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High Court of New Zealand Decisions |
Last Updated: 7 December 2018
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
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CIV-2016-409-1004
[2018] NZHC 2896 |
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BETWEEN
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KI COMMERCIAL LIMITED
Applicant
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AND
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CHRISTCHURCH CITY COUNCIL
Respondent
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Hearing:
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29 October 2018
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Appearances:
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J S Angland for Applicant
M K Prendergast and E K Osborne for Respondent
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Judgment:
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8 November 2018
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JUDGMENT OF NICHOLAS DAVIDSON J
[1] This judgment addresses the correct jurisdiction for an application by KI Commercial Limited (“KIC”) for the recall of a judgment delivered by the High Court on 23 May 2017.1
[2] That judgment was given on an appeal against a decision of the Independent Hearings Panel relating to provisions of the Proposed Christchurch Replacement District Plan, now operative, which KIC said adversely impacted on it, in error of law. The judgment was adverse to KIC. KIC says that the Judge had a conflict of interest in hearing the appeal, and/or that there is a perception of bias, because her former legal firm acted against Mr Paul Keung and companies he was involved in, including Goose
1 KI Commercial Ltd v Christchurch City Council [2017] NZHC 1076.
KI COMMERCIAL LIMITED v CHRISTCHURCH CITY COUNCIL [2018] NZHC 2896 [8 November 2018]
Bay Ranch Ltd in Kaikoura. Mr Keung is Chief Executive Officer (“CEO”) of KIC, but not a director or shareholder. He is the settlor and appointor of the Trust which owns KIC.
[3] The Christchurch City Council (“the Council”) appears under protest and says the Court has no jurisdiction to hear the application. The judgment for which recall is sought was the subject of an application by KIC for leave to appeal to the Court of Appeal, which declined leave on 10 November 2017.2 The Council says this Court is functus officio, and if KIC wants to pursue the recall application it should do so under Part 2 of the Court of Appeal (Civil) Rules 2005.
[4] The application for recall is to be called before the Judge after 26 November 2018, and timetable orders have been made. Counsel agreed that the jurisdictional issue should be heard by another Judge of this Court. If, by this judgment, I too held that the High Court has jurisdiction to consider the application for recall, it would proceed under timetabling orders made on 3 September 2018, or as varied. If the Court of Appeal is the correct court to hear the application, the timetabling orders to be vacated.
Background
[5] The question of recall arose long after judgment was delivered. The judgment has not been sealed, although it was taken to the Court of Appeal on the declined application for leave to appeal.
[6] Mr Keung, by affidavit, tracks the history of KIC, and other litigation, including his adjudication in bankruptcy. The Keung Investment Trust (“the Trust”), owns 100 per cent of the shares in KIC, and as sole director of Keung Investments Limited, Mr Keung instructed Buddle Findlay, solicitors, to act for him and his family interests.
[7] Mr Keung says his family interests were represented by Buddle Findlay while the Judge was practising in that firm. While she was a partner in Buddle Findlay, the
2 KI Commercial Ltd v Christchurch City Council [2017] NZCA 480.
firm issued a statutory demand against Keung Investments Limited for outstanding fees.
[8] Then in 2007, Buddle Findlay acted on behalf of the Koulanov family on the purchase of the Keung family home in Lansdowne Valley. Mr Keung says that someone else took over directorship of KIC as he was subject to a “litigation offensive” by other clients of Buddle Findlay. Proceedings were issued by GBR Investment Limited (“GBRI”) through Buddle Findlay against Mr Keung and Keung entities in 2009. In September 2009, Mr Keung sought an order to restrain Buddle Findlay from acting for GBRI in its claim against him for $2.9m plus interest. He swore an affidavit saying that Buddle Findlay “got to know him” and used that knowledge in legal proceedings, against Keung interests. That application failed but Mr Keung says confidential information held by the firm was used against him.
[9] There were other matters involving Buddle Findlay, not directly connected to the Judge. In short, Mr Keung is very much at odds with Buddle Findlay, and certain of its partners, but not the Judge personally.
