Thomas v Morrhall
[2016] NZHC 2853
•29 November 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-001126 [2016] NZHC 2853
UNDER the District Courts Act 1947 BETWEEN
EDEN THOMAS First Appellant
J R THOMAS AND J COCKROFT as Trustees of the THOMAS FAMILY TRUST
Second Appellant
ECLIPSE FOODS LIMITED Third Appellant
AND
JONATHAN MORRHALL Respondent
Hearing: 18 August 2016 Appearances:
T J Herbert for the Appellants
E J Werry for the RespondentJudgment:
29 November 2016
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 29 November 2016 at 3.30 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors: Baker Law, Auckland
Kennelly Law, Orewa
Counsel: T J Herbert, Auckland
E J Werry, Auckland
THOMAS v MORRHALL [2016] NZHC 2853 [29 November 2016]
Introduction
[1] The appellants’ claim was commenced within time when it was filed in the Disputes Tribunal, but was subsequently struck out as being out of time following its transfer to the District Court.
[2] The Judge found that that the claim was not commenced when it was filed in the Tribunal, because the Tribunal is not a “Court of law” within the meaning of the Limitation Act 1950 (1950 Act). The Judge held that the claim was only commenced when it was brought in the District Court, which was outside the applicable limitation period.1 The appellants appeal that decision.
[3] The key issue is whether the Tribunal is a “Court of law” for the purposes of
s 4 of the 1950 Act.
Facts
[4] The appellants’ substantive claim relates to an alleged loan of $3,000 advanced by the first named appellant to the respondent on 25 February 2007. The appellants claim that the terms of the loan required repayment by 30 June 2007, and attracted default interest at the rate of 19.25 per cent per annum. They also claim that the respondent failed to settle an agreed purchase of shares for the sum of $90,000 on 30 June 2007.
[5] It is common ground that 30 June 2007 is the relevant date for limitation purposes.
[6] The claim was lodged in the Tribunal on 6 May 2013. Further claims were added on 18 June 2013 and on 9 July 2013 respectively.
[7] On 27 August 2013 the Tribunal Referee unilaterally ordered the transfer of the claims to the District Court. He did so on the basis that the claims were complex
and the appellants would benefit from having legal representation.
1 Thomas v Morrhall [2016] NZDC 8166.
[8] The appellants filed a notice of claim in the District Court on 10 September
2013 as required by the applicable District Court Rules.
[9] The respondent subsequently applied to strike out the claim on the grounds it was brought outside the six year limitation period prescribed by s 4 of the 1950 Act.
District Court decision
[10] The District Court Judge determined that the 1950 Act applied by virtue of s 59 of the Limitation Act 2010. Section 4(1) of the 1950 Act prohibits certain “actions” from being brought after the expiration of six years from the date on which the cause of action accrued. “Action” is defined in s 2(1) to mean:
Any proceeding in a Court of law other than a criminal proceeding.
[11] The Judge found that the Tribunal was not a Court of law. He referred to a passage in Laws of New Zealand on limitation periods.2 That passage expressed the view that Tribunals are not Courts of law because they are not bound to give effect to strict legal rights or obligations in determining disputes.
[12] The fact that Tribunals are divisions of the District Court did not persuade the Judge that they were Courts of law. He considered Tribunals to be different to the Family Court, and Youth Court (which are also divisions of the District Court), because Family and Youth Court Judges had to be District Court Judges holding a general warrant, whereas Tribunal Referees did not have to be Judges or lawyers.
[13] The Judge also relied on s 58 of the Disputes Tribunals Act 1988 (DTA). That section gives a Referee the same protection afforded to Justices of the Peace exercising their criminal jurisdiction. The Judge considered that this provision was similar to the immunities afforded under s 125 of the Motor Vehicle Dealers Act
1975. Those immunities had led the Motor Vehicle Disputes Tribunal to consider it was not a Court of law, as otherwise it would be unnecessary to state that the
immunities applied “as though it were a Court of law”.3
2 Laws of New Zealand Limitation of Civil Proceedings: Limitation Act 1950 at [15].
3 Decision CH15/96 [1996] NZAR 322.
[14] The Judge also had regard to the changes made by the Limitation Act 2010. That Act now provides for claims to be brought in a specified court or tribunal, which is defined to include a Disputes Tribunal. The Judge considered that the fact that such amendments were necessary implied that there was a shortcoming in the application of the 1950 Act. He further found that the effect of the decision would be limited given that most claims would now be governed by the 2010 Act.
