Commons v Commons
[2019] NZHC 1850
•1 August 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-000515
[2019] NZHC 1850
BETWEEN ANDREW HAMILTON JOHN COMMONS
Plaintiff
AND
HAMISH JOHN COMMONS, PATRICIA ANNE COMMONS, and JONNE BRYDE WILLCOX
Defendants
CIV-2018-404-001057 BETWEEN
HAMISH JOHN COMMONS and JONNE BRYDE WILLCOX
Applicants
AND
HAMISH JOHN COMMONS, JONNE BRYDE WILLCOX and PATRICIA ANNE COMMONS
Respondents
On the papers: 18 June 2019 Appearances:
Plaintiff in Person
R J Brown for Defendant Trustees in CIV-2018-404-1057
K Muir and C Chung for the Defendants (as beneficiaries), and for the Applicants in CIV-2018-404-1057
R Von Keisenberg and K Mortimer for Susan Axford (litigation guardian for Patricia Commons)
Judgment:
1 August 2019
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 1 August 2019 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
COMMONS v COMMONS [2019] NZHC 1850 [1 August 2019]
Introduction
[1]The proceeding concerns the estate of the late Dr John Commons.
[2] On 27 March 2019 I issued a judgment on the application made by Andrew Commons, the plaintiff, for tailored discovery.1 The judgment declined to order tailored discovery for a number of the categories of documents sought in the discovery application. Andrew Commons now seeks leave to appeal that judgment.
[3] The application for tailored discovery was made against all the defendants. They are the members of Dr John Commons’ second family, and the trustees of his estate. They are also the primary beneficiaries under the will. Andrew Commons is another of the beneficiaries. The tailored discovery sought from John’s second wife, Patricia Commons, and the children of John and Patricia’s marriage (Hamish Commons and Jonne Wilcox) in their dual capacity as trustees of the estate and beneficiaries was extensive and said to be relevant to issues in the then pleadings. The relevant statement of claim is the first amended statement of claim which relied on three causes of action; the first was under s 4 of the Family Protection Act 1955; and the second and third concerned the actions of the trustees of the estate.
[4] In the discovery judgment I ordered the defendants to provide affidavit evidence setting out proper statements of their financial positions as at the date of John Commons’ death, as well as tailored discovery of:
(a)documents identifying the estate property and its value;
(b)documents in relation to trustee decisions and/or directions relating to distribution of income from the estate to any beneficiary and the mix of investments to be undertaken with estate funds;
(c)documents identifying the extent, if any, of Patricia’s exercise of her office as trustee under the will from the date of the appointment of her litigation guardian; and
1 Commons v Commons [2019] NZHC 557.
(d)the estate’s financial statements.
[5]The other tailored discovery sought was declined.
[6] Not long after the judgment was issued – 15 April 2019 – Andrew filed a further amended statement of claim. This judgment does not deal with any new discovery issues that may arise from the amended pleading.
[7] Andrew’s complaint about the discovery judgment is that it was in error in declining to order discovery of documents identified in categories 2.1, 2.2(a, c, e and f), 5.2, 5.5, 6, 7.5, 8, 9 and 10, listed in his application. Those are:
2. Documents identifying:
2.1. Benefaction Jonne and/or Hamish received from John while he was alive.
2.2. Benefaction Jonne and/or Hamish received from trusts in relation to which John had any power of trustee or settlor.
a) Identification of the source of funding to purchase the homes beneficially owned by Jonne and Hamish in Balmoral.
c) Funds raised against the properties identified in (a) above.
e) Other financial assistance received from [John] (other than for daily living expenses while living in the family home).
