Murray v Murray [2014] NZHC 1684 (17 July 2014)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of New Zealand Decisions

BETWEEN	IMELDA MURRAY First Plaintiff BERNARD LOGAN MURRAY and IMELDA MURRAY as trustees of the LIFESTYLE FAMILY TRUST Second Plaintiffs
AND	SHANE GRAHAME BRUCE MURRAY First Defendant DRH (NORTHLAND) LIMITED Second Defendant KERIKERI INFRASTRUCTURE LIMITED _{Third Defendant}

Hearing:	17 July 2014
Appearances:	R O Parmenter for the Plaintiffs J M Trotman for the Second and Third Defendants
_Judgment:	_{17 July 2014}

[1] The second and third defendants have applied for summary judgment against the plaintiffs for the cause of action against them. I am dismissing the application. I shall also give a direction that the cause of action against the second and third defendants is to be heard in the District Court rather than in the High Court. If the claim had been brought against the second and third defendants alone in the District Court, it would have been brought in the Kaikohe District Court or, alternatively, the Whangarei District Court where the defendants appear to have their registered offices. Material parts of the cause of action arose within the jurisdiction of the Kaikohe District Court.

[2] The claim by the plaintiffs against the second and third defendants arises out of the hiring-out of two diggers by the plaintiff trustees. There was a three-tonne digger and a 13-tonne digger. Mr Bernard Murray had acquired those diggers during

2011. It appears that Bernard has limited intelligence and low-level business skills. He is at present serving a term of imprisonment. I have not been told why he is in prison, but it is not relevant to the present proceeding. While he is one of the plaintiffs, his wife, Imelda Murray, has started this proceeding. Bernard and Imelda are the present trustees of the Lifestyle Family Trust, the owners of the diggers.

[3] Shane Murray, the first defendant, has a number of roles. He was formerly one of the trustees of the Lifestyle Family Trust. He is a director of the second defendant, David Reid Homes (Northland) Ltd (DRH). He is a director of the third defendant, Kerikeri Infrastructure Ltd. He is also a director of another company, Emprex Importing Ltd, which is not a party to this proceeding. The fact that Shane has so many different roles in this matter has added complexity to this proceeding.

[4] The trustees say that the second or the third defendant or both of them hired the diggers at various times and that the trustees have not been paid in full for the hire. The defendants contest the claims. DRH says there was no contractual nexus between it and the trustees. The evidence modified that slightly – DRH admits that at one brief period there was a contractual relationship under which it hired the plaintiffs’ diggers, but it says it has paid for that.

[5] As for Kerikeri Infrastructure Ltd, it also says that there was no contractual relationship between it and the trustees in the early stages, that there were no monies outstanding and that it has a set-off which would extinguish any claim in any event.

[6] DRH is the Far North franchisee for the David Reid Homes franchise. Kerikeri Infrastructure Ltd is a company established by Shane Murray, which carries on a contracting business including contracting for DRH.

[7] At the outset, when the diggers were first acquired, it was intended that they would be used by DRH. There is a contest between the parties as to the nature of the contractual relationship. DRH says that it did not contract directly with the trustees. Its case is that at the outset it was invoiced for the digger hire by Shane Murray’s company, Emprex Importing Ltd. In turn, it says that the trustees would have invoiced Emprex. Its case is that for all the invoices for digger hire received from Emprex it made due payment, and therefore it is not under any further liability. It says that later Emprex ceased trading. There was a brief period when it dealt directly with the trustees for the hire of diggers but shortly afterwards Kerikeri Infrastructure Ltd was established. Kerikeri Infrastructure Ltd then invoiced it, and it has paid Kerikeri Infrastructure Ltd for all digger hire.

[8] Initially, Bernard Murray was not able to operate the diggers himself, and hire was simply on a dry-hire basis. Later, as he became proficient, Bernard operated the diggers and the hire included costs of labour and fuel.

