Hills v Public Trust

[2010] NZCA 401

IN THE COURT OF APPEAL OF NEW ZEALAND

CA208/2010
[2010] NZCA 401

BETWEENKATHLEEN WINIFRED HILLS

Appellant

ANDPUBLIC TRUST

First Respondent

ANDTHOMAS IAN GANNON

Second Respondent

ANDALEXANDRIA CATHERINE MEDCALF

Third Respondent

ANDDOUGLAS GWILLIAM HILLS

Fourth Respondent

ANDDONALD ROSS EAGLE

Third Party

Counsel:S A Grant for Appellant

H Fulton for First Respondent
S R G Judd for Second Respondent
C E A Townsend for Third and Fourth Respondents
T Chubb for Third Party

Judgment:2 September 2010 at 10 am

(On the papers)

JUDGMENT OF HAMMOND J

A            Application for review dismissed.

B            No order for costs on the review.

CThe time for paying or securing the security for costs as assessed by the Acting Registrar is extended until Friday, 29 October 2010.

____________________________________________________________________

REASONS

Introduction

[1]        This is an application for review of the Acting Registrar’s decision on an application to dispense with security for costs or reduce the amount of security in relation to an appeal to this Court, by the appellant, Kathleen Winifred Hills.  I personally have considered the application under r 7(2) of the Court of Appeal (Civil) Rules 2005 (the Rules) and s 61A(3) of the Judicature Act 1908.

The High Court proceeding

[2]        The appeal is against a judgment of Potter J.[1]

[1]      Hills v Public Trust HC Auckland CIV 2008-404-2217, 15 March 2010.

[3]        Ms Hills made an application under the Family Protection Act 1955 for further provision from her deceased mother’s estate.  That application was dismissed.

[4]        Ms Hills also advanced claims against the second respondent for wrongful conduct, breach of trust and/or undue influence; and against the second, third and fourth respondents, in conversion.  Those claims were all dismissed.

[5]        Ms Hills has appealed to this Court.  I will consider the basis of that appeal later in this judgment.

The Acting Registrar’s decision

[6]        Security for costs on the appeal was fixed at $14,220.  The appellant then requested a waiver or reduction of this security for costs under r 35(6)(b) and (c) of the Rules.

[7]        The Acting Registrar noted that the grounds of the application were that the appellant’s finances are unsubstantial and due to her impecuniosity she is unable to provide the Court with that level of security.  He also noted that it had been submitted that the interests of justice require a waiver or dispensation since, without a waiver or significant reduction, Ms Hills will be unable to pursue an appeal.

[8]        Following the usual practice, the Acting Registrar sought the views of the various respondents.  All opposed the appellant’s request.  The Acting Registrar said, “They consider the appeal to be without merit, though this is [a] matter I cannot consider in my decision”.

[9]        The Acting Registrar declined to waive or reduce the amount of security.  He noted:

However, the appellant has asked, in the event the application for waiver was refused, for an extension of time of four months to enable payment of the security.  In the circumstances, and as there was no adverse comment by the respondents, I am prepared to grant the extension requested and so, under r 35(6)(d), security is to be paid on or before 24 September 2010.

The grounds for a review

[10]       Ms Grant advanced three grounds for the review:

(a)Ms Hills’ impecuniosity was not considered in relation to reduction of security and not given adequate weight in relation to waiver;

(b)The Acting Registrar incorrectly applied “an independent exceptional circumstances test”.  He should have considered whether a waiver or reduction was in the interests of justice, which usually then qualifies as exceptional circumstances;

(c)On the interests of justice test, Ms Hills’ case does require a waiver or reduction as Ms Hills’ appeal has merit.  Her right of appeal will be rendered nugatory if a waiver or reduction is not granted.  The Acting Registrar did not take into account either of these factors.

The principles relating to wavier or reduction of security

[11]       The starting point is that r 35 of the Rules requires that on “every appeal” (emphasis added) the appellant “must, within the [specified] time” pay to the Registrar security for the respondent’s costs in the Court of Appeal.

[12]       The rule is therefore of general application to every civil appeal.  Furthermore, an appeal is permitted only on terms as to security – the decision at first instance being presumed correct until found otherwise.  This is consistent with the view taken by the European Court of Human Rights that the imposition of a requirement of security for the costs of an appeal is compatible with the art 6, European Convention on Human Rights right to a fair trial.[2]  However, r 35(6) enables the Registrar, “if satisfied that the circumstances warrant it”, to make an order increasing or reducing the amount; dispensing with security; or deferring the date by which security must be paid.  This recognises that, as is so often the case in the law, an absolute rule can work an injustice. 

[2]      Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442.

[13]       This statutory scheme is in turn reflected in the general principle that the eventual decision must reflect the circumstances of the particular case.  Relevant considerations may include, but are not necessarily limited to, the nature of the proceeding and the significance of matters being raised in it;[3] whether the appeal appears to have any real legs;[4] and whether an appellant’s appeal rights will be rendered nugatory if security is not waived. 

[3]      RIG v Chief Executive of the Ministry of Social Development [2010] NZCA 370 at [4].

[4]      See for example Clarke v Watts [2010] NZCA 221 at [10] and [16].

[14]       It is to be recalled that, in New Zealand, permission to appeal is not required in civil cases.  Real caution has therefore to be exercised in inhibiting a right of access to our Courts.  Even so, impecuniosity – to the extent it is a factor – does not ipso facto ground an application for waiver or reduction, though it is a relevant factor.[5]

[5]      Easton v Broadcasting Commission [2009] NZCA 252, (2009) 19 PRNZ 675.

[15]       Ultimately, the Court must balance the injustice to the appellant if prevented from pursuing an appeal because she is unable to provide security, against the injustice to the respondents if no security is ordered and the respondents are unable to recover costs.

