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Wiklkinson v Wilkinson [2018] NZHC 2258 (30 August 2018)

Last Updated: 18 September 2018

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by me on

30.08.18 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

P M WILKINSON v D W WILKINSON and J D LANDERS as executors of the Estate of W L WILKINSON & ORS [2018] NZHC 2258 [30 August 2018]

Introduction

[1] These summary judgment proceedings arise out of a Heads of Agreement signed by the parties present at a mediation of Family Protection Act 1955 proceedings. The principal protagonists in those proceedings are the children and the grandchildren of the deceased, Mr William Louis Wilkinson. A key issue in the mediation was how the estate should be divided between the children on the one hand, and the grandchildren on the other.

[2] Following the mediation, Mr Henry Bell, one of the grandchildren and the counterclaim plaintiff, filed a counterclaim again the trustees of the K L Wilkinson (No.2) Trust seeking to enforce the Heads of Agreement.

[3] The trustees, named as the counterclaim defendants, seek an order that the counterclaim be dismissed and summary judgment be entered for the defendants on the basis that Mr Bell seeks to enforce a conditional agreement, when the conditions of the agreement have not been fulfilled.

[4] The Heads of Agreement was expressed to be conditional on the agreement of the trustees after having taken legal advice and no such agreement has been given. It is said that the counterclaim plaintiff cannot possibly succeed. The Heads of Agreement was also conditional on the agreement of the deceased’s wife, Mrs Barbara Wilkinson. She likewise did not give her agreement and now also applies for summary judgment.

[5] The issue for determination is whether the counterclaim-defendants have satisfied the Court that Mr Bell’s counterclaim cannot succeed.¹ Do the defendants have a complete defence to the counterclaim-plaintiff’s counterclaim and/or a clear answer to the counterclaim which cannot be contradicted?

Relevant legal principles

[6] Rule 12.2 of the High Court Rules 2016 provides that the Court may give judgment against the plaintiff if the defendant satisfies the Court that none of the

¹ Ferrer-Aza v NZONE Race Management Ltd [2016] NZHC 885 at [10]- [12].

causes of action in the plaintiff’s statement of claim can succeed. The following principles, as stated by the Court of Appeal in Westpac Banking Corp v M M Kembla New Zealand Ltd, apply where a defendant is seeking summary judgment:²

(a) The defendant bears the onus of satisfying the Court that none of the plaintiff’s claims can succeed. It is not enough for the defendant to merely show there are weaknesses in the plaintiff’s case.

(b) Summary judgment will be inappropriate where there are disputed issues of material fact or material facts need to be ascertained by the Court and cannot confidently be concluded from the affidavit evidence.

(c) Summary judgment will generally only be entered against a plaintiff where there is a complete defence of the plaintiff’s claim, or a clear answer to the claim which cannot be contradicted.

(d) It may be inappropriate to award summary judgment where ultimate determination of the case turns on the judgment that is only able to be properly arrived at after a full hearing of the evidence.

(e) It will generally be inappropriate to assess the sufficiency of the proof of the plaintiff’s claim at a summary judgment. Otherwise a defendant, particularly one more in possession of the facts than the plaintiff, could force on the plaintiff’s case prematurely, before discovery and before the plaintiff’s evidence can reasonably be assembled.

(f) Although a legal point may be decided in a summary judgment if it is sufficiently clear, novel or developing points of law may require the context provided by trial to provide the Court with sufficient perspective.

[7] In Krukziener v Hanover Finance Ltd the Court of Appeal confirmed that:³

2. Westpac Banking Corp v M M Kembla New Zealand Ltd [2000] NZCA 319; [2001] 2 NZLR 298 (CA) at [60]- [64]; see also Ferrer-Aza v NZONE Race Management Ltd, above n 1, at [10].

³ Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26].

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 ... 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 ...

