IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE	
CIV-2019-470-8
[2019] NZHC 902	

UNDER	the High Court Rules and the Residential Tenancies Act 1986	
IN THE MATTER	of appeal against the decision of the District Court decision dated 24 January 2019	
BETWEEN	CHARLES TE TOKOTU SERGEANT
Appellant	
AND	ADRIENNE MAREE NIGRO AND
MICHAEL JOHN TAPSELL as trustees of the Tapsell Family Trust
Respondents	

Hearing:	12 April 2019	
Appearances:	G J Denize for the Appellant
M Ward-Johnson, for Respondents	
Judgment:	26 April 2019	

JUDGMENT OF GORDON J

This judgment was delivered by me on 26 April 2019 at 1 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:	Keam Standen, Tauranga
Chris Rejthar & Associates, Tauranga
Counsel:	G J Denize, Tauranga
M Ward-Johnson, Tauranga

SERGEANT v NIGRO [2019] NZHC 902 [26 April 2019]

[1]	This is an application pursuant to s 120 of the Residential Tenancies Act 1986 (the Act) for leave to appeal my judgment of 4 March 20191 to the Court of Appeal and an application for a stay of the orders in that judgment pending the hearing of an appeal in the Court of Appeal.2

[2]	My judgment involved an appeal on a question of law against the decision of a District Court Judge upholding an order of the Tenancy Tribunal (the Tribunal) under the Act. By that order, the respondents, Adrienne Nigro and Michael Tapsell (the trustees), as trustees of the Tapsell Family Trust (the trust), were granted possession of the residential premises at 23 Otimi Street, Maketu, RD 9, Paengaroa (the property).

Background

[3]	The background is set out in my judgment of 4 March 2019. I repeat the relevant paragraphs as a convenient summary:

[3]	The appellant, Charles Sergeant, had been in a long-term de facto relationship with Maureen Tapsell. Mrs Tapsell originally owned the property jointly with her late husband. After her husband’s death, the property was transmitted into Mrs Tapsell’s sole name.

[4]	After her husband had died, Mrs Tapsell and Mr Sergeant started a relationship. The two of them lived in the property from about 1993 throughout their relationship, apart from a period between 2006 and 2008.

[5]	In 2001, Mr Sergeant and Mrs Tapsell signed an agreement pursuant to the Property (Relationships) Act 1976 designating the property as Mrs Tapsell’s separate property (the Relationship Property Agreement).

[6]	The trust was created by deed on 19 June 2003 with Mrs Tapsell as the settlor. The property was transferred to the trustees of the trust in 2005. The trustees at that time were Mrs Tapsell and the trustees in this proceeding (who are her children). Mrs Tapsell died in 2016 and Mr Sergeant has continued to live in the property. He has not paid rent and the trustees have continued to meet on-going obligations and outgoings relating to the property.

[7]	The property is subject to a mortgage to the Heartland Bank securing a debt in the form of a reverse annuity mortgage. The debt is due for repayment six months after the death of the nominated resident of that property. Mrs Tapsell was the only nominated resident.

1	Sergeant v Nigro [2019] NZHC 328.
2	The application as filed sought a stay pending the hearing of the application for leave to appeal. At the hearing Ms Denize clarified that the stay was sought pending the hearing of an appeal in the Court of Appeal.

[8]	The Heartland Bank has issued a Property Law Act notice demanding repayment, calling up the sum of approximately $159,000, and there is a threat of a mortgagee sale.

Other proceedings

[4]	There are other proceedings involving the same parties. I mention two of those.

[5]	First, Mr Sergeant has brought a claim in the High Court (the High Court claim) against the executors of the estate of Mrs Tapsell and the trustees challenging the validity of the 2001 Relationship Property Agreement. Mr Sergeant pleads that if the agreement is invalid, then the transfer of the property to the trust is equally invalid, and the trustees have no right to demand possession of the property. He further pleads that he has an interest in the property under a constructive trust. Mr Sergeant seeks orders, amongst others, setting aside the Relationship Property Agreement, transferring the property from the trust to Mrs Tapsell’s estate and declaring that the trustees hold an equal share of the property as trustees on his behalf.

