Biggs v Biggs
[2018] NZHC 1592
•29 June 2018
BRIEFPASSAGES IN THIS JUDGMENT ARE SUPPRESSED AND HAVE BEEN REDACTED.
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2017-425-000007 [2018] NZHC 1592
BETWEEN SOPHIE ANNABELLE BIGGS
Plaintiff
AND
STEPHEN TIMOTHY BIGGS Defendant
AND
STEPHEN TIMOTHY BIGGS as trustee for the TIM BIGGS FAMILY TRUST
Second Defendant
AND
LAGUNA BAY CAPITAL PTY LIMITED as trustee for the LAGUNA BAY CAPITAL TRADING TRUST
Third Defendant
AND
LB MANAGEMENT PTY LIMITED as trustee for the LAGUNA BAY CAPITAL MT TRUST
Fourth Defendant
Hearing: 26-28 March 2018 Appearances:
D A T Chambers QC and E M Eggleston for the Plaintiff
M J McCartney QC and S H Jacobson for the Defendant
J F Anderson QC for the Second, Third and Fourth DefendantsJudgment:
29 June 2018
JUDGMENT OF NATION J
BIGGS v BIGGS [2018] NZHC 1592 [29 June 2018]
TABLE OF CONTENTS
INTRODUCTION ............................................................................................... [1] SUMMARY OF DECISIONS .......................................................................... [12] Discovery ............................................................................................................ [22] Confidentiality ................................................................................................... [28] Sale of the home / interim distribution............................................................ [30] Anonymisation of parties’ names..................................................................... [34] Service of the proceedings/representation ...................................................... [36] THE CURRENT STATE OF THE PLEADINGS .......................................... [37] Ms Biggs’ claim.................................................................................................. [37] The trustees’ pleadings ..................................................................................... [46] Mr Biggs’ pleadings........................................................................................... [47] Interrogatories and further particulars .......................................................... [50] Observations as to the pleadings...................................................................... [52] THE COMMENCEMENT OF PROCEEDINGS .......................................... [58] THE APPLICATIONS FOR DISCOVERY AND HOW PROCEEDINGS PROGRESSED.................................................................................................. [78] MY ASSESSMENT AS TO HOW MR BIGGS HAS APPROACHED
THESE PROCEEDINGS ............................................................................... [138] MS BIGGS’ APPLICATION FOR FURTHER DISCOVERY AGAINST TRUSTEE DEFENDANTS ............................................................................ [144] Category 4 – correspondence to and from trustees ...................................... [151]
All correspondence between trustees (current and former) in respect of
the trusts or beneficiaries of the trusts …………………………………… [151] (a) Disposi ti on s to t rust ees …………………………………..…………….[157] (b) Value of Mr Biggs ' w ork for t rust ees …………………..……………….[161] (c) Propos ed dist ribut ions ……………………………………………...…..[166] (d) Use of t rust assets ……………………………………………………...[168] (e) C ont ribut ions of Mrs Biggs …………………………………..………...[169] (f) Purpos e of t rust s ………...……………………………………………...[172]
Category 7 – further correspondence and distribution information .......... [177]
Category 9 – legal advice ................................................................................ [183]
Category 10 – solicitors’ files.......................................................................... [191] Category 11 – general discovery .................................................................... [200] Conclusion as to Ms Biggs’ application for orders for discovery against
trustee defendants ........................................................................................... [201] MS BIGGS’ APPLICATION FOR DISCOVERY AGAINST MR BIGGS[202] Summary of submissions ................................................................................ [206] Discovery sought as to Laguna Pastoral ....................................................... [211] Other discovery required by Mr Lyne........................................................... [263]
- Email correspondence …………………………………………………....[264]
- Passport and travel documents…………………………………………...[264]
- Tax returns …………………………………………….………………… [265]
- Tax return work papers ……………………………………….……….... [265]
- Accounting work papers ……………………………………………….... [266]
- Employment contracts………………………………………..………….. [267]
- Remuneration benefits ……………………………………….…………. [267]
- Income from overseas portfolio …………………..…………………….. [269]
- General ledger extracts ……………………………………………..…... [271]
- Inter-entity transactions …………………………………………...……. [271]
- Loan accounts …………………………………………………………....[271]
- General ledgers ………………………………………………………….. [271]
- Transactions to which Mr Biggs is a party ..……………………………. [271]
- Trust distributions to Mr Biggs ………...……………………………….. [274]
- Laguna Sierra Pty Ltd …………………………………………………... [276]
- US tax returns …………………………………………………….……... [276]
- Park Road Partnership ………………………………………………….. [278]
- Bank statements …………………………………………………….…… [279]
- Credit card statements ………………………………………….……….. [279]
- Sopris Holdings Ltd ………………………………………………..……. [282]
- Standard discovery ……………………………………………………….[283] Overall conclusions as to Mr Lyne’s requirements for further discovery . [287] MR BIGGS’ APPLICATION FOR DISCOVERY ...................................... [297] CONFIDENTIALITY..................................................................................... [320] MS BIGGS’ APPLICATION FOR ORDERS OVER THE SALE OF THE QUEENSTOWN PROPERTY ....................................................................... [362]
APPLICATION FOR INTERIM DISTRIBUTION/COSTS ...................... [389]
SUPPRESSION OF THE PARTIES’ NAMES AND OTHER
INFORMATION ............................................................................................. [412] MR BIGGS’ APPLICATION FOR FURTHER PARTICULARS/ORDER REQUIRING ANSWER TO INTERROGATORIES .................................. [440] APPLICATION FOR DIRECTIONS AS TO SERVICE ............................ [441] COSTS.............................................................................................................. [449]
INTRODUCTION
[1] Mr and Ms Biggs began living together in January 2010. They married on 31
December 2011 and had one child in November 2012. They lived apart between
December 2013 and November 2014. They finally separated on 27 January 2016.
[2] In proceedings that have been transferred from the Family Court to the High Court, Ms Biggs seeks half of the couple’s relationship property and, through a range of claims, seeks a share of the wealth which she says Mr Biggs has available to him through trusts and companies that she says he controls.
[3] Ms Biggs’ case is that, during the relationship, she devoted herself to the family and to supporting Mr Biggs while he worked in the businesses run in the names of trusts and companies controlled by him.
[4] Mr Biggs says he was wealthy when the relationship began. He says, whatever his interest is in these companies and trusts, it is not relationship property and Ms Biggs has no claim against them or on account of them. He has filed a counterclaim.
Mr Biggs contends that, because Ms Biggs is seeking a share of the substantial wealth he had before their relationship began (including properties he owns in Australia and Argentina), this is a case where there should not be equal sharing of relationship property.
[5] Proceedings were filed in the Family Court in April 2016 under the Property (Relationships) Act 1976 (PRA). More than two years later, Ms Biggs has incurred over $300,000 in legal and accounting costs. Mr Biggs’ costs are also likely to be high.
[6] With Ms Biggs’ current applications, she is asking:
(a) the Court to order an interim distribution to her of half the proceeds from the sale of the family home (the Queenstown property);
(b) for Mr Biggs’ share of the proceeds to be retained in a trust account until all claims have been resolved;
(c) for either an interim distribution to her of $400,000 or that Mr Biggs pay her legal and accounting costs as they are incurred; and
(d) orders for further discovery.
[7] Mr Biggs and the trustee defendants ask the Court to ensure the confidentiality of documents that will be provided to Ms Biggs’ advisers. Mr Biggs seeks orders suppressing the parties’ names, orders for discovery, and directions that the settlors and beneficiaries of the trusts be served with the proceedings.
[8] A number of these issues were the subject of a one day hearing on 12 June
2017 before Nicholas Davidson J. For reasons discussed in his interim judgment of
12 October 2017, Davidson J held he could not finally decide a number of the issues that were put before him.1 It has been necessary for me to revisit those issues.
[9] Ms Chambers characterises Mr Biggs as someone who has provided misleading information and someone who is simply trying to wear down Ms Biggs to force her to accept an unjust settlement, in the same way as it was suggested a husband had been doing in SM v LFDB.2 A recurring theme in affidavits sworn by Ms Biggs and her accounting expert has been that Mr Biggs has been obstructive in these proceedings.
[10] Determining the various applications before me has required me to assess how the parties have approached the proceedings and whether the orders they are seeking are needed to achieve a proper division of property under the PRA. In doing so, I have had to consider some 2,300 pages of documents in the 10 case bundles that were before the Court both in March 2017 and again in March 2018.
[11] The course of these proceedings well illustrates how, in the pursuit of claims in a particular way, there can be scant recognition of the principle that questions arising under s 1N(d) PRA about relationship property should be resolved as inexpensively,
simply and speedily as is consistent with justice.
1 Biggs v Biggs [2017] NZHC 2501.
2 SM v LFDB [2013] NZHC 1056.
SUMMARY OF DECISIONS
[12] When the parties first began negotiations over the settlement of relationship property claims, the background was such that Ms Biggs and her advisers should not have assumed Mr Biggs would refuse to cooperate or resist providing information in a way that would make it difficult to resolve Ms Biggs’ claims.
[13] Early on, Ms Biggs’ advisers, particularly the accountant Mr Lyne, insisted on extensive and detailed disclosure of documents and information as to the way Mr Biggs, and trusts and companies with which he was associated, had conducted their affairs and carried on business. Mr Lyne required a level of documentation that indicated he wanted to know not just what the results had been of that activity, as apparent from annual accounts and tax returns, but also to be able to audit, in considerable detail, how the apparent end results had been reached.
[14] Given the way Mr Biggs was cooperating in providing information, Mr Lyne’s requirements were excessive and disproportionate to what was reasonably required to allow the parties to advance their cases. The discovery he sought was excessive, having regard to the principles governing discovery in relationship property proceedings.
[15] The insistence on satisfaction of Mr Lyne’s requirements has led to delay and significant costs that could otherwise have been avoided. It has made resolution of the proceedings more difficult. It resulted in the parties not taking advantage of the potential for settlement through a private mediation. It has led to an intensely adversarial approach to the resolution of claims, a further deterioration in the parties’ relationship, and a raft of interlocutory applications from both parties. These have all significantly added to the costs which both parties must be incurring.
[16] A feature of the litigation has been an insistence on behalf of Ms Biggs that Mr Biggs effectively fund the very high costs Ms Biggs was incurring in pursuing these proceedings in this manner.
[17] The parties should have been able to benefit from accounting experts engaging cooperatively between themselves and with other professionals such as the chartered
accountant who prepared annual accounts for relevant companies, so as to avoid unnecessary delay and cost in obtaining the information which the experts reasonably required to assist, as expert witnesses, in a relationship property context.
[18] Throughout the proceedings, Mr Biggs has continued to provide detailed financial information and associated documentation in a manner which indicated he wanted to see issues resolved on an informed basis.
[19] Mr Biggs did refuse to provide certain documents on the basis they were confidential to a company with which he was involved in an equal partnership situation. Such confidentiality concerns did not, of themselves, necessarily justify non-disclosure but his concerns were genuine. His refusal to provide information or documents on those grounds was not motivated by an intent to be simply obstructive as far as Ms Biggs’ claims are concerned.
[20] This is not a case of a husband trying, through attrition, to use his financially advantaged position to pressure a claimant to accept what might be less than a just legal entitlement.
