Woolf v Kaye [2016] NZHC 1628 (19 July 2016)

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BETWEEN	VIRGINIA WOOLF Plaintiff
AND	VIRGINIA WOOLF AS THE EXECUTOR OF THE ESTATE OF NOEL BERNARD WOOLF Defendant
AND	ALWYN BERNARD KAYE First Defendant
AND	MARK WILLIAM SYDNEY CLARK Second Defendant

Hearing:	26 May 2016
Appearances:	G A Keene for the Plaintiff A Gilchrist for the First Defendant No appearance for the Second Defendant
_Judgment:	_{19 July 2016}

This judgment was delivered by me on 19 July 2016 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

[1] This proceeding concerns an action by the plaintiff, Ms Woolf, in which she seeks enforcement of certain obligations that she says exist in respect of a property owned by the first defendant, Mr Kaye. Mr Kaye denies that any such obligation ever arose, and further says that if it had, the obligation would since have become unenforceable due to the passage of time. He pleads defences of limitation and laches.

[2] Mr Kaye applies for defendant’s summary judgment, or in the alternative to strike out the statement of claim and for security for costs. He requires leave to bring the summary judgment application out of time.

[3] It is common ground that the outcome of the strike-out application should mirror the outcome of the summary judgment application.

[4] The proceeding relates to a home owned by the parties’ parents, Violet and Noel Woolf. The home was purchased in 1981 with a deposit and two mortgages. Virginia Woolf says that the deposit was supplied by Violet and Noel and that she, as well as Mr Kaye, made contributions to the purchase of the home such that she has a beneficial interest in it. She made those contributions because all four family members agreed that the purchase price would be split between Mr Kaye and the parents, and Ms Woolf and Mr Kaye would have responsibility for servicing the mortgages. Ms Woolf and Mr Kaye would live in and maintain the property, and the property would represent an investment for the benefit of all four family members. Ms Woolf says she did in fact maintain the property, made payments towards the mortgages and cleared one of them herself, and had the primary responsibility for arranging various property management matters including finding boarders for the property.

[5] Mr Kaye, on the other hand, says that his parents contributed, but that money was intended as a gift, not as securing an interest in the property. He says he was the only one who contributed to the mortgages, and there was no agreement that his parents or Ms Woolf should have a share in the property. Ms Woolf lived in the

house and paid rent, but she was a mere tenant, though she attempted from time to time to have Mr Kaye gift her a share in the property.

[7] Violet passed away in 2006, and Noel in 2014. Following Violet’s death, Ms Woolf lodged a caveat over the property. Following Noel’s death, Ms Woolf applied for an order that that caveat not lapse. An interim order that the caveat not lapse was made by consent on 31 March 2015, pending this application.

(a) in breach of contract for failing to have all four family members listed on the title of the house (in breach of the terms of an alleged part- performed oral contract); and

(b) in breach of trust, saying that there was a common intention among all the parties that each of the two parents and the two children should share in the property and be included on the title, and financial contributions were made according to that intention. The breach is Mr Kaye’s initial and continuing failure to add the other alleged co- owners’ names to the title.

[9] Ms Woolf seeks specific performance of the alleged oral contract, orders fixing the shares of the property attributable to each co-owner, and orders for sale. In respect of the breach of trust claim, she submits that principles both of resulting and constructive trusts apply, though the pleading does not particularise those claims into two different causes of action. For the purposes of the present application, I do not consider that the precise type of trust makes any difference.

[10] Mr Kaye says that there was never any intention to create a contract, nor any interest which could support a trust. He accepts that there may be evidential

difficulties in proving this at the summary judgment stage, but says that is of no importance as any relevant breach of contract or of trust could only have happened in

1982 when he first registered the property his name. Accordingly, s 4 of the Limitation Act 1950 applies to block the claim in contract, and the claim in equity is barred either by the Limitation Act directly, by analogy to the contract claim, or by laches.¹

[11] In the circumstances, I consider that Mr Kaye has acted reasonably in seeking summary judgment, even though (as I will outline) he has failed to make his case for it. In any case, much the same issues are raised on the strike out application, for which leave is not required. In the circumstances, in my view, it is not contrary to the interests of justice that I should grant leave to bring the summary judgment application.

