Park as Executor of the Estate of Stirling v Stirling HC Whangarei CIV 2009-488-57
[2010] NZHC 2304
•20 December 2010
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2009-488-57
IN THE MATTER OF Mining Permit # 41786 issued under the
Crown Minerals Act 1991
AND
IN THE MATTER OF an application for Judicial Review under Part
1 of the Judicature Amendment Act 1972
BETWEEN DESMOND JOHN PARK AS EXECUTOR OF THE ESTATE OF GRAHAM HERBERT STIRLING
Plaintiff
ANDMARGARET EVE BIRKBECK STIRLING First Defendant
Continued …
Hearing: 17 May 2010
Appearances: J L Foster for the Plaintiff
J G Ross for the First Defendant
L A Andersen for the Second Defendants
No appearance required for the Third Defendant
Judgment: 20 December 2010 at 10:00 a.m.
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 20 December 2010 at 10:00 a.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Counsel:
Ms J L Foster, Barrister, Auckland
Mr J G Ross, Barrister, Whangarei
Mr L A Andersen, Barrister, Dunedin
Copy to:Mr H L Dempster, Crown Law, Wellington
Mr G Bilkey (plaintiff’s instructing solicitor), Graham & Co., Solicitors, Auckland
Mr G Swanepoel (first defendant’s instructing solicitor), SwanLaw, Solicitors, WhangareiMr J D Polson (second defendants’ instructing solicitor), Solicitor, Dunedin
PARK V STIRLING AND ORS HC WHA CIV 2009-488-57 20 December 2010
Continued …
ANDBLAIR ANDREW STIRLING, BRENDAN HUGH STIRLING and JASON PAUL STIRLING
Second Defendants
ANDTHE ATTORNEY-GENERAL in respect of the MINISTER OF ENERGY
Third Defendant
[1] Graham and Brian Stirling were brothers. They carried on a quarry business on land near Kerikeri. In March 2003 they applied for a mining permit under the Crown Minerals Act 1991. The permit was necessary for the partnership business.
[2] Brian Stirling died on 23 September 2003, after all conditions for issue of the permit had been met, but before it was formally issued. The permit was issued on 13
November 2003. The holders were recorded in one part of the permit as “Graham Herbert Stirling and Brian Hugh Stirling (Deceased)” and in another part as “Graham Herbert Stirling and Brian Hugh Stirling (Estate)”.
[3] The first defendant, Margaret Stirling, is the widow of Brian Stirling and executor of his estate. By judgment dated 3 June 2005, Keane J awarded Mrs Stirling, as executor of her husband’s estate, a sum of approximately $355,000 on a claim for Brian Stirling’s interest in the partnership. The judgment sum was eventually paid but it remained in joint names.
[4] Graham Stirling died on 18 April 2007. The plaintiff, Mr Park, is executor of Graham Stirling’s estate. Mr Park brings this proceeding, as executor, claiming in effect that the judgment of Keane J means that Mrs Stirling has no interest in the mining permit and it should now be in Mr Park’s sole name as executor.
[5] The second defendants are Brian Stirling’s sons and Mrs Stirling’s stepsons. They claim that they are entitled to have the mining permit put in their names jointly with Mr Park. That claim is founded on a settlement of a claim under the Family Protection Act 1955 by the second defendants against Mrs Stirling as executor of their father’s estate. The second defendants settled in consideration of Mrs Stirling’s transferring to them such interest as she may have had in the permit “as Trustee and Executrix of the estate of Brian Hugh Stirling”.
[6] Although I heard a range of arguments in support of the rival contentions, in my judgment the primary inquiry is whether the judgment of Keane J, and satisfaction of it by Graham Stirling, satisfied any rights Mrs Stirling may have had, as executor of her husband’s estate or otherwise, in the mining permit. I am satisfied
that it did. My reasons are, in considerable measure, contained in the narrative of facts which are not materially in dispute.
[7] One other background matter requires noting before turning to the facts. The proceeding against the third defendant, the Attorney General sued on behalf of the Minister of Energy, was an application for judicial review of decisions said to have been made as to who should be recorded as the permit holders. This included a change to the names of the owners following Graham Stirling’s death in April 2007. The owners were then recorded as Mr Park as executor of Graham Stirling’s estate and Mrs Stirling as executor of Brian Stirling’s estate. Before the hearing, during a pre-trial conference, agreement was reached which enabled the third defendant to withdraw. The agreement, so far as relevant, as recorded in my minute of 14 May
2010, was: (1) the Crown will record the holder or holders of the mining permit in accordance with whatever determination the Court makes in respect of ownership of the permit; and (2) the plaintiff discontinued his application for judicial review.
