Osborne v First Credit Union - [2018] NZHC 546

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2016-485-989

[2018] NZHC 546

IN THE MATTER of an appeal under s 151 of the Friendly Societies and Credit Unions Act 1982

BETWEEN

WYN OSBORNE, CRAIG GOLD AND

BRUCE BHIKHU BHANA AS TRUSTEES, FOR THE TIME BEING, OF THE

NEW ZEALAND ASSOCIATION OF CREDIT UNIONS

Appellants

AND

FIRST CREDIT UNION

Intervener

Hearing: On the papers

Counsel:

D J Friar and B J Ward for Appellants

D M Hughes and J V R James for Intervener

Judgment:

27 March 2018

JUDGMENT OF THOMAS J (COSTS)

[1] The appellants, the trustees for the time being of the New Zealand Association of Credit Unions (NZACU), seek indemnity costs against the intervener, First Credit Union (FCU), following their successful appeal as determined by my decision dated 16 November 2017.1

1 Re New Zealand Assoc of Credit Unions [2017] NZHC 2806.

RE NEW ZEALAND ASSOCIATION OF CREDIT UNIONS [2018] NZHC 546 [27 March 2018]

[2] Neither NZACU nor FCU seek costs against the Registrar of Friendly Societies and Credit Unions (the Registrar), nor does the Registrar seek costs against NZACU or FCU.

Background

[3] Since 1994, NZACU2 has had its rules (the Rules) approved by the Registrar allowing it to provide services to associate members and, since 2003, to third parties.3

[4] The Registrar’s approval of the Rules is required pursuant to s 146 of the Friendly Societies and Credit Unions Act 1982 (the Act). Following complaints made by a former member, Westforce Credit Union (Westforce), and FCU, the Registrar determined by decision dated 18 November 2016 (the Decision) that the Rules allowing associate members to purchase NZACU business services, and allowing NZACU to provide them, were inconsistent with the Act and therefore invalid.

[5] NZACU appealed the Decision. The Registrar, while not a respondent, filed a notice of appearance and a report to the Court. Westforce was given leave to file an appeal but subsequently abandoned it. It filed evidence confirming it disagreed with the Decision but was not represented at the hearing. FCU was granted leave to intervene (the Joinder Judgment).4 It filed affidavit evidence and was represented at the appeal.

[6]I allowed the appeal, concluding:

[82] The objects of NZACU are prescribed by s 143(3) of the Act. Pursuant to s 101(2), NZACU has the power to take any action or do anything directly in pursuance of those objects or incidental to them, provided that action is authorised by the Rules or the Act.

[83] In order to provide any services to associate members or third parties, the Rules must allow NZACU to do so. The Rules at issue allow NZACU to provide services to associate members. Whether provision of those services is directly or indirectly in pursuance of NZACU’s objects is then a question of fact. The evidence provided in support of NZACU’s position is to the effect

2 Originally called the New Zealand Credit Union League, later the New Zealand Association…

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: [2018] NZHC 546
Decision Date: 27 March 2018

CaseChat Overview and Summary

The appellants, the trustees of the New Zealand Association of Credit Unions (NZACU), sought indemnity costs against the intervener, First Credit Union (FCU), following a successful appeal against a decision by the Registrar of Friendly Societies and Credit Unions (the Registrar). The Registrar had determined that certain rules of NZACU were inconsistent with the Friendly Societies and Credit Unions Act 1982 (the Act). NZACU appealed, and the Court allowed the appeal, concluding that the objects of NZACU were prescribed by s 143(3) of the Act and that the Rules must allow NZACU to provide services to associate members. The question arose as to whether FCU should pay indemnity costs to NZACU for its participation in the appeal.

The Court considered whether FCU had acted vexatiously, frivolously, improperly or unnecessarily. The Court accepted that FCU was encouraged to participate in the appeal and that it played a role as a contradictor. However, FCU did not provide any evidence about the operation of credit unions or how the issues on appeal would affect credit unions. The Court concluded that FCU should not be liable for indemnity costs, as it had not acted unreasonably. The Court also found that FCU should not be liable for increased scale costs, as there was no failure by FCU to act reasonably. Instead, the Court ordered FCU to pay costs on a 2B basis, as from the date of the Joinder Judgment.

The Court ordered that FCU are to pay costs on a 2B basis as from 16 March 2017, together with disbursements.

Orders