White v Lynch
[2015] NZCA 376
•17 August 2015 at 10:00 am
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA281/2015 [2015] NZCA 376 |
| BETWEEN | AMANDA ADELE WHITE ANNE LEOLINE EMILY FREEMAN |
| AND | CHRISTOPHER MAURICE LYNCH STUART GORDON SPENCE |
| Counsel: | Appellants in person |
Judgment: (On the papers) | 17 August 2015 at 10:00 am |
JUDGMENT OF RANDERSON J
AThe application for review of the Registrar’s decision declining to dispense with security for costs is dismissed.
BThe appellants must pay to the Registrar security of $5,880.00 within 20 working days of the date of this judgment.
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REASONS
Introduction
The appellants filed an appeal on 20 May 2015 seeking to appeal a decision of Faire J on 14 May 2015.[1] Security for costs on the appeal was set on 20 May at $5,880. On 7 July 2015, the appellants applied to have security dispensed with under r 35(6)(c) of the Court of Appeal (Civil) Rules 2005 (the Rules). The application was out of time by 14 working days.
[1]White v Lynch [2015] NZHC 1020.
On the same day, the Registrar dismissed that application on the basis that she had no discretion to accept or consider an application for dispensation filed out of time. On 10 July 2015, the appellant applied to review that decision. I have considered the application for review under r 7(2) of the Rules and s 61A(3) of the Judicature Act 1908.
Background
The first appellant Ms White and the second respondent Mr Spence were in a de facto relationship which came to an end and has resulted in litigation in various courts. The dispute included claims made in respect of a family trust known as the DCT Trust. The trustees of that trust were Ms White, her mother (the second appellant Ms Freeman) and a lawyer (the first respondent Mr Lynch). Priestley J determined the dispute between the parties by a judgment delivered on 19 June 2013.[2] He found that sums totalling $224,480.48 had been advanced by Mr Spence to the DCT Trust. Priestley J rejected a contention by Ms White and Ms Freeman that there was a profit-sharing arrangement between Ms White and Mr Spence. The Judge found the advances were loans by Mr Spence. After deducting repayments there was a balance owing of $130,158.00. This sum was found to be due to Mr Lynch who had taken an assignment of the debt on Mr Spence.
[2]Spence v Lynch [2013] NZHC 1478.
The result was that judgment was entered against Ms White and Ms Freeman in favour of Mr Lynch for the debt of $130,158.00. In a separate judgment, Priestley J made a substantial costs order against Ms White and Ms Freeman.[3]
[3]Spence v White [2013] NZHC 2668.
On 17 July 2013 an appeal was filed to this Court against the decision of Priestley J.[4] This Court delivered a judgment relating to three interlocutory issues: an application for extension of time under r 43(2) of the Rules; an application to adduce further evidence in the form of bank statements; and an application to amend the grounds of appeal to include an appeal against the costs decision.[5] This Court declined the application to adduce further evidence on the basis that it was not fresh; it was not in the interests of justice to admit the further evidence; and the parties were not entitled to recast their case on appeal. This Court ordered the appellants to pay the respondents costs of $3,433.00 on the application to adduce further evidence.
[4]The appeal against Priestley J’s judgment cannot be pursued at present because the appellants have not paid security for cost.
[5]White v Spence [2014] NZCA 298.
The appellants did not pay the costs ordered by this Court. Bankruptcy notices were issued against both Ms White and Ms Freeman. They responded by filing proceedings in the High Court to set aside the bankruptcy notices, as well as proceedings to set aside Priestley J’s judgment on the basis of, among other things, fraud.[6] Mr Lynch and Mr Spence applied to strike out the statement of claim on the basis that it was a collateral challenge to a previous final judgment of the Court, alleging fraud without proper foundation; an attempt to relitigate matters that were in issue and finally determined by those proceedings; and an attempt to raise matters that could and should have been raised in those proceedings. These applications for strike-out and the application to set aside the bankruptcy notices were heard together by Faire J and determined in a judgment of 14 May 2015.[7]
The judgment under appeal
[6]The specific allegations were that the judgment of Priestley J was obtained as a result of Mr Spence knowingly giving false or misleading evidence; that Mr Spence is estopped from denying the existence of a property sharing agreement; a claim for an accommodation debt which the appellants allege Mr Spence owes the DCT Trust; claims for interest on amounts awarded to Ms White in the judgment of Priestley J and allegations that Mr Lynch breached fiduciary duties and duties of care, and was negligent in his capacity as a trustee of the DCT Trust and as a solicitor for the appellants.
[7]White v Lynch, above n 1.
Faire J considered that the statement of claim contained many causes of action that were either dealt with by Priestley J or should have been raised by the parties at the time, and struck them out. The appellant’s allegations of fraud were not substantiated to the very high threshold required.[8] Further, the bank statements relied upon by the appellants for the allegations of fraud were the same bank statements this Court had refused to adduce as new evidence on the first appeal. This was on the basis that they were reasonably available to the plaintiffs at the time, and were neither material, credible or cogent. Faire J considered that to use this evidence as a basis for alleging fraud was an attempt to circumvent the earlier decision of this Court and to have a second bite at the cherry. Further, Priestley J’s finding that a profit-sharing agreement did not exist (as Ms White and Ms Freeman had alleged) was made on the basis of contemporaneous documents and not on credibility findings. Any allegations that Mr Spence gave misleading or false evidence did not therefore support a conclusion that Priestley J’s judgment was obtained by fraud. Faire J concluded that the pleadings in the statement of claim were largely an attempt to circumvent this Court’s refusal to adduce new evidence on appeal and to relitigate the same issues as those first put before Priestley J. All the causes of actions were struck out.
[8]Citing Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804.
