New Zealand Guardian Trust Company Ltd v Siemonek [2007] NZCA 494; [2008] 2 NZLR 202 (13 November 2007)

Last Updated: 2 February 2018

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA260/06
[2007] NZCA 494

BETWEEN THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED
Appellant

AND BARBARA JOAN SIEMONEK
Respondent

Hearing: 4 October 2007

Court: William Young P, Robertson and Wilson JJ

Counsel: M J Wenley for Appellant
S A Thistoll and M C Kavanagh for Respondent

Judgment: 13 November 2007 at 10 am

JUDGMENT OF THE COURT

A Appeal allowed and costs order in the High Court quashed.

B Summary judgment entered for the appellant on the substantive claim.

REASONS OF THE COURT

(Given by Robertson J)

Introduction

[1] The New Zealand Guardian Trust Company Limited (Guardian) appeals against a refusal to grant it summary judgment as the defendant in a proceeding brought by Barbara Joan Simoenek as administratix of the estate of her late mother, Ellen Joan Parsons (Joan), on the ground that the High Court should have concluded that the claim advanced could never succeed.

Background

[2] On 18 March 1980, Douglas Frederick Wereta (Douglas) sustained serious injuries in a motor accident in New South Wales. Douglas was the natural son of Joyce Wereta (Joyce) although he was substantially raised by his matua whāngai (foster parent), Joyce’s sister, Joan.
[3] As a result of the motor accident, Douglas had permanent brain damage, slurred speech, epileptic fits, memory loss, hearing loss, headaches, unstable gait, decreased vision and renal failure (requiring dialysis).
[4] In September 1981 Douglas returned to New Zealand and lived with Joan who acted as his primary caregiver until her death in September 1995.
[5] In 1997 personal injury proceedings were commenced in New South Wales on Douglas’s behalf, claiming over A$9 million. In the calculation of this claim there was a sum of almost A$1.3 million for past care and A$1.7 million for interest thereon.
[6] On 25 September 2001 the proceedings were compromised. A Court Order noted:

Without admission of liability, verdict for the Plaintiff in the sum of $3.5 million for personal injuries together with costs as assessed or taxed.

[7] By an order dated 15 November 2001, the Supreme Court of New South Wales directed that the money be paid to Guardian to:

... be held in trust and dealt with by that company for the benefit of the plaintiff in accordance with section 66(4) of the Public Trust Office Act 1957 (New Zealand) and other applicable laws as to the administration of trusts in New Zealand.

[8] Under that empowerment, Guardian received and satisfied claims by various family members for about $100,000 for past care and support provided to Douglas during periods prior to the settlement.
[9] Children of Joan made a similar claim for the care provided by their mother. Guardian obtained an opinion from Mr M J Wenley of Willis, Toomey and Robinson, solicitors in Napier who, in a letter of 29 July 2002 concluded:

We accordingly conclude that it is theoretically possible for the estate of the late Joan Parsons to make a claim however that claim can only properly be made by a duly appointed Administrator. The claim could only be for past maintenance. The claim would only be payable at the discretion of Guardian Trust and you would have to be satisfied on an objective basis that the amount paid was appropriate. If you declined the claim then any subsequent action should be capable of being effectively defended as being statute barred and on the basis that the funds held are protected.

[10] On 14 January 2003, letters of administration of Joan’s estate were granted to her daughter, the respondent, Barbara Siemonek (the estate). The estate renewed its claim but it was also rejected by Guardian.
[11] Eventually the estate commenced proceedings in the High Court in 2006. They are short on detail as to the jurisdictional basis for the claim being asserted, but narratively contended that the decisions of Guardian were wrong and in breach of the terms of the Trust Fund, and that Guardian had failed to properly consider:

(a) whether Joan was a beneficiary of the trust or if the Guardian Trust did consider her they wrongly excluded her estate as a beneficiary on account of her having predeceased the judgment and/or Letters of Administration had not been granted;

(b) alternatively if Joan was not accepted as a beneficiary Guardian Trust has failed to consider her effort, generosity, physical, emotional and financial care of Douglas, including her role as Douglas’ primary caregiver from 1981 to 1995, in providing maintenance advancement and/or benefit and whether that is deserving of a payment;
(c) whether a payment should be made to Joan in order that she should be treated conscionably, fairly and in accordance with principles of equity when a significant portion of the Trust Fund represented past maintenance provided by Joan and payments were made to other beneficiaries who had cared for Douglas for significantly lesser periods of time than Joan; and

(d) alternatively Guardian Trust, accepting that if Joan was alive that she would be deserving of, and would receive, a payment from the Fund which would be in proper proportion to the payments to other beneficiaries, that Guardian Trust has wrongfully declined the application, on account of her having died, to prevent any benefit of a payment going to her estate.

