RACHELLE v SCHNAUER [2020] NZHC 1351

RACHELLE v SCHNAUER [2020] NZHC 1351 [16 June 2020]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2019-425-000113[2020] NZHC 1351BETWEEN GEORGINA ANNE RACHELLEAppellantAND ANDREW PHILLIP LANE SCHNAUERRespondentHearing: 4 June 2020Appearances: Appellant – in personD M Lloyd for the RespondentJudgment: 16 June 2020JUDGMENT OF NATION J[1] Ms Rachelle and Mr Schnauer have been parties to proceedings under theProperty (Relationships) Act 1976 (PRA) in the Family Court since 2017. There wasa settlement conference with a Judge on 22 November 2018. Mr Schnauer said he hadmade further attempts to settle relationship property claims through correspondencein February 2019 and again in March 2019. Ms Rachelle has been adamant that sherequires the matter to proceed to a hearing.[2] On 26 September 2019, Judge Brandts-Giesen, in the Family Court atQueenstown, ordered Ms Rachelle to provide security for costs in the sum of $7,832.1That sum was based on costs Mr Schnauer could be entitled to on steps taken in theproceedings to that date, calculated on a 2B basis. Ms Rachelle appeals that decision.1 Rachelle v Schnauer [2019] NZFC 7778.The District Court decision[3] In his decision, the Judge referred to Mr Schnauer saying there was unlikely tobe sufficient equity in the family home to repay relationship debts. He referred to MsRachelle's contention that she was a woman of substance with assets of more than $3million but telling the Judge those assets were all in Australia, held in variousdiscretionary trusts associated with her family. He referred to Ms Rachelle saying MrSchnauer had no claim over any of the property as he had contributed nothing at all,and her describing their home as being "my sole property". He referred to MsRachelle's complaints over her being subjected to domestic violence, and Mr Schnauersmashing up her house and a company vehicle during the relationship.[4] The Judge considered the application for security for costs in terms of r5.48(1)(b) District Court Rules 2014, and outlined the four steps the Court had to gothrough.[5] The Judge referred to the parties having shares in a company but Ms Rachellesignalling these shares had no value. He said she was not in consistent employment.He referred to the home as having a value of between $390,000 and $515,000. Hesaid, in light of "this debt" (which I infer was a reference to the ASB loan secured overthe family home that was in default), Ms Rachelle would be unable to pay MrSchnauer's costs if her application was unsuccessful. He found the threshold test forthe making of an order had been met. He said he did not need to consider the meritsof her claim other than to note that the property and debts appeared to be the jointresponsibility of both parties.[6] After that brief introduction, the Judge said "I therefore consider it is proper toexercise my discretion to make an order for security for costs". He then made theorder as sought.The appeal[7] Ms Rachelle has acted for herself in these proceedings. She says she was alawyer in Australia. Her grounds of appeal include:1. The Plaintiff Ms Rachelle agrees with the Judge in (section 2) that "it isimportant that both the matters proceed to a hearing and in reference(section 1) it has indeed been "a long running battle" between the Applicantand Defendant and needs to be resolved.2. And, in (Section 22) "property and the debts appear to be the jointresponsibility of both of the parties that being Georgina Anne Rachelle andAndrew Phillip Lane Schnauer.3. Georgina Anne Rachelle solely perchance [sic] her home on her own,which makes Mr Andrew Schnauer unneglectable [sic] for any financialcomputations for they were in a very short duration of Marriage due to MrSchnauer's Domestic Violence, which he was committed of under theCrimes Act.[8] In a minute of 2 December 2019, Gendall J made standard directions as to stepsMs Rachelle had to take to advance her appeal. These included requirements for thefiling of submissions and a chronology within 20 working days.[9] Osborne J issued a minute after he convened a conference on 16 March 2020.He noted that Ms Rachelle said she would be continuing to pursue her appeal but shedid not accept the need for an amended timetable or the need to file submissions,stating instead that "the case at hand is ready for Trail [sic]". Osborne J said MsRachelle must file submissions. To assist her, he said they were to strictly focus onthe judgment dated 26 September 2019 and were not to include a number of allegationsand propositions made in a memorandum she filed on 28 February 2020.[10] Osborne J issued a further minute on 19 March 2020, after Ms Rachelle hadfiled submissions. Helpfully, from the documents, he identified the basis on whichMs Rachelle intended to appeal three aspects of the judgment:(a) the finding the threshold test was established;(b) the exercise of the discretion under r 5.48(2); and(c) the amount of security.