JOHN HENRY BOURKE AND MARY LOUISE BOURKE and BOURKE INDEPENDENT TRUSTEE COMPANY LIMITED as current trustees of the HENMAR TRUST s
[2024] NZHC 3218
•31 October 2024
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2023-419-000194
[2024] NZHC 3218
UNDER The Declaratory Judgments Act 1908 IN THE MATTER
Of the HENMAR TRUST
BETWEEN
JOHN HENRY BOURKE
Plaintiff
AND
MARY LOUISE BOURKE and BOURKE INDEPENDENT TRUSTEE COMPANY
LIMITED as current trustees of the HENMAR TRUST
Defendants
AND
MARY ANNE BOURKE and LOUISE RITA BOURKE
Interested Parties
Hearing: 5 June 2024 Appearances:
Further evidence filed:
V M Whitfield and M Meier for the Plaintiff P J Morgan KC for the Defendants
No appearance by or on behalf of the Interested Parties
1 August 2024
Judgment:
31 October 2024
JUDGMENT OF POWELL J
[Declaration as to whether binding settlement agreement]
This judgment was delivered by me on 31 October 2024 at 4.30 pm.
Pursuant to R 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
JOHN HENRY BOURKE v MARY LOUISE BOURKE and BOURKE INDEPENDENT TRUSTEE
COMPANY LIMITED as current trustees of the HENMAR TRUST [2024] NZHC 3218 [31 October 2024]
[1] The plaintiff, John Henry Bourke (“Mr Bourke”), seeks a “declaration that there is no concluded settlement agreement for the Henmar Trust claim”.
[2] Mr Bourke relies on the fact that no particular version of the settlement agreement was signed by all parties, notwithstanding that all relevant terms contained in both written versions of the settlement have been implemented and the underlying proceedings have been discontinued.
[3] It is on this basis the defendants, the current trustees of the Henmar Trust, Mr Bourke’s mother, Mary Louise Bourke (“Mrs Bourke”), and the Bourke Independent Trustee Co Ltd, oppose the application. While they accept that Mr Bourke’s signature does not appear on the deed of settlement signed by all the other parties, they say there was a compromise effected to settle the 2019 litigation issued by Mr Bourke against the then-trustees of the Henmar Trust, a compromise which was then put into effect by the documents that were signed, the conduct of the parties and the contemporaneous correspondence. It is the defendants’ position that there is no utility in the relief now sought by Mr Bourke, and that the Court should not give or make any declaratory judgment or order exercising the discretion as under s 10 of the Declaratory Judgments Act 1908.
Background
[4] The Henmar Trust claim was part of a proceeding brought by Mr Bourke in the High Court at Hamilton against the then-trustees of the Henmar Trust, Mrs Bourke and a solicitor, Simon Makgill.1 Mr Bourke sought the trustees’ removal and replacement of them by new trustees. Mr Bourke’s sisters, Mary Anne Bourke and Louise Rita Bourke were interested parties in the litigation as beneficiaries of the Henmar Trust.
[5] The Henmar Trust claim was set down for hearing on 14 February 2022. The fixture was, however, vacated when the parties notified the Court they were in settlement negotiations. A proposal for settlement was reached whereby:
1 With the file number: CIV-2019-419-333.
(a)Mrs Bourke would remain as a trustee of the Henmar Trust;
(b)Mr Makgill would retire and be replaced by an independent trustee; and
(c)The proceedings would be discontinued by Mr Bourke with no issue as to costs.
[6] Following input from all parties Mr Bourke’s solicitors prepared a draft deed recording the terms of settlement. This was referred to by the parties at that time as the Henmar principal settlement agreement, to distinguish it from parallel settlement negotiations in respect of another trust, the HJ Bourke Family Trust, which was subject to separate allegations by Mr Bourke in the course of the same proceedings.
[7] Mr Bourke signed the completed settlement deed (“version 1”) and it was then circulated to the other parties for execution.
