Ash v Singh
[2019] NZHC 2878
•1 November 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-589
[2019] NZHC 2878
UNDER the Trustee Act 1956 and in the inherent jurisdiction of the High Court IN THE MATTER
of an application for removal and substitution of trustees
BETWEEN
GABRIEL SEBASTIAN ASH
Plaintiff
AND
MAHENDRA SINGH AS TRUSTEE OF THE SHEAN SINGH FAMILY TRUST
First Defendant
GEOFFREY HUGH BOURCHIER AS TRUSTEE OF THE SHEAN SINGH FAMILY TRUST
Second DefendantDARSAN SINGH AS TRUSTEE OF THE SHEAN SINGH FAMILY TRUST
Third Defendant
Hearing: 1 November 2019 Counsel:
R Thompson for the Plaintiff Ash
S R Morris for the Defendants Mahendra Singh and Bourchier
Judgment:
1 November 2019
ORAL JUDGMENT OF MUIR J
Counsel:
R Thompson, Barrister, Auckland
Solicitors:
W M Patterson, Patterson Hopkins, Solicitors, Auckland S R Morris and AAM Newfield, Morris Legal, Auckland A J Steele, Martelli McKegg, Auckland.
ASH v SINGH [2019] NZHC 2878 [1 November 2019]
Introduction
[1] In 1993 the late Auckland solicitor, Mr Shean Singh, established a family trust, the Shean Singh Family Trust (the Trust) upon separation from his first wife. His children (then two) were the beneficiaries. He subsequently remarried. His second wife, Mrs Darsan Singh, is the third defendant in these proceedings. Their marriage lasted until 2005 when Mr Shean Singh was tragically killed in a boating accident. They had two further children, both of whom are accepted as being beneficiaries under the Trust.
[2] By a variation of the Trust Deed, executed in 1996, Mrs Darsan Singh was added as a beneficiary, with her share of the Trust assets on vesting fixed at 60 per cent. In essence therefore, the underlying issue in these proceedings is whether Mr Ash and his full sister have a 25 per cent entitlement to the corpus of the Trust or whether their entitlement (and that of the other children) is 10 per cent only.
[3] The proceedings have a long interlocutory history which has already included one appeal to the Court of Appeal.1 The matter currently before me is an application by the trustees (who now include Mrs Darsan Singh) for orders that the plaintiff's first cause of action be determined in priority to the balance of his claims.
The plaintiff’s claims
[4] I summarise the respective causes of action in the plaintiff's first amended statement of claim dated 27 April 2017:
(a)The first seeks a declaration that the 1996 Deed of Variation and appointment of Mrs Darsan Singh as a beneficiary was invalid, void and of no effect. As the Court of Appeal accepted, the 1993 Deed gave no power to add or remove beneficiaries.2 The trustees' defence to that claim is now limited to a plea of rectification. They assert that, having regard to all of the relevant factual background, including:
1 Singh v Ash [2018] NZCA 310, (2018) 4 NZTR 28-015.
2 At [3].
(i)the Deed of Variation;
(ii)Shean Singh's Memorandum of Wishes dated 23 December 1993 and an amendment to that in October 1994; and
(iii)his actions and conversations with the trustees in 1993 and at the time of the drafting of the Deed of Variation in 1996,
the Court can safely conclude there was a mistake in the 1993 Deed by non-inclusion of a variation provision.
(b)The second seeks the removal and replacement of the trustees on the basis of their failure to understand or apply the Trust Deed and to administer its assets in the interests of the beneficiaries. I am satisfied that the outcome of this cause of action turns largely on the outcome of the first cause of action.
(c)The third is for orders for removal or replacement of the trustees and for damages against them for alleged losses caused to the Trust. Such losses are said to have resulted from the trustees' maladministration of the Trust, including by the provision of loans to corporate entities which it was not permitted to lend moneys to.
(d)The fourth relates to alleged failure of the trustees to produce documents to which the plaintiff says he was entitled. Whether that cause of action remains live at the ultimate hearing of these proceedings is at this stage uncertain.
