Perriam v Wilkes
[2012] NZHC 1879
•6 August 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-425-000284 [2012] NZHC 1879
BETWEEN WENDY JOY PERRIAM Plaintiff
ANDLAWRENCE ERNEST WILKES First Defendant
ANDSTEPHEN JOHN BRADSHAW Second Defendant
ANDALEXANDER MCLENNAN WILSON Third Defendant
ANDLESLEY MARGARET INSTONE Fourth Defendant
ANDJUDITH ELEANOR FLETT Fifth Defendant
ANDQBE INSURANCE (INTERNATIONAL) LIMITED
Third Party
Hearing: On the papers
Counsel: S Callanan for Plaintiff
D J Chisholm for F T Perriam
Judgment: 6 August 2012
RESERVED JUDGMENT OF WOOLFORD J [as to continuation of restraining order]
This judgment was delivered by me on Monday, 6 August 2012 at 3:00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: Lewis Callanan, Auckland
Hornabrook Macdonald, Auckland
Copy to: D J Chisholm, Auckland
PERRIAM V WILKES & ORS HC AK CIV 2009-425-000284 [6 August 2012]
Introduction
[1] The plaintiff issued these proceedings against the partners of an Invercargill law firm known as Macalisters which acted for her husband, Mr Mark Perriam, in setting up a number of companies and trusts to hold a range of business assets. She alleges that Macalisters knowingly set out to defeat her interests in relationship property and thereby breached fiduciary duties owed to her and were guilty of equitable fraud.
[2] In a judgment dated 11 August 2011, Venning J allowed an application for the joinder of the plaintiff’s father-in-law, Mr Frank Perriam, who had received two sums of money from Macalisters in 2008. The Judge ordered the plaintiff to file and serve an amended statement of claim particularising her claim against Mr Frank Perriam by 24 August 2011 (later extended to 2 September 2011). In a separate judgment on 18 August 2011, Venning J made an order restraining the solicitors acting for Mr Frank Perriam from disbursing any part of the sum of $263,362 held to the credit of Mr Frank Perriam pursuant to s 43 of the Property (Relationships) Act
1976.
[3] The plaintiff however chose not to file an amended statement of claim particularising her claim against Mr Frank Perriam and in a judgment dated
15 December 2011, I struck out his name as the sixth defendant. In the same judgment, I also dismissed Mr Frank Perriam’s application to discharge the restraining order made by Venning J on 18 August 2011. I did so largely on the basis of what I thought was a concession by his counsel that the funds at issue may be relationship or separate property and accordingly, the plaintiff may have an interest in them as the wife of Mr Frank Perriam’s son, Mr Mark Perriam. I was mistaken in believing that such a concession had been made by counsel.
[4] There are proceedings in the Family Court involving the plaintiff and Mr Mark Perriam in which the plaintiff claims that the sum of $263,362 is either relationship or separate property but, in any event, claims that the entire sum should be paid out to her.
[5] Upon receipt of my judgment, counsel for Mr Frank Perriam made an immediate application to recall my judgment. Although received by the High Court on 16 December 2011, unfortunately I did not become aware of the application until February this year after the Christmas/New Year vacation.
[6] I held a telephone conference with counsel on 16 March 2012 and gave counsel leave to file further memoranda. I subsequently considered these memoranda. There has also been a further development of significance. On 13 June
2012, Associate Judge Gendall struck out the plaintiff’s fourth amended statement of claim in its entirety as disclosing no tenable cause of action and ordered the plaintiff to pay costs to the first to fifth defendants. The plaintiff has applied for review of Associate Judge Gendall’s decision.
[7] Following Associate Judge Gendall’s decision, I held a further telephone conference with counsel on 28 June 2012. At the request of counsel for the plaintiff, I gave her leave to file a further memorandum. On 12 July 2012, Ms Callanan filed another affidavit from the plaintiff sworn on 10 July 2012 and a memorandum dated
12 July 2012. In response, counsel for Mr Frank Perriam filed a fourth affidavit from Mr Mark Perriam and a memorandum, both dated 19 July 2012. I have also considered this new material.
