Lisk v Lisk
[2024] NZHC 3360
•12 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-000928
[2024] NZHC 3360
BETWEEN GREGORY JACK LISK
Plaintiff
AND
ODILE RAYMONDE MATHILDE LISK
Defendant
CIV-2023-404-1559 BETWEEN
ELZA PASCALE MARIE LISK and ZOE WALKER IWA MOUNI WALKER
PlaintiffsAND
GREGORY JACK LISK
Defendant
Hearing: 28 August 2024 Appearances:
AW Johnson for GJ Lisk, Plaintiff in CIV-2023-404-928 and Defendant in CIV-2023-404-1559
RJ Thompson for GJ Lisk in his personal capacity
C Light for OM Lisk, Defendant in CIV-2023-404-928DJ Pine for EPM Lisk and ZIM Walker, Plaintiffs in CIV-404- 1559
Judgment:
12 November 2024
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 12 November 2024 at 4 pm pursuant to r 11.5 of the High Court Rules
Solicitors:
Registrar/Deputy Registrar
Martelli McKegg & Cormack, Auckland Shine Lawyers. Auckland
LISK v LISK [2024] NZHC 3360 [12 November 2024]
Introduction
[1] Elza Lisk (Elza) and Zoe Walker (Zoe) apply for orders consolidating these two proceedings.1
[2] The first proceeding is a claim brought by Greg Lisk (Greg), their uncle and the executor of the estate of their deceased grandmother, Iwa Lisk (Iwa). The proceeding is against Elza and Zoe’s mother, Odile Lisk (Odile), and relates to payments out of Iwa’s bank accounts prior to her death. Six causes of action are pleaded including unjust enrichment (the Unjust Enrichment Proceeding).
[3] Following the filing of the Unjust Enrichment Proceeding, Elza and Zoe filed separate proceedings to remove Greg as executor of Iwa’s estate and for distribution of the estate under the Court’s inherent equitable jurisdiction (the Removal Proceeding).
[4] In addition to the application for consolidation, Elza and Zoe apply for orders that the application to remove Greg as executor is heard before the Unjust Enrichment Proceeding and that it is stayed in the meantime. Odile supports the orders sought.
[5] Greg opposes consolidation on several grounds in his capacity as executor. Greg is separately represented in his personal capacity as a beneficiary but did not appear on the consolidation application.
[6] Counsel submits on Greg’s behalf as executor that it seems clear that, by way of the consolidation and stay applications, Elza and Zoe are effectively trying to obtain summary disposal of the estate’s substantive claims without the evidence being tested at trial.
[7] I set out the background in further detail below before considering whether the Court ought to exercise its discretion under r 10.12 of the High Court Rules 2016 (HCR) to consolidate the proceedings and whether an order ought to be made that the removal application should be heard first.
1 I refer to the parties by their first names to avoid confusion but intend no disrespect in doing so.
Background
[8] Iwa was married to Jack Lisk (Jack), who passed away in 2013. Together, Iwa and Jack had two children, Greg and Dirk Lisk (Dirk). Dirk was Odile’s husband and Elza and Zoe’s father.
[9] On 14 August 2008, Greg and Dirk were jointly and severally appointed as attorneys for Iwa pursuant to an enduring power of attorney for property. On 22 November 2017, Iwa executed a new enduring power of attorney in relation to property whereby she revoked all previous powers of attorney executed by her and appointed Dirk as her sole attorney in relation for property.
[10] Dirk died on 8 April 2019. Odile then became the successor attorney for Dirk in relation to Iwa.
[11] Greg pleads in the Unjust Enrichment Proceeding that between 5 September 2013 and 3 January 2020 a total of $432,488.06 was withdrawn from Iwa’s three bank accounts and was deposited into the joint bank account of Dirk and Odile. Odile admits in her statement of defence that $428,488.06 was deposited as alleged.
[12] When Iwa passed away in May 2021, Greg was appointed executor and trustee of her estate. The will originally named Greg and Dirk as the two residuary beneficiaries with each receiving a half-share. However, because Dirk predeceased Iwa, his half-share passed to Elza and Zoe.
[13]Iwa’s will was admitted to probate on 25 June 2021.
[14]As at 14 June 2023, the assets of the estate include:
(a)funds of $575,885; and
(b)various items of jewellery.
[15] No distributions have been made to the beneficiaries save for an allocation of jewellery by agreement between the parties following an exchange of open correspondence.
Unjust Enrichment Proceeding
[16] The Unjust Enrichment Proceeding was filed by Greg on 4 May 2023 and includes six causes of action:
(a)unjust enrichment/money had and received;
(b)knowing receipt;
(c)dishonest assistance;
(d)equitable proprietary claim (equitable tracing);
(e)breach of fiduciary duty on the part of Odile in her capacity as successor attorney after Dirk’s death; and
(f)negligence/breach of equitable duty of care.
