GARTH BOWKETT PATERSON v LEPIONKA & COMPANY INVESTMENTS LIMITED [2021] NZCA 364

GARTH BOWKETT PATERSON v LEPIONKA & COMPANY INVESTMENTS LIMITED [2021] NZCA 364[3 August 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA521/2020[2021] NZCA 364BETWEEN GARTH BOWKETT PATERSONAppellantAND LEPIONKA & COMPANYINVESTMENTS LIMITEDFirst RespondentSTEFAN JOZEF JOHN LEPIONKA, JOEDUNCAN AND GREGORY BERNARDHORTON AS TRUSTEES OF THELEPIONKA BUSINESS TRUSTSecond RespondentsLEPIONKA & COMPANY LIMITEDThird RespondentSTEFAN JOZEF JOHN LEPIONKA ANDNIGEL WARREN HUGHES ASTRUSTEES OF THE SJ LEPIONKAFAMILY TRUSTFourth RespondentsSTEFAN JOZEF JOHN LEPIONKAFifth RespondentCA40/2021BETWEEN GARTH BOWKETT PATERSONAppellantAND LEPIONKA & COMPANYINVESTMENTS LIMITEDRespondentCourt: Clifford and Gilbert JJCounsel: Appellant in personM G Colson and S J Leslie for RespondentsJudgment: 3 August 2021 at 9.30 amJUDGMENT OF THE COURTA The appeal in CA 521/2020 is struck out save in respect of the order madeunder s 166 of the Senior Courts Act 2016. That aspect of the appeal isallowed to proceed.B The appeal in CA 40/2021 is struck out.C The interlocutory application by the appellant dated 27 April 2021 isdeclined.D There is no order as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)Table of contentsIntroduction [1]Background [7]The development [8]The first mortgagee proceeding [11]Mr Paterson adjudicated bankrupt [12]First application for annulment of bankruptcy [14]Official Assignee disclaims rights [15]The Liability judgment [16]Appeal against Liability judgment [18]Mr Paterson lodges a caveat over the property [19]Second application for annulment of bankruptcy [23]Settlement [24]Mr Paterson applies to be joined in GLW's appeal [25]Further caveats lodged by Mr Paterson's interests [26]The second mortgagee proceeding [30]Mr Paterson's further attempt to appeal the Liability judgment [31]The malicious prosecution proceeding [32]Strike out judgment [33]Appeal against Strike out judgment [38]Second bankruptcy — Adjudication judgment [41]DecisionCA521/2020 [42]CA40/2021 [50]Mr Paterson's interlocutory application [53]Costs [54]Result [55]Introduction[1] Garth Paterson's appeal in CA521/2020 is against a judgment delivered byDoogue J on 26 August 2020 striking out two sets of proceedings he commenced inthe High Court at Napier (the Strike out judgment).1 The first of these proceedings(which we will refer to as the second mortgagee proceeding)2 was struck out onthe basis it was precluded by the doctrine of res judicata and therefore an abuse ofthe Court's process.3 The second proceeding (which we will refer to as the maliciousprosecution proceeding)4 was struck out on the basis that the statement of claimdisclosed no reasonably arguable cause of action.5 The Judge also made an extendedorder under s 166(4) of the Senior Courts Act 2016 restricting Mr Paterson fromcommencing or continuing any civil proceeding for a period of three years relating inany way to specified land in Hawke's Bay.6[2] Mr Paterson's appeal in CA40/2021 is against a judgment delivered byAssociate Judge Johnston on 16 December 2020 adjudicating Mr Paterson bankrupt(the Adjudication judgment).7[3] The respondents now apply to strike out both appeals on the grounds they arevexatious and an abuse of process.[4] Mr Paterson opposes the application and applies for orders:(a) suspending or staying his bankruptcy pending determination of hisappeal against the Adjudication judgment;(b) directing that the appeal against the Adjudication judgment be heardfirst;1 Paterson v Lepionka & Co Investments Ltd [2020] NZHC 2184 [Strike out judgment].2 Paterson v Lepionka & Co Investments Ltd CIV-2019-441-78 [the second mortgagee proceeding].3 Strike out judgment, above n 1, at [168].4 Paterson v Lepionka & Co Investments Ltd CIV-2020-441-41 [the malicious prosecutionproceeding].5 Strike out judgment, above n 1, at [169].6 At [170].7 Lepionka & Co Investments Ltd v Paterson [2020] NZHC 3332 [Adjudication judgment].(c) staying the appeal against the Strike out judgment pendingdetermination of the appeal against the Adjudication judgment; and(d) convicting and fining Lepionka & Company Investments Ltd (LCIL)and its director, Stefan Lepionka, for offences pursuant to s 163(4) ofthe Property Law Act 2007 (the PLA).[5] These orders are sought on the basis there has been a miscarriage of justice andLCIL and Mr Lepionka have intentionally breached their statutory duties unders 163(4) of the PLA.