White v Bank of New Zealand

[2015] NZHC 1058

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-002298 [2015] NZHC 1058

BETWEEN

AMANDA ADELE WHITE

First Plaintiff

AND

ANNE LEOLINE EMILY FREEMAN Second Plaintiff

AND

BANK OF NEW ZEALAND Defendant

Hearing:	25 November 2014
Appearances:	Plaintiffs in Person B White for the Defendant
Judgment:	19 May 2015

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 19 May 2015 at 4.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Pidgeon Law, Auckland

Buddle Findlay, Auckland

AMANDA ADELE WHITE v BANK OF NEW ZEALAND [2015] NZHC 1058 [19 May 2015]

Summary

[1]      The plaintiffs seek that the orders in my judgment of 10 June 2014 (in which I struck out the plaintiffs’ claims against BNZ in breach of contract and unconscionable conduct) be rescinded because they were fraudulently or improperly obtained.1

[2]      The application is opposed by the defendant, Bank of New Zealand Limited. [3]      For reasons that will become apparent, the application is declined.

Relevant law

[1]      Rule 7.51 of the High Court Rules reads as follows:

7.51 Order may be rescinded if fraudulently or improperly obtained

(1) A Judge may rescind any order that has been

fraudulently or improperly obtained.

(2) The Judge may grant any further relief by way of costs that the interests of justice require.

(3) This rule does not limit any other remedies of a party who has been adversely affected by an order that has been fraudulently or improperly obtained.

[2]      The relevant principles were set out in Yang v Ko:2

(a)       The rule exists to prevent intentional or innocent misuse of the Court’s

processes;

(b)The focus of the enquiry is the knowledge and conduct of the party that obtained the order in question: orders are fraudulently obtained when there is intentional misuse of Court processes but improperly

obtained when there is innocent misuse;

1      White v Bank of New Zealand [2014 NZHC 1271].

2      Yang v Ko HC Auckland CIV-2005-404-4583, 31 July 2007 at [24].

(c)      A key factor in an enquiry into whether the order was improperly obtained is whether the party obtaining it knowingly ignored a legal obligation, so that it would be contrary to the interests of justice to allow the order to stand;

(d)The conduct of the party seeking to rescind the order is only relevant to the extent it affects the knowledge of the party who obtained the order;

(e)      The fact that the order would not have been granted had the alleged impropriety not  occurred  is  a  relevant  fact  in  the  exercise  of  the discretion.

[3]      The  above  principles  were  adopted  in  Elvidge  v  ASB  Bank  Ltd,  a  rare successful application under r 7.51, in respect of which Bell AJ made the following additional points:3

(a)      Applications under r 7.51 are not to be used as a chance to have a second  bite  at  the  cherry  —  finality  is  just  as  important  in interlocutory decisions as substantive ones. The rule is restricted to where an order has been fraudulently or improperly obtained.

(b)The time limits on review and appeal rights should be respected by not allowing applications under r 7.51 to be used as a substitute for an appeal or review.

(c)      The rule is not an avenue for reviewing a preliminary assessment of the merits in a security for costs application or where new counsel has a fresh view of the case.

(d)Where an application under r 7.51 is based on new evidence that was available at the time of the original hearing, and could reasonably

3      Elvidge v ASB Bank Ltd [2015] NZHC 44 at [134], paraphrased in Andrew Beck and others

McGechan on Procedure (online looseleaf ed, Brookers) at HR7.51.01.

have been adduced then, such evidence will only be considered in special circumstances.

(e)      The word “obtained” in r 7.51(1) shows a linkage is required between the alleged fraudulent or improper conduct and the court’s order. Conduct which does not influence the court’s decision is outside the rule.

(f)      Although the rule is silent as to all the consequences of a rescission order, a flexible, discretionary response to meet the circumstances of the case seems open. Rescission sets aside only the order, not the application on which it was made. It may be open to order a rehearing, or make a new decision on the original application as part of the rescission application.

Background facts

[4]      The “fraud” the plaintiffs allege is that:

(a)      BNZ falsely claimed that it had extended to White and Freeman a loan offer on 2 April 2009 for $300,000, in order for them to purchase a property on Greenmeadows Road. In fact, they say, this was an agreement relating to the restructuring of an existing loan facility.

(b)BNZ falsely claimed that the only loan offers it extended to White and Freeman were on 2 April 2009 and 19 May 2009. In fact, they say, BNZ sent a letter of advice on 6 April 2009 extending a loan offer of

$350,000 to White and Freeman.

[5]      The plaintiffs say that BNZ has admitted the actual state of affairs in respect of both these points in its memorandum dated 5 September 2014. They say that the same affidavits, with the same false evidence, were used by Katz J to dismiss their

2013 application for non-party disclosure.4   Justice Katz heard applications to recall

4      Spence v Lynch [2013] NZHC 1081.

and rescind that judgment; the applications were challenges based on a dispute of facts which was entirely immaterial to the actual issues, and the applications to recall and rescind were declined accordingly. In any case, the substantive issue in respect of which the applications for disclosure were made had already been determined and the court was functus officio.5

Analysis

[6]      I accept that actual (intentional) fraud is not necessary for an application under r 7.51. Unintentional incorrectness will be termed impropriety, and may justify rescission, as outlined above.

[7]      However, what is necessary is that the judgment was improperly obtained or obtained by fraud. That is, there must be a causal link between the false evidence and the judgment actually reached. That is supported in particular by Elvidge:6

The rule contemplates a connection between the alleged fraudulent or improper  conduct  and  the  court's  order. “Obtained”  shows  the  required linkage. Conduct which does not influence the court's decision is outside the rule.

I therefore look at whether there has been an impropriety on the part of BNZ which could have had an effect on the outcome of the proceeding.

[8]      I can dispense with that possibility at the outset. For the sake of argument, I assume that the plaintiffs’ pleaded facts here are correct. In terms of the first pleaded impropriety, it made no difference to the outcome of the earlier litigation whether the

2 April offer was, in technical terms, a new loan or a change to the existing one. Similarly,    whether    the    $350,000    loan    was    obtained    on    19    May    or

6 May is immaterial to the decision.

5      Spence v Lynch [2015] NZHC 609; Spence v Lynch [2015] NZHC 735.

6      Elvidge v ASB Bank Ltd, above n 2, at [134].

[9]      In any case, as BNZ points out, the decision was made on the basis of the plaintiff’s pleaded facts, not on its evidence. The evidence I cite in support of the disputed paragraph of my original judgment, [11], comes from Ms White’s own affidavit.

[10]     I therefore find it unnecessary to discuss further the plaintiffs’ allegations.

Result

[11]     The application is dismissed.

[12]     As costs follow the event, I make an order against the plaintiffs for costs in scale 2B and disbursements as fixed by the Registrar.

Associate Judge Sargisson