IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE	
CIV-2017-485-978
[2018] NZHC 3163	

UNDER	Part 8 of the High Court Rules 2016; Law Reform (Testamentary Promises) Act 1949	
IN THE MATTER	of the estate of Faalepo Paul Sila	
BETWEEN	SILIUA VAA SILA
Plaintiff	
AND	UAITA NANAI-LEOTA
Defendant	

Hearing:	3 December 2018	
Counsel:	S Perese for the Plaintiff
J J Pietras for the Defendant	
Judgment:	4 December 2018	

JUDGMENT OF CHURCHMAN J

Introduction

[1]	This is an application by the defendant for an order for security for costs pursuant to r 5.45 of the High Court Rule 2016.

[2]	By application dated 9 November 2018, the defendant sought the following orders:

(a)	an order that the plaintiff pay $25,000 by way of security for costs in two stages:

SILA v NANAI-LEOTA [2018] NZHC 3163 [4 December 2018]

(i)	$15,000 within 10 working days of the Court granting the order; and

(ii)	$10,000 no later than 1 February 2019.

(b)	a direction that the proceedings be stayed until the plaintiff pays the first $15,000; and

(c)	an order granting leave to apply to strike-out the proceedings if the plaintiff does not pay the $10,000 by 1 February 2019.

[3]	The application that a direction for stay was abandoned during the course of the hearing.

The claim

[4]	The substantive proceedings in this case allege:

(a)	a breach of constructive trust;

(b)	a claim under the Law Reform ((Testamentary Promises) Act 1949; and

(c)	an action in equity alleging the existence of a fiduciary obligation on the defendant as administrator of the deceased’s estate to dispose of the deceased’s remains in a specified culturally appropriate manner.

[5]	The plaintiff (Siliua Vaa Sila) and the deceased (Faalepo Paul Sila) were brother and sister.

[6]	The defendant’s mother (So’iligamalo) was also a sister of the deceased and the plaintiff. The plaintiff and the deceased moved to New Zealand from Samoa in the early 1960s.

[7]	The defendant was born on 9 July 1982 in Samoa. In accordance with a customary arrangement, the defendant was brought up by his maternal grandmother, Fesouaina Sila (who was the mother of the plaintiff and the deceased).

[8]	The defendant and Fesouaina Sila moved to New Zealand in 1985 and lived with the deceased at his property in Lower Hutt.

[9]	The defendant started school in Lower Hutt at the age of 5 in 1987. In 1993, the defendant and Fesouaina Sila returned to Samoa to live. Fesouaina Sila died on 25 August 1995.

[10]	The deceased wanted to adopt the defendant and for the defendant to come and live with him in New Zealand.

[11]	By order of the Magistrates Court of Samoa on 11 December 1995, the defendant was adopted by the deceased. The defendant was some 13 years old at this stage. He moved to New Zealand and lived with the deceased in Nelson between 1996 and 1998.

[12]	In 1998, it appears that the relationship between the defendant and the deceased broke down, and the defendant moved from Nelson to live with an aunt (Fegauiaí Sila) in Petone who at that time was living with the plaintiff’s daughter (Hannah Sila) and Hannah’s then husband, Manila, and looking after Manila and Hannah’s children. Fegauiai continues to reside with Manila and the children and to look after the children, even though Hannah left the home some 10 years ago.

[13]	Once the defendant left Nelson in 1998, the only contact between the two were two letters that the defendant sent to the deceased:

(a)	to advise of his mother’s (the deceased’s sister’s) death in 2002; and

(b)	to invite the deceased to his wedding in 2007.

The deceased did not respond to either letter.

[14]	The deceased was hospitalised in early October 2014 and was discharged to his home in Nelson in mid-October 2014. The plaintiff visited the deceased at his home in Nelson in January 2015. There is dispute about whether she stayed for a few days or a month.

[15]	The plaintiff alleges that during her visit to Nelson in January 2005, the deceased gave a mavaega (a Samoan customary promise) whereby he promised to:

(a)	give the whole of his estate, including his house at 24 Gladstone Road,
Richmond to the plaintiff; and

(b)	leave sufficient funds in the estate to enable the plaintiff to take the deceased’s remains back to Samoa.

