Scottwood Charitable Trust v Bank of New Zealand [2001] NZCA 287; [2002] 2 NZLR 305; (2001) 15 PRNZ 545 (14 November 2001)

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Scottwood Charitable Trust v Bank of New Zealand [2001] NZCA 287 (14 November 2001); [2002] 2 NZLR 305; (2001) 15 PRNZ 545

Last Updated: 10 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 117/00

	BETWEEN	SCOTTWOOD CHARITABLE TRUST
		First Appellant

	AND	R F MURRAY FAMILY TRUST
		Second Appellant

	AND	SAVRIL CONTRACTORS LIMITED
		Third Appellant

	AND	ROBIN MURRAY FAMILY TRUST
		Fourth Appellant

	AND	ROBIN FRANCIS MURRAY
		Fifth Appellant

	AND	BANK OF NEW ZEALAND
		Respondent

Hearing:	20 September 2001
Coram:	Richardson P Tipping J Anderson J
Appearances:	A L Hassall QC for Appellants R J Craddock QC and M J Bunting for Respondent
Judgment:	14 November 2001

JUDGMENT OF THE COURT DELIVERED BY ANDERSON J

The nature of the application

[1] The appellants apply for conditional leave to appeal to Her Majesty in Council from a judgment of this Court, delivered on 19 June 2001, which dismissed an appeal from a judgment of the High Court. The appellants’ proceedings in the High Court were struck out by Morris J, pursuant to Rule 478 of the High Court Rules, for want of prosecution.
[2] The present application raises the issue whether the judgment of this Court is a “final Judgment” in terms of Rule 2(a) of the New Zealand (Appeals to the Privy Council) Order 1910 entitling the appellants to appeal to the Privy Council as of right or whether it is an interlocutory judgment for which leave to appeal to the Privy Council is discretionary.
[3] The grounds of appeal in the appellants’ amended notice of motion for conditional leave are expressed as follows:

1. That the judgment is a final Judgment and the matter in dispute on the Appeal amounts to or is of the value of $5,000 or upwards.
2. In the event of the Court ruling that the Judgment is interlocutory and not final, then the Court should exercise its discretion under Rule 2 (b) because the question involved in the appeal is one which by reason of its great general or public importance ought to be submitted to Her Majesty in Council for decision.

100. In the event of the Court ruling that the Judgment is interlocutory and not final, then the Court should exercise its discretion under Rule 2 (b), in reliance upon the “or otherwise” provision, because the question involved in the Appeal is one which ought to be submitted to Her Majesty in Council for decision by reason of manifest factual errors in the Judgment and other matters affecting findings in the Judgment which ought to cause the Court to doubt the accuracy of its decision.

Background to the application

[4] The causes of action pleaded by the appellants have their origin in substantial foreign currency borrowings in October 1984 and 14 February 1985 by companies and trusts with which Mr R F Murray was closely associated. In June 1987 all off-shore borrowings, together with a debt of $271,156.66 owed by two other partnerships in which Mr Murray was involved were repaid from an advance of $2.7 million by way of a commercial bill facility with BNZ. The advance was made to a company which was under the control of Mr Murray and which had been incorporated specifically for the purpose of facilitating the refinancing of existing debt including the off-shore borrowings. Mr Murray and a number of the original borrowers guaranteed the $2.7 million advance. There was subsequently default by reason of which BNZ called in the loan and realised the securities in respect of it.
[5] In August 1992 the first and second appellants began proceedings in the High Court seeking an injunction to restrain BNZ from exercising powers of sale in its securities over two properties, Glenbyre Tavern and the Golden Mile Tavern. In November 1992 the High Court granted injunctions but these were set aside in April 1994 when this Court allowed appeals by the bank.
[6] In March 1995 the first two appellants filed an amended statement of claim in the existing proceedings and the third, fourth and fifth appellants began their own separate proceedings against the bank. The two sets of proceedings contained closely similar allegations against the respondent by way of several causes of action. They alleged that BNZ was liable in damages to the appellants for losses in relation to the foreign currency borrowings said to have been caused by BNZ’s fraud, breach of fiduciary duty, breach of contract in relation to the loan agreement, negligence in terms of sundry other causes of action.
[7] On 23 March 1995 the respondent filed applications for security for costs. That application was heard by a Master in December 1995. On 7 June 1996 the Master made an order for security for costs directing that the proceedings be stayed should such security not be given within three months. It was not given and on 7 September 1996 the stay took effect.
[8] On 24 June 1997 the respondent filed applications for orders striking out the claims for want of prosecution. Five months later the appellants filed a notice of opposition to that application. In December 1997 a Master made an order, by consent, dismissing the proceedings unless security should be given and in January 1998 the appellants gave security for $100,000.
[9] In December 1998 a further application to strike out for want of prosecution was filed. On 25 May 2000 Morris J struck out the proceedings on the grounds that there had been inexcusable delay on the part of the appellants in the prosecution of the proceedings and that there had been prejudice to the respondent, particularly in the circumstances of the case where, fraud being alleged, the appellants had given insufficient particulars to allow the bank to identify employees whose conduct was impugned. The prejudice was to such an extent that a fair trial could not be achieved.
[10] In a judgment dated 19 June 2001 this Court dismissed an appeal against the High Court judgment hence the present application for leave to appeal to Her Majesty in Council.
[11] For the reasons mentioned later in this judgment there is no justification for granting discretionary leave pursuant to s2(b) of the New Zealand (Appeals to the Privy Council) Order 1910 if this Court’s judgment is interlocutory and not final. Its nature is accordingly crucial.

