Turner v Public Trust

[2020] NZHC 92

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-419-326

[2020] NZHC 92

IN THE MATTER

of the Trustee Act 1956

BETWEEN

MAPUNA LYNETTE TERESA TURNER

Plaintiff

AND

THE PUBLIC TRUST

Defendant

Hearing:	3 February 2020
Appearances:	M Reason for Plaintiff A Holden for Defendant
Judgment:	7 February 2020

JUDGMENT OF LANG J

[on application for freezing order]

This judgment was delivered by me on 7 February 2020 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

TURNER v THE PUBLIC TRUST [2020] NZHC 92 [7 February 2020]

[1]                 This proceeding concerns a house property in Te Aroha owned by the estate of the late Dennis Paul Samson. Mr Samson died on 31 May 2012. The Public Trust, the defendant in this proceeding, is the executor of Mr Samson’s last will.

[2]                 Under the will Mr Samson gave his then partner, Ms Turner, the right to occupy the property for a period of ten years on a rent-free basis. The right was conditional on Ms Turner paying the rates and other outgoings on the property. At the expiration of that period the property was to be transferred to Ms Turner as to an undivided one- half share and the balance to Mr Samson’s three daughters in equal shares.

[3]                 Ms Turner continued to live in the property following Mr Samson’s death. Some years ago, however, the Public Trust and the other beneficiaries became aware that she had not been paying the rates as they fell due. In December 2016 the Public Trust issued a proceeding seeking an order for possession of the property on the basis that Ms Turner’s right to occupy it under the will had expired. In a judgment delivered on 1  December  2017,  Associate  Judge  Doogue  granted  the  application  over  Ms Turner’s opposition and entered summary judgment in favour of the Public Trust.1 The bailiff subsequently executed the order in May 2019 and Ms Turner ceased living in the property at that point.

[4]                 The Public Trust now proposes to sell the property and to distribute the sale proceeds  in  accordance  with  the  provisions  contained  in  Mr  Samson’s  will.  Ms Turner’s one-half share of the net proceeds will be paid to the Official Assignee because she was adjudicated bankrupt in July 2018.

[5]                 Ms Turner does not want the Public Trust to sell the property. She wishes to continue living in it even though the rates arrears currently amount to approximately

$16,000 and she has no apparent  means  of paying that  sum.  In  this  proceeding Ms Turner asks the Court to make an order preventing the Public Trust from selling the property pending disposition of an appeal that she proposes to lodge with the Court of Appeal against the Associate Judge’s decision. The length of time that has passed since the Associate Judge delivered  his decision  means that Ms Turner will need  to

1      Public Trust v Turner [2017] NZHC 2979.

persuade the Court of Appeal to grant her an extension of time within which to file the appeal.2

Jurisdiction

[6]                 Several issues arise in relation to the jurisdiction of the Court to hear and determine Ms Turner’s application. The first arises because she is currently an undischarged bankrupt. All of her assets have therefore vested in the Official Assignee by operation of law.3 The Public Trust contends that any rights of action Ms Turner may have had in relation to her interest in Mr Samson’s estate are therefore vested in the Official Assignee. The Official Assignee has not consented to Ms Turner commencing this proceeding. Rather, and in common with the other three beneficiaries, the Official Assignee wishes the Public Trust to sell the property.

[7]  I accept that Ms Turner’s interest in the property as one of the beneficiaries under Mr Samson’s will vested in the Official Assignee on her adjudication. I consider, however, that her right to occupy the property under the will was personal to her and did not pass to the Official Assignee on her adjudication. I therefore consider she retains the ability to issue proceedings based on that right.

[8]                 Had she filed her appeal within the prescribed time Ms Turner could have sought an order from either this Court or the Court of Appeal staying the execution of the judgment pending determination of the appeal.4 That course is no longer open to her because the judgment has already been executed.

[9]                 This no doubt prompted Ms Turner to take the novel approach of seeking a freezing order in relation to the property pending determination of her proposed appeal. Rule 32.2(4) of the High Court Rules 2016 permits an application for a freezing order to be made by way of either an interlocutory application or an originating application.

2      Court of Appeal (Civil) Rules 2005, r 29A.

3      Insolvency Act 2006, ss 101(1) and 102(1).

4      Court of Appeal (Civil) Rules 2005, r 12(3).

[10]              A freezing order made under r 32 will generally restrain the disposition of assets pending the determination of a substantive claim. In order to obtain a freezing order the applicant must therefore show that it has a good arguable case on the substantive claim.5 Ms Turner is clearly treating her proposed appeal to the Court of Appeal as being a substantive claim. I consider, however, that the issue to be determined in any appeal to the Court of Appeal is the same as that which the Associate Judge decided in favour of the Public Trust. I do not see how this Court could now say that she had a good arguable case in relation to that issue given the conclusions that the Associate Judge reached. I therefore do not consider the Court can now make the order sought in Ms Turner’s originating application.

Should the Court grant an interim injunction?

