Hill v Māori Trustee
[2016] NZHC 364
•4 March 2016
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV-2015-454-39 [2016] NZHC 364
UNDER the District Courts Act 1947, ss 72(1), 75,
76(1)(a), 76(1)(b)(i) and (ii), 76(1)(c), Bill of Exchange Act 1908, s 10(2), High
Court Rules 2005 r 7.55(1), District Court Rules 2009, Crimes Act 1961, Judicature Act 1908, Bill of Rights Act 1990, ss 14,
27, 28, 29, Animal Welfare Act, Magna Carta 1215, Human Rights Act 1993, Property Law Act 2007, Securities Act
1978, Personal Properties Act 1999, Interpretation Act 1979 and not limited to others supporting the intent of this application by appellant in accord with law or by lawful amendment
IN THE MATTER OF
judgment decision dated 23 February 2015 by District Court Palmerston North
CIV-2011-054-0533
BETWEEN
FREDERICK PIRIPI KINGI HILL Appellant
AND
MĀORI TRUSTEE Respondent
Hearing: 22 February 2016 Appearances:
Appellant in person
C Reuhman for respondentJudgment:
4 March 2016
RESERVED JUDGMENT OF DOBSON J
HILL v MĀORI TRUSTEE [2016] NZHC 364 [4 March 2016]
Contents
The context of the appeal .................................................................................................................. [1] Process criticisms............................................................................................................................. [21]
Not recognising a “case of doubt” requiring directions .............................................................. [23] A simplified trial should not have been directed .......................................................................... [27] Any consent to the process was conditional on trial by jury ........................................................ [30] Inadequate time for Mr Hill’s counterclaim ................................................................................. [34]
Absence of specific hearing date precluded Mr Hill from summonsing Attorney-General and others
...................................................................................................................................................... [37]
Substantive criticisms ..................................................................................................................... [40] The Court failed to acknowledge Mr Hill’s two distinct personalities ......................................... [41] Lease not enforceable? ................................................................................................................. [52] Māori Trustee in breach of fiduciary obligations owed to Mr Hill?............................................. [56] A misrepresentation? .................................................................................................................... [58] Lease not enforceable because of refusal to arbitrate? ................................................................ [59] Amounts claimed for commission overstated and rates not payable? .......................................... [63] Mr Hill’s counterclaim.................................................................................................................. [70]
Result ................................................................................................................................................ [76] Costs ................................................................................................................................................. [78]
The context of the appeal
[1] The appellant (Mr Hill) was the lessee from the respondent (the Māori
Trustee) of a rural property in Mangatainoka (the property) for a nine year term from
11 December 2006. The primary component of this proceeding is an appeal from a District Court judgment that found Mr Hill liable for breaches of the lease and ordered the lease to be cancelled.
[2] In proceedings commenced in the Palmerston North District Court in 2011, the Māori Trustee brought claims totalling some $87,000 for unpaid rent and regional and district council rates and penalties, the cost of issuing a Property Law Act notice and the costs of gorse control on the property. Mr Hill counterclaimed, initially for $16,000 for the costs of effecting work on the property.
[3] After what Judge Ross described as “a tortuous passage over preceding years”, on 1 October 2014 he allocated a fixture for the proceeding and directed that it was to proceed by way of a simplified trial. Mr Hill was not at the case management conference on 1 October 2014, and subsequently claimed that he did not receive timely notice of the conference.
[4] At the end of a one day hearing on 7 November 2014, the Judge adjourned the proceeding to give Mr Hill 28 days to file evidence in support of his counterclaim, together with such documents as he relied on to prove the counterclaim of $16,000.
[5] Mr Hill did not comply with that direction, but instead filed an application to review Judge Ross’s October 2014 decision to allocate a simplified trial. The Judge treated this as one instance too many of non-compliance with procedural directions. He was concerned at the delays that had been occasioned by Mr Hill and the serial
failures to comply with directions made by the Court. Judge Ross observed:1
[13] ,,, The defendant has persisted … down his own path and setting his own agendas. Each step taken or direction made by the Court is a subject of a reactive step in a different direction. I have come to the conclusion that the defendant is playing a delaying and disruptive role, and that he is being abusive and vexatious of the processes of the Court. …
[6] The Judge then reviewed the components of the Māori Trustee’s claim and was satisfied that the claims had been made out. He entered judgment for the amount claimed, and allowed the Māori Trustee’s application for cancellation of the lease. He also ordered that possession of the land be returned to the Māori Trustee. The Judge considered that Mr Hill had been given ample opportunity to put his counterclaim in order, and that relevant directions had not been complied with. The counterclaim was accordingly dismissed.
[7] In addition to filing a notice of appeal from the District Court decision, Mr Hill sought a stay of the orders made, and for a re-hearing in the District Court.
The stay was granted, but the application for re-hearing was declined.
