Lee v Lee
[2017] NZHC 712
•11 April 2017
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
CIV-2010-463-000430 [2017] NZHC 712
BETWEEN ROBERT LEE
First Plaintiff
HELEN HEARD Second Plaintiff
AND
GREGORY LEE First Defendant
GREGORY LEE and JANE LEE as TRUSTEES OF THE LEEROY FAMILY TRUST
Second Defendant
Hearing: 3 April 2017 Appearances:
R Lee (Self-represented First Plaintiff) in Person
No Appearance of, or for the Second Plaintiff
D A T Chambers QC and A H H Choi for the Defendants
F C K Wood for R L PryceJudgment:
11 April 2017
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 11 April 2017 at 4.45 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Counsel: D A T Chambers QC, Auckland Solicitors: Carson Fox Legal, Auckland Copies To: R Lee, Rotorua
H Heard, Australia
LEE v LEE [2017] NZHC 712 [11 April 2017]
Introduction
[1] Mr Robert Lee and Ms Heard are siblings. They have been engaged in a long running dispute with their brother and first defendant, Mr Gregory Lee, in relation to the estate of their parents.
[2] The proceeding was set down for a five day fixture commencing 3 April
2017. The trial did not go ahead. I made an order maintaining a stay of the proceeding. I also made an order that unless the first and second plaintiffs file all remaining affidavits (being the two substantive affidavits on behalf of Mr Robert Lee and any reply affidavits) within five working days the proceeding would be struck out (the unless order).
[3] This judgment sets out my reasons for those orders. It also records my decision on an application for costs by Mr Pryce (a proposed witness in the proceeding), and an oral application by the defendants to vary the security for costs order.
A short procedural history
[4] Mr Robert Lee commenced his claim in 2010 with a pre-trial discovery application. A statement of claim was filed on 30 September 2011.
[5] An application by Mr Gregory Lee to strike out the proceeding on Limitation Act 1950 grounds was granted by Christiansen AJ on 6 December 2012,1 and subsequently upheld by Collins J.2 However, it was reversed on appeal and on
4 November 2015 the proceeding was reinstated.3
[6] On 1 March 2016, Asher J made various timetabling orders including orders that all evidence in chief would be by way of affidavit and all existing affidavits would form part of the evidence. Orders were made requiring the plaintiffs to file
any further evidence by 27 May 2016 and fixing 24 June 2016 as a close of
1 Lee v Lee [2012] NZHC 3283.
2 Lee v Lee [2013] NZHC 1069; Lee v Lee [2013] NZHC 1820.
3 Lee v Lee [2014] NZCA 403; Lee v Lee [2015] NZCA 514.
pleadings date. The proceeding was allocated a five day fixture which the parties agreed could be brought on as a back-up fixture.
[7] On 23 May 2016, Associate Judge Christiansen made orders on a raft of interlocutory applications made by both parties.4 One such order was to require the plaintiffs to provide security for costs in the sum of $150,000 by providing a second registered mortgage over the property at 101 Springfield Road, Rotorua (Property). The registered proprietors of that Property were Mr Robert Lee and Ms Heard. The Property is held in a family trust, although the fact that Mr Robert Lee is not the sole
trustee did not appear to be before the Associate Judge at that time.
[8] Mr Robert Lee applied for a review of those orders. That application was heard in December 2016 before Davison J together with other pre-trial applications made by both parties. Those applications included the defendants’ application for unless orders in relation to the plaintiffs’ non-compliance with discovery obligations, and the plaintiffs’ application for the fixture on 3 April 2017 to be vacated.
[9] The application to vacate the 3 April 2017 fixture was repeated in a memorandum filed by Mr Robert Lee on 15 February 2017. Davison J declined to vacate the 3 April 2017 fixture. He directed the plaintiffs to file any further affidavits on or before 14 March 2017, with the defendants to file any further affidavits on or before 28 March 2017. At [18] and [19] of his minute, the Judge said:
[18] I direct that the timetable set out above shall be strictly adhered to, and further order that no party shall file documents other than in compliance with the terms of the timetable, without first obtaining an order of the Court granting leave to do so.
