Harrison v Harrison
[2017] NZHC 598
•29 March 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-993 [2017] NZHC 598
UNDER The Trustee Act 1956 and others IN THE MATTER
of Valerie Geard Family Trust
BETWEEN
PAULINE JANICE HARRISON Plaintiff
AND
GRAEME ROSS HARRISON First Defendant
ADRIENNE HARRISON Second Defendant
Hearing: 15 December 2016
Supplementary submissions 21 December 2016 (Defendants)
and 17 February 2017 (Plaintiffs)Appearances:
(on papers)
Judgment:
29 March 2017
JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE
This judgment was delivered by me on
29.03.17 at 3.30 pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
HARRISON v HARRISON & Anor [2017] NZHC 598 [29 March 2017]
[1] This proceeding was commenced in 2012. Little progress has been made in readying the matter for trial. One of the reasons has been that the plaintiff has not complied with in order for security for costs. That fact is one of the reasons why the defendants have brought one of the current applications. Orders striking out the proceedings have been filed as I discuss further on in this judgment.
[2] The other application which requires to be dealt with seeks an order striking the Valerie Geard Family Trust out of the proceeding. It is an application which I shall deal with first.
[3] It is not necessary to traverse the background which gave rise to the dispute in this case. It has been covered in other judgements such as that of Faire J in Harrison v Harrison.1
[4] The defendants are seeking two orders. The first seeks an order striking out a party which the plaintiff added to the proceeding, the Valerie Geard Family Trust. As I explain subsequently, the grounds are that that party does not appear to have anything to do with these proceedings and, in any event, was added without the consent of the court.
[5] On 1 March 2013, this Court made an order directing the plaintiff to provide security for costs.2 A substantial part of the security for costs order has apparently been satisfied, but the second plaintiff withheld an amount. This amount was the equivalent of an amount of an order for costs that she had been ordered to pay to the defendants. The plaintiff declines to take any steps to complete payment of the security for costs which were directed to be paid. The proceeding was stayed.
Application to strike out first plaintiff as improperly joined as a party by second plaintiff
[6] The defendants are seeking orders in the following terms:
1 Harrison v Harrison 2016] NZHC 574.
2 Valerie Geard Family Trust v Harrison [2013] NZHC 385.
(a) The “first plaintiff” herein, Valerie Geard Family Trust (sic. Valerie Geard Trust) be struck out of the proceeding under r.4.56(1)(a); and
(b) The proceeding, then carried on solely by the second plaintiff, be dismissed under r.15.2;
[7] The application is made in reliance on 4.56 which provides as follows:
4.56 Striking out and adding parties
(1) A Judge may, at any stage of a proceeding, order that—
(a) the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or
(b)the name of a person be added as a plaintiff or defendant because—
(i) the person ought to have been joined; or
(ii)the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
(2)An order does not require an application and may be made on terms the court considers just.
(3)Despite subclause (1)(b), no person may be added as a plaintiff without that person's consent.
[8] The grounds upon which those applications are made are as follows:
(a) R. 4.56(1)(a) – the first plaintiff was improperly joined as a party by the second plaintiff;
(b) The statement of claim herein had Ms PJ Harrison as the sole plaintiff but the amended statement of claim filed by Ms PJ Harrison named the “Valerie Geard Family Trust” as first plaintiff. The original statement of claim is at G1.
(c) There is no such entity as the “Valerie Geard Family Trust created by Deed on 18 October 2005”. That Pauline’s intention is that the VGT is the first plaintiff is apparent from, for example, para’s 1 and 8 of the amended statement of claim (G12). Indeed, as I mention below, recent filings by Pauline transmogrify the first plaintiff’s name to VGT.
(d) On the assumption that the first plaintiff intended by Ms PJ Harrison was the Valerie Geard Trust (which was created by Deed on 18 October 2005), the Valerie Geard Trust has been improperly joined because:
(i)The defendants, as the only trustees of the Valerie Geard Trust, are being sue qua trustees of the Valerie Geard Trust and did not want to be joined (and have not consented to being joined) to the proceeding as a first plaintiff; and
(ii)Ms PJ Harrison had no authority to file a pleading adding the Valerie Geard Trust as first plaintiff; and
(iii)There was no formal application for joinder under r.4.56(1)(b) let alone an application by the trustees of the Valerie Geard Trust.
[9] This part of the application can be dealt with relatively briefly.
