YOUNG v ROSS [2023] NZHC 212

YOUNG v ROSS [2023] NZHC 212 [17 February 2023]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYI TE KŌTI MATUA O AOTEAROAAHURIRI ROHECIV-2022-441-059[2023] NZHC 212BETWEEN PHILIP ROGER YOUNGAppellantAND PHILIP NICHOLAS ROSSRespondentCIV-2022-441-060BETWEEN PROGRESSIVE ACCOUNTANTSLIMITEDAppellantAND PHILIP NICHOLAS ROSSRespondentHearing: 8 February 2023Appearances: P R Young in person and, by leave, for Progressive AccountantsLimitedP N Ross in personJudgment: 17 February 2023JUDGMENT OF CHURCHMAN J[1] Mr Young appeals two decisions of Judge Kelly in the District Court at Napier.1[2] Leave to appeal was required in relation to the earlier decision because it wasout of time. Such leave was granted unopposed by Isac J in a minute of 17 October2022.21 Ross v Young [2021] NZDC 22297; and Ross v Progressive Accountants Ltd [2022] NZDC 13340.2 Young v Progressive Accountants Ltd HC Napier CIV-2022-441-059, 17 October 2022(Minute of Isac J) at [5].[3] In the same minute Isac J also granted Mr Young leave to represent theappellant in CIV-2022-441-060.3[4] Although the two separate appeals have not been formally consolidated, theyare inextricably intertwined and this joint judgment will address both of them.History[5] Mr Young and Mr Ross have had dealings going back more than 30 years.Mr Young bought defamation proceedings against Mr Ross in the High Court atHamilton in February 1997. As he has done in this case, Mr Young, who is not alawyer, represented himself in those proceedings. According to the amendedstatement of claim dated 18 February 2000, the defamation proceedings related tostatements that Mr Ross had made about Mr Young in the nature of a "credit alert" tovarious parties. The events upon which the claims were based appeared to haveoccurred in 1995 and 1996.[6] In addition to being communicated directly, it appears that some of the matterssaid to amount to defamation were posted on an internet site.[7] The proceedings were terminated when a notice of discontinuance (preparedby Mr Young) dated 4 September 2000 was filed in the High Court.[8] As the terms of that notice are significant to many of the arguments raised byMr Young in relation to the appeals, I set them out in full:TAKE NOTICE that both parties agree to discontinue these proceedings, andthat the parties agree that:1. Both parties bear their own costs.2. That all publicity, including the Internet sites of the defendant, bestopped forthwith and forever.3. That any publicity in relation to these proceedings is prohibited.4. That no attempt will be made to relitigate any of the causes of actionof these proceedings.3 At [13].[9] In accordance with the notice of discontinuance, Mr Ross removed the internetposts that had been referred to.Subsequent events[10] Several significant events occurred in Mr Young's life subsequent to theconclusion of the defamation proceedings. A number of these events are relevant tomatters raised by Mr Young in these appeals.[11] Mr Young appeared before the Disciplinary Tribunal of the Institute ofChartered Accountants in New Zealand. On 31 July 2003, that body found that he hadbeen guilty of: misconduct in a professional capacity; negligence or incompetence ina professional capacity; conduct unbecoming an accountant; and breaching therelevant code of ethics. The charges included matters related to Mr Young's activitieswith a number of finance companies, including allowing a finance company to receivemoney from the public without having issued a current prospectus as required by theSecurities Act 1978. As a result he was struck off the register of CharteredAccountants.4[12] On 9 October 2003, he was adjudicated bankrupt.[13] On 7 January 2006, Mr Young was convicted in the Hamilton District Court ofassaulting a Court security officer in the execution of his duty, and sentenced to80 hours' community work. The assault had occurred during the course of adepositions hearing before a Community Magistrate. Mr Young had shouted down theCommunity Magistrate and had been remanded in custody. He had assaulted the Courtsecurity guard attempting to take him into custody. Mr Young appealed the convictionand sentence but the appeal was dismissed on 21 November 2006.5[14] On or about 1 September 2018, an article about Mr Young was published onthe Wiki site "RationalWiki.org". Among other things, the article referred to the4 "Disciplinary Tribunal of the Institute of Chartered Accountants of New Zealand-Notice ofDecision (Member Guilty of Misconduct in a Professional Capacity, Negligence or Incompetencein a Professional Capacity, Conduct Unbecoming and Breaching the Code of Ethics)" (14 August2003) 101 New Zealand Gazette 2672.5 Young v Police HC Hamilton CRI-2006-419-114, 21 November 2006.various events that Mr Young had been involved in since 4 September 2000 detailedat [9]–[13] above.[15] Since the time of the defamation case, Mr Ross has qualified as a lawyer andnow practises in Hawkes Bay.