Furlong v Mill
[2024] NZHC 3569
•27 November 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-083
[2024] NZHC 3569
UNDER the District Court Act 2016 IN THE MATTER
of an appeal against a decision of the District Court at Christchurch
BETWEEN
JAMES MICHAEL FURLONG
Appellant
AND
CAMERON MILL
Respondent
Hearing: 2 September 2024 Appearances:
A J Summerlee for Appellant R V Sami for Respondent
Judgment:
27 November 2024
JUDGMENT OF EATON J
This judgment was delivered by me on …….. at ……… pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
FURLONG v MILL [2024] NZHC 3569 [27 November 2024]
[1] On 17 January 2024, Judge Tuohy declined the application of James Furlong (James) for summary judgment against Cameron Mill (Cameron).1 James appeals that decision.
Background
[2] The appellant, James, was in a relationship with the late Brittnea Mill (Britt) from 2008 to 2015.
[3] From 2015 to her untimely death from cancer in March 2020, Britt was in a relationship with the respondent, Cameron.
[4] Prior to and during his relationship with Britt, James had been in the New Zealand Defence Force (Defence Force). While in the Defence Force, James was able to take out income protection and life assurance administered by AON New Zealand Ltd (AON). There was provision for policy benefits to be extended to life partners and Britt took advantage of this. Britt applied for a life benefit of $100,000 in February 2015, with an initial monthly premium of $5.57 which was paid solely by James until the time Britt died.
[5] Although James and Britt separated in 2015, it was not until 2019 that they entered into a Relationship Property Agreement (the Agreement) pursuant to s 21A of the Property (Relationships) Act 1976 (the Act).
[6] The Agreement contained a section headed “Life Assurance Policies”. It provided:
8.1 As from the separation date, the Sovereign Assurance life policy, number V1013468 has been and will continue to be James’ separate property.
8.2 As this policy has no cash out value, there will be no apportionment in relation to the same.
[7] No other policy is mentioned in the Agreement. I will return to the significance of this below.
1 Furlong v Mill [2023] NZDC 29304.
[8] After Britt’s death, James corresponded with AON about the life benefit. Because the policy was in Britt’s name, albeit subject to the above clause of the Agreement, AON had to organise payment of the life cover via Britt’s estate.
[9] Cameron is the sole beneficiary of Britt’s estate. It seems he is not the executor of Britt’s estate. In any event, between May and December 2020, there were a number of Facebook Messenger communications between James and Cameron relating to the insurance policy.
[10] A contract was reached between James and Cameron pursuant to which Britt’s estate would claim the life benefit. James agreed that Cameron would receive $20,000 from the payment and the balance would be paid to James, who would also make a donation to charity from the payment.
[11] James, as I will detail further below, had already been in correspondence with AON and provided all the information he had in relation to the policy to the solicitors for Britt’s estate.
[12] The life cover was paid out and ultimately received by Cameron who, in breach of the contract, did not make payment to James.
[13] James applied for summary judgment against Cameron to enforce the contract between them. Judge Tuohy found that a concluded contract was reached, and that Cameron breached that contract.2 There was no cross-appeal against those findings. However, the Judge declined to grant summary judgment. The Judge found:
[42] The strongest defence raised, and possibly the only reasonably arguable one, is that of mistake. The mistake which is alleged is that when he made the contract with James, Cameron believed that James was beneficially entitled to the proceeds of Britt’s life benefit when in fact he was not. It is possible that James was under the same misapprehension.
[43] In terms of s 24 of the Contract and Commercial Law Act 2017 (the Act), what would have to be established is that the existence of that mistake was known to James at the time he made his offer to Cameron; alternatively, that James had the same mistaken belief; and that Cameron, or alternatively, both of them, were influenced by that mistake in deciding to enter into the contract. It must also be shown that that mistake of him or both
2 Furlong v Mill, above n 1, at [38] and [41].
of them was material and resulted in an unequal exchange of values and/or disproportionate benefit to James.
[14] The Judge considered the key issue was whether it was reasonably arguable that Britt’s estate and not James was entitled to the life benefit.
[15] As to the beneficial ownership of the AON policy, the Judge was not satisfied that the full evidentiary picture had been presented. More particularly, the Judge observed that the policy number in the Agreement is James’ Defence Force service number. His Honour said:
[47] …The membership certificate and its covering letter and the policy terms indicate that the benefit was Britt’s, that her membership in the plan would continue even after she ceased to be James’ ‘spouse’ and that the proceeds were to be paid to her estate on her death. The use of the service number appears to have been only an administrative linkage.