[11]              Matters are complicated further in the present case by the fact that, in reality, Ms Turner is not seeking a freezing order. Rather, the submissions filed in support of the application make it clear she is seeking an interim injunction to prevent the Public Trust from taking steps to sell the property until such time as her appeal has been determined. The originating application does not make any mention, however, of an injunction and Mr Reason did not apply to amend the originating application during the hearing. I therefore do not consider the Court has the jurisdiction to grant an injunction based on the current pleadings. It could only do so based on an oral interim application, which I am prepared to accept Mr Reason advanced on Ms Turner’s behalf during the hearing.

[12]              A further issue arises, however, because s 17 of the Crown Proceedings Act 1950 (CPA) prohibits the Court from granting an injunction against the Crown. Section 2(2) of the CPA provides that any reference to the Crown in the context of civil proceedings “shall be construed as a reference to...any Government Department…where the Department…is a party or third party to the proceedings…” The definition of “government department” in s 2(1) of the CPA expressly includes the Public Trust. I therefore accept that s 17 of the CPA prevents the Court from granting an interim injunction against the Public Trust in the present proceeding.

5      Shaw v Narain [1992] 2 NZLR 544 (CA) at 548.

[13]               A similar issue arose in Coumat Ltd v The Registrar General of Land.6 In Coumat Gilbert J observed that in civil proceedings involving the Crown it may “be appropriate for the Court to declare the terms on which it would have granted an interim injunction if the dispute had been between subjects or where it would be appropriate to guide the parties on how they should conduct their activities pending further order of the Court”.7 I consider the fact that this Court has already finally determined the rights of the present litigants means it would now be inappropriate for it to make any declaration of that type.

[14]                In addition, I do not consider the arguments Ms Turner proposes to advance on appeal to be strong. Her principal argument will be based on the fact that the Public Trust is the registered owner of the property and is therefore legally liable to pay any rates levied by local authorities. Mr Reason submits the Public Trust ought to have used its own funds to pay the arrears of rates and then sought to be reimbursed from the estate. This would have avoided penalties being imposed for the non-payment of rates. It would also have avoided any risk of the local authorities exercising their statutory powers to sell the property to recover the outstanding rates.

[15]              I accept without reservation that the local authorities are entitled to enforce their claims for outstanding rates from the Public Trust as the owner of the property.8 I also accept that the Public Trust could have elected to pay the arrears of rates from its own resources and then sought reimbursement from the estate when the property was transferred to the beneficiaries or sold.9 Mr Reason was unable to point me to any authority, however, to support his submission that the Public Trust was required to take that step. More importantly, payment of the rates by the Public Trust would not affect Ms Turner’s position. She would remain in breach of the condition in the will requiring her to pay the rates on the property if she wished to continue residing in it on a rent-free basis. I therefore see no merit in this argument.

6      Coumat Ltd v Registrar General of Land [2016] NZHC 1911.

7 At [32].

8      Local Government (Rating) Act 2002, s 67.

9      O’Donoghue v Farmer HC Hamilton M. 191/96, 26 June 1997 at 7.

[16]              Mr Reason also wishes to advance an argument based on the wording used in the will. The provision giving Ms Turner the right to live at the property was in the following terms:

6.4        This 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 …

[17]              Mr Reason will seek to argue that this clause can be construed to mean that Ms Turner was not required to pay the rates and outgoings. Rather, they were to be paid using income derived from the property. There are two obvious difficulties with this argument. First, there is no evidence that the property derived income once Ms Turner remained in it following Mr Samson’s death. Secondly, I do not consider the wording of the provision to be ambiguous. It plainly requires Ms Turner to pay all outgoings on the property, including rates, that would otherwise have been paid from income derived by the property.

[18]              Finally, the issue of delay is highly relevant to the exercise of the Court’s discretion in the present case. Ms Turner has not yet filed an appeal to the Court of Appeal even though more than two years have now passed since the Associate Judge delivered his decision. Furthermore, there is no certainty that she will file an appeal in the near future. Mr Reason advised me he is likely to require a grant of legal aid to enable that to occur. This has not yet been approved and may take some time to obtain. I consider the beneficiaries of Mr Samson’s estate have now waited long enough. It is time for them to either receive the property or the fruits of any sale of the property they might instruct the Public Trust to undertake.

[19]              For these reasons I do not consider there is jurisdiction to grant the order that Ms Turner seeks and, even if there was, I would not exercise my discretion favour of granting interim relief.

Result

[20]The originating application is dismissed.

Costs

[21]              The Public Trust is the successful party and is accordingly entitled to an award of costs and disbursements against Ms Turner. Costs would ordinarily be payable on a category 2B basis for a proceeding of this type and complexity. If the parties are unable to reach agreement I will determine costs after receiving concise memoranda from both counsel addressing that issue.

Lang J

Solicitors:

Nolan & Lu, Lawyers, Hamilton Wilson Harle, Auckland

M Reason, Te Aroha