Neil-Webber v Webber HC Hamilton CIV 2011-419-800
[2011] NZHC 1279
•13 October 2011
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV 2011-419-800
IN THE MATTER OF an application for Summary Judgment
BETWEEN TESSA ANNE NEIL-WEBBER AND LINDA MAJORIE PRESOW AS TRUSTEES OF THE DAVID NEIL MEMORIAL TRUST
Plaintiffs
ANDRAYMOND DENNIS WEBBER AND TESSA ANNE NEIL-WEBBER AS TRUSTEES OF THE ELLACANA TRUST
Defendants
Hearing: 11 October 2011
Counsel: DA Bogers for plaintiffs
KL Hoult for defendants
Judgment: 13 October 2011 at 9:30 AM
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for summary judgment]
Solicitors: Bogers Scott Shortland, PO Box 945, Hamilton
Niemand Peebles Hoult, PO Box 1028, Hamilton
NEIL-WEBBER V WEBBER HC HAM CIV 2011-419-800 13 October 2011
[1] The plaintiffs are the trustees of the David Neil Memorial Trust. [2] The defendants are trustees of the Ellacana Trust.
[3] The first-named plaintiff is also a trustee of the Ellacana Trust.
[4] The dispute concerns the alleged liability of the Ellacana Trust to the David
Neil Memorial Trust.
[5] The plaintiffs, on behalf of the David Neil Memorial Trust, allege that the Ellacana Trust owes the David Neil Memorial Trust $400,000. They sue the defendant trustees and seek summary judgment for this sum. It is not suggested that liability extends beyond the assets of the Ellacana Trust. Indeed, a deed of acknowledgement of trust, which is relied upon and which is dated 31 October 2007, records such limitation.
[6] The plaintiff trustees apply for summary judgment in the sum of $400,000. Ms Bogers acknowledged that if the plaintiff trustees are successful, judgment should be entered against both defendants, but limited to the assets of the Ellacana Trust.
The court’s approach to a plaintiff ’s summary judgment application
[7] Rule 12.2 of the High Court Rules requires that a plaintiff satisfy the court that a defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action. The obligations imposed by the rule have been examined by a number of authorities.
[8] The correct approach to an application for summary judgment by a plaintiff was recently summarised in Krukzeiner v Hanover Finance Ltd[1] where the court said:
[1] Krukziener v Hanover Finance Ltd [2008] NZCA 187 (CA) at [26].
The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11
PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[9] In Pemberton v Chappell[2] the court also commented on the position where a
[2] Pemberton v Chappell [1987] 1 NZLR 1(CA) at 3.
defence is not evident on a plaintiff’s pleading and said:
If a defence is not evident on the plaintiff's pleading I am of opinion that if the defendant wishes to resist summary judgment he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue. In this way a fair and just balance will be struck between a plaintiff's right to have his case proceed to judgment without tendentious delay and a defendant's right to put forward a real defence.
[10] That position was further reinforced in Australian Guarantee Corporation
(New Zealand) Ltd v McBeth[3] where the court said:
[3] Australian Guarantee Corporation (New Zealand) Ltd v McBeth [1992] 3 NZLR 54 at 59.
Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff's verification stands unchallenged and ought to be accepted unless it is patently wrong
[11] Hypothetical possibilities in vague terms, unsupported by any positive assertion or corroborative documents advanced by defendants will not frustrate the
obligation on a plaintiff to discharge the onus of proof: SH Lock (NZ) Ltd v
Oremland.[4]
[4] SH Lock (NZ) Ltd v Oremland HC Auckland CP641/86, 19 August 1986.
[12] In Tilialo v Contractors Bonding Ltd[5] the court raised a caution and said:
[5] Tilialo v Contractors Bonding Ltd CA 50/93, 15 April 1994 (CA) at 6.
The Courts must of course be alert to the possibility of injustice in cases in which some material facts to establish a defence are not capable of proof without interlocutory procedures such as discovery and interrogatories. That does not mean that defendants are to be allowed to speculate on possible defences which might emerge but for which no realistic evidential basis is put forward.