(f) Distributions from, assets and valuations of property in, the Whare Kamana Trust, the John and Patricia Commons Children’s Trust No. 1, and “the Springwood Place Trusts”.2
5. In relation to all Trustee decisions and/or directions, documents identifying/relating to:
5.2. Distribution of capital from the Estate to any beneficiary.
5.5. Steps taken relating to repayment of capital distributed from the Estate.
6. Documents identifying the extent, if any, of Patricia’s exercise of her office as Trustee under the Will.
7. In relation to the Whare Kamana Trust, the John and Patricia Commons Children’s Trust No. 1, and “the Springwood Place Trusts”:
2 Alternatively, the Hamish Commons Trust and Jonne Commons Trust.
7.5. Annual financial statements.
8. Documents identifying the quantum of income to support Patricia to a standard of living to which she was accustomed prior to John’s death.
9. Documents identifying the income Patricia received since John’s death other than from the Estate.
10. Documents identifying the use of the income from the Estate received by Patricia since John’s death.
[8] The application for leave is opposed. For reasons set out in this judgment the application for leave to appeal is declined.
[9] There are multiple sets of submissions. Andrew has filed submissions in support. One set of opposing submissions have been filed on behalf of Patricia, one jointly by Hamish and Jonne, and one by the trustees of the estate. Andrew has filed submissions in reply to each set of opposing submissions. The submissions collectively lay out the bases for each party’s supporting or opposing leave to appeal, and also contain substantive arguments on each category of discovery as well as the wider issues to be decided at trial. The summaries that follow are therefore highly condensed.
Law
[10] The starting point in considering whether to grant leave to appeal is s 56(3) Senior Courts Act 2016, which has had effect since 1 March 2017:
No appeal, except an appeal under subsection (4), lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court on application made within 20 working days after the date of that order or decision or within any further time that the High Court may allow.
[11] The section does not provide express guidance as to how the Court should consider whether to grant leave. Fitzgerald J in Finewood Upholstery Ltd v Vaughan referred to the requirement for leave as a “‘filtering mechanism’, to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no
great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.”3
[12] The Judge identified three relevant considerations regarding whether to grant leave to appeal:4
(a)A high threshold exists for the granting of leave. An allegation of error of law or fact is generally insufficient. A plaintiff should raise an arguable error.
(b)Leave should only be granted where the circumstances warrant incurring further delay.
(c)The alleged error should be of general or public importance that requires determination, or otherwise be of sufficient importance to the applicant to outweigh the lack of any general or precedential importance.
[13] Justice Palmer outlined further principles in Li v Chief Executive, Ministry of Business, Innovation and Employment:5
Pulling all these strands together, I consider the text, purpose, context and case law of s 56 suggests an application to appeal an interlocutory decision under s 56(3) is likely to be granted if:
(a)the appeal is not likely to be overtaken by the substantive hearing or cannot otherwise be considered as effectively in the context of an appeal of the substantive decision; or
(b)the appellant is likely to be prejudiced by a postponement to the substantive appeal; or
(c)the appeal may be dispositive of the case in law or as a practical matter;
…
(d)the arguments in the appeal are capable of bone fide and serious argument; and
(e)the issue on appeal concerns a decision of sufficient significance to the parties or a question of law or general principle of sufficient importance as to outweigh the cost and delay of the appeal.
More pithily, perhaps, an application to appeal an interlocutory decision under s 56(3) is likely to be granted where (a) there is good reason to consider it
3 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
4 At [9], referring to Dobson J’s observations in A v Minister of Internal Affairs [2018] NZHC 887.
5 Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171 at [21]–[22].
before, or separately to, the substantive appeal; and (b) it is sufficiently meritorious in substance and relates to a sufficiently important issue as to outweigh the cost and delay of appeal.
[14] In Greenfields Internet Ltd v Rural Networks Ltd Dunningham J emphasised as material the extent to which the decision on the interlocutory application may determine the substantive rights of the parties.6 Where an interlocutory decision finally determines any aspect of the claim by either party, leave to appeal will almost inevitably be granted. The Judge noted the consistency of this with s 56(4), which dispenses with the need to seek leave where the order or decision strikes out or dismisses the whole or part of a proceeding, claim or defence or grants summary judgment.
