Beere v Bullock
[2023] NZHC 1172
•17 May 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-2416
[2023] NZHC 1172
IN THE MATTER OF the BEERE FAMILY TRUST BETWEEN
WARREN EARNEST BEERE
Plaintiff
AND
GEORGE BULLOCK
First Defendant
PHILLIP RAYMOND NOTTINGHAM
Second DefendantROBERT EARLE McKINNEY
Third Defendant
Hearings: 13 September 2022 and 27 March 2023 Appearances:
Andrew J Steele for the Plaintiff Defendants are self-represented
Judgment:
17 May 2023
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application to strike out proceedings, debar counsel and find counsel in contempt of Court]
This judgment was delivered by me on 17 May 2023 at 3pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Patterson Hopkins (William M Patterson), Auckland, for the Plaintiff
Copy for:
Andrew J Steele, Auckland, for the PlaintiffThe Defendants
WARREN EARNEST BEERE v GEORGE BULLOCK [2023] NZHC 1172 [17 May 2023]
TABLE OF CONTENTS Paragraph
Introduction
[1]
Background
[2]
Defendants’ applications
[18]
Notice of opposition
[20]
Defendants’ submissions
[21]
Warren’s submissions
[25]
Legal principles
[29]
Analysis
[32]
Whether Warren’s claims of breach of trust and knowing receipt
are untenable or not? [34]
Kohukohu Road property and Allen Bell Drive properties [34]
The Beazley Place property [44]
Conclusions in relation to the breach of trust and knowing receipt claim
[51]
Application to debar Warren’s counsel and find him in contempt [55]
Conclusion in relation to the application to debar Warren’s counsel and find counsel and his law firm in contempt of Court [67]
Result [69]
Orders [70]
Introduction
[1] Warren Beere claimed against George Bullock, Phillip Nottingham and Robert McKinney for breach of trust and knowing receipt.1 The defendants now bring applications to strike out the proceeding, to debar Mr Warren Beere’s counsel, and find Mr Warren Beere’s counsel in contempt of Court.
Background
[2] In December 1998, Warren’s son, Stephen, became the registered owner of 6 Beazley Place, Glendene (the Beazley Place property). On 19 January 2008, he established the Beere Family Trust (the Trust).
[3] Pursuant to an agreement for sale and purchase dated 19 January 2008, Stephen sold the Beazley Place property to himself and Mr Nottingham in their capacity as trustees of the Trust. The sale was for a consideration of a debt of $355,000, with that debt to be forgiven by Stephen over time.
[4] On 26 April 2010, Mr Nottingham retired as trustee of the Trust and was replaced by Mr Bullock.
[5] By deed of gift dated 18 October 2012, Stephen forgave the trustees for all debts owed by them to him in their capacity as trustees.
[6] On 29 July 2014, Stephen and Mr Bullock registered a mortgage over the Beazley Place property to secure a loan to the Trust from Arifin Leo. A general security agreement was signed at the same time.
1 Where surnames are common, I will for convenience, and meaning no disrespect, refer to parties by their given names.
[7] On 13 June 2015, Stephen signed a will that provided $50,000 to each of a number of beneficiaries, including Warren and Mr McKinney. The residue was to be divided equally between Mr Nottingham, his brother Dermot, and Mr Leo.
[8] A month later, the trustees of the Trust resolved to purchase 447 Kohukohu Road, Kohukohu (the Kohukohu Road property), and to enter a mortgage in favour of Mr Nottingham, securing a loan of $300,000.
[9] On 9 June 2016, the trustees and Mr Leo executed a deed of agreement and power of attorney recording that all sums borrowed by the Trust from Mr Leo had been repaid, and authorising Stephen to discharge the mortgage over the Beazley Place property. A week later, the trustees entered a deed with Mr Nottingham recording that the $300,000 loan in respect of the Kohukohu Road property had been repaid.
[10] In November 2016, Stephen and Mr Bullock, in their capacities as trustees of the Trust, became the registered proprietors of 107 Allen Bell Drive and 129 Allen Bell Drive, Kaitaia (the Allen Bell Drive properties). They had been nominated as purchasers by Stephen in his personal capacity.
[11]Stephen died without children on or around 3 August 2019.
[12] On 1 October 2019, a deed of variation of Trust was executed. It purported to retire Mr Bullock as trustee, and to appoint Mr Nottingham as settlor and trustee. A later deed, dated 17 October 2019, acknowledged an error in appointing Mr Nottingham as settlor, and stated that the trustees acknowledged Mr Nottingham was appointed only as trustee.
[13] On or around 6 November 2019, Mr Bullock signed a statutory declaration that he held the Kohukohu Road property and the Allen Bell Drive properties in his own name, free of all trusts and equities. The following day, those properties were transferred to Mr Bullock as though he were absolutely and beneficially entitled to them. He then transferred the properties to Mr Nottingham on the basis that Mr Nottingham was beneficially entitled to them.