[13] A court is not required to accept uncritically any or every disputed fact: Eng Mee Yong v Letchumanan.[6] However the court will not reject even dubious affidavit evidence, even though there must be suspicion as to the good faith of the deponent, if there is an essential core of complaint that supports a defence. In essence, the inquiry is whether or not the person’s assertion passes the threshold of credibility: Pemberton v Chappell;[7] Orrell v Midas Interior Designs.[8]
[6] Eng Mee Yong v Letchumanan [1980] AC 331.
[7] Pemberton v Chappell, above n 2.
[8] Orrell v Midas Interior Designs (1991) 4 PRNZ 608 at 613.
[14] In Tilialo v Contractors Bonding Ltd[9] it was observed:
[9] Tilialo v Contractors Bonding Ltd, above n 5, at 8.
Drawing the line between mere assertions of possible defences and material which sufficiently raises an arguable defence so that the defendant should not be denied the opportunity to employ interlocutory procedures and have a trial is a matter of judgment. Views may well differ.
Background
[15] Ms Neil-Webber and Mr RD Webber were in a domestic relationship. The relationship began in about 2002. They were married on 3 July 2004. They separated on 21 December 2009.
[16] At the date of separation they were living in a house owned by the defendant trust at 16 Camden Place, Tamahere.
[17] The Ellacana Trust was settled and established by a deed of trust dated
28 May 2007. The David Neil Memorial Trust was settled and established by a deed of trust dated 28 May 2007. The Hamilton law firm, Norris Ward McKinnon, acted in the formation of both trusts.
[18] The Ellacana trustees, on behalf of the trust, purchased a bare section at what is now known as 16 Camden Place, Tamahere. That property is also referred to in the papers as 66 Koppens Road. They are one and the same property. The intention behind the purchase was that a new home would be built on the section for the use of Ms Neil-Webber and Mr RD Webber as their home. There is some dispute as to the precise purchase price. The difference is not significant for the purposes of this application. The purchase price was either $312,000 or $320,000. What is significant is exactly how the purchase, and the subsequent cost of building the house, was funded.
[19] The house was sold in November 2010. The court has been provided with a settlement statement prepared by the solicitor who acted on the sale. From that settlement statement it appears that the sale price was $653,000. Deductions were made on account of real estate commission, rates instalments and arrears and the repayment of two mortgages: one to the ANZ National Bank Ltd in the sum of
$499,220.11 and the other to DB Breweries of $40,300. There were also deductions on account of costs.
[20] The settlement statement advises that there was a credit balance available to the trustees of the Ellacana Trust of $76,748.96 on completion of the transaction. The papers generally disclose that the only asset of the defendant trust was the house and, accordingly, the balance after sale represents its only real asset. That suggests that any judgment in real terms could not be for anything more than $76,748.96.
[21] An historic search of the title to the property at 16 Camden Place was produced to the court. I refer to the following entries from that search of title. As was expected, the purchase was registered on 4 July 2007. On 6 December 2007 a mortgage was registered in favour of Westpac New Zealand Ltd. That mortgage was discharged on 9 June 2008. On the same day, a mortgage to ANZ National Bank Ltd
was registered. That was followed by a mortgage to DB Breweries Ltd on
17 September 2009. The mortgages to the ANZ National Bank Ltd and to DB Breweries Ltd are shown as having been discharged on 12 November 2010; no doubt as a consequence of the sale of the property in November 2010.
[22] Ms Neil-Webber’s father died in 2004. She was the primary beneficiary of his estate. A significant asset in her father’s estate was a property at 56 Ward Road, Rotorua. She received an interim distribution from her father’s estate of $90,000 on
10 May 2005. 56 Ward Road, Rotorua was transferred to her in June 2006. She sold it in April 2007 resulting in $460,038.14 being deposited into her ASB Fastsaver account.
[23] Prior to the purchase of the bare section at 16 Camden Place, Tamahere on
3 July 2007 Ms Neil-Webber and Mr RD Webber had owned a home at 592 Matangi Road, Tamahere. That home was sold. Precise details of the sale are not provided. The house was owned, however, by Mr RD Webber prior to the relationship with Ms Neil. Mr RD Webber can only recall an understanding of what was received on the sale of 592 Matangi Road, Tamahere, which he says was $180,000. His recollection was that that formed part of the cash contribution towards the purchase of the section at 16 Camden Place, Tamahere.