[17]Odile denies the claims and pleads three affirmative defences:
(a)the Limitation Act 2010;
(b)change of position; and
(c)consent.
[18] Greg denies the affirmative defences as executor. Greg has also filed a notice of appearance in his personal capacity as a beneficiary.
[19] In addition Elza and Zoe have filed a notice of appearance as beneficiaries of the estate recording that they wish to be heard in opposition to the executor’s claim.
[20] On 6 June 2023, the estate filed an application for freezing orders against the assets of Odile which was heard on 28 August 2023. The parties were able to reach an agreement that Odile would not dissipate her assets, which Lang J recorded in a minute issued on the same date.2
Removal Proceeding
[21] On 28 July 2023 Elza and Zoe filed the Removal Proceeding against Greg, pleading two causes of action seeking:
(a)orders for distribution under the Court’s inherent equitable jurisdiction; and
(b)removal and replacement of Greg as executor in favour of a new independent trustee under s 21 of the Administration Act 1969.
[22] Elza and Zoe include a pleading that the estate may have a claim against Greg on account of monies he invested on behalf of his parents in the amount of AUD
$109,645.40.
[23] Greg opposes the orders for removal and for distribution. He says that the monies referred to were gifted to him between 1992 and 1994 and that, having regard to the Limitations Act 1950 and the Limitations Act 2010, the alleged debt cannot be pursued by the estate.
[24] Greg has also filed a notice of appearance in these proceedings in his personal capacity as a beneficiary.
Relevant legal principles
[25] Rule 10.12 of the HCR permits the Court to order the consolidation of two or more proceedings as follows:
2 Lisk v Lisk HC Auckland CIV-2023-404-000928, 28 August 2023 (Minute of Lang J).
10.12 When order may be made
The court may order that 2 or more proceedings be consolidated on terms it thinks just, or may order them to be tried at the same time or one immediately after another, or may order any of them to be stayed until after the determination of any other of them, if the court is satisfied—
(a)that some common question of law or fact arises in both or all of them; or
(b)that the rights to relief claimed therein are in respect of or arise out of—
(i)the same event; or
(ii)the same transaction; or
(iii)the same event and the same transaction; or
(iv)the same series of events; or
(v)the same series of transactions; or
(vi)the same series of events and the same series of transactions; or
(c)that for some other reason it is desirable to make an order under this rule.
[26] Rule 10.13(a) confirms that the Court can consider consolidation even if the relief claimed in the proceedings is not the same.
[27] In Regan v Gill, the Court of Appeal confirmed the power to consolidate proceedings is a wide discretion, to be exercised broadly in the interests of justice.3
[28]The following principles emerge from the case law:
(a)The aim should be to avoid a multiplicity of proceedings4 and to avoid “inconsistent approaches to, and/or outcomes from, cases dealing with the same event(s) and/or transaction(s)”.5
3 Regan v Gill [2011] NZCA 607 at [10].
4 Callplus Ltd v Telecom New Zealand Ltd (2000) 15 PRNZ 14 (HC) at [17]; and Medlab Hamilton Ltd v Waikato District Health Board (2007) 18 PRNZ 517 (HC) at [8].
5 Callplus Ltd v Telecom New Zealand Ltd, above n 4, at [17].
(b)Consolidation is desirable where it will lead to savings in time and cost to the parties, and in judicial resources.6 Having to call the same evidence on more than one occasion is costly and inefficient.7 Where factual and legal issues overlap, a concurrent hearing permits common legal and factual issues to be addressed in the most logical, efficient and coherent way.8
(c)Differences between the issues in two sets of proceedings does not prevent consolidation if there is a “sufficient common thread” that makes it desirable and efficient to hear the cases together.9
[29] Ultimately, the Court must have regard to the overarching objective of the High Court Rules in exercising its discretion, namely, “to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.” The fact that different relief is claimed is not a disqualifying factor but is one that is to be taken into account.
[30] Counsel for Greg as executor spent some time going through the factors set out in r 10.12(b). He submits that the events in these two proceedings are not the same, that they do not relate to the same transaction, and so forth. In my view this depends on how “event” is interpreted. But in any case r 10.12(c) allows the Court to order consolidation where there is some other reason why it is desirable to make an order for consolidation.
[31] I consider there is clearly such a reason in this case. The proceedings both relate to Iwa’s estate and the facts and issues overlap, the assets of the estate are relatively modest especially in circumstances where two proceedings have been initiated and the parties are all related.
