Blakley v Blakley

[2014] NZHC 1730

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-449 [2014] NZHC 1730

BETWEEN

LINDA MARGARET BLAKLEY

Applicant

AND

CLIFFORD JOHN BLAKLEY as executor of the estate of Margaret Elinor Blakley

First Respondent

PENELOPE ANN BELL as executor of the estate of Margaret Elinor Blakdey

Hearing:	23 July 2014
Counsel:	JM Gandy for applicant SSS Khan and JC Muggeridge for respondents
Judgment:	23 July 2014

JUDGMENT OF FAIRE J

This judgment was delivered by me on 23 July 2014 at 4:45pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Thomas & Co, Auckland

Fortune Manning, Auckland

BLAKLEY v BLAKLEY as executor of the estate of Margaret Elinor Blakley [2014] NZHC 1730 [23 July 2014]

[1]      The applicant applies for an order against the respondents for particular discovery prior to the commencement of a proceeding.  The application seeks either the release of, or the authority to obtain, the bank statements of the late Margaret Elinor Blakley for the period from 1 January 2007 until her death on 24 August

2009.

[2]      The application is made in reliance on r 8.20.

[3]      The respondents oppose the application on two principal grounds, namely:

(a)       That there are no funds unaccounted for in the estate of Margaret

Elinor Blakley; and

(b)The applicant has not identified an adequate basis for a claim against the estate or any other person.

Background

[4]      Mrs Margaret Blakley died on 24 August 2009.   She was 83 years of age. The respondents are the two executors of her estate.   She had five children.   The applicant was her third child.  The applicant left New Zealand in the mid-1980s and married and established a family and now lives in Italy.

[5]      Clifford Blakley, the first respondent, is Mrs Blakley’s eldest son.   He left New Zealand in early 2002 and lives with his family in Australia.   Mrs Blakley’s other children Duncan, Malcolm and the second respondent, Penelope, have always lived in New Zealand.  Mr Jack Blakley, Mrs Blakley’s husband, died in 1982.  The deceased lived in the family home with her son, Malcolm.  Malcolm is the youngest son.   The family home is a large century-old wooden bungalow.   It was poorly maintained for many years after Mr Blakley’s death.   Mrs Blakley and Malcolm relied on a Government pension received by Mrs Blakley and a disability payment received by Malcolm.

[6]      In  early 2003,  Mrs  Blakley’s  older brother,  Gilbert  Searle,  who lived  in

Ireland died.   Later, her older sister, Kathleen Searle, who lived in England, died.

Mrs Blakley received an inheritance from both estates.   Mrs Blakley received the following inheritances:

(a)       The  sum  of  $75,945.33  on  or  about  14 January  2005  from  her

brother’s estate;

(b)      The sum of $272,681.10 on or about 3 April 2007 from her brother’s

estate; and

(c)       The sum of $111,148.69 on or about 10 December 2007 from her

sister’s estate.

[7]      The applicant’s affidavit indicates that she was led to believe that a greater sum may have been received by her mother from her brother and sister’s estates. The documents now disclose that that is not the case and that the applicant’s belief was overstated by $51,224.88.  This, in large part, should have allayed the original concerns that the applicant had, because it discloses over the last four years of her mother’s life, and without taking into account any New Zealand expenditure, the shortfall was some $51,224.88.

[8]      The second respondent has filed a detailed affidavit.  She explains that her mother was unable to spend any money renovating the home prior to receiving the inheritances.   She says that when her mother received the first payment from her brother’s estate she undertook work on the property, including the refurbishment and conversion of a bathroom from a bath to a shower and relocating and installing a new hot water cylinder.  She also gifted money to her children and undertook a trip to Europe to visit old friends, relatives and the applicant and her family in Italy.

[9]      She says that on her mother receiving the second payment from her brother’s estate in 2007, her mother made a second tranche of gifts to her children.  She also refers to  a major  renovation  that  was  undertaken  on  the house  in  2006,  which involved  the  removal  and  repair  of  rotten  timber,  repairing  drains,  renovating original fittings, painting the roof, interior and exterior, hanging new wallpaper, replacing windows,  repairing light  fittings  and  other general  maintenance work.

There was also work carried on outside the property in the installation of a new fence.

[10]     The above description indicates, in a general way, how the deceased would have spent the surplus funds that were available to her in her life time.

[11]     Mr Khan, in his submissions, drew attention to the fact that the applicant was mistaken as to how much was received from the inheritances – a matter to which I have already made reference.   He also refers to the fact that the applicant was mistaken as to when the inheritances were first received.   The first tranche was received in 2005, indicating that the deceased had money available to her from the inheritance over a four-year, not a two-year, period.  He also drew attention to the fact that the applicant was mistaken in her belief that the respondents had a power of attorney from the deceased in 2007.  The evidence is that they did not have such a power of attorney.

