Wyllie v Firmin
[2022] NZHC 1994
•12 August 2022
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2021-463-000046
[2022] NZHC 1994
UNDER the Land Transfer Act 2017 IN THE MATTER
of an application for removal of a caveat and for an order for possession of a property
BETWEEN
CORNELIA FRIEDERIKE MARIA
WYLLIE and ABIGAIL JUTTA LATHAM
PlaintiffsAND
TIMOTHY RICHARD FIRMIN
Defendant
Cont/…
Hearing: On the papers Counsel:
HL Thompson for Ms Wyllie and Ms Latham as executors of the will of Anthony Lawrence Firmin
S Iorns for Timothy Firmin
Judgment:
12 August 2022
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
[Recall and Costs]
This judgment was delivered by me on 12 August 2022 at 4pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors/Counsel:
McMahon Butterworth Thompson, Auckland Upper Hutt Law Ltd, Upper Hutt
S Iorns, Barrister, Wellington Copy to: Mr JA Porter
WYLLIE and LATHAM v FIRMIN [2022] NZHC 1994 [12 August 2022]
CIV-2021-463-000069
UNDERSection 21 of the Administration Act 1969
IN THE MATTER of an application to remove and replace
the executors of the estate of Anthony Lawrence Firmin
BETWEEN TIMOTHY RICHARD FIRMIN
Plaintiff
ANDCORNELIA FRIEDERIKE MARIA WYLLIE and ABIGAIL JUTTA
LATHAM as executors of the estate of Anthony Lawrence Firmin
Defendants
Introduction
[1] On 21 March 2022 I issued a judgment determining applications in these two proceedings: 1
(a)dismissing Ms Cornelia Wyllie and Ms Abigail Latham’s application as executors of the will of their father, Mr Anthony Lawrence Firmin, for orders removing a caveat registered by their brother, Mr Timothy Firmin, against a property which is the main asset in their father’s estate (and for vacant possession of that property) (Caveat Application);2
(b)granting Timothy’s application for an order removing Cornelia and Abigail as executors of their father’s will and replacing them with an independent executor (Removal Application).
[2] Cornelia and Abigail have filed an application for recall of my decision on the grounds that:
(a)I refused the application for an order removing Timothy Firmin’s caveat for reasons which were not pleaded nor argued by Timothy Firmin, without first informing the applicants that I was considering determining the application based on those reasons and without affording them an opportunity to make relevant submissions and that this was a breach of natural justice.
(b)Associate Judges have no jurisdiction to hear or determine an application for an order for possession of the property and that the applicants raised that with the Registry before I heard the application.
(c)The decision to remove the applicants as executors was influenced by the views formed in relation to the caveat when I had not given the applicants a proper opportunity to make submissions on the caveat application.
1 Wyllie v Firmin [2022] NZHC 527.
2 As in the original judgment, I refer to the members of the Firmin family by their first names to avoid confusion. I intend no disrespect by doing so.
(d)These circumstances are likely to give rise to injustice when the Court considers the question of costs in this proceeding and in the related successful application by Timothy Firmin to remove the applicants as executors of their father’s estate.
[3] Timothy opposes recall, submitting that Cornelia and Abigail no longer have standing to apply as executors because the part of the judgment relating to the removal of executors in CIV-2021-404-69 has been sealed.
[4] Timothy submits that in any event the challenge to the caveat decision is insufficient to grant recall. Cornelia and Abigail did not raise the jurisdictional point in relation to the possession order at the hearing, nor did they appeal, instead electing to make submissions on the possession order, receive judgment, see out the appeal period and then, one day after receiving cost submissions seeking costs to be awarded personally against them, file an application for recall.
[5] Counsel for Cornelia and Abigail submit in response that whether they have been removed as executors or not, Cornelia and Abigail are affected by the judgment and so have sufficient standing to apply for its recall because costs are being sought against them personally. The former executors submit that this is not an appeal in disguise but addresses fundamental procedural flaws in the judgment which in the interests of justice ought to be recalled.
