MCBRIDE STREET CARS LTD V RAPANA AND ORS HC DUN CIV 2006-412-000053

MCBRIDE STREET CARS LTD V RAPANA AND ORS HC DUN CIV 2006-412-000053 3 August 2006IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY CIV 2006-412-000053UNDER The District Courts Act 1947 IN THE MATTER OF an Appeal pursuant to Section 72 of that Act BETWEEN MCBRIDE STREET CARS LTD Appellant AND TUI JOY MARIA RAPANA First Respondent AND THE ATTORNEY-GENERAL Second Respondent AND REILLY'S TOWAGE & SALVAGE 2002 LIMITED Third Respondent Hearing: 20 July 2006 Appearances: L A Andersen for Appellant D P Robinson for First and Third Respondent Judgment: 3 August 2006JUDGMENT OF HON. JUSTICE JOHN HANSEN A The appeal against the refusal to grant exemplary damages is allowed. Exemplary damages of $1,500 awarded. B The appeal against the third respondent is dismissed. ____________________________________________________________________ REASONS[1] Following a lengthy hearing between 30 May and 3 June 2005 Judge Roderick Joyce Q.C., delivered a reserved decision on 14 December 2005. They were consolidated proceedings, one with the same parties as this appeal, and theother being a claim by Mr M.D.Cottle against the Police. In the end result, Mr Cottle recovered general damages of $6500.00, and McBride Street Cars Ltd recovered $500 for unlawful arrest/false imprisonment and trespass. Mr Cottle's award was against the Attorney General in respect of the New Zealand Police, and the company's award was against the first respondent, a bailiff. [2] The Judge rejected a claim for exemplary damages against Ms Rapana, a claim for unlawful interference with trade, and a claim against the third respondent in conversion.The Appeal[3] The appeal is limited in scope. Initially it was an appeal against the failure to award exemplary damages against the first respondent in respect of her trespass, a dismissal of the appellant's claim for the tort of unlawful interference with trade against the first and second respondents, and a determination that the third respondent had not converted the appellant's vehicle. [4] At the commencement of the hearing Mr Andersen withdrew the appeal against the dismissal of the claim for the tort of unlawful interference with trade. [5] Therefore, this Court is only concerned with the failure of the learned District Court Judge to award exemplary damages against the first respondent, and his determination that the third respondent had not converted the appellant's vehicle.SubmissionsExemplary Damages[6] Mr Andersen referred to various paragraphs of the learned District Court Judge's decision. He said there were findings that the bailiff trespassed on the appellant's property after being told to leave by driving her car back onto the property and remaining there. That she also unlawfully seized a vehicle belonging tothe appellant, and that Mr Cottle had been wrongfully arrested. He stressed the finding that the bailiff had a fundamental lack of understanding of the difference between an individual trading as a firm, or trading name and where a business was trading as a limited liability company. He said there was a clear finding that the bailiff had no interest in listening to what was said to her by way of explanation because she was "on a mission". He said it was also clear that she was untroubled by Mr Cottle becoming upset, and haranguing which is made clear from the 111 call. He pointed to the finding at paragraph [59] when the son tried to have a sensible and rational discussion with the bailiff, including showing her a High Court judgment that made clear the difference between the personal and the corporate in relation to the appellant, but she unreasonably refused to listen. Finally, he pointed to the finding that she had not sought to take any registered car as she had established they belonged to McBride Street Cars. He submitted it should have been clear the same applied to the unregistered vehicles. [7] Mr Andersen relied on the decision of the Privy Council in Bottrill v A [2003] 2 NZLR 721, and submitted that it was clear the actions of the bailiff in this case, judged on those principles, warranted a modest award of exemplary damages. [8] On the other hand, Mr Robinson submitted that the Judge had correctly concluded that the activity of the first respondent fell short of what was required to meet the threshold for exemplary damages. He submitted that this was not a case of intentional wrongdoing, and it could not be said that the first respondent was aware of the risks involved, but proceeded with reckless indifference, so the conduct evoked a sense of outrage. [9] Referring to paragraph [37] of Bottrill, he said the absence of intentional wrong doing and conscious recklessness in this case points strongly away from an award of exemplary damages. [10] He said the Judge had made a finding of fact that while the first respondent was irresponsible she had not been outrageously so. He said the Judge was right to treat her ignorance as a significant mitigating factor weighing against an award of exemplary damages. He said this ignorance was attributable to her training, and wasa factor external to her. He submitted that in terms of McDermott v Wallace [2005] 3 NZLR 661 at paragraph [74] it was proper to look at such contextual matters.Conversion[11] Mr Andersen submitted that the actions