Huljich v Huljich
[2018] NZHC 2205
•24 August 2018
ORDER PROHIBITING PUBLICATION OF THE JUDGMENT AND ANY PART OF THE PROCEEDINGS (INCLUDING THE RESULT) IN NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLE DATABASE UNTIL FURTHER ORDER OF THE COURT. IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2014-404-002631
[2018] NZHC 2205
BETWEEN ELIZABETH HULJICH
Plaintiff
AND
CHRISTOPHER PETER HULJICH
First Defendant
AND
PETER KARL CHRISTOPHER HULJICH
Second Defendant
AND
MICHAEL STEPHEN HULJICH
Third Defendant
Hearing: 17 August 2018 Appearances:
John Katz QC and Aaron Nicholls for the Plaintiff Jenny Cooper QC and Honor Ford for the Defendants
Judgment:
24 August 2018
JUDGMENT OF MOORE J
This judgment was delivered by me on 24 August 2018 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar / Deputy Registrar Date:
HULJICH v HULJICH & ORS [2018] NZHC 2205 [24 August 2018]
Introduction
[1] Unless orders are self-executing; the sanction applies without further order if the party in default fails to comply with the order by the time specified.1 But where the breach was not deliberate, and the interests of justice so require, it may be excused.
[2] Unless orders were made on 24 May 2018 and 24 July 2018. The deadline for compliance passed on 1 August 2018. The issue here is whether this is a case where temporary relief from sanction should be granted.
Background
[3] It is unnecessary to traverse the lengthy background to this proceeding in detail. What is relevant is that the plaintiff, Elizabeth Huljich, has had proceedings on foot against one of her sons since October 2014. The proceedings have their genesis in events in preceding years. Since August 2015 and May 2017, she has also pursued claims against a further son and a grandson.
[4] The present proceedings have been plagued by delay and non-compliance by the plaintiff. This has included a chronic failure to provide particulars and the engagement then termination of various counsel. For long periods, the plaintiff has been self-represented.
[5] In April this year Associate Judge Smith delivered a judgment ordering the provision of further particulars in a sixth amended statement of claim.2 Neither that claim, nor the two which followed, satisfactorily complied with the order. The eighth amended statement of claim is currently before the Court. It too remains deficient in certain respects.
[6] The trial was scheduled to commence on 13 September 2016; then 9 July 2018. I adjourned the fixture to 3 December 2018 on 24 May 2018. At the same time I made unless orders requiring a sixth amended statement of claim to be filed and served by 5:00 pm on 29 June 2018, and for briefs of evidence and an index of documents for
1 SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [29].
2 Huljich v Huljich [2018] NZHC 836.
the common bundle to be filed by 13 July 2018. If the plaintiff failed to comply, her claim would be struck out.
[7] The sixth amended statement of claim, and two briefs of evidence, were filed in accordance with my orders. However, the claim did not contain all required particulars. Furthermore, the plaintiff advised further briefs would be served and no index of documents was filed. The defendants applied for the unless orders to take effect. Shortly afterwards the seventh amended statement of claim was filed. As noted this too was deficient. It was filed on 24 July 2018, together with an application for relief against sanction, rescission of my 24 May 2018 orders, and an extension of time. The same day I ordered that the plaintiff could file no further evidence, and that she file and serve all particulars by 1 August 2018. The other aspects of my 24 May 2018 orders remained intact.
[8] The current statement of claim, the eighth amended version, was then filed on 1 August 2018. Two days later the defendants filed strike out orders for sealing, and on 8 August 2018 the plaintiff again applied for relief, rescission and an extension of time.
[9] Against that backdrop I convened a hearing with counsel, to deal with the various applications and determine where matters sat and how they should progress, if at all. Given the time which has already elapsed, the existence of unless orders, and the approaching December 2018 fixture, there is some urgency to resolving these matters.
The issues for resolution
[10] At the hearing I was greatly assisted by the helpful and focused submissions of Mr Katz QC, for the plaintiff and Ms Cooper QC, for the defendants. Counsel were largely in agreement as to what issues needed to be resolved.