[16]	The deceased died intestate in early 2017, and on 29 May 2017 the High Court granted letters of administration of the deceased’s estate in favour of the defendant.

[17]	On 7 November 2017, the defendant in his capacity as administrator, transferred the title to 24 Gladstone Street, Richmond, Nelson, to his own name. These proceedings were commenced by the plaintiff on 21 November 2017.

Security for costs

[18]	On 8 August 2018, the parties agreed that security for costs would be settled on the basis that the plaintiff depositing $10,000 in the High Court. However, that payment into Court was not immediately made.

[19]	On various dates in August and September 2018, payments totalling $10,000 were deposited into the plaintiff’s solicitor’s trust account.

[20]	From the bar, Mr Perese indicated that the payments had been made into the solicitor’s trust account, on behalf of the plaintiff, for the purpose of then being paid into Court, as had been agreed by the parties’ legal advisors in satisfaction of the security for costs requirement.

[21]	Mr Perese indicated that the solicitor, Mr Saseve, had been involved in a 10- week trial at about this time, and invited the Court to conclude that it was only through oversight that the payment was not paid into Court as had been agreed. The court did not have the benefit of an affidavit from Mr Saseve.

[22]	In the absence of hearing from Mr Saseve, I would be reluctant to come to any conclusion that he had not expeditiously discharged his duties. I also note that follow up emails to Mr Perese of 5 and 18 October 2018 went unanswered.

[23]	The email of 5 October 2018 had attached to it a joint memorandum of counsel regarding security for costs which recorded the agreement on 8 August 2017, that the sum of $10,000 would be paid into Court by way of security for costs.

[24]	I note that the memorandum provided for the signature required to be that of counsel rather than Mr Saseve. The Court did not hear any explanation as to why it was not promptly signed and returned.

[25]	Mr Pietras, for the defendant, indicated that with no response to the emails, and no explanations as to why the consent memorandum had not been returned, he felt obliged, given the impending close of pleadings date, to make a formal application for security for costs.

[26]	He indicated that, as at the date of the filing of that application, he had not been advised that any funds had been paid into the instructing solicitor’s account, but was aware that nothing had been paid into Court.

[27]	By application dated 9 November 2018, the defendant filed the present application for security for costs.

[28]	On 9 November 2018, shortly after having been advised of the application for security for costs, Mr Saseve confirmed that he was holding $10,000 in his trust account.

[29]	The week after the filing of this application, $10,000 was paid into Court on 16 November 2018.

Legal arguments

[30]	Mr Perese submits that the parties had a binding legal agreement that security for costs would be satisfied by way of the payment into Court in the sum of $10,000. He was critical, in his oral submissions, of the solicitor for the defendant not regarding himself as bound by an agreement entered into over the telephone and implied that there was some lack of propriety or probity in that regard.

[31]	I do not accept that submission.

[32]	While there clearly was an agreement in August 2018 that the plaintiff would settle the issue of security for costs by way of a payment into Court of $10,000, no such payment occurred. The plaintiff’s legal advisors failed to respond to emails querying what the delay was. Counsel did not only not return the prepared signed joint memorandum, but failed to indicate to the defendant’s solicitor what the reason for delay was.

[33]	When the payment into Court had not been made within a reasonable time, and reminder correspondence had been ignored, it was reasonable for the defendant to assume that the plaintiff had resiled from the agreement. In those circumstances, given that interlocutory applications had to be made before the close of pleadings date, the defendant cannot be criticised for making this application.

[34]	The plaintiff submitted that this application was unnecessary and that the Court should direct that the $10,000 paid into Court on 16 November should be refunded to the plaintiff and that no order as to costs should be made. That is an unrealistic submission.

[35]	The parties had agreed that security for costs was appropriate in this case and had fixed upon the sum of $10,000. This is a case, as the parties themselves appreciated, that an order for security for costs is appropriate. It is a matter for this Court to work out how much that should be, and how it is to be satisfied.

[36]	The defendant also initially sought an order disclosing the identity of the person who had paid the funds into the plaintiff’s solicitor’s trust account, relying on

cases such Waterhouse v Contractors Bonding Ltd.1 However, when the attention of counsel was drawn to the observation by the Supreme Court at [24] of that case, that, in relation to their comments about third party litigation funders, they were not addressing the position of relatives or associated bodies who might fund litigation, Mr Pietras withdrew that application reserving his right to raise it again at the conclusion of the pleadings should any costs application be required.

