PATERSON v LEPIONKA & CO INVESTMENTS LTD [2020] NZHC 2184

PATERSON v LEPIONKA & CO INVESTMENTS LTD [2020] NZHC 2184 [26 August 2020]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYI TE KŌTI MATUA O AOTEAROAAHURIRI ROHECIV-2019-441-000078[2020] NZHC 2184UNDER the Trustee Act 1956, the Land Transfer Act1952, the Land Transfer Act 2017, theProperty Law Act 2007, the Companies Act1993, the Senior Courts Act 2016, and theFair Trading Act 2006BETWEEN GARTH BOWKETT PATERSON as Trusteeof the Garth Paterson Family TrustPlaintiffAND LEPIONKA & COMPANYINVESTMENTS LIMITEDFirst DefendantSTEFAN JOZEF JOHN LEPIONKA,JOE DUNCAN and GREGORYBERNARD HORTON as trustees of theLepionka Business TrustSecond DefendantsLEPIONKA AND COMPANY LIMITEDThird DefendantSTEFAN JOZEF JOHN LEPIONKA andNIGEL WARREN HUGHES as trustees ofthe SJ Lepionka Family TrustFourth DefendantsSTEFAN JOZEF JOHN LEPIONKAFifth DefendantCIV-2020-441-000041UNDER the Senior Courts Act 2016IN THE MATTER OF malicious civil prosecution, abuse ofprocess and dishonest assistanceBETWEEN GARTH BOWKETT PATERSONPlaintiffAND LEPIONKA & COMPANYINVESTMENTS LIMITEDFirst DefendantSTEFAN JOZEF JOHN LEPIONKASecond DefendantHearing: 10 – 11 August 2020Appearances: Plaintiff in person, with D Hayes, McKenzie friendM G Colson and S J Leslie for the DefendantsJudgment: 26 August 2020JUDGMENT OF DOOGUE JThis judgment was delivered by Justice Doogueon 26 August 2020 at 3.30 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:Solicitors:Bell Gully, WellingtonIntroduction [1]Factual background [7]The mortgagee proceedings [7]The bankruptcy proceedings [20]Submissions [26]The defendants [26]The mortgagee proceedings [26]The bankruptcy proceeding [30]Application for order under s 166 of the Senior Courts Act [32]Mr Paterson [33]The current proceedings [33]Application for order under s 166 of the Senior Courts Act [36]Applications for strike out/summary judgment [39]The law [39]The current mortgagee proceeding [44]The principles of res judicata [44]Was the Main Judgment final? [48]Are the issues raised in the current mortgagee proceeding the same as those in theMain Judgment (or sufficiently connected that they properly belonged to the subjectmatter of the Main Judgment)? [51]Are the parties in the current mortgagee proceeding the same as those in the currentmortgagee proceeding, or their privies? [56]Does the fraud exception to the principles of res judicata apply? [66]Conclusion [74]The current bankruptcy proceeding [75]The tort of malicious prosecution [77]The tort of abuse of process [81]Dishonest assistance [95]Application under s 166 of the Senior Courts Act [98]The law [98]Are there at least two proceedings that are or were totally without merit? [107]Tenancy Tribunal application 4057525 [109]First application for annulment of the bankruptcy: Paterson v Lepionka & CoInvestments Ltd [2016] NZHC 1331 [113]Second application for annulment of the bankruptcy: Paterson v Lepionka & CoInvestments Ltd [2018] NZHC 3022 [116]First proceeding against the Registrar-General: Paterson v Registrar-General ofLand CIV-2019-441-47 [121]Second proceeding against the Registrar-General: Paterson v Registrar-General ofLand CIV-2020-441-4 [129]The current mortgagee proceeding: Paterson v Lepionka & Co Investments Ltd CIV-2019-441-78 [133]The current bankruptcy proceeding: Paterson v Lepionka & Co Investments LtdCIV-2020-441-41 [134]Conclusion [135]Is it appropriate for the Court to make an order under s 166? [136]Other proceedings commenced by LCIL and defended by Mr Paterson [137]Appeals by Mr Paterson [151]Conduct of proceedings by Mr Paterson [152]Mr Paterson's submissions [153]Analysis [156]The terms of a s 166 order [163]Orders [168]Introduction[1] These proceedings are the latest in a lengthy series of litigation betweenMr Paterson (and various entities related to him) and Mr Lepionka (and variousentities related to him), relating to a property development located at354 Kahuranaki Road in the Tukituki Valley in the Hawke's Bay (the property).[2] At its core, the original dispute concerned a mortgagee's statutory andequitable duties, and the remedies to be granted in the event those duties are breached.The High Court has thoroughly considered these issues, and found Mr Paterson waswronged by some of the defendants to the present proceedings. The issue for the Courtto now determine is whether Mr Paterson has exhausted his legal options in relationto the dispute.[3] In the present proceedings, there are two substantive applications before theCourt:(a) In proceeding CIV-2019-441-78 (the current mortgagee proceeding),Mr Paterson, as trustee of the Garth Paterson Family Trust(the Paterson Family Trust), pleads eight causes of action for breachesof duties owed to him under statute, common law, and equity, relatingto the sale of the property by the first defendant, Lepionka andCompany Investments Limited (LCIL) as mortgagee.(b) In proceeding CIV-2020-441-41 (the current bankruptcy proceeding),Mr Paterson, in his personal capacity, pleads three causes of action:malicious prosecution of bankruptcy proceedings by LCIL againstMr Paterson; abuse of process; and dishonest assistance.[4] In the current application, the defendants:(a) in the current mortgagee proceeding, seek summary judgment or, in thealternative, ask the Court to strike out the proceeding or grant ordersfor security for costs;(b) in the current bankruptcy proceeding, ask the Court to strike out theproceeding; and(c) seek an extended order under s 166 of the Senior Courts Act 2016,restricting Mr Paterson from commencing or continuing any civilproceedings relating to the current matters (and specified relatedmatters), for a period of five years.[5] Mr Paterson opposes the applications for strike out or summary judgment, andfor an order under s 166 of the Senior Courts Act.[6] I pause to note at the outset that the Court shall be slow to make a restraintorder, because it is a breach of a person's right of access to justice.1 However, I alsonote the following comments of Hinton J in Auckland Council v Mawhinney:2However, considering the worry and expense that the opponents of meritlesslitigation face, and the barely sufficient resources of the judicial system toafford justice without unreasonable delay to those who have genuinegrievances, a Court should exercise its discretion to make an order inappropriate cases.1 Auckland Council v Mawhinney [2019] NZHC 299 at [54].2 At [55].Factual backgroundThe mortgagee proceedings[7] Mr Paterson was the director of GLW Group Limited (now in liquidation)(GLW). GLW purchased the property in 2009, with the intent of subdividing it intolifestyle blocks. At that time, GLW borrowed a significant sum from Westpac Bank,which took a first registered mortgage over the property as security.[8] By 2012, GLW had entered into an agreement to sell lot 1, and lot 2 was subjectto an option to purchase.[9] In January 2014, GLW entered into agreements for sale and purchase (theLepionka purchase contracts) for the remaining lots, with two entities associated withMr Lepionka (the Lepionka purchasers): Lepionka and Company Limited (LCL), andthe trustees of the SJ Lepionka Family Trust. Deposits of $463,000 were paid.[10] Over the following year, various problems emerged with the development.GLW owed obligations to the purchasers of lots 1 and 2 that were inconsistent withthe rights provided for in the Lepionka purchase contracts, and caveats were lodgedpreventing settlement of the Lepionka purchase contracts. It also appeared GLW didnot have the funds to complete the development.[11] In early 2015, Westpac issued a default notice under the Property Law Act 2007(the PLA). Following unsuccessful attempts to resolve the difficulties, Mr Lepionkawas concerned the interests of the Lepionka purchasers may be at risk. In March 2015,he incorporated LCIL, and in early April 2015, took an assignment from Westpac ofGLW's debt and securities. LCIL, as mortgagee, adopted the Lepionka purchasecontracts under s 179 of the PLA, and became mortgagee in possession.[12] On 3 April 2015, Mr Paterson enquired with LCIL's lawyers about redeemingthe mortgage, and requested a repayment statement for 9 April 2015. Followingcorrespondence between the parties, and clarification of their respective positions,LCIL's lawyer advised Mr Paterson on 9 April that GLW was no longer able to redeemthe mortgage, as LCIL had exercised its power of sale by adopting the Lepionkapurchase contracts.[13] LCIL sought to progress the development, obstructed at various stages bycontinued litigation brought by Mr Paterson and associated parties. InDecember 2017, following a three week trial in July-August 2017 (the 2017 trial),Fitzgerald J issued a lengthy decision on the substantive proceedings in AFIManagement Pty Ltd v Lepionka & Co Investments Ltd (the Main Judgment).3 Twoproceedings were tried simultaneously (the 2017 proceedings): one set brought byGLW and Mr Paterson personally against LCIL, LCL, the SJ Lepionka Family Trust,and Mr Lepionka personally; and one set brought by AFI Management Pty Ltd (afinancier with an unregistered second mortgage over the property, granted by GLW)against LCIL.[14] Fitzgerald J set out a detailed list of the issues,4 which for present purposes canbe summarised as claims that LCIL, as mortgagee:(a) wrongfully refused to allow GLW to redeem the mortgage;(b) breached its statutory and equitable duties to act in good faith and for aproper purpose; and(c) by adopting the Lepionka purchase contracts, breached its statutory andequitable duties to obtain the best price reasonably obtainable at thetime of sale, as those sales were under value.[15] GLW sought relief in the form of orders preventing the Lepionka purchasecontracts from settling, and/or damages. Fitzgerald J made numerous findings,5 thefollowing of which are relevant for present purposes:3 AFI Management Pty Ltd v Lepionka & Co Investments Ltd [2017] NZHC 3116.4 At [16].5 Summarised at [494].(a) LCIL had exercised its power of sale as mortgagee by adopting theLepionka purchase contracts under s 179 of the PLA, effective from7 April 2015.(b) LCIL did not wrongfully refuse to allow GLW to redeem the mortgagein April 2015.(c) LCIL breached its equitable duties as mortgagee, in that it exercised itspowers of sale for an improper purpose.(d) LCIL may have breached its statutory and equitable duties under s 176under the PLA to take all reasonable precautions to obtain the best pricereasonably obtainable for the property. This could not be determineduntil after the sales had settled.(e) It would be inequitable to set aside the Lepionka purchase contracts,and GLW's remedy would be confined to damages. A final assessmentof damages would occur after the subdivision and all sales had beencompleted.[16] GLW initially appealed the Main Judgment. GLW was subsequently placedinto liquidation, and LCIL entered into settlements with AFI in August 2018, and withGLW (through its liquidator) in December 2018. As part of the settlement, GLWdiscontinued its claims against LCIL and its appeal.[17] On 14 November 2019, Mr Paterson commenced the current proceedingrelating to the mortgagee sale (CIV-2019-441-78).[18] In April 2020, Mr Paterson applied in his personal capacity to theCourt of Appeal, for leave to appeal the Main Judgment. In a minute dated8 June 2020, the Court found Mr Paterson had no standing to file the appeal.66 Paterson v Lepionka & Co Investments Ltd CA214/2020, 8 June 2020 (Minute of Brown J).