Hislop v Public Trust

[2015] NZHC 1101

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-003297 [2015] NZHC 1101

UNDER	the Property (Relationships) Act 1976
IN THE MATTER	of an appeal against a decision of the Family Court at North Shore
BETWEEN	JAMES STEWART HISLOP Appellant
AND	PUBLIC TRUST AS PERSONAL REPRESENTATIVE OF THE ESTATE OF SUZANNE HEAVEN (FORMERLY KNOWN AS SUZANNE WYATT) Respondent

Hearing:	20 May 2015
Appearances:	A E Ashmore for the Appellant A Goodwin for the Respondent
Judgment:	21 May 2015

JUDGMENT OF GILBERT J

This judgment is delivered by me on 21 May 2015 at 2.45 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

HISLOP v PUBLIC TRUST [2015] NZHC 1101 [21 May 2015]

Introduction

[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 commenced

within 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 the value of the estate did not exceed $15,000 and was therefore a “small estate” for the purposes 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  for probate 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 the

1      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 being served.  The deceased’s daughter says that this was done without her knowledge or authority  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 proceedings

90(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 set by  s 90(1)(a)  of  the  Act  for  commencing  proceedings  had  expired,  the  Judge concluded that it had not.  This was because the Judge considered that the deceased’s former interest in the home formed part of the estate and accordingly the estate was not a “small estate”.  The Judge reached this conclusion relying on s 83(1) of the Act which provides:

Relationship property defined

83(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 would have had if the deceased’s spouse or partner had not died.

[9]      The Judge’s reasoning was summarised in the following paragraphs of her

judgment:

[90]      The  position  of  Mr  Hislop  is  that  s  90(1)(a)  of  the Act  applies

because the estate of the deceased is a “small estate”.

[91]      The basis of this argument appears to be on the fact that the whole of the 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 be granted, 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 it was 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  her conclusion 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 estate had 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