Lobb v Lockhart Trustees Services no 56 Limited [2021] NZCA 180 (13 May 2021)

Last Updated: 18 May 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA728/2020 [2021] NZCA 180

	BETWEEN	STUART JAMES LOBB Applicant
	AND	LOCKHART TRUSTEES SERVICES NO 56 LIMITED First Respondent VERENA COLLEEN RYAN Second Respondent DIGBY JOHN NOYCE Third Respondent

Court:	Brown and Clifford JJ
Counsel:	P A Fuscic for Applicant A A H Low for First Respondent W M Patterson for Second Respondent H L Thompson for Third Respondent
Judgment:	13 May 2021 at 12.30 pm

JUDGMENT OF THE COURT

A The application for an extension of time to appeal is declined.

2. The applicant must pay the second respondent costs on a band A basis for a standard application for leave to appeal and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Brown J)

Introduction

• [1] The applicant, Mr Lobb, applies under r 29A of the Court of Appeal (Civil) Rules 2005 for an extension of time to appeal against a judgment of the High Court which ordered the removal of each of Mr Lobb, the first respondent (Lockhart) and the second respondent (Ms Ryan) as trustees of the Lothbury Trust, and appointed the third respondent (Mr Noyce) as receiver of the Trust.^[1]
• [2] The application is opposed by Ms Ryan. Mr Noyce abides the decision of the Court. While initially opposing, Lockhart now abides the Court’s decision on the extension of time application because it understands that Mr Lobb is not expressly seeking Lockhart’s reappointment as a trustee. However Lockhart reserves its position both in respect of any appeal and in relation to costs.

Background

• [3] The Trust, whose assets include the former Remuera family home of Mr Lobb and Ms Ryan, who are now estranged, was settled by Mr Lobb and Ms Ryan by Deed of Trust dated 17 June 2005. They were the first trustees of the Trust together with the Public Trust, the latter of which was replaced as independent trustee by Lockhart in 2015. Mr Lobb and Ms Ryan have the power to appoint and remove trustees, a power required to be exercised by them jointly and unanimously.
• [4] Lockhart applied for orders discharging it as a trustee and appointing an interim trustee or a receiver of the Trust assets. In her judgment of 27 July 2020 granting the application, Edwards J described Lockhart’s position as impossible, it being unable to obtain instructions or agreement from the other trustees which prevented it from discharging its duties as an independent trustee.^[2] The Judge noted that a replacement trustee could not be found, but observed that, even if that were not so, an appointment would serve little purpose as the new trustee would find itself caught in the crossfire between Mr Lobb and Ms Ryan.^[3]
• [5] The Judge concluded:

[28] The Trust Deed allows for the Trust to continue with only two trustees. That means Lockhart could be removed without any further orders being made. However, the extent of the dysfunctional relationship between Mr Lobb and Ms Ryan means that the current stalemate will continue. That dysfunction is evidenced by the multiplicity of proceedings between Mr Lobb and Ms Ryan. Nine separate proceedings between the couple have been listed in Mr Lobb’s affidavit. These include applications by each spouse for a protection order against the other.

[29] That dysfunction is having a major impact on the primary Trust asset, being the house in Remuera. The mortgage is in arrears, and there is an undischarged PLA notice, making the possibility of a mortgagee sale a reality. The trustees cannot agree on how to deal with Westpac regarding the outstanding loan, and the Trust’s assets are being eroded as penalty interest continues to accrue.

[30] The interests of the beneficiaries are directly compromised by the ongoing dispute between the two primary trustees. The level of acrimony and dysfunction is such that there is really no other option but to remove all trustees.

• [6] The last day for filing an appeal against the High Court judgment within time was 24 August 2020. Mr Lobb’s application for an extension of time to appeal was filed on 17 December 2020.

The application

• [7] On 17 December 2020 Mr Lobb filed the application for an extension citing the following grounds:

The appellant has a reasonable excuse for the delay, including the justifiable delay of awaiting the decision of the High Court on his Interlocutory Application in a related proceeding, which is now the subject of a Judgment by Associate Judge Smith in [2020] NZHC 3085, delivered at Auckland in proceedings CIV-2019-404-1591 on 20 November 2020. The appellant intends to appeal that Judgment and has filed with the High Court an application for leave to appeal it.

The Judgment is intrinsically tied in with and underpinned the Judgment of Associate Judge Smith. His Honour found as one of the reasons why the arbitration clause in the Trust Deed was inoperative or incapable of being performed or accessed by the appellant is because the appellant and the first respondent are no longer trustees, having been removed as trustees by the Judgment given earlier.