[16] The above observation may be correct, but it is not referenced to the ownership of the policy.
[17] Mr Summerlee, counsel for James, also relied on authority that supports the existence of a presumptive equitable right to the proceeds of a life insurance benefit accruing to a person other than the insured who has paid the premium. While the Judge acknowledged that presumption, he also recognised that it was rebuttable. His Honour said:
[48] …There may be such circumstances in this case including the factors referred to in the last paragraph and the fact that, although renewable annually, the benefit had an intrinsic value in that the insurer was bound to renew at an age related premium even if the life assured’s health deteriorated even to the degree of contracting a potentially terminal illness such as Britt’s.
[18] I do not consider these observations are of relevance to a rebuttal of the presumption.
[19] As to the Agreement, Mr Summerlee argued that it provided that the life policy became James’ property. The Judge said:
[49] …I am not sure that the contrary is not reasonably arguable, at least without scrutiny of the negotiations which resulted in Clause 8. The clause appears to assume that there was only one “policy” whereas the membership
certificates indicate there were two separately owned entitlements. The wording of Clause 8 suggests that Britt (and James) may have been unaware of that and/or unaware that the benefit was payable before death from a terminal illness, particularly when it is kept in mind that the Agreement was signed less than eight months before her death of bowel cancer, which she may then have known was terminal.
[20]That finding raises a number of issues that were developed on appeal.
The appeal
[21] James appeals against the refusal to grant summary judgment on three grounds, all confined to the Judge’s treatment of the mistake defence. No other factual matters are challenged. As I have observed, Cameron does not cross-appeal the Judge’s finding that a concluded contract was reached, and that Cameron breached that contract.
[22]Mr Summerlee, for James, submits:
(a)The Judge erred by misapplying the threshold for granting summary judgment, which requires a positive finding Cameron had a reasonably arguable defence, by concluding he was “not sure” the possibility James did not own the life policy is not reasonably arguable and that that there was insufficient evidence to exclude the defence.
(b)The Judge erred by declining summary judgment based on an un-pleaded defence, the onus resting on the defendant to lay a proper foundation but where the defence of mistake had not been raised in the statement of defence nor was it apparent from Cameron’s affidavit.
(c)The evidence led in the District Court proceeding was insufficient to form an evidential foundation to make the defence of mistake, even had it been pleaded, reasonably arguable.
[23] Mr Sami, for Cameron, submits the Judge applied the correct threshold in finding there was a reasonably arguable defence, and that the evidence supported the findings made. Mr Sami submits the Judge correctly exercised judicial caution in the
context of “skeletal evidence” and that the appeal should be declined to allow for proper discovery of relevant evidence on the issue of beneficial entitlement to the policy payment to avoid injustice to Cameron.
Did the Judge err by finding there was an evidential basis to conclude there was a reasonably arguable defence?
[24] I am not satisfied that there is a reasonable evidential basis for Judge Tuohy’s suggestion that there may have been more than one policy. But even if my conclusion is wrong, James’ proceeding concerns the policy that became his property under the Agreement and no other.
[25] James commenced the process of seeking to recover the life benefit by communicating with AON. In August 2020, that is, a little less than three months before probate, James wrote to a Miss Senior at the solicitors acting for the executors of Britt’s estate to commence the process of collecting the insurance payment.
[26] Significantly, the day before that email, James sent Miss Senior an email as follows:
Cam has sent me your email address. This is a slightly different situation in regards to insurances, but Cam wanted to work through it and I am happy to assist where I can.
I have attached a copy of my policy with my NZDF service number – v1013468. You will see that Brits policy is a Tier 3 and is linked via my service number.
Please let me know if you have any further questions.
[27]Miss Senior replied the next day:
Dear James
Thank you for sending this information to me. I have been in touch with Aon and that [sic] have advised me of their requirements.
[28] In a further email of 13 August 2020, James provided Miss Senior with an email from AON which set out their requirements for claiming on the policy. Nothing in AON’s email suggests there is more than one policy.
[29] The significance of this evidence is that Britt’s executors were working on the basis that they were corresponding with AON to recover the amount payable under the policy linked to James’ Defence Force service number.
[30] The timing of this evidence is similarly significant. The executors’ solicitor was made aware of the policy by the August 2020 emails, well before probate, with the firm receiving the insurance payout on 2 December 2020. It is also noteworthy that the same firm is acting for Cameron in resisting James’ claim. Had there been a separate policy, then one would expect that to have been put into evidence. The absence of such evidence is stark.
