Public Trust v Turner

[2017] NZHC 2979

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE

CIV-2016-419-432 [2017] NZHC 2979

BETWEEN

THE PUBLIC TRUST THE EXECUTOR

AND TRUSTEE OF THE ESTATE OF THE LATE DENNIS PAUL SAMSON Plaintiff

AND

MAPUNA TERESA LYNETTE TURNER Defendant

Hearing:	8 November 2017
Appearances:	D Mayall for Plaintiff M T Turner in person
Judgment:	1 December 2017

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

01.12.17 at 4.30 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

THE PUBLIC TRUST v TURNER [2017] NZHC 2979 [1 December 2017]

[1]      The plaintiff, the Public Trust, is the executor of the estate of the late Dennis Paul Samson (“the deceased”) who passed away on 31 May 2012.  The defendant was the deceased’s partner up until the time of his death.  In terms of cl 6.3 of his will, the deceased conferred on the defendant a right to live in a house property that he owned at Te Aroha rent free.  The licence to occupy the house was subject to a number of conditions contained in the will, including the following:

6.4This  right  is  given  to  my  partner  Mapuna  on  these  terms  and conditions:

1.My partner Mapuna will pay the rates, insurance premiums, mortgage interest and principal repayments, and other outgoings usually paid from income on my home …

[2]      On or about 17 October 2013, the property, which is situated at 27 Stanley Avenue, Te Aroha, was transferred to the plaintiff as the executor of the will.  Since the time of the deceased’s death, the defendant has occupied the property without paying rent.

[3]      However, the defendant has not paid the rates over the property.  The current amount of unpaid rates amounts to approximately $12,000.  The contention of the plaintiff is that because the defendant has failed to pay the rates since the date of death of the deceased, she has forfeited her right to continued occupation of the house property.    As  a result,  the plaintiff seeks  an  order  for possession  of the property and a writ of possession relating to it.

Principles relating to summary judgment application

[4]     Because this proceeding concerns a plaintiff’s application for summary judgment, brief reference is required to the principles which are relevant to such proceedings.

[5]      The plaintiff applies for summary judgment under r 12.2(1) of the High Court

Rules, which provides:

The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[6]      The plaintiff must prove on the balance of probabilities, therefore, that the defendant has no arguable defence.

[7]      The Court of Appeal in Krukziener v Hanover Finance Ltd stated that there must be no real question to be tried.1   It further commented:

[26]     …  The  Court  will  not  normally  resolve  material  conflicts  of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable … In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it …

Defences in overview

[8]      The defendant has raised a number of defences.  I will now consider each of these and make brief reference to the relevant evidence.  I will deal with some of the arguments which the defendant puts forward in a little more depth subsequently in this judgment.

[9]      The defendant is firstly critical of the circumstances in which the plaintiff prepared and had executed the will of the deceased.  In her first affidavit sworn 28

March 2017, the defendant gives the background to the circumstances in which the deceased prepared his will.  He had been diagnosed with terminal cancer and advised to get his affairs in order.  He went to the Public Trust, the plaintiff, apparently partly motivated by the fact that they offered a free will service.  She says that the deceased did not “have his full mind and capacity when he signed the will”.  He was “fuddled” by various drugs that he was taking for pain relief.

[10]     I consider that Mr Mayall for the plaintiff is correct in submitting that a court is  obliged  to  accept  that  the  grant  of  probate  of  the  will  of  the  deceased  is

unimpeachable and that the only course that the defendant could have taken if she

1      Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26].

wished to pursue this line of argument was to institute proceedings for the purpose of attacking the grant of probate.  That she has not done.  Indeed, as Mr Mayall pointed out, if the grant of probate was set aside, then the defendant would lose the license to occupy the house.

[11]      In my view, none of these matters give rise to an arguable defence.  As well as the argument just noted, the further contention is put forward that the supposed “free will” service was no such thing in the end, because of various costs which were required to be paid, such as costs of probate.

[12]     I consider that there is no arguable defence that the will did not take effect on the death of the deceased.  Therefore, it is beyond dispute that the property was properly transferred to the plaintiff as executor, and it has the right to bring the present proceedings for possession of the property.

The will did not require punctual payment to be made

[13]      The defendant, in her affidavit of 30 March 2017, said:

5.I have not been neglectful, nor delinquent [in paying the rates]  and  state  categorically  there  has  never  been  an intention to not or never pay the due rates.

6.I have merely found it difficult to pay the rates – the plaintiff has  added  the  word  “punctual”  –  due  to  the  amount  of income received since the death of [the deceased] …

[14]     Several contentions are raised in this part of the affidavit.  I shall first deal with the question of punctuality of payment.

[15]     The defendant has very little income, I accept.  It would be difficult for her to pay the rates.   The annual rates are approximately $2,000.   From what I can understand, the defendant receives approximately $220 per week from benefits.  She has been attempting to negotiate a settlement regarding the rates which would enable her to pay arrears of rates and current rates on an instalment type basis.  She says that she has attempted to come to an arrangement with the Matamata-Piako District Council (“the Council”), but that she has been frustrated in her attempts to do so.

