Johnston v Mapp

[2013] NZHC 700

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2012-485-259 [2013] NZHC 700

IN THE MATTER OF     the estate of PHILIP ROLAND GORDON AND

IN THE MATTER OF     Administration Act 1969

BETWEEN  GLYNIS ROSE JOHNSTON Plaintiff

ANDVANESSA LOUISE MAPP Defendant

Hearing:         27 March 2013

Counsel:         S F Gaines for Plaintiff

K Smith for Defendant

Judgment:      27 March 2013

ORAL INTERIM JUDGMENT OF THE HON JUSTICE KÓS

[1]      This proceeding involves an application by siblings of the late Philip Roland Gordon for recall of the grant of letters of administration.  The defendant is the recipient of those letters of administration.   They were issued by the Court on

5 November 2010 on the basis that she was the deceased’s de facto partner.

[2]      There has  been  substantial  non-compliance by the defendant  with  orders made by the Court in October 2012 and February and March 2013.  As a result, the issue before me today is whether to make orders by default and proceed to formal

proof on the substance of the plaintiff’s claim as against the defendant.

JOHNSTON v VANESSA LOUISE MAPP HC WN CIV 2012-485-259 [27 March 2013]

Claim advanced

[3]      The deceased, Philip Gordon, died in England in May 2010.   Prior to his death he had invested some $1.1 million in a property development scheme in Wellington.   It involved a substantial residential property in Brougham Street, Wellington.  The property was owned by a company called Bast Investments Limited as to 50 per cent and a Mr Miles Buckingham as to the other half.   An acknowledgment of debt in Mr Gordon’s favour was executed by Bast and both proprietors agreed to an unregistered mortgage and the registration of a caveat to protect Mr Gordon’s interests.

[4]      Bast  and  Mr  Buckingham’s  financial  affairs  then  went  into  decline.    A substantial amount of money was owed by them not only to Mr Gordon but also to registered mortgagees.  Eventually a scheme was put in place whereby a company called Aquila Real Limited was incorporated as a vehicle to purchase the Brougham Street property from Bast and Mr Buckingham.  The shareholding of that company was owned as to 80 per cent by Mr Gordon and as to 20 per cent by Mr Ashley Owers.   Settlement of the property in favour of Aquila Real Limited occurred on

11 May 2010 and Aquila became the registered proprietor.  Tragically on the same day Mr Gordon, an arborist, died falling from a tree in England.

[5]      At a later date the property was on-sold by Aquila to a Mr Eric Thorsten.  The purchase price was $2.5 million.  It is not suggested other than that Mr Thorsten was an arm’s length purchaser.  As vendor Aquila had various registered mortgages to clear.    On  settlement  net  proceeds  of  approximately  $707,000  were  paid  into Aquila’s Bank of New Zealand bank account.  They were received in that account on

19 November 2011.

[6]      There is evidence before the Court from Mr Murray Ellot, a Christchurch chartered accountant.  He is the liquidator of Aquila and he has produced the bank accounts of that company.   They show that on 19 November 2011 Aquila was in receipt  of  settlement  proceeds  of  $707,589.62.     Just  under  a  week  later,  on

25 November 2011, $612,689.85 was transferred to “Phil Gordon”.1     In addition another $83,000 appears to have been transferred to a company called Wellington Luxury Limited.  Its sole shareholder and director is the defendant, Ms Mapp.

[7]      Ms Mapp was the executor of Mr Gordon’s estate and she was, as I have said, granted letters of administration in November 2010 on the basis that she was the deceased’s de facto partner.

[8]      The plaintiff is Mr Gordon’s sister.  The essence of her claim is that Ms Mapp held the deceased’s estate on constructive trust for the benefit of his surviving siblings.    Because  we  are  dealing  with  administration  it  of  course  follows  that Mr Gordon had died intestate.

Procedural background

[9]      Orders were made on 8 October 2012 by Simon France J.   They required, inter alia, that the defendant file and serve an affidavit providing an inventory and account of the estate, within 20 working days.   The order referenced High Court Rule 27.32(1)(a) and (b)(i) and (ii).

[10]     As Williams J’s minute of 11 February 2013 records, the defendant failed to comply with that timetable order.  Her then counsel withdrew from representing her. On 11 February 2013, Williams J vacated a 25 February 2013 fixture and allocated a new fixture for 27 March 2013.

[11]     Paragraph [7] of Williams J’s minute recorded that the defendant must file any affidavit evidence in support of her defence by 28 February.   Paragraph [9] reads:

Any failure by the defendant to comply with these timetabling directions will lead to her defence being struck out and the matter proceeding to formal proof on 27 March.

[12]     On 7 March 2013 the plaintiff’s counsel sought that the defence be struck out

for non-compliance with the order to file an accurate inventory and account of the

1 The evidence is that the sum in fact went to the defendant’s personal account: see [6].

estate.  Ordinarily an application would be required for that purpose, but in this case

the Court had already made an “unless order” on 11 February.

[13]     There was then a further hearing in the Judge’s Chambers List on 11 March

2013, this time before Dobson J.  The Judge agreed to grant an extension to the defendant, noting it was in everyone’s interests, including those of the plaintiff, that the defendant administrator play a meaningful role in the proceedings.   Dobson J said at [7] of his minute of 13 March 2013:

I  accordingly  direct  that  the  defendant  have  until  5.00  pm  this  Friday

15 March 2013 to file her affidavits and inventory.  They should address the

detail contemplated in Mr Gaines’ draft orders tendered to the Court ...

