George v Dilks
[2020] NZHC 37
•29 January 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2014-404-2139
[2019] NZHC 37
BETWEEN ARIANA CAILEEN GEORGE
First Plaintiff
RODNEY LEE TE WAKA TOTO HOLLAND
Second Plaintiff
AND
SELL SMART.BIZ LIMITED
First Defendant (Discontinued)
DAVID CHARLES PADFIELD
Second Defendant (Discontinued)PAUL DILKS
Third Defendant
Hearing: 29, 30 and 31 October 2019 Appearances:
R S Pidgeon for plaintiffs
P Dilks (third defendant) in person
Judgment:
29 January 2020
JUDGMENT OF KATZ J
This judgment was delivered by me on 29 January 2020 at 5:00pm pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Integritas Law Firm, Auckland
Counsel: R S Pidgeon, Barrister, Auckland Copy to: Mr P Dilks
GEORGE & HOLLAND v DILKS [2019] NZHC 37 [29 January 2020]
TEA CUSTODIANS (BLUESTONE) LIMITED
Fourth Defendant (Discontinued)
PRENDOS NEW ZEALAND LIMITED
Fifth Defendant (Discontinued)
Table of Contents
Introduction and overview.................................................................................. [1]
The procedural history........................................................................................ [7]
NZMBA decision [7]
The proceedings against Bluestone [9]
This proceeding [11]
The pleadings..................................................................................................... [12]
The plaintiffs’ causes of action [12]
Mr Dilks’ defence and counterclaim [13]
Pleadings issues [15]
Limitation issues................................................................................................ [22]
Limitation pleadings [22]
The first three causes of action [25]
The fourth cause of action (breach of fiduciary duty) [28]
Does s 25 of the Limitation Act apply? [35]
Does s 28 of the Limitation Act apply? [43]
Conclusion on limitation issues [44]
Factual findings................................................................................................. [46]
General impressions of the key witnesses [46] Ms George and Mr Holland acquire an interest in the Weymouth property [50] Ms George enters into an agreement to purchase a TouchNZ franchise [52] Unsuccessful attempt to obtain financing from the National Bank [56] Mr Dilks is introduced to the plaintiffs by Mr Padfield [57]
Mr Dilks’ representation to Bluestone about the purpose of the
refinancing loan [61]
Did Mr Dilks misrepresent the employment status of Mr Holland to
Bluestone? [74]Did Mr Dilks misrepresent the employment status of Ms George to
Bluestone? [82]
Loan approval [92]
Failure of the franchise business [92]Did Mr Dilks give advice to the plaintiffs as to the merits of the franchise business? [95]
Causation/inducement..................................................................................... [100]
Mr Dilks’ counterclaim.................................................................................... [105]
Result................................................................................................................ [106]
Introduction and overview
[1] In February 2007 Ariana George entered into two agreements with Sell Smart.Biz Limited (“Sell Smart”), a company owned and operated by David Padfield. Under the first agreement she purchased a licence to sell tourism advertising using touch screen electronic kiosks owned by Sell Smart. Under the second agreement (which was unconditional) she purchased the related TouchNZ franchise for $105,000. The purchase price was to be paid by way of a $50,000 deposit, with the balance to be paid by instalments to be agreed later.
[2] Ms George then set about raising the required finance. Ms George and her then partner, Rodney Holland, had recently borrowed from the National Bank to purchase a two-thirds interest in Mr Holland’s mother’s home in Weymouth. The National Bank, however, was not willing to advance them any further funds. Mr Padfield then referred Ms George to a mortgage broker, Paul Dilks. With his assistance they were eventually able to refinance their mortgage and secure additional funding to purchase the franchise, from a second-tier lender, TEA Custodians (Bluestone) Limited (“Bluestone”). As part of this process, Mr Holland’s mother agreed to have her name removed from the title.
[3] The franchise was not a success, however, and Ms George and Mr Holland rapidly fell behind with their loan repayments. Ms George and Mr Holland brought proceedings against Bluestone to try and stop their home being sold by way of mortgagee sale. Woodhouse J dismissed the proceeding on 18 June 20091 and the plaintiffs’ home was subsequently sold by the mortgagee.
[4] Over five years later, in August 2014, Ms George and Mr Holland brought this proceeding against five defendants including Bluestone, Sell Smart and Mr Padfield. They subsequently settled and/or discontinued against all defendants, however, except Mr Dilks.
1 George and Holland v TEA Custodians (Bluestone) Limited HC Auckland CIV 2009-004-890, 18 June 2009.
[5] The plaintiffs advanced four causes of action against Mr Dilks. At the heart of each cause of action is the allegation that Mr Dilks represented to the plaintiffs that he would apply for a loan from Bluestone on the basis that the funds would be used for the purchase of a business. Mr Dilks acknowledges, however, that he actually represented to Bluestone (falsely) that the refinancing was for the purpose of home improvements. The plaintiffs say that they were not aware of this at the time. Mr Dilks says that they were.
[6] Mr Dilks’ conduct, the plaintiffs allege, was a material cause of the following losses:2
(a)the $50,000 loan advanced by Bluestone for the purchase of the TouchNZ franchise business, less a refund of $20,000 obtained from Mr Padfield (i.e. $30,000); and
(b)the loss of the equity in the plaintiffs’ home, which they quantify at
$116,371.22.3
The procedural history
NZMBA decision
[7] On 10 December 2007, Bluestone served the plaintiffs with a Property Law Act notice in respect of the mortgage arrears then owing. Ms George contacted Bluestone to discuss the arrears. She says it was at this time that she first learned that Mr Dilks had told Bluestone that the refinancing was for funding home improvements, rather than the true purpose, which was to purchase the TouchNZ franchise.
2 In closing Mr Pidgeon did not pursue a claim for the mortgage shortfall debt allegedly owing to Bluestone. No evidence was before me quantifying that debt. Further, it appears that no steps were taken by Bluestone to pursue it (presumably because the plaintiffs were impecunious).
3 I note that there appears to be an error in the plaintiffs’ calculations, in that they have only taken into account their original loan from National Bank ($258,628.74) and not a subsequent National Bank loan of $14,500.03 (which appears to relate to mortgage arrears). The correct equity sum would appear to be $101,871.19. This figure appears, in effect, to reflect Mr Holland’s mother’s one-third ownership interest in the home. Ms George and Mr Holland appear to have had little or no equity in the home themselves.
