Rosenberg v AMP Services (NZ) Limited

[2017] NZHC 2232

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-000767 [2017] NZHC 2232

BETWEEN

REBECCA ROSENBERG

Plaintiff

AND

AMP SERVICES (NZ) LIMITED Defendant

Hearing:

13 September 2017 with additional written submissions 29

September 2017, 5 October 2017 and 9 October 2017

Appearances:

R Rosenberg (Plaintiff/Respondent) in person - attendance excused

J A Knight/S Kettani for the Defendant/Applicant

Judgment:

15 September 2017

Reissued:

13 November 2017

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

[on defendantʼs strike out and other applications]

ROSENBERG v AMP SERVICES (NZ) LIMITED [2017] NZHC 2232 [15 September 2017]

Introduction

[1]      Rebecca Rosenberg is the daughter of the late Allen Rosenberg (“the father”).

The father died on 18 April 2006.

[2]      On 15 April 2016, Ms Rosenberg commenced this proceeding.  She claims that  the  defendant  (then  the  National  Mutual  Life Association  of Australia  Ltd (“NMLA”)) did not pay a life insurance benefit following the death of the father. Her claim also extends to superannuation and “any other outstanding payments”.

[3]      Ms Rosenberg seeks damages and an order for disclosure of information.

The defendant’s applications

[4]      The defendant applies for an order striking out the plaintiff’s claim in its

entirety. Alternatively, it seeks security for costs.

Procedure

[5]      On  10  May  2017,  the  Court  made  directions  for  the  hearing  of  the defendant’s  application  on  4  July  2017.     It  made  standard  directions  as  to submissions and other matters.  Ms Rosenberg subsequently sought and was granted an adjournment to 13 September 2017.

[6]      The parties then filed their submissions – the defendant on 22 July 2017 and

Ms Rosenberg (48 pages) on 6 September 2017.

[7]      On 6 September 2017, Ms Rosenberg, when filing her submissions, also stated by email that she was overseas and could not handle any mental stress.  She asked whether it was possible that her attendance be excused and that the Court rely on her written submissions.

[8]      By Minute I excused Ms Rosenberg’s appearance.  I explained in the Minute that the hearing would proceed on 13 September 2017.  Mr Knight would have the opportunity to speak to his submissions.  Ms Rosenberg’s written submissions would be considered by the Court and treated as her full submission.

[9]      That is how the hearing then took place, with Ms Rosenberg’s appearance excused.

The strike out application

Striking out a claim – the principles

[10]     High Court Rule 15.1 makes provision for orders striking out all or part of a pleading.  In this case the defendants/applicants invoke r 15.1(1)(a) (no reasonably arguable cause of action) and r 15.1(1)(d) (abuse of the process of the court).

[11]     I adopt the following as principles applicable to the consideration of this application:1

(a)       The Court is to assume that the facts pleaded are true (unless they are entirely speculative and without foundation).

(b)      The cause of action must be clearly untenable in the sense that the

Court can be certain that it cannot succeed.

(c)       The jurisdiction is to be exercised sparingly and only in clear cases.

(d)The  jurisdiction  is  not  excluded  by  the  need  to  decide  difficult questions of law, even those requiring extensive argument.

(e)       The Court should be slow to rule on novel categories of duty of care at the strike out stage.

[12]     Further principles apply where the application is based on an allegation that the claim is time-barred:2

1      Attorney-General v Prince [1998] 1 NZLR 262 (CA).

2      Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721, per Tipping J at [33] (reasons agreed with per Blanchard J at [1], McGrath J at [93]).

(a)      The defendant  must  satisfy the Court  that  the  plaintiff’s  cause of action is so clearly time-barred that the plaintiff ’s claim can properly be regarded as frivolous, vexatious or an abuse of process.

(b)If the defendant demonstrates that the plaintiff’s proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act 2010, the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable case for an extension or postponement which would bring the claim back within time.

Facts relevant to limitation issue

The plaintiff ’s pleadings as to the life policy

[13]     Ms Rosenberg pleads the following as facts and they are therefore taken to be true:

(a)       Ms Rosenberg is the daughter of the father.

