Jack v Carver HC Auckland CIV-2008-404-5910 [2011] NZHC 592 (20 June 2011)

Last Updated: 3 July 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV-2008-404-5910}

BETWEEN NEIL CLARENCE JACK First Plaintiff

AND NEIL CLARENCE JACK AND ALAN ROBERT JACK

Second Plaintiffs

AND SHIRLEY-ANNE CARVER First Defendant

AND GARRY DESMOND STEWART Second Defendant

AND SHIRLEY-ANNE CARVER, GARRY DESMOND STEWART AND HAYDN ASH AS TRUSTEES OF THE WHITIORA TRUST

Third Defendants

Hearing: 25 May 2011

Appearances: S P Bryers for Plaintiffs

G D Neil for Official Assignee

S-A Carver in Person

Judgment: 20 June 2011

_{JUDGMENT OF WHATA J}

This judgment was delivered by Justice Whata on

20 June 2011 at 11.30 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

R S Wood, PO Box 6422, Wellesley Street, Auckland

Meredith Connell, Crown Solicitors, PO Box 2213, Upper Shortland Street, Auckland 1140

Copy to:

S-A Carver, PO Box 47-285, Ponsonby, Auckland

JACK V CARVER HC AK CIV-2008-404-5910 20 June 2011

[1] This is an application for review of a decision made by Associate Judge Matthews in respect of a decision to grant leave to the plaintiff to discontinue proceedings against the defendants in those proceedings. The application is lodged by the third defendants Shirley-Anne Carver, Garry Desmond Stewart and Haydn Ash, all of Auckland and suing as trustees of the Whitiora Trust.

[2] The primary complaints of the third defendant are as follows:

(a) Mrs Carver was not afforded an opportunity to be heard.

(b) Had she been given the opportunity, she would have strongly opposed the grant of leave.

(c) There remain matters of substance to be resolved, including redress for the damage caused by the Mareva injunction which is said to be unnecessary and disproportionate.

(d) She has been unfairly deprived an opportunity to ventilate her concerns.

[3] I apprehend that underlying this review application is a sense that the plaintiffs have abused the processes of this Court with great detriment to the second and third defendants, in fact to all of the defendants. These concerns are detailed in the multiple written submissions and several affidavits filed in support.

Jurisdiction

[4] The jurisdiction of this Court to review a decision of an Associate Judge is set down in s 26P of the Judicature Act 1908.

[5] Before moving to a substantive assessment I need to deal with the procedural objection raised by Mr Bryers, namely that the application for review was out of time.

[6] I accept Mr Bryers’ contention that the third defendant had five working days to seek a review of the Associate Judge’s decision. The third defendants, the trustees of the Whitiora Trust, were clearly out of time. But I consider that given the overall circumstances and history to this litigation, it is appropriate to get to the merits and I grant leave to file out of time.

Background

[7] The background to the notice of discontinuance is that the plaintiffs obtained summary judgment for part of their claims. The Court also dismissed an application by the defendants seeking to discharge or modify the freezing order.

[8] Summary judgment was obtained against the third defendant in April 2009.[1]

An appeal against the summary judgment lapsed in May 2010 following a decision of the Court of Appeal declining to extend the time for the third defendants to file their case on appeal and apply for a hearing. The immediate background to that was that the first and second defendants were bankrupted and the Official Assignee was not prepared to pursue the appeal. The third defendant then sought to appeal out of time, but leave to appeal was not granted.

[9] Apparently the Trust assets (two properties and a boat), had been sold by mortgagees. The plaintiffs recovered the sum of $62,569 from the surplus of the proceeds of the sale of a commercial property in Parnell (presumably owned by the first or second defendant).

[10] As the plaintiffs point out, there is no prospect of any further recovery from the third defendant. The first and second defendants, Mrs Carver and Mr Stewart are bankrupt. The other third defendant, Mr Ash is a professional trustee whose liability (I am advised by the plaintiffs) is limited to the assets of the trust.

[11] I am also advised by the plaintiffs that they saw no point in pursuing their claim against the third defendants and accordingly sought leave to discontinue.

