Ostermann v Ebert
[2022] NZHC 365
•8 March 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000778
[2022] NZHC 365
UNDER the Wills Act 2007 and the Administration Act 1969 IN THE MATTER
of an application for unless orders
BY
CRAIG STEVEN EBERT
Applicant
CIV-2019-409-000545 UNDER
the Property (Relationships) Act 1976
BETWEEN
SCOTT MALCOLM OSTERMANN
Plaintiff
AND
CRAIG STEVEN EBERT
Defendant
Hearing: On the papers Counsel:
S M Bevin for the Applicant
S M Ostermann (self-represented)
Judgment:
8 March 2022
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 8 March 2022 pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Ostermann v Ebert [2022] NZHC 365 [8 March 2022]
[1] This judgment concerns an application by the above-named applicant, Craig Ebert, for unless orders. The application relates to two proceedings which are being progressed together. Specifically, Mr Ebert applies for orders that unless Scott Malcolm Ostermann complies with certain discovery orders that have been made against him:
(a)his notice of opposition in proceeding CIV-2017-409-778 be struck out;
(b)his statement of claim in CIV-2019-409-545 be struck out; and
(c)that he is liable to pay Mr Ebert’s costs in respect of the proceedings on an indemnity basis.
[2] In addition, Mr Ebert seeks costs on an indemnity basis in relation to this application.
Procedural context
[3] In the proceeding CIV-2017-409-778, Mr Ebert applies for an order that a particular document is a valid will of the late Andrea Ebert (Mr Ebert’s late sister). The application is opposed by Mr Ostermann.
[4] In the proceeding CIV-2019-409-545, Mr Ostermann seeks orders under the Property (Relationships) Act 1976. This claim is defended by Mr Ebert (as temporary administrator of Ms Ebert’s estate). Mr Ebert has filed a counterclaim for orders under the Property (Relationships) Act.
[5] Mr Ostermann was originally represented by solicitors. He has been self- represented since June 2021.
[6] This application was filed on 28 January 2022 and was considered at a telephone conference on 14 February 2022 before Osborne J. At that conference Mr Ostermann advised he would be providing further bank statements by 17 February 2022 and he was directed to do so.
[7]In relation to this application, Osborne J made directions as follows:
(a)by 18 February 2022, Mr Ebert’s solicitors were to file and serve any supplementary evidence in support of the application together with a memorandum of submissions;
(b)by 25 February 2022, Mr Ostermann was to file and serve his notice of opposition together with all evidence in support of his opposition and a memorandum of submissions; and
(c)the file was to be referred to Associate Judge Lester for determination on the papers.
[8] In addition to those directions, Osborne J noted Mr Ostermann’s agreement that should the Court make an unless order, the period in which he would have to comply with the order would be set as expiring at 5.00 pm on 14 April 2022.
[9] In compliance with the directions made by Osborne J, Mr Ebert filed a supplementary affidavit and submissions in support of the application on 18 February 2022. Mr Ebert’s supplementary affidavit records that since this application was filed Mr Ostermann has supplied a significant number of documents he ought to have previously disclosed, but that there are still important gaps in his disclosure.
[10] On 25 February 2022, Mr Ostermann sent to the Court informal documents which purport to be a notice of opposition to the application for unless orders, a cover letter addressed to Associate Judge Lester, a request for information from Mr Ebert regarding the estate of Andrea Ebert, and a document headed “Memorandum of Submission”, which is the notice of opposition sworn before a Justice of the Peace but omitting several paragraphs.
[11] Two further points should be made about Mr Ostermann’s filing. First, because he did not immediately pay a filing fee on the notice of opposition, the documents were not forwarded to me for my consideration and this has delayed the issue of this judgment. Second, it appears from a memorandum of Ms Bevin dated 7 March 2022
that the documents filed by Mr Ostermann may not have been served upon Mr Ebert or his solicitors. I have, however, been provided by Ms Bevin with correspondence that was sent to Mr Ebert’s solicitors, which appears to provide an explanation for one of the concerns raised by Mr Ebert in this application.