[8] The approach to interpretation of any contract is an objective one, the aim being to ascertain the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in a situation in which they were at the time of the contract.⁴

[9] While context is a necessary element of the interpretive process and the focus is on interpreting a document rather than the particular words, the text remains centrally important. If the language at issue, construed in the context of the contract as a whole has an ordinary natural meaning, that will be powerful, although it is not conclusive in ascertaining what the parties meant.⁵

Factual background

[10] The deceased died in 2015. He was survived by his wife, Barbara Wilkinson, who passed away in March 2018. They had five children, David, Ann, Patricia, Richard and Neville. They also had five grandchildren including Henry and Declan Bell, who are the sons of Ann.

[11] The K L Wilkinson (No 2) Family Trust (the Trust) was established in 1960 with the deceased’s father as the settlor. The children and the grandchildren are the discretionary beneficiaries of the Trust. The trustees at the time of the mediation in 2017 were Patricia Wilkinson, David Wilkinson, Barbara Wilkinson and the corporate trustee, Wilkinson Independent Trustees Ltd (WITL). Mr Brian Bilas is a director of that company.

[12] In his will, Mr William Wilkinson left the net annual income from his estate to his wife during her lifetime. Upon her death, he then left income for life to his five

⁴ Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60].

⁵ At [63].

children. The capital of his residuary estate ultimately went to four of the five grandchildren progressively after the death of each child. The deceased completely omitted one granddaughter.

[13] Patricia filed Family Protection Act proceedings in August 2016. Barbara then brought and successfully compromised proceedings against the estate under the Property (Relationships) Act 1976. As well as Patricia, the other children are also claiming further provision from their deceased father’s estate.

[14] A mediation took place in Hamilton on 8 August 2017 to resolve their claims. The parties who signed the mediation agreement dated the same day were Patricia Wilkinson, t David Wilkinson and John Landers (as executors of the estate), Barbara Wilkinson, David Wilkinson, Richard Wilkinson, Ann Wilkinson, Neville Wilkinson and counsel representing some of the grandchildren. Mr Brian Bilas signed as a non- party attendee.

[15] The mediation has been described as long and arduous. It began at approximately 9:30am on 8 August 2017 and concluded in the early hours of the following day. Barbara Wilkinson was not present for the whole time. She left the mediation at about 6:00pm.

[16] The Heads of Agreement dated 8 August 2017 is signed by Neville Wilkinson, Richard Wilkinson, Patricia Wilkinson, John Landers, David Wilkinson, Henry Bell and Declan Bell. It contains, amongst others, the following clauses:

6. The trustees of the K L Wilkinson No 2 Trust appoint Henry as a trustee of the Trust. Barbara Wilkinson resigns as a trustee of the Trust. If necessary, the powers of appointment and removal under the Trust are to be altered to ensure that no trustee can be removed except by the Court.

...

12. This agreement is in full and final settlement of all and any claims in relation to William Wilkinson’s estate including all cost issues past and present between the parties. No claims can be made by any party to this agreement against the past or present trustees of the K L

Wilkinson No 2 Trust except in the case of fraud.

13. This agreement is conditional on the obtaining of a consent order of the High Court, which is to be sought by the executors promptly after the execution of this agreement. Any issue about the effect or implementation of this agreement is to be referred to arbitration under the Arbitration Act 1996.

...

15. Declan’s assent to this agreement is wholly conditional on the receipt by him of independent legal advice on this agreement (the reasonable costs of which are to be met by the estate).

16. The trustees of the K L Wilkinson No 2 Trust are parties to this agreement in their capacity as trustees, and

16. This agreement is conditional on the trustees’ agreement and they intend to obtain their own independent legal advice with the reasonable costs of their legal advice to be met by the Trust.

17. No distributions are to be made from the Trust (estate) pending the

High Court order.