[21] Mr Biggs has however, with his applications this year, taken steps in the proceedings that were not essential to resolving matters. These have led to both parties incurring costs with counsel that would not have been required if he and his counsel were doing what they could to progress the proceedings in a way that recognised s
1N(d) PRA.
Discovery
[22] The discovery provided to date had been extensive and sufficient for Ms Biggs to determine the scope of the claims she wished to make. Discovery properly addressed the matters that were at issue in the proceedings. There has been a commitment to providing documents that will assist in the valuation of the business with which Mr Biggs had been primarily involved during the marriage. The further particular discovery Mr Lyne seeks, through the application before the Court, is oppressive and disproportionate. The application for further discovery against Mr Biggs is declined.
[23] The trustee defendants had only recently been joined in the proceedings. Ms Biggs sought discovery against them as to 11 categories of documents. The trustees had agreed to provide documents as to six of those categories. The discovery sought, in relation to the remaining five categories, is oppressive and disproportionate. The application for discovery as to those categories is declined. No orders are made as to discovery of the agreed categories but that is on the basis such discovery will occur. Leave is reserved for Ms Biggs to apply for further discovery if this does not happen.
[24] Discovery has been sought of documents which are the property of a company with which Mr Biggs was involved during the marriage. Discovery was not sought by way of a non-party application. It is not clear that Mr Biggs’ status as a director, or as the discretionary beneficiary of a trust that has a 50 per cent shareholding in the company, would give him control of the sort that would require him to make discovery. A significant amount of information, including annual accounts of the company, has been made available. The company has agreed to make further documents available provided confidentiality of those documents is preserved. Further discovery from Mr Biggs, in the detail and at the level sought by Mr Lyne, would be oppressive and disproportionate because of the potential impact such discovery could have on the company’s business and the relationship between Mr Biggs and the other partner.
[25] The application, with regard to discovery of such documents, is declined but this is on the basis there will be discovery of documents from the company to the extent already agreed. Leave is reserved to seek non-party discovery should that not happen.
[26] With his initial discovery application, Mr Biggs sought discovery from Ms Biggs as to 12 categories of documents. Ms Biggs agreed to file an affidavit listing documents for 11 of those categories and eventually did so. Mr Biggs then sought particular discovery as to the one category that was in dispute. Through discovery, he sought disclosure as to if and when Ms Biggs had obtained documents not in the public arena but relating to the business with which he was involved, and if and when Ms Biggs provided those documents to solicitors before final separation. It was suggested the information obtained might be relevant to potential costs orders, an assessment of her contributions to the relationship, and her credibility.
[27] Discovery was likely to be of marginal relevance to the real issues between the parties and as to any assessment of contributions to the marriage. Discovery, with the particulars as sought, would be onerous and oppressive in the sense of requiring Ms Biggs to disclose, in some detail, information about a solicitor-client relationship which is confidential. Mr Biggs’ application for this further discovery is declined.
Confidentiality
[28] This judgment sets out the terms on which the agreed business documents of the company are to be provided so as to protect the confidentiality of those documents and the information in them. The information in the documents may be discussed with Ms Biggs and her brother who is experienced in business and is providing support and advice for her in the proceedings. They will not however be entitled to retain copies of the documents. The documents or extracts from them may be referred to or put before the Court as the proceedings continue. This is to be done in a way which ensures they can be kept separate from other documents so that their circulation is limited. Ms Biggs and her brother will not have copies of those parts of the affidavits but are entitled to see those documents at Mr Lyne’s office if they wish.
[29] The trustee defendants say an affidavit from Mr Lyne, referring to a confidential document, was released to Ms Biggs in breach of confidentiality directions, in breach of an undertaking Mr Lyne had given and in breach of an express condition on which the document had been provided. The trustee defendants sought an order for costs to recognise this. Ms Biggs’ solicitor took steps promptly to rectify what had occurred. The application is refused.
Sale of the home / interim distribution
[30] The parties agree that their home is to be sold. It is on the market. This judgment records mostly agreed terms governing the process of sale and payments that are to be made from the proceeds of sale.
[31] To the extent there is an interim distribution from the proceeds of sale, the distribution should be to the parties equally. There is uncertainty as to when a sale will occur and what the net proceeds will be. There is still to be an accounting between
the parties over the way a finance facility secured over the property has been used since separation. There may have to be an accounting with regard to costs once the proceedings are resolved. In these circumstances, the parties are each to receive
$1,500,000 from the net proceeds of sale once settlement of the sale has taken place.
[32] The balance is to be retained in a solicitors’ trust account pending the resolution of the proceedings. Leave is reserved to the parties to seek a further distribution when a sale has been obtained and the precise balance available for distribution between the parties has become clear.
[33] Mr Biggs is ordered to pay Ms Biggs $200,000 within two weeks as an interim distribution of relationship property. He is to be credited with payment of that amount against any sum to which Ms Biggs is ultimately entitled on resolution of all claims. If the home sells before claims have been resolved, that $200,000 is to be paid to Mr Biggs from the $1.5 million that Ms Biggs is entitled to from the sale of the home. The requirement on her to pay that amount to Mr Biggs is without prejudice to any order that might ultimately be made over costs. The application for an interim distribution in excess of this is declined.
Anonymisation of parties’ names
[34] Mr Biggs sought suppression of the parties’ names through anonymisation. In the judgment, there is reference to the parties having a child who is under the age of
18. Mr Biggs argued that s 35A PRA and ss 11B-11D Family Court Act 1980 thus apply, and there could be no publication of the parents’ names without leave.
[35] However, the judgment is not about the child. Her privacy interests are unlikely to be affected to her detriment. The principle of open justice is important with proceedings such as these. Leave is granted for there to be publication of the parties’ names and any identifying information, as defined in s 11C Family Courts Act. There is to be no publication of the child’s name.
Service of the proceedings/representation
[36] The High Court Rules orders did not require Ms Biggs to seek directions in this regard. No such directions are made.
THE CURRENT STATE OF THE PLEADINGS Ms Biggs’ claim
[37] On 4 December 2017, Ms Biggs filed a second amended statement of claim. At the same time, she filed an application to join further parties in their capacity as trustees. By consent, an order joining the trustees was made on 24 January 2018. She filed a third amended statement of claim on 23 February 2018. Before me, the trustees of the three trusts were separately represented by Ms Anderson QC.3
[38] In an appendix to his affidavit of 6 September 2016, Ms Biggs’ accountant, Mr
Lyne, provided a diagram showing the various entities with which Mr Biggs was involved and how they were related. I reproduce that below.
3 In this judgment, I refer to the Laguna Bay Capital Trading Trust as “the Trading Trust”.
[39] In her statement of claim, Ms Biggs asserts that relationship property comprises:
(a) the Queenstown property;
(b) chattels from the Queenstown property;
(c) chattels at a residential property in Noosa, Queensland;
(d)monies owing to Mr Biggs by the Trading Trust – $11,672,610, or increase in value during relationship;4
(e) monies owing to Mr Biggs by Laguna Bay Capital MT - AUD3,853,474;
(f) monies owing to Mr Biggs by Laguna Bay Capital Pty Ltd – AUD1,000;5
(g) Mr Biggs’ shares in LBPC Services Pty Ltd;
(h) Mr Biggs’ superannuation fund – AUD1,263,788 (book value);
(i) various bank accounts in the parties’ personal names;
(j) silver Audi Quattro - $30,000; and
(k) Mr Biggs’ interest obtained during the relationship in the Tim Biggs
Family Trust, the Trading Trust and Laguna Bay Capital MT Trust.
[40] In her claim, Ms Biggs refers to nine entities as an amalgamation and as corporate structures/trusts. She claims that, during the relationship, Mr Biggs’ separate property and corporate structures/trusts increased in value and the income and gains from these entities were attributable wholly or in part to the application of
relationship property. She asserts Mr Biggs’ salary and income was applied to the
4 Ms Biggs claims that, through intermingling, the amount owing to Mr Biggs on that loan account cannot be identified as the debt due to him from that trust at the beginning of the relationship and, in the alternative, the loan account was acquired for the common use or benefit of the parties.
5 Ms Biggs claims these debts in (e) and (f) were relationship property, having been acquired during the relationship or, in the alternative, the credit was acquired for the common use or benefit of the
parties.
separate property/corporate structures/trusts and asserts he was not paid a market remuneration for the period 30 June 2009 to 30 June 2016, the shortfall of which benefited the corporate structures/trusts.
[41] Ms Biggs also asserts the separate property and the corporate structures/trusts benefited from the proceeds of Ms Biggs’ Queenstown apartment and from the way Mr Biggs went without interest on loans he made to the trusts. She asserts that the increase in value of Mr Biggs’ separate property/corporate structures/trusts and income, and gains from them, was attributable wholly or, at least in part, through the direct and indirect support she provided to Mr Biggs as a wife and mother, and in his business dealings.
[42] Ms Biggs makes claims under:
(a) Section 15 PRA, for a capital sum by reason of a significant difference in income and living standards which she says are attributable to the effect of the divisions and functions within the marriage while the parties were together;
(b) Section 17 PRA, for a payment from Mr Biggs on the basis his interest in separate property/corporate structures/trusts was sustained by the application of relationship property or her actions;
(c) Section 20E PRA, for full compensation for the reduction in Mr Biggs’ separate property debts, through the use of relationship property, in the sum of $148,194;
(d) Section 44 PRA, for an unspecified amount but subject to discovery on the basis that, during the relationship, Mr Biggs made dispositions of relationship property to three trusts to defeat the rights and claims of Ms Biggs;
(e) Section 44C PRA, for adjustment compensation on the basis Mr Biggs made dispositions of relationship property to the trusts that had the effect of defeating Ms Biggs’ claims and rights; and
(f) Section 32 PRA, for retrospective and prospective maintenance on the basis that, during the separation and while she was living in the Queenstown property, her monthly expenses were $20,650 and Mr Biggs had been paying only interim maintenance of $12,000 per month from 1
December 2016 and $14,000 from 1 September 2017.
[43] Ms Biggs claims that, during the course of the marriage, Mr Biggs made post- nuptial settlements for the benefit of himself, her and their child. She claims under s
182 Family Proceedings Act 1980 that, with the dissolution of the marriage, the Court should make orders for the benefit of the child of the marriage and for her benefit.
[44] C onst ructi ve trust – Ms Biggs asserts that she and Mr Biggs, by their financial and non-financial contributions, both direct and indirect, assisted in the acquisition, improvement and maintenance of the trusts. Ms Biggs says that assistance was provided with the reasonable expectation that they would beneficially own the assets and liabilities of the trusts. Accordingly, the trusts should reasonably yield an interest to her.
[45] Ms Biggs asserts that Mr Biggs was the de facto settlor of the Trading Trust and the Tim Biggs Family Trust and that, on a true construction of the deeds, Mr Biggs was the beneficial owner of all the assets in the trusts so that they should be attributed
to him and accordingly be categorised as relationship property.
The trustees’ pleadings
[46] The trustees admit many of the allegations that are made in the statement of claim as to the terms of the trusts, the provisions for appointer, the potential or actual beneficiaries and other matters but plead all terms of the trust deeds in full. They assert that the trust deeds are governed by and are to be construed in accordance with the laws of Queensland, Australia. They deny the pleadings of Ms Biggs on which she makes a s 9A PRA claim in respect of the increase in value of Mr Biggs’ interests in the trusts. With particulars, they deny she has an entitlement against the trusts as a result of the various claims she has made.