[8]The operative terms of version 1 were recorded as follows:
2.1 Mr Bourke, J H B Trust, Mary Anne Bourke, M A B Trust, Ms L R Bourke, L R B Trust and the Trustees have agreed to settle the disputes between them in respect of Henmar whether included in the Proceeding or otherwise. The parties agree to fully and finally settle all matters and disputes between them in respect of Henmar which have been raised by any party at the date of this agreement on the following terms:
a Mr Makgill is to retire as a trustee of Henmar within 20 working days of the execution of the agreement and a single independent trustee is to be appointed to replace Mr Makgill. The solicitors acting for Ms M L Bourke will provide to Mr Makgill’s solicitors all necessary documents to affect [sic] the retirement within 10 working day of execution of the agreement.
b Ms M L Bourke (as a trustee) shall appoint an independent trustee by no later than 10 working days following the execution of this agreement.
c The trustees shall take all practical steps to keep Mr Bourke, Mary Anne Bourke and Louise Rita Bourke informed of any modification, variation or exercise of power which may impact Mr Bourke, Mary Anne Bourke, and Louise Rita Bourke – in accordance with section 51 of the Trusts Act 2019.
d Mr Bourke shall discontinue the Proceeding as it relates to the cause of action relating to Henmar, with no issue as to costs.
2.2 Mary Anne Bourke and Louise Rita Bourke agree to the settlement on the terms recorded in this settlement agreement in their capacity as discretionary and/or residuary beneficiaries of the Henmar Trust, both personally and in their capacity as trustees of the Trusts listed at paragraph 1.1(e) & (g) above respectively. Mr Bourke agrees to the settlement on the terms recorded in this settlement agreement as a discretionary and/or residuary beneficiary of the Henmar Trust both personally, in his capacity as a trustee of the J H B Trust, and also as the Plaintiff in the High Court Proceeding (CIV-2019-149-333) [sic].
[9]The following relevant “further terms” were also included:
3.1This agreement shall bind all subsequent trustees of Henmar.
3.2Any person who enters into this agreement who is a trustee or beneficiary of any trust being a discretionary beneficiary of Henmar, warrants that any such trust shall abide this agreement shall abide this agreement and shall indemnify the trustees of Henmar accordingly.
3.3No amendment to this agreement will be effective unless it is in writing and signed by all parties.
3.4This agreement:
a constitutes the entire understanding and agreement of the parties relating to the matters dealt with in it; and
b supersedes and extinguishes all prior agreements, statements, representations and understandings whether verbal or written given by or made between the parties relating to matters dealt with in this agreement.
3.5The execution of this agreement by the parties will comprise full and final settlement of any and all claims and proceedings arising directly or indirectly including any existing or future claims whether known or unknown relating to Henmar, and can be pleaded as a complete defence to any actions against the Trustees in their capacity as Trustees of the Henmar.
…
3.8 In this agreement unless the context requires otherwise:
…
e this agreement shall not bind any party until it has been signed by the parties;
…
[10] Following distribution, Mr Makgill also signed version 1. Mrs Bourke’s solicitors, however, noted a range of issues, principally that the personal trusts of the
parties had been incorrectly included in cl 2.1 as those trusts were not beneficiaries of the Henmar Trust.2 Mr Bourke’s then solicitors accepted the changes proposed were correct or otherwise appropriate, 3 and amended the settlement agreement accordingly (“version 2”). This meant the terms agreed in version 2 recorded:
2.1Mr Bourke, Mary Anne Bourke, Ms L R Bourke, and the Trustees have agreed to settle the disputes between them in respect of Henmar whether included in the Proceeding or otherwise. The parties agree to fully and finally settle all matters and disputes between them in respect of Henmar which have been raised by any party at the date of this agreement on the following terms:
a Mr Makgill is to retire as a trustee of Henmar within 20 working days of the execution of the agreement and a single independent trustee is to be appointed to replace Mr Makgill. The solicitors acting for Ms M L Bourke will provide to Mr Makgill’s solicitors all necessary documents to affect the retirement within 10 working days of execution of the agreement.
b Ms M L Bourke (as a surviving appointor) shall appoint an independent trustee by no later than 20 working days following the execution of this agreement.
c Mr Bourke shall discontinue the Proceeding as it relates to the cause of action relating to Henmar, with no issue as to costs, within 5 working days of his receiving a fully executed copy of this agreement.
