Court of Appeal Judgments of Public Interest

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Case name
Case number
[2021] NZCA 651
Date of Judgment
03 December 2021
Summary
Appeal against sentence allowed.
Sentence of seven years’ imprisonment substituted with 15 months’ imprisonment. 

Criminal Law. Sentence. Constitutional Law. New Zealand Bill of Rights Act 1990. 

The appellant was convicted of indecent assault after entering a sleeping woman’s room and rubbing her hand, arm and back.  It was his third strike under the three strikes regime, so he was sentenced to the maximum sentence of seven years’ imprisonment.  After the appellant was sentenced, the Supreme Court gave its judgment in Fitzgerald v R [2021] NZSC 131.  This held that where the application of the three strikes regime would amount to disproportionately severe punishment under s 9 of the New Zealand Bill of Rights Act 1990, the defendant should be sentenced under ordinary sentencing principles.  The appellant appealed his sentence on the grounds that it was covered by the reasoning in Fitzgerald

Whether the appellant’s sentence was disproportionately severe?Held: Yes.  When considering whether a sentence is disproportionately severe, three factors will likely be significant: first, whether ordinary sentencing principles would result in a sentence of a different nature, such as a non-custodial sentence; second, the numerical difference between the sentence under the three strikes regime and under ordinary sentencing principles, including the multiplicative and additive difference; and third, whether the defendant is an inadvertent and unforeseen casualty of the three strikes regime.  In this case, the appellant’s sentence under ordinary principles would have been 15 months, so his sentence under the three strikes regime was 5.6 times greater. The appellant’s offending was also on the lower end of indecent assault, so he is an inadvertent and unforeseen casualty of the three strikes regime.
Case name
Case number
[2021] NZCA 649
Date of Judgment
03 December 2021
Summary
Appeal allowed. 
Relationship Property — Jurisdiction — Polyamorous relationships. 

Lilach Paul and Brett Paul were married in February 1993 and formed a polyamorous relationship with Fiona Mead in 2002.  They all lived together in that relationship for the next 15 years in the same house in Kumeu.  Each partner made contributions of various kinds to their joint household.  Lilach separated from Fiona and Brett in November 2017, and Brett and Fiona subsequently separated in early 2018.  Fiona remains living in the Kumeu property.  In 2019, Lilach applied to the Family Court seeking relationship property orders under the PRA.  Fiona protested the Family Court’s jurisdiction on the basis that the PRA did not apply to a three‑person relationship.  Brett filed a notice of defence and cross‑application for relationship property orders under the PRA.  The case was referred to the High Court by way of case stated.  Hinton J found that the PRA was limited to relationships between two people only, which meant the relationships between Lilach and Fiona, and between Brett and Fiona, were not qualifying de facto relationships.  Lilach appeals to this Court.

Does the Family Court have jurisdiction under the PRA to determine the property rights of three persons in a polyamorous relationship, either on the basis of that relationship or by dividing that relationship into dyadic parts?Held: Yes.  The Family Court has jurisdiction under the PRA to determine claims to property as between two persons who were married, in a civil union, or in a de facto relationship, and also in a polyamorous relationship.  That jurisdiction extends to determining claims among three people in a polyamorous relationship, where each partner in that polyamorous relationship is either married to, in a civil union with, or in a de facto relationship with, each of the other partners in that polyamorous relationship.  The PRA is concerned with relationships between two people, and a polyamorous relationship as such is not a qualifying relationship under the PRA.  But coupledom is not exclusive coupledom: within a wider polyamorous relationship, there may be (multiple) qualifying relationships between two people to which the PRA applies.
Case name
Case number
[2021] NZCA 645
Date of Judgment
02 December 2021
Summary
RELATIONSHIP PROPERTY – Dispositions in order to defeat rights – Pre-qualifying relationship – Trusts – Contracting out

This appeal raises important questions for the ambit of s 44 of the Property (Relationships) Act 2004 (the Act), which deals with dispositions of property made “in order to defeat” the rights and interests of a spouse or partner (in this case, to a family trust before the commencement of a de facto relationship).

Mr Sutton and Ms Bell met in July 2003 and quickly started a relationship.  The couple started living together at Mr Sutton’s house in Point Chevalier (Pt Chevalier) in February or March 2004.  In February 2004 Ms Bell emailed Mr Sutton informing him of the risk that, if they started living together, Ms Bell might acquire rights under the Act.  She encouraged him to see a lawyer and put Pt Chevalier in trust.  Some months later, in September 2004, Mr Sutton received legal advice as to the benefits of trusts for asset protection, including as regards relationship property.  In November 2004, Mr Sutton transferred Pt Chevalier into trust.  In December 2004/January 2005, the couple holidayed together and conceived their first child.  They had a second child in 2009.  They separated in 2012.

Ms Bell subsequently claimed a half interest in Pt Chevalier on the basis that, contrary to s 44 of the Act, Mr Sutton disposed of that property to the Trust in order to defeat her relationship property entitlements.  First, as a preliminary step, the Family Court held the de facto relationship commenced in February 2004, around the time when Ms Bell moved in with Mr Sutton.  Secondly, even though the disposition was made before the de facto relationship commenced, the Family Court granted Ms Bell’s s 44 application and made orders accordingly.

The High Court, dealing with appeals against both decisions, held (a) the de facto relationship commenced in December 2004/January 2005 (and not March 2004); and (b) dismissed the appeal against the second Family Court decision.  Walker J did so with the benefit of fresh evidence including emails between the couple from 2003 and 2004 (including the February 2004 email).  With leave of the High Court, Mr Sutton now appeals.  The High Court’s finding as to the commencement date of the de facto relationship is not challenged on appeal.

