Skelton v Howcroft
[2015] NZHC 2214
•14 September 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-001897 [2015] NZHC 2214
UNDER the Trustee Act 1956 AND
the Partnership Act 1908
IN THE MATTER
of a claim to set aside an agreement and for damages
BETWEEN
BEVIN H SKELTON Plaintiff
AND
CHARLES M HOWCROFT Defendant
Hearing: 8 September 2015 Appearances:
B H Skelton (Self-represented Plaintiff) in Person
B M Cunningham for the DefendantJudgment:
14 September 2015
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 14 September 2015 at 4.45 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Counsel: B M Cunningham, Auckland
Solicitors: BSA Law, Auckland
Copy To: B H Skelton, Auckland
SKELTON v HOWCROFT [2015] NZHC 2214 [14 September 2015]
Introduction
[1] Mr Skelton seeks an extension of time to bring a review of a decision of an
Associate Judge striking out his claim.1
[2] Mr Skelton is out of time because he mistakenly attempted to file an appeal in the Court of Appeal rather than seeking a review of an Associate Judge’s decision made in Chambers.
Applicable law
[3] Rule 2.3(2) of the Rules provides:
(2) Unless a Judge or an Associate Judge directs otherwise, notice of the application must be filed and served,—
(a) if it is made by a party who was present or represented when the order was made or the decision was given, within 5 working days of the order being made or the decision being given; or
(b) if it is made by a party who was not present or represented, within 5 working days after the receipt by that party of notice of the making of the order or the giving of the decision.
[4] The factors that are relevant to the exercise of the discretion to extend time to review an Associate Judge’s decision are no different to those that are applicable to an application to extend time to appeal.2 Relevant factors include:3
(a) the length of the delay; (b) the reasons for the delay;
(c) the conduct of the parties;
1 Skelton v Howcroft [2015] NZHC 1313.
2 Sutton v New Zealand Guardian Trust Co Ltd (1989) 2 PRNZ 111 (HC) at 113.
3 Hsu v Moor Stephens Markhams Ltd [2014] NZHC 961 at [12]; Hansen v Bird HC Whangarei
CIV-2004-488-519, 15 February 2007 at [38]; Junken Nissho Ltd v Attorney General (1998) 12
PRNZ 380 (HC).
(d) the prospective merits of the claim; and
(e) the risk of prejudice to the defendant.
[5] The overall test is whether the extension of time would meet the overall interests of justice.4 The parties’ submissions were directed to the factors in (a), (b), (d) and (e) above and each of those factors is considered below.
The strike-out decision
[6] Mr Skelton’s first cause of action was for alleged breach of duties by Mr Howcroft arising out of a loan contract executed by Mr Howcroft in his capacity as trustee of the Bevin Skelton Children’s Trust. Mr Skelton claimed that the Trust never received the benefit of the loan, that Mr Howcroft failed to keep accurate records, and mismanaged funds.
[7] The second cause of action was for breach of duties by Mr Howcroft as Mr Skelton’s alleged partner in relation to a Gold Coast apartment which the Howcrofts owned jointly with the Urban and Country Partnership (Partnership). That Partnership was formed between Mr Skelton’s family trust and his former wife’s family trust. The Partnership was dissolved in August 2006 and Mr Nair was appointed receiver the following month. The Partnership’s half share in the Gold Coast apartment was sold by the receiver to Mr and Mrs Howcroft. Mr Skelton alleges that there was a separate partnership between him, his spouse and Mr and Mrs Howcroft in relation to the apartment. He alleges that the sale was at an undervalue, and that it was not properly disclosed to Mr Skelton. Mr Skelton says that Mr Howcroft is liable for the difference between what he bought the half share for and what could have been obtained if the apartment was sold to somebody else.
[8] Associate Judge Sargisson struck out the first cause of action on the basis that the claim was covered by a settlement agreement dated 4 August 2008 entered into at a judicial settlement conference. This followed proceedings issued by Mr Nair
against Mr Skelton and Mr Howcroft in their capacity as trustees of the
4 Havanco Ltd v Stewart (2005) 17 PRNZ 622 (CA) at [5].
Bevin Skelton Children’s Trust for an alleged debt owed to the Partnership by that
Trust.
