A brief overview
17 LFDB and SM lived for a time in the 1990s and 2000s as domestic partners. Some of that time they lived in New Zealand; for a longer part of that time, they lived in Australia. They separated in 2009.
18 SM commenced the NZ proceeding in the Family Court of New Zealand seeking a division of property under the Property (Relationships) Act 1976 (NZ) (PR Act). It was subsequently transferred to the High Court of New Zealand. It was noted by Priestley J in the High Court of New Zealand as early as 28 May 2012 that the "couple seem to be locked into intractable and protracted litigation" (SM v LFDB [2012] NZHC 1152 at [5]). Also, even at that time, the saga of the litigation involving the parties was not confined to New Zealand Courts. In February 2009, LFDB commenced separate proceedings in the Supreme Court of New South Wales concerning the parties' respective property rights arising from their de facto relationship. SM successfully applied to have those proceedings stayed. The Supreme Court found that LFDB's proceedings in New South Wales were oppressive (see the discussion of this litigation in Priestley J's judgment referred to above).
19 On 10 May 2013, Ellis J published a judgment in the High Court (SM v LFDB [2013] NZHC 1056) concerning SM's application for an interim distribution under s 25 of the PR Act. Her Honour took into account what she described as "the recalcitrance with which LFDB has made available much of the financial information that is necessary to undertake the required analysis" and that "LFDB's general approach to this litigation and his reluctance to comply with Court orders [do not] weigh in his favour here" (at [44]). Reference was also made at [48] to "the web of dealings between [LFDB] and entities owned and controlled by him…".
20 On 29 August 2013, the High Court (Ellis J) made what is referred to in New Zealand as an "unless" order. It provided that if LFDB did not pay to SM's solicitors the sum of $24,435.08 plus interest by 5pm on 9 September 2013, "he will be debarred from taking any further part in the proceedings before this Court".
21 On 11 October 2013, the Court of Appeal in LFDB v SM [2013] NZCA 481 dismissed an application by LFDB for an extension of time to appeal against the judgment of Priestley J which is referred to in [18] above. The Court was highly critical of LFDB's conduct. It described LFDB's application for an extension of time as "a deliberate attempt to frustrate the progress of SM's proceeding to trial" and that "this step followed a discernible pattern of obstructing the determination of SM's claim" (at [14]). At [19] the Court described LFDB's application for an extension of time as "hopeless and his conduct plainly disqualified him from the grant of discretionary relief" in circumstances where his application "was vexatiously or improperly brought".
22 LFDB did not pay the amount ordered by Ellis J on 29 August 2013 by the time specified. Thus he was therefore debarred from taking any further part in the NZ proceeding. However, LFDB did pay the requisite amount on 17 October 2013. Subsequently, on 22 November 2013, the High Court (Ellis J in SM v LFDB [2013] NZHC 3105) made an order nunc pro tunc to extend the time for payment to 17 October 2013. The effect was that LFDB was not thereafter debarred from taking part in the substantive proceeding in the High Court.
23 However, on 14 July 2014, the New Zealand Court of Appeal allowed an appeal by SM from the High Court's order of 22 November 2013 (SM v LFDB [2014] NZCA 326; [2014] 3 NZLR 494). The effect was that LFDB was again debarred from taking any further part in the substantive proceeding. At [33] the Court said the following regarding LFDB's conduct:
… We are in no doubt the respondent deliberately flouted the second unless order, knowing full well the consequences. The breach was contumacious. The respondent had the money to pay the costs. On 9 September 2013 he transferred AUD$35,000 from an Australian (sic) into a New Zealand bank account, and then those monies to fund his own legal representation, presumably including making the various applications and appeals he launch unsuccessfully following the second unless order. Ellis J was surely right to observe that the respondent continued to play "some protracted game of 'chicken' with the Court".
24 On 6 October 2014, Ellis J published reasons for her decision dated 22 November 2013 that SM was entitled to costs in relation to various events consequent upon the making of the unless order against LFDB on 29 August 2013 (SM v LFDB [2014] NZHC 2445). At [4], her Honour noted that SM anticipated that she would meet "further resistance and delay" in bringing the proceedings to an end and that history was "certainly on her side in that regard".