1 Māori Trustee v Hill DC Palmerston North CIV-2011-054-533, 23 February 2015.
[8] At the time of the November 2014 District Court hearing, the counterclaim was quantified at $16,000. Thereafter, Mr Hill presented a further invoice dated
5 December 2014 for $3 million. That invoice comprised $1.5 million for the costs he claimed for appearances at the District Court in November 2014, and a further
$1.5 million for alleged violation of his personal property, namely a campervan on the property that had apparently been entered by a bailiff to serve notices in the proceeding on 8 October 2014.
[9] Mr Hill accepted that he had not paid the rent due under the lease since 2009, and from about that time ceased meeting the lessee’s obligation to pay regional and district council rates on the property. Of additional concern to the Māori Trustee was Mr Hill’s failure to control gorse on the property, in contravention of a specific provision in the lease which required him to annually spray all re-growth of gorse until it was eradicated. The result of his non-payment of rent is that the beneficial owners, on whose behalf the Māori Trustee holds the property, have had no return for many years.
[10] The stay granted related only to the judgment for a money sum and orders made by Judge Ross in February 2015, so it did not prevent the Māori Trustee from re-taking possession on expiry of the lease in December 2015. I was advised by Ms Reuhman, counsel for the Māori Trustee, that the Māori Trustee has not wished to force the issue until the present appeal has been resolved.
[11] In July 2015, Mr Hill filed an interlocutory application in the same proceeding as his appeal, which he characterised as an application for judicial review. The application sought determination of the lawfulness of the procedure adopted in the District Court. Given the protracted history of the proceedings, and the overlap between the criticisms apparently sought to be raised on this interlocutory application and the grounds of Mr Hill’s appeal, the logical course was to deal with all of his arguments in one. With the concurrence of Mr Hill and Ms Reuhman, the hearing before me proceeded in that way.
[12] Prior to Mr Hill filing the interlocutory application for judicial review, the mode for dealing with his appeal was the subject of a thorough case management
conference convened by Associate Judge Smith on 7 and 12 May 2015. Among other matters, Mr Hill had raised the prospect of adducing further evidence on the appeal. The Associate Judge directed that he was to make formal application for leave to adduce further evidence. Any such application was to be accompanied by the affidavit or affidavits he sought to have read at the hearing of his appeal, together with a summary of how the additional evidence was said to be relevant to one or more of the points raised in his notice of appeal and reasons why the new evidence could not have been produced at the hearing in the District Court.
[13] On 15 July 2015 Mr Hill filed a memorandum that included an application to adduce further evidence in support of his appeal. The matters he indicated he wanted to address in further evidence included directions made by the District Court in September 2013, the invoices he had issued for improvements to the land, together with photographic records of that work, a further invoice to be paid as damages, and witness summonses that he contemplated for the Attorney-General, the Governor of the Reserve Bank, the Secretary of the Treasury and others. The application also foreshadowed evidence about his own status, purportedly to distinguish him “in propria persona” from him as “the straw man”.
[14] An affidavit that more or less conformed to the topics foreshadowed in Mr Hill’s application was then filed on 27 July 2015. The Māori Trustee opposed leave being granted to adduce further evidence.
[15] On the morning of the hearing before me, Mr Hill completed a further affidavit, which he provided to Ms Reuhman as the hearing was about to begin, and provided to the Court as soon as the hearing had begun. That initiative did not comply with the usual requirements for seeking leave to adduce further evidence, and was also inconsistent with the specific directions made by the Associate Judge. Ms Reuhman opposed leave being granted, arguing that Mr Hill had not attempted to make out grounds for adducing this further evidence, and that she was taken by surprise in any event, having no adequate opportunity to assess the content of the affidavit, and even less opportunity to prepare any affidavit in reply against the contingency that Mr Hill’s affidavit might be admitted.
[16] Given the imperative to hear the substantive argument when the proceedings had been the subject of such significant delays up to this point, I granted Mr Hill conditional leave to refer to the content of the new affidavit in the course of his submissions. I indicated that I would assess the justification for adducing fresh evidence against the criteria that he was required to make out, depending on the reliance he placed on its contents. Further, I indicated that the admissibility of any particular content may need to be ruled on if Ms Reuhman identified content that the Māori Trustee was prejudiced by, because of the lack of an opportunity to respond. I was prepared to consider the content of the July 2015 affidavit on a similar basis, bearing in mind the longer opportunity that the Māori Trustee had had to respond to it.
[17] Mr Hill made liberal reference to the 34 pages of text in his latest affidavit in the course of his discursive arguments. The majority of its content was not new so it did not strictly qualify for a grant of leave for it to be adduced. Further, the presentation of the affidavit, consistently with other documents filed by Mr Hill, included inappropriate content such as stating his name completely in capitals, followed by the sign used for claiming copyright, and purporting in its text to draw distinctions between a legal personality artificially joined to his birth certificate, and a second persona as “the straw man”. Both affidavits contained misconceived assertions as to matters of law that are inappropriate in affidavits, which should be confined to relevant factual matters. In other circumstances, the Court would be entitled to direct the removal of such non-complying documents. Some elements of Mr Hill’s affidavits suggest a vexatious or frivolous approach to the court proceeding, and the Court might well be justified in rejecting them.