[19] In terms of the current state of the development, in an affidavit in January 2020Mr Lepionka recorded that LCIL is attempting to sell, as mortgagee, the remainingtwo lots which are in the name of GLW. This will then allow the development, andthe final mortgagee accounts, to be completed.The bankruptcy proceedings[20] At an interlocutory stage of the ongoing litigation between the parties,Mr Paterson and GLW withdrew an application seeking an interim injunction againstLCIL. On 1 October 2015, the High Court awarded costs against Mr Paterson andGLW in relation to the withdrawn application, in the sum of $8,875.24.7[21] LCIL subsequently issued a bankruptcy proceeding against Mr Paterson, onthe basis of the costs award, and he was adjudicated bankrupt on 5 April 2016.8[22] Mr Paterson did not appeal this order; rather he applied for an order unders 309(1)(a) of the Insolvency Act 2006 annulling it. This application was declined byAssociate Judge Osborne on 16 June 2016.9 In 2018, Mr Paterson lodged a secondapplication for an order annulling the order, which was declined byAssociate Judge Johnston on 21 November 2018.10[23] Mr Paterson appealed that decision to the Court of Appeal. On12 November 2019, the Court declined Mr Paterson's application for leave to adducenew evidence, and dismissed the appeal.11[24] On 18 June 2020, Mr Paterson commenced the current proceeding relating tothe bankruptcy (CIV-2020-441-41), alleging the bankruptcy application was amalicious prosecution.7 Paterson v Lepionka & Co Investments Ltd [2019] NZCA 548 at [1], citing GLW Group Ltd vLepionka & Co Investments Ltd HC Auckland CIV-2015-404-2168, 1 October 2015.8 Paterson v Lepionka & Co Investments Ltd, above n 7, citing Lepionka & Co Investments Ltd vPaterson HC Wellington CIV-2015-485-973, 5 April 2016 (Minute of Associate Judge Osborne).9 Paterson v Lepionka & Co Investments Ltd [2016] NZHC 1331.10 Paterson v Lepionka & Co Investments Ltd [2018] NZHC 3022.11 Paterson v Lepionka & Co Investments Ltd, above n 7.[25] On 28 July 2020, Mr Paterson filed an amended statement of claim, adding theabuse of process and dishonest assistance causes of action.SubmissionsThe defendantsThe mortgagee proceedings[26] Mr Colson, for the defendants, submitted that Mr Paterson is relitigating thesame issues dealt with in the Main Judgment; he submitted some of the causes ofaction are identical, and others are the same allegations in substance "thinlymasquerading as a new cause of action." The only reason the current mortgageeproceeding is being pursued, he submitted, is due to Mr Paterson's belief that a noticeissued under the PLA by LCIL's solicitor was not in fact issued on 1 April 2015; anallegation that was raised in the 2017 trial, and rejected by Fitzgerald J. He relied onthe fact that Mr Paterson's affidavits filed in the current proceedings rely heavily onexcerpts from transcripts of evidence given, or affidavits and briefs of evidence filed,in the previous proceedings.[27] The defendants seek summary judgment in relation to the current mortgageeproceeding on the ground that: Mr Paterson has no reasonably arguable interest in theland; or, in the alternative, none of his causes of action can succeed on the basis of anyinterest he may be able to establish.[28] In the alternative, Mr Colson submitted the current mortgagee proceedingshould be struck out on the basis that: none of the causes of action can succeed; and/orthat the claims are barred by the principles of res judicata; and/or that the proceedingis vexatious and an abuse of process.[29] In the event the Court allows the proceedings to continue, Mr Colson submittedan order requiring security for costs is appropriate, and sought indemnity costs.The bankruptcy proceeding[30] Mr Colson submitted the bankruptcy proceeding should be struck out as it:discloses no reasonably arguable cause of action; is an abuse of process, as it is anattempt to mount a collateral attack on previous judgments; and is vexatious.[31] In relation to the malicious prosecution cause of action, Mr Colson submittedthe proceeding discloses no reasonably arguable cause of action. He submitted that inorder for this claim to succeed, the allegedly malicious proceeding must have beendecided in favour of the tort plaintiff (Mr Paterson), and noted that all litigationrelating to the bankruptcy has been decided against Mr Paterson.Application for order under s 166 of the Senior Courts Act[32] Ms White, for the defendants, submitted an extended order under s 166 of theSenior Courts Act, restricting Mr Paterson from commencing or continuing any civilproceedings relating to the current matters (and specified related matters), for a periodof five years, is appropriate. She submitted that Mr Paterson has not previously beendeterred by adverse decisions, adverse costs orders, or a Court order preventing himfrom lodging caveats over the property. She submitted the defendants have incurredand continue to incur substantial legal costs, which ultimately cannot be recoveredfrom Mr Paterson.Mr PatersonThe current proceedings[33] Mr Paterson denied mounting a collateral attack on the Main Judgment, butrather submitted the current mortgagee proceeding is "in a way seeking that the resultof the 2017 trial be properly complied with rather than entirely avoided, as hasbeen the case so far."[34] He submitted the principle of res judicata does not bar this proceeding, as theMain Judgment is affected by fraud. It appears that the new evidence he relies on, toevidence this fraud, is the 2003 Court of Appeal decision in Roseneath Holdings Ltdv Grieve.12[35] At the hearing before me, Mr Paterson's submissions consisted of thefollowing arguments:(a) that the Court of Appeal's findings in Roseneath in relation toMr Duncan are evidence of fraud;(b) the allegation that the s 179 PLA notice was backdated;(c) that he had provided a bank cheque to LCIL for the sum for which hewas bankrupted; and(d) an attempt to reopen the valuation evidence determined in theMain Judgment.Application for order under s 166 of the Senior Courts Act[36] Mr Paterson refuted bringing any proceedings without merit. He submittedthat when there have been issues with a proceeding, he has responsibly withdrawn it.[37] He submitted LCIL or associated entities have pursued a number of meritlessclaims against him, and there have been multiple costs awards against LCIL.[38] He submitted the application for a s 166 order itself is an abuse of process, andan order would breach his rights under the New Zealand Bill of Rights Act 1990(BORA).Applications for strike out/summary judgmentThe law[39] Rule 15.1 of the High Court Rules 2016 provides a court may strike out all orpart of a pleading if it:12 Roseneath Holdings Ltd v Grieve [2004] 2 NZLR 168.(a) discloses no reasonably arguable cause of action, defence, or caseappropriate to the nature of the pleading; or(c) is frivolous or vexatious; or(d) is otherwise an abuse of the process of the court.[40] The principles relating to striking out a claim under r 15.1(a), on the basis thatit discloses no reasonably arguable cause of action, are:13(a) Pleaded facts, whether or not admitted, are assumed to be true. Thisdoes not extend to pleaded allegations which are entirely speculativeand without foundation.(b) The cause of action or defence must be clearly untenable; it isinappropriate to strike out a claim unless the Court can be certain thatit cannot succeed.14(c) The jurisdiction is to be exercised sparingly, and only in clear cases.(d) The jurisdiction is not excluded by the need to decide difficult questionsof law, requiring extensive argument.(e) The Court should be particularly slow to strike out a claim in anydeveloping area of the law.[41] An abuse of process for the purposes of r 15.1(d) includes various instances ofmisuse of the Court's processes, including a proceeding that is an attempt to relitigatematters already determined, for example by bringing substantively the sameproceeding "in a different garb".15[42] Rule 12.2(2) of the High Court Rules provides that the Court may givesummary judgment against a plaintiff if the defendant satisfies the Court that none ofthe causes of action in the plaintiff's statement of claim can succeed. Summary13 Attorney-General v Prince [1998] 1 NZLR 262.14 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33]15 Collier v Butterworths of New Zealand Ltd (1997) 11 PRNZ 581 (HC) at 586.judgment will generally only be entered against a plaintiff where there is a completedefence to the plaintiff's claim, or a clear answer to the claim which cannot becontradicted, and the onus is on the defendant to prove that to the balance ofprobabilities.16[43] The Court of Appeal has noted the distinction between an application forsummary judgement, and an application for strike out:17[60] Where a claim is untenable on the pleadings as a matter of law, it willnot usually be necessary to have recourse to the summary judgment procedurebecause a defendant can apply to strike out the claim under R 186. RatherR 136(2) permits a defendant who has a clear answer to the plaintiff whichcannot be contradicted to put up the evidence which constitutes the answer sothat the proceedings can be summarily dismissed. The difference between anapplication to strike out the claim and summary judgment is that strike-out isusually determined on the pleadings alone whereas summary judgmentrequires evidence. Summary judgment is a judgment between the parties onthe dispute which operates as issue estoppel, whereas if a pleading is struckout as untenable as a matter of law the plaintiff is not precluded from bringinga further properly constituted claim.The current mortgagee proceedingThe principles of res judicata[44] Cooke J summarised the principles of res judicata in Walker v Nelson DistrictCouncil:18[8] When a court finally determines a matter between parties, what itdetermines operates as a res judicata — meaning that it has conclusivelydetermined the question as between those parties, and the parties cannotreopen that issue. To seek to relitigate that issue in another proceeding is anabuse of process.19 The key principle has been described in the followingterms by the Supreme Court:20The principle of finality in litigation gives rise to a rule of law thatmakes conclusive final determinations reached in the judicial process:Unless a judgment of a Court is set aside on further appeal orotherwise set aside or amended according to law, it isconclusive as to the legal consequences it decides.16 Westpac Banking Corp v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [61].17 At [60]; Mills v ASB Bank Ltd [2020] NZCA 228 at [17].18 Walker v Nelson District Council [2018] NZHC 1967, [2018] NZAR 1454.19 See Dotcom v District Court at North Shore [2017] NZHC 3158 at [25]–[26].20 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94; [2013] 1NZLR 804 at [28].The rule reflects both the public interest in there being an end tolitigation and the private interest of parties to court processes in notbeing subjected by their opponents to vexatious relitigation. [12] Res judicata operates even if the arguments could have been madebetter the first time around. Indeed it operates with respect not only to allarguments that were made, but also all arguments that could have been madewith respect to the legal question in issue in the first proceeding.21[45] I also note the following statement in Henderson v Henderson,22 approved bythe Court of Appeal in Beattie v Premier Events Group Ltd:23 where a given matter becomes the subject of litigation in, and ofadjudication by, a Court of competent jurisdiction, the Court requires theparties to that litigation to bring forward their whole case, and will not (exceptunder special circumstances) permit the same parties to open the same subjectof litigation in respect of matter which might have been brought forward aspart of the subject in contest, but which was not brought forward, only becausethey have, from negligence, inadvertence, or even accident, omitted part oftheir case. The plea of res judicata applies, except in special cases, not only topoints upon which the Court was actually required by the parties to form anopinion and pronounce a judgment, but to every point which properlybelonged to the subject of litigation, and which the parties, exercisingreasonable diligence, might have brought forward at the time.