[6] This judgment determines the recall application and costs following the Caveat and Removal Applications
Recall principles
[7] Rule 11.9 of the High Court Rules 2016 provides a power to a Judge to recall a judgment as follows:
11.9 Recalling judgment
A Judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed.
[8] Despite the apparently unfettered discretion provided by r 11.9, the authorities emphasise that the recall of a judgment is a serious step and not one that the Court undertakes lightly. The principles are set out in Horowhenua County v Nash (No.2) where Wild CJ said:3
Generally speaking, a judgment once delivered must stand for better or worse subject, of course, to appeal. Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in which a judgment not perfected may be recalled – first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel has failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.
[9] Cornelia and Abigail rely on the third category in this case, where for some other special reason justice requires that the judgment be recalled.
Recall Issues
[10]The issues on the recall application are:
(a)Do Cornelia and Abigail, as former executors, have standing to apply?
(b)Was there a breach of natural justice?
(c)Do Associate Judges have jurisdiction in relation to possession orders?
(d)If the answer to (b) or (c) is yes, is that a special reason justifying recall?
Is there standing to apply?
[11] The judgment that is the subject of the recall application includes a decision on Cornelia and Abigail’s application as executors for removal of the caveat registered by Timothy. Even though the judgment included orders removing them as executors and that part of the judgment has been sealed, I consider that as parties to the judgment, Cornelia and Abigail have standing to apply.
3 Horowhenua County v Nash (No.2) [1968] NZLR 632 at 633.
Was there a breach of natural justice?
[12] The former executors submit that I gave judgment on the caveat application based on grounds which were not advanced by Timothy and on which the Court had heard no argument. The former executors submit that this amounts to a fundamental breach of natural justice.
[13] The issue arises because I held that it was reasonably arguable that Timothy’s caveat could be sustained on the basis of a claim in contract but not the testamentary promises claim on which Timothy’s substantive proceedings were based at the time of the hearing. I held the caveat was not to lapse on condition that Timothy filed a claim in contract within 30 working days of the judgment. The submission made by counsel for Cornelia and Abigail is that they were not given the opportunity to be heard on the question of whether the caveat ought to be sustained on the basis of a contractual rather than a testamentary promises’ claim.
[14] As a preliminary point, I have reviewed the submissions and hearing transcript and consider that counsel for Cornelia and Abigail was clearly on notice that the caveat may be sustained on a contractual basis and in fact made submissions on this issue. Counsel submitted at the hearing that the estate or interest claimed on the caveat does not refer to a testamentary promise and that it was “couched in words which suggest some sort of contractual origin and from the authorities that my learned friend has referred to … suggests there is some reliance on some sort of contractual basis for the caveat.” Counsel then said “[b]ut in my submission no contractual basis for the caveat is made out”.
[15] Counsel went on to discuss the terms of the letter of offer sent to Timothy and submitted that it was not a contract and nor was there anything giving rise to an interest in the property. Counsel submitted at best Timothy had a personal claim.
[16] I do not consider therefore that it is correct to say that there was no opportunity to be heard in breach of natural justice when:
(a)Counsel was aware that the caveat was framed in contractual terms; and
(b)was asked about it at hearing, accepted that the contractual basis would have to be reasonably arguable, and then proceeded to address the Court as to why it was not.
[17] Even were that not the case, I would not find a breach of natural justice in the context of these caveat proceedings. In an application to remove the caveat, the onus is on the caveator to put forward a reasonably arguable case to support the interest claimed in the caveat.
[18] In this case the interest described on the caveat was “[p]ursuant to an offer to purchase [the property] by the caveator on 16 October 2020 (triggering the event) made pursuant to a right of first refusal afforded to the Caveator”.
[19]There is no reference to a testamentary promise.
[20] In a caveat application the overriding question for the Court is whether it is clear that the caveat cannot be maintained because there is no valid ground for registering it based on the interest described in the caveat. The caveat, as worded, is the focus for the Court, not the causes of action pleaded in a separate claim.