[8] Ms George subsequently laid a complaint with the New Zealand Mortgage Brokers Association (“NZMBA”) about Mr Dilks, raising this and other concerns. The NZMBA hearing took place on 28 April 2008. Both Ms George and Mr Dilks gave evidence. In its subsequent decision, NZMBA made several adverse findings against Mr Dilks including that he had misrepresented the purpose of the refinancing to Bluestone as being for home improvements, rather than for the purchase of a business. The NZMBA suspended Mr Dilks for six months and fined him $4,000.
The proceedings against Bluestone
[9] In parallel with the NZMBA proceeding against Mr Dilks, Ms George and Mr Holland issued a proceeding in this Court against Bluestone, seeking to prevent a mortgagee sale of their home. They alleged (amongst other things) that Mr Dilks’ misrepresentation to Bluestone regarding the purpose of the loan had been instigated by a Bluestone employee, Mr Harrison. The purpose of the misrepresentation, it was alleged, was to ensure that the loan would be approved. Various other allegations were made against Bluestone, including that it had known from the outset that Ms George and Mr Holland would not be able to service the loan.
[10] In his judgment of 18 June 2009, Woodhouse J preferred the evidence of Mr Harrison to that of Mr Dilks.4 He found that Mr Dilks’ (admitted) misrepresentation to Bluestone as to the purpose of the refinancing was not prompted by Mr Harrison and accordingly could not found a claim against Bluestone. The various other claims against Bluestone were also all found to be without substance.5 His Honour noted that the plaintiffs’ various claims against Bluestone would also have failed due to lack of causation:
[60] They were not induced to enter into the loan as a result of Bluestone’s recording that the purpose of the loan was to carry out home improvements. The plaintiffs were in fact made aware, before they were committed to the loan, that Bluestone was proceeding on the understanding that the loan was sought for home improvements.
…..
4 George and Holland v TEA Custodians (Bluestone) Limited HC Auckland CIV 2009-004-890, 18 June 2009 at [49].
5 George and Holland v TEA Custodians (Bluestone) Limited HC Auckland CIV 2009-004-890, 18 June 2009 at [58].
[62] The plaintiffs proceeded with the loan with full knowledge that they would be unable to afford to make the payments unless the franchise business produced substantial income. That was their choice. They were not influenced in it by anything which Bluestone did or failed to do. It was not Bluestone’s responsibility to protect the plaintiffs from their own investment decisions in respect of which Bluestone had no involvement.
This proceeding
[11] This proceeding was filed in August 2014. The plaintiffs initially succeeded in obtaining judgment against Mr Dilks (in respect of the fourth cause of action only) before Keane J, by way of formal proof.6 That judgement was subsequently set aside by Associate Judge Bell, however, on the basis that Mr Dilks (who had by then moved to Australia) had not in fact been served with the proceeding.7 His Honour also observed that Mr Dilks may well have a defence of limitation to all four causes of action.8
The pleadings
The plaintiffs’ causes of action
[12] The plaintiffs’ have pleaded four causes of action against Mr Dilks, as set out in the first amended statement of claim:
(a)Misrepresentation: Mr Dilks is alleged to have misrepresented to the plaintiffs that the borrowing arranged by him from Bluestone would be founded on the plaintiffs’ plan to purchase a TouchNZ franchise. The alleged misrepresentation is said to have induced the plaintiffs to enter into both the Bluestone loan and the purchase of the TouchNZ franchise. I note that the pleaded misrepresentation is a representation to the plaintiffs, whereas in the Bluestone proceeding the alleged misrepresentation was to Bluestone (albeit in relation to the same subject matter).
6 George v Dilks [2015] NZHC 3060 at [49-51].
7 George v Dilks [2018] NZHC 435 at [21].
8 At [26]- [27].
(b)Deceit: In this cause of action it is pleaded that Mr Dilks “intentionally and without the plaintiffs’ knowledge altered the borrowing proposal with the intention of inducing the plaintiffs to enter into the borrowing arrangements and the purchase of the TouchNZ Franchise.” I note that there is an internal inconsistency in this allegation in that, if the borrowing proposal was altered without the plaintiff’s knowledge, it cannot have induced them to do anything. (It could arguably have induced Bluestone to do something, such as advance the loan funds, but the case is not pleaded on that basis). I accordingly infer that the misrepresentation relied upon is the same as in the first cause of action, namely that Mr Dilks misrepresented to the plaintiffs that the loan application to Bluestone would be founded on their plan to purchase a TouchNZ franchise.
(c)Negligence: It is alleged that Mr Dilks owed the plaintiffs “a duty of care to ensure that he would complete all documentation submitted to Bluestone accurately and in failing to do so he was negligent”. No particulars are given of the respects in which the documentation was not completed accurately. I infer, however, that the alleged misrepresentation that the funds were required for home improvements is again relied upon.
(d)Breach of fiduciary duty: In the fourth and final cause of action it is pleaded that:
[70] [Mr Dilks] assumed a fiduciary duty in respect of the plaintiffs when:
(a) He caused the plaintiffs to repose trust and confidence in him for the purpose of arranging finance for the purchase of the Touch NZ Franchise.
(b) He knowing of the defendant's9 vulnerability to his judgment made a deliberately false proposal to [Bluestone].
(c) [Mr Dilks] exercised power on behalf of the plaintiffs and pledged himself to act in the best interests of them.
9 It appears that the reference to the defendant may have been intended to be a reference to the plaintiffs, although the pleading lacks clarity.
The pleading lacks clarity and particularisation. I understand that the key thrust of this cause of action, however, is that Mr Dilks was in a fiduciary relationship with the plaintiffs and breached his fiduciary duties by making a deliberately false proposal to Bluestone (namely, by stating that the purpose of the loan was for home improvements).
Mr Dilks’ defence and counterclaim
[13] Mr Dilks raises an affirmative limitation defence to all four causes of action. As for the merits, Mr Dilks denies all the key allegations against him. He pleads that he had the following exchange with the plaintiffs regarding the purpose of the loan:
I told the plaintiffs that the low documentation loan application [i.e. the Bluestone application] would be quicker to get an offer if we did the
$50k as a home improvement which I remember because I thought at the time
$50k for a kitchen improvement would be possibly excessive.
[14] Mr Dilks counterclaims for legal costs incurred and lost employment income due to the time he has spent working on the legal proceedings.
Pleadings issues
[15] Mr Pidgeon accepted that, viewed in context, the first three causes of action all relied on Mr Dilks’ alleged misrepresentation of the purpose of the loan as the relevant wrongful act. He submitted, however, that the fourth cause of action (breach of fiduciary duty) should be interpreted more widely. The key pleading, as set out at [12](d) above, is that:
(b) [Mr Dilks] knowing of the defendant's vulnerability to his judgment made a deliberately false proposal to [Bluestone].
