Kirby v Fisher

[2012] NZHC 557

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-1019 [2012] NZHC 557

IN THE MATTER OF     the Family Protection Act 1955

AND

IN THE MATTER OF     the estate of Irma Murray

BETWEEN  MELISSA TANIA KIRBY First applicant

ANDNATHAN HAMMOND MURRAY Second applicant

ANDJOHN LESLIE BIRCH Third applicant

ANDCARMEL MIRINGA FISHER AND HUGH GLADSTONE FISHER Respondents

Hearing:         20 March 2012

Appearances: G Mason for the respondents

G Jenkin for Carmel Miringa Fisher, Peter Hammond Wakem and
Melanie Wakem as beneficiaries of the estate of Irma Murray
J Reardon for the second applicant
Appearances for the first and third applicants excused

Judgment:      28 March 2012

JUDGMENT OF CLIFFORD J

Introduction

[1]      This is an application for a stay of enforcement of judgment under r 12 of the

Court of Appeal (Civil) Rules 2005 and r 20.10 of the High Court Rules.

KIRBY v FISHER HC WN CIV-2010-485-1019 [28 March 2012]

Facts

[2]      In my substantive judgment in this matter of 22 August 2011,[1]  and in my costs judgment of 22 December 2011,[2] I:

[1] Kirby v Sims and Fisher HC Wellington CIV-2010-485-794, 22 August 2011.

[2] Kirby v Sims and Fisher HC Wellington CIV-2010-485-794, 22 December 2011.

(a)       made Family Protection Act awards in favour of the first, second and

third applicants against the estate of Irma Murray (“the Estate”); and

(b)made  orders  for  costs  in  favour  of  the  first,  second  and  third applicants against the beneficiaries of Irma Murray’s estate who had defended those claims, namely Carmel Miringa Fisher, Peter Hammond Wakem and Melanie Wakem (“the Will Beneficiaries”),

respectively.

[3]      The Will Beneficiaries are appealing both of those judgments to the Court of

Appeal.  Cross-appeals have also been filed.

[4]      Issues  of  enforcement  have  arisen.    The  first  and  third  applicants  have resolved those issues on terms which provide for the Estate to make an interim distribution to each of them of $250,000 and for them to take no further enforcement action against either of the Estate or the Will Beneficiaries.

[5]      Issues of enforcement remain outstanding as between the second applicant and the Estate and the Will Beneficiaries.  Charging orders were registered and first steps taken to obtain a sale order on Mr Murray’s behalf.  On 28 and 29 February this year the respondent executors for the Estate (“the Executors”) and the Will Beneficiaries applied for orders staying Mr Murray’s enforcement actions.  They did so after Mr Murray had rejected the offer which the first and third applicants had accepted.   On 29 February 2012 I granted the Estate and the Will Beneficiaries

interim stays pending the hearing of these applications.

[6]      On 6 March, Mr Murray offered to withdraw his enforcement proceedings if the Estate was to pay him $300,000 (I awarded him a specific bequest of $600,000) and the Will Beneficiaries were to pay the full amount of costs awarded against them, namely $70,000.  That remained Mr Murray’s position at the hearing of these applications for stay.

Law

[7]      The general principles applicable to applications for a stay of enforcement of judgment are summarised by McGechan at HR20.10.01 in the following way:

The general rule is that a party is entitled to enjoy the fruits of a judgment in its favour.  A party seeking a stay would accordingly have to persuade the Court that, if it were not granted, its appeal rights would be rendered nugatory: Philip Morris (NZ) Ltd v Liggett & Myers Tobacco Co (NZ) Ltd [1977] 2 NZLR 41 (CA). In exercising its discretion, the Court will engage in a balancing exercise, weighing up the position of both parties: Duncan v Osborne  Buildings  Ltd  (1992)  6  PRNZ  85  (CA);  Dymocks  Franchise Systems  (NSW) Pty  Ltd  v  Bilgola  Enterprises  Ltd  [1999] 3 NZLR 239, (1999), 13 PRNZ 48 (HC).

[8]      In my view, the implication of that summary is that the “rendered nugatory” consideration acts as some type of pre-condition, with other matters to be considered once that is established.

[9]      Curiously, there is no mention in Philip Morris of the general “rendered nugatory”  principle.  Rather,  having  accepted  that  without  a  stay  the  appeal  in question would be rendered nugatory, the Court of Appeal there declined the application based on considerations of overall fairness and convenience.   Again curiously,  McGechan’s  commentary at  CR12.01  does  not  refer to  the  “rendered nugatory” principle as a type of pre-condition to the grant of a stay.   Rather that consideration is one, albeit the first, of a list of factors to be considered.

[10]     Any uncertainty in this area has been clarified by the Court of Appeal in

Keung v GBR Investment Ltd.[3]     In the High Court, in refusing a stay application

[3] Keung v GBR Investment Ltd [2010] NZCA 396.

