Court of Appeal Judgments of Public Interest
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Case name
Case number
[2025] NZCA 31
Date of Judgment
26 February 2025
Summary
PROPERTY LAW TORT LAW — Easement — claim in nuisance of unlawful interference with right of way
The appellant, Wimax New Zealand Limited (Wimax), and the respondents, the trustees of a family trust called the Aberdeen Four Trust (the trustees), are neighbours who share a common accessway governed by a registered vehicular right of way easement. Their dispute concerns structures erected by Wimax that encroach on land subject to the easement but which do not obstruct the formed driveway or impede movement along it. The trustees sought an order requiring Wimax to remove the structures. The trustees’ claim was brough in nuisance for unlawful interference.
The terms of the easement included various rights and covenants derived from sch 4 of the Land Transfer Regulations 2002 (the 2002 LT Schedule) and sch 5 of the Property Law Act 2007 (the PLA Schedule).
The parties arbitrated the dispute and the trustees’ claims were dismissed because, amongst other things, the structures did not impede the functionality of the driveway. The trustees appealed to the High Court. In the High Court, Moore J held that the arbitrator had erred by limiting the rights under the easement to the driveway. In the Judge’s view, correctly interpreted the terms of the easement required the whole of the easement area, of which the driveway was only a part, to be cleared of structures which substantially interfered with its use. The Judge also considered that in light of the permanent and substantial nature of the encroaching structures, the conclusion that they constituted a substantial interference with the trustees’ use and enjoyment of the right of way was inescapable. However, having allowed the trustees’ appeal against the arbitration award, the Judge remitted the matter back to the arbitrator to deal with the issue of remedy.
Wimax was granted leave to appeal Moore J’s decision on two questions of law related to liability, and the trustees were granted leave to appeal the decision to remit remedy issues to the arbitrator.
At the appeal hearing, the arguments of both parties in relation to liability evolved from what they had been at arbitration and in the High Court. On appeal the primary focus was on the claim that the structures constituted a substantial interference with the trustees’ rights under the easement because of possible future plans to sub-divide their property which would likely require a widening of the driveway.
As a result of the change in focus, the Court re-framed the question of law for determination as follows.
Did the High Court err in holding there was an actionable interference with a vehicular right of way easement in circumstances where the encroaching structures did not substantially interfere with the grantee’s current use of the right of way and what was relied on was the effect the structures might have on possible future plans to develop the benefited property? Held: Yes.
After considering established common law principles, the New Zealand case law relied upon by the High Court and the trustees as well as the statutory terms, the Court held the trustees had a right to potentially expand or develop the driveway within the easement area but rejected the implication of the High Court judgment that the whole of the right of way must be kept clear in case of a possible development at some unknown time.
In coming to that conclusion, the Court relied on two established principles. First that a grantee of a right of way easement cannot insist on the entirety of the burdened land being kept free of all structures, and that an intruding structure will only be actionable if it creates a substantial interference with the grantee’s use and enjoyment of the right of way. Because an easement does not grant ownership of land, but only a right to the reasonable use of that land for its granted purpose, the benefited owner can only sustain a claim predicated on substantial interference with reasonable use for that specific purpose. The second principle was the recognition of a temporal dimension to liability, namely that a grantee is only entitled to object to activities that substantially interfere with the use or exercise of the right as for the time being.
Was the High Court wrong to remit the question of remedy back to the arbitrator? Held: No
Because the liability appeal succeeded, the remedy appeal had to be dismissed. But the Court indicated that even if the liability appeal had failed, it would have still dismissed the remedy appeal. The factual issues were unsuited for an appellate court to resolve, especially when further evidence was likely to be required.
Wimax’s appeal was allowed, the trustees’ appeal was dismissed, and the arbitral award was reinstated.
The trustees were ordered to pay costs in respect of both appeals, with costs in the High Court to be fixed by the High Court, in light of this judgment.
The appellant, Wimax New Zealand Limited (Wimax), and the respondents, the trustees of a family trust called the Aberdeen Four Trust (the trustees), are neighbours who share a common accessway governed by a registered vehicular right of way easement. Their dispute concerns structures erected by Wimax that encroach on land subject to the easement but which do not obstruct the formed driveway or impede movement along it. The trustees sought an order requiring Wimax to remove the structures. The trustees’ claim was brough in nuisance for unlawful interference.
The terms of the easement included various rights and covenants derived from sch 4 of the Land Transfer Regulations 2002 (the 2002 LT Schedule) and sch 5 of the Property Law Act 2007 (the PLA Schedule).
The parties arbitrated the dispute and the trustees’ claims were dismissed because, amongst other things, the structures did not impede the functionality of the driveway. The trustees appealed to the High Court. In the High Court, Moore J held that the arbitrator had erred by limiting the rights under the easement to the driveway. In the Judge’s view, correctly interpreted the terms of the easement required the whole of the easement area, of which the driveway was only a part, to be cleared of structures which substantially interfered with its use. The Judge also considered that in light of the permanent and substantial nature of the encroaching structures, the conclusion that they constituted a substantial interference with the trustees’ use and enjoyment of the right of way was inescapable. However, having allowed the trustees’ appeal against the arbitration award, the Judge remitted the matter back to the arbitrator to deal with the issue of remedy.
Wimax was granted leave to appeal Moore J’s decision on two questions of law related to liability, and the trustees were granted leave to appeal the decision to remit remedy issues to the arbitrator.
At the appeal hearing, the arguments of both parties in relation to liability evolved from what they had been at arbitration and in the High Court. On appeal the primary focus was on the claim that the structures constituted a substantial interference with the trustees’ rights under the easement because of possible future plans to sub-divide their property which would likely require a widening of the driveway.
As a result of the change in focus, the Court re-framed the question of law for determination as follows.
Did the High Court err in holding there was an actionable interference with a vehicular right of way easement in circumstances where the encroaching structures did not substantially interfere with the grantee’s current use of the right of way and what was relied on was the effect the structures might have on possible future plans to develop the benefited property? Held: Yes.
After considering established common law principles, the New Zealand case law relied upon by the High Court and the trustees as well as the statutory terms, the Court held the trustees had a right to potentially expand or develop the driveway within the easement area but rejected the implication of the High Court judgment that the whole of the right of way must be kept clear in case of a possible development at some unknown time.
In coming to that conclusion, the Court relied on two established principles. First that a grantee of a right of way easement cannot insist on the entirety of the burdened land being kept free of all structures, and that an intruding structure will only be actionable if it creates a substantial interference with the grantee’s use and enjoyment of the right of way. Because an easement does not grant ownership of land, but only a right to the reasonable use of that land for its granted purpose, the benefited owner can only sustain a claim predicated on substantial interference with reasonable use for that specific purpose. The second principle was the recognition of a temporal dimension to liability, namely that a grantee is only entitled to object to activities that substantially interfere with the use or exercise of the right as for the time being.
Was the High Court wrong to remit the question of remedy back to the arbitrator? Held: No
Because the liability appeal succeeded, the remedy appeal had to be dismissed. But the Court indicated that even if the liability appeal had failed, it would have still dismissed the remedy appeal. The factual issues were unsuited for an appellate court to resolve, especially when further evidence was likely to be required.
Wimax’s appeal was allowed, the trustees’ appeal was dismissed, and the arbitral award was reinstated.
The trustees were ordered to pay costs in respect of both appeals, with costs in the High Court to be fixed by the High Court, in light of this judgment.
Case name
Case number
[2025] NZCA 15
Date of Judgment
19 February 2025
Summary
Sentencing – Child Sex Offender Register – mitigating factors in sentencing – manifestly excessive – uplift for previous conviction
Background: Following a guilty plea, the appellant was convicted in the District Court of exposing a young person to indecent material under s 124A of the Crimes Act 1961 and sentenced to eight months’ imprisonment. The effect of being convicted of that offence and receiving a custodial sentence was that he was automatically placed on the Child Sex Offender Register. He unsuccessfully appealed his sentence to the High Court but was granted leave to bring a second appeal to this Court on the grounds that the lower courts should have made an allowance at sentencing for the punitive effect of being placed on the Register.