[6]	After the hearing in the Tribunal and before the hearing of the appeal in the District Court, Mr Sergeant filed  a  further  amended  statement  of  claim  (dated  31 October 2018) which included a pleading that he had a reasonable expectation of an interest in the property including, but not limited to, a right to occupy the property for the remainder of his life. As part of the amended relief, Mr Sergeant seeks a declaration that he is entitled to remain in the property for the remainder of his life or such time as his health will allow him to remain in the property. The claim is to be heard on 21 October 2019.

[7]	The second proceeding involves a claim the trustees brought in this court on 3 May 2018, seeking to remove a caveat that Mr Sergeant had registered on the property. The trustees, as plaintiffs, sought an order under s 143 of the Land Transfer Act 1952 removing both the caveat lodged by Mr Sergeant against the property and the Property (Relationships) Act Notice. The trustees, in that proceeding, also sought an order for possession of the land requiring Mr Sergeant to vacate the property.

[8]	The application in the Tribunal in this proceeding was adjourned pending the outcome of the trustees’ application in the High Court referred to in [7] above.

[9]	In his decision, Associate Judge Andrew, ordered that the caveat be removed subject to the condition that 50 per cent of the net proceeds of sale of the property be held by the solicitor for the plaintiffs pending further order of the Court.3

[10]	As to an order for possession of the land, the Associate Judge was inclined to the view that he did have jurisdiction to make such an order but, in the circumstances, concluded it was not necessary to do so. Associate Judge Andrew stated:

[32]	… There are proceedings before the Tenancy Tribunal where the issue can in my view be more appropriately dealt with.

[11]	Mr Sergeant has filed an appeal in the Court of Appeal against the decision of Associate Judge Andrew.

Appeal to the District Court

[12]	The Tribunal granted the trustee’s application for possession of the property.4 Mr Sergeant appealed to the District Court.5

[13]	The Judge stated that at the heart of the Tribunal decision was s 65 of the Act which provides:

65	Eviction of squatters

(1)	Where, on the application of any person entitled to possession of any residential premises, the Tribunal is satisfied that any other person is in possession of the premises as a squatter or trespasser, or otherwise than pursuant to any right of occupation granted to that person by any person having lawful authority to grant that right to that other person, the Tribunal shall make a possession order granting possession of the premises to the applicant.

(2)	Nothing in subsection (1) shall limit or affect the provisions of the Trespass Act 1980, or any other remedy that may be available to the person lawfully entitled to possession of the premises.

3	Nigro v Sergeant [2018] NZHC 1990.
4	Nigro v Sergeant [2018] NZTT Tauranga 4141733.
5	Sergeant v Nigro [2019] NZDC 1060.

(3)	To avoid doubt, the Tribunal has jurisdiction under this section even though the premises are not subject to a tenancy agreement.

[14]	One of the issues was whether s 85 of the Act applies to an application made under s 65. Section 85 provides:

85	Manner in which jurisdiction is to be exercised

(1)	Subject to the provisions of this Act and of any regulations made under this Act, the Tribunal shall exercise its jurisdiction in a manner that is most likely to ensure the fair and expeditious resolution of disputes between landlords and tenants of residential premises to which this Act applies.

(2)	The Tribunal shall determine each dispute according to the general principles of the law relating to the matter and the substantial merits and justice of the case, but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities.

[15]	The District Court Judge held that the three jurisdictional thresholds in s 65 to be satisfied on the balance of probabilities are:

(a)	The premises the subject of the application are residential premises.

(b)	The applicant for possession is entitled to possession of those premises.

(c)	Another person or persons are in possession as squatters, trespassers or otherwise than pursuant to any right of occupation granted by a person having lawful authority to do so.

