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Herring v Herring

Herring v Herring

Case [2010] NZCA 500 2 November 2010

Civil Litigation & Procedure

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA673/2009
[2010] NZCA 500
BETWEENRUSSELL JAMES HERRING
Appellant

ANDRUSSELL JAMES HERRING, BRENDA MAY HERRING (ALSO KNOWN AS BRENDA MAY TREACY) AND ANTHONY ROBERT HERRING ALL AS TRUSTEES OF THE R J & B M HERRING FAMILY TRUST
Respondents

Hearing:27 July 2010

Court:Arnold, Ellen France and Harrison JJ
Counsel:O G Paulsen and S Dwight for Appellant
D M Lester for Second Named Respondent

Judgment:2 November 2010 at 3 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
B No order as to costs.

REASONS
Arnold and Ellen France JJ
Harrison J (dissenting)
ARNOLD AND ELLEN FRANCE JJ
(Given by Ellen France J)
Introduction
[1]       Brenda Herring (now Brenda Treacy) and Russell Herring were formerly married. During their marriage they set up a family trust and transferred ownership of their family home and the majority interests in three family companies to the trust. Ms Treacy (Brenda) and Mr Herring (Russell) are the trustees. Their solicitor, Anthony Herring, has recently retired as a trustee.
[2]       The trust’s acquisitions were funded by advances from Brenda and Russell to the trust. They then gifted part of the debt owing to them to the trust each year. The balance of the debt owed to each of them by the trust is $271,000.
[3]       One of the three family companies is Web Power Ltd. Brenda is the sole director of this company. Russell and Brenda in their personal capacities are minor shareholders in Web Power and both drew substantial sums from the company. They each owe a considerable debt to Web Power in their personal capacities. The debts are roughly equal (Russell’s slightly the larger). Although quantum is disputed, it seems reasonably clear the debts are both greater than $271,000.
[4]       Following the breakup of their marriage, Russell demanded repayment of the $271,000 owed to him personally by the trust. When payment was not forthcoming, Russell applied to the High Court for summary judgment.
[5]       Brenda resisted summary judgment. One of the grounds for her opposition was that $271,000 of the debt Russell owed Web Power had been assigned to Brenda in her capacity as trustee and that this afforded her an equitable set off against the debt owed to Russell by the trust.
[6]       Fogarty J considered it was arguable there was an equitable set off and refused summary judgment.[1] Russell appeals against the refusal to grant summary judgment.
[1]      Herring v Herring [2010] 2 NZLR 549 (HC).
[7]       The appeal raises two issues:
(a)       Was there an arguable defence of equitable set off to Russell’s claim?
(b)Should summary judgment be declined on the basis of the residual discretion?

We deal with each issue in turn after summarising the approach taken in the High Court.
The High Court decision
[8] While initially there were four grounds of opposition to summary judgment, the two pursued before Fogarty J were first, the argument based on equitable set off and,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Herring v Herring

Details

AGLC: Herring v Herring [2010] NZCA 500
Case: [2010] NZCA 500
Decision Date: 2 November 2010

CaseChat Overview and Summary

The appeal was brought by Russell Herring against Brenda Herring and Anthony Herring, as trustees of the RJ & BM Herring Family Trust. Russell sought summary judgment on a debt of $271,000 owed to him by the family trust. Brenda opposed the application, arguing there was an equitable set off as Russell owed a greater debt to Web Power, one of the family companies, which had assigned part of that debt to her as trustee. The High Court declined to grant summary judgment, and Russell appealed. The Court of Appeal found that there was no arguable defence of equitable set off because the debts were not interdependent. The Court also declined to exercise the residual discretion to deny summary judgment, as it believed the matter should be determined in proceedings under the Property (Relationships) Act 1976. The appeal was dismissed and no order was made as to costs.

Orders