Miah v AMP Life Limited

[2019] NZHC 750

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2013-404-2864

[2019] NZHC 750

BETWEEN

ABDUR RAHIM MIAH

Plaintiff

AND

AMP LIFE LIMITED

Defendant

Hearing:

8 April 2019

Appearances:

R J Hooker for the Plaintiff

B Scott and S Kettani for the Defendant

Judgment:

8 April 2019

ORAL JUDGMENT (No.3) OF ASSOCIATE JUDGE R M BELL

[Security for costs]

MIAH v AMP LIFE LIMITED [2019] NZHC 750 [8 April 2019]

[1]        The defendant, AMP Life Ltd, applies for security for costs. It proposes that the plaintiff, Mr Miah, should provide security of $34,000.00 and that the proceeding be stayed until that sum has been paid. It says that security should be a payment of money into court, to be held in court to await the outcome of the proceeding. It says that there is reason to believe that Mr Miah will be unable to pay its costs if he is unsuccessful in this proceeding.

[2]        Mr Miah is suing AMP Life Ltd as the successor of the National Mutual Life Association of Australasia Ltd. For convenience, I will refer to the defendant as “AMP Life Ltd” even though National Mutual was the insurer at relevant times. It insured the life of Mr Miah’s wife, Afrouza Akter Miah, under a policy taken out in 2006. Mr and Mrs Miah were the owners of the policy. Her life was insured for $2,000,000.

[3]        Mr Miah was adjudicated bankrupt on 4 April 2007. At that time, Mrs Miah was in Bangladesh. While Mr and Mrs Miah were New Zealand residents and New Zealand citizens, they originally came from Bangladesh. Mrs Miah died in Bangladesh on 22 May 2007. She is said to have been murdered. Mr Miah’s brother was prosecuted and found guilty of her murder. A Bangladeshi death certificate in evidence says that she died from asphyxiation. Mr Miah was discharged from his bankruptcy in August 2011. In March 2012, AMP Life Ltd formally declined the claim on the grounds of material non-disclosure and mis-statement. Mr Miah began this proceeding in May 2013.

[4]        The most recent statement of claim has two causes of action.   In the first,   Mr Miah says that he and his wife owned the policy jointly, but the joint tenancy was severed on his adjudication in bankruptcy. While his half share vested in the Official Assignee, his wife continued to own her half share. He claims to be the executor of her estate and sues for half of the amount payable under the policy - $1,000,000 plus interest.

[5]        In the second cause of action, he pleads that the policy was personal to himself, his interest in the policy did not pass to the Official Assignee on bankruptcy, and on his discharge he remained free to enforce his own rights under the policy. In that cause of action, he claims $2,000,000 payable under the policy. For reasons that I shall

explain later, I will disregard the second cause of action - primarily because the Court of Appeal has already decided that that cause of action is not reasonably arguable.1

[6]On the pleadings, these are the issues:

(a)Has Mrs Miah died?

(b)Does Mr Miah have title to sue?

(c)Did the Miahs fail to disclose information material to the risk when they took out the policy? and

(d)Was there material mis-statement by the Miahs under s 4 of the Insurance Law Reform Act 1977?

[7]        The first issue – whether Mrs Miah has died – is unlikely to be a live issue by the time this case goes to trial. Mr Scott, for AMP, accepted that if a notice to admit facts were served, AMP is likely to admit the fact of death. That becomes important, because if AMP were to continue to put that in issue, Mr Miah may be put to considerable trouble to prove something that may be ultimately non-contentious. Proving the death of somebody in a foreign country is likely to be harder than to establish the death of someone in New Zealand. But given that there has apparently been a successful prosecution for the murder of Mrs Miah in Bangladesh, the question of death should not be controversial.

[8]        The question whether Mr Miah has title to sue turns on two aspects. The first is whether the personal representative of Mrs Miah can sue on the policy, and the second is whether Mr Miah is that personal representative.