The Judge went on to say that the fixture for 27 March 2013 remained in place, but that if the defendant did not comply with his direction, then the plaintiff would be entitled to proceed to formal proof.

[14]     A further telephone conference occurred on 15 March 2013, and Dobson J recorded the outcome in a further minute.  Shortly before that telephone conference the defendant filed what the Judge described as a “relatively substantial document” that counsel, Mr Smith, “treated as partial compliance of her obligation to provide a full account of the conduct of the administration of the estate”.

[15]     Notably, however, the Judge did not deal with the request for strike out.  He said that was premature until the extent of compliance or non-compliance could be calculated.

[16]     On 18 March 2013 the plaintiff renewed her request that the defence be struck out.  The plaintiff sought that I make that decision on the papers, given the extent of non-compliance with the Court’s orders by the defendant.

[17]     In a minute issued on 25 March 2013 I declined to strike out the defence on the papers.  I said I did not find myself in a position to assess whether the affidavit provided by the defendant on 15 March 2013 was a substantial or merely nominal compliance with the orders made on 8 October 2012.   I therefore required the application for strike out to be heard before me today.

Submissions

[18]     Appearing for the plaintiff, Mr Simon Gaines has submitted that the extent of the non-compliance is significant.  He instances specific examples of matters which were obviously required by the orders of 8 October 2012 and explicitly required by the further unless order made by Dobson J on 13 March 2013.  Those were the bank accounts for her personal estate from 23 November 2011 (the sum of $612,000 having been paid in to it) and the bank account of Wellington Luxury Limited (which has been in the defendant’s control until recently when that company went into liquidation).  Mr Gaines submits that the extent of non-compliance was profound and the Court should not grant a further indulgence to Ms Mapp.

[19]     Appearing on limited instructions for Ms Mapp, Mr Kevin Smith submitted that the difficulty arose from the fact that Ms Mapp’s financial affairs are such that she cannot afford counsel and cannot obtain legal aid because of assets, perhaps only of nominal value to her, held by her directly or indirectly.  As to the Court’s order in October 2012, Mr Smith submitted that Ms Mapp had not understood the import of those orders.  I am not sure that I am prepared to accept that submission, but in any event the order of Dobson J of 13 March 2013 was clear beyond peradventure.  It referred specifically to draft orders submitted by Mr Gaines which made those bank account details front and centre of what was required to be provided.

An agreed resolution

[20]     Following the delivery of submissions and exchange between Bench and Bar

I granted a short adjournment.

[21]     Following that adjournment Mr Smith indicated the defendant’s consent to

the making of orders 183, 184 and 185 in the statement of claim.

183An order for the recall and revocation of the grant in common form of Letters of Administration on Intestacy to Vanessa Louise Mapp by the  High  Court  at Wellington,  New  Zealand,  dated  5  November

2010.

184An order granting Letters of Administration in Intestacy in solemn form to Glynis Rose Johnston.

185An  order  directing  the  defendant  to  file  in  the  High  Court  at Wellington a complete inventory and accurate account of the deceased’s estate.

[22]     In order to comply with order 185 Mr Smith sought a period of three weeks for that purpose.

[23]     While Mr Gaines was initially minded to press on to seek entry of judgment in relation to the remaining orders sought against Ms Mapp, I think he appreciated he was pushing against a door that, if not entirely closed, was not easy to open.  He has pragmatically accepted that the substantive orders sought (which include orders directing the first defendant to pay the plaintiff the $707,000 transferred variously to her or to Wellington Luxury Limited in November 2011), should be dealt with in conjunction with the substantive remedies sought against other parties including Mr Buckingham,  Aquila  Real  Limited,  Brougham  Street  Trustee  Co  Limited, Wellington Luxury Limited and Twig Luxury Trustee Co Limited.

Result

[24]     There will therefore be orders as follows:

(a)      Order 183: an order to recall the revocation of the grant in common form  of  Letters  of Administration  on  Intestacy to Vanessa  Louise Mapp  by  the  High  Court  at  Wellington,  New  Zealand,  dated

5 November 2010.

(b)Order 184: an order granting Letters of Administration in Intestacy in solemn form to Glynis Rose Johnston.

(c)      Order 185: an order directing the defendant file in the High Court at Wellington a complete and accurate account2 of the deceased’s estate, in terms of the draft orders filed and referred to by Dobson J, such account to be filed and served not later than 5.00 pm on Wednesday

17 April 2013.

2      The inventory is not now required.

[25]     I make it clear in this judgment to Ms Mapp, as I make clear now (she sitting in the back of the courtroom) that further non-compliance with those orders will result in an explicit entitlement on the part of the plaintiff to proceed on formal proof to judgment on orders 186 to 190 of the amended statement of claim.

Timetable orders

[26]     I direct that this matter be placed in the Judge’s Chambers List on Monday

22 April 2013 at 10.00 am.  At that juncture, Mr Gaines can explain whether he has received the complete and accurate account of the deceased’s estate that he is entitled to receive.  If he has not then he can proceed to formal proof against Ms Mapp.  It may be possible for the Court to deal with that on Monday 22 April later in the day, but I make no promise.   That prospect will, however, be assisted by the advance filing of submissions (as concise as possible) by the plaintiff for that purpose.

Stephen Kós J

Solicitors:

Gaines Law, Blenheim for Plaintiff

Langford Law, Wellington for Defendant