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High Court of New Zealand Decisions |
Last Updated: 13 July 2018
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ORDER PROHIBITING PUBLICATION OF THE NAME OR IDENTIFYING PARTICULARS OF
THE FIRST RESPONDENT.
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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
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CIV-2018-485-62
[2018] NZHC 1396 |
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UNDER
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section 240 and 241 of the Crimes Amendment Act 2003
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IN THE MATTER OF
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Interlocutory application on notice
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BETWEEN
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MICHAEL ARTHUR ILES
Applicant
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AND
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Z
First Respondent
ROBYN ANN HARRIS-ILES
Second Respondent
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Hearing:
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30 May 2018
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Appearances:
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Applicant in person with E Wallis-Iles as McKenzie Friend R M Flinn and N J
Cannon for first respondent
T R Carlisle for second respondent
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Judgment:
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14 June 2018
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RESERVED JUDGMENT OF DOBSON J
Grounds for seeking strike out [26]
The scope of evidence considered [34]
No tenable cause of action [40]
An opportunity to re-plead? [42]
ILES v Z [2018] NZHC 1396 [14 June 2018]
[1] This judgment deals with applications by both respondents to strike out the proceeding against them.1 The statement of claim is discursive and confusing. It does not disclose a tenable cause of action and is vulnerable to strike out on a number of grounds. The real issue is whether Mr Iles ought to be afforded an opportunity to re-plead the essence of his current complaint.
[2] Before considering criticisms of the current pleading, it is necessary to provide some background to what is a protracted family dispute.
Background to the claim
[3] At the time relevant events began, Mr Iles owned a residential unit in Webb Street, Te Aro, Wellington, mortgaged to the Bank of New Zealand (BNZ).
[4] In 2007, his mother (Mrs Shirtcliff) provided a $44,400 loan to Mr Iles’ investment company, M&E Property Investments 2007 Limited (MEP) to assist with the purchase of a property in Martin Square, Te Aro. Two years later in 2009, Mrs Shirtcliff sold to MEP a property in Dimock Street, Porirua for $239,000.
[5] Also in 2009, Mrs Shirtcliff, Mr Iles, and his wife, Erica Wallis-Iles, together bought a property in Aspiring Terrace, Porirua. Mrs Shirtcliff funded her part of the purchase with $175,000 from the sale of the Dimock Street property. Mr Iles and his wife funded their portion with a $340,000 loan from ANZ National Bank (ANZ). Those parties, along with MEP, entered into a property sharing agreement regarding the purchase.
[6] The property sharing agreement noted MEP’s outstanding indebtedness of
$40,400 from the earlier loan and recorded that, until that debt was repaid, Mrs Shirtcliff was entitled to a 410/1000 ownership share of the Aspiring Terrace property. Mr Iles and his wife were entitled to a 295/1000 share each. When the debt was repaid, Mrs Shirtcliff’s ownership share would be amended to one third.
[7] The property sharing agreement also provided for Mrs Shirtcliff to be guarantor of the ANZ loan Mr Iles and his wife obtained to fund their share of the Aspiring Terrace purchase. As security for her liability as guarantor, Mrs Shirtcliff was to be granted second mortgages over the Webb Street and Martin Square properties. Mrs Shirtcliff could request the registration of those mortgages at any stage and, pending registration, could register caveats against the relevant properties. If Mr Iles and his wife defaulted on the ANZ loan, Mrs Shirtcliff could enforce either or both of the mortgages to recover any money paid to the ANZ pursuant to her guarantee.
[8] The property sharing agreement recorded that in the event of a sale, transfer or disposition of the Aspiring Terrace property, the net proceeds were to be paid out according to the 410/295/295 share split, on the basis that Mr Iles and his wife would repay the ANZ mortgage from their share of the net proceeds.
