Faloon v Public Trust HC Tauranga CIV-2010-470-000052 [2011] NZHC 941 (15 August 2011)

Last Updated: 2 September 2011

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

_{CIV-2010-470-000052}

UNDER the Trustee Act 1956

IN THE MATTER OF an application under sections 66, 67 and 68 of the Act in the ESTATE OF THOMAS JOHN FALOON

BETWEEN CLARENCE JOHN FALOON First Plaintiff

AND RUTH ENID FALOON Second Plaintiff

AND THREE TRUSTEES IN THE 1977-YEAR DIVERSION OF THE KAWAU STREAM TRUST

Third Plaintiff

AND PUBLIC TRUST Defendant

Hearing: 3 August 2011 (Heard at Hamilton)

Appearances: C J Faloon and R E Faloon (Self-Represented) for the Plaintiffs

J A L Oliver for the Defendant

Judgment: 15 August 2011

_{JUDGMENT OF DUFFY J}

This judgment was delivered by Justice Duffy on 15 August 2011 at 10.30 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

_Date:

FALOON and ORS v PUBLIC TRUST HC TAU CIV-2010-470-000052 15 August 2011

[1] On 30 September 2010, Associate Judge Doogue struck out the plaintiffs’ proceeding against the Public Trust. The plaintiffs have sought a review of that decision. The first and second plaintiffs (Mr and Mrs Faloon, respectively) appeared at the review hearing.

[2] The Associate Judge found that the statement of claim in which the proceeding was based was unintelligible and, when subjected to an open-minded and careful consideration, was confusing and ambiguous. He determined that the statement of claim ought not to remain on the Court file. He also found that it disclosed no reasonable cause of action, was likely to cause prejudice or delay, and was vexatious. Thus, he ordered that the plaintiffs’ proceeding be struck out.

[3] Having read the statement of claim, I consider that the Associate Judge’s description was correct. Mr Faloon said he could not see what was unintelligible about the statement of claim. Whilst I accept Mr Faloon’s view may be sincerely held, looked at objectively, the statement of claim does not disclose a reasonable cause of action.

[4] It is a well-settled principle that however badly drawn a statement of claim may be, if it is capable of being re-fashioned into a coherent and an intelligible pleading, the proceeding should not be struck out. For this reason, I attempted to see if there was any way in which the statement of claim could be re-fashioned.

[5] In the course of the review hearing, Mr Faloon attempted to explain the basis of the causes of action he brings against the Public Trust. He submitted that everything turned on paragraph 3 of the statement of claim which pleads:

At date of death Thomas John Faloon, as a joint “Special power” with the first plaintiff under a document creating a power on 18 August 1975, was engaged in the diversion of the Kawau Stream in 4 lands in Palmerston North to Engineering Plans 373/4 drawn for Thomas John Faloon by the late Leonard Walter Pirie, registered surveyor, of Palmerston North.

[6] These submissions have informed me that the special power that he contends exists in paragraph 3 of the statement of claim is to be found in a letter dated

18 August 1975.

[7] I have considered that letter to see whether its contents could ever be construed as the source of the special power for which Mr Faloon contends. I do not consider that the letter of 18 August 1975 could ever be so construed. The letter is addressed to Mr Faloon’s father, the late Mr T J Faloon. The letter refers to real estate property owned by Trade Lines Limited. The letter advises the late Mr T J Faloon that its purpose is to confirm a discussion between him and Mr Johansen, City Engineer, at a meeting in Mr Faloon’s office on 15 August 1975. The letter states as follows:

1. Council staff are proceeding with the engineering design work for the subdivision of the property recently acquired from Mr Kensington and it is proposed to pipe the existing meandering watercourse.

2. In the course of the design work it has become apparent that the best line for such piping is through your property and this proposal was indicated to you on an initial sketch plan. The main advantage to your property is that if the stream is piped and the old channel filled, three additional sections could be created.

3. Notwithstanding that you are not contemplating subdividing your property in the immediate future, you agreed to co-operate in the proposal to pipe the stream as follows:

(a) The stream would be diverted and the appropriate length, approximately 650 “, piped at the time Council proceedings with the subdivision of Kensington’s property, hopefully this coming summer”.

(b) Council will meet the initial cost of the piping but you will reimburse Council your company’s share approximately 340 degrees at the time your property is subdivided.