25 LFDB was granted leave to appeal to the Supreme Court of New Zealand from the decision of the Court of Appeal but, during the hearing on 5 December 2014, that leave was revoked (LFDB v SM [2014] NZSC 197). This was because, during the course of the hearing, the Court became aware that a further order for costs made against LFDB on 6 October 2014 had not been fully paid as at 5 December 2014. The reasons record (at [13]) that LFDB had become aware of the costs order on 20 October 2014 but that it was not served on him until 2 December 2014 and that it was then payable within 10 working days, i.e. by 16 December 2014. The reasons also record at [15] that the Court considered that the information before it "indicated that [LFDB's] attitude to the outstanding costs order continued to be that of a recalcitrant and unreasonable litigant". The Court concluded that the manner in which LFDB had continued to conduct the proceeding was oppressive and that it "is clear that the court system is being abused" (at [26]). Furthermore, at [27] the Court described LFDB as "gaming the court system" and that it was "intolerable for [SM] to be faced with this and inappropriate for the Court to countenance such abuse of its process".
26 Accordingly, from 14 July 2014, LFDB was debarred from taking any further part in the NZ division of property and tort proceeding. The substantive proceeding was to proceed to a "formal proof" hearing in which LFDB could not participate.
27 On 27 January 2015, on the ex parte application of SM, a freezing order was made by the High Court directed to the assets of LFDB and various entities associated with him until 5 February 2015 or further order (the January freezing order). Under [8] of the January freezing order, third parties (including various entities associated with LFDB) were informed that they could apply to the Court by interlocutory application to discharge or vary the order upon giving notice of not less than 48 hours to SM.
28 On 5 February 2015, on the application of SM, the January freezing order was extended to 16 March 2015 or further order (the February freezing order). Among other things, the February freezing order precluded payments for legal costs, and precluded payments in the ordinary course of business, without the consent of SM. Paragraph 8 stated that any person (other than LFDB) who was detrimentally affected by the freezing order could apply to the Court by interlocutory application to discharge or vary the order upon three clear working days' notice being given to SM. Counsel for LFDB, on behalf of himself, some Australian companies and a New Zealand company associated with LFDB (DBA(NZ)), had sought to make submissions in support of an application to discharge or vary the January freezing order. However, the Court concluded that the debarring order precluded LFDB from applying to vacate the freezing order. The applicants contend in this Court that counsel sought "in substance" to make submissions on behalf of the Australian and NZ companies, which had not been debarred, but the Court declined to hear him in light of the debarring order.
29 On 18 February 2015, DBA(NZ) applied to discharge or vary the February freezing order and sought access to documents on the Court file filed by SM in support of her application for the freezing order.
30 On 20 February 2015, the Court directed disclosure of the documents but later that day it revoked the order. Following a hearing on 23 February 2015, the Court proposed that the documents be released to an amicus. The Court noted that DBA(NZ) was "already in breach of the freezing orders because it has refused to provide the plaintiff with information and documents in accordance with paragraph 4E of those orders".
31 On 6 March 2015, still without the documents relied upon by SM, DBA(NZ) renewed its application to vary or discharge the February freezing order. On 11 March 2015, the Australian companies applied to vacate the February freezing order, again without the documents relied upon by SM. However, without determining either application, or making orders for the release of documents to an amicus as had been foreshadowed, on 11 March 2015, without notice to the Australian and NZ companies, on the ex parte application of SM, the February freezing order was extended to 4 June 2015 or pending further order (the March freezing order). Under [10] of the March freezing order, it was stated that any person, other than LFDB, who was detrimentally affected by the order may apply to the Court by interlocutory application to discharge or vary the order upon three clear working days' notice to SM.
32 On 17 March 2015, on the application of SM, the High Court (Ellis J) ordered that the Australian and NZ companies give security for costs for their applications to vary or discharge the March freezing and that, only after this, would the Court consider whether the documents filed in support of the freezing orders should be disclosed. The Court stated at [3] that if payment was not made in accordance with the orders requiring security for costs then the "applications made by the entities in question will be dismissed". Her Honour also indicated that, if the security was paid, she wished to hear further argument on the question of whether the documents filed in support of the freezing orders should be disclosed and that she no longer proposed to appoint an amicus to assist on the issue. In the orders made that day, there is a reference to reasons being provided shortly thereafter. It is unclear whether or not reasons were given for the orders made on 17 March 2015 requiring payment of security for costs. It appears, however, that no such reasons were in fact delivered in circumstances where, on 18 March 2015, Ellis J indicated that she needed to consider whether to recall her earlier judgment requiring payment of security for costs in respect of an interlocutory application.
