Clarkson v Clarkson
[2020] NZHC 2211
•27 August 2020
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2020-441-35
[2020] NZHC 2211
UNDER the Trustee Act 1956 IN THE MATTER
of an Originating Application for directions and orders under the Trustee Act 1956
BETWEEN
PETER RICHARD CLARKSON
Applicant
AND
HUGH OSWALD CLARKSON AND IAN NEIL CLARKSON
Respondents
Hearing: On the papers Appearances:
M B Lawson for the Applicant
S McCarthy for the First Respondent I N Clarkson in Person
Judgment:
27 August 2020
JUDGMENT OF COOKE J
(Leave under Rule 19.5)
[1] By application filed on 11 June 2020 the applicant has sought directions in relation to this proceeding, including a direction that leave be granted for it to be commenced by way of originating application pursuant to r 19.5 of the High Court Rules 2016 (the Rules). This course of is opposed by the respondents. An affidavit of the applicant sworn 10 June 2020 has been filed in support, and an affidavit of the first named respondent sworn 3 July 2020 has been filed in opposition.
[2] The matter was considered at a telephone conference convened by Grice J on 13 July 2020 where it was agreed that the question of the grant of leave could be
CLARKSON v CLARKSON [2020] NZHC 2211 [27 August 2020]
determined on the papers following the filing of written submissions. Those submissions have now been received.
Background
[3]I describe the background circumstances only briefly at this stage.
[4] The Glenlyon Trust (the Trust) was established on 3 November 1980 by the parties’ father, Richard Clarkson. The Trust property substantially comprises a farm called Glenlyon Station in Hastings.
[5] The applicant and the two respondents are brothers, and although there may be some uncertainties they appear to be the three trustees of the Trust. Both their parents are no longer alive. There are now disagreements between the three of them. The application seeks order removing all three of them as trustees, and that an independent trustee (Stephen Peter Lunn) be appointed as sole independent trustee. It is also an application to vary clause 11 of the Trust Deed to vary the minimum number of trustees from three to one trustee. The basis of the application for those orders is that the relationship between the three brothers is now dysfunctional. The respondents do not agree.
[6] The applicant applies for a direction that the proceedings proceed by way of originating application under Part 19 of the Rules on the basis that it is in the interests of justice to do so given the confined nature of the issues arising. The respondents oppose the substantive orders, and also oppose the matter proceeding by way of originating application under Part 19, and instead contend that it should proceed under Part 18.
[7] There is no dispute the applicant has a right to commence this proceeding under Part 18 as a consequence of r 18.1(b)(xiii). But r 18.4 provides, in part:
(2) The application of this Part to a proceeding does not prevent the commencement of that proceeding by originating application if it is eligible to be so commenced under Part 19, in which event this Part does not apply.
[8] Under r 19.5 the Court can permit matters not specifically mentioned in rr 19.2–19.4 to be commenced by originating application if that is in the interests of justice.1
Approach to rule 19.5
[9] The parties referred to previous authorities that address this issue. The most directly relevant is Jones v O’Keeffe where the Court of Appeal considered a costs appeal in a case that also involved a dispute between trustees which had been dealt with under Part 19 rather than Part 18.2 The Court said:3
[51] The context of the application and the ambit of the hearing before Palmer J are important. This was an originating application under pt 19 of the High Court Rules rather than a proceeding under pt 18. Applications under the Trustee Act are generally required to be brought under pt 18 of the High Court Rules, and to be commenced by way of statement of claim.4
[52] The originating application procedure under pt 19 is normally limited to cases where particularised pleadings and interlocutory steps such as discovery are not necessary for the proper determination of issues. It is not appropriate where factual issues are in dispute.
[53] While Muir J granted leave for the proceeding to be commenced by way of originating application under pt 19 of the High Court Rules, that was in circumstances where Mr Jones did not oppose that procedure and, importantly, Mr Jones had also confirmed he would stand down in favour of Public Trust. The only substantive issue remaining before the Court was whether one or both trustees should be replaced.
[10] On that basis the appropriate procedural path for the proceeding would be Part 18 rather than Part 19. Other cases addressing Parts 18 and 19 include Public Trust v Kain and Levin v Autoterminal New Zealand Ltd.5
[11] Mr Lawson referred to my judgment in Wellwood v Wellwood to support his proposition that proceedings involving the removal of trustees are normally dealt with under Part 19.6 But in that case there was no dispute between the parties as to the appropriate procedure, and my reference to the removal of trustees normally
1 Likewise r 18.1(e) allows the Court to direct proceedings to proceed under Part 18.
2 Jones v O’Keeffe [2019] NZCA 222.
3 At [51]–[53].
4 High Court Rules 2016, rr 18.1(b)(xiii) and 18.4(1)(a). See also the discussion in Public Trust v Kain [2018] NZHC 1547, (2018) 4 NZTR 28-012 at [12]–[21].
