GASKIN and DUSTIN v STARK [2020] NZHC 2321

GASKIN and DUSTIN v STARK [2020] NZHC 2321 [7 September 2020]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2020-412-000026[2020] NZHC 2321IN THE MATTER of Section 149 of the Companies Act 1993BETWEEN GRAEME KENNETH GASKIN andELIZABETH JOAN DUSTIN, in theircapacity as trustees of the DUSTIN FAMILYTRUSTPlaintiffsAND ALASTAIR DAVID STARKFirst DefendantAND ALAN BEVIN MCKAYSecond DefendantAND RICHARD DRUMMOND FRASERThird DefendantAND MEAD AND STARKFourth DefendantHearing: Determined on the papersCounsel: D G Hurd for Applicant, Caroline Ann StarkJudgment: 7 September 2020JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 7 September 2020 at 3.30 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] The applicant is the daughter of the first defendant Alastair David Stark(Mr Stark) and applies for orders that:(a) she be appointed as litigation guardian for Mr Stark; and(b) service of this application on Mr Stark be dispensed with.Background[2] This proceeding arises from the sale of shares in two companies by the OfficialAssignee in the bankruptcy of Ian Luke Dustin. The Official Assignee assigned itsrights of action arising from the share sale transaction to the plaintiffs who, in theirsecond amended statement of claim, plead six causes of action against Mr Stark.[3] Mr Stark is an incapacitated person for the purposes of r 4.29 of the High CourtRules 2016. The principal evidence concerning this is from an affidavit of Anna LiseSeifert, a registered medical practitioner, practising psychiatrist and a specialist inmental health for older people. Mr Stark had a brain tumour and underwent surgeriesin 2017 and 2019. He suffered a stroke in 2019 and then had a serious fall in January2020 causing further injury. Mr Stark is no longer capable of making decisions abouthis personal or property matters and lacks any understanding of issues on which hisdecisions would be required as a litigant conducting court proceedings.[4] Mr Stark granted an Enduring Power of Attorney dated 2 September 2017 inrelation to property to the second defendant, Alan Bevin McKay (Mr McKay). TheEnduring Power of Attorney came into effect when Mr Stark became mentallyincapable in May 2019. Since then, Mr McKay has been acting as Mr Stark's attorneywith regard to his property. Mr McKay understands that as Mr Stark's attorney he isauthorised to conduct this court proceeding on his behalf as his litigation guardian. Ashe is also a party to this proceeding he considers it is inappropriate for him to act asMr Stark's litigation guardian. Mr McKay disclaims any role as Mr Stark's litigationguardian in so far as it relates to the conduct of this proceeding.[5] As Mr McKay is unwilling or unable to act as Mr Stark's litigation guardian,the applicant, Caroline Ann Stark (Caroline), has applied for appointment as herfather's litigation guardian. Mr McKay and Mr Stark's wife and children support theapplication.[6] Caroline is a suitable person to appoint as a litigation guardian. She holds aBachelor of Commerce degree and a Bachelor of Arts degree from Otago University.She is the manager of a medical centre and has other commercial experience. She hasthe support and assistance of Mr Stark's family with knowledge of his affairs. Sheunderstands the role and duties of a litigation guardian.The rules[7] An application for the appointment of a litigation guardian can be madewithout notice.1[8] An incapacitated person must be represented by a litigation guardian in anyproceeding unless the court otherwise orders.2[9] An incapacitated person is defined as:incapacitated person means a person who by reason of physical, intellectual,or mental impairment, whether temporary or permanent, is ---(a) not capable of understanding the issues on which his or her decisionwould be required as a litigant conducting proceedings; or(b) unable to give sufficient instructions to issue, defend, or compromiseproceedings.[10] As noted, Mr Stark is an incapacitated person in terms of the High Court Rules.[11] A litigation guardian is defined as:3litigation guardian(a) means ---(i) a person who is authorised by or under an enactment toconduct proceedings in the name of, or on behalf of, anincapacitated person or a minor (but only in a proceeding towhich the authority extends); or1 High Court Rules 2016, r 4.36(1)(a).2 Rule 4.30(1).3 Rule 4.29.(ii) a person who is appointed under rule 4.35 to conduct aproceeding; and(b) has the same meaning as the expression "guardian ad litem".