[16] Mr Pidgeon submitted that this pleading can fairly be interpreted as referring to not only the alleged misrepresentation in the Bluestone loan proposal document as to the purpose of the loan, but also:
(a)alleged misrepresentations made by Mr Dilks to Bluestone regarding the incomes and/or employment status of Ms George and Mr Holland; and
(b)Mr Dilks’ allegedly taking on the role of trusted business advisor for the plaintiffs and then breaching the fiduciary duties associated with that role by giving them poor advice.
[17] In support of this argument, Mr Pidgeon noted that all four causes of action are preceded by a statement that “[t]he plaintiffs repeat the allegations contained in paragraphs 1 to 57 above” and submitted that the contents of those paragraphs supported a wider interpretation.
[18]In summary, the relevant paragraphs cover the following matters:
(a)Paragraphs 1 to 38 set out the general facts relied upon in support of all four causes of action. They do not include any factual allegations relating to the matters set out in [16](a) and (b) above.
(b)Paragraphs 39 to 41 appear under the heading “Limitation Act 1950 s 25” and relate to an allegation of part payment by Mr Dilks which is said to give rise to a fresh accrual of a cause of action pursuant to s 25 of the Limitation Act 1950 (“Limitation Act”).10
(c)Paragraphs 42 to 57 appear under the heading “Limitation Act 1950 s 28”. Those paragraphs set out various allegations of fraud on the part of Mr Dilks that are said to warrant postponement of the limitation period under s 28 of the Limitation Act. Amongst other things, Mr Dilks is alleged not to have disclosed his close personal relationship with Mr Padfield, withheld material facts from the plaintiffs (although it is not entirely clear what those facts were), and moved to Australia “to avoid liability for the loss he knew the plaintiffs had suffered”. A further allegation of fraud pleaded in this context is that:
[Mr Dilks] did not operate within his powers and utilised his full skill and experience in providing advise [sic] to the plaintiffs prior to their entry into the loan finance with Bluestone and when he assumed a function to provide substantive advice on the wisdom of entering the franchise.
10 The Limitation Act 1950 applies in this case, as the relevant events pre-dated the Limitation Act 2010.
[19] Given that Mr Dilks is self-represented, clarity of drafting was particularly important, so that he was fairly put on notice as to the precise case he had to meet. If the plaintiffs wished to allege that Mr Dilks breached his fiduciary duties to them by misrepresenting their incomes to Bluestone and by giving them poor business advice, then this needed to be expressly pleaded (and properly particularised). The alleged income misrepresentation is not pleaded at all. The business advice allegation is only mentioned in passing, in a section of the pleading dealing with limitation issues. The advice allegedly given is not particularised. Nor is it explained how such advice caused the plaintiffs’ losses.
[20] Further, even on the widest interpretation, the business advice allegation cannot implicitly fall within the scope of the express allegation pleaded in the fourth cause of action, which is that Mr Dilks made a deliberately false proposal to Bluestone.
[21] In conclusion, it is my view that the fourth cause of action, like the first three causes of action, is limited to Mr Dilks’ alleged misrepresentation to the plaintiffs that he would apply for a loan on their behalf on the basis of their proposed purchase of the TouchNZ franchise business.
Limitation issues
Limitation pleadings
[22] When setting aside the formal proof judgment Associate Judge Bell indicated that a limitation defence may well be available in respect of all four causes of action.11
[23] The amended statement of claim proactively addresses limitation issues and pleads various matters that are said to give rise to:
(a)the fresh accrual of a cause of action as a result of part payment of a debt pursuant to s 25 of the Limitation Act (refer [39] to [41] of the amended statement of claim); and/or
11 George v Dilks [2018] NZHC 435 at [27].
(b)postponement of the limitation period due to fraud pursuant to s 28 of the Limitation Act (refer [42] to [57] of the amended statement of claim).
[24] In his defence and counterclaim, Mr Dilks affirmatively pleads that the claims against him are time barred pursuant to the Limitation Act, in all respects.
The first three causes of action
[25] The Limitation Act applies directly to the first three causes of action - deceit, negligence and misrepresentation.12 In tort causes of action the limitation period is six years from when the cause of action accrued.13 In the normal course of events, the cause of action would have accrued when Ms George and Mr Holland suffered loss, which was when they drew down the loan from Bluestone on or about 30 May 2007. At that time, however, they say they were not aware that Mr Dilks had told Bluestone that the funds were required for the purposes of home improvements, as that fact had been fraudulently concealed from them by Mr Dilks. In that event, time would not start to run until they discovered that fact.14
[26] It is clear, however, that the plaintiffs became aware of the misrepresentation later in 2007, as recorded in a Bluestone diary entry in January 2008. They then promptly complained to the NZMBA about Mr Dilks and took part in a hearing before that body in April 2008. Mr Dilks’ misrepresentation as to the purpose of the loan was one of the issues traversed at that hearing and was the subject of a finding by the NZMBA, as set out above.
[27] In light of these facts, time likely began running from December 2007. At the very latest, the limitation period commenced in April 2008. As this proceeding was not filed until August 2014 the first three causes of action are prima facie statute barred.
12 As this action is based on acts occurring before 1 January 2011, see Limitation Act 1950, s 2A.
13 Section 4.
14 Limitation Act 1950, s 28.
The fourth cause of action (breach of fiduciary duty)
[28] As the fourth cause of action (breach of fiduciary duty) is an equitable claim, the Limitation Act does not apply directly to it. But s 4(9) preserves the ability of the Courts to apply to any claim for equitable relief an analogous time bar corresponding to one provided for in the Act. Broadly speaking, the basis for doing so is that the equitable claim is so analogous to the statute barred claim that it would be inequitable to allow it to proceed.15
[29] The discretion to time-bar equitable claims by analogy is an old one deriving from the courts of equity. In 1872, Lord Westbury said:16
[W]here the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point in time by the Statute of Limitations, the Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation.
[30] By way of example, in Molloy v Mutual Reserve Life Insurance Co, an action to rescind an insurance contract for fraud was brought more than six years after the plaintiff had had sufficient knowledge of the facts to have permitted him to bring an action for damages at law for deceit.17 The English Court of Appeal held that the six-year limitation period to which the deceit action was subject, was applicable to the equitable claim for relief. Equity’s concurrent jurisdiction could not be used to undermine the limitation period applicable to the deceit cause of action.
[31] In another case, Re Robinson, an action was brought by one beneficiary against another to recover monies paid to the latter by the trustee under a mistake of fact.18 It was held that though the particular action lay in equity, it was analogous to a common law claim for money had and received, and hence a six-year limitation period was applied.
