White v Lynch
[2016] NZCA 513
•21 October 2016 at 2.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA740/2015 [2016] NZCA 513 |
| BETWEEN | AMANDA ADELE WHITE ANNE LEOLINE EMILY FREEMAN |
| AND | CHRISTOPHER MAURICE LYNCH STUART GORDON SPENCE |
| Hearing: | 12 September 2016 |
Court: | Randerson, Wild and French JJ |
Counsel: | Applicants in person |
Judgment: | 21 October 2016 at 2.30 pm |
JUDGMENT OF THE COURT
AThe application for an extension of time pursuant to r 43(2) of the Court of Appeal (Civil) Rules 2005 is dismissed.
BThe application for an order debarring Mr Wright from acting further for the respondents is dismissed.
CWe direct the Registrar not to accept from either applicant, for filing, any fresh notice of appeal, application or other initiating document directed against the respondents or against Mr Peter Wright without the prior written consent of a judge of this Court.
DThe applicants must pay the respondents costs on each of the two applications as for an application for leave to appeal on a band A basis and usual disbursements.
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REASONS OF THE COURT
(Given by Wild J)
Introduction
Two applications are for decision:
(a)An application filed on 21 April 2016, pursuant to r 43(2) of the Court of Appeal (Civil) Rules 2005, for an extension of time to file the case on appeal and apply for a hearing date. If we grant that application, the applicants will also require an extension of time to comply with the requirement to provide security for costs, pursuant to r 5(2), in order to prosecute their appeal.
(b)An application filed on 14 July for an order debarring Mr Peter Wright from acting further as counsel for the respondents.
These applications are made in an appeal filed on 23 December 2015. The appeal is against a judgment of Faire J delivered on 15 December 2015 in which, amongst other things, he adjudicated the applicants bankrupt.[1]
Background
[1]White v Lynch [2015] NZHC 3202.
The hearing of these applications is the fifth occasion on which the litigation between these parties has come before this Court, on every occasion at the suit of the two applicants, Ms White and Ms Freeman.
The genesis of the litigation — the source of the applicants’ concern — is a judgment Priestley J delivered on 19 June 2013 in which he gave judgment against the applicants in the sum of $130,158.[2]
[2]Spence v Lynch [2013] NZHC 1478.
Ever since Priestley J delivered that judgment, the applicants have been aggrieved. They claim the judgment was obtained by fraud, the fraud being the failure of Mr Spence to discover bank account statements relevant to his claim against the applicants in their capacity as trustees of the DCT Trust. We revert, in [25] to [29] below, to those parts of Priestley J’s judgment directly relevant to the present applications.
The applicants appealed to this Court against Priestley J’s decision on 17 July 2013. In a judgment delivered on 2 July 2014,[3] this Court granted the applicants an extension of time for that appeal and an extension of time to appeal also against the costs decision Priestley J had delivered on 11 October 2013.[4] But the Court refused the application to adduce further evidence. That evidence was statements of bank accounts held by Mr Spence, Ms White and the DCT Trust, (which Ms White controlled), together with an analysis prepared by Ms White of those statements. In total, there were approximately 1,000 pages of additional material. In dismissing the application, this Court noted:[5]
[18] Ms White attempts to justify the failure to obtain the statements by blaming the bank and the fact that she was not legally represented. The record does not, however, suggest that the bank was to blame. In any event, even if the bank were at fault, there were steps that Ms White and Ms Freeman could have taken. The fact they were self-represented in our view does not excuse the failure to take those steps.
This Court ordered the applicants to pay costs of $3,433.
[3]White v Lynch [2014] NZCA 298.
[4]Spence v Lynch [2013] NZHC 2668.
[5]White v Lynch, above n 3.
Following that judgment, the applicants did not pursue their appeal against the judgment of Priestley J, and it was ultimately abandoned by the Official Assignee on 28 January 2016 (following the applicants’ bankruptcy, to which we now turn).
The applicants did not pay the costs ordered by this Court. The respondents issued bankruptcy notices and, in a judgment delivered on 15 December 2015, Faire J adjudicated the applicants bankrupt.[6] The two applications we are dealing with are made in the appeal the applicants brought from that judgment of Faire J.
[6]White v Lynch, above n 1.
In the meantime, the applicants had commenced another proceeding, seeking to have the judgment of Priestley J set aside. Faire J struck out the applicants’ statement of claim in a judgment delivered on 14 May 2015.[7]
[7]White v Lynch [2015] NZHC 1020.