Mr Biggs’ pleadings
[47] As to the claims against the trusts, Mr Biggs’ pleadings in his statement of defence are similar to those now filed for the trustees. He provides detailed responses about the various companies and trusts Ms Biggs referred to in her statement of claim and about the transactions she had mentioned. He denies she has any entitlement against trust property or against him in respect of property owned by the trusts.
[48] Mr Biggs asserts that the relationship property comprises:
(a) the Queenstown property;
(b) chattels from the Queenstown property and the Audi car;
(c) superannuation contributions attributed to the first and second relationships; and
(d)balances in bank accounts in the name of the parties at the end of the relationship.
[49] In his last statement of defence, Mr Biggs also filed a counterclaim that, under s 13 PRA, this is a situation where equal sharing would be repugnant to justice and the relationship property should be divided so as to apportion 85 per cent to him and 15 per cent to Ms Biggs.
Interrogatories and further particulars
[50] Mr Biggs issued a notice to answer interrogatories on 15 January 2018. The questions related to the circumstances in which Ms Biggs’ employment ended in the years prior to their relationship, the level of debt she had with credit cards and tax at the beginning of the relationship, a course of study she had pursued during the relationship, whether or not she suffered from particular health problems during the relationship, the cost of their wedding and whether she had seen lawyers in the period the parties were apart between the two relationships. Ms Biggs answered them in an affidavit of 16 March 2018.
[51] In that affidavit, Ms Biggs also responded in detail to a notice requiring further particulars of claims made and submissions from Mr Biggs’ counsel dated 7 March
2018 seeking particulars as to her contributions as a homemaker, contributions to the daughter and the way in which Ms Biggs claimed these contributions assisted in the development or growth of the trusts, the trusts’ assets or the corporate entities.
Observations as to the pleadings
[52] Ms Biggs’ claim uses every legal device or strategy that might be technically available to obtain a share of the wealth in trusts associated with Mr Biggs. The detail in her claim illustrates the level of information which is currently available to her that
is relevant and material to the claims and counterclaims that have been made in these proceedings. The way she answered interrogatories indicates she had a good knowledge of how he was involved in business and the time and effort this required of him.
[53] The information that Ms Biggs provided in answering interrogatories was of the kind that it would be expected both parties to a marriage would normally already have, at least in a general sense. It was also information which, given the pleadings, the parties and counsel should have expected to be provided well before trial through the conventional filing of affidavits or, in this instance, the service of briefs of evidence.6
[54] I note that, as an illustration of how the parties and their advisers are approaching this litigation, associated with Ms Biggs’ affidavit of 16 March 2018 were three bundles comprising some 644 pages.
[55] Mr Biggs’ counterclaim, his later issuing of interrogatories, and applications for discovery illustrate how an intensely adversarial approach to proceedings can cause the parties to litigation to adopt extreme positions which will ultimately make it
more difficult and expensive to settle their differences.7
6 In a minute of 18 October 2017, Davidson J directed that evidence in the proceedings was to be by way of briefs rather than affidavits.
7 I acknowledge that, in the Supreme Court, Glazebrook J has said that, if an applicant, through s
182 Family Proceedings Act, seeks a distribution to her of wealth in a trust which would, but for
[56] Mr Biggs’ statement of defence deals specifically with debits and credits against the parties’ joint bank accounts during the relationship, and credits and debits against accounts for the trusts and companies to the extent those transactions were referred to specifically in the statement of claim. In the statement of defence, explanations are given as to how those transactions were funded and what they were used for in ways that suggest Mr Biggs and his advisers had specific documentation and information available to support what was being said. It is not a situation where Mr Biggs appears to be simply stone-walling or being obstructive in responding to assertions made by or on behalf of Ms Biggs.
[57] The pleadings as to the parties’ respective contributions to the relationship indicate Mr and Ms Biggs each have a detailed knowledge of what happened during their relationship to support the allegations and counter-allegations which each makes. These issues commonly arise in relationship property cases which legal advisers and, if necessary, Judges have to deal with in resolving claims under the PRA. It is usually not difficult for lawyers who are objectively assessing the merits of the parties’ positions, and for a Judge if that is required, to carefully consider the detailed evidence which has been given by each party. It is not usually a process that will be significantly assisted by the minute examination of significant volumes of documents.
THE COMMENCEMENT OF PROCEEDINGS
[58] With a separation, the way in which parties and their advisers seek to advance negotiations over relationship property can be crucial in determining whether claims are dealt with fairly and constructively, and at the least cost to the parties. A more adversarial approach may make litigation, with its costs and delays, inevitable. Where litigation is accompanied by acrimony and distrust, the continuing dispute may well have a long term and destructive impact on the relationships which one or both parents may have with their children.
[59] There are many situations, even when there is considerable wealth, when at least one but often both parties want to see claims resolved fairly and as inexpensively
the trust, have been separate property, that could justify a departure from equal sharing under s 13
PRA. See Clayton v Clayton [2016] NZSC 29 at [89].
as possible. They may start with some assumptions as to the scope of the wealth against which a claim might be made. A party’s initial assumption in this regard might be mistaken but nevertheless it will be apparent, from the way that a party and his or her advisers deal with the other party, that they want to deal with matters constructively, and are willing to provide information which will ensure both parties are well enough informed to constructively discuss and resolve claims.
[60] In such a situation, the parties and, just as importantly, their advisers should engage with each other with the expectation that there will be cooperation (at the least cost to their clients) so as to achieve a just outcome with regard to legal entitlements.
[61] The reported cases show, however, that there will be instances where either one or both parties are intransigent, closed-minded and so dismissive of the other’s potential claims or entitlement (or so unwilling to accept the realistic limits on their entitlement or claims) that there is no alternative but to have matters resolved through Court proceedings. However, even in this latter situation, in advising clients as to what would be in their best interests, counsel obviously have a responsibility to try and ensure that such proceedings are resolved as inexpensively and efficiently as is achievable, commensurate with the just resolution of what is in dispute.
[62] In New Zealand, the ownership of assets through trusts and the building up of wealth during a marriage but within trusts has often made it more difficult for parties, usually wives, to share in the wealth that has been built up during a relationship.
[63] Here, much of the wealth at issue, both from before the relationship and from during the relationship, is owned by trusts. It would not, however, have been reasonable in the circumstances of this case to assume that this must have been done to limit the extent of any relationship property claim that Ms Biggs might have.
[64] The Tim Biggs Family Trust and the Trading Trust were both established well before Mr and Ms Biggs began their relationship in January 2010. Given the extensive investment and entrepreneurial business activities he has been involved in, Mr Biggs’ use of trusts could well have been for sound risk protection reasons. In Australia, where Mr and Ms Biggs were based, it has been held that assets of a discretionary trust
can form part of the relationship property pool.8 The fact property was owned by trusts was therefore not going to create the barrier to relationship property claims that it can in New Zealand. Mr Biggs had been married before but he had not attempted to protect himself against any relationship property claim in the future through insisting on a prenuptial agreement. During the relationship, he had not taken particular care to avoid owning property in his own name. Because of the tax benefits from doing so, capital gains from pre-existing investments for the Trading Trust had been allocated to Mr Biggs personally through significant credits to him on his loan account with the trust. During the relationship, he had been able to draw down some $7 million against his loan account with the Trading Trust, most of which was invested in the Queenstown property, title to which was held in the name of Ms Biggs alone.
[65] Notwithstanding a period of separation, to take advantage of rises on the New Zealand stock exchange in early 2014, funds were advanced against his loan account by the Trading Trust to Mr Biggs to make investments. The investments were made in Ms Biggs’ name and were short term. The gross proceeds of sale were then applied to the construction costs of the home.
[66] Soon after the parties separated, Mr Biggs suggested that, in some way, they should involve a neutral third party to assist them in resolving property claims.
[67] In her narrative affidavit of 14 April 2016, in support of her relationship property application, Ms Biggs says that on 11 February 2016 Mr Biggs sent her a schedule of assets in their relationship as he saw them. (Mr Biggs was later to object to her reference to them in an affidavit saying that the summary had been provided to her to assist in achieving a settlement and was provided without prejudice. In her affidavit of 24 June 2016, Ms Biggs said that Mr Biggs’ outline of all assets was provided to her with “no strings” attached.)
[68] That summary was headed “S T Biggs and Laguna Pool”. It was in a very general form. It detailed bank accounts, motor vehicles, the T Biggs superannuation fund to which both Mr and Ms Biggs had made contributions personally, property in
Australia and New Zealand, and a 50 per cent interest in “LB Agriculture”. It referred
8 Spry v Kennon [2008] HCA 56.
to all the investments under the heading “S T Biggs and Laguna Pool” as having a value of nearly $25 million. On the next page, there was a reference to a tax debt for the LB Group FY 15 of $225,000.
[69] The fact Mr Biggs provided this summary was at least a tangible indication that he acknowledged Ms Biggs had to be informed as to the wealth with which he was associated. His providing this information, for the purpose of facilitating some sort of settlement discussion, also indicated that he understood he would not be able to unilaterally dictate a settlement. What he did should have objectively been seen as the first move by someone who wanted to reach a settlement and it recognised he would have to provide information to achieve this.
[70] That was relevant background to the commencement of proceedings and the applications which were soon made for discovery.
[71] In April 2016, Ms Biggs filed an application under the PRA and an application for interim maintenance.
[72] In her affidavit of 14 April 2016, in support of the application for interim maintenance in the Family Court at Invercargill, Ms Biggs said she was solely reliant on Mr Biggs to provide funds and had no independent means of supporting herself. However, the next paragraph said there was a Westpac debt facility secured over the Queenstown property for $500,000. Ms Biggs said it was not her intention to draw on that facility when “Mr Biggs has sufficient means” to support her.
[73] Ms Biggs said that over the last five years Mr Biggs had devoted the majority of his efforts towards building his Laguna Bay Pastoral business.9 She said, indirectly and through a trust, he held a 50 per cent shareholding which was established during the relationship and it effectively owned and managed large farms in Australia on behalf of domestic and overseas investors. With her affidavit, she produced information from the company’s website which summarised the services it was offering as to the acquisition and management of assets. She said in her affidavit that
she understood that the business was “yet to generate any significant revenue but Tim
9 In this judgment, I refer to Laguna Bay Pastoral Company Pty Ltd as “Laguna Pastoral”.
recently told me that he believes it is about to”. She believed this was most likely “our most valuable asset, with the highest cash flow potential”.
[74] Mr Biggs responded in an affidavit of 24 June 2016. Mr Biggs said he and Ms Biggs agreed when they separated they would cooperate respectfully and in good faith to achieve a fair division of the property of their relationship. He said that, without notice to him, Ms Biggs had elected to instruct legal representatives and file proceedings. He said that his lawyers were willing to meet with Ms Biggs’ lawyers and his lawyers had instructions to progress a division of property but, if she sought to make a claim for trust property, then settlement would be difficult.
[75] In his affidavit of 24 June 2016, Mr Biggs provided detailed information about real estate he owned overseas, details of the Tim Biggs Superannuation Fund to which both he and Ms Biggs had contributed, and information about the various entities with which he was associated.
