BETH INNES AND CHRISTOPHER ROBERT DARLOW as trustee of the Innes Property Trust ISABELLE BOYLE, NICK INNES, DOUG INNES, LUKE INNES, RUBY DAY and SOPHIE HOOPER s CARLA INNES
[2024] NZHC 2614
•11 September 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-439
[2024] NZHC 2614
IN THE MATTER of the Innes Property Trust BETWEEN
BETH INNES
Plaintiff
AND
CHRISTOPHER ROBERT DARLOW as
trustee of the Innes Property Trust First Defendant
ISABELLE BOYLE, NICK INNES, DOUG INNES, LUKE INNES, RUBY DAY and SOPHIE HOOPER
Second Defendants
CARLA INNES
Third Defendant
Hearing: 30 August 2024 Appearances:
J W McDougall and S B Mossman-Young for Plaintiff No appearance for First Defendant
A S Cavanaugh and K Zhu for Second Defendants Ms C Innes appears in person for Third Defendant
Judgment:
11 September 2024
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 11 September 2024 at 4.15 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
INNES v DARLOW [2024] NZHC 2614 [11 September 2024]
[1] The plaintiff brings this claim against the first defendant, the trustee of the Innes Property Trust (the Trust), seeking damages for an alleged failure by former trustees of the Trust to compensate her for services she says she provided to the Trust. Her causes of action allege breach of contract, estoppel and quantum meruit.
[2] On 22 March 2023, Jagose J made directions for service of the proceeding on the plaintiff’s siblings. The plaintiff and her siblings are all beneficiaries of the Trust. Six of those siblings filed a statement of defence on 8 May 2023 and are the second defendants. A further sibling, the third defendant, filed a statement of defence on 13 August 2024. One sibling has taken no part in this proceeding.
[3] The plaintiff applies by way of interlocutory application for an order under s 145 of the Trusts Act 2019 (the Act) directing the parties to attend mediation. The first defendant does not take a position in relation to the application. The second and third defendants oppose the application.
[4]The primary issues arising are:
(a)Does the Court have the power to make a referral of this proceeding to mediation under s 145? This turns on whether the proceeding is an “internal matter” for the purposes of s 145.
(b)Should the Court exercise its discretion and order the parties to attend mediation?
Background
[5] Mark and Lucy Innes were married and had nine children.1 Lucy died in July 2019. Mark died in December 2020. The plaintiff, second defendants, third defendant and Hannah Innes are their children.
1 Pseudonyms have been used instead of the parties’ real names. The names that have been adopted are those used in the earlier judgment of Judge Coyle in the Family Court as it was published, Innes v Darlow [2024] NZFC 4096.
[6] Lucy left the whole of her estate to Mark. Mark, in turn, left his estate equally to the nine children. Mark and Lucy also settled assets on the Trust. Their nine children are discretionary beneficiaries and the final beneficiaries in equal shares.
[7] The assets of Mark’s estate and the Trust are substantial. However, the plaintiff was dissatisfied with the equal distribution of the assets between the siblings, and instructed lawyers to seek further provision for herself. In a letter of 10 November 2021 her lawyers wrote with a proposal that the estate and Trust assets be divided into 10 parts, with her receiving two parts and each of the other siblings receiving one part.
[8] In response to the plaintiff’s proposal, in a letter of 17 November 2021, the lawyers for the second defendants sought clarification of the legal basis for the plaintiff’s claim to a greater share. In particular, they asked:
What is the basis for the claimed compensation in the form of a higher percentage share in the estate and in the assets of the Trust?
Does [the plaintiff] say that she had an agreement with her parents that she would be paid for her time or otherwise compensated for work undertaken? If so, what were the terms of that agreement?
[9]The plaintiff’s lawyers responded on 15 December 2021 as follows:
There is no documentation to contradict that provision of equality, and no testamentary promises were made to [the plaintiff]. [The plaintiff], however, made a natural assumption that because the burden of being involved in the day to day concerns of her parents fell entirely on her, that this would be recognised by her siblings.
(emphasis added)
[10] In March 2022 the plaintiff filed a claim in the Family Court for orders under the Family Protection Act 1955 against Mark’s estate. There were delays in getting to hearing which the second defendants say were the responsibility of the plaintiff.