[11] His Honour noted that, as to the exercise of the Court's discretion, Ms Rachelleappeared to be asserting as particular grounds:(a) Mr Schnauer's financial abandonment of Ms Rachelle over four and a halfyears ago;(b) Mr Schnauer's domestic violence constituting a form of financial control;(c) Mr Schnauer being the party who wanted the divorce;(d) Mr Schnauer not paying any money towards rates and thereby stretchingMs Rachelle's finances;(e) Mr Schnauer's building up of arrears and Ms Rachelle not receiving onecent towards any bills for the last four and a half years;(f) Mr Schnauer not having any significant assets (only a $10 coffee table),representing the reason he married Ms Rachelle; and(g) the fact that Mr Schnauer agrees with Ms Rachelle that his legalrepresentation has been incompetent and agrees that the parties have had"enough".[12] Ms Lloyd filed detailed written submissions. In summary, she said the FamilyCourt judgment was the correct exercise of a discretion in accordance with r 5.48District Court Rules. She submitted the Judge was justified in finding there was reasonto believe Ms Rachelle would be unable to pay Mr Schnauer's costs if Ms Rachellewas unsuccessful in the proceedings.[13] Ms Lloyd then addressed the grounds of appeal Mr Rachelle relied on andexplained Ms Rachelle was unlikely to succeed with the claims she was intending topursue as to those matters. She submitted this was because of the way the parties hadacquired property during the relationship, the circumstances they were in after theseparation with Ms Rachelle generally having control of the parties' business andhome, and because her entitlements had to be determined in accordance with the PRA.Ms Lloyd acknowledged Ms Rachelle's feelings of aggrievement.Background[14] A barrister, Ms Byers, was appointed to assist the Family Court. She filed amemorandum on 4 May 2019 which helpfully set out some of the background andwhat was at issue between the parties.[15] The parties started living together in July 2013, married on 8 November 2014and separated on 3 October 2015. An order dissolving their marriage was made inearly 2018.[16] There are no dependents of the relationship as defined by the PRA.[17] The parties purchased a family home at Cromwell in October 2014 for$307,000 with an ASB mortgage of $246,000 and $60,000 provided by Ms Rachelle'smother from Australia.[18] Mr Schnauer lived in the home for a time after the separation between mid-March to 26 June 2016. But for that period, Ms Rachelle has occupied the home sincethe separation. Mr Schnauer says he made some payments on the mortgage while hewas in the home after the separation.[19] Ms Byers told the Court in her report of May 2019 that the property was thenworth approximately $515,000 according to Homes.co.nz. An attached document saidthe estimated range was $490,000 to $540,000.[20] Property Law Act 2007 notices were issued by the bank on several occasionsduring the separation. The property was under threat of a mortgagee sale when theJudge ordered Ms Rachelle to pay security for costs in September 2019.[21] In an affidavit of 13 September 2019, Mr Schnauer referred to emailcorrespondence between his counsel and lawyers acting for Ms Rachelle and a trustshe was establishing over the refinancing of the ASB mortgage. That correspondenceindicated that Southern Cross Finance Ltd was willing to refinance the mortgage. Oneof the conditions for the refinancing loan was that a registered valuation be providedfor the property by nominated valuers showing the property had a value of $500,000.With that refinancing having taken place after the September 2019 hearing, it seemslikely the Cromwell property was then valued by a registered valuer at $500,000.[22] It would thus seem, in September 2019, at the time the Judge dealt with securityfor costs, there was equity in the property of around $256,000. The parties howeverhad a liability to Ms Rachelle's mother for advances made during the relationship ofapproximately $155,000.2[23] In March 2015, the parties incorporated a company Cromwell Winterlands Ltd.The parties are directors and equal shareholders in the business. Two buses werepurchased in the business.[24] The only company accounts prepared for the company are for the year ended31 March 2016. They were signed off by both parties as directors. The accounts showthe company made a loss of $18,414 before depreciation. Income was just $7,247.Deductible expenses totalled $25,963.[25] At 31 March 2016, the book value of company assets was $34,280. The mainassets were two buses, each purchased for $19,130 during that year. Afterdepreciation, the book value of both buses was said to be $16,069 each. At 31 March2016, there was a bank account liability of $30. $4,024 was due for GST. $57,115was stated to be due on the shareholders' current accounts.