Kirby v Kirby
[2020] NZHC 401
•5 March 2020
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2019-419-000112
[2020] NZHC 401
UNDER The Family Protection Act 1955 IN THE MATTER
Of the Estate of Rex Stephen Kirby
BETWEEN
EMMA-JANE TERESA JUNE KIRBY
Plaintiff
AND
CORRENA FAY KIRBY
Defendant
Hearing: 4 March 2010 Appearances:
S Ambler for Plaintiff
L Kearns and S Langston for Defendant (personal capacity)
Judgment:
5 March 2020
JUDGMENT OF VENNING J
ON APPLICATION FOR DISCOVERY
This judgment was delivered by me on 5 March 2020 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Tomkins Wake, Hamilton
Shieff Angland, Hamilton
KIRBY v KIRBY [2020] NZHC 401 [5 March 2020]
[1] The plaintiff seeks relief under the Family Protection Act 1955 (the Act) against the estate of her late father Rex Stephen Kirby (the deceased).
[2] The plaintiff has made application for tailored discovery against Correna Kirby, the defendant and executor of the deceased’s last will. The defendant opposes the application in her personal capacity as a beneficiary. Ms Kearns advised that the defendant abides in her capacity as executrix of the estate.
Background
[3] The plaintiff is 42 years old. She is the youngest child of the deceased who died on 21 August 2018. She has an older brother Steven. Steven has a daughter aged 16.
[4] The deceased was married twice, first, to the plaintiff’s mother. He separated from her in 1987. The deceased then married the defendant in 1994. The deceased and the defendant had no children. The plaintiff’s mother died in 2015.
[5] In his last will dated 8 May 2013 the deceased made no bequests and after payment of debts and funeral expenses left the residue of his estate to the Jubilee Trust.
[6] The plaintiff issued these proceedings on 13 May 2019. On 21 August 2019 Associate Judge Smith directed the defendant, in her capacity as executrix, to file and serve evidence complying with s 11A of the Act and a schedule of the assets and liabilities of the estate.
[7] On 3 September the defendant filed an affidavit listing documents under s 11 and 11A of the Family Protection Act 1955 as directed. She also provided a brief schedule which recorded the financial position of the estate as follows:
Assets
Loan to Vista Paku Management Trust - $43,166.00
499 Share in Latham Court Limited (held as bare trustee) – Value $nil 333 Shares in Tekplas Limited (held as bare trustee) – Value $nil Personal effects – Estimated value $5,000.00 (estimated)
Liabilities
Loan from Jubilee Trust - $620,688.00 Loan from Hamilton Trust - $6,750.00
Visa - $ nil (debit balance written off by bank).
[8]On the sworn evidence of the defendant the estate was seriously insolvent.
Application for discovery
[9] The plaintiff did not accept that to be correct. She is aware that during her father’s lifetime he had a number of business and property interests. She filed an application for tailored discovery on 4 October 2019. The plaintiff seeks discovery of the documents set out in the schedule to the application.
[10]The application is opposed by the defendant on the basis that:
(a)the extent of the estate does not justify the discovery sought;
(b)a number of the documents sought do not exist;
(c)other documents sought are not relevant to the issues that arise in this proceeding;
(d)the defendant has provided other relevant information;
[11] The defendant says the plaintiff’s request for discovery is effectively a fishing exercise to see whether she may have a claim against various trusts.
Tailored discovery
[12] High Court Rule 8.8 provides tailored discovery must be ordered when the interests of justice require “more or less” discovery than standard discovery. The concept of proportionality is central to tailored discovery.1 The concept is relevant in
1 Commerce Commission v Cathay Pacific Airways Ltd [2012] NZHC 726 at [12].
determining whether tailored discovery is appropriate and whether the categories of tailored discovery are reasonable and proportionate.2
[13] I accept the submission of Ms Kearns for the defendant in her personal capacity that, although the application is not made under HCR 8.19 the relevant considerations applicable to that rule also have some relevance to this application. That is particularly so given how the affidavit evidence relating to the assets of the estate has evolved and changed in this case. The considerations are:
(a)Are the documents sought relevant, and if so, how important are they?
(b)Are there grounds for belief they exist?
(c)Is discovery proportionate (in terms of time and cost against their value)?
(d)Is an order appropriate balancing the above considerations?
