Krzanic v Sullivan
[2014] NZHC 1375
•18 May 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-005275 [2014] NZHC 1375
BETWEEN MARINA ZELKA KRZANIC
First Plaintiff/Respondent
DRAGI PETER KRZANIC, LUTKA KRZANIC and MARINA ZELKA KRZANIC
Second Plaintiffs/Respondents
AND
TIMOTHY PETER SULLIVAN Defendant/Applicant
Hearing: 16 May 2014 Appearances:
D M Hughes for the Applicant
H McIntosh for the RespondentJudgment:
18 May 2014
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
18.06.14 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
M Z KRZANIC v D P KRZANIC, L KRZANIC and M Z KRZANIC v T P SULLIVAN [2014] NZHC 1375 [18
May 2014]
Background to High Court proceeding
[1] The first plaintiff (Ms Krzanic) and the second plaintiffs (the DLM Family
Trust) have filed this proceeding to recover amounts totalling $640,000 and
$200,000 respectively that they say were loaned to the defendant (Mr Sullivan). Ms Krzanic says her loan comprised two amounts advanced to Mr Sullivan in May and June 2005. The DLM Family Trust says its amount was loaned in two instalments to Mr Sullivan in September and November 2008. The loans were required to be repaid on demand and demand has been made for repayment.
Strike out application
[2] Mr Sullivan has filed to strike out these claims. His grounds are:
(a) The claim is an attempt to relitigate issues previously determined by
Courts of competent jurisdiction.
(b)Issue estoppel prevents re-litigation of issues concerning the sums sought because those were the subject of a Family Court proceeding which has been struck out.
(c) Res judicata prevents relitigation on the entire statement of claim and in particular prevents the plaintiffs arguing or seeking orders regarding relationship property when prior claims in respect of those have been struck out by the District Court.
(d)The preceding is frivolous and vexatious and is otherwise an abuse of process of the Court.
(e) The plaintiffs have acted frivolously and improperly in commencing the proceeding.
[3] In support of his application Mr Sullivan has filed an affidavit. He deposes:
[2] These proceedings mirror those brought in the Family Court under
FAM-2011-044-001021…
[3] The proceeding was struck out for want of prosecution.
[4] In any event, the plaintiff and I agreed that neither would pursue the other with respect to the claims we each alleged we had against the other.
…
[4] For consideration of the Court upon the strike out application Mr Hughes, counsel for Mr Sullivan, has filed a bundle of documents. It includes:
(a) Under the reference FAM-2011-044-001021 a copy of a minute of
Burns DCJ dated 29 August 2012, noting:
- Application struck out.
- File closed.
(b) Under FAM-2011-044-001021, a minute of Judge J H Walker noting:
- Matters were before me on 2 November 2011 where I made some directions in respect to filing of documentation relating to the hearing, noting there was a family trust involved.
- Mr Webster [Ms Krzanic’s lawyer] advises that he has had no recent instructions from his client. He has attempted to contact her without success. It is unknown whether there has been any reconciliation.
- Mr Webster has foreshadowed that if he does not receive instructions, it will be his intention to withdraw as counsel.
- If there is no further progress in respect to that matter at that time [it was set to be recalled], the Registrar is to monitor and forward same to Judge in chambers to strike out the present proceedings before the Court.
(c) Under heading FAM-2011-044-002022 a copy of the application by Ms Krzanic for orders regarding relationship property. That application noted that orders were sought:
(i)Determining the respective shares of the parties in the relationship property of the parties.
(ii)Declaring the status and ownership of any property of either party not being relationship property.
(iii)Vesting specific items of relationship property in each of the parties absolutely in such shares as the Court deems just.
(d)The affidavit of assets and liabilities of Ms Krzanic. In that Ms Krzanic sets out the property that was the subject of the relationship property application including real estate, company assets, motor vehicles and trust interests. As well it noted the relationship property included unsecured debts owed to the DLM Family Trust including “$540,000 (original debt) plus payments made towards mortgage on Calliope Road property”, and a sum of $200,000 owed to Ms Krzanic’s parents.
