Ash v Singh
[2019] NZHC 2790
•31 October 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 2790
BETWEEN GABRIEL SEBASTIAN ASH
Plaintiff
AND
MAHENDRA SINGH & ORS
First Defendants
GEOFFREY HUGH BOURCHIER
Second DefendantDARSAN SINGH
Third Defendant
Hearing: 12 March 2019 Appearances:
Richard J Thompson for the Plaintiff
G M Sandelin and G Angus for the Defendants
Judgment:
31 October 2019
JUDGMENT (No 2) OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 31 October 2019 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules
Solicitors:
………………………………………………….
Registrar/Deputy Registrar
Patterson Hopkins (W Patterson/Luke Dixon), Auckland, for the plaintiff Morris Legal (Sally Morris), Auckland, for the Defendants
Copy for:
MinterEllisonRuddWatts (G M Sandelin), Auckland, for the Defendants
GABRIEL SEBASTIAN ASH v MAHENDRA SINGH & ORS [2019] NZHC 2790 [31 October 2019]
Introduction
[1] The plaintiff applies for particulars and further discovery and opposes the defendants’ application that they not be required to answer his interrogatories. In his substantive proceeding, the plaintiff as beneficiary claims against the defendants as trustees of a trust established by his late father, the Shean Singh Family Trust. But underlying the dispute are differences between the plaintiff as the son of his father’s first marriage and the third defendant, the widow of his father’s second marriage.
[2] I have taken longer to give this decision than I told the parties I would. Because of the delay, a fixture for the substantive proceeding was vacated. That has obviously caused the parties inconvenience. I apologise for the time taken. All the same I had to work through considerable material. The application for particulars and discovery ran for more than 70 pages. The bundle of documents was nearly 1,200 pages. The United Kingdom Supreme Court has recently made a plea for proportionality.1 Similarly, more focussed applications in this case would have given a quicker result.
[3] On all matters I have directed the defendants to take further steps, but not all sought by the plaintiff. I have required few particulars.
What the case is about
[4] The late Direndra Singh, more commonly known as Shean Singh, was a lawyer practising in Dominion Road, Auckland. He died tragically on 24 May 2015 in a boating accident. His widow, Darsan Singh, was his second wife. The plaintiff, Gabriel Ash (formerly known as Shannon Singh) and his sister, Olivia, are children of the first marriage. Shean Singh and his first wife separated in March 1993. There are two children of the second marriage, Christopher and Elizabeth.
[5] The Shean Singh Family Trust was established by a deed dated 23 December 1993. Shean’s brother, Mahendra, a medical practitioner in Queensland, is the nominal settlor but Shean designed the trust and drafted the deed. The trust was for
1 Lungowe v Vedanta Resources plc [2019] UKSC 20, [2019] 3 All ER 1013 at [6]-[14] – in the context of jurisdiction disputes.
himself and his children. Mahendra and Mr Geoffrey Bourchier (Shean’s accountant) were the original trustees. Darsan was added as an “advisory trustee” later.
[6] Under the deed, the final beneficiaries are Gabriel, Olivia and any other children of Shean born before the vesting date. The discretionary beneficiaries are Shean, the final beneficiaries, any children or grandchildren of the final beneficiaries and any charitable object or institution in New Zealand. The deed does not provide for any wife or de facto partner of Shean. Under the deed, the trustees shall hold the capital and income of the trust on trust for Shean, and in the event of his death for such of the final beneficiaries as shall be living and, if more than one, in equal shares. The trustees have powers to distribute to the discretionary beneficiaries. The vesting date is 23 December 2019.
[7] On separating from his first wife, Shean took as his property commercial premises in Dominion Road, where he carried on his practice, and a property at Redvale, and settled them on the trust.
[8] Shean married Darsan in August 1994. In August 1996, Shean (as settlor) and Mahendra and Mr Bourchier (as trustees) made a deed varying the Shean Singh Family Trust. Under the variation, the definition of “final trustees” was changed, making them Shean, Darsan, any children born to Shean and Darsan before the vesting date. Darsan was also made a discretionary beneficiary. There was a new vesting clause which, amongst other things, provided that if Shean died before the vesting date, one half of the funds would go to Darsan and the other half would go to the final beneficiaries in equal shares. Under those changes, Darsan would take 60 per cent of the trust assets at the vesting date. Gabriel and Shean’s other children would each take only 10 per cent.
[9] Shean’s will provided that the proceeds of his life insurance should be paid to the trustees of his family trust and expressed a wish that the trustees apply those funds to pay off mortgage debt. Darsan is the executrix. She has paid only half the life insurance proceeds to the trustees.
[10]Gabriel Ash’s statement of claim has four causes of action:
(a)he seeks a declaration that the deed of variation of the trust of 23 August 1996 is invalid;
(b)he seeks removal and replacement of the trustees, alleging that they have failed to understand or apply the trust deed and they have failed to administer the assets in the interests of beneficiaries. He proposes that a receiver or replacement trustee be appointed;
(c)he alleges breaches of duty by the trustees and seeks monetary relief; and
(d)he seeks disclosure of trust information, relying on the principles in
Erceg v Erceg.2
[11] The third cause of action sets out extensive allegations of mismanagement, breaches of duty, fraud on powers and conflicts of interest. The trustees are said to have taken out loans from banks which could not be serviced, to have failed to charge reasonable rents for use of trust properties, and to have made interest-free loans to companies of which Darsan is the sole director and shareholder (DDLTD Ltd and Property Purchase and Sale Ltd). Under his first cause of action, the plaintiff intends to establish that because the variation of trust was invalid, Darsan is not a beneficiary of the trust and powers under the trust deed cannot be exercised in her favour. While the pleading does not go into this extensively, the plaintiff believes that she has made property investments using funds lent interest-free by the trustees.
[12] The trustees deny the allegations in the third cause of action. In general, they say: that they were entitled to take Shean’s wishes and guidance into account; they could legitimately allow Darsan and the children to live and use the trust properties; the trust is solvent without any overdue taxes or other overdue financial liabilities; its liabilities under a bank mortgage are being met; trust assets are not at risk; Shean paid rent to the trust for using part of the Redvale property as a home office; after his death the trustees allowed the Singh family to use the properties, so long as they paid the outgoings; Darsan’s contributions by general maintenance, financial contributions and
2 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320.
decoration have assisted in increasing values and the long-term wealth for the beneficiaries; where bank loans were taken out to on-lend funds to Darsan’s companies, interest was also on-charged; the trustees did not pay Property Purchase and Sale Ltd interest on its loan to them; Darsan moved out of the Redvale property after Shean’s death, the Redvale property is leased to a commercial tenant; Darsan pays rent for her use of the Dominion Road premises; Mahendra and Mr Bourchier have not delegated their trust powers to Darsan; she is not involved in trust decisions. They also respond to allegations about bank loans.
[13] At the start of the proceeding, the plaintiff applied for summary judgment on the first and fourth causes of action. I found for the plaintiff on the first cause of action, but not on the fourth.3 The trustees successfully appealed. The Court of Appeal held that the plea of rectification was arguable.4 The defendants rely only on the rectification defence for the first cause of action.
[14] In the meantime, Darsan began a proceeding in the Family Court seeking relief under s 182 of Family Proceedings Act 1980 and claiming a constructive trust against the trustees. That has been transferred to this court, but so far no direction has been given for that proceeding to be case managed and heard with this proceeding.
The application for particulars
[15] The plaintiff’s application for particulars goes to the adequacy of the defendants’ pleading. The purpose of a pleading is to inform the opposing party and the court of the essential basis of the claim or defence and the necessary ingredients of it.5 Only the material facts should be stated. Evidence and law should not be included. Pleadings define the issues and inform the parties in advance of the case they have to meet, and so enable them to take steps to deal with it. The main reasons for including an allegation in a pleading are:6
3 Ash v Singh [2017] NZHC 2909.
4 Singh v Ash [2018] NZCA 310.
5 Reay v Attorney-General [2016] NZCA 519, 2016 NZAR 1672 at [16], Price Waterhouse v Fortex Group Ltd CA 179/98, 13 November 1998 at page 18.
6 Russell v Taxation Review Authority (2000) 19 NZTC 15,924, [2000] BCL 1013 (HC) at [40].
(1) The allegation forms one of the essential factual planks on which the cause of action or defence depends.
(2) The pleaded fact is critical to the quantum and nature of the remedy sought.
(3) Contextual facts may be pleaded if, without them, it would not be possible to understand the more critical factual allegations.
[16] As well as the general requirements for pleadings in rr 5.17-5.20 of the High Court Rules 2016, a statement of defence must comply with r 5.48:
5.48 Requirements of statement of defence
(1)The statement of defence must either admit or deny the allegations of fact in the statement of claim, but a defendant does not have to plead to an allegation that does not affect that defendant.
(2)A denial of an allegation of fact in the statement of claim must not be evasive. Points must be answered in substance. If for example, it is alleged that the defendant received a sum of money, it is not sufficient to deny receipt of the particular amount. Rather, the defendant must deny receipt of that sum or any part of it, or set out how much was received. When a matter is alleged with circumstances it is not sufficient to deny it as alleged with those circumstances. In all cases a fair and substantial answer must be given.
(3)An allegation not denied is treated as being admitted.
(4)An affirmative defence must be pleaded.
(5)The statement of defence must give particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances sufficient to inform the court, the plaintiff, and any other parties of the defendant’s defence.
[17]There are recurring features in the plaintiff’s application.
No longer a live issue
[18] This aspect comes up in the plaintiff’s first cause of action that the variation of trust is invalid. In opposition to the plaintiff’s application for summary judgment, the defendants ran a number of defences: resettlement under the trust deed, rectification,
and variation under ss 64 and 64A of the Trustee Act 1956. Following the decision of the Court of Appeal, only one of those defences remains: rectification. The statement of defence was filed before the summary judgment hearing and addressed other matters under the first cause of action, but now the plaintiff is concerned only with the rectification defence to his first cause of action. Particulars on other matters are not required.
Particulars of denials
[19] Most particulars applications are by defendants wanting to be better informed about a plaintiff’s case or defendants similarly wanting to know more about a plaintiff’s affirmative defences. The party seeking particulars asks the other side to expand their affirmative allegations. Particulars applications to probe denials are less common. Unless it is evasive, as under r 5.48(2), a denial puts the party making an affirmative allegation to proof. A denial may be enough to inform that party what they must prove and to prepare their case accordingly. Particulars of denials are often not required.
Denials of denials
[20] In some cases, the defendants have denied a negative allegation by the plaintiff. That is evasive. If someone denies an allegation that something did not happen, it means that it did occur and accordingly they must state what it was and give details of it.
Particulars of admissions
[21] In some cases, the defendants have admitted an allegation by the plaintiff and added an allegation by way of further information. The admission means that that matter is not contested. There is therefore no pleading requirement for particulars of the admission. The plaintiff may want more information about the matters admitted or included in the admission, but that is addressed by other means, such as discovery and interrogatories.