[15] As noted by Palmer J in Li, conflicting decisions on a point of law creates space for a bona fide and serious argument that there was an error of law in one of those decisions.7 Andrew relies on that point and further submits that there is a public interest in resolving legal uncertainty. But the paragraph in Li he points to emphasises the public interest specifically in determining “the legal course of action required when potential deportees wish to challenge official decisions underlying a decision to deport them” rather than being a more general statement.8
First cause of action – Family Protection claim
[16] Regarding discovery relevant to the first cause of action (the Family Protection claim) Andrew submits that the discovery judgment:
(a)erred in law as to whether the Court can take provision via trusts into account in assessing a testator’s moral duty to make provision for their children 9
(b)failed to address proportionality regarding the precise documents identified for disclosure;
6 Greenfields Internet Ltd v Rurual Networks South Island Ltd [2019] NZHC 645 at [12].
7 Li v Chief Executive, above n 5, at [29].
8 At [30].
9 By emphasising Ashworth v Lambie [2012] NZHC 1100 at [41]; rather than Re Franich CA 101/79, 18 June 1981 at 10; and Flathaug v Weaver [2003] NZFLR 730 (CA).
(c)failed to allow sufficient disclosure to consider whether John’s provision to the children of his second marriage via trusts was equivalent to direct testamentary provision;10 and
(d)effectively functions to dismiss his cause of action to the extent that it relies on assessing his father’s provision for others via trust and his knowledge of those others’ respective financial positions relative to his own.
[17] In his reply to the submissions of Hamish and Jonne, Andrew emphasises that he seeks information about relative inter vivos benefaction not to require the other parties to justify their benefaction under the will, but to:
(a)assess John’s discharging of his moral duty by reference to relative inter vivos benefaction between his children;
(b)assess trust provision that he alleges is equivalent to direct testamentary provision; and
(c)make a realistic assessment of the relative means of John’s children.
[18] Andrew further submits there is precedential value in having the Court of Appeal determine or consider:
(a)the questions raised regarding whether a testator’s provision for his or her children during life via trusts can be considered equivalent to testamentary provision;
(b)whether the Court can take such provision into account when assessing the testator’s moral duty to make provision to other beneficiaries;
(c)apparent inconsistency between authorities as to those questions;11 and
10 As in Flathaug v Weaver, above n 9, at [36].
11 See the cases cited above at n 9.
(d)whether his assessment of the proportionality analysis and “fishing expedition” relating to the breach of trust claims are correct.
[19] He argues that the importance to the parties themselves of the points he wishes to argue on appeal is high. In the first cause of action discovering the trusts’ financial value will potentially result in the Court considering John Commons’ “estate” to have been worth approximately $41 million, rather than $14 million. Regarding delay, Andrew argues that the Court’s focus should be on “additional delay” that would be occasioned by an appeal.12 Given the present matter is not set down for trial, he submits that causing delay is not a material factor on granting leave to appeal. He submits (in his submissions in reply to the submissions for Patricia Commons) that he has sought a trial date at every case management conference, whereas the various defendants have opposed allocation of a trial date until discovery has been attended to.
[20] I note that Associate Judge Andrew, in his 16 April 2019 minute, recorded Andrew Commons preferring a trial date towards the end of 2020 in order to allow for resolution of all outstanding interlocutory matters.
Opposing submissions
[21] The submissions made in opposition to the application overlap substantially. Collectively they can be summarised as expressing that:
(a)Andrew has failed to identify any arguable errors of law or fact in the discovery judgment; specifically:
(i)he is mistaken as to law, and Franich – upon which he relies – only stands as authority for the proposition that claimants under the Family Protection Act must provide details of their own circumstances; and
12 Pointing to the fact-specific ruling of Smith AJ in Tahi Enterprise Ltd v Te Warena Taua [2019] NZHC 630 at [37].
(ii)a clear line of Court of Appeal authorities establish that the Court’s inquiry does not require an enquiry into inter vivos benefits received by non-claimant beneficiaries;13
(b)the errors Andrew does allege lack either public or general importance (particularly given the alleged ambiguity does not exist) and do not outweigh the cost of the appeal or further delay to the proceeding.14
(c)the documents sought are not relevant to the plaintiff’s claims;
(d)the discovery judgment does not determine the substantive rights of the parties;
(e)the discovery already ordered or provided is sufficient to enable the Court to assess the first cause of action;
(f)the sought disclosure would be extensive, expensive, and unnecessarily intrusive; and
(g)the interests of justice will not be served by granting leave.