[6] The two applications are now before us for determination on the papers.Background[7] The parties to these proceedings and their associated interests have beenengaged in extensive litigation over the last six years arising out of a propertydevelopment in Hawke's Bay. The full details are collected in the numerousjudgments that have resulted, some of which are referred to in this judgment. It issufficient for present purposes to give only a brief summary of this background.The development[8] In 2009, GLW Group Ltd (GLW)8 (now in liquidation), a company controlledby Mr Paterson and of which he was the director, acquired a 24-hectare block of landon the banks of the Tukituki River in the Hawke's Bay (the property) for the purposesof carrying out a development involving the subdivision and sale of a number oflifestyle blocks. The intention was for one of these blocks to be retained for the benefitof Mr Paterson's family. The purchase was partly funded with borrowing fromWestpac Bank which took a registered first mortgage over the property as security.[9] GLW encountered difficulties, partly because it had assumed obligations tothe purchasers of proposed lots 1 and 2 in 2012 that were inconsistent with rightssubsequently conferred under agreements entered into in 2014 with Mr Lepionka's8 The letters GLW represent Garth, Luke and William, being Mr Paterson and his two sons.interests for the sale of various other proposed lots in the subdivision (the Lepionkaagreements). As a result, caveats were lodged by the purchasers of lots 1 and 2preventing settlement of the Lepionka agreements. GLW ran out of funds anddefaulted on its obligations to Westpac and another financier, AFI Management PtyLtd (AFI), which had also provided funding for the development and held anunregistered second mortgage. Westpac issued a default notice under s 119 of the PLAin early 2015.[10] To protect his interests, Mr Lepionka formed LCIL which took an assignmentfrom Westpac of GLW's debt and securities. LCIL took possession of the property asmortgagee in early April 2015. LCIL, as mortgagee, adopted the Lepionka agreementsin accordance with s 179 of the PLA. GLW then sought to redeem the mortgage butLCIL refused to allow this on the basis it had already exercised its power of sale byadopting the Lepionka agreements.The first mortgagee proceeding[11] In September 2015, GLW and Mr Paterson filed claims in the High Court atAuckland against LCIL, the Lepionka purchasers and Mr Lepionka claiming, amongstother things, that LCIL had breached its statutory and equitable duties as mortgagee inadopting the Lepionka agreements and refusing to allow GLW to redeem the firstmortgage (we will refer to this proceeding as the first mortgagee proceeding).9Mr Paterson adjudicated bankrupt[12] Mr Paterson was bankrupted in Australia on 24 September 2015 onthe application of the Deputy Commissioner of Taxation. Mr Paterson ceased asdirector of GLW the following day and his ex-wife, Elizabeth O'Neil, replaced him asthe sole director of GLW.[13] On 5 April 2016, LCIL obtained summary judgment against Mr Paterson inthe sum of approximately $3.8 million being the amount owing under his personalguarantee of the mortgage. That application was not opposed. On the same day,9 GLW Group Ltd v Lepionka & Co Investments Ltd CIV-2015-404-2168 [the first mortgageeproceeding].Mr Paterson was adjudicated bankrupt for non-payment of costs awarded bythe High Court to LCIL. That application was also not opposed.First application for annulment of bankruptcy[14] Mr Paterson subsequently applied to annul his bankruptcy. This applicationwas declined by Associate Judge Osborne on 16 June 2016.10Official Assignee disclaims rights[15] In January 2017, the Official Assignee disclaimed all rights, interests andclaims that Mr Paterson had as a plaintiff in the first mortgagee proceeding.Mr Paterson then applied to have the disclaimed causes of action vested in himpursuant to s 119 of the Insolvency Act 2006. However, that application was declinedby Fitzgerald J in May 2017.11The Liability judgment[16] GLW's claims in the first mortgagee proceeding were heard by Fitzgerald J inJuly and August 2017 together with similar claims brought by AFI against LCIL.12Ms O'Neil was at that time the sole director and shareholder of GLW. Mr Patersonwas the only witness called by GLW to give evidence at the trial.