of the third respondent in entering into the appellant's premises at the first respondent's request, and towing the vehicle from its premises and retaining it in its yard until 6 March 2003 constituted conversion by taking. Mr Andersen submitted it was conduct incompatible with the recognition of McBride Street Cars' right to display the car for sale on its car lot. [12] He submitted that it clear the learned District Court Judge at paragraph [258] held Reillys enjoyed statutory immunity. He submitted that this was an incorrect application of the law as the third respondent could only claim statutory immunity through the first respondent. Given the Judge's finding of bad faith against the first respondent, meaning she was not indemnified, such indemnity is not available to the third respondent. [13] Mr Andersen further submitted, by reference to Lamru Pty Limited v Kation Pty Limited (Supreme Court of NSW Equity Division, 4222/96, 8 July 1998) and Aitken Agencies Limited v Richardson [1967] NZLR 65,67, a proper assessment of quantum of the damages was to look at the value of a comparable rental vehicle during the period the Toyota Starlet was converted. [14] Mr Robinson submitted that this must have been a conversion by detaining because it was the bailiff who executed the distress warrant and seized the vehicle. He relied on the passage at para 12.3.02(2) of The Law of Torts in New Zealand(Todd et al 4th Ed. Brookers 2005). He said in the circumstances there was no request for the return of the goods, or any refusal on the part of the third respondent to deliver up such goods, therefore there could not be conversion by detaining. [15] He criticised the calculation of damages, and submitted that reference to the cost of a replacement rental car was unhelpful. He said the reality was in this casethe appellant had failed to prove any loss, and without proof of loss there is no actual conversion, and the matter would fail on that ground as well.DiscussionExemplary Damages[16] The legal principles applicable in determining whether or not exemplary damages should be awarded were settled by the Privy Council in Bottrill. In this case the Judge has correctly identified the principles, the submission effectively being he has misapplied the facts to them. In Bottrill the Privy Council at paras.[21] to [28] set out the threshold at some length:Thus, in distinguishing the essentially different roles of compensatory damages and exemplary damages Lord Devlin said a jury should be directed that if, but only if, the amount they have in mind to award as compensation is "inadequate to punish [the defendant] for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it", then they might award exemplary damages: see Rookes v Barnard [1964] AC 1129 at p 1228. In Cassell & Co Ltd v Broome [1972] AC 1027 at p 1060, Lord Hailsham of St Marylebone LC approved this passage as a most valuable and important contribution to the law of exemplary damages. [22] In principle the limits of the Court's jurisdiction to award exemplary damages can be expected to be coextensive with this broad–based rationale. The Court's discretionary jurisdiction may be expected to extend to all cases of tortious wrongdoing where the defendant's conduct satisfies this criterion of outrageousness. Any departure from this principle needs to be justified. Otherwise the law lacks coherence. It could not be right that certain types of outrageous conduct as described above should attract the Court's jurisdiction to award exemplary damages and other types of conduct, satisfying the same test of outrageousness, should not, unless there exists between these types a rational distinction sufficient to justify such a significant difference in treatment. [23] The next point to note is that, in the nature of things, cases satisfying the test of outrageousness will usually involve intentional wrongdoing with, additionally, an element of flagrancy or cynicism or oppression or the like: something additional, rendering the wrongdoing or the manner or circumstances in which it was committed particularly appalling. It is these features which make the defendant's conduct outrageous. Either that or at the very least, in cases of negligence, the defendant was aware of the risks involved but he proceeded with a reckless indifference such that this conduct, too, evokes a sense of outrage. Such conscious recklessness approaches very closely to intentional wrongdoing.[24] Overwhelmingly, in the exceptional cases where questions of exemplary damages fall to be considered at all, the defendant's misconduct will be of a subjectively advertent nature as just described. Overwhelmingly, in cases of negligence, whose essential ingredients are objective in character ("ought to have known"), an award of exemplary damages will be appropriate only where the defendant's wrongdoing was intentional or consciously reckless. [25] It is not surprising, therefore, that when describing conduct meet for an award of exemplary damages Judges have often used adjectives or phrases primarily, or even solely, aimed at advertent conduct. These include: malicious, vindictive, high–handed, wanton, wilful, arrogant, cynical, oppressive, and contumelious disregard of the plaintiff's rights. [26] However, if experience in the law teaches anything, it is that sooner or later the unexpected and exceptional event is bound to occur. It would be imprudent to assume that, in the absence of intentional wrongdoing or conscious recklessness, a defendant's negligent conduct will never give rise to a justifiable feeling of outrage calling for an award of exemplary damages. "Never say never" is a sound judicial admonition. There may be the rare case where the defendant departed so far and so flagrantly from the dictates of ordinary or professional precepts of prudence, or standards of care, that his conduct satisfies this test even though he was not consciously reckless.