The facts
[8] The brothers bought a quarrying business in 1974 and ran it in partnership. The quarry was at Redcliffs Road, Kerikeri. The brothers obtained licences to quarry the land under the Mining Act 1971. The Mining Act 1971 was replaced by the Crown Minerals Act 1991. The final licence issued under the Mining Act 1971 expired on 28 March 2003. This led to the application for the mining permit under the Crown Minerals Act 1991 and the grant of the permit which is in issue. I will come back to this shortly.
[9] The assets purchased by the brothers in 1974 for the quarry business did not include the land that was being quarried. The brothers bought the land in October
1986. They bought further land in 1994, subdivided the total then owned, and sold a portion of it. The portion sold was sold with an existing licence under the Mining Act 1971 to take basalt. The brothers continued their quarry business in partnership on the remaining land of approximately 25.5 hectares (“the land”). They had a licence to quarry greywacke on part of this land.
[10] On 14 March 2003, in anticipation of expiry of the existing licence on 28
March 2003, the brothers applied for a mining permit, as it was now called, under the Crown Minerals Act 1991. Both brothers signed the application, and following each of their names they wrote “(Partner)”. There was a fee payable to Crown Minerals of $1,687. This fee is recorded in partnership accounts for the year ended 31 March
2003.
[11] By letter dated 21 August 2003 Crown Minerals advised Graham and Brian Stirling that a decision had been made to grant the permit “subject to the provision of a Land and Mineral Status Report and the satisfaction of any recommendations arising from that report”. The report was sent to Crown Minerals by letter dated 29
August. The report notes, amongst other things, that the permit being sought was to cover the whole of the land then owned by the brothers (the 25.5 hectares). The report was sufficient to lead to the issue of the permit, without requiring any further action by the partners. The formal recommendation to issue the permit is dated 5
November 2003, and the permit itself is dated 13 November 2003.
[12] On 31 October 2003 Graham Stirling had telephoned an officer of Crown
Minerals. The note made by the officer records:
Brian Stirling has died suddenly.
His wife wants to extract his assets from the quarry business but this is going to be a slow process.
Graham wanted to know what he should do regarding the new permit application.
I advised to have it issued in both names and sort it out later.
[13] The permit, as issued, on the first page records the permit holder as “Graham Herbert Stirling and Brian Hugh Stirling (ESTATE), Redcliffs Road, KERIKERI”. On the backing sheet the permit is addressed “To GRAHAM HERBERT STIRLING AND BRIAN HUGH STIRLING (DECEASED)”. The permit was issued in respect of all of the land.
Mrs Stirling’s claim against Graham Stirling
[14] Mrs Stirling lodged a caveat against title to the quarry land. As a result Brian Stirling’s interest as a joint tenant with Graham Stirling did not pass by survivorship to Graham Stirling. On 9 March 2004 Mrs Stirling commenced a proceeding against Graham Stirling. The claim was made by Mrs Stirling “as executrix and trustee and sole beneficiary” of the estate of Brian Stirling. The amended statement of claim includes the following allegations:
5.At all material times the Deceased was in partnership with the Defendant under the name and style of B H & G H Stirling (“the Partnership’) and being a quarry operating business at Redcliffes [sic] Road, Kerikeri.
The Partnership was a 50/50 partnership.
6.An asset of the Partnership included the quarry at Redcliffes Road, Kerikeri being the land comprised and described in Certificate of Title 96B/579 (“the Land)” and upon which the Partnership business of quarrying was carried out.
The Land is registered in the name of B H & G H Stirling as joint tenants.
7.The joint tenancy has however been severed by the Partnership agreement between the Plaintiff and the Defendant and the provisions of Section 23, Partnership Act 1908 and the Land is now a partnership asset and has been treated as such by the Partnership in its books of account since the acquisition of the Land many years ago.
In addition in the Will the Plaintiff has treated the Land as being an asset of the Partnership.
8.That pursuant to Section 23, Partnership Act 1908 the Land is to now be held by the Defendant as trustee for the Partnership and thereby as tenants in common for the individual partners in accordance with the like proportions in which they are entitled to share the assets of the partnership (50/50).
Ultimately the Deceased’s particular interest in the Partnership devolves to the Plaintiff as sole beneficiary under this Will.
9. The Partnership was dissolved by operation of law on the 22nd day of
September 2002 upon the death of the Deceased pursuant to Section
36, Partnership Act 1908.
10.The Plaintiff has requested the Defendant to acknowledge that the land is an asset of the Partnership and to pay her a one half share of
the Partnership assets of the Partnership assets on behalf of the
Deceased but the Defendant has neglected or refused to do so.