[17] In a judgment delivered on 14 December 2017 (the Liability judgment),Fitzgerald J dismissed most of GLW's claims but found that LCIL had breached itsequitable duties as mortgagee by exercising its power of sale for an improper purposeand had failed to take reasonable precautions to obtain the best price reasonablyobtainable at the time of sale.13 The Judge declined to set aside the Lepionkaagreements with the result that GLW's remedy would be confined to damages.14The Judge found that whether LCIL had breached its statutory duty of reasonable carein exercising its power of sale under s 176 of the PLA would depend on the final price10 Paterson v Lepionka & Co Investments Ltd [2016] NZHC 1331.11 AFI Management Pty Ltd v Lepionka & Co Investments Ltd [2017] NZHC 1176 at [167].12 AFI Management Pty Ltd v Lepionka & Co Investments Ltd CIV-2015-404-2836.13 AFI Management Pty Ltd v Lepionka & Co Investments Ltd [2017] NZHC 3116 [Liabilityjudgment] at [494(d)] and [494(f)].14 At [494(h)].achieved by LCIL on the sale of the property as compared with the best pricereasonably obtainable in April 2015 when it adopted the Lepionka agreements.15A final assessment of damages would be made after completion of the subdivision.16Appeal against Liability judgment[18] GLW filed a notice of appeal against the Liability judgment on 1 February 2018but Mr Paterson (who was obviously not entitled to any relief in the circumstances wehave described) did not.Mr Paterson lodges a caveat over the property[19] The previous day, on 31 January 2018, Mr Paterson lodged a caveat overthe property claiming an interest pursuant to "a cestui que trust agreement dated16 November 2016 between the registered proprietor [GLW] and [Mr Paterson]".This was some 19 months after LCIL had taken possession on the property asmortgagee in April 2015. LCIL filed an application under s 143 of the Land TransferAct 1952 for removal of the caveat and for an order restraining Mr Paterson, GLW,Ms O'Neil and Nadia Dapas (Mr Paterson's current partner) from lodging any furthercaveat against the title to the property without leave of the Court. The applicationnamed Mr Paterson as first respondent in his capacity as trustee of an unknown trust,GLW as second respondent, Mr Paterson in his personal capacity as third respondent,Ms O'Neil as fourth respondent and Ms Dapas as fifth respondent. The notice ofopposition filed on behalf of Mr Paterson (in his personal capacity and as a trustee)stated that he "does not claim any caveatable interest in the property and undertakesnot to personally lodge any caveat".17 In the same notice of opposition, GLW claimedit had a caveatable interest in the property and contended that "the caveat has thereforebeen properly lodged".18 This was despite the caveat being lodged to protectMr Paterson's asserted interest in the property, not any interest by GLW.15 At [494(f)].16 At [494(j)].17 GLW Group Ltd v Lepionka & Co Investments Ltd [2018] NZHC 1658 at [15].18 At [15].[20] Despite taking that position in the notice of opposition, the submissionspresented at the hearing were, as noted by Fitzgerald J, "the complete opposite".19Counsel advised that GLW consented to the order sought restraining it from lodgingany caveat against the title to the property. These instructions had been provided byMs O'Neil as the current director of GLW. Mr Paterson appeared at the hearing.He asserted a caveatable interest arising under the Lepionka agreements whichcontained provisions relating to the "GLW fishing hut".20[21] Fitzgerald J was satisfied it was appropriate to make an order removingthe caveat and an order preventing Mr Paterson from lodging any further caveat overthe property. The Judge made the following pertinent observations in her judgmentdelivered on 6 July 2018 as to why these orders were justified:[47] Mr Paterson did not adduce any evidence of any alleged trustbetween himself and other members of his family. Indeed, and as noted earlier,in his written submissions, Mr Paterson expressly disclaimed any such trust,and confirmed that he simply appeared as a "representative" ofthe Garth Paterson family. Mr Paterson's suggestion that he holds contractualrights arising from the [Lepionka agreements] on trust for his familyaccordingly appears to be an attempt to avoid the consequences of his ownbankruptcy.[52] I record that I do not consider Mr Paterson, or individual membersof his family, or their guests, have a reasonably arguable case for the claimedcaveatable interest in any event.[66] I have carefully considered [whether to make a restraining order] andhave reached the conclusion that such an order against Mr Paterson isappropriate.