[14] On or around 24 May 2021, the defendants executed a deed by which Mr Bullock retired as a trustee and Mr McKinney was appointed as trustee in his place. The record of title for the Beazley Place property records that on that day, title to the property was transferred from Stephen and Mr Bullock to Mr Bullock and Mr Nottingham. It was transferred again to Mr Nottingham and Mr McKinney on 10 December 2021.
[15] On 10 December 2021, Mr Nottingham and Mr McKinney, in their capacities as trustees, obtained a loan of $300,000 from Kensington Finance, secured by a mortgage over the Beazley Place property. The defendants say this loan was used to repay a loan and mortgage secured over the Beazley Place property in favour of ANZ Bank and to pay certain legacies to legatees named in Stephen’s will dated 13 June 2015 as if they were beneficiaries of the Trust.
[16] Warren has brought these proceedings alleging breach of trust and related causes of action by the defendants. He claims the defendants have dealt with the Trust properties inconsistently with the terms of the Trust and that they ought to be removed as trustees. He seeks orders vesting the Beazley Place property, Kohukohu Road property, and Allen Bell Drive properties in an independent trustee and associated declarations and other relief.
[17] The defendants now seek orders debarring William Patterson and his firm Patterson Hopkins from acting for Warren in this proceeding; finding Mr Patterson and his firm in contempt of court; striking out the proceedings with a permanent stay; and any other orders the Court thinks relevant.
Defendants’ applications
[18]The defendants seek orders.2
[1]Debarring Counsel, William Patterson, and the Firm Patterson Hopkins, from any involvement in the proceedings; and
[2]Finding counsel and the firm Patterson Hopkins in contempt of court, and;
2 Defendants’ applications dated 12 April 2022.
[3]Striking out the proceedings with a permanent stay.
[4]Any other orders considered relevant.
[19]The grounds on which the orders are sought are:
[i]Intentional vexation, and criminal harassment,
[ii]Purposeful, and/or reckless false accusation, malicious defamation, and scandalous pleadings,
[iii]No case to answer, no cause of action, unwinnable case, and no investigation as to sufficiency of, [or any] evidence, to mount claim, and being aware of evidence completely contrary to that pleaded that entirely dispensed with substance for claims, prior to filing, and then confirming claim was impossible when communicating no evidence held, and no inquiries made, in the annexed communication [marked “A”] of 22 March 2022, and when the Plaintiff, Plaintiffs counsel, and the law firm of Patterson Hopkins failed, and refused to reply, [thus admitting to the allegations pursuant to HCR 5.62[2]] to the positive allegations and affirmative defences of the defendants pursuant to HCR 5.62 and 5.63 [which HCR’s are annexed marked “B” and “C”].
[iv]Counsels corruption, money laundering, coercion, blackmail, theft, conflicts, and involvement in proved actionable fraud by the Plaintiff, Plaintiff’s counsel, and the law firm of Patterson Hopkins, against the Defendants, and their Lawyers, as admitted by the Plaintiff, Plaintiff’s counsel, and the law firm Patterson Hopkins, when failing, and refusing to reply, [thus admitting HCR5.62[2]] to the positive allegations and affirmative defences of the defendants pursuant to HCR 5.62 and 5.63.
[v]Making knowingly false allegations in pleadings of theft, fraud, forgery, and false declaration, when the allegations were impossible to have been believed.
[vi]Making knowingly false allegations in declarations of theft, fraud, forgery, and false declaration, to LINZ in order to obtain caveats to use in further attempts at blackmail and theft, and fraud, when the allegations were impossible to have been believed, and were invented for the criminal purpose of defeating, perverting, and obstructing justice.
[vii]Being aware of debts amounting to over $3.5m to creditors when alleging that no good or any consideration was given or received by the defendants, in an attempt to defraud creditors and to pervert, defeat, and obstruct justice.
[viii]Being aware that the plaintiff had concealed and stolen circa $500k from the estate and had attempted to defraud the creditors to the Trust and the estate and made false allegations in the past and had aided and abetted, along with the assistance of Arifin Leo, Steindle Williams, and Dentons to steal and launder $2m in New Zealand funds using a fraudulent GA and mortgage and to coerce payment of $3m to $4 in
Estate Assets in Jakarta in order to protect the Trust and Estate Assets in New Zealand.
[ix]Admissions by the Plaintiff, Plaintiff’s counsel, and the law firm, to that conduct alleged in paragraphs [i] to [viii] when failing, and refusing to reply, [thus admitting to the allegations pursuant to HCR5.62[2]] to the positive allegations and affirmative defences of the defendants pursuant to HCR 5.62 and 5.63.
[x]Plaintiff’s counsel, and the law firm, threatening to use HCR 8.4 in a threatened application to strike out the statement of defences containing the crucial positive allegations and affirmative defences when aware that the allegations were to be admitted by failing to deny them pursuant to HCR 5.62 and 5.63.