[19] I note that this proceeding has been underway now for a considerable time and that since mid 2016, a fixture in the first half of 2017 has been anticipated. Whilst the first plaintiff may have been preoccupied with other aspects of the case and has had difficulty in dealing with the volume of material he wishes to review, and preparing himself for the hearing, it is his responsibility as plaintiff to do so. The Court recognises that a litigant in person may find the process of trial preparation more difficult than parties who have legal representation. However, the Court is also concerned to ensure that the interests of justice are served for all parties which of course includes the defendants, by ensuring that proceedings are
4 Lee v Lee [2016] NZHC 1073.
conducted as efficiently and expeditiously as possible. In my view the point has clearly been reached where this matter should be determined at the scheduled April hearing without further delays, and accordingly I have confirmed the fixture and made the necessary timetable directions.
[10] On 15 March 2017, Mr Robert Lee filed a memorandum indicating that he had filed most of the substantive affidavits in compliance with the timetabling orders, but there were two affidavits outstanding which could not be filed by the stated deadline. The deponent of both those affidavits was Mr Robert Lee himself. He indicated that he would file both affidavits by 17 March 2017. He did not do so. As at 3 April 2017, the affidavits were still not filed.
[11] The judgment on the review of Associate Judge Christiansen’s orders was issued on 14 March 2017.5 In relation to security for costs, Davison J determined that on the basis of the available equity in the Property, and the fact that the trial was now split between liability and quantum, security in the sum of $75,000 was appropriate to cover the liability phase of the proceeding.
[12] His Honour directed Mr Robert Lee to provide that security by way of registerable second mortgage over the Property, and made other directions as to the terms and form of the mortgage document. Mr Robert Lee was ordered to provide the mortgage by Friday, 24 March 2017, and in the event of non-compliance “the claim of the first and second plaintiffs will thenceforth be stayed”.6
[13] The fact that the Property was held in a trust, and Mr Robert Lee’s indication that his co-trustee was unlikely to agree to the mortgage being provided, was recorded in His Honour’s judgment.7
[14] Mr Robert Lee did not provide the signed mortgage. It appears that his co- trustee refused to sign the mortgage as Mr Robert Lee had intimated was likely to happen. By memorandum dated 27 March 2017, Mr Robert Lee sought
confirmation from the Court that the proceeding was accordingly stayed.
5 Lee v Lee [2016] NZHC 431.
6 At [31].
7 At [14] and [23].
[15] By way of response, counsel for the defendants filed a memorandum dated
30 March 2017 indicating that the defendants would seek to strike out the proceeding on 3 April 2017 if the mortgage was not provided by that time, and, if not struck out, they would seek to waive the benefit of the security for costs order and proceed immediately to trial.
[16] The proceeding was called on 3 April 2017. There was no appearance by the second plaintiff, Ms Heard, who resides in Australia and no communication from Ms Heard as to the reasons for her non-appearance.
Stay
[17] At the hearing, Ms Chambers QC indicated that the defendants’ application to strike out the proceeding was not pursued. Instead, the defendants sought an order lifting the stay to allow the trial to proceed (although it subsequently transpired that this was only on the basis that an order was made directing the Registrar to sign the mortgage document to provide the security sought. That application is dealt with below.).
[18] Mr Robert Lee opposed the stay being lifted. He submitted that his co-trustee had reached an independent decision not to sign the mortgage document. Mr Robert Lee stressed that the plaintiffs were entitled to rely on Davison J’s order that the proceeding would be stayed if the mortgage was not provided.
[19] Mr Robert Lee also submitted that he would be unfairly prejudiced if the trial was to go ahead as he had not had an opportunity to file his two remaining substantive affidavits, and there was no provision in the timetable for the filing of reply affidavits.
[20] There was considerable merit in Ms Chambers’ submission that Mr Robert Lee had deliberately failed to comply with Court orders so that he could secure the very adjournment of the fixture which had been declined on earlier occasions. The ongoing hardship to the defendants in not having a final resolution of all issues also weighed in favour of the stay being lifted so that the trial could
proceed. However, I ordered that the stay of the proceeding was to continue for the following reasons.
[21] First, the order made by Davison J was clear. In the event that the security was not provided, the proceeding was to be stayed. The plaintiffs were entitled to rely on that order. In particular, the second plaintiff, Ms Heard, is resident overseas. She may reasonably have expected that a stay would be the consequence of non- compliance with the security for costs order and have altered her position accordingly.