Responses to plaintiff’s scene-setting pleadings
[22] The statement of claim pleads background events to set the context for the plaintiff’s claims. In some cases, the defendants have not accepted the way that the plaintiff has set out the background. They have not only denied facts, but also stated other facts. The plaintiff wants to engage with the defendants on their alternative contentions. But that is inefficient. Those matters are generally peripheral to the matters in issue and it makes little sense for the parties to spend significant time and effort disputing matters not relevant to the plaintiff’s causes of action. It is unnecessary to require these matters to be developed by more particularised pleadings. These background aspects can be adequately addressed in the exchange of evidence.
Responses on financial matters
[23] The plaintiff does not agree with all the defendants’ responses to his pleadings of financial matters. It is, however, unnecessary to require further particulars because that is an ineficient way to deal with these issues. In most cases where there are disputes on accounting matters, it is better to ensure that there is a proper exchange of financial information and documents so that each side may appoint accountants to advise and give evidence as to transactions recorded in the accounts. There should be proper discovery of financial records, rather than requiring further particulars.
Arguing with the defendant’s allegations
[24] In some cases, the plaintiff wants to argue with the defendants about what they have pleaded by way of defence. While the plaintiff understands the defendants’ case, he wants to remonstrate with them and debate the merits of their defence. Ordering particulars is not the way to do that. Arguments about the merits of the defence come at the substantive hearing and do not need to be addressed in a particulars application.
Acceptable general allegations
[25] In some matters, the plaintiff has pleaded general assertions, usually by way of summing up what has gone before. In response the defendants have made a general
denial, again relying on what they have already pleaded. When a party’s general assertions can be read as relying on earlier pleadings, it is unnecessary to require that party to give a particularised answer.
The drafting of the plaintiff’s requests for particulars
[26] The plaintiff has taken a “leave no stone unturned approach” with his request for particulars and has drafted his requests for particulars to catch all eventualities. Invariably, for each challenged paragraph in the defendants’ pleading, the plaintiff begins his request with the following:
Particulars of this paragraph are sought because the defendants have failed to provide proper particulars of the events they say occurred and the basis on which they have this knowledge in accordance with r 5.48(5) of the High Court Rules 2016. Further, without proper particularisation as requested, it is insufficiently substantive to allow the plaintiff or the court to fairly understand the grounds of the defendants’ defence in accordance with rules 5.48(5) and
5.21 of the High Court Rules 2016.
And he includes these requests:
If the fact, matters and certain circumstances relied on arise due to a document, please provide a copy of the document, or if the document has been destroyed or lost, particulars of:
(1) The date it is alleged the document was created;
(2) The person alleged to have been the author of the document;
(3) The person(s) alleged to have seized the document on behalf of the trust;
(4) The date it is alleged the document was first received by the trust;
(5) How the document was at first received by the trust;
(6) Whether the document was an original or a copy;
(7) Those persons the defendants have shared a copy of the document with;
(8) The alleged content of the document;
(9) How it is alleged the document was lost or destroyed;
(10) The alleged date on which the document was lost and destroyed; and
(11)The steps that the defence allege they undertook to preserve or protect the document from destruction or loss.
And these:
If the fact, matters or circumstances relied on arise due to a conversation;
(i)when do the defendants allege the conversation took place?
(ii)where do the defendants allege the conversation took place?
(iii)who do the defendants allege took part in the conversation?
(iv)what was the content of the conversation, including those words, or words to the effect of those used by each of the parties to the conversation?
(v)those actions undertaken by the defendants to record or preserve the conversation in writing?
[27] Responding to each of these requisitions is tedious and unnecessary. I have had regard to them only when I consider that they are appropriate in a particular case.
Paragraph 14 of statement of defence
[28] Paragraph 14 of the statement of claim appears in the part giving background. It says that Shean Singh settled the proceeds of his relationship property settlement with his former wife into the trust. In response, paragraph 14 of the statement of defence denies that, but also makes affirmative assertions, including that the trust was heavily in debt and that on separation Shean paid out his wife, not the other way round.
[29] The plaintiff seeks particulars of the affirmative allegations. None of them is necessary. While each side may have different versions of what happened when Shean and his first wife separated and Shean’s financial position when he established the trust, that can be adequately addressed in evidence. Particulars are not required for scene-setting.
Paragraph 15
[30] Paragraph 15 of the statement of claim pleads that Shean’s first wife went without a substantial share of their relationship property in reliance on Shean agreeing to settle his assets on the trust to provide for the plaintiff and his sister, Olivia. Paragraph 15 of the statement of defence denies that and says that during his lifetime, Shean advised the trustees that his former wife received a substantial share of
relationship property and that he got a smaller share. Under the relationship property agreement, he received less than 50% of the relationship property. Following the separation, Shean and the trust were in substantial debt. Any equity and increase in value has occurred over the 18 years since Shean’s relationship with Darsan and with the benefit of her contributions.
[31] The plaintiff’s particulars requisition is extensive. At trial it will no doubt be necessary to establish what assets were held by the trust when it was established and what debt the trustees owed. That will presumably be provided by financial records. Beyond that, the allegations in paragraph 15 in the statement of claim are no more than contextual background and the defendants’ response likewise. Particulars are not required.
Paragraph 16
[32] Paragraph 16 of the statement of claim pleads that the assets of the trust from inception comprised almost exclusively capital and earnings introduced by Shean, including the properties in Dominion Road and Redvale. The defendants deny that. They say that the trust assets were derived from the relationship property agreement and those assets comprised a property in Peary Road, Mt Eden, two Dominion Road properties, the Redvale property and a property at Hoods Landing Road. These were subject to liabilities to the ASB Bank, a Mrs McLaughlin and Ned Quill. There were also borrowings to pay out Shean’s former wife.
[33] The plaintiff requires the defendants to give particulars of all facts, matters and circumstances to support the allegation that the Peary Road property, the property at 3/479 Dominion Road, Mt Eden and the Hoods Landing Road bach did form part of the trust assets, and particulars to support any allegation that Shean had additional borrowings to pay out his first wife.
[34] The plaintiff’s pleading sets the scene and the defendants’ response does the same. The parties’ differences can be addressed in evidence, but it is not necessary to require particulars.
Paragraph 18
[35] Paragraph 18 of the statement of claim pleads that until approximately December 2016, Darsan lived in the Redvale property as her personal residence. Paragraph 18 of the statement of defence says that Darsan occupied the Redvale property and lived there with Shean and their children until his death. After his death in May 2015, she lived there until July 2015. But in July 2015, she moved to temporary accommodation because the Redvale property was not liveable. She returned in October 2015 and moved out again in December 2015.
[36] The plaintiff makes general requisitions for particulars and asks for reasons why the Redvale property was said not to be “liveable”.
[37] The defendants have answered the substance of the plaintiff’s pleading. It was open to them to state the periods that Darsan lived at Redvale without adding any reasons why she did not live there for certain periods. That would have been an adequate response and further particulars would not be required. The reasons why she did not live there are matters of evidence which can be canvassed at the hearing. The reasons why Darsan did not live in the property do not matter so far as pleadings requirements are concerned. There is no need for particulars here.
Paragraph 19
[38] Paragraph 19 of the statement of claim pleads that since January 1999, Darsan occupied part of the Dominion Road property, either directly or through companies or trading trusts in which she had shareholdings or financial interests. The defendants admit paragraph 19. They also say that DDLTD Ltd operated from the premises. Shean’s legal practice was charged rent. That state of affairs had existed from before Shean’s death.
[39] It would have been an adequate pleading for the defendants to admit paragraph 19 of the statement of claim. The defendants did not have to provide anything further. The plaintiff, however, wants them to provide particulars of the additional matters. The particulars sought by the plaintiff go to information about DDLTD Ltd: whether
it had a lease, the arrangements between DTTLTD Ltd and Shean Singh’s legal practice, and whether any rent was received by the trustees associated with Darsan occupying the property as a tenant.
[40] That misses the purpose of pleadings and particulars – to establish what each side’s case is. One of the best ways for a defendant to avoid a plaintiff’s particulars requisition is to admit the plaintiff’s allegation and take the matter out of contention. The defendants have done that here.
Paragraph 20
[41] Paragraph 20 of the statement of claim pleads that since Shean’s death, Darsan has been the sole occupant of the Dominion Road property. The defendants admit that and go on to say that she occupies only part of the property. She uses the property not only for her occupation as a lawyer, but also as a place of residence for her and her children. This is said to be a step down from living in the Redvale property and has assisted the trust in remaining solvent.
[42] The plaintiff seeks details as to Darsan’s reasons for occupying the property, given that her companies own other properties in Auckland she could live in.
[43] The statement of defence has admitted the substance of paragraph 20 of the statement of claim. The remaining matters on which the plaintiff seeks particulars go beyond what is required for pleadings and seek a justification for matters the defendants have admitted. The particulars are not required.
Paragraph 23
[44] Paragraph 23 pleads the variation of trust of 23 August 1996. Paragraph 23 of the statement of defence admits those matters and pleads matters to justify the variation of trust. Those matters have, however, been overtaken by events. The only basis on which the defendants justify the variation of trust is their rectification defence. The matters of justification pleaded in paragraph 23 of the statement of defence are not required. The defendants accepted that they did not rely on them. Accordingly,
apart from the first sentence of paragraph 23 of the statement of defence, the rest of that paragraph is struck out. Particulars are not required.
Paragraph 25
[45] Paragraph 25 of the statement of claim pleads that the trust deed did not allow for the appointment of any further beneficiaries. The statement of defence denies paragraph 25 and states the defendants’ justification for the variation of trust.
[46] Because they denied the plaintiff’s negative allegation, the defendants were required to state how the appointment of further beneficiaries was allowed. Most of the justifications have, however, been ruled out, leaving only their rectification defence, which is referred to in paragraph 25(g). Any particulars for the rectification defence can be addressed where that is pleaded in full. The other matters of justification can be ignored. Therefore, particulars are not required.
Paragraph 28
[47] Paragraph 28 of the statement of claim pleads that following Shean’s death, the final beneficiaries of the trust were the plaintiff and his siblings. The statement of defence admits that, but also pleads that on Shean’s death, Darsan was also a final beneficiary.
[48] The plaintiff seeks particulars for the pleading that Darsan is also a final beneficiary. The point is pedantic. In the statement of claim, the plaintiff pleaded that the variation of trust, under which Darsan became the beneficiary, was unlawful and of no effect. On the other hand, the defendants rely on the variation of trust to say that Darsan is a final beneficiary of the trust. That is clear from any reading of the parties’ pleadings. It is unnecessary to make the defendants repeat their rectification defence in response to paragraph 28. It goes without saying. More particulars are not required.
Paragraph 35
[49] Paragraph 35 of the statement of claim pleads that on or about 4 June 2015 the trustees advised Shean’s children of certain matters, including:
“… (d) the trust would vest in 2016 at which time they would acquire an interest in the trust if they were still alive …”
[50] The defendants have admitted saying some of those matters and denied others including (d). They say that it was discussed that the trust would vest in 2019 when the youngest beneficiary became sui juris.
[51] For particulars, the plaintiff probes why the defendants would think that the youngest beneficiary became sui juris in 2019, when the youngest beneficiary, Elizabeth, turned 20 in 2015. The plaintiff is trying to debate the merits of the defendants’ response, but he does not need to know more by way of particulars. He already understands enough to show that the defendants’ version of what they told the children does not make sense. The particulars are not required.