[31] The subject line of an email from AON to Miss Senior on 13 August 2020 records Britt’s policy number as “V1013468-S”, rather than simply “V1013468”, being James’ policy number and the number recorded in cl 8 of the Agreement. The possibility there may be two policies is raised in reliance on that single reference in the subject line of the email.
[32] However, there is no evidence that there was more than one policy or that the executors of Britt’s estate held that belief. But for the single subject line reference, the policy is consistently referred to as V1013468. Further, the insurance membership certificates of both James and Britt state the service number is V1013468, Britt’s certificate recording this alongside the heading “Spouse Service Number”. I infer the “S” in the insurer’s email is more than likely a reference simply to “spouse”, recognising the two insured parties under the one policy.
[33] As well, if there were two separate policies, it would be odd for the Agreement to refer to only one and not the other. Moreover, if that was the true factual position, it would be Britt’s policy, not James’, that was included in the Agreement. It would not be disputed that James owned his own policy obtained through his employment in the Defence Force. The only potential question requiring clarification by way of provision in the Agreement would be who owned Britt’s life insurance that was obtained through James’ employer. This further undermines the weak evidential foundation to find there may have been more than one policy.
[34] To grant summary judgment, the court must be satisfied there is no reasonably arguable defence to the plaintiff’s cause of action.3 The Court held in Pemberton v Chappell that:4
At the end of the day [r 12.2(1)] requires that the plaintiff “satisfies the Court that a defendant has no defence”. In this context the words “no defence” have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example, no bona fide defence, no reasonable ground of defence, no fairly arguable defence.
[35] The threshold of a “real question to be tried” cannot be met by a bald assertion that there is a defence but without any elaboration or detail.5 While the onus is on the plaintiff to satisfy the Court there is no defence, the defendant must particularise the defence so as to show an issue of fact which ought to be tried.6 There “must be a proper evidential foundation for a defence put forward as justifying refusal of summary judgment…demonstrated on the pleadings and evidence before the court”.7
[36]The Judge declined to grant the summary judgment application because:8
[49] …I am not sure [that the possibility that James did not own the life policy by reason of the Agreement] is not reasonably arguable, at least without scrutiny of the negotiations which resulted in Clause 8. The clause appears to assume that there was only one “policy” whereas the membership certificates indicate there were two separately owned entitlements.
…
[51] I am not persuaded there has been sufficient exposition of the evidence or legal analysis of it to be able to exclude mistake as a reasonably arguable defence on this summary judgment application. While such a defence faces many hurdles and has not been fully and coherently expressed or pleaded at this stage, this is a case where some judicial caution is required particularly because of the rather skeletal evidence now before the Court.
(emphasis added)
3 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.06]; Pemberton v Chappell [1987] 1 NZLR 1, (1986) 1 PRNZ 183 at 3; and Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [28].
4 Pemberton v Chappell, above n 3, at 3. The relevant rule in that case was r 136 of the High Court Rules 1986, of which r 12.2(1) in the High Court Rules 2016 is equivalent.
5 Haines v Carter [2001] 2 NZLR 167 at [97]; and Public Trust v Kumar HC Auckland CIV-2009- 404-4886, 13 October 2010 at [35].
6 Pemberton v Chappell, above n 3, at 3–4.
7 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA).
8 Furlong v Mill, above n 1.
[37] That the Judge was “not sure” the “skeletal evidence” was sufficient to establish a reasonably arguable defence of mistake and found that Cameron had failed to “fully and coherently” express or plead that defence is, in my view, an appropriate acknowledgement of the lack of evidential foundation for a such a defence. That evidential lacuna is real even if I agreed with the Judge that the membership certificates indicate there were two separate policies which, because as stated at [32] the certificates state the same policy number, I do not.
[38] Mr Sami submits that if there was an evidential lacuna, the appellant and not the respondent was at fault. He submits that it was for the appellant to establish, by way of evidence in support of the summary judgment application, that he was the beneficial owner of the insurance proceeds. The Judge took the view that both sides were at fault in terms of the deficiency of evidence. I disagree.
[39] If Cameron sought to raise as an arguable defence that James had no entitlement to the insurance proceeds, it was his obligation to raise that issue, supported by evidence. It strikes as inconceivable that in his dealings with the estate lawyers, Cameron, as the residuary beneficiary, would not have raised an issue as to James’ entitlement to the deceased’s life insurance policy.