The applicants appealed that decision and applied for dispensation from giving security for costs. The Registrar refused to dispense with security. In the judgment he delivered on 17 August 2015, dismissing the applicants’ application to review the Registrar’s decision, Randerson J described that appeal as “not reasonably arguable”.[8] He explained that the appeal was essentially a collateral attack against the original decision of Priestley J. He pointed out that an appeal against that decision had been filed but could not be pursued unless security was paid. He took the view that the applicants were seeking to relitigate the same issue by way of their appeal against the strike-out judgment of Faire J, on the basis of evidence this Court had already refused to admit on their appeal against the judgment of Priestley J.
[8]White v Lynch [2015] NZCA 376 at [22].
That second appeal (CA281/2015) was deemed abandoned on 21 August 2015 pursuant to r 43(1).
Since their bankruptcy, the appellants have had standing only to appeal against their adjudication in bankruptcy.[9] Their other litigation rights vested in the Official Assignee.[10]
[9]Insolvency Act 2006, s 414.
[10]Section 101.
Despite that, the applicants purported to appeal against Faire J’s refusal to rescind his judgment striking out the applicants’ statement of claim as well as their adjudication in bankruptcy.
The Registrar declined to dispense with security for the costs of that further appeal. In a decision on 22 March 2016, Wild J upheld the Registrar’s decision.[11] In that judgment Wild J said:
[6] Underlying this application, and the appeal itself, is the appellants’ view that the respondents have perpetrated a fraud on them by deliberately withholding vital evidential documents, namely Mr Spence’s bank statements.
[7] The appellants hold fast to this view notwithstanding the findings made by Priestley J in his substantive judgment of 19 June 2013, the conclusion reached by Faire J in his judgment of 14 May 2015, and this Court’s views expressed in its judgment of 2 July 2014 as to the 1,000 pages approximately of additional material the appellants sought to adduce in support of their appeal against Priestley J’s substantive judgment of 19 June 2013, and also their attempted appeal against Priestley J’s costs judgment of 11 October 2013.
[8] It is apparent that the appellants resolutely refuse to accept that their view that they have been defrauded by the respondents is unfounded, and that no amount of judicial consideration and reconsideration will dissuade them. I sense that the appellants have become obsessed with their conviction that they have been defrauded. They have lost any objectivity or balance, not helped by the fact that, latterly, they have not had the advantage of objective professional advice and representation.
[9] I am unable to fault Deputy Registrar McGrath’s assessment of the factors relevant to an application to dispense with security for costs. In particular, I endorse her view that this appeal lacks merit. Indeed, in my view it has no realistic prospect of success. That is because it is essentially a further attempt to substantiate the appellants’ belief that they have been defrauded and to have this Court look at Mr Spence’s bank statements, something this Court made clear in its 2 July 2014 judgment that it was not prepared to do.
(Footnotes omitted.)
[11]White v Lynch [2016] NZCA 78.
The applicants then applied under s 61A(2) of the Judicature Act 1908 for a panel of judges of this Court to review Wild J’s decision. The Registrar declined to accept that application for filing. The applicants unsuccessfully sought a review of the rejection of their application. In a decision on 22 April 2016 Kós J held that the applicable section was s 61A(3).[12] As the Supreme Court had explained in Reekie v Attorney-General, decisions under s 61A(3) are not subject to further review.[13]
The application for an extension of time
[12]White v Lynch [2016] NZCA 149.
[13]Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [24]–[26].
It is apparent from the applicants’ submissions, both written and oral, that they are not suggesting there were not proper grounds for Faire J to adjudicate them bankrupt. Rather, this appeal is a yet further attempt to challenge the judgment of Priestley J.
In particular, the applicants allege Mr Spence failed to discover, in the proceeding heard by Priestley J, statements for three bank accounts[14] that contain information material to the dispute. Ms White delivered her oral submissions on 12 September with considerable vehemence. Indeed, she apologised for her show of anger, but invited the Court to try to understand the reason for it.
[14]ANZ Access Account (last five digits 562-00); BNZ Account (last five digits 959-97); further BNZ Account (also with last three digits of account number 959, but suffix unknown).
Although Ms White’s submissions largely targeted Mr Wright, their nub was a complaint that no court had ever addressed the relevance of the documents that the applicants allege Mr Spence failed to discover. Ms White submitted “through Wright’s obfuscation and dishonesty the Court has never looked at the documents”, and that the documents “have never been addressed by the Court”.