[10] Mr Keung was bankrupted in September 2010 on the application of GBRI and again Buddle Findlay acted for that company. This is at the heart of the issue of recusal, as discussed below. Some of Mr Keung’s interests directly and indirectly were liquidated following a without notice application by GBRI through Buddle Findlay against Goose Bay Ranch Holdings Limited (“GBRH”) and associated companies, and he says he and the Family Trust have lost much as a result. He was the personal guarantor of GBRH.
[11] The Trust is a stakeholder in commercial properties at 9-13 Bernard Street (the “Bernard Street properties”) which Mr Keung manages. He was KIC’s key witness on the Plan appeal to this Court, and represented its interests as CEO. He had been a witness before the Independent Hearings Panel. KIC has been at odds with the Christchurch City Council for years over resource consent and re-zoning issues, and it had issues with Buddle Findlay when it acted for the Council. A building consent was cancelled in 2014 and the reasons for that form the basis of the claim by KIC
against the Council. The appeal before the Judge related to the re-zoning of the Bernard Street properties following the Christchurch earthquakes.
CIV-2010-409-000835
[12] In 2017 an aspect of the insolvency proceedings were scheduled to be heard before the Judge, but she raised her apparent conflict of interest and a Minute to that effect was issued:
[1] This matter was scheduled for a formal proof hearing at 10.00 am today to seek an order under s 238 Insolvency Act 2006 to cancel the creditor’s claim of GBR Investment Limited admitted in Mr Keung’s bankruptcy. The ground on which the application was made was that “the claim was improperly admitted.”
[2] Much more recently, on 24 May 2017, a number of parties, including Mr Keung and GBR Investment Limited, signed a deed of settlement which is said to have effected a full and final settlement of all issues between the parties to the deed and under which GBR Investment Limited withdrew all its claims in Mr Keung’s bankruptcy, including by retrospective rescission of those claims.
[3] As the Judge scheduled to hear this matter, I only had the opportunity to review the file this morning. It was immediately apparent to me that my former firm, in which I was a partner, Buddle Findlay, acted for GBR Investment Limited in seeking Mr Keung’s adjudication.
[4] In my view, because the present application is seen as an important step in Mr Keung seeking to annul his adjudication, it is important that all decisions made are made by Judges who have no apparent conflict of interest. My concern, as I explained to Mr Angland, was that given my firm’s involvement in Mr Keung’s adjudication, that was not possible. I proposed an alternate date of 24 April 2018 at 10.00 am before Mander J. After taking instructions from Mr Keung, Mr Angland concurred.
[5] Accordingly, this matter is adjourned to be heard on 24 April 2018 at
10.00 am.
[13] This identification of conflict led Mr Keung to reflect, and he says that the reasons for recusal apply equally to the Plan appeal which came before Her Honour.
Jurisdictional issue for this judgment
[14] This judgment is concerned only with whether the recall application should be heard in the High Court or in the Court of Appeal. The application for recall also seeks an order that the appeal be reheard by another Judge.
Submissions for KIC
[15] Mr Angland says this Court should hear the application and that it is settled law that a party to judgment is entitled to have it set aside as of right if bias is substantiated, as in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue.3
[16] The conflict of interest founds the bias alleged by KIC. Bias for these purposes means actual or apparent bias, but logically in this case can only be apparent bias, by an association with Buddle Findlay, not personal to the Judge.
[17] Mr Angland says that although Ben Nevis and Lamb v Attorney-General4 hold that the High Court’s jurisdiction is ousted after an appeal judgment or decision declining leave to appeal, there is good cause for the application to recall being heard in this Court. He says Lamb is distinguishable as judgment had been sealed before the recall application was filed. Here, the judgment has not been sealed. He refers to R v Smith, which involved allegations of presumptive bias where it was held that the Court has inherent power to revisit decisions in exceptional circumstances, in the interests of justice.5 Mr Angland relies on Greymouth Petroleum Limited v Solicitor-General6 as authority for the proposition that allegations of bias should be heard by the Judge against whom the allegation is made. He submits that is so even though Her Honour’s judgment was the subject of the application for leave to appeal to the Court of Appeal. Because the Court did not rule on the merits of the appeal, unlike Saxmere Company Limited v Wool Board Disestablishment Company Limited,7 Mr Angland submits that judgment is also distinguishable.