…
12. The Defendant is in breach of Section 42 and 47, Partnership Act
1908 in that he has failed to account to the Plaintiff for the Plaintiff’s share of the Partnership.
13.The Defendant is also in breach of Section 45, Partnership Act 1908 in that he has failed to account to the Plaintiff for the Plaintiff’s share of profits of the Partnership after the dissolution of the Partnership.
[15] The relief sought by Mrs Stirling included the following:
(a)A declaration that the quarry at Redcliffes Road, Kerikeri is an asset of the partnership and that the Plaintiff is entitled to a one half share therein.
(b) An order that the Partnership be dissolved at the 22nd day of
September 2003.
(c)An order appointing an independent accountant as manager/receiver of the Partnership to prepare final accounts, value the assets of the partnership including the Land, and to wind up the Partnership and to distribute the assets/proceeds of sale of the Plaintiff and Defendant as tenants in common in equal shares and in accordance with the provisions of the Partnership Act 1908.
(d) An order that the Plaintiff be entitled to a share of the profits of the partnership from 22 September 2002 pursuant to Section 45, Partnership Act 1908.
[16] Graham Stirling contended that the land was not a partnership asset and that his brother’s interest as joint tenant passed to him by survivorship. Graham Stirling otherwise acknowledged, in effect, that his brother’s estate had an interest in the partnership.
[17] Following a defended hearing, with evidence over four days, Mrs Stirling’s claim led to the judgment of Keane J, delivered on 3 June 2005.[1] The claim of Mrs Stirling that was dealt with by Keane J was the claim advanced in the amended statement of claim, outlined above, with one modification in relation to the relief sought. This modification was to replace the claim for a share of profits of the partnership from the date of dissolution of it, pursuant to s 45(1) of the Partnership
Act 1908, with the alternative provided in s 45(1) of a claim for interest at 5% per annum on the estate’s share of the partnership assets. In other words, the claim advanced by Mrs Stirling and determined by Keane J was a claim for the full entitlement of the estate to its share of capital of the partnership together with interest in lieu of a share of profits from the date of Brian Stirling’s death (which was the date of dissolution).
[1] Stirling v Stirling HC Whangarei, CIV 2004-488-162, 3 June 2005.
[18] The hearing before Keane J, and his judgment, is focused principally on the question whether the land was a partnership asset. The Judge determined that it was. A chartered accountant who gave expert evidence for Mrs Stirling calculated that the value of Brian Stirling’s estate’s half share in the assets of the partnership was
$330,809. This included 50% of the value of the land, being $300,000. There was judgment in favour of Mrs Stirling for $330,809 together with the interest claimed at
5% per annum, amounting to $24,810.
[19] Although Keane J’s judgment dealt mainly with the question whether the land was a partnership asset, which was the central point of contention between the parties, there is no doubt, from the pleadings and the judgment that the claim was for an accounting for all of Brian Stirling’s half interest in the partnership, capital and interest in lieu of profits, and that this is what the judgment dealt with. This is the conclusion that was reached by Associate Judge Faire in a subsequent proceeding between Graham Stirling and Mrs Stirling. I will come to that decision, but before doing so some further aspects of Mrs Stirling’s claim and Keane J’s decision of direct relevance to the present claim require noting.
[20] It is clear that when Mrs Stirling’s claim was heard she and her advisers were aware of the fact that the partnership had mining licences in the past and, at the least, had an understanding that a mining permit under the new Act had been applied for by Graham and Brian Stirling, with the permit having been issued shortly after Brian Stirling’s death; or they at least had information which would have made that clear. This is demonstrated by the evidence in support of Mrs Stirling’s claim, some evidence she gave in the hearing before me and Graham Stirling’s evidence at the hearing before Keane J.
[21] The evidence in support of Mrs Stirling’s claim included expert evidence from a chartered accountant, Mr Mallett, and a valuer, Mr Nicholls. Mr Mallett reviewed financial statements for the partnership and commented on them. He produced an analysis of capital accounts which includes credits to each of Brian and Graham Stirling a sum of $1,000 for “transfer mining licence”. A statement of financial performance (income and expenses) for the period 1 April 2003 to 30
September 2003 (that is to say ending eight days after Brian’s death) includes payment of royalties, which are royalties paid to the Crown for the mining licence. There is an expense for “licences” for the year ended 31 March 2003 of $1,903 and, as Mr Andersen, for the second defendants acknowledged, this includes the fee paid to Crown Minerals of $1,687 for the application for the permit that is now in contention. The same statements include a further expense for licences of $648 for the six months ended 30 September 2003.
