Washikita v Smith - [2024] NZHC 980

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-001132

[2024] NZHC 980

BETWEEN
HISAKO WASHIKITA

Plaintiff and Second Counterclaim Defendant

AND

JOHN SOLOMON SMITH

First Defendant and Counterclaim Plaintiff

ROBYN CHRISTINE McALLISTER
Second Defendant

AKIRA WASHIKITA by his litigation guardian, Tetsu Washikita

First Counterclaim Defendant

Hearing: On the papers

Appearances:

P J Davey for Counterclaim Defendants No appearance by or for J Smith

Judgment:

27 June 2024

COSTS JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 27 June 2024 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Rosebank Law, Auckland P Davey, Auckland

WASHIKITA v SMITH [2024] NZHC 980 [27 June 2024]

Introduction

[1] This judgment determines costs on John Smith’s (Mr Smith) discontinued counterclaim against Hisako Washikita (Mrs Washikita) and the late Akira Washikita (Mr Washikita). Mr Smith is a pensioner of no means and was in receipt of legal aid for most of the relevant period.

[2] The main issue is whether exceptional circumstances warrant an award of costs being made against Mr Smith despite him being legally aided.

Background

[3] Mrs Washikita commenced proceedings against Mr Smith and Robyn McAllister (Ms McAllister) for an order requiring them to vacate a property in Auckland which Mr and Mrs Washikita had purchased from a company of which Mr Smith was a director. From the time the Washikitas purchased the property, Mr Smith and Ms McAllister (the defendants) had been allowed to live in the property rent-free, while paying outgoings and maintaining the property. Mrs Washikita required them to vacate the property. They refused. Mrs Washikita applied for summary judgment of her claim.

[4] Mr Smith defended the claim and counterclaimed that he had an informal agreement with the Washikitas granting him a right of first refusal to purchase the property and agreeing to reimburse him for all costs incurred in respect of the property. He sought an order for specific performance of the agreement requiring Mr Washikita to acknowledge his entitlement to be reimbursed for the reasonable costs, and to negotiate in good faith to sell the property to him with a set-off for his expenses. Alternatively, Mr Smith brought a second cause of action against both Mr and Mrs Washikita, claiming that he had an interest in the property under a constructive trust by virtue of his contributions to it. He made similar claims in a cause of action against both Mr and Mrs Washikita for proprietary estoppel.

[5] In a judgment delivered on 19 December 2022, Associate Judge Paulsen entered summary judgment for Mrs Washikita.1 He rejected the argument that there was an oral agreement and stated: 2

…I am satisfied that Mr Washikita did not grant Mr Smith a right of first refusal and did not agree to reimburse Mr Smith his costs. The evidence is quite overwhelming that this is the case.

[6] He also…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Washikita v Smith

Details

AGLC: Washikita v Smith [2024] NZHC 980
Case: [2024] NZHC 980
Decision Date: 27 June 2024

CaseChat Overview and Summary

In Washikita v Smith, Hisako Washikita brought proceedings against John Smith and Robyn McAllister to obtain an order for them to vacate a property they had been living in rent-free. Smith counterclaimed against Washikita, asserting an informal agreement for a right of first refusal to purchase the property and reimbursement for costs incurred. The counterclaim was dismissed by Associate Judge Paulsen, who held that the claims were without merit and had no realistic prospect of success. Smith subsequently discontinued his counterclaim.

The High Court was required to decide whether exceptional circumstances warranted an award of costs against Smith despite him being legally aided. The court considered the reasonableness of both parties' stances in the proceeding, the reason for discontinuing the counterclaim, and Smith's means. The court found that Smith should pay for the period before he received legal aid but ruled out an order for costs against him for the period he was receiving legal aid due to his inability to pay and his belief that he was immune from a costs order.

The court ordered Smith to pay Washikita's costs of $4,780 for filing her statement of defence and $110 for the filing fee. The balance of the steps for which costs were claimed were taken after Smith was granted legal aid, and therefore, the court had to be satisfied that there were "exceptional circumstances" before an order for costs was made against Smith. The court concluded that an order against Smith for the period he was receiving legal aid was not appropriate.

The court ultimately decided that an award of costs against Smith would not be appropriate given his financial situation and his belief that he was immune from a costs order. However, the court did order Smith to pay Washikita's costs incurred before he applied for legal aid.

Orders