5 Public Trust v Kain, above n 4; Levin v Autoterminal New Zealand Ltd [2019] NZHC 2412.
6 Wellwood v Wellwood [2019] NZHC 801 at [8].
proceeding under Part 19 related to uncontested applications such as those regularly considered by Duty Judges. It was not intended to have wider application.
[12] What may be more significant is what is the actual differences that arise for applications addressed under different parts of the Rules, particularly between Parts 18 and 19. In Hong Kong and Shanghai Banking Corporation Ltd v Erceg Asher J addressed the difference between originating applications in Part 19 and ordinary proceedings.7 He said:
[20] The originating application procedure is, in contrast to standard proceedings, short and simple. It is initiated by an application, and there is no need for a statement of claim particularising the causes of action, or for statements of defence, replies or counterclaims. There are no procedures set out for discovery and interrogatories. The matter notionally can be set down immediately. Orders akin to those in standard proceedings could be made in originating applications utilising r 19.11, which applies r [7.43A]8 to originating applications. Rule [7.43A] gives a judge wide powers to make interlocutory orders to secure the just, speedy and inexpensive determination of a proceeding. Indeed, the court would in any event have inherent jurisdiction to do so in an originating application: Re Securitibank Limited (In Liquidation).[9] However, it would be undesirable for the courts as a matter of course to allow parties to commence proceedings by way of originating application which required a statement of claim, statement of defence and other interlocutory procedures, and to then as a matter of course make such orders as are necessary under r [7.43A] or the court’s inherent jurisdiction. That would damage the procedural structures established by the Rules, and by practice. Rule [7.43A] should not be invoked under r 19.11 as a way to bypass the need to file standard proceedings, when standard proceedings are appropriate.
[13] This would also suggest that Part 19 would not be an appropriate procedure for cases requiring pleadings, interlocutory steps such as discovery, and cross- examination. But in the present case it is not suggested that the proceeding should be addressed as an ordinary proceeding. The contest is between Part 18 and Part 19. It is accordingly important to consider the differences between those two Parts.
[14] Part 18 deals with “… certain types of proceedings wholly within the equitable jurisdiction of the Court, determinations by the Court under statutes … and contracts
7 Hong Kong and Shanghai Banking Corporation Ltd v Erceg (2010) 20 PRNZ 652 (HC).
8 Until 10 November 2013, r 19.11 cross-referred to r 7.9, which rule corresponded until 3 February 2013 to the provisions of the contemporary 7.43A (to which r 19.11 now refers).
9 Re Securitibank Limited (In Liquidation) [1978] 1 NZLR 97 at 106.
for the sale of land”.10 A proceeding under Part 18 is commenced by statement of claim and an application for directions as to service and representation.11 The Court then gives directions as to service and the naming of parties.12 There are then rules for the filing of statements of defence and for the filing of affidavits.13 Rule 18.4(3) used to bring across certain case management powers into Part 18, but this was revoked in 2013.14 Part 18 proceedings are now case managed as ordinary or complex proceedings in accordance with sub-part 1 of Part 7.15 Rule 18.15 provides that evidence is usually by agreed statement of fact or affidavit unless the Court directs otherwise, albeit there is a presumption in relation to oral evidence in certain situations.
[15] As Asher J outlined in Hong Kong and Shanghai Banking Corporation Ltd v Erceg, Part 19 includes more specific procedural powers.16 Cases initiated under Part 19 are normally commenced by originating application rather than statement of claim, but the Court may direct that statements of claim and defence be filed.17 A series of rules applicable to ordinary proceedings then apply to originating applications including rules in relation to interlocutory applications, and in relation to affidavits.18 Under r 19.13 evidence can be given either by affidavit, or orally on oath in Court. Moreover under r 19.14 the rule requiring deponents to be available for cross- examination are also part of the Part 19 procedure.
[16] The key difference between Part 18 and Part 19 is that under Part 18 the proceeding is subject to full case management under sub-part 1 of Part 7, whereas under Part 19 there is more confined case management control.
10 Andrew Beck and others McGechan on Procedure (loose-leaf ed, Brookers, updated to 18 May 2020) at [HR Pt 18.01].
11 High Court Rules 2016, r 18.4.
12 Rules 18.5–18.9.
13 Rules 18.11–18.12.14 High Court Amendment Rules (No 3) 2003, r 22(2) (SR 2013/425).
15 They are ordinary or complex proceedings under r 7.1(4) and are not excluded from the application of case management provisions of Part 7 by the list of other case management approaches under r 7.1AA.