[xi]Admissions pursuant to HCR 5.62 and 5.63 meaning that there existed no defence for the Plaintiff, Plaintiff’s counsel, and the law firm to the same allegations to be made in intended consequential proceedings in tort and in defamation, seeking circa $3m to $5m.
[xii]Propensity offending as related in the findings of English High Court [Chancery Division] Justice Birss in the now infamous Pugachev- Patterson case where the Court found Mr William Patterson to have:
[a]Lied to Heath J in the High Court in New Zealand in the Sergei Pugachev case, when Heath J was unaware of the deceits designed to defeat, obstruct and pervert justice.
[b]Lied to Rose, and Richards JJ [and other English Justices of the High and Courts of Appeal], when those Judges doubted the veracity of the evidence under oath, and Rose J sentenced Mr Patterson’s client and conspirator in a $4b money laundering scheme with OPK Limited, Churton Trust, and numerous other entities.
[c]Lied to Birss J when falsely asserting that;
[i]Mr Patterson did not know that Mr Pugachev was the settlor of trusts in order that Mr Patterson and Mr Pugachev would successfully maintain the concealing and laundering of $4b in assets in devices designed by Mr Patterson for that specific purpose.
[ii]Mr Patterson did not represent Mr Pugachev and do his bidding on a daily basis in order that Mr Patterson and Mr Pugachev would successfully maintain the concealing and laundering of $4b in assets in devices designed by Mr Patterson for that specific purpose.
[xii] Annexed marked “D” is an article from the Stuff website that clearly identifies the criminal activity of Mr Patterson. Annexed marked “E” is a short sample of the findings of Birss J against Mr Patterson that leaves nothing to the imagination.
[xiv] The applicants want the debarring matter heard first.
Notice of opposition
[20]Warren opposes the defendants’ applications on the following grounds:3
(a)Paragraph [i] — There has been no intentional vexation, and criminal harassment. The Respondent has brought a civil action against the Applicants in good faith and based upon the documentary information available to him which has been disclosed to the Applicants in the course of initial disclosure in accord with High Court Rules 8.4.
(b)Paragraph [ii] — The allegations in this paragraph are of a similar nature to paragraph [i] and the Respondent’s response is the same,
(c)Paragraph [iii] — The causes of action pleaded in the Respondent’s statement of claim herein are based on the information and documents in the possession of the Respondent. Contrary to the Applicants’ assertion, the Respondent is not aware of evidence contrary to what has been pleaded. The letter dated 22 March 2022 from Patterson Hopkins, on behalf of the Respondent, to the Second Defendant is a routine request that the High Court Rules in respect to initial disclosure be complied with. The statement that the non-compliance with the Rules would be brought to the attention of the Court is, similarly, a routine statement in the course of court proceedings. Finally, the Respondent has not yet filed a reply because the statements of defence filed by the Applicants do not comply with the High Court Rules or usual principles of pleading because they are prolix, contain scandalous and irrelevant material, and plead evidential matters and submissions of law. This issue is being raised with the Court in order to have the defences properly pleaded whereupon formal replies will be filed and served if they are properly required.
(d)Paragraph [iv] — The Applicants’ allegations against the Respondent, against the solicitor-on-the-record and the law firm Patterson Hopkins are patently false and scandalous to the extent that there likely constitute an improper use of the court’s process. The Respondent has made no admissions in respect to the Applicants’ allegations and conjecture. For the avoidance of doubt the allegations are denied.
(e)Paragraph [v] — All allegations pleaded by the Respondent in his statement of claim have been made in good faith and in the belief that they are true having regard to the information and based upon the documentary information available to him. The Applicants’ contention that the Respondent’s allegations “were impossible to have been believed” is denied.
(f)Paragraph [vi] — The allegations in this paragraph are of a similar nature to paragraph [v] and the Respondent’s response is the same.
(g)Paragraph [vii] — The Respondent has no knowledge of any debts by the trustees of the Beere Family Trust in a sum over $3.5 million and
3 Notice of opposition to application by defendants dated 12 April 2022 (dated 28 April 2022) at [3].
therefore denies the existence of such debts. The balance of the paragraphs is denied.
(h)Paragraph [viii] — The Respondent has no knowledge of any of, and therefore denies, the matters alleged in this paragraph.
(i)Paragraph [ix] — The Respondent repeats that he has not yet filed a reply because the statements of defence filed by the Applicants do not comply with the High Court Rules or usual principles of pleading because they are prolix, contain scandalous and irrelevant material, and plead evidential matters and submissions of law. This issue is being raised with the Court in order to have the defences properly pleaded whereupon formal replies will be filed and served if they are properly required.
(j)Paragraph [x] — The Respondent denies that he has used any reference to the High Court Rules improperly.