[32] In Johns v Johns the Court of Appeal considered whether a claim for breach of fiduciary duty (based on the defendant’s role as a director and shareholder of a
15 Johns v Johns [2004] 3 NZLR 202 (CA) at [68].
16 Knox v Gye (1872) LR 5 HL 656 at 674.
17 Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756 (EWCA).
18 Re Robinson [1911] 1 Ch 502.
trust-related company) was barred by analogy to a (putative)19 statutory bar on a related breach of trust claim.20 The Court held that:
[80] … There will be a bar by analogy only when the fiduciary claim parallels the statutory barred claim so closely that it would be inequitable to allow the statutory bar to be outflanked by the fiduciary claim. In order to determine how close the parallel is the Court must examine not only the underlying facts but also the nature of the relationship between the parties and the policy and purpose of the different causes of action. If there is a sufficient difference in any material respect, the suggested parallel is unlikely to be close enough to make it appropriate in equity to apply an analogous bar.
[81] … The judgments in Matai Industries and S v G should not be read as suggesting that the issue can be concluded solely by reference to the degree of concurrence of factual allegations. That of course must be the first focus because, if there is no sufficient degree of concurrence in that respect, the suggested analogy is likely to fail at that point. If, however, there is factual concurrence in the sense that the different causes of action are simply different ways of putting the same factual complaint, and there are no policy or other reasons militating against it, the case for an analogous bar is likely to have been made out.
[33] At the heart of all four causes of action in this case is the allegation that Mr Dilks represented to the plaintiffs that he would apply to Bluestone for refinancing on the basis of the plaintiffs’ proposed purchase of the TouchNZ franchise, but actually applied on the basis of home improvements. There is therefore a clear factual concurrence in this case. Mr Pidgeon did not advance any policy or other reasons why a time bar, analogous to that which applies to the first three causes of action, should not be applied to the fourth cause of action. Rather, he focussed on the argument that time should be extended pursuant to ss 25 or 28 of the Act.
[34] In my view an analogous time bar should be applied to the fourth cause of action. It relies on an identical factual sub-stratum to the other three causes of action, and there appears to be no policy or other reasons militating against such a course. Accordingly, all four causes of action are time barred, unless ss 25 or 28 of the Limitation Act apply.
19 The court had found that the breach of trust claim was not barred due to the application of the proviso to s 21(2) of the Limitation Act 1950.
20 Johns v Johns [2004] 3 NZLR 202 (CA).
Does s 25 of the Limitation Act apply?
[35]Section 25(4) relevantly provides that:
Where any right of action has accrued to recover any debt or other liquidated pecuniary claim… and the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment…
[36] It is common ground that, following the hearing before Woodhouse J on 2 and 3 June 2009, Mr Dilks gave the plaintiffs his spare van. Ms George’s evidence was that Mr Dilks gave them the van because his credibility was damaged while he was in the witness box before Woodhouse J and “he did not want us to name him in any further court case”. Similarly, Mr Holland’s evidence was that:
Paul Dilks sought to have his name omitted from any subsequent proceedings by giving me his spare van, valued at $10,000, along with a vehicle transfer form which he signed. He did this right outside the High Court after the 2009 hearing, and has since mentioned this act as “refund” of the commissions received by his mortgage broking company. He also promised to pay an amount of cash, which I recall was $4000.21
[37]Mr Dilks, on the other hand, gave evidence that:
I freely gave my Van because I felt sorry back then and Mr Holland said he had a vehicle problem and he only went after me because he was told by the lawyer I had insurance for this – I told Mr Holland that I did have insurance but because I had not notified them early in the piece, because I felt I had done nothing remiss - I would not be able to submit possible claim because I effectively delayed in this notification process. Seemed very harsh.
…
…the plaintiffs had car problems and back then I ran a spare vehicle which was unencumbered (used for weekends paragliding and scuba diving) so was in a position to really help as back then I was really upset for this family and it affected me deeply too.
[38] Mr Dilks may well have felt sorry for the plaintiffs, who at the time were facing the prospect of losing their home. I accept the plaintiffs’ evidence, however, that his primary motivation for giving them his spare van and also (most likely) agreeing to make a modest payment of $4,000 to them, by way of instalments, was to try and
21 It is in dispute whether Mr Dilks subsequently made several payments towards that $4,000.
persuade the plaintiffs not to issue proceedings against him, in circumstances where his credibility had been undermined at the hearing before Woodhouse J.
[39] Of note, however, there was no settlement agreement (written or oral) and no apparent consideration for Mr Dilks' gift of the van or offer to pay $4,000 to the plaintiffs, by instalments. These were gratuitous acts, undertaken by Mr Dilks in the ultimately vain hope that he would curry favour with the plaintiffs, who would not then issue legal proceedings against him.
[40] The key elements required before there will be a fresh accrual of a cause of action under s 25(4) are that:
(a)there must be a debt or other liquidated pecuniary claim;
(b)a right of action must have accrued in relation to that debt;
(c)the person liable must have either:
(i)acknowledged the debt/liquidated pecuniary claim; or
(ii)made a payment in respect thereof
[41] On the facts I have outlined, there is no debt or other liquidated pecuniary claim. Rather, the plaintiffs are pursuing unliquidated claims in this proceeding, the quantum of which reduced very significantly over the course of the trial. The only sum that could possibly be categorised as a liquidated sum would be the sum of $4,000 that Mr Dilks offered to pay to the plaintiffs, by way of instalments. For the reasons I have outlined above, however, that sum was not a debt (and it is not being pursued as such). Further, if any fresh cause of action accrued (contrary to my findings), it would not be for the whole (unliquidated) amount of the plaintiffs’ claims, but only for the sum of $4,000.
[42] In conclusion, no fresh cause of action accrued in June 2009 as a result of Mr Dilks’ gift of a van to the plaintiffs or his offer to pay them $4,000 by instalments.
Does s 28 of the Limitation Act apply?
[43] Section 28 provides for the limitation period to be postponed in cases of concealed fraud. For s 28 to apply in this case, the relevant fraudulent conduct must have impaired the plaintiffs’ ability to discover that Mr Dilks had represented to Bluestone that the refinancing was for the purposes of home improvements. Given this context, a number of the matters pleaded by the plaintiffs under the heading “Limitation Act 1950 s 28” are simply not relevant. Further, even accepting (for present purposes) that Mr Dilks concealed from the plaintiffs that he had misrepresented the purpose of the refinancing to Bluestone, that would only extend the moment of accrual to April 2008 at the very latest for the reasons set out at [27] to
[28] above. Given that the proceeding was filed in August 2014 (more than six years after the latest date on which the cause of action could have accrued), s 28 does not assist the plaintiffs.