4 Lamb v Attorney-General [2018] NZCA 257.
5 R v Smith (CA) [2002] NZCA 335; [2003] 3 NZLR 617 (CA).
7 Saxmere Company Limited v Wool Board Disestablishment Company Limited [2008] NZSC 94.
Submissions for the Council
[18] Mr Prendergast and Ms Osborne submit that the High Court has no jurisdiction to recall the judgment as the appeal judgment is the last word and remains such unless that Court directs otherwise.
[19] They put the issues for judgment as:
(i) Does the Court have jurisdiction to recall a judgment based on allegations of bias raised post judgment?
(ii) If it does have jurisdiction, is that overtaken by disposition on appeal?
[20] They refer to the application for leave to appeal to the Court of Appeal by KIC, alleging two errors of law of the Independent Hearings Panel (down from nine errors alleged on appeal to the High Court). The Court declined leave to appeal on these two questions and ordered KIC to pay costs and disbursements.8 That judgment was sealed on 12 November 2017. On 3 August 2018, KIC filed the application for recall of the High Court judgment, some 15 months after it was delivered.
[21] A Judge may recall a judgment at any time prior to it being sealed (High Court Rule 11.9). If it is not sealed there are three established categories for recall, but only the third is relevant: “some other very special reason justice requires that the judgment be recalled”. That is a narrow category, as the “very special” degree demonstrates, and there are no precedents for alleged bias being raised post judgment in this context. This is likely to be because a party or the Judge will have recognised the issue of bias at the time the case was heard.
[22] Mr Prendergast and Ms Osborne submit it would be anomalous if there is jurisdiction to address allegations of bias raised post judgment, as an aggrieved litigant could seek recall on that basis in many circumstances. It is also anomalous when the allegation could have been raised at the outset of the proceeding. The detail of
8 KI Commercial Limited v Christchurch City Council, above n 2.
Mr Keung’s disenchantment with Buddle Findlay shows that he knew at the time of the Plan appeal in this Court of the very things of which he now complains.
[23] An application for leave to appeal to the Court of Appeal can be filed or a fresh appeal be commenced on the basis that judgment was obtained in breach of natural justice. This established exception is submitted for the Council to be available in this case, and the fact that it exists stands in the way of this Court having jurisdiction to recall.9
[24] Mr Prendergast and Ms Osborne rely on Saxmere for the proposition that bias raised post judgment should be dealt with on appeal. In Saxmere, that company raised allegations of bias after judgment and after it had been declined leave to appeal, when it filed a second application for leave to appeal. Saxmere obtained information which it considered gave rise to an appearance of bias on behalf of one of the Court of Appeal judges. The Court gave leave for a ground of appeal as to whether the Court of Appeal judgment should be set aside because of a reasonable apprehension of bias resulting from a Judge’s relationship with counsel for the appellant in that Court.
[25] Mr Prendergast and Ms Osborne submit that KIC’s reliance on Greymouth Petroleum is misplaced, as while that case is authority for the proposition that the recall jurisdiction can be exercised where there are allegations that the decision maker is biased, the facts are distinguishable. There McKenzie J recalled his judgment and ordered a re-hearing before a different Judge because an application for his recusal had been filed following a hearing and prior to delivery of judgment, unbeknown to the Judge. The application had been filed and not dealt with, so there was a risk that justice may not have been seen to have been done. Distinguishing Saxmere on the basis judgment had not been delivered, the Judge recalled his judgment and directed a re-hearing.