[16]	The Judge further held that upon satisfaction of those three primary jurisdictional requirements, it is mandatory for the Tenancy Tribunal to make a possession order. The Judge found, as the Tribunal had done, that the three jurisdictional thresholds were satisfied.

[17]	In response to Mr Sergeant’s claim that he had a lawful right of occupation on the basis of his yet to be heard claim in the High Court (referred to in [5] above), the Judge held:

[29] Those arguments can only be assessed in terms of an analysis of the primary jurisdictional hurdles set out above. An as yet unresolved argument based on the High Court claim can only have an impact in the Tenancy

Tribunal if it prevents the Tenancy Tribunal from being satisfied as to one or more of the above jurisdictional requirements.

[18]	The Judge held that the claim did not prevent the Tribunal from being satisfied that the trustees were entitled to possession. The Judge accordingly upheld the Tribunal’s decision stating that the trustees were entitled to possession.

[19]	Prior to the hearing of the appeal before me, this Court made orders by consent that the orders of the District Court Judge were stayed until the Court issued its judgment on the appeal.

Appeal to this Court

[20]	An appeal to this Court under the Act is limited to a question of law.6 The questions of law (as reframed) were:

(a)	Does s 85 of the Act apply to applications made under s 65?

(b)	Are undetermined claims in separate proceedings (challenging an applicant’s entitlement to possession and asserting a right of occupation or other interest in the property) relevant in considering an application for an order under s 65 of the Act?

[21]	There was a third question which I did not answer. It was not necessary to do so  as  the  issue  involved  was  not  part  of  the  Judge’s  reasoning  for  refusing  Mr Sergeant’s appeal.

[22]	I concluded that the District Court Judge made an error of law when he determined that s 85 does not apply when the Tribunal is determining an application under s 65.7

[23]	I then stated:

[106]	However, that determination did not affect the outcome of the appeal in the District Court. That is because the Judge was correct to determine that

6	Residential Tenancies Act 1986, s 119(1).
7	Sergeant v Nigro (HC), above n 1, at [105].

the Tribunal cannot consider claims made by the appellant in another proceeding when deciding if the applicant for an order for possession has proven the pre-condition for an order under s 65. That is the correct position even employing s 85. That section does not have such a wide ambit so as to allow a consideration of Mr Sergeant’s claim in those other (undetermined) proceedings.

[24]	I dismissed Mr Sergeant’s appeal.

Application for leave to appeal

[25]	In the application for leave (dated 22 March 2019), the proposed questions of law for consideration by the Court of Appeal are:

a.	Are undetermined claims in separate proceedings (challenging an applicant’s entitlement to possession and asserting a right to occupation or other interest in the property) relevant in considering an application for an order under s 65 of the Residential Tenancies Act 1986?

b.	Should s 65 of the Residential Tenancies Act 1986 apply in circumstances in which the party seeking to obtain possession of a property is defending claims, yet to be heard, made by the party in occupation of the property in reliance on claims in equity and the Property (Relationships) Act 1976?

c.	Can Trustees of a Trust pursue an application for possession under   s 65 of the Residential Tenancies Act 1986 when the Trustees will directly benefit from the Order of Possession if granted?

[26]	I do not consider question (c) arises from my decision. I will therefore put it to one side. Leave is refused on that question without the need for further consideration.

The law

[27]	Section 120(1) of the Act provides that any party to an appeal under s 119 may, “with the leave of the High Court … appeal to the Court of Appeal against the determination of the High Court”.

[28]	Mr Sergeant was a party to an appeal under s 119 of the Act.

[29]	Section 120(2) of the Act provides:8

… the High Court may grant leave accordingly if, in its opinion, the appeal involves a question of law that, because of its general or public importance or for any other reasons, ought to be submitted to the Court of Appeal for decision.

[30]	Two cases often cited in applications for leave to appeal are Waller v Hider9 and Snee v Snee.10 Both involved appeals under s 67 of the Judicature Act 1908 which provided:

The determination of the High Court on appeals from inferior courts shall be final unless, leave to appeal from the same to the Court of Appeal is given by the High Court or, where such leave is refused by that court, then by the Court of Appeal.