[37]	At [60] in Waterhouse v Contractors Bonding Ltd2, the Supreme Court confirmed that in relation to applications for costs, the existence and identity of a litigation funder may be relevant.

Legal tests

[38]	The discretion conferred upon the Court by r 5.45 is a broad one. The Judge may order security for costs if it is just in all the circumstances. That assessment involves a balancing of competing considerations. The more impecunious the plaintiff, the more exposed the defendant is to costs, and the greater the apparent justification for security. Conversely, the more impecunious the plaintiff, the less likelihood there is that security would be able to be provided.3

[39]	What is required is that there must be credible evidence of circumstances from which it might be reasonably inferred, that a plaintiff would be unable to pay costs.4

[40]	In the absence of direct evidence, it can be sufficient to adduce evidence surrounding the circumstances from which an inference or inability to pay can reasonably be drawn.5

[41]	The Court of Appeal has summed up the balancing exercise required as being:6

The rule itself contemplates an order for security where the plaintiff will be unable to meet an adverse award of costs. That must be taken as contemplating also that an order for substantial security may, in effect, prevent

1	Waterhouse v Contractors Bonding Ltd [2013] NZSC 89.
2	Above n 1.
3	See Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.
4	See Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd (No 2) [1977] 1 NZLR 516 at 519.
5	Totara Investments v Abooth Ltd HC Auckland CIV-2017-404-990, 4 March 2009 at [28].
6	A S McLachlan Ltd v MEL Network Ltd [2002] 16 PRNZ 747.

the plaintiff from pursuing the claim. An order having that effect should be made only after careful consideration and in a case in which the claim has little chance of success. Access to the courts for a genuine plaintiff is not lightly to be denied.

Of course, the interests of defendants must also be weighed. They must be protected against being drawn into unjustified litigation, particularly where it is over-complicated and unnecessarily protracted.

[42]	In assessing the balance point at which justice between the parties is achieved, there are cases which would support the proposition that, where there is an arguable case, that balance should tend towards the plaintiff.

[43]	Kόs J in Highgate on Broadway Ltd v Devine said:7

Access to justice is an essential human right. The cost of exercising that right is the payment of costs in the event of failure. The right of a successful defendant to costs in that event is arguably subordinate to the plaintiff's right to be heard. Strong social policy considerations favour the use of Courts as an accessible forum for the resolution of disputes and grievances of almost all kinds.

[44]	In the exercise of its discretion, the Court must also consider whether or not the application for security for costs has being unduly delayed.8 In the present case, there is no disentitling delay. The parties had responsibly agreed a suitable arrangement and it only became necessary for formal application to be made when the plaintiff failed to comply with the agreement reached.

Merits of the claim

[45]	The first cause of action relevantly pleaded:

(a)	That the Deceased’s estate passed to the plaintiff when the mavaega
was accepted.

(b)	The defendant is accordingly a constructive trustee of the Deceased’s estate, for the benefit of the plaintiff and the trusts declared during the Deceased’s life.

7	Highgate on Broadway Ltd v Devine [2012] NZHC 2288, [2013] NZAR 1017 at [23](b).
8	See Jo v Johnston [2013] NZHC 552 at [18].

(c)	A declaration that the defendant holds all of the Deceased’s estate and assets on a constructive trust under which the defendant is a constructive trustee and the plaintiff is the beneficiary, for the carrying out of the trusts established by the mavaega.

(d)	Alternatively to (a) above, judgment for the plaintiff in such sum as represents the value of carrying out the trusts as set out at [30.2] as to repatriation of the Deceased’s ashes in circumstances of burial.

[46]	The second cause of action – Law Reform (Testamentary Promises) Act 1949, referred to the plaintiff having agreed to the defendant’s request to repatriate his remains to Samoa and thereby giving him peace of mind. It was pleaded that:

It was implied in the deceased’s request that there was a promise that the Deceased would make by way of testamentary provision, sufficient funds to be available to the plaintiff for the undertaking and performance of the mavaega.