[26] Counsel further submit that while it is clear from Ben Nevis that a judgment
may be set aside as of right where there are bias allegations post judgment, that case
was based on a possible breach of natural justice, particularly the right to an impartial decision maker, and the judgment was capable of being categorised as a nullity. The Court held that jurisdiction was ousted if the judgment had been taken on appeal. Katz J said:10
In my view, the more appropriate procedural course is for post-trial bias allegations to be raised by way of appeal (as discussed at [21] – [25] above) rather than by endeavouring to have the first instance decision set aside on nullity grounds. The nullity exception is more appropriately applied in cases of obvious and egregious procedural deficiencies not requiring lengthy argument, let alone detailed pleadings.
[27] The judgment of Katz J was upheld by the Court of Appeal.11 The Court did not accept the argument for Ben Nevis that an alleged breach of natural justice should be determined by the Court that deals with putting the matter right:12
... we do not see [Ben Nevis’ submission] as necessarily indicating that the appropriate venue for an application for the judgment to be set aside is the trial court. It may be so if there were no other alternative available, but we do not consider that there is any doubt that there is another venue available, being the Court that finally determined the matter, in this case the Supreme Court.
[45] We see that conclusion as consistent with the way the Court of Appeal of England and Wales dealt with the similar situation that arose in Taylor v Lawrence. The Court of Appeal was clear that it had jurisdiction to deal with the bias allegation, and did not even refer to the possibility that the allegation ought to have been raised in the County Court, where the original decision had been made. Applying the logic of Taylor v Lawrence to the present situation, we consider that the application for the re-opening of the Supreme Court appeal, so that the Supreme Court can determine the appropriate mode of dealing with the matter if it considers that there is any substance to the bias claim. We therefore reach the same conclusion as Katz J on this issue.
[28] Mr Prendergast and Ms Osborne submit that if the High Court had jurisdiction to consider the application for recall based on post judgment allegations of bias, once the appeal is determined that brings an end to that jurisdiction, and the High Court is functus. Recall must be of the Court of Appeal’s judgment.13 That position is supported by the Court of Appeal in Lamb.14
10 Ben Nevis Forestry Ventures Limited, above n 3 at [30].
12 At [44].
13 Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2014] NZCA 350.
14 Lamb v Attorney-General, above n 4.
[29] An aggrieved party’s rights are not undermined if they have to take their case to the appellate court. Counsel cite further from Ben Nevis:
[47] We do not see this as matter of concern. The appellate court would be asked to recall its judgment or to entertain a new appeal or application for leave to appeal and would deal with the application in accordance with its normal procedure. If grounds for setting aside the judgment of the lower court are established, the appellate court could reopen the appeal or grant leave to appeal and deal with the point. Its powers would include setting aside the lower court’s judgment. We do not think that is any serious risk an appellate court would refuse to deal with a meritorious application for recall in these circumstances. But, just as the High Court would, it will dismiss any abusive applications. Unlike the High Court, it will not then be subject to further challenge on appeal.
[48] The approach also has the benefit that allegations of bias are dealt with by the appellate court rather than by a fellow trial judge of the judge against whom the allegation is made.
[30] Mr Prendergast and Ms Osborne submit that to grant the orders sought would effectively mount to a recall or variation of the Court of Appeal’s judgment.
Discussion
[31] In the course of argument, the issue of conflict (and potential bias) surfaced in another way. While I did not recognise Mr Keung, who was sitting in court, I recalled that Mr Angland instructed me as counsel some years ago in connection with a dispute involving Goose Bay Ranch. Neither he nor I could remember much of what I did, if anything, but recognising that the issue for this judgment is one of jurisdiction, both KIC and Mr Keung for his part consented to my hearing argument, as did the Council.
[32] The underlying basis of the application for recall rests on a somewhat unusual proposition. The Judge, who has been asked to recall her judgment on the basis that she should have recused herself on the Plan appeal, immediately identified a conflict when the insolvency proceeding came before her. Mr Angland says Her Honour should have done the same on the Plan appeal, which can only mean at the time the appeal was heard, or before.