33 On 13 April 2015, the Court declined to recall the orders relating to security for costs. The Court noted that if security was provided it "would, in all likelihood, direct that the documents" be made available "but in redacted form" (the redactions not being specified). The Court stated at [4] that if payment was not made within the specified time "then the applications made by the entities in question will be stayed pending further order of this Court". The Court added a qualification to the effect that, even if security for costs was not given, the Australian and NZ companies could seek the Court's assistance in resolving difficulties they may experience in obtaining SM's approval for payments necessary for their day to day business operations.
34 The Court noted that if such assistance was sought, any failure to inform the Court regarding prior discussions with SM would result in the qualification being revoked.
35 The security required was not provided by any of the relevant entities. However, on 24 April 2015, the Australian and NZ companies filed a memorandum seeking the Court's assistance as permitted under the qualification, referring to "extremely urgent" matters causing undue hardship.
36 In the meantime, on 1 May 2015, the Australian and NZ companies notified the Court that they sought to be heard in the formal proof hearing in the substantive proceeding which they understood to be scheduled for 4 May 2015 if any orders might be sought that may affect their property interests. They also notified the Court that they sought to be heard on any application to renew the March freezing order, and noted that they had not received any response to their 24 April 2015 memorandum.
37 The formal proof hearing took place on 4 and 5 May 2015. On 5 May 2015, the Court stated its view that nothing in the formal proof hearing was likely to affect the property interests of any of the Australian or NZ companies associated with LFDB and that there was therefore no need for them to be heard in the substantive proceeding. The Court directed that SM respond to the 24 April 2015 memorandum by 6 May 2015. The Court also noted that the issue of whether the associated entities had a right to be heard in relation to the continuation of the freezing orders "will be dealt with (if necessary) closer to the date that the present orders are due to expire".
38 Notwithstanding the 1 May 2015 memorandum from the Australian and NZ companies, on 3 June 2015, without notice to them, on the ex parte application of SM, the March freezing order was replaced by a further order of indefinite duration (the June freezing order). Paragraph 10 of the order stated that any person (other than LFDB and any company or trust associated with him) who was detrimentally affected by the June freezing order could apply to the Court by interlocutory application to discharge or vary the order upon giving three clear working days' notice to SM. With specific reference to the entities who are applicants in the proceedings before this Court, the Court ordered in [10] that, in the event that any of those entities were detrimentally affected by the June freezing order "and have each paid security for costs in accordance with the Court's orders dated 17 March and 13 April 2015", they could apply to the Court to have the June freezing order discharged or varied upon giving three clear working days' notice to SM.
39 On 3 June 2015, Ellis J published reasons for her decision dated 13 April 2015 in which she declined to alter the judgment of 17 March 2015 which required the associated entities to pay security for costs (SM v LFDB [2015] NZHC 1217). Her Honour's judgment contains a convenient summary of the background leading up to the making of the freezing orders and the orders relating to security for costs. At [6], her Honour described information previously provided by LFDB to the Court about his travel plans as "false", which her Honour described as underscoring "the conclusion that has previously been reached by the New Zealand courts at every level; [LFDB] is not to be trusted and deserves no indulgences". At [9] her Honour noted that SM had filed "persuasive evidence that indicated that all the third party entities were, in reality, the alter ego of the defendant". At [10], her Honour made reference to there being evidence which showed that both LFDB and the third party entities had failed to comply with the term of the freezing orders which required them to provide SM with certain information on request. Her Honour then noted at [11] that notwithstanding the "considerable sympathy" she had for SM's position, "judicial instinct necessarily was that the corporate veil must be respected and that the third parties therefore had a right to be heard".
