Clark v Ngati Karewa Trust

[2004] NZCA 225

IN THE COURT OF APPEAL OF NEW ZEALAND

CA112/04

BETWEENNGAIRE NICOLA CLARK AND GRAHAM UERATA CLARK

Applicants

ANDNGATI KAREWA AND NGATI TAHINGA TRUST

Respondents

Hearing:16 August 2004

Coram:Glazebrook J
Hammond J
Chambers J

Appearances:  J E Dorbu for Applicants

A R Gilchrist for Respondents

Judgment:14 September 2004 

JUDGMENT OF THE COURT DELIVERED BY CHAMBERS J

Application to appeal out of time

[1]       Ngaire and Graham Clark apply for special leave to appeal out of time against a decision of Venning J given on 15 October last year.  Venning J dealt with a summary judgment application brought by the Ngati Karewa and Ngati Tahinga Trust, a charitable trust, against Mr and Mrs Clark.  He found that the Clarks did not have an arguable defence to the application for summary judgment.  He awarded the trust $150,817, together with interest.  The total came to $222,536.26. 

[2]       The trust opposes the Clarks’ application for special leave on two main grounds.  First, the trust points to the Clarks’ extreme delay in challenging Venning J’s judgment.  Secondly, the trust asserts that the proposed appeal has no merit.  Those are the issues we deal with in this judgment. 

Background facts

[3]       The trust was set up by a deed of trust dated 13 June 1985.  The Clarks were two of the trustees.  In May 1988, some of the trustees purported to lend the Clarks money so that they could purchase a property for their own use.  The sum of $150,817 was advanced.  The loan fixed interest at the rate of 5% pa.  The principal was to be repaid upon Mr Clark’s retirement. 

[4]       Over the years since the trust was established, there have been ongoing disputes and litigation over the way in which the trust has been administered.  Eventually, in 1999, the Attorney-General took action: the proceeding was commenced in the High Court under M 2073/99 (Auckland Registry).  In that proceeding, the Attorney-General sought an order under s 51 of the Trustee Act 1956 appointing a new trustee or trustees in substitution for the existing trustees.  The following year, Inuwai McKinnon (claiming to represent at least 150 members of Ngati Tahinga) brought separate proceedings seeking a review of various acts and decisions of the trustees pursuant to s 68 of the Trustee Act.  In the main, the relief sought by Mr McKinnon was the same as that sought by the Attorney-General, except that he also sought an order that the Clarks restore to the trust the $150,000 which had been lent to them by the trust for the purpose of buying their property at Papatoetoe. 

[5]       Those two proceedings were heard together by Randerson J in the High Court at Auckland in October 2001.  His Honour delivered judgment on 5 November 2001.  He found that certain people who had purportedly been appointed as trustees had not been properly appointed, and he declared their appointments “to be invalid and of no effect”.  He removed the remaining validly appointed trustees, who included the Clarks, as trustees pursuant to s 51 of the Trustee Act.  He appointed the Public Trustee at Auckland as the interim trustee of the trust until further order. 

[6]       Most importantly for current purposes, Randerson J dealt with the purported loan to the Clarks.  He found that the loan had never been validly authorised.  Nor were two later attempts to write it off authorised.  He held that “the total sum advanced of $150,816.84 (less any reductions of principal shown to have been validly made) remained the property of the Trust and should be restored to it” (at [112]).

[7]       Randerson J did not consider it appropriate at that stage “for any relief to be given in relation to the loan to Mr and Mrs Clark as sought in Mr McKinnon’s proceedings” (at [119]).  He considered that the Public Trustee should investigate this matter, including exactly what sums (if any) had been paid by way of principal and interest.  He thought that the Public Trustee would be able then to take action (in the light of his judgment and any further enquiries made). 

[8]       Randerson J’s judgment is now final in the sense that there is no extant appeal against it. 

[9]       The Public Trustee, following his appointment as interim trustee, did enquire into the purported loan to the Clarks.  He then commenced the current proceeding against the Clarks, seeking recovery of the loan, together with interest at the rate of 5% pa from 5 May 1988 to date of judgment.  The Public Trustee gave credit for sums paid by the Clarks between 1989 and 1994.  Those credits reduced the amount of interest that would otherwise have been payable.  It was this proceeding which led to Venning J’s judgment of 15 October last year.