Her evidence, which is contained in a “further affidavit” that she filed on 27 October

2017, and which has not been the subject of any reply by the plaintiff, is as follows:

1.(f)     That the plaintiff in the past months since the originating hearing has as yet not released their embargo against the option of time payment of both the arrears and current rates to the Matamata-Piako District Council.   An interview with the Rates Officer disclosed this in a letter of confirmation is expected to be received by the time of the scheduled hearing.

[16]     I note that the defendant does not actually claim that an arrangement had been entered into with the Council.  On one view of it, because the obligation to pay her rates is hers, it would be open to her to arrange the terms on which those rates are to be paid.  However, the position of the plaintiff is apparently that it has an interest in the matter of whether or not an instalment rates’ arrangement is agreed.   The plaintiff points out that over the five years since the deceased died, the defendant has only paid $30 in rates.  It doubts her willingness or ability to pay the rates, whether in their entirety or pursuant to an instalment agreement.   The plaintiff explains its position in an affidavit in reply, which has been filed on behalf of the plaintiff by Ms H A Skedgwell.  Ms Skedgwell says that she understands that the Council was not prepared to accept the defendant’s offer to pay rates of $300 per month to clear the rates arrears and penalties owing to the Council.  I interpolate that the defendant has not expressly refuted this evidence from the plaintiff.

[17]     Ms Skedgwell further says that by her calculation at the rate of $300 per month:

It would take the defendant approximately 7 ½ years or just over 89 months to maintain the current rates, and to clear the arrears and penalties owed to the Council in respect of the land.

[18]     Ms Skedgwell goes on to explain why any such proposal would, in any event, be prejudicial to the estate.   Therefore, regardless of whether or not the Council would be prepared to accept a proposal of the kind that the defendant says she wishes to make, that is not the end of the issue.  If the plaintiff is correct, such an arrangement could not be entered into because it would represent a departure from the terms of the will.

[19]     It is the case for the plaintiff that the beneficiaries of the estate would be prejudiced if possession is not granted as the plaintiff seeks.  That is because, as a result of the continued occupation of the property by the defendant, which would continue in those circumstances, the failure to maintain the rates in respect of the land would lead to further problems and lead to the plaintiff incurring “significant legal costs”.   Those costs are not explained, but presumably they relate to further legal proceedings that would be required if, as it is the expectation of the plaintiff apparently, the defendant would default on any rates’ arrangement.

[20]     Ms Skedgwell spells out the prejudicial effect in more detail:

If the defendant fails to make payment, then this will have a detrimental effect to the other beneficiaries of the deceased’s estate.   If the Council forces the land to be sold via a mortgagee sale then the land is likely to be sold for a significantly less price; and

(e)   The plaintiff has no assurance (formal  or otherwise) of the Council to forego or delay enforcement and action in respect of the rates, arrears and penalties owing to the Council.   But even if the plaintiff had such assurance, it would inevitably be contingent on the defendant adhering to a payment arrangement in working with the plaintiff neither of which the plaintiff has done since probate was granted in July 2012.

Assessment

[21]     In general terms, I agree that the condition of the will, in the absence of some provision which expressly authorises other than current payment of the rates as they fall due, means that it is the obligation of the defendant to not allow the rates to fall into arrears.  I cannot accept that the deleterious effects of accumulating rate arrears were something that the testator foresaw might happen and was an outcome that he authorised, in the absence of express indication that that was in fact his wish.  The will does not make any reference to delayed or instalment payments.

[22]     Further, and more significantly, I accept that any failure to pay rates would have a prejudicial effect on the other beneficiaries to the estate.   If a substantial amount of arrears continues to exist or, worse, is increased, it is likely that the Council will be obliged to recover the rates by means of a rating sale.  The cost of the rates would therefore be deducted from the proceeds of sale of the house.  I also

agree that it is likely that there is a risk that such a sale would be at a lower value than a sale on a non-forced basis.  Be that as it may, the effect of the entitlement of the local authority to charge the land with rates liabilities is a relevant factor when it comes to interpreting the provisions of the will.

[23]     The   amassing   of   increasing   rates   arrears,   given   the   poor   financial circumstances of the defendant, could potentially defeat the requirement in the will that it is the defendant who is primarily liable to pay the rates.  A failure to pay the rates and the resulting default would in fact move the obligation onto the estate and thence, at least in part, to the residuary beneficiaries.   That would mean that they would be visited with an obligation to pay the rates, which is not possible as it was not what the will contemplated.  I, therefore, consider that the defendant has been in breach of the will and has not satisfied the conditions on which she is entitled to

continue in possession of the property.2

[24]     In my view, the plaintiff is correct that the prejudicial effects of allowing the rates to fall into arrears was such that it is generally unlikely that that was what the testator assumed would happen, and was acceptable to him when he drew up the will.