[33] Reaching that conclusion involves a good deal more analysis than simply referring to the Judge’s prompt decision that she would not deal with the insolvency related proceeding. I have considered this on the material before me. While
Mr Angland says that the narrative set out by Mr Keung in his affidavit is not necessary for argument because if the Judge recused herself on one occasion, she should have done so on another, that does not necessarily follow as a recusal may be based on a specific concern about a perception of bias in one setting, which may not be apposite in a different setting.
[34] It is also one thing for a judge to recuse her or himself from hearing a matter, and another to exercise the power to recall based on what should have been a recusal, after judgment.
[35] I find no attraction in the argument that a sealed or unsealed judgment should dictate the answer here. The question is whether in the administration of justice the Judge should have heard the appeal. That is an issue which should be determined, not on a technicality such as sealing of judgment. What the Judge has to say about the contention that she should have recused herself on the Plan appeal is unknown except to the extent of recusal from the insolvency formal proof hearing.
[36] There may be a factual challenge to what Mr Keung says but at this stage two factors stand out, already mentioned. First, there was it seems no challenge to the Judge sitting on the Plan appeal. The same facts must have been known then to Mr Keung about the Judge’s practising in Buddle Findlay. The second is the straightforward and proper recusal in the insolvency matter, as Her Honour plainly did see that as a reason to recuse herself, in that particular context.
[37] This judgment is concerned only with jurisdiction and does not address, except by way of these observations, the merits of the application for recall. In one respect, I would rather have reached a contrary view, that this Court retains jurisdiction to consider the merits of recall, as High Court Judges are required to do from time to time, either of their own volition or when asked to do so. A Judge has a duty to address recusal and recall according to well established principles, as to his or her own knowledge of the facts, and relevant principles.
[38] There are sound reasons Her Honour recused herself on the insolvency proceeding. It is an issue for the Court of Appeal, but those reasons may not apply on
the Plan appeal. Mr Keung’s case is essentially the history between his family and Buddle Findlay, but that on its own is not enough. In the insolvency proceedings, Mr Keung’s personal affairs were at issue, and as the Judge said, her firm had been involved in an important step along the way to his being adjudicated bankrupt. The zoning dispute involved KIC, not Mr Keung as an individual, and his name is not mentioned in the judgment on appeal. The Plan appeal was restricted to allegations of errors of law on the part of the Council, and as such issues of weight and discretion where conscious or subconscious bias are most likely to creep in, were not relevant. Unlike the insolvency proceedings, there is no step in the background to the zoning dispute where the Judge is said to have been directly involved – any objection to her hearing the case is much more general.
[39] The fact that Mr Keung did not ask that the Judge recuse herself on the Plan appeal suggests a dissimilarity between the two sets of proceedings. Seeking retrospective recusal now gives the appearance of opportunism to relitigate the Plan appeal. Again, that is a matter for the Court of Appeal which will have in the first place no more information than what is reflected in this judgment and the pleading. The Court of Appeal will, I expect, reflect on the fact that there was nothing said about conflict or bias on behalf of Mr Keung’s interests on the Plan appeal, nor did the Judge advert to there being any such.
[40] I conclude that the application for leave to appeal was determined by the Court of Appeal on the merits as it concluded neither of the two errors of law was arguable. That is an end to it, and the High Court has no further role unless directed to do so by the Court of Appeal. For the High Court now to address recall would undo the Court of Appeal leave judgment, which meant that the High Court judgment should stand. Mr Angland explained that KIC decided to come to the High Court so the Judge could address the issue of recall and recusal. However, the principle of finality, the resolution of the proceedings in the Court of Appeal, and the authorities referred to, make it clear that the application for recall should be addressed in that Court.
Disposition
[41] I conclude that this Court does not have jurisdiction, and should not determine whether the judgment should be recalled unless the Court of Appeal so directs. An application for leave should be made in the Court of Appeal if KIC wants to pursue the recall.
Costs
[42] Costs are reserved.
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Nicholas Davidson J
Ronald W Angland & Son, Leeston Simpson Grierson, Christchurch
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