Held: Appeal dismissed.

(1)  The first issue is whether dispositions made before the commencement of a qualifying relationship can engage s 44 of the Act. The Court holds they can, drawing on s 21 of the Act, which allows spouses or partners to contract out of the Act’s provisions by agreement when “in contemplation of entering… a de facto relationship”.  If s 44 did not apply at all to dispositions made before a qualifying relationship began, there would be considerable potential to ‘hollow out’ s 21.  A soon-to-be-spouse or partner could unilaterally dispose of property and thereby shield it from the Act’s property-sharing consequences.  It would seem strange if attempts made before the commencement of a qualifying relationship, to lawfully contract out of equal sharing, could be set aside under s 21J; but that unilateral, and hence non-consensual, attempts made at the same time would fall outside the courts’ jurisdiction under s 44.  Thus, the existence of a qualifying relationship at the time of the disposition cannot have been intended by Parliament to be a necessary pre-condition for s 44 relief.

(2)  The second issue is when does a couple reach a stage so as to be “in contemplation” of entering a de facto relationship? The Court says, guided by the s 2D definition of “de facto relationship” as two persons who “live together as a couple”, that a couple’s decision to live together will create a strong but rebuttable presumption of mutual contemplation of entering a de facto relationship.  Rebuttable, because an analysis of the contextual factors in s 2D(2) may indicate that, even where two people agree to live together, they are not doing so “as a couple” (e.g., ‘friends with benefits’ type situations).  Ultimately, an inquiry into the substantive characteristics of the relationship may be necessary.

(3)  Applying that approach to the present case, Mr Sutton and Ms Bell were in contemplation of a de facto relationship when Mr Sutton disposed of Pt Chevalier to the Trust in November 2004. They had been, by that time, in an exclusive relationship for approximately 16 months and had been living together for eight of those months.  They presented to their families and friends as a couple, and were by that time a serious and committed couple.

(4)  Did Mr Sutton transfer Pt Chevalier to the Trust in order to defeat the rights the Act would have otherwise given Ms Bell? As knowledge of a consequence can be equated with an intention to bring it about, the Court finds Mr Sutton knew that transferring Pt Chevalier into trust would protect it from the implications of relationship property law.  While he may have also had other motivations, it is sufficient for s 44(1) if the intent to defeat a partner’s interests is one the disposer’s various purposes.  In terms of the significance of Ms Bell’s apparent encouragement, as evidenced by the February 2004 email, of Mr Sutton to transfer Pt Chevalier to the Trust, the decision was ultimately Mr Sutton’s on the advice of his counsel.  Ms Bell was not disavowing any future interests, but she was effectively agreeing to contract out of the Act.  That did not happen.  The Court does not place weight on that encouragement in evaluating Mr Sutton’s intent.  A disposition made in good faith, but nevertheless in order to defeat, meets the threshold for s 44(1).

(5)  Other issues: Section 44(2) did not apply because the Trust did not receive Pt Chevalier in good faith because Mr Sutton’s knowledge, as trustee, is attributed to it.  There was also not enough evidence for the Court to exercise its remedial discretion to change the equal sharing orders made.
Case number
[2021] NZCA 638
Date of Judgment
02 December 2021
Summary
Appeal dismissed.  Appellant must pay first, second and third respondents costs for a standard appeal on band A basis plus usual disbursements.

The Otago Regional Council notified its Proposed Regional Policy Statement in 2015 and released a decision on that statement in 2016.  That version of the PRPS did not contain any express provision for port activities at Port Chalmers or Port Dunedin.  Port Otago appealed and proposed a specific ports policy (policy 4.3.7) as it was worried the ports would have to shut down otherwise due to environmental consequences of port activities, maintenance and expansion falling foul of the avoidance policies of the New Zealand Coastal Policy Statement 2010.  Following attempted mediation the Environment Court issued an interim decision recommending amended wording for policy 4.3.7.  Namely, that adverse effects in areas of outstanding natural character could be “avoided, remedied or mitigated”.  On appeal, the High Court held the Environment Court erred in not giving effect to the NZCPS avoidance policies.  Port Otago appealed to the Court of Appeal.

Resource Management – New Zealand Coastal Policy Statement.  Did the High Court misapply Environmental Defence Society Inc v The New Zealand King Salmon Co Ltd [2014] NZSC 38, [2014] 1 NZLR 593.

Held per majority:  No.  The alternative policy 4.3.7 wording fails to give effect to the environmental bottom lines by substituting “avoid, remedy or mitigate” for “avoid”.  The Environment Court invites a broad judgment permitting impermissible effects.

Policy 9 of the NZCPS is not sufficiently textually or contextually different to policy 8 to allow a different outcome to that in King Salmon.  Directions to “recognise” and “consider” are flexible.  “Requires” merely serves as an intensifier rather than give greater imperative status than the avoidance policies.  Policy 9(a) is directive but in respect to the protection of ports from new development.  Policy 9(b) provides a far lower level of direction.

Polices 7 and 9 do not conflict with the avoidance policies as they are not equally directive.  The avoidance policies contain relatively clear environmental bottom lines; policies 7 and 9 contain lower level degrees of direction as to development and other activities in the coastal environment.If in the wake of King Salmon the NZCPS poses unworkable standards for essential infrastructure, the answer lies elsewhere.  Regulatory mismatch means the NZCPS was likely drafted on the premise that a broad overall judgment would be taken in its construction and application in subsidiary planning instruments, and that recourse might be made to pt 2 in that process.  That is no longer possible.