18. This agreement is conditional on Barbara’s agreement.

[17] Following the mediation, the trustees met with senior counsel on 10 August 2017. The trustees say that they then decided not to agree to the terms of the Heads of Agreement. Senior counsel subsequently wrote to all parties to the mediation advising that the trustees did not agree. The letter also advised that the trustees did not agree to appointing Henry Bell as a trustee of the trust.

[18] On 21 August 2017 Barbara Wilkinson, through her lawyers, wrote to the other parties to the mediation stating that she too did not agree to the Heads of Agreement.

[19] On 25 August 2017 Mr Henry Bell filed a statement of defence and counterclaim against Mrs Barbara Wilkinson and against the trustees seeking to enforce the Heads of Agreement. Up until that time the trustees had not been named as a party to the substantive Family Protection proceedings.

[20] Both Barbara Wilkinson and the trustees (together the applicants) have sought summary judgment in respect of the counterclaim.⁶

6. The executors of the estate of William Louis Wilkinson abide the Court’s decision. Neville Wilkinson, Daniel and James Wilkinson, the minor grandchildren, David Wilkinson and Patricia Wilkinson, all abide the decision of the Court.

The opposition to summary judgment

[21] The applicants say that the conditions in cls 16 and 18 of the Heads of Agreement mean that Barbara and the trustees could resile from the agreement, or not approve it for any reason whatsoever. Henry on the other hand contends for a narrow interpretation, namely that the conditions were designed to enable review of the machinery that the parties had drafted to encompass the oral agreement that they had reached. The conditions in cls 16 and 18 are said to be conditions subsequent and akin to a solicitor’s approval clause, which focusses on the legal ability or process to enable the agreed matters to be given effect.

[22] Henry claims that in the context of what had been discussed and agreed both before and at the mediation, the conditions as to approval and legal advice relating to Barbara and the trustees were limited so that they only allowed for a process to ensure there was no legal impediment to the bargain the parties had already struck. On his behalf Ms Grant submitted the conventional analysis that a court must make in these types of cases requires the full process of discovery, interlocutory procedures and trial and is inappropriate for determination in a summary judgment context, particularly given the family nature of the arrangement.

[23] Ms Grant contended that the issue before the court is not whether the applicants’ interpretation is tenable, or even whether it is more likely to prevail at trial than the narrow interpretation advanced by Henry. Rather, the court must be satisfied that the interpretation advanced by the applicants is correct and that advanced by Henry is untenable.

[24] At the hearing, Ms Grant filed a draft amended statement of claim and counterclaim. This contains a claim for estoppel. Henry claims that based on representations made by the parties at the mediation, including the trustees, they are estopped from denying that Henry has become a trustee, that his grandmother Barbara has resigned as a trustee and that the Heads of Agreement is valid and binding.

Analysis and decision

[25] The starting point is of course the text of the Heads of Agreement. As with any contractual interpretation exercise, the text is centrally important.

[26] The Heads of Agreement is a relatively simple document. It arises out of a lengthy mediation with many lawyers in attendance. The critical words in cls16 and 18 (i.e. conditional on agreement) are not qualified in any way. There is nothing in the text of the document that even hints at a suggestion the consent of the trustees and Barbara “to this agreement” is confined to machinery or process issues akin to a solicitor’s approval clause. On the contrary, the words, construed in the context of the text as a whole, make very clear that the trustees and Barbara could elect not to agree to the Heads of Agreement for any reason whatsoever. The reference to the trustees intending to seek independent legal advice, which again is not constrained in any way, also clearly suggests there is no requirement to disclose the reasons why they might decide not to agree to the Heads of Agreement, to any other party.

[27] There is no ambiguity in the text that Ms Grant was able to identify and against the clear and simple words used; the narrower interpretation that Henry contends for is, in terms of the text, a hopeless argument.

[28] I acknowledge that a purposive or contextual approach to contractual interpretation is not dependent on there being ambiguity in the contractual language.⁷ The aim is to ascertain the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation of which they were at the time of the contract. The focus is on the background that a reasonable person would regard as relevant. With that in mind I turn to consider some of the important relevant background facts.