In the course of considering these applications following the hearing, the Court became concerned that it did not properly understand the relevance of the allegedly undiscovered bank statements, and how they might have led to a different result, had they been discovered and in evidence before Priestley J when he heard the case. For those reasons, the Court issued a minute on 5 October outlining its concerns, including in the following passage:[15]
… However, as this Court said in 2014 … Ms White and Ms Freeman had control over the Trust’s bank accounts and statements at all relevant times. We understand their position to be that the Trust made payments to Mr Spence that he has not disclosed. If that is the case, those payments would have appeared in the Trust’s accounts. In those circumstances, it is not clear how the allegedly undiscovered bank statements of Mr Spence are relevant. It seems to us that they would, at best, simply show the other side of the bank transactions between the Trust and Mr Spence.
The Court directed the applicants to respond by memorandum to be filed by 14 October.
[15]White v Lynch CA740/2015, 5 October 2016 (Minute and Direction of the Court) at [5].
The applicants duly responded in a memorandum filed on 10 October. This memorandum included these passages:
3.In response to the Court, the applicants require a justice to give a cogent explanation as to the reason for this request.
4.The Court knows, or ought to know, the contents of the unlawfully suppressed bank statements are completely irrelevant to the serious issues raised in the applicants’ applications currently before the Court for consideration.
5.As the Court (via Randerson, Wild and French JJ) are aware of, or ought to be, the applicants’ applications are solely focused on requesting the Court to FINALLY address (after the Court’s ongoing unexplained avoidance to date to do so) the historical and ongoing unlawful and fraudulent conduct of Counsel Wright to assist his clients Lynch and Spence to suppress evidence (a substantial number of client Spence’s bank statements).
…
10.The relevance of the contents of the unlawfully suppressed bank statements of Counsel Wright’s client (Spence), though this relevance is absolutely unconnected with the issues the Court has been asked to address via the applicants’ current applications, is that the unlawfully suppressed bank statements will confirm Counsel Wright’s client Spence received significant credits, via cheques, from the applicants’ family trust during the 6 and a half year de facto relationship between Counsel Wright’s client Spence and the first applicant.
…
14.Though it may be harsh, the applicants’ voice their significant concerns that this Court, after the 12 September 2016 oral hearing, has not taken any steps to deliver [a] stern order demanding Counsel Wright compel his client Spence to immediately discover the unlawfully suppressed bank statements. The applicants believe by judiciary members holding back delivering such an order is conduct on the precipice of the Court assisting Counsel Wright and his clients (barrister and police officer) in the deliberate unlawful and fraudulent suppression of evidence.
In summary, Ms White’s position is that the content of the undiscovered bank statements and their relevance to the proceeding heard by Priestley J has nothing to do with the present applications. Ms White explains that the applications:
… are solely focused on the Court addressing the unlawful conduct (deliberate historical and ongoing suppression of evidence) by an officer of the Court (Peter Wright) and his clients.
We do not accept what Ms White is saying. The discovery obligation of a party to a proceeding is limited to what is relevant. Essentially, what is relevant are documents on which the party relies, documents that support another party’s case, or documents that adversely affect either the party’s own case or that of another party.[16] Ms White cannot logically complain of wrongdoing by Mr Wright, but at the same time claim that the relevance of documents Mr Wright allegedly assisted in withholding from discovery is of no concern to the Court.
[16]High Court Rules, r 8.7 (Standard discovery).
In dealing with the two applications, this Court’s focus remains firmly on the potential relevance of the allegedly undiscovered bank statements. That is because we understand the applicants to maintain that the undiscovered statements, had they been before Priestley J, would have led the Judge to a different result.
As we have pointed out, the applicants, as bankrupts, have no standing to advance an argument to that end. But we put that obstacle to one side. Likewise, we put to one side the further obstacle that the applicants’ appeal against the judgment of Priestley J came to an end some time ago. We turn to the judgment of Priestley J in an endeavour to see whether there is anything in the applicants’ assertion that the undiscovered bank statements might have led to a different result.
Priestley J was dealing with Mr Spence’s claim for $224,480.48, which he said he had advanced to the DCT Trust during the course of his approximately six‑year‑long de facto relationship with Ms White. Mr Spence had sued only Mr Lynch, the professional trustee. Mr Lynch then joined his two co-trustees, Ms White and Ms Freeman. Mr Lynch settled with Mr Spence on terms that included Mr Spence assigning his debt claim to Mr Lynch. Mr Lynch then pursued the debt claim against Ms White and Ms Freeman.
The Judge heard evidence from Mr Spence, Mr Lynch, Mr Campbell (a chartered accountant who had endeavoured to analyse the financial dealings between Ms Spence and Ms White), three officers of the Bank of New Zealand (BNZ) (the bank used by Mr Spence, Mr White and the DCT Trust), Ms White and (although only briefly) from Ms Freeman.