40 Her Honour then described the events leading to the making of the orders on 17 March 2015 requiring security for costs. On the question of the power of the Court to make such an order in interlocutory proceedings, her Honour applied the decision of the Court of Appeal of England and Wales in CT Bowring & Co (Insurance) Ltd v Corsi Partners Ltd [1995] 1 BCLC 148; [1994] 2 Lloyd's Rep 567 that security for costs could be ordered in such proceedings in special circumstances such as where there is a need to prevent an abuse of process. Her Honour concluded at [28] that there were "good grounds for genuine doubt" concerning the bona fides of the associated entities based on the following matters:
(a) her finding that LFDB was the alter ego of the third parties and that she had "no doubt whatsoever that he is the directing mind of each of them";
(b) LFDB's personal mala fides in the conduct of the litigation, which she noted had been recorded in other judgments; and
(c) the absence of any evidence to indicate that the Australian entities were suffering any operational hardship or difficulty arising from the freezing orders.
41 On 3 August 2015, DBA(NZ) requested that the Court deal with the 24 April 2015 memorandum as soon as possible. It repeated the request on 8 September 2015. Having heard nothing, on 18 November 2015, it sought the Court's leave to pay the security for costs previously ordered so as to deal with the situation. Leave was required because the time specified for paying the security had lapsed on 16 April 2015, i.e. more than seven months previously.
42 On 20 November 2015, the Court directed SM to respond to the 18 November 2015 memorandum within 10 working days and, as to the 3 August 2015 memorandum, said that unspecified "information provided by the plaintiff following the receipt of the August memorandum" showed DBA(NZ) had not fully and properly informed the Court about prior discussions with SM. The Court also stated that, absent the payment of security for costs, the Court would not consider any substantive argument sought to be advanced by DBA(NZ).
43 On 26 November 2015, the Court published its reasons for judgment in the NZ proceeding (SM v LFDB [2015] NZHC 2630 - the NZ final judgment). For reasons which are not apparent from the material before this Court, Ellis J directed that the delivery time of the judgment be 2:00 pm on 27 October 2015. The judgment contains what her Honour describes at [8] as "a relatively anodyne account" of the litigation history and was expressed as omitting "many of the steps taken by [LFDB] to prevaricate, obfuscate, frustrate and obstruct the proceedings and their efficient progress". Her Honour also referred at [57] to what she described as "the fact that [LFDB] has repeatedly failed to comply properly or completely with numerous orders for discovery and disclosure".
44 The NZ final judgment was accompanied by a further ex parte freezing order, made the same day, which was expressed to continue until the NZ final judgment and any other orders to be made in those and related proceedings were satisfied (the November freezing order), and orders as to costs of the applications for all the previous freezing orders (the NZ costs judgment). No provision was made for LFDB or any company or trust associated with him to seek a variation or discharge of the November freezing order. It is part of the final orders the subject of the NZ final judgment and the NZ costs judgment which have been registered in this Court.
45 The NZ final judgment contains a helpful summary of the history of the litigation and sets out the Court's findings regarding the parties' respective assets and the Court's orders concerning the division of the property and the payment of costs.
46 A copy of the NZ final judgment was not served on LFDB until 24 December 2015. By an application dated 7 March 2016, LFDB together with six other entities associated with him (with the acronyms DBA(AU), DBA(NZ) DPT, SE, BWP and LDT) sought an extension of time within which to appeal to the Court of Appeal from the NZ final judgment and a variation of the November freezing order, together with a stay of enforcement of the NZ final judgment and the appointment of LFDB as representative of the companies in the appeal.
47 On 10 March 2016, the Registrar of the Court of Appeal refused to accept the documents for filing, because inter alia the six applicants apart from the first applicant had not been parties in the proceeding below which produced the NZ final judgment and, accordingly, were considered to be not entitled to appeal. On 16 March 2016, the Registrar's decision was upheld by a judge of the Court of Appeal on the basis that the six entitles associated with LFDB had no rights of appeal in proceeding to which they were not parties.
48 On 14 March 2016, this Court made orders for security for costs, conditional upon variation of the November freezing order to enable such payment to be made.
49 By application dated 21 March 2016, LFDB resubmitted the appeal papers to the Court of Appeal, without the other six applicants being mentioned as parties. On 29 June 2016, the Court of Appeal granted an extension of time for appealing until 24 March 2016 on condition that LFDB pay into Court substantial sums owing to SM by 12 August 2016. LFDB had submitted to the Court of Appeal that such a condition could not be met because of financial circumstances and, in the event, it was not. Accordingly, on 15 August 2016, the appeal to the Court of Appeal was dismissed.