Bacarji v Gray
[2017] NZHC 1190
•2 June 2017
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
THE-FAMILY-COURT/LEGISLATION/RESTRICTION-ON-PUBLISHING- JUDGMENTS.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-295 [2017] NZHC 1190
UNDER the Property (Relationships) Act 1976 and
the Family Proceedings Act 1980
IN THE MATTER
of an appeal against a decision of the
Family Court at AucklandBETWEEN
ELENA BACARJI Appellant
AND
DUNCAN JAMES GRAY Respondent
Hearing: On the papers Appearances:
Appellant in person
C M Murphy and A P Bennett for the RespondentJudgment:
2 June 2017
JUDGMENT OF WOODHOUSE J (LEAVE TO APPEAL : INJUNCTION : COSTS)
This judgment was delivered by me on 2 June 2017 at 3.30 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Parties/Solicitors:
Ms E Bacarji, Auckland
Ms C M Murphy, Simpson Western, Solicitors, Auckland
BACARJI v GRAY [2017] NZHC 1190 [2 June 2017]
[1] In December 2005 the appellant, Ms Bacarji, and the respondent, Mr Gray, entered into an agreement contracting out of the provisions of the Property (Relationships) Act 1976 (the Act). They were then in a de facto relationship. They separated in December 2010.
[2] In January 2012 the appellant applied to the Family Court for an order setting aside the contracting out agreement (the agreement). In a reserved judgment delivered on 27 January 2016, Judge Southwick QC dismissed Ms Bacarji’s application.1 Ms Bacarji appealed against the Family Court decision. In a reserved judgment I dismissed the appeal.2
[3] This judgment deals with the following matters arising out of the substantive judgment on the appeal:
(a) An application by Ms Bacarji for leave to appeal to the Court of
Appeal.
(b)An informal application by Ms Bacarji which amounts to an application for interlocutory injunctions.
(c) An application by Mr Gray for costs on the appeal.
Application for leave to appeal
[4] The application for leave to appeal is to be determined on well settled principles. The threshold for appeal is reasonably high. Ms Bacarji, although she was represented by counsel in the Family Court and on the appeal in this Court, has filed the application for leave and made submissions on her own behalf. It is apparent from her submissions that Ms Bacarji, understandably enough, is not familiar with the principles. For this reason I will set out at length the discussion of
the principles by the Court of Appeal in Waller v Hider.3
1 Bacarji v Gray [2015] NZFC 9995.
2 Bacarji v Gray [2016] NZHC 2636.
3 Waller v Hider [1998] 1 NZLR 412 (CA) at 413-414.
The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal: Rutherfurd v Waite [1923] GLR 34; Cuff v Broadlands Finance Ltd [1987] 2
NZLR 343 at pp 346 – 347. In the latter case the Court also remarked that in the end the guiding principle must be the requirements of justice. Further authorities of this Court are cited in McGechan on Procedure, para J 67.05.
Notwithstanding frequent reminders of the test, applications continue to be made which have little or no prospect of success. Counsel are of course to be commended for making all reasonable efforts to advance the cause of their clients but after a first appeal they must draw back and appraise the state of the case dispassionately, asking whether in truth the disputed matter contains the requisite element of sufficient importance. The scarce time and resources of the High Court and of this Court are not to be wasted, nor additional expense for an unsuccessful client incurred without realistic hope of benefit.
Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.
When the disputed matter is entirely or largely a question of fact the task of the applicant under s 67 is harder. An issue of fact in a matter falling within the jurisdiction of an inferior Court will seldom be of public importance. It is better that we make no attempt to define the circumstances in which a factual contest can be taken to have private importance but obviously it may do so if the amount at stake is very substantial or the decision reflects seriously on the character or conduct of the would-be appellant or, as in Cuff, the judgment below has special consequences (for example, bankruptcy) for the losing party. Even then, however, leave cannot be anticipated if the applicant is seeking to disturb concurrent findings of fact in the lower Courts.
…
The cost to the litigants in coming to this Court, including preparation of submissions and written materials as required by the Practice Note for civil appeals, oral presentation of the substance of the case (at least half a day), travel and accommodation expenses of both counsel and other normal disbursements would not in the aggregate be much less than $10,000. (As best we can assess it, half as much again would be expended by the Court system in processing, hearing and determining the appeal.) To this can be added moneys already spent on the s 67 application in the High Court (and there was a cost to the system of that action). On a cost-benefit analysis, the view may be taken that a second appeal would add unjustifiably to the burden already shouldered by these litigants. The limited chance of success on the s 67 application and again at any substantive hearing ought to be carefully weighed against the relatively modest net benefit sought by the applicant.