In consequence, Faire J concluded there was no proper basis to stay or set aside the bankruptcy notices.
The application to dispense with security for costs
After filing their appeal against Faire J’s judgment on 20 May 2015, Ms White and Ms Freeman applied on 7 July 2015 for dispensation from payment of security. The appellants submitted they were impoverished as a result of the respondents’ actions and the requirement of security prohibited them from progressing their appeal. They submitted they had a strong arguable case and relied on s 27(1) of the New Zealand Bill of Rights Act 1990 for their right to access justice.
They accepted their application was out of time but relied on r 5 of the Rules for an extension of time. Various allegations were made about complaints made to the New Zealand Police and CYFS.
As earlier indicated, the application was declined on the basis that it was out of time and therefore the Registrar had no discretion to accept or consider it.
Grounds for review of the Registrar’s decision
The appellants’ grounds for review are essentially the same as those for their application to dispense with security for costs. They claim they are certainly eligible for legal aid and have had legal aid granted in the past. They submit they have taken steps to apply for legal aid, although their new lawyer is said to have been remiss in giving a certificate as to the merits of the appeal for legal aid purposes.
The appellants submit they are impecunious while the respondents are not. They also submit that their impecuniosity has been caused by the respondents’ unconscionable acts against them. In these circumstances it would be against natural justice if security for costs were not dispensed with, as the requirement for security will prohibit them from pursuing the appeal.
The respondents oppose the application for review. They submit the Registrar was correct in her decision that she had no discretion to consider an application to dispense with security for costs out of time. However, the more important factor is that the appeal is meritless and is not one, applying the test set out by the Supreme Court in Reekie v Attorney-General, that a reasonable and solvent litigant would pursue.[9] They submit the appeal faces an insurmountable hurdle: the finding by Priestley J that there was no property-sharing or profit-sharing agreement between the parties and the conclusion that the amounts advanced by Mr Spence to the DCT Trust were by way of loan. The finding is not amenable to reversal on the grounds of fraud; as such, the appeal is doomed to fail.
Analysis
[9]Reekie v Attorney-General [2014] NZSC 63, [2014] NZLR 63 at [35].
The time limit for applying for a dispensation under r 35(6) of the Rules is set out in r 35(7):
(7) An application under subclause (6)—
(a)must be made and served within 20 working days after the notice of appeal has been filed in the Registry;
The discretion of the Registrar to extend the time for filing an application to dispense with security was considered by Wild J in Orlov v The National Standards Committee No 1:[10]
[7] There are at least three reasons why the Rules do not give the Registrar a discretion to extend the r 35(7) period. First, the period is a generous one — four working weeks. Second, application to the Registrar can be made on an informal basis: r 35(7)(b). It can, for example, be made in an email or letter to the Registrar. So there is not the need to draft and file a formal application. Thirdly, the whole aim of r 35 is to deal with security promptly once an appeal is filed. Strict enforcement of r 35(7)(a) time limit is commensurate with that aim.
[8] I therefore consider the Registrar was correct not to entertain the application, and to decline to consider it on its merits.
[10]Orlov v National Standards Committee No 1 [2014] NZCA 182, (2014) 22 PRNZ 120.
Rule 36 sets out the exemptions for security for costs for appellants who have applied for or been granted legal aid. Rule 36(1) specifies that the rule applies to every appeal in which the appellant has applied for, or been granted, legal aid at the time the appeal is brought. The Registry has been informed that an incomplete application for legal aid was not filed until 18 June 2015. As at 7 August 2015, a proper application for legal aid had still not been filed.
As such, the Registrar was correct to consider that r 36 was of no relevance. A legal aid application must have been filed when the appeal is brought for the applicant’s legal aid status to be relevant to the question of security for costs.
For these reasons, the Registrar was correct not to entertain the out of time application and to decline to consider it.
Should the time to apply for dispensation be extended?
While the Registrar has no discretion to extend the time for seeking dispensation from the payment of security for costs, we accept that a Judge may do so under r 5(2) of the Rules. That power may be exercised where, as here, an application for review of a Registrar’s decision is made.
This question depends substantially on whether security for costs should be dispensed with if an extension of time is granted. In Reekie v Attorney-General, the Supreme Court held that the Registrar (or a single Judge on review) should only dispense with security if it is right to require the respondent to defend the judgment under appeal without protection as to costs.[11] Whether it is right is a matter of discretion which turns on whether the Court should preserve an impecunious person’s access to the Court for an appeal that a solvent person would reasonably wish to prosecute.[12]
[11]Reekie v Attorney-General, above n 9, at [21] and [31].
[12]At [35].
The appeal brought by the appellants is not reasonably arguable. Their substantive appeal amounts to a collateral attack against the original decision of Priestley J and his clear finding that there was no profit-sharing agreement between the parties. An appeal against that decision was filed in this Court and cannot be pursued unless security is paid. The appellants are now seeking to relitigate the same issue by way of an appeal against the decision of Faire J. They are bringing their appeal on the basis of evidence this Court has already refused to admit on their first appeal.
We also note that the bankruptcy notices issued against the appellants relied on a costs order made by this Court. That order can no longer be challenged.
I am satisfied a reasonable and solvent litigant would not pursue the appeal and that it would not be right to require the respondents to defend the judgment under appeal without the usual protection of security for costs. There are no exceptional circumstances and no public interest considerations to justify dispensing with security for costs. It follows that an extension of time to file the application for dispensation is not warranted.
Result
The application for review of the Registrar’s decision declining to dispense with security for costs is dismissed.
The appellants must pay to the Registrar security of $5,880.00 within 20 working days of the date of this judgment.
Solicitors:
Sellar Bone, Auckland for Respondents
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