[32] To determine the removal application itself, the Court will need to consider the Unjust Enrichment Proceeding and the decisions made by the executor in relation to
6 At [17] and [37].
7 Gair v Newnham [1974] 1 NZLR 662 (CA) at 664-665.
8 Medlab Hamilton Ltd v Waikato District Health Board, above n 4, at [9] and [15].
9 At [9], [12] and [15]; and Callplus Ltd v Telecom New Zealand Ltd, above n 4, at [16].
them. It will also need to consider those proceedings in relation to the first cause of action in the Removal Proceeding, for the distribution of Iwa’s estate under the Court’s inherent equitable jurisdiction. To determine whether it is appropriate to make such an order, the Court will need to consider the Unjust Enrichment Proceeding brought by Greg as executor and whether any distribution needs to await its determination, as Greg currently says.
[33] Counsel for Greg as the executor submits that there is no reason for Elza and Zoe to be joined to the Unjust Enrichment Proceeding, or to be involved in that claim any more than they would be if the claim involved a non-family member.
[34] In response to this I record first that Greg has filed notices of appearance himself in both proceedings in his personal capacity as beneficiary.
[35] Secondly, Elza and Zoe have already filed a notice of appearance in the Unjust Enrichment Proceeding following directions that they be served. Even if Elza and Zoe’s mother was not the defendant, they would have an interest in the Unjust Enrichment Proceeding because Greg has not distributed the estate and by incurring legal costs on behalf of the estate in proceeding with the claim, the amount available for distribution is reducing. This is in circumstances where any additional distribution to Greg as a beneficiary of 50 per cent of the estate, even if the executor wholly succeeded in the Unjust Enrichment Proceeding, is not likely to significantly exceed a half share of the cost of the litigation.
[36] Elza and Zoe’s application in the Removal Proceeding to remove and replace Greg as the executor is brought pursuant to s 21 of the Administration Act 1969. This provides the Court with the power to remove an administrator where “it becomes expedient” to do so.
[37]The principles applying to the removal of executors are fairly well settled:10
(a)The starting point is the court’s duty to see estates properly administered and trusts properly executed.
10 Farquhar v Nunns [2013] NZHC 1670 at [13] (see also [31] and [36]); approved in Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22]; and Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154 at [29].
(b)This jurisdiction involves a large discretion which is heavily fact-dependent.
(c)The wishes of the testator/settlor (evidenced by the appointment of a particular executor or trustee) are to be given consideration, but ultimately the question is as to what is expedient in the interests of the beneficiaries.
(d)Expedience is a lower threshold than necessity, and imports considerations of suitability, practicality and efficiency. Misconduct, breach of trust, dishonesty, or unfitness need not be established.
(e)Hostility as between administrators/trustees and beneficiaries is not of itself a reason for removal, but hostility will assume relevance if and when it risks prejudicing the interests of beneficiaries.
…
(footnotes omitted)
[38] The authorities make it clear that the Courts will respect the choice of executor made by the deceased, but that the interests of the beneficiaries must be the primary focus.
[39] Elza and Zoe submit that they have brought the application to remove Greg as the executor as, in their view, an independent executor would not continue with the Unjust Enrichment Proceeding because it does not make sense from a financial perspective. It is useful to consider the minute of Lang J issued following the hearing of the freezing order application. Greg places some emphasis on Lang J’s comment that the transfer of such significant sums over a lengthy period obviously requires explanation. However, this comment needs to be read in its full context.
[40] Lang J began by expressing his view that the Unjust Enrichment Proceeding cries out for resolution other than by means of determination by the Court, being essentially a family dispute in which a limited sum of money is available for distribution. His Honour suggests a judicial settlement conference might be appropriate, which I discuss further below. Lang J acknowledges the dispute has some complexities, including the fact that Odile and Dirk received the sum of at least
$428,000 from bank accounts held by Iwa.
[41] However, Lang J records that the issue is whether they were entitled to receive those funds, noting that Greg takes the view that the transfer of funds to Odile and Dirk were unauthorised transactions and that Iwa did not know that they occurred
and/or did not consent to them being made but that Odile on the other hand says the transactions were undertaken with Iwa’s knowledge and consent.
[42]Lang J continues:
[5] It is obviously not possible to determine in the context of an interlocutory application where the truth lies. However, the transfer of such significant sums over a lengthy period obviously requires explanation. Having said that, it may be beyond the means of Odile to provide full explanations because she says the transactions were arranged by her late husband in his capacity as Iwa's attorney. She was not party to those transactions and therefore cannot speak to the basis on which they were made. All of these issues are obviously matters for trial. However, the sum in question is not great, at least so far as the plaintiff is concerned, because he would only receive one-half of any amount recovered. The balance would go to Odile's daughters, who have said that they do not wish the proceeding to be continued. They oppose their mother being required to repay any funds to Iwa's estate.