In granting leave, this Court noted that while there was a consensus in the authorities that registration is punitive, the sentencing response to that fact was not yet settled, making this a suitable case for a second appeal.
Result: The appeal against sentence is dismissed.
Issue 1: Can registration on the Child Sex Offender Register be a mitigating factor to be taken into account at sentencing when determining the length of a sentence and type of sentence?
Held: Yes but only in exceptional circumstances.
Having regard to general sentencing principles, the provisions of the Sentencing Act 2002 (in particular
s 8(2)(h)), and the purpose and text of the Child Protection (Child Sex Offender Government Agency Registration) Act 2016, the Court reached the following conclusions:
(a) Because sentencing is quintessentially a discretionary exercise, clearer words would be required in the legislation before Parliament can be assumed to have intended to remove completely any discretion to take the impact of registration into account at sentencing.
(b) However, having regard to the important purpose of the legislation to reduce sexual offending against children, any judicial discretion to take registration into account must be considered a limited one.
(c) It would be contrary to Parliament’s intention were registration to result in reduced sentences for child sex offenders in anything other than exceptional cases. That approach (requiring exceptional circumstances) applies to both the issue of length of sentence where registration should not generally be regarded as warranting a discrete discount and also to the type of sentence.
(d) Exceptional circumstances justifying an allowance for the effect of registration will exist if registration is exceptional in its effects on the particular offender and will render an otherwise appropriate sentence unusually or disproportionately severe.
(e) The operation of the registration regime will therefore seldom result in a sentence otherwise within range being manifestly excessive.
(f) It would be inconsistent with the legislative purpose and hence wrong for a sentencing court to reduce a prison sentence on account of registration so as to bring it within the range of home detention. That would be to subvert the distinction drawn in the legislation for the purposes of registration between child sex offending that warrants a prison sentence and offending that does not.
(g) Where the length of a prison sentence arrived at without regard to the impact of registration is under the home detention threshold, then in deciding between prison and home detention, the availability of a registration order may be taken into account in determining whether home detention will sufficiently meet the need for community protection. Home detention should not however be imposed for the purpose of avoiding registration.
Issue 2: Did the appellant’s case meet the exceptional circumstances threshold?
Held: No. There was nothing exceptional in the circumstances of this case to warrant any allowance being made for the impact of registration in relation to the period of imprisonment or the substitution of a non-custodial sentence.
Background: Following a guilty plea, the appellant was convicted in the District Court of exposing a young person to indecent material under s 124A of the Crimes Act 1961 and sentenced to eight months’ imprisonment. The effect of being convicted of that offence and receiving a custodial sentence was that he was automatically placed on the Child Sex Offender Register. He unsuccessfully appealed his sentence to the High Court but was granted leave to bring a second appeal to this Court on the grounds that the lower courts should have made an allowance at sentencing for the punitive effect of being placed on the Register.
In granting leave, this Court noted that while there was a consensus in the authorities that registration is punitive, the sentencing response to that fact was not yet settled, making this a suitable case for a second appeal.
Result: The appeal against sentence is dismissed.
Issue 1: Can registration on the Child Sex Offender Register be a mitigating factor to be taken into account at sentencing when determining the length of a sentence and type of sentence?
Held: Yes but only in exceptional circumstances.
Having regard to general sentencing principles, the provisions of the Sentencing Act 2002 (in particular
s 8(2)(h)), and the purpose and text of the Child Protection (Child Sex Offender Government Agency Registration) Act 2016, the Court reached the following conclusions:
(a) Because sentencing is quintessentially a discretionary exercise, clearer words would be required in the legislation before Parliament can be assumed to have intended to remove completely any discretion to take the impact of registration into account at sentencing.
(b) However, having regard to the important purpose of the legislation to reduce sexual offending against children, any judicial discretion to take registration into account must be considered a limited one.
(c) It would be contrary to Parliament’s intention were registration to result in reduced sentences for child sex offenders in anything other than exceptional cases. That approach (requiring exceptional circumstances) applies to both the issue of length of sentence where registration should not generally be regarded as warranting a discrete discount and also to the type of sentence.
(d) Exceptional circumstances justifying an allowance for the effect of registration will exist if registration is exceptional in its effects on the particular offender and will render an otherwise appropriate sentence unusually or disproportionately severe.
(e) The operation of the registration regime will therefore seldom result in a sentence otherwise within range being manifestly excessive.
(f) It would be inconsistent with the legislative purpose and hence wrong for a sentencing court to reduce a prison sentence on account of registration so as to bring it within the range of home detention. That would be to subvert the distinction drawn in the legislation for the purposes of registration between child sex offending that warrants a prison sentence and offending that does not.
(g) Where the length of a prison sentence arrived at without regard to the impact of registration is under the home detention threshold, then in deciding between prison and home detention, the availability of a registration order may be taken into account in determining whether home detention will sufficiently meet the need for community protection. Home detention should not however be imposed for the purpose of avoiding registration.
Issue 2: Did the appellant’s case meet the exceptional circumstances threshold?
Held: No. There was nothing exceptional in the circumstances of this case to warrant any allowance being made for the impact of registration in relation to the period of imprisonment or the substitution of a non-custodial sentence.
Case number
[2025] NZCA 1
Date of Judgment
04 February 2025
Summary
Employment law - Rest and meal break entitlements - Work period.
The appeal is dismissed.
The question of law is answered as follows: Did the Employment Court err in its interpretation of s 69ZC of the Employment Relations Act 2000? No.
Many public bus drivers employed by Tranzurban Hutt Valley Ltd are rostered to work for a period in the morning and a period in the afternoon, with a time in the middle of the day where they are not rostered to work. This arrangement is commonly known as a "split shift" and reflects the demand pattern for public buses.
Issue: Whether a split shift involves two discrete work periods or one work period for the purposes of the worker's entitlements to rest and meal breaks under the Employment Relations Act 2000 (the Act).
Held: There is nothing in the words of s 69ZC of the Act to preclude more than one work period in a day. The start and end of a work period are determined with reference to the employee's terms and conditions of employment. The rest and meal break entitlements under s 69ZD contemplate entitlements based on a continuous period of work during which the employee is working or on a rest or meal break or other authorised break. Whether a split shift involves a continuous work period or two separate work periods depends on a factual assessment. Tranzurban's approach to split shifts, which treats split shifts with a middle period of two or more hours as separate work periods, is consistent with the purposes of the rest and meal break provisions and the terms of the collective agreement.
The appeal is dismissed.
The question of law is answered as follows: Did the Employment Court err in its interpretation of s 69ZC of the Employment Relations Act 2000? No.
Many public bus drivers employed by Tranzurban Hutt Valley Ltd are rostered to work for a period in the morning and a period in the afternoon, with a time in the middle of the day where they are not rostered to work. This arrangement is commonly known as a "split shift" and reflects the demand pattern for public buses.
Issue: Whether a split shift involves two discrete work periods or one work period for the purposes of the worker's entitlements to rest and meal breaks under the Employment Relations Act 2000 (the Act).
Held: There is nothing in the words of s 69ZC of the Act to preclude more than one work period in a day. The start and end of a work period are determined with reference to the employee's terms and conditions of employment. The rest and meal break entitlements under s 69ZD contemplate entitlements based on a continuous period of work during which the employee is working or on a rest or meal break or other authorised break. Whether a split shift involves a continuous work period or two separate work periods depends on a factual assessment. Tranzurban's approach to split shifts, which treats split shifts with a middle period of two or more hours as separate work periods, is consistent with the purposes of the rest and meal break provisions and the terms of the collective agreement.