[26] The information before the Court suggests that, if funds went into the companyfrom either of the parties before the separation, what they contributed would have beenreflected in what was shown in the company accounts as being due to the directors ontheir current accounts, that is $57,115. It seems that, if either of them had funds to putinto the company before the separation, those funds were likely to have come frommoney which was made available from Ms Rachelle's mother in Australia. Such2 Subsequent to the decision over security for costs, the Cromwell property has been transferredfrom the parties to the trustees of Ms Rachelle's new trust. The ASB mortgage has been repaidwith a loan from Southern Cross Finance Ltd. Mr Schnauer is not a party to that new mortgage.The transfer of the property and the refinancing was without prejudice to the parties' rights in theproceedings.payments have been recorded, and are accepted by Mr Schnauer, as having been madeavailable by way of loan to both parties.[27] There seemed to be no dispute that Ms Rachelle has been in control of theirbusiness to the extent she has continued with it after the separation. I was told one buswas sold after separation, but the other bus is still owned by the company. It does notseem the company would have any value on an earnings basis. Mr Schnauer's counselsaid it should not be necessary and would not be economically sensible to obtain anyfurther valuation of the shares in the company.[28] During submissions, Ms Rachelle told the Court she was intending to make aclaim against Mr Schnauer for costs she incurred through Mr Schnauer abandoningthe business. She accepted, as was pointed out by Mr Schnauer's counsel, that shortlyafter the separation she had stated to Mr Schnauer he must have nothing to do with thebusiness. Ms Rachelle said this was because she accepted advice from the Police thatthey would both be at risk if they continued to be involved in the business together.[29] Amongst the documents Ms Rachelle filed in the Family Court was thefollowing document, described as a loan agreement:THIS AGREEMENT made the 16th day of September 2014Between:Lender: GABRIELLE MARY RACHELLE of 69 Church Street, Cowes,Victoria of the one part; andBorrower: GEORGINA ANNE RACHELLE representing on behave [sic]of Cromwell Winterlands Limited as co-director, other being ANDREWPHILLIP LANE SCHNAUER of 146 Waenga Drive, Cromwell, CentralOtago, New Zealand, of the second part.Recitals:A. The Lender has, at the request of the Borrower, consented to lend toher the sum of ($248,640.14) to the Borrower to provide workingcapital and for general living expenses.B. The parties have agreed, (that being the Directors of CromwellWinterlands and Gabrielle Rachelle) to enter into this Agreement onthe terms and conditions set out herein.[30] That document is not signed by either the lender or the people named asborrower. Attached to it is a document headed "Statutory Declaration". In thatdocument, Gabrielle Mary Rachelle (Ms Rachelle's mother) says she has loaned thetotal sum of $248,640.14 to the parties on dates and in the following amounts. Thereis then listed a series of payments made on various dates between 16 September 2014and 24 October 2018 for a total of $248,640.14.[31] It thus appears Ms Rachelle was seeking to rely on an unsigned agreementwhich she presents as having been dated 16 September 2014. The agreement couldnot have been prepared at that time because it refers to payments made at various timeswell after that date.[32] Nevertheless, in his affidavit of 13 September 2019, Mr Schnauer referred tothe declaration made by Ms Rachelle's mother which detailed advances totalling$155,049.99 made during the relationship. In his affidavit, he accepted he was jointlyresponsible for that portion of the debt. He said a further $93,590.15 had beenadvanced to Ms Rachelle after the separation. He did not know why those advanceswere made or what they were for. He did not accept any liability for those advances.[33] Despite the Court's concerns as to the documents I have referred to, it wouldappear that, to the extent funds from Ms Rachelle's mother were made available to theparties while they were together and used in the business of Cromwell Winterlands,those monies were made by way of loan to both parties and then contributed by themboth to the company. If so, they would both be entitled to benefit from those advancesbut would also have a debt to Ms Rachelle's mother for the amount of those advances.Those loans would have been part of the $155,000 which Mr Schnauer accepted wasa joint liability of the parties to Ms Rachelle's mother.[34] Mr Schnauer's counsel confirmed during submissions that Mr Schnauer iswilling to settle on the basis the parties are equally liable for approximately $155,000of debt to Ms Rachelle's mother but he does not accept any liability for advances madeby Ms Rachelle's mother to her daughter or the company after separation. In response,Ms Rachelle said she is not making any claim against Mr Schnauer as to advancesmade by her mother after separation.