Burgess v Beaven

[2020] NZHC 497

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-549

[2020] NZHC 497

UNDER THE

Senior Courts Act 2016

IN THE MATTER OF

a proceeding for damages, fraud and

malicious or reckless use of proceedings

BETWEEN

GARY OWEN BURGESS

First Plaintiff

AND

GARY OWEN BURGESS

Second Plaintiff

AND

SUSAN NATALIE BEAVEN

First Defendant

AND

ANGELA MARY CORY

Second Defendant

AND

HOWARD JOHN DAWSON

Third Defendant

AND

DAWSON INNES

Fourth Defendant

Hearing:	19 February 2020
Appearances:	G O Burgess (self-represented First and Second Plaintiff) M J Wallace as Contradictor
Judgment:	12 March 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 12 March 2020 at 4.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 12 March 2020

BURGESS v BEAVEN [2020] NZHC 497 [12 March 2020]

[1]        Mr  Burgess   was   bankrupted  by  this   Court  on  24  October  2017.1    On 6 August 2018, Mr Burgess filed in this Court a statement of claim seeking orders against his ex-wife, Ms Beaven, and her solicitor and counsel who acted for her in relationship property proceedings that ran between 2005 and 2012.

[2]        Associate Judge Osborne, as he then was, struck out that claim, in part because it had been issued without reference to the Official Assignee when any litigation right that might be represented by the proceeding had  vested in the Official Assignee by  s 101(1) of the Insolvency Act 2006 (“the Act”).2

[3]        On 7 October 2018, the Official Assignee disclaimed any interest in the alleged litigation rights. Mr Burgess appealed that decision, but that appeal was dismissed because he lacked standing.3

[4]        Mr Burgess then brought this application to have the disclaimed litigation rights vested in him pursuant to s 119 of the Act with s 119(2) providing that the bankrupt is entitled to apply to the Court for an order.

[5]        To explain the nature of the claimed litigation rights, it is necessary to set out a brief and general timeline of events. What follows is not intended to be comprehensive. Omitted are some applications for recall and/or leave to appeal made by Mr Burgess, separate proceedings involving Mr Burgess and his bank, and another set of proceedings between Mr Burgess and solicitors who acted for him for part of the relationship property proceedings;

8 May 2002:	Mr Burgess and Ms Beaven marry.
23 August 2002:	Mr Burgess and Ms Beaven purchase Medbury Rd, Hawarden (“Medbury”).
20 May 2003:	Mr Burgess and Ms Beaven separate.
2005:	Mr Burgess commences relationship property proceedings in the Family Court with legal

1      Malley & Co v Burgess [2017] NZHC 2581.

2      Burgess v The Official Assignee [2019] NZHC 1324.

3      Burgess v Beaven [2018] NZHC 2793.

assistance,     claiming     an     unequal     share     in

relationship property.

2006:

Mr Burgess begins acting for himself and amends the proceedings to see equal sharing.

16 May 2007:

First District Court judgment of Judge Strettell following a three-day hearing – unequal sharing awarded in Ms Beaven’s favour 65/35 per cent.

27 November 2007:

First High Court appeal by Mr Burgess. John Hansen J allows the appeal only in part and remits calculation of percentages back to Family Court. The issue of the correct date for the value of contributions is addressed but appellant’s argument not accepted.

9 April 2008:

John Hansen J refuses Mr Burgess’ application for leave to appeal.

30 June 2008:

Second District Court decision of Judge Strettell – small adjustment to unequal sharing. Shares now 62/38 per cent in Ms Beaven’s favour. The Judge did not revisit valuation date for assessing contributions given the appeal on that ground dismissed.

15 December 2008:

Second High Court Appeal, Fogarty J dismissed appeal against Judge Strettell’s refusal to revisit the valuation date issue as it was not open to his Honour to do so given the findings in first appeal.

3 June 2009:

The Court of Appeal grants leave to Mr Burgess to appeal out of time the decision of John Hansen J noting that adopting different dates for assessing contributions to the marriage was at least arguably wrong in principle.

20 December 2010:

Court of Appeal judgment against the first appeal decision released – Mr Burgess partly successful with ruling that Mr Burgess entitled to receive

$22,000 from Ms Beaven to reflect the difference between the Court of Appeal assessment and the orders made in the Family Court.

22 September 2011:

Leave to appeal granted by the Supreme Court.

23 April 2012:

Supreme Court hearing.

9 August 2012:

Supreme Court judgment released confirming that

the same date should be utilised for the assessment of contributions by each of the parties – judgment in Mr Burgess’ favour following adjustments for costs   in   Courts   below   and   other  allowances

$30,046.

