Woolf v Kaye
[2017] NZHC 2651
•27 October 2017
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2015-404-001043
[2017] NZHC 2651
BETWEEN VIRGINIA WOOLF
First Plaintiff
AND
VIRGINIA WOOLF AS THE
EXECUTOR OF THE ESTATE OF NOEL BERNARD WOOLF
Second Plaintiff
AND
ALWYN BERNARD KAYE
First Defendant
AND
MARK WILLIAM SYDNEY CLARK AS EXECUTOR OF THE ESTATE OF VIOLET ISABEL WOOLF
Second Defendant
Hearing: 11 August 2017 Appearances:
G A Keene for the Plaintiff
A Gilchrist for the First Defendant
No appearance for the Second DefendantJudgment:
27 October 2017
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 27 October 2017 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Foy & Halse, Auckland Aoraki Legal Ltd, Timaru
WOOLF v KAYE & Ors [2017] NZHC 2651 [27 October 2017]
R Wood, Auckland
A Gilchrist, Auckland
Introduction
[1] This judgment addresses the plaintiff’s application for security for costs. Three other applications at issue in this interlocutory stage are addressed in a judgment to be released early next week, or as time allows.
[2] The plaintiff, Mr Kaye seeks security in the sum $50,000 to be paid in two instalments: an immediate award of $30,000 and a further $20,000 at the time of setting down. He wants the proceedings stayed until such security is paid, and also seeks leave to review those numbers if the trial proves even more complex and expensive than anticipated.
Background
[3] The substantive proceeding concerns an action by the plaintiff, Ms Woolf, seeking enforcement of certain obligations that she says exists in respect of a property owned by the first defendant, Mr Kaye. Mr Kaye opposes the action.
[4] In February 2016, Mr Kaye applied for summary judgment; or alternatively, strike out and security for costs. In my decision of 19 July 2016, I declined summary judgment or strike out, but invited further submissions on security for costs should Mr Kaye wish to pursue the matter further (which of course he did).1
[5] I do not proceed to repeat the background facts, which are described in detail in my 19 July decision.
Security for costs
1 Woolf v Kaye [2016] NZHC 1628.
[6] Rule 5.45(1)(b) provides for the circumstances in which a Judge may order a plaintiff to give security for the defendant’s costs. The court must address the following questions:2
(a)Is there reason to believe the plaintiff will be unable to meet an award of costs against it?
(b)Is it appropriate for an order for security for costs to be made?
(c)How much security is appropriate?
(d)Should a stay be ordered?
Is there reason to believe Ms Woolf can meet an award for costs?
[7] This first question represents a jurisdictional threshold. Neither side has the onus; the court must simply come to a decision on the evidence before it as to whether this threshold is met.3 The court will not order Ms Woolf to give security unless there is credible evidence for the belief that Ms Woolf suffers an inability (as opposed to an unwillingness) to pay costs.
[8] The second plaintiff is Ms Woolf as executor of the estate of the parties’ late father. It is common ground that this estate has been fully distributed and has no remaining assets. As first plaintiff, Ms Woolf has therefore provided an undertaking dated 26 May 2016 that she will meet any costs awarded against the estate, as well as any costs awarded against her personally.
[9] Mr Kaye points to surrounding circumstances from which he says an inference of an inability to pay can reasonably be drawn.4 In particular, Ms Woolf has on numerous occasions over the last 15 years or so made much of her financial difficulties, including in legal correspondence.
2 Highgate on Broadway Ltd v Devine [2012], NZHC 2288, [2013] NZAR 1107 at [6]; Busch v Zion Wildlife Gardens Ltd (In Rec and Liq) [2012] NZHC 17.
3 Wishart v Murray [2014] NZCA 461, [2014] 3 NZLR 722 at [163].
4 Totara Investments v Abooth HC Auckland CIV-2007-404-990, 3 March 2009.
[10] Significantly, however, these circumstances predate the event chiefly relied on by Ms Woolf, namely an inheritance in excess of $200,000 which she received from her late father’s estate in 2015. She submits that most of this money is still held in her ASB investment account. Mr Kaye accepts she received the inheritance, but says it is insufficient by itself to establish her ability to meet a costs award without reference to how much of that money is still remaining, and what her other liabilities are.
[11] Still, the inheritance sum is significant, and more than adequate to cover any cost award. While Ms Woolf does not own any property, and does not appear to have substantial income, she says her part-time employment is sufficient to meet her living expenses and avoid large-scale further depletion of those funds. On balance, I do not consider the threshold is met for reasonably believing that Ms Woolf has no prospect of meeting these costs.
Is it appropriate for an order for security for costs to be made?
[12] But even if I am wrong on that, I consider it would not be just in all the circumstances to order security for costs: r 5.42(2).
[13] This is a discretionary analysis. The factors most pertinent in this case are whether Ms Woolf’s claim substantive claim appears unmeritorious, and whether the denial of security for costs in the circumstances of this litigation is oppressive to Mr Kaye’s reasonable interests.
[14] I do not agree with Mr Kaye’s contention that Ms Woolf’s case is frivolous or even unlikely to succeed. In my judgment of 19 July, I cautioned Mr Kaye about my preliminary view that “the evidence Ms Woolf provided was strong enough to cast serious doubt on Mr Kaye’s version of events”.5 I see no reason to depart from those words. Indeed, counsel for Mr Kaye eventually conceded at the hearing that Ms Woolf’s case was at least arguable.
[15] Withholding security for costs is not oppressive to Mr Kaye in my view. Mr Kaye points out that as he lives in Canada, dealing with counsel at a distance and
5 Woolf v Kaye [2016] NZHC 1628 at [21].
travelling for the trial will involve steep costs, and that he is therefore entitled to some protection. But such protection would only be necessary if the plaintiff seemed impecunious, or the litigation unmeritorious. These are not my findings.
[16] In the round, I consider that Ms Woolf’s right of access to the court, and the importance of this dispute being resolved at trial, would in any case outweigh Mr Kaye’s interest in being protected from the (slight) risk of a barren costs order.6
Result
[17]The application for security for costs is declined. Costs are reserved.
Post-script
[18] There are some outstanding issues relating to discovery and interrogatories. I will issue a minute shortly in relation to them, and in relation to remaining costs issues.
Associate Judge Sargisson
6 Clear White Investments Ltd v Otis Trustee Ltd [2016] NZHC 2837 at [4].
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