[46] For the current mortgagee proceeding to be barred by the principles ofres judicata, the Court must be satisfied that the Main Judgment:24(a) was final;(b) was made on the merits;(c) was made by a Court with jurisdiction over the parties and subjectmatter;(d) determined a question raised in the current mortgagee proceeding, orthat the question raised in the current mortgage proceeding is one whichproperly belonged to the subject matter of the Main Judgment;21 See Beattie v Premier Events Group Ltd [2014] NZCA 184; [2015] NZAR 1413 at [43]–[46].22 Henderson v Henderson (1843) 3 Hare 100, 67 ER 313 (Ch) at 114-115.23 Beattie v Premier Events Group Ltd, above n 21, at [43].24 K R Handley Spencer Bower and Handley: Res Judicata (5th ed, Lexis Nexis, London, 2019) at[1.02].(e) was made following proceedings involving the same parties as those inthe current mortgagee proceeding, or their privies; and(f) was not obtained by fraud, creating an exception to the principles ofres judicata.[47] The issues at [46](b) and [46](c) do not appear to be in dispute; the MainJudgment was made on the merits, by a Court with the necessary jurisdiction.Was the Main Judgment final?[48] The Main Judgment determined liability in respect of each cause of actionpleaded, except for the question of whether LCIL breached its statutory duty unders 176 of the PLA to take all reasonable precautions to obtain the best price reasonablyobtainable for the property. The s 176 claim was unable to be resolved, as liabilitydepended on quantum issues which could not be resolved until the subdivision wascompleted; although finding LCIL's actions demonstrated it did not take reasonableprecautions to obtain the best price reasonably obtainable, Fitzgerald J could not finda breach of s 176 without proof of damage on the part of the mortgagor.25 Fitzgerald Jcould not assess damages at the time of the judgment, as the actual price achieved bythe mortgagee was not yet known.26[49] Mr Colson submitted that the Main Judgment was akin to a split trial, whereliability and quantum were determined separately. The first decision in a split trial isconsidered final for the purposes of res judicata.27 This is consistent with theCourt of Appeal's approach in Johnson v Felton, where the Court held it would beunrealistic to regard the splitting of claims as having been intended to result in asituation in which parties could relitigate before the same judge issues determined inan earlier judgment.2825 AFI Management Pty Ltd v Lepionka & Co Investments Ltd, above n 3, at [323].26 At [374].27 Handley, above n 24, at [5.28].28 Johnson v Felton [2006] 3 NZLR 475 (CA) at [56].[50] I consider the Main Judgment was final, for the purposes of the principles ofres judicata. Additionally, the rights and liabilities of the parties were fully and finallydetermined by the settlements in 2018, and GLW discontinued its appeal. I also notethat this Court has previously considered Fitzgerald J's decision to be final, becausethe proceeding was settled and the appeal was abandoned.29Are the issues raised in the current mortgagee proceeding the same as those in theMain Judgment (or sufficiently connected that they properly belonged to the subjectmatter of the Main Judgment)?[51] In the current mortgagee proceeding, Mr Paterson pleads eight causes ofaction:(a) First, breach of duty pursuant to the Trustee Act 1956: LCIL's executionof the adoption notice under s 179 of the PLA was for an improperpurpose (to prevent redemption of the mortgage), and LCIL is a trusteefor any surplus funds made from sales, and owes a duty of care to thePaterson Family Trust in its capacity as trustee.(b) Second, breach of duty pursuant to the Land Transfer Act 1952: thetransfer of the Westpac mortgage to LCIL was designed for the purposeof fraudulently defeating the interests of those with unregisteredinterests in the property.(c) Third, breach of duty pursuant to s 6 of the Land Transfer Act 2017 (theLTA 2017): execution and use of memoranda of transfers for LCIL in2019, pursuant to its power of sale, were executed and utilised in breachof s 6 of the LTA 2017.(d) Fourth, breach of duty pursuant to s 176 of the PLA: LCIL breached itsduty as mortgagee to take reasonable care to obtain the best pricereasonable obtainable.29 Lepionka & Co Investments Ltd v Naldapat Ltd [2019] NZHC 1646 at [75].(e) Fifth, breach of duties pursuant to ss 131, 133 and 137 of theCompanies Act 1993: various courts have held that LCIL did not act ingood faith and used its powers for an improper purpose, andMr Lepionka has therefore acted in breach of the Companies Act.(f) Sixth, breach of common law and equitable duties to act in good faith,for a proper purpose, and not to act with fraudulent intent: thedefendants have colluded to enable various illicit acts against variousduties of good faith.(g) Seventh, breach of duty pursuant to s 9 of the Fair Trading Act 1986(the FTA): the defendants have conspired between them, causing abreach of the statutory obligation under s 9 of the FTA.(h) Eighth, breach of duty pursuant to s 14 of the FTA: the defendants haveconspired between them, to cause a breach of s 14 of the FTA.[52] The first, second, third, fourth and sixth causes of action are clearly barred bythe principles of res judicata, as they seek to relitigate matters already determined.They are either the same claim already determined in the Main Judgment, or the sameclaim in a "different garb".[53] The fifth, seventh and eighth causes of action are new arguments; breaches ofthe Companies Act or the FTA were not considered in the Main Judgment. However,they rely entirely on issues already determined by Fitzgerald J, and appear to seeklargely the same remedies as sought in the Main Judgment, via a new route. I considerthese fall within the realm of issues which should have been raised in the 2017proceeding.[54] I also note that in the 2017 proceeding, GLW pleaded a range of whatFitzgerald J labelled "miscellaneous" causes of action, including oppressive conductunder the Credit contracts and Consumer Finance Act 2003, unlawful sales by LCIL,unjust enrichment, and conspiracy to injure by unlawful means.30 Fitzgerald J30 AFI Management Pty Ltd v Lepionka & Co Investments Ltd, above n 3, at [456].dismissed all of these, and noted parties are discouraged from advancing "supporting"claims unless they genuinely add to the overall position.31[55] The pleadings in the current mortgagee proceeding are sufficiently similar tothe issues determined in the Main Judgment that they are barred by the principles ofres judicata.Are the parties in the current mortgagee proceeding the same as those in the currentmortgagee proceeding, or their privies?[56] In determining whether the parties to a subsequent proceeding are the priviesof parties in an earlier proceeding, for the purposes of res judicata¸ the Court of Appealhas held:32The next question is whether the present plaintiff , who was not a party tothe first action, is nevertheless estopped from bringing the present actionbecause he was a privy of one or more of the plaintiffs in the first action.Privity in this sense denotes a derivative interest founded on, or flowing from,blood, estate, or contract, or some other sufficient connection, bond, ormutuality of interest. No case has yet sought to define exhaustively the degreeor nature of the link necessary to render a person privy in interest. That thisis so is not surprising for the necessary connection may arise in a variety ofways and its existence falls to be tested in the light of the object of the rulesabout estoppel by res judicata and their effect in preventing the party in thesubsequent proceeding from putting his case in suit[57] In order for a proceeding to be barred by the principles res judicata, there mustbe both a sufficient union of interest in the subject matter of the previous action, andrelationship with the party to that previous action, that it is just that the new partyshould be bound by the outcome of that previous litigation.33 In examining whether aperson is a privy for res judicata purposes, the substance of the person's involvementin the earlier litigation is the key;34 and it is necessary to look to who in reality isbehind the proceedings.3531 At [457].32 Shiels v Blakeley [1986] 2 NZLR 262 (CA) at 268; McGougan v Depuy International Ltd [2018]NZCA 91, [2018] 2 NZLR 916 at [74].33 McGougan v Depuy International Ltd, above n 32, at [77].34 At [92].35 Hamed Abdul Khaliq Al Ghandi Co v New Zealand Dairy Board (1999) 13 PRNZ 102 (CA) at[49].[58] The plaintiff in the current mortgagee proceeding is Mr Paterson in his capacityas a trustee of the Paterson Family Trust. The plaintiffs in the 2017 proceeding wereGLW and Mr Paterson in his personal capacity. Mr Paterson claims that he nominatedGLW as purchaser of the land in 2009, as bare trustee for his sons. Mr Paterson alsoclaims that the Paterson Family Trust has had an unregistered interest in the propertysince September 2009, pursuant to an agreement to mortgage with GLW.[59] Mr Paterson has not provided any documentary evidence of a mortgage beinggranted in 2009. He relied on a document dated 9 June 2017, recording an agreementto mortgage the property in 2009. Mr Lepionka's evidence was that this documentwas not produced in the 2017 trial, and would have been in breach of the Westpacmortgage (assigned to LCIL), which prohibited GLW from creating new interests inthe land without the mortgagee's consent.[60] There was conflicting affidavit evidence before me (from Mr Paterson andMr Lepionka) about the validity of the Paterson Family Trust and its purported interestin the property. I also note Fitzgerald J has expressed concerns about Mr Paterson'sclaims that he holds interests on trust for his family, finding them "hollow, unsupportedby evidence."36 Regardless, even assuming the trust held the interest Mr Paterson isarguing for, I consider it to be a privy of the plaintiffs in the 2017 proceeding.[61] I consider Mr Paterson is the person behind the litigation. In particular, I noteMr Lepionka's evidence that Mr Paterson attended the three week 2017 trial, andappeared actively involved in GLW's case. GLW was incorporated by Mr Paterson,for the benefit of himself and his sons. Mr Paterson now asserts the Paterson FamilyTrust was established for the benefit of his sons. There appears to be an obviousfamilial connection between the plaintiffs in the 2017 proceeding and thePaterson Family Trust. I also note that in an affidavit dated 15 June 2020, for a relatedproceeding in the Court of Appeal, Mr Paterson recorded that he was a plaintiff in the2017 proceeding in "multiple capacities, – including but not limited to: – as directorof GLW, as guarantor of the mortgage, as trustee for [his sons], and as a co-developer36 GLW Group Ltd v Lepionka & Co Investments Ltd [2018] NZHC 1658 at [68].of the property." I therefore consider that the Paterson Family Trust is sufficientlyconnected to the plaintiffs in the 2017 proceeding to be considered their privy.