(b)During his lifetime, the father had taken out a life insurance policy with AXA (now part of the defendant).

(c)       On 21 April 2006, AXA sent to the father a “Notice of Payment Due”

in which it was stated:

Unfortunately,  your  policy  now  has  insufficient  funds  to cover  ongoing  costs.  Please  pay  $56.70  before  5th   May

2006.  If we do not receive any payment by 5th  May 2006,

your  POLICY  WILL  BE  CANCELLED  AND  ALL ENTITLEMENTS DISCONTINUED.

(d)      The father had been unwell before he died (on 18 April 2006).

(e)       The plaintiff’s mother (“the mother”) called AXA by telephone on 18

April 2006, at a time when the father was still alive (“the 18 April

2006 conversation”).  In the 18 April 2006 conversation, the mother

was told that the policy was still in force and was told to send a

premium payment of $56.70 to stop the policy from lapsing before 19

May 2006.

(f)      Following the 18 April 2006 conversation, the mother immediately wrote a cheque and sent it to AXA.

(g)On 20 April 2006, AXA received the cheque, accepted it and banked it.

(h)The mother (subsequently) in 2006 contacted AXA as to the father’s life insurance but AXA denied the claim, saying that the father was not alive at the time of the 18 April 2006 conversation.

The plaintiff ’s pleadings as to superannuation and other entitlements

[14]     The plaintiff’s material pleadings as summarised above concern the father’s

life insurance.

[15]     The plaintiff’s  pleadings  at  other  points  refer  to  superannuation,  pension

fund, retirement fund, and mutual funds.

[16]     In particular, Ms Rosenberg pleads:

My family have an equitable right to the proceeds of the Life Insurance Policy and also to the Superannuation; Pension Fund; Retirement Fund and any mutual funds that were a part of the Arch Scheme and my father’s dealings with Axa.  As such, any life insurance proceeds; superannuation; pension fund; retirement funds and mutual funds are held on trust by Axa/Amp on behalf of my family.  Trustees have a duty to disclose full and honest information to equitable beneficiaries.

[17]     Thereafter, in the pleading Ms Rosenberg records:

For the reasons mentioned above, I would like to request a full disclosure of my father’s life insurance policy; superannuation; pension fund; retirement fund; mutual funds; the full Arch Scheme details and the full file.

The plaintiff ’s pleadings in relation to limitation periods

[18]     Through  the  statement  of  claim,  Ms  Rosenberg,  in  addition  to  seeking financial relief, seeks orders that AXA provide information.   She pleads in explanation of that information request:

(a)      AXA refused to provide any information unless there was an executor or an administrator of the father’s estate.

(b)The father had not left a will and “letters of administration have not been administered”.

(c)       AXA refused to provide a copy of the life policy or the file to “us”.

(d)In 2009, a law firm requested a copy of the 18 April 2006 telephone conference.

(e)       AXA initially rejected that request.

(f)      Upon further demand, AXA provided a two-line summary (not a full written transcript) of the 18 April 2006 conversation and said that they had lost the original telephone voice recording.

(g)AXA’s losing of the telephone evidence involved “a failure to exercise due diligence” material to this case which prejudiced the preparation of “our” case.

(h)Ms Rosenberg has experienced and continues to experience numerous medical issues from 2004 to date, including for a very rare condition, and has experienced “serious trauma”.

(i)Another member of Ms Rosenberg’s family has had serious medical issues.

(j)       The medical issues have affected the whole family.

The plaintiff ’s additional evidence

[19]     Ms Rosenberg in an affirmation in opposition has deposed to the following additional facts:

(a)       NMLA (trading as AXA) issued a life insurance policy for $105,000 over the life of the father on 5 October 2001.

(b)      The policy was owned by the father.

The defendant’s interlocutory applications

[20]     The defendant applies for an order striking out the claim on two grounds: (a)           The plaintiff does not have standing to pursue the claims.