Case name
Case number
[2024] NZCA 692
Date of Judgment
19 December 2024
Summary
New Zealand Bill of Rights Act 1990 - Treaty of Waitangi - climate change
The appellant, Mr Smith, is an environmental advocate and elder of Ngāpuhi and Ngāti Kahu. He is the plaintiff in a claim against seven New Zealand companies for their contribution to the adverse effects of climate change that survived a strike out application following a decision of the Supreme Court earlier this year.
This appeal concerns Mr Smith’s separate claim against the Crown in relation to the adverse effects of climate change. Mr Smith alleges that hundreds of sites of special cultural, historical and spiritual significance to his iwi have already been impacted or will be impacted by climate change, specifically those in the vicinity of the Mahinepua C Block, whenua with which he has a close connection. He brings this claim on behalf of his whānau, members of his iwi and future descendants.
He says that New Zealand’s legislative framework responding to climate change, primarily the Climate Change Response Act 2002 (the CCRA), is inadequate to provide rational and effective deterrence of the real and immediate risk that Mr Smith and those he represents will be deprived of their right to life under s 8 of the New Zealand Bill of Rights Act 1990 (NZBORA) and their right to culture under s 20 of NZBORA. He further says their right to life and their right to culture is breached because the Crown does not measure or monitor its own emissions and does not have a regulatory framework to mitigate its own emissions. He also says the inadequate framework under the CCRA and the absence of a framework for Crown emissions breaches te Tiriti, a fiduciary duty and/or a novel common law duty. He seeks declarations to this effect as well as reporting orders requiring the Crown to update the court of the steps it is taking to bring itself into a position of compliance with NZBORA (including the possibility for further relief).
Grice J in the High Court granted the Crown's application to strike out the claims. Mr Smith appeals from that decision.
Held: The appeal is dismissed.
Right to life
The Court examined Mr Smith's right to life claim through six questions:
a) whether the right to life includes a right to a life with dignity;
b) whether widespread effects prevent the engagement of the right to life;
c) whether the risks from climate change are sufficiently proximate;
d) whether the right to life can impose positive duties;
e) whether it is tenable that New Zealand's regulatory framework breached the right to life; and
f) whether reporting orders are tenably available.
On the first question, it is not clearly untenable that the right to life includes a right to a minimum baseline as to the quality of one’s life and is engaged in the context of the potential impacts of climate change. This approach is not necessarily inconsistent with the words of s 8 or earlier authority, is consistent with international jurisprudence on equivalent rights and could be necessary to give the right to life its “full measure”.
On the second question, the claim is not clearly untenable on the basis that the alleged risk to life potentially affects a large group or all of the population.
On the third question, overseas jurisprudence on equivalent rights requires that a risk to life be reasonably foreseeable and sufficiently timely and physically proximate to be engaged. The scientific consensus articulated in the ICCPR reports is relevant to the imminence of the risk to life from climate change and the timeframe within which measures are available to address this risk. Whether the risk to life pleaded by Mr Smith is sufficiently timely and proximate to engage the right to life in NZBORA would require further particulars and would be a matter of evidence for trial. While proof would be challenging, as this would be a matter of evidence for trial this aspect is not so clearly untenable that the claim should be struck out on this basis.
On the fourth question, given the context of the climate emergency and the developing jurisprudence around the world responding to this challenge, it is not clearly untenable that the right to life in NZBORA encompasses a requirement on the Crown to take protective measures against foreseeable threats to life so as to give practical effect to the right.
On the fifth question, the pleaded claim challenged the efficacy of the legislative framework responding to climate change which reflected Parliament’s policy choices. The claim largely relied on jurisprudence on art 2 of the European Convention on Human Rights which had been interpreted to impose substantive obligations on states to have a legislative and administrative framework designed to provide effective deterrence against threats to the right to life. If a legislative and administrative framework is in place, the state was allowed a wide margin of appreciation, but the efficacy of the framework could still be considered and might be found to breach art 2. In the present case, the CCRA is New Zealand’s primary framework for responding to the threats that climate change presents. The pleaded deficiencies in the CCRA framework reflect policy choices that are for Parliament under New Zealand’s constitutional arrangements and it is not for this Court to second guess them. The CCRA is comprehensive in its reach and the accountability mechanisms for decisions made under it included consultation, judicial review and potentially NZBORA claims in respect of those decisions. It is the decisions that are made under the CCRA that will determine the adequacy or otherwise of New Zealand’s response to climate change. Judicial review claims of these decisions is available and would be brought against the Minister responsible for the particular decision rather than against the Attorney-General as here. The pleaded claim under s 8 of NZBORA is clearly untenable and the Attorney-General is therefore entitled to an order striking it out.
On the sixth question, although there is jurisdiction to grant declarations of inconsistency with NZBORA, the court’s institutional role did not encompass an ongoing monitoring role of the measures the Crown is implementing in response to climate change. The reporting orders sought would not have been available even if the s 8 claim had been tenable.
Right to culture
It is not clearly untenable that climate change may give rise to a positive obligation on the Crown to protect against a denial of the right to culture under s 20 of NZBORA. It is not any damage to the whenua or sites of cultural significance that could give rise to any such obligation. A substantial interference amounting to a denial of the right would be necessary.
The pleaded claim is that s 20 is breached because the regulatory framework does not provide a rational and effective deterrent of the pleaded real and imminent risk to the right of Mr Smith and those he represents to enjoy their culture. This pleaded claim is clearly untenable for the same reasons as the right to life claim. The pleaded deficiencies of the CCRA framework reflect policy choices that are for Parliament.
Te Tiriti breach
The claim of a breach of te Tiriti is clearly untenable because the CCRA and other relevant Acts give effect to the Crown’s obligations under the Treaty. The CCRA could not be said to breach the Treaty where decisions consistent with Treaty principles are available to decision-makers. If decisions have been made lawfully under legislation that gives effect to the Crown’s Treaty obligations, there is no room for a claim to operate that the Treaty had been breached. If the decisions have not been made lawfully, Mr Smith’s remedy is judicial review in respect of that decision against the decision-maker under the relevant legislation. There are also other remedial avenues available for decisions made under the CCRA including a claim under s 20 of NZBORA if the basis for such a claim arises and under the Waitangi Tribunal’s jurisdiction.
Te Tiriti fiduciary duty
Mr Smith claims that the Crown owes fiduciary or fiduciary-like duties to Mr Smith, his whānau, Ngāpuhi and Ngāti Kahu which includes duties to perform the commitments undertaken in te Tiriti, to take active steps to ensure those commitments are honoured and to act in good faith. He claims that the Crown has breached these duties.
The claimed fiduciary duty is unlike specific fiduciary duties that can arise between the Crown and certain Māori as a result of particular dealings between them. The pleaded claim is inconsistent with the nature of fiduciary duties because the response to climate change requires the Crown to represent and must balance many interests — it could not just act in the interests of the pleaded beneficiaries. The duty would also sit uneasily with the statutory scheme in the CCRA which reflected the range of considerations relevant to the Crown’s response to climate change (of which the effect on Māori communities was undoubtedly an important one).
Novel common law duty
The parts of the pleaded novel common law duty relying on NZBORA and the Treaty are untenable and therefore do not add to the case for the pleaded novel common law claim. The claim primarily relied upon a public trust doctrine which had been applied at common law to provide rights of access to the seashore and navigable waters, a context a long way from the extensive duty pleaded in relation to climate change. The boundaries of the public trust doctrine are imprecise and fluid, and raised a host of conceptual problems in imposing fiduciary or trust-like obligations on the Crown. The doctrine could also only operate to the extent that it was not displaced by legislation. The comprehensive framework that the CCRA provides does not leave room for the public trust doctrine to operate because it would cut across the balancing of interests entrusted to the Minister under the CCRA and, ultimately, Parliament.