[62] It does not appear there is any argument relating to the defendants, but I set thedetails out here for completeness. The defendants in the current mortgagee proceedingare the same as in the 2017 proceeding, with the addition of one additional defendant:the trustees of the Lepionka Business Trust (LBT). Mr Paterson's pleadings and hissubmissions allege that the LBT is the governing body of LCIL, and is included as adefendant because it controls LCIL. Mr Lepionka is one of the three trustees of LBT,and gave evidence in the 2017 proceeding.[63] Mr Colson submitted that the present case is similar to one were an entitywholly owned and effectively managed by a different entity was found to be a privyof that entity, and it would be "unreal" to suggest there is not privity between theLepionka Business Trust and LCIL.37 Mr Paterson agrees, and this does not appear tobe an issue.[64] I therefore find that the parties in the current mortgagee proceeding are eitheridentical to those in the 2017 proceeding, or are their privies.[65] In conclusion, there is sufficient union of interest in the subject matter of the2017 proceeding, and relationship with the parties to that proceeding, that it is just thatthe Paterson Family Trust should be bound by the outcome in the Main Judgement.The Main Judgment acts as res judicata and bars Mr Paterson from pursuing thecurrent mortgagee proceeding.Does the fraud exception to the principles of res judicata apply?[66] Mr Paterson seeks to avoid the rules of res judicata by relying on the fraudexception in Shannon v Shannon.38 In Shannon, in ongoing litigation relating to arelationship property dispute, the appellant filed proceedings alleging a previousjudgment had been obtained by fraud as it was based on perjured evidence. Thoseproceedings were struck out in the High Court, on the basis they disclosed no37 Hamed Abdul Khaliq Al Ghandi Co v New Zealand Dairy Board, above n 35, at [12].38 Shannon v Shannon [2005] NZCA 83, (2005) 17 PRNZ 587.reasonable cause of action and were an abuse of process of the Court. The appellantappealed the strike out decision.[67] The Court of Appeal held that fraud, if proven, displaces the principles ofres judicata:39There is no doubt that fraud is an exception to the principle of finality ofjudgments but, because of the strength of the policy grounds for requiringjudgments to be final, there are stringent requirements that must be met beforea judgment can be set aside on the basis of fraud[68] Before a claim alleging fraud can be allowed to proceed, there must be:40(a) evidence newly discovered since the trial;(b) evidence that could not have been found by the time of the trial byexercise of reasonable diligence;41(c) evidence so material that its production at the trial would probably haveaffected the outcome; and(d) when the fraud charged consists of perjury, then the evidence must beso strong that it would reasonably be expected to be decisive at arehearing, and if unanswered must have that result. The new evidencemust do more than corroborate evidence of a similar type given at thefirst trial.[69] In relation to the onus of proof, the Court of Appeal held:42 in order to survive a strike-out application where the action is to set asidea judgment on the basis of fraud, the onus is on the party alleging fraud toshow that the case is not frivolous or vexatious or an abuse of process. Theplaintiff is required to put sufficient new evidence before the Court to show39 At [102].40 At [104] and [119].41 At [125]. This rule requiring due diligence is not "immutable"; Courts have a discretion to allowactions to proceed, even if based on evidence that would have been reasonably discoverable at thetime of the original hearing. The test is whether it is in the interests of justice to do so and whetherthe public would consider it an affront to justice not to let the case proceed.42 At [127].that the case has a reasonable prospect of success and, in the case of perjury,that the new evidence would be decisive, if established by proof.[70] Mr Paterson relied on the 2003 Court of Appeal decision in RoseneathHoldings Ltd v Grieve,43 as new evidence which was not considered in the MainJudgment. Mr Paterson submitted that in Roseneath, the Court found Mr Duncan (oneof the trustees of LBT) caused an act of land transfer fraud to occur, and if Fitzgerald Jhad known of this judgment, she would not have made various findings in favour ofLCIL.[71] Not only is this a misunderstanding of the decision in Roseneath,44 it isnonetheless immaterial. Mr Paterson does not establish, for the purposes of thestringent threshold established in Shannon, that this is new evidence, which could nothave been discovered in the 2017 trial, and which would have affected the outcome.In particular, I note Mr Duncan did not give evidence in the 2017 trial, and I cannotsee how the decision in Roseneath would have materially swayed Fitzgerald J'sreliance on Mr Lepionka's evidence.[72] For the sake of completeness, I note Mr Paterson also highlightedFitzgerald J's finding that LCIL exercised its powers of sale for an improper purposein breach of its duties as mortgagee. He repeatedly referred to this as fraud. I notethis allegation would not bring the proceeding within the fraud exception, as it wasthoroughly addressed in the Main Judgment.[73] Mr Paterson also records allegations of fraud in his statement of claim, relatingto the date of the s 179 notice. Fitzgerald J accepted the notice was signed on1 April 2015,45 and held it took effect as LCIL exercising its power of sale (due tovarious notice and service requirements) on 7 April 2015.46 Fitzgerald J held the43 Roseneath Holdings Ltd v Grieve, above n 12.44 The case was an appeal against an interim injunction granted against Roseneath Holdings Ltd.Mr Duncan's partner was a director of Roseneath, and he had referred a business associate to thecompany in the context of a loan required for a property development. The Court of Appeal foundthere was a serious question to be tried against Roseneath, that it was a party to a fraudulent schemeunder the Land Transfer Act, although acknowledged that the events concerned may have beencapable of innocent explanation following completion of any further discovery and perhapsadditional evidence.45 AFI Management Pty Ltd v Lepionka & Co Investments Ltd, above n 3, at [208].46 At [247].evidence did not demonstrate that the s 179 notice was backdated to 1 April 2015.47Again, as these issues were addressed in the Main Judgment, Mr Paterson's allegationsof fraud in relation to the s 179 notice do not meet the stringent threshold to comewithin the fraud exception.Conclusion[74] I conclude it is appropriate to strike out the current mortgagee proceeding as itis barred by the principles of res judicata, and is therefore an abuse of the Court'sprocess.The current bankruptcy proceeding[75] Mr Paterson originally pleaded one cause of action of malicious prosecution,alleging that LCIL and Mr Lepionka maliciously brought a bankruptcy applicationagainst him. I note the bankruptcy proceeding was brought by LCIL alone.[76] On 28 July 2020, Mr Paterson filed an amended statement of claim recordingtwo additional causes of action: abuse of process, and dishonest assistance.The tort of malicious prosecution[77] Mr Colson submitted that there has been some doubt over whether the tort ofmalicious prosecution exists in New Zealand in relation to civil proceedings generally.However, there is clear authority that it is available in relation to bankruptcy andliquidation proceedings, in the 1917 case of Jones v Foreman.48 Additionally, I notemore recent High Court authority, building on the 1999 decision inRawlinson v Purnell Jenkinson & Roscoe,49 has favoured the existence of the tort inrelation to civil proceedings.50 I also note that in considering an application for strikeout in 2012, the High Court held the plaintiffs were entitled to the benefit of an47 At [465].48 Jones v Foreman [1917] NZLR 798 (NZSC); Deliu v Hong [2013] NZHC 735 at [76].49 Rawlinson v Purnell Jenkinson & Roscoe [1999] 1 NZLR 479 (HC).50 Burgess v Beaven [2020] NZHC 497 at [20]; Robinson v Whangarei Heads Enterprises Ltd [2015]NZHC 1147, [2015] 3 NZLR 734 at [49]; Deliu v Hong, above n 48, at [80]-[88].assumption that the tort may exist.51 This is consistent with the principle that Courtswill be reluctant to strike out claims in new or developing areas of law.[78] The elements of the tort were established in Rawlinson v Purnell Jenkinson &Roscoe:52(a) the defendant must have advanced a civil cause against the plaintiff;(b) the application must have been ultimately resolved in the plaintiff'sfavour;(c) the defendant must have had no reasonable and probable cause forbringing the civil proceeding;(d) the defendant must have acted maliciously in instituting or continuingthe civil proceeding; and(e) damage of a kind for which the law will allow recompense must havebeen caused to the plaintiff.[79] Mr Paterson's case obviously fails on the basis of the second element of thetort: the bankruptcy application proceeding he alleges was a malicious prosecutionwas not decided in his favour.53 Additionally, three subsequent attempts byMr Paterson to challenge that decision have failed.54 The cause of action is clearlyuntenable.[80] I conclude it is appropriate to strike out the malicious prosecution cause ofaction of the current bankruptcy proceeding, on the basis that Mr Paterson's statementof claim discloses no reasonably arguable cause of action.51 Chesterfields Preschools Ltd v Commissioner of Inland Revenue [2012] NZHC 394 at [47].52 Rawlinson v Purnell Jenkinson & Roscoe, above n 49, at 484-485; adopted in Burgess v Beaven,above n 50, at [20].53 Lepionka & Co Investments Ltd v GLW Group Ltd, above n 8.54 Paterson v Lepionka & Co Investments Ltd, above n 9; Paterson v Lepionka & Co InvestmentsLtd, above n 10; Paterson v Lepionka & Co Investments Ltd, above n 7.The tort of abuse of process[81] In relation to abuse of process, Mr Paterson alleged that the bankruptcy noticewas filed after he and GLW had commenced a separate proceeding against LCIL andMr Lepionka (CIV-2015-404-2168). He alleged there was enough disclosed in thatproceeding for it to be clear to LCIL that there was a genuine and substantial disputeover the monies being claimed.[82] Mr Paterson submitted it is an abuse of process to use the legal process in itsproper form in order to accomplish an ulterior purpose for which it was not designed.He alleged the bankruptcy proceedings were a tactic of oppression against him, tocause harm to him and procure a collateral advantage in existing litigation.