Priestley J prefaced his judgment by observing the Court, through the proceeding, was asked “to sort out an unholy and totally unnecessary mess”.[17] The Judge set out the breakdown of the $224,480.48 Mr Spence claimed he had lent to the DCT Trust, in four main tranches between February 2005 and October 2006.[18] Priestley J then made the following findings about Ms White’s use of the funds of the DCT Trust:
[81] From the inception of the DCT Trust, the dominant trustee, Ms White, operated the trust with scant regard for orthodox legal, equitable, and accounting principles. I so find. There is no evidence whatsoever the income and capital needs of the trust’s beneficiaries were given regular or impartial consideration. There were never trustees’ meetings. No accountant ever scrutinised the trust’s banking records. Loans were never recorded. There were no balance sheets. Ms White clearly regarded the trust as a vehicle for her property development enterprises and as a fund from which her personal and family expenditure could be met. Expenditure or reimbursement by the trust were permitted so that Ms Freeman could earn air points.
[82] Property development (and historically she seems to have been reasonably successful at it) was Ms White’s livelihood. During the course of the hearing it became clear she was unaware of the distinction between capital and income. She regarded the trust and its assets as her income. Money was received from both Ms Freeman and Mr Spence with absolutely no thought given to protecting or acknowledging the position of the trust’s creditors. To commit the trust to purchasing the Glenbrook property before it had obtained an unconditional sale of Whangapouri Road carried a degree of risk which no prudent trustee, responsible ultimately for the interests of beneficiaries, should have entertained. Mr Saunders,[[19]] with an eye for trustees’ prudence, was totally correct to bring about Mr Lynch’s retirement.
[83] In the personal circumstances in which she found herself after the December 2008 separation, to commit the trust to further debt by acquiring the Greenmeadows property was akin to recklessness. The trust became over-committed, was unable to service its debt, and now faces disaster.
[84] As this judgment will make clear, I reject the suggestion that the trust’s current predicament can be blamed on Mr Spence or Mr Lynch. Ultimately Ms White is the author of her own misfortune.
[17]Spence v Lynch, above n 2, at [4].
[18]At [31].
[19]Mr Saunders was a partner at Mr Lynch’s firm. He initiated and finalised Mr Lynch’s resignation as trustee in October 2007.
Then, dealing with Ms White’s counterclaim against Mr Spence, the Judge said this:
[90] … [Ms White] submitted [Mr Spence] had been deliberately and indeed deceitfully silent, both in respect to the advances he had made to the trust and in respect to the absence of a loan agreement. He had thereby caused loss to the third parties. I reject that submission. Mr Spence at all relevant times believed that he was applying his own separate property to improve or construct homes which were owned by the DCT Trust. Foolishly, perhaps, he trusted Ms White to the extent he was prepared to allow her to operate his bank accounts. He was well aware, as was Ms White, that a property sharing agreement had not been finalised. To suggest that Mr Spence was being deceitful or was deliberately feathering his nest at the expense of Ms White and the trust is an untenable proposition and I reject it.
And a little later he added this:
[103] Throughout her cross-examination of Mr Spence, Ms White asked questions designed to show that Mr Spence had over the years received extensive monetary benefits from the DCT Trust. There was mention of this factor too in Ms White’s closing submissions. It is doubtful whether this issue has been properly pleaded. Nonetheless I can deal with it succinctly.
[104] Ms White essentially submitted that an analysis of Mr Spence’s credit card statements and personal bank accounts revealed inflows of money from the DCT Trust. Her estimate of the figure is $184,000. There has, however, been no itemisation or evidence of this. Similarly there appears to have been modest funding of the DCT Trust on a reasonably regular basis from Mr Spence’s bank account.
[105] I find as a fact that payments made, on Mr Spence’s behalf, by the DCT Trust were the product of Ms White’s internet banking access to his accounts. More importantly this pattern is, in my judgment, a product of the use to which Ms White chose to put the trust’s funds. Certainly Mr Spence was not a beneficiary of the trust. A perusal of such items as can be gleaned from the disclosed bank accounts of the trust and Mr Spence points to high levels of domestic expenditure. As I have already commented Ms White’s clear conduct, as the dominant DCT Trust trustee, was to fund the bulk, if not all, of the domestic, personal, and family expenditure of the couple from the trust’s bank account.
