Manjarrez v Chisholm

[2023] NZHC 2184

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-154

[2023] NZHC 2184

BETWEEN

STELLA MARIE RAMIREZ MANJARREZ

Plaintiff

AND

HENRY JOHN CHISHOLM

Defendant

Hearing:	10 August 2023
Appearances:	B A J Taylor for the Plaintiff H J Chisholm in person
Judgment:	15 August 2023

JUDGMENT OF HARVEY J

This judgment is delivered by me on 15 August 2023 at 11am pursuant to r 11.5 of the High Court Rules.

Solicitors:           Wilkinson Rodgers Lawyers, Dunedin And to: The Defendant

MANJARREZ v CHISHOLM [2023] NZHC 2184 [15 August 2023]

Introduction

[1]    Robert Chisholm died on 6 June 2022 leaving a will dated 21 April 2015. He had no children and was unmarried at the date of his passing. Probate has been granted. The will provided that his brother Henry Chisholm be appointed as executor and trustee, that he be gifted the contents of any house owned by the deceased at his death and that the residuary estate after payments of debts and expenses, including executorship costs, be divided equally between their niece and three nephews, Lucas Chisholm, Hugh Chisholm, the children of Robert’s deceased brother Phillip; and Leslie Chisholm and Stella Chisholm, the children of his brother William. Stella Manjarrez is Stella Chisholm’s married name.

[2]    On 28 March 2023 Mrs Manjarrez applied for a without notice temporary injunction to prevent distribution of the estate in light of Mr Chisholm’s instructions to the estate’s lawyer to pay all monies to him and his previously expressed desire to bring a claim against the estate. Later that day, Gwyn J granted the application, noting Mrs Manjarrez’s submissions that she did not know where Mr Chisholm resided and that the all the residuary beneficiaries consented to the orders. The Judge granted leave to Mr Chisholm to apply to set aside the order on notice.

[3]    On 19 March 2023 Mr Chisholm applied to set aside the interlocutory injunction. He is self-represented. This is the application under consideration.

[4]    On 24 April 2023 Mrs Manjarrez filed a statement of claim seeking to remove Mr Chisholm as executor and appoint herself in his place. She also opposes the application to set aside the interim injunction on the following grounds:

(a)The applicant has not addressed the substantive issues that led to the making of the interim injunction;

(b)The applicant has provided no reassurance that the estate funds will remain with the estate’s lawyer should the interim injunction be set aside;

(c)The applicant has not disclosed the reasons why it would be appropriate for the funds to be transferred into the applicant’s personal bank account; and

(d)The applicant acknowledges that the claim potentially outstanding against the estate is by the applicant himself. There is a clear conflict between the applicant’s claim against the estate and his role as the executor of the estate. It would not be appropriate for the applicant to take charge of the estate funds in the circumstances.

[5]    On 12 June 2023 Ellis J set down the application for a half day hearing. The Judge noted her impression that it may be possible to come to some form of consent order. Nonetheless, the Judge considered it would be useful for the parties to have a court date to bring focus to any discussions they may have.

[6]    The issue for determination is whether the injunction should remain in force. Whether it should be extended to include any shares controlled by Mr Chisholm is also considered. Additionally, at the hearing there was discussion as to whether and how the substantive issues could be settled by the parties.

Background

[7]    Robert Chisholm’s principal asset was a residential property 14 St James Avenue, Lower Hutt.1 This has since been sold, other assets called in and debts repaid. However, there are still some remaining unliquidated shares in Australia. Some

$739,000 was being held in a solicitor’s trust account but according to Mr Chisholm there has been an interim distribution. The 28 March 2023 affidavit of Mrs Manjarrez suggests that, as at that date, the total value of the cash assets available for distribution was approximately $739,000.

[8]    On 3 November 2022, the estate’s solicitor advised the beneficiaries that Mr Chisholm had signalled his intention to make a claim against the estate. The claim would be based on an alleged promise by that Mr Chisholm would have effectively an interest for life as a paying tenant in the St James Avenue property. The letter stated that Mr Chisholm was prepared to settle the claim by receiving the deceased’s New Zealand shares. Mr Chisholm also claimed that he was entitled to the deceased’s vehicle as it fell within the wording of the will gifting him the “contents of my house”.

1     Henceforth, referred to as the deceased.

The other beneficiaries did not agree to the claim or the settlement and informed Mr Chisholm of their views.