[47]	Judgment was sought for such sum as is reasonable and sufficient to give effect to the deceased promise to compensate the plaintiff for her acceptance of his mavaega.

[48]	The third cause of action is against the defendant in his capacity as administrator of the deceased’s estate. It alleges a fiduciary obligation on the defendant to arrange for the disposal of the remains of the deceased in a culturally appropriate manner, and in accordance with his wishes, it is claimed that he expressed in his mavaega. It seeks a declaration that as administrator of the deceased’s estate, the defendant tend to the disposal of the deceased’s remains in Samoa in accordance with the customs procedures and trusts expressed in his mavaega.

[49]	During the course of the hearing, Mr Perese clarified what was sought in the claims.

[50]	Initially the Court, and it would seem that the defendant as well, had interpreted the pleadings as seeking something more than arrangements for the repatriation of the defendant’s remains to Samoa.

Assessment of strength of claim

[51]	In terms of assessing the strength of the plaintiff’s claims, the only claims that would appear to have any prospect of success are those relating to the repatriation of the remains to Samoa and even then, the basis for such a claim needs to be established in circumstances where the evidence is contested.

[52]	Based on the decision of the Court of Appeal in Harvey v Beveridge.9 There appears to be no realistic legal basis upon which the plaintiff could be said to have obtained an interest in the deceased’s former residential property in Nelson.

[53]	This matter has been set down for a three-day hearing in March of next year. There was no dispute to the suggestion by Mr Pietras, for the defendant, that the scale costs for the hearing could be in the order of $25,000. That does not include any accounting for costs in relation to this interlocutory hearing. The defendant has personally incurred substantial costs already in defending these proceedings. I was advised that he had to arrange a loan in order to do this.

The plaintiff’s financial position

[54]	The plaintiff is 76 years of age. No affidavit describing her sources of income or assets or liabilities was provided to the Court. I infer that her only income is some form of benefit.

[55]	The plaintiff is a registered proprietor (along with her sister Fegauiai Sila) of a half-interest in 8 Halifax Street, Wainuiomata. However, there is dispute as to whether or not she has any equitable interest in the property.

[56]	The defendant asserts that the property was purchased to provide a home for Fegauiai Sila and Hannah Sila and her then husband Manila and their children. It is said that the only reason that the names of Hannah Sila and her then husband, Manila, were not put on the title as ownership of a half-share with Fegauiai, was because of their bad credit rating. It is asserted that the property continues to provide a home for Fegauiai, Manila, and the children of Fegauiai and Hannah (Hannah has not lived there

9	Harvey v Beveridge [2014] NZCA 72.

since she departed for Samoa in 2008); that the plaintiff has never lived there and that all the outgoings have been paid by Fegauiai and Manila.

[57]	Mr Perese’s written submissions suggested that the plaintiff’s beneficial interest in this property may be as much as 60 per cent. In the absence of any evidence indicating that she had contributed any equity to the property, such a claim is speculation.

[58]	Presently, there is no information before the Court that would give the Court confidence that the plaintiff has any interest in the Wainuiomata property that the defendant would be able to access to meet a costs award should the plaintiff’s claim be unsuccessful.

[59]	It is therefore not an option for the Court to address the issue of security for costs by directing that some form of charging order be registered against the property.

Analysis

[60]	I am satisfied that the plaintiff is impecunious and that an order for security for costs is necessary. There are no assets beneficially owned by the plaintiff which could provide security for payment of costs. Insofar as the Court can assess the merits of the plaintiff’s claim, it is weak.

[61]	I am mindful of the comments of Kόs J in Highgate on Broadway Ltd v Devine.10 Even though the plaintiff’s claim is weak, I am reluctant to make an order for security of costs that would deprive any opportunity of litigating this matter. However, it would be unfair to the defendant not to make some order as to security for costs.

[62]	Security is not necessarily ordered in an amount that represents the actual likely costs of the hearing. The parties knew, when they agreed in August on the sum of
$10,000 as security, that this would be somewhat less than actual costs.

10	Above n 7.

[63]	In the circumstances, I believe that balancing the parties’ respective interests can but be achieved by fixing security at $10,000 and I direct that the $10,000 already paid into Court by the plaintiff be held by the Court as security for costs until further direction of the Court.