(e) A copy of Ms Krzanic’s narrative affidavit filed in support of her relationship property applications wherein Ms Krzanic refers to the aforementioned unsecured loans. With respect to those Ms Krzanic said that in addition to the $540,000 borrowed from the DLM Family Trust an additional $100,000 was borrowed to enable Mr Sullivan to settle his relationship property with his ex-wife. In addition she said the $540,000 was provided on the basis that when the settlement with the ex-wife was complete that former relationship property would be transferred to a trust set up by she and Mr Sullivan and upon the basis to be set out in a relationship property agreement between them. She records that unfortunately neither the trust nor the relationship property agreement was ever finalised.
[5] The purpose of these documents was to support claims on behalf of Mr Sullivan that those sums of money for which he is now being sued, were clearly matters before the Family Court for consideration and decision and because that claim has been struck out those claims are no longer capable of litigation.
[6] With respect to the rule and objects of res judicata estoppel the Court refers to the authority of Shiels v Blakeley1:
The rule is, … that where a final judicial decision has been pronounced by a New Zealand judicial tribunal of competent jurisdiction over the parties to, and the subject-matter of, the litigation, any party or privy to such litigation, as against any other party or privy thereto, is estopped in any subsequent litigation from disputing or questioning the decision on the merits.
[7] Res judicata estoppel can fall into two categories namely issue estoppel or cause of action estoppel; and that issue estoppel occurs when a particular issue has been determined in an earlier final decision of the Court with competent jurisdiction. Issue estoppel prevents a party from raising the same issue in later litigation.2
[8] Cause of action estoppel prevents a party from raising the same cause of action in later litigation. The cause of action that ought to be estopped must be exactly the same as the cause of action that was earlier adjudicated.
[9] In situations res judicata cannot be precisely established, the Court maintains its inherent jurisdiction to strike out a proceeding for abuse of process if a party is effectively repleading a previous proceeding.
Mr Sullivan’s case upon strike out
[10] For Mr Sullivan it is claimed that the Family Court proceeding concerned the distribution of relationship property; and that there was a dispute regarding the status and ownership of property which was not relationship property. He says that as much is clear by the content of Ms Krzanic’s application and in the affidavit she filed in support.
[11] Mr Sullivan’s application invites the Court to strike out the whole of this
proceeding pursuant to Rule 15.1 HCR on the grounds that this proceeding is frivolous or vexatious, or is otherwise an abuse of the process of the Court because it
1 [1986] NZLR 262 at 266.
2 Van Huijsduijnen v Woodley [2012] NZ HC 2685 at [61] citing Chean v De Alwis [2010] NZCA 30.
is an attempt to relitigate a matter that has already been determined (res judicata estoppel).
[12] Mr Hughes submits that estopping any re-litigation of the Family Court issues is consistent with the twin objectives of res judicata set out in Shiels v Blakeley (supra), namely:
(a) That it is in the interest of the State that there is an end to this litigation.
(b)That it is an unacceptable hardship on Mr Sullivan to vex him twice for the same cause.
[13] Mr Hughes submits that Ms Krzanic had the opportunity in the Family Court to attempt recovery of the funds in dispute, but failed to follow through on the proceeding and having failed to do that she ought to be estopped from now pursuing Mr Sullivan for the same money when the Family Court has already struck the proceeding out.
[14] Mr Hughes submits that position holds notwithstanding Ms Krzanic having sought to determine the status of the $200,000 allegedly owing to the DLM Family Trust as a beneficiary of that Trust. He submits, by reference to the application and affidavit documents provided that Ms Krzanic has already litigated the question of ownership and status of the $200,000 and therefore is estopped from relitigating this question. Further, that equity should not permit the relitigation of an issue by the trustees of a trust if that issue has already been litigated by a beneficiary of that trust.