The appellant, Mr Smith, is an environmental advocate and elder of Ngāpuhi and Ngāti Kahu. He is the plaintiff in a claim against seven New Zealand companies for their contribution to the adverse effects of climate change that survived a strike out application following a decision of the Supreme Court earlier this year.
This appeal concerns Mr Smith’s separate claim against the Crown in relation to the adverse effects of climate change. Mr Smith alleges that hundreds of sites of special cultural, historical and spiritual significance to his iwi have already been impacted or will be impacted by climate change, specifically those in the vicinity of the Mahinepua C Block, whenua with which he has a close connection. He brings this claim on behalf of his whānau, members of his iwi and future descendants.
He says that New Zealand’s legislative framework responding to climate change, primarily the Climate Change Response Act 2002 (the CCRA), is inadequate to provide rational and effective deterrence of the real and immediate risk that Mr Smith and those he represents will be deprived of their right to life under s 8 of the New Zealand Bill of Rights Act 1990 (NZBORA) and their right to culture under s 20 of NZBORA. He further says their right to life and their right to culture is breached because the Crown does not measure or monitor its own emissions and does not have a regulatory framework to mitigate its own emissions. He also says the inadequate framework under the CCRA and the absence of a framework for Crown emissions breaches te Tiriti, a fiduciary duty and/or a novel common law duty. He seeks declarations to this effect as well as reporting orders requiring the Crown to update the court of the steps it is taking to bring itself into a position of compliance with NZBORA (including the possibility for further relief).
Grice J in the High Court granted the Crown's application to strike out the claims. Mr Smith appeals from that decision.
Held: The appeal is dismissed.
Right to life
The Court examined Mr Smith's right to life claim through six questions:
a) whether the right to life includes a right to a life with dignity;
b) whether widespread effects prevent the engagement of the right to life;
c) whether the risks from climate change are sufficiently proximate;
d) whether the right to life can impose positive duties;
e) whether it is tenable that New Zealand's regulatory framework breached the right to life; and
f) whether reporting orders are tenably available.
On the first question, it is not clearly untenable that the right to life includes a right to a minimum baseline as to the quality of one’s life and is engaged in the context of the potential impacts of climate change. This approach is not necessarily inconsistent with the words of s 8 or earlier authority, is consistent with international jurisprudence on equivalent rights and could be necessary to give the right to life its “full measure”.
On the second question, the claim is not clearly untenable on the basis that the alleged risk to life potentially affects a large group or all of the population.
On the third question, overseas jurisprudence on equivalent rights requires that a risk to life be reasonably foreseeable and sufficiently timely and physically proximate to be engaged. The scientific consensus articulated in the ICCPR reports is relevant to the imminence of the risk to life from climate change and the timeframe within which measures are available to address this risk. Whether the risk to life pleaded by Mr Smith is sufficiently timely and proximate to engage the right to life in NZBORA would require further particulars and would be a matter of evidence for trial. While proof would be challenging, as this would be a matter of evidence for trial this aspect is not so clearly untenable that the claim should be struck out on this basis.
On the fourth question, given the context of the climate emergency and the developing jurisprudence around the world responding to this challenge, it is not clearly untenable that the right to life in NZBORA encompasses a requirement on the Crown to take protective measures against foreseeable threats to life so as to give practical effect to the right.
On the fifth question, the pleaded claim challenged the efficacy of the legislative framework responding to climate change which reflected Parliament’s policy choices. The claim largely relied on jurisprudence on art 2 of the European Convention on Human Rights which had been interpreted to impose substantive obligations on states to have a legislative and administrative framework designed to provide effective deterrence against threats to the right to life. If a legislative and administrative framework is in place, the state was allowed a wide margin of appreciation, but the efficacy of the framework could still be considered and might be found to breach art 2. In the present case, the CCRA is New Zealand’s primary framework for responding to the threats that climate change presents. The pleaded deficiencies in the CCRA framework reflect policy choices that are for Parliament under New Zealand’s constitutional arrangements and it is not for this Court to second guess them. The CCRA is comprehensive in its reach and the accountability mechanisms for decisions made under it included consultation, judicial review and potentially NZBORA claims in respect of those decisions. It is the decisions that are made under the CCRA that will determine the adequacy or otherwise of New Zealand’s response to climate change. Judicial review claims of these decisions is available and would be brought against the Minister responsible for the particular decision rather than against the Attorney-General as here. The pleaded claim under s 8 of NZBORA is clearly untenable and the Attorney-General is therefore entitled to an order striking it out.
On the sixth question, although there is jurisdiction to grant declarations of inconsistency with NZBORA, the court’s institutional role did not encompass an ongoing monitoring role of the measures the Crown is implementing in response to climate change. The reporting orders sought would not have been available even if the s 8 claim had been tenable.
Right to culture
It is not clearly untenable that climate change may give rise to a positive obligation on the Crown to protect against a denial of the right to culture under s 20 of NZBORA. It is not any damage to the whenua or sites of cultural significance that could give rise to any such obligation. A substantial interference amounting to a denial of the right would be necessary.
The pleaded claim is that s 20 is breached because the regulatory framework does not provide a rational and effective deterrent of the pleaded real and imminent risk to the right of Mr Smith and those he represents to enjoy their culture. This pleaded claim is clearly untenable for the same reasons as the right to life claim. The pleaded deficiencies of the CCRA framework reflect policy choices that are for Parliament.
Te Tiriti breach
The claim of a breach of te Tiriti is clearly untenable because the CCRA and other relevant Acts give effect to the Crown’s obligations under the Treaty. The CCRA could not be said to breach the Treaty where decisions consistent with Treaty principles are available to decision-makers. If decisions have been made lawfully under legislation that gives effect to the Crown’s Treaty obligations, there is no room for a claim to operate that the Treaty had been breached. If the decisions have not been made lawfully, Mr Smith’s remedy is judicial review in respect of that decision against the decision-maker under the relevant legislation. There are also other remedial avenues available for decisions made under the CCRA including a claim under s 20 of NZBORA if the basis for such a claim arises and under the Waitangi Tribunal’s jurisdiction.
Te Tiriti fiduciary duty
Mr Smith claims that the Crown owes fiduciary or fiduciary-like duties to Mr Smith, his whānau, Ngāpuhi and Ngāti Kahu which includes duties to perform the commitments undertaken in te Tiriti, to take active steps to ensure those commitments are honoured and to act in good faith. He claims that the Crown has breached these duties.
The claimed fiduciary duty is unlike specific fiduciary duties that can arise between the Crown and certain Māori as a result of particular dealings between them. The pleaded claim is inconsistent with the nature of fiduciary duties because the response to climate change requires the Crown to represent and must balance many interests — it could not just act in the interests of the pleaded beneficiaries. The duty would also sit uneasily with the statutory scheme in the CCRA which reflected the range of considerations relevant to the Crown’s response to climate change (of which the effect on Māori communities was undoubtedly an important one).
Novel common law duty
The parts of the pleaded novel common law duty relying on NZBORA and the Treaty are untenable and therefore do not add to the case for the pleaded novel common law claim. The claim primarily relied upon a public trust doctrine which had been applied at common law to provide rights of access to the seashore and navigable waters, a context a long way from the extensive duty pleaded in relation to climate change. The boundaries of the public trust doctrine are imprecise and fluid, and raised a host of conceptual problems in imposing fiduciary or trust-like obligations on the Crown. The doctrine could also only operate to the extent that it was not displaced by legislation. The comprehensive framework that the CCRA provides does not leave room for the public trust doctrine to operate because it would cut across the balancing of interests entrusted to the Minister under the CCRA and, ultimately, Parliament.
