New Zealand Law Society - Courts roundup 29 September - 5 October 2022

Courts roundup 29 September - 5 October 2022

Decisions, proceedings and news from the courts in some common law jurisdictions in the past week.

Auckland High Court 2

New Zealand Supreme Court

Family law, care of children

Newton and anor v Newton and ors [2022] NZSC 112 (27 September 2022)

Unsuccessful leave application - In June 2017, L, maternal grandmother of two children, applied to Family Court for parenting order granting her regular contact with children - Children’s father and stepmother (N) opposed application - At November 2017 issues conference FC judge ordered psychological report on children be obtained under s 133 Care of Children Act 2004 – N sought judicial review of order and related matters - Resulted in protracted litigation involving three HC judgments, further DC issues conference and CA judgment which N sought leave to appeal to SC –

SC said appeal on interlocutory matter – SC could not grant leave unless satisfied necessary in interests of justice to hear and determine proposed appeal before proceeding concluded - Stressed children’s interests first and paramount consideration - Decisions affecting them should be made in timely manner - Questions about when and how children’s views should be taken into account under Care of Children Act arguably matters of general or public importance - Not appropriate case to consider issue - CA already directed matter be referred back to FC for fresh consideration - Other proposed grounds did not raise any issues of general or public importance - No risk of substantial miscarriage of justice - In any event, arguments had insufficient prospects of success – Application dismissed.

Taxation, tax avoidance

Frucor Suntory New Zealand Ltd v Commissioner of Inland Revenue [2022] NZSC 113 (30 September 2022)

Unsuccessful appeal, successful cross-appeal – 4 Judge majority decision – In March 2003, Deutsche Bank advanced $204 million to Danone Holdings NZ Ltd (DHNZ) in exchange for convertible note redeemable at maturity in five years’ time at Deutsche Bank’s election by issuing 1,025 non-voting shares in DHNZ - Interest on advance (often referred to in documents as “coupons”) payable semi-annually in arrears at 6.5 per cent per annum - DHNZ claimed tax deductions for interest payments, treatment that followed form of transaction between it and Deutsche Bank – Transaction component of broader funding arrangement –

Section BG 1(1) of (now repealed) Income Tax Act 2004 said tax avoidance arrangement void as against Commissioner for income tax purposes – Section OB 1 defined Tax avoidance to include “directly or indirectly altering the incidence of any income tax” -

Commissioner’s position, among other things, that funding arrangement purported to alter incidence of DHNZ’s liability to income tax by facilitating claim of deductions for payments which were, in substance, repaying debt - Frucor Suntory New Zealand Ltd (Frucor Suntory) successor to DHNZ and responsible for its liabilities – Its position throughout that s BG 1(1) not engaged and interest deductions DHNZ claimed were legitimate –

Appeal concerned only deductions DHNZ claimed for 2006 ($10,827,606) and 2007 ($11,665,323) income years, along with shortfall penalty assessments premised on contention that DHNZ adopted unacceptable and abusive tax positions –

HC upheld Frucor Suntory’s challenge - CA allowed Commissioner’s appeal on disallowance of deductions but not shortfall penalties - Both sides appealed to SC – SC said, among other things, since purpose and effect of tax avoidance arrangements were to provide deductibility for what in economic substance were repayments of principal, Commissioner correctly applied s GB 1(1) to adjust DHNZ taxable income - SC dismissed Frucor Suntory’s appeal and allowed Commissioner’s cross-appeal.

New Zealand Court of Appeal

Civil procedure, leases, limitation of actions

Beach Arena Ltd v Waikoro Ltd [2022] NZCA 454

Claim for monies due under a lease signed in Dec 2012 – Appellant filed statement of defence and counterclaim partly relying on alleged misrepresentations inducing the lease but High Court (HC) struck out parts on basis claims were barred by the Limitation Act 2010 – Ambiguity in pleading – Whether HC correct in stating that no application for relief under s50(2) had been made prior to the issue of the judgment finding that a defence to appellant’s ancillary claim had been established – HELD: proposed amended defence and counterclaim did not overcome fundamental difficulty that appellant had knowledge of sufficient facts to pursue its misrepresentation claim more than 6 years before the defence and counterclaim filed – No application for order under s50(2) made before it was ruled on – Appeal dismissed.