[21] In caveat proceedings, often substantive proceedings will not yet have been brought so how the substantive claim has been pleaded will not be considered by the Court. Here, substantive proceedings had been filed, but the focus must still be on whether the interest claimed in the caveat was reasonably arguable rather than whether the claim pleaded in the substantive proceedings can be made out. Those proceedings can always be amended if necessary and so do not confine the basis on which the caveat can be sustained.
[22]Joseph on Constitutional and Administrative Law states that natural justice is:4
… a single but flexible concept whose context is “always contextual”. The requirements vary according to the power that is exercised and the circumstances of its use, including the effect of the decision on personal rights or interests The requirements of natural justice are “flexible”, “adaptable”
4 Philip A Joseph Joseph on Constitutional and Administrative Law (5th ed, Thomson Reuters, Wellington, 2021) at [25.1].
and “context specific”, and cannot be neatly tabulated: “This is an area of broad principle, not precise rules”.
(footnotes omitted)
[23] As Joseph on Constitutional and Administrative Law continues,5 the requirements of natural justice are affected by whether the decision finally determines rights. If the nature of the decision is a preliminary one, this will be treated as one of several factors considered in determining the requirements of natural justice in any particular case.
[24] Caveat proceedings do not determine the final rights of the parties. The issue in a caveat proceeding is whether it is reasonably arguable that the caveator has the interest claimed in the caveat (assuming that the interest claimed is an interest in land).
As stated in Philpott v Noble Investments Ltd:6
[a]n order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained.
[25] The requirements of natural justice in caveat proceedings must be that the party opposing the caveat being sustained has an opportunity to make submissions on why the interest described on the caveat is either not an interest in land or why it is not reasonably arguable that the caveator has such an interest.
[26] As counsel for Cornelia and Abigail had the opportunity to make submissions on whether a contractual basis was reasonably arguable, and did, and because the judgment did not determine final rights, I do not consider there was any breach of natural justice in this case.
Order for possession
[27] In the judgment in relation to the application for the order for possession, I held:
[142]Given the conclusions reached sustaining the caveat and removing the executors, it is not appropriate for any order for possession to be made at this time.
5 At [25.3.1].
6 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26(c)].
[28]In the results section of the judgment, I included an order that:
The application for orders for vacant possession is dismissed.
[29] Counsel for Cornelia and Abigail submits that I did not have jurisdiction to determine the application for an order for possession. Counsel records that prior to the hearing he enquired of the Registry whether Associate Judges had jurisdiction to hear and determine the application for possession of the property. Email correspondence with the Registry, copied to counsel for Timothy, is attached to counsel’s memorandum. Counsel submits that the appropriate course would be for the judgment to be recalled and to allocate a directions conference to discuss next steps.
[30] Counsel for Timothy submits in response that the jurisdictional point should have been raised at the hearing. Counsel goes so far as to say this argument amounts to the former executors seeking “to have their cake and eat it too”. In Timothy’s submission, the former executors raised this issue with the Registry on 12 November 2021, decided to proceed to the hearing where it was not raised, made submissions on the application for possession, received the decision, saw out the appeal period, then raised it by way of recall application following Timothy’s costs submissions being filed.
[31] Having now considered this point, it appears that Associate Judges do not have jurisdiction to determine applications for orders for vacant possession when they are not brought by way of summary judgment.
[32] In this case I do not consider however it is appropriate to recall the judgment because the application for orders for vacant possession does not affect the substance of the decision. As set out above, I only determined the application to the extent that I said it was not appropriate to determine it at this time because of the views that I had reached sustaining the caveat and removing the executors.
[33] It appears from the correspondence with the Registry attached to the submissions filed on behalf of Cornelia and Abigail that no response was received from the Registry when the jurisdictional point was raised on 12 November 2022. The point was not however raised at the beginning of the hearing as I would have expected if an issue remained extant.
[34] Furthermore, the written submissions filed on behalf of Cornelia and Abigail sought leave to proceed by way of originating application in respect of the order for possession on the basis that ordinarily such an application is brought by way of summary judgment. The application for orders for possession was brought together with the application for removal of the caveat which is required to be brought by originating application.7 It was submitted that the form of an originating application under Part 19 of the High Court Rules and nature of the procedure is materially the same as a summary judgment application. The inference must be that if the application for orders for possession had been brought as a separate application, it would have been brought as a summary judgment application. Associate Judges have jurisdiction in relation to summary judgment and so if the application had been brought in that way, there would have been jurisdiction.
