Low Vehicle Technical Association Incorporated v Brett - [2020] NZHC 1821

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-1925

[2020] NZHC 1821

BETWEEN LOW VOLUME VEHICLE TECHNICAL ASSOCIATION INCORPORATED
First Plaintiff

AND

ANTHONY PETER JOHNSON

Second Plaintiff

AND

JOHN BERNARD BRETT

Defendant

Hearing: On the papers

Appearances:

D P MacKenzie for the plaintiffs The defendant in person

P C Murray for affected persons

Judgment:

28 July 2020

JUDGMENT NO 4 OF PALMER J

This judgment was delivered by me on Tuesday 28 July 2020 at 3.00pm.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Solicitors/Parties:
MinterEllisonRuddWatts, Wellington P Murray, Barrister, Auckland
Schnauer & Co, Auckland Mr Brett in person

LOW VOLUME VEHICLE TECHNICAL ASSOCIATION INC v BRETT NO 4 [2020] NZHC 1821 [28 July 2020]

Proceedings and charging orders

[1] In a judgment issued on 20 November 2017, I ordered Mr Brett to pay Mr Johnson $100,000 in damages for defamation as well as costs and issued a permanent injunction that Mr Brett not repeat the defamatory statements.1 On 26 March 2019, the Court of Appeal upheld LVVTA’s appeal and dismissed Mr Brett’s appeal.2 It granted a permanent injunction to the LVVTA prohibiting Mr Brett from any further breach of a settlement agreement, awarded costs to the LVVTA and remitted a cause of action to the High Court for re-trial. On 9 December 2019, following the LVVTA’s pursuit of Mr Brett for the costs awards, Mr Brett was adjudged bankrupt. Accordingly, under s 76 of the Insolvency Act 2006, the proceeding against him was automatically stayed by operation of law. The LVVTA did not seek to have it continued.3

[2] In January 2018, Mr Johnson obtained a charging order from this Court, as security over the damages and costs award. The order was over Mr Brett’s 50 per cent shareholding in a company, MJT 14 Ltd (MJT), which owns an investment property in Papakura.

[3] On 1 and 3 April 2019, the Companies Office recorded that Mr Brett’s shareholding in MJT was transferred to his de facto partner, Mrs Wallace-Deane, and then to the John Brett Family Trust (the Trust). On 8 and 20 April 2019, MJT filed annual returns stating Mr Brett was no longer a shareholder and his shareholding had been transferred to the Trust.4 On 11 April 2019, I held a teleconference regarding the proceedings at which Mr Gordon, for Mr Johnson and the LVVTA, raised the issue of the apparent transfer of ownership.5 Mr Brett explained that he “was just correcting a mistake made five years ago about who owned the company”.6 As recorded in my minute:

[4] I advised Mr Brett that he and Mrs Wallace-Dean (who also attended the teleconference) needed to take seriously the question of breach of the charging order. Courts do not take breaches of their orders lightly. He indicated they

1 Low Volume Vehicle Technical Association Inc v Brett [2017] NZHC 2846, [2018] 2 NZLR 587.
2 Low Volume Vehicle Technical Association Inc v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 1821
Decision Date: 28 July 2020

CaseChat Overview and Summary

Low Vehicle Technical Association Incorporated and Anthony Peter Johnson filed proceedings against John Bernard Brett in the High Court of New Zealand. The plaintiffs sought damages for defamation and costs, and the LVVTA sought a permanent injunction against Mr Brett. The dispute involved defamatory statements made by Mr Brett about the plaintiffs. The Court of Appeal upheld the plaintiffs' appeal and dismissed Mr Brett's appeal, awarding costs to the LVVTA and granting a permanent injunction to the LVVTA. Mr Brett was adjudged bankrupt, which stayed the proceeding against him. The plaintiffs obtained a charging order over Mr Brett's shareholding in MJT 14 Ltd, which owns an investment property in Papakura. Mr Brett transferred his shareholding in MJT to his de facto partner and then to the John Brett Family Trust. The plaintiffs filed an interlocutory application alleging a breach of the charging order. Mr Brett opposed the application, claiming the charging orders had lapsed and no legal transfer occurred.

The legal issues in this case were whether costs should be awarded for the interlocutory application to enforce the charging orders and whether costs should be awarded for Mr Brett's application to represent the affected persons. The court considered the general principle that the party who fails with respect to an interlocutory application should pay costs to the party who succeeds, but the court may reduce costs if the party claiming costs contributed unnecessarily to the time or expense of the relevant step. The court also considered whether there were exceptional circumstances justifying an award of costs against Mrs Wallace-Deane under the Legal Services Act 2011.

The court held that Mr Brett's conduct made the interlocutory application necessary, and Mr Johnson achieved the purpose of the application, which was to retain the shareholding in Mr Brett's estate. The delay in applying did not alter that. The court awarded costs on a 2B basis against Mr Brett in his personal capacity for the application to enforce the charging order. The court did not award costs for Mr Johnson's opposition to Mr Brett's application to represent the affected persons because Mr Brett's representation of the other affected persons would have been misconceived, and Mr Johnson's formal opposition was not required. The court also did not award costs against Mrs Wallace-Deane or the trustees of the Trust because they were not aware of, and did not consent to, Mr Brett's actions.

In conclusion, the court awarded costs on a 2B basis against Mr Brett in his personal capacity for the interlocutory application to enforce the charging orders. The court did not award costs for Mr Johnson's opposition to Mr Brett's application to represent the affected persons or against Mrs Wallace-Deane or the trustees of the Trust. The costs award against Mr Brett will now be provable in his bankruptcy.

Orders