Discussion
[14] The first and principal issue on any discovery application is relevance. In a claim for further provision under the Act the issue for the Court is whether the deceased failed to make adequate provision in his will for the proper maintenance and support of the plaintiff. That involves consideration of the size and extent of the estate, the financial position of the plaintiff and the financial position of competing interests.
[15]In Re Harrison (deceased) Thomson v Harrison the Court of Appeal stated:3
In considering whether there is a moral obligation, regard is had not only to the needs of the applicant but also to the extent of the estate which the testator had to dispose of and to the claims which other persons had upon him.
[16]In Williams v Aucutt the Court of Appeal stated:4
2 HCR 8.9(a) and 8.14(2)(e) and Schedule 9.
3 Re Harrison (deceased) Thomson v Harrison [1962] NZLR 6 at 14.
4 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [8].
The first inquiry, whether there has been a breach of duty, obviously requires details of the estate and of the financial positions of the claimants and beneficiaries under the will, all as at the date of death.
[17] To the extent that the discovery sought relates to the size or extent of the estate in issue the discovery is directly relevant as confirmed by the authorities.
[18] The size and extent of the estate is not at all clear at present. As noted, in the first affidavit the defendant swore as executrix she deposed the estate was effectively insolvent but that information is now acknowledged to be wrong. The defendant filed a further affidavit on 30 October 2019 in support of her opposition to the application for tailored discovery. In that affidavit the defendant acknowledged the amount of the debt owed by the Vista Paku Management Trust to the deceased at the date of death which she had said was $43,166, was incorrect. The figure was taken from a draft set of accounts. She also acknowledged that the debt she had deposed was owing by the deceased to the Jubilee Trust of $620,688 was in error. Again she says that she took that figure from draft accounts. She says she understood Ms Gisby, the deceased’s accountant, was to give evidence about those debts.
[19] The Court has been advised that Ms Gisby is ill, and unable to complete the accounts. Instead, Regan Brown, a chartered accountant of Hamilton, was asked by the defendant to review the accounts. He has sworn a recent affidavit on behalf of the defendant. In that affidavit he confirms he was instructed on 15 November 2019 to review the draft financial accounts for the year ended 31 March 2019 for the Vista Paku Management Trust. Having reviewed historical financial statements from the years 31 March 2015 and following he concluded the amount of $43,166 said to be owing to the deceased’s estate was incorrect. In his opinion the correct figure owing to the estate was $233,875. While the second draft accounts record the figure owing to the deceased of $295,931, a figure of $45,618 related to 2019 income tax which he had not included and there was also a discrepancy as to the treatment of $15,000 which he treated as a drawing of the deceased and the defendant. Even those figures do not exactly reconcile.
[20] The accountant Mr Brown then says he has only “briefly reviewed” the draft financial accounts for the Jubilee Trust prepared by the deceased’s accountants for the
year ended 31 March 2019. Those accounts were amended by the accountants largely because the first draft accounts incorrectly recorded the transfer of funds to a term deposit as drawings. The term deposit is in fact for the Jubilee Trust. Mr Brown provided a redacted copy of the deceased’s beneficiary advance account with the Jubilee Trust recording a closing balance of approximately $113,803 (overdrawn). That is significantly different to the original figure the defendant deposed was owing by the deceased as at the date of death.
[21] The information currently provided to the plaintiff and the Court in relation to the debt owing by the deceased to Jubilee Trust and the debt owing by Vista Paku Management Trust to the estate and consequently the value of the deceased’s estate as at the date of death is unsatisfactory. It is hardly surprising the plaintiff is suspicious about the information provided to her given the way the matter has developed. The size and extent of the estate are relevant to the plaintiff’s claim. Documents that are reasonably required to clarify the extent of the estate should be disclosed. I return to the exact form of the discovery orders shortly.
[22] The next consideration is the position of other claimants or beneficiaries under the will. In this case the plaintiff’s brother does not pursue further provision from the estate. Nor does the defendant. However, information about the Jubilee Trust as the residuary beneficiary and its financial position is potentially relevant to the plaintiff’s claim.