It is common ground the High Court erred in inferring that the inevitable effect of King Salmon is that implementation of the avoidance polices in the NZCPS would result in rules creating prohibited activities that cannot obtain a resource consent.  The avoidance policies require adverse effects to be avoided in certain areas not that activities be prohibited.  Whether an activity has an adverse effect, whether that effect can be avoided, and how it can be avoided will depend on the facts of a specific proposal and its context.  Where factual context is relevant in determining policy compliance, provisions enabling an application for resource consent can be appropriate.  Whether port activities will adversely affect relevant areas requires consideration of the effects of existing port activities, the location of the relevant areas, and the likely effects.  These factors cannot be pre-judged at this point.

The High Court also erred in stating implementation of the NZCPS avoidance policies would preclude the use of adaptive management to monitor at risk activities.

Held per minority:  No.  King Salmon provides that where NZCPS policies pull in different directions reference to pt 2 may be justified and the NZCPS policies vest the relevant decisions in regional and district councils and allow them scope for choice, within limits.

On the available evidence, the effects of dredging the channel appear likely to affect relevant coastal areas.  If the port policy is subject to the avoidance policies, Port Otago may not be able to deepen or realign the channel for larger vessels.  It cannot be said that the ports policy and avoidance policies will not pull in different directions.

The majority in King Salmon held territorial authorities should seek to reconcile NZCPS policies in a way that gives effect to avoidance policies before finding that policies are in conflict.  The EDS appeal pre-empted reconciliation.

“Requires” is the main verb in policy 9:  provision for ports is not optional for the Regional Council.  This distinguishes policy 9 from policy 8 of the NZCPS.  Policy 9 is therefore not subject to the avoidance policies.  The Environment Court correctly provided a mechanism for the Regional Council to consider whether the ports and avoidance policies conflict.

But the Environment Court erred by deciding the ports policy would ultimately prevail if it proves irreconcilable with the avoidance policies.
Case number
[2021] NZCA 616
Date of Judgment
22 November 2021
Summary
Constitutional law - New Zealand Bill of Rights Act 1990Mr Chisnall applied for a declaration that the extended supervision order (ESO) and public protection order (PPO) regimes are inconsistent with various rights in the New Zealand Bill of Rights Act 1990 (BORA), particularly the right to immunity from second penalty  affirmed  by s 26(2). After referring to the Court of Appeal's judgment in Chief Executive of the Department of Corrections, Whata J held the ESO regime was penal in nature, thus engaging ss 25(g) and 26(2) of BORA. In contrast, he held the PPO regime was not presumptively penal. Insofar as the ESO regime (as amended  in 2014)  applied  retrospectively, the limitations  it imposed  on s 26(2) were not justifiable under s 5, having regard to the impregnable and non-derogable nature of the right to immunity from retrospective penalty. However, the Judge held the extent to which an ESO imposed on offenders who committed qualifying offences after the regime came into effect imposed unjustified limitations on the s 26(2) right would have to be decided on the facts of each case. Had the Judge concluded that the PPO regime was penal in nature, he would have found the limitations imposed on s 26(2) by that regime to be incapable of reasonable justification. In the result, the Judge made a declaration that the ESO regime was inconsistent with s 26(2) of BORA insofar as it applied retrospectively. He declined to make any other declaration. Mr Chisnall appealed. The Attorney-General cross-appealed.

Held - appeal allowed, cross-appeal dismissed. The ESO regime was penal  in  nature. Although the ESO regime had changed since the Court decided Belcher, none of those changes made a material difference to the characterisation of the regime. It could not be said that the ability to consider the consequences of treatment and rehabilitation was a feature of the current ESO regime not present in the regime as it stood when Belcher was decided. All features of the ESO regime identified in Belcher as indicative of a penalty remained. Accordingly, an ESO was a second penalty for the purposes of s 26(2) of BORA. That was the case regardless of when an offender committed his or her qualifying offence.

The PPO regime was also penal. The impact of a PPO was more wide-reaching than the impact of an ESO. A PPO was therefore a penalty unless other aspects of the regime required a different conclusion. None of the features of the PPO regime were sufficient to avoid the conclusion that it was penal. The fact applications for PPOs are made within the civil jurisdiction of the High Court was not material: the focus must be on substance not form. Further, the PPO regime provided no guarantee of therapeutic and rehabilitative interventions by the state. That would have been required in order to conclude the regime was not penal.

Section 26(2) of BORA was not, unlike s 25(g), absolute and non-derogable. However, the importance of the right required sufficient evidence before it could be said the ESO and PPO regimes were justified as a minimum and necessary response to the potential harm caused by persons made subject to the orders. The limitations on the s 26(2) right could not be justified and the ESO and PPO regimes were thus inconsistent with BORA. Declarations would follow.
Case number
[2021] NZCA 591
Date of Judgment
11 November 2021
Summary
Appeal allowed.  Employment Court orders set aside.  Employment Relations Authority determination restored.  Proceeding referred back to Authority for outstanding matters to be determined in light of this Court’s decision. 

Employment Law — Minimum wage entitlements. 

Gate Gourmet New Zealand Ltd (Gate) provides inflight catering services to passenger aircraft.  In March 2020 it had over 130 employees, including the five appellants (the employees), who are all members of the Aviation Workers United Inc Union (AWU).  Each of the employees’ employment agreements provides for full-time employment for a minimum 40-hour week, paid at the minimum hourly wage.  During the COVID-19 Alert Level 4 lockdown, Gate advised its employees and the unions representing them (including AWU) that, as a result of having very little work to offer employees, it would need to partially shut down operations.  It proposed three options to its employees, two of which provided that the employee would be paid 80 per cent of their normal pay.  The employees have not worked much since the partial close‑down of Gate’s operations. 

