Parbery v Parbery
[2012] NZHC 439
•15 March 2012
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2011-409-001678 [2012] NZHC 439
BETWEEN JAMES KIRTLAND PARBERY Plaintiff
ANDJULIAN DAVID PARBERY First Defendant
ANDJULIAN DAVID PARBERY AND INDEPENDENT TRUSTEES (CANTERBURY) LIMITED Second Defendant
Hearing: 8 March 2012
Appearances: J M Kirkland for the Plaintiff
P A Cowey for the First Defendant and the first-named Second
Defendant
No appearance for the second-named Second Defendant
Judgment: 15 March 2012
RESERVED JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] In this proceeding the plaintiff, to whom I shall refer as James, sues his brother, to whom I shall refer as Julian, and his brother’s family trust (the Julian Parbery Trust) in relation to James’ share of the proceeds of sale of a property they, and other members of their family, formerly owned in West Wales, known as Laura. The property was sold in 2004. The plaintiff’s share of the proceeds of sale was
£15,000. It is common ground that at the applicable exchange rate this equated to
NZ$40,000. Initially James sought summary judgment against both the defendants for this sum.
JAMES KIRTLAND PARBERY V JULIAN DAVID PARBERY HC CHCH CIV-2011-409-001678 [15 March
2012]
Procedural issues
[2] Prior to 11 March 2009 James and Julian were the trustees of Julian’s family trust. On that day they executed a deed by which James retired as a trustee and the second-named second defendant was appointed to hold office with Julian. On 7
April 2010 Julian and the second-named second defendant together with P F Trust Services 2009 Limited executed a deed whereby Independent Trustees Canterbury Limited retired as trustee and P F Trust Services 2009 Limited was appointed to hold office with Julian. At the time this proceeding was issued this appointment was not known to James; hence the naming of the second defendants. On 25 October 2011
James applied to strike out the proceeding against Independent Trustees Canterbury Limited and add P F Trust Services 2009 Limited as the second-named second defendant.
[3] This application is opposed, as is James’ application for summary judgment. Both applications were set down for hearing on 8 March 2012. In advance of the hearing, and as directed, Mr Cowey filed submissions on behalf of Julian in his capacity as first defendant and first-named second defendant. At the beginning of the hearing he informed the Court that he appeared for Julian in those two capacities, but not for the second-named second defendant or the trust company the plaintiff seeks to substitute. Thus the proposed substituted second defendant was not represented. Whilst, generally, it is established practice that a party sought to be joined need not be served with the application, if joined the proposed substituted party would certainly need to be served with the application for summary judgment and have an opportunity to respond to it prior to being required to appear at a fixture. Accordingly it was apparent that if the application for joinder were argued, the application for summary judgment against the Julian Parbery Trust could not be, and I was not prepared to allow the application for summary judgment against Julian to proceed separately from the application for summary judgment against the Julian Parbery Trust.
[4] As a consequence counsel for the plaintiff elected to proceed with the summary judgment application against Julian, as first defendant, to discontinue the proceeding against Independent Trustees Canterbury Limited and to withdraw the
summary judgment application against the Julian Parbery Trust. He sought to adjourn the application to add P F Trust Services 2009 Limited as a second-named second defendant. Orders were made accordingly.
Principles to be applied on an application for summary judgment
[5] Summary judgment may be entered if a plaintiff satisfies the Court that the defendant does not have a defence to the claim. The principles to be applied were summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd as follows:[1]
[1] Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.
[26] The principles are well settled. 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).
The facts
[6] James and Julian and their brother Giles each owned one-sixth of the West Wales property and on its sale were each entitled to £15,000. Giles appears to have administered the sale of the property. On 2 September 2004 he gave instructions to Lloyds Bank to transfer £30,000 to HSBC Bank, for credit to a stipulated account in the name of Collinson Forex Limited. This is a New Zealand based company dealing in foreign currency exchange. On 3 September Collinson Forex sold
£32,486.80 at an exchange rate of .376 and bought New Zealand currency in the sum of $86,631.47. The difference between the instruction by Giles and the currency sale record in the number of pounds handled by Collinson Forex, was not explained and is not presently relevant. The document recording the transaction into New Zealand
currency shows that the funds were to be transferred by telegraphic transfer, the
beneficiary was named as J D Parbery, and the account number given was that of the Julian Parbery Family Trust at the Bank of New Zealand, Christchurch. It is common ground that on or about that day this account was credited with $86,631.47. It is also common ground that this sum represented part of the proceeds of the sale of the West Wales property, comprising all of James’ share, all of Julian’s share and a small portion of the value of the share in the property owned by their mother, Mary Parbery.