[9]        The Court of Appeal has already considered the first question. Associate Judge Doogue gave summary judgment against Mr Miah, holding that all the causes of action in his earlier statement of claim were bound to fail.2 On appeal, the Court of Appeal

1      Miah v National Mutual Life Association of Australasia Ltd [2016] NZCA 590, [2017] 2 NZLR 241.

2      Miah v The National Mutual Life Association of Australasia Ltd [2015] NZHC 993.

held that one of his causes of action was arguable: the first cause of action in the current pleading. 3 The Court of Appeal went no further than saying that the cause of action was arguable, noting that there were questions of interpretation of the policy. It did indicate that on bankruptcy there would be severance, but in the light of case law from other jurisdictions it noted that there could be a question of interpretation as to whether severance could apply to a jointly-owned policy. It held that the other causes of action were not arguable. That included the cause of action now pleaded as the second cause of action in the current pleading.

[10]      As to whether Mr Miah can sue on the policy, AMP has taken the point that so far Mr Miah has not obtained a grant of administration for the estate of his wife. In the month before she died, Mrs Miah made two handwritten wills – one dated 5 May 2007, the other dated 11 May 2007. Mr Miah says that he has obtained a grant of probate in the District Court in Dhaka, Bangladesh. He has presented that grant of probate for re-sealing in New Zealand. AMP has lodged a caveat against any grant of administration. A proceeding is pending in the High Court in Wellington under CIV- 2017-485-611762 to decide whether probate should be re-sealed. Mr Hooker advises that if that proceeding should fail, Mr Miah has launched a further proceeding seeking a grant of probate in New Zealand for the will of 11 May 2007 made by Mrs Miah in Bangladesh.  He says that  he has provided affidavits by the witnesses to the will.  Mr Miah’s case will be that the will was formally valid under the laws of Bangladesh where it was made, and that it meets the requirements of substantive validity for New Zealand law. I understand that AMP will oppose that application. It will contend that the will is not valid. It will wish to have a document examiner determine whether the signature of Mrs Miah is genuinely hers. It has earlier applied in this proceeding for an order for inspection of the will.4

[11]      Mr Hooker has also explained that if that fails, as a further back-up, he has applied for a grant of administration for Mr Miah on the basis that Mr Miah is the widower of the deceased and is first in line to obtain a grant of administration on an intestacy. In response, AMP has indicated that it will contest Mr Miah being appointed

3      Miah v National Mutual Life Association of Australasia [2016] NZCA 590, [2017] 2 NZLR 241 at [44]-[45].

4      Miah v AMP Life Ltd [2018] NZHC 1634.

as administrator of his wife’s estate, saying that he is unfit, because he has relied on forged documents from Bangladesh to support his application to re-seal the grant of probate.

[12]      In those proceedings, there will also be an issue whether AMP has standing to lodge a caveat against the grant of administration, and to oppose any applications to re-seal probate or to obtain a grant of administration by way of probate or on an intestacy. The issue will be whether someone who does not have an interest in an estate – for example, a beneficiary under that will, a beneficiary under another will or on an intestacy – has standing to contest the grant of administration. As I understand it, debtors do not normally have standing to contest a grant of administration. But that is a matter for argument in the High Court in Wellington. I understand that there will be a hearing in May this year. The point about this argument about title to sue is that the matter is likely to be protracted. It may be quite some time before it is finally established who has title to sue on the policy.

[13]      AMP has pleaded material non-disclosure and material mis-statement as one defence. Conceptually, they are separate. The non-disclosure is said to arise both at common law and contractually. There is a term in the policy giving the insurer the right to avoid the policy for material non-disclosure. The Miahs are said to have provided information as to their financial position which, on examination by AMP, was found to be inaccurate.