[11] The primary remedy the plaintiff seeks in respect of the unless orders is relief against sanction. The jurisdiction to grant relief from the sanction of an unless order
was discussed comprehensively by the Court of Appeal in SM v LFDB. Where relief is sought:3
(a)Justice may require that the party in default be relieved of the consequences of the unless order where the Court is satisfied that the breach resulted from something for which that party should not be held responsible. The party should not assume that belated compliance will suffice.
(b)Where the unless order has been deliberately breached — that is, flouted — it is difficult to conceive of any situation where the interests of justice would require granting the flouter relief from the sanction imposed, notwithstanding belated compliance.
(c)In deciding whether or not to excuse breaches of an unless order the question for the Judge is: what does justice demand in the circumstances of the case? Considerations in answering that question include:
(i)the public interest in ensuring that justice is administered without unnecessary delays and costs;
(ii)the interests of the injured party, in particular in terms of delay and wasted cost; and
(iii)any injustice to the defaulting party, although that consideration is likely to carry much less weight in the circumstances than considerations (i) and (ii).
[12] Rescission is also sought under r 7.49 of the High Court Rules 2016 (“the Rules”). I agree with Ms Cooper that there is no basis for rescission in respect of the unless orders; as early as the teleconference on 24 May 2018 Mr Nicholls, solicitor for
3 SM v LFDB, above n 1, at [31].
the plaintiff, accepted the plaintiff’s non-compliance had reached the point where any further breaches would result in strike out of the whole claim.
[13] But in respect of the filing and service of further briefs of evidence, I have already ordered in my Minute of 24 July 2018 that no further evidence may be filed. Accordingly, in determining whether to now allow further filing, I must act under the r 7.49 jurisdiction.
[14] I shall first consider the issue of relief, before turning to discuss whether I should rescind and vary my order in respect of the filing of further evidence.
Should the appeal against Associate Judge Smith’s strike out decision affect my decision?
[15] As a preliminary point, it was submitted by Mr Katz that I should be wary of allowing the proceeding in its entirety to be struck out given the Court of Appeal is presently considering whether to allow an appeal against Associate Judge Smith’s decision striking out the “loss of chance” claims.
[16] This submission cannot succeed for a number of reasons. First, the nature of unless orders is such that the claim in its entirety has been struck out by operation of law, and I am now considering whether to grant relief. Second, I accept Ms Cooper’s submission that the appeal has no bearing on my decision-making. This is because matters before me arise from distinct circumstances, namely default in respect of various orders. It would be wrong in principle to ignore the more recent developments which lie at the centre of what I must determine on the present applications simply because the consequences of historic events remain to be determined.
Should relief against sanction be granted?
Was the plaintiff ’s non-compliance deliberate?
[17] As the Court of Appeal said in SM v LFDB, where an unless order has been deliberately breached it is highly unlikely the interests of justice will require the granting of relief. That inquiry is thus a logical place to start.
[18] Ms Cooper took me through the background to the most recent incidents of non-compliance, submitting that when viewed in its entirety there is little question the plaintiff’s most recent defaults are deliberate. Perhaps the most extraordinary action taken by the plaintiff was terminating her instructions to counsel in March this year and travelling to Mexico during the hearing before Associate Judge Smith.
[19] Despite chronic and repeated failures by the plaintiff, I am not satisfied her non-compliance is deliberate. The primary reason for this conclusion is the evidence of Dr Srzich and Mrs Huljich that her mental state is such that her ability to properly prepare for trial has been and continues to be compromised by circumstances brought on by her old age, particularly anxiety and cognitive ability. Dr Srzich deposed that the size of the task and associated time pressures would heighten her anxiety and impact on her ability to adequately prepare. Mrs Huljich has also given evidence that she has found it hard to concentrate for prolonged periods.
[20] While her behaviour is clearly irresponsible, and while the vagaries of the plaintiff’s health are certainly not new, it is the backdrop against which her substantial non-compliance must be viewed. Coupled with the fact that there has been partial compliance recently, in the sense that two briefs of evidence have been filed, I am not satisfied the plaintiff’s non-compliance is deliberate. I am fortified in this conclusion by the fact that she has recently re-engaged highly experienced and competent counsel in the form of Mr Katz.
Do the interests of justice require the grant of relief?