[9] In 2009, Mrs Shirtcliff lodged caveats against the titles to the Webb Street and Martin Square properties. In 2013, Mr Iles and his wife encountered financial difficulties. Due to her caveat on the Webb Street property, Mrs Shirtcliff received a notice from BNZ that they were defaulting on their mortgage. Around this time, Mrs Shirtcliff commenced a proceeding seeking an order that her caveat over the Webb Street property not lapse. The issues between the parties in that caveat proceeding were the subject of a judicial settlement conference (JSC) before Associate Judge Gendall.
[10] The JSC occurred on 12 June 2013. The participants were the first respondent
(Z) appearing as solicitor for and on behalf of Mrs Shirtcliff, plus Mr Iles, his wife and their daughter. In a minute issued by the Associate Judge that day, his Honour recorded that the JSC had commenced at 10 am and was concluded at 4.05 pm, that the dispute between the parties was settled, and that:2
[3] A Settlement Agreement or consent memorandum is now being prepared and entered into between the parties which will resolve this proceeding.
[11] Immediately after the dispute had been settled, Z recorded the terms of the settlement in a handwritten document labelled as “Consent Memorandum”. Z signed that document on behalf of Mrs Shirtcliff. Mr Iles, his wife (in their personal capacities) and daughter (as director of MEP) also signed it.
[12] Thereafter, Z presented the completed handwritten document to the Court with a request that it be reproduced as a consent order of the Associate Judge. That was done, with the order being sealed by the High Court and dated 12 June 2013. It terms were as follows:
Aspiring Terrace
Sale of Webb Street
Loan to M&E Property Investments 2007 Limited
[13] Both the Aspiring Terrace and Webb Street properties were sold. A dispute arose as to the deductions properly made from the proceeds of sale of the Webb Street property, but that has no direct bearing on the present dispute.
[14] Mr Iles has pursued a range of complaints and proceedings about the conduct of related matters by and on behalf of Mrs Shirtcliff and, subsequent to her death, by his sister, the second respondent, as administrator of their mother’s estate.
[15] The Martin Square property has not been sold so, on the terms of the consent memorandum, the pre-condition for repayment of the $40,400 loan has not occurred. The stance adopted by the second respondent on behalf of Mrs Shirtcliff’s estate is that the amount remains outstanding and is a debt owed by MEP (and guaranteed by Mr Iles3) to Mrs Shirtcliff’s estate.
[16] Mr Iles, for himself and MEP, disputes any outstanding liability, arguing the agreement to allocate all proceeds of the sale of the Webb Street property to Mrs Shirtcliff was to be treated as repayment of the $40,400 loan previously advanced by her. Mr Iles wants to argue that the terms drafted by Z at the end of the JSC, and which he, his wife and daughter were allegedly procured to sign by trickery, deceit and improper pressure, do not reflect the terms that had been agreed before the Associate Judge in the JSC. Mr Iles contends that the consent memorandum ought to have recorded that allocation of the full proceeds of the sale of Webb Street to Mrs Shirtcliff included discharge of the obligation to repay the $40,400 loan. If Mr Iles was correct on this, cls 6 to 10 of the consent memorandum would have been superfluous to, and inconsistent with, the agreement as recorded.
[17] A dispute along these lines, as defined after extensive exchanges with Mr Iles during the course of argument, would involve claims possibly for deceit or undue influence against Z as the person procuring execution of a consent memorandum on incorrect terms. Mr Iles’ criticisms of Z might also give rise to a claim against her for misrepresentation as to the status of the consent memorandum. Mr Iles alleges he was not given notice of Z’s intention to rely on it when asking the Court to issue a consent order reflecting the outcome of the JSC. Rather, Mr Iles claims he was left with the impression that it was only an informal record that, if he wanted to, he could later “walk away from”.
[18] There could conceivably be a related claim against the administrator of Mrs Shirtcliff’s estate for orders precluding her enforcing the debt owed to the estate on the terms recorded in the consent memorandum.
The statement of claim
[19] The statement of claim attempts to plead very different causes of action from those just described. It seeks the leave of the Court to bring a prosecution against Z under s 240 of the Crimes Act 1961 for her “criminal acts of perjury, lies, deceit and trickery”.4 The statement of claim proposes that instead of imposing a prison sentence, Mr Iles would respectfully request an order that Z pay him a sum of not less than
$30,000 as compensation for financial losses and stress.