12.2 Judgment when there is no defence or when no cause of action can succeed

(2)The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.

[13] The principles applicable to a summary judgment application are well established. They were summarised in Westpac Banking Corporation v M M Kembla New Zealand Ltd:²

[61] The defendant has the onus of proving, on the balance of probabilities, that the plaintiff cannot succeed. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is a complete defence to the plaintiff's claim. Examples, cited in McGechan on Procedure at HR 136,09A, are where the wrong party has proceeded or where the claim is clearly met by qualified privilege.

[62] Application for summary judgment will be inappropriate where there are disputed issues of material fact, or where material facts need to be ascertained by the Court, and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated procedure and affidavit evidence will sufficiently expose the facts and the legal issues.

[63] Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary procedure the sufficiency of the proof of the plaintiff's claim ...

[64] It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then, it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Courts must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.

[14] Where a defendant brings an application for summary judgment, the test is a relatively high one: ³

Summary judgment should not be given for the defendant unless he shows on the balance of probabilities that none of the plaintiff's claims can succeed. That is an exacting test, and rightly so since it is a serious thing to stop a plaintiff bringing his claim to trial unless is it quite clearly hopeless.

(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading

[16] The general principles applying to a strike out application such as this are well established:⁴

⁴Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33]; Attorney-General v

(b) The cause of action must be clearly untenable. The court must be certain that it cannot succeed.

(c) The jurisdiction is to be exercised sparingly and only in clear cases, reflecting the Court's reluctance to terminate a claim short of trial.

(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.

(e) The Court should be particularly slow to strike out a claim in any developing area of the law.

[17] “Pleaded facts” at (a) above refers to the plaintiff’s pleaded facts. However, there are occasional cases where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter will not be allowed to proceed.⁵A claim may be struck out wholly if it discloses no reasonable cause of action, or partially if the result will be a genuine reduction in the scope of the case.⁶

[18] As the requirements are relatively similar, in that they turn on the interpretation of the Limitation Act and the doctrine of laches, and both will be defeated by a conflict in evidence which could undermine those defences, I propose to deal with the summary judgment and strike out applications simultaneously.

[19] There is a factual dispute here as to the parties’ conduct around the time of the purchase, and as to their understanding of their status in the subsequent years. Ms Woolf has provided substantial affidavit evidence to support her version of events, including a statutory declaration sworn by her father, Noel Woolf, to the effect that there was an arrangement between the parties to buy the property; Ms Woolf did not

_{contribute a specific amount of cash to the purchase price, but did have
a shared}

⁶Attorney-General v Prince and Gardner, above n 4; Couch v Attorney-General, above n 4;

responsibility with Mr Kaye to pay off the mortgages; that the parents and Ms Woolf were surprised not to find their names on the title; and that they repeatedly asked Mr Kaye to add their names to the title.

[20] Ms Woolf also filed affidavits sworn by her mother and by Mr Kaye himself, both of which supported the idea that there was an intention that the property should be divided up among the four of them. There was also evidence that there were ongoing negotiations as to how the property should be divided; and that Noel’s will showed an intention for the property to go to the three remaining members of his family in the event of his death. Mr Kaye, for his part, provided evidence to the effect that Ms Woolf knew she was not on the title, and at least at times accepted that she was a tenant, not an owner.

[21] In my view, the evidence that Ms Woolf provided was strong enough to cast serious doubt on Mr Kaye’s version of events. Certainly, bearing in mind that on an application for defendant’s summary judgment she need only produce evidence of a serious dispute as to material facts, Ms Woolf has provided enough evidence to suggest that there was an agreement to the effect that she should have a share in the property. Though the terms of a contract might be difficult to establish absent contemporaneous written evidence of the terms, I consider that there is enough material for the cause of action to survive. Certainly the resulting trust cause of action is arguable. Mr Kaye has not met the standard for summary judgment on the basis of his argument that there was no agreement. Mr Kaye’s concession to that effect is properly made.