[16] Unhappy with the 1 September 2018 article on the RationalWiki.org site, andconvinced that Mr Ross had been the author, on or about 30 March 2019, Mr Youngcomplained to the Standards Committee of the New Zealand Law Society alleging thatMr Ross had republished defamatory material originally published in the late 1990s.[17] Mr Young also complained that the publication of the article breached an ordermade by Potter J during the defamation proceedings.[18] On 17 July 2019, the Standards Committee determined that no further actionon Mr Young's complaint was necessary or appropriate.[19] On or about 6 August 2019, Mr Young then applied to the Legal ComplaintsReview Officer (LCRO) for a review of the Standards Committee's decision.[20] On or about 30 April 2020, the LCRO confirmed the decision of the StandardsCommittee.[21] Mr Young then issued the proceedings that are the subject of the appealCIV-2022-441-059. In the proceedings, he alleged that the terms of the notice ofdiscontinuance amounted to a contract between himself and Mr Ross, that the contracthad been breached and that he was entitled to remedies including:(a) an order that Mr Ross remove the 2018 article from wherever he hadcaused it to be published;(b) compensatory damages of $50,000 or such other amount as the Courtconsidered just;(c) interest on compensatory damages from 1 September 2018 to the dateof payment in accordance with the Interest on Money Claims Act 2016;(d) exemplary damages of $50,000 or such other amount as the Courtconsidered just;(e) costs; and(f) interest on those exemplary damages and on the costs from the date ofsuch awards, in accordance with the Interest on Money Claims Act.[22] There were three causes of action pleaded by Mr Young: firstly, that thecontractual provision set out at cl 2 of the notice of discontinuance, namely "[t]hat allpublicity, including the Internet sites of the defendant, be stopped forthwith andforever" had been breached; and in respect of the second and third causes of action,that the Court was entitled to make a finding that the Standards Committee and theLCRO had reached a wrong decision because they were allegedly misled and that thisjustified the remedy of an award of exemplary damages.[23] Mr Ross moved to strike out the statement of claim in its entirety.Strike out decision — CIV-2022-441-059[24] This strike out decision was decided on relatively narrow grounds. In relationto the first cause of action, based in contract, the Judge noted that on 14 October 2003Mr Young was adjudicated bankrupt, and that the effect of being adjudicated bankruptpursuant to s 42 of the Insolvency Act 1967 was that all of Mr Young's property,including any choses in action, vested in the Official Assignee.6[25] The Judge specifically accepted that while a claim in contract based on thesettlement agreement evidenced in the terms of the notice of discontinuance was "notso clearly bad that in itself it should be precluded from going forward", the claim itselfwas "untenable because of a legal impediment".76 Ross v Young, above n 1, at [41], [95] and [97].7 At [96].[26] The legal impediment was the fact that the contractual rights arising from thenotice of discontinuance had vested in the Official Assignee on Mr Young'sbankruptcy. The Judge noted that the definition of term "property" in the 1967 Actincluded things in action.8 He noted that the definition had changed in the current(2006) Act but that a chose in action remains property for the purposes of the currentlegislative scheme.9 He referred to the comments of Master Williams in OfficialAssignee v Probert, where it was held in relation to choses in action:10 There is no section divesting the Official Assignee of such property at anystage, certainly not on the bankrupt's discharge, whether automatic orfollowing application [27] The Judge also referred to the decision in Edmonds Judd v Hobbs, but notedthat, unlike that case, there was no suggestion that the Official Assignee hadabandoned any choses in action.11 He also referred to Hull v Official Assignee for theproposition that "abandonment" is a question of fact.12 He noted there was noevidence that there had been any abandonment here.[28] At [103], he concluded: there must be some positive act which removes, or assign[s] the choses inaction (the settlement agreement), from the Official Assignee to Mr Young inorder for it to have returned to Mr Young. Discharge alone is not that act. Asa consequence, Mr Young does not possess the right upon which he is seekingto rely.[29] Although not required to, due to his finding as to the effect of Mr Young'sinsolvency, the Judge went on to make the following finding:[105] Further, Mr Young has acknowledged that in 2000 Mr Ross took downthe relevant wiki posts. In relation to the 2018 wiki, Mr Young acknowledgesthat even if Mr Ross published the wiki, it was taken down on 29 April 2019and republished by someone other than Mr Ross. Mr Ross cannot beresponsible for a publication made by a third party.