2.2Mary Anne Bourke and Louise Rita Bourke agree to the settlement on the terms recorded in this settlement agreement in their capacity as discretionary beneficiaries of the Henmar Trust. Mr Bourke agrees to the settlement on the terms recorded in this settlement agreement as a discretionary beneficiary of the Henmar Trust both personally, and also as the Plaintiff in the High Court Proceeding (CIV-2019-419-333).
[11] A limitation of liability clause for Mr Makgill was also included, resulting in the further terms appearing in cl 4 of version 2 rather than cl 3 of version 1. The removal of references to the three personal trusts also resulted in consequential amendments to the further terms, including the removal of cl 3.2 of version 1 requiring trusts to abide the agreement. Otherwise, apart from renumbering, the further terms remained identical.
2 Specifically, the JHB Trust, the MAB Trust and the LRB Trust.
3 With one minor amendment to the proposed addition of “contemporaneous with filing a notice of discontinuance of the HJ Bourke Family Trust part of the proceeding” to the end of cl 2.1(d), being changed to say that discontinuance will be filed “withing 5 working days of [Mr Bourke] receiving a fully executed copy of this agreement”.
[12] Version 2 was referred back to the parties for execution on 12 May 2022. The covering email from Mr Bourke’s solicitors recorded as follows:
10. Please find annexed two copies of the draft agreement. One showing tracked changes (PDF) and the other in final form ready for execution by the parties. Given our client has already shown good faith by providing a signed copy of a version of this agreement, we would appreciate it if you would arrange for your client to sign as a sign of her good faith in resolving this matter.
[13] Version 2 was subsequently executed by Mrs Bourke on 17 May 2022, and by Mary Anne Bourke and Louise Rita Bourke on 27 May 2022. On 30 May 2022, Mrs Bourke’s solicitors emailed asking if Mr Bourke would be signing the updated settlement agreement and when a copy would be received.
[14]On 21 June 2022, the solicitors for Mr Makgill emailed the parties to advise:
The most recent agreed Henmar Trust settlement agreement is with [Mr Makgill] for signature on the basis that it will be signed by [Mr Bourke] as soon as practicable after we provide it to all parties. We will forward this as soon as it is returned to us. We trust this will resolve the current impasse.
[15] Mr Makgill signed version 2 the next day. By 8 July 2022, nothing further appears to have been heard from Mr Bourke. Mrs Bourke’s solicitors wrote as follows:
Considerable effort and good faith by our client has been put into the preparation of the final version of the Henmar Trust and the HJ Bourke Family Trust Settlement Agreements.
The latest version of the Henmar Settlement Agreement has been signed by Simon Makgill, Mary Anne Bourke, Louise Rita Bourke, and Mary Louise Bourke, leaving only your client to sign.
…
Please advise within 5 working days whether or not your client is going to sign these Agreements.
[16]Similar concerns were echoed by Mr Makgill’s solicitors on 21 July 2022:
We refer to Allen, Needham & Co’s 8 July letter inquiring if and when Mr Bourke was to sign the settlement agreements.
Having resolved the impasse that required all other parties to sign the Henmar agreement before Mr Bourke did so, he appears now to have no interest in actually signing. If that is the case, please advise by return as we will be seeking to have the proceedings set down for hearing.
[17] Despite further follow-up, no signed settlement agreement was received from Mr Bourke. On the contrary, on 11 August 2022, Mr Bourke’s solicitors relevantly advised:
Our client has instructed that he is not in a position to sign [version 2], and that he requires the following:
1.To be provided with a copy of the current Financial Accounts.
2.To be provided with a copy of the current sharemilking agreements.
3.To be permitted to carry out an inspection of the Henmar Trust properties annually.
4.To be provided with a short list of who the newly appointed trustee is likely to be.
5.Ms Mary Louise Bourke to undertake a full physical and psychological assessment annually to ensure she is fit to manage the Trust.
6.To be provided with the name of Ms Mary Louise Bourke’s EPA.
7.To be told what the process will be in the event that the managing Trustee is no longer being able to carry out their duties.
8.His concerns about access to his machinery and equipment do be addressed, as he considers that access is being unreasonably withheld.
9.A copy of the asbestos report for the shed that the contract milker put some of our client’s items into, as he understands that the shed may in fact be constructed with asbestos. Further, our client has observed that this particular shed has been pulled off its foundations and he would like to know how it is intended to rectify this.
