Beric v Eady

[2021] NZHC 1755

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000879

[2021] NZHC 1755

IN THE MATTER

of the estate of DIANA MAITLAND EADY

AND

a trust settled by Roy Granville McElroy on 12 March 1965 known as the Diana M Eady Family Trust and the ECI Trust

BETWEEN

PETER BERIC as beneficiary of the estate of Diana Maitland Eady suing derivatively on behalf of the estate

First Plaintiff

PETER BERIC suing in his personal capacity

Second Plaintiff

AND

OLAF GUY EADY, JOANNA MAITLAND CHAPLIN EADY and SIMON HOLM

EADY as the executors and trustees of the estate of the late Diana Maitland Eady
First Defendants

Contd/2

Hearing:	17 June 2021
Appearances:	V Bruton QC and P Brown for Plaintiff A J Steele for First Defendants
Judgment:	13 July 2021

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Tuesday, 13 July 2021 at 4:00 pm

pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

BERIC v EADY [2021] NZHC 1755 [13 July 2021]

OLAF GUY EADY, JOANNA MAITLAND CHAPLIN EADY and

SIMON HOLM EADY in their capacity as trustees of the Diana M Eady Family Trust

Second Defendants

OLAF GUY EADY, JOANNA MAITLAND CHAPLIN EADY and
SIMON HOLM EADY in their capacity as recipients of the assets of the Diana M Eady Family Trust on or about 3 April 2017

Third Defendants

OLAF GUY EADY, JOANNA MAITLAND CHAPLIN EADY and
SIMON HOLM EADY in their capacity as trustees of the ECI Family Trust Fourth Defendants

[1]    This proceeding has been set down for a 10-day hearing commencing on     30 August 2021. On 26 May 2021, the plaintiff filed an interlocutory application challenging privilege claims made by the first defendants as the executors and trustees of the estate of the late Diana Maitland Eady (the deceased). The plaintiff is the former de facto partner of the deceased. The first defendants are the three children of the deceased. The three children are also named as the second, third and fourth defendants in different capacities. I heard argument on the application on 17 June 2021.

Factual background

[2]    The plaintiff was in a de facto relationship with the deceased for 32 years from 1986 until her death in 2018. The plaintiff shared an apartment (Highpoint) with the deceased in Parnell and a holiday home in Rāwhiti in Northland. Within weeks of the deceased’s death, the deceased’s three children, in their capacity as trustees of the ECI Family Trust, changed the locks on the Highpoint apartment, effectively evicting the plaintiff, and served trespass notices on him in relation to both Highpoint and Rāwhiti.

[3]    In this proceeding, the plaintiff alleges that the defendants embarked on an improper scheme to deprive him of any property, for their own personal benefit. The plaintiff says he made contributions to the trust wealth and is entitled to provision from it.

[4]    At issue is the discoverability of the contents of estate planning files held by solicitors Martelli McKegg, relating to the period from 2012 to the deceased’s death in 2018. By Court order dated 14 December 2020, the first defendants were directed to provide discovery of “solicitors’ files relating to Diana’s estate planning from 2012 to 2018”. However, in a subsequent affidavit of documents sworn on 8 March 2021, the first defendants claimed solicitor/client privilege for almost the entirety of the estate planning files.

Leave

[5]    Before the plaintiff’s grounds may be addressed, the first defendants contend that the plaintiff must first satisfy the Court that leave should be granted to bring the application, as it was filed after the close of pleadings and at a time when all parties’ cases were well advanced in terms of preparation for trial.

[6]    The plaintiff says the formal application was delayed by the lateness of the first defendant’s affidavit of documents, the executors taking a blanket approach to claiming privilege, senior counsel’s full-time study commitments at Waikato University and the need to secure legal aid funding before a formal application could be made.

[7]    I am of the view that leave should be granted. The paramount consideration is that the parties should have every opportunity to ensure that the real controversy goes to trial so as to secure the just determination of the proceeding.1 I am also of the view that, if granted, the order sought will not cause significant delay or prejudice to the defendants. Counsel submits that the further documents to be discovered as a result of this application (to the extent successful) will likely be put to the first defendants in cross-examination. The documents are unlikely to affect the evidence-in-chief of the parties. Leave is, however, given for the parties to make application for directions to accommodate that possibility if the application succeeds.