[83] In his statement of claim, Mr Paterson appeared to rely entirely on the23 June 2016 decision of Associate Judge Smith in GLW Group Ltd v Lepionka & CoInvestments Ltd to support this cause of action.55 The Judge found LCIL served GLWwith a statutory demand, despite other proceedings making it clear there was a genuineand substantial dispute over the amount claimed,56 and found LCIL's inappropriate useof the statutory demand procedure was sufficient to justify an uplift above scalecosts.57[84] In his submissions, Mr Paterson paraphrased a quote from this judgment andincorrectly included reference to a dispute over the amount claimed in the "bankruptcynotice", and then recorded that the disputed debt referred to was "the very same debtI was bankrupted for". This is not quite correct. Associate Judge Smith was dealingwith two statutory demands issued by LCIL to GLW: one in September 2015 for$2,712,576.39,58 and one in November 2015 in respect of the costs awarded againstGLW on 1 October 2015 (the sum leading to Mr Paterson's bankruptcy).59[85] GLW applied to set aside the September 2015 statutory demand, and LCILwithdrew it in May 2016. I read the comments of Associate Judge Smith at [27]-[30]55 GLW Group Ltd v Lepionka & Co Investments Ltd [2016] NZHC 1380.56 At [27].57 At [34].58 At [7].59 At [24].of the judgment, which Mr Paterson relied on, as relating to the September 2015statutory demand (in other words, not the sum for which Mr Paterson was bankrupted).The Judge later records that although GLW had grounds to challenge theSeptember 2015 statutory demand, GLW then failed to pay the October 2015 costsaward, and failed to comply with statutory demand for payment of those costs.60[86] The ingredients of the tort of abuse of process are:61(a) the use of a legal process,(b) in order to accomplish an ulterior process,(c) which is the predominant purpose, and(d) which causes damage to the plaintiff.[87] Gilbert J examined the development of the tort in Robinson v Whangarei HeadsEnterprises Ltd, and held it is concerned with the improper use of the court's processesto effect an object outside their legitimate scope.62 Although similar to the tort ofmalicious prosecution, it differs in two key ways: it is not necessary for the plaintiff toshow the relevant proceeding was brought without reasonable and probable cause; andthe relevant proceeding need not have been decided in the plaintiff's favour.63[88] Gilbert J referred to the decision in Grainger v Hill, where abuse of processhad been made out.64 In Grainger, the defendants had obtained a warrant for theplaintiff's arrest, asserting he had failed to pay a debt that was not yet due. Theirobjective was to force the plaintiff to hand over the register to a ship, which wouldprevent him from using the ship, and thereby pressure him to make early repaymentof the loan. The plaintiff was told he would not be arrested if the register was handedover, and he therefore complied and repaid the loan. The Court held the tort of abuse60 At [36].61 Deliu v Hong, above n 48, at [50].62 Robinson v Whangarei Heads Enterprises Ltd, above n 50, at [29]-[47]; see also Wilding v TeMania Livestock Ltd [2017] NZHC 717 at [398]-[409].63 Robinson v Whangarei Heads Enterprises Ltd, above n 50, at [30].64 Grainger v Hill (1838) 4 Bing (NC) 212 ; 132 ER 769 (Comm Pleas).of process was established because the defendants had sought the warrant not for thepurpose of arresting the plaintiff, but to extort the ship's register (which they had noright to) by threat of imprisonment.[89] Gilbert J rejected the claim of abuse of process in the case before him. Thedefendants had applied for an order for the arrest of the plaintiff under s 55 of theJudicature Act 1908, after he took possession of equipment belonging to the defendant.Section 55 was concerned with situations where, after civil proceedings had been filed,a defendant threatened to leave New Zealand in circumstances where his or herabsence would materially prejudice the plaintiff in prosecuting its claims and obtainingjudgment. The plaintiff was arrested as he was about to board an international flight,and held in custody for approximately two days. The plaintiff claimed that there wereno reasonable and proper grounds for his arrest and that the application was made toforce him to return the contracting equipment, a purpose outside the scope of s 55.[90] Although accepting the defendant's objective was to secure return of theequipment, Gilbert J held this did not necessarily mean the processes of the courtswere abused. He noted the defendant sought recourse to it rights to return of itsequipment, not "to extort some benefit to which it was not entitled and which wasoutside the scope of the Court's process."65 Gilbert J held the return of the equipmentwas an "expected consequence" of the arrest order (which the defendant genuinelybelieved it was entitled to), but that did not mean the defendants were abusing theprocesses of the Court.66 He distinguished Grainger, holding the immediate object ofthe defendant's application was to secure the plaintiff's arrest, an outcome "whollywithin the purpose of the provision invoked."67[91] It may be true that LCIL procured a collateral advantage in existing litigationby making the bankruptcy application. However, I cannot see how this alone is anabuse of process. As in Robinson, LCIL's primary purpose in bringing the applicationwas to bankrupt Mr Paterson – a purpose entirely within the purpose of the legalprocess it used.65 Robinson v Whangarei Heads Enterprises Ltd, above n 50, at [46].66 At [46].67 At [47].[92] I conclude it is appropriate to strike out the abuse of process cause of action ofthe current bankruptcy proceeding, on the basis that Mr Paterson's statement of claimdiscloses no reasonably arguable cause of action.[93] I also note that this cause of action could be an abuse of process itself, as itmay be barred by the principles of res judicata. I acknowledge the cause of action isquite different to that raised in the bankruptcy annulment applications, and relies ondifferent facts (improper purpose, as opposed to disputed factual evidence about thepurported payment of the debt by bank cheque, discussed below at [113]).[94] However, in the first application to annul the bankruptcy in 2016,Associate Judge Osborne found there were three grounds for an annulment unders 309(1)(a) of the Insolvency Act: abuse of process, defect in form or procedure, orwhere a material fact was not drawn to the Court's attention.68 The Judge found therewas no abuse of process in the bankruptcy application process.69 I note the decisionof Associate Judge Smith which Mr Paterson relies on was delivered a week afterAssociate Judge Osborne's, but it does not raise any new relevant facts relating to thebankruptcy proceedings, which would be considered new evidence Mr Paterson couldnot have raised in the application to annul the bankruptcy. Regardless, he could haveraised them in his second application to annul the bankruptcy in 2018.Dishonest assistance[95] Mr Paterson alleged that, pursuant to the doctrine of conversion, as at5 April 2016 LCIL was a trustee for surplus funds of at least $4 million, followingsales of some of the property. He alleged that in breach of trust, and its duties as afiduciary, LCIL spent that money for the benefit of itself and related parties. Healleged Mr Lepionka was a participant in LCIL's breaches of trust and fiduciary duties.[96] These arguments, relating entirely to the mortgagee sales by LCIL, do notrelate to Mr Paterson's personal bankruptcy proceedings. This cause of actionproperly belongs with the current mortgagee proceeding, and is also barred by the68 Paterson v Lepionka & Co Investments Ltd, above n 9, at [17].69 At [48].principles of res judicata. While the claim of dishonest assistance was not consideredin the Main Judgment, these arguments rely on the same facts and the same allegationsof breaches of various duties by LCIL considered in the Main Judgment. Like thecauses of action discussed above at [53], this claim should have been raised in the2017 proceeding.[97] I conclude it is appropriate to strike out the dishonest assistance cause of actionof the current bankruptcy proceeding, on the basis that it is barred by the principles ofres judicata and is therefore an abuse of the Court's process.Application under s 166 of the Senior Courts ActThe law[98] Section 166 of the Senior Courts Act 2016 (the Act) enables a Judge of theHigh Court to make an order restricting a person from commencing or continuing acivil proceeding in a senior court, another court, or a tribunal. It replaces s 88B of theJudicature Act 1908, and introduces a new tiered regime for making orders of differentstrength and duration.[99] Section 166 sets out the three types of order a Court may make:(a) a limited order restrains a party from commencing or continuing civilproceedings on a particular matter;(b) an extended order restrains a party from commencing or continuing anycivil proceedings on a particular or related matter; or(c) a general order restrains a party from commencing or continuing civilproceedings.[100] Section 167 sets out the grounds for making a s 166 order, the primaryrequirement being that the party has brought at least two proceedings that were totallywithout merit:167 Grounds for making section 166 order(1) A Judge may make a limited order under section 166 if, in civilproceedings about the same matter in any court or tribunal, the Judgeconsiders that at least 2 or more of the proceedings are or were totallywithout merit.(2) A Judge may make an extended order under section 166 if, in at least2 proceedings about any matter in any court or tribunal, the Judgeconsiders that the proceedings are or were totally without merit.(3) A Judge may make a general order if, in at least 2 proceedings aboutany matter in any court or tribunal, the Judge considers that theproceedings are or were totally without merit.(4) In determining whether proceedings are or were totally without merit,the Judge may take into account the nature of any interlocutoryapplications, appeals, or criminal prosecutions involving the party tobe restrained, but is not limited to those considerations.(5) The proceedings concerned must be proceedings commenced orcontinued by the party to be restrained, whether against the sameperson or different persons.(6) For the purpose of this section and sections 168 and 169, an appeal ina civil proceeding must be treated as part of that proceeding and notas a distinct proceeding.[101] The phrase "totally without merit" is not defined in the Act, and the High Courthas referred to the following factors as being relevant in determining whether aproceeding is totally without merit:70(a) the proceeding has no prospect for success, whatsoever;(b) the proceeding exposes the defendants to inconvenience, harassmentand expense out of all proportion to the gain the litigant is likely toreceive;(c) the proceeding is brought at the drop of a hat despite the lack of merit;(d) the litigant has paid no regard to the merits, proportionality, or costs ofthe proceeding;(e) the statement of claim or defence discloses no reasonable grounds ofbringing or defending the claim;70 Auckland Council v Mawhinney, above n 1, at [50]; Siemer v Attorney-General [2018] NZHC3406 at [86].(f) the statement of claim is an abuse of the Court's process or is otherwiselikely to obstruct the just disposal of the proceeding; and(g) the litigant has failed to comply with a rule, practice direction, or courtorder.[102] Under s 88B of the Judicature Act 1908, the predecessor to s 166, theproceedings were required to be vexatious. Although this is no longer a requirement,the test for vexatious proceedings is still relevant when assessing whether an order isnecessary.71 Features of vexatious proceedings can include:72(a) a deeply entrenched pattern of behaviour characterised by a refusal toaccept adverse decisions;(b) extravagant and baseless allegations;(c) claims against a wide range of people;(d) failure to comply with the rules of court;(e) the filing of prolix and confusing pleadings; and(f) a failure to recognise any distinction between pleadings, evidence andsubmissions.[103] Section 168 provides for the terms of an order under s 166:168 Terms of section 166 order(1) An order made under section 166 may restrain a party fromcommencing or continuing any proceeding (whether generally oragainst any particular person or persons) of any type specified in theorder without first obtaining the leave of the High Court.