Is this Court’s judgment of 19 June 2001 final or interlocutory?

[12] As courts have often remarked the distinction between the two categories of judgments is not always easy to draw and the cases disclose diverse opinions about the defining qualities of final and interlocutory judgments. In Salaman v Warner [1891] 1 QB 734, at p735, Lord Esher MR expressed the opinion:

If their decision, whichever way it is given, will, if it stands, finally dispose of the matter in dispute, I think that for the purposes of these rules it is final. On the other hand, if their decision, if given in one way, will finally dispose of the matter in dispute, but, if given in the other, will allow the action to go on, then I think it is not final, but interlocutory.

[13] Fry LJ at p736 and Lopes LJ at p737 expressed similar views although the latter referred to final determination of the rights of the parties rather than determination of the action.
[14] However in Bozson v Altrincham Urban District Council [1903] 1 KB 547, the English Court of Appeal unanimously declined to follow Salaman v Warner, preferring instead the proposition that if a judgment or order, as made, finally disposes of the rights of the parties then it will be treated as a final order but if it does not then it will be treated as an interlocutory order.
[15] Seventy years after Bozson Lord Kilbrandon remarked in Tampion v Anderson [1973] VicRp 82; [1973] 48 ALJR 11, at p12:

There is a continuing controversy whether the broad test of finality in a judgment depends on the effect of the order made, as decided in Bozson v Altrincham UDC ... or on the application being of such a character that whatever order had been made thereon must finally have disposed of the matter in dispute – Salaman v Warner ...

[16] The authority of Bozson must be doubted in the light of subsequent cases. As Lord Evershed MR remarked in Hunt v Allied Bakeries Ltd [1956] 1 WLR 1326, at p1328:

... rightly or wrongly, orders dismissing actions – either because they are frivolous and vexatious, or on the ground of disclosure of no reasonable cause of action – have for a very long time been treated as interlocutory.

[17] That authority was referred to in the judgment of the Privy Council in Strathmore Group v Fraser [1992] 3 NZLR 385, at p390.
[18] The utility of precedent in the face of conflicting attempts at rationalisation of principle is recognised by Lord Denning in Salter Rex & Co v Ghosh [1971] 2 QB 597, at p601 in these terms:

This question of ‘final’ or ‘interlocutory’ is so uncertain that the only thing for practitioners to do is to look up the practice books and see what has been decided on the point.