[7] James’ claims against Julian and the Julian Parbery Family Trust are based on this transaction; in short James alleges that Julian orchestrated a transfer of his funds to Julian’s family trust, and is thus liable as a constructive trustee, and for breach of fiduciary duty. In the amended statement of claim the Julian Parbery Family Trust is also said to be liable to James as constructive trustee. Although the claim against the Julian Parbery Family Trust is not the subject of this application for summary judgment, it is necessary to record that it is James’ position that the trust received his money as a result of the actions of Julian, and that he has never received any part of it. Julian, on the other hand, says several months later the trust paid the entire sum to a company he and James then owned and operated, and ultimately James’ share was credited to his current account, thereby satisfying any obligation he or his trust had to James.
James’ claims against Julian
[8] James’ claim for summary judgment against Julian is pleaded in two causes of action. First it is claimed that by directing Collinson Forex to transfer a sum of money which included his share of the proceeds of sale of the West Wales property to the BNZ account of his family trust, and receiving that money into the account, Julian was constituted a constructive trustee to the extent of James’ share of the sum transferred.
[9] Alternatively, it is pleaded that “by having control and directing” Collinson Forex to pay the moneys to the BNZ account of the family trust without accounting or ensuring that the trust would account to James for his share of the money, Julian wrongfully deprived James of the sum of $40,000 and caused him to lose that sum.
The heading to this cause of action implies it is based on a fiduciary duty but the duty alleged is not pleaded.
[10] In both these pleadings it is the specific action of Julian in “directing Collinson Forex Limited” which is said to give rise to the fiduciary obligations respectively pleaded. The issue on this application is whether it is established that Julian gave that direction.
[11] Counsel referred to Frame v Smith,[2] in which Wilson J formulated three general characteristics of relationships which cumulatively may attract fiduciary obligations:
[2] Frame v Smith [1987] 2 SCR 99.
1. The fiduciary has scope for the exercise of some discretion or power.
2. A fiduciary can unilaterally exercise that power or discretion so as to
affect the beneficiary’s legal or practical interests.
3. The beneficiary is peculiarly vulnerable to, or at the mercy of, the fiduciary holding the discretion or power.
[12] This categorisation was adopted by the Court of Appeal in DHL International
(NZ) Ltd v Richmond Ltd.[3]
[3] DHL International( NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10.
[13] The first two characteristics describe the position and action of the fiduciary; Mr Kirkland submitted that the conduct of Julian was properly thus characterised and James was within the third element of the classification.
[14] In the causes of action against the first defendant the focus, therefore, is on Julian’s actions in bringing about the state of affairs which James maintains has deprived him of his money. In the causes of action against the trust the focus is on the actions of the trustees who are said to hold the funds on constructive trust,
relying on the principles enunciated in, for example, Neste Oy v Lloyds Bank Plc.[4] A
[4] Neste Oy v Lloyds Bank Plc [1983] 2 Lloyd’s Rep 658, cited in Goff & Jones, The Law of Restitution (3rd ed, Sweet and Maxwell, London, 1986) and noted in Elders Pastoral Ltd v BNZ [1989] 2 NZLR 180.
good deal of the evidence, and indeed argument on this application, was directed at the events which followed the depositing of James’ funds in the BNZ account owned by the Julian Parbery Family Trust and, in particular, the question of whether James has or has not in fact received those funds. On this application against Julian personally, it is only necessary to turn to an examination of those facts and reach conclusions on them if it is first established that Julian is liable to James, for breach of one or other of the equitable obligations pleaded.