Paragraph 39
[52] Paragraph 39 of the statement of claim is in the second cause of action which seeks the trustees’ removal. The paragraph pleads that by signing the deed of variation to appoint Darsan as a discretionary and final beneficiary, and amending the vesting clause, Mr Bourchier and Mahendra were acting ultra vires and the appointment was unauthorised and void.
[53] The statement of defence denies paragraph 39 and refers to matters to justify the variation of trust. Now the defendants can rely only on the rectification defence to justify the variation of trust. More particulars are not required for this paragraph.
Paragraphs 40 and 41
[54] Paragraph 40 of the statement of claim pleads that since the deed of variation the trustees have administered the trust on the basis that Darsan is a discretionary and final beneficiary. Paragraph 41 pleads that since Shean’s death, the trustees have administered the trust and managed the trust assets on the basis that Darsan is a discretionary and final beneficiary and is entitled to 60 per cent of the residual capital and income remaining on the vesting date. The defendants have admitted both paragraphs and added that Darsan is or ought to be a discretionary or final beneficiary
of the trust. For particulars, the plaintiff wants the defendants to state the facts relied on for contending that Darsan is or ought to be a beneficiary of the trust.
[55] That was cleared up in the hearing. The issue turns on the rectification defence and nothing else. If the rectification defence fails, the variation of trust will be invalid and the trustees should not have treated Darsan as a beneficiary of the trust, whether discretionary or final. Particulars are not required.
Paragraph 42
[56] Paragraph 42 of the statement of claim pleads that since Shean’s death, the trustees have managed the trust by allowing Darsan and interests in which she is beneficially interested to live in and receive benefits from the Redvale and Dominion Road properties and have not sought rent for her tenancies of either property.
[57] Paragraph 42 of the statement of defence says that the defendants have administered the trust and managed the trust assets by in part allowing Darsan and her children (beneficiaries of the trust) to live in and receive benefits from the Redvale and Dominion Road properties. Those were legitimate and authorised decisions for the trustees to make. They deny other allegations in paragraph 42.
[58] There is one aspect where the defendants’ pleading is evasive. In denying that they have not sought any rent from Darsan for her tenancy of the Dominion Road or Redvale properties, they need to state affirmatively what rent they have received from her. Accordingly, they are required to give particulars of that. That is to ensure compliance with r 5.48(2) of the High Court Rules. That has, however, been provided in a schedule to the statement of defence.7 I see no need to require the defendants to give further particulars of paragraph 42.
Paragraphs 44 and 45
[59] In paragraph 44 of the statement of claim, the plaintiff pleads that a letter of 23 February 2017 to the trustee’s solicitor stated that the trust deed did not allow
7 See [83] below.
Darsan to be appointed a discretionary or final beneficiary, and sought undertakings from the trustees that they would not allow her to derive financial benefits or make capital distributions to her until such time as a court had considered these matters. Paragraph 45 pleads that the trustees did not respond to that letter and did not provide any undertaking.
[60] The trustees admit paragraph 44 but deny paragraph 45. They say with the breakdown in relations between the plaintiff and the trustees it was decided that communications should be between lawyers. They gave undertakings in two letters (with dates given). They also deny that rent was not sought. For particulars, the plaintiff takes the point that the defendants need to do more than deny that rent was not sought. If the defendants are to say that they sought rent, they should give more details.
[61] The rental matter is extraneous to the plaintiff’s pleading in paragraph 45. The question is whether the trustees replied to a letter and gave undertakings. The defendants have adequately addressed that without going into rental issues. All the same, the schedule to the statement of defence sets out rent received. There is no need for further particulars of paragraph 45.
Paragraphs 46, 47 and 48
[62] Paragraph 46 of the statement of claim pleads that the trustees breached their fiduciary duties (which have been specifically pleaded). Paragraph 47 pleads that the trustees’ actions in treating Darsan as a discretionary and final beneficiary are a fraud on the powers of the trust. Paragraph 48 pleads that in using the trust powers to favour Darsan there was a breach of the fiduciary duty to avoid obtaining a personal benefit from the trusteeship. In response, the defendants deny paragraphs 46, 47 and 48 without adding anything else.
[63] Further particulars are not required. Paragraphs 46, 47 and 48 in the statement of claim come as conclusory allegations that rely on matters pleaded before. Just as the plaintiff did not have to plead in paragraphs 46, 47 and 48 of the statement of claim the particular matters on which he relied to allege breaches of duty by the trustees,
similarly the trustees are no more required to repeat matters which they have already addressed in earlier parts of their statement of defence.
Paragraph 50
[64] Paragraph 50 of the statement of claim alleges that Mahendra Singh demonstrated hostility and antipathy to the plaintiff (and gives particulars). In response the defendants say that the plaintiff has demonstrated hostility and antipathy to them, but without giving particulars.
[65] The defendants’ “tu quoque” allegation adds nothing to the case and can be disregarded. The matter in issue is Mahendra Singh’s fitness as a trustee, not the plaintiff’s fitness as a beneficiary. Under his case he has a vested 25 per cent interest in the trust assets. The parties and the court should not be side-tracked by personal attacks on the plaintiff. Particulars are not required.
Paragraph 51
[66] Paragraph 51 of the statement of claim pleads that Mahendra Singh has demonstrated hostility and animosity to the plaintiff to the extent that he can no longer properly administer the trust and treat the plaintiff impartially and even-handedly. It is therefore expedient to remove him. The statement of defence denies that, adds that the words were spoken under immense emotional stress and that the defendants have always done their best for the beneficiaries of the trust.
[67] The plaintiff wants particulars as to how Mr Singh came to speak the words under immense emotional stress.
[68] It is not useful to require particulars on matters like this. It goes to evidence, not pleadings. The issues have been adequately defined for the substantive hearing. The plaintiff does not need to know more to prepare his case.
Paragraph 53
[69] Paragraph 53 of the statement of claim pleads generally that it is expedient in the circumstances that the defendants be removed. In response, the statement of defence denies that and says that any such action would be to the detriment of all beneficiaries.
[70] The plaintiff’s request for particulars is misdirected. This is another case where the plaintiff has made a general assertion, relying on matters already pleaded. The defendants’ response, a general denial, is adequate. More particulars are not required.
Paragraph 55
[71] Paragraph 55 of the statement of claim pleads that it is appropriate that a receiver/manager be appointed. Four matters are pleaded in support: the imminent vesting date, the trust is cash flow insolvent, there is a risk of the trustees dealing with or disposing of trust assets imprudently and it is in the beneficiaries’ interests to appoint a receiver. Particulars of these matters are not given.
[72] The statement of defence denies paragraph 55 generally and responds specifically to each of the particulars given by the plaintiff. The pleading is adequate. There may be matters of evidence that go to the plaintiff’s allegations and the defendants’ responses, but the issues are defined adequately for the plaintiff to prepare his case. Disclosure of accounting records will assist in resolving the insolvency issue and the plea that Darsan is paying rent regularly. Other matters are more assertions of a position than factual matters on which particulars can be required.
Paragraph 57
[73] Paragraph 57 of the statement of claim comes in the third cause of action, the claim for mismanagement of the trust. The plaintiff believes that the trust’s indebtedness is over $3,139,991 and gives particulars showing how he reaches this figure. The defendants say that an interest-only loan from Westpac in May 2015 was
used to repay loans from the BNZ in full and to partly repay private loans, leaving about $290,000 still owing.
[74] The plaintiff asks for particulars about the Westpac loan being interest only, but that is a matter of evidence.
[75] The plaintiff asks for particulars of the private loan still outstanding. However, the plaintiff knows about the private loans. He pleaded particulars of them at paragraph 57(e), one a beneficiary’s account and the other from Property Sales and Purchase Ltd. The defendants have pleaded that the loan from Property Sales and Purchase Ltd has been repaid. The plaintiff can deduce that the remaining private loan indebtedness is on the beneficiary’s account. He knows enough to examine accounting records to establish the trust’s indebtedness. He also challenges the trustees’ plea that the loan from Property Sales and Purchase Ltd was interest free, but that is an attempt to debate the merits of the plea. No particulars are required for paragraph 57 of the statement of defence.
Paragraph 58
[76] Paragraph 58 of the statement of claim pleads that in August 2016, the trustees disclosed that the Redvale and Dominion Road properties had been valued at $3.36 million. The defendants admit that and add that in March 2017 the trust’s equity was about $2.2m.
[77] The plaintiff asks for particulars of the allegation as to the trust’s equity, but that is not necessary. The defendants’ admission means that there is no issue in paragraph 58 of the statement of claim that needs to be proved and therefore no particulars are required. The plaintiff may want information about the trust’s equity, but that is not a pleading matter. Discovery and examination of the trust’s accounting records are likely to help him.
Paragraph 59
[78] Paragraph 59 of the statement of claim pleads that the value of trust assets comprises entirely the increase in the market value of the properties and does not comprise any value added through the management of those assets by the trustees.
[79] The defendants deny that and add that the plaintiff refuses to acknowledge the contributions that Darsan Singh has made with the general maintenance, financial contributions, decoration, and such towards the trust properties, without which the properties would not have the values they currently have. Improvements were made to the properties to enhance the long-term wealth of the beneficiaries.
[80] In response, the plaintiff requests details and particulars of the contributions made by Darsan Singh. Given the plaintiff’s complaints that the defendants mismanaged the properties by allowing Darsan and her companies to occupy them without paying adequate, if any, rent, the defendants may wish to justify their actions by showing that Darsan added value to the properties. Accordingly, particulars should be given. Paragraph 133 of the schedule to the application details the particulars sought but these are over-prescriptive. The defendants should give particulars recognising what the plaintiff is after. As a suggestion, the details of Darsan’s contributions should be same as would be given by a plaintiff making a Lankow v Rose constructive trust claim.8 Darsan has made such a claim against the defendants and it may be heard with this one. This proceeding is however distinct. Mahendra and Mr Bourchier may not adopt all Darsan’s claims. While the plaintiff here may be given information in that proceeding, that does not relieve the defendants from giving particulars of Darsan’s contributions in this case.
Paragraph 60
[81] Paragraph 60 of the statement of claim pleads that on the limited information the trustees have given the plaintiff as to the market value of the trust assets, the equity of the trust is estimated to be less than $220,000, being assets of $3,360,000 less
$3,139,991 of debts.
8 Lankow v Rose [1995] 1 NZLR 277 (CA).
[82] The defendants deny that and say that the net value of the trust is estimated to be currently $1.7 million. The plaintiff seeks particulars how the $1.7 million is arrived at. That is a proper request for particulars. The defendants should provide a simple balance sheet as at the end of the last financial year showing assets and liabilities, using values taken from reports of registered valuers rather than book values. More detail is not required. The balance sheet will provide a basis for both sides to consider accounting records.
Paragraph 61
[83] Paragraph 61 of the statement of claim pleads that on the basis of information given by the trustees, the trust currently has no income or revenue. Particulars going back to 2005 are given. The plaintiff provides a schedule showing a shortfall in rent that could have been derived from the trust properties.