[11] In March 2023 the plaintiff also commenced this proceeding and applied to transfer her claim in the Family Court to this Court for hearing. That application was opposed and was dismissed by Judge Coyle in a judgment of 3 July 2023.2
2 Innes v Innes [2023] NZFC 6755.
[12] The claim in the Family Court was heard in March 2024. The plaintiff’s claim was dismissed by Judge Coyle in a judgment dated 11 April 2024.3 The judgment is notable for the criticisms the Judge made of the plaintiff and her manner of conducting the claim, and what he regarded as her intention to diminish and demean her siblings’ contributions to Mark and Lucy.4
[13] The plaintiff alleges that Mark and Lucy (who were two of the three trustees of the Trust) agreed, promised or induced her to provide services in consideration for which they would use their powers as trustees to compensate her for those services out of the trust fund. In respect to each cause of action she seeks special damages, general damages, interest, costs and other relief. The quantum of the relief sought is to be quantified prior to trial, but is stated to be no less than $720,000 in “reliance losses” and $300,000 in “expectation losses”.
The law
[14] Section 143 of the Act provides that if there is no provision in the terms of a trust that requires or empowers a trustee to refer a matter to an alternative dispute resolution (ADR) process, a trustee may “with the agreement of each party to the matter” refer the matter to ADR.
[15]Section 145 of the Act relevantly provides:
145 Power of court to order ADR process for internal matter
(1)The court may, at the request of a trustee or a beneficiary or on its own motion,—
…
(b) otherwise submit any matter to an ADR process (except if the terms of the trust indicate a contrary intention).
(2)In exercising the power, the court may make any of the following orders:
(a)an order requiring each party to the matter, or specified parties, to participate in the ADR process in person or by a representative:
3 Innes v Darlow, above n 1.
4 At [5], [6], [35], [38], [39], [42], [61] and [62].
(b)an order that the costs of the ADR process, or a specified portion of those costs, be paid out of the trust property:
(c)an order appointing a particular person to act as a mediator, an arbitrator, or any other facilitator of the ADR process.
(3)This section applies in relation to internal matters only.
[16]“Matter” is defined at s 142 as:
matter—
(a)means—
(i)a legal proceeding brought by or against a trustee in relation to the trust; or
(ii)a dispute in relation to the trust between a trustee and a beneficiary, or between a trustee and a third party, or between 2 or more trustees, that may give rise to a legal proceeding; but
(b)does not include a legal proceeding or a dispute about the validity of all or part of a trust.
[17] “Internal matter” is defined as “a matter to which the parties are a trustee and 1 or more beneficiaries, or a trustee and 1 or more other trustees, of the trust”.
[18] “External matter” is defined as “a matter to which the parties are a trustee and 1 or more third parties”.
[19] It appears there have been six decisions of this Court on contested applications under s 145. In three instances the Court granted the applications, and in three declined to do so.
[20] In these cases the Court recognised that ADR will very often be preferable to litigation as a means of resolving trust disputes. Even if the jurisdiction thresholds imposed in s 145 are met, the Court retains a discretion whether to refer a proceeding to ADR,5 but the fact that one or more parties’ object to ADR cannot be determinative.6
5 S v N [2021] NZHC 2860 at [29].
6 Wright v Pitfield [2022] NZHC 385 at [30].
[21] A decision upon which the plaintiff relies is Wright v Pitfield, where Venning J recognised the benefits of mediation and the reality that many disputes will settle at mediation despite an initial unwillingness of a party to attend:7
[35] ... The Court’s approach to mediation has changed considerably since then. A pithy encapsulation of the response to concerns about compelling parties to attend a voluntary process can be found in the speech by Lord Phillips, the Lord Chief Justice of England and Wales in 2008:8
‘Those opposed argue that compulsion is the very antithesis of mediation. The whole point of mediation is that it is voluntary. How can you compel parties to indulge in a voluntary activity? ‘You can take a horse to water, but you cannot make it drink’. To which those in favour of compulsory mediation reply, ‘yes, but if you take a horse to water it usually does drink.’ Statistics show that settlement rates in relation to parties who have been compelled to mediate are just about as high as they are in the case of those who resort to mediation of their own volition.’
