Easton v New Zealand Guardian Trust Company Limited

[2017] NZHC 345

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2015-485-9 [2017] NZHC 345

BETWEEN

IAN CHARLES EASTON

Plaintiff

AND

THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED Defendant

Hearing:	6 March 2017
Counsel:	J O Upton QC for Plaintiff L J Taylor QC for Defendant
Judgment:	6 March 2017

JUDGMENT OF ELLIS J

[1]      I do not intend to set out in any detail the history of these proceedings in this judgment.   For present purposes it suffices it to note that New Zealand Guardian Trust Company Limited (NZGT) is the Trustee of the Moutoa Trust which holds the estate of Mr Easton’s parents in Trust for Mr Easton and his two sisters.  The estate has remained undistributed for well over 15 years.  Its principal assets are shares in two companies which own farm properties that are leased to Mr Easton.  For reasons that are the subject of dispute the Trust has a large and ever-increasing debt to Inland Revenue.

[2]      To the extent that further background is necessary to understand what follows it can be found in my judgment dated 27 April 2016.1

1      Easton v The NZ Guardian Trust Co Ltd [2016] NZHC 798.

EASTON v THE NZ GUARDIAN TRUST CO LTD [2017] NZHC 345 [6 March 2017]

[3]      On 13 December 2016, I gave judgment awarding costs in the amount of

$59,675.48 in favour of NZGT after Mr Easton was granted leave to discontinue.2   I also ordered that, as a result of an application of r 15.24 by analogy, Mr Easton was not  permitted  to  take  any  further  steps  in  his  new  proceeding  against  NZGT (CIV-2016-485-963) until those costs are paid.3

[4]      Mr Easton did not (and still does not) seek to dispute either his liability for, or the quantum of, the costs award.  But he applied to have my judgment recalled on the r 15.24 point.  He said that as a result of events subsequent to my costs judgment (namely that his bank has refused to lend him the money required to pay the costs order, or to fund his ongoing litigation) the requirement to pay the costs should be deferred until NZGT has repaid money that it owes him.

[5]      I declined to recall my judgment on the grounds that, in my view, the terms of r 15.24 (whether applied directly or by analogy) were mandatory.4    I also ordered that unless Mr Easton paid the costs owing within seven days his new proceeding would be struck out.

[6]      Mr Easton then applied for a stay of that recall decision pending an appeal. In order to succeed in that appeal he would need to persuade the Court of Appeal that:

(a)      rule 15.24 is not mandatory and this Court has the power to defer the payment of a costs award following a discontinuance, with the effect that the costs debtor could either bring a new proceeding or (in the unusual circumstances of this case) continue with such a proceeding notwithstanding non-payment;5 and

(b)      the Court should have exercised that power in this case.

2      Easton v the NZ Guardian Trust Co Ltd [2016] NZHC 3011.

3      Application by analogy, pursuant to r 1.6(1) was required because Mr Easton had issued the new proceedings prior to the release of my costs judgment.

4      Easton v The NZ Guardian Trust Co Ltd [2017] NZHC 203.

5      I record that Mr Upton QC does not now seek to differentiate between a case involving a direct application of r 15.24 and an application by analogy.

[7]      And the effect of such a stay in this case would be that:

(a)      Mr  Easton  would  not  pay  the  costs  but  the  CIV-2016-485-963 proceeding would not be struck out; and

(b)he would, almost certainly, (re)apply in that proceeding for an interim injunction  to  prevent  NZGT selling  the  farm  properties  which  he presently leases.

[8]      The stay application is opposed.

Discussion

[9]      There  is  no  dispute  about  the  factors  commonly  taken  into  account  in determining whether to grant a stay pending appeal. They are:6

(a)       whether the appeal may be rendered nugatory by the lack of a stay; (b)         the bona fides of the applicant;

(c)       whether the successful party will be injuriously affected by the stay; (d)       the effect on third parties;

(e)       the novelty and importance of questions involved; (f)  the public interest in the proceeding;

(g)      the overall balance of convenience; and

(h)      the merits of the appeal. [10]     Each will be considered in turn.

6      Keung v GBR Investment Ltd [2010] NZCA 396 at [11].

Will the appeal be rendered nugatory?

[11]     In the event that no stay were granted but Mr Easton’s appeal was later allowed he would be able to commence new proceedings against NZGT without first paying  the  costs  of  the  discontinued  proceeding.    In  that  sense  I  agree  with Mr Taylor QC the appeal is not rendered nugatory.  But Mr Upton QC submitted that there would nonetheless be prejudice to Mr Easton because:

(a)       in  the  meantime,  NZGT would  likely take  steps  to  sell  the  farm property; and

(b)      there may be a limitation issues in relation to the new proceeding.