Further relevant background
[5]The following is further relevant background to the current application:
(a)In parallel with these proceedings is a further claim by Mrs Darsan Singh, which was initiated in the Family Court and which
has now been transferred to this Court, in which she seeks orders by way of constructive trust against the Trust.
(b)I have earlier today made orders for the sequential trial of the two sets of proceedings with Mr Ash's claims set down for a five-day trial on 8 March 2021 and Mrs Darsan Singh's claims set down for a five-day trial on 15 March 2021, each before the same Judge.
(c)I have also made orders that they be case managed together, with the expectation that a case management conference will be shortly convened by Associate Judge Bell, who has managed the proceedings to date.
(d)I adjourned for further review at such joint case management conference the defendants' application for orders consolidating the two proceedings, on the anticipated basis that, with sequential trials having now been directed, counsel will confer as to the most efficient means by which to deal with interlocutories and the provision of evidence in both those cases.
(e)It is common ground that determination of the first cause of action in Mr Ash's proceedings will take a full two-days. It is anticipated that there will be five or possibly six witnesses. My enquiries have established that the earliest that such two-day trial could be accommodated is 23 March 2020.
The applicant’s/defendants' submissions
[6] For the defendants Ms Morris submits, in my view appropriately, that the first cause of action in Mr Ash's proceedings represents the gravamen of his claim. She says that the sooner it is resolved the better, and that such resolution is highly likely to concentrate the minds of all the parties in respect of a settlement. At a minimum she says it will refine the issues to be determined at trial in respect of the remaining causes of action. She says that there will be no delay as a result of the order because trial of the proceedings cannot now occur until 2021.
The respondent’s/plaintiff's submissions
[7] Mr Thompson opposes the application. He foreshadows the likelihood of an appeal (possibly even two) from any decision of this Court on the first cause of action which he says would inevitably imperil the 2021 fixture.
[8] He says that although the first cause of action raises a very significant issue it is by no means the only issue before the Court. He refers in particular to the third cause of action and emphasises what he says are unauthorised loans to companies of which Mrs Singh, either solely or with her late husband, was a shareholder/director. He says that whatever interpretation of the Trust Deed and variation is available, it did not authorise such loans, and that this cause of action would therefore survive an order as to rectification.
[9] He says that it is important that one Judge be able to hear all of the evidence because credibility findings in relation to some parts of the claim may have an effect on like findings in respect of other parts of the claim.
[10] Finally, he says that his client, who is based on Germany, would be significantly prejudiced by having to attend two trials in New Zealand.
Principles
[11] Rule 10.4 of the High Court Rules 2016 provides that where justice requires the Court may order separate trials of causes of action. The Court may also direct the sequence of separate trials and make any supplementary order that is just. The preeminent consideration for the Court is the balance of convenience both to the parties and to the Court.3 "Parties" for the purposes of considering the balance of convenience include parties to other litigation awaiting hearing. The Court must consider whether those parties will be prejudiced by the risk that separate trials may require more time than a single trial.
[12]An order will not be made if there is a real risk that:4
3 Goodship v The Minister of Fisheries [2001] NZAR 274, (2000) 15 PRNZ 256 at [8].
4 Goodship v The Minister of Fisheries [2001] NZAR 274, (2000) 15 PRNZ 256 at [13].
(a)the matters to be traversed in each trial may substantially overlap;
(b)issues of res judicata or conflicting findings may result; or
(c)substantially more Court time will be taken by separate trials.
Discussion
[13] Ms Morris endeavours to address the first two of the potential objections in [12] above by providing the terms of a draft order which I accept defines the issues under the first cause of action in a way which immunises them significantly from the balance of the plaintiff's claim; and will adequately ensure that there are no issues in respect of res judicata or conflicting findings.
[14] However, it appears to me that there are nevertheless two important considerations (both relevant to the overall convenience of what is proposed).
(a)The first is the extent to which granting the application is likely to dispose of the proceeding or at least substantially reduce the number of issues at trial; and
(b)The second is whether by granting the application there is any reasonable prospect that the 2021 trial dates will be derailed.
The two issues are in fact interrelated.
[15] Courts have long cautioned about the false promise often implicit in applications to determine parts of proceedings on a stand-alone basis. It is often the case that what is seen, one or more years out from trial, as a handy expedient only ends up complicating and delaying disposition of the ultimate proceedings.