Challenge to privilege claims

[8]    The challenge to the first defendant’s privilege claims is made under r 8.25 of the High Court Rules 2016:

8.25 Challenge to privilege or confidentiality claim

(1)If a party challenges a claim to privilege or confidentiality made in an affidavit of documents, the party may apply to the court for an order setting aside or modifying the claim.

(2)In considering the application, a Judge may require the document under review to be produced to the Judge and may inspect it for the purpose of deciding the validity of the claim.

(3)The Judge may—

1      Oraka Technologies Ltd v Geostel Vision Ltd [2015] NZHC 991 at [17].

(a)set aside the claim to privilege or confidentiality; or

(b)modify the claim to privilege or confidentiality; or

(c)dismiss the application; or

(d)make any other order with respect to the document under review that the Judge thinks just.

[9]The grounds advanced for the orders sought are:

(a)A consent discovery order was made on 14 December 2020 pursuant to which the first defendants agreed to provide discovery of “solicitors’ files relating to Diana’s estate planning from 2012 to 2018”;

(b)Notwithstanding the consent discovery order, the first defendants appear to have simply gone through their solicitors’ files, listed each document and made a blanket claim of privilege;

(c)In respect of many of the documents, no claim for privilege could possibly be made. Examples include memoranda of wishes of the deceased and the deceased’s will. There is no privilege in documents which are generated and signed, such as memoranda of wishes and wills, even if that happens after legal advice is obtained. It is the communications between solicitor and client leading up to that point that may be privileged;

(d)In respect of many of the documents, if there was a starting point for claiming the privilege, it has been waived (including in respect of all related communications) as a result of disclosure of the document in evidence in the proceedings, or because of discovery by the defendants in their other capacities;

(e)The documents have come into the first defendants’ hands as executors and as a result they cannot assert solicitor/client privilege against the plaintiff as a beneficiary of the estate. It is incorrect to claim that the documents were prepared for the dominant purpose of litigation. They were prepared for the dominant purpose of the deceased’s trust and

estate planning. The defendants have used various documents and affidavit evidence when giving evidence about the deceased’s wishes and related trust and estate planning. Having done so, it is improper for them to seek to hide the documents (and the related communications) from the plaintiff in Court by claiming privilege.

Discussion

[10]   The first defendants have filed an affidavit from a consultant at Martelli McKegg, Angus John Brockway Rogers, who was the first point of contact and supervising partner with respect to the deceased’s instructions to Martelli McKegg during her lifetime. He says that the first conversation he had with the deceased pertained to her personal situation and, more particularly, concerns she had that following her death, the plaintiff would bring litigation and/or claim an interest in her personal assets and assets held by the trustees of the Diana M Eady Family Trust. The deceased told Mr Rogers that she did not wish the plaintiff and her children to fight each other, but this was probable if the plaintiff was not provided for in some way following her death.

[11]   Mr Rogers says that the deceased expressed a desire to provide for the plaintiff following her death, but his firm identified it was not possible given that the plaintiff was not a beneficiary of the Diana M Eady Family Trust and the deceased did not have personal assets of any worth. It was against this background that Mr Rogers advised the deceased in planning her estate. This included obtaining an independent expert quantification of her interest in the Diana M Eady Family Trust with a view to enriching the deceased’s personal estate and providing her with capital that she could leave to the plaintiff under her will.

[12]   Mr Rogers is quite clear that it was never intended that the plaintiff would be privy to the advice he gave the deceased. The deceased never proposed to share his advice with the plaintiff during her lifetime, nor after her death. In fact, the deceased specifically directly Mr Rogers not to send anything to her by email as the plaintiff had access to her email inbox. The deceased directed Mr Rogers to speak to her by telephone only and send all correspondence to her via her children’s email addresses.

The deceased’s wishes and Mr Rogers’ intention was that this advice would remain confidential as between her, her children and her lawyers.

[13]   At all times in advising the deceased, Mr Rogers was alert to the likelihood that the plaintiff might bring a claim against the deceased, her estate, or the Diana M Eady Family Trust. He says that the litigation risk was always “front and centre” as demonstrated ultimately by the condition in the deceased’s final will, which provided that the plaintiff would get half of the deceased’s estate on condition that he did not issue proceedings against either her estate or the trustees of the Diana M Eady Family Trust.