[20] The statement of claim also alleges that the second respondent has used the falsified consent order (that is, following the terms of the consent memorandum) “to deceive the courts and other authorities”, for which the Court should recognise the second respondent’s liability to pay Mr Iles a sum of not less than $10,000.
[21] The statement of claim pleads alleged exchanges between Z and Mr Iles, his wife and daughter at the conclusion of the JSC, during which they repeatedly protested at the untrue content in the consent memorandum which Z had prepared and signed. Allegedly, Z insisted that they also sign it before leaving Court. The statement of
claim alleges that Z added to the pressure on Mr Iles by claiming she needed to hurry to get to the airport to catch a flight.
[22] The statement of claim further alleges that Mr Iles and his family were not put on notice that Z intended to formalise the executed consent memorandum by applying to the Court for consent orders, which subsequently occurred. The 11 pages of text in the statement of claim include rhetorical questions and discursive comments on the events being described.
[23] The description of events at the JSC, as alleged in the statement of claim, also includes an allegation that Z wilfully misled the Associate Judge in claiming that two loans had been made by Mrs Shirtcliff to Mr Iles or MEP. The basis for the allegations that two loans were outstanding is not clear. Such a stance would be inconsistent with the terms of the consent memorandum, which refers only to the loan from Mrs Shirtcliff to MEP. It is also inconsistent with the memorandum filed by Z shortly before the JSC, to outline Mrs Shirtcliff’s perspective on the dispute.
[24] The statement of claim concludes with a repetition of the prayers for compensation from Z of not less than $30,000, from the second respondent of not less than $10,000 and for an order “repealing” the consent order made by Associate Judge Gendall.
[25] I raised with Mr Iles the procedural steps required to pursue a private prosecution. I also pointed out the standard of proof required in proving an intentional falsehood, where that is an element of obtaining by deception. Initially, Mr Iles maintained his resolve to seek leave to bring a criminal prosecution. However, after the luncheon adjournment he indicated that he no longer intended to pursue a criminal prosecution. Nor did he want to proceed with his application for monetary relief. The focus would instead be on obtaining a reversal of that part of the consent memorandum that recorded an outstanding debt owed to Mrs Shirtcliff (given on Mr Iles’ version of events that it was repaid out of the proceeds of the sale of the Webb Street property) and formal acknowledgement of the alleged serious breach of standards by Z as a lawyer, in lying to him and his wife and deliberately misleading the Court.
Grounds for seeking strike out
[26] Z raised four grounds in support of her strike out application. Two related to the form of the statement of claim in that it:
[27] Z also sought strike out on the basis that the statement of claim disclosed no arguable cause of action and was clearly untenable. Separately, it was argued that the claim was frivolous, vexatious or otherwise an abuse of process in that it amounted to an attempt to re-open matters in a long-running family dispute that had previously been before the Court and either settled or determined.
[28] The second respondent relied on variants of these grounds and in particular that no discernible cause of action against the second respondent could be identified that would enable the second respondent to respond by way of a defence.
[29] In argument, counsel for both respondents placed considerable emphasis on the untenability of the factual assertions on which Mr Iles relied. Counsel for both respondents accepted that the onus was on them to establish to a high standard that strike out was justified. The Court needs to be certain that the claim cannot succeed and it must be so certainly or clearly bad that it should be precluded from going forward.5
[30] Where a lay litigant makes scandalous and potentially vexatious allegations, there is likely to be less scope for an indulgence in affording opportunities to repair an
5 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
untenable claim.6 More particularly, where any form of fraud is alleged as a ground for revisiting court orders, then a plaintiff needs to show a prima facie basis for credible grounds to make out fraud, with a higher obligation to particularise the circumstances than generally applies. In Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd, the Supreme Court observed:7
[32] The rationale for allowing a fraud exception to finality is that it is right that a party who can show that his or her ability to mount an effective case was compromised by the fraudulent conduct of the other party, should not be bound by a judgment which was thereby obtained.