(2) An order made under section 166, whether limited, extended, orgeneral, has effect for a period of up to 3 years as specified by theJudge, but the Judge making it may specify a longer period (which71 Auckland Council v Mawhinney, above n 1, at [52]; Siemer v Attorney-General, above n 70, at[87].72 Attorney-General v Heenan [2009] NZAR 763 (HC) at [138].must not exceed 5 years) if he or she is satisfied that there areexceptional circumstances justifying the longer period.[104] Section 169 of the Act sets out the procedure for making s 166 orders, applyingfor leave when subject to a s 166 order, and appealing a s 166 order.[105] I again note a Court should be cautious in making an order under s 166, as itamounts to a breach of a person's right of access to justice,73 but acknowledge thatcaution must also be balanced against the stress and expense that opponents ofmeritless litigation face, and the limited resources available within the judicialsystem.74[106] Hinton J in Auckland Council v Mawhinney identified a two-step process fordeciding an application under s 166:75(a) Are there at least two proceedings that are or were totally withoutmerit?(b) If so, in exercising its discretion, is it appropriate for the Court to makean order under s 166?Are there at least two proceedings that are or were totally without merit?[107] Ms White submitted Mr Paterson has commenced seven proceedings totallywithout merit:(a) an application to the Tenancy Tribunal (application number 4057525)in 2015;76(b) the first application for annulment of the bankruptcy, declined byAssociate Judge Osborne in 2016;7773 Auckland Council v Mawhinney, above n 1, at [54].74 At [55].75 At [115].76 Paterson v GLW Group Ltd Order of the Tenancy Tribunal on Application Number 4057525,Hastings, 19 December 2016.77 Paterson v Lepionka & Company Investments Ltd, above n 9.(c) the second application for annulment of the bankruptcy, declined byAssociate Judge Johnston in 2018 (and upheld by the Court of Appealin 2019);78(d) the first proceeding against the Registrar-General of Land (theRegistrar-General) in 2019 (CIV-2019-441-47), discontinued byMr Paterson following a minute issued by Churchman J;79(e) the second proceeding against the Registrar-General in 2020(CIV-2020-441-4), discontinued by Mr Paterson;(f) the current mortgagee proceeding; and(g) the current bankruptcy proceeding.[108] I consider six of these were totally without merit: the Tenancy Tribunalapplication, the second application for annulment of the bankruptcy, the first andsecond proceedings against the Registrar-General, the current mortgagee proceeding,and the current bankruptcy proceeding.Tenancy Tribunal application 4057525[109] Mr Paterson filed a claim with the Tenancy Tribunal (the Tribunal) inDecember 2016, alleging he had entered into an unwritten tenancy agreement withGLW in December 2015. On 19 December 2016, the Tribunal found that LCIL hadbeen mortgagee in possession since April 2015, and therefore any tenancy agreementbetween GLW and Mr Paterson after that date did not confer on him occupation rightsas against LCIL.80 Additionally, the Tribunal decision expressed "real doubts" aboutwhether an enforceable residential tenancy contract had been created, even if GLWwere in a position to grant the tenancy.8178 Paterson v Lepionka & Company Investments Ltd, above n 10.79 Paterson v Registrar-General of Land HC Wellington CIV-2019-441-47, 8 August 2019(Minute of Churchman J).80 Paterson v GLW Group Ltd, above n 76, at [24]-[35].81 At [40].[110] Mr Paterson applied for a rehearing on 23 December 2016, on the ground hehad written evidence that the tenancy was granted in November 2011, based on aminute dated 7 November 2011. When LCIL sought discovery of the minute book,Mr Paterson advised it was held by a colleague, Mr Tony Kelly, who had prepared theminute. LCIL obtained an affidavit from Mr Kelly, recording he was not employedby Mr Paterson in 2011, had not prepared the minute, and had not spoken toMr Paterson for several years. Mr Paterson subsequently withdrew his request for arehearing.[111] The Tribunal decision records that Mr Paterson appeared to accept that LCILwas mortgagee in position from April 2015 until August 2015, but had submittedevidence GLW re-entered possession of the property in December 2015.82 Althoughthat evidence was not compelling enough to sway the Tribunal, in fairness toMr Paterson, I note that the Main Judgment had not yet been issued, meaning the HighCourt had not yet confirmed when LCIL became mortgagee in possession.[112] However, the most concerning element of the application to theTenancy Tribunal is the lack of credible evidence, and particularly the different basisfor the tenancy raised in his application for a rehearing. It appears Mr Paterson simplychanged the basis of the tenancy, to avoid the adverse finding relating to the timing ofLCIL being in possession of the property. When viewed in this light, the applicationto the Tenancy Tribunal was totally without merit.First application for annulment of the bankruptcy: Paterson v Lepionka & CoInvestments Ltd [2016] NZHC 1331[113] Although the first bankruptcy annulment application failed on multiplegrounds, I do not consider it to have been totally without merit. In fairness toMr Paterson, I note it was his first challenge to the bankruptcy order. The applicationcentred on factual evidence relating to a bank cheque purportedly tendered as paymentof the relevant debt. In the course of the hearing, it was accepted that LCIL neverreceived the bank cheque, and there was no conclusive evidence it was posted.82 At [33].However, I do not consider it was totally without merit for Mr Paterson to test thatevidence in the proceeding.[114] In declining the application, Associate Judge Osborne identified two stages tohis analysis: first, he must have been satisfied, in terms of s 309(1)(a) of theInsolvency Act, that Mr Paterson should not have been adjudicated bankrupt; andsecond, whether it would be appropriate to exercise his discretion and grant theannulment. Associate Judge Osborne found Mr Paterson failed at the first stage: therewas no procedural defect in the application for bankruptcy;83 no material fact notdrawn to the Court's attention in the adjudication proceeding;84 and no evidence of anabuse of the process of the Court.85[115] The Judge also noted that had he reached the second stage of the analysis,multiple factors pointed against granting the annulment: interest had accrued on thecosts order, meaning the bank cheque would have been insufficient to meet the debt;86by reason of summary judgment entered in favour of LCIL on the same day as thebankruptcy (for over $3 million), LCIL likely would have been able to bankruptMr Paterson on that basis, even if the costs order had been paid;87 Mr Paterson hadsubstantial other debts;88 Mr Paterson took no steps to protest his position;89 and theOfficial Assignee had incurred costs which there was no evidence Mr Paterson couldpay.90Second application for annulment of the bankruptcy: Paterson v Lepionka & CoInvestments Ltd [2018] NZHC 3022[116] The second bankruptcy annulment application, filed two years later, is clearlya proceeding which was totally without merit. It was filed largely on the same grounds83 Paterson v Lepionka & Co Investments Ltd, above n 9, at [46].84 At [47].85 At [48].86 At [51].87 At [52]-[53].88 At [54]-[56].89 At [57].90 At [58].as the first,91 and Associate Judge Johnston found the application was barred by theprinciples of res judicata.92[117] There was a potential exception to the principle of res judicata, as Mr Patersonalleged the bankruptcy order was obtained by fraud. Associate Judge Johnston foundthat, even accepting there was jurisdiction to make an application on the basis of newevidence that the bankruptcy order was obtained by fraud, there was no newevidence.93[118] Finally, Associate Judge Johnston recorded that even if his analysis wereincorrect, he would not have exercised his discretion in Mr Paterson's favourbecause:94 Mr Paterson had delayed two years in making his second application;Mr Paterson was bankrupt in Australia; and the application was opposed by theOfficial Assignee, who indicated Mr Paterson had assets of approximately $9,000 andpotential liabilities of over $7,700,000.[119] Although Mr Paterson's appeal of the second bankruptcy annulmentapplication to the Court of Appeal does not count as a separate proceeding, I note theCourt of Appeal upheld Associate Judge Johnston's findings.95[120] For the sake of completeness, I also note that in an affidavit dated31 January 2020, Mr Paterson continued to assert that LCIL were in possession of thebank cheque, and that he subsequently transferred the sum to them electronically, buthe has provided no evidence of this.First proceeding against the Registrar-General: Paterson v Registrar-General of LandCIV-2019-441-47[121] On 2 August 2019, Mr Paterson filed a statement of claim seeking declarationsand other relief against the Registrar-General relating to the property, and aninterlocutory application for an interim injunction against the Registrar-General.91 Paterson v Lepionka & Co Investments Ltd, above n 10, at [4].92 At [14].93 At [17].94 At [18].95 Paterson v Lepionka & Co Investments Ltd, above n 7.Mr Paterson was seeking to restrain the Registrar-General from processing ane-dealing that LCIL had lodged seeking to subdivide and transfer the property inexercise of its power of sale as mortgagee. Mr Paterson sought orders preventingtransfers to or from most of the defendants, but did not name or serve any of thedefendants.[122] A review of those proceedings is instructive. Mr Paterson claimed yet againthat the s 179 PLA notice was improperly executed by LCIL's solicitor, and allegedthat LCIL colluded with Mr Duncan in a fraudulent scheme under theLand Transfer Act 1952. All the causes of action bear remarkable similarity to causesof action already heard and determined in the Main Judgment.[123] Mr Paterson discontinued the proceeding after a teleconference beforeChurchman J on 8 August 2019.96 Churchman J issued a minute recording concernsraised by the Court during the teleconference about the application, including:97(a) the fact that the relief sought against the Crown was prohibited bys 17(1) of the Crown Proceedings Act 1950;(b) although Mr Paterson had filed an undertaking as to damages, he wasan undischarged bankrupt in New Zealand;(c) the proceeding appeared to be a collateral attack on a judgment givenby Associate Judge Bell on 15 July 2019 (discussed further below at[144]-[149]),98 judgments given by Fitzgerald J in 2017 and 2018(including the Main Judgment), and other related decisions; and(d) the proceeding appeared to be predicated on the basis that Mr Patersonwas acting on behalf of a trust, the beneficiaries of which were histwo sons – a claim which had been unequivocally rejected by FitzgeraldJ.9996 Paterson v Registrar-General of Land, above n 79.97 At [6]-[7].98 Lepionka & Co Investments Ltd v Naldapat Ltd, above n 29.99 GLW Group Ltd v Lepionka & Co Investments Ltd, above n 36, at [68].[124] Churchman J also drew to Mr Paterson's attention "the possibility that hisactions in commencing these proceedings may ultimately be found to be a contemptof Court".100[125] In a memorandum dated 20 August 2019, Mr Paterson alleged that LCIL'scounsel misled Churchman J in a memorandum dated 7 August 2019, which was notprovided to Mr Paterson in advance of the teleconference. Mr Paterson recorded thatthe reason he discontinued the proceeding was because he was understandably anxiousabout the possibility of being in contempt of court.