Delay

[10]     The Clarks’ application for special leave to appeal was not filed in this court until 15 June this year, eight months to the day from the date of Venning J’s judgment and almost as long since that judgment was sealed.  There can be no doubt that the application for leave to appeal was “hopelessly out of time”, to borrow a phrase used in this court in describing a delay of some seven months in Belling v Belling (1996) 9 PRNZ 469.  In that case, the delay was considered to be excessive and the application failed.  Even much shorter periods of delay have been held excessive: see, for example, Langridge v Wilson (1989) 3 PRNZ 341 (a delay of six weeks). 

[11] The Clarks advance three reasons as justifying the delay. The first is that it was agreed, according to Mrs Clark, that no action would be taken “concerning the judgment of Justice Venning until the matters in the Privy Council were resolved”. The Privy Council reference is a reference to the fact that the Clarks were attempting to appeal to the Privy Council from this court’s rejection of an appeal from Randerson J’s judgment of 5 November 2001. Todd Parker, the General Manager of the Public Trust at Auckland, Stewardship Services division, has sworn an affidavit that that was not the “agreement” following Venning J’s judgment. Rather, he says that the Public Trust gave an undertaking, at the time of the summary judgment hearing, that it would take no steps to enforce any judgment obtained pending the outcome of the Clarks’ application for special leave to appeal to the Privy Council. That application was dealt with and dismissed, we are told, in December 2003. We accept that that was the undertaking, as it is recorded in the judgment of Venning J under review: HC AK CIV2003-404-000426 at [8]. That undertaking provided no excuse for the Clarks not appealing promptly from the judgment of Venning J if they were dissatisfied with it. The Public Trust was not putting appeal rights on hold: indeed, it would have no power so to do. But, even if one were to take a de facto starting point of December 2003, the Clarks’ application is still hopelessly out of time.

[12]     The second reason advanced for the delay is that Mr Clark has been unwell.  We accept that that is so, even though no medical evidence has been adduced in support.  But that would not excuse Mrs Clark’s failure to act.  In any event, Mr Clark’s illness has not stopped the Clarks from taking steps on other related proceedings in the High Court since 15 October last year.  For instance, Mrs Clark swore affidavits in those related proceedings on 22 October and 5 December last year.  The Clarks were represented by their current counsel, Mr Dorbu, at a hearing on 20 February this year in those related proceedings.  If all that activity could be undertaken, notwithstanding the illness, it is a little difficult to see why the simple act of filing a notice of appeal could not have been undertaken.  We do not accept that Mr Clark’s ill health represents a valid excuse. 

[13]     Thirdly, Mr Clark in an affidavit has pleaded the couple’s financial difficulties.  Again, we are unable to accept that as an excuse, given that the Clarks were able to advance matters in the other proceedings and on the Privy Council application during the relevant period.  Again, we note the relative simplicity of a notice of appeal to this court and the low cost which would have been involved in taking the simple step of getting the appeal underway. 

[14]     There can be no doubt that the Clarks were aware of the appeal period.  They have in the past on two occasions brought applications for special leave to appeal, because appeals were out of time.  Indeed, one of those applications had been dealt with by this court in the month before the hearing in front of Venning J: Ngati Tahinga and Ngati Karewa Trust and Clark and others v The Attorney-General of New Zealand CA163/03 24 September 2003.  So mistake as to the appeal period cannot be and is not relied on.

[15]     In short, we find the delay in this case inexcusable. 

The merits of the proposed appeal

[16]     The delay in itself would be sufficient in this case to reject the application for special leave.  Notwithstanding that, we shall discuss briefly the merits of the proposed appeal. 