[22] Mr Kaye’s primary defences are based on limitation and laches respectively. As a result, he says, judgment can be granted in his favour despite the underlying factual dispute, because that dispute has no bearing on the defences. He argues for two separate limitation defences. In response to the action for specific performance based on the alleged contract, he says that s 4(9) of the Limitation Act 1950 applies by analogy. Ms Woolf concedes that that section would block an action for breach of contract damages, but argues that a claim for specific performance cannot be

analogised to a simple breach of contract claim. In respect of the equitable claim, Mr Kaye argues that either s 7 (which governs actions for the recovery of land) or s 21 (which governs actions in respect of trust property) operates to defeat Ms Woolf’s claim.

[23] The parties are agreed that the cause of action in breach of contract accrued more than six years before this claim was brought. Section 4 of the Limitation Act

1950 bars claims in contract brought more than six years after the date on which the cause of action accrued. However, Ms Woolf contends that s 4(9) provides an exception for claims for specific performance or other equitable remedies.

[24] Mr Kaye submits that the six-year limitation must apply so as not to undermine the general limitation, because specific performance is a remedy and not a cause of action. He relies on a recent case heard in this Court by Osborne AJ, McLachlan v Meyers.⁷Ms Woolf, for her part, submits that she is entitled to the relief preserved by subsection (9), particularly since she has been in possession of the property the whole time. As such, the submission runs, she has not been sleeping on her rights. Ms Woolf’s submission relies on the UK case of P&O Nedlloyd v Arab Metals and the more recent New Zealand case of Zhang v Zhai.⁸

[25] Zhang v Zhai concerned an agreement for sale and purchase of a property. The plaintiff, Mr Zhang, had entered into an agreement for sale and purchase with the defendant, and had paid a deposit. There was a long delay during which the defendants continued to live in the property, until Mr Zhang served a settlement notice on them, but they did not comply. Mr Zhang sought specific performance of the original contract, i.e. a transfer of legal title from the defendants to Mr Zhang. It was accepted that Mr Zhang had equitable title to the property, and that if the exception in s 4(9) did not apply, the limitation period for claims in breach of contract would bar the claim.

[26] Toogood J approached the claim as a question whether the action for specific performance was barred by analogy with s 4, such that the s 4(9) exception did not

⁸P&O Nedlloyd BV v Arab Metals Co [2006] EWCA Civ 1717; Zhang v Zhai [2014] NZHC

apply. He noted that in McLachlan v Meyers, the Judge had not been referred to the powerful authority in Nedlloyd. He explained the position in New Zealand, following Nedlloyd, as follows:⁹

... it is doubtful that limitation by analogy is available in the context of specific performance. In P & O Nedlloyd BV v Arab Metals Co, the English Court of Appeal held, in the context of a provision virtually identical to s 4(9), that limitation by analogy does not apply to specific performance. This is because there is no remedy at common law directly equivalent to specific performance and because specific performance does not require there to be an existing breach of contract. Delivering a judgment in which the other members of the Court simply agreed, Moore-Bick LJ noted at [47], relying on Hasham v Zenab, that while most claims for specific performance are made in response to an existing breach of contract, an accrued right of action for breach of contract is not a necessary precondition to obtaining relief of that kind. He held it was wrong in principle, therefore, to treat specific performance as merely an equitable remedy for an existing breach of contract. Moreover, since a claim for specific performance may be made as soon as the contract has been entered into, it is very arguable that, if the limitation period were to be applied by analogy, it would be necessary to regard the cause of action as accruing at that moment, with the unfortunate result that the claim could become time-barred before any need for relief had arisen. These considerations lend further support to the conclusion that the application of the limitation period by analogy is not appropriate in relation to claims for specific performance.

I prefer to adopt the considered conclusions of the English Court of Appeal and hold that the plaintiff's claim for specific performance cannot be barred by limitation by analogy. If I am wrong about that, and the matter falls to be decided on the basis of judicial discretion, the merits can be considered in the context of the defendants' reliance on the equitable defence of laches, to which I turn next.