[18] However, given the nature of Mr Hill’s reliance in resorting to the latest affidavit to clarify matters that he endeavoured to advance in oral argument, I am prepared to have regard to its content in assessing Mr Hill’s arguments in support of his appeal including his challenges in the nature of judicial review. This is not to be treated as any precedent for the admissibility of documents of its type.
[19] At an advanced stage of Mr Hill’s submissions, having been given conditional permission to refer to his latest affidavit on the terms described above, he
indicated his wish to go into the witness box and give viva voce evidence. He had not provided any specific notice of his intention to seek this further indulgence and was not specific as to the additional factual matters he intended to address. At one point, Mr Hill indicated that most of what he wanted to address was in the affidavit, but that he wanted the opportunity to draw out some nuances that might not otherwise be fully appreciated.
[20] I was not prepared to grant any further indulgence to Mr Hill in circumstances where there was no accurate indication of the content of the evidence he contemplated, and therefore no ability to assess whether leave ought to be granted for it to be adduced.
Process criticisms
[21] The criticisms of the process adopted by the District Court Judge can adequately be considered under the following headings:
· The Judge should have recognised this as a “case of doubt” as to the status in which Mr Hill was participating, which therefore required directions under the then District Court rule that provided for the making of directions in cases of doubt. This argument depended on Mr Hill’s proposition that he could assert a distinct legal personality for purposes such as responding to civil court proceedings.
· The Judge was wrong to direct hearing by simplified trial because of the complexity of the issues Mr Hill raised in response.
· Mr Hill’s specific consent to the matter progressing was conditional on compliance with his request for a jury trial.
· Mr Hill was afforded inadequate time to prepare and present evidence on his counterclaim.
· The uncertainty over the date for hearing precluded his requiring the attendance as witnesses of the Attorney-General and others, including the Governor of the Reserve Bank.
[22] In relation to these process criticisms, Mr Hill did not address the nature of error that he was required to make out. He made general assertions that the District Court Judge had conducted the proceedings “unlawfully”. In assessing his range of arguments which did not differentiate between grounds for judicial review and appeal, I have considered whether the Judge acted unlawfully, or whether he made errors within jurisdiction that may have given rise to a risk of a miscarriage of justice.
Not recognising a “case of doubt” requiring directions
[23] This criticism relied on the proposition that Mr Hill has two distinct personalities for the purposes of legal proceedings. This assertion was also prominent in Mr Hill’s arguments on the substantive errors made by the Judge, and I address it in more detail in dealing with those criticisms below. In terms of the procedure adopted, Mr Hill argued that once he had raised the prospect of doubt as to the capacity in which he was participating, the Judge was required to consider making directions (presumably as a preliminary issue) as to the appropriate identity to attribute to him.
[24] The argument relied on r 1.11 of the District Court Rules 2009 (since repealed) which, at the time, provided:
1.11 Directions in case of doubt
1.11.1 If any party or intended party to a proceeding is in doubt regarding a matter to which this rule applies, that party or intended party may apply without notice to the court for directions.
1.11.2 This rule applies to any doubt a party has as to—
(a) the joinder of any person as a party; or
(b) the proper court in which to take any step in the proceeding;
or
(c) any other matter of procedure under these rules.
1.11.3 Any step taken in accordance with the directions given on any application under rule 1.11.1 is treated as having been properly taken.
[25] For reasons I address below,2 there is no tenable prospect of Mr Hill maintaining the existence of two distinct personalities for the purposes of his participation in these proceedings. His initial premise that this was a “case of doubt” is therefore wrong.
[26] Mr Hill has misconceived the scope and purpose of what was r 1.11. The rule created jurisdiction for a party to proceedings to apply for directions, without notice to other parties to that proceeding, if a doubt arose as to the appropriateness of joining another party, or the proper court in which to take a step in the proceeding, or any other matters of procedure under those rules. The Māori Trustee might have resorted to an application under the rules if, for example, there was some doubt whether the property was treated by the Court as closer to Palmerston North than, say, Levin. There could be no prospect of the Court taking an initiative to clarify Mr Hill’s assertion of discrete legal personalities. If Mr Hill wished to raise the argument, it was not one that the Court need respond to by providing directions under the then r 1.11.
A simplified trial should not have been directed
[27] Mr Hill complained that the Judge should not have directed that the issues to be determined on the Māori Trustee’s claim and his counterclaim were to be heard adopting the simplified trial process in the District Court. Part of Mr Hill’s complaint was that he did not receive notice of the case management conference on
1 October 2014, and was therefore deprived of the opportunity to put forward his views on the length of hearing, and the mode of trial to be adopted.