[22] Mr Nicholls, the registered valuer, was instructed to “value the quarry situate at Redcliffs Road, Kerikeri”. Mr Nicholls commented as follows:
Presently this property is operated as a small quarry, however it is obvious output is low and at present limited to clay over-burden and brown rock. [If] [i]t is considered as a quarry this property is near the end of its economic life and the highest and best of the land would be for lifestyle blocks. The quarry enterprise is dealt with more fully later in this report …
It is also noted the mining licence for the property has expired – 1 April
2003 and as at 23 October 2003 has not been renewed. The mining licence did not related [sic] to the total property but to 9.887 hectares …
Value of quarry
•This is not a unique source of greywacke rock in the district, there are local greywacke quarries available at Puketona and Stanners Road to name two;
•The output from this quarry has been low and the mining licence appears to have expired;
•[And there were further observations indicating low value in the quarry operation.]
Alternative use to quarrying
•It is considered that if placed on the open market this property would be most saleable as a lifestyle block subdivision proposal. As already explained adjoining zonings will permit more intensive
subdivision and there are some excellent potential house sites on the land close to Redcliffs Road.
[23] Mr Nicholls put a total value on the land of $600,000. This was brought into account in Mr Mallett’s assessment that the share of Brian Stirling’s estate was
$330,809. This was derived from an adjusted figure in the partnership loan account for Brian Stirling.
[24] The question of the method of valuation to determine the partnership share of
Brian Stirling’s estate was expressly addressed by Keane J as follows:
Value as quarry
[40] Finally, there is at least a question whether at the date of Brian Stirling’s death the land had, or has still, the value for quarrying that Graham Stirling maintains that it has. He may in 2003 have obtained a further licence to quarry for greywacke for the next 40 years, but how well that accords with the actual capacity of the land may be another issue.
[41] Alistair Nicholls, who valued the land on behalf of Margaret Stirling, ascribed value to it not as land for quarrying, but for its potential for sale as three or four lifestyle blocks. His assessment was that the quarry was small, that it had a low output, and that it was near the end of its economic life. Mr Nicholls may not have expertise in geology or quarrying, but he is highly experienced, and he saw what he saw. His evidence was not challenged, until I put it to Graham Stirling, who answered by assertions.
[42] On the evidence I cannot resolve this question, and I do not need to, but the fact that it is at large does not assist Graham Stirling.
[25] Keane J’s reference at [40] to “a further licence to quarry for greywacke for the next 40 years” is a reference to the permit in question in the present proceeding. At [42] the Judge referred to a question “that is at large”. This was the question whether there was more value in the land for quarrying or if sold for lifestyle blocks. It is apparent that what the Judge was saying there was that the question remained “at large” because of the absence of any evidence to challenge Mr Nicholl’s opinion. There was nevertheless a determination by the Judge, binding on both parties, on the question of value in respect of all partnership assets and, more particularly, the full value of the half share of Brian Stirling’s estate.
[26] I should also note that at [43] Keane J said that Mr Nicholls had valued the land at $635,000. Examination of Mr Nicholls’ report, annexed to an affidavit,
indicates that this was an error. The land value assessed by Mr Nicholls was, as recorded above, $600,000. It is obvious that the Judge inadvertently took the final figure in Mr Nicholls’ assessment of $635,000 which included an ascribed value for improvements. Those were dealt with separately in the complete appraisal of all partnership assets by Mr Mallett. The error made no difference to the result, but for the purpose of the present proceeding it required clarification.
[27] In the hearing before me, Mrs Stirling was cross-examined on questions relating to the permit, also referred to as “the licence”. At one point there was the following:
Q.During the hearing before Justice Keane you considered your – the evidence that was presented on your behalf, was that the land was worth more in subdivision blocks than as a quarry, wasn’t it?
A. Now that I can answer. I was in the United States when that property – now this can be backed up by my passport – when that property – land property of the quarry was valued, I was in the USA. There were two people as far as I know valuing. The valuer and Graham Stirling. I don’t know how much experience that the valuer had about quarries and what could be underneath the ground in minerals, because by the time I came back that valuation was done and I remember thinking it was very low, because that – Fulton Hogan would in my opinion would not ever have been interested in that extra land had it not had a lot of greywacke rock in it, because as the Northland developed that would be very needed. I remember thinking that was a low, low estimate.
Q. But that low estimate was the value presented to Justice Keane on your behalf?
A. It was already in yes, but that was my opinion of it.
[28] Keane J’s judgment was not related solely to an award to Brian Stirling’s estate of the value of the land. There is no doubt from the judgment as a whole that the award was in respect of all interests Brian Stirling had in the partnership.