[14]      AMP relies on the same information to allege material mis-statement. It relies largely on information in a document called a Financial Needs Analysis. It says that his position was much worse than was disclosed in that document. Mr Miah disclaims any responsibility for the information in that document.  He says that he and his   wife did not sign it. I note that both sides have retained accountants who have analysed Mr Miah’s financial position. The crucial part of AMP’s case is that during May 2006, Mr Miah would have been aware that his property development business was collapsing, and he was required to disclose that before the policy started. The policy did not come into force until late in June 2007.

[15]      At first sight it may seem strange that an application for security for costs is being heard nearly six years after the proceeding started. Often a late application for security can count against a defendant. That is usually because a plaintiff commits resources to a proceeding on the assumption that they are not being required to put up security. A late security application can cause disruption that might otherwise have been avoided if the application had been made earlier. But that factor does not apply in this case. While the proceeding started in 2013, I was advised that it was not served until 2014. Soon after being served, AMP Life applied for strike-out and summary judgment and at the same time applied for security for costs. Associate Judge Doogue heard the strike-out and summary judgment applications during 2015, and in his decision of 1 September 2015 gave summary judgment to AMP Life.5 He therefore did not have to deal with the application for security for costs. Mr Miah appealed. The Court of Appeal gave its decision on 8 December 2016, reinstating the cause of action based on severance on adjudication of bankruptcy. That meant that the case could resume its normal course as a defended hearing. During 2017, I gave directions for the security for costs application. I set it down for hearing on 16 November 2017, but that was later put back to 12 February 2018 because of other commitments of  Mr Hooker.

[16]      Shortly before the hearing, the parties filed a joint memorandum advising that Mr Miah had agreed to provide security for costs by way of a mortgage over land. The parties were negotiating the terms of that arrangement but did not seek a hearing. The proposal was that a company of which Mr Miah was the sole director and shareholder, Bismillah Property Ltd, would give AMP a first mortgage over a lifestyle block near Kaiwaka in Northland. While that arrangement was agreed in early 2018, AMP did not send a mortgage for execution until September 2018. In a letter of 3 October 2018, Mr Miah’s lawyers said that Mr Miah had reassessed the question of security in the light of a review of the merits of the case and in the light of various costs orders made in 2018. With that, AMP revived its application for security for costs. It had filed an amended application in October 2017. I gave directions for the hearing today. The short point is that right from the start of the proceeding, the defendant has taken proper

5      Miah v AMP Life Ltd [2015] NZHC 993.

steps to seek security and the question of security has been on foot ever since the start. That means that the passage of time does not count against the application.

[17]      Mr Miah has filed limited affidavits as to his financial circumstances. He is known to be the sole director and shareholder of Bismillah Ltd, which owns the lifestyle block near Kaiwaka. When the security for costs arrangement was first proposed, the property was mortgage-free. Since then, a mortgage has been lodged against the title in favour of a second tier financier. There is mixed information as to the value of the property.   Mr Miah is said to have bought the property for over

$300,000. At a later stage, there was a suggestion that the property had a current rating valuation of about $139,000.  There is a suggestion now that it is on the market for

$230,000.

[18]      Mr Miah is a property developer. He had been a property developer before his bankruptcy. His failure as a property developer led to his bankruptcy. Apart from his project at Kaiwaka, nothing else is known as to his circumstances in New Zealand. In an affidavit he swore in 2014 – some three years after he was discharged from bankruptcy – he said that he was unemployed and had no assets. An address for him can be found from a company search for Bismillah Ltd. That address suggests that he is living in rental accommodation. He has not provided any evidence to suggest that he owns, in his own right, any real estate in New Zealand. He has not put forward any evidence to suggest that he owns any other assets.

[19]      Some of the information that AMP relies on to establish Mr Miah’s inability to pay costs is historic. It goes to his original bankruptcy: credit records which reflect his insolvency at that time.