[28] The mode of trial was a decision within the Judge’s discretion, to be made by reflecting on the nature and scope of factual and legal issues likely to arise.3 A disputed claim for breach of a lease contract where there had been non-payment of
rates and other outgoings by the lessee, and a counterclaim by the lessee that he
2 See [41] to [51] below.
3 Jin v North Shore District Court [2013] NZCA 475, [2014] NZAR 205 at [28].
should be entitled to offset expenditure incurred on the property, was inarguably within the category of civil proceeding in the District Court that was appropriate for determination in a simplified trial. For the Judge to have appreciated greater complexity being involved would have required him to recognise, as tenable, arguments within the range of issues that Mr Hill had then foreshadowed. The Judge had jurisdiction to make a procedural direction of this type in the absence of Mr Hill. From a review of Judge Ross’s management of the proceeding up to that point, and the manner in which he dealt with Mr Hill thereafter, the directions he provided were clearly open to him.
[29] Mr Hill’s challenge to this decision was based on its merits, and he did not draw to the Court’s attention any failure on the part of the Judge to have regard to relevant matters or some other basis for disturbing that decision. I address the range of Mr Hill’s arguments in dealing with the substantive challenges below. I am not persuaded that the Judge erred in failing to appreciate that their inclusion might give rise to complexities that rendered the simplified trial procedure inappropriate.
Any consent to the process was conditional on trial by jury
[30] Mr Hill’s initial proposition on this criticism was that his agreement with the procedure being proposed was subject to the stipulation that trial be before a jury. He argued that he should not have been taken to have consented, once his proposal for trial by jury was rejected. When the point was made to Mr Hill that there is no entitlement for a jury trial for civil matters in the District Court, his alternative argument was to criticise the Judge for not advising him that he could apply to have the case transferred to the High Court where he could assert an entitlement to a jury trial.
[31] This argument is misconceived. First, it was not for the Judge to advise Mr Hill on how he might pursue a jury trial. It would have been for Mr Hill to make an application under r 43 of the District Court Rules for transfer of the proceeding to the High Court.
[32] Second, even if transfer had been a prospect, the Court would be most unlikely to allow it to proceed as a jury trial in the High Court. Civil jury trials are
very rare, and in practice are confined to defamation proceedings. It is highly unlikely that a jury trial in this matter would have been:4
… the method of trial best suited effectively and speedily to dispose of the issues in the case, considering the interests of the parties, of the Court and the jury whose time is occupied, and the general interests of the administration of justice.
[33] In any case, the question is not whether the High Court would have allowed Mr Hill a jury trial had the proceedings been transferred. The reality is that the dispute was determined in the correct forum, and no error can be made out of Mr Hill’s complaint that he was denied trial by jury.
Inadequate time for Mr Hill’s counterclaim
[34] Mr Hill raised concerns that the hearing allocated for November 2014 was inconvenient because it clashed with his university exam commitments, and that advice of the hearing dates in October 2014 gave him inadequate time to prepare his defence and his counterclaim. The proceeding was reasonably perceived by the District Court as a contested debt recovery and application for cancellation of a lease. It had been progressed very slowly over three years, with numerous delays caused by interlocutory initiatives taken by Mr Hill. Given the history of the proceeding, the Court was entitled to be wary of further delaying tactics, and the directions as to the hearing was a reasonable step for Judge Ross to take.
[35] So far as the counterclaim was concerned, the Judge afforded Mr Hill a further 28 days to assemble and present evidence. In the context of a case of this scale that raised the issues that were involved, I am not persuaded that there was any error, or indeed a risk of a miscarriage of justice, in the timetabling of the hearing.
[36] A separate component of this criticism was that it was wrong for the Court to allocate only a single day for the hearing, which unnecessarily rushed Mr Hill’s contribution to the evidence and argument. Similarly, I am not persuaded that the limited resource of court time required the District Court to allocate longer than it
did. On the hearing of Mr Hill’s appeal, I allowed him to make all the submissions
4 Ti Leaf Productions Ltd v Neill (1999) 14 PRNZ 100 (HC) citing Ford v Blurton (1922) 38 TLR
801.
that he wished to, which left me with the clear impression that the legitimate issues raised on the claim and counterclaim ought to have been capable of determination within a single court day.
Absence of specific hearing date precluded Mr Hill from summonsing Attorney- General and others
[37] In the minute issued on 1 October 2014, Judge Ross set the matter down for a back-up fixture on 5 or 6 November 2014, with an alternative date of 7 November
2014 being provisionally available. Mr Hill complains that the uncertainty about the date prevented him serving witness summonses on the Attorney-General, the Governor of the Reserve Bank, the Secretary of the Treasury and others. That argument overlooks the prospect of successful challenges to the summonses, if they were lawfully able to be served on the Attorney-General and others. Given the matters which Mr Hill would have questioned such witnesses about, there must be a real issue that he would not have obtained leave to issue summonses to compel attendance by such proposed witnesses in any event. If he had, then uncertainty over the date would not be a compelling excuse for not attending, were the witnesses otherwise lawfully compellable.