[67] First, Mr Paterson's approach and conduct in relation to this particularcaveat is concerning. As will be evident from this judgment, he has takendiffering positions as to the basis upon which he lodged the caveat, and reliedon a variety of documents and alleged trusts to support it, without properevidence of such matters.[68] Second, I remain concerned at Mr Paterson's actions as anundischarged bankrupt, both in taking steps to issue a caveat and thenappearing on the subsequent application to remove it. This concern reflects19 At [16].20 At [36].more general concerns I expressed in a separate hearing in these proceedings,as to Mr Paterson's continuing involvement in GLW's activities and decisions.His claim to hold contractual rights on trust for his family is hollow,unsupported by evidence. I conclude it was a device to enable him to continueto pursue these matters personally, despite his status as undischargedbankrupt. If members of Mr Paterson's family properly considered they hada caveatable interest in the Land, it was open to them to have taken legaladvice on those matters and lodged a caveat in their own name, if consideredappropriate.[69] Third, Mr Paterson was responsible for another caveat improperlylodged over the Land, in that case, by a company named Horseshoe BendHawkes Bay Ltd ("HBHB"). Those proceedings were determined inSeptember 2016 by Associate Judge Sargisson. She found there to be "noroom for the slightest inference that the sales contracts referred to in [HBHB's]caveat afford [HBHB] the interest in Lot 7 that its caveat claims." The Judgeaccordingly ordered that the caveat be removed. Despite Mr Paterson'sevidence in the main proceedings to the contrary, I found that that caveat hadbeen lodged to frustrate the settlement of the sale of Lot 2 in the Land.Mr Paterson now accepts that he was responsible for causing HBHB to lodgethat caveat (though continues to maintain it was lodged for genuine reasons).[70] Fourth, Mr Paterson's actions (and those of others associated withhim, for example, in the HBHB proceedings) has undoubtedly caused loss toLCIL, such as the legal costs and expenses involved in dealing with theseissues. This is exacerbated by irregularities as to appearances, and confusingand inconsistent approaches being taken in the materials filed in support ofthe caveat. Any award of damages, or costs against Mr Paterson personally(even on an increased or indemnity basis), is unlikely to be of practical benefitgiven his present status. Further, the Court's scarce resources are divertedunnecessarily from other litigants.(Emphasis added, footnotes omitted.)[22] The Judge accordingly made an order restraining Mr Paterson from lodgingany further caveat against the property without prior leave of the Court.21 An order inthese terms was made by consent against GLW.22 The Judge accepted undertakingsfrom Ms O'Neil and Ms Dapas not to lodge caveats against the property in anycapacity without leave of the Court.23Second application for annulment of bankruptcy[23] In July 2018, Mr Paterson made a second application for annulment of hisbankruptcy. This was in almost exactly the same terms as his first application that hadbeen rejected by Associate Judge Osborne in June 2016. This application was declined21 At [90(b)].22 At [90(c)].23 At [74].by Associate Judge Johnston in November 2018.24 Mr Paterson's appeal against thatjudgment was dismissed by this Court in November 2019.25Settlement[24] GLW was placed into voluntary liquidation in July 2018. LCIL subsequentlyentered into comprehensive settlements with AFI in August 2018 and with GLW(through its liquidator) in December 2018. As part of the settlement, GLWdiscontinued its claims against LCIL in the High Court and abandoned its appeal tothis Court against the Liability judgment. That should have been the end of the matter.However, Mr Paterson does not accept finality and has continued to press the samegrievances against the Lepionka interests ever since.Mr Paterson applies to be joined in GLW's appeal[25] On 20 December 2018, one day before GLW filed its notice of abandonmentof the appeal from the Liability judgment, Mr Paterson filed a memorandum seekingto be added as an appellant in the appeal. LW354 Ltd (LW354), a companyincorporated on 13 November 2018 with Ms O'Neil as its sole director andshareholder, later filed a memorandum also seeking to be added as an appellant inthe appeal. This Court declined these applications on 28 February 2019.26Further caveats lodged by Mr Paterson's interests[26] In November 2018, Naldapat Ltd (Naldapat) lodged a caveat claiming aninterest in the property under a purported agreement with GLW on 11 May 2018.Ms Dapas was the sole shareholder of Naldapat and she and Vaughan Bowkett,Mr Paterson's cousin, were its directors. Naldapat withdrew this caveat after LCILapplied to the High Court for its removal.