10.Additionally, our client would like the digger keys. He has been told by the contract milker that Dave Miller turned the digger around, and therefore, there must be keys for the digger.
…
In respect of the recent correspondence raising the delay in signing of the documents by our client, it is worth recalling that versions of these agreements had been circulating for some time when our client signed those versions in good faith, only to have late changes requested by other parties.
[18] It is clear that none of the matters raised in the email were at all relevant to the resolution of the Henmar Trust claims nor the signing of version 2. It is noted that Mr Bourke was also hedging in relation to the settlement of the issues relating to the HJ Bourke Family Trust being negotiated at the same time.
[19] Ultimately, notwithstanding ongoing protest by the other parties that a binding settlement had been agreed, it became clear that Mr Bourke was not prepared to sign version 2. At the point, by way of deed dated 17 October 2022, Mr Makgill retired as a trustee of the Henmar Trust and Mrs Bourke appointed the newly incorporated Bourke Independent Trustee Co Ltd as Mr Makgill’s replacement to act jointly with Mrs Bourke as the trustees of the Henmar Trust.
[20] In December 2022, Mr Bourke appointed his current counsel, Ms Whitfield. As time went on, Ms Whitfield on Mr Bourke’s behalf actively disputed the existence of any binding settlement agreement, let alone any obligation on Mr Bourke to sign version 2. On the contrary, Ms Whitfield sought to redraft the settlement (“a new more simplified version of the proposed agreement”) but this was rejected by the other parties who continued to maintain a settlement had been reached. As the solicitors for Mrs Bourke noted:
The parties all spent considerable time, effort and money on drafting and reaching agreement on the settlement terms and our client is not prepared to start again. Mr Bourke proposed a settlement which he signed and forwarded through his lawyers on 27 April 2022. We pointed out flaws in the agreement and as a consequence Edmonds Judd amended the proposed agreement. Mr Bourke wanted the other parties to sign the amended document before he did, claiming his signed earlier version demonstrated his good faith. They did, but he did not.
That history speaks for itself. More time and money spent on what you propose is just wasteful and then there is a prospect that Mr Bourke will repeat his previous conduct and attempt to re-negotiate months later.
[21] Mr Bourke’s position appears to have hardened. Although it did not appear to alter the allegations in respect of the Henmar Trust claim, Ms Whitfield filed an amended statement of claim on Mr Bourke’s behalf on 9 March 2023. Not long afterwards, Ms Whitfield announced that:
If the parties intend to maintain a position that my client is bound by the terms of one of the versions of the Henmar agreement, then my client will need to consider his rights and remedies, including seeking a declaration that no binding settlement agreement was reached.
Can you please therefore respond by Friday, 14 April 2022 and advise if your respective client accepts that no binding agreement was concluded, or maintains that a binding agreement was concluded? That will then inform my client as to his next required steps.
[22] Despite this, not long afterwards in April 2023 the related dispute involving the HJ Bourke Family Trust settled. Sums payable on that settlement were paid out on or about 12 April 2023 and the claims in respect of the HJ Bourke Family Trust were discontinued by Mr Bourke on 20 April 2023.
[23] The other parties subsequently confirmed their position that a settlement had also been reached on this Henmar Trust claim. As counsel for Mr Makgill noted, having reviewed the correspondence:
Although Mr Makgill acknowledges that all parties did not sign one settlement agreement, all had an intention to settle, and took steps to facilitate that. The key terms between the parties were agreed. In fact, as mentioned above, steps were taken allowing Mr Makgill to retire as a trustee.
The current claim in relation to the Henmar Trust seeks an order appointing new trustees. Although Mrs Bourke is a continuing trustee, Mr Makgill has retired. As a result, there is no relief which could be ordered against him.
In all the circumstances, it is difficult to understand the basis on which the claim in respect of the Henmar Trust should proceed. However, if you believe otherwise, please advise the basis for this.
[24] In response, on 14 April 2023, and apparently for the first time, Ms Whitfield asked the parties what the consequences of the express term contained in version 2 that it would not bind any party unless signed by all parties?
[25]On 7 July 2023, Ms Whitfield advised the other parties:
My client does not accept that he is legally bound by the unsigned settlement agreement. I have set out the legal principles and my client’s position in previous correspondence.