[35] For all these reasons, I do not consider that this issue is a sufficiently special reason justifying recall of the decision.
Conclusion on application to recall
[36] For the reasons set out above, I decline the application to recall the unsealed parts of the judgment delivered on 21 March 2022.
Application for Costs
[37]As the successful party, Timothy seeks the following costs orders:
(a)costs on a 2B basis for both proceedings, totalling $25,692.50;
(b)disbursements of $2,522.75;
7 High Court Rules, r 19.2(l).
(c)that costs and disbursements are met by Cornelia and Abigail personally; and
(d)Cornelia and Abigail are not to be reimbursed by the estate for the costs of progressing the lapse of the caveat and defending the application for removal.
[38] There does not appear to be any dispute over the scale costs calculations provided by Mr Firmin. The controversy arises from the orders sought, requiring Cornelia and Abigail to pay Timothy’s costs personally and for their costs not to be reimbursed by the estate.
Costs principles
[39] As a general rule a successful party in litigation is entitled to costs. Counsel for Timothy submits that while each assessment turns on its facts, the following themes have developed in matters concerning estates:
(a)To the extent proceedings have been reasonably necessary to resolve disputed issues in relation to an estate (such as its administration), a party who reasonably and successfully brings such issues to the Court for determination will normally be awarded their reasonable and actual legal costs from the estate.8
(b)To the extent that the unsuccessful party has acted unreasonably in opposing the position advanced by the successful party, it may also be appropriate that the unsuccessful party bear the unsuccessful party’s costs, rather than burden the estate.9
8 Loosley v Powell [2018] NZCA 73 at [6]–[8]; Powell v Powell [2015] NZHC 1984 at [19] –[20] and [24].
9 Mumby v Mumby [2016] NZHC 2836 at [19]. In that case, the parties pursued allegations in support of an undue influence claim which ought not to have been made or ought to have been abandoned.
(c)Where the unsuccessful party is an executor or trustee who has taken an unreasonable position in bringing or defending proceedings, it would normally be inappropriate that they be reimbursed by the estate for their own costs.10
Analysis in this case
[40] As submitted on behalf of Timothy, in my view, Cornelia and Abigail took unreasonable positions in respect of both applications compounding delay and creating significant expense.
[41] Counsel for Timothy submits that the application to remove the executors had no tenable defence. Furthermore, the former executors had been warned by their own lawyer of there being fair to good prospects of their removal and “real risks of personal liability for damages and/or costs”. Instead of heeding that advice, they changed lawyers and continued to take unreasonable and adversarial positions despite their dual roles as beneficiaries and executors. Timothy submits that their conduct in the removal proceedings was demonstrably unreasonable.
[42] I record that the advice to the executors by their former lawyer, Mr Marshall, was in December 2020. Following that advice and the appointment of new lawyers, the executors received an offer from another beneficiary but failed to record in their report to all beneficiaries that the offer included a further term of sale that the estate was to offer the property for sale to Timothy on the same terms and that the agreement was conditional on Timothy not accepting the offer made to him within five working days after the date of that agreement. That offer did not go unconditional. The executors then offered the property to Timothy at the same price as the discontinued offer.
[43] No new registered valuation was obtained during this time despite the “strong advice” to obtain another valuation from the executor’s previous lawyers. The next step taken by Cornelia and Abigail was to give Timothy notice to vacate the property.
10 Thompson v Koligi [2020] NZHC 560 at [19] and [47]; Jones v O’Keefe [2019] NZCA 222 at [82]–[83] and [88]–[89].
Timothy’s lawyer responded expressing disappointment at the notice “which is of no assistance to what is already a volatile and complex situation”. At that stage Timothy’s lawyer asked for an agreement for sale and purchase to be forwarded. A further offer was then made by Timothy based on a valuation obtained by Timothy for banking purposes. This valuation valued the property at $775,000, $25,000 less than the original valuation of $800,000 obtained by the executors.