[27] In the meantime, LW354 also lodged a caveat claiming an interest inthe property as trustee, having purportedly assumed this role on 13 November 201824 Paterson v Lepionka & Co Investments Ltd [2018] NZHC 3022.25 Paterson v Lepionka & Co Investments Ltd [2019] NZCA 548.26 GLW Group Ltd (in liq) v Lepionka & Co Investments Ltd [2019] NZCA 24.following the retirement of Naldapat as trustee. The interest claimed under the caveatwas described as follows:27The abovenamed caveator claims an interest in the land contained in the abovecertificate of title 716653 as beneficial and/or equitable owner of the freeholdestate and the fee simple, pursuant to a cestui que trust agreement as perthe deed of appointment and retirement of trustee dated 13 November 2018 assuccessor pursuant to a deed of appointment of trustee dated 20 July [2018]between the registered owner [GLW] and [Naldapat].[28] Associate Judge Bell made an oral order removing LW354's caveat atthe conclusion of the hearing of LCIL's application on 27 June 2019 for reasons setout in his judgment subsequently delivered on 15 July 2019.28 The caveat had beenlodged in breach of the restraining order made by Fitzgerald J and the undertakingMs O'Neil had given to the Court.29 The Associate Judge was satisfied that the caveatwas vexatious and an abuse of process and Mr Paterson was clearly behind the lodgingof it.30 LW354 filed an appeal against this judgment but it has now been abandoned.[29] Immediately following the announcement of the order to remove LW354'scaveat, a further caveat was lodged against the property by 47 Fairfax Pty Ltd, anothercompany associated with Mr Paterson. Ms Dapas was a director of this company.Ms Dapas also sought to register a notice of claim under the Property (Relationships)Act 1976 against the title to the property.The second mortgagee proceeding[30] In November 2019, Mr Paterson commenced the second mortgagee proceedingin the High Court at Napier. He claimed to be a trustee of the Garth Paterson FamilyTrust and asserted that this trust has held an unregistered interest in the property since15 September 2009 pursuant to an agreement to mortgage with GLW. Mr Patersonalleged that GLW took title to the property in 2009 as trustee for Mr Paterson as baretrustee for his two sons. In his capacity as trustee, he advanced eight causes of actionclaiming that LCIL breached various duties in the exercise of its powers as mortgagee,including an alleged breach of s 176 of the PLA by failing to take reasonable care to27 Lepionka & Co Investments Ltd v Naldapat Ltd [2019] NZHC 1646 at [1].28 At [4].29 At [78] and [80].30 At [85].obtain the best price reasonably obtainable. In August 2020, Doogue J struck out thesecond mortgagee proceeding on the basis the claims were the same, or sufficientlysimilar, to those pursued in the first mortgagee proceeding and dealt with byFitzgerald J in the Liability judgment.31 Accordingly, Doogue J found the secondmortgagee proceeding was barred by the principles of res judicata.32Mr Paterson's further attempt to appeal the Liability judgment[31] In the meantime, in April 2020, Mr Paterson applied for an extension of timeto appeal against the Liability judgment. Brown J directed that the papers be returnedto Mr Paterson because he had no standing to appeal.33The malicious prosecution proceeding[32] In June 2020, Mr Paterson, in his personal capacity, commenced the maliciousprosecution proceeding against LCIL. He alleged that LCIL's application to adjudicatehim bankrupt in April 2016 was a malicious prosecution and an abuse of process.He added a third cause of action against LCIL for "dishonest assistance", assertingthat LCIL was a trustee in respect of funds received following sales of parts ofthe property and had breached its fiduciary obligations in that capacity.Strike out judgment[33] Doogue J struck out the malicious prosecution and abuse of process claims onthe basis these claims disclosed no reasonably arguable cause of action and wereclearly untenable.34 Mr Paterson had not opposed the bankruptcy application. Nor didhe appeal