[21] As Ms Cooper forcefully submitted, the defendants have had these allegations hanging over their heads for a number of years. Through the plaintiff’s successive defaults they have been denied the ability to defend themselves in a timely way. The plaintiff’s claim has also evolved in its form and focus over the years. It now includes allegations of fraud. And because the claims are inadequately particularised, the defendants’ right to be adequately informed of the case against them has been compromised. Moreover, despite claims she has been deeply affected and upset in bringing these claims against her family the plaintiff has given media interviews.
[22] Needless to say, there are sound reasons why the interests of justice do not favour the grant of relief. But weighing Mrs Huljich’s ill health and her recent engagement of Mr Katz, I consider overall the interests of justice favour a limited and defined period of relief. Mr Katz accepted that at best only a short and final indulgence could be appropriate. But he argued a limited window of opportunity was necessary in order to avoid the substantial wrong that would result if the plaintiff was denied the possibility of a successful outcome at trial. Mr Katz suggested if I was minded to grant a final indulgence, a deadline of 31 August 2018 could be set. That is two weeks from the date of the hearing before me.
[23] I agree, for the reasons given. The engagement of Mr Katz in particular justifies a temporary extension, and provides confidence this proceeding is salvageable and will be managed towards trial in a responsible way.
What form should the relief take?
[24] Mr Katz conceded that to the extent causes of action have not been adequately particularised by 31 August 2018 in terms of Associate Judge Smith’s orders, they should be struck out. He also accepted any relief is a final indulgence.
[25] During the hearing I was inclined to sympathy for that course. However, upon reflection, I do not consider it would be appropriate to retrace my earlier orders in that way. The nature of the unless orders made on 24 May and 24 July 2018 is such that if Associate Judge Smith’s order for further particulars is not complied with, the claim in its entirety will be struck out. Mr Nicholls, for Mrs Huljich, conceded as early as 24 May 2018 that further non-compliance would result in strike out of the claim as a whole. Mr Katz also conceded as much later in the hearing, referring to Mr Nicholls’ concession and responsibly acknowledging he was obliged to make a similar concession.
[26] That means the order for further particulars made by Associate Judge Smith must be complied with in its entirety. I agree with Ms Cooper that it is not appropriate to relitigate the order for further particulars here. As such particulars must be provided in respect of the following paragraphs, which have not been amended since the order was made:
(a) [8]
(b) [32](e)
(c) [34](b) and (f);
(d) [71](c), (d), (e) and (f); and
(e)(b) of the prayer for relief in the first cause of action.
[27]Particulars have been added in respect of the following paragraphs: (a) [32](g);
(b) [34](a);
(c) [56];
(d) [76];
(e) [78](c), (d), (e) and (f); and
(f)the prayer for relief in the fourth cause of action.
[28] In my view, some of those particulars are sufficient to comply with Associate Judge Smith’s order, while others are not.
[29] Paragraph [32](g) involves an allegation of fraud. I agree with Ms Cooper that the particulars currently provided are insufficient to support such a serious allegation. Mr Katz agreed. As he observed, there are professional obligations on counsel to ensure reasonable grounds exist before making an allegation of fraud.4 Similarly, while particulars have been provided in respect of [76](a) and (b), the particulars under (c), which relate to the claim the second defendant was in a fiduciary relationship with the plaintiff as an agent, have not been expanded. As Associate Judge Smith observed,
4 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.8.
the plaintiff should not be making such allegations if she does not have the particulars to support them.5
[30] By contrast, in respect of [78](c), (d), (e) and (f), there has been some elaboration. Further particularity as to the date of all transactions should be provided, but otherwise I consider sufficient particulars have now been provided. Assuming further particulars of the second defendant’s role as agent for the plaintiff can be provided under [76](c), the particulars now specify the transactions the second defendant allegedly made or encouraged the plaintiff to make, namely transferring money from her account to partnership and personal accounts. I consider this is sufficient particularity to inform the second defendant of the case he has to meet, and the way in which he allegedly acted in breach of a fiduciary duty owed to the plaintiff.