[44] The executors rejected this offer on 30 June 2021 and continued to rely on the earlier notice to vacate. On 9 July 2021, the executors then filed an application to remove Timothy’s caveat together with orders for vacant possession. At no time during this period did the former executors seek either an update to the original valuation obtained or a further valuation from a different valuer. This is despite the advice from their former lawyer and a letter to the deceased just prior to his death referring to “fair market value (to be determined by registered valuation)”.
[45] On 19 July 2021, ten days after the executors filed the application to remove Timothy’s caveat, Timothy filed proceedings pleading four causes of action including seeking an order enforcing the testamentary promise to purchase the property on the basis of the registered valuation and, in the alternative, for an order revoking probate and declaring part of the letter referred to above as a codicil to the deceased’s will.
[46] On 27 July 2021, after the application to remove the caveat was filed by the executors, Cornelia and Abigail’s lawyer sent an open letter to Mr Firmin’s lawyer which stated below the heading “[T]he only material dispute is over market value”, that “[i]t is plain that substantially the most significant issue between the parties is the value of the property at 1B Luxton Road, Awakeri”. The letter stated that the valuation obtained by Mr Firmin of $775,000 was a valuation obtained for mortgage lending purposes which “often set the value of properties below that obtainable by arm’s length sale on the open market” and that the “executors believe Ms Nicholson’s valuation understates the true market value of the property by at least $175,000”. The letter then said “[b]y way of a cross-check, the executors advise that they have received an unsolicited arm’s length expression of interest for the property of $950,000 plus GST, if any.” As set out in my judgment, it was not disputed that this “arm’s length offer”
was not a letter of offer but an oral expression of interest and that it was from a business partner of Cornelia in Vanuatu.11
[47] Once Timothy had filed proceedings seeking orders to enforce the first right of refusal, it was not reasonable for the executors to continue with the application to remove the caveat. Even if a testamentary promise does not support an interest in land (because the interest does not arise until the court declares it), there was no longer any need to remove the caveat as it would not have been appropriate in the circumstances of this case to sell the property in advance of Timothy’s claim being determined by the Court.
[48] Cornelia and Abigail’s counsel submits that, unlike in family protection claims, executors are not required to take a neutral position in relation to testamentary promises claims. But as I held in the judgment, the steps taken by Cornelia and Abigail, rather than just taking a position in relation to Timothy’s claim, were active steps to defeat his claim. The reason given for seeking the removal of the caveat and for orders for vacant possession was to allow the former executors to make decisions regarding the future of the property which, in their words, “may involve selling or renting it on the open market”.12 By selling the property, prior to determination of Timothy’s claim, it would be likely to defeat that claim if it had been sold to a third party.
[49] To continue with the application to remove the caveat in these circumstances was not a reasonable use of the estate’s funds. Before Timothy filed the substantive proceedings there may be an argument to say that Cornelia and Abigail’s actions were reasonable in that they were forcing Timothy to file a claim so matters could be resolved. But once Timothy filed his claim, continuing with the application to remove the caveat was not reasonable.
11 Wyllie v Firmin [2022] NZHC 527 at [65]-[68].
12 Wyllie v Firmin, above n 1, at [57].
[50] By way of comparison, in Loosley v Powell, the Court of Appeal noted that although the executors had failed, there were arguments that could properly be run and accordingly there were “sufficient and reasonable grounds” to pursue the litigation.13 When the executors resisted claims of mental incapacity and brought an appeal, they were entitled to costs from the estate where they were acting “in a manner consistent with their positions as executors”.14 In this case, by contrast, there were not sufficient and reasonable grounds to pursue the application to remove the caveat once Timothy had filed substantive proceedings.
[51] This case might also be broadly analogised with De Gregorio v Surridge, where Clark J noted that:15
[15]My clear view is that this is an inappropriate case for any party’s costs to be paid from the estate. While the validity of the 2014 will had to be determined one way or another, neither Paul nor Anne can legitimately claim to have been acting in the interests of the estate as a whole. This proceeding was the definition of adversarial litigation. The parties levelled countless accusations at one another and produced copious amounts of evidence in attempts to malign the character of the other. The palpable acrimony undeniably and disproportionately escalated costs.
