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High Court of New Zealand Decisions |
Last Updated: 19 July 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-003297 [2016] NZHC 1578
UNDER
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the Property (Relationships) Act 1976
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BETWEEN
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PUBLIC TRUST AS PERSONAL REPRESENTATIVE OF THE ESTATE OF SUZANNE HEAVEN
(FORMERLY KNOWN AS SUZANNE WYATT) Appellant
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AND
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JAMES STEWART HISLOP Respondent
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On the papers
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Appearances:
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D M Kennedy for Appellant
A E Ashmore for Respondent
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Judgment:
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12 July 2016
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JUDGMENT OF GILBERT J [COSTS]
This judgment is delivered by me on 12 July 2016 at 3.30 pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
Solicitors/Counsel:
Bramwell Grossman, Hastings (D M Kennedy) The Public Trust, Lower Hutt
A Ashmore, Barrister, Ponsonby, Auckland
PUBLIC TRUST v HISLOP [2016] NZHC 1578 [12 July 2016]
Introduction
[1] Mr Hislop seeks costs orders pursuant to s 45 of the Legal Services
Act 2011 following his successful appeal from a decision
of the Family Court and
in relation to an application for leave to appeal to the Court of Appeal that
was withdrawn after the hearing.1
Background
[2] Mr Hislop and Suzanne Heaven (the deceased) lived together in a de facto relationship for approximately 22 months prior to Ms Heaven’s death on
8 April 2005. In February 2004, they jointly purchased a property at
Warkworth which became their home. It appears that this property
was funded by
the proceeds of sale of a property belonging to the deceased and a mortgage.
The deceased left a will appointing Mr
Hislop and her solicitor as executors and
trustees. Mr Hislop was the sole beneficiary. Apart from her interest in the
home, the
deceased’s only assets at the time of her death comprised $246
in a bank account and a tax refund of $309. There was also a
debt of
$1,128.
[3] The executors did not apply for probate. They did not consider
that this was necessary because the deceased’s interest
in the home was
extinguished upon her death and accrued to Mr Hislop. On that basis, the estate
was very modest in value. The last
asset to be distributed was the tax refund
which was paid to Mr Hislop in August 2006.
[4] The deceased’s only child, Chante Heaven, contends
that her mother breached her moral duty in failing to
make any provision for
her in her will. She has three children to care for, one of whom is disabled.
She is not in employment and
has few assets.
[5] On 19 December 2006, Ms Heaven filed an application for probate and for the appointment of Public Trust as executor of the estate. This was to enable
Public Trust to bring an application under the Property (Relationships)
Act 1976 in
1 Hislop v Public Trust [2015] NZHC 1101.
respect of the deceased’s former interest in the home. If successful,
this would allow
Ms Heaven to bring a claim against the estate under the Family Protection Act
1955.
[6] The application for probate was discontinued in June 2007 without being served. Ms Heaven says that this was done without her knowledge or authority and she says that she did not become aware of this until she instructed new solicitors in
2011.
[7] Public Trust was appointed as administrator of the estate in April
2013. On
30 July 2013, Public Trust filed an application in the Family Court for an order extending the time for commencement of proceedings under the Property (Relationships) Act. Public Trust considered that the estate was a small estate and the time limit for commencing proceedings had expired in April 2006, 12 months
after the date of death.2 However, it argued that an extension
of time could be
granted on the basis that final distribution of the estate had not
occurred.3
[8] In a judgment delivered by Judge J H Walker in the
Family Court at North Shore on 17 November 2014,4 the Court
concluded that the deceased’s interest in the property was not
extinguished upon her death and did not accrue to Mr
Hislop by survivorship
because of s 83(1) of the Act which provides:
83 Relationship property defined
(1) If, on the death of a spouse or partner, any property of that spouse or partner passes to the surviving spouse or partner, whether by survivorship or otherwise (but not by succession), then unless, in any
proceedings under this Act, the court decides otherwise,-
(a) that property is not automatically to be treated as the separate property of the surviving spouse or partner;
and
(b) the status of the property as relationship property or
separate property is to be determined according to the
status it would have had
if the deceased spouse or partner had not died.