[22] In deciding whether to make an order under s 145 the Court must balance all relevant factors that bear on the exercise of its discretion. The Act does not set out a list of relevant factors the Court should consider but case law provides some guidance. In S v N, Wylie J noted some of the factors were:9
… cost, confidentiality, speed, the seriousness and complexity of the matter, the suitability of the proposed mediator, the wishes of the parties, the wishes of the settlor (if known), finality and enforceability. This is not meant to be an exhaustive list …
(footnote omitted)
[23] I would add to these factors the likelihood that ADR will be successful as a means of resolving the dispute, in respect to which the merits of the case being advanced may be important. I would also expect the Court to be slow to refer a case to mediation where it is plainly unmeritorious.
7 Wright v Pitfield, above n 6.
8 Lord Phillips of Worth Matravers, Lord Chief Justice of England and Wales “Alternative Dispute Resolution: an English Viewpoint” (India, 29 March 2008).
9 S v N, above n 5, at [29].
Issue one — Is the plaintiff’s claim an “internal matter” for the purposes of s 145?
[24] The trust deed of the Trust neither provides for ADR nor does it indicate a contrary intention in that regard.10
[25] The point of disagreement between the parties is whether this proceeding is an internal matter; the significance being that the Court’s power under s 145 to order an ADR process applies to internal matters only.
[26] The meaning of s 145 is to be ascertained from the text and in light of its purpose and context.11 One of the purposes of the Act is to provide mechanisms to resolve “trust-related disputes”, and the scheme is to facilitate the use of ADR for both external and internal matters. The Court is required to have regard to the principle that trusts should be administered in a way that avoids unnecessary cost and complexity.12
[27] However, the Act makes an important distinction between internal and external matters. The position was summarised by Andrew Butler in his article “Arbitration of trust disputes under the Trusts Act 2019” as:13
The result is that where the matter is an external matter, then arbitration depends on the parties’ consent to submit a dispute to arbitration: whether that is prior agreement in terms of the contract between the trustee and the third party or an ad hoc agreement at the time the matter becomes a dispute. In contrast, where the matter is an internal matter arbitration is available where the terms of the trust so require or empower or where the trustee and beneficiary (or trustee and other trustee) agree or, alternatively, where the court orders that the matter be referred to arbitration. Where the dispute is referred to arbitration by order of the court, the ensuing “arbitration” … will not be based on the consent of the parties.
[28] The plaintiff advocates for a literal interpretation of the definitions of “matter” and “internal matter”. She argues this is a legal proceeding brought against a trustee in relation to the Trust concerning the division of trust property and is therefore a “matter” as defined in s 142. The plaintiff then submits that this is an internal matter because the parties are the trustee and beneficiaries of the Trust. She says conversely
10 Trusts Act 2019, s 145(1)(b).
11 Legislation Act 2019, s 10.
12 Addleman v Lambie Trustee Ltd [2024] NZHC 1790 at [26]–[27].
13 Andrew Butler “Arbitration of trust disputes under the Trusts Act 2019” [2021] NZLJ 106. The references to arbitration can also be taken to refer to other ADR processes.
the proceeding is not an external matter as none of the parties is a third party to the Trust.
[29] The second defendants take a more nuanced approach. They say the plaintiff’s claim is not brought as a beneficiary but as an alleged creditor of the Trust. They submit it is entirely incidental that the plaintiff happens to be a beneficiary, and for present purposes she is to be regarded as a third party. It follows that this proceeding is not an internal matter and s 145 does not apply.
[30] There is no definition of the terms “third party” or “third parties” in the Act to assist in resolving this issue. However, there is some support for the second defendants’ position. Again referring to Andrew Butler’s article, he addresses the distinction between an internal and external matter as follows:14
Distinction between “internal matter” and “external matter”. An external matter “means a matter to which the parties are a trustee and one or more third parties”. (Notably, there is no definition of “third parties”. I return to that point below.) In contrast, an internal matter “means a matter to which the parties are a trustee and one or more beneficiaries, or a trustee and one or more other trustees, of the trust”. So, for example, an external matter would include a scenario in which a creditor sues the trustee of a trust for work undertaken on trust property, or, conversely, in which the trustee sues a third party who has damaged trust property. An example of an internal matter would be a claim that a trustee has failed to provide information to the beneficiaries, or has acted in a manner that gives rise to a conflict, or has made an unreasonable decision. Similarly, where there is a dispute between the trustees as to the correct interpretation of a trust instruments [sic], that would be regarded as an internal matter.