(c) Any surplus spoil available from the proposed runway extension at the airport will be stockpiled on your property to assist in the filling of your section of the old stream channel.

Your co-operation in this matter is appreciated and we will keep you informed on progress of the work.

[8] The pipeline referred to in the letter went ahead. The pipeline passed through land owned by Trade Lines Property Limited, which has now been liquidated and its assets, including the subject land, have been sold off. Another company, Central Equipment Company Limited, held an easement on the land. Central Equipment Company Limited has also been liquidated. At some point in

time, the easement was extinguished. Consequently, the pipeline is currently lying in land that is now owned by persons unconnected with Mr Faloon. Mr Faloon accepts that the land is now owned by third parties with whom he has no association. However, Mr Faloon maintains that he and his late father’s estate jointly hold a special power in relation to the pipeline, which is capable of being exercised against the current landowners.

[9] I fail to see how the letter of 18 August 1975 can be said to create the special power for which Mr Faloon contends. I also fail to see how either Mr Faloon or the late Mr T J Faloon could have any legal claim to a pipeline in circumstances where the pipeline runs through land that was never owned by them. And as is clear from the letter of 18 August 1975, the pipeline was installed by the local territorial authority.

[10] Any claim that might once have been made to this pipeline lay with the owner of the land, Trade Lines Property Limited. On this company’s liquidation, any such claim has been lost. Mr Faloon informed me he was an accountant by training. He acknowledged that he understood the concept of limited liability companies having a separate and distinct legal personality from their shareholders. I expect, therefore, that he will appreciate the impact on his case of the fact that the relevant land was at all material times owned by a limited liability company and not by him or his late father.

[11] Mr Faloon contends that the Public Trust, as the administrator of his deceased father’s estate, should now take steps to enforce the alleged special power which Mr Faloon contends was jointly held by him and his deceased father. Mr Faloon’s argument here is that the landowners through whose property the pipeline passes should pay a fee to the holders of the special power relating to that pipeline. He argues that had the Public Trustee acted earlier by exercising the special power available to him as administrator of the late Mr T J Faloon’s estate, money could have been obtained for the support and welfare of Mr Faloon’s mother. However, since Mrs Faloon is also now deceased, this reason no longer applies.

[12] As I can see no basis for the special power, I can see no basis for a claim against the Public Trustee in the way that Mr Faloon makes.

[13] Furthermore, the land in question is Torrens title land and it is difficult to see how an unregistered special power allegedly created in 1975, even if it could exist, could be invoked against landowners in 2011. This is especially so given that the special power is not recorded on the Certificates of Title to the land. Even if a special power had been created by the letter dated 18 August 1975, it has lain dormant ever since and the delay in attempting to enforce it would in itself preclude any proceeding now being taken to do so.

[14] In addition, the Public Trustee completed his administration of the estate of the late Mr T J Faloon in the 1990s. It is too late now, in a proceeding commenced in 2010, to obtain directions from the Court requiring the Public Trustee to take any further step in administering the estate.

[15] All the other allegations made in the statement of claim hinge on there being a special power which the Public Trustee could be directed either to exercise or to vest in some other person. It follows that there is no foundation for the remaining allegations in the statement of claim.

[16] Mrs Faloon also addressed the Court. However, nothing she said advanced

the plaintiffs’ case any further.

[17] Having carefully considered the matter, I am fully satisfied that there was every reason for the Associate Judge to strike out the proceeding. The statement of claim is not capable of being re-fashioned into something on which a tenable claim could be based.

[18] The Public Trustee sought indemnity costs against Mr Faloon. An award of indemnity costs is only made once the Court is satisfied that scale costs or increased costs are unsuitable. If the Public Trustee wishes to pursue a claim for indemnity costs, he should file a memorandum setting out the basis for an award of indemnity

costs in accordance with the process set out by the Court of Appeal in Holdfast NZ Ltd v Selleys Pty Ltd [2005] NZCA 302; (2005) 17 PRNZ 897.

Duffy J

Counsel: J A L Oliver 10A Bristow Place Karori Wellington 6012 for the Defendant

Copies To: C J Faloon and R E Faloon (Self-Represented) 43B Twentieth Avenue

Tauranga 3112 for the Plaintiffs

Public Trust (H G P Stokes, Managing Solicitor (Northern)) P O Box 429 (DX GX

10100) Hamilton