[31] In respect of [34](a), the particulars sought relate to the date on which the plaintiff signed a power of attorney in respect of the second defendant. In response to Associate Judge Smith’s order, the claim now reads “the plaintiff does not now recall the date when she signed the power of attorney”. It would thus appear the plaintiff is unable to provide these particulars because it would seem there is simply no record and she has no memory of the date. While not helpful at one level, such a significant lapse will provide the defendants with fertile ground in cross-examination to challenge Mrs Huljich’s veracity or reliability.
[32] I also consider the particulars provided in respect of [56] are sufficient. It should now be clear to the defendants the case they have to meet. As with [34](a), to the extent there is uncertainty as to the place and time the false and misleading conduct occurred, the defendants should be able to exploit these deficits to their advantage in cross-examination.
[33] In respect of the prayer for relief in the fourth cause of action, Associate Judge Smith ordered that the plaintiff provide particulars of the interest paid by the plaintiff on the Sovereign loan since the first and second defendants stopped paying interest, and particulars of the rate of interest for which the plaintiff is liable. The particulars now provided simply state:
5 Huljich v Huljich, above n 2, at [154].
The specific dollar amount of the interest paid by the plaintiff on the Sovereign loan since the first and second defendants stopped paying that interest (up until the loan was repaid) will be provided prior to trial. The Sovereign loan was a revolving credit type facility with interest charged daily on the outstanding balance, which could at any time be repaid and redrawn, and not a table mortgage on which the amount of principal interest paid monthly is fixed, as such the calculation is complex, and the plaintiff requires professional assistance in doing that calculation correctly.
[34] That remains insufficient to properly inform the defendants of the quantum of the claim they face. It is not sufficient to state figures will be provided at some indeterminate point prior to trial. The proceeding is already at a late stage, having been on foot for a number of years, and with two trial fixtures having been vacated. The complexity of the calculation is no justification for non-compliance, particularly at this late stage.
[35] Finally, in respect of the claim for equitable damages in the sixth cause of action, the particulars read:
The plaintiff is unable pending discovery from the first and second defendants to particularise what losses she has suffered but will seek to recover all such losses following discovery and inspection and then provision by the plaintiff of particulars of losses, to be provided prior to trial.
[36] While I am content to grant a very brief extension in respect of the provision of particulars and, as I will address shortly, briefs of evidence, I am not willing to permit further discovery. It will put the December fixture in jeopardy. The time for discovery has long since passed. That means the claim for equitable damages under the sixth cause of action is unsustainable, and should be struck out now.
[37] Accordingly, the plaintiff must provide further particulars to comply with Associate Judge Smith’s order in respect of the following paragraphs no later than 31 August 2018:
(a) [8];
(b) [32](e) and (g);
(c) [34](b) and (f);
(d) [71](c), (d), (e) and (f); (e) [76](c);
(f)[78](c), (d), (e) and (f) (in respect of dates only);
(g)(b) of the prayer for relief in the first cause of action; and
(h)the prayer for relief of the fourth cause of action.
[38] If she fails to comply, the unless orders issued in my Minutes of 24 May and 24 July 2018 will bite and the claim in its entirety will be struck out.
[39] The same considerations apply in respect of the late filing of the draft index of the plaintiff’s documents for the common bundle. Unless this is filed by 31 August 2018 the claim in its entirety will be struck out.
Should the order in respect of evidence be rescinded?
[40] Mr Katz wishes to file five additional briefs of evidence no later than 31 August 2018. He accepts that if not filed by that date, they cannot form part of the evidence. The briefs comprise:
(a)a brief from Richard Connell, a solicitor who acted for Mrs Huljich in 2009 when the original loan underlying this proceeding was taken out;
(b)two briefs from forensic accountancy experts, one from Karen Greenwood who will analyse Mrs Huljich’s accounts, and one from Shane Hussey, who will analyse the damages claim and losses; and
(c)two further expert briefs of a psychiatric/psychological nature.
[41] Of this evidence, the four expert briefs will be new or largely new. Mr Katz told me Mr Connell’s evidence simply duplicates evidence already disclosed in Mrs Huljich’s brief. With the exception of aspects of Mr Hussey’s evidence, further
discovery will not be necessary. Ms Cooper raised concerns that the filing of psychiatric or psychological evidence on behalf of the plaintiff may require the defendants to engage their own psycho-geriatrician to examine Mrs Huljich.