[5] That passage was reproduced in full by the Court of Appeal in Snee v Snee.4
It is apparent from the judgment in Snee that the principles set out in Waller v Hider were reproduced in full because, notwithstanding what was said in Waller v Hider, unmeritorious applications for leave continued to be made.5
[6] For the reasons that follow Ms Bacarji’s application for leave does not meet
the test.
[7] There were 12 points on appeal in this Court. Four of those were withdrawn. Of the remaining eight points on appeal, only one involved, in part, a question of law, relating to interpretation of one clause in the agreement. The Family Court Judge’s conclusion was upheld on appeal.6 The error of interpretation which Ms Bacarji said occurred, in the Family Court and again in this Court, if it was an error, is not one of such importance, either generally or to the two parties, to justify leave
for a further appeal. The reasons are contained in the substantive judgment, and apart from one point, those reasons do not need to be repeated here. The point to be noted is that Ms Bacarji, on her own evidence, knew before she signed the agreement that the clause, which made provision for review of the agreement, had no real effect. That would be the case irrespective of the interpretation. In other words, the issue Ms Bacarji seeks to pursue is of no consequence.
[8] A more fundamental point, in relation to the application for leave to appeal as a whole, is illustrated by the matter just discussed. The ultimate issue on an application to set aside a contracting out agreement is that contained in s 21J(1) of the Act – whether the Court is “satisfied that giving effect to the agreement would cause serious injustice”. None of the points on appeal, including the withdrawn points which Ms Becarji seeks to revive, has a material bearing, if any, on that ultimate issue. On the appeal in this Court there was no substantive argument demonstrating how the alleged errors of the Family Court Judge, individually or together, arguably supported a conclusion that giving effect to the agreement would
cause serious injustice.
4 Snee v Snee [2000] NZFLR 120 at [15].
5 At [16]-[20].
6 Bacarji v Gray, above n 2, at [63]-[71].
[9] The remaining points on appeal, including the four that were withdrawn, were all concerned with questions of fact. None of the issues of fact, including the factual issues arising on the interpretation point already referred to, warrant leave being granted for a second appeal. As the Court of Appeal made clear in Waller v Hider, the threshold for leave, when the disputed matter is entirely or largely a question of fact, is higher than the threshold in respect of a question of law (and with the threshold for a question of law in itself being reasonably high). There have been concurrent findings of fact in the Family Court and in the High Court. Leave should not be granted for a further appeal on these issues when, as already noted, the conclusions of fact are unlikely to have a material bearing on the ultimate issue under s 21J(1). It is also relevant that the Family Court hearing took place over six days and, in particular, involved extensive cross-examination of Mrs Bacarji and Mr Gray.
[10] There are further considerations which persuade me that leave to appeal should be declined.
[11] One is that Ms Bacarji and Mr Gray separated more than six years ago, and this litigation has been on-foot for over five years. Mr Gray has a serious illness with an uncertain prognosis. There should not be further delay for Mr Gray unless there are clear grounds for granting leave.
[12] There is also a question of further costs. The advice in a memorandum for Mr Gray is that his costs to date exceed $330,000. His further costs on an appeal are likely to be reasonably high, and in this case higher than normal based on the procedural difficulties that have occurred to date. A further factor relating to costs, weighing against granting of leave, is that it seems reasonably likely that costs will not be recoverable by Mr Gray from Ms Bacarji if Mr Gray is successful on an appeal. Ms Bacarji was granted legal aid for the appeal to this Court, so that Mr Gray’s prospects of recovery of costs are very restricted by s 45 of the Legal Services Act 2011, as discussed later. The same will apply if legal aid is granted for an appeal to the Court of Appeal. If Ms Bacarji acts on her own behalf on an appeal, the restriction will not apply. However, based on advice from Ms Bacarji about her
financial circumstances, Mr Gray’s prospects of recovering costs from Ms Bacarji appear doubtful.
[13] A further consideration is that the benefit to Ms Bacarji if she were to succeed on a second appeal appears to be modest. Judge Southwick in the Family Court determined that, if the agreement had been set aside, the relationship property pool was no more than $60,000 to $70,000. Ms Bacarji makes claims to numbers of other assets, but all of these are either not and never were Mr Gray’s property, or are clearly his separate property.
[14] The application for leave to appeal is dismissed.
Informal application for injunction and other orders
[15] Ms Bacarji has sent a memorandum to the Court, by email, which seeks orders expressed as follows:
1.FOR THE INJUCTION/ORDER PREVENTING SELLING ALL ASSETS, including in Taupo
2.THE VALUE/SALE PROPERTY 15-19 MT EDEN RD SOLD ILLEGALLY FOR 3.3 MILLIONS ON 25 APRIL 2017, WHILE WE GOING VIA DIVORCE, TO BE INCLUDED IN MARITAL ASSETS WHAT HAS TO BE DIVIDED.