[19] There seems, however, to be an appreciation that a judgment is final when it is finally determinative of the substantive merits or part of the substantive merits of a proceeding. Where however a judgment finally disposes of a proceeding otherwise than on the basis of its substantive merits the judgment will not be final but interlocutory. The judgment of the Privy Council in Strathmore Group Ltd v Fraser recognises both the relevant finality of a judgment in respect of separate substantive issues and the want of relevant finality in respect of orders dismissing actions for reasons related to process rather than substantive merits. The cogency of settled precedent rather than logic persuaded this Court, by a majority, in Matthews Corporation Ltd v Edward Lumley & Sons (NZ) Ltd (1994) 7 PRNZ 591, that an order striking out a statement of claim as disclosing no reasonable cause of action, as well as being vexatious and an abuse of process, was not a final order even though its effect was the termination of the particular proceeding. McKay J, for the majority, expressed the opinion at p 597 that:

It should therefore be regarded as settled in New Zealand that an order striking out a proceeding is not a final judgment but an interlocutory one. That is so for the purposes of the Privy Council Rules ...

[20] The judgment referred to the opinion of Lord Denning MR in Salter Rex & Co v Ghosh at 601 that:

On an appeal from an order striking out an action as being frivolous or vexatious, or as disclosing no reasonable cause of action, or dismissing it for want of prosecution – every such order is regarded as interlocutory: see Hunt v Allied Bakeries Ltd.

[21] Mr Hassall submitted that, notwithstanding McKay J’s dictum, it is not settled law in New Zealand that an order dismissing an action for want of prosecution is interlocutory and not final. He pointed out that in Hunt the English Court of Appeal considered, not an order striking out for want of prosecution but one striking out part of a statement of claim on the grounds that it contained no reasonable cause of action. Yet in the course of his judgment in Hunt Lord Evershed MR at p1328 referred to the case of Arnot v Amber Commercial Co Ltd, The Times, May 20, 1953, where the English Court of Appeal held that the same principle and the same rule applied in the case of an action dismissed for want of prosecution.
[22] Nor is there a single logical indication for classification. As this judgment has already indicated there may be different yet reasonable views on the sense or connotations of the word “final”. A judgment may finally determine a proceeding by finally determining substantive right issues on their merits; or it may finally determine the proceeding without having adjudicated upon the substantive merits. Settled precedent is no less a touchstone of a judicial system than perceived logic.
[23] The settled precedent on the issue includes Arnot v Amber Commercial Co Ltd where an order dismissing for want of prosecution was held to be not final; Hunt v Allied Bakeries Ltd which clearly accepted such an order as being of the same nature as orders which for a very long time had been treated as interlocutory; Salter Rex & Co v Ghosh which accepted the approach taken in Hunt. And in Wilkins v Concept Innovation Limited & Others (CA 81/96, judgment 1 October 1996) this Court cited with approval the dictum of McKay J previously referred to, and applied it in holding that an order made under s71A(2) District Courts Act 1947 striking out proceedings was an interlocutory order.
[24] The approach of the majority of this Court in Matthews Corporation Ltd v Edward Lumley & Sons (NZ) Ltd is entirely consistent with the way the English Court of Appeal had approached the issue in those cases. We think that is the approach which should be followed and hold accordingly that the judgment of 19 June 2001 in respect of which the present application for leave is brought was not a final judgment in terms of Rule 2 of the Privy Council Rules but an interlocutory judgment. The issue then is whether special leave should be given pursuant to Rule 2(b).

The question involved in the appeal

[25] In support of the application for discretionary leave pursuant to Rule 2(b) of the Privy Council Rules Mr Hassall submits that the question to be considered in the appeal is:

whether or not by virtue of alleged inordinate and inexcusable delay on the part of the Appellants causing serious prejudice to the Respondent, the proceeding should be dismissed so that

(a) The Respondent would never have to answer most serious allegations made against it in the way of fraudulent conduct.
(b) Causing millions of dollars losses to the Appellants and
(c) Likely to have caused millions of dollars losses to other customers whose like proceedings against the Respondent have been dismissed.

Counsel further submits that it is a matter of great general and public importance that the public should know whether or not one of this country’s leading trading banks has or has not acted in the fraudulent way alleged by the Plaintiffs.