[9] The Judge therefore determined, contrary to the view taken by both parties in the proceedings before her, that the estate was not a small estate for the purposes of
the Act and the time limit in s 90(1)(a) did not apply. The Judge
considered that the
2 Property (Relationships) Act 1976, s 90(1)(a).
3 Property (Relationships) Act 1976, s 90(4).
4 Public Trust v Hislop [2014] NZFC 9170.
proceedings were brought within time because they were filed within 12 months
after administration of the estate was granted.5
[10] In allowing Mr Hislop’s appeal from this decision, I
concluded that the estate was a small estate in terms of s 2
of the Act because
the deceased’s interest in the former home was extinguished upon her death
and therefore did not form part
of her estate. Section 83 provides that the
status of the property as relationship property or separate property is to be
determined,
for the purposes of proceedings under the Act, as if the deceased
had not died. Unless and until the Court makes an order under
the Act,
ownership of the home is to be determined in accordance with
conventional property law.
[11] Public Trust sought leave to appeal to the Court of Appeal
against my judgment delivered on 21 May 2015. In deciding
whether or not to
grant leave, I needed to determine whether the proposed appeal raised some
question of law or fact capable of bona
fide and serious argument in a case
involving some public or private importance sufficient to outweigh the cost and
delay of a further
appeal.6
[12] The principal question raised by the proposed appeal was whether the
interest held by a joint tenant in real estate immediately
prior to death forms
part of that person’s estate for the purposes of determining whether it is
a “small estate”
as defined in s 2 of the Property (Relationships)
Act 1976. If not, proceedings under that Act must be commenced within 12 months
of the date of death or, if administration of the estate is granted in New
Zealand within that 12 month period, no later than
12 months after the
grant of administration. A subsidiary issue concerned the date on which an
estate is finally distributed
for the purposes of s 90(4) of the
Act.
[13] The application for leave to appeal to the Court of Appeal was heard
on
14 December 2015. In response to questions from the Court, Mr Ashmore responsibly conceded that leave should be granted if Public Trust was uncertain as to
whether an estate with little or no assets was nevertheless not a
“small estate” if a
5 Property (Relationships) Act 1976, s 90(1)(b).
6 Waller v Hider [1988] 1 NZLR 412 (CA).
claim was available under the Act. He acknowledged that if there was
genuine uncertainty on the part of Public Trust, which
administers many
estates in New Zealand, this could justify the cost and delay of a further
appeal. Accordingly, determination
of the application was deferred to enable
Public Trust’s position to be clarified.
[14] It took some time for Public Trust to determine its position.
Ultimately, it advised the Court that it did not seek clarification
of the law
through a further appeal and it sought to withdraw its application for leave to
appeal to the Court of Appeal. The application
was accordingly
dismissed.
Legal Aid
[15] Public Trust allowed these proceedings to be pursued in its name, on
behalf of Ms Heaven, on the basis that it would not
be responsible for the costs
of the proceeding and would be indemnified by her against any adverse costs
award.
[16] Legal aid was granted in the name of Public Trust for the appeal and
the application for leave to appeal to the Court of
Appeal. I understand that
the grant of legal aid reflected that Ms Heaven was the effective claimant and
that she had insufficient
income or assets to meet the costs of the
proceeding.
Legal principles
[17] Section 45 of the Legal Services Act insulates a legally aided
person from an adverse costs award unless there are exceptional
circumstances:
45 Liability of aided person for costs
...
(2) No order for costs may be made against an aided person in a civil
proceeding unless the court is satisfied that there are
exceptional
circumstances.
(3) In determining whether there are exceptional circumstances under
subsection (2), the court may take account of, but is
not limited to, the
following conduct by the aided person:
(a) any conduct that causes the other party to incur unnecessary cost:
(b) any failure to comply with the procedural rules and orders of the
court:
(c) any misleading or deceitful conduct:
(d) any unreasonable pursuit of 1 or more issues on which the aided person
fails:
(e) any unreasonable refusal to negotiate a settlement or participate
in alternative dispute resolution:
(f) any other conduct that abuses the processes of the
court.
...
(5) If, because of this section, no order for costs is made against
the aided person, an order may be made specifying what
order for costs would
have been made against that person with respect to the proceedings if this
section had not affected that person’s
liability.
Submissions
[18] Mr Hislop seeks a direction under s 45(5) of the Act as to what, if
any, order for costs would have been made against Public
Trust in respect of the
proceedings up to 26 June 2015 had it not been legally aided. He also seeks an
order for costs against
Public Trust for the steps taken after that date. These
relate to the application for leave to appeal to the Court of
Appeal.
[19] Mr Ashmore submits that there are three exceptional circumstances
justifying an award of costs being made against Public
Trust for the leave
application:
(a) It applied for leave to appeal without independently considering the
merits of the proposed appeal.
(b) It delayed in ascertaining and disclosing its position in relation to the
leave application.
(c) It is in a financial position to meet an award of costs.
