Skelton v Nair [2016] NZCA 316 (7 July 2016)

Last Updated: 27 July 2016

IN THE COURT OF APPEAL OF NEW ZEALAND
CA294/2015 [2016] NZCA 316
BETWEEN	BEVIN HALL SKELTON Appellant
AND	DARAN NAIR Respondent

Hearing:	16 June 2016
Court:	Harrison, Mallon and Toogood JJ
Counsel:	Appellant in person E J Werry for Respondent
Judgment:	7 July 2016 at 10.15 am

JUDGMENT OF THE COURT

A The appeal is dismissed.

2. The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

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REASONS OF THE COURT

(Given by Toogood J)

[1] Mr Bevin Skelton appeals against a decision of Asher J striking out a High Court proceeding in which Mr Skelton sued Mr Daran Nair, formerly the receiver of a partnership between family trusts established by Mr Skelton and his wife Marie.^[1] The proceeding was struck out on the basis that Mr Skelton’s claims had previously been compromised by a binding settlement of earlier proceedings involving the trusts and dealings between them over property and other matters to which Mr and Mrs Skelton and Mr Nair were parties.

Background

[2] The background to the proceeding, and a summary of Asher J’s judgment, were accurately and helpfully set out in a judgment of Winkelmann J in this Court upholding a decision of the Registrar refusing to dispense with security for costs.^[2] We adopt that summary for the purposes of this judgment.
[3] In 2006 Mr and Mrs Skelton were involved in litigation. Mr Nair, a chartered accountant, was appointed as a receiver of a partnership known as the Urban and Country Partnership (the UC Partnership) which was in effect a partnership of Mr and Mrs Skelton’s trusts.
[4] As receiver of the partnership, Mr Nair commenced a proceeding against Mr Skelton’s trust and another associated trust, seeking recovery against the trustees of $439,000. There was a settlement conference on 4 August 2008 before an Associate Judge at which settlement of the claim was reached, and a Heads of Agreement executed by the parties (the Heads of Agreement). There were then two later deeds of settlement dated 30 August 2008 (the 2008 deed) and February 2009 (the 2009 deed), in implementation of the Heads of Agreement.
[5] Mr Skelton filed the proceeding the subject of this appeal in July 2014. The original statement of claim was 17 pages long and contained hundreds of clauses and sub-clauses. Mr Nair applied to strike out the proceeding on the basis of that pleading, but Mr Skelton was given an opportunity to file an amended statement of claim before the application was heard.
[6] In an amended statement of claim filed in November 2014 (the Amended Claim), Mr Skelton pleaded that on 18 May 2007 Mr Nair entered into an agreement to sell the half share in an apartment owned by Mr Skelton’s interests to a Mr Howcroft, another apartment owner, and his spouse (the Howcroft agreement).
[7] Mr Skelton alleged that Mr Nair did not disclose the existence of this agreement to Mr Skelton, so that when he entered into the Heads of Agreement he believed that the apartment was only subject to offer and the sale of the one-half share had not yet occurred. Mr Skelton alleged that Mr Nair had a duty to disclose to him as a trustee all material information, including in relation to the sale of the one-half share in the apartment. Had he been aware of the state of affairs, he would not have signed the Heads of Agreement, settling all claims that he had or may have against the other parties including Mr Nair. He sought to set aside or step around the various documents he executed to enable him to pursue his claim against Mr Nair on the grounds of this non-disclosure.
[8] The claim as amended was based on the allegation that at the time of the sale to Mr Howcroft, there was another buyer who was willing to pay more for the half share. It was said that Mr Nair failed, therefore, to make an adequate effort to obtain the best sale price, and was selling the apartment under its value. Mr Skelton estimated the extent of the undervaluation to be AUD $69,975 and therefore claimed a half share, AUD $34,987.50. He also sought to set aside the Heads of Agreement and the variations.

Judgment in the High Court

[9] Asher J struck out the proceeding. He noted that Mr Skelton did not contest that he had signed the settlement agreements referred to.^[3] The August 2008 and February 2009 deeds contained a final settlement clause broad enough to encompass claims relating to the Howcroft agreement, then existing or arising in the future.
[10] The Judge also referred to evidence that when Mr Skelton entered into the deeds he knew of the agreement to sell to Mr Howcroft. Further, the Judge said that in the recitals in the Heads of Agreement entered into at the judicial settlement conference, there was reference to the receiver completing the sale.^[4] There was also reference in that agreement to the parties signing all documents and doing all things necessary to facilitate completion. He referred to an affidavit of Mr Skelton sworn on 25 March 2008, some months before the 2008 deed, in which Mr Skelton expressly referred to the Howcroft agreement, and alleged that the receiver had not obtained the best price for the property.^[5]
[11] Against that background Asher J said:

[20] It seems plain then that the very issue that Mr Skelton now complains about, namely impropriety or negligence of the sale to Howcroft, was at issue in the early proceedings and expressly settled on a final basis in the settlement agreements. Further, the settlement was expressed in the broadest terms that covered all matters at issue between Mr Nair and Mr Skelton.