against it. He made two unsuccessful applications to annul the bankruptcyand the second of these decisions was upheld on appeal to this Court.35[34] The Judge struck out the third cause of action which related to LCIL'sobligations as mortgagee in possession on the basis this claim was barred by31 Liability judgment, above n 13.32 Strike out judgment, above n 1, at [55].33 Paterson v Lepionka & Co Investments Ltd CA214/2020, 8 June 2020 (Minute of Brown J).34 Strike out judgment, above n 1, at [79], [80] and [92].35 Paterson v Lepionka & Co Investments Ltd, above n 25.the principles of res judicata following the Liability judgment and that claim wastherefore an abuse of the Court's process.36[35] The Judge then turned to consider the application by the Lepionka interests fora barring order under s 166 of the Senior Courts Act. She found the second mortgageeproceeding and the malicious prosecution proceeding were totally without merit interms of s 167 of the Act.37 The Judge also found that the second application forannulment of bankruptcy was totally without merit.38 Three other proceedings broughtby Mr Paterson were also found to be totally without merit:(a) An application to the Tenancy Tribunal filed in December 2016asserting occupation rights to the property pursuant to an unwrittentenancy agreement allegedly entered into with GLW in December 2015,some eight months after LCIL took possession as mortgagee.39(b) A proceeding filed in the High Court at Napier in August 2019 againstthe Registrar-General of Land seeking to restrain the processing of ane-dealing lodged by LCIL for subdivision and transfer of title tothe property in exercise of its power of sale as mortgagee. Doogue Jobserved that all causes of action in this proceeding "[bore] remarkablesimilarity" to the causes of action determined in Fitzgerald J'sLiability judgment.40 The Judge found this proceeding was totallywithout merit.41(c) A second proceeding filed in the High Court at Napier in March 2020against the Registrar-General of Land seeking various relief in relationto the property including declarations, damages and orders vesting partsof the property in Mr Paterson. The Judge noted that this claim reliedon "almost identical facts" as in the earlier proceeding against36 Strike out judgment, above n 1, at [97].37 At [133]–[134].38 At [116].39 At [112].40 At [122].41 At [128].the Registrar-General and sought similar remedies.42 Mr Patersondiscontinued this proceeding. The Judge was satisfied this proceedingwas totally without merit and yet another attempt to relitigate mattersalready determined.43[36] The Judge considered the various proceedings displayed various featuresindicative of vexatious litigation and she was satisfied that an order under s 166 ofthe Senior Courts Act should be made.44[37] The order restrained Mr Paterson, in any capacity, including but not limited toas a trustee of any trust, from commencing or continuing any civil proceeding(or matter arising out of a civil proceeding) that relates in any way to the matters listedat [170] of the Strike out judgment.Appeal against Strike out judgment[38] Mr Paterson's notice of appeal against the Strike out judgment is dated15 September 2020. He did not seek leave to file this document, as required bys 168(1) of the Senior Courts Act.[39] In a minute dated 13 October 2020, Cooper J stated:45[4] In a memorandum dated 29 September, counsel for [the Lepionkainterests] submit that Mr Paterson has no right to appeal the decisions strikingout the proceedings, since they are themselves barred by the order made unders 166. Counsel accepts that Mr Paterson may appeal the s 166 order as ofright: that is the effect of s 169(8) of the Senior Courts Act. Counsel indicatethat if Mr Paterson does make an application for leave in respect of the struckout High Court proceedings [the Lepionka interests] would object to thoseproceedings continuing.[5] In a memorandum in reply, also dated 29 September, Mr Patersonsubmits that if he was successful in his appeal against the s 166 order, it wouldfollow that he would have the right to appeal the striking out of the High Courtproceedings. He submits that the most practical course to follow is for hisappeal to be heard, and for the Court to adjudicate first on the s 166 issue.In doing so the Court could determine whether the balance of the appealneeded to be considered.42 At [130].43 At [132].44 At [157]–[162].45 Paterson v Lepionka & Co Investments Ltd CA512/2020, 13 October 2020 (Minute of Cooper J).