[29] I accept that the parties do appear to have reached a consensus on some matters during the course of the mediation and that they made some significant progress in narrowing their differences. That contention is clearly arguable. However, some of

⁷ Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 3, at [61].

the critical background factors very clearly support the applicants’ contention that no binding agreement was reached.

[30] At the time of the mediation the trustees were not a party to the litigation. The Trust is a separate legal entity from the executors and trustees of the estate of the deceased. It is the estate of the deceased that is at issue in the substantive Family Protection Act proceedings.

[31] The parties to the mediation agreement signed on 8 August 2017 were the parties to the Family Protection Act proceedings. That agreement is a formal legal document and cannot credibly be interpreted as having been signed by the trustees in their capacity as trustees of the Trust. Patricia Wilkinson, Barbara Wilkinson and David Wilkinson all signed the mediation agreement in their personal capacity. Mr Brian Bilas who was in attendance as the accountant advisor for Mrs Barbara Wilkinson signed the confidentiality agreement attached to the mediation agreement as a non-party attendee. Nowhere in the mediation agreement is there any reference at all to the Trust.

[32] I also find it is equally untenable to interpret the minute of Mr Robert Fisher QC dated 5 May 2017 as referring, at paragraph 11, to the trustees of the Trust. It is abundantly clear from the background and context that the trustees referred to at paragraph 11 are the executors and trustees of the estate of the deceased. This is reinforced by the will of the deceased dated 6 October 2014 which refers at paragraph 2 to the executors and trustees as “my trustees”.

[33] None of the parties dispute that during the course of the mediation the role of the Trust was put on the table as a matter for discussion and debate. It seems clear that this was the result of representations made by Mr Henry Bell. Ultimately of course the Heads of Agreement does make express reference to the Trust.

[34] However, I find that it is not tenable to contend that the trustees of the Trust signed the Heads of Agreement. I acknowledge that Patricia Wilkinson and David Wilkinson, both trustees of the Trust at the time of the mediation, signed the Heads of Agreement. However, it was not signed by Mr Bilas, one of the directors of the
corporate trustee, namely WITL. In his affidavit Mr Bilas makes it very clear, and for entirely understandable reasons, why he would not sign the Heads of Agreement. In all the circumstances, I find it inherently improbable that Patricia and David either signed in their capacity as trustees or, as claimed, signed on behalf of their fellow trustees in a way which would commit the Trust to a binding agreement.

[35] The Heads of Agreement was not signed at all by Barbara Wilkinson, whether in her personal capacity or as a trustee. Likewise, it was not signed by her legal representative in attendance at the end of the mediation, when the other parties signed. That legal representative was in attendance with full authority to settle but did not sign the Heads of Agreement. Accordingly it is difficult to see how it can credibly be claimed Barbara Wilkinson was bound by the Heads of Agreement in any way.

[36] A further background factor of importance is the presence of a number of lawyers at the mediation. The vast majority of the parties were legally represented throughout. There is no evidence nor any basis for contending that the legal representation was less than competent. Overall, I find that if it had been intended to limit cls 16 and 18 to machinery or process issues, then completely different language would have been used.

[37] In her very careful submissions, Ms Grant traversed the various iterations of the Heads of Agreement which, she contended, demonstrate there is a tenable claim that the parties reached agreement on key issues – and that the conditions to be fulfilled were conditions subsequent. However, in my view, the various iterations do not in any way provide a basis for concluding that the narrow interpretation contended for is reasonably arguable. The iterations are of no assistance either way and the focus must be on the final words used. It is salient to recall the observations of Tipping J in Vector Gas Ltd v Bay of Plenty Energy Ltd ⁸:

The common law focuses strongly on the agreement in its final form as representing the ultimate consensus of the parties. Hence it is regarded as irrelevant how the parties reached that consensus. To enquire into that process would not be consistent with an objective inquiry into the meaning of a document which is generally designed to be the sole record of the final

8. Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [20] (footnotes omitted).

agreement. A party cannot be heard to say – never mind what I signed, this is what I really meant.

