Walsh v Gough
[2022] NZHC 798
•14 April 2022
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV 2018-488-76
[2022] NZHC 798
BETWEEN MICHAEL EDWARD WALSH
Plaintiff
AND
BARRY JOSEPH GOUGH
Defendant
Hearing: 11 April 2022 Appearances:
R Mark for Plaintiff
C Muston for Defendant
Judgment:
14 April 2022
JUDGMENT OF DUFFY J
This judgment was delivered by me on 14 April at 3 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors:
R Mark, Kerikeri
C Muston, Whangarei
WALSH v GOUGH [2022] NZHC 798
Introduction
[1] Mr Walsh and Mr Gough are tenants in common over a rural parcel of land near Kaeo. In November 2018, Mr Walsh obtained an order for subdivision by way of formal proof. Palmer J ordered the property to be divided per the plan shown in exhibit MW-10 of the affidavit of Mr Walsh.1 The costs of said subdivision were ordered to be covered equally by the parties. Mr Walsh registered a charging order over an adjacent property owned by Mr Gough to secure this payment.
[2] As it happened, the subsequent land survey returned acreage additional to the area recorded on the plan (which was an allotment of 80 ha each). This increased the area of Mr Walsh’s allotment to 94.3 ha and Mr Gough’s to 85.5 ha. Mr Gough considered he was getting the raw end of the deal and sought a stay of enforcement on any sale order so that he could bring a challenge. The stay was granted on 8 October 2019 to allow Mr Gough to apply for leave to appeal out of time. To date no such application has been filed.
[3] Mr Walsh now applies to discharge the stay. He says there are outstanding costs being Mr Gough’s share of the subdivision costs and rates. The share of the survey costs is roughly $18,000 and rates of around $6,000 are owing by Mr Gough. If the stay is lifted Mr Walsh can proceed to enforce the charging order registered against the block of land owned by Mr Gough, which will allow Mr Walsh to cover the costs presently owed by Mr Gough.
The subdivision decision
[4] Mr Walsh’s application for subdivision proceeded by way of formal proof before Palmer J on 29 November 2018. The Judge considered that the subdivision should be ordered. The boundary was logical and reflected the parties’ earlier agreement.2 The relative area, value and extent of the two lots of the subdivision was consistent with the extent of the co-owners’ shares, their agreement in 1989 and what each had put into the property.
1 Walsh v Gough [2018] NZHC 3104 at [28].
2 At [21].
[5]Palmer J gave orders in the following terms:3
(a)Under s 339 of the Property Law Act 2007, the property at 2539 Waiare Road, Kaeo, NA 1145/78 in the North Auckland Land Registration District, must be divided between the current co-owners, Mr Michael Walsh and Mr Barry Gough, as described in exhibit MW- 10 of Mr Walsh’s affidavit of 14 November 2018.
(b)Under s 343(c) I direct the reasonable costs of effecting the 2018 subdivision of the property, supported by third-party invoices, incurred to date and yet to be incurred, in, be paid equally by the parties.
(c)I award costs, on a 2B basis, and reasonable disbursements to Mr Walsh.
[6] Exhibit MW-10 is a topographical representation of the land. It shows boundary lines, including the boundary line which runs through the middle and effects the subdivision. This boundary follows the natural contours of the land. The northern area is labelled “Lot 1”. Below that label it states “80 ha” and “M.E. Walsh”. The southern area is labelled “Lot 2” followed by “80 ha” and “B.J. Gough”. There is a note in the right hand corner stating that “[a]reas and measurements are subject to survey”.
The stay decision
[7]Palmer J stayed enforcement in his minute of 8 October 2019 because:
[a] substantial miscarriage of justice is likely to result if the judgment is enforced by way of a sale order being issued before Mr Gough has had a reasonable opportunity to pursue his application for leave to appeal. If his application were to be successful because the subdivision ordered is unjust as he submits, then sale of his other property in the meantime would not be just. Any arguments that the property is held for the benefit of his daughter only adds to his case. I am satisfied Mr Gough is serious about pursuing his appeal.