Media Release
- MR [2024] NZCA 692 (PDF, 153 KB)
Case name
Case number
[2024] NZCA 684
Date of Judgment
19 December 2024
Summary
The application for leave to adduce further evidence dated 11 September 2023 is granted; the application for leave to adduce further evidence dated 23 November 2023 is declined. The appeal is dismissed.
The respondents are awarded costs on an indemnity basis.
Summary judgment – Commercial law – Quantum
Associate Judge Gardiner entered summary judgment in the High Court against Mr George Kerr and a group of related corporate defendants (together, the appellants) (the Liability Judgment). The Judge subsequently quantified the amount owing, in the sum of approximately $65 million (the Quantum judgment). The Judge found that the appellants had no reasonably arguable defences to claims made against them (as either borrowers or guarantors) by Bank of New Zealand (BNZ) arising out of two substantial loan facilities provided to Lothian Partners Capital Ltd (Lothian), and Pyne Holdings Ltd (Pyne Holdings). Specifically, the Judge found it was not reasonably arguable that BNZ’s claims were time-barred under the Limitation Act 2010, as Mr Kerr had acknowledged liability to pay the outstanding debts on behalf of both himself (as guarantor) and the corporate appellants (as borrowers or guarantors) during the primary limitation period, giving rise to fresh claims. The Judge further found that Galt Nominees Ltd (Galt) and Glencoe Land (Joint Venture) Ltd (Glencoe JV) had no reasonably arguable defence to BNZ’s claim for recovery of an indemnity costs award of$243,419.84 (Costs Award) arising out of an unsuccessful injunction application brought by those companies against the BNZ. Mr Kerr, Lothian and Pyne Holdings were also liable to pay the Costs Award in their capacity as co-guarantors of Galt’s obligations under the Lothian Facility Agreement.
Did the Judge err in finding that Mr Kerr had acknowledged his personal liability as guarantor during the primary limitation period, giving rise to fresh claims against him? Held: No.
The corporate appellants are all closely associated with Mr Kerr. He is, or was previously, a director of each of them. Following the defaults on the loan facilities, Mr Kerr assumed overall responsibility for ensuring repayment of the outstanding debt on behalf of all of the appellants. His acknowledgements of liability were not made solely on behalf of the corporate appellants. Mr Kerr was the sole point of contact with BNZ following the defaults for almost eight years in respect of the Lothian Facility, and almost six years in respect of the Pyne Holdings Facility. He engaged in a sustained, consistent pattern of communication with BNZ during this time regarding the outstanding debt and his proposals for repaying it. In his correspondence, Mr Kerr used terms such as “my facilities” and “my companies”. He almost always signed his communications “George” and they were sent from his personal email address without any identifying corporate logos or email signatures. Mr Kerr consistently used possessive terms like “we” and “our” and language such as “we expect,” “we understand,” and “we wish to make a proposal” in his communications. Mr Kerr did not differentiate himself from the corporate appellants at any stage. Rather, the tone and content of Mr Kerr’s communications indicated that he was speaking both for himself and “his” companies. Viewed objectively, the inevitable inference is that Mr Kerr was acknowledging his personal liability as a guarantor of both facilities, in addition to acknowledging the liability of the corporate appellants under those facilities.
Did the Judge err in finding that Mr Kerr’s acknowledgements of liability extended to both principal andinterest? Held: No.
As Mr Kerr acknowledged liability to pay interest, it is immaterial that he sought to negotiate to pay a lesser sum than BNZ were seeking as he did not specifically record that limitation.
Did the Judge make errors in her assessment of quantum? Held: No.
The appellants did not raise an arguable defence to the quantum claimed by the BNZ. The various challenges to quantum were almost entirely based on the expert evidence of Mr Cornmell on behalf of the appellants. Mr Kerr, who was the person best placed to provide factual evidence regarding the challenged transactions, did not specifically address any of them in his evidence. In the absence of such evidence from Mr Kerr (or any other Pyne Holdings or Lothian witness) there was an insufficient evidential foundation for Mr Cornmell’s opinions. The factual evidence that was before the Court, including affidavit evidence filed by BNZ and the contemporaneous documents, indicated that there was no substance to the various issues identified by Mr Cornmell. Ultimately, as the appellants were unable to show that there was specific, credible evidence of arguable errors in BNZ’s assessment of quantum, the Judge did not err in entering summary judgment.
Is the Costs Award recoverable? Held: Yes.
The limitation of liability clauses in the Galt and Glencoe JV Guarantees do not preclude BNZ from recovering the Costs Award. The obligation in those guarantees to pay BNZ’s enforcement costs, on an indemnity basis, is a distinct and separate contractual obligation imposed on Glencoe JV and/or Galt to meet any costs BNZ may incur in enforcing their obligations as guarantors. This obligation is in addition to Galt and Glencoe JV’s obligations as guarantors to meet the guaranteed indebtedness under the relevant facility agreement.
Is BNZ entitled to recover indemnity costs in respect of the appeals? Held: Yes.
As the successful party, BNZ is entitled to an award of indemnity costs in respect of the appeal in accordance rule 53E(3)(e) of the Court of Appeal (Civil) Rules 2005 and its entitlement to recover indemnity costs under the terms of the relevant contracts.
The respondents are awarded costs on an indemnity basis.
Summary judgment – Commercial law – Quantum
Associate Judge Gardiner entered summary judgment in the High Court against Mr George Kerr and a group of related corporate defendants (together, the appellants) (the Liability Judgment). The Judge subsequently quantified the amount owing, in the sum of approximately $65 million (the Quantum judgment). The Judge found that the appellants had no reasonably arguable defences to claims made against them (as either borrowers or guarantors) by Bank of New Zealand (BNZ) arising out of two substantial loan facilities provided to Lothian Partners Capital Ltd (Lothian), and Pyne Holdings Ltd (Pyne Holdings). Specifically, the Judge found it was not reasonably arguable that BNZ’s claims were time-barred under the Limitation Act 2010, as Mr Kerr had acknowledged liability to pay the outstanding debts on behalf of both himself (as guarantor) and the corporate appellants (as borrowers or guarantors) during the primary limitation period, giving rise to fresh claims. The Judge further found that Galt Nominees Ltd (Galt) and Glencoe Land (Joint Venture) Ltd (Glencoe JV) had no reasonably arguable defence to BNZ’s claim for recovery of an indemnity costs award of$243,419.84 (Costs Award) arising out of an unsuccessful injunction application brought by those companies against the BNZ. Mr Kerr, Lothian and Pyne Holdings were also liable to pay the Costs Award in their capacity as co-guarantors of Galt’s obligations under the Lothian Facility Agreement.
Did the Judge err in finding that Mr Kerr had acknowledged his personal liability as guarantor during the primary limitation period, giving rise to fresh claims against him? Held: No.
The corporate appellants are all closely associated with Mr Kerr. He is, or was previously, a director of each of them. Following the defaults on the loan facilities, Mr Kerr assumed overall responsibility for ensuring repayment of the outstanding debt on behalf of all of the appellants. His acknowledgements of liability were not made solely on behalf of the corporate appellants. Mr Kerr was the sole point of contact with BNZ following the defaults for almost eight years in respect of the Lothian Facility, and almost six years in respect of the Pyne Holdings Facility. He engaged in a sustained, consistent pattern of communication with BNZ during this time regarding the outstanding debt and his proposals for repaying it. In his correspondence, Mr Kerr used terms such as “my facilities” and “my companies”. He almost always signed his communications “George” and they were sent from his personal email address without any identifying corporate logos or email signatures. Mr Kerr consistently used possessive terms like “we” and “our” and language such as “we expect,” “we understand,” and “we wish to make a proposal” in his communications. Mr Kerr did not differentiate himself from the corporate appellants at any stage. Rather, the tone and content of Mr Kerr’s communications indicated that he was speaking both for himself and “his” companies. Viewed objectively, the inevitable inference is that Mr Kerr was acknowledging his personal liability as a guarantor of both facilities, in addition to acknowledging the liability of the corporate appellants under those facilities.