[20]      When considering a plaintiff’s inability to meet orders for costs, it is important to bear in mind that the party seeking security is only required to show “reason to believe”. It need not prove the matter on a balance of probabilities. It is also helpful to bear in mind a dictum of Lord Mansfield in Blatch v Archer:6

6      Blatch v Archer (1774) 1 Cowp 63 at 667.

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

Here, Mr Miah was able to provide more information about his financial circumstances, but he has not taken that opportunity. AMP has put what information it has before the court. That information shows risk factors for Mr Miah. There is his past bankruptcy arising from his activities as a property developer, and the fact that following his discharge from bankruptcy he has gone into property development again. His company appears to have owned the Kaiwaka property for some time, and little progress appears to have been made in completing any development by subdivision and selling lots. He has not been forthcoming about the progress on that subdivision. It is unknown when any funds will become available. There are no other identifiable assets for Mr Miah. Apart from a costs matter which I will come to, AMP will have difficulty enforcing an order for  costs  against  the  Kaiwaka  property.  After  all, Mr Miah, as shareholder, does not own assets that belong to the company. He only owns shares in the company and AMP could only enforce any costs orders against the shares. The normal execution remedies under Part 17 of the High Court Rules 2016 do not lend themselves to execution against shares in a privately-owned company. AMP might have a receiver appointed or it might have to put Mr Miah into bankruptcy again so that the Official Assignee could exercise the rights of a shareholder to appoint a director to arrange the sale of the land. In short, execution remedies for the Kaiwaka property do not look promising. On that information, there is reason to believe that Mr Miah may not be good for an order for costs.

[21]      There is a worrying feature. Mr Miah originally comes from Bangladesh. The record shows that he returns to Bangladesh from time to time. He retains a New Zealand domicile. He has his home in New Zealand, although it is rental accommodation. It is understandable that he may return to Bangladesh for normal family purposes and there may be nothing nefarious in the wish to go back to Bangladesh from time to time. All the same, it makes the ability to enforce a costs order problematic. There is then good reason to be concerned that any order for costs against him might be barren.

[22]      I am therefore satisfied that AMP has met the threshold for a security for costs application under r 5.45(1) of the High Court Rules. Mr Miah’s evidence is not enough to suggest that I should not draw an inference from the information provided by AMP that he may not be good for costs.

[23]      I have left aside, for this part of my decision, the matter of costs orders in favour of Mr Miah. So far in this proceeding, he has obtained costs orders against AMP. The amounts have not yet been fixed and he has not enforced the orders, but they are arguably assets in his name which may be of value to him if costs come to be enforced against him. I will deal with that factor later in my decision.

[24]      It is standard in a security for costs decision to review the merits of the case even if the court can obtain no more than a broad view of the issues. There are two main points. The first is title to sue. This is proving to be protracted. Ideally, Mr Miah ought to have acted much earlier to ensure that he had title to sue by obtaining a grant of administration or probate much earlier after the death of his wife. His delay is now proving a handicap because AMP is taking firm steps to defeat his claim to administration.

[25]      AMP does not deny that someone might be able to obtain a grant of administration. It says, however, that if someone else is appointed they might take a different view of the case. It points to the fact that the Official Assignee considered whether to claim under the policy and, after receiving advice, chose not to continue the claim.7 It therefore says that someone other than Mr Miah might well come to the same view. It is accordingly contesting Mr Miah’s efforts to obtain title to sue. Given the many-layered approach to obtaining a grant of administration, I assume that that question is not going to be finally resolved this year and may have to await a determination next year.

[26]      The meat of the case comes down to AMP’s defences of material non- disclosure and material mis-statement. They will call for a careful examination of factual evidence of the circumstances in which the Miahs took out the policy and the information that the Miahs provided. I acknowledge that there is prima facie some

7      See Miah v Official Assignee [2013] NZHC 2726.

strength in AMP’s position. It relies on a document which the Miahs signed when they applied for insurance cover. It included this declaration:

I confirm the truth accuracy and completeness of all statements given in support of this application (whether in this application form, given orally or in any other document in connection with this application) which shall form the basis of any contract of insurance resulting from this application.

