RICHARD JOHN CRESER V THE OFFICIAL ASSIGNEE CA CA196/05

RICHARD JOHN CRESER V THE OFFICIAL ASSIGNEE CA CA196/05 12 June 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA196/05BETWEEN RICHARD JOHN CRESER Appellant AND THE OFFICIAL ASSIGNEE Respondent Counsel: R J Creser in person P R W Chisnall for Official Assignee Judgment: 12 June 2006JUDGMENT OF O'REGAN J The application to review the decision of the Deputy Registrar declining to dispense with security for costs or reduce the amount of security is dismissed. Payment of security of $4,300 must be made on or before 6 July 2006. REASONS Introduction[1] This is an application for review of the Deputy Registrar's decision on an application to dispense with security for costs or reduce the amount of security in relation to two appeals to this Court by the applicant, Mr Creser. The first appeal is against a judgment of Fogarty J (Creser v Official Assignee HC WN CIV-2003-485- 000893 17 August 2005). The second is against a judgment of Ronald Young J (Creser v Creser and Official Assignee HC WN CIV-2005-485-1407 4 October2005). I personally have considered the application under r 7(2) of the Court of Appeal (Civil) Rules 2005 ('the rules') and s 61A of the Judicature Act 1908.Background[2] Mr Creser was adjudicated bankrupt on 8 March 2004. This was the result of non-payment by Mr Creser of costs in proceedings relating to his mother's will (to avoid confusion, I will call her 'Mrs Creser'). That will established a protective trust in respect of Mr Creser's share of the residue of Mrs Creser's estate for the purpose of protecting Mr Creser's share from creditors. Mr Creser's sisters, Janine and Marion Creser, were trustees and executors of the estate. [3] Mr Creser applied to the High Court to caveat the will to prevent it being granted probate. He also sought the removal of Janine Creser as executor. On 2 September 2003 Gendall J ordered that the caveat would be discharged unless Mr Creser provided security for costs of $20,000 in the form of a charge against his share in Mrs Creser's estate, pending the determination of an application by Mr Creser's siblings to grant probate. Costs were also awarded against Mr Creser (HC WN CIV-2003-485-893 2 September 2003). Mr Creser appealed to this Court. This Court declined to interfere with the costs awards made by Gendall J (CA193/03 8 October 2003). [4] Mr Creser did not pay costs and was eventually bankrupted. Mr Creser applied to this Court for special leave to appeal against the adjudication of his bankruptcy. This Court declined his application (CA110/04 2 September 2004). [5] Mr Creser gave $20,000 security for costs to his siblings by way of a charge against his interest in Mrs Creser's estate. The will was admitted to probate by Miller J on 15 June 2004 (HC WN CIV 2003-485-644 15 June 2004). [6] On 2 May 2006 Miller J heard a challenge to the provisions of the will in the High Court ('the challenge proceedings'). This was brought by Mr Creser's siblings, and the Official Assignee pursued a claim under the Family Protection Act 1955 on Mr Creser's behalf. The Official Assignee argued the protective trust wasinsufficient in providing for Mr Creser. Mr Creser opposed the Official Assignee's stance. [7] The judgment under appeal of Fogarty J: (1) dismissed Mr Creser's appeal against the decision of the Official Assignee not to oppose the grant of probate; (2) dismissed an appeal against the decision of the Official Assignee not to pursue an application to review the original bankruptcy of Mr Creser; (3) approved the Official Assignee's decision to institute proceedings under the Family Protection Act in the challenge proceedings; (4) granted the Official Assignee's application to strike out various claims by Mr Creser with respect to Mrs Creser's will. [8] The judgment under appeal of Ronald Young J struck out claims by Mr Creser against his siblings and the Official Assignee. These claims sought (1) removal of the trustees; (2) review of the trustees' decision to bankrupt Mr Creser; (3) orders to account and seek pre-trial disclosure against the trustees; (4) exemplary damages as against the Official Assignee.Mr Creser's application to the Registrar under r 35(6)(c)[9] Mr Creser was required to furnish security for the respondent's costs in this Court under r 35(1) of the rules in relation to his appeals against the two judgments detailed at [7]-[8] above. [10] On 28 September Mr Creser wrote to the Registrar applying for an order dispensing with security for costs or reducing the amount of security under r 35(6) of the rules. In that letter, Mr Creser detailed the grounds for his application. He said there was already an existing security of $20,000 against his share of Mrs Creser's estate. [11] Mr Creser then said he was a bankrupt and was unable to provide further security without the consent of the Official Assignee, who is also the respondent. Accordingly, a failure to dispense with security would 'render [Mr Creser's] statutory right of appeal nugatory'.[12] Submissions from the Official Assignee in respect of Mr Creser's application were filed on 17 November. The Official Assignee contended that Mr Creser's alleged existing security had no relevance to the present appeals. It applied as security to the trustees in separate probate proceedings. In any event, it was argued that Mr Creser's entitlement under his mother's estate was pursuant to a discretionary trust set up for his maintenance. Accordingly it was questionable whether it constituted a grant of security. [13] On 13 December, the Deputy Registrar advised Mr Creser that his application under r 35(6) for the security to be reduced or dispensed with was unsuccessful. However, she made an order under r 35(6)(d) deferring the date for payment of the security. The security had to be paid within 20 working days from the date of the Deputy Registrar's decision. The amount of the