[31]In reference to what is a third party, the author says:
An external matter is one between a trustee and a third party (s 142). It is entirely possible for a beneficiary to be, in principle, a third party. For example, where a beneficiary has made a loan to a trustee of a trust the beneficiary would typically be classed as a “third party” for the purposes of such a dispute. That is because the beneficiary’s claim lies in the ordinary law of contract, rather than in the law of equity. It will be interesting to see how the courts interpret the concept of third party in such disputes. The reason this is important is that external matters can only be referred to arbitration with the agreement of all parties; the High Court’s power to refer a trust matter to arbitration only applies to internal matters.
14 Andrew Butler “Arbitration of trust disputes under the Trusts Act 2019”, above n 13.
[32] In Terry v Terry, Associate Judge Johnston declined to make an order transferring a proceeding under s 145 to mediation.15 The claims before him were clearly internal matters, but he noted:
[22] Section 142 contains definitions. Importantly, for present purposes, it defines an “internal matter” as a dispute in relation to the trust that involves only trustees and beneficiaries and no “outsiders”. It is common ground that that definition applies here as only the trustees of each of the trusts and [the plaintiff], in his capacity as a beneficiary of both, are involved (though of course other beneficiaries may have an interest in the litigation).
(emphasis added)
[33] Section 7(1)(c) provides that the provisions of the Act may be interpreted having regard to the common law and equity insofar as they are not inconsistent with its provisions and the promotion of its purposes and principles. The second defendants make what I consider to be a strong point, that the distinction between beneficiary disputes and third party proceedings brought by beneficiaries is well-known in trust law. The distinction was explained in a costs context by the Court of Appeal in Pratley v Courteney as follows:16
[19] There are generally thought to be three broad categories of disputes involving trustees. In Alsop Wilkinson (a firm) v Neary, Lightman J described the first category as a “trust dispute”, for example a dispute about the proper construction of the trust. The second he described as a “beneficiaries dispute” concerning the propriety of any action taken or to be taken by the trustees. Disputes in this category are regarded as ordinary hostile litigation with costs following the event and not being paid out of the trust estate. The third category he called a “third party dispute”. These were disputes with persons, other than in their capacity as beneficiaries, in respect of the trust, for example in contract or tort. As to the third category, Lightman J made the following observations of importance in the present case:
“Trustees (express and constructive) are entitled to an indemnity against all costs, expenses and liabilities properly incurred in administering the trust and have a lien on the trust assets to secure such indemnity. Trustees have a duty to protect and preserve the trust estate for the benefit of the beneficiaries and accordingly to represent the trust in a third party dispute.”
[20] By contrast, Lightman J stated that a beneficiaries dispute is regarded as ordinary hostile litigation with costs following the event and not payable out of the trust estate.
15 Terry v Terry [2023] NZHC 884.
16 Pratley v Courteney [2018] NZCA 436, [2018] NZAR 1787.
[21] Cull J considered that Steven’s claim against the estate in the District Court fell into the second category as being a beneficiaries dispute:
“The hostile dispute between two rival claimants to a trust fund is the situation which greeted Mr Pratley upon his appointment.”
[22] We consider this was an error. Steven was not claiming against the estate in his capacity as a beneficiary. This was not a claim to the same trust fund by two rival beneficiaries. Steven pursued the claim, not in his capacity as a beneficiary, but as a person claiming to be a creditor of the estate. His claim accordingly fell into the third category.
(footnotes omitted)
[34] This proceeding is not an internal matter. The plaintiff’s claim is not brought in her capacity as a beneficiary but as a third party to the Trust. It is not founded on breach of any obligation owed to her as beneficiary nor does it concern, as the plaintiff submits, the division of trust property as between beneficiaries. It is simply a claim for damages for the failure to pay her for services said to have been rendered at the request of former trustees.