[12] The Statement of Claim sought judgment against Guardian as Trustee of the Trust Fund of an amount considered by the Court to be “fair, equitable and just for Joan’s past maintenance advancement and/or benefit of Douglas”.
[13] Guardian filed a statement of defence and an application for summary judgment. The latter was advanced on the basis that none of the causes of action could succeed and specifically:

(a) That the fund held on trust for Douglas did not come into existence until 25 September 2001, a date more than six years from the death of Joan;

(b) The common law maxim that a personal action dies with the person (actio personalis moritur cum persona) was applicable;
(c) Section 3 of the Law Reform Act 1936 which provides that “on the death of any person after the passing of this Act all causes of action ... vested in him shall survive ... for the benefit of his estate” is applicable but does not assist the estate as there was no cause of action vested in Joan at the time of her death;
(d) Any cause of action which Joan had against Douglas would have been statute barred by 8 September 2001;
(e) Guardian held the trust funds pursuant to section 66(4) of the Public Trust Office Act 1957 for the benefit of Douglas and in accordance with the applicable laws as to the administration of trusts in New Zealand;
(f) Guardian did not hold the trust fund on trust for Joan nor for any other person that has provided past care;
(g) Guardian, in refusing the estate’s claim, had acted lawfully and properly exercised a discretionary power and there was no basis in law or equity for the Court to set aside or interfere with that decision; and
(h) The trust fund was protected from the estate’s claim by s 66(4)(c) of the Public Trust Office Act.
[14] In a reserved judgment Associate Judge Christiansen concluded that Guardian’s assertion was not a foregone conclusion and its application for summary judgment was accordingly rejected: HC WN CIV-2006-485-001677 1 November 2006.

The issues in this Court

[15] Guardian challenges the refusal to grant it summary judgment as being wrong in fact and in law, and specifically complained:

(a) the learned Associate Judge failed to give due effect to the provisions of s 66(4) of the Public Trust Office Act 1957;

(b) the Associate Judge incorrectly held or inferred that a portion of the fund was held in trust for past care givers and in particular for the respondent;
(c) the Associate Judge failed to give due effect to the doctrine that personal actions die with the person which limits the action a personal representative can take on behalf of a deceased, and the limited effect of s 3 of the Law Reform Act;
(d) the Associate Judge failed to give due effect to the provisions of the Limitation Act 1950 and the doctrine of laches;
(e) the Associate Judge failed to distinguish between potential claims against Douglas personally, and the limited actions that could be taken against the appellant as trustee under s 66(4) of the Trust Office Act;
(f) the appellant holds the fund for Douglas and has properly exercised its discretion conferred by s 66(4) of the Public Trust Office Act. Guardian properly exercised its discretion not to make a payment to the estate and that decision is not open to review by the Court;
(g) the material facts not being in dispute, the Associate Judge was in a position to grant Guardian’s summary judgment application by correctly determining the relevant legal issues but did not do so; and
(h) Guardian was entitled to summary judgment because none of the causes of action in the estate’s Statement of Claim could succeed.
[16] It was on this basis that the parties presented their written submissions, but regrettably they do not engage with what the case is really about and we permitted counsel to file further submissions after the hearing.
[17] The pleadings do not include a claim in restitution – for unjust enrichment or quantum meriut – against either the estate or Douglas, although that possibility was alluded to in submissions.
[18] The emphasis by Guardian was on s 66 of the Public Trust Office Act. This in large part reflects the opinion it received from Mr Wenley, counsel before us. His assessment of matters was in reality the dispute between the parties and his advice was effectively the issue under scrutiny.
[19] The proceedings in this Court turn on two fundamental points:

(a) was Joan a beneficiary of the Trust Fund?