[84] The defendants deny paragraph 61 and address each of the particulars. They say that a schedule is attached setting out rent and outgoings for the Dominion Road and Redvale properties. The schedule was not in the bundle for the hearing, but I take it that the schedule can be provided without my directing it. The plaintiff wants the defendants to give particulars to show that the matters in the schedule are correct and accurate. That is asking the defendants how they are going to prove the matters in the schedule, but that is going into evidence, for which particulars cannot be required.
Paragraph 63
[85] Paragraph 63 of the statement of claim pleads that in the year ending March 2006, the trustees borrowed from the BNZ. The purpose of the loan was for the trust to on-lend $444,266 interest-free to DDLTD Ltd, and the amount of the loan was
$444,266.
[86] The defendants deny paragraph 63. They further say that the amount of the loan was for $450,000 which was repaid in full in March 2009. All loans by the trustees to DDLTD Ltd were subject to interest. They refer to repayments recorded in
a schedule. Again the schedule was not provided in the bundle and again I assume that it will be provided.
[87] The plaintiff takes issue with that pleading. He says that the records received show that no interest was received from DDLTD Ltd and the loan was not repaid. He asks for particulars how the defendants can say their plea is correct. That is misdirected. The plaintiff is asking for evidence and he is debating the merits of the plea. Particulars are not required as he knows enough to prepare his case.
Paragraph 66
[88] Paragraph 66 of the statement of claim pleads that in the year ending March 2006, the trustee advanced proceeds of the loan referred to in paragraph 63, by way of an interest-free loan to DDLTD Ltd. The defendants deny that and say that interest has been charged on all loans to DDLTD Ltd.
[89] The plaintiff wants to argue with that in the same way as for paragraph 63 of the statement of defence. The matter can be dealt with better by way of disclosure of financial records to show whether DDLTD did pay any interest on the loan. Disclosure of financial records should be enough to make that clear.
Paragraph 75
[90]Paragraph 74 of the statement of claim pleads that the trustees borrowed
$318,000 from the BNZ. The purpose of the loan was to allow the trust to meet its debts and to provide a further loan of $113,077 to DDLTD Ltd. Paragraph 75 pleads that the loan to DDLTD Ltd was interest free and does not appear to have been repaid but has been written off incrementally.
[91] In response, the defendants say that the BNZ loan was fully repaid by refinancing with Westpac Bank in May 2015. DDLTD Ltd is being charged interest on the portion of the refinancing loan that relates to its borrowings from the trust.
[92] The plaintiff’s request for particulars argues with the defendants as to how they can allege that interest was charged to DDLTD Ltd when the financial records do not
record any interest payments by DDLTD. That is a request for evidence. The plaintiff understands the defendants’ case. He does not need particulars to prepare his case. Again, the issue can be better explored by disclosure of financial records, instead of remonstrating with the way that the defendants have pleaded.
Paragraph 78
[93] Paragraph 78 of the statement of claim pleads that in the year ending March 2007, the trust took a loan from Shean for $13,993, which was recorded as a trust liability.
[94] The defendants deny that. They say that Shean did not make contributions to meet principal repayments of the loans for the Dominion Road and Redvale properties. He and Darsan did advance funds to the trust from time to time, interest free and repayable upon demand.
[95] The plaintiff wants to probe why Shean made advances to the trust and the way the defendants have kept their accounts. He says the trust’s ledgers show that payments made by Shean were applied to repay loans taken out by the trust. The matters he raises go beyond the scope of his pleading. No doubt he seeks information, but he is alive to the issues and has access to accounting records with which he can challenge the defendants’ allegations. Particulars are not required.
Paragraph 81
[96] Paragraph 81 of the statement of claim pleads that in the year ending March 2008, the trustees borrowed $129,000 from the BNZ. The purpose of the loan was to allow the trust to meet its debts and provide a further interest-free loan to DDLTD Ltd of $51,800. In response, the trustees admit the loan and say that the funds were advanced to DDLTD Ltd for investment. Its admission is qualified; it says that the details are not quite as the plaintiff has pleaded them, but the differences are not significant. The trustees also say that DDLTD Ltd partially repaid the advance by making a beneficiary distribution of $41,578 on behalf of the trust to the plaintiff in October 2007. They also say that interest on the loan was on-charged to DDLTD Ltd.
[97] The plaintiff wants to know why matters such as the repayment of the advance are relevant to his paragraph 81. This is another way of arguing the merits of the response rather than seeking particulars. The plaintiff does not accept that he received any distribution from the trust as a beneficiary. He asks for proof of the payment, but that is a matter of evidence.
[98] In the context of paragraph 81, the defendants’ allegation of a distribution to the plaintiff is a red herring. It is better not to be side-tracked by it in a particulars application. All the same it may be an issue later, as when distributions from the trust are made on the vesting date. Both sides are on notice that the distribution will need to be proved, but there is no need to order particulars.
Paragraph 87
[99] Paragraph 87 of the statement of claim pleads that in the year ending March 2008, the trust was unable to pay $50,000 due in interest on the loans from the BNZ, but the trustees took out another loan which required annual interest payments of
$11,800. The defendants have denied paragraph 87 but added nothing further.
[100] The plaintiff seeks particulars but does not say in what way he has been embarrassed by the denial. He has pleaded facts which the defendants have denied. He is therefore aware that he must adduce evidence to prove what he has pleaded. I see no need for the defendants to provide more by way of particulars.
Paragraphs 90 and 91
[101] Paragraph 90 of the statement of claim pleads that for the year ending March 2009, interest on loans from the BNZ amounted to some $79,000, but the trustees paid only $2,200 towards those loans. The total income for that period was $51,000. The trustees paid $13,728 in taxes and $76 in operational costs. Paragraph 91 of the statement of claim says that the trustees do not report what occurred with the remaining $35,443, but that amount is not recorded as having been applied against the trust’s debts or costs. The defendants have denied paragraph 91.
[102] The defendants have denied a negative assertion. If they have not failed to report something, they must have reported it. They should therefore say what they reported. However, some pragmatism is required. Obviously, there are financial statements. The plaintiff could not have pleaded paragraphs 90 and 91 without recourse to them. The matter may require an accounting investigation. Any forensic accountant engaged by the plaintiff should be able to analyse the accounts and establish how the income was applied. For preparation of that part of the plaintiff’s case, it will not matter whether the defendants’ response to paragraph 91 is evasive or not. Pressing the defendants to give a more informative response may give a better pleading but will not otherwise make a difference to how the case is run or how the plaintiff prepares his case.
Paragraph 94
[103] Paragraph 94 of the statement of claim, which comes after paragraphs alleging accounting transactions and that the trustees ran the trust insolvently. Paragraph 94 alleges that the trustees refused to provide the beneficiaries with any information to explain how or if various liabilities were actually repaid. The defendants deny paragraph 94 and add nothing further.
[104] The denial is evasive. If the trustees did not refuse to provide the beneficiaries with the information, they should state when and what they gave the beneficiaries. Particulars are required.
Paragraph 100
[105] Paragraph 100 of the statement of claim pleads that in the year ending March 2012, the trustees made an interest free loan of $130,000 to Property Sale and Purchase Ltd.
[106] The defendants deny that and say that in May 2011 the trust advanced $181,000 to Property Sale and Purchase Ltd, of which $60,000 was repaid almost immediately. They also say that Property Sale and Purchase Ltd was charged with and met all interest payments on the loan.
[107] The plaintiff seeks further particulars. He argues with the denial by stating that the trust’s bank records obtained on discovery show that no interest payments were received and the loan was not repaid. The plaintiff knows enough to prepare his evidence. It is not the purpose of particulars to require a defendant to justify their pleadings. The particulars are not required.
Paragraphs 102 and 103
[108] Paragraph 102 of the statement of claim says that when the loan to Property Sale and Purchase Ltd was made, the trust did not have the ability to meet its costs or liabilities and did not have the $130,000 or the capacity to raise that sum. Paragraph 103 says that the trustees have refused to provide any information or documents to beneficiaries to explain how the trust was able to raise the money for a fourth interest- free loan to a company under the control of Darsan, when the trustees were not reporting repayments of any loans, the trustees were actively reducing the income of the trust, and loans to Darsan’s companies had not been repaid but had been written off.
[109] The defendants deny paragraph 103. The bare denial of a negative assertion is evasive. The defendants should say how and what they reported to the beneficiaries. Particulars are required.
Paragraph 104
[110] Paragraph 104 of the statement of claim pleads that the plaintiff apprehends that the loan of $130,000 to Property Sale and Purchase Ltd was written off in the following financial year and accordingly the loan was never repaid. The defendants deny that and say, further, that the loan was repaid by Property Sale and Purchase Ltd from the proceeds of sale of two investment properties owned by that company.
[111] The plaintiff seeks further particulars of the sales of the two investment properties. The defendants should provide particulars of the repayments, the dates and amounts, but more is not required. Any more would go into evidence.
Paragraph 109
[112] Paragraph 109 of the statement of claim says that between March 2006 and March 2014, the trustees took out six separate bank loans to provide $1,744,660 to companies in which Darsan is the sole director and held all the shares (except for DDLTD, where she was a 50% shareholder while Shean was alive). The defendants admit paragraph 109 and say that all loans were at commercial rates and all interest payments have been met.
[113] The plaintiff seeks particulars of the commercial rates and payments of interest. He remonstrates with the defendants’ response because he says that from the documents disclosed by the defendants on discovery, there are no interest payments shown as having been made by Darsan Singh’s companies and the defendants have sworn that all documents about these loans have been lost or destroyed.
[114] The plaintiff has the defendants’ admission. No pleading issue remains. It is not useful to require particulars about other matters the defendants have added. The plaintiff may want more information from the defendants but asking for particulars is not appropriate here.
Paragraph 112
[115] Paragraph 112 of the statement of claim pleads that the trustees have not recorded any repayment of these loans to the companies, but they have instead incrementally written down all those loans. The defendants deny that but add nothing more.
[116] The bare denial is evasive. If the defendants say that they have properly recorded and reported in their financial statements repayment of these loans, they should state where. Particulars are required.
Paragraph 119
[117] Paragraph 119 of the statement of claim comes under the heading “Losses suffered as a result of defendants’ breaches of fiduciary duties”. The paragraph pleads
that the trustees’ actions significantly devalued the trust in the period between 2006 and 2014. In response, the defendants have made a bare denial.
[118] The plaintiff wants the defendants to provide particulars how they did not significantly devalue the trust assets. That puts the matter the wrong way round. The plaintiff has made a general assertion, relying on allegations in earlier parts of the pleading. The defendants have denied liability, also relying on their earlier allegations. They do not have to give particulars any more than the plaintiff. Putting the plaintiff to proof is not evasive. Particulars are not required.
Paragraph 120
[119] Paragraph 120 of the statement of claim pleads that the trustees have refused to provide any information about the trust’s liabilities since March 2014, so the extent to which the trust has been further devalued or whether it remains insolvent is unknown to the beneficiaries. The defendants deny the allegation but add nothing further.