The mortgagee sale of Medbury

[6]        In February 2010, the mortgagee of Medbury issued a Property Law Act notice to Mr Burgess. The property was sold by the mortgagee at auction on 11 June 2010 with the sale settling early July 2010. The amount stated in the Property Law Act notice was less than the amount Mr Burgess was ultimately held to be entitled to receive from Ms Beaven. Mr Burgess had paid to Ms Beaven the amount to which she had been held to be entitled under the judgment of Judge Strettell, that outcome being eventually overturned by the Supreme Court.4 Mr Burgess paid that amount before the end of 2009 as Judge Somerville in a decision dated 12 November 2009 recorded that the payment had been made by that time.5

[7]        It was clear from the submissions presented by Mr Burgess at the hearing of this application that the primary focus of the claims he wishes to pursue is the loss  of the Medbury property.

[8]        Mr Burgess’ complaint can be summarised as follows. He says he was deprived of the timely recovery of his Property (Relationships) Act 1976 entitlement through the improper dragging out of the litigation by his ex-wife and her legal team “the proposed defendants”. He goes further and says the proposed defendants presented an unmeritorious position to the Court by presenting what he called “false evidence and false propositions of law”. Mr Burgess said the falsity of the position being adopted by the proposed defendants must have been known to his ex-wife’s legal team. He referred to them manipulating the Court process such that the mortgagee sale became inevitable. It follows that Mr Burgess is claiming he was improperly required to pay to Ms Beaven the amount determined by Judge Strettell and his efforts to correct that were frustrated by the proposed defendants.

4      Burgess v Beaven [2012] NZSC 71, [2013] 1 NZLR 129.

5      Burgess v Beaven FC Christchurch FAM-2005-009-8126, 23 April 2010.

[9]        Mr Burgess said his victory in the Supreme Court was pyrrhic because the Medbury property had gone in 2010.

[10]      Mr Burgess also said that what he called “judicial error” in the Family Court and High Court was a significant part of why things ended up the way they did. He was critical of the Family Court and the High Court for swallowing “hook line and sinker”, what he described as the false case presented against him.

[11]      Mr Burgess said it was fair for the litigation rights to be vested in him because he had been failed by the judicial process and had to go to the Supreme Court to have the situation addressed, albeit that being too late to save Medbury. Mr Burgess said he had suffered a wrong – the tactics of the proposed defendants – for which there should be a remedy.

Section 119 Insolvency Act 2006

[12]      Mr Burgess applies to have the litigation rights vested in him under s 119 of the Act which provides:

119     Position of person who suffers loss as result of disclaimer

(1)A person suffering loss or damage as a result of disclaimer by the Assignee may—

(a)claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of the effect of an order made by the court under paragraph (b):

(b)apply to the court for an order that the disclaimed property be delivered to, or vested in, that person.

(2)The bankrupt may also apply for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

(3)The court may make an order under subsection (1)(b) or (2) if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant.

[13]      As Toogood J in Goldstone v Goldstone pointed out, s 119(3) provides little guidance about the grounds upon which a vesting order may be made, as the sections says only that the Court may do so if it is fair.6

6      Goldstone v Goldstone [2019] NZHC 1649 at [17].

[14]      The Court’s discretion under s 119(3) was described by Moore  J  in Robinson v IAG New Zealand Ltd, as “broad and largely unfettered.”7 In Goldstone, Toogood J said “all of the surrounding circumstances should be taken into account so far as they bear on what the Court may consider just, but the Court’s decision must reflect the context in which the application is made”.8

[15]      Toogood J noted that relevant circumstances to be considered are those that related to the disclaimed property including:9

(a)the applicant’s former interest in it, if any;

(b)how and when such interest was acquired;

(c)if the applicant had no interest in the disclaimed property, what other relationship formerly existed between the applicant and the property;

(d)whether the applicant has maintained or increased the value of the property to be vested or prevented its transfer to a third party;

(e)the circumstances in which the disclaimed property became vested in the Assignee through bankruptcy;

(f)the rights and interests of third parties, if any, and, in particular, whether they consent to the vesting; and

(g)the consequences of any vesting for the applicant and any other persons.

[16]      Not all factors will be relevant in every case and ultimately each case falls to be determined on its own facts.