‡ [27] Indeed, the "advertent conduct only" limitation, as it may be called, adopted by the Court of Appeal presupposes this is so. The very purpose of adopting this limitation is to exclude from the scope of the Court's jurisdiction to award exemplary damages cases which otherwise would fall within it. The Court's definition of the boundary is intended to exclude all cases where the defendant's wrongdoing was not deliberate or consciously reckless, and it is intended to do so regardless of the circumstances. Thus, the limitation serves to exclude cases from the jurisdiction even if they satisfy the outrageous conduct criterion. Cases not satisfying this criterion are outside the Court's jurisdiction anyway. [28] So the crucial question arises: considered as a matter of principle, what is the basis on which cases of outrageous but "inadvertent" conduct are to be excluded from the scope of the Court's jurisdiction to award exemplary damages? Why should the Courts set themselves to exclude exemplary damages in every such case, whatever the circumstances? Such a rigid exclusion accords ill with the rationale of this jurisdiction. It is at odds with the underlying principle, and in that regard it is an artificial limitation.[17] At paragraph [44] the Board went on to refer to other cases that used strong language to record the threshold. It is clear that the threshold is a high one, but in this case I am satisfied it has clearly been reached. In my view, the Judge has focussed totally on the first respondent's ignorance of the legal position in determining her actions fell short of that required to meet the threshold, which has rather missed the point. It has also overlooked his own critical findings.[18] I bear in mind that the pleading against the first respondent is in trespass, and the action complained of in the pleading is the initial trespass when the first respondent was told to leave the premises because all property was owned by the appellant, and then after her vehicle was pushed from the premises the further trespass by her driving back on and parking it within the premises of Tokyo Auto Town. She locked it to prevent it being removed from the premises. [19] Mr Robinson correctly submitted it is important to look at matters in a "contextual" setting. While this involves taking into account the first respondent's ignorance of the true legal position, it involves looking at matters somewhat more broadly. [20] In McDermott v Wallace the Court of Appeal stated:[73] MacKenzie J narrowed the appropriate field of evaluation to what might be termed the "immediate" causative element in the crash. He then assessed "the outrageousness" of the conduct solely against the aspects so identified: effectively, the sudden avoidance manoeuvres. [74] We think this was wrong in principle. We agree that those manoeuvres were at the heart of this case. But it cannot be said, in a claim for exemplary damages, that the other factors were not (at least) contextual, and of some significance.[21] Here in this case there are other contextual matters raised by the evidence, and found against the first respondent by the learned District Court Judge. [22] Also, I cannot agree with the assessment that the behaviour occurred because of ignorance. While it is apparent that the training of the first respondent left something to be desired, and it was "regrettably clear that she had no grasp at all of the difference between an individual trading under a firm or trading name, and an individual the legal vehicle for whose business was an incorporated company" the matter does not end there. [23] While the Judge noted the first respondent's ignorance and lack of training, he has not found this caused her to act as she did. At [242] to [244] of the judgment the Judge said:[242] Unfortunately, in my view Ms Rapana's zeal got the better of her. She was on a mission in which she had determined not to fail. So she closed her eyes and ears even to what – the quite reasonable in his conduct – Dean Cottle tried in vain to get across to her. At least from that point on, any claim to good faith deserted her. [243] Her ignorance of legal fundamentals (that one would have thought she might have been trained in) did not help (though one might say that ignorance of the law does not itself equate bad faith); but the real and effective driver of her actions was a misguided determination to show herself to be a bailiff who would not be beaten. [244] Thus is the only conceivable reason why she did not want to know or hear the Cottles' side of the story; not even from the reasonable and rational in all respects Dean Cottle. And she compounded things to her detriment by saying nothing to Sergeant Bridgman of what Dean Cottle had tried