Evidence relating to Julian’s actions
[15] As noted earlier, documents produced in evidence show that Giles Parbery orchestrated a transfer of James’ funds to Collinson Forex Limited, and that firm transferred the money to the BNZ account of Julian’s family trust. Neither of the documents indicate any participation by Julian in those two steps. In his first affidavit in support of this application James did not give any evidence about Julian’s actions in relation to the transfer of the funds to his family trust; nor did he in his affidavit in reply. In the former affidavit, however, he produced a copy of an email he had received from Giles Parbery.
[16] At the time James and Julian jointly ran a company which wished to purchase a new furnace from China and for that purpose it required funds. According to the email from Giles, Julian approached their mother, Mary to lend them funds as finance could not be raised in New Zealand. A decision was made to sell the West Wales property to provide the funds but if this did not occur sufficiently soon a short term advance would be made by Mary Parbery and Giles. In his email Giles said:
The plan was:-
If Laura was sold in time your and Julian’s share would be paid into an account (details provided by Julian) which I assumed was the Heatex Company account, but could have been the manufacturer (see attached email).
[17] Again, there was no indication of any action on Julian’s part in respect of these steps, apart from an expectation by Giles, as part of the plan, that the details of the account into which the payment was to be made would be provided by Julian.
There is no evidence before the Court on who actually gave the details of the destination bank to Collinson Forex.
[18] In the absence of direct evidence in relation to Julian’s involvement, Mr Kirkland invited me to draw an inference that he had in fact orchestrated the transfer of the funds to the BNZ account of his family trust. There are a number of facts from which, cumulatively, this inference might be drawn:
• The reference by Giles to Julian providing the details of an account to which the moneys would be paid.
• The fact that the moneys stayed in the trust’s account from the date of
payment in December 2004 until 24 July 2007.
• There is no evidence to show that Giles, the only person identified as acting in the funds transfer, knew the number of the trust’s bank account to pass on to Collinson Forex.
• Julian was on notice of the allegation that he directed the transfer of the money to the trust by paragraphs 12 and 14 of the statement of claim and the amended statement of claim, yet gave no evidence to reject that allegation.
• There is no evidence to show that the trust had any involvement whatever in the West Wales property, or the business.
• The deposit cleared an overdraft the trust had at the BNZ at the time.
• Julian would have known the bank account number.
The last two of these factors are tempered by two facts: transfer of Julian’s share of the proceeds, alone, would have been sufficient to clear the overdraft, and at the time James was also a trustee of the trust and might therefore also have known the BNZ account number.
[19] The orchestration of the transfer of James’ money to Julian’s family trust
account was not an act in isolation. It was the beginning of a series of steps. Once
in the account the money remained there for a prolonged period rather than being paid to James at once. If it has been accounted for at all, on which I make no finding, it has not been in cash but rather by an apparently unilateral course of conduct by Julian involving piecemeal payment of funds from the account of the trust to the company and, later again, adjustment of the current accounts of James and Julian by Julian without James’ knowledge, let alone consent.
[20] The explanation for this in evidence and submissions was less than convincing. There is evidence from which dishonesty on the part of Julian might be inferred, subject to the evidence withstanding scrutiny at trial. The transfer of James’ money to the trust in the first place is the first step in the handling of the money and although the entire course of action by Julian presently lacks a convincing explanation, it would be wrong in my view to draw an inference that Julian took that first step from untested evidence which, if ultimately accepted, could
form the foundation for findings of dishonesty on the part of Julian. In Sime v Bale,[5]
it was noted that where allegations of fraud are made, the proceeding may be inherently unsuitable for resolution by way of summary judgment. All the more so, in my view, where the Court is invited to draw inferences in order to establish a fundamental element of the conduct under review. In my view the evidence in this case must be tested at trial for the result to be safe.
Outcome
[5] Sime v Bale HC Whangarei CP34/95, 15 February 1996.
[21] I decline to enter summary judgment against the first defendant. The application is dismissed. Costs are reserved.
J G Matthews
Associate Judge
Solicitors:
Saunders & Co, Christchurch. Email: [email protected]
Parry Field Lawyers, Christchurch. Email: [email protected]
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