Olliver v BBG Holdings Limited (in liquidation)
[2021] NZCA 669
•9 December 2021 at 9 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA517/2021 [2021] NZCA 669 |
| BETWEEN | GREGORY MARTIN OLLIVER |
| AND | BBG HOLDINGS LIMITED (IN LIQUIDATION) |
| Court: | French and Miller JJ |
Counsel: | P J K Spring and K J Ng for Applicant |
Judgment: | 9 December 2021 at 9 am |
JUDGMENT OF THE COURT
AThe application for leave to appeal as a non-party is declined.
BThe applicant must pay the respondent costs for a standard application on a band A basis together with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by French J)
Introduction
Mr Olliver seeks leave to bring an appeal against a decision of the High Court.[1] Leave is required because Mr Olliver was not a party in the High Court proceeding.
[1]BBG Holdings Ltd (in liq) v Fatupaito [2021] NZHC 1877 [High Court judgment].
The application raises two issues:
(a)Does this Court have jurisdiction to entertain such an application?
(b)If so, should the Court grant Mr Olliver’s application?
Background
Mr Olliver is the director of two companies, BBG Holdings Ltd and CIT Holdings Ltd.
In 2014, BBG Holdings entered into an agreement to purchase land belonging to CIT Holdings. The agreement was subject to a condition that CIT Holdings remove certain caveats that were on the title. While the agreement was still conditional, BBG Holdings engaged an earthworks company to undertake certain work including work on the land it was purchasing. The cost of the earthworks amounted to some $836,000. BBG Holdings agreed to pay the earthworks company that sum and then invoiced CIT Holdings. CIT Holdings never reimbursed BBG Holdings.
CIT Holdings was unable to remove the caveats with the result that the agreement for sale and purchase never became unconditional and the property was never transferred to BBG Holdings.
Subsequently in 2016, CIT Holdings was put into liquidation.
At Mr Olliver’s direction, BBG Holdings made a claim in the CIT Holdings liquidation for the $836,000. The liquidators accepted the claim. They were unaware that BBG Holdings had paid for the earth works at a time when there was an agreement for sale and purchase in existence.
However, before the liquidators were in a position to make any payment to BBG Holdings, the latter itself went into liquidation in 2019.
Mr Olliver made several claims in BBG Holdings’ liquidation but none of the claims was accepted.
Mr Olliver then contacted the liquidators of CIT Holdings to make them aware of the existence of the agreement between BBG Holdings and CIT Holdings to purchase land on which the earthworks had been undertaken. That information prompted the liquidators of CIT Holdings to reverse their previous decision and reject BBG Holdings’ claim for the $836,000. In making that decision, the liquidators of CIT Holdings considered that when the earthworks costs were incurred, BBG Holdings was either the equitable owner of the land or about to become the legal owner of the land and was therefore paying for the earthworks to improve its own land. In their view, in those circumstances, BBG Holdings could not compel CIT Holdings to cover the cost. Although in the end BBG Holdings never obtained legal ownership of the land, it knowingly took the risk of paying the cost of the earthworks while the agreement was still conditional.
The liquidators of BBG Holdings challenged the decision to reject its claim in the High Court by way of a creditor’s application for review under s 284(1)(b) of the Companies Act 1993. The parties to the proceedings were the two sets of liquidators.
The application for review was heard by Associate Judge Sussock. Mr Olliver provided an affidavit and was cross-examined. He was the only witness to give oral evidence.
In her subsequent judgment, the Judge held that the decision of the CIT Holdings liquidators to reject BBG Holdings’ claim was a decision no reasonable liquidator could have come to and must be reversed.[2] It was unreasonable because the earthworks were not limited to properties which BBG Holdings was intending to purchase and because on the evidence she was satisfied it could be inferred that CIT Holdings had agreed to pay for the earthworks. Both companies were controlled by the same person, CIT Holdings had never objected to the invoices and the two companies were in a joint venture.
[2]At [86]–[107].
In reaching those conclusions, the Judge rejected Mr Olliver’s claims that BBG Holdings had invoiced CIT Holdings in error. The Judge also opined that given the agreement never became unconditional, it was debatable whether BBG Holdings ever acquired an equitable interest but in any event that was irrelevant given her finding of an agreement to repay.