[9]    On 8 November 2022, the beneficiaries received a letter from Mr Chisholm via the estate’s solicitor that he was abandoning his claims and he would be taking steps to distribute the estate.

[10]   Mrs Manjarrez and the residual beneficiaries received an email from the estate’s solicitor on 11 March 2023 informing them that Mr Chisholm had instructed the solicitor to discontinue acting for the estate and distribute all funds to him. The solicitor was concerned that these instructions could be contrary to the interests of the residual beneficiaries. The solicitor was obliged to follow Mr Chisholm’s instructions but could not in good conscience allow that to occur without giving the residual beneficiaries an opportunity to protect their interests. The solicitor therefore delayed distribution.

[11]   As foreshadowed, Mrs Manjarrez then applied to the Court for an interlocutory injunction to prevent distribution of the estate unless by consent of all the residuary beneficiaries or by further order of the Court, which was granted on 29 March 2023.

Should the injunction be set aside?

Henry Chisholm’s submissions

[12]   Mr Chisholm submitted that setting aside the injunction was necessary for him to carry out his functions as executor. He states that contrary to Mrs Manjarrez’s assertions that he lives “off-grid” he simply spends a lot of time campervan travelling and the beneficiaries have full access to him via text and email. He does in fact live in Kawakawa, he pointed out, and can be contacted. Mr Chisholm also pointed out that he had been in regular contact with Mr Taylor as matters have progressed.

[13]   In addition, Mr Chisholm stated that he has only paid out $200,000 from the estate as there are two potential claims – from himself and from a Barbara Mills, who Mr Chisholm said had been, in effect, a casual partner of the deceased. He noted that

“this danger passes on 20 August 2023”, presumably referring to the claims, but the significance of this date is not known to me.

[14]   Mr Chisholm also argued that Mrs Manjarrez’s claim to remove him as executor was unjustified as he gave full-time palliative care to the deceased for seven months, hence his brother’s faith to make him executor. Appointing Mrs Manjarrez as executor was not the deceased’s wish as the will confirms. Added to that, Mr Chisholm asserted that Mrs Manjarrez had not been entirely truthful about him in her statement.

[15]   Further, Mr Chisholm said it had been agreed that he would receive $400 weekly in his role as executor because there had been a lot of work to complete so that the Wellington property of the deceased could be tidied up and then sold. He had been paid for approximately nine weeks but highlighted that his role had continued long after that. Overall, he argued that approximately $20,000 would be a fair settlement of his claims against the estate. He acknowledged that he had initially sought some

$38,000 being the sale price of the deceased’s shares in various publicly listed companies. However, he was prepared to take $20,000 in full and final settlement, plus the deceased’s car which he continued to assert was left to him under the will.

Stella Manjarrez’s submissions

[16]   Mr Taylor submitted that it is appropriate for the injunction to remain in place until any substantive proceedings are determined for five principal reasons.

[17]   First, there is no harm being caused to Mr Chisholm by the injunction. Secondly, other than a small number of shares in Australia, the estate’s assets have been called in and there are no outstanding debts to be met. Thirdly, it is unclear why the applicant needs access to the estate’s funds. Fourthly, Mr Chisholm himself is bringing the claim which he says prevents distribution of funds. Fifthly, Mr Chisholm also says that the claim will not be brought against the estate, which begs the question why the funds cannot be distributed to the residuary beneficiaries.

[18]   Mr Taylor contends that these grounds and in particular the uncertainty that still surrounds the applicant’s intentions, amplify the original grounds upon which the injunction was sought. He submitted that the matter can be dealt with by leaving the injunction in place until the substantive proceedings are determined.

[19]   In addition, Mr Taylor confirmed that his instructions were that Mr Chisholm had sold some of the deceased’s shares and had kept the money, over $30,000. If the injunction were to continue counsel contended that it should be extended to cover any shares and any proceeds from the sale of shares.

[20]   Further, Mr Taylor also pointed out that if Mr Chisholm wishes to still make a claim against the estate, which he is perfectly entitled to do, then that would be incompatible with his role as executor and trustee. He would have to then be replaced.

[21]   He then underscored the relevant legal principles and how they remain entirely applicable to the present case. In short, counsel argued that the injunction should remain in place pending resolution of any claims, that it should be extended to include the shares and sale proceeds mentioned and that, should Mr Chisholm file a claim against the estate, he must be replaced.