In April 2020, the employees, through AWU, alleged before the Authority that, inter alia, Gate acted unlawfully in paying them less than the minimum wage.  The Authority held that the employees were ready, willing and able to work, and were not working at the direction of Gate, so s 6 of the Minimum Wage Act 1983 applied and paying the employees 80 per cent of their wages was a breach of that Act.  Gate appealed to the Employment Court.  The majority found that the employees were not working for the purposes of s 6 of the Act, so they had no minimum wage entitlement and there was no breach of the Act.  Section 6 was not engaged so there was no need to consider s 7(2).  Chief Judge Inglis dissented, holding there was a breach of the Act.  The employees sought and obtained leave to appeal to this Court on a question of law.

In the absence of sickness, default, or accident, is the minimum wage payable for all of a worker’s agreed contracted hours of work or is it lawful to make deductions from wages for lost time not worked at the employer’s direction?
Held: It is not lawful to make deductions from wages for lost time not worked at the employer’s direction.  The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.  Sections 6 and 7 of the Act form part of a coherent scheme and must be read together in a way that makes sense of that scheme.  The only logical reading of s 6, in the context of the Act as a whole, is that it requires payment of the minimum wage for the whole of the time that the employee has agreed to work.  If the employee does not work for some of that time — if time is “lost” — then s 7(2) prescribes the consequences and sets out the only circumstances in which payment of wages may be withheld in respect of that time.  That reading is consistent with the purpose of the Act, which is directed at preventing the exploitation of workers and recognises the diminished bargaining power of those in low-paid employment.  If s 6 only applied to time actually worked, s 7(2) would be superfluous: time lost would not be time worked, so the minimum wage would not be payable in respect of that time.  No question of deduction in respect of that time would arise.
Case number
[2021] NZCA 587
Date of Judgment
10 November 2021
Summary
JUDICIAL REVIEW - Illegality - Unreasonableness.

Appeal allowed. Declaration that the decision to impose the APTR in the 2017/2018 and 2018/2019 rating years were invalid. Those decisions are set aside.

In the 2017/2018 rating year, Auckland Council (Council) decided to impose a targeted rate (APTR) on a selected group of commercial accommodation providers to help fund expenditure on visitor attraction and major events by Auckland Tourism, Events and Economic Development Ltd (ATEED). The objective was to free up funds needed to pay for major infrastructure projects. Although four other categories of ratepayer benefited more from ATEED's expenditure, Council considered that accommodation providers benefited more directly because almost all of their revenue came from visitors and they would be able to pass on the increased cost to them. A similar targeted rate was imposed in the 2018/2019 year after some slight modifications to the scheme.

The appellants issued proceedings in the High Court seeking judicial review of the decision to impose the APTR. They alleged Council failed to comply with the mandatory relevant considerations in s 101(3) of the Local Government Act 2002 (the Act). The appellants also claimed that no reasonable local authority would have made the decision. Moore J rejected the appellants' claims. They now appeal.

Issue: Did Council comply with s 101(3)(a)(ii) of the Act - to consider the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals?
Held: No. The pass through assumption was central to the APTR. Because the true target was the visitor, the APTR was not formulated on the basis of the statutory criteria. Pass through was not a relevant consideration in setting a targeted rate under the Act. While pass through was later described as a matter of choice for accommodation providers, it remained the fundamental rationale for selecting this group over the four other categories of ratepayer that benefited more from ATEED's expenditure. Council undertook virtually no assessment of the benefit to the targeted group or how the benefit of the funded activity was distributed across other groups of ratepayers and the Auckland community as a whole. This was fundamentally because the assessment was carried out at the end of the process to reverse engineer a justification for a scheme that had been formulated without regard to the statutory criteria. Their goal was to achieve an outcome that was beyond the proper scope of a rating mechanism, namely to obtain an additional source of revenue from non-ratepayers. Council's failure to adequately consider this mandatory relevant consideration was an error of law going to the heart of the decision and, given the significance of this error to the rating decision in both years, it impeaches the validity of these decisions.

Obiter:
Issue: Did Council comply with s 101(3)(a)(v) of the Act - to consider the costs and benefits of funding the activity distinctly from other activities?
Held: Yes. Council was not required to consider under this subsection the extent to which the targeted group already contributed to visitor attraction. There was no error in Council's analysis of the factors relevant under this provision.

Issue: Was the decision to impose the APTR unreasonable?
Held: Had it been necessary to determine this ground, the Court would have concluded that a finding of unreasonableness was inevitable given the combination of (1) the failure to adequately consider the distribution of benefits and (2) the imposition of such a disproportionate burden on the targeted group.
Case number
[2021] NZCA 520
Date of Judgment
02 November 2021
Summary
Appeal dismissed. 

Administrative Law. Judicial review. 

This case concerns New Zealand’s response to COVID-19. The Health Act 1956 gives the Director-General of Health special powers. Under s 70(1)(f), the Director-General may require persons to isolate or quarantine. Under s 70(1)(m), the Director-General may close premises of any stated kind or description and forbid people to congregate. In response to COVID-19, the Director-General issued three orders. The first order closed all premises except “essential businesses”. This meant businesses that provided the “necessities of life”, as described on a government website. The first order also forbade people to congregate unless physically distancing. The second order required all New Zealanders to stay home with certain exceptions. The third order had similar terms to the first and second orders. The appellant claimed that the orders exceeded the scope of s 70(1)(f) and (m). The appellant also claimed that the Director- General unlawfully delegated the decision on what premises would close under the first order, because other officials decided what businesses were listed on the government website. 