[15] The Judge’s conclusions meant that proceedings commenced in the Tribunal were not “actions” for the purposes of s 4 of the 1950 Act. This meant that the first time an action was commenced was when the notice of claim was filed in the District Court on 10 September 2013. That was outside the six year time period (which expired on 30 June 2013) and the claim was accordingly struck out.
Disputes Tribunals
[16] Disputes Tribunals are established by s 4 of the DTA. Tribunals have jurisdiction to hear claims involving sums of up to $15,000 or $20,000 if the parties agree.4
[17] Tribunals are divisions of the District Court, but they do not exercise the jurisdiction of a District Court. Their jurisdiction is prescribed under the DTA and in terms of specific enactments conferring jurisdiction.5
[18] Section 10 of the DTA deals with the jurisdiction of Tribunals. Prior to its repeal on 1 January 2011, s 10(5) provided as follows:
(5) Subject to this Act and the Limitation Act 1950, the jurisdiction of a Tribunal shall extend to a claim based on a cause of action that accrued before the commencement of this Act.
[19] That subsection was substituted by s 58 of the Limitation Act 2010 as follows:
4 Dispute Tribunals Act 1988, ss 10 and 13.
5 DTA, s 4(3), and as provided for in s 4B(1) of the District Courts Act 1947. Enactments which confer jurisdiction are set out in pt 2 of sch 1 to the DTA. Those statutes include the Consumer Guarantees Act 1993, the Credit Contracts and Consumer Finance Act 2003, and the Fair Trading Act 1986.
(5) The Limitation Act 2010 prescribes defences in respect of claims based on an act or omission after 31 December 2010.
[20] Referees determine claims filed in the Tribunal. There is no requirement that Referees be legally trained. Section 58 of the DTA gives Referees the same protection afforded to Justices of the Peace exercising their criminal jurisdiction.
[21] Section 18 of the DTA sets out the functions of the Tribunal. The Tribunal must assess whether it is appropriate to assist the parties to negotiate an agreed settlement in relation to a claim. Section 18(6) governs the determination of unsettled claims. It provides:
(6) The Tribunal shall determine the dispute according to the substantial merits and justice of the case, and in doing so shall have regard to the law but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities.
[22] Orders of the Tribunal are deemed to be orders of the District Court and are enforced accordingly.6
[23] Appeals are to a District Court on the grounds that the proceedings were conducted in a manner that was unfair to the appellant and prejudicially affected the result. A failure to have regard to any provision of any enactment that is brought to the attention of the Referee which has resulted in unfairness is deemed to be unfair or prejudicial for that purpose.7
Is a Tribunal a “Court of law”?
[24] The starting point is the plain meaning of “Court of law” in the definition of
“action”.8
[25] The meaning of an enactment must be ascertained from its text and in light of its purpose. In determining purpose, regard must be had to the immediate and
6 Section 45.
7 Section 50(1) and (2).
8 Set out above at [10].
general legislative context, and the social, commercial or other objectives of the enactment.9
[26] The purpose behind limitation regimes was summarised by the Supreme
Court in Credit Suisse Private Equity LLC v Houghton as follows:10
[156] The primary rationale for limitation provisions is fairness to intended defendants. They protect against endless litigation and the inevitable prejudice in preparing a defence to long-dormant claims where evidence is stale or no longer available and they also recognise the public interest in claims being pursued within a reasonable period. This is reflected in s 3 of the Limitation Act 2010, which provides that the purpose of the Act is to “encourage claimants to make claims for monetary or other relief without undue delay by providing defendants with defences to stale claims”. Limitation statutes achieve these ends by ensuring defendants are notified of claims against them in a timely fashion. Statutes of limitation are generally regarded as beneficial and construed liberally. Unless the defendant would be unfairly prejudiced by the delay, depriving a plaintiff of the right to bring an action is not a legislative purpose.