[30] As to the second and third causes of action (the claims that Mr Ross had misledthe Standards Committee and the LCRO), the Judge concluded that Mr Young was8 At [98].9 At [98].10 At [100], citing Official Assignee v Probert [2001] 2 NZLR 506 (HC) at 506.11 At [102], citing Edmonds Judd v Hobbs [2000] 2 NZLR 135 (CA).12 At [102], citing Hull v Official Assignee HC Auckland HC 13/96, 12 December 1997.inviting the Court to go behind the statutory regime set out in the Lawyers andConveyancers Act 2006 and make a finding that the Standards Committee and theLCRO reached a wrong decision because they were allegedly misled by Mr Ross andthat the appropriate remedy was an award of exemplary damages.13[31] The Judge noted that a review by the LCRO of a decision of the StandardsCommittee was final, pursuant to s 152(4) of the Lawyers and Conveyancers Act, andthat Mr Young had accepted that.14 The Judge therefore concluded that the Courtlacked jurisdiction to reopen and reconsider Mr Young's complaints in this regard.15Strike out decision — CIV-2022-441-060[32] Mr Young's response to the Judge's decision of 18 November 2021 was not toappeal that decision, but to issue fresh proceedings. These proceedings were issued inthe name of Progressive Accountants Ltd (PAL), the company that was formed byMr Young on 7 February 2001 and through which he conducted an accountancypractice.[33] Mr Ross moved to strike out these proceedings as well.[34] In a decision of 19 July 2022, Judge Kelly struck these proceedings out.16[35] The new statement of claim alleged three causes of action. The first was thatMr Ross had committed contempt of court by publishing the blog article onRationalWiki.org on 1 and 2 September 2018 because he had breached an undertakingsaid to have been given to the High Court on or around 4 September 2000.[36] The second cause of action alleged a breach of contract. Although the plaintiffin those proceedings had not been a party to the defamation proceedings or the noticeof discontinuance, and in fact did not exist as a legal entity at that time, it was claimedthat as a beneficiary to the notice of continuance it could take advantage of s 12(1) of13 At [107].14 At [108].15 At [109].16 Ross v Progressive Accountants Ltd, above n 1.the Contract and Commercial Law Act 2017 (CCLA) and was accordingly able toenforce the terms of the notice of discontinuance.[37] The third cause of action alleged that Mr Ross had misled the StandardsCommittee and the LCRO in relation to a complaint made by Mr Young.[38] Similar relief was sought as that which had been sought by Mr Young in theearlier proceedings, including "compensatory damages pursuant to the Contempt ofCourt Act 2019 and the CCLA" and exemplary damages of $50,000.[39] The Judge held that PAL, not being a party to a proceeding in respect of whichthe notice of discontinuance was filed, had no standing to bring an action in respect ofthe promise contained in the agreement.17 He noted that the notice of discontinuancedid not confer, or purport to confer, a benefit on PAL by designating PAL by name,description, or reference to a class.18[40] In respect of the claim for relief under the Contempt of Court Act 2019, theJudge noted that the Act did not have a retrospective effect.19 It did not becomeoperative until after the time when the events pleaded as giving rise to the cause ofaction occurred.[41] As to the third cause of action, for the same reasons in his earlier decision, theJudge held that a decision of the Standards Committee was final, and that the Courtlacked jurisdiction in respect of the complaints of PAL.20[42] The Judge concluded by noting that Mr Young's action in bringing the claimagainst Mr Ross in the name of the company after the proceedings brought by him ina personal capacity were struck out was bordering on being vexatious or otherwise anabuse of the process of the Court.21 He noted that "[a]ny further proceedings bought17 At [44].18 At [44].19 At [43].20 At [45].21 At [48].in respect of the same subject matter" were "likely to risk" being found to be vexatiousor otherwise an abuse of the process of the Court.22Mr Young's argument[43] In both his written and oral submissions, Mr Young traversed many mattersthat were irrelevant to the appeal. There are, in fact, only four legal issues that fall fordetermination:(a) What was the effect of Mr Young's bankruptcy on his ability to sue onthe terms of the contract evidenced by the notice of discontinuance?(b) Whether this Court has jurisdiction in these proceedings to make thefindings sought in respect of the Standards Committee and LCROdecisions.(c) Whether PAL has rights, pursuant to the Contempt of Court Act 2019,to the relief sought.(d) Whether PAL falls within any of the categories of non-party set out ins 12(1) of the Contract and Commercial Law Act 2017.