[22] Second, the affidavits filed by the defendants on 28 March 2017 in accordance with Davison J’s orders were voluminous. Timetabling orders did not provide for the right to file reply affidavits. Whilst issues of reply can ordinarily be dealt with in oral evidence, the trial in this case was to proceed on the affidavit evidence with only those witnesses required for cross-examination purposes attending at trial. In those circumstances, I considered a short time to allow the plaintiffs to file reply affidavits, and any other remaining affidavits, to be appropriate. Timetabling orders requiring the filing of all outstanding affidavits were made on an “unless” basis for the reasons set out below.
[23] Third, even if the trial proceeded, it could not have been completed within the five days allocated. That was because Mr Pryce was unavailable to attend as he was overseas. The parties had agreed that his evidence could be taken after the trial and following his return at the end of April. Further time would also be required for closing submissions.
[24] Fourth, at the time I made the orders, I was hopeful that another trial date could be found in relatively short order so that the trial could proceed expeditiously. Although, as it transpires, another fixture in Rotorua cannot be found in the short term, and the plaintiffs do not consent to the proceeding being transferred to Auckland.
Unless order
[26] I made the unless order in the terms set out at [2] of this judgment. I considered such an order to be reasonable in light of the nature and history of the proceeding as explained further below.
[27] The claim was commenced in 2010, with the statement of claim filed in 2011. Timetabling orders made by Asher J required the plaintiffs to file any further evidence by 27 May 2016. In February 2017 Davison J ordered the plaintiffs to file all remaining affidavits by 14 March 2017. His Honour made it clear that strict compliance with those timetabling orders was required.
[28] The difficulties faced by Mr Robert Lee as a litigant in person are acknowledged, but I consider the above history shows that both plaintiffs have had more than ample time to file all necessary affidavits in support of their claim. The matters to be canvassed in the affidavits are those which both plaintiffs are intimately involved with, and which have been before this Court and the Court of Appeal for some time.
[29] The plaintiffs’ default in complying with timetabling orders to progress their claim is causing the defendants’ hardship. In the circumstances, an unless order requiring all affidavit evidence to be filed within five days reconciles the interests of the plaintiffs in pursuing their claim, and those of the defendants in having the proceeding disposed of expeditiously.
Mr Pryce’s costs application
[30] Mr Pryce filed an application to set aside a subpoena served by Mr Robert Lee. That subpoena was subsequently withdrawn by Mr Robert Lee. Mr Pryce seeks an order of indemnity costs on the grounds that subpoena was an abuse of process.
[31] Mr Pryce is a solicitor. He was previously with a firm who acted in relation to issues in this proceeding. He swore an affidavit setting out the nature of that firm’s involvement which was subsequently filed in the Court of Appeal.
[32] On 9 March 2017, Mr Robert Lee gave notice to Mr Pryce that he was required to attend the trial for cross-examination purposes. Mr Pryce indicated that he would be overseas at the relevant time on a trip that had been planned since February 2016. Mr Robert Lee then served a subpoena on Mr Pryce requiring him to attend the trial on 5 April 2017.
[33] Efforts to find alternative ways to take Mr Pryce’s evidence came to nothing, and Mr Pryce indicated that he was left with no other option but to file an application to set aside the subpoena, and seek an order of indemnity costs. That application and an affidavit in support were filed on 23 March 2017. The subpoena was subsequently withdrawn by Mr Robert Lee on Thursday, 30 March 2017.
[34] I do not consider an order of indemnity costs is justified in this case. The issue of the subpoena was not vexatious or for an ulterior purpose. As soon as Mr Robert Lee was aware that the hearing might not proceed, he advised Mr Pryce accordingly and ultimately withdrew the subpoena.
[35] However, the issuing of the subpoena was arguably premature given the failure to consider alternative ways in which Mr Pryce’s evidence could be taken. Mr Pryce was left with no real option but to make the application to set aside. I accept that it was properly made in the circumstances. Given the pragmatic agreement subsequently reached in relation to his evidence, it is likely that the subpoena would have been set aside had it been necessary to argue the application. I consider an award on a schedule 2B basis (being the sum of $1,338) for the filing of the application (but not the appearance which followed the withdrawal of the subpoena) is warranted in this case.