(emphasis added)
[27] A requirement that an action be commenced in a Court “of law” appears to have originated from a historical distinction in the way various actions could be commenced. In WT Lamb & Sons v Rider, the UK Court of Appeal noted that the same phrase contained in the Limitation Act 1939 (UK) was included because many of the actions dealt with by that statute were commenced by originating summons
and not by writ.11 Defining actions by reference to those filed in a Court of law
ensures a broad range of claims are captured by the limitation regime.
[28] The requirement also reflects the public interest in enforcement of limitation periods. Limitation periods operate to reduce the volume of stale claims that might otherwise be filed in Court. They therefore promote the expeditious resolution of all disputes the subject of Court proceedings, and the efficient operation of the justice
system.
9 Interpretation Act 1999, s 5; and Commerce Commission v Fonterra Co-operative Group Ltd
[2007] NZSC 36, [2007] 3 NZLR 767 at [22].
10 Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541 (citations omitted).
11 WT Lamb & Sons v Rider [1948] 2 KB 331(CA) at 338. Cited in Riddiford v New Zealand Law
Society HC Wellington CIV-2005-485-879, 15 December 2005 at [9].
[29] The institutional and functional aspects of a Court of law provide the machinery by which limitation periods may be enforced. Filing a claim in a Court of law provides certainty as to how a claim is to be commenced, and when a claim is brought. A Court of law also has the necessary processes by which a defendant is to be notified of such a claim.
[30] The general purpose of the 1950 Act, and the specific purpose underpinning the definition of “action”, set the yardstick by which to measure whether or not a Tribunal is a Court of law within the meaning of the 1950 Act.
[31] Tribunals have been described as hybrid institutions.12 They comprise both legal and non-legal features. Some of the non-legal features were identified by the Judge and relied on by the respondent on appeal, as being inconsistent with a “Court of law”. But Tribunals also have a number of legal features which are analogous to those of a Court of law.
[32] Tribunals are divisions of the District Court and form part of the Court structure. They are included within the definition of an inferior Court in s 2 of the Inferior Courts Procedure Act 1909. The fact that Tribunals are different to Youth Courts and Family Courts, which are also divisions of the District Court, is not disputed. But the degree of similarity or difference to those Courts provides little assistance in determining whether Tribunals are to be regarded as Courts of law for the purposes of the 1950 Act. The appropriate measure is not a comparison to other divisions of the District Court, but whether Tribunals share sufficient attributes of a Court of law to meet the purposes of the 1950 Act.
[33] Other characteristics reinforce the Tribunal’s status as part of the Court system. They have formal processes in place for the filing and notification of claims. Claims are aired in a hearing presided over by a Referee. Orders made by the Tribunal are enforced as if they were a District Court order. These features
clothe the Tribunal with the institutional characteristics of a Court of law.
12 Peter Spiller The Disputes Tribunals of New Zealand (2nd ed, Brookers, Wellington, 2003) at 9.
[34] The claims which the Tribunal may hear and determine are claims which might be brought in the District Court, and include claims advanced under the core contractual statutes.13 The policy reasons which underpin limitation statutes apply equally to these claims. That necessitates a liberal interpretation of what is meant by “Court of law” to ensure the capture of these claims.
[35] The absence of any requirement that Referees be legally trained may be seen to be at odds with the notion of a Court of “law”. But the fact that claims are heard and determined by independent and impartial adjudicators, who must give reasons for their decisions, is broadly consistent with the operation of a Court. In my view, those features are more indicative of a “Court of law” for the purposes of the 1950
Act, than the qualifications of the Referees.