[76] Mr Biggs described the structure of Laguna Pastoral, incorporated on 13
October 2013. He provided a copy of the constitution and described how it holds various unit trusts with unit trust holders (eight investors) who each make investments. He provided the first set of financial accounts for the year ending 30 June 2014 which he said reflected “the fledgling business” and said there was an agreement between the Trading Trust interests and Tim McGavin interests which included pre-emptive rights.
[77] Mr Biggs produced his tax returns for the years from 2009 to 2014. He referred to the fact that, under Australian law, capital gains income in a trust had to be included in a tax return and was attributed to the trustee, but said that he had not in fact received those gains.
THE APPLICATIONS FOR DISCOVERY AND HOW PROCEEDINGS PROGRESSED
[78] Ms Biggs’ requirements for discovery in the context of these proceedings were advanced through correspondence from Mr Lyne, an accountant instructed by Ms
Biggs’ solicitors. Mr Lyne has significant experience in relationship property and associated litigation.
[79] Central to Ms Biggs’ discovery application was Ms Chambers’ submission that, given Mr Lyne’s experience, if Mr Lyne regarded the discovery of certain documents was necessary, then the Court should accept this must be so. The reasonableness of his requests, however, has to be assessed against the principles which the courts say should be applied in dealing with issues of discovery in a relationship property context.
[80] Before both Davidson J and myself, counsel for both parties accepted as appropriate Kós J’s articulation of the principles governing discovery in relationship property litigation:10
(a) A robust approach should be taken to discovery consistent with the purposes and principles of the Act: the need for just division, but also inexpensive and efficient access to justice.
(b) Such discovery must not be unduly onerous.
(c) Such discovery must be reasonably necessary at the time sought.
(d) The scope of discovery should therefore be tailored to the need of the Court to dispose, justly and efficiently, of relationship property issues under the Act.
(e) More substantial discovery may well be ordered by the Court where it has reason to believe that a party has concealed information or otherwise sought to mislead either the other party or the Court as to the scope of relationship property. But even here, the scope of discovery should be no more than is required for the Court to fairly and justly determine relationship property rights. It is just that in such a situation, more is likely to be required to meet that requirement.
[81] The observation which Kós J made at (e) illustrates why it is important that, when dealing with discovery, courts and counsel should consider carefully the approach which each party is taking as to potential settlement or resolution of claims.
[82] Importantly, the discovery sought must be relevant to the issues in the proceeding.11
10 Dixon v Kingsley [2015] NZHC 2044 at [20].
11 J v P [2013] NZHC 557 at [21]; New Zealand Rail Ltd v Port Melbourne New Zealand Ltd (CA
59-93), [1993] 2 NZLR 641. See also the reference to “matters at issue in the proceeding” in r 8.9
High Court Rules.
[83] In M v B, Robertson J in the Court of Appeal said:12
The law relating to relationship property disputes requires total disclosure and cooperation between people who are parties in such litigation. Section 1N(d) of the Act provides that “questions arising under this Act about relationship property should be resolved as inexpensively, simply and speedily as is consistent with justice”.
[84] Robertson J emphasised the need for parties to cooperate. The Court should also be able to expect the same of accountants who are engaged to give expert evidence before the courts. In a relationship property context, such experts should be mindful of s 1N(d) PRA. To that end, they should be ready to engage with other professionals and to obtain the information which reasonably and realistically they need, in a manner which is cost-effective and which also is likely to promote respect and trust between parties as they attempt to resolve matters in dispute.
[85] In Dixon v Kingsley, Kós J emphasised the need for realism in relationship property cases. Associated with that, he said:13
Wide-ranging discovery obligations, with associated opportunity for interlocutory wrangling, interlocutory applications and appeals, create a substantial risk of injustice by precluding or limiting access to civil justice. Peruvian Guano-type obligations14 may be entirely inappropriate where the assets available are limited.
[86] While Kós J’s comments dealt with a situation where litigation might involve assets of limited value, they are also pertinent where, simply because of one party’s wealth, another pursues litigation in a manner which creates a substantial risk of injustice. That can happen when one or both parties is wealthy, wishing perhaps to preserve a relationship with children, or simply wanting to make the clean break that enables them to move on in their lives. For such a party, there can also be a substantial risk of injustice if they are faced with undue pressure to compromise on what might be a properly maintainable legal position because they have to be a party to litigation which is being conducted in a way that exacts a financial and human toll, more than is
necessary or expected of litigation of this sort.
12 M v B [2006] 3 NZLR 660 at [49].
13 Dixon v Kingsley, above n 10, at [16].
14 Kós J was referring to the very wide scope of discovery set out in the English case Compagnie
Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 (CA).
[87] As Mallon J noted in J v P:15
I accept, as a general statement, that wide discovery may sometimes be appropriate and necessary (to ensure the parties have access to all the relevant documents), but the appropriate scope of discovery in a particular case will still be determined by relevance and reasonable necessity. The need for transparency is not a justification for ordering onerous discovery which is unnecessary for the disposition of the claims. A balance must be struck between the need for transparency (i.e. so that, where there is asymmetry of knowledge, a party obtains relevant information) and applications seeking wide-ranging information which are “fishing” in the hope that something of use may be uncovered. That balance is achieved by limiting discovery to what is reasonably necessary at the time the discovery is sought.
[88] Mr Lyne’s discovery requirements were first set out in a letter of 22 August
2016. These were later mirrored in a schedule attached to an application for discovery. The schedule had 124 categories of documents. The list indicated that Mr Lyne wanted to effectively audit how the various trusts and companies, with which Mr Biggs had been associated during the marriage, had been established and how they had operated during the relationship and afterwards. He wanted to do that not just by looking at records such as the annual accounts, which summarised the transactions in which those entities had been involved, but by examining documents such as bank statements, Mr Biggs’ email correspondence and the accountant’s work papers and general ledgers.
[89] Documents sought from Mr Biggs personally included:
(a) bank statements for Mr Biggs personally or for his nominee for the period
1 January 2010 to the date of the application (ie including the period after separation);
(b) credit card statements for the same period;
(c) copies of all email correspondence between Mr Biggs and seven people:
• Mr Shreyas Chotai (Mr Biggs’ accountant)
•Mr Timothy McGavin (the partner involved in the Laguna Pastoral business)
15 J v P, above n 11, at [33].
•Ms Tiffany Hedberg (a manager involved in his business and investment activities)
• Mr Kevin Cairns
• Mr Pablo Sitjar (Chairman Santiago Stock Exchange)
• Ms Anna Palmer (his new partner)
• Mr Enrique Flynn
(d) a copy or printout of Mr Biggs’ calendar/appointment diary used for work purposes from 1 January 2010 to the date of the application;
(e) a copy of all (ie worldwide) 2015 income tax returns of Mr Biggs along with all tax return work papers; and
(f) a copy of valuations and documents recording rental income in respect of property at:
• Noosa;
• Stradbroke Island; and
• Recoleta, Argentina
(These were immovable property assets of which Ms Biggs eventually acknowledged could not be the subject of a claim within the New Zealand jurisdiction.)
[90] The documents Mr Lyne required as to Laguna Pastoral and associated entities included:
• copies of those companies’ board of directors’ reports, senior management reports recording assets under management, fund and group performance including operation and financial management reports;
• a list of their institutional and non-institutional investors as at February
2016;
• a copy of all fee agreements with each of the companies institutional and non-institutional investors;
• a copy of all investment committee meeting “information packs” as well as minutes of meetings;
• copies of roadshow presentations and marketing material, promotional material, information memorandums, prospectuses, investor statements and similar documents provided to investors during the period January
2010 to the present date;
• a copy of records including general ledger extracts, PAYG records and all management accounting records evidencing total remuneration and benefits paid and provided to Mr McGavin for the years 30 June 2010 to
30 June 2016;
• a copy of all job descriptions for personnel providing personal services;
and
• a copy of all accounting work papers used or produced in preparation of the financial statements for the years to which accounts were available and copies of tax returns.
[91] Mr Lyne swore a second affidavit on 6 September 2016 in support of Ms Biggs’
maintenance application. He said he was asked to express his opinion on:
• the net asset position of Mr Biggs; and
• the income and earning capacity of Mr Biggs.
[92] In that affidavit, he presented the wiring diagram of what he described as the couple’s various interests, details of the various trusts, details of various companies, and details of properties owned by the couple. He was able to provide a high-level summary of the various entities and provide detailed information from a range of accounts. He commented on the profits from Laguna Bay Capital Pty Ltd over the years 2011 to 2014, and the profits and gains in the Trading Trust 2011 to 2014. He described the shareholding arrangements with a 50/50 split as between the Trading Trust and McGavin interests with Laguna Pastoral. He knew the company was established on 13 October 2013 and referred to the statement of financial performance for the company in the 2014 financial year and the statement of financial position for
that company and its record of net tangible assets, then in the 2014 accounts at
AUD120,000.
[93] He was aware of the financial performance of Laguna Bay Management Pty Ltd in the financial years 2012 to 2014 and referred to the statement of financial position for the company as at 30 June 2014. He referred to the statement of financial performance for Laguna Bay Capital Management Trust in the financial years after it was formed, from 2012 to 2014.
[94] Mr Lyne’s estimated value of Biggs Group entities was $59,181,000.
[95] In his affidavit of 15 March 2018, Mr Biggs provides detail as to what he says were mistakes in Mr Lyne’s estimate:
(a) Laguna Sierra is owned by the Trading Trust. Mr Biggs says the value of its investment in the Aspen property has been brought into account twice;
(b) the Trading Trust has made an investment in Laguna Bay Capital
Management Trust which Mr Biggs says was brought into account twice;
(c) in ascribing a value to the Trading Trust, Mr Lyne refers to the income equalisation reserve. Mr Biggs asserts this was purely for taxation purposes, it does not represent true equity and has no value;
(d) Mr Lyne has allowed for an asset of $10,603,000 as an advance from Mr Biggs to the Trading Trust without bringing into account about $5 million that was applied in the purchase and build of the Queenstown property, the value of which is included in Mr Lyne’s estimated value; and
(e) there was no provision for tax in Mr Lyne’s analysis.
Mr Biggs claims Mr Lyne’s $59 million value is an over-valuation of at least $25 million.
[96] Mr Lyne said that, from his review of affidavits of the couple and information available to them on the group, it appeared that, during the relationship, Mr Biggs’
skills and efforts had been directed primarily towards two businesses: the Laguna Pastoral business of agricultural funds management and asset acquisition, which he said he understood Mr Biggs co-founded with Tim McGavin in or around 2010, and the Trading Trust, through which Mr Biggs conducted equities and commodities trading activities using “his own capital”. He identified that the largest source of Mr Biggs’ taxable income was from “discounted” capital gains of the Trading Trust, returned by Mr Biggs for income tax purposes at 50 per cent of the actual capital gain arising.