Civil procedure, employment law, recall

Attorney-General v Fleming [2022] NZCA 461

Application to recall leave decision – F obtained declaration from Employment Court (EC) that she was an employee of the Ministry of Health because she was providing full-time care for her disabled adult son, the Ministry was aware of that fact, and the work was for the Ministry’s benefit – EC declined to impose a penalty – Parties appealed – Leave to appeal refused in respect of one question because Court of Appeal (CA) not satisfied it raised a question of law – Application for recall on the basis that Labour Inspector v Southern Taxis Ltd (CA) was inconsistent with the approach signalled in the leave decision – Southern Taxis decision delivered shortly after the leave decision in this case – HELD: fact Southern Taxis was concerned with different provisions in the Employment Relations Act 2000 did not necessarily mean it had no relevance – Conclusion reached in Southern Taxis had potential application to determination of the basis for liability under other provisions in the Act – Application for recall granted and judgment reissued adding grounds to F’s cross-appeal.

New Zealand High Court

Sentencing, murder, threatening to kill

R v Kaitai [2022] NZHC 2438 (23 September 2022) Muir J

Sentencing – K sentenced after being found guilty following jury trial for  murder and threatening to kill - Both charges involved same victim - Two days after altercation between K and victim, when K brandished firearm at victim and threatened to kill him, K visited address where victim socialising with associates - Victim approached K to confront her - Responding to seemingly modest provocation K revealed concealed firearm, loaded it and told victim to get back – Victim attempted to grab firearm, but K pulled it up - She then aimed at victim's torso and fired -
HC said offending circumstances could not displace presumption of life imprisonment - Nine-month discount applied to MPI starting point reflected mitigating factors personal to K including remorse and contents raised in s 27 report - Final MPI 10 years nine months - Concurrent sentence one year imprisonment for threatening to kill - Order for forfeiture and destruction of firearm; to lie in Court for two months pending exercise of any appeal rights.

Sentencing, murder

R v Filoa [2022] NZHC 2461 (27 September 2022) Harvey J

Sentencing – F found guilty of murder after jury trial - Sentenced to life imprisonment with MPI 10 years six months – HC said presumption against life imprisonment not displaced - F shot victim twice when drug (deal?) went wrong - MPI starting point 11 years - Six months discount for personal circumstances.

Interim stay order, prisoner transfer

Wallace and ors v Chief Executive Department of Corrections [2022] NZHC 2464 (27 September 2022) Grice J

Unsuccessful urgent application for interim orders staying proposed transfer of prisoners at Arohata Women’s Prison (Arohata), near Wellington, to other prisons, pending substantive judicial review application - Substantive application focused on Chief Executive decisions and actions leading to decision to transfer women from Arohata to accommodate women remand prisoners –

HC said repercussions, public and private, of granting interim relief weighed heavily against granting relief – Application dismissed.

NZBORA, damages for breach of, Three Strikes

Fitzgerald v Attorney-General [2022] NZHC 2465 (27 September 2022) Ellis J

Successful claim for damages under NZBORA - F wrongly spent over four and a half years in prison following what SC said was misinterpretation of statutory provisions governing sentencing of “third strike” offenders – SC said seven year sentence imposed following his conviction for indecent assault breached his fundamental right to be free from grossly disproportionate punishment, as confirmed by s 9 New Zealand Bill of Rights Act 1990 (NZBORA) – F resentenced to six months' imprisonment, which would have entitled him to release after three - By time he was resentenced had already spent some 1789 days (59 months) in prison - He therefore brought proceedings seeking damages for breach of right not to be arbitrarily detained under s 22 NZBORA – In another case SC said judicial acts (such as sentencing) could not found claim under NZBORA – Consequently, F’s challenge focused on Crown Prosecutor’s decision to lay indecent assault charge –

HC said Crown prosecutor, when acting in that capacity, was state "actor" for s 3 NZBORA purposes – Also exercising prosecutorial discretion governed by Solicitor-General's Prosecution Guidelines, which had force of law under s 188 Criminal Procedure Act 2011 -  Guidelines required prosecutor to be satisfied not only that there was evidential sufficiency for laying particular charge but also that laying that charge in public interest – HC said Crown prosecutor obliged to exercise prosecutorial discretion to avoid risk of defendant becoming subject to  disproportionately severe punishment on sentencing – Here, obligation breached –