[17]     This case is somewhat unusual in that, while we have no doubt whatever that the Clarks are bound to pay at least as much as they were ordered to pay by Venning J, we nonetheless consider that the basis upon which they were required to pay was not correctly pleaded in the Public Trust’s statement of claim, and accordingly was not correctly set forth in Venning J’s judgment.  Were this an appeal which had been brought within time, we would have given the Public Trustee leave to amend his pleadings to reflect the correct cause of action on which the trust’s claim should have been based.  But we do not consider that that course is necessary in the present case.  Technically, we could grant leave to appeal on the basis that the claim was wrongly pleaded; then, on the hearing of the appeal, we could grant leave to amend the pleadings, and then give judgment for the amount of the Public Trust’s claim (probably more).  All that would achieve is further expense not only for the Clarks but also the trust.  The end result could not be more advantageous to the Clarks than the present result.  Indeed, it could be worse, and they would certainly incur additional legal expense in the meantime.

[18]     We shall now briefly explain the way in which the claim was incorrectly presented in the High Court.  The trust sued the Clarks on “the loan”.  The trust claimed that the Clarks “remain indebted” in the original principal sum.  The trust claimed interest at the rate of 5% pa, that being said to be the agreed interest rate on the loan.  But this was not “a loan”.  Randerson J has already held that the advance to the Clarks was unauthorised.  As he correctly held in his 5 November 2001 judgment, the advance "remained the property of the trust and should be restored to it”. 

[19]     The present case is really on all fours with Guinness PLC v Saunders [1990] 2 AC 663 (HL), in which a committee of the Guinness board purported to make an agreement with one of the Guinness directors, Mr Ward, to pay him a “success fee” in the event that a take-over bid made by Guinness was successful. The success fee of £5.2 million was paid to Mr Ward, but later the Guinness board claimed recovery of the money on the ground that Mr Ward had received the payment in breach of his fiduciary duty as a director. In the House of Lords, Guinness was successful. But the claim against Mr Ward was not based in contract. It could not be, because, as Lord Templeman said, there was no contract. The committee may have purported to conclude a contract with Mr Ward, but the committee had no power to enter into it: at 693. That is exactly what happened here. Some of the trustees purported to lend money to the Clarks, but they had no power to do so. Just as Mr Ward was constructive trustee of the money which he had received and had to pay it back, so the Clarks are constructive trustees of the money they received and must pay it back.

[20]     Further, equity of course permits compensation by way of interest: Butler (ed) Equity and Trusts in New Zealand (2003) at [28.5.3].  The Public Trustee, had he brought the claim in equity, would not have been limited to the 5% interest rate of the purported loan.  In the circumstances, a higher interest rate could certainly have been justified.

[21]     Had the case been properly advanced, the concerns which Mr Dorbu had with respect to Venning J’s judgment would have been easily answered. 

[22]     Mr Dorbu was particularly concerned about the way in which Venning J had dealt with the limitation defence advanced.  Venning J considered, because he was dealing with this case as a claim in contract, that s 4 of the Limitation Act 1950 applied.  But His Honour considered that it did not bar the claim because fraud can extend the limitation period: see s 28.  Mr Dorbu was concerned that a finding of fraud had been made on the basis of the affidavit evidence before the judge. 

[23]     But, on a correct approach, neither s 4 nor s 28 of the Limitation Act applied.  There was no limitation defence available.  The Clarks, as constructive trustees, remain bound to restore the property they are holding to its rightful owner, the trust. 

[24]     Secondly, Mr Dorbu claimed that summary judgment should not have been granted because the Clarks have a set-off or counterclaim in respect of remuneration for services rendered to the trust.  There is nothing in that point.  It is not alleged that the trust ever agreed to pay the Clarks for the alleged services.  At best, it seems to be some sort of claim for quantum merit, which is completely unquantified.  If such a claim is to be formulated, it must be by way of separate proceeding.  Venning J was quite correct to reject this argument.

[25]     For the reasons given, we conclude that the proposed appeal is without merit in that the Clarks clearly do owe the trust at least the sum they have been ordered to pay.  This fact, coupled with the Clarks’ delay in seeking to appeal, leads to the inevitable conclusion that the application must fail. 

Result

[26]     We dismiss the application for special leave to appeal out of time. 

[27]     We order the Clarks to pay to the trust costs in the sum of $3,000, together with reasonable disbursements, including the trust’s counsel’s travel and accommodation costs (if any).  If the disbursements cannot be agreed, they are to be fixed by the Registrar. 

Solicitors:
Tua Mose Saseve, Auckland, for Applicants
The Public Trust, Auckland, for Respondents