[36] Following my orders regarding the stay and filing of affidavits, Ms Chambers made an oral application for an order directing the Registrar to sign the mortgage if Mr Robert Lee continued to refuse to do so. She sought leave, which I granted, to cross-examine Mr Robert Lee on the reasons for non-compliance with the security of costs order.
[37] Ms Chambers raised three main grounds of support for the direction sought:
(a) First, that the co-trustee of the Property had not been validly appointed and so his position could be set to one side.
(b)Second, that Mr Robert Lee had made it abundantly clear that he would not comply with the order sought irrespective of his co- trustee’s position.
(c) Third, that any costs awarded to the defendants (for example, if the proceeding was struck out following non-compliance with the unless order) would only be met if the mortgage was registered against the Property.
[38] There is some force in the defendants’ submission that Mr Robert Lee has engineered non-compliance with the security for costs order and has made it plain that he will avoid taking steps to provide any such security. But, the issue is whether an order directing the Registrar to sign the mortgage is an appropriate response in those circumstances.
[39] A security for costs order strikes a balance between the right of an impecunious plaintiff to pursue their claim in Court, and the right of a defendant to be protected from the costs of defending that claim in the event they are successful at trial. If the plaintiff does not provide security, then they cannot put the defendant to the cost of defending their claim. Failure to provide security means the proceeding
is either stayed pending the provision of security, or, in some cases, it may be struck out.
[40] Davison J determined that non-compliance with the security for costs order would result in the proceeding being stayed. That is the appropriate response in my view. An order directing the Registrar to sign the mortgage, and effectively force the plaintiffs to provide the security sought, would alter the balance struck by Davison J’s order. The defendants’ interests are adequately protected by an order staying the proceeding.
[41] The fact that the mortgage is to be registered against Property held in a family trust provides further support for that conclusion. I accept (as did Mr Robert Lee) that there is a reasonably arguable case that the co-trustee of the Property was not appointed in accordance with the Deed of Trust. However, there is insufficient evidence before me to be able to conclusively determine the validity of that appointment. At the very least, the co-trustee would have to be afforded a right to be heard on the circumstances of his appointment (and for that matter, the reason for declining to execute the mortgage). I do not consider the co-trustee’s position can be simply ignored in the circumstances.
[42] The fact that the defendant may be left without means to enforce any costs orders for steps taken up to the point that the proceeding was stayed does not provide adequate grounds to make the order sought. A security for costs order is essentially prospective in nature. It requires security to be posted for steps which will be taken in the proceeding. Any costs awarded to the defendants for steps taken prior to security being posted may be enforced by the defendants against the plaintiffs in the ordinary course.
[43] Finally, I have considered whether an order striking out the proceeding is appropriate at this juncture. As I have already noted, Mr Robert Lee’s non- compliance with Court orders appears in many respects to have been deliberately designed to avoid trial. He has not produced any evidence of steps taken by him to procure compliance with the security for costs order, and his co-trustee has refused
to provide reasons for declining to sign the mortgage. Deliberate non-compliance may well justify an order dismissing the proceeding.
[44] However, I take into account that the security for costs order was in respect of trust Property. Mr Robert Lee advised the Court that his co-trustee was unlikely to agree to provide the mortgage sought. That is what happened. Davison J ordered that the proceeding should be stayed if security was not provided. That is the consequence which should therefore follow.
[45] Whether the proceeding progresses further from here is a matter for the plaintiffs. If security for costs is not provided (whether in the form ordered or any other form), the plaintiffs will not be able to progress their claim. Failure to progress the claim may render it vulnerable to dismissal. It is premature to make such an order at this stage.
[46] Accordingly, I decline the application to vary the security for costs order and confirm that the proceeding is stayed.
Result
[47] The orders referred to at paragraph [2] of this judgment were made at the hearing on 3 April 2017 for the reasons set out above.
[48] Mr Robert Lee shall pay Mr Pryce costs of $1,338 on a schedule 2B basis for the filing of the application to set aside the subpoena.
[49] The defendants’ application to vary the security for costs order is declined.
[50] Both parties have had a measure of success and accordingly the costs of the appearance on Monday, 3 April 2017 shall lie where they fall.
Edwards J