Application for recall of judgment
[8] Rule 11.9 of the High Court Rules provides that a Judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed. My judgment has not been sealed. Technically, it is therefore able to be recalled. However, Courts have consistently restricted the situations in which such a power can be exercised in recognition of the need for finality in litigation at first instance.
[9] The Court of Appeal confirmed in Erwood v Maxted[1] that where a party seeks to recall a judgment not falling within the accidental slip or omission rule, the criteria set out in Horowhenua County v Nash (No 2)[2] are to be followed and strictly applied.
[1] Erwood v Maxted (2010) PRNZ 466 at [23].
[2] Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633.
[10] The third broad category of cases, identified in the case law, in which a judgment not perfected may be recalled is where for some other very special reason justice requires that the judgment be recalled. An example of this third category is where a judge has misapprehended counsel’s submissions.[3] This is similar to the present case. I therefore consider I have jurisdiction to recall that part of the judgment dismissing Mr Frank Perriam’s application to discharge the restraining
order made by Venning J on 18 August 2011.
Fresh application to discharge order
[3] Cynotech Securities Ltd v People Ltd (No 2) HC Auckland CIV-2008-404-1559, 4 March 2009.
[11] Because of the further development of significance noted above in the form of Associate Judge Gendall’s judgment of 13 June 2012, I am of the opinion that instead of dealing with the matter as an application for recall of my judgment, I am alternatively able to view it as a fresh application to discharge the restraining order. In his judgment dated 18 August 2011, Venning J reserved leave to revisit the order.
He stated:[4]
... I am conscious that this matter has been dealt with at short notice. Whilst I heard submissions it was not fully argued with the benefit of reference to the amended claim against Frank Perriam and the other pleadings. I reserve the position of Frank Perriam to revisit the order if necessary, particularly following the outcome of the adjourned strike out application in this Court.
[4] Perriam v Wilkes HC Auckland CIV-2009-425-284, 18 August 2011 at [23]
[12] Not only did the plaintiff choose not to file an amended claim against Mr Frank Perriam, following which I struck Mr Frank Perriam out as the sixth defendant, but the latest version of the statement of claim has been struck out in its
entirety.
Mr Frank Perriam’s submissions
[13] The funds currently restrained total $263,362. They are what remain of two payments of $201,404 and $84,750 totalling $286,154 received by Mr Frank Perriam from Macalisters in July 2008. That much is not contested.
[14] Mr Frank Perriam states that when he first received the funds he did not know what the payments were for or why they had been made apart from knowing the funds had been paid to him at the direction of his son, Mr Mark Perriam. He states that he put the funds on term deposit and awaited a direction from his son about what he might do with them.
[15] Mr Lawrence Wilkes, a partner of Macalisters and the first defendant, states that the larger payment of $201,404 was half of the sum of $402,808, received from the Perron Group and receipted by Macalisters into the ledger of the Colorado Property Trust on 28 July 2008 which was paid out on the same date to Mr Frank Perriam as a distribution for Mr Mark Perriam. The second payment of $84,750 was received from an Auckland firm of solicitors, Russell McVeagh, and receipted by Macalisters into the ledger of Mr Mark Perriam personally. It was received by Macalisters on 16 June 2008 and paid out to Mr Frank Perriam as a repayment on 1
July 2008.
[16] As to the origin and nature of the sum of $201,404, Mr Mark Perriam states that he considers the funds to be held on behalf of the Perriam beneficiaries of the Colorado Property Trust and not for himself personally. He acknowledges he was giving directions to his father in respect of the funds paid to him although the directions were for the benefit of the Perriam beneficiaries of the Trust.