(b)The claim is time-barred under the Limitation Act 1950 and should therefore be regarded as frivolous, vexatious or an abuse of process.

Alternatively, the defendant seeks security for costs.

Application to strike out claim – issues

Issue 1

The plaintiff ’s standing – beneficial rights

[21]     For the defendant, it is noted that the father was both the life insured and the sole beneficiary under the policy, and thereby the policy owner.   The defendant asserts that Ms Rosenberg has no standing to bring this proceeding because she is neither a party to or beneficiary of the policy nor an executor or administrator of the estate of the father.

[22]     As submitted by Mr Knight, the policy and any entitlements under it formed

part of the father’s estate upon his death.3

3      R Merkin and C Nicholl Colinvaux’s Law of Insurance in New Zealand (Thomson Reuters, Wellington, 2014) at [14.2.1].

[23]     Mr Knight first focused on who has the right to pursue any claim on behalf of the father’s estate, submitting that the right lies (because the father died without a will) with any administrator appointed  under the Administration Act 1969.   Mr Knight correctly submits that, in the absence of such an appointment, no one may legally act on behalf of the estate.  The position is recognised in the judgments of the Court of Appeal in Guardian Trust & Executors Company of New Zealand Ltd v

Hall,4 and in Wakenshaw v Wakenshaw.5

[24]     The point is addressed in different terms, but to similar effect in Nevill’s Law

of Trusts, Wills and Administration:6

The title of an administrator is different from that of an executor.  Since such a person is appointed by the court, no one is in a position to act until an appointment has been made and the grant issued.

[25]     There is accordingly no one at present legally permitted to bring a proceeding in relation to any assets of the father’s estate.

[26]     Mr Knight also addressed directly the nature of the interest that a beneficiary has in an estate, having regard to references in Ms Rosenberg’s submissions to equitable interests.  In the written submissions filed by Ms Rosenberg, she did not claim to have rights of administration.  Rather, Ms Rosenberg’s submission in this regard may be summarised in these terms:

(a)       as the daughter of her intestate father, she is entitled with siblings to share equally in two-thirds of the estate; and

(b)she is therefore an equitable and property owner of her share (as is her mother of her mother’s share).

[27]     Ms Rosenberg invokes s 24(1) Administration Act for the proposition that equitable  estate  property  rights  (such  as  superannuation)  are  held  pending  the

establishment of a legal estate.  In fact, s 24(1) of the Act provides:

4      Guardian Trust & Executors Company of New Zealand Ltd v Hall [1938] NZLR 1020 at 1026.

5      Wakenshaw v Wakenshaw [2017] NZCA 252 at [32].

6      N  Richardson  and  L  Breach  Nevill’s  Law  of  Trusts,  Wills  and  Administration  (12th   ed, LexisNexis, Wellington, 2016) at [19.2].

24       Estate to vest in administrator

(1)       Immediately upon the grant of administration of the estate of any deceased person, all the estate then unadministered of that person, whether held by him or her beneficially or held by him or her in trust, shall vest in the administrator to whom the administration is granted for all the estate therein of that person:

provided that nothing in this section shall affect the earlier vesting in an executor by operation of law.

[28]     As this provision expressly states, the deceased’s property rights (that is, those of his estate) are vested in the administrator.   Section 24(1) of the Act thus deals with the administrator’s rights – it does not deal with the rights of persons beneficially entitled in the estate.

[29]     Ms Rosenberg refers also  to the provisions of s 5(1) of the Act  for the proposition that this Court has authority to hear and determine matters of the kind that are the subject of this proceeding.

[30]     Section 5(1) of the Administration Act states:

5        Probate jurisdiction of High Court

(1)       The court shall continue to have jurisdiction and authority in relation to the granting and revoking of probate of wills and letters of administration with or without a will annexed of the estates of deceased persons, and in regard to the hearing and determining of proceedings relating to testamentary matters and matters relating to the estates of deceased persons.

[31]   Ms Rosenberg submits that this litigation falls within the concept of “proceedings relating to testamentary matters and matters relating to the estates of deceased persons”.