(b) if not, was there any other basis upon which her estate could challenge the exercise of Guardian’s powers as trustee?
[20] The Trust Fund is currently in excess of $4 million. Its income, which approaches $200,000 per year, may not always be sufficient for the needs of Douglas. But even allowing for some periodic recourse to capital to make up the shortfall, the Trust Fund will inevitably be several million dollars after the death of Douglas. As Mr Wenley noted in a letter of 29 July 2002, Douglas “is effectively a wealthy man”. The residue of the fund will then go to his children (who we were informed have not been actively involved in the care, maintenance or support of their father). There has already been, at the request of Douglas, advances to them of $100,000 each.
[21] It is unquestionable that the focus of the Trust is the maintenance, support and welfare of Douglas. Its size means that it is inevitable that his children will receive very substantial benefits on his death. The expressed crux of Guardian’s objection to responding to the estate’s request has been that Mrs Parsons’ children would benefit from the Trust when they were not the providers of the care. In that regard the position of Joan’s children is little different from that of their cousins – the children of Douglas.
[22] When regard is had to:

(a) the size of this Trust;

(b) the fact that part of the Trust’s original corpus recognised past maintenance, care and support of Douglas (although this was not identified separately in the settlement);

(c) that payments have been made to others for past maintenance, care and support;
(d) the fact that the contribution made by Joan is acknowledged by Guardian to be greater than that of anyone else;
(e) the admission that Guardian would have paid Joan if she had been alive; and
(f) the fact that, although Guardian is concerned at Joan’s children as strangers getting a benefit, Guardian nonetheless has supported advances to Douglas’s children who are not involved in care and support of their father,

it is immediately apparent why, in human terms, Joan’s estate would want to argue that the decisionmaking of Guardian (or the advice it received upon which it made its decision) was perverse or capricious.

[23] None of that, however, deals with the fundamental issue which is the basis upon which Joan’s estate can come before the Court and complain about Guardian’s action as trustee.

Does Guardian hold part of the trust fund on trust for Joan?

[24] The estate asserts in its statement of claim that, because some of the damages awarded to Douglas were for past care, Guardian held some of the trust funds on trust for Joan who was the principal carer prior to the settlement.
[25] To determine whether Joan was a beneficiary of the Trust, it is necessary to analyse the basis upon which damages for personal injury were awarded.
[26] Counsel for the respondent relied first on Taylor v Taite HC ROT M13/00 23 May 2002. A claim was made by the estate of a woman who had provided care to her grandson. The carers were paid by ACC, but were significantly underpaid. A claim was successfully made to ACC to recover the backpay owed to the carers. The claim was made by the injured boy’s mother. No money was paid to the grandmother as she had died. The estate brought a claim for payment. Chambers J found that ACC paid the backpay owed to the injured party on trust for the carers and that a portion was therefore held in trust for the grandmother.
[27] Taylor v Taite is consistent with the earlier decision in Re Robbie James Allen Investment Trust HC AK M964/98 12 March 1999. The same approach has been adopted by Winkelmann J in New Zealand Guardian Trust v Pora [2006] NZHC 1326; [2007] NZAR 1 (HC).
[28] These cases are significantly different to the present case in two ways:

(a) the right to be compensated for the underpayment was statutory. The statute directed that payment was to be made to the injured party so that he/she could pay for necessary care: s 80(3) Accident Compensation Act 1982; and

