Page v Page HC Wellington AP No. 193/00

[2001] NZHC 592

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY AP No. 193/00

BETWEEN LEO SEBASTIAN PAGE
of 10 Harriet Street, Wellington,
Building Contractor
Appellant

AND JUDITH ANN PAGE
of 32 Cleveland Street,
Wellington, Musician
Respondent

Date of Hearing: 26 June 2001

Date of Judgment: 2 July 2001

Counsel: S.L. Abdale for Appellant
M.G. Gazley for Respondent

JUDGMENT OF DURIE J

Solicitors:
Neumegen & Co, Auckland for Appellant
G.J. Black and M. Gazley, Wellington for Respondent

Introduction

[1] In the Family Court the appellant opposed a matrimonial division of property from his mother that he claimed was held on an implied trust. However, for failure to particularise that claim and comply with related Court directions over a considerable period, the Court ordered that the appellant could not argue that defence.

[2] That order is now appealed. The right to appeal an interlocutory order of the Family Court with leave is not in dispute. The only question, as stated in the grounds of appeal, is whether the judgment was erroneous in fact, the appellant contending, amongst other things, that a lawyer caused the delay.

Background on delay

[3] The respondent commenced proceedings in October 1997 and filed an affidavit of assets and liabilities in the usual way. In responding with his equivalent affidavit the appellant gave notice that certain paintings in his possession or control were separate property. He claimed that these, which had come from his mother, had still not been subject to final distribution in accordance with wishes in or with his mother’s will. He also claimed that his sister and their respective children had an interest in them, and “it may be that such possession is in the capacity as Trustee”.

[4] In elaboration of his separate property claim in April 1998 the appellant completed a narrative affidavit deposing that his mother and he had always understood that he and his sister, his only sibling, were to hold the paintings for their respective children. He had children from the first marriage but not from the second, the marriage now in question. He appended his mother’s Will. Amongst other things this recited that unspecified personal property was to be distributed according to lists prepared and filed with it. The residue was for the appellant. The appellant deposed that his mother had left lists with the solicitor and had changed them from time to time but no complete list existed at her death. He then deposed that his sister had disputed ownership of the copyright of the paintings and that this had been settled by an agreement to share the copyright between them.

[5] The reason for particular concern over the paintings should be explained. The appellant’s mother was a celebrated artist of wide repute. She had sold few paintings in her lifetime and the collection represented most of her works. Included also were original works of artists of equal fame. No matter if the true monetary value of paintings withheld from the market is conjectural, in this case it will certainly be great.

[6] The appellant deposed that the claimed fact that the paintings were held for the children of the first marriage caused stress in the second, and to his second wife, the respondent. He stated that the respondent had pressed him to sell paintings but because of the perceived trust he felt obliged to decline. He filed affidavits from two others to support that perspective. He also claimed that the respondent had taken and had retained paintings.

[7] The respondent deposed of her understanding that the paintings were to be divided between the appellant and his sister absolutely. She disputed the mother had ever intended a trust or that the appellant had ever claimed or acted as though there was one.

[8] Two matters dominated proceedings at this stage. The first concerned the location and valuation of the paintings and other chattels. The second was that each party desired that the other should disclose further material. The respondent sought from the appellant details of the distribution of the paintings between the appellant and his sister. She also sought the lists that the testator’s will referred to, the solicitor’s files for the estate and the mother’s wills and details of the copyright claim, the claimed trust and all dealings with the paintings.

[9] On 4 September 1998 Judge Ellis directed on how the valuations would be completed. On discovery he directed each party to particularise that sought within 3 weeks with responses 3 weeks thereafter. The matter would come on again on 16 October.

[10] The parties listed their queries. The respondent prepared but deferred her reply awaiting an exchange with the appellant.

