KI COMMERCIAL LIMITED v CHRISTCHURCH CITY COUNCIL [2019] NZCA 645

KI COMMERCIAL LIMITED v CHRISTCHURCH CITY COUNCIL [2019] NZCA 645 [13 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA330/2017[2019] NZCA 645BETWEEN KI COMMERCIAL LIMITEDApplicantAND CHRISTCHURCH CITY COUNCILRespondentCourt: Kós P and Gilbert JCounsel: J E Hodder QC, S W H Fletcher and J S Angland for ApplicantS J Scott and M K Prendergast for RespondentJudgment:(On the papers)13 December 2019 at 11 amJUDGMENT OF THE COURTA The application for recall is declined.B The application for further leave to appeal is declined.____________________________________________________________________REASONS OF THE COURT(Given by Kós P)[1] The applicant, KIC, owns two commercial buildings in Bernard Street,Addington, Christchurch. Pursuant to the Canterbury Earthquake (ChristchurchReplacement District Plan) Order 2014, the respondent Council promulgateda proposed district plan. Submissions on the proposed plan were heard byan independent hearings panel chaired by the Hon Sir John Hansen. KIC soughtsite-specific exemptions, rezoning the properties "Commercial Core" rather than"Industrial General". Ultimately the panel issued a decision declining that relief.[2] KIC then appealed to the High Court. By cl 19(3) of the 2014 Order, appealslay to the High Court only on an error of law. In its appeal, KIC alleged nine errors oflaw. That appeal was heard by Dunningham J in February 2017. In May 2017,she dismissed the appeal.1[3] A second appeal, to this Court, depended on the grant of leave.2 Leave couldnot be given unless this Court was satisfied that the appeal involved a matter of generalor public importance, or a miscarriage of justice would occur if the appeal was notheard.3[4] KIC advanced only two of the original nine alleged errors of law in its leaveapplication. That application was heard by a panel comprising Kós P, Harrison andGilbert JJ, and dismissed, in October 2017.4[5] KIC now applies to recall this Court's judgment, and to "resume" itsapplication for leave to appeal against the judgment of Dunningham J. A single groundis advanced, namely that the original High Court judgment should be set aside becauseof a reasonable apprehension of bias "resulting from Her Honour's former firm'sacrimonious relationship with Mr Seng Bou (Paul) Keung (and entities associated withMr Keung), a principal stakeholder in [KIC]".[6] We consider that, properly viewed, this is a combined application for recall ofthis Court's judgment denying leave to appeal and an application for further leave toappeal (out of time) on a new ground (being apprehended bias by the High CourtJudge).5[7] The underlying proceeding having been commenced in the High Court after1 March 2016, these applications fall to be determined in accordance withthe provisions of s 49 of the Senior Courts Act 2016. By s 49(2)(a), any two or more1 KI Commercial Ltd v Christchurch City Council [2017] NZHC 1076 [High Court judgment].2 Canterbury Earthquake (Christchurch Replacement District Plan) Order 2014, cl 19(7);Resource Management Act 1991, s 308; and Criminal Procedure Act 2011, s 303.3 Criminal Procedure Act, s 303(2).4 K I Commercial Ltd v Christchurch City Council [2017] NZCA 480 [Court of Appeal judgment].Harrison J has since retired as a judge of this Court.5 See Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2008] NZSC 94, (2008) 19 PRNZ132.judges of this Court may determine any contested application for leave to appeal.We treat the application for recall of this Court's leave judgment in 2017 as fallingnaturally within that provision also. The two applications are to be determined onthe papers.6Chronology of events[8] A chronology of events may be extracted from the affidavit evidence beforeus:(a) In 1995 the Judge joined Buddle Findlay as an employed solicitor in itsChristchurch office.(b) In 2004 KIC was formed. It was controlled by Mr Keung until 2009 or2010.(c) Partners in Buddle Findlay's Christchurch office acted for Mr Keung,KIC and associated entities in 2004. There is no suggestion the Judgeacted for the Keung interests. Or, subsequently, against them.(d) In 2005 Buddle Findlay sued an associated company,Keung Investments Ltd (the parent company of KIC) for unpaid fees.The company in response sought a costs review from the CanterburyDistrict Law Society. The fee dispute was settled in mid-2005. In thesame year the Judge became a partner in Buddle Findlay.(e) From 2007 Buddle Findlay acted against the Keung interests overinvestments in a joint venture at Goose Bay. Buddle Findlay acted forinterests associated with the Koulanov family. From that pointMr Keung deposes, "the relationship soured". The deposition is asingular one. Buddle Findlay had not acted for the Keung interestssince 2004, and had had to sue for its fee in 2005, so it is unclear exactlywhat relationship there now was to sour. Mr Keung also says that6 Senior Courts Act 2016, s 49(7).Buddle Findlay acted with "animosity" against him while acting forthe Koulanovs.