[17]      Mr Wallace, as Contradictor, referred to Gay v Bruns, which concerned whether potential defendants to rights of action vested in the respondent, Mr Bruns, were able to appeal the vesting decision.10 The Court of Appeal held that the potential defendants were not parties “aggrieved” by the decision of the Court which made  the vesting order, that being the term used in the section creating the right of appeal. The potential defendants were not “aggrieved” as the vesting order did not cause any material prejudice to their position, either substantively or procedurally. Whoever held

7      Robinson v IAG New Zealand Ltd [2016] NZHC 3149 at [50].

8      Goldstone v Goldstone, above n 6, at [18].

9 At [41].

10     Gay v Bruns CA193/98; CA 194/98, 3 March 1999.

the chose in action, the potential defendants were in the same position when it came to defending the claim. Thus, given the restricted definition of “aggrieved” the potential defendants did not have standing.

[18]      Gay, in my opinion, does not prevent me considering the merits of the litigation rights in determining whether vesting those rights in Mr Burgess would be fair. Determining the fairness of the vesting order sought, in my view, entitles me to consider the strengths of the proposed claim, the effect of delay in the claim being brought and the interests of the proposed defendants. If I am of the view that the proposed litigation rights are not reasonably arguable then it would not be appropriate for this Court to  encourage  such  a claim to  be brought by vesting those rights      in Mr Burgess. This Court has said that liquidators and the Official Assignee in bankruptcy should not encourage meritless litigation by assigning causes of action which are frivolous or vexatious. In determining whether it is fair to make a vesting order of litigation rights I consider that I should heed the same warning.11

The tort of malicious prosecution

[19]      It is clear from Mr Burgess’ submissions that he intends to rely upon the tort of malicious prosecution to advance his claims.

[20]      The tort of malicious prosecution of civil proceedings is reasonably available in New Zealand law.12 Hammond J in Rawlinson v Purnell Jenkinson & Roscoe outlined the elements of the tort:13

(a)the defendant had to have advanced a civil cause against the plaintiff;

(b)the application had to have been ultimately resolved in the plaintiff's favour;

(c)the defendant had to have had no reasonable and probable cause for bringing the civil proceeding. This could be divided into two parts. First, it had to be shown that … [the defendant] did not honestly believe that … [they] had reasonable and probable cause for the

11     La Famia No 1 Ltd (in liq) v GAN [2014] NZHC 3158 at [50]-[54], Callis v Pardington (1996)  7 NZCLC 261,211 (CA).

12     See Robinson v Whangarei Heads Enterprises Ltd [2015] NZHC 1147 at [49], and

Rawlinson v Purnell Jenkinson & Roscoe [1999] 1 NZLR 479.

13     Rawlinson v Purnell Jenkinson & Roscoe, above n 12, at 478 and 479.

non-molestation proceeding. The second question had to be did ... [the defendant] have reasonable and probable cause?

(d)the defendant had to have acted maliciously in instituting or continuing the civil proceeding; and

(e)damage of a kind for which the law would allow recompense had to have been caused to the plaintiff.

[21]      These elements are consistent with the approach taken the United Kingdom.14 In Australia a claim for malicious abuse of civil proceedings has been accepted as an available tort,15 while the United States has the largest body of jurisprudence in this area.16

[22]      A key element of the tort is the plaintiff must prove the defendant acted with malice. Malice “must be the driving force behind the prosecution.”17 Lord Toulson in Willers v Joyce considered “[t]he most obvious case is where the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation.”18 Accordingly, malice may be distinguished from a defendant simply acting incompetently, or continuing proceedings based upon a mistake of law.

[23]      Mr Burgess considers there was reckless behaviour by the defendants in the proceedings.  However, malice is the element required to establish liability under   the tort.

Discussion of merits

[24]      In my view, the timeline I have set out above shows that Mr Burgess’ claims of manipulation of the litigation process by the proposed defendants, that is, in effect the allegation that there was deliberate delay by the proposed defendants, can not be sustained. The key loss of time in challenging the decision of John Hansen J resulted from the application for leave to appeal to the Court of Appeal not being made for

14     See Willers v Joyce [2016] UKSC 43, [2017] 2 All ER 32, [2018] AC 779; and Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman Ltd) [2013] UKPC 17; [2014] AC 366.

15     Little v Law Institute of Victoria (No 3) [1990] VR 257.

16     See generally Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman Ltd), above n 14, at [170] – [196].

17     Williamson v Attorney General of Trinidad and Tobago [2014] UKPC 29, [2014] All ER (D) 46 at [12].

18     Willers v Joyce, above n 14, at [55].

approximately one year after John Hansen J dismissed the application for leave. The successful application for leave to appeal to the Court of Appeal was heard on       18 May 2009. I do not know when that application was made, but it must have been about a year after John Hansen J refused leave to appeal on 9 April 2008. It then took over a year from the granting of leave for the appeal to be heard in October 2010, and as I have said the decision was released in December 2010.