[97] A list of principal documents relied upon was in appendix 1 to Mr Lyne’s affidavit. It is apparent from that list that Mr Lyne had extensive annual financial accounts for various entities for the years of operation through to 2014, financial statements for the Trading Trust for the years 2009 to 2014, the tax returns for LBPC Investments for the years ended 2011 through to 2014, tax return for Laguna Pastoral for the 2014 financial year, tax return for LBPC Services for the 2014 financial year, tax returns for Mr Biggs for the 2010 to 2014 years, and minutes of trustees meetings from June 2011 to 2014.16
[98] There were ways Mr Lyne’s discovery expectations in August 2016 were oppressive. Meeting Mr Lyne’s expectations was inevitably going to put both parties to significant expense.
[99] Consistent with that, in an affidavit of 1 September 2016, Ms Biggs said she had incurred legal costs to that date of about $80,000, and forensic accounting costs of about $61,000. She said she had engaged junior counsel with an hourly rate of $310 and senior counsel with an hourly rate of $1,250. At that time, she said her estimated total accountancy costs through to the final hearing was close to $200,000. In a maintenance application, she sought a total monthly amount of $50,650, comprised of
$20,650 monthly for herself and outgoings on the Queenstown property and $30,000 per month for legal and accounting costs.
[100] On 22 November 2016, Mr Paul Moriarty, Chartered Accountant, provided a detailed report for Mr Biggs. Mr Moriarty has extensive experience in assisting with
16 No doubt associated with completion of annual accounts.
litigation. Mr Moriarty identified the entities with which Mr Biggs was involved at
the beginning of the relationship and the debt to Mr Biggs personally from the Trading Trust of $7.3 million which he said arose from Mr Biggs’ original injection of capital into the trust. He identified three debt-free property holdings that were in Mr Biggs’ personal name at the beginning of the relationship: the half share in Stradbroke Island, the Noosa land and an apartment in Buenos Aires. He identified property owned at the end of the relationship, putting to one side assets such as vehicles, bank accounts, superannuation and chattels. He referred to the Queenstown property. He identified that, during the relationship, several new companies and trusts were incorporated or settled by the Trading Trust and said these had occurred as a result of redeployment of capital into three areas of activity:
(i) property investments;
(ii) share trading through a managed fund; and
(iii) pastoral-related business.
[101] Mr Moriarty said he had reviewed the affairs of the Trading Trust which he considered was the central entity through which investments had been funded, reviewed movements in the loan account between the Trading Trust and Mr Biggs, and reviewed the investments that had occurred during the relationship and identified any property involved in those investments. He said the financial statements of the Trading Trust reflected the historic activity along with the investments made during
the relationship. He summarised those. He noted the volatility in profits. He described how, during particular financial years, there was a sale of long-term strategic investments freeing up capital for redeployment into other areas.
[102] Mr Moriarty’s report provided detailed information as to the most significant business activities Mr Biggs had been involved in during the relationship, how new investments had been financed, and the impact this had on the value of property held by the various entities at the end of the relationship.
[103] In his affidavit, Mr Lyne had provided an opinion as to Mr Biggs’ income. For tax purposes, Mr Biggs’ net taxable income included 50 per cent of capital gains within
the Trading Trust. Mr Lyne considered that Mr Biggs’ income should be as represented in his tax returns plus income and distributions of the Trading Trust over the five years. Mr Moriarty acknowledged the way capital gains had been reflected in Mr Biggs’ income returns but was of the opinion that, in assessing his income and earning capacity, the focus should have been on what he had been paid, or should have been paid, for personal services he had provided to the Trading Trust, and not on one-off capital gains allocated to him, or cash flows arising from the repayment of a separate property debt which had existed before the relationship began. Mr Moriarty referred to the AUD75,000 of remuneration Mr Biggs had received from the Trading Trust but pointed to information that Mr Biggs had not been employed full time during the period of the relationship.
[104] Mr Moriarty’s report stated:
In relation to LBPC, Tim Biggs’ contribution (time effort) has been independently assessed to be 33% of that contribution by Tim McGavin. In return for this, he has been allocated a fee of $83,333 per annum, backdated to February 2014 when the Adveq Almond Trust 2 settled. (One of the Laguna Pastoral unit trusts.) Since Tim McGavin’s salary is at market rate, and the value of Tim Biggs’ contribution has been independently assessed at 33% of this, it is reasonable to infer that the market remuneration of Tim Biggs’ service into LBPC is $83,333 per annual.
[105] The report footnoted that the 33 per cent contribution of time and effort was based on a recent and anonymous staff vote on everyone’s contribution towards the close of the most recent fund and Mr McGavin’s arm’s length market salary was
$250,000 per annum. Thirty-three per cent of that was $83,333.
[106] Mr Lyne criticised Mr Moriarty for accepting instructions and expressing an opinion as to whether relationship property existed in, or had been invested in, the various trusts and companies associated with Mr Biggs. I agree the classification of property as either relationship or separate property is a legal issue for lawyers or, if necessary, for a Judge to determine. Mr Biggs’ lawyers should not have assumed that Mr Moriarty would know all the ways that a relationship property interest could exist in assets held under another name.
[107] Nevertheless, Mr Moriarty’s report provided much useful information as to the investments that the various Biggs entities had been involved with during the
relationship and whether Mr or Ms Biggs had contributed personal funds towards the investments. His analysis should have been of value to the parties and their counsel in identifying whether and to what extent, from a purely financial and accounting perspective, the wealth in the Biggs entities at separation was derived from the wealth in those or related entities at the beginning of the relationship.
[108] On 2 December 2016, Mr and Ms Biggs recorded their intention to hold a private mediation to discuss a final property settlement. The mediation was arranged for 20 February 2017. Mr Warren Sowerby was to be the mediator. Mr Biggs agreed to provide $30,000 to Ms Biggs and says it was to assist Ms Biggs in obtaining advice for the intended mediation. Their agreement records this was provided on “an uncategorised basis”. They also agreed the proceedings would be transferred to the High Court.
[109] In a third affidavit, sworn 24 February 2017, Mr Lyne annexed his letter setting out the documents he required for a limited scope analysis in advance of a proposed mediation. The documents he required were again extensive, including for instance:
•bank statements for all Mr Biggs bank accounts for the period 1 January 2010 to 22 December 2016;
• Laguna Pastoral “operational reports or similar” for the years ended 30 June
2014, 2015, 2016 and up to the present;
• Laguna Pastoral financial projections, budgets and forecasts prepared between
30 June 2014 to the present;
•roadshow presentations, promotional materials, information memorandums and similar documents prepared during the period January 2010 to the present; and
• general ledger extracts for years ending 30 June 2014, 30 June 2015 and 30
June 2016 for all inter-company or inter-entity accounts, all shareholder/director current accounts or term loans/advance accounts, and general ledger extracts for Laguna Pastoral, LPC Investments Pty Ltd, Laguna
Bay Capital Pty Ltd, Laguna Bay Management Pty Ltd, the Trading Trust, LBMT, and Laguna Sierra LLC.
[110] On 1 February 2017, Ms Biggs’ solicitors said that she would not confirm her participation in mediation until the documents sought by Mr Lyne had been provided.
[111] Mr Biggs refused to provide all the documents Mr Lyne requested. He said some of these documents had already been supplied and some were irrelevant. He refused to provide certain documents in respect of Laguna Pastoral. His solicitors said the request appeared to encompass documents in specific unit trusts below manager level and operational documents relating to the investments by unit trusts, confidential marketing material and fee arrangements with investors. Mr Biggs’ solicitors did not consider the documents to be relevant or necessary.
[112] In a letter of 27 January 2017 to Ms Biggs’ solicitor, Mr Biggs’ solicitors wrote:
As to the financial information, we reiterate that the financial accounts for FY
2015 that will be provided are the relevant financial accounts. There are no available/reliable management accounts for the period July 2015/January
2016. These entities have never produced monthly/quarterly accounts or budgets. Accounts are prepared for filing in May 2016 in the ordinary course
to comply with regulatory requirements, and there are not the resources to have them completed earlier than this. Tim is prepared to facilitate
engagement between the accountants by which Mr Lyne may confirm in writing directly [sic] what information is available with Shreyas Chotai, the entity’s accountant; and to enable Brendan Lyne to have any questions he has
asked via written question and answers provided in writing by Shreyas Chotai. That is only on the basis of confirmation of commitment to the 20 February
date.
[113] As is apparent from subsequent developments, more information or documents relating to this company could have been supplied but Mr Lyne already had annual accounts for the company for 2014 and knew, in general terms, a significant amount about how the company operated. Further information had been provided in Mr Moriarty’s report. By then, Mr Lyne had all the documents on which Mr Moriarty’s report was based.
[114] Ms Biggs also had some understanding of the general nature of the company’s business and the extent of Mr Biggs’ involvement. In his affidavit of 24 June 2016, Mr Biggs described Ms Biggs as “an experienced and competent stockbroker and
funds investor”. In answering interrogatories in her affidavit of 16 March 2018, Ms Biggs produced a document headed “a deal attribution and transaction history for Laguna of May 2015”. It summarised how the Laguna Bay business was set up, the sort of investments the business had been involved in between 2011 and 2014, the major transactions and investments the business had made and the individuals involved, with specific reference to Mr Biggs’ responsibility for various investments.
[115] In answering interrogatories, Ms Biggs referred to the time Mr Biggs was away. She said his passport, itineraries and diary, provided in her discovery, confirmed this. She produced a bundle of emails from 7 December 2012 to 2 November 2014 which she considered supported her views in relation to her contributions, reflected what they had discussed in relation to the challenges Mr Biggs faced with the Laguna Pastoral business and his trading, and stated what she said they were hoping to achieve. She described generally the way she considered she had supported him in his business activities through socialising with business-related people and in other general ways.
[116] In her recent submissions as to confidentiality, Ms Chambers said “Mrs Biggs already knows a significant amount about the business”.
[117] In February 2017, Ms Biggs did not have a valuation of shares in Laguna Pastoral but Mr Lyne had been able to arrive at tentative or indicative values for the various entities in his affidavit of 6 September 2016. Mr Biggs had indicated he did not accept that Ms Biggs would have a claim against trust assets. Despite this, given the potential benefits to the parties of a mediated settlement, it was unfortunate they did not take advantage of the February 2017 mediation opportunity.
[118] The position of Ms Biggs and her advisers was made clear in a letter from Ms Chambers to Mr Biggs’ solicitors of 4 April 2017. She indicated that Ms Biggs would like to mediate if possible but said Ms Biggs’ preconditions for mediation at that point were:
1. that Mr Biggs provide discovery; and
2. Mr Biggs advance $120,000 at least four weeks prior to mediation.
[119] Ms Chambers said that in her view:
… it would be unprofessional for Sophie to attend mediation without a clear understanding of her entitlements under the Property (Relationships) Act
1976. At this stage, she does not have that because I do not have a forensic
report advising me in regard to the financial transactions during the relationship. Sophie does not have a forensic report because Tim has been obstructive in regard to discovery.
[120] In the High Court, Ms Biggs then sought to pursue her application for discovery and filed an application on 21 February 2017 for an interim distribution and an order that Mr Biggs pay legal and accounting fees. On 21 February 2017, she filed a first statement of claim in the High Court proceedings. It included a PRA claim as to her share of relationship property; applications under ss 9A, 20E, 44C, 44F and 32; claims in respect of the Noosa, Stradbroke Island and Argentina properties; a claim under s 182 Family Proceedings Act; and claims based on constructive trust allegations.