[33] While this rationale exceptionally warrants permitting an unsuccessful litigant to bring a proceeding seeking to reopen a judgment in concluded litigation on the ground it was procured by fraud, it also provides for pre-trial scrutiny of such claims to protect against abuse of that process. So where a defendant in a proceeding involving the fraud exception applies to strike it out, the plaintiff is required to discharge the onus of showing it has a case with an evidential foundation amounting to a prima facie case of fraud. The plaintiff’s claim of fraud must be one that is fully and precisely pleaded and particularised and of sufficient apparent cogency that it should go to trial. Where the claim alleging fraud is based on allegations concerning facts discovered since the judgment concluding the litigation, it must be shown they were not discoverable with reasonable diligence at the time of the previous proceeding. The same requirements of freshness, materiality and cogency that are imposed for admissibility of new evidence on appeal must be met. Evidence that was available at the time of trial, and could reasonably then have been adduced, will only be considered in special circumstances. As well, if the defendant applies to dismiss the proceeding on the ground that the threshold for a claim under the fraud exception is not met, the plaintiff must also respond by promptly submitting probative affidavit evidence which verifies the critical pleaded facts relied on in the proceeding. It has the onus of establishing that the new evidence is such as to justify a new trial.
[31] Although what Mr Iles seeks to re-open here is a consent order rather than a final contested determination, the same principles should apply. As Mr Flinn submitted, one source of authority relied on by Mr Iles for “repealing” the consent order reflecting the terms of the consent memorandum was r 7.51 of the High Court Rules, which provides that a judge may rescind any order that has been fraudulently or improperly obtained.
6 Van der Kaap v Attorney-General (1996) 10 PRNZ 162 (HC).
[32] The same standard applies to plaintiffs making such allegations whether they be represented or lay litigants acting for themselves. The point was well made by the Court of Appeal in Schmidt v Pepper New Zealand (Custodians) Ltd:8
- [15] Allegations of fraud or dishonesty are very serious. They must be pleaded with care and particularity. As the authors of Bullen & Leake & Jacobs Precedents of Pleadings emphasise, counsel must not draft any originating process or pleading containing an allegation of fraud unless they have reasonably credible material which, as it stands, establishes a prima facie case of fraud – that is, material of such a character which would lead to the conclusion that serious allegations could properly be based upon it. Fraud cannot be left to be inferred from the facts – fraudulent conduct must be distinctly alleged and as distinctly proved. General allegations, however strong the words may be appear to be, are insufficient to amount to a proper allegation of fraud.
[16] While these principles have been articulated in authoritative discussions of duties imposed upon counsel, they apply with equal rigour to those who represent themselves. Those who seek to portray themselves as well acquainted with the law and its processes cannot shelter behind the barrier of unfamiliarity when it suits. They must satisfy the same exacting standard when preparing their own pleadings. The obligation exists for the benefit of defendants – to allow them to be fully aware of, and able to address, a serious allegation – and for the Court which will be called upon to decide it.
[33] A plaintiff is generally entitled to an assumption that he or she will be able to make out allegations that are coherent, so long as they have an appearance of credibility and are relevant to a pleaded cause of action. However, that starting point does not preclude the Court rigorously testing the basis for allegations where doubts are raised about their credibility. Counsel for the respondents urged that this was such a case, given the extent of the bitter history between the parties and the pattern of extravagant allegations made by Mr Iles that have not been accepted in other fora. Both Mr Flinn and Ms Carlisle urged me to reject the allegations of fraud against Z, and any suggestion of knowing reliance on that fraud by the second respondent.