[11] At about this time the appellant instructed other counsel. Since that person has not been heard on criticisms in these proceedings I refer to him as ‘second counsel’. I am satisfied on affidavits now before me that following a meeting with the appellant second counsel was instructed by the appellant on 7 October and was advised of the forthcoming conference on 16 October. Possibly he was not formally briefed by instructing solicitors until later, as second counsel claimed, but the file was transferred from the former solicitors on 8 October and the need for prompt action was plain.

[12] The appellant had still not replied to the respondent when the matter was before the Court on 16 October. Nor was the appellant represented at that conference. The Court allowed the appellant one further week and ordered costs to the respondent for the appearance that day.

[13] Still nothing had been filed when the matter was next called, on 29 October. Again, counsel appeared only for the respondent. The matter was adjourned to the Registrar’s list on 12 November. The Court minuted that the appellant’s defence may be struck out if matters were not attended to by that date.

[14] On 10 November Mr Gazley for the respondent applied to strike out the appellant’s claim for non-compliance with directions. Mr Sygrove, the appellant’s instructing solicitor, applied to have the directions reheard on account of the intervening change of counsel. A concern over the valuation arrangements appears to have been the main reason.

[15] The Family Court file does not show what happened before the Registrar on 12 November but it appears second counsel was present. Then on 26 November the appellant filed an affidavit disclosing some but not all of the matters that he was bound to address. He deposed:

“1. He did not have power or authority over the mother’s estate and will files and was advised that these files were privileged.

2. The trust “was an implied trust from the express wishes from my mother and the way in which we subsequently treated those wishes by holding the paintings. There is no express Deed of Trust, no Trust in writing”.

[16] The appellant’s application to amend directions and the respondent’s application for strike out were considered by the Court on 12 February 1999. The appellant’s second counsel could not appear and Mr Sygrove attended in his place. In dispute were the valuation directions, a question of jurisdiction and whether the solicitor’s files were privileged. Judge Frater directed the appellant to file, in 3 weeks, an affidavit on the first item and submissions on the other two.

[17] The affidavit was filed on 12 March but no submissions were ever received. On 28 March the respondent filed a further strike out application for further non-compliance.

[18] This came before Judge Pethig on 1 April 1999. Second counsel was again unable to attend and Mr Sygrove was despatched in his place. The Judge was reluctant to accede to striking out the defence as “once again, the Court . . . has only Mr Gazley appearing as counsel”. In any event, the time for filing submissions was extended to 12 April. There was then a direction that the strike out “is otherwise to apply in terms of the application” but is suspended until 12 April “and will remain suspended thereafter if the submissions are filed, otherwise it takes effect on that date”. In fact nothing was done.

[19] The file is unclear on what happened on 12 April but according to subsequent minutes of Judge Ellis second counsel for the appellant informed the Court he was not pursuing the valuation objection. On 4 May he advised the Court he was not pursuing the privilege matter either. However, second counsel clearly intended to still advance the separate property claim. This is evident from a letter he sent to the appellant on 5 May. Production of material from the estate file appears to have been anticipated.

[20] The Court file was then mislaid. It surfaced again before Judge Ellis, nearly a year later, on 10 March 2000. He called urgently for a final directions conference.

[21] That conference was held on 3 April. I can find no record of it on the Court file but second counsel deposed he was present and, “according to . . . memory”, the appellant as well. However, although the Court did give notice of the conference to the appellant, I think it far from established that the appellant was in fact present. A strong indication that he was not is a letter to him from second counsel reporting the results. In recounting events in a minute dated 12 June, Judge Ellis recorded directions being given after hearing ‘both counsel’. Counsel for the respondent had complained by memorandum that the respondent had still not received the estate or will files and a list of the chattels and paintings in the respondent’s possession or control. Valuations were also incomplete. Judge Ellis ordered the appellant to file the particulars sought by 26 April.

[22] As shown in an annexure to second counsel’s affidavit, second counsel wrote to the appellant advising of the above on 4 April. He stated that he would photocopy the estate files for Mr Gazley. On this appeal Mr Gazley advised that to this day he has not seen such papers.