[10] The discussion of the proceeding which has been the subject of judgments that I and other Judges have issued in this matter has described the parties to the trust arrangements in detail. What becomes clear from that background is that there is no party by the name of “Valerie Geard Family Trust” which has any involvement in the trust which was settled as the Valerie Geard Trust on 18 October 2005. Of course, the trust known as the “Valerie Geard Trust” is at the heart of the dispute between the parties. In my view there are two reasons why the application to strike out ought to succeed. In the first place, the addition of a party which has no conceivable connection with the proceedings necessarily means that that party was improperly or mistakenly joined. Secondly, while a party has an untrammelled right when commencing proceedings to include the parties that he or she chooses, once the litigation has commenced the addition of further parties requires the consent of the Court. That is what r 4.56(b) provides and the promulgation of that Rule can only have been for the purposes that I have just stated. Presumably the policy of the Rule is to ensure that existing proceedings which are well on into their life should not be disrupted through the unnecessary or even prejudicial adding of parties which can disrupt progress of the proceedings to completion.
[11] For all of these reasons I consider that the order which is sought by the defendants sought to be made under r 4.56 and I order accordingly.
Dismissal of Proceeding for Want of Prosecution – r 15.2
[12] The defendants now apply for an order striking out the proceedings.
[13] The substance of this application is that the plaintiff had an order for security for costs made against her but has failed to comply with that. This has led, the defendants assert, to very considerable delays in the proceeding. The history of the matter will be referred to below.
[14] The plaintiff opposes the making of that order. The plaintiff submits that the matter must go to trial in order for justice to be served.3 This is on the basis that there have allegedly been legal wrongs committed. The nature of these wrongs is continuously reiterated throughout their submissions, as each of the substantive causes of action is explored. In this sense, the plaintiff argues that a trial is required to explore the issues and test the evidence.
[15] It is clear that there is jurisdiction to make an order of this kind. The two authorities that are generally relied upon are Jagwar Holdings Ltd v Fullers Corporation Ltd4 and J & T Christie Ltd (in rec) v Westpac Merchant Finance Ltd.5
Those authorities are referred to in the commentary as follows:6
A proceeding may be dismissed if the plaintiff fails to provide the security ordered. The following principles emerged from Jagwar Holdings Ltd v Fullers Corp Ltd (1991) 4 PRNZ 577 (HC); J & T Christie Ltd (in rec) v Westpac Merchant Finance Ltd HC Dunedin CP128/91, 17 April 1997:
(a) The plaintiff is entitled to a reasonable opportunity to comply;
generally the Court fixes the time;
(b) If the plaintiff fails to provide security within the time allowed, or within a reasonable time, the Court may strike out the proceeding, and an “unless” order may be made (as, for example, it was in Lloyd v National Mutual Life Assoc of Australasia Ltd HC Auckland CIV-
2002-404-1705, 27 February 2004) even within the limitation period;
3 They cite all sorts of sources for this, including the New Zealand Bill of Rights Act 1990, s 27.
4 Jagwar Holdings Ltd v Fullers Corporation Ltd (1991) 4 PRNZ 577 (HC).
5 J & T Christie Ltd (in rec) v Westpac Merchant Finance Ltd HC Dunedin CP128/91, 17 April
1997.
6 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at
[HR5.45.11].
(c) If the defendant cannot establish the more general ground of failure to prosecute (r 15.2), a proceeding should only be dismissed if the non-compliance is “intentional and contumelious”; and
(d) Generally, the proceeding will only be dismissed if its continuation would involve substantial prejudice to the defendant.
[16] The issue of substantial prejudice requires brief mention. The position of the defendants is that they are suffering prejudice of the type that is described as covered by the “sword of Damocles” principle.7 That is that they are caught in a position where they are subject to a pending proceeding which they cannot advance. The plaintiff considers that such a principle does not form part of the law of New Zealand.
[17] The defendants have also given evidence that they cannot proceed with distributions from the trust while the present proceedings are ongoing. The prejudice is therefore similar to that which was relied upon in the case of Lloyd v National Mutual Life Assoc of Australasia Ltd.8 In that case, the defendant company wished to wind up the insurance scheme which the plaintiff was claiming against. The plaintiff was the last remaining claimant. The defendant gave evidence that they had
not been able to devise any solution which would enable them to wind up the scheme and yet make provision for the contingency that her claim might succeed. This was found to be substantial prejudice by Master Faire.
[18] In my view, the situation in the present case is similar. The effect of the delay is that the trust cannot be brought to completion. This is what the trustees would wish to achieve, but they are unable to do so because of the continuation of the claim by the plaintiff. I conclude that substantial prejudice is to be contrasted with a situation where all that has happened to the applicant party is that it has suffered some inconvenience. Viewed in this way, my conclusion is that substantial prejudice has resulted to the defendants from their continuing inability to bring these
proceedings to a conclusion.
7 Biss v Lambeth Health Authority [1978] 2 All ER 125 (CA) at 131 per Lord Denning MR.
8 Lloyd v National Mutual Life Assoc of Australasia Ltd HC Auckland CIV-2002-404-1705, 27
February 2004.