[9] The Associate Judge found that this claim was time-barred under the Limitation Act 1950 because the loan agreement was signed on 13 September 2005 and the claim was not filed until 30 July 2014. As the claim did not plead fraud or mistake, the six year limitation period applied and the claim was statute-barred.
[10] The second cause of action was also struck out as being time-barred. The claim regarding the sale of the apartment was filed by way of an amended statement of claim dated 30 January 2015. The agreement for sale and purchase was dated
18 May 2007, so that any claim was outside the applicable limitation period.
[11] The Associate Judge found that there had been no pleading of fraud or mistake such that time would start to run from the time of discovery within the meaning of s 28 Limitation Act 1950. In any respect, such a claim could not succeed even if pleaded as Mr Skelton had sworn an affidavit on 28 March 2008, showing he knew about the signed sale and purchase agreement at that time. Even on that date, the claim would still be outside the period of limitation.
[12] Finally, as a further basis for striking out the second cause of action, the Associate Judge concluded that it was also covered by the settlement agreement. There were specific references in the settlement agreement to the sale and purchase agreement and completion of the sale to the Howcrofts, indicating that the sale of the apartment had been part of the overall settlement agreed at the judicial settlement conference.
The length of the delay and the reasons for the delay
[13] Associate Judge Sargisson’s decision was given on 11 June 2015. Mr Skelton deposes that he filed his appeal on 8 July 2015, 19 working days after the decision was given and within the timeframe for filing an appeal to the Court of Appeal.5 On
9 July 2015, Mr Skelton became aware that he was out of time. The application for
5 Court of Appeal (Civil) Rules 2005, r 29.
leave to extend time was filed on 23 July 2015, 10 working days after Mr Skelton became aware that he was out of time, and 25 working days after the time limit for filing an application for review expired.
[14] As to the initial error in filing an appeal rather than an application for review, Mr Skelton’s explanation is that he was simply mistaken. He considered that the significance of the matter and the finality of the result indicated that the order was made in Court and there was nothing to suggest otherwise.
[15] Mr Skelton explains that the delay between finding out he was out of time, and filing the application to extend time, was because he was preparing an application for leave to appeal against another decision and he prioritised that application in order to comply with those time limits. Mr Skelton says that his resources are limited and it takes him longer to prepare the necessary applications for filing given he is representing himself.
[16] Mr Cunningham, on behalf of Mr Howcroft, says ignorance of the law is no excuse and as a former solicitor Mr Skelton should have appreciated the distinction between chambers and open court. He submits that a prudent litigant would have foreseen the consequences of the strike-out application succeeding and been prepared to challenge the Associate Judge’s decision accordingly. As Mr Skelton is a litigant in person, he cannot blame counsel for any error.
[17] I accept Mr Skelton’s explanation for the delay in bringing the review in this case. It is now settled that an order striking out a plaintiff’s claim can be made by an Associate Judge in his or her chambers jurisdiction,6 but the question of whether a particular decision is made in court or chambers has been the source of some confusion.7
[18] The fact that Mr Skelton filed a notice of appeal with the Court of Appeal within applicable time limits weighs in his favour. The short delay in filing the
6 Siemer v Heron [2013] NZCA 599 at [10]–[15].
7 Sutton v New Zealand Guardian Trust Co Ltd, above n 2 and Talyancich v Index Developments
Ltd [1992] 3 NZLR 28 (CA); and Faloon v Commissioner of Inland Revenue [2013] 21 PRNZ
454 (HC) at [6].
review application once he was notified of the correct procedure is also explicable by
Mr Skelton’s position as a litigant in person and his apparent limited resources.
[19] This is not a case where Mr Skelton has been dilatory in pursuing his review, and I am satisfied that there is a reasonable explanation for the delay in filing the review application.
The merits of the review application
[20] Mr Skelton submits that there are strong grounds for review. He says that the Associate Judge struck out the proceeding as time barred because he failed to plead fraud or mistake but that he could have simply amended his statement of claim to expressly do that. He strenuously contests the Associate Judge’s finding that a claim of deceit or fraud, even if pleaded, could never succeed.