[42] As noted, because I have already ordered that no further evidence may be filed, rescission of that order is required rather than relief. Rule 7.49 provides that the Judge may, if satisfied the order or decision is wrong, vary or rescind the order or decision.
Generally, there are four circumstances where such an order will be appropriate:6
(a)when there was not full argument on the first hearing;
(b)if some relevant point of evidence was overlooked at the original hearing;
(c)there has been a material change of circumstances; or
(d)some other special circumstance has arisen.
[43] For the reasons already stated, I am prepared to rescind my earlier order and grant a short extension for the filing of additional briefs to 31 August 2018. When I made my earlier orders I did not have the benefit of full argument I received at the hearing with counsel. The orders I made followed telephone conferences. Additionally, at the time I made my earlier orders, Mrs Huljich had not re-engaged Mr Katz. I consider that change justifies the limited amnesty within which Mr Katz expressed confidence remedial steps could be taken.
[44] There are concerns about the effect admitting further evidence may have on the defence case. But it is over three months to trial, and only a very brief extension will be tolerated. Moreover, I accept Ms Cooper’s submission that if further evidence is filed generous timetabling extensions (i.e. until 31 October 2018) are required to allow the defendants to properly respond. That should sufficiently mitigate any prejudice to the defence case. Finally, I am satisfied, either on the basis of Mr Katz’s indication Mrs Huljich would consent to examination by a defence expert, or by order
6 Crequer v Chief Executive of the Ministry of Social Development [2014] NZCA 284 at [18]-[19].
of this Court,7 that if desired the defendants will be able to respond to any psychological/psychiatric evidence filed by the plaintiff.
[45] In terms of the forensic accounting evidence, because I have ordered there will be no further discovery, Mr Hussey’s evidence must also be filed by 31 August 2018. He will be confined to the evidence available on the documents discovered to date.
Orders
[46] Relief against the sanctions in the unless orders made on 24 May 2018 and 24 July 2018 is granted, in the terms set out at [47] and [49] below.
[47] The plaintiff is ordered to provide the particulars ordered in a form acceptable to the defendants or, alternatively to file a ninth amended statement of claim by 31 August 2018 complying with Associate Judge Smith’s order for provision of further particulars in his judgment of 27 April 2018 in terms of my directions at [37] above. If this order is not complied with, the claim in its entirety will be struck out.
[48]The claim for equitable damages under the sixth cause of action is struck out.
[49] The draft index of the plaintiff’s documents for the common bundle must be filed by 31 August 2018. In the event of default, the claim in its entirety will be struck out.
[50] I rescind my order at [9](a) of my Minute dated 24 July 2018. The plaintiff is to serve any further evidence no later than 31 August 2018.
[51] I vary my order at [19](e) of my Minute dated 24 May 2018. The defendants are to serve their briefs of evidence no later than 31 October 2018.
7 Senior Courts Act 2016, s 44 and Keys v IAG New Zealand Ltd HC Auckland CIV-2015-404- 000342, 4 May 2018 (Minute of Powell J).
Costs
[52] As Mr Katz conceded, it is inevitable there will be costs implications for the plaintiff on these applications. The defendants have already applied for indemnity costs in respect of the steps taken up to 24 May 2018 before me, and now seek indemnity costs for the steps taken to date. Mr Katz submitted an order for increased costs, with an uplift of between 30 and 50 per cent, is appropriate.
[53] I consider that fair and reasonable indemnity costs are appropriate for all steps before me. That is despite the fact the plaintiff has nominally succeeded in this application. The defendants were entirely justified in opposing the application, and the plaintiff’s success is an indulgence. This application has only become necessary as a result of the plaintiff’s non-compliance with a series of court directions. She should bear the costs, despite her success.
[54] Ms Cooper is to file a memorandum particularising the reasonably incurred expenses for which indemnity is sought within 20 working days of the date of this judgment. Mr Katz shall have a further 10 working days thereafter to respond. Once filed I shall deal with both costs applications together.
Moore J
Solicitors/Counsel:
Mr Katz QC, Auckland Mr Nicholls, Auckland Ms Cooper QC, Auckland Ms Ford, Auckland
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