Family protection claims by second defendants
[29] Brian Stirling’s will left his entire estate to Mrs Stirling. Not long after Brian Stirling’s death one of his sons, the second defendant Brendon Stirling, consulted Jack, Riddett, Tripe, solicitors, for advice in respect of his father’s estate. On 10
February 2004, Jack, Riddett, Tripe wrote to the solicitors for Brian Stirling’s estate and advised that the second defendants were seeking to have their father’s “interest in the quarry” transferred to them. A claim under the Family Protection Act 1955 was issued in the name of one of the second defendants, Jason Stirling, on 28
October 2004. His brothers Blair and Brendon were subsequently joined as plaintiffs.
[30] In or about February 2004 Mr Ross had been instructed to act for Mrs Stirling. It appears that the instructions he received then were to act for Mrs Stirling in the claim that was commenced during 2004 against Graham Stirling (that is to say the claiming leading to the Keane J judgment) and also to act in respect of the family protection proceedings heralded by the letter from Jack, Riddett, Tripe of 10
February 2004. Correspondence ensued between Mr Ross and Jack, Riddett, Tripe over an extended period from February 2004 until settlement of the family protection claim in March 2007. Jack, Riddett, Tripe were made aware of the differences that had arisen between Mrs Stirling, as executor of Brian Stirling’s estate, and Graham Stirling in respect of the partnership. I will note some of the correspondence, before and after Keane J’s judgment, and through to the settlement of the family protection claim.
[31] On 24 February 2004 Mr Ross wrote to Jack, Riddett, Tripe. He said that the value and assets of the estate had not been finalised and that there appeared to be a dispute with Graham Stirling as to whether or not the quarry was an asset of the partnership. Mr Ross continued in his letter:
I note that the quarry has been treated as an asset of the partnership and the partnership accounts for many years, and certainly Mr B H Stirling in his Will treats the Quarry as an asset of the partnership and it is difficult to see how Mr G H Stirling can now advance this proposition that it is not an asset of the partnership.
[32] On 18 February 2005 Mr Ross wrote to Jack, Riddett, Tripe forwarding a copy of a letter from McLeod and Partners, solicitors for the estate of Brian Stirling. The letter from McLeod and Partners, dated 16 February 2005 records one of the assets of the estate of Brian Stirling as including:
Contingent one-half share in the quarry property at Redcliffs ) estimated Road, Kerikeri, CPNA96B/579 (subject to mortgage to ANZ ) value Banking Group Ltd). One-half share in Stirling Brothers ) $330,000
Partnership.
[33] On 29 May 2006 Mr Ross wrote to Jack, Riddett, Tripe “without prejudice”.
I have been advised that Mr [Graham] Stirling is presently negotiating an agreement for sale and purchase with Fulton Hogan and a sufficient deposit is to be paid to satisfy the judgment [in favour of Mrs Stirling] in full. If this eventuates then my client will be in a position to settle your client’s claim.
As you know from McLeod and Partner’s letter dated 16 February 2005 the amount of the estate is estimated at $330,000. The final judgment was for
$355,619 plus costs.
You have offered to settle the matter in the sum of $100,000 and I have counter-offered in the sum of $75,000 and I am waiting to hear back from you in respect to that counter-offer.
[34] There was correspondence from Jack, Riddett, Tripe querying whether the full value of the quarry partnership had been ascertained. This was followed by a letter of 7 August 2006 from Mr Ross to Jack, Riddett, Tripe saying, amongst other things:
I enclose a copy of affidavits of Mr Nicholls, Registered Valuer and Mr Mallett, Chartered Accountant. I also enclose accounts prepared by Byers and Co. at date of dissolution of partnership/death.
This is the evidence which was produced as to valuation of the partnership at the hearing and which was accepted by Justice Keene [sic].
In other words my client’s one half share of the partnership was valued at
$330,809 and she received the further sum of $24,810 in respect of profits between date of death and date of hearing. This valuation includes land, plant and other assets shown in the accounts.
…
It may be that Mr Stirling has sold the quarry for a much greater amount than was indicated by Mr Nicholls’ valuation but this matter is “res judicata” and there is probably nothing my client can do about this.