(k)Paragraph [xi] — The Respondent repeats what is said in relation to paragraph [ix] above.
(l)Paragraph [xii] — The proceeding referred to in this paragraph is irrelevant to the present proceedings.
(m)Paragraph [xiii] — A Stuff.co.nz article is not evidence. The proceeding referred to in this paragraph is irrelevant to the present proceedings.
(n)Paragraph [xiv] — No ground nor allegation is contained in this paragraph, so a response is not required.
(o)The Applicants have no adduced evidence in support of the Application, so it should be struck out.
Defendants’ submissions
[21] The defendants, representing themselves, submit that the facts pleaded in Warren’s statement of claim are speculative and false. They say Warren’s concerns are not evidenced, are proven to be without foundation and are grounds for strike-out. They submit Warren and his counsel have made false allegations in respect of the defendants’ purported breach of trust and knowing receipt. In any event, they say, the trustees had every right, under cl 21.1 of the Trust deed, to sell, call in and convert into money any part of the Trust fund in such manner and on such terms as they saw fit.4
[22] The defendants submit that Warren’s behaviour is vexatious, and that there is Warren’s claim lacks merit. They say therefore that strike-out is appropriate. They
4 Synopsis of submissions of applicant defendants dated 26 August 2022 at [4]–[23].
say claim has no possibility of success, the pleadings are deficient, and the allegations are unsupported by evidence.5
[23] Further, the defendants say Warren and his lawyers have made unsubstantiated allegations of fraud against the defendants. They submit the allegations are defamatory and irrelevant. They say counsel have a duty to the Court not file false pleadings and not to mislead by commission or omission. By alleging fraud, the defendants submit, Warren’s lawyers have breached their duties and applicable rules of conduct.6
[24] Finally, the defendants submit that Warren’s claims cannot succeed, no matter how they are pleaded. They seek that the Court grant their applications, which they say are sought to prevent further abuse of the Court’s processes to cause vexation, delay, and substantial damage to the defendants, the Trust, and the Trust’s creditors and beneficiaries.7
Warren’s submissions
[25] Mr Andrew Steele, for Warren, submits that strike-out applications proceed on the assumption that the facts pleaded in the statement of claim are true. The Court will only strike out a proceeding where the cause of action is so clearly untenable that it cannot possibly succeed. The jurisdiction is exercised sparingly, and none of the grounds the defendants plead is tenable or entitles the defendants to the orders they seek. He says that Warren’s case is that the Northland properties are trust assets, and they were transferred to Mr Nottingham for no consideration in circumstances where he was not entitled to them. If that pleading is treated as true, it establishes that both transfers were in breach of trust and that Mr Nottingham was a knowing recipient. That alone suffices to dispose of the defendants’ strike out application as concerns the Northland properties.8
5 At [24]–[37].
6 At [38]–[56].
7 At [57]–[58].
8 Synopsis of submissions of counsel for the plaintiff dated 9 September 2022 at [17]–[22].
[26] Mr Steele submits that Warren’s case in relation to the Beazley Place property is that it is a trust asset, that Mr Bullock dishonestly transferred it to him and Mr Nottingham for no good consideration in circumstances where they had no entitlement to it, and that Mr Bullock and Mr Nottingham then dishonestly transferred the property to Mr Nottingham and Mr McKinney for no consideration and in circumstances where they had no entitlement to it. Again, he submits, these pleaded allegations would clearly support findings by the Court that the defendants had transferred and received the Beazley Place property in breach of trust and with knowledge of that breach. That should dispose of the strike-out application so far as it concerns the Beazley Place property.9
[27] Turning to the applications to debar and find counsel in contempt, Mr Steele submits that the defendants have made serious and scandalous allegations of criminal conduct, which they have not substantiated with evidence. He says the allegations are reckless and without foundation. Further, he submits the defendants’ residual grounds are without merit, premature or otherwise irrelevant.10
[28] Summarising, Mr Steele says the defendants have fallen short of establishing any proper grounds for the debarment of Mr Patterson from the proceeding or for holding him in contempt. Neither have they established that Warren’s causes of action are untenable. Mr Steele says the defendants’ application was hopeless from the outset
— so hopeless that the Court can form the view that it was issued to cause delay and to avoid scrutiny of the defendants’ conduct in relation to the Trust and its properties. Given the defendants’ reckless and unfounded allegations, and the extraordinary volume of irrelevant evidence they have filed, Mr Steele submits that the application should be dismissed with indemnity costs awarded against them.11
Legal principles
[29]Rule 15.1 of the High Court Rules 2016 provides, relevantly:
15.1 Dismissing or staying all or part of proceeding
9 At [26]–[29].
10 At [30]–[40].
11 At [41]–[43].
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading[.]
[30]There are established criteria for strike out:12
(a)A strike out application proceeds on the assumption the pleaded facts are true, unless those pleaded facts are entirely speculative or without foundation.