This case

Impecuniosity

[16]       In the judgment of Potter J the appellant is recorded as acknowledging that she is “not in need” and that the claim under the Family Protection Act was brought under the “support” head of s 4.[6]  And the Judge said, “The evidence is that Kathleen [the appellant], Sandra and Douglas [the three sibling beneficiaries in the estate] were all reasonably comfortably placed financially at the time of Nora Hills’ death”.[7]  While there was detailed evidence as to the financial situation of the three siblings at the date of death the High Court Judge did not find it necessary to describe their circumstances in anything other than general terms.

[6] At [3].

[7] At [33].

[17]       In her letter of application for a review dated 10 May 2010, Ms Grant noted:

Ms Hills is a trustee of a number of property owning trusts; however, she is a discretionary beneficiary of only three of these trusts and does not own any property herself.  Her annual income is approximately $34,840.00 from an ACC benefit, in addition to modest compensation she receives from Te Kotuku ki te Rangi Inc for attending Board meetings and finance meetings, which totals approximately $2,500 per year.

[18]       The prospective circumstances should however also be taken into account.  Ms Hills’ mother’s estate – which is the subject of the proceeding – is approximately $600,000 (rounded off).  Ms Hills is entitled to a one-third interest in this estate.  There was no challenge to this prospective share, which will yield her up to $200,000.

[19]       Ms Grant notes that the unsuccessful claim in the High Court resulted “in a significant award of costs against [her client].  The costs will consume the vast majority of the appellant’s share of the estate and may in fact exceed her entitlement”.  In short, a (by today’s standards) modest interest in a modest estate has seemingly been substantially eroded in the course of an unsuccessful Family Protection Act claim, as too often happens in such proceedings.  Counsel for the respondents have also noted the erosion to their clients’ interests by this unfortunate litigation.

The strength of the appeal

[20]       The appellant’s mother provided that her estate should be divided equally between her three children.  The appellant’s principal concern is that, in a way which need not be fully detailed here, the appellant’s mother made provision for each of the other two siblings (through a trust) of $100,000 each during her lifetime.  The appellant also received inter vivos assistance, though much below that order.  At heart this is a case in which the appellant obviously considers that she has not been treated “equally”, when she considers she should have been.

[21]       In a careful judgment of some 202 paragraphs Potter J found that Ms Hills had “failed to establish that the deceased had breached a moral duty to her”.  The Judge found that a memorandum of wishes, which was one of the factors which led to the inter vivos distributions from the trust, should not be disregarded.  An attempt to have that memorandum set aside as a forgery was not accepted on the facts.  And the Judge (rightly) held that the mere fact of disparity in the treatment of the three children is not enough, by itself, to establish a claim under the Family Protection Act.

[22]       The other causes of action were all, in one way or another, an attempt to pursue the trustees for doing what they perceived to have been required of them, and also addressed various accounting issues.  The Judge found that there was no evidence of misconduct by the trustees (although the Judge did make some observations critical of Mr Gannon in accounting matters).  However the Judge did ultimately make an order substituting the Public Trustee as trustee because what had happened “may prejudice the efficient and effective ongoing administration, management and winding up of the NHF Trust”.[8]

[8] At [181].

[23]       A claim for conversion of goods was dismissed, on the facts.

[24]       Turning to the specific grounds for appeal – which occupy some ten pages in the Notice of Appeal – the appeal is essentially against the findings of fact of the High Court Judge.  Ms Hills is entitled to challenge findings of fact, but of course on appeal the burden is on her to demonstrate that the trial Judge was wrong.  I have read Her Honour’s judgment and the full statement of the grounds of appeal.  I am cognisant of the difficulties of trying to estimate the chances of success in advance of full and proper argument.  But it is nevertheless difficult to see this appeal as having anything like a respectable chance of success.  It has to be said that the appeal is very much of the variety of endeavouring to persuade a panel of Judges to take a different view on many factual issues from that reached by the trial court Judge.  That in a subject-area which involves as much if not more the exercise of sound judgment than the correct application of distinct rules of law.

The position of the other parties

[25]       It is apparent from the representations by other counsel that the burden of this litigation has also fallen heavily on the other parties Ms Hills has brought into court.  Ms Townsend notes that her client is in remission with cancer, and is dependent on her husband’s income.  Mr Judd has noted that the second respondent is in his 70s and is retired.  He has had to defend his equal share of the estate out of his retirement savings.  Mr Judd notes that the difference between the award of costs and his actual costs is about $40,000.  And furthermore, his award of costs has not been paid.  The fourth respondent is said to be “in financially strapped circumstances”.  He has had to obtain a mortgage against his home to fund his defence of this claim in the High Court, yet there has been no distribution from the estate to date. 

Disposition

[26]       I am not persuaded that I should intervene in the Acting Registrar’s decision to require what amounts to “usual” security, or in the actual amount ordered. 

[27]       On what is in front of me, Ms Hills is not strictly impecunious (at least in the sense that she could not fund the security at all).  There are alternatives open to her.  To take only one example, she could request the Public Trust to hold aside out of her share in the estate a sufficient sum to meet the security.  Presumably that could be done in a non-revocable way so as to secure the position of the respondents to that extent.  Further, it has not been shown that she could not borrow money (as other respondents have had to do) to defend their position.

[28]       On the merits, for the reasons I have already indicated, the basis of the appeal appears to me to be weak.

[29]       The application for review is therefore dismissed.  There will be no order for costs on the review.  There has been a delay between the application for a review and the delivery of this judgment.  The file was only recently passed to me.  Under r 35(6)(d) I extend the time for payment of the security until Friday, 29 October 2010.

Solicitors:

Taylor Grant Tesiram, Auckland for Appellant