[31]	In Waller v Hider, the Court said:11

… the test is well established. The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal: Rutherfurd v Waite [1923] GLR 34; Cuff v Broadlands Finance Limited [1987] 2 NZLR 343, 346-7. In the latter case the Court also remarked that in the end the guiding principle must be the requirements of justice. Further authorities of this Court are cited in McGechan, para J 67.05.

Notwithstanding frequent reminders of the test, applications continue to be made which have little or no prospect of success. Counsel are of course to be commended for making all reasonable efforts to advance the cause of their clients but after a first appeal they must draw back and appraise the state of the case dispassionately, asking whether in truth the disputed matter contains the requisite element of sufficient importance. The scarce time and resources of the High Court and of this Court are not to be wasted, nor additional expense for an unsuccessful client incurred without realistic hope of benefit.

Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.

8	Section 120(2) also requires the appeal to be brought within 15 working days after the determination of the High Court.  In this case, the application for leave to appeal was  filed on  22 March 2019, within the statutory period.
9	Waller v Hider [1998] 1 NZLR 412 (CA).
10	Snee v Snee [2000] NZFLR 120 (CA).
11	Waller v Hider, above n 9, at 413.

[32]	Two years later in Snee v Snee, the Court of Appeal emphasised what it referred to as the “restricted approach” identified in Waller v Hider.12

[33]	More recently in Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd, the Court of Appeal stated: 13

There may be a need to reconsider the criteria under s 67 of the Judicature Act, with a view to restricting second appeals even further.

[34]	As Gendall J stated in Greig v Hutchison, one rationale underpinning the leave requirement for second appeals, at least in part, is that of resource allocation.14

[35]	The test in s 120 of the Act reflects the authorities I have referred to. Although the section does not refer to the interests of justice, I consider the “guiding principle” namely “the requirements of justice” also applies.

Submissions

[36]	Ms Denize, appearing for Mr Sergeant, submits that the questions in the notice of appeal involve matters of general and public importance. She also submits that the “for any other reasons” ground applies.

[37]	The trustees oppose the application for leave to appeal.   On their behalf,    Mr Ward-Johnson submits that if leave were granted this would be the fourth hearing on the issue of possession and the third appeal. In those circumstances the grounds must be compelling, and that is not so here. Both the District Court and this Court found that the Tribunal has no discretion to consider matters outside the three jurisdictional threshold questions. Once those three jurisdictional requirements are met, it is mandatory for the Tribunal to make an order under s 65. The proposed grounds of appeal raise nothing new and do not establish a case involving public interest or a private interest of sufficient importance.  The reality, he says, is that   Mr Sergeant’s complaint is simply one regarding process rather than substance.

12	Snee v Snee, above n 10, at [19].
13	Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355, [2008] 2 NZLR 591 at [36].
14	Greig v Hutchison [2015] NZHC 3067 at [17].

[38]	Mr Ward-Johnson further submits on the “any other reasons” ground that the fact Mr Sergeant has other High Court proceedings on foot is irrelevant given the mandatory nature of s 65.

Question of general or public importance?

[39]	I accept that my decision may have application beyond the parties in this case, so that a party may use s 65 to determine a claim that the opposing party may have in another proceeding.

[40]	The very nature of the Tenancy Tribunal is that it is cost effective and easy to access. I accept that, for example, s 65 may be used to dispossess a party who has a relationship property claim to a property which may include a claim to a right of occupation and other claims under the Property (Relationships) Act 1976 before those claims have been heard. The consequence of this, is that s 65 operates to provide possession in circumstances where the party’s “right” of possession is actively being challenged and may subsequently be successfully challenged.

[41]	There is an available argument as to whether this was Parliament’s intent when amending s 65 of the Act in 2010.