The Judge issued formal orders granting BBG Holdings’ application for leave under s 284(1) of the Companies Act, and reversing the decision made by the liquidators of CIT Holdings so that BBG Holdings’ claim in the liquidation of CIT Holdings was accepted.[3]
[3]At [108]–[109].
The liquidators of CIT Holdings who lost in the High Court have decided not to appeal the Judge’s decision.
However, Mr Olliver wishes to appeal. He says he is aggrieved and prejudiced by the judgment and argues that the Judge erred in both her application of the law and her findings of fact. He asks this Court to make orders quashing the High Court decision.
Mr Olliver’s application for leave to appeal is opposed by the liquidators of BBG Holdings. They submit this Court does not have jurisdiction to hear an appeal by a non-party. They also contend that if there is jurisdiction, it should not extend to liquidation cases where timeliness is crucial.
The position of the liquidators of CIT Holdings as regards Mr Olliver’s application is that they neither oppose nor support it. They did not wish to file any submissions.
Does this Court have jurisdiction to hear an appeal by a non-party?
This case appears to be the first time the issue has arisen for consideration by this Court. There is an unreported 1993 High Court decision which emphatically rejected out of hand the suggestion that a non-party could bring an appeal. The Judge deciding that case reached that conclusion by reliance on the fact that only the parties to a proceeding are bound by the judgment.[4]
[4]NZI Insurance New Zealand Ltd v Ball HC Auckland HC66/92, 31 May 1993 at 3.
In support of his application, Mr Olliver relies on s 56 of the Senior Courts Act 2016, and r 5 and pt 2 of the Court of Appeal (Civil) Rules 2005 as well as English[5] and Canadian authority.[6]
[5]The English cases were reviewed by the Supreme Court of Canada in Société des Acadiens du Nouveau-Brunswick Inc v Assoc of Parents for Fairness in Education, Grand Falls District 50 Branch [1986] 1 SCR 549 at 592–594.
[6]Société des Acadiens, above n 5.
However, neither s 56 nor the Court of Appeal (Civil) Rules expressly empower this Court to consider an appeal brought by a non-party. On the contrary, they are premised on the basis that any appeal contest is between the original parties to the decision being challenged on appeal. It is correct that appeal courts in England[7] and Canada[8] and indeed Australia[9] have confirmed the existence of such a jurisdiction including in cases involving liquidation disputes. However, those authorities must be treated with caution, because at least in the case of the English and Canadian authorities, the jurisdiction appears to be derived from inherent jurisdiction. It is well established however that this Court, unlike its English counterpart, lacks an inherent jurisdiction. The jurisdiction of this Court is derived entirely from statute.
[7]Reviewed in Société des Acadiens, above n 5, at 592–594.
[8]Société des Acadiens, above n 5.
[9]Cuthbertson v The Mayor, Aldermen and Citizens of the City of Hobart (1921) 30 CLR 16; and Fortress Credit Corp (Australia) II Pty Ltd v Fletcher [2015] NSWCA 85, (2015) 89 NSWLR 110.
It follows in our view that if this Court does have the power to grant Mr Olliver’s application, it can only be found in its inherent powers. As explained in the Supreme Court decision of Siemer v Solicitor-General,[10] every court has inherent powers, that is to say powers that are incidental to or ancillary to its jurisdiction whether that jurisdiction is inherent or statutory. The inherent powers include all but only such powers as are necessary to enable a court to act effectively and uphold the administration of justice within its jurisdiction.[11] Examples of such powers include powers to dismiss or stay proceedings, to control barristers and solicitors and to issue orders to preserve evidence.
[10]Siemer v Solicitor-General [2013] NZSC 68, [2013] 3 NZLR 441.
[11]At [114]. See also District Court at Christchurch v McDonald [2021] NZCA 353, at [27]-[34].
In our view, the power to hear a civil appeal by a non-party is arguably in a different category to those sorts of powers. It is not an ancillary procedural power. Rather it is a power which if exercised would confer a substantive right — a right of appeal — on a non-party where none exists at statute.