[23] The plaintiff seeks discovery of documents relating to the Jubilee Trust. That is resisted by the defendant in reliance on the reasoning in Commons v Commons.5
[24] The situation is somewhat different to the case of Commons v Commons where Associate Judge Sargisson, while accepting the breach required a contextual assessment, concluded that affidavit evidence from each of the principal beneficiaries setting out their financial positions as at the date of the deceased’s death, (including any contingent invested interests acquired on his death) was sufficient to enable the
5 Commons v Commons [2019] NZHC 557.
Court to take the relevant financial considerations into account when deciding the extent of any breach.6
[25] In this case the residuary beneficiary is the Jubilee Trust. Nothing is known about it. As I discussed with Ms Kearns, the Judge hearing the plaintiff’s substantive claim for further provision will want to know the extent of the net assets of the Jubilee Trust and the terms of the Trust, particularly whether the plaintiff is a discretionary beneficiary.
[26] Ms Kearns submitted, by reference to Re Wilson (deceased) and Re Hardie that the Courts generally do not accept the existence of a discretionary trust as sufficient to discharge a deceased’s moral duty.7 A beneficiary under a trust has no enforceable right to either the assets or income of the trust. On that basis, Ms Kearns submitted details concerning Jubilee Trust were irrelevant although she acknowledged that in certain circumstances a beneficiary’s entitlement under a trust may be relevant.8 The issue in the present case is, however, different to that in Re Wilson (deceased) and Re Hardie. In Re Wilson the deceased had created a trust providing for a life interest only for his wife in his will. In Re Hardie the deceased had created a different and separate inter vivos trust for his children.
[27] What is clear from the authorities, particularly Re Hardie and Flathaug v Weaver is that the Court had information before it about the terms of the trusts and also information about the assets of the trusts in issue. Where, as here, the Trust is the residuary beneficiary of the entire estate, the provisions of the Trust Deed and the financial position of the Trust will be relevant to the consideration of whether adequate provision has been made for the plaintiff.
[28] For example, if the Jubilee Trust was established for charities as opposed to family or if it already has substantial assets, the fact the deceased left his estate to it rather than make any provision for the plaintiff will be relevant considerations for the Court.
6 Commons v Common, above n 5, at [28].
7 Re Wilson (deceased) [1973] 2 NZLR 359; and Re Hardie [2002] NZFLR 229.
8 Re Hardie, above n 7; and Flathaug v Weaver [2003] NZFLR 730 (CA).
[29] I agree, however, with the force of Ms Kearn’s submission in relation to the existence or details of trust deeds other than the Jubilee Trust. They can have no particular relevance. Further, if the plaintiff was a beneficiary under the Trusts it would be in the defendant’s interest to disclose that in any event.
[30] The plaintiff also seeks financial information relating to Latham Court Ltd and Tekplas Ltd. The defendant’s response is that there are no accounts or valuations and they are irrelevant anyway because the deceased held the shares as bare trustee.
[31] But the plaintiff’s evidence at least raises the possibility the shares were held beneficially by the deceased. The plaintiff has referred to discussions she had with her father which suggest the shares were his to deal with (and that they had substantial value). The plaintiff has also produced records which show that when Latham Court Ltd was incorporated in August 2005 the deceased was both a director and held 333 of the 999 shares issued. In August 2012 that was increased to 499 shares. Further, when Tekplas Ltd was incorporated in May 2004 the deceased was both a director and held 333 of the 999 shares.
[32] While there is no requirement for the share register to disclose that the shares were held by the deceased in trust, on the face of the documentation and the plaintiff’s evidence the deceased held the shares in his own right. In the circumstances, clarification of the basis for the allegation the shares were held by the deceased as a bare trustee ought to be produced. If the shares were held by him as a bare trustee there should be documents supporting that. If he did not, then his interests in those companies would form part of his estate.
[33] I do agree with Ms Kearns that to the extent the plaintiff seeks details of all personal chattels that is a request not for documents but for evidence. Ms Ambler submitted the landcruiser and boats could be worth substantial sums of money. But the defendant has deposed the landcruiser is owned by the Vista Paku Management Trust and the boats by the Jubilee Trust. The relevant section of the accounts of those Trusts will confirm that position. Nothing further is required. I also note that the defendant has offered (through counsel) to make the deceased’s personal chattels
(including assets that do not form part of his estate, namely fishing gear), available to the plaintiff to enable the plaintiff to value them at her own cost.
[34] I record that Ms Kearns confirmed that copies of the redacted assets schedules for the Jubilee Trust and Vista Paku Management Trust showing the ownership of the assets could be provided once the accounts have been finalised.
