Canterbury Legal Services Limited v Walker [2014] NZCA 287 (1 July 2014)

Last Updated: 12 July 2014

IN THE COURT OF APPEAL OF NEW ZEALAND
CA821/2013 [2014] NZCA 287
BETWEEN	CANTERBURY LEGAL SERVICES LIMITED Appellant
AND	ROBERT BRUCE WALKER Respondent

Hearing:	16 June 2014
Court:	Ellen France, Venning and Mallon JJ
Counsel:	N A Till QC for Appellant K P Sullivan for Respondent
Judgment:	1 July 2014 at 3 pm

JUDGMENT OF THE COURT

1. The appeal is dismissed for want of jurisdiction.
2. The appellant is to pay costs to the respondent for a standard appeal on a band A basis together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Mallon J)

Introduction

[1] Canterbury Legal Services Ltd (CLS) provided legal services in respect of a transfer of shares in Gibbston Water Services Ltd (GWS). Pursuant to the transfer, in August 2011 Gibbston Water Holdings Ltd (GWH) transferred its 100 per cent shareholding in GWS to Castlereagh Properties Ltd (Castlereagh) for $1. Shortly after this transfer GWH was put in liquidation. CLS’s appeal to this Court arises out of a decision of the High Court (Associate Judge Osborne) upholding the liquidator’s decision to reject CLS’s proof of debt in respect of its fee to GWH for its legal services.^[1] CLS does not seek to overturn that decision. Rather it seeks orders quashing the reasons given by Associate Judge Osborne in reaching that decision.

Background

[2] The share transfer on which CLS acted was part of a number of other transactions involving companies associated with David Ian Henderson:

• (a) At the time of the share transfer, 100 percent of the shares in GWH and Castlereagh were held by FTG Trustee Services Ltd (FTG), a company associated with Mr Henderson.
• (b) FTG’s holding in GWH was pursuant to a transfer from RFD Investments Ltd (RFD), another company associated with Mr Henderson, which had been entered into in breach of RFD’s general security agreement with another party.
• (c) RFD was in receivership and liquidation, and the receivers were taking steps for the return of FTG’s shareholding in GWH back to RFD.
• (d) The transfer of GWS from GWH to Castlereagh removed control of the GWS holding before FTG returned GWH shares back to RFD.

[3] Shortly after the transfer of the GWS shares from GWH to Castlereagh, GWH was placed in liquidation. At that time CLS’s invoice to GWH for $969.45 for its services in respect of the share transfer had been rendered but not paid. CLS filed a proof of debt in the liquidation and, as a creditor of GWH, sought notice of the creditors’ meeting of GWH.^[2] The liquidator rejected the proof on a number of grounds. He also determined to dispense with holding a creditors’ meeting and to void the agreement to transfer the shares in GWS from GWH to Castlereagh. He applied to the High Court for orders confirming these decisions and sought other orders.

The High Court decision

[4] By agreement of the parties, only some of the orders sought by the liquidator were heard by Associate Judge Osborne. Others were adjourned for later hearing. The matters heard by Associate Judge Osborne included whether the liquidator was entitled to reject CLS’s proof of debt, and consequently whether CLS had status in respect of a meeting of creditors. The Associate Judge determined these matters in the liquidator’s favour. His order was expressed as follows:^[3]

I order:

(a) Robert Bruce Walker as liquidator of [GWH] was entitled to reject the proof of claim filed by [CLS] and has validly dispensed with the holding of a meeting of the creditors of [GWH]; ...
[5] In reaching that decision the Associate Judge noted that a liquidator stands not as a judge of finality, but as a gatekeeper for the time being. The proof of debt can be rejected if there are circumstances which indicate that GWH should not accept liability for the fee unless a civil judgment is obtained.^[4] The Associate Judge noted that the liquidator had a legitimate concern as to the way the fee was incurred.^[5]
[6] The Associate Judge considered that the evidence before him established, on the balance of probabilities, that CLS did not obtain the prior informed consent of both parties before acting on the sale of the GWS shares. He considered that this was sufficient to justify the liquidator’s decision to reject the proof of debt.^[6] He went on to say that because of the absence of informed consent “there is a distinct prospect that a Standards Committee would find in favour of [GWH] on such a complaint”.^[7] He considered that the assertion that GWS shares had no value was not proven and could not be used to suggest that the same transaction would have occurred had prior informed consent been given.^[8]
[7] Because of his view that the liquidator was entitled to reject the proof of debt because CLS acted without prior informed consent, the Associate Judge did not address the alternative ground that CLS did not file a proof of debt in time.^[9]