(f) In 2009 Buddle Findlay acted for the Koulanovs in bankruptingMr Keung. At or about this time Mr Keung challenged Buddle Findlayacting, without success. In the course of that he made allegations thatthe firm had engaged in money laundering for the Koulanovs. There isno evidence before us suggesting any substance to those allegations.(g) In 2012 Buddle Findlay acted for the Council on issues concerningbuilding consents on the two properties owned by KIC inBernard Street.(h) In 2014 the Judge was appointed a judge of the High Court, sitting atChristchurch.(i) As we have already noted, in 2017 the Judge heard KIC's planchallenge, and dismissed that appeal in May 2017.7 In October 2017this Court declined leave to appeal.8(j) In April 2018 Mr Keung applied to set aside his bankruptcy on the basisit had been improperly obtained. That application was placed beforethe Judge. She however recused herself, as Buddle Findlay had actedfor the Koulanovs in bringing the application to adjudicate Mr Keungbankrupt.9(k) In May 2019 the Judge also recused herself in a case brought bya Keung company, Ballantyne Trustees Ltd, against the liquidators ofGoose Bay Ranch Holdings Ltd, the vehicle for the ill-fated Goose Bayjoint venture undertaken by the Keungs and the Koulanovs.7 High Court judgment, above n 1.8 Court of Appeal judgment, above n 4.9 Keung v Official Assignee HC Christchurch CIV-2010-409-835, 16 April 2018 (Minute ofDunningham J).Discussion[9] The circumstances in which the Judge first recused herself concerneda challenge to the bankruptcy of Mr Keung arising from the failed Goose Bay venture.The basis of the challenge was that the bankruptcy was improperly obtained.As Buddle Findlay had acted for the creditor in obtaining that adjudication, and asthe Judge was then a partner in that firm, her decision to recuse herself was appropriateand inevitable. The decision was recorded in a minute from the Judge dated16 April 2018. The second recusal, in the Ballantyne proceeding, is less clear-cut.But the proceedings arose from the same essential course of events, resulting inthe liquidation of Goose Bay Ranch Holdings Ltd, on which Buddle Findlay had actedfor the Koulanovs. Recusal was merely advised by a deputy registrar on 17 May 2019.No reasoned minute issued, so we do not know the basis for that decision.Both recusals were, of course, long after the Judge had determined the planning appealat the heart of these proceedings.[10] We do not think the same concerns apply in relation to the Judge sitting onthe planning appeal concerning the zoning of the two buildings in Bernard Street,Addington. Apparent bias must be considered on a case-by-case basis.10 To state theobvious, the fact the Judge had been a partner in a law firm did not mean she wasdisqualified from hearing a case brought by someone her firm had previously actedagainst. Indeed, it does not follow that a judge is disqualified from hearing a casebrought by someone she has herself acted against. It all depends. But here there wasno suggestion on the evidence that the Judge had had anything to do with the Keungs,or the Koulanovs.[11] The Bernard Street properties, the subject of the present proceedings, werenever part of the troubled Goose Bay venture on which Buddle Findlay had acted forthe Koulanovs against the Keungs. The planning appeal involved discrete questionsof law. It is unclear from the judgment whether the Judge actually appreciated theassociation between KIC and Mr Keung. If so, plainly she did not think it material.10 Russell v Taxation Review Authority [2011] NZCA 158, [2011] NZAR 310 at [23], citing Locabail(UK) Ltd v Bayfield Properties Ltd [2000] QB 451 (CA).[12] We do not consider a fair-minded lay observer aware of these essential factscould reasonably apprehend that the Judge might not bring an impartial mind to theresolution of the nine questions of law the Judge was required to decide in theseproceedings.11 The contrary proposition requires the observer to disregard thedistinction between the 2017 hearing (concerning Bernard Street) and the 2018 and2019 ones (concerning Buddle Findlay's handling of interests adverse to the Keungson an entirely different project). It would also require that observer to infer thatthe Judge (who had never had anything to do with the Keungs herself) might bring tothe hearing of a planning appeal concerning the unrelated Bernard Street properties,based on discrete questions of law, some sort of ill-defined ill will based on litigationthat had been conducted by other members of the firm for the Koulanovs. Or, evenmore remotely, that because the firm had had to sue one of Mr Keung's companies foran unpaid fee at about the time the Judge entered the partnership, some ill-will mightexist. This is tenuous stuff indeed.