[21] Mr Cunningham submits that a review of the decision has no substance or merit. He says that in light of the Associate Judge’s findings in respect of the settlement agreement and the limitation defences, the pleading is a “total write-off” and incapable of repair.8 He supports the Associate Judge’s finding that any pleading of fraud or mistake in respect of the second cause of action would also be time barred as Mr Skelton’s own affidavit evidence made it clear that he was aware of the sale to the Howcrofts as at 25 March 2008. That suggests the alleged fraud or deceit was, or could have reasonably been, discovered at that point, so that any pleading of
fraud or mistake now would fall outside the applicable limitation period for filing such a claim.
[22] Most of the submissions before me were directed to the second cause of action rather than the first cause of action. It is not clear on the material before me whether a claim of fraud or mistake in relation to the first cause of action could succeed, and if so, whether it could overcome the terms of the settlement agreement. It does not appear to have been an issue raised in the proceedings leading to the
settlement agreement, and it is unclear whether there was, by this time, any disputes
8 Marshall Futures Ltd (in liq) v Marshall [1992] 1 NZLR 316 (HC) at 324.
between Mr Skelton and Mr Howcroft as opposed to disputes between the respective
Trusts and the receiver.
[23] The strike-out jurisdiction is to be exercised sparingly, and only where the causes of action as so clearly untenable they cannot possibly succeed.9 In the context of a leave application, rather than a substantive review, I have insufficient material before me to say that the first of cause of action, if amended, would be so clearly untenable so as to warrant declining leave to bring the review.
[24] However, the review of the second cause of action falls into a different category. Based on the material before me, a successful review of the strike out of that cause of action faces significant hurdles. Mr Skelton asserted in oral submissions that he only became aware of the “small print” of the sale and purchase agreement in 2012 and the terms of the transfer instrument when the strike-out proceedings were commenced. That appears to be a difficult position to maintain in light of his sworn statements made in the 2008 affidavit. Even if the fraud pleading point could be overcome, it seems clear that the issue of completion of the sale to the Howcrofts was on the table at the settlement conference and was specifically dealt with in the settlement agreement. I note that similar claims advanced by Mr Skelton against Mr Nair relating to the sale of the apartment were struck out on the basis of
the terms of the settlement agreement.10
[25] I consider the second cause of action to be tenuous at best, and if it were not for the uncertainty surrounding the first cause of action, the unmeritorious nature of the claim would tip the balance towards declining leave to bring the review out of time.
[26] Ultimately, the merits of the proposed review are not matters which I can finally determine in the context of a leave application and on the basis of the limited material before me. I consider that to be a matter best left for determination at the substantive review where the Judge will have the benefit of full submissions from
both parties directed to both causes of action.
9 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267.
10 Skelton v Nair [2015] NZHC 832. Mr Skelton advises this decision is subject to a pending appeal.
Prejudice
[27] Mr Skelton says he has not yet had a chance to have his day in Court. He says that the claims are being advanced for the benefit of his sons and that they will be prejudiced if he is not afforded at least an opportunity to review the strike-out decision. Mr Skelton also points out that Mr Howcroft has commenced bankruptcy proceedings against him in respect of his failure to pay costs on the judgment.
[28] Mr Cunningham says that there needs to be finality in litigation. He submits that the respondent will be prejudiced by the grant of leave as he will be put to the time and cost of fighting yet another round of litigation involving issues which were settled in 2008.
[29] I acknowledge Mr Howcroft’s frustration at being put to defending yet another round of litigation which he regards as unmeritorious. However, the cost and expense of defending a review would have had to be incurred anyway had Mr Skelton not been mistaken as to the correct procedure. The prejudice which Mr Howcroft will suffer arises out of the merits of the review rather than the late filing of the application for review.
[30] I am satisfied that Mr Skelton will suffer prejudice if he is not allowed to bring the review out of time. That prejudice is disproportionate to the delay in filing the application for review which I have already found was reasonably explained.
Overall justice
[31] The competing factors are finely balanced in this case. Whilst the delay and reasons for the delay are reasonably explained, the merits of the claim are extremely weak. On balance, I am satisfied that the overall justice in the case favours the grant of leave to Mr Skelton to bring a review of the Associate Judge’s decision out of time.
Result
[32] Application for leave extending the time for filing an application for review is granted. Mr Skelton has received an indulgence from this Court, and in the circumstances an award of costs in his favour is not appropriate. I decline to make
an order for costs.
Edwards J
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