The Judicial Committee of the Privy Council Decisions

Contradictors v. The Attorney General of New Zealand The Public Trustee and Marion unne Pritchard and Barbara Joan Wright v. The Attorney General of New Zealand The Public Trustee (New Zealand) [2001] UKPC 10 (8th March, 2001)

ADVANCE COPY

 

(1) The Contradictors Petitioners

(2) The Public Trustee Respondents

(2) Barbara Joan Wright Petitioners

(2) The Public Trustee Respondents

Lord Hope of Craighead

Lord Millett

 

[Delivered by Lord Millett]

 

1. At the conclusion of the argument on 20th February 2001 their Lordships announced that they would humbly advise Her Majesty that these two petitions for special leave to appeal from the judgment of the Court of Appeal of New Zealand of 10^th March 1999 ought to be dismissed. Exceptionally and in view of the importance of the case their Lordships said that they would briefly state their reasons for doing so later. This they now do.

2. The litigation concerns the beneficial ownership of the assets held by the Public Trustee Office and in particular the ownership of the surplus that has been built up in the Common Fund constituted by Section 30 of the Public Trust Office Act 1957.

3. The Government of New Zealand was considering the reorganisation of the Public Trustee Office and wished to know whether the surplus in the Common Fund was public property or was subject to any legal or equitable interest adverse to the interests of the general public. The Attorney-General of New Zealand accordingly brought proceedings on behalf of the Crown in the High Court to determine this question. He joined the Public Trustee as the only Defendant, presumably in the expectation that it would represent the interests of the many estates which it administered. But the Public Trustee was unwilling to do so. This was not surprising. In relation to the issues raised by the proceedings there was an obvious conflict of interest between the Public Trustee on the one hand and its beneficiaries on the other. It was therefore necessary to arrange for the interests of the beneficiaries to be represented before the Court. Their Lordships are inclined to think that the most appropriate course would have been to join one or more of the beneficiaries as defendants under rule 77 of the High Court Rules and make an order under rule 78 to constitute them representative defendants. They could then have engaged Counsel to act on their behalf in the usual way, but after having come to some arrangement with the Attorney-General in regard to their costs.

4. This was not done. Perhaps it was assumed that the beneficiaries were already parties through the Public Trustee, even though none of them had been officially informed of the proceedings or invited to take part; and that all that was necessary was to appoint Counsel to represent them. This was done on the application of the Attorney-General under rule 81 (a). The order appointed Dr. G. P. Barton Q.C. and Mr. K. B. Johnston of Wellington

"as Counsel representing all past and present beneficiaries of estates and trusts of which the Public Trustee is or has been a trustee or administrator and all other persons who may assert an interest in relation to the assets and undertakings of the Public Trustee Office in the form of private property rights or other rights adverse to the proposition that such assets and undertakings are public property."

 

This class was described in the Defence and Counterclaim as "the Contradictors.˝

5. Their Lordships do not proposes to discuss the effect of that Order or the proper scope of rule 81, with which the Courts of New Zealand are more familiar. But the Order had unfortunate consequences. It may have led to some confusion as to the identity of the actual parties to the proceedings. Dr. Barton Q.C. and Mr. Johnson acted in the normal way as if they were appearing as Counsel on behalf of others, the Contradictors being their clients and the actual parties to the proceedings. The pleadings were drawn on this basis.

6. In their substantive judgments in favour of the Crown, however, Heron J. and the Court of Appeal both referred to Mr. Barton and Mr. Johnson as if they were themselves the Contradictors, seemingly filling the dual role of Counsel and representative defendants. When they sought conditional leave to appeal to the Board, however, the Attorney-General opposed their application on the ground that they were not parties to the proceedings and had no standing to seek leave to appeal. The Court of Appeal accepted this submission.

7. The failure to join any member of the class as a representative defendant now meant that there was no one in a position to instruct Counsel in relation to the bringing of a further appeal to the Board. All would have been well if the Attorney-General had lost in the Court of Appeal, for some arrangements would presumably have been made to join a representative respondent to any appeal which he might wish to make. But the Attorney-General had been successful, and unless successfully appealed the judgment of the Court of Appeal would bind the Contradictors. If they were already parties, they could have appealed as of right. If they were not already parties, they could have applied to be joined in order to appeal. But they had been given no notice of the proceedings and were in no position to take immediate action.

8. Eventually after a delay of some 17 months two of the Contradictors presented their own petition for special leave to appeal to the Board. At the same time a similar petition was lodged by Dr. Barton and Mr. Johnston on behalf of the Contradictors.

9. The petitions were opposed by the Attorney-General on the grounds (i) that the petitioners had failed to identify any serious error or errors in the judgment of the Court of Appeal; (ii) that the judgment was unassailable; (iii) that there had been inordinate delay in lodging the petitions for which no reasonable excuse or explanation had been given; (iv) that the respondents would suffer prejudice as a result of the delay; and (v) in the case of the petition lodged by the Contradictors, that Dr. Barton and Mr. Johnston had no locus standi to present it.

10. If the delay had caused no prejudice to the respondents, their Lordships would have been willing to overlook it. It arose from the failure to join any of the Contradictors as a representative defendant and the consequent absence of anyone in a position to take timely steps to bring an appeal. Their Lordships would have made appropriate orders to join the petitioning beneficiaries as representative defendants and granted them special leave to appeal, and either consolidated the Contradictors’ petition or dismissed it by consent.

11. But their Lordships are in no doubt that the delay will cause substantial prejudice to the respondents. They understand that a Bill has been presented in the New Zealand Parliament to reorganise the office of the Public Trustee. It is proposed to retain a substantial part of the surplus in the Common Fund and to treat the rest as public funds. The proposal is clearly based on the decision of the Court of Appeal that the surplus is not subject to adverse private rights. If special leave to appeal were granted, the Government’s programme for this legislation would be disrupted, for Parliament would be likely to delay further progress on the Bill until after the judgment of the Board had been obtained and its implications considered.

12. These circumstances would have militated against the grant of leave even if the appeal had a reasonable prospect of success. Despite the valiant efforts by Counsel for the petitioners to persuade them otherwise, however, their Lordships are not satisfied that it has. It is not in dispute that the Public Trustee is a trustee and that the Common Fund is held in trust for the various estates whose money has been received into it. Nor is it in dispute that there is nothing in the 1957 Act which expressly excludes the fundamental rule of equity that a trustee must not profit from his trust. Their Lordships recognise the force of Counsel’s submission that the statutory provisions which entitle the Public Trustee to apply income for the purposes of the office are nothing to the point, since the surplus to which the Contradictors lay claim is the surplus left after the effect of those provisions has been exhausted. But their Lordships agree with the Court of Appeal and for the reasons which they gave that the nature of the statutory scheme as a whole is inconsistent with the equitable principle or with the existence of any resulting trust in favour of the estates taken into the Common Fund. The beneficial interest of the participating estates is limited to the monetary value of the capital paid into the Common Fund and interest on such capital at the prescribed rate, however the capital money may be invested. All else is the property of the Public Trustee.

13. It was for these reasons that their Lordships have humbly advised Her Majesty that both petitions ought to be dismissed.