[35] The plaintiff refers to three cases to support her position. She says in the recent decision of Gatfield v Hinton Associate Judge Lester clarified the interpretation of “internal matter”, where he said:17
[7] Section 145 of the Act only applies to internal matters. An internal matter is defined under s 142 as “… a matter to which the parties are a trustee and one or more beneficiaries, or a trustee and one or more other trustees, of the trust”. All the parties to this litigation are either a trustee ... or beneficiaries
... Accordingly, this is an internal matter.
[36] The Associate Judge did not address the issue that arises here. There, the jurisdictional issues raised were that the proceeding was not a matter because it at least in part concerned the validity of a trust, whether the process by which the application was brought before the Court was appropriate and whether an Associate Judge had jurisdiction to make a referral to ADR under s 145. I am not assisted by that decision.
17 Gatfield v Hinton [2024] NZHC 1712.
[37] In reliance upon Addleman v Lambie Trustee Ltd, the plaintiff submits that even if there is a live issue as to whether this proceeding is an internal matter the Court retains the ability to make a referral to mediation under s 145 regardless.18 In Addleman, the party opposing a referral to ADR under s 145 argued that some of the claims made in the proceeding were external matters and therefore could not be referred to mediation. Andrew J considered that the opposing party’s position, that at best the Court could compel mediation only in respect to certain matters in the claim, was “narrow and technical”.19 He considered that the substance of the proceeding related to internal matters of the trust and he could therefore make a referral of the whole of the proceeding to mediation. That case is distinguishable from this one in that none of the plaintiff’s claims relate to internal matters of the Trust.
[38] The third case the plaintiff relies upon is Wright v Pitfield.20 However, I again get little assistance from it because the case clearly involved an internal matter, namely a dispute between two trustees about control of the trust and its principal assets.21
[39] I therefore conclude that this proceeding is not an internal matter, and the Court cannot refer it to mediation under s 145 of the Act. In the event I am wrong in my conclusion on this issue, I turn to consider whether this would be an appropriate case for the Court to exercise its discretion to make a referral to mediation.
Should the Court exercise its discretion and order the parties to attend mediation?
[40] The plaintiff advances six grounds that she says support her application. The second defendants respond with three principal grounds in opposition. Carla Innes, who represented herself at the hearing via telephone, supports the submissions made by the second defendants and also advances her own reasons why the Court should not order mediation. I will consider these matters under the headings below.
18 Addleman v Lambie Trustee Ltd, above n 12.
19 At [29].
20 Wright v Pitfield, above n 6.
21 At [41].
Confidentiality
[41] The plaintiff says this is a family dispute and it is desirable for family matters to be dealt with confidentially and not made public to prevent further damage to familial relationships.22 I accept that the possibility of resolving a dispute in a confidential setting is usually a factor in support of mediation, but here the parties have already been through the Family Court proceeding and the resulting judgment is a matter of public record. Very significant damage to the siblings’ relationships has already occurred.
Purpose of the legislation
[42] The plaintiff argues that the Court’s power to refer disputes to mediation is intended to help preserve relationships, free up the court system, and provide potential cost-savings for parties. As well, it is said mediation allows parties to explore “different solutions” than are available at trial, and that it can be useful where issues seem intractable and the parties entirely at loggerheads because settlement rates are high.23 I accept these benefits of mediation in most cases.
No judicial settlement conference
[43] The third factor advanced is that the parties have not had the benefit of a judicial settlement conference or similar opportunity to reach a settlement. Relying on Addleman v Lambie, the plaintiff submits this is a situation where there is a clear need for an “honest reckoning” where the parties sit in the same room and “candidly and sensibly address their concerns”.24
[44] While the second defendants say there is no utility in mediation and they are not prepared to make any further offers of settlement, the plaintiff submits this is entirely self-serving and what you would expect them to say when they do not wish to go to mediation. I was referred to Associate Judge Lester’s judgment in Gatfield v Hinton, where he said:25
22 Gatfield v Hinton, above n 17, at [63].
23 Gatfield v Hinton, above n 17, at [61].
24 Addleman v Lambie, above n 12, at [38].
25 Gatfield v Hinton, above n 17.
[83] ... People’s views of a dispute change. Sometimes the benefit of independent advice leads a party to reflect on their part in the dispute and on the desirability of resolution.