Did the Judge err in finding that Mr Kerr’s acknowledgements of liability extended to both principal andinterest? Held: No.
As Mr Kerr acknowledged liability to pay interest, it is immaterial that he sought to negotiate to pay a lesser sum than BNZ were seeking as he did not specifically record that limitation.
Did the Judge make errors in her assessment of quantum? Held: No.
The appellants did not raise an arguable defence to the quantum claimed by the BNZ. The various challenges to quantum were almost entirely based on the expert evidence of Mr Cornmell on behalf of the appellants. Mr Kerr, who was the person best placed to provide factual evidence regarding the challenged transactions, did not specifically address any of them in his evidence. In the absence of such evidence from Mr Kerr (or any other Pyne Holdings or Lothian witness) there was an insufficient evidential foundation for Mr Cornmell’s opinions. The factual evidence that was before the Court, including affidavit evidence filed by BNZ and the contemporaneous documents, indicated that there was no substance to the various issues identified by Mr Cornmell. Ultimately, as the appellants were unable to show that there was specific, credible evidence of arguable errors in BNZ’s assessment of quantum, the Judge did not err in entering summary judgment.
Is the Costs Award recoverable? Held: Yes.
The limitation of liability clauses in the Galt and Glencoe JV Guarantees do not preclude BNZ from recovering the Costs Award. The obligation in those guarantees to pay BNZ’s enforcement costs, on an indemnity basis, is a distinct and separate contractual obligation imposed on Glencoe JV and/or Galt to meet any costs BNZ may incur in enforcing their obligations as guarantors. This obligation is in addition to Galt and Glencoe JV’s obligations as guarantors to meet the guaranteed indebtedness under the relevant facility agreement.
Is BNZ entitled to recover indemnity costs in respect of the appeals? Held: Yes.
As the successful party, BNZ is entitled to an award of indemnity costs in respect of the appeal in accordance rule 53E(3)(e) of the Court of Appeal (Civil) Rules 2005 and its entitlement to recover indemnity costs under the terms of the relevant contracts.
Case name
Case number
[2024] NZCA 674
Date of Judgment
17 December 2024
Summary
Hague Convention — Care of Children Act 2004 — Section 105(1)(d) — Section 106(1)(d) — Habitual residence — Child objection to being returned — Exercise of discretion to refuse to make an order for return — Appeal allowed
Mr McDonald and Ms Sanchez are the parents of Andrew and Sophia. Andrew and Sophia have been living with their father in a small town in New Zealand since November 2021. Ms Sanchez lives in Spain. The parents’ original intention (based on an agreement following their separation, which was reflected in orders made by a Spanish court) was that the children would spend a year living in New Zealand and then return to Spain. However in December 2022 Mr McDonald told Ms Sanchez that he and the children would not be returning to Spain.
Ms Sanchez sought the return of the children to Spain under s 105 of the Care of Children Act 2004 (the Act), which, together with other provisions of the Act, gives effect to the Hague Convention on the Civil Aspects of International Child Abduction (the Convention). In a decision dated 9 November 2023, Judge Dravitzki made an order for the return of the children: [Sanchez] v [McDonald] [2023] NZFC 12247 (Family Court judgment). Mr McDonald appealed from that decision. In a decision dated 31 July 2024, Osborne J dismissed Mr McDonald’s appeal, upholding the order for the return of the children to Spain: McDonald v Sanchez [2024] NZHC 2110 (High Court judgment). Mr McDonald appeals from the High Court judgment, having been granted leave to do so by this Court: McDonald v Sanchez [2024] NZCA 542.
The appeal raises two issues. The first is whether the children were habitually resident in Spain when Mr McDonald declined to return them to Spain in December 2022. The Convention provides for the return of children to their State of habitual residence. This is reflected in s 105(1)(d) of the Act. If the children were habitually resident in New Zealand rather than Spain in December 2022, no order for their return can be made.
The second issue concerns the children’s views about returning to Spain. Andrew and Sophia (aged almost 14 and almost 12 at the time the appeal was heard) object to returning to Spain. They want to continue living in New Zealand. Under the Convention and s 106(1) of the Act, the Court has a discretion to decline to make an order for the return of the children when the prerequisites for return under s 105 of the Act are established if one or more of the exceptions set out in s 106(1) is made out. In this case, the relevant exception is found in s 106(1)(d), which provides that the Court may exercise its discretion if the child objects to being returned and has attained an age and degree of maturity at which it is appropriate to give weight to the child’s views. The issue is how this Court should exercise its discretion in light of Andrew and Sophia’s objections, it being common ground that they are at an age and maturity at which it is appropriate to give significant weight to their views.
Held: the appeal is allowed. The order made in the Family Court for the return of the children is set aside.
The children were habitually resident in New Zealand in December 2022. They were not habitually resident in Spain. Habitual residence is a question of fact to be considered having regard to all the relevant circumstances. The Courts below set too high a threshold for acquisition of habitual residence and put too much emphasis on the parents’ original plan for the children to live in New Zealand for one year, and on the court orders giving effect to that plan. The Courts below gave insufficient weight to the circumstances of the children and the extent of their connection to New Zealand as at December 2022. The parents’ agreement and the Spanish court orders are important background factors. But they are not determinative. Circumstances and plans can change. By December 2022, having spent just over a year in New Zealand, the children were happy and settled. They had integrated into social, family and community environments in the small town in New Zealand. Andrew had developed his own authentic intentions about remaining in New Zealand unless required to leave. Their residence had the necessary stability to be described as “habitual”. The children were habitually resident in New Zealand in December 2022. It was therefore not open to the Family Court to make an order for the return of the children to Spain. The appeal must be allowed.
If Andrew and Sophia were habitually resident in Spain in December 2022 for the purposes of s 105(1)(d) of the Act, this Court would have exercised its discretion under s 106(1) to decline to make an order for their return in light of their clear and authentic objections to returning to Spain.
Section 106(1)(d) of the Act is engaged in this case. In circumstances where one of the exceptions to return under s 106(1) is engaged and a court is required to decide whether to exercise its discretion under that provision, the welfare and best interests of the particular child must be the first and paramount consideration, as required by s 4(1) of the Act.
The Courts below erred in treating “Convention principles” relating to deterrence of child abduction as a significant factor weighing in favour of an order for return. When an exception to return is made out, there is no presumption of return. There are no “Convention principles” which a court should weigh against the interests of the particular child, and which might result in an order for return being made even though that is contrary to the welfare and best interests of that child.
Andrew and Sophia are happy and settled in New Zealand. Returning to Spain would be a major change for them and would be challenging. Requiring the children to return to Spain despite their clearly expressed and reasoned wishes is likely to be stressful and have significant adverse effects on their wellbeing. Remaining in New Zealand would be less disruptive to their current lives. Maintaining a substantial and meaningful relationship with their mother is very important for the children’s welfare and best interests. But this factor is not sufficient to outweigh the other dimensions of the children’s welfare that are best advanced by remaining in New Zealand. Having regard to all the relevant factors and their objections, the welfare and best interests of Andrew and Sophia would be promoted by remaining in New Zealand, with appropriate measures in place to ensure substantial and meaningful contact with Ms Sanchez. In those circumstances this Court would have declined to make an order for their return.
Mr McDonald and Ms Sanchez are the parents of Andrew and Sophia. Andrew and Sophia have been living with their father in a small town in New Zealand since November 2021. Ms Sanchez lives in Spain. The parents’ original intention (based on an agreement following their separation, which was reflected in orders made by a Spanish court) was that the children would spend a year living in New Zealand and then return to Spain. However in December 2022 Mr McDonald told Ms Sanchez that he and the children would not be returning to Spain.