[126] In a memorandum dated 10 July 2020, in the second proceeding against theRegistrar-General, Mr Paterson alleged Churchman J "essentially cut and pasted theLCIL untruthful comments into his minute". Mr Paterson recorded that, after theteleconference but before he had seen the LCIL memorandum, he sought advice fromhis McKenzie friend, Mr Dewar. He discontinued the proceeding as he did not wantto prejudice other proceedings he was pursuing at the time, and says he discontinuedit "with great regret".[127] Mr Paterson has not expanded on these allegations to explain howChurchman J was misled. I have reviewed the memorandum of 7 August 2019, I canfind nothing in that I would consider to be misleading.[128] I consider this proceeding to have been totally without merit.Second proceeding against the Registrar-General: Paterson v Registrar-General ofLand CIV-2020-441-4[129] On 13 March 2020, Mr Paterson filed a statement of claim seeking relief(including declarations, damages, and orders vesting of parts of the property withMr Paterson) against the Registrar-General, in relation to the property. LCIL, LCLand the SJ Lepionka Family Trust were later joined as defendants to that proceeding,and applied for strike out on the grounds that the statement of claim: disclosed noreasonably arguable cause of action as Mr Paterson lacked standing, was barred from100 Paterson v Registrar-General of Land, above n 79, at [10].bringing a claim under s 54 of the LTA 2017 due to the time that had passed, and hadno reasonably arguable interest in the land; and was vexatious and an abuse of process,being a collateral attack on previous judgments of the courts. In the alternative, theysought summary judgment or security for costs.[130] The statement of claim relied on almost identical facts as in the first proceedingagainst the Registrar-General, and sought similar remedies.[131] In a memorandum dated 10 July 2020, Mr Paterson recorded that his reasonfor discontinuing the proceeding was that, following a minute issued by Cull J, hebecame aware that the proceeding may be unnecessary if he was successful in thecurrent mortgagee proceeding. He recorded that he discontinued the proceeding ingood faith, to mitigate the costs to all parties.[132] I consider on its face this proceeding was totally without merit, and yet anotherattempt to relitigate matters previously determined.The current mortgagee proceeding: Paterson v Lepionka & Co Investments Ltd CIV-2019-441-78[133] As I have determined at [48]-[74] and [95]-[97], the current mortgageeproceeding should be struck out as an abuse of process based on the principles ofres judicata. It is another collateral attack on an issue that has already been decidedby the High Court, and is totally without merit.The current bankruptcy proceeding: Paterson v Lepionka & Co Investments LtdCIV-2020-441-41[134] As I have determined at [77]-[94], the current bankruptcy proceeding shouldbe struck out on the basis that the statement of claim discloses no reasonably arguablecause of action. Additionally, for the purposes of the s 166 analysis, I note the currentbankruptcy proceeding can also be seen as a collateral attack on the bankruptcyadjudication and subsequent challenges outlined above; the issue has now beendecided three times by the High Court and once by the Court of Appeal. The maliciousprosecution proceeding is totally without merit.Conclusion[135] In these six proceedings (the Tenancy Tribunal application, thesecond application for annulment of the bankruptcy, the first and second proceedingsagainst the Registrar-General, the current mortgagee proceeding, and the currentbankruptcy proceeding), Mr Paterson has consistently displayed a willingness to bringproceedings:(a) that have no prospect for success;(b) that expose the defendants to inconvenience, harassment and expenseout of all proportion to the gain he is likely to receive;(c) without regard to the merits, proportionality or costs of the proceeding;(d) disclosing no reasonable grounds of bringing a claim; and(e) that are an abuse of the Court's process.Is it appropriate for the Court to make an order under s 166?[136] In addition to the six proceedings identified above, which were totally withoutmerit, I also note the broader context of the litigation between the parties. I firstconsider other proceedings commenced or defended by Mr Paterson, appeals byMr Paterson, and Mr Paterson's general conduct in proceedings, before consideringMr Paterson's submissions.Other proceedings commenced by LCIL and defended by Mr Paterson[137] Ms White submitted four further proceedings commenced by LCIL, due toMr Paterson's actions, are relevant:(a) removal of a caveat lodged over the property by Horseshoe BendHawkes Bay Limited in March 2016 (the Horseshoe Bend caveat);101101 Lepionka & Co Investments Ltd v Horseshoe Bend Hawkes Bay Ltd [2016] NZHC 2318.(b) removal of a caveat lodged over the property by Mr Paterson inMay 2018 (the Paterson caveat);102(c) removal of two caveats lodged over the property by Naldapat Limitedand LW354 Limited in December 2018 and January 2019 (the Naldapatcaveat and the LW354 caveat);103 and(d) application to set aside a statutory demand issued by Mr Paterson inDecember 2019.104[138] Ms White submitted these should be considered by the Court as proceedingswhich have been "continued" by Mr Paterson for the purposes of s 167(5), as hisactions (in lodging a caveat or issuing a statutory demand) meant that it was necessaryfor LCIL to bring the proceedings. As I have found the six proceedings discussedabove are sufficient to meet the threshold (of two proceedings that were totally withoutmerit) for making a s 166 order, I do not need to consider these proceedings at thefirst stage. The appropriate course is to consider them as relevant in this second stage,when I am exercising my discretion.[139] I first consider the four caveats, which were all removed.[140] Although the Horseshoe Bend, Naldapat, and LW354 caveats were brought bycompanies (rather than Mr Paterson personally), those proceedings can be consideredwhen deciding whether to exercise the discretion under s 166.105 All three companieswere, at the relevant times, controlled by associates of Mr Paterson:Ms Elizabeth O'Neil (Mr Paterson's former wife) incorporated Horseshoe BendHawkes Bay Limited, and Ms Nadia Dapas (Mr Paterson's current de facto partner)was its sole director at the time;106 Ms Dapas was the director and shareholder ofLW354 Limited and Naldapat Limited.107 Fitzgerald J later recorded, when dealing102 GLW Group Ltd v Lepionka & Co Investments Ltd, above n 36.103 Lepionka & Co Investments Ltd v Naldapat Ltd, above n 29.104 Lepionka & Co Investments Ltd v Paterson HC Auckland CIV-2020-404-36, 3 July 2020 (Minuteof Associate Judge Bell).105 Auckland Council v Mawhinney, above n 1, at [128].106 Lepionka & Co Investments Ltd v Horseshoe Bend Hawkes Bay Ltd, above n 101, at [17].107 Lepionka & Co Investments Ltd v Naldapat Ltd, above n 29, at [2].with the Paterson caveat, that Mr Paterson accepted he was responsible for causingHorseshoe Bend to lodge the caveat.108 Associate Judge Bell found he was behind thelodging of the LW354 caveat.109[141] Associate Judge Sargisson ordered the removal of the Horseshoe Bend caveat,finding there was "no room for the slightest inference that the sales contracts referredto in Horseshoe's caveat afford Horseshoe the interest that its caveat claims."110The Judge made increased costs orders against GLW and Ms O'Neil.111[142] The Paterson caveat was originally lodged based on GLW's claimed interest inthe land, but Mr Paterson later claimed he had a caveatable interest under a trust forhis sons. Fitzgerald J ordered the removal of the caveat, and made an order restrainingMr Paterson from lodging any further caveats, noting:112 Mr Paterson's "concerning"conduct, in taking differing positions as to the basis of the caveat without properevidence; concerns about Mr Paterson's actions as an undischarged bankrupt and hisinvolvement in GLW; the Horseshoe Bend caveat; and the loss caused to LCIL. TheJudge made increased costs orders against Mr Paterson.113[143] Naldapat Limited removed its caveat following agreement with Lepionka, andAssociate Judge Bell ordered the removal of the LW354 caveat.114 The Judge held:115 the breaches of the order and the undertaking mean that the caveat shouldnot have been lodged at all. I am satisfied that LW354 Ltd's caveat wasvexatious and an abuse of the caveat process. Mr Paterson was clearly behindlodging the caveat. He and his associates should understand that the litigationcannot be re-opened and that the Lepionka mortgagee can complete the salesof the lots in the Kahuranaki Road property. This attempt to block the transfersof title has been pointless.[144] Perhaps the best example of Mr Paterson's approach to this litigation andrelitigation is the LW354 caveat. On 27 June 2019, Associate Judge Bell heard the108 GLW Group Ltd v Lepionka & Co Investments Ltd, above n 36, at [69].109 Lepionka & Co Investments Ltd v Naldapat Ltd, above n 29, at [85].110 Lepionka & Co Investments Ltd v Horseshoe Bend Hawkes Bay Ltd, above n 101, at [35].111 Lepionka & Co Investments Ltd v Horseshoe Bend Hawkes Bay Ltd [2017] NZHC 1482.112 GLW Group Ltd v Lepionka & Co Investments Ltd, above n 36, at [66]-[73].113 GLW Group Ltd v Lepionka & Co Investments Ltd [2018] NZHC 2445.114 Lepionka & Co Investments Ltd v Naldapat Ltd, above n 29.115 At [85].application by LCIL to set aside a caveat lodged against the property byLW354 Limited.[145] The interest claimed under that caveat was:116The abovenamed caveator claims an interest in the land contained in the abovecertificate of title 716,653 as beneficial and/or equitable owner of the freeholdestate and the fee simple, pursuant to a cestui que trust agreement as per thedeed of appointment and retirement of trustee dated 13 November 2018 assuccessor pursuant to a deed of appointment of trustee dated 20 July 2017between the registered owner GLW Group Limited and Naldapat Limited.[146] At the end of the hearing on the same day, the Judge announced that theLW354 caveat should be removed. The Judge did not deliver his reasons in writinguntil 15 July 2019.[147] In response to the oral decision delivered on 27 June 2019, a new caveat waslodged against the property on 28 June 2019. The caveator was 47 Fairfax Road PtyLimited, a company registered in New South Wales, Australia. Company recordsshow that Ms Dapas is a director of the company, and Mr Paterson was formerly adirector. The interest claimed was "pursuant to agreements to mortgage between theregistered owner of the above named caveator, dated 15 September 2009, (prior to theregistration of the first mortgage), and 9 June 2017."[148] Additionally, Ms Dapas filed a notice of claim dated 5 July 2019, seeking toregister a relationship property interest under the Property (Relationships) Act 1974,by virtue of her 12-year de facto relationship with Mr Paterson. This is whollyinconsistent with Mr Paterson's claim in the LW354 caveat that GLW owned theproperty as a trustee for his sons under a trust established in 2009.[149] I also note that Mr Paterson unsuccessfully sought to challenge this decisionof Associate Judge Bell in the Court of Appeal.117[150] I turn now to the statutory demand. Mr Paterson issued a statutory demand toLCIL on 31 December 2019, claiming payment for chattels LCIL had allegedly116 At [1].117 LW354 Ltd v Lepionka & Co Investments Ltd [2020] NZCA 137.converted from his family. Associate Judge Bell set aside the demand on20 March 2020,118 and held in a minute awarding increased costs againstMr Paterson:119[12] Mr Paterson's actions were reckless at the least. They were alsocalculated to cause embarrassment and inconvenience to [LCIL] in serving astatutory demand on New Year's Eve.