[35] Negotiations between Mr Ross and Jack, Riddett, Tripe continued through to March 2007 when settlement was recorded in a deed. The deed is between Mrs Stirling as trustee and executrix of the estate of Brian Stirling and the third defendants. Provisions of this deed include the following:
a) Recital A records: “Margaret Eve Birkbeck Stirling as trustee and executrix of the estate of Brian Hugh Stirling (“the estate”) may be a holder of mining permit number 41786 issued under the Crown Minerals Act 1991 on 13 November 2003 (“the chose in action”)”.
b)Recital G records: “This Deed witnesses that [Mrs Stirling] transfers all of her part of the interest in Mining Permit Number 41786 (whatever that interest and entitlement may be) to [the second defendants] to be held by them as tenants in common in equal shares”.
c) The operative clauses 1 and 2 provide for transfer of the permit to the second defendants in settlement of their claims under the Family Protection Act 1955.
d)Clause 3 provides: “[Mrs Stirling] gives no warranty as to ownership of the Mining Permit Number 41786 or the value thereof and [the second defendants rely] solely on their own judgment in this regard”.
e) Clause 4 provides: “For the purpose of clarification, the parties accept that [Mrs Stirling] is entitled to payment of the judgments in her favour against Graham Herbert Stirling … together with interest and orders for costs thereon without deduction in favour of [the second defendants].
Graham Stirling’s claim against Mrs Stirling : judgment of Associate Judge Faire
[36] In August 2006 Graham Stirling, acting on his own behalf, issued proceedings against Mrs Stirling as executor of Brian Stirling’s will. The essence of the relief sought by Graham Stirling was for the taking of final partnership accounts following the dissolution of the partnership on his brother’s death.
[37] Mrs Stirling applied to strike out the claim. The application came before
Associate Judge Faire, who delivered a decision on 22 November 2006.[2]
[2] Stirling v Stirling HC Whangarei, CIV 2006-488-409, 22 November 2006.
[38] The Judge recorded the grounds of the strike out application as follows:
a)The application does not disclose any reasonable cause of action or defence and it deals with matters which are res judicata between the parties;
b) The application is an attempt to relitigate matters between the parties and is an abuse of process of the Court;
c)The application also attempts to overturn settled accounts which the parties have acquiesced in and acted on; and
d) Appearing in the affidavits of John Gerard Ross and William
Edward Mallett sworn and filed herein.
[39] The Judge noted that the abuse of process alleged by Mrs Stirling was an attempt to relitigate matters which had been determined by the judgment of Keane J delivered on 3 June 2005. The Judge recorded the relevant particulars of the claim that had been advanced by Mrs Stirling, and the relief sought, in the proceeding that led to the judgment of Keane J, and as recorded in this judgment at [38].
[40] The Judge considered evidence of Mr Ross, which was given in opposition to the claim by Graham Stirling, and analysed Keane J’s judgment, to determine the matters that were in issue in the proceeding before Keane J. Following this the Judge held, at [18]:
… The judgment of Keane J establishes what the entitlement of the deceased partner’s estate is in respect of the partnership assets. Judgment has been entered for the sum which the Judge has found to be due to that deceased partner’s estate. The inquiry sought by the originating application [of Graham Stirling] seeks to change the sum which Keane J has found to be due to the deceased partner’s estate. That could only happen if the very issues which were before the Judge were retried.
[41] The Judge then referred to the well-known passage in Henderson v
Henderson[3] as follows:
[3] (1843) 3 Hare 100; 67 ER 313 (HL).
Where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of the matter which might have been brought forward as part of the subject and contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of the litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
He also cited a statement of the Court of Appeal in Bank of New Zealand Ltd v Savril Contractors Ltd[4] reaffirming the Henderson v Henderson principle in New Zealand, and noting that it had recently been explained by Lord Bingham of Cornhill in Johnson v Gore Wood & Co (a firm).[5]
[4] [2005] 2 NZLR 475 at [109].
[5] [2002[ 2 Act 1 at 23.
[42] Graham Stirling’s claim was struck out as an abuse of process because it was an attempt to re-litigate issues already dealt with. In other words, it was struck out on the basis that the judgment of Keane J had dealt with all issues relating to the partnership.
[43] The solicitors acting for the second defendants in the family protection claim were aware of the claim brought by Graham Stirling, the fact that Mrs Stirling was applying to strike it out, and the fact that it was struck out. In addition, Mrs Stirling brought the application to strike out Graham Stirling’s claim with knowledge, through her counsel, that the second defendants, as part of their family protection claim, were contending that the judgment of Keane J had not dealt with claims in respect of the mining permit. The second defendants were in fact claiming to be entitled to an interest in the mining permit as “equitable beneficiaries”.
Submissions for the parties
[44] The primary submission for the plaintiff was that, as a consequence of Keane
J’s judgment, and the eventual satisfaction of it, all interest of the estate of Brian
Stirling in the permit passed to Graham Stirling. Ms Foster, for the plaintiff, advanced alternative arguments in support of the same conclusion.
