This Student Companion by Barry Allan appeared in the July 2015 edition of the New Zealand Law Journal
[2015] NZLJ 345.

 

STUDENT COMPANION: TORTS

Robinson v Whangarei Heads Enterprises Ltd [2015] NZHC 1147

 

This case applied the Privy Council decision in Crawford Adjusters v Sagicor General Insurance (Cayman) Limited [2014] 1 AC 366, which had held that the tort of malicious prosecution includes the commencement of civil proceedings. The plaintiff had been the owner of the defendant company. He sold all of his shares but the purchaser could not pay the full purchase price. The parties agreed that the purchaser would make monthly interest payments until the purchase was settled. The purchaser, believing that the plaintiff was competing with the company, ceased payments. This led to the plaintiff taking several items of company property and hiding it. The defendant’s response was to have the plaintiff arrested pursuant to s 55 Judicature Act 1908.

The general effect of s 55 is to allow for the arrest of a defendant in a civil High Court proceeding on the bases that there is a good cause of action for at least $100; the defendant is about to quit New Zealand; and the defendant’s absence will materially prejudice the plaintiff in the prosecution of those proceedings. The plaintiff was indeed about to leave New Zealand: the arrest prevented him from making one of his routine business trips to Vanuatu. To the purchaser’s knowledge, this was a short trip as he was due back in New Zealand for a medical procedure in a few days. Furthermore, there was plenty of evidence (mostly furnished by the plaintiff himself) to allow a court to enter judgment against the plaintiff in respect of the company’s claim to have its property returned. No prejudice would have arisen from the plaintiff’s absence. The Court proceeded on the basis that there no grounds for the arrest; the application was misconceived; and the arrest would not have been ordered had full information been provided to the Court to take into account in deciding to order the plaintiff’s arrest.

The plaintiff’s primary cause of action was the tort of abuse of process, which was first recognised in Grainger v Hill (1838) 132 ER 769. The essence of the tort is that a process of the law is abused in order to effect an object not within the scope of the process. That case was also concerned with an arrest: as Gilbert J noted (at [31]), so long as that extraneous object is the purpose for which the arrest process was used and it is irrelevant whether there were good grounds for the arrest or, as here, there were not. Where there were no such grounds, the malicious prosecution tort becomes available. After noting several High Court of Australia decisions on the point, His Honour quoted (at [44]) the following from Lord Sumption in Crawford Adjusters (at [149]):

The essence of the tort is the abuse of civil proceedings for a predominant purpose other than that for which they were designed. This means for the purpose of obtaining some wholly extraneous benefit other than the relief sought and not reasonably flowing from or connected with the relief sought. The paradigm case is the use of the processes of the court as a tool of extortion, by putting pressure on the defendant to do something wholly unconnected with the relief, which he has no obligation to do.

Here, the Court accepted that the company’s objective in obtaining the arrest was to have its property returned and the company expected that upon arrest, the property would be promptly returned. So the arrest process was being used to ensure return of company property, but this did not amount to an abuse of process. The critical point of his Honour’s judgment on this point is at [46]: the company was simply seeking vindication of its rights to its property, not to extort some benefit to which it was not entitled or which was outside the scope of the court’s process. The company genuinely believed (on legal advice) that it was entitled to have the plaintiff arrested as a means of recovering its property. The immediate object was to have the plaintiff arrested, which is what s 55 allows.

As for the malicious prosecution claim, the Court accepted that there were no grounds for seeking the plaintiff’s arrest but nonetheless found that his arrest had not been obtained maliciously. It found that the company just wanted its property back and was pursuing what it had been advised was an appropriate remedy: it (by its director) had never really thought about the consequences to the plaintiff.

The plaintiff did not go away empty-handed. In order to obtain the order for arrest, the company had given an undertaking to compensate the plaintiff for any damages sustained as a result of the order. The plaintiff was awarded $10,000 for what the Court accepted (without any discussion) was false imprisonment and for the economic consequences of not being able to make his trip to Vanuatu.

 

The full July 2014 edition of the New Zealand Law Journal is available on the LexisNexis research database.

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