[106] During the course of cross-examination of bank officers, questions were asked by Ms White designed to raise the inference that Mr Spence himself had operated the DCT Trust’s bank account to pay off his personal debts. He would have been able to do this if he had had access to the account’s internet access number, password, and the frequently changing link card. Certainly there would have been occasions (such as the Ford Territory’s loan refinancing) when Mr Spence might have asked for or suggested to Ms White payments. The couple were living in a domestic relationship and would inevitably have periodic financial discussions. But, as I have found, it was Ms White who effectively managed the family’s finances (including Mr Spence’s) through the vehicle of the DCT Trust’s account. She would have inevitably discovered any internet banking transactions made by Mr Spence to which she might have been oblivious. I find as a fact from the evidence I have heard, that at no stage did Mr Spence operate the DCT Trust’s bank account in an unauthorised fashion.
(Footnote omitted.)
We have set these passages out because they contain observations and findings that cannot be reconciled with Ms White’s submission that Mr Spence failed to discover relevant bank statements. They record that Ms White had complete control of the DCT Trust and its bank accounts, and also had access to Mr Spence’s bank accounts. They record that officers of BNZ (banker to all the relevant parties) gave evidence. Similarly, they record that a forensic accountant gave evidence. It is improbable that any failure by Mr Spence to discover relevant bank statements would survive that sort of evidential and forensic scrutiny. And there is no hint in the judgment of any concern on the Judge’s part that it did. On the contrary, the only concern expressed by the Judge was about the failure of Ms White and Ms Freeman to make full discovery. The judgment contains the following footnote:
10The third parties [Ms White and Ms Freeman] have failed to make full discovery or disclosure of all relevant bank statements. Ms White contends the Bank of New Zealand blocked online access to historic bank records. Although not having a complete run of bank records has not helped, I am, without apportioning blame, able to resolve matters, and certainly in respect of claims and cross-claims, on the balance of probabilities.
For those reasons, we are unable to detect any merit in the applicants’ basic assertion that a different result may have been achieved if the allegedly undiscovered bank statements had been before Priestley J. There is no point in extending time for an appeal that has no prospect of success.
Quite apart from that, the applicants have not given security for the costs of this appeal, and now have a track record of not giving security. They are both currently bankrupt.
For all those reasons, we dismiss the application for an extension of time.
Application to debar the respondents’ counsel
As we have mentioned, the ground for this application is that the respondents’ counsel, Mr Wright, is party to Mr Spence’s failure to disclose relevant bank statements. The applicants allege that Mr Wright, since late 2013, has been assisting Mr Spence to suppress the bank statements.
In a judgment he delivered on 13 November 2014, Heath J rejected an application by the applicants to join Mr Wright and to restrain him from acting for the respondents in relation to applications and substantive hearings.[20] The present application is largely a repeat of that application.
[20]White v Lynch [2014] NZHC 2819.
For that reason, and also for the reasons we have given in dismissing the application for an extension of time, we consider that this second application is also misconceived. If there was no failure to disclose relevant documents for which Mr Wright might be responsible, then there can be no wrongdoing on his part. And we are not satisfied there was such a failure. Certainly, we are not satisfied that there was any failure that would have made a difference to the outcome before Priestley J.
As to the alleged failure by Mr Spence to discover relevant documents, we note Mr Spence swore an affidavit in this appeal on 19 July 2016, deposing that he did comply with all his discovery and disclosure obligations.
The application to debar Mr Wright is also dismissed.
Applicants vexing the Court
As Priestley J pointed out, the chaotic situation he was asked to deal with was of Ms White’s own making. The same can be said of the subsequent financial difficulties encountered by the DCT Trust, and of the applicants’ bankruptcy. Despite that, the applicants have sought to lay the blame on other people. First it was on Mr Spence. Now it is on Mr Wright. What started as an unjustified attempt to lay the blame on other people has become a groundless obsession, at least on the part of Ms White. We refer particularly to the comments of Wild J set out in [14] above in that respect.
The applicants have ignored what this Court has said about this conduct.
The point has been reached where the applicants are vexing this Court, not to mention the respondents. Accordingly, we intend giving the Registrar a direction that she is not to accept from either applicant, for filing, any fresh notice of appeal, application or other initiating document directed against the respondents or against Mr Wright without the prior written consent of a judge of this Court.
Result
The application for an extension of time pursuant to s 43(2) of the Court of Appeal (Civil) Rules is dismissed.
The application for an order debarring Mr Peter Wright from acting further for the respondents is dismissed.
We direct the Registrar not to accept from either applicant, for filing, any fresh notice of appeal, application or other initiating document directed against the respondents or against Mr Peter Wright without the prior written consent of a judge of this Court.
The applicants must pay the respondents costs on each of the two applications as for an application for leave to appeal on a band A basis and usual disbursements.
Solicitors:
Sellar Bone & Partners, Auckland for Respondents
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