[35]Dealing then with the documents sought:
(a)Copies of any loan agreements, deeds of acknowledge of debt, or any other document relating to the debt of $43,166 or any other debt owed by Vista Paku Management Trust to Rex’s estate
[36] On the basis discovery should be tailored and limited, the documents relevant for present purposes are the financial accounts of the Vista Paku Management Trust which disclose the debt owing to the deceased and the schedule of Trust assets. The defendant is to discover the financial accounts of the Visa Paku Management Trust for the years ended 31 March 2018 and 31 March 2019. The details of beneficiaries’ current accounts can be redacted.
(b) & (c) Copies of financial statements for Latham Court Ltd and Tekplas Ltd
[37] The copies of the financial statements for these companies for the years ended 31 March 2018 and 31 March 2019 could be relevant, but only if the shares were held by the deceased in his own name as opposed to as a bare trustee.
[38] The defendant is to provide discovery of any documentation that discloses that the deceased held the shares in both or either of these companies as a trustee. In the event such documentation is not provided I reserve leave for the plaintiff to renew the application for discovery of these accounts.
(d)Any valuations held for the shares in the Latham Court Ltd and Tekplas Ltd
[39]I accept there are no valuations held. Discovery is not required.
(e)Details of all personal chattels owned by the deceased at death
[40] As noted, this is a request for evidence rather than documentation. To the extent the plaintiff refers to the landcruiser and boats the assets should appear in the assets schedule of the Visa Paku Management Trust and Jubilee Trust accounts.
(f)Copies of financial statements for the Jubilee Trust showing the balance of the deceased’s beneficiary account for the years 31 March 2014 to 31 March 2018
[41] The defendant is to discover the financial accounts of the Jubilee Trust for the years ended 31 March 2018 and 31 March 2019. The distributions to individual beneficiaries (apart from to the deceased) may be redacted.
(g)Copies of all loan agreements, deeds of acknowledgement of debt, deeds of gift or any other documents relating to the debt said to be owed by the deceased to the Jubilee Trust
[42] There is no need for the discovery of such underlying documents even if they exist. To the extent the information is relevant it will appear in the current account to the financial accounts which are to be discovered (see below).
(h)Copies of financial statements for the Hamilton Trust showing the balance of the deceased’s current account for the years ended 31March 2014 to 31 March 2019
[43] The statement as to the amount owing by the deceased has not altered. On the present information, further discovery of these accounts is not required.
(i)Copies of all loan agreements, deeds of acknowledgement of debt, deeds of gift or any other documents relating to the debt said to be owed by the deceased to the Hamilton Trust
For the same reason these documents are not required.
(j)Copies of all documents relating to any debts owed to the deceased by any trust, company or individual, including current account debts.
This appears to be entirely speculative. To the extent the evidence supports discovery of such documents it has been provided for above.
[44] The plaintiff also seeks documents identifying the plaintiff’s interest in any trust, including:
(a)A copy of the trust deed for the Jubilee Trust
[45] As noted, for the above reasons, the terms of the Jubilee Trust are relevant. The defendant is to provide discovery of a copy of the Trust Deed.
(b)All deeds, resolutions, memoranda (including memoranda of wishes or ancillary documents of the Jubilee Trust)
[46] This is too broad. The defendant is however to discover any documents relating to any change in the beneficiaries from the date the Trust was established and is also to discover any memorandum of wishes completed by the testator.
[47] The discovery is also to include the financial accounts as at 31 March 2018 and 31 March 2019 for the Jubilee Trust setting out its assets and liabilities for each year. The individual beneficiaries’ accounts (apart from the deceased’s) which are to be provided may be redacted.
(c)A copy of the trust deed of any other trust in which the deceased held any interest or power together with all deeds, resolutions memoranda or ancillary documents of such trusts
[48]This is unnecessary. Only the Jubilee Trust is relevant.
[49]The defendant is to provide the further discovery by 26 March 2020.
Costs
[50] The plaintiff has had a measure of success on the applications. With further cooperation from the defendant there should have been no need for this application. The plaintiff is to have costs on a 2B basis plus disbursements. Nothing more is warranted.
Representation
[51] I note that counsel raised the issue of representation of the plaintiff’s 16 year old niece. Given the uncertainty over the extent of the estate I do not propose to make any order for her representation at this time. Her father is aware of the proceedings. I leave over whether further representation of her is necessary to the next review.
Review
[52] The file will be reviewed at a Case Management Conference on 20 April 2020 at 3.00 pm.
Venning J
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