in preparation for his appeal:I came across the subsidiary legislations of the International Arbitration Act 143A [IAA 143A]. These legislative provisions provided evidence of the fact that [HG Metal] did not satisfy its onus of proof as per article 35(2) of the Arbitration Act 1996 and the Applicable law in Singapore.12 Numbering of the grounds in the notice of appeal begins at 6 and the grounds numbered 6, 7, 11, 13 and 14 make complaints such as "administrative" and "procedural" errors resulting in Mr Navaratnam not being given a fair opportunity to present his case and failing to apply the rules of evidence without specifying the consequences.13 Grounds numbered 8,9,10 and 12.14 Arbitration Act 1996, s 5(e).[18] Later in the affidavit Mr Navaratnam asserts that the award and arbitration agreement were not authenticated or certified by the person specified in IAA 143A. Specifically, "the Award was a copy of a certified true copy from a Solicitor in Singapore" and the "Arbitration Agreement was a certified true copy of a copy of an Arbitration Agreement and was certified by a solicitor in Singapore".[19] In his submissions, Mr Navaratnam asserts that the Judge "only had authority to recognise and enforce the terms of authenticated or duly certified award in accordance to the provisions of the Arbitration Act 1996 and the High Court Rules specific to Arbitration proceedings and IAA 143A".[20] Under IAA 143A authentication of an award and arbitration agreement can only be made by specified persons. These include "the Registrar and Deputy Registrar of the Singapore International Arbitration Centre". 15[21] Mr Navaratnam had raised the issue of authentication of the award in the High Court. Katz J recorded that she had before her "an affidavit attaching duly certified copies of the Award and September Guarantee". 16 In considering Mr Navaratnam's argument that the award was not properly authenticated, the Judge said:[22] The affidavit in support of the Enforcement Application was sworn by HG Metal's Singaporean solicitor, Mr Chow Jie Ying, rather than an employee of HG Metal. There is no requirement, however, that the supporting affidavit be sworn by a director or employee of the company. The affidavit was clearly filed on behalf of HG Metal, in support of its application. There is no substance to this complaint.[24] The Award has clearly been properly certified. It is sealed on the first page where it says, "Registered in SIAC Registry of Awards as: Award No. 059 of 2020 on 24 April 2020". Mr Chow has provided expert evidence that this is all that is required as a matter of Singaporean law.[22] We do not have Mr Chow's affidavit before us, nor a copy of the certified award to which the Judge referred. Mr Navaratnam has not identified any specific error by15 International Arbitration Act (Chapter 143A) (Singapore), s 19C(3); and International Arbitration (Appointed Persons Under Section 19C) Order 2009 (Singapore), cl 3(a).16 Enforcement judgment, above n 1, at [13].the Judge in finding that the award was properly certified. Given that this ground does not appear in the proposed notice of appeal and that Mr Navaratnam's affidavit contains nothing to support his assertion regarding authentication we cannot see the basis on which Mr Navaratnam might impugn the Judge's finding.[23] We turn to the second proposed ground of appeal, the Judge's rejection of Mr Navaratnam's application under art 36 for refusal of recognition and enforcement. The limited grounds provided for in art 36 for refusing recognition are:36 Grounds for refusing recognition or enforcement(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only—(a) at the request of the party against whom it is invoked, if that party furnishes to the court where recognition or enforcement is sought proof that—(i) a party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication on that question, under the law of the country where the award was made; or(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party's case; or(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or(b) if the court finds that—(i) the subject matter of the dispute is not capable of settlement by arbitration under the law of New Zealand; or(ii) the recognition or enforcement of the award would be contrary to the public policy of New Zealand.(2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v), the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.(3) For the avoidance of doubt, and without limiting the generality of paragraph (1)(b)(ii), it is hereby declared that an award is contrary to the public policy of New Zealand if—(a) the making of the award was induced or affected by fraud or corruption; or(b) a breach of the rules of natural justice occurred—(i) during the arbitral proceedings; or(ii) in connection with the making of the award.[24] We understand Mr Navaratnam's argument to be that because the guarantee on which HG Metal obtained its award had previously been the subject of proceedings in the High Court of Singapore, the matter was res judicata and could not have been raised in the context of the arbitration, meaning the grounds in art 36 for refusing recognition of the award were engaged.[25] For the background to this argument, we note the Judge's summary of the proceedings in the High Court of Singapore: 17[4] Between June 2013 and February 2014, Gayathri placed various sales orders with HG Metal for the supply of steel and steel products. In order to facilitate payment of the sums due under the sales agreements, HG Metal entered into two separate guarantee agreements with Mr and Mrs Navaratnam, Gayathri's directors. The first guarantee was entered into on or about 24 July 2013 ("the July Guarantee"). The second guarantee was entered into on or about 24 September 2014 ("the September Guarantee").17 Enforcement judgment, above n 1 (footnotes omitted).