[24] In April 2007 Ms Neil-Webber sought advice from Mr Barry Webber, of Norris Ward McKinnon, a law firm in Hamilton. Ms Neil-Webber produced Mr Barry Webber’s file note made when he took instructions, which I now set out:
Tessa and her husband are forming two trusts.
The David Neil Memorial Trust is being set up by Tessa to hold the funds she has received as a distribution from her late father’s estate. She intends using most of those funds towards the purchase of a new property to be owned by the Ellacana Trust being set up by them both. The intention is that any funds advanced by Tessa to the Neil Trust and then readvanced to their joint trust will always be separate property.
They are selling their existing property and will then purchase in the name of the Ellacana Trust. The funds advanced by the Neil Memorial Trust will be secured by a Deed of Acknowledgement of Debt from the Ellacana Trust and their personal contributions from the sale of their existing property will also require an Acknowledgement of Debt from the Ellacana Trust and their initial gifting in respect of that debt.
The Trust Deeds, Indemnities & Memo’s of Guidance have been prepared for signature for both trusts and an appointment needs to be made with Tessa to have the documents signed by the local trustees. Two other trustees will probably not be able to call and it will be necessary for the documents to be sent to them for signing.
Opening minutes have also been drafted for each trust but these cannot be finalised until the purchase is arranged and the amounts Tessa advances to the Neil Memorial Trust and the amount they jointly advance to the Ellacana Trust is known. At that time the acknowledgements of debt and gifting documents will also have to be prepared.
[25] It is significant to draw attention to the fact that the parties’ intention was to fund the purchase of the bare section from two sources, namely through a trust which held Ms Neil-Webber’s inheritance and, secondly, from the proceeds of sale of Mr RD Webber and Ms Neil-Webber’s first home at 592 Matangi Road, Tamahere.
[26] The plaintiff trustees’ case relies largely on documentation which, in
summary, is as follows:
(a) The plaintiff trustees produced a photocopy of a document which is dated 15 June 2007 and which is headed Resolution of trustees David Neil Memorial Trust, which I now set out:
Tessa Anne Neil-Webber, Linda Marjorie Presow and Kathryn Joanne Cochet having accepted the trusteeship of a trust to be known as the David Neil Memorial Trust, signed the deed establishing the Trust, and received a memorandum for their guidance from Tessa Anne Neil-Webber, resolve that:
1. The Trustees accept an advance of
$320,000$400,000 [TN-W] from Tessa Anne Neil Webber and, for the purpose of such advance, enter into and execute the deed of acknowledgement of debt between Tessa Anne Neil-Webber and the trustees to record the debt.
2. The Trustees in turn advance the sum of
$320,000$400,000 [TN-W] to the trustees of the Ellacana Trust to be used towards the purchase of a property at 66
Koppens Rd by that trust and, for the purpose of such advance, enter into and execute the deed of acknowledgement of debt between the trustees of the Ellacana Trust and the trustees to record the debt.
3.Norris Ward McKinnon be appointed solicitors to the Trust.
By way of comment I observe that this document is dated before any settlement of the purchase of the property was made and before any evidence produced that any sum, be it $320,000 or $400,000 was in fact advanced;
(b)Ms Neil-Webber’s ASB bank account, which discloses transactions entered on 2 July 2007, contains a deposit of $320,000 and withdrawal to herself on the same day;
(c) A copy of what purports to be a page from Norris Ward McKinnon’s trust account for Ellacana Trust discloses entries on 2 July 2007, being an entry credit of $320,000 with the notation recorded by it of “Received from: Ellacana Trust cash contribution”. This ledger page is entitled:
Purchase 66 Koppens Road,
16 Camden Place, RD3, Hamilton 3283.
The document produced is a copy only but is clearly part of the law
firm’s trust account record for the purchase of the bare section;
(d) The settlement statement received from the vendor’s solicitors by
Norris Ward McKinnon for the purchase of the subject property on
3 July 2007 and showing a purchase price of $320,000 was produced;
(e) There was next produced a minute resolution for the Ellacana Trust dated 3 July 2007 which provided as follows:
RESOLVED
1. THAT the Trust execute an Agreement for Sale and Purchase for the purchase of the property at Lot 66, Koppens Road, Tamahere from Beverley Anne Caroline McKenzie for the sum of $320,000.