[15] The firm submission for Mr Sullivan is that the striking out of FAM-2011-
044-001021 by Burns DCJ constituted a final judicial decision by a Court of competent jurisdiction in the same way that a judgment by consent or default would. The striking out of that proceeding therefore gives rise to an estoppel in the same way that a judgment would after the Court had exercised its judicial discretion in the matter.
[16] With respect to the submission contained in the preceding paragraph herein, the Court respectfully disagrees.
[17] It is clear from the decision of the Court of Appeal in Gay v Bruns3 that a previous dismissal for want of prosecution cannot create an estoppel unless there are exceptional circumstances or the dismissal was consented to. In the present case and on the evidence available, there was neither.
[18] Although the purpose of providing copies of some Family Court documents was to suggest that the current debt claims were included for any determination in the relationship property application, it is clear they were not. The simple fact is the proceeding was struck out because Ms Krzanic’s lawyer was without instructions. The purpose of the striking out was to enable the Court to close its file. Clearly in that process there was no determination of any of the issues at all upon which Ms Krzanic filed her Family Court application.
[19] The High Court proceeding claims the payments of debts due. The Family Court proceeding was about deciding what was relationship property and what was separate property for the purpose of ordering a division of property. The Family Court proceeding was not about determining whether or not the DLM Family Trust has an outstanding debt due to it. In the Family Court the existence of the debt is declaratory but it is not a determination of whether that debt is due.
[20] As the Family Court affidavit of Ms Krzanic clearly shows, the Court will enquire into all range of background factors giving rise to property ownership. That enquiry is quite different from the simple debt claim before the High Court.
[21] From Ms Krzanic’s affidavit evidence provided from the Family Court file, albeit without leave of this Court, it is clear there is a considerable conflict of evidence regarding what property is relationship property and what property was not.
Ms Krzanic’s evidence claims the funds were advanced to Mr Sullivan to enable him
3 [2003] NZLR 547 at [20], and [22].
to settle his previous relationship issues. Those are matters for another Court on another day.
[22] What is clear is that no claim of issue estoppel arises, neither in personam, nor in rem. There is no cause of action estoppel or issue estoppel. They are not the same claim. In any event it is quite clear from the authority of Gay v Bruns that the Family Court strike out of Ms Krzanic’s application was not a determination, merely a disposition.
[23] Equally clear is that the High Court proceeding is neither vexatious nor frivolous. In short there is no abuse of process because we do not have the same claim pleaded in a different way in the two Courts. We have different plaintiffs. It is far from clear in the Family Court proceeding that the two debts were as a matter of fact up for determination. Certainly the trustees claim was not before the Family Court for determination as to whether it was relationship or other property.
[24] On behalf of Ms Krzanic Mr McIntosh challenges the inadmissibility of the copy of Ms Krzanic’s Family Court affidavit which was attached to the bundle for consideration upon the strike out application. Certainly no leave was sought for that affidavit to be considered on the strike out application. That notwithstanding, it is not uncommon for such documents to be routinely supplied when the contents of such documents is not challenged. Mr McIntosh’s challenge in this case was appropriate. Ms Krzanic’s Family Court document had not been the subject of consideration by the Family Court. For that reason it would have been inappropriate for this Court upon this application to draw any conclusions regarding the content or value of those documents.
Conclusions
[25] No challenge has been provided to claims by the High Court proceedings that the funds were paid to Mr Sullivan. Rather, the challenge appears to be that any issue of responsibility to account for those funds was absolved by the Family Court relationship property dispute process. It has been suggested Ms Krzanic did not provide instructions to her lawyer because she and Mr Sullivan had reconciled.
Perhaps the services of the Family Court may again be needed should any property relationship issues arise in that connection. But even if that is so that is not a matter for consideration by this Court upon the strike out claim.
[26] The clear evidence is that claims of res judicata must fail because there has been no determination of the claims that were submitted to the Family Court for consideration.
Judgment
[27] The strike out application is dismissed.
Costs
[28] These are fixed on a 2B basis together with disbursements to be paid by
Mr Sullivan to the plaintiffs.
Associate Judge Christiansen