[12] Associate Judge Lester has recused himself from any involvement with the file and it was referred to me.
Applicable legal principles
[13] The Court may respond to a breach of a procedural order by making any order the Judge thinks just under r 7.48 of the High Court Rules 2016. This includes the making of an unless order. An unless order is peremptory and decrees that unless some specified action is taken by a party by a specified time, a particular sanction will result.1
[14] In SM v LFDB, the Court of Appeal noted the principles that should guide the making of unless orders were as follows:2
…
(a)As an unless order is an order of last resort, it is properly made only where there is a history of failure to comply with earlier orders.
(b)An unless order should be clear as to its terms. That is, it should specify clearly what is to be done, by when and what is the sanction for non-compliance. That sanction should be proportionate to the default.
(c)The sanction will apply without further order if the party in default does not comply with the order by the time specified. However, the party in default may seek relief by application to the Court.
(d)Justice may require that the party in default be relieved of the consequences of the unless order where the Court is satisfied that the breach resulted from something for which that party should not be held responsible. The party should not assume that belated compliance will suffice.
1 SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [29].
2 At [31].
(e)Where the unless order has been deliberately breached – that is, flouted – it is difficult to conceive of any situation where the interests of justice would require granting the flouter relief from the sanction imposed, notwithstanding belated compliance with the order.
(f)In deciding whether or not to excuse breach of an unless order the question for the Judge is: what does justice demand in the circumstances of this case? Considerations in answering that question include:
(i)The public interest in ensuring that justice is administered without unnecessary delays and costs.
(ii)The interests of the injured party, in particular in terms of delay and wasted cost.
(iii)Any injustice to the defaulting party, although that consideration is likely to carry much less weight in the circumstances than considerations (i) and (ii).
Background of non-compliance with Court’s directions
[15] Mr Ebert’s counsel has helpfully set out what I consider a balanced summary of relevant events to date. I largely adopt counsel’s summary in what follows.
[16] As noted above, the proceeding commenced by Mr Ebert is an application for handwritten notes of Andrea Ebert to be validated as her final will. The assets which were available for distribution under the will are relevant to that proceeding. This includes a property that was the family home at Cintra Place.
[17] The proceeding commenced by Mr Ostermann is an application for division of relationship property under the Property (Relationships) Act. For the Court to be in a position to effect the fair distribution of the relationship property, the assets which are available for distribution must be identified.
[18] Mr Ostermann’s first filing was an affidavit of assets and liabilities in the relationship property proceeding. It did not contain adequate information about his assets, nor account for any assets obtained or disposed of by Mr Ostermann since Andrea Ebert’s death. For instance, it did not contain details of rental received from Cintra Place other than to state it was a minimal amount.
[19] Following filing by Mr Ostermann of the relationship property proceeding, a timetable was set down for initial disclosure. Mr Ostermann failed to comply with the timetable.
[20] Counsel for Mr Ebert wrote to Mr Ostermann’s then lawyers setting out the documents that needed to be disclosed and advising that an application for further discovery would be made if the documents were not provided. The documents were not provided.
[21] Orders for particular discovery were made by Associate Judge Lester on 25 June 2020 (sealed on 3 July 2020) which required Mr Ostermann to file an affidavit and that he discover:
(a)all documents from Kiwibank and Commonwealth Bank of Australia (CBA) detailing all accounts (whether held by Mr Ostermann or in another name in which he has an interest) as at the date of Andrea Ebert’s death;
(b)bank statements for specified bank accounts in Mr Ostermann’s name;
(c)documents outlining all assets disposed of and acquired by Mr Ostermann since the date of Andrea Ebert’s death including relating to the balance of the life insurance funds and what those funds had been applied to;
(d)the tenancy agreement in respect of Cintra Place, and documents outlining all tenant payments of rental and documents outlining all bank accounts into which these payments have been made; and
(e)copies of the tax returns and rental statements filed by Mr Ostermann with the IRD (whether in New Zealand or in Australia).