The scope of evidence considered
[34] Relatively voluminous affidavits were filed in support of the application for strike out, from Mr Iles in opposition to it, and then in reply. Those exchanges concluded by 13 April 2016. Shortly thereafter, Mr Iles filed a further affidavit, which was opposed as being in reply to affidavits in reply. The respondents (as applicants
8 Schmidt v Pepper New Zealand (Custodians) Ltd [2012] NZCA 565 (citations omitted).
for the strike out) opposed a second round of reply evidence from Mr Iles and that objection was upheld in a ruling by Clark J on 1 May 2018.9
[35] Notwithstanding the terms of the opposition to Mr Iles’ further affidavit, Z completed a further affidavit on 29 May 2018, which counsel sought leave to read at the outset of the hearing the next day. The purpose of the affidavit was not to address any explanation of Z’s conduct, but rather to annex further documents which counsel (recently instructed) considered were relevant to issues arising on the argument of the strike out application. None of the documents attached to the affidavit would have been new to Mr Iles, and he was the author of a number of them.
[36] Mr Iles initially opposed the admission of Z’s further affidavit. For his part, Mr Iles sought leave to adduce an affidavit from Mr Ian McCulloch, solicitor of Porirua, who had acted for Mr Iles for a period leading up to the conduct of the JSC.
[37] After the morning adjournment, I was informed that, as between Mr Iles and Z, agreement was reached that both the affidavits for which leave was sought could be read.
[38] The second respondent was not a party to that arrangement and Ms Carlisle protested on her behalf that the McCulloch affidavit should not be read without her being afforded a reasonable opportunity to respond to it. The second respondent considered that statements by Mr McCulloch were materially incorrect and she was concerned that they not be held against her in any other context, if the affidavit enjoyed status as a document that had been considered by the Court.
[39] I elected to take both affidavits into account. I have done so expressly on the basis that none of the statements by Mr McCulloch can be relied on in any other contexts against the second respondent.
9 Iles v Z HC Wellington CIV-2018-485-62, 1 May 2018 (ruling of Clark J).
No tenable cause of action
[40] The present statement of claim is entirely inappropriate as the foundation for any application for leave to bring a private prosecution for fraud. The proposed form of monetary penalty as an outcome of a successful prosecution is misconceived. As noted above,10 by the end of the hearing Mr Iles had resiled from his intention to pursue any such claim.
[41] I am also satisfied that the terms of the present statement of claim could not form a sufficient basis for prayers for alternative forms of relief that reflect Mr Iles’ complaint as explained at the hearing.
An opportunity to re-plead?
[42] Counsel for both respondents submitted that there was no justification for allowing Mr Iles an opportunity to re-cast his pleadings. For Z, Mr Flinn submitted that, notwithstanding the limitations on the capacity of the Court to determine factual disputes on affidavits, Z could discharge the onus of establishing that Mr Iles’ primary factual allegations were not credible. Ms Carlisle supplemented the attack on the credibility of the allegations from the second respondent’s perspective.
[43] In the course of his discursive submissions, I allowed Mr Iles to demonstrate his version of the circumstances in which the consent memorandum was completed. It can be summarised as follows.
[44] After the parties had confirmed with the Associate Judge that they had settled terms to resolve the disputes triggered by the caveat proceedings, Z went out of the courtroom to another part of the court building and handwrote the content of what became the consent memorandum. As soon as it was presented to Mr Iles, he objected that its content was incorrect. Z apparently made minor changes, the extent of which is apparent from the document as completed, and then insisted that it had to be signed by the others on the terms Z had recorded. Mr Iles claims that he, his wife and their adult daughter all protested on a number of occasions that it was wrong, but they were
10 At [25].
overborne by Z insisting that it be signed before they leave the court building. At one point I took Mr Iles to be suggesting that Z physically blocked their means of exit from the building, but later when he described the foyer area in which it occurred I took him to acknowledge that they were not physically confined.
[45] Mr Iles claimed that when he wanted to take a copy of the terms for consultation with a lawyer, Z refused and physically held on to the document, presenting it to them and insisting that they sign whilst she continued to hold the document in front of them.