[14] The service of a statutory demand is relatively simple, compared withthe steps that a company must take to have the statutory demand set aside. Itmust have been clear to Mr Paterson that he was deliberately vexing [LCIL]and putting it to needless expense and extra work and stress over the holidayperiod when he must have known there was no proper basis for the statutorydemand.Appeals by Mr Paterson[151] Ms White submitted that Mr Paterson's unsuccessful attempts to appeal thejudgments detailed above are relevant to the making of a s 166 order:(a) Mr Paterson has twice attempted to challenge the Main Judgment in theCourt of Appeal, and leave to appeal has been declined each time;120(b) the Court of Appeal declined Mr Paterson's appeal ofAssociate Judge Johnston's decision in the second bankruptcyannulment application;121 and(c) the Court of Appeal declined Mr Paterson's appeal ofAssociate Judge Bell's removal of the LW354 caveat, and the Courtordered the Registry not to accept any documents for filing fromMr Paterson in relation to the appeal.122118 Lepionka & Co Investments Ltd v Paterson [2020] NZHC 831.119 Lepionka & Co Investments Ltd v Paterson, above n 104.120 GLW Group Ltd (in liq) v Lepionka & Co Investments Ltd [2019] NZCA 24; Paterson v Lepionka& Co Investments Ltd, above n 6.121 Paterson v Lepionka & Co Investments Ltd, above n 7.122 LW354 Ltd v Lepionka & Co Investments Ltd, above n 117.Conduct of proceedings by Mr Paterson[152] Ms White submitted that Mr Paterson's general conduct in various proceedingsis relevant to the making of a s 166 order, which can be summarised as Mr Paterson:(a) continuing to file documents himself in proceedings, despite having noformal role in the relevant company that is a party to the proceeding;(b) failing to comply with timetabling orders;(c) adopting contradictory positions about the basis of his claims (forexample, who held a caveatable interest in the property in relation tothe Paterson caveat discussed at [142] above);(d) breaching procedural rules;(e) filing generally ill-advised applications (for example, seeking ajury trial in the current proceedings);(f) taking actions calculated to cause inconvenience (particularly, thestatutory demand discussed at [150] above); and(g) generally causing increased costs to the defendants and the Courts.Mr Paterson's submissions[153] Mr Paterson submitted LCIL has brought a number of proceedings against himand entities associated with him without merit, and there have been multiple costsawards against LCIL. He drew particular attention to the 2016 decision inGLW Group Ltd v Lepionka & Co Investments Ltd (also relied on at [83] above inrelation to the tort claim of abuse of process), where Associate Judge Smith found:LCIL served GLW with a statutory demand, despite other proceedings making it clearthere was a genuine and substantial dispute over the amount claimed; 123 and LCIL's123 GLW Group Ltd v Lepionka & Co Investments Ltd, above n 55, at [27].inappropriate use of the statutory demand procedure was sufficient to justify an upliftabove scale costs.124[154] Mr Paterson also highlighted the 2016 decision of Associate Judge Smith inLepionka & Co Investments Ltd v GLW Group Ltd (where Mr Paterson personally wasthe second defendant) awarding costs against LCIL, where LCIL discontinued aproceeding alleging trespass and seeking vacant possession, shortly before thehearing.125 Mr Paterson submitted he had spent a substantial amount of moneytravelling from Australia to attend the proceedings.[155] At the hearing before me, Mr Paterson's submissions consisted of repetition ofthe arguments outlined at [35] above. In addition to those submissions, he madetwo highly inflammatory and irrelevant claims, unsubstantiated by any evidence,which do not warrant examination. For completeness, I simply refer to those claimsas the breast cancer and Black Power claims. The importance of these claims is todemonstrate Mr Paterson's obsession with this litigation and his belief system, whichappears to be increasing in its intensity rather than abating.Analysis[156] The six proceedings I have referred to at [109]-[135] are by themselves enoughto justify my making an order under s 166. In relation to the other cases referred to byMs White at [137]-[151], I consider them to be relevant to deciding whether to exercisemy discretion.[157] The proceedings discussed above display various features of vexatiousproceedings, which support the making of a s 166 order: a deeply entrenched patternof behaviour characterised by Mr Paterson's refusal to accept adverse decisions;claims against a wide range of people and entities, including the Registrar-General;and failure to comply with rules of the courts. The manner in which Mr Patersonconducts litigation – personally – is vexatious. Constant case management is neededby the defendants to consolidate proceedings, strike out new proceedings, obtain and124 At [34].125 Lepionka & Co Investments Ltd v GLW Group Ltd [2016] NZHC 1337.enforce costs orders, and respond to "thinly disguised old arguments masquerading asnew ones". Documents are frequently filed late, and submissions filed on the morningof the hearing. This was true of the proceedings before me.[158] The repetitive nature of Mr Paterson's proceedings, most of which arecollateral attacks on matters which have clearly been determined by the courts multipletimes, also supports the making of a s 166 order. Any question of law in relation tothe dispute about LCIL's statutory and equitable duties as mortgagee underlying theMain Judgment has been tried and resolved.[159] The usual deterrents to unmeritorious litigation (most notably, the cost) do notappear to deter Mr Paterson. He is impecunious and is unrepresented in almost all ofhis litigation. Although applications for strike out and security for costs are availableto dismiss unmeritorious claims, I note this still causes considerable cost andinconvenience to the defendants, and uses court resources.[160] A compounding feature of this case is the intensity of proceedings broughtwithin a limited timeframe. Rather than slowing down, if anything, the filing of claimsappears to have accelerated. In addition, the grandiosity of some of the later claims isconcerning.[161] In fairness to Mr Paterson, I acknowledge the fact that the defendants in thetwo current proceedings, as applicants for the s 166 order, are not without faultthemselves. The Main Judgment made findings against LCIL, and the increased costsawards noted above show they have also commenced or continued questionableproceedings. However, I note the two judgments Mr Paterson refers to are from 2016,and predate the substantive decision of this Court on these matters in theMain Judgment. He has not pointed to any more recent complaints about the conductof the defendants, other than the breast cancer and Black Power allegations referred toat [155] above. The evidence he purported to produce in support of this allegation isinadmissible in any event.[162] I think it is highly likely that Mr Paterson's conduct would continue if an orderwere not made in the defendant's favour. An order under s 166 is necessary.The terms of a s 166 order[163] Having decided an order under s 166 is appropriate, I must now consider theterms of the order.[164] Ms White submitted an extended order for a period of five years is appropriate,restraining Mr Paterson from commencing or continuing proceedings relating to anyof the matters arising out of the dispute between the parties over the development ofthe property. Ms White submitted a limited order would be insufficient, given thebroad range of claims Mr Paterson has brought.[165] Section 168 of the Act provides that an order has effect for a period of up tothree years. and that a Judge may make an order for up to five years if satisfied thereare "exceptional circumstances justifying the longer period." I note the courts haverecorded that the intent of the Act was not to give Judges a "blank cheque", and thedefault limit of three years was set, being sensitive to the impairment of the right ofaccess to justice.126 Hinton J found there were exceptional circumstances justifying afive year term in Mawhinney, noting litigation between the parties had been ongoingfor 25 years, and the meritless proceedings for the purposes of the s 166 order wentback 13 years.127[166] I consider an extended order restraining Mr Paterson from commencing orcontinuing any civil proceedings in relation to the dispute between the partiesstemming from the property development (including any matters relating to themortgagee proceedings and the bankruptcy proceedings) is appropriate. However,I do not consider there are exceptional circumstances warranting an order for a periodof more than three years.[167] I note that although four years of litigation creates a burden for the defendants,it falls well short of the 13-25 years justifying a five year order in Mawhinney. I acceptthat in Mawhinney, the remedy was not available until very late in the piece, and the126 Judicature Modernisation Bill: Report of the Ministry of Justice to the Justice and ElectoralCommittee (Ministry of Justice, Departmental Report CRT-09-04-07, April 2014) at [298]-[300]as cited in Auckland Council v Mawhinney, above n 1, at [158].127 Auckland Council v Mawhinney, above n 1, at [159].13-25 year time span is therefore not the benchmark for cases that follow. However,I am not persuaded that an order for five years is appropriate in the present case, giventhe caution the courts need to exercise when restricting a person's access to justice.Orders[168] The current mortgagee proceeding (CIV-2019-441-78) is struck out, on thebasis that it is barred by the principles of res judicata and is therefore an abuse of theCourt's process.[169] The current bankruptcy proceeding (CIV-2020-441-41) is struck out, on thebasis that Mr Paterson's statement of claim discloses no reasonably arguable cause ofaction.[170] An order under s 166 is made on the following terms:Garth Bowkett Paterson, in any capacity, including but not limited to as atrustee of any trust, is restrained from commencing or continuing any civilproceeding (or matter arising out of a civil proceeding) that relates in any wayto the matters listed below, for a period of three years:(a) Any interest in any of, or part of, land at 354 Kahuranaki Road,Hawke's Bay, including the parcels of land having the following uniqueidentifiers:(i) 716653;(ii) 716652;(iii) 716651;(iv) 822870;(v) 822871;(vi) 868572;(vii) 868573;(viii) 868574;(ix) 868575;(x) 868576;(xi) 868577.(b) Any caveat lodged on any of the parcels of land identified at (a) or theirpredecessors or successors in title.(c) Any sale or proposed sale of any of the parcels of land identified at (a).(d) The development by GLW Limited (in liquidation), and/or Lepionkaand Company Investments Limited as mortgagee, at354 Kahuranaki Road, Hawkes Bay and which resulted in the parcelsof land identified at (a).(e) The borrowing or lending arrangements involving two or more of:GLW Limited (in liquidation), Lepionka and Company InvestmentsLimited, AFI Management Pty Limited, K R Mortgage CompanyLimited, and Garth Bowkett Paterson (in any capacity whatsoever).(f) Any actions of any of the defendants in this proceeding, or any of theirfamily members, or KR Mortgage Company Limited, which in any wayrelates to any of the above matters.Doogue J