[12] Rule 4.35 deals with the grounds for the appointment of a litigation guardianas follows:4.35 Appointment of litigation guardian(1) This rule applies if an incapacitated person does not have a litigationguardian within the meaning of paragraph (a)(i) of the definition oflitigation guardian in rule 4.29.(2) The court may appoint a litigation guardian if it is satisfied that ---(a) the person for whom the litigation guardian is to be appointedis an incapacitated person; and(b) the litigation guardian ---(i) is able fairly and competently to conduct proceedings onbehalf of the incapacitated person; and(ii) does not have interests adverse to those of theincapacitated person; and(iii) consents to being a litigation guardian.(3) In deciding whether to appoint a litigation guardian, the court mayhave regard to any matters it considers appropriate, including theviews of the person for whom the litigation guardian is to beappointed.(4) The court may appoint a litigation guardian under this rule at any time---(a) on its own initiative; or(b) on the application of any person, including a person seeking tobe appointed as litigation guardian.[13] The applicant's counsel, Mr Hurd, has correctly drawn to my attention thepotential complication in this case: whether by reason of his appointment as Mr Stark'sattorney Mr McKay is deemed to be his litigation guardian, leaving no apparentjurisdiction under r 4.35 to appoint Caroline as a litigation guardian.4[14] As Mr Hurd correctly submits, the situation that arises throws up an apparentanomaly in the Rules. While the existence of an Enduring Power of Attorney shouldordinarily make it unnecessary for the court to appoint a litigation guardian, theapparent exclusion of jurisdiction does not make sense where, as here, for wholly4 Re Cron [2020] NZHC 1074; Warin v Warin [2017] NZHC 786.proper reasons, the attorney considers it inappropriate to carry out the litigationguardian role.[15] Plainly on the facts, Mr Stark requires a litigation guardian. In circumstanceswhere there is no other person both validly entitled and willing to act as Mr Stark'slitigation guardian, justice requires that his interests be protected. The matter can bedealt with in a number of ways. Caroline can be appointed as Mr Stark's litigationguardian in exercise of the court's inherent jurisdiction or by the application of r 1.6High Court Rules. The inherent jurisdiction of the court is exercised to protect andfulfil the judicial function of administering justice. Rule 1.6 can be applied, as theHigh Court Rules do not deal with this situation yet the appointment of a litigationguardian for Mr Stark is consistent with the objectives of the rules. Those objectivesinclude securing the just determination of any proceeding.5[16] For completeness Mr Hurd mentioned a third possibility involving makingapplication to exclude from the scope of Mr McKay's powers the conduct of thisproceeding on behalf of Mr Stark. That would potentially involve an application tothe Family Court and, if successful, a fresh application to this court for theappointment of Caroline as litigation guardian. Such a wasteful and time consumingprocess is not justified when the matter can be dealt with by other means.[17] The final issue concerns the application to dispense with service of thisapplication upon Mr Stark. Under r 4.36(1) an application to appoint a litigationguardian must, unless the court otherwise orders, be served on the person for whomthe litigation guardian is to be appointed. Mr Stark has no capacity to make decisionsabout his own care or property affairs. The evidence is he would not understand thisapplication or be able to provide instructions in relation to it. He entrusted his propertyaffairs to Mr McKay who is supportive of this application. I can see no purpose wouldbe served in requiring this application to be served on Mr Stark. In thosecircumstances I dispense with service of the application upon him.5 High Court Rules, r 1.2.Result[18] I appoint Caroline Ann Stark to be Mr Stark's litigation guardian to defend andconduct these court proceedings in his name and on his behalf.[19] I reserve leave for the applicant to further apply in respect of any matter arising.[20] No costs are sought on the application._______________________O G PaulsenAssociate JudgeSolicitors:Checketts McKay Law Limited, AlexandraCopy to:Sandi Anderson & Partners, AucklandParker Cowan, Queenstown