[25]      As the applicant for leave to appeal and then as the appellant, the ability to drive the application and appeal lay with Mr Burgess. There is nothing to suggest the proposed defendants did anything to cause these delays and no allegation in the struck-out statement of claim, setting out the claimed litigation rights, aims to make the proposed defendants liable for these delays. Mr Burgess blamed his solicitor for the delay in  filing the application for leave to  appeal.19  That  claim  was rejected.   It would be untenable having blamed his own lawyer for the delay to try and shift blame on to the proposed defendants for the same delay.

[26]      Mr Burgess’ allegation that Ms Beaven and her legal team deliberately delayed and frustrated Mr Burgess’ ability to have his appeal heard is also inconsistent with findings by the Court of Appeal.

[27]      In separate proceedings between Mr Burgess and solicitors who acted for him in some parts of his family proceedings, the Court of Appeal said:20

By “the circumstances leading to his adjudication”, Mr Burgess acknowledged he meant what he perceives to be the unjust history of the relationship property litigation between him and his former wife. Mr Burgess has attempted on several previous occasions to blame his ex-wife as well    as the respondent for his financial losses. He plainly intends to re-run those arguments. Those claims have however been rejected by several court decisions and findings have been made that Mr Burgess was essentially the author of his own misfortune.21 At the hearing before us, Mr Burgess suggested that the Courts were somehow also to blame because of delays in his securing this correct entitlement to relationship property. But that is not sustainable having regard to the documented history of the litigation,22 and the

19 See Burgess v Malley & Co [2017] NZCA 401 at [129]-[131]. Burgess v Malley & Co [2018] NZCA 269 at [17] where the Court of Appeal said it would be an abuse of power for Mr Burgess to attempt to run those arguments yet again.

20 Burgess v Malley & Co [2018] NZCA 269 at [16] (footnotes original).

21   Burgess v Malley & Co [2017] NZCA 401 at [139]; [CA decision]; holding Burgess v Malley &  Co [2016] NZHC 907 per Gendall J.

22 Burgess v Malley & Co [2017] NZCA 401 at [4]-[29].

findings made in the High Court and upheld in this Court as well as findings in the Supreme Court.23

[28]      In the above passage, the reference to documented history of the litigation is to another Court of Appeal decision also in Mr Burgess’ litigation with his then solicitor where at [4]-[29] the Court set out under the heading “Background”, the history of the Family Court litigation and issues relating to the mortgagee sale.24

[29]      Mr Burgess did not refer to any suggestion of deliberate delay or even negligent delay by Ms Beaven or her advisors in any of the relationship property cases. I find Mr Burgess does not have an arguable claim against the proposed defendants for malicious prosecution or abuse of process.

Delay by Mr Burgess in pursuing claimed litigation rights

[30]      Mr Burgess received the Supreme Court decision in August 2012. He was not bankrupted until some five years later. He offered no explanation as to why he did not pursue the claim he now wishes to bring when he could have issued the proceedings as of right.

[31]      The claim Mr Burgess wishes to bring goes back to events that occurred prior to 2010. I say that, as the judgments of which he complains are the two District Court decisions of Judge Strettell and the appeal decision of John Hansen J. The loss which Mr Burgess complains of was the mortgagee sale of  Medbury  that  occurred  in June 2010. The proceedings struck out by Associate Judge Osborne were not issued for more than eight years after the mortgagee sale.

[32]      Mr Wallace referred the following statements about the mortgagee sale of Medbury made by the Supreme Court:25

More generally, we consider that it would not be just to seek to apportion blame for the loss of Medbury and, on the basis of such appointment, order financial adjustments. Given the time which has elapsed since separation (nine years) and the Family Court hearing (five years), conducting an exercise of the kind contended for by  Mr  Burgess  would  be  distinctly  unfair  to Ms Beaven. It would, retrospectively, make her a hostage to Mr Burgess’

23     Burgess v Beaven, above n 3, at [3]-[4].

24     CA decision, above n 21; upholding Malley & Co v Burgess [2016] NZHC 907, per Gendall J.

25     Burgess v Beaven SC9/2011, [2012] NZSC71, [2012] NZFLR 670 at [50].

entrepreneurial activity in relation to Medbury despite Mr Burgess having elected to take title to Medbury at a time when the second judgment of  Judge Strettell was in place and he was thus well-positioned to assess the financial implications, and thus the risks, of doing so. Despite his success in the Court of Appeal – and his greater success in this Court notwithstanding – he has been over-litigious and not always focused on what is truly relevant and he has undoubtedly contributed to the imbroglio. In any event, his contention that Ms Beaven acted unreasonably is not entirely convincing. She was, after all, merely insisting on enforcement of the judgments in her favour which were then in place. Notwithstanding the terms of the Court of Appeal’s leave judgment, she was entitled to do so. Or, to put this another way, her insistence  on enforcing the judgments  in her favour does not  give rise to    a claim against her for the consequences.