As might be expected, there are appropriate policy terms to ensure that that becomes enforceable as a term of the policy. That is the basis for alleging contractual non- disclosure. That document contains one item as to the financial position of the Miahs. Mr Miah has recorded that he had an income of $100,000 a year. The question whether he did have an income of $100,000 a year is in issue. Mr Miah’s forensic accountant says that that figure was accurate but AMP denies that is the case.

[27]      When the Miahs first sought life insurance, they asked for cover of $1,500,000. Later they wished to increase the cover to $2,000,000. With that, AMP’s underwriters requested further information and asked for a financial needs analysis to be completed. There is a financial needs analysis, but Mr Miah says that he did not sign that document. He points the finger at the agent as the person who provided the information. His case is that little reliance can be put on the information in that financial needs analysis. Much of the document was not completed. While National Mutual indicated that they would use the information in the document, the document reads more as one eliciting information to establish how the Miahs’ financial needs might be met and asks for examples or opinions on matters rather than clear statements of fact. Much of the document has been left incomplete. Clearly there will be a contest about that document.

[28]      While Mr Miah denies having any part in preparing that document, AMP’s case is that the agent had recorded on the initial proposal that he had obtained a needs analysis. My view is that while AMP appears on the face of it to have a defence, its case is not clear-cut. There is room for contest as to the merits of the defences of material non-disclosure and material mis-statement. Equally, I cannot say that AMP’s defence is hopeless.

[29]      Mr Hooker submitted that the fact that AMP has the burden of establishing affirmative defences counts against AMP having security for costs. He cited Ansell v State Insurance and  Turf  Industries (1979) Ltd v  Bondor  NZ  Ltd.8  In response,  Mr Scott cited Cloud House Ltd v Bulletproof Group Ltd where Associate Judge Smith said:9

… It seems to me that a defendant's entitlement or otherwise to security for its costs should not depend upon whether its success at trial will be based on the plaintiff's failure to make out all necessary elements of its claim, or on some affirmative defence successfully run by the defendant.

With respect, I concur with Associate Judge Smith and I apply that approach. The cases cited by Mr Hooker turn on their own facts.

[30]      A matter of concern is the time this matter is taking. Mr Miah did not begin the proceeding until 2013 - just in time to beat the six-year limitation under the Limitation Act 2010. There was a delay in serving the proceeding. Steps since then have taken time as well. To a large extent that may be explained by the unusual circumstances of the case – that is, a death overseas of the life insured, under a policy of insurance owned by two people, and the effect of the bankruptcy of the survivor. Even so, further delay in this proceeding ought to be avoided if possible. It is important to bear in mind the objective under r 1.2 of the High Court Rules to secure the just, speedy and inexpensive determination of a proceeding. To a certain extent, there is going to be further delay because of the probate proceedings to determine title to sue. All the same, further steps to slow this case getting to a hearing on the merits ought to be avoided if possible. Even though I do not hold AMP Life Ltd responsible for the delay, further steps that stand in the way of this matter getting to a hearing are not to be encouraged.

[31]      I come to the matter of costs orders which Mr Miah has already obtained in this proceeding. He says that he has succeeded on appeal in the Court of Appeal. The Court of Appeal reserved costs. It said:10

8      Ansell v State Insurance (1996) 10 PRNZ 133; Turf Industries (1979) Ltd v Bondor NZ Ltd HC Auckland CP936/91, 26 September 1991.

9 `    Cloud House Ltd v Bulletproof Group Ltd [2018] NZHC 1450 at [73].

10     Miah v National Mutual Life Association of Australasia [2016] NZCA 590.

[61]      … The usual rule that costs on an opposed interlocutory application will become payable when they are fixed does not apply to an application for summary judgment. Mr Miah has succeeded only on some of the arguments he put forward. Others have failed. There have been significant changes of position by Mr Miah during the course of the proceeding. Clearly the proceeding will be stoutly defended. In these circumstances, we consider it would be premature to make a costs order.