Whether the orders exceeded the scope of s 70(1)(f) and (m)?Held: No. Section 70(1)(f) used the word “persons”, so orders could be made against the public and not just individuals. Section 70(1)(f) also allowed people to “isolate” by staying at home in their bubbles. Section 70(1)(m) allowed closing all premises except those in a list of exceptions as long as those premises could be identified. Section 70(1)(m) also allowed an exception to congregation for physical distancing. A broad approach to s 70(1)(f) and (m) was required because of the broad statutory language, the fact that these were emergency powers to be used in unforeseeable situations, and the broad use of similar powers under previous Health Acts.Although these powers were inconsistent with the rights to freedom of movement, assembly and association in the New Zealand Bill of Rights Act 1990, they were justified limitations to prevent disease and protect the health of society. 

Whether the Director-General unlawfully delegated the decision on what premises would close? Held: No. There is no delegation if a decision-maker adopts a recommendation.  In this case, the list of essential businesses was prepared by other officials, but the Director-General approved that list before it went on the government website, then adopted the list on the government website when making the first order. Furthermore, a delegation is not unlawful if the delegator provides sufficient principles for the delegate. In this case, the Director-General provided sufficient principles on what constituted essential businesses, so any delegation would not have been unlawful. It appears that Ministers may have acted unlawfully when making subsequent exemptions to business closures, but this was unrelated to the question of whether the Director-General made an unlawful delegation.
Case number
[2021] NZCA 561
Date of Judgment
26 October 2021
Summary
Halifax Investment Services Pty Ltd (Halifax AU), an Australian corporation, and Halifax New Zealand Ltd (Halifax NZ) were financial service providers.  Clients could use Halifax online platforms to acquire various financial products.  Client money and financial product assets were held by Halifax on trust.  Halifax however used client assets to fund company activities and mingled client funds and assets in a manner inconsistent with those trusts.  On 23 November 2018 Halifax AU entered administration and on 27 November 2018 Halifax NZ entered administration.  On 23 November 2018, combined funds across Halifax AU and Halifax NZ totalled AUD 192.6 million but investor assets were recorded as totalling AUD 211.6 million.  The administrators, who were later appointed as liquidators, allowed investor clients to choose whether to close out existing investments or keep existing positions open, but not to purchase new investments, following directions given in the High Court and Federal Court of Australia.  Due to the market rising, some nominal recorded investor positions changed after the date of administration.  Category 1 investors are those investors whose proportionate entitlement to the deficient mixed funds will be higher after the realisation of all extant investments than their entitlement was on the date of administration, and Category 2 investors are those investors whose entitlement will be correspondingly lower.  The liquidators applied to the High Court and Federal Court for directions as to the distribution of investor assets.  Following a joint hearing, the High Court and Federal Court issued separate judgments to the same effect.  Save for certain assets traceable to Category 3 and 5 investors, all investor funds were part of a single deficient fund to be distributed on a pari passu basis.  Investor entitlements to the funds were to be quantified as at 27 November 2018.  Mr Loo appeals the choice of that date to the Court of Appeal and to the Full Court of the Federal Court of Australia. 

Practice and procedure – Jurisdiction.  Whether the Court had jurisdiction to hear the appeal jointly with the Full Court of the Federal Court of Australia and to deliberate jointly.Held:  Yes.  The High Court heard the proceedings jointly with the Federal Court under the Insolvency (Cross-border) Act 2006.  That Act does not confer jurisdiction on this Court, but the Court of Appeal has jurisdiction to hear the appeal against the High Court judgment under s 56(1)(a) of the Senior Courts Act 2016.  The power to conduct a joint hearing and deliberate jointly falls under the Court’s inherent powers to regulate the conduct of proceedings before it and was consented to by all parties. 

Equity – Trusts – Directions.  Insolvency – Directions.  Did the Judge err in directing the liquidators adopt 27 November 2018 as the date at which the proportionate entitlements of investors are to be calculated.
Held:  No. 
The parties agreed the appeal is against a discretionary decision.  The Court considers it may be an appeal against an evaluative decision, but it makes no difference to the outcome.
It is common ground a single date for valuing entitlements should be used.  Liquidators allowed investors to maintain open positions to preserve the ability to argue for tracing and distribution in specie.  Category 1 and 2 investors could not trace.  Using the date of administration is principled as it offers a reasonable proxy for the amount each investor contributed to the jointly owned fund at that date.
The choice permitted to each investor to refrain from closing out the nominal position in their accounts does not mean a different date should have been chosen.  Investor positions are book-keeping fictions.  Investors have no proprietary interests, only an equitable charge over the deficient mixed fund.  As a matter of first principle, contributions to a mixed fund are usually calculated as at the date of creation of the fund and increases in value of a jointly owned fund enure for the benefit of all owners.
The liquidators gave no assurance that entitlements would be calculated based on nominal positions after the administration date.  There is no claim founded on representation, estoppel or legitimate expectation.
The gains are attributable to a combination of the make-up of the shares and products notionally attributed to Category 1 investors and the choices they made to close out at a later date.  But the assertion of greater risk taking by Category 1 investors was overstated.  New trading could not occur, only a decision when to close out.  Close out dates may vary between Category 1 investors.  The High Court and Federal Court approved of the liquidators delegating decisions as to whose positions should remain open to investors but did not determine the effect of holding positions open.  Investors who did close out positions made no irrevocable commitment to accept valuation of their entitlement by reference to the later balance of their account, in particular if their nominal balances fell.  Choosing to keep positions open affected the assets of the whole fund and the Judge did not err in selecting the date of administration in New Zealand.
It is therefore unnecessary to address whether the High Court Judge failed to consider the fact that the liquidators permitted investors to keep positions open.  But if it were, the Court considers he was alive to this fact and did consider it.
Case number
[2021] NZCA 560
Date of Judgment
26 October 2021
Summary
In 2016 and 2017 the appellant employer sent a letter to certain senior employees inviting them to participate in what the letter described as a discretionary bonus scheme.  The schemes contained conditions that were attached to performance targets but also stated that any payments made by the appellant under the schemes were entirely at its discretion and that it had no obligation to make any payment even when all the specified  criteria were  met.    