The alleged errors

[12] The right to be heard in contested litigation is well recognised. The issue here is whether the third defendant was deprived of that right. For the following reasons I do not consider that the trustees were so deprived:

(a) I accept the record of both Mr Bryers and the Associate Judge that leave was granted to Mrs Carver to appear on behalf of the Trust at the conference. The minute of the Associate Judge records:

[1] Mrs Carver is one of the third defendant trustees. She forwarded two memoranda to the Court for the purposes of this telephone conference. The trust is not legally represented and Mrs Carver does not have any status to appear for the trust. However, I granted her leave to appear for the purposes of the telephone conference only, so she could be a party to the issues which have arisen as a result of the memoranda filed on behalf of the plaintiffs and the first and second defendants.

[2] The plaintiffs wish to discontinue, but require leave as there is an undertaking from the plaintiffs to the Court – r

15.20(1).

[3] The first and second defendants, through the Official Assignee, consent and do not seek costs. The third defendant trustees were not represented. Mrs Carver did not raise any objection, on her behalf as a trustee.

[4] All known assets have been realised and the proceeds utilised. In the circumstances I agree that it is appropriate that the proceeding be discontinued and I grant leave accordingly. The plaintiffs are legally aided; no application for costs has been made by any defendant and the first and second defendants indicated that no application would be made.

(b) It may be that Mrs Carver, and her associates who apparently were listening also, perceived that the Associate Judge had qualified her right to a right to attend only – that is an unfortunate misunderstanding, but it is not a breach by the Associate Judge of natural justice principles.

(c) I would add further that if the Associate Judge had intended to exclude Mrs Carver a much simpler approach would hae been to terminate the telephone conference with her.

(d) The Associate Judge addressed the key matters he needed to address, including the undertaking, the questions of costs and the ongoing effect of the Mareva injunction (freezing order).

[13] The third defendants now raise a raft of matters that must be resolved, they say, before the proceeding can be properly discontinued. For reasons that I will canvas, I consider that the matters are either not relevant or that there are other more suitable alternatives available to the third defendants rather than continuing a proceeding the plaintiff does not wish to pursue.

[14] Firstly, the discretion on an application to discontinue is not unfettered. A plaintiff has a prima facie right to end proceedings it no longer wishes to pursue. After all, it is the plaintiff’s claim that is before the Court. If the plaintiff does not wish to pursue it, there is no dispute for the Court to adjudicate on, subject to any claims that the defendant may have properly pleaded and put before the Court. Even then, the plaintiff must be entitled to discontinue its part of the proceedings, subject, of course, to resolution of any issues as to costs or abuse of process in the

discontinuance.[2]

[15] I asked Mrs Carver whether there are any outstanding claims. She pointed to what she said is an outstanding and unresolved application for security for costs dated 2009. I see this application as entirely moot. In fact, it is difficult to discern what costs need to be secured at this very late stage. In any event, the Associate Judge addressed the issue of costs.

[16] I would add further, approaching this aspect afresh, I would decline an order of costs in any event:

(a) The plaintiffs are legally aided, and I see no special reason to depart from the normal approach to costs in respect of legally aided litigants.

(b) The defendants still owe more than $60,000 to the plaintiffs, two of whom are bankrupt, leaving only the third defendants to pay the sum owing. There would be, in my view, an injustice in awarding costs in such circumstances.

(c) The only reason the plaintiffs have discontinued substantive proceedings is that the defendants are now impecunious. They do not concede that the substantive claims are without merit – the summary judgment suggests the opposite.

(d) The defendants are unrepresented, so no costs are payable for legal fees. That leaves disbursements. Given the full, litigious background to this matter, disbursement costs should lie where they fall. I repeat, the defendants still owe a substantial sum to the plaintiffs, and in all of the circumstances it would not be just for an award of costs to be made against the plaintiffs for discontinuing in these circumstances.

[17] Secondly, many if not all of the matters raised by Mrs Carver for consideration deal with what she perceives as abuse of process and unfairness in the conduct of the proceedings to date (rather than in relation to the discontinuance per se). For example, she raises concerns about:

(a) The summary judgment process and outcome – she says that she was deprived of an opportunity to properly defend an appeal for summary judgment.

(b) The scope of the mareva injunction (freezing order) – that it was excessive, unnecessary and in effect immobilised the defendants.

(c) The failure of the Court to consider serious objections and flaws in the case for the plaintiffs, including what she says are misleading actions, false or fraudulent deeds, and inappropriate hearsay evidence.