[120] The bare denial is evasive. Ordinarily, if they are to maintain their denial, the defendants would be required to state how they have reported to the beneficiaries. But the point is now academic. The plaintiff has obtained discovery. Even if the trustees left him in the dark before, he now has the trust’s financial statements. He can use that information to make his case in the third cause of action. Making the defendants give particulars as to how they told beneficiaries about the trust’s liabilities may allow the plaintiff to score points but will not advance his case. He will still be able to give evidence showing how he was left in the dark and how the trustees refused to give him any information, but that goes only to context. Particulars are not required.
Paragraphs 123 and 124
[121] Paragraph 123 of the statement of claim pleads that the structure of the trust’s investments requires careful consideration, particularly given the different ages and requirements of beneficiaries and the prevailing economic conditions. The trustees did not give the required careful consideration. Paragraph 124 says, by way of
particulars of paragraph 123, that the defendants did not properly consider the options for generating income to meet the interests of all beneficiaries and to preserve the capital of the trust. In particular, they did not obtain reliable information about the loans or the income that could be earned by leasing the properties. The defendants deny paragraphs 123 and 124 and say nothing further.
[122] The defendants’ denials that they did not consider what the plaintiff says they should have requires a more specific response, for example, that they did not have to consider those matters, or that they did consider them. In the latter case they need to give details of their considerations. Particulars are required.
Paragraphs 128 and 129
[123] Paragraph 128 of the statement of claim alleges various conflicts of interest facing Darsan, as sole director and shareholder of DDLTD, sole director and shareholder of Property Purchase and Sale Ltd, as executor of Shean’s estate and as trustee. Paragraph 129 pleads that she has been unable to keep separate her duties as trustee, her interest as a beneficiary and her other capacities which conflict with her trustee duties. She treated the trust funds as if they were her personal funds, withheld and failed to pay to the trust half of Shean’s life insurance policy proceeds, and acted as solicitor for the trust either directly or by having her law firm’s employees act for the trust. The defendants deny paragraph 129 with nothing further.
[124] In his request for particulars, the plaintiff wants the defendants to say why they deny his allegations when they are incontestable. He is debating the merits of the pleading. He does not need to know more to prepare his case. Particulars are not required.
Paragraph 131
[125] Paragraph 131 of the statement of claim pleads that Mahendra Singh and Mr Bourchier failed to take proper steps to ensure that Darsan did not exercise any trust power or discretion in her own favour. The defendants deny paragraph 131.
[126] The bare denial is not adequate. The defendants should state whether they were required to take steps to ensure that Darsan did not exercise any trust power in her favour and, if so, what steps they took. Particulars are required.
Paragraph 139
[127] Paragraph 139 of the statement of claim is at the start of the fourth cause of action which seeks disclosure of trust documents. The cause of action is based on the principles in Erceg v Erceg.9 The paragraph pleads that the trustees are obliged to provide to a beneficiary such as the plaintiff, upon request, such documents as are necessary to enable that beneficiary to monitor whether the trustees are complying with the trust deed and otherwise properly administering the assets of the trust. The defendants deny paragraph 139 and further say that all relevant requested documents have been provided.
[128] Later paragraphs in the cause of action give details of requests for documents and the trustees’ responses. Paragraph 139 is accordingly introductory, and the defendants’ response is likewise. It is not necessary to require the defendants to give particulars in an introductory paragraph, when later paragraphs address the matter.
Paragraph 141
[129] Paragraph 141 of the statement of claim sets out the plaintiff’s requests for trust documents. The defendants deny the paragraph without addressing each request separately.
[130] The plaintiff wants the defendants to give particulars justifying their denial. That is not necessary. The defendants have put the plaintiff to proof on his requests. That may be tiresome for the plaintiff. But he cannot require them to justify why they have denied something obvious. The particulars are not required.
9 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320
Paragraph 142
[131] Paragraph 142 of the statement of claim deals with the defendants’ responses to the plaintiff’s requests for information. It is properly particularised, stating which documents the plaintiff received and when and recording documents that had been refused. Paragraph 142 of the statement of defence gives a bare denial with an assertion that since the start of proceedings the defendants have provided all relevant requested documents to the plaintiff.
[132] That is not adequate. There is a proper question about the scope of the trustees’ obligations to give documents under the Erceg principles. Clearly the plaintiff considers that all the information in his requests should be handed over. The defendants’ assertion that they have given “relevant requested” documents is not helpful. They should state what documents they consider should be given under the Erceg principles and what documents they have given. That will better define the issues for hearing. Particulars are required.
The rectification plea
[133] Paragraphs 150 to 156 of the statement of defence set out the defendants’ rectification defence. It is pleaded as an affirmative defence and as a counterclaim. The defendants make affirmative allegations and accordingly are required to give particulars to inform the plaintiff of their case.10
[134] The defendants’ rectification plea is general only: they say there was a common intention of the settlor and the trustees that the trust deed have a clause to allow the trust deed to be varied by allowing beneficiaries to be added or amended; the common intention continued to exist in the minds of all parties until the trust deed was signed; the common intention was objectively apparent from the words or actions of each party; the trust deed does not reflect the parties’ common intention; and the clause to vary the trust deed was omitted by mistake or inadvertence. There are no particulars.
10 High Court Rules 2016, rr 5.26(b) and 5.48(5).
[135] The pleading is inadequate. The courts consider rectification pleas warily and require convincing proof to overcome the improbability that the deed does not represent the settlor’s intentions.11 It is especially so in rectification of trust deeds where the matter turns only on the intention of the settlor. It will be all the more important in this case where the settlor has died.
[136] The defendants have pleaded rectification as if they had to prove common intention, as in a claim for rectification of a written contract. But here the intention of the settlor counts, not the intentions of the trustees. Shean was the settlor.12 Particulars of his intention are required.
[137] It is important that the intention be properly pleaded and proved. A mistake in interpretation is not enough. In Davey v Baker, the Court of Appeal said:13
It is suggested that a mistake in the interpretation of an instrument or in the legal consequences of entering into an instrument is regarded as insufficient to ground rectification; rectification is a remedy to ensure the instrument contains the provisions which the patties intended it to contain, and not those which it would have contained had the patties been better informed. The remedy of rectification is strictly limited to a clearly established disparity between the words of the document and the intentions of the parties.
(citations omitted)
In some cases, there is no mismatch between what is intended and what the document says, but the parties fail to appreciate the consequences of the words used. In others intention and text do not correspond, although the party wrongly believes them to do so. Rectification is available only in the second case.
[138] Sometimes in these cases, the settlor’s intention can be established by referring to drafts of deeds or instructions to solicitors to prepare documents. In this case, the defendants should state what documents they rely on to show Shean’s intention when preparing the trust deed. If they rely on matters other than documents, they should
11 Bonhote v Henderson [1895] 1 Ch 742 (Ch D) at 748-749; Thomas Bates & Sons Ltd v Wyndham’s Lingerie Ltd [1981] 1 WLR 505 (CA) at 521.
12 Ash v Singh [2017] NZHC 2909 at [27]-[30], not disturbed on appeal; Singh v Ash [2018] NZCA 310 at [5]-[6].
13 Davey v Baker [2016] NZCA 313, [2016] 3 NZLR 776 at [40]. See also Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 345.
state what Shean Singh said or did to show that he intended to include in the deed a provision for adjusting beneficiaries. Particulars are required.
Summary on particulars application
[139]The defendants are required to give these particulars by 29 November 2019:
(a)Paragraph 59:
(i)Identify Darsan’s contributions to the trust assets, saying whether they were by payments, services, materials or otherwise.
(ii)For each class of contribution, describe the particular contributions by Darsan, giving dates, amounts of payments, value of particular contributions (where these can be given easily, as in the purchase of materials) and other supporting details.
(b)Paragraph 60:
(i)Give a balance sheet to show how the defendants derive the net value of the assets.
(ii)Use actual values rather than book values where these are available.
(iii)The defendants need not be held to the sum of $1.7 million. The balance sheet may show the trust’s financial position at the last convenient date, for example, the end of the last financial year. Alternatively a projected balance sheet as at the trust’s vesting date may be given.
(iv)The balance sheet should show whether the proceeds of the insurance policy on Shean Singh’s life are included and, if so, how much.
(c)Paragraph 94:
(i)State whether the defendants accept they were required to provide the information in paragraph 94 of the statement of claim.
(ii)State the times when the defendants gave the beneficiaries information about the trust’s liabilities.
(iii)State which beneficiaries they gave the information to.
(iv)State how the information was given.
(v)State the information given.
(d)Paragraph 103:
(i)State whether the defendants accept they were required to provide the information in paragraph 103 of the statement of claim.
(ii)State the times when the defendants gave the beneficiaries information explaining how the trustees were able to make the loan of $129,553 to Property Purchase and Sale Ltd.
(iii)State which beneficiaries they gave the information to.
(iv)State how the information was given.
(v)State the information given.
(e)Paragraph 104:
(i)State the amounts of repayments by Property Purchase and Sale Ltd.
(ii)State the dates of those payments.
(f)Paragraph 112:
(i)State the documents which have recorded repayment of loans by companies controlled by Darsan.
(ii)State the dates and amounts of repayments recorded in those documents.
(g)Paragraph 124:
(i)State whether the defendants accept that they were required to consider options for generating income for all beneficiaries and to preserve the capital of the trust.
(ii)State whether they obtained reliable information about the loans made by the trust.
(iii)State whether they obtained information about income that could be obtained by leasing the trust’s properties.
(iv)If the defendants did take any of the steps in (i), (ii) or (iii) above, state what they did and when.
(v)State what they decided on each occasion they took any of the steps in (i), (ii) and (iii).
(h)Paragraph 131:
(i)State whether the defendants accept they were required to take steps to ensure that Darsan did not exercise any trust power or discretion in her own favour.
(ii)State what steps they took to ensure that Darsan did not exercise any trust power or discretion in her favour and, if so, what steps they took.
(iii)State when they took those steps.
(i) Paragraph 142:
(iv)State which documents or classes of documents should be given to the plaintiff as beneficiary.
(v)State which documents they have given the plaintiff. Addressing the particulars in paragraph 142 of the statement of claim, they must state which of the documents they have provided to the plaintiff and those they have refused to provide.
(vi)State the dates they provided the documents to the plaintiff.
(j)Paragraphs 150-156:
(i)State the actions of Shean Singh that showed an intention to include in the trust deed a provision to add or amend beneficiaries.
(ii)State the times of those actions.
(iii)If those actions include spoken words, state the purport of those words and the occasions they were spoken.
(iv)Identify any documents in which his intention is shown or recorded.
(v)State the facts relied on to show that Shean Singh’s intention continued from when he first formed it to the signing of the trust deed.
(vi)State the words by which the trust deed is to be rectified to conform with Shean Singh’s intention.
[140] The defendants may give the particulars in an amended statement of defence and counterclaim or by a separate memorandum filed in court and served, but they may not file and serve an amended pleading without giving the particulars. The defendants are not required to give particulars for other paragraphs in the statement of defence and counterclaim.
[141] As a tidy up matter, I record parts of the statement of defence and counterclaim that rely on defences to the first cause of action that are no longer tenable: paragraphs [147]-[149], [157]-[160], [161]-[164] and those parts of paragraph [25] that rely on these paragraphs. They can be ignored. The plaintiff does not need to plead to them.