[32]     Contrary to the thrust of Ms Rosenberg’s submission, s 5(1) of the Act does not authorise a person who is either an established beneficiary or a claimant to beneficial rights in relation to an estate to pursue a claim by reason of that beneficial interest against a stranger to the estate.   Things in action, such as rights to claim

against strangers, vest in the executor or administrator.  The relevant principle was enunciated by the Court of Appeal in Cowan v Martin where the Court stated:7

Where a claim is based on a duty owed to a trust, a beneficiary of the trust does not have a separate cause of action in their own right against the third party wrongdoer. The beneficiary cannot supplant the trustee and bring a separate action.

The Court of Appeal’s observation in relation to the rights of trustees applies equally

to the rights of executors and administrators.

[33]     If neither an executor nor an administrator has been appointed in relation to an estate, then a person wishing to have a claim pursued on behalf of the estate must first have letters of administration issued or, where a will exists, probate granted.

[34]     To the extent that Ms Rosenberg is a beneficiary of the father’s estate, she will have a claim against the estate (the administrator of which might pursue a claim on the insurance policy).   However Ms Rosenberg has no claim directly on the insurance policy.  The same applies to any other rights which the father may have had  under  contracts  entered  into  with  the  defendant,  whether  relating  to  life insurance, superannuation or otherwise.

[35]     As Mr Knight submitted, the Court of Appeal’s judgment in Guardian Trust

& Executors Company of New Zealand Ltd v Hall establishes that the beneficiary of an estate has no equitable interest in the estate property until administration of the estate is complete.8

[36]     The first ground of the defendant’s application is therefore established.  Ms Rosenberg does not have standing to pursue the claims.   That is sufficient to determine the application.

[37]     The plaintiff’s claim on Issue 1 cannot succeed.

7      Cowan v Martin [2014] NZCA 593 at [53](a).

8      Guardian Trust & Executors Company of New Zealand Ltd v Hall, above n 4.

Issue 2

The plaintiff ’s standing – transfer or assignment of relationship property rights

[38]     Ms Rosenberg claims an entitlement to seek relief against the defendant also by reason of entitlements under the Property (Relationships) Act 1976 (PRA).  She asserted that:

(a)       under the PRA her mother owned a share of the policy; and

(b)      her mother had transferred to Ms Rosenberg that share.

[39]     In her submissions, Ms Rosenberg has recorded an intention to elect Option A under s  61  of  the PRA, whereby she applies  for a division  of the  relationship property of her father and mother.  (Her submissions recognise that no such election has occurred to date).

[40]     For strike out purposes I assume that Ms Rosenberg will be able to prove that her mother did execute a document purporting to transfer or assign to Ms Rosenberg the mother’s share in relationship property.

[41]     Even when such assumption is made, Ms Rosenberg does not acquire by assignment a standing to pursue division.  The choice of options under s 61 of the PRA must be made in the form prescribed in s 65 of the PRA – namely by “a written notice indicating that choice” completed and signed by the “surviving spouse or partner”.

[42]     It is not (and apparently cannot on the facts be) asserted that to date an election has been made.  In the absence of such election there is no right (whether on the part of the spouse, partner or anyone else) to seek a division of property.

[43]     Furthermore, any purported choice of option by Ms Rosenberg would be a nullity.  The classes of persons who may apply for a division of property (under s

25(1)(a) of the PRA ) are those set out in s 88 of the PRA.  Ms Rosenberg does not fall within the categories of person under s 88(1) (the surviving spouse or partner

and persons with conflicting claims in respect of the property).   Nor is she, as covered by s 88(2), the personal representative of the deceased (who is under that subsection entitled, with the leave of the Court, to apply for an order under s 25(1)(a) of the PRA).  The discussion at [21] to [25] above applies equally to this aspect of Ms Rosenberg’s argument – she would have no standing to pursue a division of her parents’ relationship property.

[44]     Anticipating  these  issues,  Ms  Rosenberg  alternatively  requested  that  the Court adjourn the proceeding to allow time for an election to be made under the PRA.  There might be grounds for an adjournment if an effective option were about to be made, but (for the reasons stated) that is not going to occur.