The Labour Inspector considered the payments made under the schemes were “gross earnings” for the purposes of the Holidays Act 2003 and should therefore have been taken into account in calculating holiday pay.  The appellant disputed this and argued they were discretionary payments which the Holidays Act does not require to be included in the calculation. 

The Employment Court found in favour of the Labour Inspector and the case ended up in the Court of Appeal. 

The question for the Court of Appeal was whether payments made under these discretionary bonus schemes were payments the appellant was required to make to its employees under the employment agreement and so within the definition of "gross earnings" under s 14 of the Holidays Act. 

In answering that question, the Court began by addressing the issue of whether "employment agreement" for the purpose of the definition of "gross earnings" should be interpreted narrowly as meaning only the formal written employment agreement.  The Court held the meaning of "employment agreement" will differ depending on context.  Under the Holidays Act the essential difference between a discretionary payment and gross earnings is whether the employer is contractually bound to make the payment.  If a contractual obligation exists, the source of the obligation is irrelevant.  It is well established that contractual obligations between an employer and employee can arise from different sources outside of the formal written employment agreement.  Therefore, in this case the fact the bonus scheme was not contained in the formal written employment agreement but in a standalone document did not of itself render the payments discretionary.   

While agreeing with the Employment Court that “employment agreement” should not be interpreted narrowly, the Court however disagreed with the implicit finding in the Employment Court decision that   incentive or productivity based payments will always be gross earnings under the Act and can never be discretionary payments.  That was an error of statutory interpretation because it overlooked the key element of the definition of gross earnings which is that the payment at issue must be one the employer is contractually bound to pay.  As a result the Employment Court never considered whether the existence of the residual discretion in the schemes not to make any payment even if all conditions were met took it outside the scope of gross earnings and into the territory of a discretionary payment as defined. Although Metropolitan would be under a duty to exercise its residual discretion fairly and reasonably, the fact payment was neither conditional nor guaranteed meant it retained its character as a discretionary payment for the purposes of the Holidays Act. 

The Court therefore found the Employment Court was wrong to find the payments were gross earnings.
Case number
[2021] NZCA 552
Date of Judgment
21 October 2021
Summary
The appellant, Mr Smith, an elder of Ngāpuhi and Ngāti Kahu and the climate change spokesperson for the Iwi Chairs’ Forum contends that too little is being done in the political sphere on the issue of climate change and calls for a bold response from the common law.  He issued proceedings in the High Court against seven New Zealand companies, the respondents, who are all involved to some lesser or greater extent in industries that either emit greenhouse gases or produce/supply products which release greenhouse gases when they are burned. 

These activities, Mr Smith says, contribute to dangerous anthropogenic interference with the climate system and lead to adverse climate events.  He alleges that poor and minority communities will be disproportionately burdened by these adverse effects.  Mr Smith seeks redress against the defendants under three tortious causes of action — public nuisance, negligence and a proposed new tort “breach of duty”.  As to remedy, Mr Smith seeks declarations that each respondent has unlawfully caused or contributed to the negative effects of climate change or breached duties owed to him.  He also seeks injunctions requiring each respondent to produce zero net emissions by 2030. 

The Court of Appeal considered to recognise such a duty would be a radical response contrary to the common law tradition which is one of incremental development.  This is especially true in this case which would require fundamental principles to be departed from.  No other tort claim recognised by the courts involves a scenario where every person in New Zealand and the world (to varying degrees) is both responsible for causing the relevant harm and is also the victim of that harm.

Mr Smith sought to identify a small group of those responsible, but he was unable to identify any principled basis for singling them out.  It was accepted that none of the defendants standing alone materially contributed to climate change.  If their contribution to climate change is an actionable wrong, the logic underpinning that finding would apply to every individual and every business that has not achieved net zero emissions.   

It would be a surprising result if every person and business in New Zealand could be brought before the courts for contributing to climate change and therefore restrained from doing so — such a situation would have tremendous social and economic consequences.  Additionally, such restraint would have to be enforced and monitored by the courts which would require some sort of emissions offset and trading regime parallel to the statutory regime.  Actions would have to be brought on an ad hoc basis which would be inherently inefficient and unjust.  For these reasons, and others, the Court of Appeal explains the issue of climate change cannot be effectively addressed through tort law.  Climate change is a pressing issue which involves competing social and economic considerations which are more appropriately addressed by the legislature.
Case name
Case number
[2021] NZCA 542
Date of Judgment
18 October 2021
Summary
Application for bail pending appeal declined. 

The applicant was convicted in September 1999 of the murder of Olivia Hope and Ben Smart in January 1998.  Subsequent appeals and applications for leave to appeal were dismissed by the Court of Appeal and Privy Council.  A first application to the Governor-General for exercise of the prerogative of mercy was declined in July 2013.  In November 2017 the applicant made a second application to the Governor-General.  The application was granted in terms that two reports prepared by a forensic scientist may now raise doubts about the reliability of evidence regarding hairs recovered from the applicant’s yacht that were said to be from Ms Hope.  The applicant now applies for bail pending appeal. 