(b) the compensation was solely for the purpose of compensating carers for past care. Thus the amount available for past care was identifiable.
[29] These three New Zealand cases do not assist the respondent in the present case even remembering that this is summary judgment so the test is only an arguable proposition.
[30] Ms Thistoll further sought to rely on decisions in the United Kingdom. In Cunningham v Harrison [1973] QB 942 at 951-2 (CA) Lord Denning MR expressed the rule that where services were provided gratuitously to an injured plaintiff, damages representing the cost of providing the services were recoverable, but the plaintiff would hold the damages on trust to pay them over to the person providing the services. That approach was not adopted in Donnelly v Joyce [1973] EWCA Civ 2; [1974] QB 454 (another decision of the English Court of Appeal, released the day after Cunningham v Harrison).
[31] However, in Hunt v Severs [1994] UKHL 4; [1994] 2 AC 350 at 363, the House of Lords affirmed the position taken by Lord Denning. The Court found that, as the voluntary carer had no cause of action against the tortfeasor, the injured plaintiff was entitled to recover as part of his/her damages, the reasonable value of services rendered gratuitously, but those damages were held on trust for the provider.
[32] Quite to the contrary, however, are decisions in Australia. In Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161, the High Court of Australia held that an injured plaintiff could recover damages for gratuitous services rendered by family or friends even though the plaintiff was under no legal or moral obligation to pay for the services and had accordingly suffered no loss. The Court found that the plaintiff did not hold the sum on trust for the person who provided the services.
[33] In Kars v Kars [1996] HCA 37; (1996) 187 CLR 354, the High Court of Australia affirmed that such damages are not held on trust for the voluntary carer. The majority held (at 371-372) that damages for gratuitous services are designed to provide for the injured plaintiff’s needs. The plaintiff may or may not reimburse the provider – that is a matter for the injured plaintiff and the provider.
[34] We are not satisfied that there is an arguable issue that Joan was a beneficiary of the Trust when these decisions are considered. This Trust has its genesis in Australia where the law is clear and unequivocal. In Grincelis v House [2000] HCA 42; (2000) 201 CLR 321, the High Court, in a joint judgment of Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ noted that Griffiths v Kerkemeyer was “too deeply entrenched as part of the law in Australia for this Court to reopen it”: at [19]. Australian law imposes no obligation on an injured party to pay a voluntary carer and does not impose any kind of trust.
[35] In this case there is no indication as to what proportion of the money which was paid was specifically for Douglas’s past carers. Although it is undoubtedly the case that some of the damages he received was in respect of past attendant care, to impose a trust for past carers over the global fund is conceptually difficult. There is no identifiable sum over which the Trust could be impressed.
[36] The Associate Judge was in error in concluding that it was arguable that Joan had a beneficial interest in the Trust Fund. Whether she, or now her estate, could institute proceedings against Douglas as averted to in Kars is not before the Court. Mr Wenley’s confidence that legitimate claims established in litigation against Douglas could be ignored by Guardian because of s 66 of the Public Trust Office Act or the limitation regime is problematic. But none of that creates a right of action by the estate.

Was Joan’s estate entitled to seek the review of the Court to the exercise of Guardian’s discretion to refuse a past-maintenance payment to it?

[37] It is uncontroverted that Joan was the primary caregiver to Douglas for over 15 years and she was not paid anything other than a board amount.
[38] Section 68 of the Trustee Act 1956 gives the Court the power to review acts and decisions of trustees. The jurisdiction for the operation of s 68, however, is predicated on the basis of “[a]ny person who is beneficially interested in any trust property, and who is aggrieved by any act or omission or decision of a trustee”.
[39] Joan’s children, through her estate, are aggrieved by the acts or decisions of the trustee - and perhaps with justification. However, the question is in what way are they beneficially interested in the trust property? Although not a point which was central to Guardian’s appeal, we invited post hearing submissions from counsel on the point.
[40] In their submissions, counsel for the respondent repeated their claim that a portion of the money was held on trust for those people who had provided past maintenance. We have held that Guardian does not hold any of the money on trust for past caregivers and that the approach of Lord Denning does not apply to this case.
[41] Whatever the factual merits of the claim, we are in no doubt that the Court does not have jurisdiction to review the decision of the trustee. Joan’s estate does not have a beneficial interest in the Trust Fund.

Conclusion

[42] We are satisfied that the Associate Judge was in error in concluding that it was arguable that Joan had a beneficial interest in the Trust Fund. There is no jurisdiction for the Court to review Guardian’s decision not to make a payment to the estate. Guardian was entitled to summary judgment.

Result

[43] The appeal is allowed and the costs order in the High Court is quashed. Summary judgment is entered in favour of Guardian on the substantive claim. In the circumstances we make no orders as to costs.

Solicitors:
Willis Toomey Robinson, Napier, for Appellant
John Miller Law, Wellington, for Respondent