[23] Nothing had been filed in Court when the proceedings were called again on 12 or 15 June. Court minutes put the event at 12 June though affidavits in this appeal refer to 15 June. I do not think it matters but I will refer to the date given by the Court. In any event, Mr Sygrove appeared on that occasion. On this appeal Mr Sygrove deposed that the day before, second counsel’s secretary telephoned to say that second counsel was overseas and to ask that Mr Sygrove attend court. A letter from the Secretary the day before confirms this. Mr Sygrove deposed that he had no knowledge of the failure to apply with Court directions as he had left the running of the case entirely in second counsel’s hands. I note that Mr Sygrove had last appeared in April 1999, more than a year before.

[24] Mr Sygrove sought an adjournment. This was refused and the judge made the order that is now the subject of this appeal. He considered the appellant must certainly have been informed that 26 April was the final opportunity to file the information required and that the consequences of any failure had been clearly spelt out. He relied on the fact that the respondent had sought a strike out in a memorandum before the Court. He acknowledged that the appellant’s second counsel was out of the country but considered he had been able to instruct Mr Sygrove who had been involved earlier and was generally aware of the issues. Nonetheless he went on to observe that Mr Sygrove had not been put in a position to offer any explanation or excuse.

[25] The Judge went on to consider how the case, minus the separate property argument, might proceed. Still outstanding was a list of paintings and other chattels in the appellant’s possession. However valuations had been arranged for the next week and he deferred further directions pending the outcome. He awarded interim costs to the respondent of $2000, anticipating more, later, as a penal measure.

[26] The appellant completed an affidavit on 4 July annexing valuations of paintings and other personalty in his possession and indicating an intention to appeal the 12 June order. At a conference on 5 July 2000 Mr Gazley urged that the matter be set down for hearing. Judge Ellis was not prepared to do so and directed that the respondent file her valuation particulars and make further disclosure, if necessary, in view of fresh claims in the appellant’s affidavit. A final pre-trial conference was expected on 4 August and counsel were to file a further memorandum on issues and other matters including a schedule of the property for division.

[27] The appellant then instructed present counsel, Ms Abdale, on 19 July 2000. She filed for leave to appeal on 24 July. She received the files on 28 July and the following day filed an extensive memorandum in response to the Court’s most recent direction. On 1 August the appellant completed an affidavit in support of the leave application. He deposed that he did not know that he had been in continual disobedience of the Court’s directions. He said he complied with requests of his former counsel to provide information and had relied upon his counsel to attend to all matters relating to his defence.

[28] Despite opposition, on 25 August Judge Ellis granted leave to appeal. Quite properly he expressed no view on the cause of delay or the strength of the separate property argument but observed that if the appellant’s assertions on the cause of delay were true, there was ‘a risk of serious injustice’ if he was not allowed to even argue the matter.

Tests

[29] Applicable to this case is rule 13 of the Matrimonial Property Rules 1988. Where a respondent, the appellant in this case, fails to comply with an order of the Court, the Judge may order that the respondent be allowed to defend the application only on such terms as the Judge thinks fit. Further, the failure may be taken into account when the Court exercises its power under section 40 of the Act to make an order as to costs. In this case counsel did not contend that the order was without jurisdiction, only that there was an error of fact or procedure.

[30] Applicable tests for the Court’s inherent jurisdiction to reinstate proceedings struck out for non-compliance with timetable or ‘unless’ orders were considered in Jarden v Lawlor 12 PRNZ 516. Master Venning determined, after reviewing the authorities, that the Court should direct attention to the reasons for the default, the explanation for the same, the general merits of the claim or defence, and the overall justice including any prejudice to others. I think the same applies here save in the following respect. In Jarden the Court was reforming its own process. This being an appeal from another Court, I think Mr Gazley correctly submitted that the appellant must first establish error. The error pleaded here is that the Court was uninformed of the true facts. Even if that were so, there is still an issue of whether that was due to an error on the part of the Court or whether there was a procedural error.