[62]      Therefore we direct that costs are to be fixed and not to be paid until final resolution in the High Court.

(footnotes omitted)

[32]Mr Hooker has calculated costs in the Court of Appeal on an A-band basis at

$15,164 and disbursements of $1,740.00, to make $16,904. He has also claimed

$18,000 as costs for the hearing before Associate Judge Doogue, but I regard that as a slight over-claim. $16,000 would be a more appropriate sum. He has also claimed costs for the decisions I gave in his favour on his application challenging privilege claimed by AMP and dismissing AMP’s application under r 9.34 of the High Court Rules.11 All up, AMP’s costs liability may be in the order of some $46,000. Some of those costs orders are defeasible. AMP Life Ltd has applied for a review of both my decisions, although neither of those applications has been pursued actively. The application to review my decision under r 9.34 has been put on hold to await the outcome of the probate proceedings in Wellington. Although not formally fixed and sealed, these costs orders are still assets of Mr Miah that can be taken into account in a security for costs application because they go to reduce any costs liability of Mr Miah later in the proceeding by way of set-off.

[33]      For its application, AMP proposes that costs be fixed in the sum of $34,000. It provided a schedule showing how it had calculated its costs. It calculated costs on a 2B basis at some $59,000 excluding disbursements.  It calculated costs up till now at

$24,000 and calculated costs from the close of pleadings through to trial at $34,000. If anything - and contrary to what I find in other cases - the estimate is probably light. I would expect AMP Life Ltd to call at least two expert witnesses, one on accounting issues and the other on underwriting practice. That is likely to add a further $30,000 to  the  costs  of  the  proceeding.    AMP  sought  security  only  for  costs  arising

11     Miah v AMP Life Ltd [2018] NZHC 1634, Miah v AMP Life Ltd [2018] NZHC 1964.

prospectively because some judges have demurred at ordering costs for steps already taken in the proceeding on the basis that that might be unjust to the plaintiff. That factor does not necessarily arise here, given that AMP has sought security for costs right from the outset.

[34]      There is a balancing exercise here. AMP appears to have arguable defences, although success is not assured and there is room for argument. Against that, Mr Miah has held his hand on the costs orders he has obtained. In effect he has left money in the bank and has not drawn on it. AMP would, of course, pay if required to do so. There is no doubt as to its ability to pay its debts. But it seems to me that Mr Miah has, in his own way, struck a balance between the competing interests by not enforcing his orders for costs in the meantime while trying to continue the case through to hearing. The matter may be rough-and-ready, but Mr Miah can point to credit he has against AMP Life for some $46,000.

[35]      Even if I were to assume that AMP Life may obtain an order for costs much greater than $46,000, I do not consider that there will be any great injustice to AMP Life Ltd if it is held to that $46,000 as what it can enforce against Mr Miah. It already has that through not being required to pay that $46,000 in the meantime.

[36]      Mr Hooker acknowledged that his submission meant that there should be a stay of execution of the costs orders. Mr Hooker made this point in his letter of 3 October 2018 when he explained why his client was no longer prepared to give security over the Kaiwaka land. AMP Life has been aware of this position at least from that time onwards, but still sought security for costs. In those circumstances, Mr Miah has been vindicated in his position on security for costs. That means also that AMP Life Ltd will be liable for costs on the security for costs application. In keeping with my approach, while Mr Miah will be entitled to costs on the application, and they may be fixed, there will be a stay of enforcement of that costs order just as there will be a stay of enforcement of the orders for costs in the other decisions in Mr Hooker’s schedule to his submissions.

[37]      On that basis, apart from ordering a stay of execution of the orders for costs in favour of Mr Miah, I make no further orders on this security for costs application.

……………………………….

Associate Judge R M Bell

Solicitors:

Vallant Hooker & Partners (Rodney J Hooker/J Bruce Murray), Ponsonby, Auckland, for Plaintiff Chapman Tripp (Bruce Scott/S Kettani/A Wicks), Wellington, for the Defendant