[45] The plaintiff says it is noteworthy that some siblings have previously been open to offers of compensation and it is possible with the benefit of the mediation process that they will reconsider their position.
[46] The plaintiff also argues that mediation will allow the trustee to hear the issues and canvas the beneficiaries’ views, and she may be able to reach a settlement with the trustee at mediation regardless of the positions adopted by her siblings.
[47] In my opinion, this is not a case where mediation will assist the parties to understand alternative points of view. The evidence filed in the Family Court was voluminous and dealt with the matters that arise in this proceeding. The plaintiff’s affidavits in support of her claim totalled over 100 pages and more than 800 paragraphs. There were affidavits filed in response by all the other siblings. Everyone understands and knows where the others sit on the issues.
[48] I also do not accept the submission that mediation may result in settlement with the trustee notwithstanding the opposition of the second and third defendants. The trustee is taking a neutral position and the suggestion that he might choose to take a different approach at mediation is not realistic.
The issues are clear
[49] The plaintiff says the issues to be decided are clear. I accept that is the case but regard it as a neutral factor.
Authority to settle
[50] The plaintiff submits the siblings have the ability at mediation to reach a binding settlement which the trustee would be expected to endorse. This overlooks that Carla, who lives in Australia, advises that she will not attend mediation due to health issues. The Court would be reluctant to force her attendance even remotely by
electronic means in the circumstances she described. Further, Hannah has not taken any steps in the proceeding and cannot be ordered to attend mediation.
Cost savings
[51] It is said there are significant potential cost-savings in referring the case to mediation if the parties are able to settle, but if the Court declines this application those potential cost-saving benefits will be automatically lost. I accept the potential for cost savings, but the importance of this factor must be assessed against the likelihood of settlement and the costs of mediation as compared to litigation in the circumstances of this particular case.
[52] My assessment is that there is little chance of settlement at mediation and therefore the potential for saving costs is small but the potential for costs to be unnecessarily incurred is significant.
[53] Further, the cost of mediation will be high. In addition to the usual costs of a highly-qualified mediator and the fees of the first defendant and several other lawyers in attendance, there are eight siblings involved in the proceeding. Wherever the mediation is conducted, many of them will need to travel from other centres.
[54] It was suggested by Mr McDougall that an order could be made that the costs of mediation were to be payable from the Trust and this would result in the plaintiff shouldering a greater burden of those costs than her siblings. That submission does not address the fundamental concern about the cost of mediation in this case and also presupposes that a settlement will be reached involving the plaintiff receiving a substantially greater share of the trust fund than her siblings. Further, while I accept the costs of litigation will also be significant, much of the evidence that will be called has been prepared already in the Family Court proceeding.
Conduct of the plaintiff in the Family Court and this Court
[55] The second defendants argue there are three very significant factors that either alone or together mean that the application should be refused. The first is the manner in which the plaintiff has conducted her proceedings in the Family Court and this
Court, which they submit has caused delays and added to their costs. The second defendants consider this application is an attempt by the plaintiff to increase their costs further for the purpose of inducing settlement.
[56] I accept Mr McDougall’s submission that I should not place much weight on the conduct of proceedings to date as the matters of which the second defendants complain generally relate to a time when the plaintiff was engaging other counsel. I also do not accept the plaintiff’s motivation in making this application will be to unnecessarily increase the defendants’ costs.
No prospect of settlement
[57] The second defendants and third defendant say there is no prospect of settlement. The affidavit of Nick Innes, sworn on behalf of the second defendants, states “… we are not prepared to make any further offers of settlement to [the plaintiff]. Mediation would be pointless.”
[58] This position is based on several factors, including the unrealistic stance of the plaintiff as to the merits of her claim, the failure by the plaintiff to recognise the significant criticisms made of her in the Family Court judgment, the fact that there is a broader set of disputes between the siblings which cannot be resolved at mediation because Hannah Innes has chosen not to participate in the proceeding, and the risk of further damage to the ongoing relationships between the second defendants within the wider family. In respect to this last matter, Nick Innes says:
Finally, we are also concerned that being forced to attend mediation with [the plaintiff] will risk damaging the ongoing relationships between the six of us. It goes without saying that being locked into years and years of litigation with your siblings, all while grieving, is extremely stressful. We have all worked incredibly hard throughout this process to work together and avoid further fracturing to our family as a result of [the plaintiff’s] litigation. But as a set of six siblings who are all in our 50s and 60s, that is not always an easy task. We do not think that being forced into a direct confrontation with [the plaintiff] would in [sic] the interests of the wider family.