Discussion
[22] I am not satisfied that there is a sufficient basis for the application for leave to appeal regarding claimed errors relating to the categories of tailored discovery sought in respect of the first cause of action. The arguments that Andrew wishes to have heard on appeal are seen by him as highly important to his case; but they are not in my assessment sufficiently meritorious in substance to treat as capable of bona fide and serious argument.
13 Williams v Aucutt [2000] 2 NZLR 479 (CA); Auckland City Mission v Brown [2002] 2 NZLR 650 (CA); and McKenzie v Thomas CA120/02, 14 November 2002.
14 I note the submissions on behalf of Patricia Commons emphasise her health is likely to be impacted by the delay caused by an appeal.
[23] At bottom, Andrew’s application for leave centres primarily on the contentions that:
(a)assets disposed of by his father – via inter vivos gifts and trusts for the benefit of his second family – are equivalent to direct testamentary dispositions;
(b)the Court has failed to allow sufficient disclosure of such dispositions to allow proper consideration of whether the actual testamentary provision made in the will for the children of the first marriage discloses a breach of moral duty under the Act; and
(c)the alleged failure stems from an incorrect approach taken to relevance and proportionality in dealing with tailored discovery.
[24] The principles applicable to tailored discovery – agreed by all parties as being appropriate in the circumstances for this case – including the requirement to limit discovery to what is reasonable and proportionate, are discussed in the discovery judgment. The approach taken in the judgment to relevance and proportionality is also discussed. There are no arguable errors raised in relation to these parts of the judgment.
[25] I accept the thrust of submissions made for the defendants that Andrew has not identified any arguable errors of law or fact in the judgment in dealing with inter vivos gifts and trusts to the second family members; and that he is mistaken as to the decision in Franich – which only stands as authority for the proposition that claimants under the Family Protection Act must provide details of their own circumstances. Further, as opposing counsel point out, a clear line of Court of Appeal authorities establishes that the Court’s inquiry does not require a detailed enquiry into inter vivos benefits received by the non-claimant beneficiaries or inter vivos trusts settled by the testator from which the non-claimants stand to benefit.15 It is not enough to assert relevance
– in reliance on a pleading that runs contrary to established authority – to extend the proper scope of tailored discovery.
15 See above n 13.
[26] Even if this were a case about genuinely arguable errors of law, the errors alleged are not of public or general importance; and they are not otherwise of such importance to Andrew’s case as to outweigh the lack of general importance and the cost of the appeal and further delay to the proceeding, which will inevitably be significant. Delay is plainly a factor that affects all the parties and most especially Patricia Commons. There has been sufficient disclosure to address the issue of the alleged breach of moral duty; and Andrew’s own case as to quantum shows that the very substantial estate is sufficient for the Court to provide a remedy to any breach.
Second and third causes of action – breach of trust claims
[27] Andrew submits the Court has failed to assume his case was true for the purposes of assessing relevance on the discovery application as it relates to the first, second and third causes of action.16
[28] The second and third causes of action seek orders that distributions from the estate be set aside, as ultra vires the trustees’ authority under the will. Regarding discovery relevant to the breach of trust causes of action Andrew submits that the judgment:
(a)erred in law by failing to consider the law of tracing and to allow tracing to occur by declining disclosure;
(b)failed to address proportionality regarding the precise documents identified for disclosure;
(c)erred in law by considering documents relating to steps Patricia has taken as a trustee “fishing for a foundation for the second cause of action”17 when those documents were solely within her power, and therefore the plaintiff was not required to particularise or prove these allegations before disclosure.18 Further, he submits such fishing is
16 Kawarau Village Holdings v Chi [2015] NZHC 1379 at [38].
17 Commons v Commons, above n 1, at [35].
18 Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HCR 5.21.05]–[5.21.06].
permissible where categories of documents can be assumed to relate to a matter at issue.19 Declining disclosure in relation to these documents functions to strike out his second cause of action by denying him the ability to establish part of the claim; and
(d)limits the ability of the trial judge to assess Patricia’s baseline expenses in considering the discretion exercised by the trustees under the will to distribute money to her, thereby limiting the Court’s ability to determine the quantum of any excess paid.