[35] It seems that, for most of the separation, Ms Rachelle had the benefit of beingable to live in what was the parties' former family home. She has retained a Kiwisaveraccount and a motor vehicle which was used during the relationship. She has alsoretained the use of the chattels in the home. Despite having the benefit of living at theproperty, it appears Ms Rachelle did not pay rates, certain insurance premiums or allmortgage outgoings due during that time.[36] In May 2019, counsel to assist advised the Court that Mr Schnauer sought toresign as a director and transfer his shares in Cromwell Winterlands and his interest inthe home to Ms Rachelle, in consideration of which she would be responsible for hisshare of the debts relating to the home and the company.[37] The debt originally secured over that home has now been repaid. The onlyremaining debt in respect of which Mr Schnauer says he could have a liability wouldbe the $155,000 loan from by Ms Rachelle's mother during the time they weretogether. That debt appears to have been less than the equity in the home around thetime the home was transferred to the trust established by Ms Rachelle for her benefit.[38] Ms Rachelle wanted the Cromwell property transferred to her without havingto make any payment to Mr Schnauer on the basis he made no contribution to thepurchase price. She wanted Mr Schnauer to pay $90,219 as his share of debts whichshe said were owed by the directors of Cromwell Winterlands. Ms Rachelle alsowanted to claim reimbursement for certain expenses she had incurred.[39] Ms Rachelle made it clear to me that the proceedings in the Family Court willneed to go to a hearing. She told the Court she wishes to pursue claims against MrSchnauer for compensation for:(a) his allegedly shutting down the business;(b) domestic violence which occurred during the relationship;(c) $200,000 which she says Mr Schnauer stole from her during therelationship;(d) damage she says he did in kicking at doors during the relationship;(e) leaving her having to care for two cats; and(f) $900 for a sleep apnoea machine purchased during the relationship.[40] Ms Rachelle provided to the Court a document which purported to beparticulars of her claim in the Family Court. It included a claim for:3) Human body damage under s 1961 [sic] as well as Domestic ViolenceAct 19954) Costs of Dependants [with reference to two cats]9) Compensation for humiliation, loss of dignity and injury to feelingspursuant under s 123(1)(c) of the Employment Relations Act 2000.[41] Subsequent to the Judge's decision over security for costs, Ms Rachelle filed amemorandum with the High Court advising she was claiming an additional $16,598.12for half the costs she incurred in having the home transferred to the trustees of a trustshe established. Attached to that memorandum were draft statements prepared bysolicitors acting for Ms Rachelle and her new trust on the refinancing.[42] It appears from those statements that the $33,196.24, which Ms Rachelle saysMr Schnauer should pay half of, relates to costs she incurred in arranging a new loanto enable her to repay the existing mortgage and $26,970.36 of the new advance whichwas retained by the new lender to cover "retained interest and loan administrationfees". The statement showed the amount required to repay the ASB mortgage was$244,790.83. Also deducted from the new loan advance were payments foroutstanding rates, insurance, legal costs incurred by the trust on the formation of MsRachelle's new trust, the purchase and other matters. Monies were also used to repaya loan of $12,392 through Baycorp NZ Ltd.[43] From the Court record and from the way Ms Rachelle pursued this appeal, itwould seem Mr Schnauer may succeed in having the Family Court deal with theparties' respective claims in the way he proposes. If that is the outcome, Ms Rachellecould be ordered to pay him costs and not just according to the scale. There could bean increase on that scale because of the particular claims Ms Rachelle is determinedto pursue and the way she is pursuing them. Ms Rachelle is putting herself at risk ofsuch a costs order in a situation where she told me Mr Schnauer is bankrupt and hasno means to pay her the amount she is seeking.[44] I have set this out in some detail to assist the parties and also for the benefit ofthe Family Court which, it appears, will be dealing with the parties' respective claims.It has also been necessary for me to do this because, in deciding whether a party shouldbe required to provide security for costs, it is appropriate and was appropriate for aJudge to consider the merits of each party's position.Analysis[45] On this appeal, the only issue I can and will determine is whether there wasany error in the way the Judge required Ms Rachelle to provide security for costs inthe sum of $7,832.[46] Most of Ms Rachelle's submissions as to the appeal were not directed to theissues Osborne J identified. She began by telling me I was going to receive a narrativeof the last five years. Her submission also began with a personal attack on MrSchnauer and his counsel for the fact Mr Schnauer was not available in Court for herto cross-examine. (When I pointed out to Ms Rachelle that Osborne J had alreadymade it clear Mr Schnauer did not have to be present and there would be no newevidence at the hearing or any ability to cross-examine, Mr Rachelle said she had notbeen told that in writing.)