(b)The cause of action or defence must be clearly untenable.
(c)The jurisdiction is to be exercised sparingly and only in clear cases.
(d)The jurisdiction is not excluded by the need to decide difficult questions of law.
(e)The Court should be slow to strike out a claim in any developing area of the law, perhaps particularly where a duty of care is alleged in a new situation.
[31] The legal basis on which the defendants seek Warren’s counsel debarred and held in contempt is unclear. Accordingly, I do not address here any principles going to debarment and contempt.
Analysis
[32]The issues to be determined in this judgment are:
(a)whether Warren’s claims of breach of trust and knowing receipt in respect of the Kohukohu Road property, the Allen Bell Road properties and the Beazley Place property are untenable or not?
12 Attorney-General v Prince & Gardner [1998] 1 NZLR 262 (CA) at 267; and Couch v Attorney- General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
(b)Whether there are grounds established to debar Warren’s counsel from acting for Warren or hold him in contempt of Court?
[33]I deal with each of these in turn.
Whether Warren’s claims of breach of trust and knowing receipt are untenable or not?
Kohukohu Road property and Allen Bell Drive properties
[34] Warren, in his statement of claim, alleges that the breach of trust and knowing receipt claims against Mr Bullock and Mr Nottingham arise as follows:
(a)On 2 November 2019, the transmission by survivorship of Stephen’s interest in the Kohukohu Road property was registered in favour of Mr Bullock as trustee of the Trust, so making Mr Bullock sole registered proprietor of the property;
(b)On 7 November 2019, a transmission by survivorship of Stephen’s interests in the Allen Bell Road properties was registered in favour of Mr Bullock, so making Mr Bullock sole registered proprietor of these properties.
(c)Mr Bullock’s interest in the Kohukohu Road property and the Allen Bell Drive properties were transferred to Mr Nottingham on 7 November 2022.
[35] The statement of claim alleges that in respect of the transfer of Kohukohu Road property and the Allen Bell Drive properties by Mr Bullock to Mr Nottingham was in breach of trust in that:
(a)Mr Nottingham was not a beneficiary or a trustee of the Trust and so has no lawful right to receive ownership of the Trust property other than for good and adequate consideration;
(b)the transfer of the Kohukohu Road and Allen Bell Drive properties by Mr Bullock to Mr Nottingham was not for any good consideration.
[36] In relation to the claim of knowing receipt of the properties by Mr Nottingham, the statement of claim alleges:
(a)Mr Bullock and Mr Nottingham knew that the Kohukohu Road property and the Allen Bell Drive properties were assets of the Trust;
(b)Mr Bullock and Mr Nottingham knew that Mr Nottingham was not a beneficiary of the Trust;
(c)Mr Bullock and Mr Nottingham knew that Mr Nottingham had never given or promised to give good or adequate consideration for the transfer of the properties;
(d)further, and alternatively, when Mr Nottingham received the Allen Bell Drive properties knowing that he received them in breach of trust;
(e)Mr Bullock and Mr Nottingham knew that the transfer of the properties was contrary to the interests of the beneficiaries of the Trust.
[37] The defendants claim, in respect of the Kohukohu Road property and the Allen Bell Drive properties, that the properties were transferred to Mr Nottingham for good consideration and to repay debt to him owed by the Trust for work carried out on the Kohukohu Road property and the Allen Bell Drive properties. The defendants submit that accordingly no breach of trust has occurred in relation to these properties.
[38] The defendants rely on the following as evidence of the work carried out by Mr Nottingham on the Kohukohu Road property and the Allen Bell Drive properties, and the debt owed by the Trust to Mr Nottingham:
(a)extensive photographic evidence of the physical work undertaken by Mr Nottingham;
(b)affidavit of Mr Harvey John Taylor dated 30 June 2022 (in particular as to the work carried out by Mr Nottingham);
(c)affidavit of Mr Nottingham dated 5 July 2022, and subsequent affidavits of Mr Nottingham dated 8 August 2022, 19 August 2022, 28 September 2022, 28 November 2022 and 22 March 2023;
(d)affidavit of Mr Aaron Kashyap dated 11 July 2022 (in particular as to the circumstances of mortgage over the Kohukohu Road property in favour of Mr Nottingham and the subsequent conveyance of the Kohukohu Road property to Mr Nottingham by the trustees);
(e)the affidavit of Mr Bullock dated 11 July 2022 (in particular paragraph 24 as to the transfer of the Kohukohu Road and Allen Bell Drive properties), and a subsequent affidavit dated 18 August 2022;
(f)affidavit of Mr McKinney dated 14 July 2022, and a subsequent affidavit dated 8 August 2022;
(g)affidavit of Dermot Gregory Nottingham dated 21 July 2022;
(h)valuations of Kohukohu Road property ($340,000 as at 18 February 2020) and the Allen Bell Drive properties (129 Allen Bell Drive - $255,000, and 107 Allen Bell Drive - $55,000 as at 29 January 2020);
(i)affidavit of Johnathan Wayne McGoram, dated 7 February 2023.