[12] The Judge said that the pleadings had not specified information that should have been disclosed but was not disclosed, noting that in submissions Mr Skelton had said that he would need discovery to find out the necessary details.^[6]
[13] The Judge also considered that it was an abuse of procedure to pursue court claims that had been compromised by a binding settlement and that there were “various hallmarks indicating this proceeding is a frivolous and vexatious proceeding”.^[7] The hallmarks he identified were the unexplained delay in issuing the proceedings and the initial pleading which was prolix and diffuse. Although the Amended Claim was more focused, it addressed an issue that had already been the subject of litigation which had been settled, and raised speculative and unspecified allegations. He was satisfied that the proceeding could not succeed and struck it out.^[8]

The grounds of appeal

[14] Mr Skelton’s notice of appeal specifies the following grounds of appeal:

• (a) The Judge had directed his attention to the Amended Claim filed in the proceeding, but that pleading had been superseded by a second amended statement of claim (Second Amended Claim).
• (b) The Judge did not address the principal ground for the application to set aside the Heads of Agreement document on which Mr Nair relied, namely that Mr Nair had concealed from him relevant facts which he had a duty to disclose and, if he had disclosed those facts, would have resulted in Mr Skelton not entering into the Heads of Agreement.
• (c) The Judge contradicted himself in the judgment. He narrated the allegation that Mr Nair had a duty to disclose the existence of the Howcroft agreement, but then said that Mr Skelton “did not specify any information that should have been disclosed but was not disclosed.”
• (d) In concluding the proceeding was “frivolous and vexatious”, the Judge took into account irrelevant considerations, namely delay in issuing the proceedings when the proceedings were issued within the time contemplated by the relevant Limitation Act, and the first statement of claim and the Amended Claim when there was a Second Amended Claim on file.

Preliminary issue — the Second Amended Claim

[15] It is clear from Asher J’s judgment that the hearing of the strike-out application on 17 April 2015 concerned the amended statement of claim filed on 3 November 2014. It appears to be clear also that Mr Skelton did not draw the Judge’s attention to the Second Amended Claim during the hearing. Mr Werry informed us from the Bar that no second amended statement of claim had been served on Mr Nair’s solicitor or on counsel. We accept Mr Werry’s assurance.
[16] Nevertheless, in an additional case on appeal filed shortly before the hearing of this appeal, there is a copy of a notice of opposition to Mr Nair’s application to strike out the amended claim and an affidavit in support, both dated 27 November 2014. A receipt from the High Court attached to the notice of opposition appears to record the payment of a filing fee of $220 for two documents; namely, a statement of defence and a notice of opposition. It appears the reference to a statement of defence may be a mistake, and that the document filed at that time was the second amended statement of claim dated 27 November 2014. Moreover, Mr Skelton obtained a screenshot from a computer in the High Court Registry which recorded the amended statement of claim as having been withdrawn and a “2nd Amended Statement of Claim” as having been struck out.
[17] For the purposes of the appeal, we are prepared to accept that Mr Skelton filed the Second Amended Claim but did not serve it and did not draw it to Asher J’s attention.
[18] We have compared the Second Amended Claim with the Amended Claim addressed by the High Court. The Second Amended Claim adds additional particulars to the allegations of non-disclosure by Mr Nair and the allegation that Mr Skelton did not understand that the Australian property had been sold, and at an undervalue. We are satisfied, however, that they do not materially alter the nature of Mr Skelton’s claim and that the essential allegations and the relief sought remain the same as those considered in the strike-out proceeding. Notably, Mr Skelton does not dispute in the later pleading that he signed the Heads of Agreement, the 2008 deed and the 2009 deed by which Asher J determined he had compromised his claims.
[19] We are satisfied, therefore, that even if Asher J had been aware of the existence of the Second Amended Claim he would have reached the same conclusion that the proceeding should be struck out as an abuse of process. The question we have to determine is whether he would have been right to do so.

The merits of the appeal

[20] The appeal may be disposed of briefly. The 2009 deed recorded the following at cl 12:

This agreement and completion of the settlement in its terms and the subsisting terms of the agreement [sic] dated 4 August 2008 and 30 August 2008 are accepted by all parties in full and final satisfaction of all claims and obligations now or in the future as between the trusts referred to herein and as between the receiver, the trusts and parties herein or by either Bevin or Marie against any family trust of which the other is or has been a beneficiary.

(Emphasis added.)

[21] The parties to the 2009 deed were Mr Nair and the trustees of the UC Partnership; Mr Skelton in his personal capacity and as trustee of his two family trusts; and Mrs Skelton in her personal capacity and as trustee of her family trust.
[22] The matter addressed by the 2009 deed and the earlier settlement agreements, which remain on foot except as varied, included the claim based on Mr Skelton’s allegations that Mr Nair had acted improperly and in breach of his duties to Mr Skelton as receiver in connection with the sale to Mr Howcroft.
[23] It is clear from the Second Amended Claim that Mr Skelton seeks to rely on the same allegations in seeking relief. Asher J was undoubtedly right to conclude that the proceeding could not possibly succeed because it concerned claims which had previously been compromised by a binding settlement. Pursuing it is an abuse of the Court’s process.

Result

[24] We dismiss the appeal.
[25] The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

Solicitors:
Stephen McDonald, Auckland for the Respondent

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^[1] Skelton v Nair [2015] NZHC 832 [HC decision].

^[2] Skelton v Nair [2015] NZCA 343 at [2]–[8].

^[3] HC decision, above n 1, at [15].

^[4] At [16].

^[5] At [19].

^[6] At [22].

^[7] At [24].

^[8] At [25].