[121] On 25 March 2017, Mr Biggs filed an application for orders for further and better particulars, an application striking out three causes of action included in Ms Biggs’ statement of claim dated 21 February 2017 and an application for an order that the Court decide a question separately before trial. Mr Biggs also then filed his counterclaim for a s 13 unequal sharing of relationship property.
[122] It appeared the parties and their advisers were committed to an intensely adversarial approach to resolving their claims, an approach which, certainly as far as costs were concerned, was not to the benefit of Mr and Ms Biggs personally.
[123] Mr Biggs did however provide further discovery. In an affidavit of 16 February
2017, he provided a detailed response to the specific requests for discovery that had been made in Ms Biggs’ application, as set out in the schedule associated with that application. He referred to the extensive documents he had already provided, stated that certain documents requested had not been provided because they did not exist and agreed he would provide taxation returns for the years ended June 2015 and 2016 when they were available. He refused to provide certain documents on the basis they were irrelevant. He repeated objections that had been made earlier as to discovery of documents connected with Laguna Pastoral on the basis the documentation sought was
confidential to unit trust holders or was commercially sensitive. For those entities and certain other companies, he opposed the discovery of work papers that might exist in connection with the preparation of financial accounts. He also opposed the provision of the general ledger saying that the financial accounts and tax returns for the various entities were accurate and “the accountants who prepared the financial accounts are skilled and reputable”.
[124] As to that objection and explanation, in a fourth affidavit, Mr Lyne said he considered there were no details, even at a high level, of what constituted the movement between year end balances. As to Mr Biggs’ reference to financial accounts having been prepared by reputable accountants, Mr Lyne said this was “entirely irrelevant. The accounts lacked independence, the financial statements were compilation only, had not included verification or validation of procedures and no audit had been carried out”.
[125] In responding to Mr Lyne’s criticisms to his report and what Mr Lyne considered the inadequacy of the information he had relied upon, Mr Moriarty said he had engaged with Shreyas Chotai, the accountant who prepared the annual accounts he had referred to. He said he found Shreyas Chotai to be helpful in providing both explanations and relevant documents. Mr Moriarty said:
I have approached my expert analysis and report on the basis that, in assisting the Court to identify separate and relationship property, the role of the expert accountant is not to trawl through the minutiae but to maintain a sense of proportionality in accordance with s 1N(d) of the Property (Relationships) Act
1976 so that identification and classification of property can be resolved as inexpensively, simply and speedily as is consistent with justice.
[126] In his fifth affidavit of 21 April 2017, Mr Lyne responded to affidavits from both Mr Biggs and Mr Moriarty. He criticised detailed statements that both had made and explained why he had particular concerns as to the way various transactions had been recorded in accounts made available to him, and queries he had arising out of other records which he had examined. He did all this, he said, to explain why he needed the extensive further documentation.
[127] In an affidavit of 26 May 2017, Mr Biggs responded in detail to the issues and concerns Mr Lyne had raised in his fifth affidavit. When providing explanations, he
attached documents such as accounts, financial statements, ledger accounts and bank statements to back up what he was saying.
[128] Mr Moriarty also swore an affidavit of 30 May 2017 in response to Mr Lyne’s criticisms and queries. His responses and explanations were also detailed and supported by reference to relevant documents. He noted that his expectation was that
the documents would also be made available to Mr Lyne.
[129] The way in which the conduct of these proceedings has impacted negatively on the parties’ relationship, increasing distrust and further difficulty in achieving the resolution of matters is apparent from developments since then. Some of these are reflected in the judgments of Davidson J of 12 October 2017 and 18 December 2017.17
[130] Correspondence between the parties’ legal advisers of 15 December 2017 reflected Mr Biggs’ frustration at what he saw as a stone-walling of attempts to resolve relationship property claims.
[131] In an affidavit of 5 February 2018, Ms Biggs said she was having difficulty obtaining cooperation from Mr Biggs over payment of what she considered to be expenses for the sale of the home. She said that, as a consequence of no decision having been made on her applications for interim distribution/legal costs and the hugely expensive litigation costs in trying to have Mr Biggs provide disclosure, she had no option but to sell the Queenstown property. She said she did not want to do this as she loved the property and it was their daughter’s home.
[132] On Friday 2 March 2018, Mr Biggs received an email directly from Ms Biggs giving him notice that she and their daughter were relocating to Brisbane. Mr Biggs says in his affidavit that he sought information as to what his daughter’s living arrangements would be. Ms Biggs then told him that she was in a de facto relationship and would be living in her new partner’s home in Brisbane.
[133] Mr Lyne swore a seventh affidavit on 7 February 2018. In that affidavit, he produced correspondence between the parties’ solicitors. That correspondence
17 Biggs v Biggs, above n 1; Biggs v Biggs [2017] NZHC 3170.
indicated Mr Biggs required undertakings as to confidentiality from those to whom disclosure was to be made and a full indemnity from Mr Lyne and employees of his firm if there was any breach of confidentiality.18 The distrustful nature of Mr Biggs’ requirements was matched by Mr Lyne’s opinion as expressed in his affidavit that what Mr Biggs was doing was “an ongoing attempt by Mr Biggs to frustrate disclosure, delay matters and cause Mrs Biggs to incur additional cost”.
[134] The second, third and fourth defendant trustees were not joined in these proceedings until 24 January 2018. With their involvement, separately represented, some progress was made in providing further documents from Laguna Pastoral. Through counsel, the trustees made available to Mr Lyne a report from Grant Thornton, chartered accountants, valuing the shares in the company. The provision of the valuation report should have been seen as a positive step. It provided Ms Biggs and her advisers with more relevant information. No party was insisting that it had to be accepted as establishing the then up to date value of shares in the company.
[135] Mr Lyne’s response however was not to treat it as a positive development but to criticise it as “totally inadequate”. His concerns were that it was:
(a) a year out of date, having been based on figures as at 31 December 2016 although dated April 2017;
(b) provided on an indicative basis only so, in his view, probably based on limited information; and
(c) provided for internal use by Laguna Bay and not for the purposes of this specific litigation.
[136] He went further to say that he could see no reason why Laguna Pastoral would commission such a valuation other than for the purposes of presenting a low valuation.
In submissions, Ms Chambers referred to it as “a patsy valuation”.
18 I note that, in the exchange of correspondence, Mr Biggs’ solicitors said they had expected these issues could be sorted out through counsel without having to involve the Court.
[137] In an affidavit in response on 15 March 2018, Mr Biggs said that Laguna Pastoral had obtained the valuation of its shares for the purpose of making some of the shares available to key staff of Laguna Pastoral. Mr Biggs said that, as only one of the two directors of Laguna Pastoral, and with the Trading Trust having a 50 per cent shareholding, he did not unilaterally control what documents could be made available from that company. He asserted he had done his best to provide some initial material through providing the financial accounts for the company and had asked Tiffany Hedberg, as a director of Laguna Bay Capital Pty Ltd, to liaise with his co-director, Tim McGavin, to obtain documents sufficient to enable a valuation for the purpose of these proceedings.
MY ASSESSMENT AS TO HOW MR BIGGS HAS APPROACHED THESE PROCEEDINGS
[138] I have read and considered:
1. the correspondence between the parties’ solicitors during the separation;
2. the parties’ affidavits that have been in the case books prepared for the
High Court hearings on 12 June 2017 and 18 March 2018; and
3. the detailed affidavits of Mr Lyne and Mr Moriarty.
[139] I am satisfied that Mr Biggs has never withheld documents or information for the purpose of consciously obstructing any claim he thought Ms Biggs might have. I accept that his concerns about confidentiality have been genuine. Different information has been provided as negotiations have developed or as claims have developed and been clarified.
[140] The accounts, bank statements, tax returns and various other documents supplied were sufficient to allow Mr Lyne to have a clear understanding as to how all the entities were related and to see what has happened to the assets and liabilities of those entities on a year-by-year basis. The information has been sufficient for him to raise specific queries as to matters of concern to him, even as to amounts that were modest in the scheme of what is generally at issue in these proceedings. When he raised such concerns, which were at odds with evidence given by Mr Biggs or opinions
the Mr Biggs from her share of the sale proceeds of the Queenstown property;40
(e) following sale, the balance of the deposit, after payment of any reasonable real estate agents commission, is to be paid to AWS Legal for them to hold for the credit of both parties;
(f) the balance of the proceeds of sale shall be applied in the following order and priority:
(i)all costs and expenses of sale, including legal fees and disbursements, and agents’ commission;
(ii)payment to Ms Biggs in the sum of $15,985 on account of the debt which she has to Lachlan Given for $19,985 together with interest at five per cent, as recorded in a deed of acknowledgement of debt dated 28 January 2018. That payment is to be made in full satisfaction of any claim which Ms Biggs has to contribution from Mr Biggs in respect of that debt including interest;
(iii) repayment of all amounts owing to Westpac Bank secured by mortgage over the property;
(iv)payment to Mr Biggs of the total sum he has paid, if any, on account of Council rates, property levies, insurance, diesel and general maintenance for the period from 1 March 2018 to the date when the funds are available for distribution;
(v)from the balance then remaining, $1,500,000 shall be paid to each of Ms Biggs and Mr Biggs on account of their relationship property entitlement; and
(vii) the balance after payment of that sum shall be held in an interest- bearing term deposit in Mr and Ms Biggs joint names with AWS
40 This is as drafted for both parties by counsel and as submitted to me. The intention must be that Ms Biggs reimburse Mr Biggs for one-half of these costs so they are shared equally. I leave it to counsel to clarify what was meant.
Legal, solicitors, Queenstown, pending further written agreement between Mr and Ms Biggs or orders of the Court.
(g) the parties are to forthwith do all things available to them, using best endeavours to arrange an extension of the Westpac facility over the Queenstown property, which can be utilised to pay outgoings on the property, including Council rates, property levies, insurance, diesel and general maintenance. If, despite those best endeavours, such a facility cannot be arranged, Mr Biggs is to meet those outgoings. In that event, he is to be reimbursed from the proceeds of sale, before they are divided equally between the parties, for all such expenses he has met for the period from 1 March 2018 to settlement of the sale;
(h) subject to the orders in (f)(ii) and (f)(iv), at settlement, all steps necessary are to be taken in terms of payments and reimbursements to ensure that all reasonable costs of sale, including advertising costs, are paid by Ms Biggs and Mr Biggs equally;
(i) the distribution of $1,500,000 to Ms Biggs is subject to the requirement for her to reimburse Mr Biggs $200,000 for the payment which he is being ordered to make as an interim distribution later in this judgment; and
(j) leave is reserved to the parties to seek a variation of these orders if and when a sale of the Queenstown property has been achieved and there is certainty as to the price that has been obtained for it and the debt secured over it.
APPLICATION FOR INTERIM DISTRIBUTION/COSTS
[389] In his interim judgment of 12 October 2017, Davidson J discussed in some detail the jurisdiction to make such an order, what he considered to be the relevant circumstances including that, after the hearing before him in the High Court, agreement had been reached in the Family Court on 23 August 2017 dealing with interim distribution and professional fees.
[390] Ultimately Davidson J reserved his position over the application for an interim distribution.
[391] Davidson J also discussed in some detail the application for the order that had been sought as to costs with reference to s 40 PRA and declined to make the order sought but did not formally dismiss the application “pending further development of the litigation”.
