Gaskin v Stark

[2020] NZHC 2321

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2020-412-000026

[2020] NZHC 2321

IN THE MATTER

of Section 149 of the Companies Act 1993

BETWEEN

GRAEME KENNETH GASKIN and ELIZABETH JOAN DUSTIN, in their

capacity as trustees of the DUSTIN FAMILY TRUST

Plaintiffs

AND

ALASTAIR DAVID STARK

First Defendant

AND

ALAN BEVIN MCKAY

Second Defendant

AND

RICHARD DRUMMOND FRASER

Third Defendant

AND

MEAD AND STARK

Fourth Defendant

Hearing:	Determined on the papers
Counsel:	D G Hurd for Applicant, Caroline Ann Stark
Judgment:	7 September 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 7 September 2020 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

GASKIN and DUSTIN v STARK [2020] NZHC 2321 [7 September 2020]

[1]    The applicant is the daughter of the first  defendant Alastair  David  Stark (Mr Stark) and applies for orders that:

(a)she be appointed as litigation guardian for Mr Stark; and

(b)service of this application on Mr Stark be dispensed with.

Background

[2]    This proceeding arises from the sale of shares in two companies by the Official Assignee in the bankruptcy of Ian Luke Dustin. The Official Assignee assigned its rights of action arising from the share sale transaction to the plaintiffs who, in their second amended statement of claim, plead six causes of action against Mr Stark.

[3]    Mr Stark is an incapacitated person for the purposes of r 4.29 of the High Court Rules 2016. The principal evidence concerning this is from an affidavit of Anna Lise Seifert, a registered medical practitioner, practising psychiatrist and a specialist in mental health for older people. Mr Stark had a brain tumour and underwent surgeries in 2017 and 2019. He suffered a stroke in 2019 and then had a serious fall in January 2020 causing further injury. Mr Stark is no longer capable of making decisions about his personal or property matters and lacks any understanding of issues on which his decisions would be required as a litigant conducting court proceedings.

[4]    Mr Stark granted an Enduring Power of Attorney dated 2 September 2017 in relation to property to the second defendant, Alan Bevin McKay (Mr McKay). The Enduring Power of Attorney came into effect when Mr Stark became mentally incapable in May 2019. Since then, Mr McKay has been acting as Mr Stark’s attorney with regard to his property. Mr McKay understands that as Mr Stark’s attorney he is authorised to conduct this court proceeding on his behalf as his litigation guardian. As he is also a party to this proceeding he considers it is inappropriate for him to act as Mr Stark’s litigation guardian. Mr McKay disclaims any role as Mr Stark’s litigation guardian in so far as it relates to the conduct of this proceeding.

[5]    As Mr McKay is unwilling or unable to act as Mr Stark’s litigation guardian, the applicant, Caroline Ann Stark (Caroline), has applied for appointment as her

father’s litigation guardian. Mr McKay and Mr Stark’s wife and children support the application.

[6]    Caroline is a suitable person to appoint as a litigation guardian. She holds a Bachelor of Commerce degree and a Bachelor of Arts degree from Otago University. She is the manager of a medical centre and has other commercial experience. She has the support and assistance of Mr Stark’s family with knowledge of his affairs. She understands the role and duties of a litigation guardian.

The rules

[7]    An application for the appointment of a litigation guardian can be made without notice.1

[8]    An incapacitated person must be represented by a litigation guardian in any proceeding unless the court otherwise orders.2

[9]An incapacitated person is defined as:

incapacitated person means a person who by reason of physical, intellectual, or mental impairment, whether temporary or permanent, is ---

(a)not capable of understanding the issues on which his or her decision would be required as a litigant conducting proceedings; or

(b)unable to give sufficient instructions to issue, defend, or compromise proceedings.

[10]As noted, Mr Stark is an incapacitated person in terms of the High Court Rules.

[11]A litigation guardian is defined as:3

litigation guardian

(a)means ---

(i)a person who is authorised by or under an enactment to conduct proceedings in the name of, or on behalf of, an incapacitated person or a minor (but only in a proceeding to which the authority extends); or

1      High Court Rules 2016, r 4.36(1)(a).

2      Rule 4.30(1).

3      Rule 4.29.

(ii)a person who is appointed under rule 4.35 to conduct a proceeding; and

(b)has the same meaning as the expression “guardian ad litem”.