[6] There is no interlocutory application before the Court. Mr Paterson isaware of the view of counsel for [the Lepionka interests] and has chosen notto seek leave. No formal decision is required at this stage.[7] The appeal should be set down when the parties are ready to proceed.[40] No application for leave to appeal against the Strike out judgment ordersstriking out the second mortgagee proceeding or the malicious prosecution proceedinghas since been filed by Mr Paterson and, as we now come to, he has again beenadjudicated bankrupt.Second bankruptcy — Adjudication judgment[41] In December 2020, Mr Paterson was adjudicated bankrupt for failing to payfurther costs orders in favour of the Lepionka interests totalling over $60,000.46DecisionCA521/2020[42] We are satisfied that the second mortgagee proceeding and the maliciousprosecution proceeding are wholly untenable, frivolous, vexatious and an abuse ofthe process of the Court. Those proceedings were properly struck out by Doogue J forthe reasons she gave.[43] Any rights Mr Paterson may have had in connection with the issues raised inthe first mortgagee proceeding passed to the Official Assignee following his firstbankruptcy in New Zealand in April 2016. Mr Paterson's application to havethe causes of action vested in him following the Official Assignee's disclaimer wasfinally determined against him in May 2017. GLW's claims in the first mortgageeproceeding were finally determined by the Liability judgment and the subsequentsettlement in December 2018 between the Lepionka interests and GLW, through itsliquidator, as the judgment creditor.[44] Mr Paterson now attempts to overcome the resulting finality by asserting inthe second mortgagee proceeding that he purchased the property in March 2009 as a46 Adjudication judgment, above n 7.bare trustee for his sons and that he later "nominated GLW to take title to the propertyas trustee for [him] as bare trustee for [his two sons]". GLW did not sue in the firstmortgagee proceeding as a trustee of any trust.47 GLW's claims in those proceedingswere pursued in its own right as the registered proprietor and mortgagor. In any event,all claims by GLW and its privies against the Lepionka interests in connection withthe property are now precluded by the principles of res judicata and the settlement.Mr Paterson's present claim that GLW resigned as a trustee on 20 July 2018 to ensureit had no interest in the property before it was placed in liquidation on 27 July 2018does not assist him. LCIL had no notice of the asserted trust, nor of any change oftrustee. It was entitled to settle with the liquidator of GLW as the judgment creditor.The Lepionka interests are entitled not to be further vexed with these issues.[45] The malicious prosecution proceeding arising out of the first bankruptcy is alsoplainly untenable. An essential element of the cause of action is that the proceedingmust have been resolved in the plaintiff's favour.48 That is not the case here.Mr Paterson did not oppose the bankruptcy application, nor did he appeal againstthe bankruptcy order. His contention that this proceeding was a malicious prosecutiontherefore has no prospect of success.[46] The alternative claim that the bankruptcy was an abuse of process is alsountenable for the reasons Doogue J gave.49 The dishonest assistance cause of actionis an attempt to re-run the claims dealt with in the first mortgagee proceeding and it istherefore precluded by the principles of res judicata.[47] For these reasons, Mr Paterson's appeal against the judgment striking outthe second mortgagee proceeding and the malicious prosecution proceeding is anabuse of process and must accordingly be struck out.[48] The Lepionka interests contend that Mr Paterson's appeal against the s 166order should also be struck out because Mr Paterson's rights to litigate the matterscovered by the order have passed to the Official Assignee, who has not indicated any47 High Court Rules 2016, r 5.35.48 See Rawlinson v Purnell Jenkinson & Roscoe [1999] 1 NZLR 479 (HC) at 484–485 and Burgessv Beaven [2020] NZHC 497 at [20]..49 Strike out judgment, above n 1, at [81]–[94].intention to pursue those claims. For that reason, the Lepionka interests argue thatthe appeal against this order is now moot.