[33]We are about seven and a half years on from those observations.

[34]      Leaving aside issues of limitation and laches, the difficulties of attempting to reconstruct why delays occurred in litigation more than a dozen years ago are self-evident.

[35]      As the Supreme Court noted, Mr Burgess was alleging in 2012 that Medbury was lost as a result of the actions of Ms Beaven.26

[36]      The Supreme Court considered that in 2012 it would not be just to seek to apportion blame for the loss of Medbury, but that is the very thing Mr Burgess seeks to do now. The Supreme Court considered the elapse of time in 2012 from the Family Court hearing (then five years) made trying to apportion blame for the loss of Medbury unfair to Ms Beaven. That unfairness is compounded now that it is nearly 13 years since the first Family Court judgment. It is not fair to vest in Mr Burgess the litigation rights which seek to hold Ms Beaven and her legal team responsible for the loss of Medbury seven and a half years after the comments made by the Supreme Court.

[37]      Nor do I consider there is any evidence of malice by the proposed defendants. Ms Beaven through counsel advanced an argument that was accepted to the District Court and to the High Court. Ms Beaven did not act unreasonably, let alone with malice in “merely insisting on enforcement of judgments in her favour which were then in place”.27

26 At [48].

27 At [50].

[38]Accordingly, I dismiss Mr Burgess’ application for a vesting order.

[39]      For completeness, I record that Mr Burgess’ statement of claim raises alleged wrongs other than the deliberate delay in the Family Court litigation. There is the claim that a registration of a s 42 Property (Relationships) Act notice by Ms Beaven was improperly registered against Medbury and a claim that Ms Beaven improperly refused to remove that notice of claim when requested by Mr Burgess. The circumstances in which an agreement was  reached between the parties  to secure  Ms Beaven’s position pending Mr Burgess’ first appeal and whether that agreement complied with the Property (Relationships) Act is also referred to. These issues were dealt with in findings made against Mr Burgess in Burgess v Malley & Co, where he sought to visit responsibility for these and other matters on his solicitors.28

[40]      The Court of Appeal in Burgess v Malley & Co found those claims did not have merit and its reasoning does not leave room for responsibility for those matters to be visited on the proposed defendants.29

[41]      In other parts of his draft statement of claim, there is reference to Ms Beaven filing false affidavits, that is dishonest or fraudulent affidavits. This is a sub-set of the improper conduct of litigation argument. To the extent that Mr Burgess now wishes to say the evidence that was the foundation of the Property (Relationships) Act 1976 judgments was wrong, that is a collateral attack on those judgments. The judgments in the Family Court do not suggest that Mr Burgess challenged Ms Beaven’s credibility. From the bar, Mr Burgess said that he did during the hearing, but credibility findings do not feature in the Family Court judgment.

[42]      Ms Beaven’s position in the Supreme Court was, if anything, criticised by the Court for an absence of evidence as opposed to her argument being founded on dishonest evidence. It was the absence of evidence in support of unequal sharing that

28     CA decision, above n 21.

29     CA decision, above n 21.

meant Ms Beaven’s claim in that regard did not succeed, rather than her relying on dishonest evidence.30

[43]      Mr Burgess also says that Ms Beaven owed him fiduciary duties in respect of relationship property pending its final distribution. The property referred to is Medbury, so this alleged claim is in the same category as the other claims aimed at trying to make Ms Beaven and/or her legal team responsible for its loss.

[44]      Mr Burgess’ claim also refers to the tort of fraud, abuse of process and breach of fiduciary duty. In his oral submissions the events Mr Burgess said were at the heart of his claim related to the deliberate delay already discussed. Whatever cause of action it is said covers the delay claim, it runs into it now being too late to seek to apportion blame for the loss of Medbury as already discussed.

Associate Judge Lester

Solicitors:

Fee Langstone, Auckland

Copy to counsel:
Malcolm J Wallace, Barrister, Christchurch

Copy to:
Mr G O Burgess, Waipara (First and Second Plaintiff in person)

30 Ms Beaven was declined leave to appeal the Court of Appeal’s conclusion that the relationship property was required to be divided equally. Burgess v Beaven [2011] NZSC 114 – the leave decision.