[31] The appellant’s position was twofold.

1. He was unaware of the Court’s directions and the prospect that his separate property defence was in jeopardy for non-compliance.

2. The order complained of was made in the absence of appellant’s counsel. The appellant’s solicitor attended but was not briefed of the position and was therefore unable to properly put forward the appellant’s case. The appellant’s defence of the non-compliance claim was therefore reduced without proper hearing and process.

[32] The respondent’s position is that the appellant was in fact made aware of matters and cannot hide behind the alleged inactivity of his counsel.

[33] I deal first with whether there was an error as to the true facts and second, and only if need be, with whether there was an error on the part of the Court.

Submissions and conclusions on facts

[34] Crucial to the appeal was the affidavit of second counsel filed at this Court’s request. The substance of his response was that he came to put little weight on the appellant’s separate property claim. He said this followed perusal of the estate file (being, by deduction, after 4 May 1999). He deposed that thereafter he discussed with the appellant the prospect of a settlement and that the appellant supported that course. A settlement proposal was packaged in December 1999 but was rejected. The appellant was advised. He was also advised of the outcome of the conference on 3 April in which he was directed to give all particulars of the estate by 26 April. The letter added that if that was not done by that date then the separate property argument was to be discontinued. He said that he had no further instructions on that matter but subsequently assisted the appellant complete an affidavit of 4 July (in which the appellant deposed as to the paintings in his possession and the valuation for the same).

[35] The affidavit concluded that the appellant was informed of progress and process and that the appellant supported a settlement but that a settlement could not be achieved.

[36] In an affidavit in reply the appellant insisted that he had left everything to his counsel and had supplied information upon request. He deposed that he was never advised that his counsel had reservations about the separate property claim. Quite to the contrary at the final meeting counsel reviewed the affidavits required for that claim to be pursued. The appellant added he was unaware of the consequences of the strike out application and thought, even after the order was made in June, that it related only to counsel’s failure to secure proper representation at the conference that month.

[37] Ms Abdale for the appellant submitted that on a true construction of the several affidavits filed, second counsel had at all times been made aware of the court’s requirements. The failure to respond was due to a combination of absences overseas and counsel’s own view that the matter was capable of settlement. Counsel adverted to the fact that second counsel took no steps to respond to the Court’s directions until after a settlement proposal was rejected. She further submitted that counsel’s communications with the appellant were passive in the sense that they gave no direction to the appellant at a time when clear advice and active direction was required.

[38] In the submission of Mr Gazley for the respondent the evidence was consistent with the view that the appellant was privy to all material matters of process and had himself delayed in attending to matters.

[39] I have fully set out the facts to bring perspective to numerous details in the arguments. While there is clear conflict in the affidavits, and cross-examination was not sought by either side, I have no difficulty in reaching conclusions on the evidence as presented

1. I am satisfied that Mr Sygrove was not fully conversant with the file and was not in a position to argue matters at the June conference. He left all matters on the conduct of the case to counsel, and had not been involved with Court appearances for the appellant for more than a year. He was called upon to appear at the eleventh hour. That was at the request of second counsel’s secretary after second counsel had failed to telephone her. In other words, no proper arrangement in fact was made to secure adequate representation for the client.

2. Equally I am satisfied that the communications with the appellant were inadequate when the appellant expected and was entitled to expect direction and advice. I find no reason to doubt his sworn testimony that he did not appreciate the likely consequences of the way in which the case was conducted but most especially, he did have reason to think that the difficulty that he may have perceived would be resolved by his counsel. More particularly the primary outstanding matter in April 2000 was the failure to disclose particulars of the estate file. The telling point is that when second counsel advised that matters had to be attended by 26 April, he specifically stated “I am to photocopy the Estate files for Dr Gazley”. What else would the appellant think but that that concern was covered? In fact the files were not copied.