[49] While there may be little practical advantage to Mr Paterson in pursuing hisappeal against this order given his bankruptcy, not all rights of potential claim vest inthe Official Assignee. It is not a sufficient answer to say that Mr Paterson could seekleave to pursue such a claim within the terms of the existing order. He is entitled totest the correctness of the order placing this restriction on him. Mr Paterson may notbe able to argue that the threshold jurisdictional question for the making of a s 166order was not satisfied (namely, that at least two proceedings were totally withoutmerit). However, the making of such an order and the setting of its terms involvedthe exercise of discretion and Mr Paterson has a right to contest this aspect on appeal.This aspect of the appeal cannot be categorised as an abuse of process and should beconsidered in the usual way on its merits, not in the context of a strike out application.That aspect of his appeal should be allowed to proceed, as Cooper J directed in hisminute of 13 October 2020 (at [39] above).CA 40/2021[50] As noted, the second bankruptcy was based on unpaid costs awards ordered bythe High Court in favour of LCIL in connection with Mr Paterson's proceedingsrelating to the property. The essence of Mr Paterson's appeal against the Adjudicationjudgment is encapsulated in his notice of appeal as follows:3. The Judge erred by failing to support my Notice to Produce served onLCIL on 30 November 2020, requiring LCIL to producethe mortgagee in possession accounts that LCIL is required to producepursuant to the Property Law Act 2007.4. The Judge erred by failing to recognise that [GLW] had not beenthe owner/mortgagor of the property since 20 July 2018.5. The Judge erred by failing to recognise that section 155(1) ofthe Property Law Act 2007 applied to LCIL, - subsequent to whichLCIL - " must account to the current mortgagor, and to everyperson holding a subsequent encumbrance over the land, goods oraccounts receivable " 6. The Judge erred by failing to recognise that as a consequence ofthe acknowledged breach of their equitable duties by LCIL asmortgagee And subsequently LCIL must account to all partiesinterested in the equity of redemption; - and as a consequence of theirbreaches LCIL cannot claim for any costs incurred from the time theybreached, (1/4/2015), and onwards.7. The Judge erred by failing to recognise that myself and partiesassociated with me are entitled to an accounting from LCIL asmortgagee in possession; - pursuant to the Property Law Act 2007,and pursuant to the equity of redemption.8. The Judge erred by failing to order an accounting from LCIL.14. The Judge erred by failing to recognise that I had a right of set-offagainst the sums claimed by LCIL to bankrupt me; - and that due toLCIL owing substantially more monies to me than I do to LCIL,I should not have been bankrupted.(Emphasis in original, footnotes omitted.)[51] Mr Paterson seeks orders setting aside the Adjudication judgment and directingLCIL to provide "a full set of mortgagee in possession accounts" pursuant to s 155 ofthe PLA.[52] It can be seen that Mr Paterson seeks to ventilate on this appeal the sameunderlying issues that were determined in the Liability judgment and compromised inthe settlement. Mr Paterson's claims, purportedly in answer to the second bankruptcyapplication, cannot be entertained. They are clearly an abuse of process and the appealmust be struck out.Mr Paterson's interlocutory application[53] It follows from these conclusions that the orders sought by Mr Paterson in hisinterlocutory application dated 27 April 2021 referred to at [4] above must be declined.The basis for his application for the first three orders has fallen away. There is plainlyno basis for the fourth order sought, namely an order convicting and fining LCIL andMr Lepionka for alleged offences under the PLA. Mr Paterson's application for suchorders merely serves to underscore the frivolous, vexatious and abusive nature of theseappeals (save in respect of his appeal against the s 166 order).Costs[54] The Lepionka interests would ordinarily be entitled to an award of costs,having largely succeeded on their application to strike out these appeals.However, because Mr Paterson is bankrupt and has succeeded to a limited extent, wemake no order for costs.Result[55] The appeal in CA521/2020 is struck out save in respect of the order made unders 166 of the Senior Courts Act. That aspect of the appeal is allowed to proceed.[56] The appeal in CA40/2021 is struck out.[57] The interlocutory application by the appellant dated 27 April 2021 is declined.[58] There is no order as to costs.Solicitors:Bell Gully, Wellington for Respondents