[42]	I accept that, while the threshold for leave is high, Mr Sergeant has identified an arguable error of law in my decision, and that issue has general importance beyond the parties in this case. I therefore give leave for Mr Sergeant to appeal on questions
(a) and (b).

[43]	It is not necessary for me to consider the “any other reasons” ground.

Stay application

[44]	Ms Denize puts Mr Sergeant’s case on the basis that if the stay is not granted Mr Sergeant will be dispossessed of his home prior to the hearing of his appeal in the Court of Appeal. The trustees’ intention is to sell the property and use the proceeds to repay the mortgage. This will render Mr Sergeant’s appeal in the Court of Appeal

nugatory as it is the entitlement to possession and Mr Sergeant’s eviction that underlie his appeal.

[45]	The application for a stay is opposed by the trustees. Mr Ward-Johnson submits that the stay must be viewed against the application for leave to appeal. Even if leave were to be granted, he submits the prospects of success are slim at best.

[46]	An appeal does not operate as a stay of proceeding and an application under  r 12 of the Court of Appeal (Civil) Rules 2005 is required.

[47]	In Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust, the Court of Appeal said:15

[10] … Rule 12 does not set out any criteria for the granting of a stay or interim relief, but the approach is well-established. As a starting point, a successful party is entitled to the fruits of its judgment. An appellant who seeks to stop this must make an application and show why the usual consequences of a judgment should not follow. The court will need to balance the competing rights of the party who has obtained judgment against the need to preserve the appellant’s position in the event of the appeal succeeding. …

(Footnotes omitted)

[48]	In Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd,
Hammond J stated:16

[8] … It is routinely said that, at the end of the day, the test for a stay of execution is one of the justice of the given case. In the broadest sense, that must be so. But a formula which, with respect, more accurately indicates the essential nature of the balancing approach which must be adopted, is set out in the decision of Gault J in Duncan v Osborne Buildings Ltd (1992) 6 PRNZ
85. His Honour said (at p 87):

“In applications of this kind it is necessary carefully to weigh all of the factors in the balance between the right of a successful litigant to have the fruits of a judgment and the need to preserve the position in case the appeal is successful. Often it is possible to secure an intermediate position by conditions or undertakings and each case must be determined on its own circumstances.”

15	Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377.
16	Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC).

[49]	Factors which Courts have conventionally addressed to find the appropriate balance in any given case were listed by Hammond J in Dymocks Franchise Systems as follows:17
(1)	Whether the appeal may be rendered nugatory by the lack of a stay.

(2)	The bona fides of the appellant as to the prosecution of the appeal.

(3)	Will the successful party will be injuriously affected by the stay?

(4)	The effect on third parties.

(5)	The novelty and importance of questions involved.

(6)	The public interest in the proceedings.

(7)	The overall balance of convenience.

[50]	Although the above list does not include the apparent strength of the appeal, that has been treated as an additional factor.18

[51]	I also refer to the comment by Woodhouse J, in SKIDS Program Management Ltd v McNeill, on the factors a Court is likely to consider:19

[9] It needs to be emphasised that these are amongst the factors that the Court is likely to consider in determining whether or not to exercise the Court’s discretion to grant stay and, if stay is to be granted, to determine what, if any, conditions should be imposed. Each case must be determined on its own circumstances. The list is not determinative. There may be other factors which, in the particular circumstances, warrant more weight than the factors referred to in Dymocks and Keung. Of the factors that are referred to in Dymocks and Keung, some may have no application. Of those that do, some may warrant less weight than others.

(Footnotes omitted)

[52]	I now address each of the factors to the extent that they are relevant.

Appeal nugatory?

[53]	The evidence is that the trustees intend to sell the property. Refusing a stay would effectively settle the appeal. This factor therefore favours the grant of a stay.

17	At [9].
18	See Keung v GBR Investment Ltd [2010] NZCA 396 at [11].
19	SKIDS Program Management Ltd v McNeill HC Auckland CIV-2010-404-1696, 20 December 2011.