2. THAT the Trustees of the Trust:-
(a) Approve the transactions contemplated by the documents and the documents themselves;
(b) Authorise execution of the documents by the Trust in the manner in which they have been executed.
3.IN approving the documents and the transactions contemplated by them, the Trustees after taking into account all relevant factors, consider that the entry into and performance of the documents and the transactions contemplated by them is in the best interests of the Trust or of any beneficiary under the Trust.
(f) The next document is the resolution of the Ellacana Trust dated
14 July 2008. I set out the resolution in full because, although it is signed a year after the transactions were entered into, it records the source of funds which the parties intended to use towards, in the case of the advance from the David Neil Memorial Trust, the purchase of the property and the construction of the dwelling and, in the case of the funds received from RD Webber and Ms Neil-Webber, the construction of the dwelling on the same property:
Raymond Dennis Webber, Tessa Anne Neil-Webber and Aaron Brian Dawson having accepted the trusteeship of a trust to be known as the Ellacana Trust, signed the deed establishing the Trust, and received a memorandum for their guidance from Raymond Dennis Webber and Tessa Anne Neil-Webber, resolve that:
1.The trustees accept an advance of $282,000 from Raymond Dennis Webber and Tessa Anne Neil- Webber to help finance the construction of the dwelling on the property at 16 Camden Place and, for the purpose of such advance, enter into and execute the deed of acknowledgement of debt between Raymond Dennis Webber and Tessa Anne Neil-Webber and the trustees to record that debt.
2.The trustees accept a gift of $27,000 from each of Raymond Dennis Webber and Tessa Anne Neil- Webber by way of reduction of the debt owing by the trustees to each of them and, for the purpose of such gifts, enter into and execute deeds of reduction of debt between each of Raymond Dennis Webber and Tessa Anne Neil-Webber and the trustees.
3. The trustees having accepted an advance of
$400,000 from the trustees of the David Neil Memorial Trust to help finance the purchase of the property and the construction of the dwelling at
16 Camden Place, ratify the trustees execution of the
deed of acknowledgement of debt between the trustees of the David Neil Memorial Trust and the trustees to record the debt.
4.Norris Ward McKinnon be appointed the solicitors to the Trust.
5.Raymond Dennis Webber and Tessa Anne Neil- Webber be permitted to reside in the dwelling to be erected on the property situated at 16 Camden Place for so long a period as they wish to do so, provided that they pay all the costs of repairs and maintenance, rates, insurance premiums, interest on any borrowings and other outgoings in respect of the dwelling and the property, unless otherwise agreed between them and the trustees.
(g) There was next produced a letter from Norris Ward McKinnon dated
17 September 2007 which refers to enclosures which include the deeds of trust, the deeds of indemnity, the memorandum of guidance and the resolution of trustees in respect of both the plaintiff and defendant trusts. The timing of this letter may mean that some of the earlier documents referred to were post-dated. The letter also refers to the deeds of acknowledgement of debt;
(h)There was next produced the foundation document for the cause of action which is the deed of acknowledgement of debt entered into by the trustees of the defendant trust with the trustees of the plaintiff trust and dated 31 October 2007. That document records that the plaintiff trust had advanced to the defendant trust $400,000 and that the parties wished to record the terms of the advance. I have already referred to paragraph 6 of this document which limits the liabilities of the trustees to “the funds belonging to the Ellacana Trust coming into the hands of the trustees in the proper course of the administration of the Ellacana Trust”;
(i) There was next produced a document which is entitled Trust Register.