[38] Further, even if their attendance and evidence could be compelled, I am satisfied that they would not have assisted Mr Hill in the range of arguments he had intended to raise, and which were fully aired during his arguments on appeal.
[39] Accordingly, irrespective of the standard by which these various criticisms are assessed, I am satisfied that no error of process or jurisdiction by the District Court can been made out.
Substantive criticisms
[40] Mr Hill made wide-ranging criticisms of the District Court decision, which raised the following points:
· The Judge wrongly failed to recognise his dual personalities, which should have enabled the personality sued to avoid liability under the
lease, and alternatively gave rise to a sufficient counterclaim to offset the money claim made.
· The lease was not enforceable because its execution on behalf of the
Māori Trustee had not been witnessed.
· The Māori Trustee owed Mr Hill fiduciary obligations which it breached by not making full disclosure of how gorse-prone the property was.
· Mr Hill was induced to enter the lease by a misrepresentation as to the state of the property.
· The lease should not be enforced because the Māori Trustee refused numerous offers to arbitrate or mediate the differences; alternatively the lease should not be enforced because it was in an archaic form that was not suited to the bargain Mr Hill thought he had made.
· The amount claimed by the Māori Trustee was overstated because it could not add commission, but rather had to deduct any commission out of the rent payable under the lease. Further, the Māori Trustee was not liable for local body rates if it was not receiving rent for a property, therefore there was no liability for rates once he stopped paying rent.
· The claim should not be enforced because of Mr Hill’s counterclaim for expenditure on the property.
The Court failed to acknowledge Mr Hill’s two distinct personalities
[41] Mr Hill argued that in addition to his status as a natural person, he had a separate legal personality derived from the issue by the Department of Internal Affairs of a birth certificate in his name. By some unexplained means, the issue of a birth certificate once his birth had been registered by his parents gave rise to a separate legal identity. Arguably, the Crown used the identity created by the issue of birth certificates as an asset when undertaking Crown borrowings. Because of the use that was made of the birth certificate, he argued that the Crown has to assume
trust obligations in respect of all benefits obtained by its reliance on the asset represented by birth certificates.
[42] Mr Hill argued that his separate legal personality evidenced by his birth certificate gave him status as a cestui que trust entitled to certain undefined benefits arising from the Crown’s use of the birth certificate. There was a measure of confusion in Mr Hill’s use of the term cestui que trust. At times he appeared to be using it to refer to the form of obligation imposed on the Crown, and at other times to describe his own position as a person entitled to benefits owed to him by the Crown. In modern trust law, “beneficiary” is an adequate and more appropriate synonym. At various points in his argument, Mr Hill accepted that the same obligations would be owed by the Crown to all New Zealanders for whom a birth certificate is issued. In response to my enquiry as to whether the trust he described had a settlor and, if so, who, he responded that his parents were the settlors of the trust.
[43] There is an obvious and fundamental flaw in Mr Hill’s sequence of unsubstantiated and illogical propositions. If any duty was owed by the Crown as a consequence of the statutory responsibility to issue birth certificates, then any obligation of the Crown would be entirely distinct from obligations owed by Mr Hill to the Māori Trustee. A claim against the Crown could therefore not be set off against Mr Hill’s liability to the Māori Trustee.
[44] The Māori Trustee cannot be linked to the Crown and is certainly not a component of the Crown. It is a creature of statute, constituting a corporation sole with perpetual succession, and its independence from the Crown is emphasised by s 5 of the Māori Trustee Act 1953:
5 Independence of Māori Trustee
In exercising the powers and performing the functions and duties of the Māori Trustee in his or her fiduciary capacity under this Act or any other enactment, the Māori Trustee must act independently, free from any direction or instruction from the Crown.
[45] At the risk of casting Mr Hill’s arguments in terms that suggest some shred of tenability, it is appropriate to debunk the more important of the sequence of
propositions that he advanced on the dual personality/entitlement as cestui que trust arguments.
[46] It is nonsense that the Crown treats birth certificates issued under the Births, Deaths, Marriages and Relationships Registration Act 1995 as a form of bond providing security for Crown borrowings. Certainly, one of the purposes in s 1A of that Act requires the provision of:
… an official record of births, deaths, marriages, civil unions, and name changes that can be used as evidence of those events and of age, identity, descent, whakapapa, and New Zealand citizenship;
[47] However, it is in the fanciful world of conspiracy theorists that the control by a government agency of the register is utilised by Treasury as evidence of assets that are offered as security for Crown borrowings. I can take judicial notice of the fact that rating agencies and lenders to the New Zealand Government may take into account a wide range of information possibly relevant to an assessment of risk in the New Zealand Government’s ability to meet its borrowing obligations. However, that in no circumstances would such assessments extend to details of birth certificates issued by the Department of Internal Affairs.