Conclusion on limitation issues
[44] For the reasons I have outlined, I find that the first three causes of action are time barred pursuant to the Limitation Act, and the fourth cause of action is time barred by analogy (pursuant to s 4(9) of the Limitation Act).
[45] Given these findings, the plaintiffs’ claims must be dismissed. Nevertheless, in the event that the matter proceeds further, I set out below my factual findings on the key issues.
Factual findings
General impressions of the key witnesses
[46] The three key witnesses were Ms George, Mr Holland and Mr Dilks. Given that 12 years or so have passed since the relevant events, the evidence of all three witnesses was affected by the passage of time and I found aspects of their evidence to be unreliable. That is to be expected, in the circumstances.
[47] It was also clear that the evidence of all three witnesses was coloured to an extent by hindsight. Ms George and Mr Holland have lost their family home. It was
clear that they felt a strong need to hold someone “accountable” for that. They appeared unwilling or unable to accept that some of their own poor decisions may well have been key contributors to what occurred. Both Ms George and Mr Holland were at times somewhat evasive and their evidence was silent, vague, contradictory or implausible in relation to some key matters. That said, on the whole I did not find them to be deliberately untruthful. Rather, over the years they appear to have “rewritten history” to some extent, to try and explain (to themselves and others) how they came to lose the Holland family home relatively soon after acquiring a two-thirds interest in it from Mr Holland’s mother.
[48] I also had a number of reservations about Mr Dilks’ evidence. He was reluctant to make concessions when concessions were clearly called for. His evidence was given through the lens that, from his perspective, he believes that he has been unjustifiably hounded, almost to the point of bankruptcy (having previously spent large sums on lawyers). He tried to minimise his own involvement in the relevant transactions, or receipt or knowledge of key documents, for example by shifting responsibility to his “office ladies”. I did not find such evidence to be credible. A number of aspects of his evidence were implausible, and inconsistent with the contemporaneous documents. Further, on his own admission he was willing to (and did) lie to Bluestone about the purpose of the refinancing, which reflects poorly on his character.
[49] In light of my concerns about the evidence of all three key witnesses, I have relied as closely as possible on the contemporaneous documents in making my factual findings. As is usually the case, however, those documents provide only an incomplete record of the relevant events.
Ms George and Mr Holland acquire an interest in the Weymouth property
[50] In May 2006, Ms George and Mr Holland borrowed approximately $260,000 from the National Bank to purchase a two-thirds share in a property owned by Mr Holland’s mother in which the three adults lived, together with the four children of Ms George and Mr Holland. At the time Ms George was working as a school teacher and Mr Holland as a drill offsider for Geovert Limited.
[51] Unfortunately, Ms George and Mr Holland appear to have struggled to meet their National Bank loan repayments almost from the outset. In less than a year they were already more than $14,000 in arrears.
Ms George enters into an agreement to purchase a TouchNZ franchise
[52] In early 2007 Ms George started looking for business opportunities to increase the couple’s income. She found the TouchNZ franchise for sale on the internet on 13 February 2007. The vendor was Sell Smart, a company owned and operated by David Padfield, who was both an entrepreneur and the minister of a local church.
[53] Ms George met with Mr Padfield. He impressed her as a highly successful businessman. He was also clearly a very persuasive salesman. His sales pitch for the franchise was supported by a brochure containing financial projections for the business which, on any realistic assessment, appear to have been wildly optimistic. For a deposit of only $50,000 (and subsequent instalment payments of a further
$55,000) a cash surplus of over $250,000 per annum was projected.
[54] Ms George was convinced by Mr Padfield’s smooth presentation and the brochure he provided. She appears to have seen the franchise business as a way for the couple to overcome their financial difficulties and put themselves on a more secure financial footing, for a relatively modest outlay.
[55] On 13 February 2007, without taking any legal or accounting advice, Ms George entered into an unconditional agreement to purchase the franchise.
Unsuccessful attempt to obtain financing from the National Bank
[56] Ms George then approached the National Bank for funding. The bank declined her application. The loan officer advised the plaintiffs against proceeding with the purchase, on the basis that they simply could not afford to borrow any further money.
Mr Dilks is introduced to the plaintiffs by Mr Padfield
[57] Ms George advised Mr Padfield that their application to the National Bank had been declined. Mr Padfield then offered to introduce Ms George to an independent mortgage broker for help with obtaining finance. That mortgage broker was Mr Dilks.
[58] The plaintiffs expressed concern in their evidence that Mr Dilks had a very close (and undisclosed) business association with Mr Padfield and that this had given rise to a conflict of interest. They provided little factual foundation for this assertion, however, and did not call Mr Padfield as a witness to substantiate the allegation.
[59] Mr Dilks’ evidence was that he had only known Mr Padfield for a few months at the relevant time. He had previously arranged insurance for Mr Padfield, following which Mr Padfield had introduced Mr Dilks to his daughter. Mr Dilks had then helped her to obtain mortgage financing. Mr Dilks’ evidence was that he had met with Mr Padfield about five or six times in total prior to being referred to the plaintiffs. He said that the plaintiffs “were aware that David Padfield was a recent client of mine for insurance and mortgage work”. Mr Dilks was adamant, however, that he was never an agent for the TouchNZ franchise and did not stand to receive (and did not actually receive) any monies or inducements of any kind from Mr Padfield in relation to the TouchNZ franchise.
[60] I accept Mr Dilks’ evidence about the nature and extent of his relationship with Mr Padfield. The plaintiffs carry the burden of proof. They have adduced no evidence (either documentary or from Mr Padfield) that raises any doubts as to the reliability or credibility of Mr Dilks’ evidence on the topic. The extent of the relationship is not such, in my view, as to give rise to any conflict of interest.
Mr Dilks’ representation to Bluestone about the purpose of the refinancing loan
[61] In his mortgage broker role, Mr Dilks approached several institutions about the proposed refinancing. The only institution willing to lend to the plaintiffs was Bluestone, a second-tier specialist lender that (amongst other things) offered mortgage products to borrowers who did not meet the traditional lending requirements of the
major retail banks. Bluestone’s interest rates were generally higher than the retail banks, however, reflecting the increased level of risk involved.