[17] Mr Mark Perriam states that the Colorado Property Trust was established by Deed of Trust dated 20 August 1999. The Trust was established at his instigation and that of his business partner, Mr Cameron Marsh, on advice received from Deloittes, chartered accountants. The Trust was set up as a trading entity. It purchased investment properties on capital account from companies in the Perron Group, a group of companies involved in property development. It was intended that the
Trust would purchase and hold residential properties long term and rent them out. The structure was, according to Mr Mark Perriam, of benefit to both the Trust and the Perron Group. The Trust purchased properties on valuation and held them on capital account. The purchase prices received by the Perron companies reduced high interest and second mortgage debt. The Perron companies had previously held the properties on revenue account.
[18] Mr Mark Perriam confirms that the primary beneficiaries of the Colorado Property Trust were family members associated with himself and Mr Marsh, in particular their children, grandchildren and themselves. Neither the plaintiff nor Mr Marsh’s wife were beneficiaries. He states that no relationship property has ever been transferred into the Trust following the Trust’s settlement. In addition, he confirms that neither Mr Marsh nor himself have transferred any of their separate property into the Colorado Property Trust. The Trust has also never bought property or assets that were Mr Mark Perriam’s relationship or separate property. He states that all of the transactions made by the Trust have been normal commercial transactions for value. The balance sheet of the Colorado Property Trust as at 31
March 2006 shows that the Trust assets at that time were substantially made up of advances to the Perron companies. Following the collapse of the property market in
2007, and the receivership and/or liquidation of the companies in the Perron Group, the advances were, by and large, unrecoverable. The only funds that the Colorado Property Trust ultimately secured were the funds that were paid through Macalisters’ bank account in July 2008.
[19] Mr Mark Perriam said that at the time of the transfers both he and Mr Marsh were aware that their personal guarantees could be called up by financiers of the Perron companies as the global financial crisis worsened. As trustees of the Colorado Property Trust they wished to ensure that any distributions made from the Trust were not simply for their benefit but for the benefit of their respective family beneficiaries. The Trust Deed allowed the Trust to maintain separate funds for the benefit of the Marsh Beneficiaries on the one hand and for the benefit of the Perriam beneficiaries on the other. They, accordingly, resolved that 50 percent of the benefit of the funds received by the Trust would be paid and held for the benefit of the Marsh beneficiaries, while 50 percent would be paid and held for the benefit of the
Perriam beneficiaries. It is for that reason that the funds received were divided in two and paid to their respective fathers for the benefit of their respective family beneficiaries.
[20] As to the origin and nature of the sum of $84,750, it appears from records provided by Russell McVeagh that it was essentially half of the net proceeds of sale of a storage facility owned by one of the companies in the Perron Group, Perron Storage Limited.
[21] Mr Wilkes states that after discussion it was treated by Macalisters as a repayment by Mr Mark Perriam to Mr Frank Perriam of advances made to Mr Mark Perriam or to Mr Mark Perriam and the plaintiff over the years. Mr Wilkes annexes as an example a copy of a deed of acknowledgement of debt dated 29 July 1994 in respect of a payment of $71,000, which is signed by both Mr Mark Perriam and the plaintiff and is addressed to Mr Frank Perriam. Mr Frank Perriam states that the money had never been repaid.
Plaintiff ’s submissions
[22] Counsel for the plaintiff notes that it is not contested that the sum of
$263,362 is held by Mr Frank Perriam at the direction of Mr Mark Perriam. She states that it is also not contested that the sum of $263,362 was derived from the Colorado Property Trust and the Perron Group of companies which were all set up after the plaintiff’s marriage to Mr Mark Perriam.
[23] The plaintiff submits that the Trust and companies are relationship property and any distribution of money to Mr Mark Perriam via any of these entities is relationship property in terms of s 8(e) of the Property (Relationships) Act, which provides that all property acquired by either spouse after their marriage began is relationship property. The plaintiff also points to s 9 of the Act, which provides that all property of either spouse that is not relationship property is separate property. Accordingly, she submits that the sum of $263,362 must be either relationship property or separate property given the statutory definition.