Criminal practice and procedure — Bail.  Should the application for bail pending appeal be granted? 

Held:  No.  In terms of the considerations under s 14(3) of the Bail Act 2000, the apparent strength of the appeal cannot prospectively be assessed, at this point, as “very strong” or “compelling”.  The reference records that the two reports “may raise doubts about the reliability of an important aspect of the prosecution case”.  A bail application is not an appropriate time to prejudge the merits of an appeal, particularly as the evidence on appeal has not yet been filed and Crown has not yet responded to it.

Moreover, it does not appear that bail is necessary to enable the appeal to be properly advanced.  Other avenues of access and consultation are available.  Other factors advanced do not support the grant of bail either. 

According the application for bail is declined.
Case number
[2021] NZCA 540
Date of Judgment
18 October 2021
Summary
Ms Harrison was convicted of dishonesty offences involving the misappropriation of a large sum of money from her employer.  In April 2019 the Commissioner of Police obtained final assets and profit forfeiture orders against Ms Harrison under the Criminal Proceeds (Recovery) Act 2009.  Those orders did not include her KiwiSaver account because the High Court had ruled that was protected from enforcement action by s 127 of the KiwiSaver Act 2006.  In 2020 Ms Harrison who had by that time been deported to England sought to have her KiwiSaver funds released on grounds of significant financial hardship.  A partial release was approved, following which funds totalling $23,000 arising from the sale of assets in the relevant KiwiSaver scheme were credited to a bank account in the name of the Public Trust pending transfer to Ms Harrison’s UK bank account.   

On the eve of the transfer to Ms Harrison, the Commissioner applied without notice to the High Court for a restraining order over the $23,000.  Following an urgent hearing, the High Court determined that the $23,000 was no longer protected by s 127 of the KiwiSaver Act and granted the without notice restraining order but suggested the Commissioner give thought to converting the proceeding to one seeking a freezing order under the High Court Rules. 

The Commissioner then filed an on notice restraining order application along with an alternative freezing order application in relation to the $23,000.  Ms Harrison successfully opposed those applications in the High Court. The High Court found it had no jurisdiction to grant either application. 

The Commissioner then appealed to this Court. 

The Court has dismissed the appeal and awarded costs to Ms Harrison.  The Court’s reasons were as follows: 
(a)  It is not possible under the Criminal Proceeds (Recovery) Act to obtain a restraining order after final forfeiture orders have been made. 

(b) A debt owing under a profit forfeiture order may be enforced through the means of a freezing order against property acquired by a respondent even although the property in question was not specified in the forfeiture order. To the extent that the decision of this Court in Doorman v Commissioner of Police decided otherwise, we consider it was wrong and should not be followed. 

(c) In this case however, a freezing order is not available to the Commissioner, because for so long as the $23,000 remains in the Public Trust account, it is still being held under the terms of the trust deed of the particular KiwiSaver scheme of which Ms Harrison is a member and it still forms part of her member’s account. That means s 127 of the KiwiSaver Act 2006 does still apply to preclude any enforcement action. 

In the judgment, the Court also observed that the issue of the relationship between the Criminal Proceeds (Recovery) Act and the KiwiSaver Act requires urgent legislative attention. It says that apart from the fact scenario that arose in this case, another crucial matter that needs to be addressed is what happens when KiwiSaver members turn 65.  As matters currently stand, the Court said it was not persuaded there are compelling reasons to treat KiwiSaver schemes as so sacrosanct as to be beyond the reach of the Crown under the Criminal Proceeds (Recovery) Act.  However, that was not the case before the Court and in any event given the competing policy considerations and the importance of avoiding further delay and uncertainty, may well be an issue best resolved by Parliament.
Case number
[2021] NZCA 514
Date of Judgment
07 October 2021
Summary
Imran Kamal was subject to disciplinary sanctions by the New Zealand Institute of Chartered Accountants (NZICA) in 2009, 2010, and 2011 and was convicted of six criminal tax offences in 2013.  He would have been removed from membership of NZICA if he had not resigned.  In 2013, Mr Kamal started practising as a liquidator.  In 2015, the High Court ordered him to pay costs personally because of his conduct in a liquidation.  Now, the Insolvency Practitioners Regulation Act 2019 effectively requires that Mr Kamal either be a member of NZICA or of the Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ) to continue to practise as a liquidator.  In 2020, NZICA declined his application for readmission to membership.  In 2021, RITANZ declined Mr Kamal’s application for membership on the basis he was not of good character.  Mr Kamal challenged the decision by judicial review.  The High Court upheld RITANZ’s decision but issued two declarations: that RITANZ erred in law by not making its good character assessment in a forward-looking way in three respects and that a statement in its report about Mr Kamal was not put to him so was unfair and a breach of natural justice. 

Mr Kamal appeals the High Court’s decision to uphold RITANZ’s decision.  RITANZ appeals the High Court’s decision to grant the two declarations.  On 30 August 2021, the Court of Appeal issued a results judgment dismissing the appeal.  This judgment explains the Court’s reasons for dismissing the appeal and sets out its decisions on the cross-appeal and costs. 