[46] During the hearing before me, both Mr Iles and his wife presented as articulate and forceful personalities. During the JSC, they confirmed that they had dispensed with the services of a lawyer and provided a document to Z confirming that their own residence was henceforth their address for service. Mr Iles had allowed the JSC to proceed with him being self-represented. Z was, at the time, a relatively inexperienced practitioner. This is not a case in which Mr Iles claims to have signed the document misunderstanding its effect. To the contrary, his claim is that the errors were immediately apparent and were important, and that he conveyed to Z that the terms were unacceptable.
[47] I consider it barely credible that all three of Mr Iles, his wife and adult daughter were prepared to sign the document in the circumstances as Mr Iles claims they occurred. All three of them legibly printed their names under their signatures, and each added the date. Mr Iles’ daughter added after the printed form of her name “on behalf of M&E Property Limited”. Each of them also initialled the first page recording the terms of the agreement. Those details are hardly suggestive of reluctant signatories forced to sign while the other party held the document out in front of them.
[48] Z denies entirely the circumstances of execution as alleged by Mr Iles. She deposes that the terms she drafted were those agreed before the Associate Judge. She denies falsifying or altering the terms of the consent memorandum, or any element of pressure in obtaining the signatures of the others to it.
[49] Mr Flinn characterised Z’s evidence as describing the consent memorandum being drafted in the presence of the Judge. I read Z’s description of that as referring to the terms having been agreed, not necessarily the handwritten recording of them.11 Certainly, Mr Iles’ recollection was that the document was drafted by Z after the Judge left the parties alone to record the agreement that they had orally confirmed to him.
[50] There is a discrepancy over the length of the JSC. Mr Iles’ statement of claim alleges that it concluded around 2.30 pm, whereas the Judge’s minute recorded it as concluding at 4.05 pm. A possible rationalisation is that agreement was reached at the earlier time, with the matter being treated by the Court as resolved when the parties provided the consent memorandum.
[51] Another uncertainty about events at the conclusion of the JSC is the way in which the consent memorandum became reflected in the terms of a consent order issued by the Court. Mr Iles claims that he was not advised of Z’s intention to take that step. The point does not have the materiality he attributed to it because an informal record of the terms of settlement such as the consent memorandum in this case would, in any event, be a sufficient basis on which to enforce those terms. Whilst parties understandably prefer to have terms agreed at a JSC reflected in a consent order of the Court for ease of subsequent enforcement, the absence of a Court order does not prevent enforcement of terms recorded informally as they were here.
[52] Doubt about Mr Iles’ claimed ignorance of the preparation of a consent order is raised by the additional words endorsed on the foot of the cover page of the copy of the consent memorandum included in Mr Iles’ casebook of 22 May 2018:
1 x Original – [Z] ) By hand 1 x Duplicate to M Iles ) 12/6/2013
[53] The reference to “Duplicate” is used by the Court Registry to refer to duplicates of formal documents issued by the Court. This raises the prospect that this endorsement records the provision to Mr Iles of a duplicate of the consent memorandum.
11 Z’s affidavit in reply, 10 April 2018 at [7].
[54] The consent order was sealed and dated the same day and records that it relies on the terms of the consent memorandum and on the application of all of those who signed it.
[55] I can take judicial notice of the practice of the Registry that the date endorsed on the sealed order reflects the date from which the order is operative, not necessarily the date on which the document was sealed. What can safely be inferred is that a copy of either the consent memorandum or the formal order was provided to Mr Iles so that he had a record of its terms from the time it was completed, or shortly thereafter.
[56] An important aspect of the respondents’ challenge to the credibility of the claim Mr Iles now wants to pursue is his failure to raise it in the intervening period from June 2013 to January 2018, during which time he has taken numerous aggressive initiatives to criticise Z. The present claim would be important to, and an integral part of, the complaints and concerns he has pursued.
[57] First, there is the absence of any formal protest to the Court, immediately after the consent memorandum was signed, that Mr Iles had been pressured to complete it on false terms. The Court file in the caveat proceeding in which the JSC was conducted records Mr Iles participating in a telephone conference before Ronald Young J on 7 October 2013 at which it was accepted that those proceedings were at an end. That would have been an obvious opportunity for Mr Iles to protest that the record of settlement did not comply with the terms actually agreed. At the hearing before me, Mr Iles claimed he had no recollection of participating in the telephone conference.