[44] No challenge was made in either appeal to the Judge's analysis of the law as tostrike out decisions.Discussion[45] In both his written and oral arguments, Mr Young advanced a number ofpropositions that simply are not correct.[46] Mr Young repeatedly tried to portray the notice of discontinuance as adocument for which Potter J was responsible by describing it as an "agreement" madebefore Potter J or a document which was "supervised and sanctioned by Justice Potteras part of the CP4/97 matters".22 At [48].[47] Notices of discontinuance are dealt with in subpart 4 of part 15 of the HighCourt Rules 2016. Rule 15.19 provides:15.19 Right to discontinue proceeding(1) At any time before the giving of judgment or a verdict, a plaintiff maydiscontinue a proceeding by—(a) filing a notice of discontinuance and serving a copy of thenotice on every other party to the proceeding; or(b) orally advising the court at the hearing that the proceeding isdiscontinued.[48] Other than in the very limited circumstances detailed in r 15.20, leave is notrequired to file a notice of discontinuance and the Judge has no role to play in"supervising" or "sanctioning" it.[49] Notices of discontinuance are not required to be signed by a defendant butcommonly are, particularly if there is an agreement that costs are to lie where they fall.[50] Mr Young also advanced the proposition that Mr Ross was prohibited fromreferring, even in these proceedings, to matters that had been the subject of the 1997defamation proceedings. That cannot be the case.[51] Where, as here, Mr Young is asserting that the agreement evidenced by thecontents of the notice of discontinuance is being breached, there is nothing in thenotice of discontinuance that prohibits Mr Ross from referring to such matters relatingto the 1997 litigation as may be relevant.[52] Thirdly, Mr Young claims that the agreement was prospective in effect. Inother words, it related not only to matters that existed as at 4 September 2000, butmeant that any "publicity" by the defendant at any stage in the future about anyactivities of the plaintiff was also prohibited. That is not an interpretation that canrealistically be placed on the wording of the notice of discontinuance.[53] I also note that the matters which occurred after 4 September 2000 thatMr Young is concerned about all appear to be matters of public record. Again, theseare:(a) the findings of the Disciplinary Committee of the Institute of CharteredAccountants;(b) the bankruptcy;(c) his striking off as a Chartered Accountant; and(d) his criminal conviction.[54] Referring to these matters therefore cannot amount to defamation.[55] Mr Young also claims that the terms of the notice of discontinuance meant that"the respondent promised to stop forever all his publicity about both of the appellants".[56] In relation to Mr Young, the agreement related to the matters that had been thesubject of the defamation proceedings. It did not relate to publicity in the future aboutmatters that had not yet occurred. The notice of discontinuance could not possiblyhave imposed any obligation on Mr Ross in relation to PAL as that company did noteven exist as at 4 September 2000 and was not identified or referred to in any way inthe notice of discontinuance.Effect of bankruptcy[57] Judge Kelly correctly summarised the law relating to the consequences of anadjudication in bankruptcy at [96]–[105] of the 18 November 2021 decision.[58] A chose in action is defined in Black's Law Dictionary as:231. A proprietary right in personam, such as a debt owed by another person, ashare in a joint-stock company, or a claim for damages in tort.2. The right to bring an action to recover a debt, money, or thing.3. Personal property that one person owns but another person possesses, theowner being able to regain possession through a lawsuit. — Also termed thingin action; right in action.23 Bryan A Garner (ed) Black's Law Dictionary (11th ed, Thomson Reuters, St Paul, 2019).[59] Mr Young's case before Judge Kelly was that a contract existed betweenhimself and Mr Ross on the basis of the terms recorded in the notice of discontinuance.Rights arising from a contract are clearly a chose in action. In accordance with thecases cited by Judge Kelly, such rights are vested in the Official Assignee and, unlessspecifically abandoned by the Official Assignee, remain with the Official Assignee onthe bankrupt's discharge. Judge Kelly did not err on this point.Jurisdiction in relation to the Standards Committee and LCRO decisions[60] The Lawyers and Conveyancers Act is a code which regulates the practice oflaw in New Zealand. The role and powers of the Standards Committee and the LCROare circumscribed by the Act. Section 152(4), in relation to the power of the StandardsCommittee to determine a complaint or matter, provides:(4) Subject to the right of review conferred by section 193 and tosection 156(4), every determination made under subsection (1) andevery order made under section 156 or section 157 is final.