Ipsofactoj.com: International Cases [2000] Part 6 Case 7 [NZCA]



Countrywide Banking Corporation

- vs -





26 JUNE 2000


McGechan J


  1. This is an appeal against refusal to dismiss for want of prosecution. As such, it is an appeal against exercise of discretion. Counsel accepted the applicable discretionary principles are as stated in Lovie v Medical Assurance Society NZ Ltd [1992] 2 NZLR 244. Essentially, the applicant must show delay was inordinate, unjustified, and occasioned serious prejudice. In addition an applicant must show dismissal for want of prosecution would be in the overall interests of justice.

  2. There is no dispute the delay involved in this case was inordinate. The application and this appeal turn upon the other discretionary factors; particularly the level of prejudice, and ability nevertheless to provide a fair trial.

  3. The leading authorities, plus a selection related to forex cases such as the present, were cited. While such are helpful as statements of principle, and examples of application, applications of this sort in the end turn very much upon their own facts. This decision should not be taken as laying down any special rule in a forex claim context.


  4. As noted, it is a forex loan case. There is no dispute respondents borrowed under a Swiss franc loan on 16 August 1985, taking up the equivalent of $NZ500,000 repayable on the fifth anniversary, with power to appellant to convert to other currencies meantime. The Swiss franc proceeded to move upwards against the New Zealand dollar. The appellant refused, or claimed it was unable, to re-denominate. Respondents incurred considerable losses. Ultimately respondents refinanced with the appellant, repaying the Swiss franc loan in a much larger sum of New Zealand dollars.

  5. Respondents issued proceedings alleging pre-contractual misrepresentations, breach of contract, mistake, negligence, and breach of fiduciary duty. Counsel for respondents advised during hearing in this Court that the last would not be pursued.

  6. There is no doubt that the content of conversations which are said to have occurred between the Appellant’s then commercial loans manager and the respondent Mr. D G Eadie in or about August 1985, in the course of which misrepresentations are said to have occurred, will be a key element in liability.


  7. The following chronology is drawn largely from the judgment below. The facts recorded are not in significant dispute.

  8. The Judge noted Lovie (supra) principles, and the importance of individual facts. The Judge found the delay, whether put at 12 years or 7 years, was inordinate. (That point no longer is in dispute).

  9. The Judge then moved, under a heading "Responsibility for Delay" to consider whether the delay was unjustified. His Honour found that "responsibility for the overall delay lies mainly with the Eadies but that Countrywide contributed to it in substantial measure". It was considered that when respondents sought to make up time which had been lost "their efforts were thwarted by the substantial delays of Countrywide in the inspection and discovery of documents and its deferral of timetabling". That contribution, moreover, was regarded as occurring "at the more sensitive end of the delay spectrum".

  10. Having so found, however, the Judge then expressed the view that decision turned upon whether appellant had suffered "serious prejudice" in consequence. His Honour thought not. The Judge recognised that the case would seem to turn on documents and on the evidence of the respondent Mr. Eadie and the appellant’s manager witness as to conversations which took place. The appellant’s manager was available as a witness, despite residence abroad, and was willing to assist. Although not (at time of judgment, anyway) fully briefed there was no claim that he was unable to remember the events. The manager was aware of the grievance and the prospect of legal proceedings within two years of the date of the loan agreement, and of the proceeding shortly after its service. The documents (as discovered) were complete and available. In the Judge’s view, even allowing for diminution of memory given passage of time, in those circumstances there was no serious prejudice.

  11. That, in terms of Lovie (supra), would have sufficed; but his Honour proceeded onward to consider overall justice, citing Fitzgerald v Beattie [1976] 1 NZLR 265, 268 per McCarthy P — "the overriding consideration is always whether justice can be done despite the delay". The Judge considered that given appellant’s significant contribution to delay, and absence of serious prejudice, that was so, and it was in the interests of justice for the claim to proceed.


  12. As noted, it is accepted the delay was inordinate. Finding to that effect would have been inevitable even in absence of such acceptance.