[27] Bearing in mind the position in Nedlloyd so helpfully summarised by Toogood J, and the factual similarities (on Ms Woolf’s pleaded facts) between the present case and that in Zhang v Zhai, I consider that it is at least reasonably arguable that the s 4(9) exception preserves the claim for specific performance in the context of the breach of contract.

[28] Having made this finding, it is not necessary for me to make any conclusions as to the rest of the claim. However, in case I am wrong, I do so anyway.

[29] It is not necessary to delve too deeply on the present application into the exact nature of the trust that may have been created in respect of the property. As to a resulting trust, the classic explanation is the following, by Lord Browne-Wilkinson:¹⁰

(A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption can be easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer ...

(B)Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest.

[30] Ms Woolf’s contributions to the mortgage and upkeep of the property might, if that is indeed what they were, have given her a share in the property proportionate to her contribution, according to the first category of resulting trust. (The parents’ contributions to the deposit, unless they were gifts, would similarly have given the parents a proportionate share in the property).

An express trust is one which is deliberately established and which the trustee deliberately accepts. An institutional constructive trust is one which arises by operation of the principles of equity and whose existence the Court simply recognises in a declaratory way. A remedial constructive trust is one which is imposed by the Court as a remedy in circumstances where, before the order of the Court, no trust of any kind existed.

The difference between the two types of constructive trust, institutional and remedial, is that an institutional constructive trust arises upon the happening of the events which bring it into being. Its existence is not dependent on any Order of the Court. Such order recognises that it came into being at the earlier time and provides for its implementation in whatever way is appropriate. A remedial constructive trust depends for its very existence on the Order of the Court; such order being creative rather than simply confirmatory. This description should not be regarded as

¹⁰Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12; [1996] AC 669, [1996] 2 All ER 961 (HL) at 708. As an example of such a purchase money resulting trust relating to land in New Zealand, see Crampton-Smith v Crampton-Smith [2011] NZCA 308.

¹¹Fortex Group Ltd (in rec & liq) v Macintosh [1998] 3 NZLR 171 (CA) at 172-173.

definitive or as precluding further developments in this area of the law when greater refinement may be necessary.

[32] The authors of Equity and Trusts in New Zealand specifically recognise the situation where “a person makes an unconscientious assertion of ownership in respect of property to which another has contributed” as being an orthodox example of an institutional constructive trust.¹²On Ms Woolf’s version of the facts, I consider that it is at least reasonably arguable that, even if no resulting trust arose immediately upon purchase of the property, a constructive trust in substantially the

same terms arose at a later point, once Ms Woolf was making payments towards the mortgage and maintenance of the property. I consider also that it is at least arguable that one of the elements of that trust was that Mr Kaye would be obliged either to convey the property into the names of his co-owners, or at least that he would not refuse to do so with the intention of keeping the proceeds of any sale of the property to himself.

[33] As to the breach of trust claim, in my view, s 7 has no application to the present application. Section 7 places a limitation of 12 years upon actions for the recovery of land. Section 8, which is closely related, provides that a right of action in the case of a present interest in land accrues when the person bringing the action has been dispossessed of the land, or has discontinued his or her dispossession. Section

9, which deals with future interests in land, is likewise predicated on possession rather than legal ownership, in that it deals with failures to take possession following the accrual of a reversion or remainder interest. The importance of possession in respect of the Limitation Act is demonstrated by the doctrine of adverse possession; in cases where a person with no legal right to possession occupies a property, and the landowner takes no action to recover possession of the land, the adverse possessor eventually acquires full ownership rights. Considering that Ms Woolf has been in

_{continuous possession of the property, I do not consider that her cause
of action can}

¹²Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, 2009, Thomson Reuters, Wellington) at 13.2.1. Similar resulting and constructive trusts are, of course, commonly found to exist in relationship property proceedings in similar circumstances.

be barred by s 7. In fact, as counsel for the plaintiff points out, s 7 applies more closely to Mr Kaye than to Ms Woolf.