[58] In August 2013, Mr Iles lodged a complaint with the New Zealand Law Society against Z, in vitriolic terms. He contended that Z was guilty of negligence, deliberate perjury, acting in conflict of interest, and had altered land transfer consent forms. The detailed complaint alleged Z had used affidavits containing lies to dispossess Mr Iles and his wife of properties. He also complained that Z misrepresented to the Associate Judge that Z was acting only on instructions from Mrs Shirtcliff, when that was “a deliberate lie, stated to pervert the course of justice”. Implicitly, his complaint was that Z should have acknowledged she was also acting for
Mrs Shirtcliff’s daughter. The third aspect of Mr Iles’ complaint was that during the JSC in June 2013, Z rang Mr Iles’ bank or the bank’s lawyers seeking information about Mr Iles’ bank accounts or mortgages. Mr Iles had not given her permission to do so and he implied that it amounted to work being done in his name, creating a conflict of interest and an invasion of his privacy. Mr Iles sought some sort of action against Z and reparation for the alleged breaches.
[59] After investigating the complaints, including a response by Mr Iles to Z’s explanation for the matters complained of, in December 2013 the Law Society Standards Committee found that there was no basis for the complaints, that they had not been made in good faith and did not warrant further action.
[60] I accept Mr Flinn’s point that, in focusing on Z’s conduct at the JSC, Mr Iles’ 2013 complaint addressed an incidental aspect that is not nearly so significant as the allegation now advanced. Checking the state of indebtedness on Mr Iles’ mortgage from the BNZ was relevant to the caveat proceedings. In May 2013, Mrs Shirtcliff had been given notice by solicitors for the BNZ of default on the terms of the mortgage. That was conveyed to her because of her caveat lodged against the Webb Street property. It is understandable in those circumstances that, as an aspect of calculating amounts at stake in the course of the JSC, the solicitor representing a caveator would check the current status of a mortgage registered in priority to that caveat. More importantly, the consequences of that action pale into insignificance compared with the misconduct now alleged against Z of forcing Mr Iles, his wife and adult daughter to commit to a record of the terms of settlement that were dramatically different to what had been agreed before the Associate Judge. There is no satisfactory explanation as to why Mr Iles did not pursue the complaint he now raises with the Law Society two months after he was allegedly coerced into doing so.
[61] Mr Iles took steps to challenge the administration of Mrs Shirtcliff’s estate by the second respondent. In April 2016, he filed an affidavit in those probate proceedings which included the following narrative:
[62] This was an aspect of Mr Iles’ claim at the time that the second respondent and possibly also Z were asserting that he and/or MEP had received two loans from Mrs Shirtcliff. Although intended to achieve the same aim of denying liability to repay the $40,400, which sum had been advanced in 2007 and receipt of which was acknowledged in the 2009 property sharing agreement, the contention in the 2016 dispute was inconsistent with the claim Mr Iles now seeks to advance. Had he believed the circumstances of completion of the consent memorandum were as he now claims, then the narrative in his 2016 affidavit would instead have complained that the consent memorandum did not reflect the agreement made during the JSC because the single advance from Mrs Shirtcliff to his interests was repaid by Mrs Shirtcliff taking all the proceeds of sale of the Webb Street property.
[63] Mr Iles did not provide any credible explanation for this fundamental inconsistency.
[64] The extent of proceeds of sale of the Webb Street property, and their character as a repayment of the loan to Mrs Shirtcliff (as claimed in [11] of the affidavit quoted at [61] above), appears inconsistent with the settlement statement prepared by
Mr McCulloch, Mr Iles’ solicitor who attended to settlement of that transaction. After deduction of both the conveyancing costs incurred on that transaction and outstanding costs owed by Mr Iles for unrelated legal work, the net proceeds accounted for in the settlement statement were some $33,000.