16 Hong Kong and Shanghai Banking Corporation Ltd v Erceg, above n 7.
17 Rules 19.5, 19.7–19.9.18 Rule 19.10. In addition r 19.11 allows the Court to exercise its power to give directions under r 7.43A for originating applications
The present case
[17] When decisions are made on the most appropriate procedural pathway for a proceeding the Court should focus on what the issues in dispute in the proceeding seem to be, and the most appropriate procedural pathway for determining them. There is one preliminary point about the present case that influences the procedural course.
[18] With family disputes over property there is a possibility that the parties may lose perspective. I am concerned that this may be the case here. The Trustees, and beneficiaries of the Trust are limited in number. There appears to be a single asset of the Trust, being the farm. I understand that the farm is presently not stocked, and may be adversely affected by drought. I am not in a position to know what the value of the farm is, but I am concerned to see in Mr Sam Clarkson’s submission the reference to an offer for the property in the amount of only $95,000. If it transpires that this is the only asset of the Trust, and it has a value anything like that amount, then there is a real prospect that these proceedings will be uneconomic whatever procedural pathway is chosen. That will be particularly so if it transpires that the farm is to be sold and the proceeds distributed to the beneficiaries.
[19] With that in mind it seems to me to be appropriate for the Court to be guided by the procedural pathway that reduces the prospect of unnecessary interlocutory steps, and focuses on what is necessary to enable the dispute to be resolved. In that respect the proceedings have not started well, with the parties even disagreeing on which part of the Rules should apply.
[20] One usual advantage of proceeding under Part 18 is the requirement for it to be commenced with an application for directions, particularly in relation to Trusts. But here the only beneficiaries are the parties, and in any event the application made under Part 19 includes an application for directions as to service.
[21] A further difference is that Part 18 requires a statement of claim. In the present case the applicant will need to provide pleaded details of the features that made the relationship dysfunctional to the point that the Court was required to exercise its powers to remove the trustees. Whilst that could be achieved by statements of claim, and statements of defence, it can also be achieved in an originating application and
notices of opposition. The key attraction of pleadings is simply helping make clear a party’s stance to the other parties. In any event a statement of claim can be required in a proceeding under Part 19 (r 19.5A). So that seems to me to be a neutral factor.
[22] In terms of interlocutory steps, such as discovery, that can be ordered under Part 19, although it is subject to greater judicial control. I do not presently see any need for discovery. I consider it unlikely that any of the brothers have documents not already available to the others that will be truly relevant to the matters the Court needs to decide. But if there really are such documents, and application for discovery can be made under Part 19 (through rr 19.11 and 7.43A(1)(e)).
[23] The evidence in this case should come before the Court in affidavit form. That is indeed what has happened with affidavits already filed by both sides. It then seems to me that there should be some control over the extent of cross-examination, if any.
Decision
[24] The starting point is that the rules direct that this proceeding can be addressed under Part 18 as a consequence of r 18(a)(xiii). The Court only directs that Part 19 should be used instead if that is in the interests of justice under r 19.5.
[25] I am satisfied that it is in the interests of justice that this proceeding proceed under Part 19, and I give that direction under r 19.5. The issues between the parties are confined in nature. There may be strong disagreements between them, and contested evidence, but the ultimate questions remain limited. The most important thing is to ensure there is control of the proceeding so that the strong disagreements between the parties remain directed to the key issues.
[26] In terms of the pleadings, it is not necessary that the applicant’s contentions be set out in a statement of claim. But it will be necessary for the originating application to particularise, in detail, the specific matters that are said to give rise to the relationship between the trustees being dysfunctional to the point that the Court needs to exercise its powers under the Trustee Act 1956. The notices of opposition can also be appropriately particularised against that background.
[27] I see no need for discovery but in any event there is an ability to obtain discovery under a Part 19 proceeding if it is necessary.
[28] As is the case in both Part 18 and Part 19 the evidence should come before the Court by way of affidavits, with some cross-examination if that is truly necessary.
[29]In furtherance of that decision I give the following directions:
(a)The proceedings are to be treated as an originating application under Part 19, and leave is granted to proceed in that way.
(b)The applicant is to file and serve a fully particularised originating application by Monday 7 September 2020.
(c)The respondents are to file and serve notices of opposition by Monday 21 September 2020.
(d)The proceeding is then to be considered in a further case management conference at which it is to be confirmed (inter alia) that:
(i)no directions for service are required;
(ii)no further affidavit evidence is to be filed; and
(iii)that the matter can be set down for hearing.
Cooke J
Solicitors:
Lawson Robinson, Napier for the Applicant
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