The appeal grounds

[8] CLS initially sought to appeal the High Court’s decision upholding the liquidator’s decision to reject the proof of debt. It subsequently filed an amended notice of appeal in which it sought only to quash certain “findings” of the Court, namely those relating to whether there was a conflict between the interests of GWH and Castlereagh, whether CLS failed to obtain prior informed consent of both parties to act, and the comments about the prospect of success of a complaint made to the Standards Committee.
[9] The reason for pursuing the appeal is that a complaint has since been made to the Standards Committee. The complaint is that CLS acted for parties where there was a conflict of interest. CLS is concerned that, in determining the complaint, the Standards Committee inevitably will be influenced by the views expressed by the Associate Judge. CLS considers that the Associate Judge’s comments were tantamount to a finding that CLS breached the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. CLS says that the Associate Judge’s views were both unnecessary to what he had to decide and wrong.

Our decision

[10] As we indicated informally at the hearing of the appeal, we dismiss the appeal for want of jurisdiction. As is explained in Arbuthnot v Chief Executive of Department of Work and Income:^[10]

[25] It is fundamental that an appeal must be against the result to which a decision maker has come, namely the order or declaration made or other relief given, not directly against the conclusions reached by the decision maker which led to that result, although of course any flaws in those conclusions may provide the means of impeaching the result. A litigant cannot therefore, save perhaps in very exceptional circumstances, bring an appeal when they have been entirely successful and do not wish to alter the result. The successful litigant cannot seek to have the appeal body overturn unfavourable factual or legal conclusions made on the journey to that result which have had no significant impact on where the decision maker ultimately arrived. In short, there is no right of appeal against the reasons for a judgment, only against the judgment itself.

[11] Although some of those comments refer to a successful party who seeks to appeal reasons rather than the result, the same principles apply to an unsuccessful party as the balance of the paragraph indicates. If an unsuccessful litigant does not seek to appeal the result there is no appeal except in exceptional circumstances.^[11]
[12] In this case the result was the order holding that the liquidator was entitled to reject CLS’s proof of debt (and that the liquidator validly dispensed with the creditors’ meeting). There are no exceptional circumstances here that would allow CLS to appeal to overturn reasoning when it does not seek to alter this result. The Associate Judge’s comments about CLS were expressed on the basis of the evidence before the Associate Judge and arose in the context of whether the liquidator was correct to exercise his gatekeeper role in respect of GWH’s liabilities. No issue estoppel can arise out of those comments. The Standards Committee must consider the issue before it afresh, on the material before it. In doing so it should not take into account the views expressed by the Associate Judge, which are not accepted by CLS as correct.

Result

[13] The appeal is dismissed for want of jurisdiction. Costs should follow the event. The respondent was properly a party to the appeal and has incurred costs in preparing for the appeal. It was appropriate for the respondent to continue to oppose the appeal, notwithstanding that the nature of the appeal changed. CLS is to pay the respondent costs for a standard appeal on a band A basis with usual disbursements.

Solicitors:
Coghlan Smith, Christchurch for Appellant
DLA Phillips Fox, Wellington for Respondent

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^[1] Walker v Gibbston Water Services Ltd [2013] NZHC 2933.

^[2] Companies Act 1993, s 243(1)(a).

^[3] At [107].

^[4] At [78].

^[5] At [83].

^[6] At [94].

^[7] At [96].

^[8] At [101].

^[9] At [102].

^[10] Arbuthnot v Chief Executive of Department of Work and Income [2007] NZSC 55, [2008] 1 NZLR 13 (footnote omitted). See also Colman v Police [2010] NZSC 147, [2011] 2 NZLR 59 at [9].

^[11] See Right to Life New Zealand Inc v Abortion Supervisory Committee [2012] NZSC 68, [2012] 3 NZLR 762 at [50] where the Supreme Court referred to Arbuthnot, above n 10, that “an appeal must be against the result to which a decision maker has come” but that there can be “exceptional circumstances”.