[16]Furthermore, to award costs from the estate would negatively impact on Lofty’s other children who took neutral, or less adversarial stances. It would be unjust to require them to bear the cost of the hostility between Paul and Anne.
[52] In this case, the application brought was clearly adversarial, with large amounts of evidence aimed at maligning the character of Timothy. Importantly it was unnecessary from the estate’s perspective. The estate (and therefore its beneficiaries) should not be expected to bear Cornelia and Abigail’s costs when they did not act consistently with their position as executors.
[53] I therefore find in respect of costs for the Caveat Application that Cornelia and Abigail ought to pay personally for the legal costs incurred in continuing with the Caveat Application following the filing of proceedings by Timothy and to pay for a
13 Loosley v Powell, above n 7, at [7].
14 At [8].
15 De Gregorio v Surridge [2019] NZHC 2842.
significant proportion of the 2B costs claimed by Timothy. I discuss below the appropriate proportions.
[54] Turning to the Removal Application, this application was filed by Timothy on 3 September 2021. It was only one week prior to the hearing on 18 November 2021 that a notice of opposition was finally filed on behalf of Cornelia and Abigail with affidavits in support.
[55] Counsel for Cornelia and Abigail submits the starting point in relation to costs on the Removal Application is that the Court removed the former executors on grounds of expediency rather than misconduct.
[56] The application for removal as executors was brought by way of summary judgment. As counsel for Cornelia and Abigail submits, it would have been inappropriate to make findings of misconduct or breach of trust on a summary judgment application without the Court having heard all of the relevant evidence. However, the question is not whether there was misconduct but whether it was reasonable for the executors to oppose the application when the test for removal of executors is whether it is expedient for them to be removed. In my view it ought to have been clear to the executors that the Court would find that it was expedient to do so. The executors had received advice in December 2020 that there were “fair to good prospects” of their successful removal at that stage and matters had significantly deteriorated by the time Cornelia and Abigail filed their notice of opposition.
[57] Again, I consider that Cornelia and Abigail ought to pay a significant proportion of the costs incurred in opposing the Removal Application and the 2B costs claimed by Timothy.
What is the appropriate proportion of costs?
[58] The appropriate proportion is difficult without details as to what legal advice was given or when. In addition, I expect that there is unlikely to be a breakdown available of the legal fees arising between the Caveat and Removal Applications. There is also the issue of the legal costs for advice received by Cornelia and Abigail in relation to the sale of the property but Timothy does not seek for those costs to be
paid personally by Cornelia and Abigail, only the costs in relation to the Caveat and Removal Applications themselves.
[59] I do not consider that seeking further details of costs is likely to alter the result at this stage and will just add to costs for all parties. I do not order all costs to be paid personally by Cornelia and Abigail as the applications were heard summarily and the original filing of the application to remove the caveat may be able to be justified (although I find that somewhat difficult).
[60] In the end and taking a broad brush approach in the interests of finality and a cost effective outcome, I consider that the fairest proportion is for Cornelia and Abigail personally to pay two thirds of the 2B costs claimed by Timothy and for Cornelia and Abigail not to be reimbursed by the estate for two thirds of the costs incurred in respect of the Caveat and Removal Applications. The remaining one-third of the 2B costs claimed by Timothy and incurred by Cornelia and Abigail in respect of the Caveat and Removal Applications is to be paid by the estate.
Result
[61]I order:
(a)The application for recall is dismissed;
(b)Cornelia and Abigail are to pay $18,810.17 to Timothy, being two- thirds of the 2B costs and disbursements claimed in relation to the Caveat and Removal Applications;
(c)The remaining one-third of the 2B costs and disbursements claimed by Timothy, and amounting to $9,405.08, is to be paid by the estate;
(d)Cornelia and Abigail are not to be reimbursed by the estate for two- thirds of the costs of the Caveat and Removal Applications.
Associate Judge Sussock
7
1