[62] Mr Dilks’ loan application to Bluestone, on behalf of the plaintiffs, was made by fax dated 12 April 2007. The application included a covering letter and 47 pages of supporting documents such as bank statements. Mr Dilks’ covering letter stated, amongst other things, that:
Purpose85% LVR [loan to value ratio] home loan on property… Weymouth, Auckland. Current Loan $273k with National Bank. Wanting to refinance to $385,000. Property with valuation at $445,000.
StabilityRodney and Ariana long term married with two dependents Ariana is a school teacher of 14yrs and Rodney a field technician drilling specialist 12 yrs. They have a beautiful home in Weymouth which needs enhancing throughout.
(Emphasis added)
[63] This appears to be the only contemporaneous document generated by Mr Dilks (as opposed to Bluestone) that specifically refers (albeit somewhat indirectly) to the purpose of the loan.
[64] On receipt of the application Bluestone opened a form of diary, comprising notes relating to the progress of the loan application. On 2 May 2007, the Bluestone diary notes record the purpose of the loan as being for home improvements:
Clients would like to re-finance & top up to complete home improvements.
…
Finance with Bluestone will assist clients with their home improvements.
[65] Mr Dilks acknowledged in his evidence that he had applied for the loan on the basis that the funds would be used for home improvements, rather than for the purchase of a franchise business. He knew that that was not true but said that he made the representation following a discussion with Mr Harrison, a business development manager at Bluestone. Mr Dilks’ evidence was that Mr Harrison suggested that the loan be presented in that way to secure a lower interest rate. Mr Harrison denied that in his evidence.
[66] Ms Dilks’ recollection is (possibly) supported by a somewhat puzzling, undated, internal Bluestone document which included a handwritten annotation stating “home Imps – possibly buying a business”. This note indicates that, at some stage, Mr Dilks must have mentioned to someone at Bluestone the possibility that the loan might be used for buying a business.22
[67] Ultimately, however, I do not find it necessary to resolve the conflict in evidence. Mr Dilks deliberately included information that he knew was false in the loan application to Bluestone. He intended that that information be relied on. Unlike in the previous proceeding against Bluestone, nothing turns in this case on whether he did that at the suggestion of Mr Harrison, or entirely of his own volition. The key issue is whether the plaintiffs were aware that Mr Dilks had misrepresented the purpose of the loan to Bluestone.
[68] Mr Dilks’ evidence was that Ms George was aware of the basis on which he had applied for the loan, and that it was intended to secure a lower interest rate. He further noted that the purpose of the loan (“home improvements”) is squarely stated in the home loan documentation that Bluestone required the plaintiffs to sign before an independent lawyer. The relevant disclosure documents made it clear that the lenders must read the loan agreement carefully before signing it and ask any questions before they did so.
[69] Ms George strenuously denied either that Mr Dilks told her that he had applied for the loan for home improvements, or that she had seen the reference to home improvements in the loan documents.
[70] Ms George’s evidence that she had been very surprised to discover that the purpose of the loan was for home improvements when she contacted Bluestone about the mortgage arrears appeared to be entirely genuine. Her contemporaneous actions in raising this issue with the NZMBA are consistent with her narrative.
22 I accept the plaintiffs’ evidence (which is consistent with the contemporaneous documents) that their dealings with Bluestone throughout the loan application process were all through Mr Dilks, and that there was no direct contact between either of the plaintiffs and any employee of Bluestone until after the loan agreement was entered into.
[71] I accordingly find that Mr Dilks misrepresented the purpose of the refinancing loan to Bluestone and that Ms George and Mr Holland did not learn of this until December 2007, or at the latest April 2008 (when the NZMBA hearing took place).
[72] The pleaded misrepresentation, however, is not Mr Dilks’ misrepresentation to Bluestone. Rather, the plaintiffs plead that Mr Dilks represented to them that he would apply for the loan for the purposes of purchasing the franchise. Neither Ms George nor Mr Holland gave any evidence of any such express representation. I am satisfied, however, that it is implicit that a professional mortgage broker will not misrepresent the purpose for which a loan is sought to a prospective lender, and that Ms George and Mr Holland were therefore entitled to assume that Mr Dilks (if a purpose were stated at all) would inform prospective lenders of the true purpose for which financing was sought.
[73] There is nothing to suggest, however, that Mr Dilks’ apparent failure to mention this matter to Ms George and Mr Holland was anything other than inadvertent. From his perspective it was in their interests to misrepresent the loan purpose to secure a lower interest rate. Further, he would have appreciated that the loan purpose would be expressly referred to in the loan documentation that they signed. Further, given that Ms George and Mr Holland were both willing to misrepresent Mr Holland’s income to Bluestone (as discussed further below) it seems likely that if Mr Dilks had raised this issue with the plaintiffs, they would have concurred with his approach of misrepresenting the loan purpose in order to secure a lower interest rate.
Did Mr Dilks misrepresent the employment status of Mr Holland to Bluestone?
[74] For completeness, I will address this issue briefly, although it does not form part of the pleaded case.
[75] The plaintiffs alleged, in their evidence, that Mr Dilks deliberately misrepresented the employment status of Mr Holland to Bluestone to assist in securing a loan. Mr Dilks denied doing so and took the position that if there was any misrepresentation responsibility for it lay with the plaintiffs.
[76] It appears from Bluestone’s internal notes that, by 9 May 2007, they were aware, likely as a result of their own enquiries (there is an earlier reference to phoning Geovert to do an employment check) that Mr Holland was no longer employed by Geovert. Bluestone’s notes record that he was “now a self-employed truck driver… currently contracting to his old employer Geovert”. This was corroborated by Mr Harrison’s evidence that he could recall the underwriting team contacting him to advise that there was a requirement for a product change as Rodney was no longer an employee of Geovert Limited but an independent contractor working with Geovert. Mr Dilks’ recollection was to similar effect.
[77] As a result of their discovery of this information, Bluestone changed the loan type to a “business easy” loan and sought further information from Mr Holland as to his self-employed income. Mr Holland then signed a blank standard form Bluestone “self-certified income declaration” and gave it to Ms George, who then filled it out. She recorded a monthly income of $6,800 per month. She said that this was the income that she believed that they would earn from the franchise business and that Mr Dilks advised her to insert this. Mr Dilks denies that and said that his understanding at the time was that Mr Holland was working as a contractor.
[78] The income form was then sent to Bluestone. Bluestone was also provided with copies of bank statements for Mr Holland recording, amongst other things, income from Geovert Limited over the period November 2006 to February 2007 at
$1,870.50 per fortnight. Bluestone used that figure in assessing Mr Holland’s income, rather than the $6,800 per month that he had self-certified.