3.TO FRREZE THE SALE MONEY OF $3.3 MILLIONS INSTEAD OF $792,000 AS PER MR GRAY AFFIDAVIT
4.To use all possible measures available in your power to prevent further sale of any other assets, including in Taupo, as well as any illegal transfer/hiding of any money in personal and trust accounts in different banks in New Zealand and overseas.
[16] Leaving aside issues as to the precise scope of the orders sought, all four of them are most appropriately treated as applications for interlocutory injunctions restraining Mr Gray from dealing with property.
[17] The principles applying on applications for interlocutory injunctions are well settled. It is necessary for Ms Bacarji to establish two things. The first is that her claim raises a serious question to be tried. The second is that, if there is a serious question to be tried, what is called “the balance of a convenience” favours the
granting of an injunction rather than its refusal. The main question to be answered in considering the balance of convenience is one of risk: will there be more harm to Ms Bacarji if the injunction is refused and she is ultimately successful in the substantive claim, or more harm to Mr Gray if the injunction is granted and Ms Bacarji ultimately fails in the substantive claim.
[18] The claims advanced by Ms Bacarji do not give rise to serious questions to be tried at a substantive hearing. The transaction which prompted the application is the sale of the property in Mt Eden Road referred to in orders 2 and 3. The claim that Ms Bacarji had an interest in the property, and that she has an interest in the proceeds of sale, is untenable. The Mt Eden Road property was purchased approximately 10 years before Ms Bacarji and Mr Gray met. It was purchased by a company incorporated by Mr Gray in 1995, DJG Investments Ltd (DJG). Mr Gray originally owned all the shares. Ninety-nine per cent of the shares were transferred in 2005 to the trustees of the Grayson Trust. The Grayson Trust was established by Mr Gray in
1995.
[19] Pursuant to the contracting out agreement the Mt Eden Road property and the interests in DJG and the Grayson Trust, are separate property. But also under the Act the shares in DJG were and remain the separate property of Mr Gray, or of a third party. In consequence, Ms Bacarji can have no claim to the proceeds of sale of an asset owned by DJG even if the agreement is set aside.
[20] One of the points on appeal in relation to the agreement concerned DJG. For reasons discussed in the substantive judgment on the appeal, the argument relating to DJG, as Ms Bacarji’s counsel acknowledged, had no bearing on whether the agreement should be set aside.7 In that part of the judgment I nevertheless considered and dismissed an argument that is now advanced by Ms Bacarji in support of the injunction application. This is an argument to the effect that DJG was
operated and controlled by Mr Gray as Mr Gray’s alter ego so that the assets of the
company were and are to be treated as Mr Gray’s assets. That would not make those
assets relationship property. And the argument is simply based on assertion, as opposed to evidence. The evidence is to the contrary.8
[21] If it were to be assumed that there is a serious question to be tried in relation to the Mt Eden Road property and the proceeds of sale of it, I am in no doubt that the balance of convenience falls firmly in favour of Mr Gray to decline the application. Matters relevant to that assessment include the matters discussed in relation to the application for leave to appeal. If the relative merit of the present claim is assessed as an element of the balance of convenience, it is substantially more likely that the final decision will be to dismiss Ms Bacarji’s claim for the reasons already recorded. Another consideration is that, on the basis of Ms Bacarji’s own evidence as to her financial circumstances, the likelihood of her being able to meet Mr Gray’s costs if he succeeds in the substantive claim, let alone pay an award of damages against her for any losses sustained by Mr Gray because of the injunction, is remote. In addition, and importantly, contrary to the mandatory requirement in the High Court Rules, Ms Bacarji has not provided an undertaking to pay damages if, in the end, there is an order that she pay damages to Mr Gray.
[22] One of the grounds on which Ms Gray seeks all of the orders, is that Mr Gray has acted illegally in dealing with property “during divorce”. There is no illegality in Mr Gray’s dealing with assets which he owns and which are not subject to a Court order. The reasons for declining orders 2 and 3 also apply in general terms to orders
1 and 4. In addition, the orders 1 and 4 are so vague in their terms that those applications must be declined for that further reason.
[23] Ms Bacarji’s applications, contained in the memorandum dated 29 May 2017,
are dismissed.
Costs
[24] Having succeeded on the appeal, Mr Gray has sought costs. If costs were to be determined in accordance with the High Court Rules, I am satisfied that Mr Gray
would be entitled to costs. However, Ms Bacarji was granted legal aid for the appeal. In consequence s 45 of the Legal Services Act 2011 applies.
[25] The most relevant provisions of s 45 of the Legal Services Act are as follows:
45 Liability of aided person for costs
(1) If an aided person receives legal aid for civil proceedings, that person's liability under an order for costs made against him or her with respect to the proceedings must not exceed an amount (if any) that is reasonable for the aided person to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.