[16] I accept Ms Morris' fundamental proposition that the first cause of action is likely to be the most important raised in the proceedings. If Mrs Darsan Singh is properly to be regarded as a beneficiary pursuant to a valid variation of trust then dispositions in her favour will have a prima facie validity, and the trustees will
accordingly have a prima facie defence in respect of those dispositions. But the very criticality of this issue underscores how hard fought the rectification claim is likely to be. It was rejected by Associate Judge Bell,5 but recognised as potentially available on appeal.6 The prospects of appeal from any decision on the first cause of action must in that context be regarded as significant.
[17]Assuming:
(a)a March 2020 trial date on the first cause of action;
(b)one to two months for delivery of the High Court's decision;
(c)the 28-day appeal period;
(d)current scheduling in the Court of Appeal; and
(e)the requirement for delivery of the Court of Appeal's decision,
I conclude that the likelihood that any appeal would be resolved before 8 March 2021 is low. Accordingly, the March 2021 fixture (which I observe is a second fixture for Mr Ash's claims – the first having been in August 2019 and vacated because of an outstanding interlocutory decision) would have to be abandoned. That would neither meet the requirements of convenience for the Court nor for the parties.
[18] The related issue is the extent to which such a preliminary hearing would be likely to resolve all issues between the parties. If there was a strong prospect that it would do so, then I would be more willing to entertain the risks inherent in an appeal from that decision because there would be an equally strong prospect that the existing 2021 fixture was likely to be redundant in any event. But that is not the case. Although the second cause of action would likely be determined as a result of a determination on the first, the third cause of action, especially insofar as it relates to unauthorised
5 Ash v Singh [2017] NZHC 2909, (2017) 4 NZTR 27-034 at [36].
6 Singh v Ash [2018] NZCA 310, (2018) 4 NZTR 28-015 at [9].
advances to companies of which Mrs Singh was a director or shareholder, would survive. Ms Morris accepts that that would be the case.
[19] It is possible, depending on the extent to which such loans have been repaid – and if not repaid, the abilities of such companies to do so (and related interest claims) that significant sums could be at stake in this respect. I am not satisfied, particularly having regard to the course of interlocutories to date and the extent to which the respective claims and defences have all the appearances of being hard fought on both sides, that a decision on the first cause of action has a high likelihood of resolving the overall litigation.
[20] My assessment in relation to the convenience issue is further informed by the fact that irrespective of the outcome of these proceedings Mrs Singh may well wish to maintain her claims to a constructive trust, which are conceptually independent, but which are to be heard sequentially in March 2021. Even if this Court were satisfied (which it is not) that Mr Ash's claims would be finally resolved by reference to the first cause of action it would still face the potential of a five-day trial on the constructive trust claim the more so, of course, if the rectification claim were to fail.
[21] I am also persuaded that Mr Thompson is correct in saying that credibility assessments are better made by one Judge who has an opportunity to hear all of the evidence across all of the causes of action. Were I to allocate a separate trial on the first cause of action there is no guarantee that the same Judge could be allocated to any subsequent hearing, consistent with the Court’s other scheduling requirements.
[22] I also take into account the fact that Mr Ash resides overseas and would, if the trustees' application was granted, be required to make two trips to New Zealand for two separate hearings.
[23] As a result, I am not satisfied in accordance with r 10.4 that the justice of this case requires that a separate trial be allocated in respect of the first cause of action.
Result
[24]I dismiss the application.
[25] In respect of costs, I note that this application was progressed in tandem with the trustees' application to consolidate these proceedings and those of Mrs Singh in her personal capacity. I have (as indicated above) granted sequential trials and adjourned that aspect of the application. My assessment, which is necessarily robust is that in respect of the work associated with the combined applications (including submissions) the division was approximately 60 per cent (application to determine the first cause of action in priority) to 40 per cent (application for consolidation).
[26] Accordingly, I abate costs against the trustees (calculated on a 2B basis) by 40 per cent on the sum otherwise prescribed. If there is any dispute as to quantification, memoranda may be filed.
Muir J
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