[12]     As to the first matter, it is not disputed that NZGT would be likely to take steps to sell if it is able.   Indeed, there are a number of imperatives that would require it do so, including the ever-mounting IRD debt and the interests of the other beneficiaries.   But the reality is that the most likely buyer is Mr Easton; that was always his and his parents’ intention.  The only sticking point is likely to be one of price.  Market forces seem best placed to sort that out.

[13]     The question of any impending limitation issue is not clear-cut. As Mr Taylor noted, NZGT only became the Moutoa Trustee in 2011.  The proposition that it was somehow in default of its trustee obligations right from day one seems, perhaps, unlikely.  Moreover, responsibility for any looming statutory time bar must in large part be due to Mr Easton’s own carriage of the matter.   His issues with the administration of the Trust are longstanding; it is his inability thus far to articulate them in the form of any tenable legal claim that has proved the real stumbling block.

[14]     For these reasons I am not prepared to give much weight to the proposition that the refusal to grant a stay would diminish the point or value of Mr Easton’s appeal.   And as Mr Taylor submitted, the fact that an appeal might be rendered nugatory by a refusal to stay is not, in any event, determinative.

Bona fides of the applicant as to the prosecution of the appeal

[15]     I have no doubt that Mr Easton’s motives in pursuing the appeal are, from his perspective, genuine.   But when viewed in light of the history of this and other related litigation there is necessarily a concern that he is unable to see the wood for the trees.  I have some sympathy for the submission that his purpose is to frustrate and delay sale of the land for as long as he can. As Mr Taylor said, the IRD debt and the long-neglected interests of the other beneficiaries make it obvious that the land must be sold. And once the sale process is put in train there will be nothing stopping Mr Easton purchasing it at market value, as his parents intended.

Injurious effect on the respondent of a stay

[16]     NZGT would be adversely affected by a stay in two principal ways:

(a)      first, non-payment of the costs order means that the Trust will not have that money available to it to reduce the tax debt; and

(b)secondly there is the almost certain prospect that, if Mr Easton is permitted to pursue the new proceeding, he will seek to injunct the Trust to prevent the sale of the farm property.   Even if such an application were not successful, it would put the Trust to further cost which, presumably, could not be recouped and would further delay the inevitable sale of the property.

Effect on third parties

[17]     As Mr Taylor said, the effect on third parties is obvious and has already been mentioned.   Mr Easton’s sisters have been kept out of their inheritance for over

15 years.  There is considerable force in the submission that (absent the payment of the costs award) NZGT must be allowed to get on with the sale of the property and distribute the remaining assets of the Moutoa Trust to the beneficiaries.

Novelty and importance of questions involved

[18]     While I accept that the matters more widely at issue in the proceeding are of importance to Mr Easton, no novel or important question has been identified as being directly raised by the appeal.

Public interest in the proceeding

[19]     There is no public interest in the proceeding.

The apparent strength of the appeal

[20]     While it is often difficult for a Judge objectively to opine on the strength of an appeal against one of her own judgments, I struggle to see any obvious merit in the appeal here.   As I have said, Mr Upton accepts that the costs were properly awarded and payable; the central issue is whether, in those circumstances, r 15.24 is mandatory, as its terms suggest.  Even if, as Mr Upton submitted, the Court retains a discretion by virtue of its inherent jurisdiction or, somehow, by virtue of r 15.23 (which confers a discretion as to whether to order costs on a discontinuance in the first  place),  it  seems  to  me  unlikely in  the  circumstances  of  this  case  that  the discretion would be exercised in Mr Easton’s favour.   The various matters I have canvassed above all suggest otherwise.

Balance of convenience

[21]     In  light  of  the  foregoing  it  simply  cannot  be  said  that  the  balance  of convenience favours granting a stay of my recall judgment pending appeal.

[22]     The application is dismissed accordingly.   Unless the costs ordered in the discontinued CIV-2015-485-9 proceeding are paid within two working days, the CIV-2016-485-963 proceeding will be struck out without further notice or call in this Court.

[23]     Lastly, I record that Mr Upton urged me to direct a settlement conference under r 7.79.  Obviously that is not possible if the proceeding is struck out.  If the outstanding costs are paid within two working days, however, that could certainly be considered.

Postscript

[24]     I also take the opportunity formally to record the order made at the telephone

conference last Friday, namely that the hearing which was scheduled for Mr Easton’s

earlier application for an interim injunction on 15 March 2017 is vacated.

Rebecca Ellis J