[59] Carla Innes explained to me that she considers mediation would not be constructive for the reasons advanced by the second defendants. She also referred to what she described as malicious and fabricated allegations made by the plaintiff to
discredit her, which have caused her anguish and reputational damage made worse because they are referred to in the Family Court’s judgment.
[60] I accept that statements that mediation will not be constructive may be self-serving and overlook that mediation may be successful even with reluctant parties. However, this is an unusual case in my view, given the history of the matter and the evidence the plaintiff chose to give in the Family Court which could only be destructive of any goodwill that might have existed between the siblings. As Judge Coyle found in his judgment:26
[5] Much of [the plaintiff’s] evidence is irrelevant, inflammatory, and contains a number of statements of opinion … That they were unnecessarily inflammatory has, unhelpfully, served to cause what may be irrevocable rifts within the [Innes] family. [The plaintiff] appears to have no insight into the hurt and harm she has caused through the, at times, unhelpful content of her evidence.
[61] In S v N, the Court found that given “the patently obvious absence of any goodwill between the parties, it is difficult to see that mediation would achieve anything”.27 That is a conclusion I expect the Court will be reluctant to reach in most cases, but it is entirely justified here. Given the content of her evidence filed in the Family Court, I do not consider the plaintiff can reasonably expect her siblings to attend mediation with her.
Lack of merit
[62] The third ground the second defendants rely upon is that there is no merit in the claim. The pleading that promises were made to compensate the plaintiff for services provided to the Trust appears to be in conflict with the advice of the plaintiff’s former solicitors that there were no testamentary promises made to the plaintiff, but she had assumed her siblings (not her parents) would recognise her contribution. As the plaintiff was notifying her siblings of a claim against both Mark’s estate and the
26 Innes v Darlow, above n 1. There are other relevant passages of the judgment. I was taken through other parts of the Judge’s decision in the Family Court, with particular reference to [35], [38], [39], [42], [61] and [62], and the paragraphs of the plaintiff’s second affidavit at 358, 436, 489, 548, 561, 576 and 675.
27 S v N, above n 5, at [35].
Trust, it is difficult to see how she could have overlooked the promises, representations or understanding she now relies upon.
[63] I also do not see, on the plaintiff’s present pleading, how anything her parents are said to have promised or represented can bind the first defendant or render him liable to pay damages.
[64] I consider the claim faces such hurdles that the second and third defendants should be entitled to take the view that their legal spend is better utilised taking the matter to a hearing, where if successful they could expect to recover a significant portion of their costs.
Further matters
[65] It was recognised in S v N that a relevant factor is the wishes of the settlor of the trust.28 Here, the plaintiff’s claim is contrary to the intention of Mark and Lucy that their children be treated equally. Not only is this clearly reflected in the terms of the Trust, it was also recognised by Judge Coyle, who found:29
[65] ... Additionally, [Mark] expressly recorded that he had been advised about the provisions of the Family Protection Act, and he made his Will after a time in which [the plaintiff] alleges, she had made significant contributions to both his and her mother’s lives. Yet [Mark], as he and [Lucy] had done throughout their lives, continued to seek the division of their estate equally between all of their nine children.
[66] Standing back and looking at all the factors I have mentioned, I am very firmly of the view that the Court should not make an order referring these parties to mediation.
Result
[67]The plaintiff’s application under s 145 of the Act is dismissed.
[68] The second defendants are entitled to costs. I see no reason why those costs should not be awarded on a 2B basis. If there is any dispute about costs the parties
28 S v N, above n 5, at [29].
29 Innes v Darlow, above n 1.
may submit memoranda within 14 days, with seven days for any reply. The memoranda are not to exceed six pages in length.
O G Paulsen Associate Judge
Solicitors:
Holland Beckett Law, Tauranga. Greg Kelly Trust Law, Wellington
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