[6] There is an added complication. This arises from the fact that Odile's daughters have recently filed a separate proceeding in which they seek the plaintiff's removal as executor of Iwa's estate. If that proceeding goes further, it will also require costly attendances by lawyers.
[7] Taken as a whole, the two sets of proceedings mean that the beneficiaries of the estate, as well as Odile, are likely to face significant legal costs if their respective claims are not resolved by the most cost-effective means possible. I would therefore urge all parties to give consideration to making a joint request to the Court for a judicial settlement conference to be convened so that all outstanding issues between them can be resolved by agreement between the parties rather than through determination by the Court.
[43] So while Lang J did say the transfer of funds requires explanation, his Honour acknowledged that it may be beyond the means of Odile to do so. In those circumstances Odile may not be held liable. This risk needs to be carefully considered by the executor.
[44] Elza and Zoe further submit that Greg’s decision as executor to commence the Unjust Enrichment Proceeding at the expense of the estate and without having obtained a Beddoe order is fundamentally improper and justifies removal.
[45] Greg submits in response that an executor’s decision not to apply for a Beddoe order does not constitute any wrongdoing or breach of trust, citing Bonham v Blake Lapthorn Linell (a firm).11
11 Bonham v Blake Lapthorn Linell (a firm) [2006] EWHC 2513 (Ch) at [191] and [204].
[46] Counsel for Greg submits that if the Court does determine that the proceedings should not have been issued, the Court could order costs personally against Greg but that such a potential outcome is not relevant to whether a trustee ought to be removed before such a decision is reached.
[47] Given the test for removal of an executor is whether it is expedient, I do not accept this submission. One relevant factor for the Court to consider is whether the executor is able to make independent decisions for the benefit of all beneficiaries. The question of whether costs are properly being paid out of the estate will be a factor in that decision.
[48] In addition, the submission made on behalf of Greg that Greg will be able to meet any such costs order personally because he has an undistributed half share entitlement to the funds currently in the estate is concerning when Greg’s entitlement is to a 50 per cent share of funds of $575,885, amounting to approximately $265,288. If Greg’s claim is not successful, not only will his own costs have to be paid but costs awards may be made in favour of Odile and Elza and Zoe. In that case, there may not be sufficient funds to pay his own costs and those costs awards.
[49] Finally I note that counsel for Greg submits that it is the approach of Elza and Zoe that is increasing the costs and delay of the litigation, including this application for consolidation. However, the affidavits suggest Greg brought the Unjust Enrichment Proceeding without warning (other than one letter). The estate also chose to oppose the consolidation application in circumstances where it ought to have been clear that orders for consolidation would be made.
[50] In all these circumstances, there will be considerable overlap between the facts and issues that the Court needs to consider in determining the two causes of action in the Removal Proceeding (whether Greg ought to be removed and whether there ought to be a distribution of the estate under the Court’s equitable jurisdiction) and the causes of action pleaded in the Unjust Enrichment Proceeding. I therefore grant the application for consolidation.
Hearing of application for removal
[51] In addition, I make an order for the application for removal to be heard first. The application will be redundant if it is not heard until after the Unjust Enrichment Proceeding as the reason for the removal application is to allow an independent executor and trustee to consider whether it is financially prudent and in the interests of all beneficiaries to proceed with the Unjust Enrichment proceeding. I therefore make orders below for this application to be heard first.
[52] In addition I make orders staying the Unjust Enrichment Proceeding and the first cause of action in the Removal Proceeding. All of these causes of action ought to await the outcome of the application for removal. If an independent executor is appointed to replace Greg, it may be that these causes of action are no longer required to be heard.
Judicial settlement conference
[53] At the hearing I discussed with counsel the possibility of a judicial settlement conference. Counsel for the executor did not have instructions as to whether Greg would agree to such a conference.
[54] A memorandum has now been filed confirming that Greg has agreed to travel from Australia to attend such a conference. Memoranda have been filed in response as to the appropriate timing.
[55] I therefore issue a minute at the same time as this judgment allocating a judicial settlement conference and making directions leading up to it.
Result
[56] Elza and Zoe’s application for consolidation of these proceedings is granted with the second cause of action in the Removal Proceeding, seeking the removal of Greg as executor, to be heard first.
[57] The Unjust Enrichment Proceeding and the first cause of action in the Removal Proceeding are stayed until the determination of the application for removal.
[58] Further directions in respect of the proceedings are made in the minute issued on the day of this judgment.
Costs
[59] I ask the parties to confer to attempt to reach agreement on costs. If that is not possible memoranda are to be filed of no more than three pages (excluding schedules). I do not direct dates because of the unavailability of counsel for the executor from 15 November 2024 but expect counsel to agree on an appropriate timetable between themselves.
Associate Judge Sussock
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