Scannell v Love

[2017] NZHC 867

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2015-485-930 [2017] NZHC 867

UNDER

Secttion 339 of the Property Law Act 2007

IN THE MATTER

of the Estate of Elizabeth Ann Love

BETWEEN

PATRICK BRIAN SCANNELL AND ANN MARIE JUDD

Plaintiffs

AND

FRANK ERNEST LOVE Defendant

On the papers
Counsel:	F J Handy for the plaintiffs J C Gwilliam for the defendant
Judgment:	3 May 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      This   is   an   application   by   the   defendant   for   costs,   following   the discontinuance of the plaintiffs’ proceeding filed under s 339 of the Property Law Act 2007 (the PLA).

Background

[2]      The plaintiffs are the executors of the Estate of the late Elizabeth Ann Love (the deceased) who died on 22 February 2015. The defendant is the widower of the deceased.

[3]      Under the deceased’s last will, the defendant was given the right to live in a house at 35 Wood Street, Wainuiomata, then owned entirely by the deceased, for as

long as he wished. However soon after the will was made the couple moved to

SCANNELL v LOVE [2017] NZHC 867 [3 May 2017]

8 Faulke Avenue, Wainuiomata (the Faulke property). The will was not updated before the deceased died.

[4]      The Faulke property is the only asset in the deceased’s estate (other assets have passed to the defendant as surviving joint tenant). The estate was left to the deceased’s children.

[5]      The  defendant  had  lodged  a  caveat  against  the  grant  of  probate,  but  he withdrew this caveat on 26 August 2015.

[6]      The plaintiffs filed this proceeding on 10 November 2015.  In it they alleged that the Faulke property was purchased by the deceased and the defendant as tenants in common in the shares nine tenths to the deceased and one tenth to the defendant. They pleaded that they wished to sell the Faulke property, so the deceased's debts could be paid and her estate distributed.  However the defendant refused to vacate the property or agree to a sale.  They sought an order for sale under s 339 of the PLA.

[7]      The defendant filed a statement of defence on 16 December 2016.  In it, he contended that the Faulke property was the family home of the deceased and himself under the Property (Relationships) Act 1976 (the PRA), and that he was entitled under that Act to continue to occupy the Faulke property.  He denied that there were any debts owed by the estate.

[8]      The defendant went on to plead that he had applied to the Family Court at Lower Hutt for orders under s 27 of the PRA, including an order for possession of the Faulke property.

[9]      The defendant filed his application in the Family Court on 16 December

2015, and it was heard on 16 September 2016.  In a reserved judgment Judge Binns granted an occupation order in favour of the defendant until 31 December 2017.1

Thereafter, the Faulke Property was to be sold.

1 Love v Scannell [2016] NZFC 8114.

[10]     The plaintiffs discontinued their proceeding in this court on 16 March 2017.

[11]     The defendant is seeking costs in accordance with r 15.23 of the High Court

Rules. The plaintiffs submit that costs should lie where they fall.

Costs following a discontinuance by a plaintiff — the law

[12]     High Court Rules 2016, r 15.23 provides:

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[13]     The following principles on the application of r 15.23 emerge from a number of decisions of the courts, including Kroma Colour Prints Ltd v Tridonicatco NZ Ltd,2  FM Custodians Ltd v Pati,3  and Opus International Consultants Ltd v Colac Bay Vision Ltd: 4

(a)      The r 15.23 presumption obviates any requirement for the defendant to demonstrate that the plaintiff acted unreasonably in commencing and then discontinuing the proceeding.

(b)Although the r 15.23 presumption is designed to give a certain and predictable outcome upon discontinuance, it may be displaced if the court finds there are circumstances which make it just and equitable that it should not apply.

(c)      Although  the  court  is  not  limited  in  the  factors  it  may take  into account when considering whether the presumption is displaced:

(i)the court will not usually consider the merits of the respective cases, unless they are so obvious that they should influence the

costs outcome;

2      Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973.

3      FM Custodians Ltd v Pati [2012] NZHC 1902 at [10]–[12].

4      Opus  International  Consultants  Ltd  v  Colac  Bay  Vision  Ltd  [2015]  NZHC  1782,  [2015] NZCCLR19 at [20]–[24].