The Court of Appeal holds that the conditions which can be imposed on licences issued under the Act do not mitigate the requirement that all licensees meet the statutory fit and proper standard.  That is so whether they are applicants under either of the alternative statutory routes of being a member of NZICA or of RITANZ.  Parliament’s purpose in subjecting all licensees to the fit and proper standard was to maintain minimum standards related to expertise, skills and character whichever route is pursued.  There was more than enough evidence on which RITANZ was entitled to decide Mr Kamal’s application did not meet the good character requirement, just as it did not meet the standard for NZICA membership.  Accordingly, the appeal fails.  The Court upholds the cross appeal, because it does not consider any of the issues raised were errors of law.
Case number
[2020] NZCA 657
Date of Judgment
24 September 2021
Case number
[2021] NZCA 482
Date of Judgment
23 September 2021
Summary
Family Law – Intercountry adoption – Registration of birth – Birth certificate 

MP and his wife (the Ps), who are New Zealand residents and German citizens, adopted their child (A) pursuant to the Hague Convention on Intercountry Adoption.  That adoption was effected by a certificate issued by the Thai Central Authority under art 23 of the Convention.  The Convention is recognised and given effect to in New Zealand pursuant to the Adoption (Intercountry) Act 1997.  That Act provides for Convention adoptions to have legal effect in New Zealand.   

The Convention distinguishes between jurisdictions, such as New Zealand, under whose laws adoption severs existing parents-child relationships (a “full” adoption) and those which do not (a “simple” adoption).  It provides for “simple” Convention adoptions in one jurisdiction to be converted to “full” adoptions in another.   

In the course of obtaining recognition under German law of their adoption of A, the Ps were advised an order from the Family Court in New Zealand under s 12(1)(b) of the Adoption (Intercountry) Act was required to convert A’s “simple” Convention adoption under Thai law into a “full” adoption under New Zealand law. 

The Ps obtained two orders from the Family Court: the first classifying A’s adoption as a full adoption under New Zealand law; and the second confirming that A’s adopted surname was P.   

The Ps then engaged with the Registrar-General of Births, Deaths and Marriages to obtain a birth certificate for A under the surname P.  The Registrar-General took the view that he could only register A’s name at birth as recorded on the art 23 certificate.  Moreover, in his view A’s Convention adoption had, from the start, been a full adoption, and so the Family Court orders were of no effect.  The High Court made two declarations consistent with the Registrar-General’s approach.  In this appeal, MP challenges the making of those declarations.   

Held: Appeal allowed.   
(1) The High Court’s declaration as to the registration of A’s name is quashed. A new declaration is made, requiring A’s birth certificate to be issued under the surname P, in the following terms:
 “When registering an adoption to which the Adoption (Intercountry) Act 1997 applies, the Registrar-General must record the name (if any) specified by the child’s adoptive parents as advised to the Registrar-General at the time of notification or, where an order is made under s 12(1)(b) of that Act, as recognised or recorded in that order, and birth certificates are to be issued pursuant to s 63 of the Births, Deaths, Marriages, and Relationships Act 1995 accordingly.” 

On the basis the better interpretation of the art 23 certificate was that A’s adoption was a simple one under Thai law, the validity and legality of the Family Court orders is confirmed.
Case name
Case number
[2021] NZCA 456
Date of Judgment
10 September 2021
Summary
Mr Maid, a former Aviation Security officer, was found guilty following trial by jury on a charge of taking an imitation improvised explosive device (IIED) into the security enhanced area (SEA) at Dunedin International Airport (Aviation Crimes Act 1972, s 1A)). He placed the IIED in a satchel, before taking it through the SEA and leaving it in his patrol vehicle. A few hours later, he radioed his superior to report foreign object debris near a Localiser Hut on the runway. He then placed the satchel containing the IIED on the tarmac alongside a part of the airport's navigation system. The taking of the IIED through the SEA, which lasted approximately three minutes, was part of his wider scheme to cause a security incident to expose deficits in the Airport's security system, but only the taking of the IIED through the SEA is a criminal act under the statutory regime. At the District Court at Dunedin, he was sentenced to three years' imprisonment. He appeals against his conviction and sentence. He says the jury's verdict was unreasonable, alleging also that errors were made in the question trail and in the Judge's summing up. He also says his sentence was manifestly excessive.

Held: Appeal against conviction dismissed, appeal against sentence allowed. Sentence reduced to 17 months' imprisonment.

(1) The Court held that the jury's verdict was not unreasonable. It recognised that the Crown's case was a circumstantial one, but agreed with the Judge's observation at sentencing that the Crown's case in proving Mr Maid's overall course of conduct was "so compelling that the only piece missing was actually seeing [him] place the imitation IED by the hut [near the runway]". But the Court emphasised that it was important to distinguish between Mr Maid's wider scheme of causing a security incident from the actually criminal act of carrying the IIED in to the SEA. Crucially, there was strong circumstantial evidence of the latter; and it was open to the jury to infer his guilt on the charge from the overall evidence of his wider scheme. Further, the Court did not agree there were errors in the Judge's summing up or the question trail.

(2) However, the Court agreed that the Judge's starting point proceeded from an incorrect assessment of Mr Maid's culpability by conflating all of Mr Maid's actions that day into a single tranche of criminal offending. Mr Maid was not criminally responsible for the entirety of his scheme, but only for the act of passing through the SEA. The Court characterised that criminal conduct as merely incidental to his wider scheme, and the legislation's purpose. That purpose was to remedy a loophole to enable prosecution of anyone identified with an item causing a security risk without having to establish an intention to board an aircraft with that item. Had he placed the IIED in the same place without taking it through the SEA, no offence would have occurred. In that context, Mr Maid's actions were not of the most serious kind contemplated by the offence. The Court also considered the Judge was overly influenced by the fact Mr Maid's actions took place two days after the Christchurch Mosque attacks. Therefore, a starting point of 20 months was appropriate and taking into account the appropriate discounts, Mr Maid's sentence was reduced to 17 months' imprisonment.