Sm v Lfdb

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeStevens J
Judgment Date14 Jul 2014
Neutral Citation[2014] NZCA 326
Docket NumberCA864/2013

[2014] NZCA 326

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Stevens, Wild and Miller JJ

CA864/2013

BETWEEN
SM
Appellant
and
LFDB
Respondent
Counsel:

A E Hinton QC and A R Nicholls for Appellant

S R Jefferson QC and E M Eggleston for Respondent

Appeal against a decision by a High Court (HC) Judge to retrospectively extend time for the respondent to comply with an unless order and then discharging the order and its consequences — litigation had commenced in 2009 and had been protracted — respondent had been ordered to pay costs and had failed to do so — court had made unless order debarring respondent from participating further in proceeding unless costs paid by certain date — costs were paid after that date and appellant applied to enforce unless order — judge noted that respondent had been — playing chicken — with the court but retrospectively extended time and quashed unless order as considered that the appellant would face further protracted litigation if the respondent was debarred and appellant had received interim payout — nature of unless order — whether the respondent should have remained debarred, or whether he should have been permitted again to participate in the proceeding.

The issue was: whether the respondent should have remained debarred, or whether he should have been permitted again to participate in the proceeding.

Held: The case management regime now included (since 2008) in pt 7 High Court Rules (HCR) (Case management, interlocutory applications, and interim relief) is designed to achieve the just, speedy and inexpensive determination of any proceeding or interlocutory application by isolating the issues and trying them fairly, swiftly and efficiently, with regard to what is at stake.

Obedience is the foundation upon which the Rules operated. From time to time the Court encountered a party who chose not to obey, seeking perhaps to avoid accountability to the other party or to secure an unfair settlement. In such a case the interests of justice required that the Court do whatever was necessary to enforce obedience to its orders Rule 7.48 (Enforcement of interlocutory order) permitted a judge to make unless orders. An unless order was peremptory; it decreed that unless the specified action was taken by the specified time, the stated sanction would result. An unless order took effect automatically if it was not complied with. It followed that the appellant in this case need not have applied to Ellis J to enforce the second unless order.

The following principles applied in this type of situation:

  • (a) As an unless order was an order of last resort, and was properly made only where there was a history of failure to comply with earlier orders

  • (b) An unless order should be clear as to its terms as to what was to be done, by when and what was the sanction for non-compliance. That sanction should be proportionate to the default.

  • (c) The sanction would apply without further order if the party in default did not comply with the order by the time specified. However, the party in default could seek relief by application to the Court.

  • (d) Justice might require that the party in default be relieved of the consequences of the unless order where the Court was satisfied that the breach resulted from something for which that party should not be held responsible.

  • (e) Where the unless order had been deliberately breached – that is, flouted – it was difficult to conceive of any situation where the interests of justice would require granting the flouter relief from the sanction imposed, notwithstanding belated compliance with the order.

  • (f) In deciding whether or not to excuse breach of an unless order the question for the Judge was: what did justice demand in the circumstances of this case? Considerations in answering that question included:

    • (i) The public interest in ensuring that justice was administered without unnecessary delays and costs.

    • (ii) The interests of the injured party, in particular in terms of delay and wasted cost.

    • (iii) Any injustice to the defaulting party, although that consideration was likely to carry much less weight in the circumstances than considerations (i) and (ii).

There was no doubt the respondent deliberately flouted the second unless order, knowing full well the consequences. The breach was contumacious. The respondent had the money to pay the costs. Ellis J was right to observe that the respondent continued to play “some protracted game of ‘chicken’ with the Court”. Ellis J failed to give sufficient weight to the respondent's flouting of the second unless order.

Ellis J was also wrong to consider the respondent, by belatedly paying the costs, had effectively “purged his contempt”, citing Attorney-General for England and Wales v Tomlinson. That was not an unless order case and its reasoning did not apply where, as here, a party contumaciously flouted an order affording him a last chance to comply, in the context of a long history of similar defaults.

Ellis J was unduly influenced the fortuitous happenstance of the sale of one of the parties’ properties, enabling the $250,000 interim distribution to the appellant to be made. Little, if any, weight should have been placed on this factor.

Secondly too much reliance was placed on the ramifications of the respondent remaining debarred. Without the benefit of any information from the parties about the likely nature and scope of a trial proceeding without the respondent's participation, Ellis J considered the task faced by the Court would be “extremely difficult”. Counsel provided this Court with an outline of the shape of a formal proof hearing. The Judge's assessment was incorrect. Further the prejudice to the respondent carried much less weight than the prejudice to the administration of justice generally, and to the appellant specifically, resulting from the respondent's flouting of the second unless order. He knew the ramifications of what he deliberately did. He brought any prejudice down on himself.

Appeal allowed. Order of extending time for payment of the second costs order, discharging the second unless order and cancelling the order debarring the respondent, quashed. The second unless order reinstated.

JUDGMENT OF THE COURT

A The appeal is allowed.

REASONS OF THE COURT

(Given by Stevens J)

Introduction
1

A party to a proceeding flouts an “unless” order. Belatedly the party complies with the order, and applies to be relieved of the sanction imposed upon breach. What principles should guide a Judge dealing with such an application? It seems there is no guidance from this Court.

2

Here, Ellis J was faced with exactly that situation. The question on this appeal is whether she correctly applied the principles in allowing the respondent's application. The Judge did that by retrospectively extending time for the respondent to comply with an unless order requiring him to satisfy a costs order by a fixed date, failing which he would be debarred from taking further part in the proceeding, discharging the order and cancelling the debarment. 1

3

Counsel appearing before us were in general agreement as to the principles Ellis J should have applied. That was not the position before Ellis J. Further, Ellis J did not have full information as to the practical consequences of the respondent being debarred from further participation in the proceeding. We have had the benefit of full submissions about that. As a consequence of those two matters, counsel invited us to consider afresh whether the respondent should have remained debarred, or whether he should have been permitted again to participate in the proceeding.

Background
4

The parties have been in dispute since early 2009 over their relationship property. Rather than lengthen this judgment with the full chronology of what has happened, we restrict ourselves to a summary which we think sufficiently conveys the flavour of what occurred.

5

The respondent filed a relationship property proceeding in Australia in February 2009. After an Australian judge ruled that New Zealand was the forum conveniens, 2 what proceeded was the claim the appellant had filed in the New Zealand Family Court in March 2009.

6

In setting aside the respondent's protest to the jurisdiction of the Family Court, Judge Ryan ordered the respondent to pay the appellant costs of $11,660. 3 This was the first costs order. The respondent did not pay it.

7

Defended applications concerning the occupation and sale of two relationship properties, maintenance, discovery, a restraining order under s 43 of the Property (Relationships) Act 1976 (PRA), and removal of a notice of claim followed over the course of 2010 to 2012. 4 There were also applications to the High Court for an injunction and for an order removing a notice of claim from the title to a relationship property. 5

8

In October 2011 the respondent applied successfully to transfer the proceeding to the High Court. 6 In ordering the transfer, Judge Ryan observed that the parties had already embarked on 23 interlocutory applications, filed 53 affidavits, had five judicial conferences and a hearing, received seven court judgments or directions and both appealed to and filed applications in the High Court. It

understates the position to observe that both parties' legal costs were, by the date of transfer, already substantial.
9

It was Priestley J who first dealt with the matter in the High Court. 7 When making orders and giving directions in September 2012 the Judge observed “this seemingly intractable dispute needs prompt resolution. Both counsel have candidly informed me that the legal costs the...

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