(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action—

(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

(2) Subject as aforesaid, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of 6 years from the date on which the right of action accrued:

Provided that the right of action shall not be deemed to have accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession.

[35] For the same reason that s 7 is not relevant to the constructive trust claim, I consider that s 21(1)(a), rather than s 21(1)(b), is the more appropriate provision to consider in this assessment. Mr Kaye is not in possession of the property; Ms Woolf is.¹³As a result, the discussion in Paki v Attorney-General upon which counsel for Mr Kaye relies is not determinative; that discussion focuses entirely on s 21(1)(b), and does not mention s 21(1)(a).¹⁴

[36] As to the application of s 21(1)(a), I accept for the purposes of this summary judgment application – as I must, considering the conflict between Ms Woolf’s and

_{Mr Kaye’s evidence – that it was arguable that there was an
intention and course of}

¹³Counsel for Ms Woolf has submitted that Mr Kaye has attempted to convert the property to his own use by refusing to register Ms Woolf’s share in it. In the context of defendant’s summary judgment, I need not delve into that claim, because the breach of trust argument, if it need be resolved in this application in case I am wrong with respect to the specific performance argument, can be addressed in terms of s 21(a).

¹⁴Paki v Attorney-General (No 2) [2014] NZSC 118, [2015] 1 NZLR 67 at [297] per William

conduct which created the result that Mr Kaye held the property on trust for himself and all three of the other alleged co-owners. It was arguable, too, that the circumstances in which this alleged trust was created gave rise to an obligation that the land should be registered in the names of all four co-owners.

[37] Whether this arose (according to principles of resulting trust) when the parents paid the deposit, or when Ms Woolf began making mortgage payments, makes little difference. Having accepted that the existence of a trust was arguable, and that it was arguable that there was an obligation for Mr Kaye to register the co- owners on the title at some point, I must conclude also that in failing to do so and maintaining that Ms Woolf had no rights to the property, it is arguable that he committed a breach of trust. Regardless of the interpretation taken, the parties are agreed that any alleged breach must have occurred more than six years before Ms Woolf’s application was filed, and is therefore outside the limitation period in s 21(2) unless it falls into the s 21(1)(a) exception.

[38] The sole remaining question, then, is whether it is arguable that this alleged breach was fraudulent. Equitable “fraud” does not necessarily involve any moral turpitude, but means, essentially, unconscionable conduct; something other than an innocent breach of trust.¹⁵On the facts as pleaded by Ms Woolf – that she contributed to the purchase price of the property, repeatedly asked to be added to the title, and Mr Kaye refused to do so – it must be arguable that in refusing to convey

her share of the property to her, Mr Kaye had notice that she might have an equitable interest in the property. In all the circumstances, I consider that it is arguable that his refusal to recognise that interest, which was both implicit in his failure to add her to the title and his explicit statements to her that he would not do so, might have been fraudulent.

[39] I note that I am not reaching any conclusion on the matter; the defence has led evidence which it says clearly shows that there was no fraud, in that Mr Kaye was always clear in his expectation that the beneficial, as well as the legal, interest in the property was his, and that Ms Woolf accepted that. I am not in a position to make

_{any pronouncements on the state of either Ms Woolf’s or Mr
Kaye’s consciences. On}

this application, however, Ms Woolf need only establish that it is reasonably arguable that the exception applies. Given the factual uncertainty at play, she has done so. That being so, s 21(1)(a) provides another ground on which Mr Kaye’s applications must be rejected.

[40] It is possible that, in the right circumstances, Mr Kaye may be able to establish equitable defence of laches. That defence is preserved by s 31 of the Limitation Act. However at this stage of proceedings, in my view, it is not possible to say definitively whether the defence of laches would apply to Ms Woolf’s claim claim. As with many equitable matters, whether or not a defence of laches is available is a highly fact-specific question. All the relevant background must be

The essence of the defence of laches is that where a Plaintiff has a right in equity the Defendant demonstrates that his plea of laches outweighs the Plaintiff's right. Questions of acquiescence, alteration of position, capacity and the like all have to be weighed.

