HISLOP v PUBLIC TRUST [2015] NZHC 1101

HISLOP v PUBLIC TRUST [2015] NZHC 1101 [21 May 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-003297[2015] NZHC 1101UNDER the Property (Relationships) Act 1976IN THE MATTER of an appeal against a decision of theFamily Court at North ShoreBETWEEN JAMES STEWART HISLOPAppellantAND PUBLIC TRUST AS PERSONALREPRESENTATIVE OF THE ESTATEOF SUZANNE HEAVEN (FORMERLYKNOWN AS SUZANNE WYATT)RespondentHearing: 20 May 2015Appearances: A E Ashmore for the AppellantA Goodwin for the RespondentJudgment: 21 May 2015JUDGMENT OF GILBERT JThis judgment is delivered by me on 21 May 2015 at 2.45 pmpursuant to r 11.5 of the High Court Rules......................................................Registrar / Deputy RegistrarIntroduction[1] This appeal concerns the time limit under s 90 of the Property (Relationships) Act 1976 for commencing proceedings for the classification and division of relationship property following the death of a de facto partner. The Family Court concluded that the proceedings, which were commenced more than eight years after the date of death, were nevertheless in time because the estate was not a"small estate" as defined in s 2 of the Act and the proceedings were commencedwithin 12 months after administration of the estate was granted.1 Alternatively, the Court found that an extension of time could be granted because the application for the extension was made before the final distribution of the estate.The facts[2] In about December 2003, the appellant, Mr Hislop, entered into a de facto relationship with Suzanne Heaven, the deceased. In February 2004, they jointly purchased a property at Warkworth which became their home. In March 2005, the deceased made a Will appointing Mr Hislop and her solicitor as her executors and trustees. Mr Hislop was the sole beneficiary. The deceased died on 8 April 2005 as a result of which her interest in the home was extinguished and accrued to Mr Hislop by survivorship. The only assets in the estate comprised the sum of $246 in a bank account and a tax refund of $309. There was also a debt of $1,128.[3] The executors did not apply for probate because they took the view that thevalue of the estate did not exceed $15,000 and was therefore a "small estate" for thepurposes of the Administration Act. They completed the administration of the estate when they paid the tax refund to Mr Hislop in August 2006. This was the last remaining asset to be distributed.[4] On 19 December 2006, the deceased's daughter filed an application forprobate and for the appointment of the Public Trust as executor of the estate. This was with a view to the Public Trust making an application under the Property (Relationships) Act in respect of the home. If successful, this would enable the1 Public Trust v Hislop [2014] NZFC 9170.deceased's daughter to make a claim against the estate under the Family Protection Act 1955.[5] The application for probate was discontinued in June 2007 without beingserved. The deceased's daughter says that this was done without her knowledge orauthority and that she did not become aware of this until she instructed new solicitors in 2011.[6] The Public Trust was appointed as the administrator of the estate in April 2013. On 30 July 2013, the Public Trust filed an application in the Family Court for an order extending the time for commencement of proceedings under the Property (Relationships) Act. This application was made on the basis that the estate was a small estate and the relevant time limit for commencing proceedings had therefore expired in April 2006, 12 months after the date of death. An extension of time was sought on the basis that final distribution of the estate had not occurred.The Family Court judgment[7] Section 90(1) of the Property (Relationships) Act provides:Time limits for commencing proceedings90 (1) Proceedings must be commenced within the following time limits:(a) if the estate of the deceased spouse or partner is a small estate (as defined in section 2), the proceedings must be commenced—(i) no later than 12 months after the date of the death of the deceased spouse or partner; or(ii) if administration of the estate is granted in New Zealand within that period, no later than 12 months after the grant of administration,—whichever is the later:(b) in any other case, the proceedings must be commenced no later than 12 months after administration of the estate of the deceased spouse or partner is granted in New Zealand.[8] Despite the Public Trust's concession in its application that the time limit setby s 90(1)(a) of the Act for commencing proceedings had expired, the Judgeconcluded that it had not. This was because the Judge considered that the deceased'sformer interest in the home formed part of the estate and accordingly the estate wasnot a "small estate". The Judge reached this conclusion relying on s 83(1) of the Act which provides:Relationship property defined83 (1) If, on the death of a spouse or partner, any property of that spouse or partner passes to the surviving spouse or partner, whether by survivorship or otherwise (but not by succession), then unless, in any proceedings under this Act, the Court decides otherwise, –(a) that property is not automatically to be treated as the separate property of the surviving spouse or partner; and(b) the status of the property as relationship property or separate property is to be determined according to the status it wouldhave had if the deceased's spouse or partner had not died.