It is in the interests of justice that an appeal against the Judgment is allowed and heard with an appeal against the Judgment of Associate Judge Smith because they interrelate. Both raise similar issues of significance to the parties and of general importance, namely the enforceability of arbitration provisions in a trust deed, matters of construction and whether inherent and statutory jurisdictions exclude resolution of trust disputes by arbitration. Such issues have not been the subject of appellate court authority in New Zealand.

• [8] The application noted that Mr Lobb had been self-representing and observed that he did not appeal the judgment in time when in the circumstances he should have. The application was supported by an affidavit of Mr Lobb discussed below.

Relevant principles

• [9] The principles applicable to applications for extensions of time under r 29A were explained by the Supreme Court in Almond v Read.^[4] The ultimate question when considering the exercise of a discretion is what the interests of justice require. Factors identified as likely to require consideration include:^[5]

(a) the length of the delay;

(b) the reasons for the delay;

(c) the conduct of the parties, particularly of the applicant;

(d) any prejudice or hardship to the respondent or to others with a legitimate interest in the outcome; and

(e) the significance of the issues raised by the proposed appeal, both to the parties and more generally.

• [10] While the Court recognised that the merits of a proposed appeal may, in principle, be relevant to the exercise of the discretion to extend time, a decision to refuse an extension of time based substantially on that ground should be made only where the appeal is clearly hopeless. The lack of merit must be readily apparent.^[6]

Discussion

• [11] Mr Fuscic for Mr Lobb describes the period of delay of 80 working days as moderate, drawing attention to other cases where the delay was even longer but extensions of time were granted. While a delay of almost four months is substantial, the significance to be attributed to the delay depends on the reasons for it. As the Supreme Court observed in Almond v Read, the longer the delay, the more the applicant will be seeking an “indulgence” from the Court and the stronger the case for an extension will need to be. The Court commented that in a case where there has been a slip up and the appeal date has been inadvertently missed, how quickly the applicant sought to rectify the mistake after learning of it will also be relevant.^[7]
• [12] In his affidavit in support of the application (which annexed a bundle of documents comprising 224 pages) Mr Lobb stated that the reasons why he did not appeal the decision at the time were “many and varied”. They included:

(a) The constraint posed by the Level 3 Covid-19 lockdown in Auckland between 12 and 30 August 2020.

(b) For the first 10 to 15 days after receipt of the judgment he tried to respect the Court and work with the receiver and preserve the Trust assets. When it became clear that the receiver and Westpac were not going to cooperate with the preservation of the Remuera house he switched his attention to trying to get refinancing of the debt to avoid a mortgagee sale.

(c) Because he was self-represented he had difficulty understanding the appropriate process for applying for supervision of the receiver’s actions.

(d) In late August/September he approached the Public Trustee for appointment as independent trustee but it declined.

(e) He was under a lot of stress stemming from the August lockdown and the prospect of losing the Remuera house in a mortgagee sale. His health was affected and he also expended considerable time and effort in caring for his daughter and elderly father.

• [13] A further consideration was that Mr Lobb was dealing with at least five other Court proceedings, in addition to the current matter and the proceeding CIV‑2019‑404‑1591 in which the judgment of 20 November 2020 was delivered. In respect of that decision Mr Lobb stated:

21. I am advised by my lawyer and accordingly believe, that an appeal against Associate Judge Smith’s Judgment to be fully and fairly undertaken cannot be done without the Court also allowing Justice Edwards’ decision being reviewed under an appeal against it, because both Judgments deal with the issue of construction and enforceability of the arbitration clauses in the Deed of Trust for the Lothbury Trust, aside from issues of general importance.