[14]   Mr Rogers unequivocally assures the Court that all of the legal advice that he gave the deceased in respect of planning her estate was in the knowledge and genuine apprehension of a claim or claims which the plaintiff might bring.

[15]   On the face of it, the documents on the files are subject to privilege by virtue of s 54 of the Evidence Act 2006 (the Act). Section 54 relevantly provides:

54 Privilege for communications with legal advisers

(1)A person who requests or obtains professional legal services from a legal adviser has a privilege in respect of any communication between the person and the legal adviser if the communication was—

(a)intended to be confidential; and

(b)made in the course of and for the purpose of—

(i)the person requesting or obtaining professional legal services from the legal adviser; or

(ii)        the legal adviser giving such services to the person. (1A) The privilege applies to a person who requests professional legal

services from a legal adviser whether or not the person actually obtains such services.

[16]   In addition to the privilege for communications with legal advisers, s 56 may also provide privilege. It relevantly provides:

56 Privilege for preparatory materials for proceedings

(1)Subsection (2) applies to a communication or information only if the communication or information is made, received, compiled, or prepared for the dominant purpose of preparing for a proceeding or an apprehended proceeding (the proceeding).

(2)A person (the party) who is, or on reasonable grounds contemplates becoming, a party to the proceeding has a privilege in respect of—

(a)a communication between the party and any other person:

(b)a communication between the party’s legal adviser and any other person:

(c)information compiled or prepared by the party or the party’s legal adviser:

(d)information compiled or prepared at the request of the party, or the party’s legal adviser, by any other person.

[17]   Here, the documents on the estate planning files were not brought into existence by the deceased for the dominant purpose of litigation. They were brought into existence by the deceased and her lawyers for the purpose of her estate planning. A major part of all estate and trust planning is often to avoid litigation. The documents were therefore not prepared for the dominant purpose of litigation, but to put in place plans to prevent litigation. Whether or not s 56 applies, I have no doubt that privilege attaches to the documents on the estate planning files in terms of s 54 of the Act.

[18]   Turning then to the grounds advanced in the application for disclosure. First, the first defendants did indeed agree to discover the solicitors’ estate planning files, but it cannot be the case that they agreed to waive privilege in respect of all documents contained therein simply by including the files in the list of discovery to be provided. Any such waiver would need to be explicit and unambiguous.

[19]   Secondly, a blanket claim to privilege was not made – there are a number of documents in the estate planning files which are described as “Listed open above”.

[20]   Thirdly, the first defendants accept that no claim to privilege could possibly be made for documents intended to be disclosed, such as the deceased’s will or the deceased’s memorandum of wishes. On the other hand, the plaintiff accepts that communications between the deceased and her lawyers leading up to the drafting of such documents may be privileged.

[21]   Fourthly, having found that the documents are subject to privilege in terms of s 54, the question is whether or not the first defendants have waived that privilege other than by including the files in the list of discovery to be provided. Counsel refers

to seven documents as already having been disclosed or discovered by the first defendants in their other capacities:

(a)Transcript of meeting with the deceased –23 March 2016;

(b)Draft report by KPMG dated 1 June 2016 quantifying value of the deceased’s alleged life interest in the Diana M Eady Family Trust;

(c)Transcript of meeting with the deceased, one of her children (Joanna Chaplin) and a Martelli McKegg solicitor, Fiona McGeorge;

(d)The deceased’s letter to Martelli McKegg dated 17 October 2016;

(e)Emails from Joanna Chaplin to Fiona McGeorge;

(f)Email from Fiona McGeorge to the deceased’s three children dated  21 September 2017; and

(g)Unsworn affidavit of the deceased dated February 2018.

[22]   The plaintiff submits that disclosure of these documents is inconsistent with the claim of confidentiality. The plaintiff submits that if confidentiality and privilege has been waived as it has been in relation to the above documents, it is inconceivable that the first defendants can “cherry pick” and nevertheless assert privilege in respect of other documents on the estate planning files that they do not want the plaintiff to see.

[23]   However, I am of the view that it is clear from the context of the disclosures, which are disparate and unrelated to each other, that no general waiver is required in the interests of justice or as a matter of fairness beyond the above documents.