[47] In his minute of 19 March 2020, Osborne J said the appeal would be based onthe material presented before Judge Brandts-Giesen. He also confirmed that MrSchnauer was not required to attend the hearing provided he was represented bycounsel, as he was.[48] Most of Ms Rachelle's submissions were presented with anger and hostilityand were centred on her intensely held grievances against Mr Schnauer. Mixed in withthat were personal attacks on his counsel and certain Family Court Judges. Relevantlyhowever, she made it clear she wants to continue with the proceedings, wants to havea hearing in the Family Court and wants to pursue claims of the sort I referred to above.Ms Rachelle said she would be prepared to provide $1 as security for costs but wasotherwise adamant she would not be paying Mr Schnauer's legal costs. She referredagain to this being a 50/50 case where both parties needed a hearing to resolve theproceedings. In her written submissions, Ms Rachelle said her net worth "is over $3million in family trust funds".[49] Ms Lloyd argued that, to allow the proceedings to continue without securitywould be oppressive to Mr Schnauer. She submitted, despite the report from counselto assist which identified what was properly in dispute, Ms Rachelle had continued topursue relief outside the scope of the PRA and in a manner inconsistent with resolvingmatters as speedily and cost-effectively as is just. She referred to the ways MsRachelle's actions throughout the proceedings had caused delay, added significant costand had failed to treat the Court and opposing counsel with respect. She referred tocomments from the High Court in Highgate on Broadway Ltd v Devine where Kós Jidentified that the conduct of a party could be a relevant consideration in determiningwhether security was required.3[50] In her oral submissions, Ms Lloyd confirmed that, when she sought securityfor costs in the Family Court, she had not sought a stay of the proceedings if suchsecurity was not provided. She said the costs had been based on an application of thescale for steps in the proceedings to date, rather than on what costs might be awardedif the parties proceeded through to a hearing of the proceedings. She confirmed that,from both parties' point of view, there needed to be a hearing of the proceedings in theFamily Court.[51] There is no dispute that the Judge correctly identified the four step processrequire before the Court makes an order for costs:4(i) The applicant for security needs to satisfy the court of the threshold testin 5.48(1);(ii) The court needs to exercise its discretion under 5.48(2);3 Highgate on Broadway Ltd v Devine [2012] NZHC 2299, [2013] NZAR 1017, at [24].4 Rachelle v Schnauer, above n 1, at [15], the approach as set out in Busch V Zion Wildlife Gardens Ltd(in rec and in liq) HC Whangarei CIV 2011-488-232 23 January 2012.(iii) Followed by an assessment as to what is an appropriate security forcosts; and(iv) Whether a stay of proceedings ought to be ordered pending security.[52] As to the establishment of the threshold test, the Judge referred to what DuffyJ said in Sharda Holdings Ltd v Gasoline Alley Services Ltd:5It is clear from the authorities cited that the threshold of proof for making anorder for security for costs is less than proof of inability to pay an award ofcosts. It is enough if the Court is satisfied that there is credible (that is,believable) evidence from which it may reasonably be inferred that theplaintiff will be unable to pay any such order.[53] Before me, Ms Rachelle accepted the Judge had been correct in identifying thather Australian "assets" are as a beneficiary only of what she believes are discretionarytrusts.[54] At the time of the security for costs application hearing, mortgage paymentsfor the home were in default. Arrears in rates were accumulating. As the personoccupying the home, Ms Rachelle would normally have been expected to meet at leastthe outgoings on the property. The only accounts available indicated the business hadmade a substantial loss. The Judge said that, whatever the assets in Australia were,they would not necessarily be available to meet any order for costs that might be madeagainst Ms Rachelle in the proceedings.[55] The parties were however in proceedings under the PRA to sort out their rightsand entitlements as to assets and liabilities that had arisen during and were connectedwith the relationship. At the time the Judge made his decision, the borrowings securedover the home were some $244,000. Mr Schnauer agreed there was a joint relationshipdebt from the parties to Ms Rachelle's mother in the sum of approximately $155,000.In the substantive proceedings, a Judge would have to decide how those debts and theequity in the home should be apportioned between the parties. If Ms Rachelle wasunsuccessful on the claims she wanted to pursue, Mr Schnauer might well have beenentitled to a substantial award of costs. A Judge could however have given him creditfor such amount by correspondingly reducing his share of the parties' debts when those5 Rachelle v Schnauer, above n 1, at [16], citing Sharda Holdings Ltd v Gasoline Alley Services LtdHC Auckland CIV-2008-004-539, 13 November 2009, at [6].debts were to be brought into account between them. Accordingly, in this case, MrSchnauer could have obtained the benefit of a costs order in his favour without havingto rely on Ms Rachelle's ability to meet those costs from income or assets which werelikely to be available to her.