[19] In my view, the authorities cited are consistent with the purpose of the security for costs rules contained in the High Court Rules. The Court of Appeal decision in McLachlan v MEL Network Ltd makes this clear.9 It was explained that the Courts will not be deflected from making orders for security for costs, even though they may result in a claim being defeated, because the claimant cannot comply with an order for security.10 The Court noted:
[15] The rule itself contemplates an order for security where the plaintiff will be unable to meet an adverse award of costs. That must be taken as contemplating also that an order for substantial security may, in effect, prevent the plaintiff from pursuing the claim. An order having that effect should be made only after careful consideration and in a case in which the claim has little chance of success. Access to the courts for a genuine plaintiff is not lightly to be denied.
[16] Of course, the interests of defendants must also be weighed. They must be protected against being drawn into unjustified litigation, particularly where it is over-complicated and unnecessarily protracted.
[20] The plaintiff in this case, having had an order for security for costs made against her, has declined to comply completely with its terms. The proceedings have been subject to a stay for a period now of nearly four years. In the meantime, the plaintiff continues to cause the defendants further expense by bringing various applications against them, including applications to rescind interlocutory orders.11
The result is that the object of making an order for security for costs has only been
partly realised. By not completing the payment of the security for costs and bringing about a lift in the stay order, the plaintiff continues to expose the defendants to further cost. The defendants therefore find themselves, in the words of the Court of Appeal in McLachlan, drawn into an unjustified litigation which is unnecessarily protracted.12
[21] It is in the plaintiff’s hands to advance this litigation. She has declined to do so and has thereby failed to prosecute the case against the defendants. She has brought into existence an unsatisfactory state of affairs. She has shown no
inclination to bring these to an end.
9 McLachlan v MEL Network (2002) 16 PRNZ 747 (CA).
10 At [15].
11 They unsuccessfully applied for an order rescinding the security for costs order itself.
12 At [16].
[22] It is my view that a similar result could be achieved by invoking rule 15.2. In regard to that rule, Mr Parmenter made the submission that there were three main requirements that needed to be established before the court would make an order:
These are well settled and were succinctly summarised by Eichelbaum CJ
in Lovie v Medical Assurance Soc NZ Ltd [1992] 2 NZLR 244 at 248, (1991)
4 PRNZ 662 at 666 (HC):
“[T]he applicant must show that the plaintiff has been guilty of inordinate delay, that such delay is inexcusable, and that it has seriously prejudiced the defendant. Although these considerations are not necessarily exclusive, and at the end one must always stand back and have regard to the interests of justice, in this country, ever since NZ Industrial Gases Ltd v Andersons Ltd [1970] NZLR 58 it has been accepted that if the application is to be successful, the applicant must commence by proving the three factors listed.”
[23] I have already considered the element of prejudice when referring to the judgment of Lloyd v National Mutual Life Assoc of Australasia Ltd.13 The same considerations there mentioned are applicable to a striking out for failure to comply with a security for costs order which was the subject of consideration in Jagwar. The requirement of substantial prejudice to which the court made reference in that case was one of the matters that required to be established as present in this case, in my view.
[24] One further matter that I will comment on briefly concerns the relevance of the stay of proceedings order. It is not the object of such orders, as I see them, to provide the plaintiff with an option to either satisfy the order and proceed to hearing or, conversely, at their election, to keep alive indefinitely proceedings to which the defendants are bound as parties who have no means of escaping that unsatisfactory position. At some point, the impasse must be resolved. While case management principles must not dominate the discussion and must not be permitted to outweigh the interests of justice, it is equally plain that orders that are made for the expeditious management of litigation cannot be simply ignored. That will have unacceptable consequences both in the specific litigation concerned and also undesirable
implications for case management generally.
13 Above
[25] In my view, the time has arrived where the plaintiff must be presented with a clear option of either complying with the security for costs order made in 2013 or, alternatively, seeing her proceedings struck out.
[26] The plaintiff is to comply with the security for costs order within 15 working days of the date of this judgment, failing which her claim is to be deemed to have been struck out.
[27] The approach that I have set out above does not, in my view, represent an unwarranted inroad into the access to justice in the Courts. It is in the plaintiff’s hands to resolve the present impasse and she must not be permitted to prolong it without justification.
[28] The defendants have been successful in this proceeding and, in accordance with the principles set out in r 14.2 of the High Court Rules, particularly r 14.2(a), the plaintiff should be required to meet the costs of the application on a 2B basis together with disbursements to be fixed by the Registrar and there will be an order
accordingly.
J.P. Doogue
Associate Judge
3