The discovery application
[142] The plaintiff applies under rr 8.18 and 8.19 for further discovery. Schedule 1 to this decision sets out the groups of documents sought. Associate Judge Johnston made tailored discovery orders. Schedule 2 is a paraphrase of the documents the defendants were required to disclose.
[143] The defendants’ affidavit of documents of 30 April 2018 includes financial statements for the Shean Singh Family Trust, some financial reports for DDLTD Ltd, Property Sale and Purchase Ltd and Darsan Trustee Ltd, and bank statements from the BNZ and Westpac banks, ledgers for the Shean Singh Family Trust, and valuation reports. The affidavit says that loan documents are no longer in the control of the trustees. They were in the possession of Shean Singh but were destroyed in or around 2014/2015.
[144] The plaintiff seeks six classes of documents. The defendants agree to provide an affidavit disclosing documents within the first four classes, to the extent that they exist. They oppose orders for discovery for the fifth and sixth categories on the ground that they have already provided the documents in their possession or control. They are not required to provide documents within the fifth category because they are privileged and are not relevant. They oppose disclosure of documents in the sixth category because they relate to documents owned by Darsan Singh in her personal capacity, not as trustee, and are not relevant.
[145] In Lighter Quay Residents’ Society Incorporated v Waterfront Properties (2009) Ltd, Katz J summarised the principles on applications for further discovery:14
[16] Rule 8.19 of the High Court Rules allows an order for particular discovery to be made if it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered one or more documents or a group of documents that should have been discovered. The relevant principles are:
(a)Existence of the document does not have to be established on the balance of probabilities on a “more likely than not” basis. A lower threshold is required, which may vary given the relevance of the documents and issues of proportionality.
(b)While there is a presumption that affidavits of documents filed are conclusive, an application under r 8.19 is a proper way to circumvent the conclusiveness rule. The party seeking further discovery has to establish that the existing affidavit of documents is incomplete.
(c)Whether a document “should have been discovered” should be determined by reference to the “adverse documents” test in r 8.7, or any stricter test imposed under tailored discovery pursuant to r 8.8.
(d)A four-stage approach is convenient:
(i)Are the documents relevant, and if so how important will they be?
(ii)What are the grounds, and what is the probative value of those grounds, for the belief that the documents sought exist?
(iii)Is discovery proportionate? or
(iv)Weighing and balancing these matters, is an order appropriate?
14 Lighter Quay Residents’ Society Incorporated v Waterfront Properties (2009) Ltd [2017] NZHC 818 at [16].
[17]The applicants bear the burden of establishing that the relevant
grounds exist. …
(Citations omitted)
[146] Before dealing with the categories of documents, I note one aspect of discovery by trustees in proceedings brought by beneficiaries. In his fourth cause of action, the plaintiff has sought substantive orders for the defendant trustees to disclose various trust documents. He is seeking that independently of any other relief in the proceeding. That cause of action for substantive disclosure will be decided under the principles in Erceg v Erceg.15
[147] I am not deciding the substantive merits of the plaintiff’s fourth cause of action. I am dealing with something else: what discovery should be ordered for all the plaintiff’s causes of action. This decision on procedural discovery is governed by questions of relevance, privilege and proportionality. Documents may be ordered to be disclosed, even if they are not trust documents. Equally, not all trust documents are relevant for this proceeding. Salmon LJ recognised the distinction between substantive disclosure and procedural discovery in Re Londonderry’s Settlement, Peat v Walsh:16
The position is quite different where the beneficiary seeks disclosure of documents from the trustees in the air, as in this case, from the position where the beneficiary seeks discovery of documents in an action in which allegations are being made against the bona fides of the trustees. If the documents in question are in the possession or power of the trustees and are relevant to the issues in the action, they must be disclosed whether or not they are trust documents. In some instances, however, the fact that they are trust documents may nullify the privilege that would otherwise exist, as for example, if the document consists of counsel’s opinion, taken before the issue of the writ, clearly the beneficiary is entitled to see any opinion taken on behalf of the trust.
[148] Nothing in the Supreme Court’s judgment in Erceg detracts from that point. Salmon LJ spoke of allegations against the bona fides of the trustees. I take it that as being a general way of asserting that the trustees have acted in breach of duty to beneficiaries. In this case, the plaintiff’s claims of fraud on the power and breach of
15 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320.
16 Re Londonderry’s Settlement, Peat v Walsh [1965] Ch 918 (CA) at 938.
fiduciary duty have some plausible basis and are sufficient to warrant discovery along the lines of the order for tailored discovery.
First category – documents with information about loans
[149] This request arises because the defendants say that Shean destroyed all the loan agreements the trustees made as borrower or lender. The plaintiff seeks disclosure of other documents that might be evidence of the loans, for example, correspondence with the other party to the transaction. Given the differences between the parties as to the loans, the documents are relevant. The loan documents are within the documents sought in the fourth cause of action. The plaintiff has also interrogated as to the loans to obtain information, if discovery under this head is unsuccessful. As I uphold those interrogatories, it makes sense that the trustees should address this head of discovery.
Second category - life insurance policy
[150] In his will of 6 November 2001, Shean Singh directed that all his life insurance proceeds should go to the trustees of the trust and expressed his wish that the trustees pay all mortgages owed by the trustees from the proceeds of insurance. Darsan Singh is the executrix of the will under a grant of probate on 24 June 2015. She has paid only half the proceeds of the life insurance policy to the trust. She has apparently not paid over the other half, contending that she has a claim against the estate and that she personally is entitled to a half share.
[151] The plaintiff relies on this to allege a breach of fiduciary duty by her. As well, the court will need to decide the financial position of the trust including establishing its assets and liabilities.17 The documents are relevant.
[152] As executrix, Darsan Singh no doubt has in her control documents relating to the claim under the policy, her receipt of the proceeds of the policy and their application. It does not matter that the documents are in her control as executrix, not as trustee. The point is that they are in her control and she must disclose them.
17 See the particulars required for the balance sheet in paragraph [138](b)(iv) above.
Equally, the trustees are required to disclose any documents relating to their receipt of the proceeds of the policy, and how they applied the proceeds.
Third category – bank statements
[153] Under this category, the plaintiff seeks bank statements, including documents relating to loans from the Bank of New Zealand, a loan from the ASB and bank statements from nine named bank accounts. These are transactions not just with the trust but also with companies associated with Shean and Darsan. Mr Bourchier, the accountant, explains that the trust banked with the BNZ but in May 2015 changed its bank to Westpac. The trustees cannot access the BNZ’s online banking system to generate electronic historic copies of its documents of the BNZ accounts. The trustees have not found any hard copies of statements for the BNZ accounts when undertaking their searches. The trustees have, however, disclosed summaries generated through Xero accounting software, showing the BNZ accounts. They contain the same information as the original statements.
[154] The defendants’ affidavit of documents has already disclosed many bank statements. The plaintiff, however, says that these are incomplete. Counsel provided a schedule. Whereas the plaintiff had sought bank statements, the documents provided were called “Bank reconciliation summaries”. The plaintiff objected that these reconciliations were insufficient, and the actual bank statements had to be produced.
[155] The defendants accept that the documents sought by the plaintiff are relevant to the plaintiff’s case as disclosing transactions the subject of his claim. They say, however, that the “bank reconciliation summaries” are generated by Xero software and replicate the information given by the BNZ in its bank statements. It is accordingly safe for the parties to rely on the documents generated by Xero software, instead of requiring the parties to obtain documents from the BNZ, when the trust stopped doing business with the bank in 2015.
[156] I see no reason to be suspicious of records generated by Xero software. The defendants may disclose them instead of obtaining bank statements. It would be disproportionate to require more.
Fourth category - trustees’ minutes and records of decisions
[157] The defendants do not contest that they are required to disclose documents relating to their decisions as to the financial administration of the trust. They are reminded that this requirement extends to all of them and that it does not matter in what capacity they hold the documents, so long as the documents are in their control.
Fifth category – efforts to obtain discoverable documents
[158] The plaintiff requires the defendants to disclose copies of correspondence or other records evincing their efforts to obtain the documents in the first three categories and the responses from the recipients of such correspondence. In response, the defendants say that the documents are not relevant and are privileged.
[159] The plaintiff is suspicious that the defendants have not made proper efforts to locate all the documents in their control. Under r 8.14(1) of the High Court Rules, a party must make a reasonable search for documents within the scope of the discovery order. Under r 8.14(2), what amounts to a “reasonable search” depends on the circumstances, which may include:
(a)the nature and complexity of the proceeding; and
(b)the number of documents involved; and
(c)the ease and cost of retrieving a document; and
(d)the significance of any document likely to be found; and
(e)the need for discovery to be proportionate to the subject matter of the proceeding.
[160] A party making an affidavit of documents must give particulars of the steps taken to fulfil their discovery obligations, and that includes steps taken to search for
documents.18 The affidavit must also state the categories or classes of documents that have not been searched, and the reason or reasons for not searching for them.19
[161] Mr Bourchier, who swore the affidavit of documents on behalf of all the defendants, says that these steps were taken:
(a)A search through the documents in Shean Singh’s practice office and home office where he stored the files relating to the Shean Singh Family Trust.
(b)A search of DFK Oswin Griffiths Carlton’s electronic files and emails using the search term “Shean Singh Family Trust”.
(c)Contacting DFK Oswin Griffiths Carlton’s off-site archive storage facility to enquire whether there were any files registered under the Shean Singh Family Trust.
The affidavit says that loan documents are no longer in the defendants’ control and that they were destroyed by Shean Singh in 2014-2015.
[162] In Hoyle v Hoyle,20 Clarke J considered whether to order the defendant to make an affidavit of documents going to the adequacy of the searches for documents which the plaintiffs had identified as relevant but missing from his discovery. The plaintiffs contended that it was implausible that the defendant would not have the documents. The defendant’s solicitors had carried out searches for documents. Clarke J held that documents going to enquiries to find documents were subject to litigation privilege.21 Notwithstanding that, she was not satisfied that the defendant’s affidavit of documents adequately described the steps taken to obtain relevant documents. She directed him to file a further affidavit under r 8.15, particularising steps taken to make a reasonable search for documents.22 The defendant was not required to reveal privileged information.
18 High Court Rules, r 8.15(2)(c).
19 Rule 8.15(2)(d).
20 Hoyle v Hoyle [2015] NZHC 3001.
21 At [48] and [52].
22 At [53].
[163] Associate Judge Johnston’s tailored discovery order of March 2018 did not require the defendants to disclose documents showing their efforts to search for relevant documents for the proceeding. The purpose of discovery is to obtain disclosure of documents that will assist in resolving contested questions of fact. For this case, that includes the trust’s accounting records and loan transactions. But documents that go to a party’s conduct of the case, whether subject to litigation privilege or not, will not go to prove or disprove factual matters in contention. They are therefore not relevant and need not be disclosed, even under an “adverse documents” test. In most cases, once a proceeding has started or is in reasonable contemplation, many documents showing a party’s efforts to carry out a reasonable search under r 8.14 of the High Court Rules are likely to be subject to litigation privilege under s 56 of the Evidence Act 2006.
