The Horseshoe Bend subdivision on the Tukituki River which was involved in protracted litigation. Photo / Warren Buckland
The Horseshoe Bend subdivision on the Tukituki River which was involved in protracted litigation. Photo / Warren Buckland
Land developer Garth Paterson has been given the rare dishonour of being labelled a vexatious litigant by the High Court and banned from engaging in certain civil proceedings for three years.
The former director of GLW Group Limited (GLW), now in liquidation, has been battling Charlie's juice co-founder Stefan Lepionkain the courts since 2015 after GLW took action over a dispute involving a 24ha riverside Hawke's Bay property.
The lengthy series of litigation between Paterson, and various entities related to him, and Lepionka, and various entities related to him, was over the development of an area known as Horseshoe Bend in the Tukituki Valley.
Lepionka's entities had paid GLW for several planned sections on the estate but GLW defaulted on its $2.6 million mortgage. Lepionka bought the debt from Westpac to protect his deposit.
After a month-long trial, Justice Sally Fitzgerald found in December 2017 that Lepionka's interests had breached their duties as mortgagee. However, she declined to set aside its power of sale and confined GLW's remedy to damages.
But she said it was "concerning" Paterson had been willing to actively mislead others. The judgment went on to dismiss GLW's claims that Lepionka's company Lepionka and Company Investments Ltd acted unlawfully.
Despite this, the court proceedings continued.
Bankrupt developer Garth Paterson
Ultimately, at a hearing in the High Court at Napier earlier this month, Justice Jan‑Marie Doogue was asked to determine whether Paterson has exhausted his legal options over the dispute.
Lepionka and his associated entities applied for the court to strike out the mortgagee and bankruptcy proceedings and make an order restricting Paterson from commencing or continuing any civil proceedings relating to the case for five years.
Paterson opposed the applications and denied bringing any proceedings without merit.
He said an application to ban him from proceedings was itself is an abuse of process, and an order would breach his rights under the New Zealand Bill of Rights Act 1990.
Yesterday, Justice Jan‑Marie Doogue delivered her judgment and ruled against Paterson.
She said the businessman, who has been bankrupt in New Zealand and Australia, has consistently "displayed a willingness" to bring proceedings "that have no prospect for success".
Paterson, who has been representing himself, also used court action which "expose the defendants to inconvenience, harassment and expense out of all proportion to the gain he is likely to receive".
The court heard Lepionka and the associated entities had incurred and continue to incur substantial legal costs, which ultimately cannot be recovered from Paterson.
Stefan Lepionka, pictured in 2011. Photo / File
Justice Doogue also said the manner in which Paterson conducts litigation – personally – is vexatious.
"Constant case management is needed by the defendants to consolidate proceedings, strike out new proceedings, obtain and enforce costs orders, and respond to 'thinly disguised old arguments masquerading as new ones'," she said.
"Documents are frequently filed late, and submissions filed on the morning of the hearing. This was true of the proceedings before me."
At the hearing this month, Paterson's also made two "highly inflammatory and irrelevant claims, unsubstantiated by any evidence", Justice Doogue said.
"For completeness, I simply refer to those claims as the breast cancer and Black Power claims. The importance of these claims is to demonstrate Mr Paterson's obsession with this litigation and his belief system, which appears to be increasing in its intensity rather than abating."
"The repetitive nature of Mr Paterson's proceedings, most of which are collateral attacks on matters which have clearly been determined by the courts multiple times, also supports the making of a [restriction on proceedings] order."
The judge said the usual deterrents to unmeritorious litigation - most notably the cost - do not appear to deter Paterson.
"He is impecunious and is unrepresented in almost all of his litigation.
"I think it is highly likely that Mr Paterson's conduct would continue if an order were not made in the defendant's favour."
Justice Doogue's order sees Paterson restrained from commencing or continuing any civil proceeding (or matter arising out of a civil proceeding) relating to the property dispute for three years.
Vexatious litigants are rare in New Zealand, with only a handful of people being subject to such restrictions.
The judge also struck out the mortgagee proceeding on the basis that it is an abuse of the court's process, and struck out the bankruptcy proceeding because Paterson's statement of claim discloses no reasonably arguable cause of action.