[79] Mr Holland’s evidence was that he was actually unemployed at the time of the loan application. I accept Mr Dilks’ evidence, however, that he was not aware of this, and that if he had been, he would have immediately advised the couple not to proceed. Mr Dilks’ belief that Mr Holland was self-employed is supported by the fact that Mr Holland (at Mr Dilks’ suggestion) took steps to get his business GST registered, as this was a requirement of Bluestone’s.
[80] I note that the declaration on the income form (a document that is only one page long) acknowledges and affirms that the information provided is true and correct,
that Bluestone will rely on it when assessing the loan application, that the applicants are able to make the loan repayments and will not suffer any financial hardship, and that Bluestone has recommended that the applicants obtain independent legal and financial advice in relation to the loan. Obviously, if Bluestone had been aware that Mr Holland was unemployed at the relevant time, it seems unlikely that the loan would have been approved.
[81] Ultimately, nothing turns on whether the $6,800 figure was inserted at the suggestion of Mr Dilks, or not. That is because, even on the most favourable interpretation of the evidence for the plaintiffs, they were willing parties to misleading Bluestone on an issue that was highly material as to their ability to service a loan. On the least favourable interpretation of the evidence, Mr Dilks was also misled.
Did Mr Dilks misrepresent the employment status of Ms George to Bluestone?
[82] Again, for completeness, I will address this issue briefly as it was the subject of evidence. I have found above, however, that this allegation does not form part of the pleaded case.
[83] Ms George’s evidence was that she left her teaching job in anticipation of finance being approved, so that she could work in the franchise business full-time. The plaintiffs allege that Mr Dilks was aware of this and failed to disclose it to Bluestone. Mr Dilks says he was not aware of this and, if he had been, would have told Ms George to start working again immediately.
[84] Unfortunately, there is no clear documentary evidence as to when Ms George ceased working as a teacher. The (limited) documentation that is before me supports the following timeline:
(a)14 March 2007 and 11 April 2007 – Ms George’s payslips indicate that she was still employed as a teacher on these dates.
(b)12 April 2007 – the plaintiffs applied for a loan from Bluestone (enclosing Ms George’s recent payslips).
(c)30 April 2007 – Bluestone’s internal notes record that they need employment contact details for Ms George.
(d)2 May 2007 – Bluestone’s internal notes record that Ms George is a teacher at a salary of $54,796.45.
(e)Undated – Bluestone’s file includes a Yellow Pages printout with the phone number for the school that Ms George worked at. On the document is the handwritten annotation “confirmed”.
(f)9 May 2007 – Bluestone’s internal notes record that employment confirmation has been completed for Ms George.
(g)10 May 2007 – the Bluestone loan was approved.
[85] Given this timeline, it is quite possible, in my view, that Ms George is mistaken in her recollection that she resigned from her teaching job prior to the loan application being approved. Further, I found Mr Dilks’ evidence that he did not know that Ms George had resigned from her job (if that was indeed the case) and that he would have advised her to start working again immediately, to be credible.
Loan approval
[86] On 10 May 2007, Bluestone sent a fax to Mr Dilks which stated, amongst other things:
We confirm the loan has been unconditionally approved, based on the information submitted.
[87] On the same date Bluestone sent a letter to the plaintiffs at their home address advising them that the loan had been unconditionally approved and that the offer was open for three months. The letter included the following paragraph:
Important: If you decide to borrow from us, you must rely only on the information contained in the formal loan agreement, which will be sent to you in due course. This sets out the final terms of your loan, which overrides this approval, and by signing it you agree that you have not relied on any promises that are not contained in the formal loan agreement itself. You acknowledge that your decision to borrow from us is based on your own assessment of the
loan product. If this is not the case, you should tell us now. We recommend that you seek professional advice before signing any documents. If your circumstances change to the extent that we feel completion of the matter would be undesirable, we have the right to cancel this conditional approval at any time.
[88] The letter also referred, in bold, to a “Loan Approval Schedule”, enclosed with the letter. The Loan Approval Schedule recorded information relating to the loan, including the principal, interest rate of 13.04% per annum and monthly payments estimated at $3,913. The schedule also stated that the loan purpose was “home improvement”.
[89] Bluestone required that the loan documents be signed in the presence of a lawyer, which occurred on 30 May 2007. The loan agreement was initialled on each page by the plaintiffs and signed by them. The loan purpose is recorded in the agreement as “home improvements”. The right to cancel within three working days is recorded in the agreement. There is a statement at the end of the agreement that:
By signing this loan agreement, each of you have made the following declarations:
1You have carefully read this loan agreement including the terms and conditions. You understand it establishes a legal contract between you and the lender. If you have any questions, ask before you sign.
[90] Prior to drawdown a complication arose, as Mr Holland’s mother still owned a one-third interest in the property. Bluestone was not willing to advance the loan to the plaintiffs if she remained on the title. Bluestone required that Mr Holland’s mother take independent legal advice on the issue, which she did. She was advised not to relinquish her interest in the property. She decided to do so, nonetheless.
[91] The Bluestone loan, in the sum of $360,000, was then drawn down by the plaintiffs. The bulk of that sum was used to repay the National Bank. $50,000 was used to purchase the franchise business (Mr Padfield had apparently agreed to reduce the purchase price after the plaintiffs had difficulty raising funding).23 The balance of approximately $37,000 was used for various other purposes.
23 Mr Dilks’ evidence, which I accept, is that he understood throughout that the purchase price was
$50,000. He was not aware of the (initial) requirement for additional instalment payments.
Failure of the franchise business
[92] The franchise business was not a success. Within months of the loan being drawn down the plaintiffs were in serious arrears of their Bluestone loan repayments.
[93] Ms George laid responsibility for the failure of the franchise largely at Mr Padfield’s door, alleging that he had not given them the required training. The plaintiffs sought a refund from Sell Smart and Mr Padfield. Ultimately, they settled their claim for $20,000.
[94] Bluestone allowed an extended period to the plaintiffs for them to try to remedy their defaults, but the arrears continued to mount. Bluestone issued a notice under the Property Law Act and, ultimately, sold the property at mortgagee sale.
Did Mr Dilks give advice to the plaintiffs as to the merits of the franchise business?
[95] An issue raised in the evidence was whether Mr Dilks gave advice to the plaintiffs as to the merits of the business. The plaintiffs argued, in essence, that Mr Dilks went beyond the role of mortgage broker and assumed the role of business advisor. In that capacity he is said to have advised them that it was a very good business and that the projected income was such that Ms George should not require alternative work. (It is not suggested, however, that he suggested the business could support both Ms George and Mr Holland.) The plaintiffs claim that they relied on this advice in taking out the Bluestone loan and purchasing the franchise business.