[22] In a sworn affidavit of 10 August 2020 Mr Ostermann stated, amongst other things:
(a)he had been advised information for his Kiwibank accounts was being compiled but, due to some current issues surrounding his passport, could not be provided but this would be resolved in several days;
(b)CBA had been contacted to provide confirmation of all his bank accounts in his name or that he had an interest in, but they had not provided any documents in response to this request;
(c)he had applied life insurance funds to the purchase of a property at 1905 Windeyer Road for AUD 169,000;
(d)he had lost a portion of the life insurance funds due to “business losses”; and
(e)a peppercorn rental of $1 per week was received for the Cintra Place property and that full bank statements were not available.
[23] Mr Ostermann filed a second affidavit of documents on 17 August 2020 disclosing 20 documents.
[24] Unsatisfied with what he regarded as Mr Ostermann’s ongoing failure to comply with his discovery obligations, a further application for particular discovery was made by Mr Ebert and granted at a teleconference by Doogue J on 3 May 2021. At the teleconference, Doogue J also gave Mr Ostermann’s lawyers leave to withdraw on the basis they had no instructions from Mr Ostermann.
[25] Mr Ebert’s solicitors wrote letters to Mr Ostermann, serving the sealed orders and seeking compliance. Mr Ostermann responded that all documents had been supplied and were “freely available from the lawyers”.
[26] A further telephone conference was convened on 28 June 2021, on this occasion before Dunningham J. The purpose was to deal with the implementation of the orders that had been made in the proceedings. Mr Ostermann did not attend. Mr Ebert’s lawyers sought an unless order against Mr Ostermann in respect to his non-
compliance with the discovery orders. While accepting Mr Ostermann had not complied with the orders, Dunningham J was not prepared to make an unless order at that time but noted if non-compliance continued there would come a point when it was appropriate to do so.
[27] There was a further telephone conference before Nation J on 8 November 2021. Mr Ostermann attended and agreed to supply a number of missing documents (as noted in a minute of Nation J of the same date). The documents described were not all provided. Some further documents were received from Mr Ostermann on 3 December 2021, but he remained in breach of the discovery orders first made in July 2020.
[28] This application for unless orders was filed on 28 January 2022. Since then, Mr Ostermann has disclosed two further tranches of documents, the first on 6 February 2022 and the second on 15 February 2022. The documents still do not meet the requirements of disclosure set out in the discovery orders that have been made.
[29] From Mr Ebert’s perspective the documents provided on 6 February 2022 are particularly concerning because, he contends, they appear to show that Mr Ostermann has misled both Mr Ebert and the Court about the rental payments he received for the Cintra Place property.
[30] In addition, Mr Ebert contends bank statements provided on 15 February 2022 show substantial payments to Mr Ostermann’s accounts from the account “376033 CITIBANK EUROPE SCOTT MALCOLM OSTE” and that it is likely this is a further account of Mr Ostermann, the bank statements of which have also not been disclosed as required by the discovery orders. However, the correspondence Mr Ostermann has most recently sent to Mr Ebert’s solicitors indicates that these are payments made as Direct Credits from his Kiwibank account.
The outstanding breaches
[31] Against that background, I am satisfied that Mr Ostermann has failed to comply with the discovery orders made by the Court in the following respects.
[32] He has failed to provide full unredacted bank statements of his bank accounts. This is evident because:
(a)Mr Ostermann has not provided the missing pages of bank statements described in the minute of Nation J dated 11 November 2021.
[33] Mr Ostermann has not provided all documents showing how the proceeds of Andrea Ebert’s life insurance policy were applied. This is evident because:
(a)He has provided no bank statements that show payment of the purchase price for the property of 1905 Windeyer Road, New South Wales.