[40] Cameron’s argument there is a reasonably arguable defence of mistake based on the possibility there were two separate policies is not established on the evidence before the Court. It amounts to a mere assertion and does not raise “a real question to be tried”.
[41] While judicial caution may permit the Court to decline summary judgment where a reasonably arguable defence is not made out, the discretion to do so is “of the most residual kind”,9 and is generally exercised to avoid injustice to a defendant or where summary judgment is used as a mechanism of oppression.10 If a defence has been raised last minute, is unsubstantiated and would require an adjournment, the
9 Pemberton v Chappell, above n 3, at 5.
10 Remnant v Mills [2002] NZHC 3414, citing Herring v Herring [2010] NZCA 500, [2011] 2 NZLR 433, Sayles v Sayles HC Auckland CP1262/86, 2 December 1986, and Ireland v Ireland [2014] NZHC 1432.
courts will often be required to act robustly to protect the integrity of the process.11 It will ultimately be a matter of judgment on the particular facts of the case.12
[42] Cameron’s notice of opposition was expressed very broadly and did not provide the particulars of any defence to be advanced, nor was the defence of mistake raised in his statement of defence. The issue was raised indirectly in written submissions filed shortly before the District Court hearing and on appeal, relies on the Judge’s view that the parties had filed skeletal evidence on the topic. The manner in which the defence was raised, considered alongside the lack of an evidential foundation and that an adjournment for sufficient exposition of the evidence would be required to explore the defence, points away from this being an appropriate case for judicial caution to decline summary judgment. The judicial caution exercised by the Judge has operated unfairly against James and undermined the integrity of the summary judgment process.
[43] I am satisfied the Judge erred in finding the defence of mistake was a reasonably arguable defence that might be advanced by Cameron. Nothing from AON has been produced suggesting there was a separate insurance policy for Britt but, even if there was, the amount recovered is from the policy linked to James’ Defence Force service number being the policy that was owned by James under the Agreement as that is the policy recorded by the executors with James’ assistance.
[44] I observe that Cameron, in his affidavit, also appears to accept the policy that was paid out was the policy referred to in the Agreement:
10I am not aware of the information disclosed to Brittnea by James regarding the Sovereign Assurance life policy [V1013468].
11My understanding is that disclosure of the Sovereign Assurance life policy [V1013468] is relevant and should have been disclosed by James in his affidavit…
12I do not believe Brittnea was fully aware of the effects and implications of the Sovereign Assurance life policy [V1013468].
11 Haines v Carter, above n 5, at [97].
12 Bilbie Dymock Corp Ltd v Patel (1987) 1 NZPC 84.
(emphasis added)
[45] If there is another policy, then it is not covered by cl 8 of the Agreement and is not relevant to James’ claim; rather, that separate policy would be a matter for Britt’s estate.
[46] Given I am satisfied it is clear that James is seeking to recover the proceeds of the policy linked to his Defence Force service number, the Agreement operated to establish that he is the beneficial owner of that policy. James made no mistake when he made his agreement with Cameron. James knew he was the owner of the policy in Britt’s name linked to his Defence Force service number and he knew that was the policy that was being claimed by the solicitor acting for Britt’s executor. There was no common mistake.
[47] While the Judge considered that the wording of cl 8 of the Agreement suggests Britt and James may have been unaware that the benefit was payable before death from a terminal illness (a view that I do not consider to be supported on the evidence), that is not an issue between James and Cameron. Any issue as to the validity of the Agreement could only be as between James and the estate. There is no need for scrutiny of the negotiations that resulted in cl 8 of the Agreement as suggested by the Judge as Cameron does not have standing to challenge that Agreement. Britt’s estate was distributed at the end of 2020. The executors have taken no steps to challenge the Agreement and Cameron has no standing to do so.
[48] The fact is, the Agreement reinforces the presumption relied on by Mr Summerlee in the summary judgment hearing.
[49]For those reasons, I am satisfied that James was entitled to summary judgment.
Result
[50]The appeal is allowed.
[51] I grant summary judgment in favour of the appellant in the sum of $85,569.32 plus interest pursuant to s 10 of the Interest on Money Claims Act 2016 from 2 December 2020.
[52] The appellant is entitled to costs on the appeal. If costs cannot be agreed counsel may file memoranda of no more than three pages within 10 working days.
...................................................
Eaton J
Solicitors:
Parry Field, Christchurch Godfreys Law, Christchurch
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