[8]The Judge then decided:
[…] I stay enforcement of the judgment of 19 November 2018 by way of sale order until such time as Mr Gough’s application for leave to appeal, and any resulting appeal, its determined. If Mr Gough does not pursue his application and appeal in a timely manner, then I grant leave for Mr Walsh to apply to discharge this order after Friday 28 February 2020.
3 At [28].
Discussion
[9] Mr Mark, for Mr Walsh, contends that Mr Gough has sat on his hands and as yet has not applied for leave to appeal the substantive decision. Mr Gough has thus had more than a reasonable opportunity to pursue his application and has chosen not to. The impetus behind the stay no longer exists. I agree.
[10] Mr Muston, for Mr Gough, says that Mr Gough has been attempting to resolve the matter out of court. He says the stay should remain until parties are able to find a practical solution to the issues.
[11] The parties have been at a crossroads for some time now. If no progress has been able to be made, then they will need to resort to court processes. An unfounded desire to resolve the issues out of court is no excuse to sit on one’s hands.
[12] Mr Gough has two options. As suggested in the call over minute of Brewer J of 7 October 2021, Mr Gough may be able to apply to the court under the Property Law Act 2007 for compensation, given he is to receive the smaller parcel of land. That is a separate remedy that may be available to him.
[13] Secondly, Mr Gough can apply for an extension of time to make his appeal. There may be some grounds for the appeal on the basis that there was a mistake or misunderstanding as to the extent of the land at the time the subdivision judgment was issued.
[14] Delay and prejudice caused by one party to another can sometimes be cured by an award of costs when the Court is to grant an indulgence to the offending party. However, Mr Gough is legally aided. Costs awards are generally not made against legally aided litigants.4 Moreover, ordinarily someone who is legally aided would be in no position to make a costs payment to compensate Mr Walsh for the prejudice caused by the inordinate delay to date. However, in this case there is a potential source of funds that Mr Gough could direct towards Mr Walsh. Top Energy has been planning to install transmission power lines in the area, including across the subject land. This
4 See Legal Services Act 2011, s 45(2).
will require an easement over the subject land for which Top Energy will compensate the respective landowners.
[15] Mr Gough has filed an affidavit dated 4 April 2022 to which is annexed a letter dated 22 December 2021 from Colliers. The letter outlines discussions that are taking place about the subject property and a proposal for the alignment of a 110 kb transmission line as part of the TE 2020 Top Energy transmission line project. From the letter it appears that Colliers have been involved with Telfer Young in relation to identifying appropriate compensation for the transmission line easement across the subject property, which is still jointly owned by Mr Walsh and Mr Gough. The letter refers to various discussions that have resulted in reassessments by the valuers. This led the valuers to reach the following position:
The resulting reassessed compensation levels were Telfer Young $50,000 and Colliers $40,000. This derived in an agreed revised position of $45,000 plus GST if payable that was acceptable to both parties.
[16] Also annexed to Mr Gough’s affidavit is an email chain showing discussions between his solicitor and Mr Gough’s solicitor regarding the Top Energy easement. Although Mr Walsh and Mr Gough have been at odds over division of the subject block of land, it seems both were separately agreed that the level of compensation being offered for the proposed Top Energy easement was too low.
[17] Mr Gough recognises that Mr Walsh is entitled to some recompense for the costs and delay he has suffered to date as well as payment of the outstanding costs he is owed for the subdivision. As an indication of good faith and intention to meet all costs that he owes for the subject land Mr Gough is prepared to unilaterally assign all his interest in the compensation for the Top Energy easement to Mr Walsh. The compensation value Top Energy appears to be willing to pay for the easement would ultimately lead to Mr Gough receiving the sum of $22,500, plus GST if applicable. This sum would cover the outstanding indebtedness of Mr Gough for subdivision survey fees and outstanding rate payments. If Mr Walsh is subsequently able to secure a higher compensation for the Top Energy easement that will be for his individual benefit. This action on the part of Mr Gough will go some way to cover the present indebtedness he owes to Mr Walsh and it reduces the need for Mr Walsh to enforce the
charging order registered against Mr Gough’s other block of land now. For the moment the charging order can remain registered but with enforcement stayed.