[41] Further relevant factors include the nature of the remedy sought, the position of the parties, and the effect of the delay in terms of prejudice, evidential difficulties, and the seriousness of the delay terms both of length and of how far it departs from the normal timeframes involved with a given type of action. This makes it unusual for defendant’s summary judgment to be granted based on laches in all but the clearest of cases.¹⁷

[42] Mr Kaye has argued that the affidavit evidence is sufficient to establish the relevant competing equities, particularly the non-availability of evidence, the prejudice to him, and the lack of action on Ms Woolf’s part. I disagree. Cases where laches may be used to rule out a claim prior to trial have been described as “rare indeed”; in one recent case, Ellis J noted that she had not been advised of a single

_{case where a strike out application based on laches had been
successful.}¹⁸_Though

¹⁶_{Matai Industries Ltd v Jensen [1988] NZHC 205; [1989] 1 NZLR 525
(HC) at 545-546.}

the situation regarding defendant’s summary judgment might be somewhat less extreme, particularly if the facts are not in dispute, I consider that where there is significant factual uncertainty, the same logic is likely to apply, so that an argument for summary judgment will also be untenable.

[43] As I have already noted, this is a case involving significant factual uncertainty. There are conflicts in the evidence, and as such it is not possible to positively establish that Mr Kaye has come to the Court with clean hands. Further, Ms Woolf’s being in possession of the house may have a significant effect on the competing equities. The present case does not belong to the small group where the equities are sufficiently clear that a laches argument can be dealt with on summary judgment.

[44] Mr Kaye attempts to get around the difficulties with a defence of laches per se by presenting the laches argument as a statutory bar by analogy. He says that the equitable claim is, in essence, the same as the simple breach of contract claim, and is barred for that reason. A statutory bar by analogy is different from the general equitable defence of laches; where there is a statutory scheme, it should not be undermined by allowing plaintiffs to use creative pleadings to sidestep the intended

.... parallels the statute barred claim so closely that it would be inequitable to allow the statutory bar to be outflanked by the [equitable] claim.

[45] As I have discussed, I do not consider that the claim for specific performance is statute-barred. Nor do I consider that the claim in breach of trust parallels a statute-barred simple breach of contract claim to the required extent. Indeed, in light of Nedlloyd and Zhang it appears that such a close parallel cannot even be drawn between the claim for breach of contract and the closely linked specific performance remedy; and the remedies sought in respect of the breach of trust claim closely

[46] In any case, however, I consider the two causes of action are conceptually distinct. One, the contract claim, is based on an initial agreement to do a specific thing, i.e. to put Ms Woolf’s name on the title. Acts of part performance are relied upon to shore up the legal force of that contract, but the alleged breach must have been complete long ago, well outside the six-year limitation period. Subsequent conduct does not extend the limitation period in a simple breach of contract action.

[47] The other cause of action is based on a continuing course of conduct and its effect on the parties’ consciences. Ms Woolf’s payments of mortgage monies over the years, and improvements she made to the property, and her occupation of the property, give her a moral claim to the property. That arises whether or not there was a specific written or oral agreement, and the legal status (i.e. registration) of the land

has little effect on it, at least as regards Mr Kaye.²⁰Further, equitable estates in land

are concerned with the factual situation, not the legal situation. As a result, Ms Woolf’s continuing possession of the property is crucial to the assessment of the competing equities. None of that can be said of a simple breach of contract claim, and the breach of trust claim cannot be excluded on the ground of a statutory bar by analogy.

(1) Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—

(b) that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff's proceeding.

(2) A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.

²⁰An innocent third party which had registered an interest in the land before Ms Woolf ’s caveat was lodged might have established a superior claim, but that factual scenario is quite distinct from the present, and given that a caveat is now in place, unlikely to arise.