French J noted that the fact an appeal may be rendered nugatory absent a stay is not

determinative.  The Court of Appeal agreed citing its decision in Cousins v Heslop.[4]

[4] Cousins v Heslop [2007] NZCA 377.

The Court held, additionally, that in determining whether or not to grant a stay:[5]

[5] At [11].

... the Court must weigh the factors “in the balance” between the successful litigant’s rights to the fruits of a judgment and “the need to preserve the position in case the appeal is successful”.  Factors to be taken into account in this balancing exercise include:

(a)       whether the appeal may be rendered nugatory by the lack of a stay; (b)      the bona fides of the applicant as to the prosecution of the appeal;

(c)       whether the successful party will be injuriously affected by the stay; (d)       the effect on third parties;

(e)       the novelty and importance of questions involved; (f)       the public interest in the proceeding; and

(g)       the overall balance of convenience.

That list does not include the apparent strength of the appeal but that has been treated as an additional factor.

The position for the Executors and the Will Beneficiaries and Mr Murray

[11]     In my view neither Mr Mason for the Executors nor Mr Jenkin for the Will Beneficiaries were able to establish that the Will Beneficiaries’ appeal rights (the Executors in their capacity as such are abiding) would be rendered nugatory if a stay was not granted.   Neither, realistically, did they try to do so with any enthusiasm. That  reflects  what  the  Will  Beneficiaries  have  argued  all  along:  namely,  that Mr Murray  is,  as  I  recognised  in  my  substantive  judgment,  by  New  Zealand standards a wealthy man.  But that is, as noted, not determinative.  Rather, and in terms of their submissions, two issues arise.  The first, argued by Mr Mason for the Executors, is that, in effect, Mr Murray is not in a position to enforce his judgment against the Estate.   The effect of that judgment properly understood was to give Mr Murray the status of a beneficiary of a specific legacy under Irma Murray’s estate.   He had to wait, along with the other specific and residuary legatees, until these proceedings were finally resolved before the Estate could be distributed.  The

second, as advanced by both Mr Mason and Mr Jenkin, was that a consideration of

the overall balance of convenience and fairness favoured a stay of both judgments, albeit on terms providing for an interim payment to Mr Murray.   Such an interim payment  was  justified  because  the Will  Beneficiaries,  in  circumstances  which  I commented on adversely in my costs judgment, had had their personal legal costs met by an interim distribution from the Estate.

[12]     Mr Reardon submitted that  as  a judgment  creditor,  both in  terms  of the substantive award and costs, Mr Murray was entitled to his judgments. There was no legal basis, by reference to the traditional authorities, to deny Mr Murray the benefit of those judgments.

Analysis

[13]     My  substantive  judgment,  as  noted,  provides  for  a  specific  bequest  of

$600,000 to Nathan David Hammond Murray out of the Estate of his late mother, Irma Murray.[6]

[6] At [176(b)(ii)].

[14]     Mr Mason submitted that the question which arose was whether an order which provides for a specific bequest from an estate is an immediately enforceable judgment debt.  In arguing that it was not, he referred to two authorities:

(a)       McDonald v FAI (NZ) General Insurance Company Limited, where

Rodney Hansen J said:[7]

[7] McDonald  v  FAI  (NZ)  General  Insurance  Company  Limited  HC  Auckland  CP507/96, 14 February 2001 at [21].

A judgment debt arises when there is an order for payment of money by way of a final and actual direction to pay: Garner v Briggs (1858)

27 LJ Eq 483.

(b)Re Olson (Deceased), Treadwell v Public Trustee,[8] where Smith J said that an order which provided for £600 to be paid in one lump sum “out of the proceeds of the realisation of the Estate” did not constitute a judgment debt within Rule 305 of the Code of Civil Procedure

which was a predecessor of Rule 11.27.

[8] Re Olson (Deceased), Treadwell v Public Trustee [1944] NZLR 778.

[15]     Acknowledging  that  there  were  no  cases  on  the  interim  enforcement  of family   protection   awards   (which   Mr Jenkin   and   Mr Reardon   acknowledged) Mr Mason argued that my judgment as sealed did not provide a final or actual direction to pay, was not an award of damages for breach of the testator’s moral duty and did not, in terms of Re Olson, constitute a judgment debt.   Hence it followed Mr Murray was not in a position to enforce it.