[38] Ms Grant further submitted that given all the hard work that had gone into the mediation, the discussions, negotiations and concessions made, no reasonable person if asked at the mediation whether Barbara Wilkinson and the trustees could simply withdraw their agreement would have said “Yes, of course”. However, having regard to both the text and the factual context, I find that claim to have no merit. I can well understand the frustrations of the parties, particularly that of Henry and his belief that significant progress was made in reaching agreement on matters of importance. However, I find that Henry’s counterclaim has not realistic prospect of success. The trustees have discharged the onus of satisfying the court that the counterclaim cannot succeed. There is no plausible or tenable explanation for why the simple, unqualified words in cls 16 and 18 do not mean what they say.

[39] In my view, the estoppel claim contained in the draft amended statement of defence and counterclaim of Henry, is equally flawed. Estoppel requires four elements to be proven:⁹

(a) a belief or expectation which has been created or encouraged by the other party;

(b) reliance on that belief or expectation has been by the party alleging estoppel;

(c) detriment suffered if the belief or expectation is departed from; and

(d) that departure from the belief or expectation would be unconscionable.

[40] In principle, representations made in the course of a without prejudice mediation process might be admissible to establish a claim of estoppel.¹⁰ However. where, as in this case, much of the evidence that Henry relies on goes to the parties’

9. Gillies v Keogh [1989] NZCA 168; [1989] 2 NZLR 327 (CA) at 345-346; see also Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Brookers, Wellington, 2009) at [19.2] and Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at [44].

¹⁰ Sheppard Industries Ltd v Specialized Bicycle Components Inc [2011] NZCA 346; [2011] 3 NZLR 620 (CA) at [24].

position in the mediation on the merits of the underlying dispute, he may well face formidable obstacles should the matter go to trial. Furthermore, any prima facie belief or expectation is firmly contradicted by the very clear and unqualified words of the Heads of Agreement. That document remains the final word on the parties’ position at the conclusion of the mediation.

[41] In any event, I find the applicants have demonstrated Henry’s claim that he has relied on the expectations created at the mediation to his detriment cannot succeed. The trustees and Barbara Wilkinson made it very clear, shortly after the mediation, that they did not accept the Heads of Agreement. Henry remains a beneficiary of the Trust and although his decision to become a trustee has not been fulfilled, notwithstanding his disappointment, there is no evidence at all to establish any actionable reliance and/or detriment.

[42] I also find that the claim by Henry in his notice of opposition that the trustees have repudiated the Heads of Agreement or changed their minds is without foundation and cannot succeed. The trustees did not sign up to the Heads of Agreement or agree to its terms in the first place. They did not change their mind or repudiate an agreement. There was no binding agreement at the outset. This also means of course that Henry’s severance argument cannot succeed. There has been no agreement and therefore, no part of it can be enforced.

Result

[43] The application by the trustees and Barbara Wilkinson for summary judgment is granted. The counterclaim of Henry Bell dated 25 August 2017 is dismissed.

[44] I also make an order, ancillary to the grant of summary judgment, that it was reasonable for the trustees to have taken the step of prosecuting this summary judgment application. Having succeeded in dismissing the counterclaim, the trustees will have no ongoing role in the substantive Family Protection Act proceeding. I accept that it must be in the interests of all beneficiaries for the trustees to have their further participation in the proceedings determined at the outset.
[45] In the ordinary course, the trustees and Barbara Wilkinson would be entitled to costs on a 2B basis. However, as requested by the parties, memoranda are to be filed on the question of costs within 14 days. The memorandum should address both the question of indemnity and costs on the summary judgment application.

Associate Judge P J Andrew