(b)Mr Ostermann has described business losses apparently paid from the insurance proceeds, but none of his bank statements evidence such losses.
[34] Mr Ostermann has not provided all documents relevant to rental income received for the Cintra Place property. This is evident because he has provided no bank statements recording the rent received from 19 March 2021 to 4 November 2021 (when the property was sold).
My assessment
[35] Relevant to the present application is the Court of Appeal’s statement in SM v LFDB that obedience with case management directions matters to the immediate parties and the public at large and is the foundation upon which the rules of the Court operate.3 The Court noted:4
From time to time the Court encounters a party who chooses not to obey, seeking perhaps to avoid accountability to the other party or to secure an unfair settlement. In such a case the interests of justice require that the Court do whatever is necessary to enforce obedience to its orders.
3 SM v LFDB above n 1, at [27]-[28].
4 At [28].
[36] While I give full weight to the fact that unless orders are to be considered a matter of last resort and made only if it is proportionate to the nature of a party’s default, I am satisfied it is appropriate to make such an order in this case.
[37] Mr Ostermann’s failure to comply with the Court’s directions have been repeated. The possibility that an unless order might be made has been raised on several occasions, but this has not led Mr Ostermann to comply with his disclosure obligations. He has also, on several occasions, promised compliance and failed to do so. His breaches of the directions have been serious and are preventing the cases progressing to trial. His actions must also have added significantly to the costs of Mr Ebert and have imposed a disproportionate case management burden upon the Court. The point has clearly been reached where an unless order should be made.
[38] Mr Ostermann has not raised anything in his notice of opposition and accompanying documents, which leads me to a view it would not be appropriate to make an unless order. For the reasons given, I do not accept that he has fulfilled his disclosure obligations. Further, it is no answer to this application to request documents from Mr Ebert. If Mr Ostermann considers he is entitled to further disclosure, he may make an application for particular discovery in the proper manner.
Result
[39]The application for unless orders is granted.
[40] I order that by 5.00 pm on 14 April 2022, Mr Ostermann shall file and serve a further affidavit of documents by way of discovery disclosing all documents in his possession or control as follows:
(a)the missing pages of the bank statements described in the minute of Nation J dated 11 November 2021;
(b)all documents showing how the proceeds of Andrea Ebert’s life insurance policy were applied;
(c)bank statements showing payment of the purchase price for the property at 1905 Windeyer Road, New South Wales;
(d)all documents evidencing “Business Losses” as described in para 7.5(h) of his affidavit of documents dated 10 August 2020; and
(e)all documents showing rental income received by him for the Cintra Place property and how such income was applied for the period 19 March 2021 to 4 November 2021 (when the property was sold).
[41]Unless Mr Ostermann complies with the order in [40] above:
(a)his notice of opposition in the proceeding CIV-2017-409-778 shall be struck out; and
(b)his statement of claim in CIV-2019-409-545 shall be struck out.
[42] Mr Ebert has been successful on his application. It is appropriate to determine costs now,5 and Mr Ebert is clearly entitled to his costs.6 The making of this application has already resulted in Mr Ostermann providing further disclosure of documents he was required to provide some time ago. Given the long history of non- compliance by Mr Ostermann with Court directions that made this application necessary, and the many opportunities he had to comply with those directions, it is appropriate to award Mr Ebert indemnity costs on this application along with his reasonable disbursements, and I so order.7
[43] I otherwise make no costs award at the present time in respect of the substantive proceedings.
[44] The case shall be listed for a teleconference on a date after 14 April 2021 to monitor compliance by Mr Ostermann with the orders made.
5 High Court Rules 2016, r 14.8(1).
6 Rule 14.2(1).
7 Rule 14.6(4)(a) and (b).
[45]I reserve leave to apply.
O G Paulsen Associate Judge
Solicitors:
Cavell Leitch, Christchurch Mr C S Ebert, self-represented