[96] I have previously found that these allegations do not form part of the pleaded case. Nevertheless, I will address them briefly.
[97] Mr Dilks’ evidence was that he never saw a copy of Mr Padfield’s marketing brochure for the business or the projections it contained. He denied giving any “advice” about the merits of the business.
[98] I accept the plaintiffs’ evidence, however, that Mr Dilks expressed very positive views to them about the merits of the franchise. It was clear from his evidence that Mr Dilks was very impressed by Mr Padfield’s apparent success in business –
including the fact that he owned a Porsche. His understanding was that the business was an existing successful franchise and the total purchase price was (only) $50,000.
[99] Mr Dilks was neither an accountant nor a business advisor. He clearly lacked the necessary skills to express an opinion, even in a very general way, as to whether a business was a good purchase or not. Rather, his views appeared to be based on the fact that he was slightly starstruck by Mr Padfield and his obvious trappings of success. Expressing any views at all as to the merits of the franchise business was beyond the scope of Mr Dilks’ role as an independent mortgage broker, and he should not have done so. I note that this is one of the issues in respect of which he was disciplined by the NZMBA, as such conduct fell outside the proper scope of his role as a mortgage broker.
Causation/inducement
[100] The plaintiffs advance four causes of action against Mr Dilks, all of them time-barred.
[101]I have found that Mr Dilks:
(a)expressly misrepresented the purpose of the loan to Bluestone and implicitly represented to the plaintiffs that he would be truthful about the purpose for the loan in the Bluestone loan application; and
(b)should not have expressed positive and/or encouraging views about the franchise business to the plaintiffs, as that was beyond his expertise and outside the scope of his role as an independent mortgage broker.
[102] I am not satisfied that either of these matters (only the first of which is pleaded) are materially causative of the plaintiffs’ losses, for the following reasons:
(a)Ms George was clearly very keen to purchase the franchise. Prior to meeting Mr Dilks, she had already been persuaded (by Mr Padfield) that the business was an excellent investment. She failed to undertake any due diligence, or to take any financial or legal advice, before
entering into an unconditional agreement to purchase the franchise. If she had not honoured that agreement Mr Padfield could have sued her for the full purchase price.
(b)Ms George and Mr Holland were in very serious mortgage arrears to the National Bank at the time of their refinancing with Bluestone. Ms George clearly put all of her hopes in the franchise business as the solution to the couple’s financial woes. They had no “Plan B”. The couple were increasingly desperate to refinance, and if they had not done so it appears likely they would have lost their home in a National Bank mortgagee sale, particularly given that Mr Holland had lost his job and does not appear to have secured paid employment for many years (if ever) after losing his employment with Geovert.
(c)The plaintiffs chose to proceed with the Bluestone loan in circumstances where (unbeknownst to Mr Dilks) neither of them currently had a job, contrary to the employment information they had provided to Bluestone. They knew that they had misrepresented their income information to Bluestone (either jointly with Mr Dilks, or on their own) and that they would be unable to afford to make the required loan payments unless the franchise business produced substantial income. This was a highly risky strategy on their part.
(d)Ms George’s view is that the reason for the failure of the franchise lies entirely with Mr Padfield. She says that he was obstructive and unhelpful, refused to pass on the existing franchise income and would not provide the necessary training. These are not matters that could have reasonably been foreseen by either the plaintiffs or Mr Dilks prior to the purchase proceeding.
(e)The loan purpose was clearly stated in the loan documents which the plaintiffs signed before a lawyer (initialling each page). They were advised to carefully read those documents.
[103] Any suggestion that the plaintiffs would have been unwilling to proceed with the loan application if they had known that Mr Dilks had misrepresented the purpose of the loan to Bluestone (in order to secure a lower interest rate) is simply implausible. On the contrary, the plaintiffs’ actions in subsequently knowingly providing false information to Bluestone regarding Mr Holland’s income (a far more serious misrepresentation) indicates that it is highly unlikely that they would have insisted that Bluestone be advised of the true purpose of the loan. Further, even if they had, Mr Harrison’s evidence is that a loan offer would likely have still been made, but at a higher interest rate.
[104] Accordingly, even if the plaintiffs’ claims had not been time-barred, and had been properly pleaded, they would have failed due to a lack of causation.
Mr Dilks’ counterclaim
[105] Mr Dilks was self-represented at trial but had previously incurred significant legal costs in having the formal proof judgment set aside. As noted above, he counterclaims for the legal costs he has incurred and also claims for lost employment income due to the time he has spent working on the legal proceedings. Such a claim is misconceived. Such matters are appropriately raised in the context of an application for costs, following delivery of this judgment. Even then, unless Mr Dilks is able to point me to any authority to the contrary, the claim for lost employment income appears to be misconceived.
Result
[106] The plaintiffs’ claims are dismissed in their entirety, on the basis that they are time-barred pursuant to the Limitation Act (the first three causes of action) or by analogy in equity (the fourth cause of action).
[107] Leave is reserved to file memoranda on costs. I note that Mr Holland is legally aided. Pursuant to s 45(2) of the Legal Services Act 2011 no order for costs can be made against a legally aided party unless the Court is satisfied that exceptional circumstances prevail – even then 45(1) says that it should not exceed an amount, if any, that would be reasonable for the aided person to pay. In considering whether
there are exceptional circumstances, the Court is entitled to consider, amongst other things, conduct causing unnecessary cost, failure to comply with procedural rules, misleading conduct, unreasonable pursuit of an issue, unreasonable refusal to negotiate, or general abuse of the court’s processes.
[108] Ms George is not legally aided. Mr Pidgeon advised, however, that she had assigned her litigation rights to Mr Holland. Mr Pidgeon foreshadowed that he is likely to submit that, as a result, she is not liable for costs.
[109] My preliminary view is that, if Mr Holland were not legally aided, costs in Mr Dilks favour on a 2B scale basis (refer r 14.3 and Schedules 2 and 3 of the High Court Rules 2016) would have been appropriate. The issue is complicated, however, by Mr Holland’s legal aid status and, possibly, Ms George’s assignment of litigation rights to Mr Holland. Given these matters, and the fact that Mr Dilks is self-represented, it is appropriate that the plaintiffs’ cost memorandum be filed first. I accordingly direct that:
(a)the plaintiffs’ memorandum on costs is to be filed by 21 February 2020;
(b)the defendant’s memorandum on costs is to be filed by 6 March 2020;
(c)any further memorandum from the plaintiff (strictly in reply) is to be filed by 13 March 2020.
Katz J
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