McFarland v Disputes Tribunal

[2013] NZHC 2885

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-1257 [2013] NZHC 2885

UNDER  Judicature Amendment Act 1972

BETWEEN  MARIE RHODA McFARLAND Plaintiff

ANDTHE DISPUTES TRIBUNAL First Defendant

BELFAST TIMBER PROCESSING LIMITED

Second Defendant

Hearing:                   16 October 2013

Counsel:                  D M Lester for Plaintiff

P J Shamy as Amicus Curiae

Judgment:                31 October 2013

RESERVED JUDGMENT OF MACKENZIE J

I direct that the delivery time of this judgment is

4.30 pm on the 31st day of October 2013.

Solicitors:           Dale Lester Barrister, Christchurch for Plaintiff

Crown Solicitor’s office, Raymond Donnelly & Co, Christchurch, as Amicus

McFARLAND v THE DISPUTES TRIBUNAL [2013] NZHC 2885 [31 October 2013]

[1]      This is an application for an order quashing the Disputes Tribunal’s decisions of 25 June 2010, 2 February 2011 and 12 December 2011 in proceedings in which the plaintiff, Mrs McFarland, was the applicant.

[2]      Mrs McFarland  was  a  shareholder  of  two  companies,  Paragon  Homes Limited (Paragon Homes) and Outside In Properties Limited (Outside In).   Her husband was a director of both companies.   Both companies were placed in liquidation on 18 February 2009.  Mrs McFarland is also a trustee of the Lochsloy Trust.  Paragon Homes had, before liquidation, contracted to purchase some timber from Belfast Timber Processing Limited (Belfast Timber).  A payment of $6,806.25 was made, by way of Barter Card transaction, by Outside In.  None of the timber was received.   When the two companies were placed in liquidation, the liquidator of Paragon Homes took the matter up with Belfast Timber.  That company required a further payment for storage costs and other expenses, which it claimed were payable before the timber could be uplifted.   The liquidator advised Mrs McFarland that Belfast Timber had said that the timber could be picked up on payment of $3,000. The liquidator advised that he would also require payment of $1,000 plus GST for his attendances.   No further payment was made, and the liquidator subsequently disclaimed the timber.

[3]      Mrs McFarland bought the claim in the Disputes Tribunal in her capacity as a trustee of the Lochsloy Trust, claiming that the funds paid to Belfast Timber had come from the Lochsloy Trust.

[4]      The claim was heard in the Disputes Tribunal and a decision was given on

25 June 2010.  The Tribunal found that Mrs McFarland had not proved her claim on the balance of probabilities.  It found that the parties to the contract for the sale of the timber were Belfast Timber and Paragon Homes.   The Tribunal appeared to accept that the payment by Barter Card transaction had been made by Outside In, but did not accept that the Lochsloy Trust was an undisclosed principal so that Outside In was the agent of the Lochsloy Trust.

[5]      Mrs McFarland appealed to the District Court under s 50 of the Disputes Tribunal Act 1988.  In his judgment delivered on 24 November 2010, Judge Moran said:1

So the case boils down to this.   The Tribunal found that Paragon Homes purchased the timber from Belfast Timber Processing.  Outside In paid for it thus creating a debt between Paragon Homes and Outside In.   Arguably, Lochsloy  Trust  reimbursed  Outside  In  for  the  price  of  the  timber  (the Tribunal made no finding in this regard).  So the end result appears to be that Paragon  Homes  owes  Outside  In  the  price  of  the  timber  purchased  by Paragon Homes but paid for by Outside In.   The Lochsloy Trust has reimbursed  Outside  In  and  thus  stands  in  its  shoes  as  Paragon  Homes’ creditor but, because both companies are now in liquidation, Lochsloy Trust is left without a remedy.

The Trust now complains that this has produced an unfair result inasmuch as Belfast Timber  Processing has received the purchase  price and kept the timber (it has had both the money and the bag).   This result could hardly have been lost on the Tribunal.  Indeed it was noted “the applicant may have had a claim against Outside In but that would need to be taken up with the liquidator”.

However, Mrs McFarland contends that this result is manifestly unfair and that this unfairness was created by the procedural gap in the Referee’s decision in failing to determine that the applicant had rights to the timber and that the only other possible claimant had disclaimed any interest.

This is an argument on the merits dressed up in procedural robes.   It is founded upon the proposition that the Trust’s reimbursing Outside In for the purchase price of the timber gave the Trust an interest in the timber.  It did not.   It gave the Trust an interest in the debt owed by Paragon Homes Limited to Outside In who funded Paragon Homes’ purchase of the timber.

