Nelson v Meier
[2015] NZHC 340
•4 March 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV2013-404-005091 [2015] NZHC 340
BETWEEN THELMA EDITH NELSON
Plaintiff/Respondent
AND
SANDRA LEANNE MEIER Defendant/Applicant
Hearing: 3 March 2015 Appearances:
D J Rooke for the Plaintiff/Respondent
JRS Lewis for the Defendant/ApplicantJudgment:
4 March 2015
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
04.03.15 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
T E NELSON v S L MEIER [2015] NZHC 340 [4 March 2015]
[1] The defendant applies for security for costs.
[2] In issue in this proceeding is the plaintiff ’s claim that funds advanced ought
to be repaid by the defendant.
[3] The defendant also seeks that the plaintiff pays security for costs.
Background
[4] The plaintiff and defendant are mother and daughter. The plaintiff’s husband Thomas Nelson died in December 2000. His estate included cash and assets, some part of which was to be held in trust for the deceased’s son (the plaintiff ’s stepson), James.
[5] The defendant is the settlor of the Sandra Meier Family Trust (SMFT) and she is a trustee of that trust. Her husband was the settlor of the Alfred Meier Family Trust (AMFT).
[6] In June 2002 a partnership of these trusts (the trusts’ partnership) purchased a property at Seaview Road, Onetangi, Waiheke Island and later built a dwelling house on it. It was occupied by the defendant and her husband and their family.
[7] In 2005 a separate occupation unit was constructed on that property. A construction contract with the builder was signed by the plaintiff and by the defendant and the defendant’s husband (as trustees of the trusts’ partnership) for the construction of a unit at a price of $117,519. It was agreed the plaintiff would pay for the costs of construction and the unit would be the property of the plaintiff.
[8] The defendant says the intention was that her mother would be able to build a unit on the trust’s property which could later be removed should the occupation arrangement become untenable i.e. if either wished the living arrangement to end the unit would be removed and the trust’s property would be returned to its original state.
[9] It seems the purpose of the arrangement was to enable the plaintiff to live close to her daughter and granddaughter. A deed granting a licence to occupy was executed on 29 August 2005. It was signed by the plaintiff and by the trusts’ partnership.
[10] The occupation unit was built and the plaintiff took occupation of it. The parties’ arrangement included a commitment by the plaintiff to pay a ‘rental’ to assist with property occupation costs.
[11] Issues later arose in connection with two matters. One of those was due, the defendant says, to the plaintiff having separately (and without the knowledge of the defendant) signed a contract for the supply to the occupation unit of a kitchen at a price of $17,121.77.
[12] The second issue concerned a breach of trust proceeding brought by the plaintiff’s stepson James who alleged the plaintiff had misapplied funds from his late father’s estate part of which were to be held in trust for him. That claim was settled by a payment of about $70,000 on or about 6 November 2006.
[13] The plaintiff occupied the occupation unit for some time but then she moved from there into the house. There is conflicting evidence about reasons for this change. A sum of $80,000 was paid to the plaintiff which was apparently used by the plaintiff to settle James’ claim against her. The plaintiff says it was a loan to her from the defendant. The defendant says it was the sum they agreed would purchase the plaintiff’s interest in the occupation unit.
[14] In or about December 2012 the trusts’ partnership sold the property including the occupation unit to a third party at a price of $880,000. After payment of sale costs and the settlement due to the defendant’s husband, and after repayment of loans secured by a mortgage, a sum of $388,204.22 remained.
[15] The defendant then purchased a property at Crescent Road West, Waiheke Island and she used all of the net proceeds from the sale of the previous property for the purchase of this replacement property.
[16] The plaintiff’s claims include debt recovery, breach of licence to occupy, and constructive and/or resulting trusts.