Legal principles

[22]   In the case of without notice orders, an application to set aside is treated as a de novo hearing of the original application and the onus remains on the party who made the initial without notice application.2

[23]   Therefore, the classic principles apply: whether there is a serious question to be tried; whether the balance of convenience favours granting or refusing relief; and the overarching consideration of where overall justice lies.3 The Court should seek to improve its chances of being able to do justice after determination of the merits at trial

2 Kennedy Point Boatharbour Ltd v Barton [2022] NZHC 257, [2022] 2 NZLR 696 at [15] citing Carter Holt Holdings Ltd v Fletcher Holdings Ltd [1980] 2 NZLR 80 (HC) at 84 Ron West Motors Ltd v Broadcasting Corp of New Zealand (No 2) [1989] 3 NZLR 520 (CA) at 523 ; and Eastridge Ltd v Oceanic Life Ltd (1997) 10 PRNZ 340; (1997) 2 NZPC 651 (HC) at 347.

3 Commerce Commission v Viagogo AG [2019] NZCA 472; [2019] 3 NZLR 559.

and “take whichever course seems likely to cause the least irremediable prejudice to one party or the other”.4

Discussion

[24]After hearing from counsel and Mr Chisholm, I suggested that:

(a)All of the funds held apart from $30,000 be distributed to the residuary beneficiaries;

(b)Mr Chisholm receive $5,000 on an interim basis pending resolution of his claims regarding executorship expenses and related matters;

(c)The balance from the $30,000 be held by an independent custodian until the issues are resolved; and

(d)A settlement conference be arranged to seek a resolution of the issues without recourse to further litigation.

[25]   Following the lunch adjournment, Mr Taylor confirmed that his clients supported this approach with certain conditions. The first was that the deceased’s 2013 Toyota Corolla car currently in the possession of Mr Chisholm is deemed an estate asset. Secondly, that Mrs Manjarrez be appointed executrix to replace Mr Chisholm. Mr Taylor confirmed that he was instructed to offer $10,000 to settle the issues with Mr Chisholm provided, as mentioned, the vehicle forms part of the estate. Counsel also confirmed he had not yet received details of Mr Chisholm’s executorship expenses.

[26]   Mr Chisholm maintained that the definition of household chattels included the vehicle and so he opposed any suggestion that it be deemed an estate asset. That said, he remained supportive of the overall approach outlined previously. Mr Chisholm confirmed that he would transfer the proceeds of the share sales to Mr Taylor’s firm trust account and that he would do so for any remaining share sales. He also agreed with my suggestion that both he and Mr Taylor request from the estate solicitor, a

4     National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16; [2009] 1 WLR 1405 at

[16] and [17].

Mr McIlroy, the original of the probate. This would then enable Mr Chisholm to expedite the final sale of all remaining shares. Mr Taylor appeared to accept this proposal as sensible.

[27]   Turning then to the issue of a settlement conference to deal with the remaining claims to the balance of $25,000, r 7.79 of the High Court Rules 2016 provides:

Court may assist in negotiating for settlement

(1)  A Judge may, at any time before the hearing of a proceeding, convene a conference of the parties in chambers for the purpose of negotiating for a settlement of the proceeding or of any issue, and may assist in those negotiations.

(2)  A Judge who presides at a conference under subclause (1) may not preside at the hearing of the proceeding unless—

(a)  all parties taking part in the conference consent; and

(b)  the Judge is satisfied there are no circumstances that would make it inappropriate for the Judge to do so.

(3)   A Judge may, at any time during the hearing of a proceeding, with the consent of the parties, convene a conference of the parties for the purpose of negotiating for a settlement of the proceeding or of any issue.

(4)  A Judge who convenes a conference under subclause (3) may not assist in the negotiations, but must arrange for an Associate Judge or another Judge to do so unless—

(a)    the parties agree that the Judge should assist and continue to preside at the hearing; and

(b)  the Judge is satisfied there are no circumstances that would make it inappropriate for the Judge to do so.

(5)  A Judge may, with the consent of the parties, make an order at any time directing the parties to attempt to settle their dispute by the form of mediation or other alternative dispute resolution (to be specified in the order) agreed to by the parties.