[45]     The plaintiff’s claim on Issue 2 cannot succeed.

[46]     As neither basis of claim is tenable, the proceeding as a whole should be struck out.

Issue 3

The limitation period

[47]     It becomes unnecessary that I determine whether the claim should have been struck out on the alternative ground that it is time-barred.

[48]     Ms Rosenberg submitted that the cause of action in relation to the contract accrued on the “date of notification”, which she submits has yet to occur.  Mr Knight referred to the wording of the Policy Schedule where the “Event when Payable” is defined as “Death of the Life Insured”.  Mr Knight submitted that the cause of action

in relation to the insurance policy therefore accrued on 18 April 2006.9    Were Mr

Knight’s submission as to the limitation date of the contractual cause of action (being

18 April 2006) upheld, Ms Rosenberg alternatively submitted that the time limit

9      Mr Knight relies also on Arnold v American International Assurance Company (Bermuda) Ltd t/a AIG Life HC Auckland CIV-2008-404-6987, 4 June 2009, per Associate Judge Abbott at [14]: “In the absence of policy terms to the contrary, the limitation period begins to run as soon as the insured event occurs even though no claim has been made at the time.”  See, also, R Merkin and

which would otherwise apply had been extended or postponed through one or more of:

(a)       an acknowledgement of the claim;10

(b)      Ms Rosenberg’s subsequent discovery of a mistake of the defendant;11

(c)       Ms Rosenberg’s intervening disability; and/or12

(d)the    cause    of   action    having    become    reasonably    discoverable subsequently.13

[49]     Alternatively,  Ms  Rosenberg  submitted  that  the  limitation  period  for  her claim should be assessed as on a claim in respect of trust property, with a six-year time-limit therefore not applying.

[50]     Mr Knight presented detailed, cogent submissions as to why each of Ms

Rosenberg’s alternative submissions must fail.

[51]     It  is  unnecessary  that  I  here  analyse  each  of  those  alternatives  –  Ms

Rosenberg’s lack of standing is determinative of the application.

Alternative application – security for costs

[52]     The application for security for costs falls away by reason of the striking out of the claim.

[53]     The  defendant,  in  support  of  its  application,  relied  on  evidence  both  of inability to pay costs and residence abroad.   The defendant asked that security be

fixed at $20,000.

10     Under Limitation Act 1950, s 25(4).

11     Under Limitation Act 1950, s 28(c).

12     Under Limitation Act 1950, s 24.

13     Under Limitation Act 1950, s 4(9) and/or s 21(1).

[54]     Ms   Rosenberg   did   not   make   submissions   in   relation   to   either   the appropriateness nor the amount of an award of security.

[55]     The jurisdiction  to  order security was  established  on  the evidence.   The amount ($20,000) suggested by Mr Knight would have fallen within an appropriate range.  In the event, no order is required.

Outcome

[56]     The defendant succeeds on its primary application.

[57]     By his synopsis of submission, Mr Knight applied for indemnity costs.  He submitted that this case comes within the indemnity costs category set out in r

14.6(4)(a)  High   Court   Rules   (“the  party  has   acted  vexatiously,   frivolously, improperly, or unnecessarily in commencing … a proceeding) and the plaintiff’s claim falls within the category of claims hopeless from the outset as identified by the Court of Appeal in Bradbury v Westpac Banking Corporation.14

[58]     It is almost inevitable that costs will follow the event.  Having regard to the fact that Ms Rosenberg’s attendance was excused at the hearing, I will reserve costs. In the event the parties are unable to agree on costs, the defendant is to file a memorandum (four page limit) to be followed by the plaintiff’s memorandum within five working days thereafter. The Court will then determine costs on the papers.

Orders

[59]     I order:

(a)       The plaintiff’s claim in this proceeding is struck out.

14     Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400, at [79] –

[80].

(b)      Costs and disbursements are reserved.

Associate Judge Osborne

Solicitors:

Chapman Tripp, Wellington

Copy to: R Rosenberg