3. I am also satisfied that the appellant did not wish to resile from his separate property claim.

4. The second outstanding matter related to the valuation. Only on that matter did second counsel seek a discussion. There was that discussion and an affidavit was filed. I am satisfied that the appellant did in fact respond to requests for information, as he claimed.

5. Finally, once the appellant was alerted to the true import of the situation, he took action. He changed lawyers.

[40] I am then satisfied that the Family Court was not apprised of the appellant’s true position. Had it been I do not think it would have made the order now complained of.

Error

[41] Was there error on the part of the Court? I admit to difficulty in considering that there could have been given the Court’s proper concern to progress matters and the inordinate delay. Standard track cases are properly to be disposed of in 26 weeks of filing and complex cases within 39 and that must have weighed heavily on the Judge especially considering the record of previous indulgences. Nonetheless the threshold must be low where persons are denied the right to progress a particular defence or cause of action. In this case I can point to an internal inconsistency. The Judge considered second counsel had been able to instruct Mr Sygrove but added that Mr Sygrove had not been put in a position to offer any explanation or excuse. In view of the second opinion it appears that the proper course was to have adjourned.

[42] I note here that neither counsel on the appeal referred to any authority on the responsibility of counsel and the Court in such circumstances.

[43] Further, the order was for the maintenance of proper process and proper process is integral to justice overall. Where process can be shown to have produced a result unfair to any party, I think it right for this Court to intervene even although all was reasonably thought to have been proper at the time.

The merits of the appellant’s case

[44] Having regard to the prejudice to the respondent from delay it may be appropriate to deny relief unless it can be shown that the appellant has at least an arguable case. That is difficult in this instance since much depends upon an estate file that (after all the years) has still to be produced. Nonetheless taking things as they stand, I note the appellant’s position that a trust can be implied from extrinsic evidence of things said at the time and that he and his sister propose evidence in that regard. Corroboration may be sought from subsequent conduct and on that the appellant filed two affidavits some time ago. Clause 5 of the Will may also be used to support a contention that the mother, the artist, intended that “as far as possible” her estate, and that of her late husband, should pass to grandchildren.

[45] While expressing no view on the strength of the case, I think it can be said there is a case to be argued.

Prejudice to the respondent

[46] The obvious prejudice of delay is offset in this instance by the more serious prejudice of denying the appellant the right to argue his case. But there is another prejudice. On the horizon, and which would not be on the horizon but for the delay, is the coming of age of the Property (Relationships) Amendment Act 2001 on 1 February 2002. I understood from Counsel that it applies to cases filed but unheard on that date and has special provisions for ‘heirlooms’ and ‘taonga’. While I have not considered the meaning of ‘taonga’ in the context of the Act, it seems to me that its ordinary and everyday use would encompass without difficulty the artworks of the mother in this case.

[47] Possibly, something of the same result could flow from the invocation of s 14 of the Matrimonial Property Act 1976, which Ms Abdale has indicated will also be raised, but I should think the amendment, as it was described to me, would provide a more certain result. Clearly, for the respondent to bear this possible effect of the delay would be entirely wrong. Mr Gazley submitted that were this appeal allowed, it should be subject to counsel agreeing that the hearing commence before 1 February. It may not be possible to oust the law by consent. For that reason and those given earlier, my conclusion is as follows.

Conclusions

[48] Pursuant to s 77(d) of the District Courts Act 1947 the interlocutory order is rescinded on condition that the case is heard before 1 February 2002. In the event that that is not achieved the respondent has leave to apply for review of this order and for other orders in lieu.

Costs

[49] Ms Abdale sought costs against second counsel. As second counsel was not advised of that prospect nor called for cross-examination no such order could be considered.

[50] Ms Abdale otherwise accepted that whatever the result costs against the appellant were appropriate on a penal basis. I note that Judge Ellis made an interim order as to costs for $2000, expressly reserving further consideration of penal costs. On this appeal I order that the appellant bear the respondent’s costs on a solicitor-client basis, costs to be referred to the Registrar if need be.