[12]   Rule 4.35 deals with the grounds for the appointment of a litigation guardian as follows:

4.35 Appointment of litigation guardian

(1)This rule applies if an incapacitated person does not have a litigation guardian within the meaning of paragraph (a)(i) of the definition of litigation guardian in rule 4.29.

(2)The court may appoint a litigation guardian if it is satisfied that ---

(a)the person for whom the litigation guardian is to be appointed is an incapacitated person; and

(b)the litigation guardian ---

(i)      is able fairly and competently to conduct proceedings on behalf of the incapacitated person; and

(ii)     does not have interests adverse to those of the incapacitated person; and

(iii)    consents to being a litigation guardian.

(3)In deciding whether to appoint a litigation guardian, the court may have regard to any matters it considers appropriate, including the views of the person for whom the litigation guardian is to be appointed.

(4)The court may appoint a litigation guardian under this rule at any time

---

(a)on its own initiative; or

(b)on the application of any person, including a person seeking to be appointed as litigation guardian.

[13]   The applicant’s counsel, Mr Hurd, has correctly drawn to my attention the potential complication in this case: whether by reason of his appointment as Mr Stark’s attorney Mr McKay is deemed to be his litigation guardian, leaving no apparent jurisdiction under r 4.35 to appoint Caroline as a litigation guardian.4

[14]   As Mr Hurd correctly submits, the situation that arises throws up an apparent anomaly in the Rules. While the existence of an Enduring Power of Attorney should ordinarily make it unnecessary for the court to appoint a litigation guardian, the apparent exclusion of jurisdiction does not make sense where, as here, for wholly

4      Re Cron [2020] NZHC 1074; Warin v Warin [2017] NZHC 786.

proper reasons, the attorney considers it inappropriate to carry out the litigation guardian role.

[15]   Plainly on the facts, Mr Stark requires a litigation guardian. In circumstances where there is no other person both validly entitled and willing to act as Mr Stark’s litigation guardian, justice requires that his interests be protected. The matter can be dealt with in a number of ways. Caroline can be appointed as Mr Stark’s litigation guardian in exercise of the court’s inherent jurisdiction or by the application of r 1.6 High Court Rules. The inherent jurisdiction of the court is exercised to protect and fulfil the judicial function of administering justice. Rule 1.6 can be applied, as the High Court Rules do not deal with this situation yet the appointment of a litigation guardian for Mr Stark is consistent with the objectives of the rules. Those objectives include securing the just determination of any proceeding.5

[16]   For completeness Mr Hurd mentioned a third possibility involving making application to exclude from the scope of Mr McKay’s powers the conduct of this proceeding on behalf of Mr Stark. That would potentially involve an application to the Family Court and, if successful, a fresh application to this court for the appointment of Caroline as litigation guardian. Such a wasteful and time consuming process is not justified when the matter can be dealt with by other means.

[17]   The final issue concerns the application to dispense with service of this application upon Mr Stark. Under r 4.36(1) an application to appoint a litigation guardian must, unless the court otherwise orders, be served on the person for whom the litigation guardian is to be appointed. Mr Stark has no capacity to make decisions about his own care or property affairs. The evidence is he would not understand this application or be able to provide instructions in relation to it. He entrusted his property affairs to Mr McKay who is supportive of this application. I can see no purpose would be served in requiring this application to be served on Mr Stark. In those circumstances I dispense with service of the application upon him.

5      High Court Rules, r 1.2.

Result

[18]   I appoint Caroline Ann Stark to be Mr Stark’s litigation guardian to defend and conduct these court proceedings in his name and on his behalf.

[19]I reserve leave for the applicant to further apply in respect of any matter arising.

[20]No costs are sought on the application.

O G Paulsen Associate Judge

Solicitors:
Checketts McKay Law Limited, Alexandra

Copy to:

Sandi Anderson & Partners, Auckland Parker Cowan, Queenstown