[48] The lack of any prospect that this proposition could be made out is also relevant in answering Mr Hill’s process criticism that he was inhibited in attempts to procure evidence from the Attorney-General, the Governor of the Reserve Bank and the Secretary of the Treasury. There would be compelling grounds to deny an application for the issue of a witness summons to the Attorney-General and those officials, where the matters sought to be put to them were their alleged participation in such a fanciful activity.
[49] One extremely confused component of Mr Hill’s arguments about his having two personalities was (as best I could understand it) that the Court had to exercise its admiralty jurisdiction to enforce a debt against him, and that he was not subject to the admiralty jurisdiction because he could establish that he was born on land. I sense he misapplied archaic concepts of admiralty law being the forum in which the Court operated against “the res”, the suggestion that birthing certification was a reflection of where a vessel would berth, and that the Court’s jurisdiction could only
be exercised against a res by consent of that res. One reason why Mr Hill wished to go into the witness box was to confirm that he had indeed been born on the land and not at sea. This spurious point could not be relevant, and I did not understand the Māori Trustee contested his place of birth in any event.
[50] The reality is that Mr Hill has only one capacity for the purposes of appearing as a defendant to a District Court civil claim brought against him. It is the same capacity as that in which he signed the lease, and the capacity in which he has defaulted on the contractual obligations he assumed. Enforcement of orders made in personam operate against him and any of his assets that may be sought in subsequent processes to execute the judgment against him. References to the admiralty jurisdiction are utterly irrelevant.
[51] Mr Hill purported to support many of his propositions by reference to archaic English statutes, several of which were mis-cited in any event. He offered no current legal authorities or principles to support the various arguments advanced, nor did he acknowledge any source of advice for those arguments. However, they bore the hallmarks of the same arguments that have been raised in New Zealand and in other common law jurisdictions in recent years, in attempts to avoid debt enforcement. Regrettably, the ideas for such fallacious arguments are available on pseudo-legal websites that hold out unrealistic prospects for debtors to avoid liability for indebtedness they have lawfully incurred. Resort to such stratagems by the gullible and the desperate is doubly regrettable as the outcome can only be a deterioration in their own position, by increasing the extent of the indebtedness by what are likely to
be substantial awards of costs, and on-going interest charges.5
Lease not enforceable?
[52] Mr Hill argued that the lease could not be enforced against him because execution on behalf of the Māori Trustee had not been witnessed, as is required by s 9 of the Property Law Act 2007. That section provides the formalities for
completion of a deed. Presumably Mr Hill’s point was that if a body corporate
5 For example, Canadian authority Meads v Meads 2012 ABQB 571, the subject of a case note in [2013] NZLJ 47; Ward v ANZ National Bank Ltd [2012] NZHC 2347; Hannah v Police [2012] NZHC 218 and France v Police [2014] NZHC 1656.
executes a deed by affixing a seal in the presence of a single director or a single person of a class specified by the constitution of the body corporate as authorised to sign a deed, then that signature must also be witnessed in accordance with s 9(7) of that Act.
[53] In this case, the lease was signed by a single signatory who is recorded as witnessing the seal being attached to the document, and completing it in accordance with s 9 of the Māori Trustee Act 1953. The additional provision in the lease form for witnessing that execution was struck out.
[54] The first difficulty with this argument is that the lease has not been engrossed as a deed, and is to be treated as a simple lease agreement. In that event, the requirements of s 9 of the Property Law Act could not apply in any event.
[55] Further, the formal status of the contract as a deed is irrelevant to its enforceability as a less formal contract. It is clear that execution on behalf of the Māori Trustee conformed with the requirements for completion of a contract by the Māori Trustee, via the signature of an authorised delegate. In all other respects, the lease was binding on both parties as a contract, and had been partly performed. The lessor had provided vacant possession, Mr Hill had taken possession, and paid rent and other outgoings. Mr Hill’s argument to avoid his obligations on a supposed technical deficiency is devoid of merit. The Court ought to be slow to allow a party to oppose enforcement of a valid contract that has been partly performed on the subsequent complaint of a deficiency in its form.
Māori Trustee in breach of fiduciary obligations owed to Mr Hill?
