Carson v Lee - [2023] NZHC 323

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-311

[2023] NZHC 323

UNDER the Property Law Act 2007, ss 339 and 343

BETWEEN

NICHOLAS FREDERICK CARSON and THE BLOMFIELD TRUSTEE COMPANY 616 LIMITED

Plaintiffs

AND

MATTHEW JOHN LEE and JOANNE LESLEY IRVING COMRIE

First Defendants

FARRY LAW LIMITED

Second Defendant

Hearing: 10 October 2022

Counsel:

N Tabb for the Plaintiff

RJ Hollyman KC, W Revell and V Hansen for the First Defendants

Judgment:

28 February 2023

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 28 February 2023 at 4pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors/Counsel:
Farry Law, Auckland

N Tabb, Barrister, Auckland RJ Hollyman KC, Auckland

CARSON v LEE & ORS [2023] NZHC 323

Introduction

[1] The first defendants have applied for orders striking out the second defendant, Farry Law Limited, as a party to these proceedings.

[2] The first defendants are the trustees of a trust settled by Ms Jodi Irving and the plaintiffs are the trustees of a trust settled by her former de facto partner, Mr Phil Whiting. The two trusts owned a property together that has since been sold following Ms Irving’s and Mr Whiting’s separation. There is a dispute between the parties as to who is entitled to the proceeds of that sale resulting in this proceeding.

[3] To allow settlement of the sale to take place in advance of the dispute being resolved, it was agreed that Farry Law Limited, the solicitors for Ms Irving’s trust, would hold the proceeds of sale subject to undertakings including not to pay out the proceeds except in accordance with:

(a)a joint written instruction of the parties; or

(b)an order of the court.

[4]The defendants submit:

(a)Farry Law holds the funds by agreement between the parties and subject to undertakings;

(b)there is nothing unusual or remarkable about that;

(c)there can be no suggestion that Farry Law would not comply with the undertakings which it has given which require it to comply with the orders of the Court;

(d)Farry Law should never have been joined as a party and should be struck out.

[5] The defendants say that while the Court does not necessarily have to determine the point, the evidence provides a clear basis for the inference that Farry Law may have been named as a party to prevent them from acting for the first defendant.

[6] The defendants further submit that, from a practical perspective, remaining as a named party is problematic as it causes issues in relation to insurance cover.

Issue

[7] The issue for determination is whether Farry Law ought to be struck out as a party.

Relevant facts

[8] Mr Phil Whiting and Ms Jodi Irving were in a de facto relationship. Mr Whiting is the settlor of the Gingers Trust (GT), the trustees being the plaintiffs in this proceeding. Ms Irving is the settlor of the Big Dog Trust (BDT

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 323
Decision Date: 28 February 2023

CaseChat Overview and Summary

In Carson v Lee, the High Court of New Zealand was asked to determine whether Farry Law Limited, the solicitors for one of the trustees, should be struck out as a party in a dispute over the proceeds of a property sale. The plaintiffs, trustees of a trust settled by Mr Phil Whiting, and the first defendants, trustees of a trust settled by Ms Jodi Irving, both owned the property and had a dispute over the proceeds of sale. Farry Law, the solicitors for Ms Irving's trust, held the proceeds of sale under an agreement between the parties. The plaintiffs sought to strike out Farry Law as a party, arguing that they were improperly joined and their presence was unnecessary. The Court considered the statutory scheme and inherent supervisory jurisdiction over solicitors to enforce undertakings, finding that Farry Law's presence was not necessary to determine the rights in the proceedings or to ensure the orders could be safely executed. The Court also held that the pleadings could not be amended to add a substantive claim against Farry Law. Consequently, the Court ordered Farry Law to be struck out as a party, granted the first defendants an extension to file their statement of defence, and requested case management memoranda from the parties.

Orders