[392] There appeared to be a large measure of agreement over the principles to be applied on an application for an interim distribution under s 25A.
[393] The Court must generally be satisfied the amount sought by way of interim distribution will be less than the applicant’s ultimate share of relationship property.41
[394] Other matters which the Court must consider will be:
(a) any possible prejudice that might arise from an order;
(b) the purpose and principles of the PRA including, in particular, the need to do justice between the parties;
(c) the needs and circumstances of the applicant;
(d) the purpose for which the distribution is sought;
(e) the applicant’s likely share of relationship property;
(f) the respondent’s ability to give effect to an order at that time;
(g) the length of time until the substantive claim is likely to be heard;
(h) any delays in proceedings to date and whether those delays are attributable to either of the parties; and
(i) whether an interim distribution will cause further delays in finally determining the relationship property claim.
41 Murray v Murray (1989) 5 FRNZ 177 (CA).
[395] Of importance, however, was the differing positions over whether the Court can order an interim distribution out of separate property or whether it had to be out of relationship property. There was High Court authority going both ways. Ellis J in SM v LFDB, and Fisher J in Cossey v Bach suggested interim payments could be ordered out of separate property.42 There has however, in Owen v Thomas, been a careful and detailed consideration by Duffy J as to whether s 25(3) PRA permits the Court to order an interim distribution to be made out of separate property or an interim distribution of one party’s separate property to another.43
[396] With respect, I consider there is considerable force in Duffy J’s reasoning that, if s 25(3) PRA were to be used to allow separate property to be vested in another party, it would have the effect of drawing separate property into the relationship property pool in ways that would not be permitted or achieved through final orders.
[397] After the hearing, Ms Chambers referred me to a judgment of Judge Wills in the Family Court, Romanes v Romanes, proceedings in which Ms Chambers had been involved.44 Judge Wills discussed the differing approaches in ways that have been of considerable assistance to me. It would appear she saw the force in Duffy J’s analysis but held that s 25(3) PRA could be applied on the basis “the order must relate to relationship property or property that is separate but susceptible to being drawn into the pool of relationship property”. It is not necessary for me to decide, in this instance, whether s 25(3) PRA can be applied in this way. If it is a permissible interpretation, then of crucial importance would be the Court’s assessment as to the degree of certainty or otherwise about the applicants’ entitlement under the Act.
[398] In Romanes, the parties had been married for 30 years. They had four children. The husband had personally held shares in a range of companies before the marriage so they were his separate property. Over the marriage, the value of the husband’s interests in the various companies had grown to over $60 million. One of the companies had bank funds in excess of $26 million. The wife had very little, if any,
capital available to her. The Judge made an order for a substantial interim payment on
42 SM v LFDB, above n 2; Cossey v Bach [1992] 3 NZLR 612.
43 Owen v Thomas [2014] NZHC 2200.
44 Romanes v Romanes [2017] NZFC 9928.
account of the wife’s likely entitlement to a share in the increase of the husband’s separate property.
[399] In this judgment, it is unnecessary for me to make any assessment as to the strength of Ms Biggs’ various claims by which she seeks to obtain a payment on account of wealth which belongs to trusts associated with Mr Biggs or the increase in value of his loan accounts with trusts. Mr Biggs says the increases are largely derived from capital gains made by those trusts on investments which the trusts had made before his relationship with Ms Biggs began. This is not, however, a case where it can be said with certainty that Ms Biggs will be entitled to significantly more than a half share of what is, at this stage, agreed to be relationship property.
[400] Mr Biggs does however have a relationship property entitlement in respect of the Queenstown property and also superannuation investments, as does Ms Biggs. Pursuant to s 25A(3) PRA, I can order him to make a payment against his interest in that relationship property.
[401] There may be understandable delays or difficulties in Mr Biggs being able to realise his interest in that relationship property. Despite some suggestion to the contrary, I do not accept that it is a prerequisite for an interim payment from one party to be that he has an immediately realisable interest in relationship property which can be utilised in making the required payment. Whether or not he can do so may be relevant in exercising the discretion over whether there should be such a payment.
[402] In her submissions, Ms Chambers said the orders were necessary because there was no sign yet of a buyer for the Queenstown property. She submitted that, if the making of such orders was otherwise appropriate, the Court should not avoid making the appropriate order just because the extent of relationship property at issue between the parties is in dispute. She submitted, referring to evidence, that Mr Biggs could not credibly claim that he could not access capital to the extent required to make the payment sought.
[403] Ms Chambers submitted the Court should follow the approach adopted by Ellis
J in SM v LFDB. She accepted that any payment that might have to be made for costs
would be without prejudice as to how that payment would be brought into account on the final resolution of all disputes between the parties. She also accepted that, if any payment was to be made by way of an interim distribution, it should be brought into account against the share of the proceeds of sale from the home that Ms Biggs would be entitled to on settlement of that sale.
[404] Ms McCartney submitted it is of significance that Ms Biggs has had access to
$300,000 of capital to assist with legal and accounting expenses so far and this was not a case where a husband had been obstructive in attempting to resolve issues.
[405] In his affidavits, Mr Biggs has described how he is involved in the significant businesses and legal entities that existed before his marriage, and the way he was able to utilise his interests in those entities during the marriage. I am satisfied that Mr Biggs has the ability to make a further significant payment to Ms Biggs which will assist her with payment of the legal costs she will inevitably have to incur to resolve relationship property claims.
[406] Against the background of this litigation to date, I consider it important that the payment is made in such a way that it is clear to Ms Biggs and her advisers that, subject to any award of costs the Court might ultimately make, the costs she incurs will have to be paid out of her share of relationship property or what she obtains from the other claims she is making.
[407] If it can be achieved without unfairly prejudicing Mr Biggs, the payment which
Mr Biggs is required to make to assist her with costs should not be so small as to leave
Ms Biggs in such a financially disadvantaged position that financial stress makes it difficult for her to receive the reasonable and necessary legal and accounting advice she requires to resolve her claims on an adequately informed basis.
[408] On the other hand, the Court should not require Mr Biggs to assist with Ms Biggs’ legal costs in a way which encourages her and her advisers to think that there is an unlimited fund at her disposal which she can use to pursue claims through litigation in a way which, on its face, is at odds with one of the principles of the PRA, namely, “that questions arising under this Act about relationship property should be
resolved as inexpensively, simply and speedily as is consistent with justice”.45 The Court should not allow Ms Biggs to pressure Mr Biggs to enter into an unjust settlement of claims through a succession of interlocutory applications, the pursuit of discovery to an extent that would be oppressive, or through requiring him to fund her legal and accounting costs at the level they are here.
[409] Against that background, the orders I make on this application are:
(a) Mr Biggs shall pay to Ms Biggs the sum of $200,000, that sum to be paid within two weeks;
(b) that sum is to be brought into account against Ms Biggs’ share of relationship property or any other sum that might be due to her from Mr Biggs on the ultimate resolution of these proceedings but without prejudice to any costs order that the Court might ultimately make when the proceedings are resolved; and
(c) if the Queenstown property is sold before the proceedings are fully resolved, Ms Biggs is to pay to Mr Biggs out of the $1,500,000 share of the proceeds, as provided for in [391](f)(v), the sum of $200,000.
[410] I decline the application for any further interim distribution of property to Ms
Biggs.
[411] Those orders are made to finally determine Ms Biggs’ application currently before the Court as to costs and an interim distribution. The Court does not expect to have to deal with any further application in this regard before the hearing of these proceedings which is scheduled to begin on 8 October 2018.
SUPPRESSION OF THE PARTIES’ NAMES AND OTHER INFORMATION
[412] After Davidson J issued an interim judgment of 12 October 2017, counsel for
Mr Biggs, by memorandum, sought a direction that the proceedings be:
45 Property (Relationships) Act 1976, s 1N(d).
(a) … subject to the usual restrictions and endorsements contained in s 35A PRA and ss 11B to 11D FCA so that the reporting must be without reference to or any identification of any information which will identify [the child of the marriage]
(b) directing that these proceedings shall proceed under [fictitious names] and shall otherwise be reported with redaction/anonymisation restrictions.
[413] In his judgment of 18 December 2017, Davidson J noted that his earlier interim judgment was “not directed to that child except for reference to maintenance and the factual circumstances of the parties”.46 He made orders:
[27] There is an order by this Interim Judgment that the provisions of ss
11B-11D FCA apply so that there should be no particulars reported which identify [A] (whether as [A] or as a child of the marriage) and any reporting will make no such reference to a child of the marriage whatsoever. As these proceedings develop, there may be necessary reference, where the fact of there being a child of the marriage is contextual, and will have to be mentioned for judgment to be properly understood. That issue can wait.
[28] The interim judgment of 11 [sic] October 2017 will be recalled to bear such order, and it will apply to this and any further orders or judgments of the court, until any further order addressing the issue.
[414] His Honour thus did not expressly decide whether ss 11B-11D Family Court Act required the suppression of the parties’ true names on the basis that use of their names would identify their child but his judgment of 12 October 2017 was published under the parties’ true names, and his judgment of 18 December 2017 referred to the parties by their true names.
[415] Before me, Ms McCartney, for Mr Biggs, sought orders as originally asked for before Davidson J. In her submissions, Ms Chambers accepted that Davidson J did not finalise the issue.
[416] The proceedings before the Court are all to do with the property interests of the parties, either directly or through trusts with which they are involved. The Court is not being asked to resolve any issues over the care of their child. The fact the parties have a child was however an important aspect of their relationship while they were
together. In this judgment, there is a reference to the parties having a child but the
46 Biggs v Biggs, above n 17, at [2].
proceedings are not about the child. In that sense, the judgment does not “concern” the child. In this way, the property proceedings between the parties are little different from many relationship property cases that come before the courts.
[417] The issue is whether, in such circumstances, there must be suppression of the parties’ names.
[418] Their child is under the age of 18.
[419] Section 35A PRA states:
35A Publication of reports of proceedings
Sections 11B to 11D of the Family Court Act 1980 apply to the publication of a report of any proceedings under this Act—
(a) in the Family Court:
(b) in any other court, in which case references in those sections to the
Family Court or court must be read as references to that other court.
[420] Sections 11B and C Family Court Act states:
11B Publication of reports of proceedings
(1) Any person may publish a report of proceedings in the Family Court. (2) Subsection (1) is subject to subsection (3).
(3) A person may not, without the leave of the court, publish a report of proceedings in the Family Court that includes identifying information where—
(a) a person under the age of 18 years—
(i) is the subject of the proceedings; or
(ii) is a party to the proceedings; or
(iii) is an applicant in the proceedings; or
(iv) is referred to in the proceedings; or
(b) a vulnerable person—
(i) is the subject of the proceedings; or
(ii) is a party to the proceedings; or
(iii) is an applicant in the proceedings. (4) However, subsection (3) does not apply to—
(a) a report of proceedings in a publication that—
(i) is genuinely of a professional or technical nature (including a publication that is intended for circulation among members of the legal or medical professions, officers of the Public Service, psychologists, counsellors, mediators, or social workers); and
(ii) does not include the name of—
(A) any person under the age of 18 years who is the subject of the proceedings, or who is referred to in the proceedings:
(B) any vulnerable person who is the subject of the proceedings:
(C) any parties or applicants in the proceedings where subsubparagraph (A) or (B) applies:
(D) any school that a person who is the subject of proceedings under the Oranga Tamariki Act 1989 is or was attending, or any other particulars likely to lead to the identification of that school:
(b) a publication of statistical information relating to the proceedings.