[13] That determines the present applications. The premise for the applications(necessity of disqualification by apparent bias) being unsustainable, the applicationsthemselves will be declined.[14] For completeness we note that even if the Judge should have recused herself,we would not have granted these applications.[15] First, the consequence of disqualification for apprehended bias in the case of acourt of record is not a nullity, but prospective invalidity.12 Applying then a reviewstandard, it does not follow (as the applicant's submissions suggest) that recall,allowance of the appeal and remittal follow automatically. The remedy, also on areview standard, is discretionary rather than automatic. In a case of substantialinjustice, the first instance judgment may be set aside ex debito justitiae, but even that11 Applying the test articulated in Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009]NZSC 122, [2010] 1 NZLR 76 at [4].12 See, for example, Dimes v Proprietors of the Grand Junction Canal (1852) 3 HL Cas 759; BerowraHoldings Pty Ltd v Gordon [2006] HCA 32, (2006) 225 CLR 364 at 369–371; Attorney-Generalv Howard [2010] NZCA 58, [2011] 1 NZLR 58 at [114]–[115]; and Lyon v R [2019] NZCA 311at [21].response is not automatic.13 In any case, for the reasons given, and about to be given,we do not find any arguable apprehended bias here to have caused substantial, or any,injustice.[16] Secondly, after receiving the judgment of the High Court, KIC sought leave toappeal here, on all nine grounds raised in the High Court. Later it amended itsapplication to press just two of those nine questions. Those two questions were dealtwith by us in our leave decision. We held neither alleged error of law to be arguable.Nothing before us suggests those conclusions were reached on an incorrect basis, suchas might justify recall under the long-established principles laid down in HorowhenuaCounty v Nash (No 2).14 What this application comes down to, then, is an attempt toleverage a previously unappreciated procedural defect in the High Court into anopportunity to re-open the original appeal, despite KIC accepting on its first visit herethat only two of its nine points were arguable, and despite this Court holding they toowere not.[17] Thirdly, relevant to the question of relief is delay. In this case Mr Keung saidhe became aware of the Judge's recusal in the bankruptcy matter, in August 2018.It may be noted that the recusal in fact occurred by a minute issued on 16 April 2018.On 3 August 2018 KIC filed an application for recall in the High Court, which wasfairly swiftly dismissed on jurisdictional grounds.15 It was not however until eightmonths later that it filed the present application. No explanation satisfactory orotherwise is offered for this delay. Alone it might not be disentitling, but incombination with other considerations noted here, we consider it would be.16[18] Finally, the proceedings sought to challenge the terms of the proposed districtplan. The statutory process accompanying promulgation of the plan provided forchallenges to be brought to the panel chaired by Sir John Hansen. That panel hascompleted its work and has been disbanded. KIC's appeal cannot now be remitted to13 Taylor v Lawrence [2002] EWCA Civ 90, [2003] QB 528 at [55]; and Ben Nevis Forestry VenturesLtd v Commissioner of Inland Revenue [2014] NZCA 350, (2014) 26 NZTC 21-086 at [46]–[47].14 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633.15 KI Commercial Ltd v Christchurch City Council [2018] NZHC 2896. The Court concludedapplication had to be made in this Court.16 As to the effect of delay in cases of apprehended bias, see Russell v Taxation Review Authority,above n 10, at [35], citing Locabail (UK) Ltd v Bayfield Properties Ltd, above n 10, at [25]; andVakauta v Kelly (1989) 167 CLR 568 at 572–573.it. With revocation of the 2014 Order, on 18 March 2019, control of the district planhas reverted to the Council. The standard processes for plan provision challengesunder the Resource Management Act 1991 have resumed. From that time KIC hasbeen at liberty to initiate private plan change processes in the usual way. That remedyis available to it now and effectively supplants the remedy sought in these proceedings.Result[19] The application for recall is declined.[20] The application for further leave to appeal is declined.Solicitors:Ronald W Angland & Son, Leeston for ApplicantSimpson Grierson, Christchurch for Respondent