[18] These matters, which are plainly of great significance to the defendants, go into the merits of the plaintiffs’ case. As the plaintiffs are no longer pursuing the balance of its case, they are moot also. In terms of the summary judgment, that is a matter now well beyond this Court’s jurisdiction in accordance with the orthodox application of the res judicata principle. The mareva injunction or freezing order aspect should have been argued at the time (if it was not). I note that an application

to set aside the freezing order was thoroughly ventilated and refused.[3] Accordingly,

the merits of the injunction are not something that this Court on an application for leave to discontinue should entertain, except insofar as to ensure that the freezing order is properly discharged. (In this respect, I am advised by the plaintiffs’ counsel that there are no assets subject to the freezing order, and as such it is in effect defunct.)

[19] Thirdly, if the third defendant believes it has real substantive matters to bring to the Court (that are not precluded by issue estoppel or res judicata as in the case of the summary judgment), then it can commence its own proceeding. It does not need to drive off the plaintiffs’ proceeding. But it cannot expect the Court to sustain the plaintiffs’ proceedings when the plaintiffs plainly do not wish to pursue their claim.

[20] Fourthly, I do not consider discontinuance is an abuse of process. Counsel for the plaintiffs cited Castanho v Brown & Root (UK) Ltd.[4] In that case the House of Lords did in fact allow the discontinuance of an action where the plaintiffs were seeking to bring proceedings in the United States instead of the United Kingdom. In the present case the plaintiffs quite legitimately see no purpose in pursuing claims against impecunious defendants. While the defendants complain about what they see

as an abuse in the substantive proceedings, the discontinuance is not improper in the

_{circumstances.}

[21] There is one aspect that did give me cause for concern, namely the allegation that the Associate Judge did not address the relevance of the undertaking as to damages.

[22] Having examined the authorities, the most appropriate time to rely on the undertaking as to damages is in the context of the proceedings within which it was granted. The third defendant says it was not afforded the opportunity to debate this point.

[23] The undertaking relates to a mareva injunction (freezing order) that served a valid purpose, ultimately legitimised by the summary judgment outcome. I appreciate the defendants’ concern that it was disproportionate. But as I have said, the defendants should have addressed that issue at the time it was granted. To the extent they did, they failed to persuade the Court of their position.

[24] On this, the minute records that the reason leave was needed was in order to deal with the undertaking. Plainly it was considered by the Judge. Mrs Carver was present during the conference and could have raised her objection then. She did not, because she says she thought she did not have a right to be heard. While that may be so, as I have said I do not consider that there has been a breach of natural justice.

[25] However, for avoidance of doubt, I have examined the merits of her claim in respect of the undertaking. In this regard I have read the very full submissions dated

25 May 2011. Many of the matters raised in those submissions repeat oral argument and are dealt with above. The nub of Mrs Carver’s complaint is captured at paragraph 119 of her submissions:

119. The Plaintiffs have used the anomalies in the legal system to file a “Claytons” Summary Judgement Application support [sic] by draconian Mareva Injunction.

[26] On my reading of the facts, the plaintiffs were successful on summary judgment. Woodhouse J examined carefully whether the injunction was necessary. Part of the summary judgment debt remains unpaid. All of this vindicates the orders obtained including the mareva injunction. On that basis I consider that a claim based on the undertaking would have no serious prospect of success. I therefore perceive

no procedural error or substantive unfairness that would warrant reviewing the

Associate Judge’s order.

[27] Accordingly, I decline to set aside the order discontinuing the proceedings.

Costs

[28] There is an issue in relation to costs on this application. In my view, given the full background to this matter, I am not prepared to award costs for any party.

_{Whata J}

Postscript

[29] I have received further papers from Mrs Carver dealing, it appears with an application for discovery. As I have resolved not to allow the review and the

_{proceedings are discontinued, I am not prepared to entertain this aspect further.}

Whata J

---

[1] See Jack v Carver HC Auckland CIV-2008-404-5910, 14 April 2009, where $159,665 was awarded

against the trustees exclusive of interest and costs. The plaintiffs’ submissins say this figure is now at

$247,673.48, with interest continuing to run.

[2] High Court Rules 15.19 – 15.23; O’Brien v New Zealand Social Credit Political League Inc (No.2)

[1984] 1 NZLR 68.
[3] _{Jack v Carver HC Auckland CIV-2008-404-5910, 14 April 2009 at [80] – [92].}
[4] Castanho v Brown & Root (UK) Ltd [1981] AC 557.