[164] The plaintiff’s concern is that loan documents between the trust, banks, Darsan Singh, and entities associated with her, have not been disclosed. If I considered that the defendants’ affidavit of documents was inadequate in describing the steps taken under r 8.15(2)(c), I would order a further affidavit to state what steps were taken. In this case, however, I am satisfied that the defendants have taken reasonable steps. They have looked in the places where relevant documents can be found – the home of the deceased, the office of the deceased, and his accountant’s. Despite their enquiries, they have not found any loan documents. I see no reason to regard their steps as inadequate. There is no reason to direct them to make further enquiries or to provide a further affidavit describing the steps they have taken in more detail. In the circumstances of this case, that would be disproportionate.
Sixth category – properties in which Darsan has an interest
[165]The plaintiff seeks documents with this information:
Details of any properties (other than the two properties owned directly by the trust) and assets in which the third defendant, Darsan Singh, has any beneficial interest, whether directly or indirectly, by way of shareholding or otherwise, including the addresses and title documents for such properties and the nature of such beneficial interest and the details of any securities to which such properties or assets may be required.
[166] In opposition, the defendants say that that relates to property owned by Darsan in her personal capacity, rather than as a trustee, and is not relevant to the issues pleaded.
[167] The statement of claim pleads transactions between the trustees and Darsan and entities associated with Darsan, DDLTD Ltd and Property Sales and Purchase Ltd. The trustees made interest-free loans to entities associated with her. The plaintiff’s case is that these interest-free loans to interests associated with a trustee, not a beneficiary, are grounds for showing misconduct by the trustee. The transactions involve breaches of fiduciary duty and fraud on a power. The plaintiff contends that these transactions were for the personal benefit of Darsan Singh, not a beneficiary. Under his case, she was not a beneficiary as the variation of trust was ineffective. It could not be a legitimate exercise of the trustees’ power to grant interest-free loans to a trustee who was not a beneficiary under the trust. The transactions enabled Darsan Singh and her companies to purchase property. If he can establish that she is liable, the plaintiff is entitled to know what properties were purchased using the funds advanced by the trustees. That may go to the remedies against her.
[168] There are good reasons to believe that Darsan has or has had documents in her possession and control relating to the transactions with the trustees and documents relating to transactions under which she and her companies acquired properties using funds advanced by the trustees. The details of those properties, their location and value, are relevant to this proceeding. If Darsan has enriched herself by making property investments using interest-free loans from the trust, taken out while she was a trustee, she ought to disclose all documents showing how she used the monies she borrowed from the trustees.
[169] It is not an objection to discovery that she has control of these documents in her personal capacity rather than as a trustee. Control does not vary according to the capacity in which she holds the documents or has access to them.23 She is required to disclose them even if they are in her control personally rather than as a trustee. She is
23 For a recent statement as to the concept of “control” see Biggs v Biggs [2018] NZHC 1592, [2018] NZFLR 580 at [225]-[228].
required to disclose documents, even if they are records of companies of which she is a director as they are documents in her control.24
[170] Admittedly documents in Darsan’s personal control are not in the control of the trustees. The other two trustees are not required to disclose documents which are in the sole control of Darsan. But that can be accommodated by directing Darsan to swear a separate affidavit of documents. There will accordingly be a direction requiring her to swear a separate affidavit of documents disclosing those documents relating to the loan transactions with the trustees, how she applied the loan funds, and giving details of properties acquired with the proceeds of the loans.
[171] I do not accept the objection that this information is publicly available. The plaintiff may be able to undertake property searches. He is based in Germany but has local lawyers. But he cannot be certain that information he obtains from searching public registers is complete. Only Darsan can ensure complete disclosure.
Summary on further discovery
[172] The defendants are required to file and serve another affidavit of documents disclosing documents that are or have been in their control that are within the application, except the fifth category – documents relating to their searches for documents. For the third category, the defendants may disclose Xero records instead of bank statements. They are not required to disclose documents which they have already disclosed. One defendant may swear the affidavit on behalf of them all.
[173] In addition, Darsan is to file and serve an affidavit of documents disclosing documents within her control, that are not or have not been in the control of the other defendants. She is to disclose those documents in whatever capacity she holds them, whether it be personally, as trustee, as executrix, as company director or any other capacity. The documents are within all the categories in the application except the fifth, but she must especially address documents in the second and sixth categories.
24 Berlei Hestia NZ Ltd v Fernyhough [1980] 2 NZLR 150 (SC).
[174] The affidavits of documents are to be filed and served by 20 December 2019. Electronic copies of the documents are to be provided at the same time.
Interrogatories
[175] In response to a notice by the plaintiff requiring them to answer interrogatories, the defendants apply under r 8.36 of the High Court Rules for an order that they are not required to answer them. They say that the interrogatories are prolix and the cost of answering is out of all proportion to the value of the questions. The interrogatories overlap the plaintiff’s application for particulars and discovery and that will affect the interrogatories. They have agreed to provide further documents which will answer many of the interrogatories.
[176]The plaintiff’s interrogatories come under these headings:
(a)Preparation, preservation, and attempts to recover copies of loan documents;
(b)loans made to a company by the trustees;
(c)loans made to a person by the trustees;
(d)loans received from a company by the trustees;
(e)loans received from a person;
(f)details of the life insurance policy;
(g)investment decisions;
(h)Family Court proceedings issued by Darsan Singh; and
(i)Trustee minutes and records.
[177] The defendants say that when all the questions under these headings are added up, they are required to answer 145 distinct matters. They complain that this is burdensome.
[178] I stated principles for interrogatories in Leishman v Levy.25 Rule 8.40 of the High Court Rules states the grounds for objecting to interrogatories:
8.40 Objection to answer
(1)A party may object to answer an interrogatory on the following grounds only:
(a)that the interrogatory does not relate to a matter in question between the parties involved in the interrogatories:
(b)that the interrogatory is vexatious or oppressive:
(c)that the information sought is privileged:
(d)that the sole object of the interrogatory is to ascertain the names of witnesses.
Interrogatories may not be used to elicit evidence, only facts.
[179] It is common to refer to the dictum of Lockhart J in WA Pines Pty Ltd v Bannerman, as to the objects of interrogatories. 26 There is a more recent statement in Disclosure by Matthews and Malek as to the purpose of information requests. Under the English Civil Procedure Rules, information requests have taken the place of interrogatories and requests for particulars.27 Much of the old learning as to interrogatories applies to the new procedure. The text’s statement as to the object of the information requests applies equally to interrogatories, namely to:
(a)obtain admissions;
(b)reveal weaknesses in the other party’s case;
(c)obtain information as to material facts which the applicant needs to prove in support of his case;
(d)ascertain details of aspects of the other party’s case so as to reduce surprise at the exchange of witness statement stage or at trial;
(e)obtain clarification of the other party’s case and to limit the other party’s ability to depart from its case as clarified; and
25 Leishman v Levy [2018] NZHC 721, [2018] NZAR 984 at [26]-[28].
26 WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 190.
27 Paul Matthews and Hodge M. Malek Disclosure (5th ed, Sweet and Maxwell, London, 2017) at 20.06.
(f)narrow the issues between the parties and thus reduce the expense and length of trial, including the expense in earlier stages of litigation such as disclosure of documents and witness statements.
The oppressiveness objection
[180] The defendants say that the number of interrogatories would place an unreasonable burden on them. They cite Shore v Thomas, where the plaintiff delivered 153 interrogatories, some of which involved sub-questions.28 Gresson J declined to allow the interrogatories, holding that they were oppressive. The case turns on its own facts. The substantive proceeding was a claim for prohibition and certiorari alleging bias, prejudice, and malperformance by the members of a transport licensing authority. The interrogatories were wide-ranging. Some involved questions of law; others related to the conduct and knowledge of other persons, not agents of the defendants; some were irrelevant or had only remote relevance; and some sought admissions in matters already admitted in the pleadings. Gresson J considered that they amounted to a searching cross-examination before trial, noting that a question put in cross- examination is not necessarily a proper question for interrogatories. He cited authorities that where there are excessive interrogatories, a court is not necessarily required to sift the interrogatories to sort out the good from the bad but may refuse to allow any of them.29 In Oppenheim & Co v Sheffield, Lord Esher MR said:30
There might be a set of interrogatories in which the individual questions, or some of them, taken by themselves, might not be objectionable; but suppose a hundred questions were asked as to a simple matter which ought to be dealt with in five, would it not be oppressive and unnecessary to ask such a number of questions, and to require the Judge and the other party to go through the whole of them to see whether there were some four or five which, if taken away, would be unobjectionable? … I think that, if the Judge, on looking at the interrogatories as a whole, comes to the conclusion that, as a whole, they are prolix, oppressive and unnecessary, he may disallow the whole; but I do not say that he must do so. (Emphasis added)
[181] There is guidance in the dictum of Collins MR in White & Co v Credit Reform Association and Credit Index Ltd:31
28 Shore v Thomas [1949] NZLR 690 (SC).
29 At 695.
30 Oppenheim & Co v Sheffield [1893] 1 QB 5 (CA) at 10-11.
31 White & Co v Credit Reform Association and Credit Index Ltd [1905] 1 KB 653 (CA) at 659.
… one general principle underlying the whole law as to interrogatories, namely that they must not be of such a nature as to be oppressive, and to exceed the legitimate requirements of the particular occasion.
(Emphasis added)
[182] To assess oppressiveness then, it is helpful to consider the purpose of the plaintiff’s claim and the information that he has obtained so far. He is suing as a beneficiary and requires the trustees to account for their administration of the trust. He has put in issue transactions between the trustees and banks, and transactions between the trustees and Darsan, not a beneficiary, and entities associated with her. He says that the trust’s loans to her and her companies were interest free. She used the funds to make property investments. So far, he has had lean pickings in obtaining particulars and discovery of documents. Importantly, the trustees say that they no longer have documents relating to the transactions the subject of the plaintiff’s claim. While trustees are under a duty to keep proper accounts and give information as required,32 the gaps in the documents mean that the beneficiary must look to other ways to obtain the information he seeks. Interrogatories are suitable to obtain that information. While I uphold some of the defendants’ other grounds for opposing the interrogatories, I do not consider that it oppressive to require the trustees to give factual information on matters relating to the administration of the trust, especially in areas where they have not provided documents.
Interrogatories 6-1033
[183] These interrogatories are about loan documents, which the defendants say in their affidavit of documents are no longer in their possession of control because they were destroyed in or around 2014-2015.
[184] The defendants object that these interrogatories are irrelevant. The normal rule is that interrogatories will not be allowed to challenge the accuracy and completeness
32 Andrew Butler Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 5.3.1(12); and see Erceg v Erceg [2017] NZSC 28.
33 Paragraphs 1-5 of the plaintiff’s notice to answer are introductory.
of the opposing party’s affidavit of documents.34 The rule is not, however, invariable.35
[185] Here, the documents the subject of these interrogatories are also the subject of the plaintiff’s claim for substantive disclosure, his fourth cause of action. He has sought disclosure of trust documents under the principles in Erceg v Erceg. The schedule of documents in the statement of claim he wants the defendants to disclose include loan documents for the agreements between the trustees and DDLTD Ltd, the loan documents for loans between the trustees and Property Sale and Purchase Ltd, and loan documents between the trustees as borrowers, and various banks and Property Sale and Purchase Ltd. As the trustees deny that they have these documents, questions to establish how the documents came into existence, where they were kept, how and when they were destroyed, whether copies were made, whether steps have been taken to obtain copies of the documents are relevant to the plaintiff’s claim in his fourth cause of action.