[45] Mrs Stirling did not take any steps to defend the claim until a few days before the hearing. The active defence had been left to the second defendants whose interests were most obviously at risk. Leave was granted for a defence to be filed by Mrs Stirling three days before the hearing. Mr Ross, for Mrs Stirling, advised that Mrs Stirling had decided to become actively involved because of a perceived risk in respect of an adverse award of costs.
[46] Mr Ross nevertheless advanced submissions in opposition to the plaintiff’s claim. Mr Ross submitted that the mining permit was not in issue in the proceedings dealt with in Keane J’s judgment. The principal ground for this submission was that the permit was not a partnership asset because it did not come into existence until after the partnership had been dissolved by Brian Stirling’s death on 23 September
2003. Mr Ross also submitted that the fact that the permit was issued in the names of Graham Stirling and the estate of Brian Stirling and, implicitly in that, not in the names of the partners as such, meant that the permit was not an asset of the partnership.
[47] It was also submitted that the permit could not be a partnership asset because Graham Stirling had positively argued that it was not and because, it was submitted, he had acquiesced in the issue of the permit with Brian Stirling’s “estate” recorded as one of the owners. These are, with respect, make-weight arguments. What Graham Stirling may have argued is not relevant. He also argued that the quarry land was not a partnership asset and Keane J found firmly against Graham Stirling on that contention having regard to, amongst other things, the arguments advanced by Mr Ross on behalf of Mrs Stirling. There is no evidence to support a contention of acquiescence, and even if there was, it would go no further than the first point.
[48] The essence of Mr Andersen’s submissions for the second defendants was as follows:
(a) That part of the grant [of the permit] that referred to “Brian Hugh Stirling (estate)” is a grant to Margaret Stirling as the executor of the estate.
(b) The grant to Margaret Stirling is not affected by the rules of survivorship as Brian Stirling was dead when the grant was made.
(c)The permit derives from the partnership and the terms of the grant constitute distribution of partnership property.
(d) There is no basis on which Graham Stirling (or his estate) can acquire the permit to be transferred to him as he has not accounted for the value of the half share of the permit that would be transferred to him.
(e) Margaret Stirling is required to transfer the permit to the second defendants pursuant to the deed of settlement dated 23 March 2007
… subject to the Minister’s consent …
Discussion
[49] The first question is whether the permit issued in November 2003 was an asset of the partnership, or an asset derived from the partnership. This is not to be determined by the matters advanced in the submissions for the defendants. These are matters of form only. The fact that the permit, when formally issued, was issued variously in the names of Graham Stirling and “Brian Hugh Stirling (Deceased)” and “Brian Hugh Stirling (Estate)” is not determinative of ownership. When issued in this form by Crown Minerals, on behalf of the Minister, Crown Minerals was not purporting to determine questions of ownership. Nor could Crown Minerals determine questions of ownership.
[50] The same applies to the submission that, because the formal permit was not issued until after Brian died, this meant, coupled with the way in which the names were recorded, that there had been a distribution of Brian’s interest in the permit, as a partner, to the executor of his estate. This is not what occurred as a matter of law.
[51] When Brian died the partnership already had an interest in the permit which was simply in the process of being given final form through internal processes in Crown Minerals. The permit had been applied for when both partners were alive; the application was made by Graham and Brian Stirling expressly as partners; it was an essential partnership asset; it was to replace the existing licence; it related to all of
the land which was held to be a partnership asset; expenses relating to it were met from partnership assets when both partners were alive; previous licences had been dealt with in the same way; all things required to be done by, or on behalf of, the partners had been done by 29 August 2003, before Brian had died, when the land and mineral status report was sent to Crown Minerals. This last point, by itself, demonstrates the lack of substance in the defendants’ arguments based on form and dates. The land and mineral status report was sent to Crown Minerals over three weeks before Brian died. The formal permit could have been issued before he died, but no doubt that did not occur simply because it was processed in the normal way by a busy government department. The point was effectively acknowledged, although not in as many words, by a submission of Mr Andersen when he said:
The permit would have been a partnership asset if it had existed prior to the dissolution of the partnership [by Brian’s death] even though the previous licence had not been shown as an asset of the partnership accounts …
[52] In the course of his oral submissions Mr Andersen acknowledged that the case can properly be approached as if the permit had been issued to Graham and Brian Stirling when Brian Stirling was alive. On that basis, Brian’s subsequent death would have meant that s 92(2)(a) of the Crown Minerals Act would have applied. It is as follows:
Except as expressly provided otherwise in the conditions of a permit,—
(a) On the death of the holder of a permit, the permit vests in the personal representative of the holder as if the permit were personal property, and he or she may deal with the permit to the same extent as the holder would have been able to do so; …
[53] For the reasons recorded above, I am satisfied that Mr Andersen acknowledgement was properly and responsibly made. The result is that the permit was an asset of the partnership and, therefore, included in the assets of the partnership in respect of which Mrs Stirling, on behalf of Brian Stirling’s estate, sought an accounting from Graham Stirling.
