Paul v Mead [2020] NZCA 637 (10 December 2020)

Last Updated: 15 December 2020

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA219/2020 [2020] NZCA 637

	BETWEEN	LILACH PAUL First Appellant BRETT PAUL Second Appellant
	AND	FIONA MARGARET MEAD Respondent

Counsel:	N W Taefi for First Appellant No appearance for Second Appellant No appearance for Respondent
Judgment: (On the papers)	10 December 2020 at 10.30 am

JUDGMENT OF BROWN J
(Review of Deputy Registrar’s decision)

1. The application for review of the Deputy Registrar’s decision not to dispense with security for costs is granted.
2. An extension of time is granted under r 43 of the Court of Appeal (Civil) Rules 2005 until 4 March 2021 for the filing of the case on appeal and application for a hearing date.

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REASONS

Introduction

• [1] The first appellant (Ms Paul), and the second appellant (Mr Paul), formed a polyamorous relationship with the respondent Ms Mead. For some 15 years they lived together in that relationship in a four hectare property purchased in Ms Mead’s name. After the relationship terminated the appellants each sought a share in the property under the Property (Relationships) Act 1976 (the Act). On a question of law by way of case stated from the Family Court, the High Court ruled that the Family Court did not have jurisdiction under the Act to determine the property rights of three persons in a polyamorous relationship.^[1]
• [2] On 24 April 2020 the appellants appealed against that judgment. Security for costs was set at $7,060 under r 35 of the Court of Appeal (Civil) Rules 2005 (the Rules). On 22 May 2020 Ms Paul applied under r 35(6)(c) of the Rules for an order dispensing with security for costs.
• [3] In a decision dated 3 July 2020 the Deputy Registrar declined the application to dispense with security for costs and directed that security be paid by 17 July 2020.
• [4] It appears that both appellants applied for a review of the Deputy Registrar’s decision. However Mr Paul’s appeal was deemed abandoned on 2 September 2020. Accordingly this decision relates only to the review sought by Ms Paul.

Relevant principles

• [5] The principles applicable to dispensation from security for costs were reviewed by the Supreme Court in Reekie v Attorney-General.^[2] The Court stated that the Registrar should dispense with security if of the view that it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security.^[3] The Court explained:

[35] ... we consider that the discretion to dispense with security should be exercised so as to:

(a) preserve access to the Court of Appeal by an impecunious appellant in the case of an appeal which a solvent appellant would reasonably wish to prosecute; and

(b) prevent the use of impecuniosity to secure the advantage of being able to prosecute an appeal which would not be sensibly pursued by a solvent litigant.

A reasonable and solvent litigant would not proceed with an appeal which is hopeless. Nor would a reasonable and solvent litigant proceed with an appeal where the benefits (economic or otherwise) to be obtained are outweighed by the costs (economic and otherwise) of the exercise (including the potential liability to contribute to the respondent’s costs if unsuccessful). As should be apparent from what we have just said, analysis of costs and benefits should not be confined to those which can be measured in money.

• [6] The Court also ruled that the review function of the Judge in relation to security for costs is to be exercised de novo.^[4]

Deputy Registrar’s decision

• [7] Having correctly recited the relevant principles from Reekie, the Deputy Registrar concluded that Ms Paul had no funds immediately available to pay security and was unlikely to be able to obtain a bank loan.
• [8] While recognising that the appeal involved an issue of public interest, the Deputy Registrar considered that it was not comparable to Banks v Ports of Auckland Ltd^[5] in terms of its public importance. The appeal raised an issue of statutory interpretation as opposed to concerning public assets. Banks was also viewed as distinguishable in that it could not be said that Ms Mead did not need the protection of security as was the situation in Banks.
• [9] The Deputy Registrar was satisfied that the appeal had some merit, involving a novel issue of statutory interpretation. However she noted that there was nothing in the High Court judgment to suggest that the decision on the issue was marginal, concluding that the merits of the appeal were not particularly strong.
• [10] With reference to the potential benefits of the appeal the Deputy Registrar stated:

[20] I am also satisfied that the potential benefits of this appeal outweigh the potential costs. Lilach and Brett each claim a one-third share of the relationship property, which Lilach says is worth over $1.8 million. It would likely be more difficult to establish that claim by way of an alternative proceeding based on equitable principles. This appeal will also provide a public benefit in clarifying whether and how the PRA can apply to polyamorous relationships. These benefits appear greater than the likely costs that Lilach and Brett may be ordered to pay Fiona if the appeal fails, which may be no more than $9,560.

(Footnotes omitted.)

• [11] While satisfied that the appeal was one which a reasonable and solvent appellant would bring the Deputy Registrar concluded that it was not of such public importance so as to justify dispensing with security for costs.

Discussion

• [12] The Deputy Registrar correctly concluded that Ms Paul has no funds immediately available to pay security and is unlikely to be able to obtain a bank loan. However the Deputy Registrar considered it might be possible for Ms Paul to sell her artwork and sculptures. Although Ms Paul had explained that those works were relationship property, the Deputy Registrar could not see why they could not be sold with the sale proceeds being available to be taken into account in any subsequent court proceeding concerning the relationship property.
• [13] However I accept Ms Taefi’s submission that selling the artworks would be difficult for a number of reasons: they are apparently not in a saleable condition, they cannot be easily moved due to their large size, and the market for them has been affected by the current economic climate.
• [14] The Deputy Registrar was satisfied that the appeal had merit and that the potential benefits of the appeal outweighed the potential costs. Hence she was satisfied that the appeal is one which a reasonable and solvent appellant would bring. I agree.
• [15] Where I part company with the Deputy Registrar is on the significance of the public interest nature of the appeal. Ms Taefi makes the point that the Act provides for “interim maintenance orders” which serve the interests of justice by enabling an equality of arms and ensuring that a shortage of funds (particularly a shortage arising from one partner’s prior economic dependence on the other) does not compromise a just result. Such an order is not available to Ms Paul as a consequence of the ruling that the Act does not apply to her.
• [16] Ms Taefi submits that the test case nature of the appeal is reflected in the approach in the lower courts:

(a) The Family Court Judge of her own motion (but with the parties’ consent) referred the matter to the High Court by way of case stated for the reason that the proceeding raised novel questions of law.

(b) Although ruling that the Act did not apply to Ms Paul’s circumstances, the High Court signalled that it would consider declining to make an award of costs because of the test case nature of the matter.

• [17] In my view the issue of statutory interpretation is one which warrants consideration by this Court. If Ms Paul is ultimately unsuccessful in her appeal there are at least reasonable prospects that costs would not be awarded against her. In those particular circumstances I consider that this is an appropriate case to dispense with the requirement for the payment of security for costs. I also extend the time for compliance with r 43 for two months (not including the vacation period).

Result

• [18] The application for review of the Deputy Registrar’s decision not to dispense with security for costs is granted.
• [19] An extension of time is granted under r 43 of the Court of Appeal (Civil) Rules 2005 until 4 March 2021 for the filing of the case on appeal and application for a hearing date.

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^[1] Paul v Mead [2020] NZHC 666.

^[2] Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.

^[3] At [31].

^[4] At [23].

^[5] Banks v Ports of Auckland Ltd [2015] NZCA 150 (2015) 22 PRNZ 461.