[24] The plaintiff states that when she first married Mr Mark Perriam, the only asset they owned was the family home at 18 Scarborough Terrace, Parnell. When Marcam Developments Limited (later renamed Perron Developments Limited) was set up in 1995 as a property development company, the family home provided the security for an all obligations guarantee in favour of Marcam. She states that the property development business could not have carried on without the security provided by the family home.
[25] The plaintiff also states that the last home she lived in at 40 Godley Lane, Albany provided security for Marcam’s borrowing right up until 2010 when the property was sold by mortgagee sale.
[26] As to the Colorado Property Trust, the plaintiff states that the loans which initially allowed the Trust to purchase two units in Birkenhead came from Marcam. She therefore submits that she has funded Marcam through an all obligations guarantee and in turn has funded the Trust. The plaintiff believes that all of the properties purchased by the Trust are relationship property because under the Property (Relationships) Act all property acquired during her marriage is by definition relationship property. She also believes these properties were ultimately funded through the use of security over her properties.
[27] There was no argument as to whether Mr Mark Perriam’s rights as a beneficiary or as trustee of the Trust were property or relationship property for the purposes of the Act.[5] Whether value could be attributed to Mr Mark Perriam’s directorships in the Perron companies and whether they were relationship property was also not advanced.[6]
[5] Nation v Nation [2005] 3 NZLR 46 (CA).
[6] Walker v Walker [2007] 2 NZLR 261 (CA).
[28] As to the second sum of $84,750, the plaintiff states that it is not true that it represents a repayment of a loan to Mr Frank Perriam. In her most recent affidavit she annexes a copy of a cheque book record of a payment of $50,000 to “FT
Perriam” on 31 December 2003 and states that on that date she was told by her
husband that the cheque was the last repayment under a loan from Mr Frank Perriam arranged on 29 July 1994 and that they did not owe any further monies to him.
[29] The plaintiff submits that the restraining order is not dependent on a statement of claim being filed against Mr Frank Perriam because she states that the sum of $263,362 currently being restrained has nothing to do with Mr Frank Perriam as he asserts no ownership to the same. The plaintiff states that she has made a claim to the sum of $263,362 in the Family Court because they are funds to which Mr Mark Perriam could have a claim or interest in and are therefore available to the Court to make an order under the Property (Relationships) Act 1976. The precise basis of a relationship property claim against these funds is, however, not pleaded or disclosed in the Family Court proceedings.
Discussion
[30] As noted above, I accept that I dismissed Mr Frank Perriam’s application to discharge the restraining order largely on the basis of what I thought was a concession by his counsel that the funds may be relationship or separate property. Upon review of his submissions, I now acknowledge that in paragraph 7.4 of his written submissions he was not making a submission on the facts but simply making an acknowledgement in respect of the law relating to s 43. Counsel was referring back to paragraphs [10] and [11] of Venning J’s judgment dated 18 August 2011, which dealt with the issue as to whether or not a restraining order could be made over separate property. Paragraph 7.4 of counsel’s submissions simply confirmed that Mr Frank Perriam accepted the law as stated, namely that the “hypothetical’ property being restrained pursuant to a restraining order may be either relationship property or separate property. Counsel was summarising the law and not making any additional concession on the facts of the present case. I now accept that such an admission would be contrary to the whole basis of Mr Frank Perriam’s submission that the property is neither relationship nor separate property.
[31] In my judgment of 15 December 2011, the approach I took to the application to discharge the restraining order was to determine whether or not the circumstances had changed since the order of Venning J such that I was able to reach a different
view on the need for a restraining order. I concluded that notwithstanding the plaintiff’s failure to particularise her claim, Mr Frank Perriam’s concession that the funds may be relationship or separate property was sufficient to warrant the continuation of the restraining order.
