Lfdb v Sm

• Jurisdiction: New Zealand
• Judge: Elias CJ,McGrath,William Young,Glazebrook,Arnold JJ
• Judgment Date: 22 December 2014
• Neutral Citation: [2014] NZSC 197
• Docket Number: SC 78/2014
• Court: Supreme Court
• Date: 22 December 2014

BETWEEN

LFDB

Appellant

and

SM

Respondent

[2014] NZSC 197

Court:

Elias CJ, McGrath, William Young, Glazebrook and Arnold JJ

SC 78/2014

IN THE SUPREME COURT OF NEW ZEALAND

Reasons for judgment. The Supreme Court had earlier granted the appellant leave to appeal against a Court of Appeal judgment debarring him from taking any further part in a relationship property proceeding, but the appellant had subsequently failed to pay a costs order made against him — whether the Supreme Court proceedings should continue, in light of the appellant's conduct, after leave to appeal had been granted.

Counsel:

M S Smith and E M Eggleston for Appellant

A E Hinton QC for Respondent

REASONS FOR JUDGMENT OF THE COURT

• A Leave to appeal is revoked.

• B Costs are reserved.

REASONS

(Delivered by McGrath J)

1 On 25 September 2014, this Court gave the appellant leave to appeal 1 against a judgment of the Court of Appeal debarring him from taking any further part in a

relationship property proceeding. 2 In the course of hearing the appeal on 5 December 2014 and after hearing counsel on the point, the Court decided to withdraw the grant of leave. We now set out our reasons for doing so

Background

2 In March 2009, the respondent brought a relationship property proceeding in the Family Court. In October 2011, a Family Court Judge directed that the proceeding be transferred to the High Court. 3 The Family Court Judge observed that, by that time, the parties had embarked on 23 interlocutory applications, filed 53 affidavits, received seven judgments or directions from the Court and brought further applications or appeals in respect of those matters in the High Court. By this time the legal costs incurred by both parties were substantial. While recognising that both parties had brought contested interlocutory applications, and appealed against judgments on them, the Family Court Judge observed that the appellant's “conduct of the case so far tends to indicate that he is waging a war of attrition against the [respondent]”. 4

3 On 19 September 2012, Priestley J made an unless order against the appellant in respect of his “longstanding and conspicuous failure” to pay costs awarded in the Family Court. 5 Unless he paid the costs and complied with other directions of the Court, by a set date he would be debarred from contesting the removed proceeding. The appellant paid the outstanding sum the day before the High Court's unless order took effect. At the time of Priestley J's judgment, the appellant was in default in relation to a number of other orders, including for discovery. 6

4 On 31 July 2013, after giving directions on interlocutory applications, Ellis J ordered that the appellant pay the respondent costs of $20,000 plus specified interest. 7 The appellant failed to make payment and the respondent applied for enforcement. On 29 August, after considering written submissions, Ellis J ordered: 8

…. If [LFDB] does not pay to [SM's] solicitors the sum of $24,435.08 plus interest calculated at 5 per cent per annum (from 10 May 2013 until the date of payment) by 5pm (New Zealand time) on Monday 9 September 2013 he will be debarred from taking any further part in the proceedings presently before this Court; …

5 When the appellant did not comply with the costs order, the respondent sought an order debarring him from further involvement in the proceedings.

6 On 14 October 2013, Ellis J rejected applications by the appellant to vary the unless order to permit him to pay the ordered costs in instalments. Her Honour dismissed his application to stay enforcement of the unless order and debarred the appellant from taking further part in the proceeding. 9 The Judge described the appellant's conduct of his case over the previous four months as involving multiple appeals and applications to extend time under or stay court orders. Some of these applications were withdrawn then reinstated. 10 He had not complied with orders imposed in respect of costs, preferring to make one or two part payments then stopping doing so and reactivating appeals against the orders which had earlier been abandoned. 11 The appellant did not appeal against this judgment of Ellis J.