[26] Counsel for the respondent submitted that the question as posited by the plaintiffs’ counsel is not the question that would be before the Privy Council on appeal. Rather, the question involved in the appeal would be whether the appellant’s conduct amounted to a want of prosecution such that the proceeding should be struck out. That question involves the application of well-established legal principles relating to want of prosecution summarised, for example, in Lovie v Medical Assurance Society [1992] 2 NZLR 244, at p248.
[27] Counsel for the respondent further submitted that the appellants have never disputed the correctness of those principles and that the question is inescapably one of fact and degree requiring examination of the periods of delay, allocation of responsibility for the delay, determination as to whether the delay is inordinate and consideration of whether the delay has caused serious prejudice to the respondent. Counsel invokes the decision of this Court in Taiaroa v Minister of Justice [1995] 2 NZLR 1, which declined special leave to appeal pursuant to Rule 2(b) of the Privy Council Rules on the grounds that the essential question was one of fact and degree, not of law or principle.
[28] In our view the respondent’s analysis is correct. The arguments of counsel for the appellants amount to issues which might arise in relation to the proceedings but are not involved in the appeal. We agree with the submission on behalf of the respondent that the arguments are misconceived and that a question which is not, on its face, a question of great general or public importance cannot become so merely because it is said to arise out of or is a case which is of public importance. Taiaroa v Minister of Justice is authority for that proposition also.
[29] In the circumstances of this case the questions involved on any appeal to the Privy Council must, perforce, be simply those raised on the motion to strike out on which judgment was given and by the appeal from that judgment.
[30] In short, we are not of the opinion that the question involved in the appeal is one which by reason of great general or public importance ought be submitted to Her Majesty in Council for decision.

Should leave be given “otherwise”?

[31] Counsel for the appellants further submits that discretionary leave should be given by virtue of the “or otherwise” provision in Rule 2(b). Counsel submits that discretionary leave might be given in circumstances where there is no question of great general or public importance involved in the appeal but where nevertheless there is otherwise a justification for submitting the question involved in the appeal to the Privy Council. Leave was considered on that basis, but refused, in NZ Insurance Company v Commissioner of Stamp Duties (No 2) [1954] NZLR 1011 and in Rich v Christchurch Girls’ High School Board of Governors (No 2) [1974] 1 NZLR 21. In Stininato v Auckland Boxing Association (Inc) (No 2) [1978] 1 NZLR 609 leave was granted pursuant to that limb of Rule 2(b).
[32] As the amended notice of motion for conditional leave para (c) asserts and as counsel for the appellants submits, the particular basis for discretionary leave should be applied “by reason of manifest factual errors in the Judgment and other matters affecting findings in the Judgment which ought to cause the Court to doubt the accuracy of its decision”.
[33] Mr Hassall referred to Lancaster v Manawatu Catchment Board (No 2) [1957] NZLR 507, where this Court, at p509 expressed the opinion:

...while this is not a ground in itself, it is in our view, “a material element, in considering whether a discretion should be exercised, to consider whether this Court has any reasonable doubts of the accuracy of its decision:” Bowron Bros v Bishop (No 2) (1910) 29 NZLR 821, 826.

[34] Mr Hassall incorporated in his submissions a “Schedule of Manifest Factual Errors” and a “Schedule of Grammatical and Like Errors”. At their highest the matters covered in these Schedules extend to insignificant slips of an evidently editorial nature and at their least fully justified counsel’s abandonment of them in the course of the hearing.
[35] One of the matters adverted to in counsel’s remaining submissions concerns responsibility for delay arising from the stay order which took effect when the appellants omitted to provide security within three months as the Master had directed. The proposition that delay should not be attributed to the appellants because they could not take any steps until they provided security is manifestly untenable.
[36] Other matters referred to amount to little more than an attempt to reargue the appellants’ case on the strike-out application for a third time. Whilst of course counsel’s submissions were considered we do not think it necessary to deal with them in greater detail in this judgment as if this were a rehearing of the appeal itself. It is sufficient for us to note, as we do, that notwithstanding counsel’s submissions we have no reasonable doubts of the accuracy of this Court’s decision.

Conclusion

[37] For these reasons we hold that the appellants are not entitled to appeal to Her Majesty in Council pursuant to Rule 2(a) of the New Zealand (Appeals to the Privy Council) Order 1910, and that there is no adequate basis for granting discretionary leave pursuant to Rule 2(b). The motion is dismissed accordingly with costs to the respondent in the sum of $3,500, together with reasonable expenses including travel and accommodation costs of one counsel.

Solicitors
Young & Associates, Hamilton for Appellants
Buddle Findlay, Wellington for Respondent