[9] At the outset, Imelda Murray did not take an active part in the arrangements. While she is driving matters now, she does not have first-hand knowledge of the parties’ contractual arrangements. Mrs Murray relies very much on information given to her by others. The defendants criticise her for that. I bear in mind that an application for summary judgment is an interlocutory application. In interlocutory applications the courts are more ready to accept hearsay evidence than in a final hearing. The purpose of Mrs Murray’s evidence is to indicate the evidence that would be available at a defended hearing. I accept that she is entitled to give the evidence she has, and I do not disregard it on account of being hearsay.

[10] The defendants’ criticisms of Mrs Murray’s evidence go to weight, rather than admissibility. I bear in mind of course that in a defendant’s summary judgment application the court is normally reluctant to assess weight of evidence and to disregard evidence except on the narrow basis laid down by the Privy Council in Eng Mee Yong v Letchumanan.¹

[11] At heart, the plaintiffs’ case is that the diggers were hired out up until the time when the diggers were returned in March 2013. The plaintiffs contend that there is a shortfall in the payments that have been made. Mrs Murray acknowledges that payments for digger hire received from Emprex, DRH and Kerikeri Infrastructure Ltd between August 2011 and February 2013 total $84,920.74. She, however, contends that that is not complete and that there is a shortfall.

[12] There is a contest between the parties as to rates, as to hours worked and whether the claims should be on a dry-hire basis or for fuel and labour as well. It is also contested whether the contractual relationship was between the plaintiffs and DRH directly, or whether there were intermediaries such as Emprex and Kerikeri Infrastructure Ltd.

[13] Bernard Murray has sworn a brief affidavit. He has referred to a meeting where he says that the arrangements made between him and the directors of DRH were that the diggers were to be hired out to DRH. The defendants criticise Bernard’s testimony on that by saying that his evidence is only to be read to as showing that the diggers were to be used by DRH and he has not addressed the question of contractual relationship. Bearing in mind that there seems to be universal acknowledgment that Bernard is of limited intelligence, the defendants are trying to read too much into his statements. The weight to be given to Bernard’s evidence is a matter to be assessed at a hearing where viva voce evidence can be given. On this matter, a defendant’s application for summary judgment, I am unable to dismiss that part of Bernard’s evidence out of hand.

_{Murray. It is apparent that it was recognised on all sides that with
his limitations,}

Bernard would not be able to manage matters by himself. That appears to be one reason why the trust was established in the first place. It had a protective purpose.

[15] Shane Murray was a trustee. He obviously had an important part in managing the hire of the diggers. At present, on the evidence, it is arguable for the plaintiffs that Shane was a person in whom Bernard would place trust and confidence. It is arguable for the plaintiffs that Shane assumed fiduciary duties towards Bernard for the contractual arrangements for the diggers. In that context, it becomes important that payments for the digger hire did not pass directly from DRH to the trustees. They went through companies over which Shane had effective control.

[16] While the defendants rely on the payment arrangements to shield them from any claim by the trustees, there is another aspect to the matter. By virtue of the duties arising out of the trust and confidence placed in him, Shane Murray may be required to ensure that he accounts properly for what he has done as a fiduciary. It may become all the more important that he account fully for funds paid by DRH to be passed on to the Lifestyle Family Trust.

[17] In her evidence, Mrs Murray has pointed to the fact that the initial payments by Emprex were rounded sums totalling $16,000. DRH has not put in evidence all the invoices which Emprex sent it for digger hire, but those that have been put in evidence are not for rounded sums. There is a question whether Mr Shane Murray may have “clipped the ticket” when collecting payment from DRH and then accounting to the Lifestyle Family Trust. At present that aspect is not clear, but the rounded figures do suggest a basis for concern whether there has been a full accounting.

[18] Equally, it remains arguable for the plaintiffs that DRH cannot not shield itself from claims that Shane has not properly accounted for the digger hire payments received from DRH. That is because Shane Murray is also a director of DRH and his knowledge and his actions may potentially be attributed to DRH as well. The same may apply to payments passing through Kerikeri Infrastructure Ltd.