[39] The defendants rely on the deed of 6 September 2017 being the Deed of Clarification of Facts and on the Deed of the Beere Family Trust accepting debts owed to Phillip dated 7 September 2017. In particular:
(a)clause (viii) of the 6 September 2017 Deed purports to repudiate the nomination by Stephen Beere of the Trust as the purchaser of the Kohukohu Road property and the Allen Bell Drive properties;
(b)clause (xiii) of the 6 September Deed states that the Deed is created to protect the interests of Mr Nottingham, which interests to be described
as those Mr Nottingham shall choose to “claim, relay, litigate, defend, settle, fund, etc without any limitation of any kind”;
(c)under the Deed of 7 September 2017, the Trust “accepts” that historic present and future debts owed to Mr Nottingham and that all the property of the Trust is held in trust for Mr Nottingham until all debts are paid to Mr Nottingham”. Further on in the Deed, the Trust undertakes that all property it holds in trust for Mr Nottingham until such time he is paid for whatever claims he has pursuant to the 6 September 2017 deed.
[40] Both of the 6 September 2017 and 7 September 2017 deeds are signed by Mr Nottingham, using the enduring power of attorney he holds from Stephen Beere dated 19 January 2008.
[41] The defendants further rely on Stephen’s will dated 13 June 2015 and the Deed of Variation of Trust dated 14 June 2015, pursuant to which the terms of the Trust were varied so that the beneficiaries under the Trust were changed to reflect the beneficiaries under Stephen’s will. The defendants assert that the effect of the variation was that Warren’s interest in the Trust was limited to a $50,000 gift.
[42] The defendants assert that these documents mean that the transfer of the Kohukohu Road property and the Allen Bell Drive properties to Mr Nottingham was not in breach of trust when this occurred in November 2019 as the documents demonstrate that the properties were held in trust for him to satisfy debts owed by the Trust to Mr Nottingham.
[43] Mr Steele, on the other hand, submits that the validity of these documents needs to be tested at trial and points to the following, relating to the trustees’ actions:
(a)A deed signed by Stephen and Mr Bullock and Mr Nottingham declaring that all monies owed to Mr Nottingham had been repaid. This deed was dated 16 June 2016 prior to the deeds of 6 and 7 September 2017 which purported to establish the properties to be used as security
for debts owed by the Trust to Mr Nottingham and held on trust for him until those debts were paid.
(b)The debts owed by the Trust to Mr Nottingham were unquantified and uncorroborated.
Mr Steele submits that accordingly these documents are suspicious and require their validity to be tested at trial.
The Beazley Place property
[44] The statement of claim alleges that the transfer of the Beazley Place property by Mr Bullock to himself and Mr Nottingham on or about 24 May 2021 was a breach of trust in that:
(a)neither Mr Bullock nor Mr Nottingham are beneficiaries of the Trust and had no right to receive the Trust property other than for good or adequate consideration;
(b)the transfer of Beazley Place to Mr Bullock and Mr Nottingham was not for good or any consideration.
[45] The claim pleads that Mr Bullock and Mr Nottingham received the Beazley Place property knowing it was in breach of trust because:
(a)at all material times, Mr Bullock and Mr Nottingham knew the Beazley Place property was an asset of the Trust;
(b)Mr Bullock and Mr Nottingham knew they were not beneficiaries of the Trust;
(c)Mr Bullock and Mr Nottingham received Beazley Place knowing they had not given any good or any consideration to the Trust for the transfer of the property to them;
(d)Mr Bullock and Mr Nottingham received the Beazley Place property knowing they received it in breach of trust;
(e)Mr Bullock and Mr Nottingham knew the transfer of the Beazley Place property to them was contrary to the interests of the beneficiaries of the Trust.
[46] The statement of claim alleges a further breach of trust occurred when the Beazley Place property was transferred on 10 December 2021 by Mr Bullock and Mr Nottingham to Mr Nottingham and Mr McKinney. The statement of claim alleges this was in breach of trust because:
(a)neither Mr Nottingham nor Mr McKinney are beneficiaries nor trustees of the Trust and have no lawful right to receive ownership of the Trust property other than for good or adequate consideration;
(b)the transfer of the Beazley Place property to Mr Nottingham and Mr McKinney was not for good or any consideration.