[6]      The Judge’s reference to “an argument on the merits dressed up in procedural robes” is a reference to the limited appeal rights conferred by s 50 of the Disputes Tribunal Act 1988.  The only ground of appeal under s 50(1) is that the proceedings were conducted by the referee in a manner that was unfair to the appellant and prejudicially affected the result of the proceedings.  There is not a general right of appeal.   The District Court on appeal is not able to examine the merits of the Tribunal decision.

[7]      Following the District Court judgment, Mrs McFarland remained dissatisfied with the outcome.  She applied to the Disputes Tribunal for a rehearing, under s 49

1      McFarland   v   Belfast   Timber   Processing   Ltd   DC   Christchurch   CIV-2010-009-2751,

24 November 2010 at [7]-[10].

of the Act.   Under s 49(3) an application for a rehearing must be made within

28 days after the Tribunal’s order or within such further time as the Tribunal may allow.     The  application  for  a  rehearing  was  declined  on  21 September 2010. Mrs McFarland continued to press for a rehearing.   The Tribunal issued a further decision on 2 February 2011 declining to grant the application for a rehearing out of time.     Mrs McFarland  sought  a  recall  of  that  decision  and  the  Tribunal  on

12 December 2011 did not recall its decision dated 2 February 2011 declining the Lochsloy Trust’s application for a rehearing.  Mrs McFarland then commenced this application for judicial review.

[8]      The ability of this Court to intervene by way of a judicial review of decisions of the Disputes Tribunal is limited. An application for judicial review cannot be used as a mechanism to bypass the limited rights of appeal from Tribunal decisions which the legislature has prescribed.2   As Anderson J stated in Evans v Dispute Tribunal at New Plymouth:3

It must be emphasised that this proceeding is not by way of appeal, either on fact or law, but an application for review of a Tribunal which is not bound to give effect to strict legal rights or obligations or to legal forms or technicalities. If a plaintiff cannot come within the limited scope of appeal provided by s 50 of the Act, the prospects of inducing this Court to intervene by way of review are slight.

[9]      The Disputes Tribunal process is intended to give a speedy and inexpensive resolution of claims, without undue regard to legal technicalities or strict legal rights and obligations.   That consideration, and the limited nature of the appeal right, influences the approach taken by the Court on review.4    A compelling case for the intervention of this Court on review, to prevent an injustice, must be shown.

[10]     Mr Lester  has  very  ably  said  all  that  could  be  said  in  support  of  the application for review.   Despite his most helpful submissions, I am satisfied that there  is  no  proper  ground  for  intervention  by  way  of  review  in  this  case. Mrs McFarland has a sense of grievance that, as Judge Moran put it, Belfast Timber

had both the money and the bag, in retaining the purchase price and keeping the

2      Shepherd v Disputes Tribunal [2004] NZAR 319 (HC).

3      Evans v Disputes Tribunal at New Plymouth [2000] 14 PRNZ 183 (HC) at [17].

4      Hertz New Zealand Ltd v Disputes Tribunal [1994] 8 PRNZ 145 (HC); NZI Insurance New

Zealand Ltd v Auckland District Court [1993] 3 NZLR 453 (HC).

timber.    She  has  been  reinforced  in  her  sense  of  grievance  by  Judge Moran’s comments, at [12], that “[t]here may be force in the argument that the Tribunal’s decision has produced as unfair result”.

[11]     I do not share the Judge’s view on this point.  If the Lochsloy Trust had any rights against Belfast Timber in respect of the payment for the timber, that could only be because the payment had been made on behalf of the purchaser of the timber, Paragon Homes.   Belfast Timber asserted a right not to hand over the timber to Paragon Homes without a further payment.   The liquidator of Paragon Homes apparently accepted that Belfast Timber was entitled to make that demand.   The liquidator was not prepared to meet it, and disclaimed the timber.

[12]     The liquidator’s disclaimer did not confer any right on any shareholder of Paragon Homes, or any related entity, to claim the timber, or the money paid.  I do not see any obvious legal, or moral, entitlement in the Lochsloy Trust to recover the money paid.  There is no obvious unfairness in a decision which refuses to allow the Lochsloy Trust, with whom Belfast Timber had no dealings, to recover either the money or the timber.  I would not, on the evidence, draw the conclusion that Belfast Timber had been unfairly enriched, or that the Lochsloy Trust had any right to recover either the money or the timber.

[13]     I make these observations in the hope that they may assist Mrs McFarland to

accept the finality of the Tribunal’s decision.

[14]     I  am  satisfied  that  none  of  the  points  raised  by  Mrs McFarland  provide grounds for the exercise of the limited review jurisdiction of this Court.

[15]     The application for review is accordingly dismissed.

“A D MacKenzie J”