[56] Mr Hill claims to be beneficially entitled to interests in other blocks of land administered by, and in legal ownership of, the Māori Trustee. He argued that that other relationship obliged the Māori Trustee to deal with him in utmost good faith in all respects, including as a potential lessee of the property. He did not refer to any relevant authority that would support this rather sweeping proposition. I am satisfied that the Māori Trustee’s conduct in dealing with Mr Hill in relation to the property was not impressed with any fiduciary obligations when he did not also have a beneficial interest in the property. In any event, given the multiplicity of beneficial
interests in blocks such as the one in issue, the Māori Trustee would have to be careful to act even-handedly in the interests of all beneficial owners, so as not to prefer one over others. Mr Hill’s relationship with the Māori Trustee vis-à-vis the lease was purely a commercial one that was the same as exists between any lessor and prospective lessees of rural land.
[57] The relevance of Mr Hill’s claim that the Māori Trustee owed him fiduciary obligations was because he argued that the Māori Trustee was obliged to warn him relatively how prone to gorse the property was, and that it had failed to do so. Mr Hill downplayed the assessment he made of the property before committing to the lease, describing it as a “drive by” inspection. He was in no different position from all other lessees of rural property, who must be taken to have made their own assessment of the nature of the property and the obligations they are assuming.
A misrepresentation?
[58] The proposition in the preceding sentence is of course subject to reliance on any specific representations made by the lessor as to the characteristics of the property. Here, Mr Hill was inclined to add a complaint that the relative difficulty in controlling the gorse had been misrepresented to him. However, when questioned as to who had made any representation about the state of gorse on the property, the terms of such representation, and when it was made, he freely acknowledged that there had been no specific representation at all. Mr Hill cannot complain of misrepresentation absent evidence of a representation in the first place.
Lease not enforceable because of refusal to arbitrate?
[59] Mr Hill made repeated criticisms of the conduct of the Māori Trustee in refusing his attempts to mediate, or arbitrate, a change to the obligations he had assumed under the lease. Mr Hill relied on the conventional provision in the lease terms for a rent review to be notified by the lessor and, if not agreed to by the lessee, for the extent of rent increase to be determined by arbitration. (The same lease provision included a so-called “ratchet clause” providing that the rent on renewal was not to be less than the rental paid during the preceding period.) The rent review provision triggers an entitlement to refer the extent of a proposed increase in rent to
arbitration, but nothing more. Here, the Māori Trustee had not sought to increase the rent payable after the first three year term, and so the provision has no application.
[60] Nor is there anything in the lease that obliged the lessor to mediate differences that had arisen in its administration. It could be no answer to Mr Hill’s breach of the obligations to pay rent and rates, and to spray the gorse, that the lessor was not prepared to meet to discuss a variation of the obligations he had assumed in signing the lease.
[61] A variant on this criticism was that the standard terms of the lease were archaic and the Māori Trustee ought to have revisited them in any event. That criticism can have no bearing on the enforceability of the contractual terms.
[62] As I suggested to Mr Hill, if he did not like the bargain he had made, he ought to have sought to be relieved of it by requesting to surrender the lease. I was advised from the bar by Ms Reuhman that an offer to surrender had been made informally to Mr Hill in 2012, which he had rejected. The consequence is that he has remained in possession, not paid rent or other outgoings to the lessor, and effectively prevented the Māori Trustee from earning income on the property by remaining there in breach.
Amounts claimed for commission overstated and rates not payable?
[63] Mr Hill criticised the quantum of the Māori Trustee’s claim in two respects. It was unclear whether he had raised these points at the District Court hearing, but Ms Reuhman did not oppose his arguing them as points on his appeal.
[64] First, Mr Hill argued that it either is or should be illegal for a lessor to claim commission on rent collection, in addition to the quantum of rent payable under the contract. He argued that the function of collecting rent was a lessor’s obligation and should not be an additional financial burden on the lessee.
[65] However, the lease as signed by Mr Hill included a specific additional obligation to pay the lessor’s commission, calculated at the rate of 7.5 per cent of the amount of the rent. There was therefore a contractual entitlement to demand the
commission. That level of commission is currently mandated by the Māori Trustee Regulations 2009. The predecessor regulations in force at the time the lease was completed made provision for commission at the same rate. There is accordingly no tenable challenge to the charge for commission.
[66] The second aspect of Mr Hill’s argument was that the commission was only payable for distributing the rent to the beneficial owners because that was the character of the commission as described in the lease. Where the inadequacy of income from the property meant that no distributions were being made, he argued that he ought not to be liable for the commission. To accede to any such argument would be to have Mr Hill take advantage of his own default. There is no evidence that, if all payments of rent had been made in a timely fashion, there would not have been distributions of income to the beneficial owners, and it is reasonable to infer that that would have occurred. I am satisfied that on the terms of the lease, the additional charge for commission was properly payable, irrespective of whether, in any particular period, a distribution to the beneficiaries was actually made.
[67] Mr Hill also argued that he should not be charged for rates he had not paid because the Māori Trustee was entitled to apply for relief from its rates liability as the registered owner of Māori freehold land, in circumstances where the Māori Trustee was not receiving any income from the land.
