Fighting for your convictions is all well and good. Getting other people to pay for it isn't.

Back in 2010, I posted on the obviously hopeless case brought by the "New Zealand Climate Science Education Trust" - a front organisation I'll come back to - against the National Institute of Water and Atmospheric Research. Rather than rehash all the details, I'll simply cut-and-paste the Court of Appeal's account of the litigation:

[2] The respondent, which we will call NIWA, collects and publishes temperature and other weather data from numerous weather stations in New Zealand, and has done so for many years.  It maintains what it calls a National Climate Database, though the database has no official status.  At issue in this proceeding were its decisions to publish three documents:  the Seven-Station Temperature Series, published in 1999, the Eleven-Station Temperature Series, published in 2009, and a review of the Seven-Station Temperature Series covering the period 1909 to 2008.

[3] Relying on its National Climate Database and the three publications, NIWA has concluded that New Zealand is experiencing a warming climate.  Its views have an impact on policy-making and public discourse.

[4] The appellant, which we will call “the trust,” is a charitable trust whose objectives include the promotion of accurate information about the science and policy of climate change in New Zealand.  It does not accept NIWA’s conclusions about a warming climate, claiming that NIWA has misinterpreted the data.  

[5] The trust sought judicial review of the decisions to publish the three documents.  It alleged, broadly speaking, that NIWA had failed in its statutory purpose of undertaking research in accordance with the principle of excellence.  It contended that for judicial review purposes Crown Research Institutes are analogous to State-Owned Enterprises, decisions of which are in principle amenable to judicial review.

[6] The application for review rested squarely on alleged mistakes of fact.  In essence, the trust contended that NIWA had been using the wrong methodology to adjust historic temperature data to reflect changes in the locations of monitoring stations.  That such adjustments are needed was not in dispute.  The trust said that NIWA made the adjustments using a methodology which did not reflect received scientific opinion.

[7] NIWA did not accept that it had made any mistake.  It claimed that its methodology was based upon what the trust says is the correct approach.  

[8] There was a great deal of evidence in the High Court.  It amounted to a debate among scientists about the correct approach to adjustments.  Venning J found it unnecessary to resolve the debate.  It sufficed that there was credible evidence of scientific opinion supporting NIWA’s approach.  

In other words, the trust comprehensively lost in the High Court. While it did get Justice Venning to accept that in theory NIWA's actions could be reviewed by a judge, as soon as the issue became whether that organisation had followed the appropriate scientific method in carrying out its duties, he refused to engage with the issue. That is, by the way, exactly what I said would happen in my original post:

[T]rying to show that any particular research programme or exercise of judgment in the course of conducting a research programme breaches [NIWA's legal duties] will be next to impossible. It requires a court to adjudicate upon matters of scientific expertise in which courts simply are not competent. It would be like asking the scientists at NIWA to pass judgment on whether the court's decision in Re: A.M.M. and K.J.O. was an appropriate judicial use of the interpretative provision in section 6 of the NZBORA.

Of course, the trust wasn't quite finished with the matter. It appealed the High Court's decision to the Court of Appeal, with consequences that can be summed up in one paragraph:

[9] Before us, Mr Illingworth QC sought to challenge the High Court decision on the facts.  That necessitated that we reject some of the evidence from NIWA scientists which was given in affidavits and was not the subject of cross-examination.  The appeal was abandoned when we made it plain that, like Venning J, we were in no position to resolve these questions on the record before us.

In other words, the trust didn't even wait for the Court of Appeal to tell it that it had lost. It listened to its lawyer when he told them in no uncertain terms "you are going to lose this case, so any more time you spend on it will just cost you more money", and then abandoned it.

Now, were that the end of the story, it would be a somewhat amusing example of some overenthusiastic zealots bring told by the courts to go away and stop trying to get judges to resolve an argument that properly belongs to another intellectual discipline. However, it isn't quite the end of the story. 

Because, not only did the High Court decide that the trust's case was so hopeless from the get-go that it ought to pay NIWA's costs, it also increased the amount that the trust had to pay to reflect the haphazard way it was presented. The Court of Appeal then upheld that decision, rejecting the trust's claim that there was a public interest in its action as follows:

[14] As to that, we observe that only after the late intervention of former counsel was the case sensibly articulated in the High Court.  Even then, it had no prospect of success, both because of the inherent difficulty of challenging a decision of this kind and because the challenge turned on disputed facts which were not susceptible to determination on judicial review.  By way of illustration, we observe that the trust initially characterised NIWA’s temperature records as the official New Zealand  record, but that allegation was abandoned in the High Court.  It was also open to the [High Court] Judge to conclude that the trust has mounted something of a crusade against NIWA’s records.