It is document prepared by Norris Ward McKinnon. It purports to be the trust register of assets and liabilities of the Ellacana Trust. It records the debt to the David Neil Memorial Trust of $320,000 for the
purchase of the land on 3 July 2007. It further records an acknowledgement of debt to David Neil Memorial Trust of $400,000 with a date entry 31 October 2007. It records a dwelling at
16 Camden Place with a value of $362,000 as at 7 July 2008. The document records therefore the purchase of land and, presumably, the cost of the building for a total asset interest of $682,000. Against that, liabilities are recorded of $400,000 to the David Neil Memorial Trust and $282,000, presumably the acknowledgement of debt from Ms Neil-Webber and Mr RD Webber, for a total liability of $682,000. No source documents, justifying the trust register of assets and liabilities in addition to the documents that I have already referred to, were produced for the purposes of this application.
[27] The first-named defendant opposes summary judgment and puts in issue whether or not the sum of $400,000 was in fact paid to the defendant trust by the plaintiff trust. The first-named defendant complains that, despite requests addressed to the plaintiff trust’s solicitors, they have not obtained an authority to access all the documentation held by the firm of solicitors that was acting for the Ellacana Trust at the time of the purchase of the section and, later, the development of the house on it. This could be addressed quite simply by Ms Neil-Webber, as one of the defendant trustees, giving such authority.
[28] Ms Hoult drew attention to the fact that there is a break in the chain of transactions leading to the funds being held in the trust account of Norris Ward McKinnon which disclose how the funds actually were received by the Ellacana Trust before they were deposited in the trust account held by Norris Ward McKinnon on Ellacana’s behalf for the purpose of the purchase of the section.
[29] In the course of counsel’s submissions I expressed my concern that there were clearly missing documents which, if located, should be able to establish precisely whether the funds were transferred in accordance with the documents prepared by the solicitors or not. If one simply took account of the trust register of assets and liabilities a conclusion might be drawn that the parties had sufficient equity from their own resources, being money allegedly advanced by Ms Neil-
Webber through the plaintiff trust in the sum of $400,000 and moneys advanced by Ms Neil-Webber and Mr RD Webber from the sale of their former home in the sum of $282,000 to complete the purchase and construction of their new home without the need for any borrowing at all.
[30] However, within five months of the purchase of the bare section a mortgage is raised from a bank, which appears to be replaced by a later mortgage, which, when coupled with a second mortgage, left the defendant trust at the time of sale owing
$539,520.11 to mortgagees in respect of registered mortgages. A consequence of that position is that instead of interests associated with the parties owning the entire equity in the property, interests associated with the parties owned a sum of
$76,748.96.
[31] I conclude that this is one of those cases where I should be alert to the possibility of injustice by not allowing the first-named defendant access to full discovery of the appropriate source document that funded the purchase and construction development. The consent of both defendant trustees, one of whom as I have already mentioned is a trustee of the plaintiff trust, is required to get access to those documents. In addition, I take into account the fact that even if I were to enter judgment, on the material before me, it could not exceed the sum of $76,748.96 because that is the known extent of the assets of the defendant trust.
Decision
[32] The application for summary judgment is declined.
Orders and directions
[33] I order:
(a) A statement of defence shall be filed and served by 27 October 2011; (b) Affidavits of documents shall be filed and served by each party by
17 November 2011;
(c) A case management conference shall be held at 12:20pm on
6 December 2011. The following matters will be addressed at that conference:
(i) The pleadings;
(ii)Whether any further interlocutory application or direction is required;
(iii) The issues requiring resolution at trial;
(iv)Whether the financial affairs of Ms Neil-Webber and Mr RD Webber are the subject matter of any other proceedings which should be taken into account before trial directions are given in respect of this proceeding;
(v)Settlement and whether a mediation or a Judicial settlement conference should be ordered and, if so, appropriate directions relating to same;
(vi)Trial duration, the fixing of the trial date and the making of any special trial directions that are required. In respect of these matters counsel should have available the number of witnesses to be called and the general scope of the evidence to be covered by them so that an accurate assessment can be made of trial duration. In addition, counsel should be in a position to indicate if any order should be made in relation to the experts pursuant to r 9.44.
Counsel shall file and serve memoranda dealing with these items two working days before the conference.
Costs
[34] In line with the Court of Appeal decision in NZI Bank Ltd v Philpott I reserve costs.10
JA Faire
Associate Judge
10 NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).
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