Mr Sergeant’s bona fides as to prosecution of appeal

[54]	I accept the bona fides of Mr Sergeant in prosecuting the appeal. Although he does not yet have confirmation of legal aid for an appeal, that is actively sought.    Mr Sergeant was granted legal aid for the High Court appeal.

Will the trustees be injuriously affected by a stay?

[55]	If the trustees are not able to sell the property, but the mortgagee does so,   Mr Ward-Johnson  submits that the trustees will be prejudiced.   (He also submits   Mr Sergeant will be similarly prejudiced). That is because a mortgagee sale will result in a reduced sale price. There is however no evidence as to any differential between the price that might be achieved if the trustees were to sell as opposed to the price that would be achieved at a mortgagee sale.

Effect on third parties?

[56]	There is no evidence as to any effect on third parties.

Novelty and importance of questions involved

[57]	This is addressed in my discussion on the leave application. I have accepted that there are questions which should be considered by the Court of Appeal.

Public interest

[58]	There is no public interest in the proceeding.

Overall balance of convenience

[59]	Taking into account all the above factors, the balance of convenience favours the granting of a stay.

[60]	As to the prospects of success on appeal, I have accepted there are available arguments on appeal. I therefore propose to order a stay of my judgment of 4 March 2019 to enable Mr Sergeant to file an appeal.

[61]	The orders I made in my judgment of 4 March 2019 were as follows:

[109] The orders of the District Court Judge were stayed until this judgment issued. That stay is now lifted. The orders now come into force. Those orders were:

(a)	The trustees are entitled to possession of the property; and

(b)	Mr Sergeant must vacate the property within 10 days of the date of the judgment. (For the avoidance of doubt the 10 days run from the date of this judgment).

[62]	The effect of this decision staying my orders means that the District Court judgment  giving the trustees possession of the property and the  order requiring    Mr Sergeant to vacate the property within 10 days of the judgment are stayed.

Application for interim injunction in High Court claim

[63]	On 13 March 2019, following the delivery of my decision on 4 March 2019, Mr Sergeant applied in the High Court claim for an ex parte interim injunction seeking orders:

(a)	That Mr Sergeant may remain in occupation of the property at 23 Otini Street, Makatu, which is the subject of these proceedings unless otherwise ordered by further order of this Court, or by consent orders of the parties to these proceedings; and

(b)	The respondents may not take any further steps to sell the property at 23 Otini Street, Makatu, which is the subject of these proceedings unless other ordered by further order of this Court, or by consent orders of the parties to these proceedings.

[64]	The application came before Whata  J, as  Duty Judge, on 20 March 2019.  Mr Ward-Johnson appeared on a Pickwick basis for the trustees.

[65]	In his minute, Whata J stated that he was not satisfied that a collateral challenge by way of interim injunction in another proceeding was the appropriate process to follow. Whata J directed Ms Denize to apply for a stay of my decision within 48 hours. The Judge also made an order, over objection from Mr Ward-Johnson, to enable the

process to occur, preventing the trustees from taking possession of the property until such time I had the opportunity to consider the application for a stay.

[66]	I agree with Whata J that the collateral challenge by Mr Sergeant to my decision was not the appropriate way to proceed. Having now given my decision, the interim order made by Whata J is discharged.

Result and orders

[67]	The application by Mr Sergeant for leave to appeal to the Court of Appeal is granted.

[68]	I also make an order  staying  my  judgment  of  4  March  2019  to  enable Mr Sergeant to file his notice of appeal in the Court of Appeal. If the notice of appeal is not filed within 20 working days of the date of this judgment,20 the stay lapses. If the notice of appeal is filed within 20 working days of the date of this judgment, then the stay will continue until further order of the Court of Appeal.

Costs

[69]	If there is any issue as to costs (having regard to the legal aid position) leave is granted for the parties to file memoranda which should be no more than four pages. I do not make a timetable order, but memoranda should be filed expeditiously.

Gordon J

20	Adopting the period in r 29(1)(b)(ii) of the Court of Appeal (Civil) Rules 2005.