[15] In the circumstances, we are not persuaded that the Judge was wrong to refuse the trust a reduction in [the trust's] liability for costs on public interest grounds.  On the contrary, we agree with him that the trust did not act reasonably.

Just to really rub it in, the Court of Appeal continued by saying it also was "not prepared to discount costs in this Court, where despite Mr Illingworth’s best efforts in introducing commendable focus to the argument on appeal, the trust cannot claim to have acted reasonably."

All of which left the "New Zealand Climate Science Education Trust" owing NIWA something well over $100,000 - that's in addition to any amounts it would have had to pay out to its own lawyers. Which is where the real kicker comes in.

You see, the trust in question had been set up only a week before the court action was filed against NIWA. And as I wrote at the time,

[T]he only reason I can think of to set up a charitable trust and then use it as a vehicle to run a court case is to avoid liability for costs should a court decide to award them against you when you lose. In other words, it's hardly a move that screams confidence (not to mention the small ethical matter of the claimants seeking to avoid any potential liability to the taxpayer for the money that will be spent in opposing their little piece of theatre).

Which appears to be exactly what has now happened. According to this account, the trust has been liquidated after NIWA sought to recover its debt, with one of its trustees stating that; "To my knowledge, there is no money. We spent a large amount of money on the court case, there were some expensive legal technicalities." 

Whether this little subterfuge is successful remains to be seen. NIWA is making noises about personally chasing two of the trust's more prominent members - former wine journalist Terry Dunleavy, a Justice of the Peace and MBE, and retired lawyer Barry Brill, a former National MP - for the money owed to it. But if the various members of the "New Zealand Climate Science Education Trust" have any honour, it won't come to that.

After all, if your cause is so just and your actions so noble, surely you're prepared to put your money where your mouth is?

Comments (12)

by Draco T Bastard on January 12, 2014
Draco T Bastard

But if the various members of the "New Zealand Climate Science Education Trust" have any honour, it won't come to that.

They aren't. As you surmised previously, the whole point of the trust was to get off any liability that the courts threw at them. This seems to be normal behaviour for RWNJs. All of them go on about personal responsibility but none of them will take any.

by Tobias Barkley on January 12, 2014
Tobias Barkley

Interesting!

Personally I am doubtful that this attempt at liability limitation will work. Ordinarily, all trustees are personally liable for trust debts. I can't see anything in the Charitable Trusts Act that would give Dunleavy and Brill limited liability just because the Board of trustees was incorporated.

by Gareth on January 13, 2014
Gareth

The matter of the trust is worse than you suggest, Andrew, as I show here: http://hot-topic.co.nz/nz-climate-cranks-trust-folded-brill-et-al-try-to.... The trust deed is dated July 30th, but papers were filed in the High Court in the trust's name on July 5th!

by Andrew Geddis on January 13, 2014
Andrew Geddis

@Tobias,

I'm not a trust expert (in fact, I don't know anything very much at all about them), but I'd note that the Companies Office website states that "Trustees [are not liable for trust debts] unless they fail to comply with requirements of trust deed or the Trustee Act 1956". And surely that's the whole point of setting up a trust - that it as an entity exists seperately from the flesh-and-blood individuals who control it?

@Gareth,

Yes - I saw your post after I'd posted mine. Very dodgy.

by Richard on January 13, 2014
Richard

"Trustees [are not liable for trust debts] unless..."

The Trustee Act 1956, mostly seems to anticipate holding trustees liable for any idiotic investment decisions they might take. But section 71 seems to allow the court to impose costs on either a trust "or to be borne and paid in such manner and by such persons as to the court may seem just." So, perhaps this could allow the court to impose costs on former trustees, even if the trust does not itself exist anymore.

by Tobias Barkley on January 13, 2014
Tobias Barkley

@Andrew and @Richard

Perhaps I can claim to be a trust expert (semi at least). Here are my reasons:

Trusts are not a separate entity in any way like a company. It's true that trust property is held separately from a trustee's own property but that is because it 'belongs' to someone else - the beneficiaries or the charitable purpose. In contrast any liabilities incurred by a trustee are their own (although they can usually get paid back from the trust property). This is because the tradtional purpose of a trust is to hold property for someone else, not to do lots of activities or run vexatious litigation.

Here are the Law Commission (para 7.16) and IRD on this. So, if this were an ordinary trust, the trustees would have to pay the costs out of their own pockets and then try and get it back from the trust assets.