[25]     My conclusion with regard to the claim of prejudice is this.  I agree that the requirement to pay rates, which was a condition of possession, is a condition requiring the rates to be paid as they fall due.  Therefore, even if the Council was willing to enter into a compromise concerning the rate of payment of the rates, it is understandable why it would not be prepared to waive the conditions in the will to accommodate such an arrangement.  By doing so, the plaintiff would be breaching its obligation to carry out the terms of the deceased’s will.

Defendant not “delinquent” – and has taken reasonable steps

[26]     The defendant accepts that the obligation to pay the rates is a condition of the right to continue occupying the property, as already noted earlier in this judgment.

The defendant’s contention, however, in effect is that rather than being an absolute

2            See Local Government (Rating) Act 2002, ss 75-76.

obligation to pay the rates, she will have satisfied the requirements of the will by making reasonable attempts to pay the rates.

[27]     The matters canvassed under the part of this judgment where I considered the question of whether the rates payment had to be punctual or could be subject to deferral have relevance to this aspect of the defendant’s case as well.

[28]     If the defendant does not herself have an absolute obligation to pay the rates, and if she is entitled to default because of financial inability for example, then the obvious result will be to throw the burden of rates onto other beneficiaries.  Such an effect would be distortionary of the testator’s apparent intentions as set out in the will.

[29]     It might also be relevant to make a comment on the apparent understanding of the defendant about the part which the plaintiff plays in the ownership of the property.  The plaintiff is in no sense a beneficial owner of the property.  In layman’s terms, the plaintiff might be described as the agent of the deceased’s estate.  There is no basis upon which a party in the position of the plaintiff, as executor of the estate, can be expected to contribute its own organisational resources to make good any deficiency in the rates.  It is inescapable that if the defendant does not pay the rates, it will not be the plaintiff that does, but the other beneficiaries.

The land value will rise

[30]     A further argument which the defendant puts forward was that over time the value  of  the  property  will  rise.    I  understand  that  this  argument,  although  not explicitly stated in these terms, involves the further proposition that because of the expected steady increases in value of the property, this will off-set any accrual of the existing and further rates arrears.  Therefore, I understand the defendant to say that there is no real problem being caused through the accumulation of the existing arrears and any further arrears that might be aggregated in the years ahead.  I do not accept such an argument, if I have accurately stated it.  Any increases in the value of the property are for the benefit of the beneficiaries of the estate generally, and cannot be regarded as the means by which the defendant would ultimately be able to pay accumulated arrears of rates.

The claim of the defendant that she can pay the rates

[31]     The defendant is of the view that her financial circumstances now afford her the opportunity to pay off the arrears of rates.  This would still require an instalment plan to be negotiated.  That is to say, it would be a repayment proposal that would not pay off the arrears of rates here and now.  Necessarily there would be continuing arrears of rates that were unpaid.

[32]       I have already discussed why such an outcome would not be consistent with the terms of the licence to occupy the property which is granted under the will.  I do not consider that this aspect of the argument which the defendant puts forward calls for further discussion.

Residential Tenancies Act 1986

[33]     I understand that the defendant further puts forward a contention that her position is protected as a tenant under the above Act.

[34]     That submission is in my assessment incorrect.  The correct position is that which is stated by counsel for the plaintiff, which is that the defendant does not occupy the property as a tenant who is paying rent, which is the appropriate subject matter  of  the  Residential  Tenancies  Act  1986.    Rather  she  occupies  it  as  a beneficiary under the will of the deceased, and in that status is not able to invoke the protections set out in the Act.

Conclusion

[35]     I am of the view that the defendant has failed to establish that she has an arguable defence to the claim which the plaintiff brings and in regard to which it seeks  summary  judgment.    The  plaintiff  is  entitled  to  judgment  in  terms  of paragraphs (a) and (b) of the prayer for relief in the statement of claim.  The terms of this judgment are not to take effect before 19 January 2018.

[36]     There will be an order that each side bears its own costs in the proceeding.

[37]     The circumstances that the defendant finds herself in are unfortunate.  She is not a young woman.  She has little in the way of financial resources and she says if the judgment in this case is executed, she will be rendered homeless.  I have urged the parties at the hearing to attempt to explore a settlement before the judgment takes effect.  I should add that I am not in any way criticising the actions which the Public Trust has taken.   In the end, the onus is on the defendant to meet her obligations under the licence.   She is not entitled to sit on her hands and then criticise the plaintiff for not coming up with some workable arrangement.   The only other comment that I would make is that it is understandable that the plaintiff, which is the executor in the estate, does not want to expose the estate to any of the risks that I have discussed in the course of this judgment.  It would seem that the only way that any workable compromise might be reached would be in circumstances where the other beneficiaries to the estate became part of an arrangement in regard to the rates, with  possible  indemnities  back  from  the  defendant  which  would  ensure  that ultimately any potential loss to them could be recovered from the interest of the

defendant in the estate.  Beyond that, it is not appropriate for me to comment further.

J.P. Doogue

Associate Judge