[9] The Judge's reasoning was summarised in the following paragraphs of herjudgment:[90] The position of Mr Hislop is that s 90(1)(a) of the Act appliesbecause the estate of the deceased is a "small estate".[91] The basis of this argument appears to be on the fact that the whole ofthe home property is excluded from the deceased's estate by virtue of having passed to the respondent by survivorship on 2 June 2005.[92[ As referred to above, this however is contrary to the provisions of s 83 of the Act, which specifically state[s] the contrary. There is no presumption that the jointly owned property can be treated in this way by the surviving partner. Accordingly the value of the home property must fall into the pool of the estate prior to any determination to treat it otherwise by the Court pursuant to s 83.[10] Because administration of the estate was not granted until April 2013, the Judge considered that the proceedings had been commenced in time in terms of s 90(1)(b). Alternatively, the Judge considered that leave could be granted because no final distribution had been made:[105] No leave is required, as s 90(1)(b) has been complied with. Even if leave were required, no final distribution has been made, so leave can begranted, at the Court's discretion.[106] By way of summary, as the deceased's estate is not a "small estate",as it includes the home property in accordance with s 83, s 90(1)(b) applies. These proceedings were brought within the 12 month period after the Public Trust was granted administration and are therefore within the prescribed time limits.The appeal[11] Mr Hislop raises two grounds in support of his appeal. He contends that the Judge was wrong to conclude that the estate:(a) was not a small estate; and(b) had not been finally distributed.Was the estate a small estate?[12] The Judge relied on s 83 of the Act in concluding that the deceased's former interest in the home should be treated as forming part of her estate. However, this section merely regulates the approach to be taken on an application for classification and division of relationship property if the statutory sharing regime under the Act is invoked. Unless and until the Court makes an order under the Act, ownership of the home is to be determined in accordance with conventional property law. Because itwas owned jointly, the deceased's former interest in it was extinguished upon her death and accrued to Mr Hislop by survivorship. Until such time as the Court makes an order under the Act, the estate has no interest in the home and it does not form part of the estate. Any order made under the Act would not have retrospective effect. All that existed at the date of death was a right to make a claim with the prospect of an interest in the home being ordered under the Act.[13] For these reasons, I disagree with the learned Judge. The estate did not include any interest in the home as this was extinguished upon the death of the deceased. I consider that the Public Trust was correct in recognising that an extension of time was therefore required under s 90 because the proceedings were over seven years out of time.Had the estate been finally distributed?[14] The Judge considered that the estate had not been finally distributed because the home had not been dealt with as part of the estate assets:[101] In this particular case, however, until the Public Trust was appointed there has been no administrator appointed, nor has there been any completion of administration.[102] ... However the trustees and executors named in the will of the deceased have not dealt with the home property at all as part of the estate assets.[15] The Judge's conclusion on this issue is therefore consequent on herconclusion on the first issue. In view of my conclusion that the deceased's former interest in the home did not form part of the estate, the Judge's finding that the estatehad not been finally distributed cannot stand. The undisputed evidence is that all assets were distributed in accordance with the Will by August 2006.Conclusion[16] For the reasons given, the appeal must be allowed. Proceedings had to be commenced within 12 months of the date of death because this was a small estate and administration of the estate was not granted within that 12 month period. The Court had no jurisdiction to grant an extension of time because no application for extension of time was made until nearly seven years after the final distribution of the estate.Result[17] The appeal is allowed. The decision of the Family Court is set aside. The proceedings commenced by the Public Trust in the Family Court under the Property (Relationships) Act 1976 are out of time and must be struck out.[18] If the question of costs cannot be resolved, memoranda should be filed.________________________M A Gilbert J