[61] Section 193, in relation to a right of review, provides:A person who is specified in any of the provisions of sections 194 to 197 as aperson who may apply under this section for a review may apply to the LegalComplaints Review Officer for that review.[62] Mr Young elected to exercise his right to refer his complaint about Mr Ross toLCRO. The LCRO elected to take no further action. The Lawyers and ConveyancersAct does not provide a right of appeal against that decision.[63] There is nothing in the Lawyers and Conveyancers Act that gives a person inMr Young's position a right to commence civil proceedings that are effectively acollateral challenge to the findings of the Standards Committee and the LCRO.[64] An attempt to do so undermines the integrity of the scheme for the regulationof the conduct of lawyers that is established by the Act. The Court has no jurisdictionto effectively reopen and reconsider the complaints already finally determined by theStandards Committee and LCRO. This cause of action is therefore untenable.Contempt of Court Act[65] The cause of action in the proceedings bought by PAL which seekscompensatory damages pursuant to the Contempt of Court Act is whollymisconceived. Quite apart from the fact that the Act was not operative as at the dateof the claimed breach and is not retrospective, a more fundamental issue is that theremedies available under the Act do not extend to compensatory or exemplarydamages.[66] Section 16 of the Contempt of Court Act restricts its application to certainCourt orders. Subsection (1) provides:16 Certain court orders and undertakings may be enforced(1) This section applies to—(a) any interim or final order, decision, decree, direction, orjudgment of a court (a court order) to do or abstain fromdoing something, except as provided in section 17:(b) any undertaking given to the court if, on the faith of theundertaking, the court has sanctioned a particular cause ofaction or inaction.[67] Mr Young relies on the notice of discontinuance as falling within eithers 16(1)(a) or (b). For the reasons discussed above, the filing of a notice ofdiscontinuance does not involve a Court order. It is an action initiated by the plaintiffand, as stated above, in this case did not require the leave of the Court or any form ofapproval by the Court. Neither was there any undertaking given to the Court whichresulted in the Court sanctioning a particular cause of action or inaction. The Courtwas not required to sanction the filing of the notice of discontinuance or any othercourse of action. I note that the commentary in Sim's Court Practice notes that theconcept of "undertaking" referred to in s 16(1)(b) "excludes undertakings given to anopposite party as well as undertakings which do not result in some action taken by thecourt."24 No undertaking of the type covered by s 16(1)(b) was involved in this case.24 Matthew Casey and others Sim's Court Practice (NZ) (online looseleaf ed, LexisNexis) at[CC16.3].[68] Even if there was jurisdiction under the Contempt of Court Act, there is noability for the Court to award either compensatory or exemplary damages. The Courtis entitled, under s 16(4)(a)(ii)(A), to impose a fine not exceeding $25,000 or, unders 16(4)(a)(iii), to order an individual to do community work not exceeding 200 hours.Under s 16(4)(b), the High Court can also make a sequestration order. They are theonly remedies available under the Act. The claims under the Contempt of Court Actwere therefore properly struck out.Application of s 12(1) of the Contract and Commercial Law Act 2017[69] Section 12(1) of the CCLA provides:12 Deed or contract for benefit of person who is not party to deed orcontract(1) This section applies to a promise contained in a deed or contract thatconfers, or purports to confer, a benefit on a person, designated byname, description, or reference to a class, who is not a party to thedeed or contract.[70] In order to fall within this definition, a non-party to a contract must thereforebe designated by name, description, or reference to a class. In the absence of such adesignation, a non-party does not obtain any benefit and cannot sue for breach.[71] It is apparent on the face of the notice of discontinuance that PAL is notdesignated by name, description, or reference to a class. It cannot possibly thereforehave acquired any rights under s 12 of the CCLA.Outcome[72] For the reasons set out above, both appeals are dismissed. All of the causes ofaction had no prospect of success and were properly struck out.Costs[73] I invite the parties to settle costs between themselves by agreement but, if noagreement is possible, Mr Ross shall file a costs memorandum no greater than threepages in length within 14 days from the date of this decision, and Mr Young shall filea memorandum in reply of no greater than three pages in length within 14 days ofservice on him of Mr Ross' memorandum. I will then deal with the matter on thepapers.Churchman JSolicitors:Cathedral Lane Law, Napier for Respondentcc: P R YoungProgressive Accountants Limited