[18] In addition, s 45(2) of the Legal Services Act does not allow costs orders to be made against legally aided persons unless the Court is satisfied that there are exceptional circumstances. Section 45(3) sets out what may qualify as exceptional circumstances. Relevantly here are: (a) conduct which causes the other party to incur unnecessary cost;5 (b) any other conduct that abuses the process of the Court.6 Mr Gough obtained a stay of enforcement in October 2019 on the basis he would be applying for leave to appeal out of time so that he could challenge the present subdivision as approved by Palmer J. As at 2022 Mr Gough is yet to take this step. The delay has prevented Mr Walsh from enjoying the fruits of his judgment, caused him extra legal cost and delayed him from enforcing the charging order he obtained to enable the recovery of the debt Mr Gough owed him. These circumstances are exceptional, and I consider that in principle they would warrant an award of costs against Mr Gough personally were he to be given one final opportunity to advance an application for leave to appeal out of time. However, the offer by Mr Gough to unilaterally assign his rights to compensation for the Top Energy easement to Mr Walsh provides a reasonable substitute for an award of costs payable to him.
[19] Mr Gough seeks a final indulgence from the Court to enable him to pursue an application for leave to appeal out of time. He realises this would be his last chance to do so. He consents to timetabling orders being made on an unless basis.
[20] Mr Gough is largely responsible for the circumstances he now faces. However, I note that r 15.10 of the High Court Rules 2016 recognises that judgments obtained by formal proof (as in the case here) may later be set aside. And Palmer J, who made the orders now stayed, was prepared to stay their enforcement. It seems the land size being larger than anticipated came as a surprise to Mr Gough and the Judge, if not to Mr Walsh as well.
5 Legal Services Act, s 45(3)(a).
6 Legal Services Act, s 45(3)(f).
[21] I am satisfied that, subject to conditions to be strictly imposed, Mr Gough should be given one last chance to appeal out of time. Those conditions are intended to mitigate the prejudice caused by Mr Gough’s delay to date and from the further delay that will follow from the stay of enforcement not being lifted now. This Court cannot assess Mr Gough’s prospect of success because whether he is granted leave to appeal out of time is for the Court of Appeal to determine. However, this Court can keep that chance alive for him by leaving the stay of enforcement in place for a short period of time.
[22] Accordingly I make, with the consent of Mr Gough, an unless order to the following effect:
(a)Mr Gough is to assign all his interest in the Top Energy easement compensation to Mr Walsh by 9 May 2022; and
(b)Mr Gough is to file an application in the Court of Appeal for leave to appeal out of time by 9 May 2022.
[23] Unless both those steps are taken by noon on 9 May 2022 the application Mr Walsh now makes for removal of the stay of enforcement is to be placed before me on 10 May 2022, and without further notice to either Mr Gough or Mr Walsh the stay of enforcement will be lifted, with Mr Walsh then being at liberty to enforce the judgment he obtained from Palmer J.
[24] Further, if both steps set out at [22] are performed by 9 May 2022 Mr Gough is then to take all further steps to progress the application for leave to appeal expeditiously. Any subsequent delay on his part is to be addressed by Mr Walsh having leave to return to this Court before me to renew his application for the removal of the stay of enforcement.
[25] If the steps set out at [22] above are taken by the due date there is to be a telephone conference at 9.00 am on Monday 30 May 2022 for the parties to report to me on the progress taken to further advance the hearing of the application for leave to appeal out of time.
Duffy J