[49] Evidence of “inability to pay costs” can be inferred from credible (i.e. believable) evidence of surrounding circumstances from which it may reasonably be inferred that the party will be unable to pay the costs. It is not necessary to prove to the balance of probabilities that the party will actually be unable to pay costs.²¹

[50] The principles relevant to the decision whether to exercise the discretion to make an order in a case such as this, once the threshold requirements are met, are well established:²²

The Court is to exercise its discretion having regard to the particular circumstances of the case.

(b) The interests of both the plaintiff and the defendant must be considered. The Court should not allow the rule to be used oppressively to deny plaintiffs with limited means the ability to bring their case before the Court. On the other hand, an impecunious plaintiff must not be allowed to use the inability to pay costs to act oppressively or to place unfair pressure on the defendant. A balancing of a number of factors is required.

(c) The general principles for the exercise of the discretion show that the Court’s discretion is not fettered by the automatic application of “principles”. The amount of the security ordered should not be illusory or oppressive, not too little nor too much.²³

(d) The Court may take into account, in the exercise of its discretion, whether the action of the plaintiff has reasonable prospects of success. The courts are generally reluctant to allow an application for security where that would have the effect of denying access to justice.²⁴

²¹Concorde Enterprises Limited v Anthony Motors (Hutt) Ltd (No 2) [1977] 1 NZLR 516 (SC) at

²²See McLachlan v MEL Network Ltd [2002] NZCA 215; (2002) 16 PRNZ 747 (CA); Highgate on Broadway Ltd v

[51] Mr Kaye initially said that he had reason to believe that Ms Woolf might not be able to pay costs because Noel Woolf’s estate had been distributed so that costs could not be met out of the estate; she had “pleaded poverty” on various occasions (referring to a dispute with her solicitors in 2001); and that she had had various other expenses in the meantime and had not provided detail as to the extent of her obligations.

[52] Ms Woolf says that the threshold requirement for an order for security for costs is not met, because she is not impecunious. She points to the distributions she has received from her father’s and mother’s estate respectively, in excess of

$200,000, and says the bulk of that remains in her bank account. She also argues that Mr Kaye is unlikely to be entirely successful at trial, saying that her main argument is strong, but also that over the years she has spent money on improvements to the property which could be awarded to her in a counterclaim. In that case, she would be able to pay costs out of funds awarded in the proceeding. She has also provided an undertaking dated 26 May 2016 to the effect that in her capacity as executor, she has access to the assets remaining in Noel Woolf’s estate, $7,000; that she accepts personal responsibility for the remaining costs, if any; and that she is sure she will have the financial ability to meet those costs.

[53] In response to my inquiry, counsel for Mr Kaye recognised the difficulty he would face in establishing Ms Woolf’s impecuniosity. Mr Kaye has not provided sufficient evidence that Ms Woolf is impecunious. An incident 15 years ago must be of limited, if any, value in assessing the extent of Ms Woolf’s means in the present day. Mr Kaye’s evidence as to the extent of Ms Woolf’s obligations is entirely speculative. Given Ms Woolf’s evidence as to the distribution she has received from her father’s estate, and her undertaking, I cannot accept the submission that she is impecunious. Therefore, the threshold requirement for an order for security for costs is not met and that application must be declined.

[56] I make no formal ruling at this stage on the security for costs application, as there was insufficient time at the hearing to hear detailed argument, and I am uncertain as to whether counsel wish to be heard further. It is sufficient to note at this point that it is clear that Ms Woolf has substantial funds available, and in those circumstances the question has to be asked whether the defendant wishes to pursue the application. Whether or not that is the position can be confirmed at the case management conference or Chambers mention which the Registrar is requested to allocate for timetable purposes.

[57] I reserve costs on the summary judgment application in accordance with the decision of the Court of Appeal in NZI Bank Ltd v Philpott [1990] 2 NZLR 403. As the outcome of the strike-out application follows the summary judgment application, I reserve costs on that application as well.

[58] Memoranda should be filed at least two days prior to the next conference or

High Court of New Zealand Decisions

Woolf v Kaye [2016] NZHC 1628 (19 July 2016)