[32] The plaintiff has now had ample opportunity to demonstrate how the sum of
$263,362 could be either relationship or separate property. Having reviewed the affidavit evidence and counsel’s memoranda, I have reached the view that the plaintiff’s submission that any remaining assets of the Perron Group of companies and the Trust are relationship property solely because the companies and the Trust were set up by Mr Mark Perriam and his business partner during his marriage to the plaintiff is misconceived. The statutory definition of relationship property does not inevitably lead to the conclusion that the sum of $263,362 held at the direction of Mr Mark Perriam is relationship property. I find as a matter of fact that Mr Mark Perriam has control over the funds as a director of one of the Perron companies or as a trustee of the Trust and not in any personal capacity.
[33] While shares in the Perron Group of companies may be relationship property or separate property, the assets of the Perron Group of companies or the Trust, which the plaintiff states was funded through Perron, are not necessarily relationship or separate property of Mr Mark Perriam or the plaintiff. Those assets may be relationship or separate property only if assets constituting relationship or separate property of Mr Mark Perriam had earlier been transferred to Marcam and through Marcam to the Trust.
[34] The plaintiff is unable to point to any relationship or separate property that was transferred into the Trust. The fact that the plaintiff had earlier guaranteed the obligations of Marcam and that some time later Marcam advanced funds to the Trust is not sufficient in my view to change the nature of the funds at issue from Trust assets to relationship or separate property. A married person is free to establish a trust without his or her spouse being a beneficiary. Provided there are no transfers of relationship or separate property into the trust, there can be no subsequent claim against the trust.
[35] In any event, Mr Mark Perriam states that the guarantee at issue was never called up or enforced. He also states that advances which Marcam initially made to the Trust were all repaid and the Trust then advanced substantial sums to the Perron Group of companies. As at 31 March 2006 and 2007, Marcam owed in excess of
$2.7 million to the Trust. In addition, Mr Mark Perriam is now bankrupt and if the funds were held for him personally, the Official Assignee would take priority for the benefit of his creditors over any relationship property claim by the plaintiff.
[36] Having had the benefit of further evidence and submissions, I am of the view now that the plaintiff’s failure to particularise her claim as to how the restrained funds could be relationship or separate property is fatal to the continuation of the restraining order. I note that in his strike out judgment of 13 June 2012, Associate
Judge Gendall noted:[7]
... In addition, at para [92] there is a bare unsubstantiated claim that the defendant’s knew or ought to have known that a sum of $286,154.00 which came into their trust account in June and July 2008, was relationship property or likely to be relationship property. There is no proper and required particularisation however as to why that is alleged to be the case.
[7] Perriam v Wilkes [2012] NZHC 1250.
[37] Given the plaintiff’s failure both to particularise her claim against Mr Frank Perriam by filing an amended statement of claim against him and the subsequent strike out of the fourth amended statement of claim in its entirety, there is no basis for continuation of the restraining order notwithstanding the continued existence of a relationship property claim in the Family Court. The restraining order is discharged on the expiry of 14 days from the date of this judgment.
Costs
[38] By memorandum dated 15 December 2011 the plaintiff sought costs against Mr Frank Perriam in respect of his application to discharge the restraining order which I initially dismissed on the basis of what I thought was a concession by his counsel. That is now clearly not appropriate given that I have discharged the
restraining order. By memorandum dated 21 December 2011, Mr Frank Perriam also
sought costs against the plaintiff in respect of both the original application by the plaintiff to join him as a party and the subsequent application by him to be struck out as a party. The costs sought are itemised in paragraph 15 of the memorandum of counsel for Mr Frank Perriam dated 21 December 2011. The calculation of these costs is however disputed on the basis that the application for joinder should be treated as an interlocutory application and not as the commencement of defence by a defendant. In those circumstances, I request that further costs memoranda be filed by both parties within 14 days of the date of this judgment.
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Woolford J
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