[24]   In particular, the transcripts of the meetings with the deceased together with her unsworn affidavit were completed on instructions from the deceased specifically for disclosure regarding her relationship with the plaintiff. No privilege is therefore

claimed  in  relation  to  the  transcripts or affidavit.    These documents set out the deceased’s reasons for her will.

[25]   The fifth and final ground advanced by the plaintiff is a joint interest exception to the claim for privilege. The plaintiff argues that because he is a beneficiary of the estate, any documents coming into the hands of the first defendants as executors of the deceased’s estate cannot be privileged against him as a beneficiary of the estate.

[26]   I agree with counsel for the first defendants that an immediate problem for the plaintiff is that the information he seeks was not generated by the first defendants as executors of the deceased’s estate, but by the deceased herself when she was alive. The documents do not relate to the deceased’s estate because the estate was not in existence when the documents were created.

[27]   The plaintiff relies on two authorities in support of his application — Hall v Guardian Trust2 and Laery v Grout.3 In Hall, the testator died on 20 April 1935. Callan J held that there was a period from 30 May 1935 until 6 August 1935 when the Guardian Trust was an executor of the will under which the plaintiffs were beneficiaries. Callan J stated:

If, then, among the documents for which the Guardian Trust Co has claimed privilege there are included documents which came into its possession as executor, it cannot, in my view, now withhold these documents from the plaintiffs. This applies even to documents which contain or record legal professional advice or opinions given to the executors or one of them, or were prepared in the course of obtaining such advice.

[28]   Callan J stated, however, that he was not prepared, by reference to the schedule in the company’s affidavit of documents, to attempt an enumeration of documents for which it had claimed privilege but for which, in his view, no privilege existed. He thought it unsafe to proceed by a consideration merely of dates without knowledge of the contents of the documents.

2      Hall v Guardian Trust [1939] NZLR 993.

3      Laery v Grout [2014] NZHC 2495.

[29]   Furthermore, Hall needs to be seen in light of the recent Supreme Court decision of Lambie Trustee Limited v Addleman.4 The Supreme Court noted that the joint interest exception first developed in respect of the law of trusts and the ability of beneficiaries to obtain legal advice given to trustees in relation to the administration of the trust.5

[30]   There was, however, no joint interest in this case because there was no will trust in existence until the deceased died. There was no trustee-beneficiary relationship between the deceased and the plaintiff. Hall does not stand for the proposition that legal professional privilege held by the deceased personally is lost upon her death. The deceased’s privilege can be asserted by her successors in title and executors of her estate.

[31]   In Laery v Grout, Venning J said that on the authority of Hall v Guardian Trust, the executors of a will executed by the deceased would not be able to resist a beneficiary’s application for discovery of documents held by them relevant to the will files under which she is a beneficiary. If the Judge was referring to documents (including any legal advice obtained) created by the executors in the course of their administration of the estate, then Laery is consistent with Addleman.

[32]   The plaintiff is even now not a beneficiary of the deceased’s estate. The plaintiff’s interest in one-half share of the estate was conditional on him:

Not making any claim of any sort in relation to my estate (including any claim under the Property (Relationships) Act 1976) and [the plaintiff] making no claim whatsoever, including any claim under the Property (Relationships) Act 1976 in relation to the Diana M Eady Family Trust and any Trust on which the assets of the Diana M Eady Family Trust are subsequently settled…

[33]   The plaintiff chose to make claims against both the estate and the trustees. He, therefore, does not have beneficial interest in the deceased’s estate for which he could claim a joint interest with the first defendants.

4      Lambie Trustee Ltd v Addleman [2021] NZSC 54.

5 At [73].

Result

[34]   The plaintiff’s application to set aside the privilege claimed in categories C, J, K of the first defendant’s affidavit of documents sworn 8 March 2021 is dismissed.

[35]   Costs are to follow the event. If they cannot be agreed, memoranda are to be filed within one month of the date of this judgment.

Woolford J

Solicitors:           Priscilla Brown, Auckland, for Plaintiff

Martelli McKegg (AW Johnson), Auckland for First Defendants

Keegan Alexander (PJK Spring and AK Hyde), Auckland, for Second to Fourth Defendants

Counsel:            V Bruton QC, Auckland for Plaintiff

J Steele, Auckland, for First Defendants

S Jefferson QC, Auckland, for Second to Fourth Defendants