The only possible reason for a different outcome in this case would have to be specific to the Charitable Trusts Act 1957, but the Act does not mention liability limitation. And I don't think incorporation as a board by itself would remove liability. Companies get limited liability only because s 97 of the Companies Act is explicit about this (before companies legislation, joint stock companies were legally understood as trusts).

Therefore, I would say the Companies Office is quite wrong. The statement smells bad anyway because trustees can be liable for breach of many duties outside of trust deeds and the Trustee Act - eg the fiduciary duty to not spend the trust money on him/herself.

Further, on liability to third parties (as opposed to beneficiaries) the Trustee Act only has a few specific limitations such as s 34, which removes some of a trustee's personal liability but only under leases, and s 35, which allows a trustee to avoid open-ended liability by advertising for creditors to come forward.

My professional opinion: these folks are screwed.

by Andrew Geddis on January 13, 2014
Andrew Geddis

@Tobias,

Well, that all sounds quite reasonable. I guess the folks who set the New Zealand Climate Science Education Trust up should have talked to you first!

by Quentin Davies on January 13, 2014
Quentin Davies

I am not a trust expert but I would think s13 Charitable Trusts Act 1957 would have a bearing on this.  It makes the body a corporate entity and therefore sue (and therefore incur court costs) in its own name.

13 Effect of incorporation
Every Board shall have perpetual succession and a common seal, and (subject to this Act and to the rules and other documents providing for the constitution of the Board) shall be capable of holding real and personal property of whatsoever nature and whether situated in New Zealand or elsewhere, and of suing and being sued, and of doing and suffering all such acts and things as bodies corporate may lawfully do and suffer.
That may not be the end of the matter.  As @Tobais points out trustees can be liable for breaches of many duties...
@Andrew Do we want the Courts to be the domain of only those who have the ability to put their money where their mouth is?  The litigation may have been unreasonable in this case on many levels but access to the Courts is something worth preserving.    
by Andrew Geddis on January 14, 2014
Andrew Geddis

Do we want the Courts to be the domain of only those who have the ability to put their money where their mouth is?

No. We don't. And "access to justice" is a real problem.

But by the same token, we don't want the courts to become a venue where individuals/groups can pursue their idiosyncratic aims/vandettas irrespective of the nature of the dispute. Not every issue is a legal issue (and nor should we want every issue to become a legal issue). So, where someone drags another person/group into court to fight a case that has no chance of success - indeed, involves matters that really have nothing to do with law at all - then the argument "if you make us pay the other side's costs, then you might stop similar such actions in the future" isn't a very stong one. In fact, the response to that claim would be "good!"

Of course, where an individual/group is asking a Court to rule on a matter of genuine legal uncertainty that it is in the public interest to have resolved, then you wouldn't want the risk of them having to pay costs if they lose to dissuade them from their action. Which is why the courts have said that costs won't lie against such "public interest" litigants, provided they act "reasonably" in how they present their case. So, for instance, when the Child Poverty Action Group lost their challenge to the decision to exclude beneficiaries from the Working for Families tax credit, there was no attempt to chase them for costs - the Crown knew that it wouldn't get them, because the claim had legal merit (even though the Court of Appeal eventually decided against it), the issue was an important one of public interest, and the case had been presented in a thorough and well-argued fashion.

There then will be grey areas, in which reasonable minds may differ as to whether the case did involve a "genuine" legal issue brought in the "public interest". However, this case just isn't one of them.

by Rich on January 14, 2014
Rich

I'm no expert either, but if a *company* were to engage in litigation they were unlikely to win and had no funds to meet the costs of, wouldn't that amount to insolvent trading?

The idea of limited liability is to protect shareholders (and trustees, directors) where unexpected events lead to insolvency, not to allow an entity to run up debts with no intention to pay them.

 

by Ross on January 17, 2014
Ross

In other words, the trust comprehensively lost in the High Court.

The Trust challenged NIWA's scientific credibility. Did the Court rule on that? If the High Court couldn't or wouldn't rule on the matter, there ought to be (and there ought to have been) somewhere else where the debate could be resolved (and that doesn't involved spending lots of taxpayers' money).

Surely, NIWA cannot be happy that its credibility has been impugned and continues to be impugned.

by Andrew Geddis on January 18, 2014
Andrew Geddis

If the High Court couldn't or wouldn't rule on the matter, there ought to be (and there ought to have been) somewhere else where the debate could be resolved (and that doesn't involved spending lots of taxpayers' money).

There is. It's called peer-reviewed science publishing.

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