[29] Andrew further submits there is precedential value in having the Court of Appeal determine or consider whether his assessment of the proportionality analysis and “fishing expedition” relating to the breach of trust claims are correct.
[30] Andrew again contends that the errors he raises are of high importance in monetary terms in relation to the second and third causes of action. He alleges that
$400,000 of income has been distributed to Patricia per annum since 2015, significantly impacting the estate’s value by the time of the trial.
Discussion
[31] The second cause of action centres on the general allegation that “distributions” to beneficiaries have been made in breach of the trustees’ obligation to act unanimously, which the defendants deny. The third cause of action concerns the distribution of all the estate’s net annual income to Patricia (not denied) in breach of the terms of clause 6.1(a) of the Will (denied). Clause 6.1(a) states:
6.1My trustees must hold the Remainder:
(a)to give the use of the assets and to pay the net annual income to my wife during her life, but my trustees may accumulate all or any part of the net annual income.
[32] The allegation of breach relies on two main planks: first, that the trustees have treated the obligation to pay the net annual income to Patricia as absolute rather than
19 Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2013] NZHC 1054 at [34].
subject to a discretionary power to accumulate income – thereby ignoring the obligation to consider whether all or any of the income is “surplus to the requirement to support [Patricia] (who is of independent means) to the standard of living to which she was accustomed prior to [John Commons’ death]” – and secondly they have failed to act fairly and to enquire into the circumstances and needs of Andrew and other beneficiaries who will ultimately benefit from the accumulated capital. There is an allegation that the trustees have acted for the ulterior purpose of distributing all of the income to Patricia in order to ultimately benefit themselves under her will.
[33] The Court is asked to give relief in both causes of action by ordering that unauthorised distributions (assuming any) are subject to a remedial constructive trust and must be returned to the estate. In the third cause of action the Court is also asked to make an order for the return of any income accumulated outside of the estate on unauthorised distributions of income. Andrew pleads that he is unaware of “the use/disposition of income generated” from such income distributed since John’s death.
[34] Andrew contends that the tailored discovery that has been ordered is not sufficient to examine or flush out the basis for the trustees’ decision-making – and its alleged lack of unanimity. The result, he argues, will be that the Court will lack the ability to determine the quantum of any surplus paid to her. He further argues that the limited tailored discovery that has been ordered effectively serves to summarily dismiss both causes of action by denying access to evidence.
[35] Andrew argues that he ought therefore to be permitted to seek, by way of appeal, disclosure of documents in the disallowed categories identified in his original application, as follows:
(a)Categories 5.2 and 5.5, being documents identifying trustee decisions relating to the distribution of capital from the estate to any beneficiary; and steps taken for the repayment of that capital.
(b)Category 6, being documents identifying the extent of “[Patricia’s] exercise of her office” as trustee throughout her time as a trustee.
(c)Categories 8 and 9, being documents identifying the income Patricia had to support her standard of living prior to John’s death, and documents identifying the income she has received since his death from sources other than the estate.
(d)Category 10, being documents that identify how Patricia has used the income from the estate.
[36] In broad terms, at issue is whether my decision to exclude these categories of documents in the tailored discovery I ordered, was based on an arguable error or errors of sufficient importance to outweigh the inevitable cost and delay of the appeal.
[37] I am not satisfied that Andrew has raised any arguable errors in respect of the limited tailored discovery that has been ordered. But if I am wrong about that, I am not satisfied that the errors are of any general or public importance that require determination, or of sufficient importance to Andrew’s case to outweigh the lack of any general or precedential importance, or to warrant the inevitable additional cost and delay arising from an appeal.