[17] The debt recovery claim is identified in a schedule attached to the statement of claim which refers to a number of advances totalling $54,991.91 over a period of more than four years to September 2012. The claim of a breach of licence to occupy seeks a sum of $234,000.00. The calculation of that amount notes the plaintiff is 71 years of age who with good health has a life expectancy of 89 years; who believes therefore she could have expected a right to a further 18 years of occupation of the unit. Because the defendant received a rental income from that unit of $250.00 per week then over a period of 18 years the amount receivable would have been
$234,000.
[18] The claim of a constructing and/or resulting trust is related to the defendant’s purchase of a replacement property in 2012. The plaintiff says the defendant holds that property for her as a beneficiary to the extent of those payments made for the construction of the unit.
[19] The plaintiff says the unit construction costs amounted to $166,995.91. Those costs include house construction of $137,759.31, unit permit $2,300, and a kitchen of $19,262.00.
[20] The plaintiff said she was compelled to move out of the unit in about February 2010 and to occupy the defendant’s house “in circumstances constituting a wrongful eviction… from the unit”. Then, and also contrary to the terms of the occupation the plaintiff said she was in about August 2012 evicted from the plaintiff’s house.
[21] Accordingly factors of cost of construction and relating to her ceasing occupation of that unit provide the basis upon which she claims she has an interest in the replacement house purchased by the defendant, the value of which is equivalent to the construction costs she paid.
[22] The related claim of a breach of licence to occupy seems to be pleaded in the alternative and that is the claim for an amount of $234,000 using the calculation earlier referred to.
[23] Regarding the sum of $80,000 paid by the plaintiff to settle her stepson’s claims the defendant says this sum was loaned to her by the defendant. The defendant says it was the price they both agreed would enable the trusts’ partnership to acquire the plaintiff ’s interest in the occupation unit.
[24] Regarding the plaintiff’s claims of breach of licence to occupy the defendant says the plaintiff elected to move out of the unit of her own free will and thereby terminated the licence to occupy. The defendant says that because of the plaintiff’s unilateral termination of the boarding relationship and the pressure caused to the defendant and the defendant’s trusts in creating an inability to meet the mortgage payments as they fell due, she was obliged on her own behalf to sell the property and to accept an offer of $880,000 when a real estate agent’s valuation at the time indicated a value of $970,000.
[25] Regarding the plaintiff’s claims of unpaid loans, she says that between 2003 and 2012 she made various financial advances to the defendant or to the trusts’ partnership to pay construction costs. In addition to the funds paid for construction costs the plaintiff says she provided loan advances in the amount she now claims for. The plaintiff says she has not been repaid any of these funds.
[26] The defendant says not all transfers of funds to her were advances and it is unclear to what extent the repayments of loans and/or advances from the defendant to the plaintiff are involved. Whilst accepting payments were made, the defendant says all of those were paid to the trusts’ partnership and not to herself and she denies suggestions those payments were made for anything but for the purpose of the construction of the unit.
[27] Whilst accepting that sums totalling $54,991.91 were provided to her she says these were by way of gifts and not loans.
[28] Regarding the plaintiff’s calculation of her interest in the occupation unit by reference to construction charges, the defendant says the plaintiff made arrangements for the addition of a kitchen, and without the consent or knowledge to the trusts’ partnership; that Council consent for the construction was for a sleep out and a boat shed and not a self contained unit and there was no Council consent for a kitchen or a laundry.
[29] The defendant says the plaintiff elected to move from the unit in February
2010 in order to occupy her home when the defendant had separated from her husband; and that the plaintiff remained in that home after the defendant purchased her husband’s share of it. She said the plaintiff unilaterally vacated the home.
[30] The defendant says that because of the plaintiff ’s unilateral termination of the boarding relationship and the pressure caused to her and her trust in creating an inability to meet mortgage payments as they fell due, she was obliged to sell the property and to accept an offer of $880,000.
[31] In short the defendant denies any debt exists. She says the $80,000 paid to the defendant to enable her to assist with the settlement of her stepson’s claim, was part of their agreement to acquire the plaintiff’s interest in the occupation unit.
Considerations
[32] The defendant contends the plaintiff kept a detailed account of payments of money and the purpose of those. The defendant suggests that the account currently available has been compiled retrospectively by reference to bank statements.