[65] Mr Iles thought accounting to Mrs Shirtcliff for that amount was appropriate. If settlement on those terms had not been challenged, she would have received some
$7,000 less than the advance. Even after a Court order confirming that Mr McCulloch was not entitled to deduct Mr Iles’ prior costs, the net proceeds for which Mr McCulloch would have accounted to Mrs Shirtcliff were in the region of $44,000, modestly more than repayment of the interest-free advance of $40,400.
[66] From Z’s perspective, the parties agreed the net proceeds should go to Mrs Shirtcliff because she was assuming liability to deal with the ANZ mortgage over the Aspiring Terrace property that was then in arrears, and other liabilities that might arise in respect of that property. That analysis raises a doubt that the net proceeds of that property may not have been sufficient to completely repay the $40,400 loan if the mortgage arrears and any other liabilities exceeded about $3,600. In any event, there is a material discrepancy between the accounting for proceeds in the settlement statement, and Mr Iles’ claim in his 2016 affidavit that Mrs Shirtcliff’s estate received around $50,000.12
[67] The requirement acknowledged in Redcliffe for allegations of fraud to be fully and precisely pleaded and for the evidence to be fresh, material and cogent is well- justified in this case. The longer the lapse in time between the alleged fraud (using the term in the wide general sense) and the attempt to reverse the effect of a court order (or indeed terms of settlement of litigation), the more difficult it is for those seeking to uphold the court order or terms of settlement to reconstruct their version of events consistent with the document being challenged.
[68] If Mr Iles had raised his present claim when Ronald Young J convened a telephone conference to review matters in anticipation of discontinuance of the proceeding, the stark difference between the terms of the settlement and what is now
12 Mr Iles affidavit, quoted at [61] above.
claimed could have been identified and the difference investigated. Even if I was persuaded that a tenable factual foundation existed for the type of claim Mr Iles attempted to articulate during argument, I am not satisfied that the evidence for such a foundation would meet the requirement of being fresh, material and cogent.
[69] A potentially more fundamental obstacle is that, even if that requirement was satisfied, I am not persuaded that there is any tenable foundation in fact. The inconsistencies in Mr Iles’ conduct since June 2013 are too great to enable a credible foundation to be laid for the different challenge he now wishes to pursue.
[70] In this assessment, I am bound to have regard to the legitimate interests of the respondents. If the Court were to afford Mr Iles an opportunity to re-plead, both respondents would inevitably be required to commit additional resources to responding to it. They have already had to deal extensively with Mr Iles’ numerous initiatives, all of which appear to have been pursued in vitriolic terms without regard for the reputations or feelings of those accused by him of wrongdoing. In the circumstances of this case, I am satisfied they should not be required to respond to another round of such behaviour from Mr Iles.
Result
[71] I accordingly strike out the claim in its entirety.
Costs
[72] Both respondents have sought costs on an increased or indemnity basis. They cite the extensive campaigns that Mr Iles has waged against them since at least 2013, and the lack of any credible foundation for a claim which would depend on an inconsistent version of events from that which Mr Iles has asserted previously. They cite also the intemperate language and confusing nature of the allegations which have made analysis of the statement of claim more time-consuming than would otherwise be the case.
[73] I did not hear from Mr Iles on costs. It is appropriate to afford him an opportunity to do so. I indicate my provisional view that neither respondent can make
out a case for indemnity costs. However, I do consider that the manner in which the proceedings have been advanced has added unnecessarily to the task for the respondents in rationalising grounds for strike out applications, and that increased costs at scale 2B plus 50 per cent for the steps involved could well be warranted.
[74] I direct that Mr Iles have a period of 15 working days after delivery of this judgment to file a memorandum opposing costs. Such memorandum is to be limited to five pages.
[75] Both respondents will have a period of 10 working days after service on them of any memorandum from Mr Iles in which to respond, including advancing arguments for costs on a different basis. The same limit on length would apply.
Dobson J
Wotton & Kearney, Wellington for first respondent Holland Beckett, Tauranga for second respondent
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URL: http://www.nzlii.org/nz/cases/NZHC/2018/1396.html