• [14] Mr Fuscic traversed all these matters in his submissions both in support and in reply, submitting that the delay was sufficiently explained.
• [15] We agree with the response of Mr Patterson for Ms Ryan that the Level 3 lockdown in Auckland in August did not prevent Mr Lobb lodging an appeal. Indeed we note that on 17 August 2020 Mr Lobb filed a memorandum in the High Court proceeding seeking various orders and directions including an order appointing Mr Lobb and his father as sole trustees of the Trust. In a minute of 17 August 2020, Campbell J as duty judge recorded that the proper venue for a challenge to the judgment of Edwards J was an appeal. In any event the lockdown period, which lasted until 30 August 2020, could only explain the first six days of the delay.
• [16] Of much greater significance is Mr Lobb’s knowledge that the appeal period was running. In email correspondence with Mr Thompson, the solicitor for Mr Noyce, on 4 August 2020 Mr Lobb stated “[m]ost important is that I have 20 days to appeal the [H]igh [C]ourt decision regarding Mr. Noyce [sic] appointment which I will be doing”. Mr Fuscic submitted that failure to appeal in time due to change of mind or indecision does not bar an extension, while acknowledging that it lessens justification. He rejected the suggestion that Mr Lobb was initially content with the judgment by working with the receiver but later changed his mind.
• [17] Whatever considerations may have influenced Mr Lobb in his decision not to promptly file an appeal, unlike in cases of inadvertence here Mr Lobb, who was well versed in litigation, knew time was running but elected not to file a notice of appeal. Even following delivery of the judgment of the Associate Judge on 20 November 2020 Mr Lobb waited almost a further month before filing the current application.
• [18] Although self-represented throughout much of the relevant period, Mr Lobb filed numerous memoranda and documents in the courts in multiple proceedings including protests to jurisdiction. He cannot claim to be unaware of the implications of his failure to pursue the present matter.
• [19] In Almond v Read the Supreme Court stated that it will be particularly relevant to know whether the delay resulted from a deliberate decision not to proceed followed by a change of mind, from indecision or from error or inadvertence.^[8] In the circumstances of this case we are not satisfied that the reasons advanced explain or justify the delay in pursuing the matter.
• [20] With reference to the fourth factor at [9] the Supreme Court explained that the greater the prejudice, the stronger the case will have to be to justify the grant of an extension of time. Where there is significant delay coupled with significant prejudice the Court suggested it may well be appropriate to refuse leave even though the appeal appears to be strongly arguable.^[9]
• [21] The extracts from the judgment of Edwards J^[10] note the multiplicity of proceedings between Mr Lobb and Ms Ryan and the impact on the primary trust asset, the Remuera house. Ms Ryan points to the hardship which she is suffering from the continued delay in resolving what she submits should have been a simple case of determining the respective entitlements of herself and Mr Lobb to the assets of the Trust. She has a concern that now that Mr Lobb’s father has purchased the former Westpac mortgage over the Remuera house, there is a risk he will attempt to seek a contribution from her which she could only meet from her share of that asset.
• [22] Mr Fuscic makes the point that Ms Ryan has not produced a statement of her financial position in order to show prejudice from a delay. However in the circumstances explained in the judgment of Edwards J we consider that the prejudice of the delay associated with an appeal is self-evident.
• [23] It remains to address Mr Fuscic’s submission that the current proceeding is interlinked with the proceeding in which the 20 November 2020 judgment was delivered and that appeals in both should be determined concurrently. The latter proceeding, which was commenced by Ms Ryan in August 2019 sought a declaration as to the true construction of the Trust deed relating to the resettlement of Trust assets in the event of separation. Mr Lobb filed a protest to jurisdiction and an application to dismiss the proceeding. A fixture for 5 May 2020 was adjourned on Mr Lobb’s application in the context of the Covid-19 pandemic. The application was then determined on the papers by the Associate Judge following a telephone conference on 8 September 2020.
• [24] We recognise that the order of Edwards J removing the trustees of the Trust had significant consequences for Ms Ryan’s claim arising from the absence of parties to any proposed arbitration. However we do not accept that the two judgments are intrinsically linked. As Mr Patterson submitted, the decision of Edwards J to remove all trustees and appoint a receiver was an outcome in accordance with longstanding authority as to the Court’s equitable jurisdiction. We agree with his submission that a provision in a Trust deed cannot oust the Court’s jurisdiction to supervise the administration of trusts for the benefit of the beneficiaries.
• [25] We note that Mr Lobb seeks to appeal from the Associate Judge’s decision. Such an appeal will require leave under s 56 of the Senior Courts Act 2016. Leave has already been declined by the High Court in a judgment delivered on 12 March 2021.^[11] An application to this Court for leave under s 56(5) has been filed.
• [26] Mr Fuscic attempted to identify a strong public interest in the hearing of an appeal from the judgment of Edwards J. However the only material ruling in the judgment was that the inherent and statutory jurisdiction of the Court to supervise trusts by ordering the removal of trustees was not a “dispute” within the terms of the relevant clause in the Trust deed. We do not consider that that proposition is seriously open to challenge or that it raises an issue of general public interest.
• [27] In our view the combined effect of the several factors reviewed above is that the application for an extension of time must be declined.

Result

• [28] The application for an extension of time to appeal is declined.
• [29] The applicant must pay the second respondent costs on a band A basis for a standard application for leave to appeal and usual disbursements.

Solicitors:
McVeagh Fleming, Auckland for Applicant
Alexandra Low & Associates, Auckland for First Respondent
Patterson Hopkins, Auckland for Second Respondent
McMahon Butterworth Thompson, Auckland for Third Respondent

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^[1] Lockhart Trustee Service No 56 Ltd v Ryan [2020] NZHC 1823.

^[2] At [26].

^[3] At [27].

^[4] Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801.

^[5] At [38].

^[6] At [39](c).

^[7] At [38](a).

^[8] At [38](b).

^[9] At [38](d).

^[10] At [5] above.

^[11] Ryan v Lobb [2021] NZHC 496.