(5) The court may grant leave under subsection (3) with or without conditions.
(6) Every person who contravenes this section commits an offence against this Act and is liable on conviction,—
(a) in the case of an individual, either to imprisonment for a term not exceeding 3 months, or to a fine not exceeding $2,000:
(b) in the case of a body corporate, to a fine not exceeding $10,000. (7) Subsection (6) does not limit the power of a court to punish any
contempt of court.
(8) This section is subject to any other enactment relating to the publication or regulation of the publication of reports or particulars of a Family Court proceeding.
11C Meaning of identifying information
(1) For the purposes of section 11B, identifying information means information relating to proceedings that includes any name or particulars likely to lead to the identification of any of the following persons:
(a) a party to the proceedings:
(b) an applicant in the proceedings:
(c) a person who is the subject of the proceedings:
(d) a person who is related to, or associated with, a person referred to in paragraphs (a) to (c) or who is, or may be, in any other way concerned in the matter to which the proceedings relate (for example, a support person for a party).
[421] Ms Chambers submitted that the issue over suppression or anonymisation of the parties’ names is to be determined with due regard to the way the Court of Appeal has, over recent years, emphasised the presumption in favour of open justice. She also referred to statements to the same effect from Glazebrook J in the Supreme Court in Scott v Williams.47
[422] In response, Ms McCartney referred to cases where the Court of Appeal had, despite this, approved suppression. She emphasised that suppression and anonymisation were being sought because they were required by ss 11B-11D Family Court Act.
[423] In Sanders v Sanders, the Court of Appeal said the scope of the provisions dealing with the report of Family Court proceedings in ss 11A-11C Family Court Act, particularly in relation to relationship property proceedings, were issues of some novelty and importance.48 It accepted there would be some benefit in the Court of Appeal considering the criteria to be applied in the exercise of the discretions provided for in those provisions. It does not appear they have had the opportunity to do so since making those comments.
[424] In Sanders v Sanders in the High Court, Stevens J said that, with the enactment of s 35A PRA:49
[58] The default position is now reversed. Previously the rule was no publication, but leave could be obtained. Now, accredited news media reporters may be present in court and may report on proceedings, but leave is still required in certain types of cases.
47 Scott v Williams [2017] NZSC 185, [2018] NZFLR 1 at [267].
48 Sanders v Sanders [2010] NZCA 176 at [13].
49 Sanders v Sanders HC Auckland, CIV-2009-404-007812, 13 April 2010.
[59] The concept of greater openness and transparency in Family Courts and in respect of family cases was intended to enhance justice and public confidence in the judicial system, as discussed at [34]-[37] above. Thus, the media has a legitimate role as the eyes and ears of the community. The legislation seeks in part to demystify the processes of the Family Court and cases involving family matters.
[425] Applying s 11B(3) literally, there will be a prohibition against any report of proceedings in the Family Court where there is any sort of reference to a child in the proceeding. The proceeding will not necessarily have to be about the child or deal with any issue concerning the child. That interpretation is required because s 11B(3) prohibits publication of a report of proceedings where a child under the age of 18 years is the subject of a proceedings, a party of the proceedings or is referred to in the proceedings. It is the interpretation that was adopted in the High Court by Stevens J in Sanders and by Judge Burns in DFT v ASR,50 although the latter was concerned with whether or not a “vulnerable person” was the subject of the proceedings.
[426] Here, there has been a reference to a person under the age of 18 years in the proceedings. Pursuant to s 11B(3), without leave of the Court, there must not be a report of the proceedings that includes identifying information. Section 11C defines identifying information as including any name or particulars likely to lead to the identification of a party to the proceedings, a person who is the subject of the proceedings, or a person who is related to or associated with such people. Without leave, I thus accept that, pursuant to s 35A PRA, and ss 11B(3) and 11C(1) Family Court Act, there cannot be publication of any report of these proceedings in which the names of the parties are included. Ms McCartney even went so far as to suggest these provisions could require suppression of Laguna Pastoral’s name.
[427] I agree with Davidson J that s 11B(3) is about reflecting the right of children to have their privacy respected and for their interests to be treated as a mandatory consideration. There is thus a particular need, as referred to by Stevens J in Sanders, to consider the nature of the proceeding, the particular age of a person under 18, that child’s special characteristics including medical, learning or other disabilities, whether and to what extent they know of the proceedings and any likely effect on them of
information gained from a possible publication of any report.
50 DFT v ASR (No 7) FC Auckland FAM-2006-004-2652, 4 August 2010.
[428] The child here is of an age where neither she nor her peers are likely to have any real understanding or knowledge of any report that might be published about the proceedings. Any reporting that does occur is most likely to happen in New Zealand. The child is now living in Australia. Because of the importance of openness and transparency in the way courts deal with relationship property proceedings, it is important that there can be a report as to the result of these proceedings, as reflected in any judgment of the Court, with publication of the names of the parties to provide proper context and avoid speculation about the identity of the parties, as Stevens J considered was appropriate in Sanders.
[429] It is somewhat surprising that Ms Biggs, through her counsel Ms Chambers, is so strongly arguing the parties’ names should be published. As might be expected with this sort of litigation, in this judgment there is inevitably reference to matters of a personal and private nature. One might have expected both parties to prefer anonymisation.
[430] In Dixon v Kingsley, Ms Chambers argued for an end to the anonymisation that had been provided for in the Family Court. Kós J maintained anonymisation but said “I am left with the uncomfortable sense that a change of stance by the respondent was adopted for extra-curial, tactical purposes”.51
[431] When this issue was before Davidson J, he noted Ms Chambers’ submission that publication of names would help promote settlement. Davidson J considered this an “unprincipled basis” on which to consider whether there should be suppression.52
[432] I too consider that, to actively promote publication to obtain a tactical advantage in that way, would be akin to that of the husband who seeks to restrict a wife’s eventual settlement through delaying Court processes and attrition.
[433] I have a concern that publication of the parties’ names is being sought for that sort of reason here. Despite that, the principle of open justice should prevail.
51 Dixon v Kingsley, above n 10, at [10].
52 Biggs v Biggs, above n 17, at [11].
[434] I thus grant leave, pursuant to s 11B(3) Family Court Act, for publication of this judgment with identifying information as referred to in s 11C(1). That leave is granted on condition there is no mention in any report of the proceedings to the name of the parties’ child.
[435] After release of Davidson J’s interim judgment of 12 October 2017, counsel for Mr Biggs, by memorandum, sought an order directing that all information in the proceedings about the parties, any further parties to be joined, the investments made by the parties or interests associated with them, the positions of the parties in the proceedings, property, the property’s value, the location of the property and the earnings of the parties are confidential and may not be disclosed.
[436] In his interim judgment of 18 December 2017, Davidson J discussed the submissions that had been made in relation to this, relevant legislation and judgments that had been referred to him. He concluded:53
There is no automatic order for non-disclosure of what may otherwise be confidential information, although that may well emerge in the context of further orders, directions or judgment of the Court. At this stage, there are claims to what is said to be relationship property, which include various assets, and the proceedings are still working through the interlocutory stages. I do not consider there is a case made out for such concern as to confidentiality or commercial sensitivity to found the application. I therefore decline to make any such order. I recognise, however, that that position may well arise as these proceedings develop.
[437] Since then, by consent, the second, third and fourth defendants have been joined as parties to the proceedings.
[438] No party has renewed the application in this regard. There is however reference in this judgment to one matter which is sensitive and where publication of such a matter could be to the prejudice of all parties to these proceedings, and also to people who are not party to these proceedings. Those parts of the judgment are suppressed until further order of the Court and will be redacted from the judgment
which is publicly available.
53 Biggs v Biggs, above n 17, at [38].
[439] The trustee defendants, through their counsel, sought an award of costs against Mr Biggs to recognise the way they submitted Mr Biggs had breached Davidson J’s directions as to confidentiality and undertakings that had been given. Once the trustee defendants’ concern about what happened was brought to the attention of Ms Biggs’ solicitors, they did what they could to rectify the situation. In all the circumstances, I am not making any order for costs regarding this. I do not require Ms Biggs to file an affidavit confirming she did not disclose information in Mr Lyne’s affidavit about the Grant Thornton report to anyone else.
MR BIGGS’ APPLICATION FOR FURTHER PARTICULARS/ORDER REQUIRING ANSWER TO INTERROGATORIES
[440] Ms McCartney advised at the beginning of the hearing that these applications were no longer being pursued. Mr Biggs had already filed an affidavit answering the interrogatories.
APPLICATION FOR DIRECTIONS AS TO SERVICE
[441] Through Mr Biggs’ application of 30 January 2018 and submissions, Ms McCartney contended that some of Ms Biggs’ claims were in the Court’s equitable jurisdiction so that r 18.7 High Court Rules required Ms Biggs to seek directions as to service and representation. Rule 18.8 permitted the Court to make any orders for service and representation as it thought just.
[442] I accept that Ms Biggs’ claim, that Mr Biggs is the beneficial owner of all the assets in the various trusts, is a claim in the Court’s equitable jurisdiction. However, I accept the submissions made by Ms Chambers that this did not require Ms Biggs to seek directions as to service and representation.
[443] The rules Ms McCartney referred to apply to part 18 proceedings. Part 18 begins:
This part applies to the following types of proceedings:
(a) proceedings in which the relief claimed is wholly within the equitable jurisdiction of the court …
(emphasis added)
[444] This proceeding involves relief sought under the PRA which does not fall under r 18.1, either under the general provision referred to or by reference to 18.1(b)-(d). It is a general proceeding commenced under part 5 after transfer from the Family Court.
[445] Rule 4.23(2) High Court Rules applies to general proceedings of the sort here: “[t]here is no need to join persons beneficially interested in a trust or an estate to a proceeding because the trustees, executors, and administrators represent those persons”.
[446] Ms Chambers acknowledged there is a discretion to order that a beneficially interested person is made a party, either in addition to or instead of the trustees, executors or administrators. I accept, as she submits, that this will be required only in an exceptional situation where the interests of the trustees and the beneficiaries are not aligned. Here, they are aligned.
[447] The only point in requiring service on the original purported settlors or trusts or beneficiaries would be if they might need to be separately represented in the proceedings. Here, both Mr Biggs and the trustees are resisting the claims that are being made against or in respect of the trusts. The interests of the original settlor and beneficiaries are thus being well represented in the proceedings. Adding them as parties would serve no useful purpose but could simply cause delay and result in more expense, contrary to the objective of the High Court Rules and the principles and purpose of the PRA.
[448] There is no need for me to make any directions as to service or representation as suggested for Mr Biggs.
COSTS
[449] Except as to the costs sought by the trustee defendants referred to in [439], costs on the various applications that have been dealt with in this judgment are reserved.
Solicitors:
DAT Chambers QC, Barrister, Auckland MJ McCartney QC, Barrister, Auckland JF Anderson QC, Barrister, Auckland
EM Eggleston, Barrister, Tauranga
City Law, Auckland.
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