[186] I did not require the defendants to disclose documents in the fifth category of the plaintiff’s application: documents about the reasonableness of searches for documents.36 The questions here are not so much about the search for documents as about what happened to the documents before they were destroyed and whether there are other ways of obtaining the information in the documents.
[187] The trustees may not know the answer to all the questions, but they are required only to answer the questions to the best of their knowledge, information and belief. The questions are relevant and should be answered.
[188] The defendants object to interrogatory 9, which asks when the trustees believed that relevant loan documents were lost and destroyed, and the grounds for their belief. The defendants object that this is a matter of evidence, not a question of fact. The loss and destruction of the documents and how the documents were destroyed are relevant
34 Jacobs v Great Western Railway Company [1884] WN 33; Hall v Truman Hanbury & Co (1885) 28 Ch D 307 (CA); Robinson v Budgett [1884] WN 94.
35 Jones v Monte Video Gas Co (1880) 5 QBD 556 at 558.
36 Paragraph [165] above.
to the plaintiff’s claim under Erceg. The time of destruction may be relevant to any retrieval of the documents or copies of the documents. These are facts, not evidence.
Interrogatories 11-14
[189] These interrogatories seek information about the loans taken and given by the trustees. Apart from their general oppressive objection, the defendants do not say that these interrogatories as a whole should not be answered, but they take issue with some sub-questions. They say that they ask about evidence, not facts.
[190] Interrogatories 11(a), 12(a) and 13(a) ask the defendants to identify the powers in the trust deed that they relied on to make each loan, including specific clauses and sub-clauses. The defendants object that this is evidence.
[191] In Duke of Sutherland v British Dominions Land Settlement Corporation Ltd, a shareholder challenging the decisions of directors who refused to register transfers of his shares was entitled to interrogate the directors as to which powers under the articles of association they relied on in refusing registration.37 Similarly, in this case, the plaintiff is challenging loans given and taken by the trustees and contends that the loans were not authorised. He is therefore entitled to have the trustees state the powers they relied on to enter into these transactions. That is a matter of fact, not evidence. As in the Duke of Sutherland case, the interrogatories should be answered.
[192] Interrogatories 11(d), 12(d) and 13(e) ask what financial consideration was made before the loans. The defendants object that this is a matter of evidence.
[193] To the contrary, the financial considerations of the trustees are a relevant fact for assessing the soundness of the trustees’ decision to give or take the loans. This aspect falls on the fact, rather than the evidence, side of the line. Tomlin J’s observations in the Duke of Sutherland case are on point.38
37 Duke of Sutherland v British Dominions Land Settlement Corporation Ltd [1926] 1 Ch 746.
38 At 756 and 757.
[194] Interrogatories 11(m), 12(l), 13(n) and 14(m) are directed at identifying bank statements which are said to disclose any repayments of interest or principal of the loans. The defendants are directed to provide the document number, according to the defendants’ discovery, the amounts paid into the accounts and the dates of payment.
[195] The defendants have said that all loans were repaid. In the light of that defence, the plaintiff is entitled to know the amounts repaid, whether the repayments were principal or interest, and the dates of those payments. But recourse to bank statements goes beyond facts and goes into matters of evidence. These interrogatories are accordingly amended to require the defendants to answer as to amounts, whether the repayments were principal or interest, and the dates of payment. The defendants may of course, if they wish, refer to particular bank statements identifying the transactions in their answers, but they are not required to do so.
[196] Interrogatory 14(b) asks why the trustees believed it was necessary to undertake a private loan and asks for details of attempts to obtain finance from commercial banks.
[197] This question relates to the plaintiff’s challenge to the private loan from Property Purchase and Sale Ltd, especially given that the trustees had lent money to that trust. The defendants’ reasons for entering into the transaction are not matters of evidence but go to findings of fact required to establish the validity of the transaction. Again, the comments of Tomlin J in Duke of Sutherland v British Dominions Land Settlement Corporation Ltd are on point. 39 The interrogatory should be answered.
Interrogatory 15
[198] This interrogatory is directed at Darsan Singh, as director and shareholder of the companies to which the loans were made. She is asked to state what loan documents are in her power or possession and what steps she has taken to recover them. Except for their general oppressiveness objection, the defendants have not opposed this interrogatory. The question is directed specifically at Darsan Singh, who may know more about loan documents than the other trustees, because she is the
39 At 756-757.
director and shareholder of the companies which borrowed from the trustees. As a party to the proceeding, she can be required to answer interrogatories.40 Whether her companies have the loan documents will be relevant to the plaintiff’s claim that she as a trustee ought to make those documents available for his claim under his fourth cause of action. She should answer the questions.
Interrogatory 16
[199] Interrogatory 16 is about the life insurance policy paid to Darsan as executor of the estate of Shean Singh.
[200] The defendants object that the interrogatory is not relevant and that it goes to their discovery obligations. Darsan Singh is being asked to answer matters as executor of the estate of Shean Singh. Whether she has complied with her duties as executor is irrelevant to the plaintiff’s claims against the trustees.
[201] I have already directed Darsan to make disclosure of documents relating to the insurance policy.41 The plaintiff’s case is that as a trustee she breached her fiduciary duty when she applied half the proceeds of the insurance pay out towards her own claim against the estate instead of paying to the trust as the will required. As a trustee and a party to the proceeding, she should answer questions as to what she did with the insurance proceeds, even if she claims that she did so as executor of Shean’s estate.
[202] In my judgment, interlocutory 16 ought to be answered, only if the information sought in them has not already been disclosed in discovery to be made. That will therefore require staged orders with interrogatories to be answered after the defendants have made discovery.
[203] Interrogatories 16(f)-16(h) go to the preservation and maintenance of insurance documents. The defendants object that these are interrogatories as to the adequacy of their discovery. However, in his fourth cause of action the plaintiff has sought disclosure of information as to the life insurance and the trustees’ receipt of the
40 High Court Rules 2016, r 8.34(1).
41 Paragraphs [151]-[152] above.
proceeds. As the defendants apparently say that the insurance documents were lost or destroyed, the plaintiff’s questions are relevant to his cause of action.
Interrogatories 17 and 18
[204] These interrogatories about investment decisions ask if the trustees considered making any investments during the administration of the trusts since 1993 and on what basis their investment decisions were considered and ultimately rejected.
[205] These do not need to be answered. They are unreasonable in asking the defendants to respond to matters going back to 1993. The interrogatories are cast too widely and could not reasonably be answered. They also smack of “fishing” – of looking for other matters to sue on in addition to the plaintiff’s current causes of action. They are rejected under the oppressiveness ground.
Interrogatory 19
[206] This interrogatory asks the trustees to give information about the proceedings started by Darsan in the Family Court and transferred to this court. They ask when she informed them of the proceeding, when they were served and the like. None of those go to facts in issue in this proceeding. As they are irrelevant, they do not need to be answered.
Interrogatories 20 and 21
[207] These ask about trustee minutes and records of decisions – who made them, who kept them, and how they came to be lost.
[208] The plaintiff has not sought substantive disclosure of these documents in his fourth cause of action. The trustees have not disclosed any trust minutes or records of trust decisions in their affidavit of documents. The questions therefore query the adequacy of the affidavit of documents and do not concern any substantive issue in the proceeding. These interrogatories are irrelevant and do not need to be answered.
Summary on interrogatories
[209] The defendants are not required to answer interrogatories 17-21. They are required to answer the interrogatories in 16 only if their discovery does not provide the information the plaintiff is seeking in those interrogatories. For interrogatories 11(m), 12(l), 13(n) and 14(m) the defendants must answer as to amounts of repayments, whether the repayments were principal or interest and the dates of repayment but are not required to identify bank statements where these transactions are recorded. Subject to those matters, the defendants must give sworn answers to all other interrogatories by 14 February 2020.
Outcome
[210]The defendants are to provide the particulars in paragraph [139] by
29 November 2019.
[211]The defendants are to make discovery in accordance with paragraphs [172]-
[174] by 20 December 2019.
[212] Subject to these matters, the plaintiff’s application for particulars and discovery is dismissed.
[213]The defendants are to give sworn answers to interrogatories under paragraph
[209] by 14 February 2020. To that extent their application under r 8.36 of the High Court Rules fails. It succeeds only to the extent that I have disallowed some interrogatories.
[214] I invite counsel to confer as to costs before filing memoranda. I do not anticipate agreement. The party seeking costs should file their memorandum before the end of November. The party opposing should respond within five working days.
[215]Leave is reserved to apply for further directions.
……………………………….
Associate Judge R M Bell
SCHEDULE 1
Further discovery sought by the plaintiff
Any information about any of the loans the trustees entered into (whether as borrower or as lender) and for which they say (in Part 2 of the defendant’s affidavit of documents sworn on 30 April 2008) all documents have been lost:
(a)Details of the life insurance policy (including the insurer and policy number) which was paid out to the estate of Shean Singh (and personally to Mrs Singh, the third defendant in this matter, under a direct claim she made on that policy) and which is bequeathed in its entirety under his will (cl 5.1) to the trust) for the sole purpose of “repaying all mortgages” owed by the trust.
(b)Outstanding bank statements for the different loans and accounts held by the trust for the past seven years (being the period such documents have to be retained by banks), including but not limited to...
The application then lists various loans and gives account numbers for accounts with both the Bank of New Zealand and the Westpac Bank.
(c)Any trustee minutes or records that would demonstrate the decision making process of the trustees in respect to any decisions made by the trustees relevant to the financial administration of the trust.
(d)Copies of correspondence or other records evincing the defendants’ efforts to obtain the three documents above, and the responses from the recipients of such correspondence.
(e)Details of any properties (other than the two properties owned directly by the trust) and assets in which the third defendant has any beneficial interest, either directly or indirectly, by way of shareholding or otherwise, including the addresses and title documents to such properties and the nature of such beneficial interests and the details of any securities to which such properties or assets may be subjected.
SCHEDULE 2
Tailored discovery order paraphrased
Documents in Annexure 2 of the statement of claim;42
Bank statements for each month for the trust from December 1993 to the present;
Any investment forecast or financial model prepared by the trust for the Redvale property and any documents in connection with how the trustees saw value from the assets between December 1993 and December 2016.
All documents, bank statements, and records from 1993 to the present in respect of the beneficiary account;
All transaction records for all expenses paid from March 2008 to the present;
All documents showing how investment value was determined from December 1993 to the present;
Documents showing how, in the 2012 financial statements, a BNZ cheque is recorded as a current asset;
Documents and transaction records for the loan made by Mahendra Singh for the year ending March 2015;
Any investment forecast and financial model by the trustees for the Redvale and Dominion Road properties for renovations recorded in the 2013 financial statements;
Any documents shown how the capital costs of these renovations was to be returned via increased rent or other income to the trust;
Details surrounding the 2016 report “Trade and Other Receivables” under “Current Assets”.
42 Documents in the fourth cause of action
6
14
1