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Court halts litigation spanning 25 years

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Dan Hughes

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Dan Hughes

On 1 March 2017, the Senior Courts Act 2016 (Act) came into force. The Act replaced the Judicature Act 1908 and introduced several changes, including specific provisions restricting vexatious litigants from commencing or continuing proceedings in court. 

Since coming into force, there have been a handful of cases where relief has been sought under the new regime. Last week, the High Court in Auckland Council v Mawhinney [2019] NZHC 299 issued a decision restraining a litigant from bringing or commencing proceedings, exercising its power to grant an extended order under the ‘exceptional circumstances’ provision for a five year period. This is the first extended order to be made with a five year embargo under the recently enacted provisions.

Regime under the Act

The regime under the Act introduces progressively restrictive orders, providing the Court greater flexibility when dealing with problem litigants known for persistently issuing proceedings against another party; despite there being limited prospects of success or with little consideration for the merits of the case.

The new regime under the Act responded to concerns about the number of vexatious claims in court which were using up valuable court resources and preventing other claims from being heard in a timely manner.

Section 166 of the Act provides a graduated system of orders. An order can have limited effect, extended effect, or general effect. A limited order will restrain a litigant from commencing or continuing civil proceedings on a particular matter, while an extended order goes further in that it applies to a ‘particular or related matter’. A general order simply restrains a party from commencing or continuing any civil proceeding, however only the Attorney-General may apply for a general order.

The overall test for the Court, when considering whether to issue a limited or extended order, is whether there are at least two or more proceedings in issue (whether historic or current) that are or were ‘totally without merit’. The qualifying proceedings must be commenced or continued by the party to be restrained, but may be against the same person or different persons.

A limited or extended order normally takes effect for a period of up to 3 years but can be extended to up to 5 years provided the presiding Judge determines exceptional circumstances exist.

Auckland Council v Mawhinney

The litigation at issue had spanned some 25 years in relation to a parcel of land on Anzac Avenue in Waitakere. The disputes had arisen from applications for land use and subdivision consents made by Mr Mawhinney or entities with which he was involved. Although the parties named in the proceedings had varied over time, the various parties shared a common denominator in that they were closely associated with Mr Mawhinney. Auckland Council sought orders under the Act to prevent Mr Mawhinney from commencing or continuing proceedings against it in relation to the land. Meanwhile, Mr Mawhinney sought orders striking out Council’s application and, failing that, opposing the application.

After dismissing the strike out application, the Court went on to analyse the application for orders under the Act.

Justice Hinton noted that whilst the term “totally without merit” is not defined, the Ministry of Justice report on the Judicature Modernisation Bill contained relevant factors, including that the qualifying proceedings had no prospect of success and exposed the defendants to inconvenience, harassment, and expense out of proportion to the gain the plaintiff was likely to attain. Further, that the party to be restrained had no regard to merit, proportionality or costs, or had a history of failed compliance with Court directions, rules, or practice directions.

While the Court was prepared to accept that proceedings commenced by Mr Mawhinney as trustee of a trust qualified for the purposes of section 167,her Honour was less certain about proceedings brought by companies associated with Mr Mawhinney (at least without a full argument about when it might be appropriate to lift the corporate veil). In any event, the Court found that there were three qualifying proceedings which were “totally without merit”. Justice Hinton noted that the litigant effectively argued the same point repeatedly in cases that could never have succeeded, there were outstanding costs orders, litigation was often brought at the drop of a hat, and that prolix pleadings and submissions were continuously filed.

In view of all of the circumstances, the Court determined that exceptional circumstances existed, especially given the 25 year litigation-span, justifying an extended order for a five year term.

Anthony Harper comment

This decision is a positive step towards relieving some of the strain New Zealand’s judicial system currently faces, as well as recognising that there are situations where access to justice ought to give way to protecting those faced with vexatious litigation.

Of note is Justice Hinton’s postscript comment that consideration ought to be given to adopting the United Kingdom practice of stating, on striking out or dismissing a case, whether that case is totally without merit. This would, in turn, make it easier for Judges addressing section 166 applications to determine whether the threshold to make a limited or extended order is met under the Act. The legal profession should consider asking for this to be expressly recorded where claims are struck out for being meritless, especially where there is a prospect of continued litigation and orders under section 166 may be necessary in the future.

From a policy perspective, the legislation is controversial in that the courts are tasked with balancing two competing rights. On the one hand, there is the fundamental right to access justice; protected by the New Zealand Bill of Rights Act 1990. Accordingly, a court will not lightly exercise its powers to limit or restrain this right. As Justice Hinton recognised “the Court should be slow to make a restraint order as it amounts to a breach of a person’s right of access to justice”. Protections are in place to recognise this fundamental right; including that a party subject to a section 166 order may appeal within the relevant period, or seek leave from the Court to commence or continue a proceeding. In other words, any potential prejudice to a vexatious litigant is appropriately mitigated.

Having said that, the right to access to justice is not unfettered and there must come a turning point where those who face vexatious litigation are afforded protection. Judicial time and resources are not unlimited, and the need to focus those resources on meritorious claims rather than insincere grievances is an important consideration if true access to justice is to be preserved.

To read the decision click here.

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