Ms Sanchez sought the return of the children to Spain under s 105 of the Care of Children Act 2004 (the Act), which, together with other provisions of the Act, gives effect to the Hague Convention on the Civil Aspects of International Child Abduction (the Convention). In a decision dated 9 November 2023, Judge Dravitzki made an order for the return of the children: [Sanchez] v [McDonald] [2023] NZFC 12247 (Family Court judgment). Mr McDonald appealed from that decision. In a decision dated 31 July 2024, Osborne J dismissed Mr McDonald’s appeal, upholding the order for the return of the children to Spain: McDonald v Sanchez [2024] NZHC 2110 (High Court judgment). Mr McDonald appeals from the High Court judgment, having been granted leave to do so by this Court: McDonald v Sanchez [2024] NZCA 542.
The appeal raises two issues. The first is whether the children were habitually resident in Spain when Mr McDonald declined to return them to Spain in December 2022. The Convention provides for the return of children to their State of habitual residence. This is reflected in s 105(1)(d) of the Act. If the children were habitually resident in New Zealand rather than Spain in December 2022, no order for their return can be made.
The second issue concerns the children’s views about returning to Spain. Andrew and Sophia (aged almost 14 and almost 12 at the time the appeal was heard) object to returning to Spain. They want to continue living in New Zealand. Under the Convention and s 106(1) of the Act, the Court has a discretion to decline to make an order for the return of the children when the prerequisites for return under s 105 of the Act are established if one or more of the exceptions set out in s 106(1) is made out. In this case, the relevant exception is found in s 106(1)(d), which provides that the Court may exercise its discretion if the child objects to being returned and has attained an age and degree of maturity at which it is appropriate to give weight to the child’s views. The issue is how this Court should exercise its discretion in light of Andrew and Sophia’s objections, it being common ground that they are at an age and maturity at which it is appropriate to give significant weight to their views.
Held: the appeal is allowed. The order made in the Family Court for the return of the children is set aside.
The children were habitually resident in New Zealand in December 2022. They were not habitually resident in Spain. Habitual residence is a question of fact to be considered having regard to all the relevant circumstances. The Courts below set too high a threshold for acquisition of habitual residence and put too much emphasis on the parents’ original plan for the children to live in New Zealand for one year, and on the court orders giving effect to that plan. The Courts below gave insufficient weight to the circumstances of the children and the extent of their connection to New Zealand as at December 2022. The parents’ agreement and the Spanish court orders are important background factors. But they are not determinative. Circumstances and plans can change. By December 2022, having spent just over a year in New Zealand, the children were happy and settled. They had integrated into social, family and community environments in the small town in New Zealand. Andrew had developed his own authentic intentions about remaining in New Zealand unless required to leave. Their residence had the necessary stability to be described as “habitual”. The children were habitually resident in New Zealand in December 2022. It was therefore not open to the Family Court to make an order for the return of the children to Spain. The appeal must be allowed.
If Andrew and Sophia were habitually resident in Spain in December 2022 for the purposes of s 105(1)(d) of the Act, this Court would have exercised its discretion under s 106(1) to decline to make an order for their return in light of their clear and authentic objections to returning to Spain.
Section 106(1)(d) of the Act is engaged in this case. In circumstances where one of the exceptions to return under s 106(1) is engaged and a court is required to decide whether to exercise its discretion under that provision, the welfare and best interests of the particular child must be the first and paramount consideration, as required by s 4(1) of the Act.
The Courts below erred in treating “Convention principles” relating to deterrence of child abduction as a significant factor weighing in favour of an order for return. When an exception to return is made out, there is no presumption of return. There are no “Convention principles” which a court should weigh against the interests of the particular child, and which might result in an order for return being made even though that is contrary to the welfare and best interests of that child.
Andrew and Sophia are happy and settled in New Zealand. Returning to Spain would be a major change for them and would be challenging. Requiring the children to return to Spain despite their clearly expressed and reasoned wishes is likely to be stressful and have significant adverse effects on their wellbeing. Remaining in New Zealand would be less disruptive to their current lives. Maintaining a substantial and meaningful relationship with their mother is very important for the children’s welfare and best interests. But this factor is not sufficient to outweigh the other dimensions of the children’s welfare that are best advanced by remaining in New Zealand. Having regard to all the relevant factors and their objections, the welfare and best interests of Andrew and Sophia would be promoted by remaining in New Zealand, with appropriate measures in place to ensure substantial and meaningful contact with Ms Sanchez. In those circumstances this Court would have declined to make an order for their return.
Case number
[2024] NZCA 645
Date of Judgment
09 December 2024
Summary
Interim relief — Serious issue to be tried — Contract law — Termination of a banking relationship by a bank — Implied terms restricting exercise of a termination clause — Breach of fiduciary duty — Estoppel by convention
In July 2022 the Bank of New Zealand (BNZ) gave notice to various trusts, partnerships and companies associated with the Gloriavale Christian Community (Gloriavale entities) of its intention to terminate the provision of banking services to those entities. This decision to terminate was considered by BNZ to be appropriate in light of its internal human rights policy.
The Gloriavale entities attempted to establish alternative banking arrangements but were unsuccessful. The Gloriavale entities therefore sought an interim injunction in the High Court on a without-notice basis to prevent BNZ from terminating its banking relationship with the Gloriavale entities. Pleadings were not prepared at the time, but the application was made on the basis that termination would be a breach of contract or a breach of fiduciary duty. Dunningham J granted an interim injunction pending a full application for interim relief being made: Christian Church Community Trust v Bank of New Zealand [2022] NZHC 3271 (first injunction decision).
The Gloriavale entities then filed proceedings and sought further interim relief pending trial. The Gloriavale entities claim that BNZ’s termination of its banking relationship with them would constitute a breach of contract because, on a proper interpretation of the contract governing the banking relationship (the BNZ standard terms), BNZ is limited in its ability to terminate the banking relationship for any reason. The Gloriavale entities also claim that termination of the banking relationship would be a breach of fiduciary duty, and that BNZ is estopped from doing so.
Cull J, in a decision dated 8 September 2023, was satisfied that there was a serious question to be tried in relation to the breach of contract cause of action, and that the balance of convenience and overall justice of the case favoured continuing the interim injunction until determination of the Gloriavale entities’ substantive claims: Christian Church Community Trust v Bank of New Zealand [2023] NZHC 2523, [2023] 3 NZLR 190 (second injunction decision). BNZ sought and was granted special leave to appeal from the second injunction decision: Bank of New Zealand v Christian Church Community Trust [2024] NZCA 246.
BNZ says there is no serious question to be tried on any of the causes of action. BNZ says in particular that it is clear as a matter of common law and interpretation of the BNZ standard terms that it had an express and unencumbered unilateral right under cl 8.2 of the BNZ standard terms to terminate its provision of banking services to the Gloriavale entities for any reason. The Gloriavale entities say the Judge was right to grant an interim injunction in the circumstances. They say that there are serious questions to be tried as to whether BNZ’s decision to terminate the banking relationship breached cl 8.2 and the fiduciary duty it owed to the Gloriavale entities, and whether BNZ is estopped from terminating the relationship; and the balance of convenience and overall justice of the case favours BNZ continuing to provide banking services until the claims have been determined.
Held: the appeal is allowed. The injunction granted in the High Court is set aside.
It is not seriously arguable that cl 8.2, properly interpreted, limits the reasons for which BNZ may terminate its banking relationship with the Gloriavale entities. Rather, under cl 8.2 BNZ can terminate the banking relationship for any reason.