[16]     As regards the Re Olson authority I accept that, as Mr Reardon submitted, the order there is not on all fours with the order I made.   My order provided for a specific bequest of $600,000.  In Re Olson, the £600.00 could only be paid once the estate had been realised and to the extent that the realisation of the estate allowed for such an amount.  As for the McDonald v FAI authority, it is not clear to me that the relevant question is whether this is or is not a judgment debt.   What, in effect, Mr Mason argued was that my judgment gives Mr Murray the status of a beneficiary under Irma Murray’s will (which status he now shares with the other beneficiaries), but not the right to enforce that judgment award against the Executors.  That is an interesting proposition, for which there is no authority.  On balance, it seems to me that  it  would  be  unusual  if  a  judgment  such  as  mine  in  Family  Protection proceedings had an effect which was, as a matter of law, different to a judgment in any  other  proceedings.    I  note  further  that  the  definition  of  entitled  party,  by reference to which the rights of enforcement provided by Part 17 of the High Court Rules are given (see r 17.8(2)) includes not only a judgment creditor, but also a person other than a judgment creditor entitled to relief against another party under a judgment.     I  am,  therefore,  at  this  point  not  persuaded  by  Mr Mason’s  first proposition.

[17]     On that basis, these applications for stay are to be considered in accordance with general principles outlined in Keung.   I must weigh relevant factors in the balance between Mr Murray’s rights to the fruits of his judgment and the need to preserve the position in case the appeal is successful.  Turning to the inclusive list of factors, I have already addressed the question of whether or not the appeal would be rendered nugatory by the lack of a stay.  In my view it is most unlikely that it would be, but that is not conclusive.  I have no reason to doubt the bona fides of the Will Beneficiaries as to the prosecution of the appeal.  I have been advised that a hearing

date in early June has been obtained.   It is not clear to me, subject to the acknowledged appropriate interim payment, that Mr Murray would be injuriously affected by the stay, relative to any other of the parties now claiming entitlements under Irma Murray’s will.  There would not appear to be any relevant effect on third parties.  The questions are clearly important for the parties and, though in my view not novel, raise here important issues in terms of claims to large estates.  I do not think there is any particular public interest involved.  Thus, taken overall, my view is that my decision is to be made by reference to the overall balance of convenience and fairness.

[18]     Here, and in Family Protection claims generally, the dispute is one over assets which constitute the estate of a deceased person.  Until the appeal has been disposed of, the nature and extent of the interests of both persons making an application, and of beneficiaries defending such an application, remain contingent and dependent upon the nature and extent of any awards a Court may make.  With reference to that consideration, I consider that the balance of convenience may well favour a stay being granted, so that the position of all actual and contingent beneficiaries remains the same as between themselves in terms of the benefit they might gain from having a distribution made.

[19]     I recognise here that the position of the Will Beneficiaries, as persons against whom my cost order was made, is different.  That is, and subject to this appeal, that that order is final.  At the same time, I think it is not unfair to take account of the consideration that, in reality, they will no doubt look – at least in the first instance – to a distribution from the Estate in order to provide the funds to meet that costs award.

[20]     Therefore, and admittedly taking a somewhat pragmatic approach, I consider the answer to these applications is to allow stays on the condition that was accepted by the first and third applicants, namely payment by the Estate to Mr Murray of an interim sum of $250,000.   I think that addresses the fairness issue that the Will Beneficiaries had their costs paid by the Estate.  It will enable Mr Murray to meet his legal bills, with an amount left over as well.

[21]     It  might  be  suggested  that,  as  regards  the  stay  granted  to  the  Will Beneficiaries, that outcome is inconsistent with the costs order I made against them personally.  I do not consider that to be the case.  Although in the case of this Estate the likely outcome is that the Will Beneficiaries will be able to meet that award of costs out of their share of the Estate, that will not always be the position.  That is the significance of making awards of costs against parties to Family Protection claims, rather than ordering that those costs be paid out of the residue of the Estate.

[22]     There are orders accordingly.

[23]     As costs were not agreed in any detail, they are reserved.  To assist, if that is possible in these protracted proceedings, my preliminary view is that when matters are finally resolved it would be in order for Mr Murray to pay costs, on a 2B scale basis for a half day interlocutory hearing, to the Will Beneficiaries and the Estate. Furthermore, and again on a preliminary basis, I do not consider the offer the Estate and the Will Beneficiaries made had Calderbank significance, or that in some other way they are entitled to increased or indemnity costs.  Although Mr Murray has not succeeded, it seems to me that the significance of the general “rendered nugatory” principle  means  that  he  did  not  act  unreasonably  in  seeking  enforcement  and opposing the application for stay.

“Clifford J”

Solicitors:

T Manktelow, P O Box 31-265, Lower Hutt (Counsel: G Manktelow, [email protected])

Cooper Rapley, P O Box 1945, Palmerston North ([email protected])

ARL Lawyers, P O Box 30-430, Lower Hutt ([email protected])

Hornabrook Macdonald, P O Box 91845, Auckland (Counsel: G C Jenkin, [email protected])

Grant O’Donnell, P O Box 900, Palmerston North (Counsel: G Mason, [email protected])