[38] No particular error has been identified in what I said in my discovery judgment relating to the principles applicable to tailored discovery. Those principles indicate that tailored discovery is not designed to permit wholesale discovery of all documents of marginal relevance, or “fishing”. Andrew relies on the following statement of Asher J in Commerce Commission v Cathay Pacific Airways Ltd, which underscores that the principle of proportionality in the context of tailored discovery may involve broader considerations than balancing the degree of relevance against the cost of discovery:20
To determine the proportionality arguments in relation to tailored discovery in particular categories, it is necessary to consider the chances of finding relevant documents in the discovery process and their degree of relevance. This should then be balanced against the cost of carrying out the discovery process. Broader considerations such as the amount at issue, the resources of the parties, and delay to the proceedings may also be relevant …
(emphasis added)
20 Commerce Commission v Cathay Pacific Airways Ltd [2012] NZHC 726 at [18].
[39] As acknowledged in the application for leave, the second and third causes of action seek orders pursuant to the Court’s supervisory jurisdiction. The application for leave also acknowledges that “ordering disclosure is an aspect of the Court’s inherent jurisdiction to supervise and if necessary, to intervene in the administration of a trust”. Reliance is placed on the Supreme Court’s words in Erceg v Erceg:21
The beneficiary’s right to seek disclosure is ancillary to the right to have the trust properly managed. What information needs to be disclosed will depend upon the obligation at issue. And confidentiality considerations may mean disclosure is limited.
[40] Andrew notes that the case for disclosure will be compelling if meaningful monitoring of the trustees’ compliance with the trust deed in the administration of the trust could not otherwise occur22 In clear cut cases the Court’s obligation to intervene in its supervisory jurisdiction will be engaged regardless of countervailing factors like confidentiality.23 However, a wider range of factors need to be assessed in cases that are not clear cut.
[41] This is not a clear cut case. As such, the considerations discussed in Erceg must bear on what is proportionate tailored discovery. The right to disclosure via discovery is not to be used as a de facto means of obtaining broad and highly intrusive disclosure of documents of marginal relevance to allegations to the central complaint of mismanagement in making distributions of estate income and capital.
[42] What Andrew is seeking by way of discovery are documents that are not obviously necessary to establish distributions of capital and income the trustees have made, or whether they acted unanimously in deciding to make distributions; or to establish whether the obligations under cl 6.1(a) of the will have been interpreted correctly or should be interpreted and applied as he contends.
[43] The trust’s financial accounts are to be discovered and will identify all distributions. There is in fact no argument that all the income has been paid to Patricia, and the trustees and their legal advisors have acknowledged there was a payment of
21 Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320 at [49]; discussing Erceg v Erceg [2014] NZHC 155, [2015] NZAR 1227 [Erceg 1].
22 Erceg v Erceg, above n 21, at [56].
23 At [68].
capital that was made to Patricia in error and repaid within two months. The trustees say there is no reason not to treat the advice as other than candid and transparent. The financial records are a proportionate means to confirm that; but if the records show undisclosed distributions of capital, further discovery may be sought pursuant to r 8.17 of the High Court Rules 2016.
[44] That brings me to the complaint relating to the discovery judgment and the way it approaches discovery in relation to the issue of the unanimity of decisions relating to distributions and the reasons for them. The trustees have been ordered to discover documents in category 5.1 which they agree includes any records of decision making in relation to the distribution of income. Whatever those documents are comprised of
– whether resolutions, minutes, or otherwise – are to be provided, and if reasons have been recorded they will be set out in the documents as will a record of who approved the decision. But through counsel the trustees say they say there are no such documents relating to the mistaken capital distribution, and they cannot fabricate documents after the fact. If the financial statement shows there were in fact other distributions of capital then further orders can be sought and orders made. But as matters stand there is no indication that it is necessary to order tailored discovery sought in categories 5.2 and 5.5.