to have her take on board.That is a clear finding that the cause of her actions was not ignorance of the true legal position, but a determination to have her way regardless. [24] What the findings illustrate is that the first respondent wilfully and intentionally closed her ears and her mind to any explanations proffered to her. That extended to the explanations from Mr Dean Cottle that the Judge found were reasonable and rational. [25] That does not go to training, or ignorance of legal fundamentals. It is the wilful act of carrying out activities regardless of the explanations or circumstances of the people she was dealing with. Indeed, the Judge's finding of what the real driver of her actions was shows this to be the wilful and intentional actions of someone who would have her way regardless of explanations or circumstances. [26] In my view, this clearly satisfies the test set out in Bottrill, and even if it fell short of that there was clearly reckless indifference on the part of the first respondent, who having checked that the registered cars were in the name of the appellant, must have been aware of the risks involved in her continued actions in refusing to listen to the rational and reasonable explanations being proffered. [27] The findings, in my view, establish intentional behaviour with an element of flagrancy or cynicism. Further, in terms of the cases referred to at paragraph [44] of the Board's decision in Bottrill the conduct was "outrageous conduct" (Taylor v Beer[1982] 1 NZLR 81); "outrageous manner" (Donselaar v Donsellar [1982] 1 NZLR 97); was with a high-handed disregard of the appellant's rights or "or the like outrageous conduct" (Green v Mathieson [1989] 3 NZLR 54); and "was truly outrageous conduct which cannot be adequately punished in any other way" (Cable v Robertson (CA125/95 10 May 1996)). [28] With respect to the learned District Court Judge this wilful refusal to consider explanations and the determination to have her way went beyond the irresponsible. It was deliberate, outrageous and high handed. There was in the circumstances a "deliberately and outrageous" disregard for the appellant's rights. It falls within the terminology set out in [27] above. [29] It follows that I am satisfied the first ground of appeal must succeed. It is hard to think of a worse example of actions by a public official who is invested with significant powers. The truth is the first respondent was determined to seize a car regardless of the circumstances, the explanations offered, or the propriety of her actions. For whatever reason she determined that she was going to put Mr Cottle in his place. [30] That leaves the question of quantum. The claim for exemplary damages is said to directly arise from the trespass. Mr Andersen accepted it should be modest. The appellant is awarded exemplary damages of $1500.00, which I consider to be appropriate to mark the nature of the first respondent's behaviour.Conversion[31] Mr Andersen's submission that the refusal to find in conversion against the third respondent was because of a belief in a statutory immunity is not correct in my view. There is force in Mr Robinson's submission that this was simply obiter, and the real finding was that the Judge found no palpable evidence of loss, and no evidence of relevant wrong doing in any event is correct. The Judge clearly held there was no evidence of loss.[32] If the Judge was saying that the third respondent enjoyed a statutory immunity I am satisfied it would be wrong. Such a finding, with respect, would read too much into the authority relied on. [33] That authority is Kewene v Buckland & Sons & Another [1928] NZLR 818. In that case the bailiff acting under a distress warrant issued in the Magistrate's Court seized certain sheep which he believed to be the property of the judgment debtor. He instructed a firm of auctioneers to sell them to satisfy the claim of the judgment creditor. This was done and the proceeds were paid into Court. Subsequently the plaintiff alleged that the sheep sold were the property of an Estate of which he was the administrator. He made a claim against the auctioneers as defendants for damages in conversion. The bailiff was joined as co-defendant upon the application of the auctioneers. [34] That case dealt with the then s 183 of the Magistrates Court Act 1908, which provides:All proceedings against any person for anything done in pursuance of this Act shall be commenced within three months after the act committed and not afterwards, and notice in writing of any such action and of the cause thereof shall be given to the defendant one month at least before the commencement of the action.[35] At page 830 Smith J stated:Upon this authority I think that where a bailiff is directed to distrain the goods of A, and where in all good faith he distrains on the goods of B, believing them to be the goods of A, he is entitled to the protection afforded by s.183 of the Act, in that what he did was done in pursuance of the Act. If the bailiff is so protected, so also should be the defendant company, for I have held that in this case the defendant company is a person within the section. It is clear also that a party at whose instance the bailiff acts is protected by the section: Wyeth v Kitto; Gordon v Buttery. It would be strange if the bailiff's agent was not similarly protected. Moreover, if the agent were not protected, the agent would be liable in conversion without any limitation of action beyond the ordinary period of six years, whereas the bailiff and the party upon whose application both the bailiff and his agent have moved would have the benefit of the limitation of three months conferred by s.183. If judgment were obtained against the agent after the expiration of three months he would in certain cases be prevented from enforcing a right of recourse against his principle, to which he might otherwise be entitled: Shieffield Corporation v Barclay.