[47] The statement of claim also pleads that the receipt by Mr Nottingham and Mr McKinney of the Beazley Place property in December 2021 was received by them knowingly in breach of trust in that:
(a)Mr Bullock, Mr McKinney and Mr Nottingham knew the Beazley Place property was an asset of the Trust;
(b)Mr Bullock, Mr McKinney and Mr Nottingham knew that neither Mr McKinney nor Mr Nottingham were beneficiaries of the Trust;
(c)Mr Bullock, Mr McKinney and Mr Nottingham knew that neither Mr Nottingham nor Mr McKinney had given nor promised to give good or indeed adequate consideration for the transfer of the property;
(d)further and alternatively, Mr Nottingham and Mr McKinney received Beazley Place knowing that they received it in breach of trust;
(e)Mr Bullock, Mr McKinney and Mr Nottingham knew that the transfer of Beazley Place to Mr Nottingham and Mr McKinney was contrary to the interests of the beneficiaries of the Trust.
[48] The defendants plead that the transfer of the Beazley Place property were transfers as a result of change of trustees in the Trust, and point to the letter of 24 May 2021 by which Mr Bullock retired as trustee and Mr McKinney was appointed as trustee, with Mr Nottingham continuing as a trustee. The defendants therefore submit that there is no breach of trust and no knowing receipt as the Beazley Place property has at all times remained in the Trust.
[49] Mr Steele submits that while the defendants’ assertion that the Beazley Place property was simply being transferred as the trustees changed, the defendants have claimed that the Trust is a sham and should be set aside, and was merely a device to defeat creditors and there is no equity or property in the Trust as a result of various debts, contracts, agreements and securities and other encumbrances affecting Beazley Place property.13
[50] Mr Steele submits that this raises the issue as to whether the conduct of the trustees with regard to the Beazley Place property from the time it was established needs to be reviewed as to whether their conduct has been in the interests of the beneficiaries of the Trust and in accordance with trustees’ duties.
Conclusions in relation to the breach of trust and knowing receipt claims
[51] The evidence presented by the defendants, in my view, raises strong arguments in favour of the following:
(a)Mr Nottingham carried out significant works to the Beazley Place property and was owed money by the Trust in payment for such work;
13 Mr Steele refers to a number of reference in the Bundle of Affidavits: para 61 at page 1003; para 198 at page 191; paras 232/233 at page 194; para 510 at page 225; para 18 at page 510; para 35 at page 514; para 69 at page 523; para xxvi at page 640 ad para 19 at page 1314.
(b)Mr Nottingham carried out significant work on the Kohukohu Road property and the Allen Bell Drive properties and was owed money by the Trust in payment for such work;
(c)that the Beazley Place property has remained in the Trust, and the transfers of the Beazley Place property only reflect changes to the trustees.
[52] However, in my view, there are still issues with the conduct of the trustees of the Trust which need to be examined. In particular, these include:
(a)in relation to the Kohukohu Road property and the Allen Bell Drive properties, while, as noted at [51] the evidence may establish that Mr Nottingham carried out extensive work on these properties for which he was unpaid and was owed a debt by the Trust, the decision of the trustees to transfer these properties to Mr Nottingham needs to be examined. There are questions about the discharge by the trustees of their duties in that:
(i)how was the value of the work established and corroborated?
(ii)was the decision to transfer the properties in the interests of the beneficiaries?
(iii)the documents of 6 September 2017 and 7 September 2017 require testing in the Court as, among other things, they purport to reject the nomination of the Trust by Stephen as purchaser of the Kohukohu Road property and the Allen Bell Drive properties, notwithstanding the fact the Trust had become the registered proprietor of these properties;
(iv)the documents purport to allow Mr Nottingham unrestricted claims to be made against the properties without valuation or corroboration of those claims being required by the trustees.
(b)the dealings of the Trust in relation to the Beazley Place property, and in particular dealings relating to:
(i)why the property is listed as an asset of Stephen in his will of 13 June 2015 when the property is ostensibly owned by the Trust;
(ii)the circumstances surrounding the mortgage and the GSA placed over the property in favour of Mr Leo and the discharge of those securities;
(iii)work carried out on the property by Mr Nottingham, the value of that work;
(iv)the discharge by the trustees of their obligations in dealing with the amounts owed to Mr Nottingham;
(v)while from the documentation the defendants have produced the property still appears to be in the Trust and the transfers to be resulting from a change of trustees, allegations by the trustees that the Trust is a sham and has been involved in a number of sham transactions which require explanation and validation.
[53] None of these matters can be resolved in the context of a strike-out application, and require to be tested at trial. Consequently I am of the view that the claims brought by Warren are not untenable and should not be struck out
[54]Accordingly, the application to strike out the proceedings should be dismissed.
Application to debar Warren’s counsel and find him in contempt
[55] The defendants allege that Mr Patterson is a blackmailer, a thief and a fraudster and he is corrupt (ground [iv] of the defendants’ application dated 12 April 2022).
[56] The defendants further allege that the security granted to Mr Arifin and the underlying loan were fraudulent and a device to defeat creditors. They allege that Warren and Mr Patterson conspired to enforce the security granted to Mr Arifin.