7 On 17 October, the appellant paid the costs order and accrued interest. He then applied for an extension of time to comply with the costs order and for discharge of the order debarring him.

The High Court decision

8 In a judgment delivered on 22 November, Ellis J rejected the appellant's explanation for the delay in payment of the costs, noting that the unless order had been made because lack of access to funds was unfairly prejudicing the respondent's conduct at the proceeding. 12 The Judge nevertheless reconsidered the position for two reasons. First, payment of the outstanding costs order had materially changed the position. 13 Secondly, the respondent would shortly be receiving an interim distribution of $250,000 following sale of a property owned by the parties, which

would ameliorate some of the concerns about ongoing prejudice to her. 14 Ellis J granted the application to set aside the debarring order because some of the prejudice faced by the respondent had been addressed and in order to avoid further protracting the litigation. 15 The Judge added that the appellant's actions constituted “some protracted game of ‘chicken’ with the Court” and expressed concern over the prejudice that the respondent had suffered and continued to suffer in consequence. 16 She said: 17

…in granting the extension sought (and discharging the unless order) LFDB is on notice (if any were needed) that he is looking down the barrel of a gun; if there is any further obstruction or default by him there will be no further chances.

The Judge awarded the respondent costs on the application.

9 The respondent appealed against the judgment.

The Court of Appeal decision

10 On 14 July 2013, the Court of Appeal delivered judgment on the respondent's appeal. 18 The Court allowed the appeal and reinstated the debarring order, holding that Ellis J had failed to give sufficient weight to the flouting of the unless order by the appellant. The Court was satisfied that evidence of transfer of funds by the appellant to New Zealand, which were applied to fund his own legal costs, demonstrated he could meet the unless orders. Instead he had deliberately flouted them. The breach was contumacious. His payment of the costs, belatedly, did not regularise his position. 19

11 As well, the Court of Appeal was of the view that too much weight had been given by the Judge to the coincidental sale of the jointly owned property, which had enabled the interim distribution to be made to the respondent. 20 The Court also decided that the Judge's perception of the difficulties the Court would face in

determining the litigation fairly at a formal proof hearing had been overstated. 21 For these reasons the respondent's appeal was allowed

12 The appellant then applied for and was granted leave to appeal to this Court. 22

The hearing on 5 December

13 Soon after the commencement of the Court's hearing on 5 December 2014, counsel for the appellant, Mr Smith, informed the Court that a further order for costs for approximately $52,000 had been made against the appellant on 6 October 2014, which became known to the appellant by 20 October. The order had been served on the appellant on 2 December. He was then required to pay within 10 working days.

14 Counsel said that $20,000 of the sum involved had been paid and the appellant proposed to pay the remainder in three equal monthly instalments. Counsel said that the appellant's position, which had been communicated to the respondent, was that he did not have the financial means to pay the outstanding costs order within the period ordered by the Court and would not do so. These circumstances were previously unknown to this Court. The appellant took this stance despite this Court having granted him leave to appeal so that he could seek to have Ellis J's judgment reinstated, and Ellis J's warning in that judgment that “if there is any further obstruction or default by him there will be no further chances”. 23

15 The Court advised counsel at the hearing of its concern that the information before the Court indicated that the appellant's attitude to the outstanding costs order continued to be that of a recalcitrant and unreasonable litigant. The Court invited counsel to address the Court on why, in these circumstances, the Court should not revoke leave to appeal on the basis that the point of principle in the appeal should await determination in a more suitable case. Counsel for both parties were heard on that matter.

16 Mr Smith took advantage of a short adjournment to take further instructions from the appellant. Counsel then indicated that the appellant would make arrangements to pay the outstanding costs in full the same day and proposed that the Court not withdraw leave on the condition that the appellant would file within a week confirmation of payment in full. Only failing that should leave be withdrawn. He submitted otherwise that the hearing should continue with the...