Although the question of what approach should be adopted in relation to implied terms concerning the exercise of contractual discretions is unsettled, it is arguable that there is an implied term in the BNZ standard terms that BNZ must exercise the cl 8.2 power for the purpose for which that power was conferred under the contract. But even if such an implied term did exist, it would not add anything in this case because the purpose of cl 8.2 was to enable BNZ to bring the banking relationship to an end if it wishes to do so for any reason, and BNZ is not seeking to invoke this clause for an ulterior motive. It is not seriously arguable that BNZ has breached such an implied term.
For the purposes of this interlocutory appeal, it is also arguable that BNZ’s exercise of cl 8.2 is subject to a term implied in law to the effect that the power to terminate must not be exercised dishonestly, in bad faith, or capriciously or arbitrarily. But the Gloriavale entities do not contend that BNZ’s decision to terminate was made dishonestly or in bad faith, and it is not seriously arguable that the decision was made capriciously or arbitrarily. So while it is arguable that an implied term of this nature exists in respect of cl 8.2, it is not seriously arguable that BNZ has breached such an implied term.
It is not however seriously arguable that as a matter of law a further term should be implied into cl 8.2 that would require BNZ to act reasonably in making a termination decision, or that would impose process obligations before BNZ makes a decision to terminate under cl 8.2. An implied term of this nature would be inconsistent with the express terms of the BNZ standard terms, in particular cl 8.2, and the general scheme of that contract. Nor is it seriously arguable that such a term could be implied in fact in the particular context of the BNZ standard terms. The BNZ standard terms do not lack business efficacy without such an implied term, and such a term would be inconsistent with the express terms of the contract.
It is also not seriously arguable that BNZ owes the Gloriavale entities a fiduciary duty which would be breached if BNZ terminated its banking relationship with them, or that BNZ is estopped indefinitely from terminating the relationship.
If (contrary to the Court’s view) the BNZ standard terms could be interpreted as imposing process obligations in relation to the circumstances in which BNZ can terminate a banking relationship, there would be a serious question to be tried on the facts in relation to whether these obligations had been met by BNZ in this case. The Gloriavale entities’ case would however be weak, as it would require a trial court to accept that BNZ had process obligations in connection with cl 8.2 that are not easy to reconcile with the express terms and scheme of the BNZ standard terms. In those circumstances the practical consequences of continuing or setting aside the injunction pending trial would have to be considered. In this case the interim injunction would have been declined in any event because it would not have been in the interests of justice to compel BNZ to continue providing banking services to the Gloriavale entities for a further extended period until trial.
In July 2022 the Bank of New Zealand (BNZ) gave notice to various trusts, partnerships and companies associated with the Gloriavale Christian Community (Gloriavale entities) of its intention to terminate the provision of banking services to those entities. This decision to terminate was considered by BNZ to be appropriate in light of its internal human rights policy.
The Gloriavale entities attempted to establish alternative banking arrangements but were unsuccessful. The Gloriavale entities therefore sought an interim injunction in the High Court on a without-notice basis to prevent BNZ from terminating its banking relationship with the Gloriavale entities. Pleadings were not prepared at the time, but the application was made on the basis that termination would be a breach of contract or a breach of fiduciary duty. Dunningham J granted an interim injunction pending a full application for interim relief being made: Christian Church Community Trust v Bank of New Zealand [2022] NZHC 3271 (first injunction decision).
The Gloriavale entities then filed proceedings and sought further interim relief pending trial. The Gloriavale entities claim that BNZ’s termination of its banking relationship with them would constitute a breach of contract because, on a proper interpretation of the contract governing the banking relationship (the BNZ standard terms), BNZ is limited in its ability to terminate the banking relationship for any reason. The Gloriavale entities also claim that termination of the banking relationship would be a breach of fiduciary duty, and that BNZ is estopped from doing so.
Cull J, in a decision dated 8 September 2023, was satisfied that there was a serious question to be tried in relation to the breach of contract cause of action, and that the balance of convenience and overall justice of the case favoured continuing the interim injunction until determination of the Gloriavale entities’ substantive claims: Christian Church Community Trust v Bank of New Zealand [2023] NZHC 2523, [2023] 3 NZLR 190 (second injunction decision). BNZ sought and was granted special leave to appeal from the second injunction decision: Bank of New Zealand v Christian Church Community Trust [2024] NZCA 246.
BNZ says there is no serious question to be tried on any of the causes of action. BNZ says in particular that it is clear as a matter of common law and interpretation of the BNZ standard terms that it had an express and unencumbered unilateral right under cl 8.2 of the BNZ standard terms to terminate its provision of banking services to the Gloriavale entities for any reason. The Gloriavale entities say the Judge was right to grant an interim injunction in the circumstances. They say that there are serious questions to be tried as to whether BNZ’s decision to terminate the banking relationship breached cl 8.2 and the fiduciary duty it owed to the Gloriavale entities, and whether BNZ is estopped from terminating the relationship; and the balance of convenience and overall justice of the case favours BNZ continuing to provide banking services until the claims have been determined.
Held: the appeal is allowed. The injunction granted in the High Court is set aside.
It is not seriously arguable that cl 8.2, properly interpreted, limits the reasons for which BNZ may terminate its banking relationship with the Gloriavale entities. Rather, under cl 8.2 BNZ can terminate the banking relationship for any reason.
Although the question of what approach should be adopted in relation to implied terms concerning the exercise of contractual discretions is unsettled, it is arguable that there is an implied term in the BNZ standard terms that BNZ must exercise the cl 8.2 power for the purpose for which that power was conferred under the contract. But even if such an implied term did exist, it would not add anything in this case because the purpose of cl 8.2 was to enable BNZ to bring the banking relationship to an end if it wishes to do so for any reason, and BNZ is not seeking to invoke this clause for an ulterior motive. It is not seriously arguable that BNZ has breached such an implied term.
For the purposes of this interlocutory appeal, it is also arguable that BNZ’s exercise of cl 8.2 is subject to a term implied in law to the effect that the power to terminate must not be exercised dishonestly, in bad faith, or capriciously or arbitrarily. But the Gloriavale entities do not contend that BNZ’s decision to terminate was made dishonestly or in bad faith, and it is not seriously arguable that the decision was made capriciously or arbitrarily. So while it is arguable that an implied term of this nature exists in respect of cl 8.2, it is not seriously arguable that BNZ has breached such an implied term.
It is not however seriously arguable that as a matter of law a further term should be implied into cl 8.2 that would require BNZ to act reasonably in making a termination decision, or that would impose process obligations before BNZ makes a decision to terminate under cl 8.2. An implied term of this nature would be inconsistent with the express terms of the BNZ standard terms, in particular cl 8.2, and the general scheme of that contract. Nor is it seriously arguable that such a term could be implied in fact in the particular context of the BNZ standard terms. The BNZ standard terms do not lack business efficacy without such an implied term, and such a term would be inconsistent with the express terms of the contract.
It is also not seriously arguable that BNZ owes the Gloriavale entities a fiduciary duty which would be breached if BNZ terminated its banking relationship with them, or that BNZ is estopped indefinitely from terminating the relationship.
If (contrary to the Court’s view) the BNZ standard terms could be interpreted as imposing process obligations in relation to the circumstances in which BNZ can terminate a banking relationship, there would be a serious question to be tried on the facts in relation to whether these obligations had been met by BNZ in this case. The Gloriavale entities’ case would however be weak, as it would require a trial court to accept that BNZ had process obligations in connection with cl 8.2 that are not easy to reconcile with the express terms and scheme of the BNZ standard terms. In those circumstances the practical consequences of continuing or setting aside the injunction pending trial would have to be considered. In this case the interim injunction would have been declined in any event because it would not have been in the interests of justice to compel BNZ to continue providing banking services to the Gloriavale entities for a further extended period until trial.