Sm v Lfdb

• Jurisdiction: New Zealand
• Judge: Stevens J
• Judgment Date: 14 July 2014
• Neutral Citation: [2014] NZCA 326
• Docket Number: CA864/2013
• Court: Court of Appeal
• Date: 14 July 2014

BETWEEN

SM

Appellant

and

LFDB

Respondent

[2014] NZCA 326

Court:

Stevens, Wild and Miller JJ

CA864/2013

IN THE COURT OF APPEAL OF NEW ZEALAND

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.

Counsel:

A E Hinton QC and A R Nicholls for Appellant

S R Jefferson QC and E M Eggleston for Respondent

JUDGMENT OF THE COURT

• A The appeal is allowed.

• B The order made in the High Court extending the time for payment of the second costs order until 17 October 2013, discharging the second unless order and cancelling the respondent's debarment is quashed.

• C The order debarring the respondent from taking any further part in the proceeding is reinstated.

• D Any outstanding issue of costs in the High Court is to be determined in that Court.

• E The respondent must pay the appellant's costs for a standard appeal on a band B basis and usual disbursements. We certify for second counsel.

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 parties are incurring are close to ruinous”. 8

10 In the above minute, Priestley J made an unless order in respect of the first costs order. 9 The respondent paid those costs on the last day before the unless order took effect.

11 Ellis J then took control of the proceeding. In granting applications by the appellant for an interim distribution and for adjournment of the trial scheduled to start in May 2013, Ellis J referred to the large number of applications, affidavits and judgments, commenting that the proceeding was continuing “in a similar vein …”. 10 She recorded that the costs incurred by both sides had been prohibitive, the respondent's “in excess of $700,000”. 11 Ellis J then made this observation about the way the respondent was conducting the litigation:

[44] Lastly, there is the matter of the recalcitrance with which LFDB has made available much of the financial information that is necessary to undertake the required analysis. Other judges in earlier decisions have commented on that. An adverse inference can fairly be drawn. Nor does LFDB's general approach to this litigation and his reluctance to comply with Court orders weigh in his favour here.

12 Having granted the two applications, Ellis J made the costs order in issue in this appeal. 12 We term it “the second costs order”. Her Honour ordered the respondent to pay costs of $20,000 plus interest at five per cent from 10 May 2013.

13 When, by mid-August 2013, the respondent had not paid the second costs order, Ellis J raised the likelihood of an unless order, and granted the appellant leave

to apply for one. 13 When the respondent still failed to pay the second costs order, the appellant applied for an unless order

14 The appellant and respondent filed memoranda and affidavits in support of and in opposition to the making of an unless order, respectively. After considering the issue on the papers, Ellis J made a second unless order against LFDB on 29 August 2013 in these terms: 14

… 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; …

15 When the respondent failed to comply with the second unless order, the appellant applied to enforce it by debarring the respondent from further involvement in the proceeding.

16 In response the respondent appealed to this Court against the second unless order and filed in the High Court several applications seeking, retrospectively, an extension of time to comply with the order. He also applied to set aside the notice he had filed abandoning an earlier appeal against the second costs order and applying for an extension of time to pursue that appeal.

17 On 27 September 2013 this Court dismissed the respondent's application for a stay of sale orders in respect of relationship property and payment of interim distribution orders. 15 On 11 October it declined the respondent's application for an extension of time to appeal the judgment Priestley J had given back in May 2012. 16 Delivering that second judgment for the Court, Harrison J stated: 17

… [The application for an extension of time is a] deliberate attempt to frustrate the progress of the [appellant's] proceeding to trial. We are satisfied that this step followed a discernible pattern of obstructing the determination of [the appellant's] claim.

This Court awarded indemnity costs because the respondent's appeal was “vexatiously or improperly brought”. 18

18 On 14 October Ellis J dismissed an application by the respondent to stay enforcement of the second unless order and debarred the respondent. 19 In her judgment Ellis J recorded that the respondent had over the previous four months: 20

• (a) filed four appeals including against consent orders made at his request, and then abandoned two of them;

• (b) made three stay applications, one of which he had withdrawn;

• (c) made four applications for extensions of time, one of which he had withdrawn; and

• (d) made, withdrawn and then “reinstated” his proposal to meet the second costs order from the sale of one of the parties' properties.

19 The judgment of Ellis J rejects offers by the respondent to make staggered payments of the outstanding costs. The Judge comments adversely on the respondent's failure to pay and his...