security was $4,300.Mr Creser's application for review of the Deputy Registrar's decision under r 7(2)[14] On 16 January 2006 Mr Creser applied to this Court pursuant to r 7(2) of the rules for a Judge of this Court to review the Deputy Registrar's decision. Attached to that application was a letter detailing the grounds of Mr Creser's application. [15] Mr Creser submitted that the security for costs provided for in the probate proceedings proved there was in existence an asset which Mr Creser was able to assign. He said to characterise his entitlement under his mother's estate as a discretionary benefit was misleading, given it was relevant to the present proceedings. [16] On 26 April I issued a minute calling for further submissions from the parties. I set filing dates of 5 May for the respondent and 12 May for Mr Creser. [17] On 4 May I received submissions from the Official Assignee. These contended: (1) the merits of the respondent's appeal were dubious; (2) the points of law raised by both appeals were not contentious; (3) impecuniosity is not of itselfsufficient grounds for dispensing with security and; (4) security for costs is properly required in appeals from orders of adjudication in bankruptcy. [18] I granted Mr Creser an extension of time in which to file submissions in reply because the judgment in the challenge proceedings was released on 11 May, one day before the original deadline.The challenge proceedings and Mr Creser's submissions[19] As I have said, these proceedings involved Mr Creser's siblings contesting Mrs Creser's bequest under the Family Proceedings Act. Relevantly, the Official Assignee challenged Mrs Creser's provision that Mr Creser's share of the residue should be held in trust for his maintenance and support during his lifetime and should then be held for any of his surviving children. Under the trust, power was vested in the trustees to apply the whole or any part of the beneficiary's (Mr Creser's) share of the income and capital of Mrs Creser's estate for the benefit of Mr Creser. [20] On behalf of Mr Creser the Official Assignee submitted that Mrs Creser had made inadequate provision for him from her estate. The Official Assignee submitted there was no disentitling conduct to justify the imposition of a protective trust. Furthermore, as the trust was a discretionary trust, any income from the trust was subject to the discretion of the trustees. If this were not the case, Mr Creser could use his share in the estate to obtain a discharge from bankruptcy or an annulment of bankruptcy. [21] In his judgment of 11 May (HC WN CIV 2005-485-2157 11 May 2006) Miller J said he considered none of Mrs Creser's children had disentitled themselves from shares in the will. The Judge said (at [42]):The provision made for [Mr Creser] is materially less in substance than the one-third share of the residue that Mrs Creser had in mind, and it represents a breach of her duty to him in circumstances where his needs are immediate and significant.[22] Accordingly, Miller J ordered the termination of the protective trust and ordered that Mr Creser would take a share of the residue absolutely. [23] On 19 May Mr Creser filed submissions in response to my minute of 26 April. Mr Creser submitted that Miller J's decision in the challenge proceedings confirmed his position that the trustees hold security by their power of retention over his assets and income. Mr Creser submitted that, in light of Miller J's decision, I should consider that ample security is furnished by Mr Creser's share in the residue. [24] Mr Creser also petitioned this Court to annul his bankruptcy pursuant to s 119 of the Insolvency Act 1967.DiscussionAnnulment of bankruptcy[25] I deal first with Mr Creser's application to annul bankruptcy. While I have jurisdiction as an individual Judge under s 61A(3) of the Judicature Act to deal with the review of the Deputy Registrar's decision on security for costs, I have no jurisdiction to grant the annulment sought under s 119 of the Insolvency Act. The application was inappropriate. If Mr Creser wants to pursue this he should do so by formal application to the High Court in the manner prescribed in s 119.Security for costs[26] Turning to the security for costs application, it does not follow from the fact that Miller J's judgment vests Mr Creser's share in the residual state in Mr Creser himself (and not in trust) that the share in the estate constitutes security for costs in this Court. [27] The security in the probate proceedings before Gendall J is not security for the present appeal. The respondents, including the Official Assignee, are entitled to independent security for the present appeals.[28] I have reviewed the decision of the Deputy Registrar and the written submissions received by the Court. I accept the submission for the Official Assignee that the merits of the appeals do not seem to be strong. [29] I reject Mr Creser's submission that the appeals raise any novel, unprecedented point of law. Neither the judgment of Fogarty J nor that of Ronald Young J determines novel or unprecedented points of law. [30] I am satisfied that there is no reason to interfere with the decision of the Deputy Registrar in the present case. The Deputy Registrar was entitled to conclude that there was no compelling case to modify the normal requirements of the rules by dispensing with security for costs or reducing the amount of the security to be provided.Result[31] I am not satisfied the Deputy Registrar's decision was incorrect. Accordingly, I dismiss the application under r 7(2). The Deputy Registrar had allowed Mr Creser 20 working days from the date of her decision to pay the security. I will adopt a similar approach. Mr Creser must pay to the Registrar security of $4,300 for the respondents' costs in this Court in relation to the present appeals on or before 6 July 2006.Solicitors: Gibson Sheat, Wellington for Official Assignee