[56] The Judge did say he was exercising a discretion but gave no reasons as to why,in the particular circumstances of this case and with these parties, he considered itappropriate to make the order he did. He said, at that stage, he did not need to considerthe merits of Ms Rachelle's claim against Mr Schnauer.[57] From his judgment, the only apparent reason for requiring security was that,because of Ms Rachelle's financial position, there was a risk of her being unable tomeet a costs award that might be made against her.[58] In Highgate on Broadway Ltd v Devine, Kós J said "the imposition of securityis not an automatic consequence of the plaintiff's impecuniosity".6 Kós J listed 11matters that might properly be considered. A number of them would not have beenrelevant to this particular case but there was nothing in the Judge's decision to indicatehe had considered any of them.[59] The last matter Kós J referred to was "how should the respective interests ofthe parties best be balanced". He said this was the overriding and most importantconsideration of all.[60] In AS McLachlan v MEL Network Ltd, Gault P for the Court of Appeal said thediscretion to be exercised by the Court "is not to be fettered by constructing"principles" from the facts of previous cases".7 The Court indicated that "a carefulassessment of the circumstances of the particular case" was required.8 The Courtnoted that the rules providing for the Court to make an order for costs are made withthe contemplation "that an order for substantial security may, in effect, prevent theplaintiff from pursuing the claim".9 The Court said "an order having that effect should6 Highgate on Broadway Ltd v Devine, above n 3, at [21].7 AS McLachlan v MEL Network Ltd CA39/02, 29 August 2002, (2002) 16 PRNZ 747 at [13].8 At [14].9 At [15].be made only after careful consideration and in a case in which the claim has littlechance of success".10 The Court said "the interests of defendants must also beweighed. They must be protected against being drawn into unjustified litigation,particularly where it is over-complicated and unnecessarily protracted."11[61] It is clear from that judgment that, in considering how the discretion will beexercised, a Court needs to consider the merits of the claims even though the Court isnot expected to make a final determination as to what the ultimate result would be onthe issues between the parties. The Court of Appeal also stated the amount of securityis not necessarily to be fixed by reference to likely costs awards. It is rather what theCourt thinks fit in all the circumstances.[62] There is nothing in the Judge's decision to indicate he gave any considerationto the particular circumstances of this case in deciding whether security was required.In that way, I consider, although he purported to exercise a discretion, he did so withoutregard to all relevant considerations.12 There was thus an error in the exercise of thediscretion which requires me to decide whether it was appropriate for the order to bemade.[63] The rules allow for a Court to require security for costs to avoid the risk of aparty having to face the costs of a continuing involvement in proceedings when, ifthey are successful in those proceedings, the other party might well not be able to meetcosts they are ordered to pay. In this instance, security for costs was not being soughtfor that reason. Mr Schnauer had expressly not sought a stay of the proceedings ifsecurity was not provided. Both parties wanted the proceedings to be taken throughto a hearing. This was not a case where the proceedings were being pursued only forthe benefit of Ms Rachelle. Both parties needed to obtain orders to clarify whatproperty each would retain from the relationship and to what extent one or the otherparty would be responsible for debts incurred during the relationship. It was thusimportant to both Mr Schnauer and Ms Rachelle that the proceedings in the Family10 At [15].11 At [16].12 A ground for a successful appeal against the exercise of a discretion, as stated by the SupremeCourt in K v B [2010] NZSC 112, [2011] 2 NZLR 1 at [32].Court be brought on for hearing without delay and without further costs orimpediments.