[36] The immunity given to Referees under s 58 DTA was relied on by the Judge as evidence that the Tribunal was not a Court of law. But that provision cuts both ways. The fact that Referees are afforded the same protection as Justices of the Peace exercising their criminal jurisdiction suggests that they are performing a broadly equivalent function. That is confirmed by s 58(2) which declares Tribunal proceedings to be judicial proceedings for the purposes of the privileges and immunities of those participating in them.
[37] The fact that the Tribunal is not bound by strict legal rights or obligations provides the strongest indication that a Tribunal is not to be regarded as a Court of “law”. But the scope of that jurisdiction requires closer scrutiny. Tribunals exercise jurisdiction conferred by statute and are granted power to act under certain statutes. In the exercise of their general jurisdiction, Tribunals must still have regard to the law in making their decision. In most cases regard to the law will result in a determination of the dispute according to the substantial merits and justice of the case.
[38] The “unfairness” ground of appeal is deemed to include a failure to have
regard to any provision of any enactment brought to the attention of the Referee.14
13 Disputes Tribunal Act 1988, sch 1, pt 1.
14 Section 50(2).
That emphasises the importance of the law to the determinations which Referees make and suggests that the non-legal features of the Tribunal’s jurisdiction are more tightly circumscribed than they might otherwise appear.
[39] Measured against the underlying purpose of the statutory requirement for a proceeding to be brought in a “Court of law”, I consider that the legal characteristics of the Tribunal are sufficient to bring it within the meaning of “Court of law” as that phrase is used in the 1950 Act.
[40] Such a construction avoids the perverse result which has arisen in this case where a party who commences its claim within time, is then found to be out of time when the claim is transferred to the District Court. That result undermines one of the stated purposes of limitation statutes, which is to encourage claims to be brought in a timely manner. As the Supreme Court noted in Credit Suisse, depriving a plaintiff of a right to make a claim is not a legislative purpose of limitation statutes.15
[41] The conclusion I have reached does not depend on the reference to the 1950
Act contained in s 10(5) of the DTA. That subsection circumscribed the Tribunal’s jurisdiction in terms of claims which pre-dated its establishment. It does not bear weight on the application of the 1950 Act more generally, nor whether the Tribunal is to be regarded as a Court of law.
[42] Finally, I take a different view to that expressed by the Judge on the effect of the Limitation Act 2010. I do not consider this to be a case where the exception to the general rule that subsequent statutory amendments may not be taken into account in interpreting the relevant statutory provision applies.16 That exception is engaged where there are two possible interpretations of an enactment, and one interpretation means a later Act was unnecessary. If this is the case, the other interpretation is preferred.17 The Limitation Act 2010 provided a much needed overhaul of the
Limitation Act 1950. There was uncertainty about whether or not the Tribunal was a
15 Credit Suisse Private Equity LLC v Houghton, above n 10, at [26].
16 The general rule is specified in Postal Workers Union of Aotearoa Ltd v New Zealand Post Ltd
[2012] NZCA 481, [2013] 1 NZLR 66 at [22].
17 Terranova Homes & Care Ltd v Service and Food Workers Union Nga Ringa Tota Inc [2014] NZCA 516, [2015] 2 NZLR 437 at [195]. See also Commissioner of Inland Revenue v Vector Ltd [2016] NZCA 396, (2016) 27 NZTC 22-065 at [36].
Court of law, at least for limitation purposes.18 The Limitation Act 2010 clarified the position by expressly including it within the purview of that Act. Such a change cannot be said to be unnecessary in all the circumstances.
[43] The Tribunal is therefore a “Court of law” for the purposes of s 4 of the 1950
Act. The claim was brought within the limitation period when it was filed in the Tribunal. The transfer of the claim to the District Court did not alter that position. The claim was therefore brought within time and it should not have been struck out as being time barred.
Result
[44] The appeal is allowed. The order striking out the proceeding is quashed. As the respondent is legally aided, I make no order as to costs.19
Edwards J
18 See Law Commission Limitation Defences in Civil Proceedings (NZLC R6, 1988) at [314]–
[315].
19 Legal Services Act 2011, s 45. There are no exceptional circumstances in this case that would justify an order of costs against the respondent.
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