[12]     Mr Gandy confirmed to me that the applicant now accepts the quantum of inheritance received by her mother.  The applicant’s case is founded, he advised me, on the possibility that the respondent executors may not have properly investigated whether there is any asset of the deceased that should be recovered.   By that, he advised me, the question was whether or not there would be some loans, or the purchase of some asset, out of the surplus $50,000 figure that might give the estate a right to seek recovery.

[13]     The major problem with this theory is that the expenditure on living expenses and on renovations to the house would seem to me to provide the logical explanation for the way the deceased spent her money.   She was entitled to spend it how she wished.

[14]     This application is made in reliance on r 8.20 of the High Court Rules.  Rule

8.20 provides:

8.20     Order for particular discovery before proceeding commenced

(1)      This rule applies if it appears to a Judge that—

(a)       a person (the intending plaintiff) is or may be entitled to claim in the court relief against another person (the intended defendant) but that it is impossible or impracticable for the intending plaintiff to formulate the intending plaintiff's claim without reference to 1 or more documents or a group of documents; and

(b)       there are grounds to believe that the documents may be or may have been in the control of a person (the person) who may or may not be the intended defendant.

(2)      The Judge may, on the application of the intending plaintiff made before any proceeding is brought, order the person—

(a)      to file an affidavit stating—

(i)        whether  the  documents  are  or  have  been  in  the person's control; and

(ii)      if they have been but are no longer in the person's control, the person's best knowledge and belief as to when the documents ceased to be in the person's control and who now has control of them; and

(b)      to serve the affidavit on the intending plaintiff; and

(c)       if the documents are in the person's control, to make those documents available for inspection, in accordance with rule

8.27, to the intending plaintiff.

(3)      An  application  under  subclause  (2)  must  be  by  interlocutory application made on notice—

(a)      to the person; and

(b)      to the intended defendant.

(4)      The Judge may not make an order under this rule unless satisfied that the order is necessary at the time when the order is made.

[15]     Before discovery orders are justified in this case three conditions must be met, namely:

(a)       The intending plaintiff “is or may be entitled to claim in the court

relief against another person”;

(b)It  is  impossible,  or  impracticable,  for  the  intending  plaintiff  to formulate his claim without reference to a document or class of documents; and

(c)       There are grounds for the belief that those documents may have been in the possession of the person concerned.

[16]     In addition, the rule requires that a judge must be satisfied that an order is necessary at the time when the order is made.

[17]     The Court  of Appeal  in  Hetherington  Ltd  v Carpenter,  dealing with  the predecessor to this rule, confirmed that what an applicant must establish is that there is a real probability of the existence of a claim against someone.1   The applicant does not have to go as far as showing that there is a real probability of the claim being established at trial.   The Court of Appeal confirmed also that the applicant must establish that it is impossible or impracticable for the intending plaintiff to formulate his or her claim without reference to the document or class of documents in issue. This means an inability to plead in accordance with the High Court Rules.  The focus is on the pleading.

[18]     The rule is designed to permit an intending plaintiff to be put in a position where that person can plead a claim in accordance with the requirements of the High Court Rules.   The discovery is limited to that purpose alone.   The rule is not a mechanism to encourage fishing expeditions.   There must be some foundation established, such as would make it just, that the respondent should be put to the trouble and suffer the intrusion in their affairs which an order would involve.  The rule provides the court with a discretion.

[19]     Mr Khan, in my view, correctly submitted that the applicant has failed to show a real probability of the existence of a claim.  His submission, of course, has greater support having regard to the affidavit in opposition filed by the second respondent who, of course, has disclosed the precise figures supported by the documentary evidence of the funds received by the deceased from her brother and sister’s estates.  In addition, when one examines the expenditure on house and other matters that are referred to in the second respondent’s affidavit, there is only a small

difference which counsel calculated at approximately $11,000.   That, as counsel

1      Hetherington Ltd v Carpenter [1997] 1 NZLR 699.

indicates, could easily have been spent on modest necessities over a four-year period by the deceased.

[20]     While there is potentially a claim for breach of fiduciary duty that could be mounted against the executors based on an allegation that perhaps they had not called in all the assets of the estate, that, on the material placed before me, is theoretical and has really no proper foundation for it.  It certainly does not fall within the category of cases where one can conclude that there is a real probability of the existence of a claim against the executors, or any other person for that matter.

[21]     That then leads me to the conclusion that it is not appropriate for the court to exercise its discretion to order discovery of the bank statements in this case.  Further, one would hope that the applicant, now that she has received precise confirmation of the inheritance moneys received by her mother, can put, what appears to be a distrust of her brother and sister in their administration of the parties’ mother’s estate, behind her.

Orders

[22]     The application is refused.

Costs

[23]     I discussed with counsel whether there should be any departure from the normal rule that the successful party should be ordered costs on a 2B basis, based on the disposal of an interlocutory application.  Both agreed that that was appropriate in this case.

[24]     The hearing took less than a quarter of a day.  Accordingly, I order that the applicant pay the respondents costs based on Category 2 Band B and for a quarter

day hearing, plus disbursements as fixed by the Registrar.

JA Faire J