(ii)the court will consider the reasonableness of the respective stances of the parties up to the point of discontinuance.  Was it reasonable for the plaintiff to bring and continue the proceeding, and for the defendant to oppose the proceeding? The plaintiff will not be able to avoid a costs order simply by showing that at one point it had reasonable grounds for believing it would be successful in the proceeding;

(iii)conduct prior to the commencement of the proceeding may be relevant (for example, conduct by the defendant that precipitated the litigation);

(iv)the reason for discontinuing may be relevant, for example a change  of  circumstances  rendering  the  proceeding unnecessary. However, it must be clear that the plaintiff would have succeeded had the circumstances not changed: The Star Trust v Hamilton City Council5 (where there had been a change in relevant legislation after the proceeding had been commenced).

(d)The court retains a general discretion under r 14.1 as to the costs order which is appropriate in the circumstances of the case.

The parties’ submissions

[14]     The defendant submits that this proceeding has caused him unnecessary cost in filing a defence and attending to initial disclosure. He says that the plaintiffs were well aware that he intended to file an application under the PRA, as they had been served with his Notice of Choice of Option A6 on 8 October 2015, in which he had elected to make an application under the PRA for a division of the relationship

property.

5      The Star Trust v Hamilton City Council [2016] NZHC 821 at [10].

6      Made under s 61 of the Property (Relationships) Act 1976.

[15]     When the defendant’s Notice of Choice of Option under the PRA was served on or about 8 October 2016, it was accompanied by a letter in which the defendant’s solicitors said:

We  will  shortly  be  filing  an  application  for  an  occupation  order  under [the PRA] in respect of [the Faulke property].  Can you please confirm that you have instructions to accept service …?

[16]      The plaintiffs oppose the awarding of costs.   In his  costs memorandum Mr Handy refers to the challenge made by the defendant to the grant of probate (eventually abandoned at the eleventh hour, after the plaintiffs had obtained an order nisi calling upon the defendant to show cause why probate should not be granted to them), and the stance taken by the defendant (pushing to remain indefinitely in the Faulke property).  By 10 November 2016 the plaintiffs had concluded that there was little prospect  of  agreement  and  (as  Mr  Handy put  it  in  his  memorandum)  the proceeding in this court was commenced “in order to prompt the defendant into commencing proceedings in the Family Court”.  Mr Handy submitted that account should be taken of the unnecessary expense to which the plaintiffs had been put in opposing the probate application, and the commencement of this proceeding being “an element in the whole dispute about the defendant’s right to occupy [the Faulke property]”.

Discussion and conclusions

[17]     I do not consider that the defendant’s challenge to the probate proceeding is relevant to costs in this proceeding.   The plaintiffs had the right to seek whatever costs they may have been entitled to on account of any obstructive or unreasonable behaviour by the defendant in that proceeding.

[18]     Additionally, I do not consider that the High Court had jurisdiction to hear the proceeding, under s 339 of the PLA.  In Shirtliff v Albert,7 Associate Judge Bell concluded that the High Court did not have jurisdiction to decide a summary judgment application under s 339 where the application under that section sought orders as to the division of relationship property.  Division of relationship property is

within the exclusive jurisdiction of the Family Court pursuant to s 22 of the Act.

7      Shirtliff v Albert [2011] NZFLR 971, (2011) 8 NZCPR 551.

[19]     In this case, the defendant chose Option A under s 61 of the Act, electing to have the relationship property divided under the Act.  The plaintiffs were aware of that election.  Furthermore they could themselves have applied to the Family Court for an order or declaration under s 25(3) of the PRA relating to the status, ownership, vesting or possession of the Faulke property.

[20]     For these reasons, I find that the presumption in favour of the defendant as to costs under r 15.23 is not displaced.  However, I do not consider the costs should be as substantial as might otherwise have been the case.

[21]     I award costs to the defendant on a 1A basis, plus disbursements as fixed by the Registrar.

Associate Judge Smith

Solicitors:

Main Street Legal Ltd, Upper Hutt for the defendant