  13. Was the delay "unjustified"? Once inordinate delay is proved, it usually is regarded as unjustified until the contrary is shown. The Judge correctly identified respondents’ actions as the primary cause of delay. That clearly was so. Respondents preferred to negotiate settlement, if possible, and dragged their feet so far as the proceeding was concerned until towards the very end. Delays to negotiate are not a sufficient justification. The Judge also, however, identified appellant’s conduct as contributing substantially. Three elements were identified. The first, delay on appellant’s part in inspecting respondents’ discovered documents, cannot be right. It is a matter in the discretion of the party entitled to inspect whether such inspection takes place at all, and the process did not delay respondents. An attempt was made to argue the delay in inspection meant the documents concerned could not be made available to an expert witness. That problem, if it was such, readily could have been overcome by copying. The second element advanced was non cooperation in disposition of respondents’ timetable applications. That is not accepted. If appellant was unjustifiably tardy in relation to timetable applications, the Courts’ assistance could have been obtained. The third contributory element was the period taken by appellant to produce further discovery. We agree with the Judge in that respect. Whether appellant’s delay in making proper further discovery is taken from 30 November 1995 or 12 March 1996, there was a delay of at least some 18 months improperly introduced. With that in mind it was correct to say that respondents’ actions contributed to the delay concerned. There is room for debate whether that contribution should be classified as "substantial", or at some rather lesser level such as "significant", but the point is no more than one of degree. The delay which occurred was unjustified, but appellant bears a contributory responsibility sufficient to be taken into account.

  14. Was there serious prejudice arising from the delay so occasioned? The requirement for serious prejudice, in total, is a constant; but as stated in Lovie, supra (253):


    The defendant must show prejudice caused by the post-issue delay. If however the defendant has suffered prejudice as a result of pre-issue delay, he will need to show only something more than minimal additional prejudice to justify striking out the proceeding.

  15. There must be some significant ("more than minimal") prejudice post-issue, and the overall totality must be serious.

  16. Decision on this point is not straightforward. As noted, the case is likely to turn upon whether respondents can prove the alleged oral misrepresentations by appellant’s manager made in 1985, some 15 years ago. Doubtless there are inherent credibility issues, and they will be complicated by the passage of time. As is well recognised, there is an inevitable dimming in memories over such a period. That is a continuing process, both before and over the seven years between the issue of proceedings and filing of this application. Clearly there is "more than minimal" prejudice subsequent to issue. On the other hand, as the Judge noted, there are balancing factors. One is the availability of complete documentation, although its character may go more towards establishing the documentary terms of the loan, and standard bank practice at the time, than bearing upon the fact and content of the conversations concerned. The other was notification of the possibility of claim within two years, a relatively short period as these matters go, with diary notes made and the bank witness concerned still being available. As the Judge particularly noted, there is at least to date no claim that witness is unable to remember the matter. That is credible. Such claims, involving personal conduct, can stick in the mind, particularly when notes have been taken which reopen memory. While it is said respondents have a supporting witness, that witness is not necessarily independent, and there is no suggestion of corroborating documentation. In that light, the inevitable diminution in memory in this case is not as serious as some, and it was open to the Judge to conclude that the requirement of serious prejudice was not satisfied.

  17. The ultimate criterion raising the overall interests of justice involves considerations similar to those canvassed in relation to justifiability and prejudice. The respondents’ conduct in not issuing until there were limitation dangers, and even then delaying service for the maximum period, invites some criticism, but does not approach an extreme where it could be said their claim should be shut out, given other factors. Indeed, there is room for the view it was reasonable to await crystallisation of quantum, as well as possible favourable movements in the forex market, for some of that period. Post-issue, there are unsatisfactory aspects to the rate at which proceedings were advanced. It is the Plaintiff who always has the carriage of proceedings. However, there are elements, as discussed, in the appellant’s conduct which played some part. It also is to be noted that appellant engaged in interlocutory exchanges until a late stage (notably the late 1995 or early 1996 to late 1997 further discovery matter), without foreshadowing this presently signalled difficulty.

  18. Perhaps more importantly, the case can still be tried fairly. The appellant’s key witness is available, willing, and is not claiming amnesia. The credibility doubts which attach with passage of time to any evidence will concern the respondents as well as the appellant; and indeed will be a greater concern, as respondents bear the onus. While the delay which has occurred is considerable, Courts not infrequently are forced to examine events of this vintage. It is never easy, but nor is it a novelty, and in this case it is not impracticable. There was room for the view that it was in the interests of justice for the claim to proceed.

  19. This is an appeal from the exercise of a discretion. The Judge is not shown to have acted on a wrong principle, or to have been plainly wrong.

  20. The appeal is dismissed. Respondents will have costs in the sum of suggest $3,500 together with reasonable disbursements and travelling and accommodation expenses as fixed by the Registrar.


Lovie v Medical Assurance Society NZ Ltd [1992] 2 NZLR 244; Fitzgerald v Beattie [1976] 1 NZLR 265


D Alderslade for Appellant (instructed by Chapman Tripp Sheffield Young, Auckland)
J G Miles QC for Respondent (instructed by Edwards Clark Dickie, Auckland)

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