(2) No order for costs may be made against an aided person in a civil proceeding unless the court is satisfied that there are exceptional circumstances.
(3) In determining whether there are exceptional circumstances under subsection (2), the court may take account of, but is not limited to, the following conduct by the aided person:
(a) any conduct that causes the other party to incur unnecessary cost:
(b) any failure to comply with the procedural rules and orders of the court:
(c) any misleading or deceitful conduct:
(d) any unreasonable pursuit of 1 or more issues on which the aided person fails:
(e) any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution:
(f) any other conduct that abuses the processes of the court.
…
[26] Ms Murphy, for Mr Gray, submits that there are exceptional circumstances justifying an order, with the focus being on s 45(3). The exceptional circumstances are submitted to be, in summary: (1) Ms Bacarji failed to comply with some procedural rules and timetabling orders, resulting in two adjournments of fixtures; (2) this caused “significant unnecessary costs” for Mr Gray; (3) Ms Bacarji “unreasonably pursued her appeal, despite having been entirely unsuccessful in the Family Court”; (4) Ms Bacarji abandoned a number of points of appeal during the
course of the hearing. The costs sought are $2,230 being the sum paid into Court by Ms Bacarji as security for costs on the appeal. This compares with costs on a 2B basis, as calculated by Ms Murphy, of $19,847, costs increased by 50 per cent totalling $29,770.50, and actual costs of $54,504.15.
[27] Ms Bacarji opposes the application, advancing on her own behalf a number of arguments. Some of these arguments are not persuasive, or not relevant. In respect of the former, Ms Bacarji submitted that it cannot be said, as Ms Murphy contended, that Mr Gray was “entirely successful” because four of the twelve points on appeal were not pursued. Mr Gray was entirely successful on the eight points of appeal that were pursued, and Ms Murphy’s submission was directed to those eight points. I am also satisfied that the decision not to pursue the four other points on appeal was an appropriate decision. Matters that are not relevant are submissions directed to the conduct of the proceedings in the Family Court and criticism of Ms Bacarji’s counsel on the appeal.
[28] Matters of relevance are, in particular, the means by which Ms Bacarji managed to pay the security for costs and her finances generally. Ms Bacarji says that she was only able to pay the security for costs by borrowing from friends as to part and by borrowing on a credit card for the balance. In respect of Ms Bacarji’s finances generally, the most relevant consideration, for the purposes of s 45 of the Legal Services Act, is that she is dependent on a WINZ benefit.
[29] The matters referred to in the submissions for Mr Gray are matters that can be taken into account to determine whether there are exceptional circumstances. But they do not persuade me that the circumstances are exceptional.
[30] There were some defaults by Ms Bacarji in complying with procedural rules and timetable directions, and this is likely to have added to Mr Gray’s costs. But the defaults were not exceptional because Ms Bacarji was struggling to do her best, as a lay litigant, and one for whom English is not her first language, after her former counsel had withdrawn.
[31] I am also not persuaded that the additional cost for Mr Gray in these circumstances amounts to an exceptional circumstance. The Court record, in relation to the pre-trial matters, in fact indicates that it is reasonably likely that a substantial portion of the additional costs incurred would have arisen from decisions, on occasions, to adopt an unduly adversarial approach to timetabling difficulties.
[32] In relation to the merit of the appeal, Mr Gray obviously succeeded in all respects. But I do not accept the submission from Mr Gray that Ms Bacarji “unreasonably pursued her appeal”. The result of the application Ms Bacarji made to the Family Court was going to determine whether she had any entitlement to bring a Relationship Property claim following a de facto relationship of five years nine months. Ms Bacarji had a general right of appeal from the Family Court decision which went against her. It was not unreasonable for her to bring that appeal and seek to advance the arguments that were assessed to be available to her on the advice of counsel.
[33] Because I have concluded for these reasons that the circumstances are not exceptional the costs application is dismissed.
[34] There is a consequential order that the security for costs paid into Court be paid out to Ms Bacarji into a bank account to be nominated by Ms Bacarji.
[35] Under s 45(5) of the Legal Services Act an order “may be made specifying what order for costs would have been made” against Ms Bacarji if s 45 had not been applied in the way I have applied it. Such an order is sought by Mr Gray. It is for costs on a 2B basis or on a 2B basis uplifted for reasons generally outlined above. I am not persuaded that this is a case justifying increased costs. The order for costs I would have made is for costs on a 2B basis in a sum of $19,847.
[36] I record for Ms Bacarji’s benefit, in case she is confused by the preceding paragraph, that she is not required to pay costs of $19,847. Ms Bacarji is not required to pay any sum for costs and the security for costs is to be repaid to her.
Result
[37] There are orders as recorded at [14], [23], [33], [34] and [35].
Woodhouse J
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