[5] A dispute arose between HG Metal and Gayathri in relation to amounts allegedly owed to HG Metal by Gayathri. HG Metal accordingly issued legal proceedings in the High Court of Singapore against Gayathri, and also Mr and Mrs Navaratnam as guarantors. HG Metal was successful against Gayathri and the Court entered judgment in the full amount claimed. The pleaded claim against Mr and Mrs Navaratnam (the second and third defendants) was unsuccessful. That claim was based on the July Guarantee. The Court held, however, that the July Guarantee had been superseded by the September Guarantee. Choo Han Teck J concluded that:Under the September Guarantee, [Mr and Mrs Navaratnam] would have been jointly and severally liable for the Outstanding Sums. Although counsel for the Plaintiff submitted at trial that the Plaintiff is relying on both the July Guarantee and the September Guarantee, the Plaintiff specifically pleaded in its Reply that it is "not relying on the terms of the September Guarantee" in its Statement of Claim and chose to rely on the July Guarantee instead. Since that is the Plaintiff's claim, I am making no orders against [Mr and Mrs Navaratnam], having found the July Guarantee to have been superseded.[6] As the September Guarantee had superseded the July Guarantee, HG Metal was prohibited from bringing any claims against Mr Navaratnam in the High Court, because the September Guarantee (unlike the July Guarantee) included an arbitration clause.[26] In his notice of appeal dated 21 October 2021 Mr Navaratnam describes the dispute arising in his application for refusal to recognise enforcement of the award as being "the validity of the arbitration agreement, conduct of the arbitration proceedings and the jurisdictional authority of the tribunal to adjudicate on [the dispute] and the making of the [award]". He says that the High Court did not address his submissions that art 36 (1)(a)(iii), (iv) and (2)(b)(ii) were engaged. His submissions included that the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the arbitration, 18 that the arbitral procedure was not in accordance with the agreement of the parties and/or was not in accordance with Singaporean law, 19 and that recognition and enforcement will be contrary to New Zealand public policy because it violates the principle of res judicata. 20[27] In his submissions Mr Navaratnam asserted that:18 Arbitration Act, sch 1, art 36(1)(a)(iii).19 Article 36(1)(a)(iv).20 Article 36(2)(b)(ii).The Honourable Courts will be in violation of public policy – to protect individuals from repeated suits, if it denies [Mr Navaratnam] his right of appeal and enforces the [entry of award as judgment].[Mr Navaratnam] was seeking to set aside the recognition of the [award] on grounds specified in Article 36 of Schedule 1 of the Arbitration Act 1996. The dispute is on the validity of the arbitration agreement, conduct of the arbitration proceedings and the jurisdictional authority of the tribunal to adjudicate on [dispute 2] in the making of the [award].[28] It is clear that the Katz J understood the nature of the argument Mr Navaratnam was advancing. Early in her decision, the Judge noted that Mr Navaratnam had challenged the jurisdiction of the arbitral tribunal on the basis that "HG Metal had made the same claims in the High Court [of Singapore] proceeding and the High Court had dismissed those claims on their merits". 21 The Judge cited from the award, where the arbitrator dismissed this argument: 22In other words, although in oral argument [HG Metal's] counsel relied on both guarantees, the High Court found based on unequivocal language in [HG Metal's] reply brief that its claims were based solely on the July Guarantee, and that because that agreement had been superseded by the September Guarantee, those claims under the July Guarantee must be dismissed. The Court did not dismiss any claims under the September Guarantee (which it could not have done in any event given the agreement's arbitration clause), and in fact went so far as to declare that "[u]nder the September Guarantee, [Mr and Mrs Navaratnam] would have been jointly and severally liable for the Outstanding Sums".[29] Later, the Judge recorded Mr Navaratnam's submissions on this point:[34] Mr Navaratnam submitted that that the September Guarantee is not enforceable against him because HG Metal repudiated the September Guarantee (including the arbitration agreement included within it) by instituting legal proceedings in the Singapore High Court. A related submission was that any issues relating to the September Guarantee are now res judicata, as a result of the High Court judgment. Similar arguments were advanced successfully in the arbitration.[30] The Judge found that HG Metal's proceeding in the Singapore High Court did not amount to a repudiation and, even if it had, Mr Navaratnam clearly had not accepted it.23 On the issue of res judicata, the Judge considered that the arbitration21 Enforcement judgment, above n 1, at [9].22 At [10].23 At [36]–[37].clause in the September Guarantee meant that the High Court of Singapore had no jurisdiction to resolve issues under that guarantee. 24 In any event, the High Court of Singapore had made clear that it was not making a determination relating to the September Guarantee. 25[31] The Judge's reasoning is plainly right. As the Judge noted, the regime of the Arbitration Act is intended to facilitate commercial arbitration by enhancing predictability and expeditiousness.26 One means of achieving this end is the limited recourse against awards and their enforcement. Mr Navaratnam seeks to attack the substance of the arbitral award but that is not generally permitted,27 and we are satisfied that there is no tenable argument that the grounds provided for in art 36(1)(a)(iii), (iv) or (2)(b)(ii) are engaged so as to justify refusal to recognise or enforce the award.Conclusion[32] Mr Navaratnam's delay in filing his notice of appeal of appeal was short. However, his conduct in this proceeding to date has been unsatisfactory and has led to unnecessary cost for HG Metal. The proposed grounds of appeal have no apparent merit. In these circumstances we have reached the view that the interests of justice do not require an extension of time to be granted.Result[33] The application for an extension of time to file a notice of appeal is declined.[34] The first applicant is to pay the respondent costs for a standard application on a band A basis, with usual disbursements.24 At [39].25 At [39].26 At [19].27 Mr Navaratnam can only challenge the substance of the arbitral award in Singapore as that is the law under which the award was made: Convention on the Recognition and Enforcement of Foreign Arbitral Awards 330 UNTS 3 (opened for signature 10 June 1958, entered into force 7 June 1959), art V(1)(e).Solicitors:Bell Gully, Auckland for Respondent