[19] To obtain a full picture it will be necessary to undertake a full reconciliation which would show the hours worked by the diggers, the rates chargeable for the diggers, the payments made by DRH and whether there is any shortfall between those and the money received by the Trust.

[20] There are also disputes as to the amounts of the charges for hire. Mrs Murray has identified a calculation error in one invoice. There is also a dispute as to the hours charged. Ms Trotman for the defendants criticised Mrs Murray for having made an inadequate allowance for the use of diggers on other jobs besides those for DRH. She claimed there was an inconsistency in that Mrs Murray did not rely on external data in respect of the small digger, but did rely on external data (namely, the recording of hours worked) for the large digger. The impression I was left with is that there are questions of fact that cannot be conveniently resolved in a defended summary judgment application.

[21] My view overall is that there are very real weaknesses in the case of the plaintiffs. I am conscious that the second and third defendants have put before the court as much information as they can reasonably obtain to try to show that there cannot be any ground for believing that there is any money outstanding. Notwithstanding that, and notwithstanding the care with which Ms Trotman has prepared her application, I am left with the view that even though the plaintiffs’ claim may be weak, I cannot at this stage say that it is bound to fail. In a summary judgment application, whether it be a plaintiff ’s or a defendant’s application, I ask myself whether allowing the case to go to a full hearing would be totally unnecessary because the answer is plain at this stage. In this case I am not satisfied that the plaintiffs’ claim is so hopeless that a hearing on the merits would be a waste of time. In stating the matter that way, I am going by what I understand to be the test

[22] In coming to this decision, I am influenced by the fact that this case has the unusual feature of Mr Shane Murray having different roles, which throws up added issues that would not arise if there was an ordinary, arm’s length, contractual

²Westpac Banking Corporation v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).

[23] There are further matters to mention. Kerikeri Infrastructure Ltd has asserted a set-off. That set-off is said to arise out of the termination of the hiring arrangements when the trustees had the machinery returned on three days’ notice. Kerikeri Infrastructure Ltd says that it had a valuable contract in the Far North, it was required to pay liquidated damages because it could not have its machinery available on the site for a certain period, and it now seeks recovery of those liquidated damages from the plaintiffs. The evidence, such as it is, might be adequate to show that it has an arguable defence if the plaintiffs applied for summary judgment against it. But the evidence falls well short of persuading me that the plaintiffs can have no defence to the alleged set-off. There is no evidence of the head contract, there is no proof of a liquidated damages clause, and there are obviously questions of causation that would need to be investigated. For the purpose of a defended summary judgment application, I cannot have regard to that alleged set-off.

[24] A draft hire agreement was put in evidence – apparently prepared towards the end of 2012. Nobody has signed the agreement. The defendants say that it can be used to prove the terms of the contract. In the absence of anyone signing it, and because it is clearly a draft (there are question marks in it), I cannot regard it as having contractual effect. It may have some evidential value, but in the absence of clear evidence that the plaintiffs agreed to its terms, I cannot regard it as binding on them.

[25] I have referred to Mr Midlane’s evidence only to have regard to an email he sent. The rest of his affidavit refers to communications between him and Bernard Murray at the time Mr Midlane was Bernard’s lawyer and the impressions he formed of Bernard arising out of those communications. I am satisfied that the discussions between Mr Midlane and Bernard were lawyer-client communications which are subject to privilege. There has not been any waiver of privilege or any grounds for setting that privilege aside. I therefore made only limited use of Mr Midlane’s affidavit.

[26] For the above reasons I dismiss the application for summary judgment. I reserve leave to the parties to come back to this court for costs depending on how

the matters evolve in the District Court. I transfer this proceeding to the District Court at Kaikohe, but on the basis that it is likely to be case-managed out of Whangarei District Court.

High Court of New Zealand Decisions

Murray v Murray [2014] NZHC 1684 (17 July 2014)