It has not however proved necessary for us to reach any definitive conclusion on jurisdiction because we are satisfied that even if there is jurisdiction, the application in this case is not sufficiently meritorious to warrant leave being granted.
The merits of the application
In one of the earliest Australian cases, it was said that leave will generally be given if the party applying, although not a party to the proceeding, might properly have been one.[12] However the case in which this was said did not involve someone who had the opportunity to apply to be formally joined but elected not do so, which is the position here. As a director, Mr Olliver had standing to apply to be joined and be formally represented at the High Court hearing if joinder had been granted. Instead, he in effect, relied on the liquidators’ counsel to advance his interests.
[12]Cutherbertson, above n 9, at 25
In a more recent Australian decision in 2015, the New South Wales Court of Appeal held that a non-party to proceedings may be granted leave to appeal if they are aggrieved or sufficiently interested in the proceeding.[13]
[13]Fortress Credit Corp (Australia) II Pty Ltd v Fletcher, above n 9.
More developed criteria for deciding whether to grant leave can be found in the decision of the Supreme Court of Canada in Société des Acadiens du Nouveau-Brunswick Inc v Assoc of Parents for Fairness in Education, Grand Falls District 50 Branch, where it was said:[14]
The test applied in order to determine when a case was a proper case for leave was whether the applicant would have been a proper, if not a necessary, party to the action … An appellant should be able to show, for example, (a) that its interest was not represented at the proceeding; (b) that it has an interest which will be adversely affected by the decision; (c) that it is, or can be, bound by the order; (d) that it has a reasonably arguable case; and (e) that the interests of justice in avoiding a multiplicity of proceedings would be served by the grant of leave.
[14]Société des Acadiens, above n 5, at 594.
Both Mr Olliver and the liquidators of BBG Holdings agree the above would be a useful set of criteria for New Zealand courts to adopt.
Applying those criteria to this case, we consider (contrary to a submission made on behalf of Mr Olliver) that his interests as a director and potential creditor, who would benefit from a correct determination of the acceptance or rejection of BBG Holdings’ claim, were sufficiently represented by the liquidators of CIT Holdings. We also consider that the High Court judgment has not adversely affected his interests including his reputation in any significant way. As he himself concedes, he is not bound by the judgment. It cannot be enforced against him. He also concedes that granting leave is not required to avoid a multiplicity of proceedings.
That leaves the question of whether the proposed appeal is reasonably arguable. It appears the proposed appeal turns on the Judge’s factual findings, in particular her finding of an agreement to repay.
Mr Olliver acknowledges that the findings of fact made by a first instance judge especially those involving an assessment of credibility are given “serious weight” by an appellate court. However he says there were “serious flaws” in the Judge’s analysis of the evidence as illustrated by her misstatement of one aspect of his evidence and her failure to refer to various matters in the judgment such as evidence that BBG Holdings did stand to benefit from the development of all the land on which earthworks were being constructed and the existence of a dispute between BBG Holdings and the earthworks company.
Some of these criticisms may be reasonably arguable. But none of them whether viewed individually or collectively are capable in our view of detracting from the cogency of the Judge’s key findings. In our view, the proposed appeal is weak and has little prospect of success. As submitted by the respondents, the evidence incontrovertibly established that Mr Olliver on behalf of BBG Holdings and with legal representation filed a proof of debt based on the earthworks invoices in the liquidation of CIT Holdings in May 2016, that he again confirmed the proof of debt to the CIT Holdings liquidators in 2018 and took no steps to challenge or reverse it. In our assessment, it can fairly be said that the inference of an agreement was irresistible.
Having regard to all the circumstances we have come to a clear view that even if there were jurisdiction to hear an appeal by a non-party, it would not be in the interests of justice to grant the application made by Mr Olliver.
Outcome
The application for leave to appeal as a non-party is declined.
As regards costs, the respondent seeks costs in relation to the filing of its submissions responding to the application. There is no reason why costs should not follow the event and we so order. The applicant must pay the respondent costs for a standard application on a band A basis with usual disbursements.
Solicitors:
Keegan Alexander, Auckland for Applicant
Adam Stevenson Botterill, Auckland for Respondent
1
4
0