[68] Mr Hill could not be any more specific in citing statutory authority for his proposition than that it was somewhere in Part 4 of the Local Government (Rating) Act 2002. The only prospect for exemption from the requirement to pay rates is in s 116. That requires an Order in Council by the Governor-General to be made on the recommendation of the Māori Land Court and with the consent of the local authority in whose district the land is situated, to exempt Māori freehold land from some or all liability for rates. That process can only occur where the relevant local authority has adopted a policy on remission of rates on Māori freehold land, as required under s 102(1) of the Local Government Act 2002. Relevantly, such policy provides for remission where the local authority is satisfied that freehold Māori land is vacant. As Ms Reuhman submitted, that position could not possibly pertain where there was a lease in force but the lessee was in breach of his obligation to pay rent.
Accordingly, the obligation for rates to be paid on the property remained in force, and it follows that Mr Hill was in breach of his obligation to make payment of them.
[69] In summary, all of Mr Hill’s arguments challenging the District Court decision as to his liability for the amount of the judgment in favour of the Māori Trustee are untenable.
Mr Hill’s counterclaim
[70] Mr Hill also challenged the District Court dismissal of his counterclaim. As to the first component, an invoice for $16,000 was apparently issued by Mr Hill in February 2010 claiming $2,000 for replacing gates, $6,500 for a bridge installed with two culverts and $7,500 for fencing the boundaries of the property. All items of expenditure of these types were to be incurred on the property at the lessee’s expense. He had obligations to repair and maintain the fixtures and fittings and, to the extent that improvements were effected at his own expense, he was obliged to leave them behind at the end of the lease term. It may be that Mr Hill misconstrued the provision in the lease that prevented the lessor increasing the rent by an amount that reflected value added by structural or developmental improvements effected by the lessee. That provision does not entitle the lessee to claim the cost of such improvements from the lessor, but merely relieves the lessee of having to pay a higher rent for having effected the improvements.
[71] A second component treated by Mr Hill as part of his counterclaim appears not to have been before the District Court at the November 2014 hearing. Mr Hill’s second invoice in evidence on the appeal was dated 5 December 2014, and comprised $1.5 million for Mr Hill’s costs for appearing in court on 7 November
2014 and a further $1.5 million for violation of the property.
[72] The invoice is utterly frivolous and without legal foundation. It gives rise to a concern that Mr Hill has been abusing the processes of the court that he should persist with claims for such amounts without legal justification.
[73] Mr Hill advanced his counterclaim on the basis that once an invoice was issued, if not challenged, then the sum claimed became legally payable. That is an
untenable notion if there is no underlying legal basis for making the claim, whether it be in contract or otherwise. Mr Hill appears to have been sufficiently familiar with court processes to appreciate that the extent of costs orders likely to be made to successful parties for appearance in a District Court civil matter would be confined to modest sums to which a claim for $1.5 million could never bear any relation.
[74] There was no evidence of the circumstances in which the claimed violation of personal property occurred, for which Mr Hill claimed a further $1.5 million. I understood from Ms Reuhman’s explanations from the bar that Mr Hill had been very difficult to serve with a Property Law Act notice or various documents in the court proceedings. Formal service at the property by a bailiff had involved securing the document to some internal part of a campervan on the property, when Mr Hill could not be located. In the context of these proceedings, such action could not possibly give rise to a tenable claim for “violation of personal property”.
[75] The counterclaim was correctly dismissed.
Result
[76] It must follow, given the outcome, that the appeal is dismissed in all respects, including the various challenges to the process adopted in the District Court, which I treat as part of the appeal but extend to the overlapping criticisms raised in the “interlocutory application for judicial review”.
[77] The stay of the effect of the District Court judgment is lifted with effect from the date of delivery of this judgment. That removes any impediment to the Māori Trustee moving to retake possession of the property.
Costs
[78] I have reviewed the history of the proceedings in the District Court, and all of the steps taken in pursuit of the appeal, including the so-called interlocutory application for judicial review. I am satisfied that the proceedings overall have been made more difficult for the Māori Trustee, and would have involved more work than was reasonably necessary to establish its claim and deal, within sensible boundaries,
with Mr Hill’s counterclaim. That triggers the prospect of liability on Mr Hill for increased costs. It is inappropriate at this stage to make a formal finding as to whether the conduct of the proceedings on Mr Hill’s part has been frivolous and vexatious, without receiving memoranda. Grounds may exist for considering that as an additional basis for ordering increased costs. That is a matter for the Māori Trustee to raise, if it wishes to.
[79] I will receive memoranda, first on behalf of the Māori Trustee within 21 days of delivery of this judgment, and thereafter within a further 21 days from Mr Hill. Such memoranda are not to exceed 10 pages in length. I will then deal with the issue of costs on the papers.
Dobson J
Solicitors:
Māori Trustee, Wellington
Copy to:
F P K Hill
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