[33] The plaintiff says she does not have any ledger accounts of the kind the defendant suggests. She has however obtained a copy of the building consent and this will be disclosed in due course.
[34] The applicant seeks the sum of $21,932.00 as security, calculated by reference to legal aid rates.
[35] It is clear that the plaintiff may be unable to pay costs if unsuccessful. Mr Rooke for the plaintiff submits however that the claim has merits and high prospects of success. He says an order for security would bring the proceedings to an end and that it would be unjust for the defendant to receive security as it was the defendant’s actions that have caused the plaintiff’s impecuniosities.
[36] Mr Rooke submits there are wide factual differences in the respective accounts of each party. He says obtaining a clear view of an outcome is speculative.
[37] The submissions on behalf of the defendant focus on, counsel submits, what is a clear and compelling account to contradict that provided on behalf of the plaintiff. Mr Lewis submits the clear evidence is that:
(a) The plaintiff sold the occupation unit soon after its completion for the
purpose of replenishing her late husband’s estate;
(b)That it was always understood that the plaintiff would have irrecoverable costs in terms of restoring the property to its original state and transferring it elsewhere;
(c) The $80,000 paid for the purchase of the unit was calculated by reference to construction costs less the likely cost of removing the unit from the property;
(d)It was understood that the cost of installing the kitchen would not be recoverable;
(e) The plaintiff received payment for her interest in the property;
(f) The documentary evidence disclosed that the plaintiff sold her interests in the property to the trust partnership;
(g)The plaintiff did not object to the selling of the property when the licence to occupy did not contemplate this happening.
[38] Whilst the plaintiff says the schedule to the statement of claim sets out what is owed by way of loans the defendant says the plaintiff retained records to clearly identify those which were gifts and those which were not and the defendant said she has repaid those which were loans.
[39] Regarding the plaintiff ’s claims of impecuniosities having been caused by the defendant, the defendant says there is other evidence by which to assess those claims including:
(a) The plaintiff ’s sale of assets which have been subject to trust obligations and which were the object of the stepson’s claims;
(b) The plaintiff’s unauthorised expenditure on the kitchen;
(c) Claims of the plaintiff ’s general lack of caution as to her financial
affairs.
Conclusions
[40] The order for security for costs is relatively exceptional and where it is likely to result in the denial of access to justice, it is entirely exception but in some situations to allow litigation to proceed without the checks and protection of security will be oppressive to the interests of other parties, particularly where the litigation
was unjustified or unmeritorious, overcomplicated or unnecessarily protracted.1
[41] The dispute is between mother and daughter. In the background are a number of factors including family arrangements to assist with the mother’s care, contributions by the mother to her granddaughter’s school costs, ill health, and a very significant disparity now regarding the classification of monies lent and those
gifted.
1 Highway on Broadway Limited v Devine [2013] NZAR 1017 at [22].
.
[42] As well there is, to the Court it seems, significant reason for these proceedings to be repleaded. Properties over which claims have been made do not belong to the defendant and did not at relevant times.
[43] The plaintiff’s resulting trust claims are ambitious. It seems at no time prior to the issue of this proceeding were there suggestions of a claim of interest in the Crescent Road West property. The plaintiff says she settled her stepson’s claim with
$80,000 that the defendant lent to her. She says it was a loan and that it was not a payment for her interest in the occupation unit. The plaintiff’s evidence apart there is little to support her contentions. Also in her pleadings she has provided no allowance for the fact that that claim remains unpaid.
[44] Notwithstanding claims on behalf of the defendant of frivolous or vexatious claims, it is clear the Court should decline to attempt to resolve what are significant issues of fact.
[45] Also the defendant is aided by a grant of legal aid. And, the plaintiff too is plainly impecunious and whether that is due to actions or behaviour by the defendant is far from clear presently.
Result
[46] The application for security is declined.
[47] Costs should be reserved, the Court noting the defendant is in receipt of a grant of legal aid.
Associate Judge Christiansen
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