Category 6
[45] Turning to documents sought in category 6, whether Patricia did or did not concur in decisions to make distributions of income – that she was the recipient of – goes to the matter in issue, being whether those decisions were not unanimous decisions of the trustees. The formal position with respect to her concurrence as a trustee, and any recorded reasons, ought to be shown in the records that are required to be disclosed, as with the other trustees. There is therefore no need for discovery under category 6.
[46] There was a suggestion at the hearing that the appointment of a litigation guardian for Patricia on 5 September 2018 indicates a lack of capability in decision-making as a co-trustee, and that discovery should have been ordered under Category 6 and for the entire period of her trusteeship. Lack of the required capability
or understanding to join in decisions as a trustee is not, however, specifically put in issue in the amended statement of claim, and the limited order made to disclose documents in category 6 from the date of the appointment of her litigation guardian places a “spotlight” on the disclosure of records that show whether she joined in decisions from that point.
[47] I do note that on 6 May 2019 Woolford J issued a judgment removing Patricia Commons as an executor and trustee of the estate on the basis of her incapacity.24 If that results in an amended pleading, r 8.17 may be grounds for an application varying the terms of the discovery order. I express no definitive view on that, but it does not, in my assessment, provide grounds for an appeal in relation to Category 6 documents.
Categories 8, 9 and 10
[48] The remaining categories of documents sought in relation to the second and third causes of action would, if ordered, represent a highly intrusive foray into Patricia’s private life. I am not satisfied that there is any error in declining to make an order for tailored discovery for these categories. Apart from the cost involved, the sheer breadth and nature of the information sought should only be ordered if it becomes necessary for Andrew to have it. At this point there is no obvious necessity. Categories 8 and 9 are not relevant to the central allegation in the third cause of action
– regarding the correct interpretation of cl 6.1(a) of the will. If Andrew’s interpretation is correct, that clause imposes a heavy duty on the trustees that would go well beyond the bounds of what seems plainly to be a simple discretion to accumulate income as capital. His interpretation would require the trustees (chosen no doubt by John Commons because of a close and trusting relationship with them) to act as inquisitors of his wife on an annual basis to regulate the supply of income that she and he enjoyed together while he was alive.
[49] The trustees freely acknowledge the approach they have in fact taken in relation to distributions. If that approach correctly reflects their powers under the will, they ought not to be required – as Andrew contends they must – to undertake a detailed
24 Commons v Commons [2019] NZHC 966.
and intrusive analysis of what Patricia needs to maintain the standard of living and the income she enjoyed with her husband at the point when he died, or to examine whether what she receives from her own independent sources of income will provide her with a comparable standard of living. But, if they are wrong and the will is to be interpreted as treating Patricia as a supplicant, then it will be open to the trial judge to make orders
– by way of the further relief sought in the statement of claim – to disclose the sought information and to make any related orders that are considered necessary and appropriate in the Court’s supervisory jurisdiction.
[50] The remaining issue relates to the contention that the discovery judgment fails to deal with the disclosure sought in category 10 as required for tracing of allegedly unlawful distributions of income. Category 10 is subject to the same considerations as the previous two categories. There is nothing about the discovery judgment that limits the Court’s supervisory jurisdiction to require an account of the use of distributions of income that are found unlawful (if any). Mention has also been made of a failure to consider the need for tracing of any return on the capital that was paid out and held by Patricia for a brief period. The amended statement of claim does not expressly put the return on such capital in issue, but putting that to one side, if as the pleading suggests, the objective is to put the estate back in the position it should have been in but for the distributions complained of, the return on the investment capital shown in the financial accounts should provide the relevant information to determine what is necessary to achieve that outcome. Indeed, that position would relate to both capital and income distributions, as does the Court’s power to order an accounting for tracing purposes pursuant to its supervisory jurisdiction.
[51] The application for leave to appeal the discovery judgment in relation to the second and third causes of action is also declined.
Result
[52]The application for leave to appeal is declined.
[53] If costs are sought against the applicant, brief memoranda may be filed within five working days. A brief memorandum may be filed in response (if necessary) within a further five working days.
Associate Judge Sargisson
13
0