[64] It was apparent from Ms Rachelle's conduct in the proceedings that she wasnot dealing with the issues in the case objectively. It seemed (and still seems) she wasdetermined to pursue claims based on her own views as to what was right withoutbeing constrained by what the PRA says about the parties' property rights at the endof a relationship. Her approach to the proceedings seems to have been dominated byher intense grievances against her husband and her belief that she should be able topursue what she wanted without any proper regard to how her claims might have tobe dealt with by a Judge.[65] With the behaviour and thinking she had demonstrated, it was highly likely MsRachelle would simply ignore the order made for security. For the order to have anypurpose, Mr Schnauer would then have to take steps to enforce the order, potentiallyincurring further cost and delaying the hearing. Mr Schnauer was wanting to avoidthose consequences.[66] The making of an order for security was thus unlikely to provide Mr Schnauerwith the security he sought, the purpose for which the order was being sought. Themaking of the order was however likely to make it more difficult for both parties totake these proceedings through to a hearing, a hearing both parties wanted.[67] I have considered the material which was before the Court when the Judgemade his decision. I have now heard further angry and personally denigratingsubmissions from Ms Rachelle. I accept that issues between the parties may well beresolved by the Family Court with a substantial award of costs in Mr Schnauer'sfavour. Such an award could be for an amount equal to or greater than the amount MsRachelle has been ordered to pay.[68] A Judge could ensure Mr Schnauer is credited with any costs that mightultimately be due to him from Ms Rachelle when deciding how they should each bearthe burden of the acknowledged joint debt to Ms Rachelle's mother for $155,000.[69] Alternatively, to obtain payment, Mr Schnauer would have to take steps toenforce the order for costs, just as he would have to do now to obtain payment of theamount required for security. Given Mr Schnauer wants the proceedings to go aheadso matters can be resolved with appropriate Court orders, it is likely that at the end ofthe proceedings and after such a hearing he will be in no worse position than he is nowif ultimately an order for costs is made in his favour.[70] The evidence for the Court at the time the Judge made his order indicated thatMs Rachelle has benefited from significant payments to her from family trusts inAustralia of which she is a beneficiary. There is now another family trust which shehas set up which owns the home she is living in. Ms Rachelle's attitude towards MrSchnauer is such that she is unlikely to willingly comply with any order for costs thatmight be made against her. If Mr Schnauer is ultimately successful and obtains anorder for costs, he may have to enforce that order through bankruptcy proceedings.Although this may not happen, it would seem likely the prospect of Ms Rachellereceiving funds as a beneficiary of a trust sufficient to meet any order for costs MrSchnauer might obtain will be as good at the conclusion of the proceedings as they arenow.[71] Accordingly, because Mr Schnauer needs to have the current proceedingsresolved with appropriate Court orders and has not sought a stay of the proceedings ifsecurity is not provided, it is hard to see how he will be prejudiced if costs are dealtwith at the end of the proceedings rather than on a provisional basis with a requirementfor Ms Rachelle to provide security as ordered by the District Court Judge.[72] For all these reasons, I consider the Judge was wrong in the way he reachedhis decision and clearly wrong in the decision he made to require Ms Rachelle to paysecurity.[73] I accordingly allow the appeal and quash the order made in the Family Court.[74] The proceedings will now be remitted back to the Family Court. Unless theproceedings can be settled, a hearing should be allocated without delay. Ms Lloydsaid the hearing would likely take one day. A Judge in the Family Court will then haveto deal with those claims in accordance with the PRA. Issues over costs can bedetermined at that time in the normal way.[75] Ms Rachelle has been successful on this appeal. Despite that, the appeal wasadvanced on a number of grounds which had no merit. She did not comply withdirections the Court made as to what steps she had to take to ensure the appeal wasready for hearing. It was Mr Schnauer's counsel who provided the High Court withrelevant documents from the Family Court. On the hearing of the appeal, Ms Rachellefailed to confine her submissions to the particular issues Osborne J said she needed toaddress. She also made a number of offensive statements personally attacking MrSchnauer's counsel in ways that were of no assistance to the Court. Because MsRachelle was self-represented, she did not incur any legal costs herself in pursuing theappeal.[76] In all the circumstances, each party is to bear whatever costs they haveseparately incurred as to this appeal.Solicitors:Lloyd Troon Law, Queenstown.Copy to:G A Rachelle, Appellant.This judgment was delivered by me on 16 June 2020 at 3.00 pmRegistrar/Deputy RegistrarDate: 16 June 2020