Costs

[64]	Given the failure by the plaintiff to honour the agreement reached in August as to the payment into Court of $10,000, the defendant really had no alternative but to bring these proceedings. It is not appropriate that the defendant be out of pocket in relation to these proceedings or that the estate bear the costs.

[65]	If, as Mr Perese intimated, the reason that the costs paid into Mr Saseve’s trust account were not promptly forwarded to the Court was because of some oversight on the part of Mr Saseve, then it may well be that the plaintiff has some recourse in relation to the costs awarded on this application. However, in the first instance, costs are awarded against her.

[66]	Accordingly, the defendant shall have costs on a category 2B basis in relation to this application, along with disbursements. These costs and disbursements are to be paid by the plaintiff by 21 December 2018. If they are not paid by that date, these proceedings are to be stayed.

Timetable orders

[67]	A timetable order was made by Grice J on 20 November 2018 following a hearing on 19 November 2018.

[68]	Prior to the 19 November hearing, the solicitor for the plaintiff had filed a joint memorandum addressing a timetabling order. That had proposed:

(a)	the plaintiff’s written statements of evidence and an index of the documents the plaintiff wished to include in the common bundle be filed and served by 30 November 2018;

(b)	the defendant’s written statements and proposed evidence and index of documents be filed and served by 21 December 2018;

(c)	the plaintiff’s reply statements to be filed and served by 1 February 2019;

(d)	the plaintiff to file and serve a common bundle by 15 February 2019;

(e)	the   plaintiff’s   chronology   of   facts   to   be   filed   and   served by
15 February 2019;

(f)	the defendant’s response to the plaintiff’s chronology to be filed by
1 March 2019; and

(g)	the plaintiff’s opening to be filed by 11 March 2019.

[69]	The timetabling order made by Grice J reflected the plaintiff’s proposal.

[70]	On 21 November 2018, the plaintiff filed a further memorandum which claimed:

That (the) timetable was drafted at an earlier time, before the defendant filed his application for costs, and it is no longer appropriate.

[71]	The plaintiff sought an amendment so that the plaintiff’s evidence and index not be filed until 21 December 2018 and the defendant’s evidence and index by      30 January 2019, and the plaintiff’s reply statements be filed by 15 February 2019 rather than 1 February 2019, with the balance of the directions remaining the same.

[72]	By a minute of 22 November 2018, Grice J refused to make the amendments in the absence of consent from the defendant. That consent has not been forthcoming.

[73]	By consent, the application for variation of the timetable order was argued before me on 3 December 2018.

[74]	It is clear that the deadline for the filing of the plaintiff’s written statement of proposed evidence in chief and an index of the documents the plaintiff wishes include in the common bundle was not filed as directed by 30 November 2018. The defendant proposed an extension of the time to 21 December 2018.

[75]	The effect of pushing the timetable back as far as the plaintiff requests will put a significant and, in my view, unacceptable burden on the defendant.

[76]	I am prepared to modify the timetable in the following way:

(a)	the plaintiff’s written statements of proposed evidence in chief, and an index of the documents that the plaintiff wishes to include in the common bundle, are to be filed and served by 12 December 2018;

(b)	the defendant’s written statements of proposed evidence and an index of the documents the defendant wishes to include in the common bundle are to be filed and served by 30 January 2019;

(c)	the plaintiff’s reply statements of proposed evidence and any documents to be included in the bundle for the purposes of reply are to be served by 7 February 2019; and

(d)	the remaining directions in Grice J’s minute of 20 November 2018 are to remain as set out in that minute.

Result

•	The application for security for costs is granted and the $10,000 already paid by the plaintiff into Court is fixed as security.

•	The defendant is entitled to scale costs on this application fixed on a 2B basis.

•	The costs in respect of this application are to be paid by 21 December 2018
otherwise these proceedings are to be stayed.

•	The timetable order in respect of the substantive proceedings is varied as set out above.

Churchman J

Solicitors:
Saseve Solicitors, Auckland for the Plaintiff ARL Lawyers, Lower Hutt for the Defendant

cc:	S Perese, Auckland, counsel for the Plaintiff