(6)  The parties, and a Judge or Associate Judge who presides at a conference or assists in negotiations under this rule, must not disclose any statement made during a conference, either—

(a)  in court; or

(b)  otherwise.

(7)   This rule must be read with subpart 8 of Part 2 of the Evidence Act 2006 (privilege).

[28]   I consider that the issues identified by the parties are capable of resolution without recourse to the cost and risk of further litigation if they are prepared to explore a compromise. That is the purpose of the proposed settlement conference. The issues as I understand them that remain for resolution include, simply as suggestions, the following questions:

(a)What are Mr Chisholm’s claimed executorship expenses?

(b)Are they reasonable in all the circumstances and if so should they now be paid from the balance of the estate proceeds?

(c)Does the vehicle form part of the estate or is it a “household chattel”?

(d)Who then should own the vehicle?

[29]   These suggested questions have been framed on the basis that Mr Chisholm has abandoned his claims to effectively a life interest in the property which has, in any event, been sold earlier this year.

[30]   Moreover, it is essential that the proposed settlement conference has a narrow focus strictly limited to the relevant outstanding issues. A raking over the coals of previous points of dispute beyond the questions suggested may prove a distraction and continue to embroil the parties in ongoing costly litigation. It is also entirely possible that the value of the points that remain unresolved in dollar terms will likely be surpassed by legal costs should the matter remain live, to say nothing of the delay and uncertainty inherent in litigation risk—hardly an attractive prospect for the parties.

[31]   I therefore implore the parties to continue with the proposed settlement conference before another Judge as soon as this can be scheduled to attempt to arrive at a sensible agreement to put this matter behind them all. Robert Chisholm has chosen to favour his niece and nephews with the bulk of his estate. From that well favoured position, and following the distribution of the great majority of the estate funds to them, they might now approach the settlement conference with an open mind and even, if I might be so bold, a sense of magnanimity. Mr Chisholm, I also encourage to approach the conference pragmatically in an effort to settle the last remaining points at issue regarding the finalisation of his late brother’s estate. As foreshadowed and at

the risk of belabouring the point, any failure to do so will likely result in a dissipation of funds held on legal costs should the proceedings become protracted

[32]   In the meantime, I consider that, effectively, a holding pattern should remain in place until the settlement conference has concluded. So both Mrs Manjarrez’s injunction and Mr Chisholm’s executorship will remain in place until further order of the Court.

[33]   To avoid doubt, Mr Chisholm remains custodian of the remaining unsold shares as executor. Once they are sold he must transfer the proceeds to Mr Taylor’s trust account as agreed at the hearing. Payment of $5,000 on an interim basis to Mr Chisholm is also contingent on payment of the current share sale proceeds to Mr Taylor. That said, for efficiency, it may prove more practical that Mr Chisholm deduct the proposed interim payment of $5,000 from those share sale proceeds with an appropriate receipt recording the event. If Mr Taylor takes issue with this proposal he should file a memorandum urgently.

[34]   While I did not raise this point at the hearing, on reflection, I wonder if the parties have turned their minds to a suitable memorial stone for Robert Chisholm. This may have been already provided for by the family out of estate funds in any event. I simply make this observation in passing.

Decision

[35]All of the estate funds, except $30,000 are to be distributed to the beneficiaries.

[36]   If he has not done so already, Mr Chisholm is to immediately transfer all of the sale of shares proceeds to Mr Taylor. The proceeds of all remaining shares should also be transferred to Mr Taylor once sold, pending finalisation of the estate. Mr McIlroy, the estate solicitor, is to send the probate to Mr Taylor to facilitate the sale of the remaining shares via Mr Chisholm as discussed and with the agreement of the parties.

[37]Henry Chisholm is entitled to an interim payment of $5,000. The balance of

$25,000 is to be held by the Court pending settlement or a further order, and per r 3.17 of the High Court Rules 2016.5

[38]   The injunction issued on 28 March 2023 will remain in force until further order of the Court, pending a settlement of the claims of Henry Chisholm or the filing of a claim against the estate when the matter can be revisited at that time if required.

[39]To avoid doubt, Henry Chisholm remains the estate’s executor and trustee.

[40] The Registrar will schedule a settlement conference per r 7.79 of the High Court Rules 2016 as soon as possible. The conference will include discussion of the questions set out at [28] above.

Harvey J

Harvey J

5      See Deliu v Johnstone [2022] NZHC 467 at [15]–[24].