[20] Mr Ashmore relies on a memorandum dated 17 December 2015, prepared by Dean O’Leary, an in-house solicitor employed by Public Trust. In this memorandum, Mr O’Leary briefly traversed the background to the proceeding and Public Trust’s involvement in it at the request of Ms Heaven’s solicitors. He recorded that after Mr Hislop’s appeal was allowed in the High Court, Ms Heaven’s
solicitors wrote to Public Trust asking for its views on an appeal. Trevor
Tso was dealing with the matter at Public Trust at that
time. Mr Tso
responded to the solicitors as follows:
[I have] no comment to make on the success or otherwise of a possible appeal.
I am mindful of the litigation costs and wish to be
assured that the costs to
date and the costs of an appeal to the Court of Appeal – should it prove
successful, can be met in
full by your client from her own
resources.
[21] Ms Heaven’s solicitors responded that Public Trust’s
costs would be covered by legal aid.
[22] I do not consider that this amounts to an exceptional circumstance that could justify an award of costs against Public Trust. The reality is that the proceedings were being pursued by Ms Heaven on the advice of her solicitors and with the assistance of a grant of legal aid. Public Trust was involved because proceedings under the Property (Relationships) Act had to be commenced by the deceased’s
personal representative.7 For obvious reasons, Mr Hislop was not
going to take this
step.
[23] It was reasonable for Public Trust to facilitate the proceedings.
If the time limit issue could be overcome, a claim under
the Property
(Relationships) Act would have good prospects of succeeding. This would
pave the way for a claim by Ms
Heaven against the estate under the Family
Protection Act. However, because the estate had no assets, it was also
reasonable for
Public Trust to seek protection from any adverse costs
award.
[24] In these circumstances, it is unrealistic to suggest that Public Trust should have taken independent advice on the merits of the proposed appeal. It had no funding for this. Given the decision in the Family Court, it could not be said that the proposed appeal was hopeless or devoid of merit. Public Trust was entitled to assume that Ms Heaven’s solicitors would not advance an improper application for leave to appeal. It would also have been entitled to take some comfort from the fact
that legal aid funding had been approved for the leave
application.
7 Property (Relationships) Act 1976, s 88.
[25] The second circumstance relied on as being exceptional is the time
it took Public Trust to clarify its position in relation
to the application for
leave to appeal. It follows from my conclusion regarding the first
circumstance advanced
by Mr Ashmore that Public Trust cannot be criticised
for allowing the application for leave to appeal to proceed without
independently
considering the prospects of an appeal succeeding. Public
Trust’s independent position in relation to the proposed appeal
was a
matter raised by the Court at the hearing on 14 December 2015. If Public Trust
was itself seeking clarification of the legal
position, independently of wishing
to support Ms Heaven with her claim, then that could have been an
important factor
weighing in favour of granting leave to appeal to the Court of
Appeal. Mr Ashmore agreed with this assessment. This is why the
Court asked
Public Trust to clarify its position.
[26] By then Mr Tso had left Public Trust. Mr O’Leary needed to
review the relevant files and consult with others at Public
Trust before he
could provide the information requested by the Court. It was appropriate for
Public Trust to consider its position
carefully before responding to the Court.
This is not an exceptional circumstance that could justify an award of costs
against Public
Trust.
[27] The fact that Public Trust is a substantial organisation and could
meet an award of costs is also not an exceptional circumstance
justifying such
an award being made against it. Public Trust has simply sought to facilitate
Ms Heaven’s access to justice.
It should not be discouraged from doing so
in future because of the risk of an adverse costs award being made against it
merely
because it has the means to pay. In any event, because of its right to
indemnity, any adverse costs award will fall on Ms Heaven.
In my view, it would
be wrong to visit a substantial costs award on Ms Heaven given her personal and
financial circumstances and
the underlying justice in her cause.
[28] For these reasons, Mr Hislop’s application for an award of
costs against
Public Trust pursuant to s 45 of the Legal Services Act is declined.
[29] If it had not been for s 45 of the Act, I would have
awarded costs to Mr Hislop for the appeal and in relation
to the application
for leave to appeal on a category 2, band B basis.
Result
[30] Mr Hislop’s application for an order for costs pursuant to s
45 of the Legal
Services Act 2011 against Public Trust is dismissed.
[31] Were it not for s 45, Mr Hislop would have been entitled to an order for costs against Public Trust for all steps taken in this Court calculated on a category 2, band B basis. If counsel are unable to agree on the calculation, the dispute can be
referred to me by way of memorandum for determination on the
papers.
M A Gilbert J
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