Find attached a notice of discontinuance which I intend to file today. It will be done with full reservation of my client’s rights and without prejudice to his position that there is no binding settlement agreement.
Since your clients maintain a position that my client is bound by the terms of one of the versions of the Henmar agreement, my client will commence proceedings seeking a declaration that no binding settlement agreement was reached.
[26] The discontinuance was filed the same day and it did not assert that there was no issue as to costs. The implications of that position were subsequently pointed out by the solicitor for Mr Makgill, namely that the default position is that costs are
payable on a discontinuance. This resulted in junior counsel for Mr Bourke seeking agreement from the other parties that there was no issue as to costs.
[27]In response, the solicitor for Mrs Bourke advised:
We consider the filing of the Notice of Discontinuance by you is completion of the agreement reached in 2022.
There has been some subsequent correspondence as to costs, but our client does not seek costs. The agreement reached in 2022 provided that your client would discontinue the proceedings as it relates to the cause of action relating to Henmar Trust, with no issue as to costs.
What is the purpose of a proceeding seeking a declaration that no binding settlement agreement was reached? It seems to be litigation for litigation’s sake. The costs of opposing such a proceeding would fall, in the first instance, on Henmar Trust. If there is a particular problem with the agreement reached in 2022, please advise what it is, so that the existing trustees may consider their position.
[28] In contrast, Mr Makgill initially applied for costs on the discontinuance but withdrew that application on 14 September 2023 after hearing and following the settlement of another matter without issue of costs on the application.
[29]The present proceedings were filed on 3 August 2023.
The position of Mr Bourke
[30] On behalf of Mr Bourke, Ms Whitfield submitted that the current proceedings were necessary to determine whether there was any binding settlement agreement between the parties on the Henmar Trust claim. Specifically, Ms Whitfield submitted that Mr Bourke deserved to know whether there was settlement agreement and submitted that if no declaration was made it may prevent him from seeking a remedy in the future against his former solicitor and he would otherwise be left uncertain as to his rights and responsibilities under any settlement.
[31] In regard to the substantive issue, Ms Whitfield submitted there can be a difference between parties reaching agreement on all terms and reaching an agreement that they are bound by those terms. Ms Whitfield acknowledged Mr Bourke signed and circulated version 1 but submitted that, as he never signed version 2, the result is that there is no version of the settlement agreement signed by all parties. Relying on
conventional principles of contractual interpretation, Ms Whitfield submitted that the parties did not have an intention to be bound until all parties signed the same settlement agreement.
[32] In Ms Whitfield’s submission, the parties did not have the intention for the settlement agreement to be binding on the parties until all parties executed the same version of the written settlement agreement — which they did not do. Of particular significance, Ms Whitfield’s submission was that all versions of the written document said “this agreement shall not bind any party until it has been signed by the parties” and in Ms Whitfield’s submission this is the best evidence that there was no agreed settlement agreement and there is no evidence to suggest that Mr Bourke ever resiled from this position.
[33] In Ms Whitfield’s submission, the subsequent conduct of the parties towards one another includes parties putting forward amended terms of the agreement and some parties signing an agreement on different terms. In Ms Whitfield’s submission, the parties subsequently did not conduct themselves as if any of the settlement agreements were binding.
Discussion
[34] As I remarked at the hearing, there is a sense of unreality about this proceeding; while Ms Whitfield seeks a declaration on behalf of Mr Bourke that no binding settlement agreement was reached, there is no dispute that all of the relevant terms of the settlement required to be completed by the parties have been completed, including by Mr Bourke who discontinued the proceedings as provided for in cl 2.1(c) of version 2,4 albeit belatedly and while disavowing any binding settlement agreement.
[35] While no issue was taken with the authorities relied upon by Ms Whitfield, those nonetheless made it clear that whether or not parties are bound by an agreement is fact-specific. For example, in Fletcher Challenge Energy Ltd v Electricity Corp of New Zealand Ltd, relied on by Ms Whitfield, Blanchard J relevantly noted:5
4 Clause 2.1(d) of version 1.
5 Fletcher Challenge Energy Ltd v Electricity Corp of New Zealand [2002] 2 NZLR 433 (footnotes omitted).
[54] Whether the parties intended to enter into a contract and whether they have succeeded in doing so are questions to be determined objectively. In considering whether the negotiating parties have actually formed a contract, it is permissible to look beyond the words of their “agreement” to the background circumstances from which it arose – the matrix of facts. This can include statements the parties made orally or in writing in the course of their negotiations and drafts of the intended contractual document.