[54] The second question, and the remaining question, is whether Graham Stirling, or his estate, became sole owner of the permit as a consequence of satisfaction of the judgment in favour of Mrs Stirling. And that is the way in which the question needs
to be framed. The question is not whether Keane J expressly addressed matters relating to ownership of the permit, but whether the effect of the judgment is that Graham Stirling became sole owner.
[55] I am satisfied that the effect of Keane J’s judgment is that Graham became the sole owner. In large measure, this question has already been determined by Associate Judge Faire. The Judge was not required to give express consideration to questions of ownership of the permit. And the focus, in terms of the case being run by Graham Stirling, in a practical sense, was on the question whether he could bring any further claims relating to the partnership. But the conclusion of the Judge was that all claims that were capable of being disposed of in respect of ownership of partnership assets had been disposed of by the judgment of Keane J.
[56] I use the expression “disposed of” to cover claims expressly dealt with and those which may not have been expressly referred to but which, in accordance with the principle in Henderson v Henderson, should have been brought before the Court for determination by Keane J. In relation to the permit, I am satisfied that it was an issue in fact raised before Keane J and dealt with in a manner resulting in transfer of Brian Stirling’s half share to his brother. This is made clear by the passages in Keane J’s judgment earlier set out, consideration of Mrs Stirling’s pleadings, and the evidence.
[57] Mrs Stirling, either directly or through her counsel, accountant and valuer, elected to make a claim for half of all partnership assets based on the market value of the land, sold as lifestyle blocks, plus the value of other tangible assets of the partnership. In addition, there was a claim for interest in lieu of an accounting for profits. In other words, quite simply, it was a claim for an accounting in respect of all partnership assets and profits.
[58] Mrs Stirling could have quantified her claim in a different way. In particular, and as Keane J expressly adverted to, she could have made a claim based on the value of the quarry partnership business as a going concern. A conscious decision was made, by or on behalf of Mrs Stirling, not to pursue that option. That was her right. Had the alternative of valuation as a going concern been pursued, all questions
relating to the permit now in issue would have to have been brought into account. And they would have to have been brought into account either for or against both partners.
[59] The result is that Mrs Stirling received, by a money payment, an accounting by Graham Stirling for Brian Stirling’s entire interest in the partnership. The consequence of that is, as a matter of law, all of Brian Stirling’s half share in the partnership assets, including any held by the executor of his estate, passed to Graham Stirling, or to Graham Stirling’s estate. This includes the interest in the permit.
[60] The fact that the second defendants were not parties to the proceeding leading to Keane J’s judgment does not mean that it remains open for them to advance claims relating to the permit. There are two reasons. One is the point already dealt with; Brian Stirling’s interest in the permit, or that of his estate, was transferred from Mrs Stirling, as executor, to Graham Stirling. The second is that the only basis upon which the second defendants claim to have an interest is through Mrs Stirling and Mrs Stirling is directly bound by the decision of Keane J. The second defendants claim an interest through Mrs Stirling pursuant to the deed of settlement of the family protection proceeding. It will be of no comfort to the second defendants, but that deed expressly records, as earlier set out, that Mrs Stirling was not giving any warranty that she had any interest in the permit capable of being transferred to the second defendants.
Result
[61] There is a declaration that the owner of mining permit number 41786 issued under the Crown Minerals Act 1991 on 13 November 2003 and which originally recorded the permit holder as “Graham Herbert Stirling and Brian Hugh Stirling (Estate)” is now owned by Desmond John Park of Kerikeri, as executor of the estate of Graham Herbert Stirling.
[62] There is a declaration that the first defendant, Margaret Eve Birkbeck
Stirling, and the second defendants, Blair Andrew Stirling, Brendon Hugh Stirling
and Jason Paul Stirling, have no interest in permit number 41786 and no claim on any proceeds of quarrying undertaken pursuant to that permit.
[63] In accordance with the agreement between all parties, the third defendant is to record the plaintiff as the permit holder.
[64] If the plaintiff wishes to pursue an application for costs a memorandum should be filed and served, with responses for the defendants to be filed and served
four working weeks after receipt of the plaintiff’s memorandum.
Peter Woodhouse J
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