[57] The defendants also allege that Mr Patterson and the law firm Patterson Hopkins, knowingly made false allegations and declarations of theft, fraud, forgery and false declaration to LINZ in order to obtain caveats to use in further attempts at blackmail, theft and fraud, when the allegations were impossible to have been believed, and were invented for the criminal purpose of defeating, perverting and obstructing justice.
[58] Mr Steele submits that there is no evidence to support these serious allegations. In particular, in relation to the security granted to Mr Arifin, this was discharged and released on 24 May 2021 and Mr Patterson was first contacted by Warren in this matter on 19 August 2021. Mr Steele submits that Mr Patterson had no earlier involvement with any of the parties before that date and, again, the allegations are reckless and without foundation.
[59] The defendants also assert that Mr Patterson was aware of debts of $3.5 million to creditors but nevertheless alleged “no good or any consideration was given or received” from the defendants, was aware that Warren had concealed or stolen circa $500,000 from the estate and had aided and abetted Mr Arifin, Steindle Williams Lawyers and Dentons Lawyers to steal and launder $2 million by way of a fraudulent GSA and coerce payment of $3 million to $4 million in estate funds in Jakarta to protect the Trust and estate in New Zealand.14
[60] Mr Steele submits that the defendants adduced no evidence that the matters referred to at paragraph [56] are factually correct and accurate, and no evidence that Mr Patterson knew any of the above, and accordingly the allegations are reckless and without foundation.
[61] The defendants also raise a point of pleading by alleging that because Warren has not replied to the claim of affirmative defences in the defendants’ statement of
14 Grounds in paragraphs [vii] and [viii] of the defendants’ application dated 12 April 2022.
defence, Warren’s claim is rendered untenable by virtue of rr 5.62 and 5.63 of the High Court Rules 2016.
[62] In response to this, Mr Steele submits the statements of defence are a rambling scramble of opinions, hearsay, recollections, submissions, and allegations and irrelevant material from which it is not possible to discern a clear defence, certainly not “affirmative defences”. He also submits that the defendants failed to comply with their initial disclosure obligations until 14 July 2022, several months after the application was filed. Mr Steele submits that because the Court has not yet determined the adequacy of the pleaded defences, the defendants’ contention in respect of the affirmative defences is premature, and to the extent replies are required, they will be filed in due course.15
[63] The defendants submit that Warren, Mr Patterson and the law firm of Patterson Hopkins, threatened to use r 8.4 in an application to strike out the statements of defence and were aware that the allegations were to be admitted by failing to deny them pursuant to rr 5.62 and 5.63.
[64] Mr Steele submits, in response to this, that this ground is untenable because Associate Judge Andrew issued a minute dated 30 May 2022 transforming Warren’s request for initial disclosure into a Court direction. Consequently, Warren’s antecedent request can constitute an improper threat.
[65] The defendants refer to “propensity offending” arising from an English Court judgment in Pugachev.16 Mr Steele submits in response to this allegation that it has no merit, Mr Patterson holds a current practising certificate as a barrister and solicitor and so is entitled to be a solicitor on the record for the purposes of r 5.38 in relation to this proceeding. He submits the defendants’ efforts to smear Mr Patterson and his firm is in keeping with similar efforts in relation to anyone they perceive to be acting contrary to their interests.
15 Mr Steele refers to Associate Judge Andrew’s minute dated 30 May 2022, at [5] and [6].
16 Pugachev – ground [xii] of the defendants’ application dated 12 April 2022.
[66] The defendants refer to a Stuff article.17 Mr Steele submits in response to this that the article does not mention Mr Patterson and is otherwise irrelevant.
Conclusion in relation to the application to debar Warren’s counsel and find counsel and his law firm in contempt of Court
[67] I am of the view that these allegations against Warren’s counsel, Mr Patterson, and his law firm are not supported by evidence other than allegations made by the defendants in their affidavit evidence, without corroboration or supporting evidence.
[68] Accordingly, I decline to make any order debarring Mr Patterson or his law firm from acting in this proceeding or holding Mr Patterson or the law firm of Patterson Hopkins in contempt of Court.
Result
[69] As a result the conclusions I have reached at [51] to [54], [67] and [68], I am of the view that:
(a)The defendants’ application to strike out Warren’s claims of breach of trust and knowing receipt should be dismissed;
(b)The defendants’ application to debar Mr Patterson and his law firm, Patterson Hopkins, from acting for Warren and hold Mr Patterson in contempt of Court should be dismissed.
Orders
[70]I make the following orders:
(a)the defendants’ application to strike out Warre’s claims of breach of trust and knowing receipt is dismissed;
17 Ground [xii] of the defendants’ application dated 12 April 2022.
(b)the defendants’ application to debar Mr Patterson and his law firm, Patterson Hopkins, from acting for Warren and hold Mr Patterson in contempt of Court is dismissed;
(c)as costs should follow the event, costs are awarded to Warren on a 2B basis, together with disbursements.
…………………………….. Associate Judge Taylor
4