…
[56] It is also permissible when considering contract formation (or rectification) to look at subsequent conduct of the parties towards one another, including what they have said to each other after the date of the alleged contract…
[36] As Mr Morgan pointed out on behalf of the defendants, and contrary to Ms Whitfield’s submission, cl 4.7(e) of version 26 does not provide an absolute bar on the settlement becoming binding unless signed. Instead, it was qualified by the words “unless the context requires otherwise”.7
[37] In this case it is clear that no party objected to the further amendments proposed on behalf of Mrs Bourke after version 1 had been signed by both Mr Bourke and Mr Makgill, and these were incorporated so as to create version 2. As noted, version 2 was then sent out to the defendants and interested parties to sign first. At the time it was sent out, there was absolutely no suggestion that Mr Bourke did not intend to sign, nor that the terms did not make a settlement recorded by the parties. As a result, it is at this point I consider that an agreement to settle the Henmar Trust claim was reached and from that point Mr Bourke was estopped from denying that agreement notwithstanding his subsequent and unexplained aversion to formally executing version 2 once the other parties had signed.
[38] Specifically in terms of the authorities referred to me by Mr Morgan, that a belief or expectation of a settlement upon the terms proposed had been created or encouraged by Mr Bourke through his actions in:8
(a)signing version 1;
6 Clause 3.8(e) of version 1.
7 See above at [9] and [11].
8 Fanshawe 136 Ltd v Fanshawe Capital Ltd [2013] NZHC 3395 at [50].
(b)indicating agreement to the changes proposed by Mrs Bourke; and
(c)sending version 2 out for execution by the parties.
[39] It is equally apparent that the belief or expectation that the terms had been agreed was reasonably relied upon by the other parties in proceeding to execute version 2, and by Mrs Bourke and Mr Makgill in giving effect to the terms of settlement. Quite clearly the uncertainty posed by the present proceedings is an obvious and sufficient detriment, and indeed all the other parties (and certainly the defendants) were ultimately prepared to forgo the costs that were presumptively payable by Mr Bourke on his discontinuance.9
[40] I likewise conclude that on the facts before me it would be unconscionable for Mr Bourke to depart from the belief or expectation by way of his ongoing refusal to sign version 2 after it had been signed by the other parties.
[41] This conclusion would have been sufficient to have enforced the settlement agreement had Mr Bourke attempted to continue with the Henmar Trust claim against the defendants but that was ultimately not necessary given the parties, including Mr Bourke, all willingly complied with the terms agreed and set out in cl 2 of version 2. Specifically, Mrs Bourke and Mr Makgill facilitated Mr Makgill’s resignation and the appointment of a new trustee acceptable to Mr Bourke, while Mr Bourke too belatedly discontinued his proceedings.
[42] Contrary to Ms Whitfield’s submissions, I am satisfied that, at least up until the discontinuance was filed, all the other parties concluded that a settlement had been reached and conducted themselves accordingly. This only changed to a degree after the discontinuance was filed when Mr Makgill’s solicitors indicated a contrary view not consistent with their previous position. This however appears to have been a device designed to demonstrate to Mr Bourke the risks of opening himself up to costs in filing the discontinuance in the absence of a settlement agreement, although ultimately the costs application was not pursued by Mr Makgill and when his costs
9 High Court Rules 2016, r 15.23.
application was abandoned it meant that Mr Bourke’s discontinuance was without issue as to costs, as had been provided in version 2.
Decision
[43] For the reasons set out above, I make a declaration there was a completed settlement agreement for the Henmar Trust claim the terms of which are as recorded in version 2 signed by all parties other than Mr Bourke.
[44] The defendants are entitled to costs on the proceedings. If costs cannot be agreed a memorandum on behalf of the defendants is to be filed by 29 November 2024, and any response is to be filed by Mr Bourke by 13 December 2024. I will then determine any issue on the papers.
Powell J