[36] It follows that the protection afforded to the bailiff, or in this case the third respondent, flows through from the actions of the bailiff. In Kewene it is clear that the Judge found the bailiff had acted in good faith. However, that may be contrasted with the present case where the bailiff was found to have acted in bad faith. In those circumstances it does not seem to me that the question of immunity arises. [37] However, I am satisfied the ratio of the decision of the learned District Court Judge was that in this case no damage had been proved. That means, whether it is conversion by detaining, as Mr Robinson submitted, or conversion by taking, as Mr Andersen submitted, proof of damage is an essential part of establishing the tort (seeThe Law of Torts in New Zealand at para 26.2). [38] In this case I am satisfied a finding loss has not been established was available to the learned District Court Judge. While Mr Andersen was correct to refer to the relevant passage in Todd (by reference to the 3rd Edition), the damages proved in this case I do not consider are of any assistance. [39] Lamru Pty Limited referred to by Mr Andersen is a case where the Judge found that the rental value of a property was the most accurate assessment of the value of the property to the trespasser, and thus the proper measure of damages. The example given from Aitken Agencies is to similar effect. Mr Andersen also referred to Flowfill Packaging Machinery Limited v Fytone Pty Limited (BC9302155, Supreme Court of NSW, Equity Division, 22 September 1993) where Young J stated:In the ordinary case of conversion the appropriate damages are the value of the goods converted as at the date of conversion plus hiring charges of a substitute chattel until the chattel was reasonably replaced. Where the original chattel is returned then there must be credit given for its value at the date of restoration.[40] Further in Hillesden Securities Limited b Ryjak Limited & Another [1983] 2 All ER 184, a vehicle being leased was sold. The purchasers were held liable for the hire value of the vehicle until its return as the owner had lost the use of the car over the whole period. At page 188 Parker J said:In the case of conversion of a profit earning chattel which a defendant has used for his own benefit, the owner can recover by way of damage a hire charge[41] However, as Mr Robinson submitted, awards of damages in conversion must be grounded in reality. Kuwait Airways Corporation v Iraqi Airways Company (No.3) [2002] 3 All ER 209 at 64 to 67 confirms that damages must relate to the losses actually sustained. [42] Lamru it must be noted was an action for mesne profits that is actionable without proof of loss, which is not the case in an action for conversion. Flowfilldealt with an item of productive plant which was held by the defendant in breach of lease under which rental was payable to the plaintiff. Hillesden Securities is similar. [43] In this case the vehicle was not being used by the appellant for transportation. It was for sale, and if a sale had eventuated there would be a registration and no doubt warranting of the vehicle. It can be seen then that at most the appellant has lost the opportunity, or chance, of sale. The rental value of a replacement vehicle does not assist in assessing damages in that circumstance. What perhaps would have assisted would have been evidence as to the normal holding time that cars were on a lot, any actual lowering of price because of the time held on the lot (which could equate to a time it was in the possession of the third respondent), the actual holding costs on a per vehicle basis, profit margins, and the overheads associated with the operation of the car yard pro rata to a per vehicle basis. [44] This type of information would have assisted the Judge in assessing whether or not the appellant had suffered any real loss. Simply providing the Court with the costs of a replacement rental vehicle (which was never able to be sold) in the circumstances of this case was simply unhelpful. In the absence of the type of information referred to above it follows the Judge was entitled to find loss had not been proved to the requisite standard. The appeal on the conversion cause of action is dismissed.Costs[45] It can be seen that the appellant has been successful on the first ground of appeal, and the third respondent on the third ground. It seems to me costs should lie where they fall. However, if the parties disagree with such a notion memoranda as to costs are to be filed within 7 working days of the handing down of this judgment. If they do agree could they notify the Registrar. Solicitors John Milne, Dunedin for Appellant Wilkinson Adams, Dunedin for First and Third Respondent