HC said while Judge imposed sentence directly leading to F’s imprisonment, Crown prosecutor had discrete constitutional obligation to exercise charging discretion in way that would not expose defendants to risk of grossly disproportionate sentence that breached NZBORA - Throughout here, prosecutor intended that apparently mandatory (and grossly disproportionate) sentence be imposed on F –

Although F (eventually) released through criminal process, NZBORA damages necessary to give him fully effective remedy for breaches here - Based on relevant authorities, factors set out in Prisoners' Victims Claims Act (PVCA) and factors personal to F, award of $450,000 (plus interest) appropriate - In first instance, award paid to Secretary for Justice, under PVCA.

Sentencing, manslaughter

R v French [2022] NZHC 2470 (28 September 2022) Osborne J

Sentencing – F pleaded guilty to manslaughter – He and co-defendant C found guilty of victim’s murder – CA quashed murder conviction - Crown reconsidered charge - Led to guilty plea – Also unusual mitigating factors in F’s role -Three years’ imprisonment, cumulative upon existing sentences - Total cumulative period of all sentences 10 years and three months’ imprisonment.

Interim injunction, milk collection

Canaan Farming Dairy Ltd v Westland Dairy Company Ltd [2022] NZHC 2524 (4 October 2022) Doogue J

Successful interim injunction application – Following interim Employment Court judgment W told C (company owning three dairy farms with links to Gloriavale Christian community) it would no longer collect C's milk supply claiming it had breached contract with W –

HC said balance of convenience overwhelmingly favoured C – W required to collect milk supply from C's dairy farms pending further Court order - Condition that C not employ any minors or associate partners under age of 18 on its farms pending determination of substantive proceedings.

Judicial Committee of the Privy Council

Consent order, enforcement, limitation

Quashie (Administratrix Pendente Lite of the Estate of Beresford Solomon) v Solomon [2022] UKPC 34 (30 September 2022)

Unsuccessful appeal from Trinidad and Tobago CA - Solomon (BS) and Ricarda Solomon (RS) married in 1978 - Had daughter, AS, in 1980 - BS and RS’s relationship broke down in early 1980s - On 7 December 1988, BS voluntarily entered into consent order to settle CA proceedings (Consent Order) - Consent Order provided that one half share and interest in  Tobago property (Property) be conveyed by BS to RS in trust for AS, then aged 8 - BS did not effect conveyance and RS did not seek to enforce Consent Order - BS later claimed RS promised she would not enforce Consent Order - BS remained living at Property, carrying out significant improvement and maintenance - RS died in 2000 without ever seeking to enforce Consent Order -

In 2009, AS discovered Consent Order - Successfully sought to enforce order - Obtained Property conveyance directly to her by deed - BS went to HC seeking, inter alia, declaration that deed null and void, AS’s claim statute-barred, and AS estopped from relying on deed because of RS’s promise to BS not to enforce Consent Order – In 2013 HC dismissed BS’s claim and found in favour of AS –

BS appealed to CA - During March 2017 hearing, Court raised several fresh issues of its own motion, including whether Consent Order had created trust over Property and whether constructive trust had arisen - Hearing resumed on 13 April 2017 when BS applied to adduce fresh evidence of RS’s substantial means and arrangements RS made during her lifetime for AS - BS died on 18 December 2017 while awaiting CA judgment - On 31 October 2018, CA heard contested application to appoint Ms Quashie (EQ) as Administratrix Pendente Lite over BS’s estate - Application granted and Court also acceded to BS’s application for fresh evidence - On 31 May 2019, CA dismissed appeal and affirmed HC order – CA granted leave to appeal to PC on 20 December 2019 – PC heard appeal on 16 June 2022 –

PC said, among other things,  limitation period in relevant statute did not apply - Consent Order remained valid court order under which BS obliged to transfer Property - No time limit imposed in Order - What action, if any, AS could have taken to force BS to transfer Property not issue in appeal - Nothing in limitation provisions precluded or invalidated voluntary compliance with court order, however old order was, and that was in effect what happened here – Appeal dismissed.

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