Davis v Mancer

[2016] NZHC 2268

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV 2015-404-000687

[2016] NZHC 2268

BETWEEN

KARLEEN ITA DAVIS

First Plaintiff

TANYA MARIE SMART

Second Plaintiff

TONI WILLIAMS MANCER

AND

Third Plaintiff

KERRY JOHN MANCER
First Defendant

KEITH ALLAN YOUNG and CAROL ELIZABETH CAULFIELD

Second Defendants

Hearing:	26 September 2016
Appearances:	P Craighead for the Plaintiffs
Judgment:	26 September 2016

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

K I DAVIS, T M SMART, T W MANCER V K J MANCER AND K A YOUNG AND C E CAULFIELD [2016]

NZHC 2268 [26 September 2016]

[1]    The proceeding concerns claims by the plaintiffs for sums awarded in the Auckland Family Court in their favour against the estate of the plaintiffs’ late mother. The plaintiffs’ brother Kerry Mancer is named as the first defendant. He was the trustee of their mother’s estate. The second defendants were and are the solicitors for the estate.

[2]    The plaintiffs allege the first defendant as trustee failed to gather monies owed to the estate to enable the estate to pay the judgment of the Family Court in the plaintiffs favour. They say the first defendant refuses to carry out his duties as trustee and hence that is why the plaintiffs are bringing a derivative action in equity. Against the second defendants it is alleged they have breached their duties of care pursuant to their contract of retainer. The plaintiffs are also bringing a personal action against the second defendants in tort.

[3]    On 9 June 2015 the second defendants applied to strike out the claim against them on the basis that the statement of claim disclosed no reasonably arguable cause of action.

[4]    The second defendants were acting on instructions from the first defendant in his capacity as executor and trustee of his mother’s estate. The late mother’s home was transferred to the trust of which she and the first defendant were trustees. She died in October 2010. The trust sold the house in 2013. The second defendants acted for the first defendant in his capacity as executor and trustee of the estate. When the house was sold the first defendant instructed the second defendants to pay the proceeds to the first defendant and this was done.

[5]    The solicitor has since given evidence that he expressed concerns about paying those funds to the first defendant but at the end of the day did so because those were his instructions and he “could see what was going to happen”.

[6]Woodford J declined to make an order for strike out. His Honour concluded:

[53] Although this claim will face many barriers, I do not consider that the relationship between the second defendants and the plaintiffs is so distant as to preclude a claim being brought in negligence or that any policy or reasons so definitively militate against the duty that the claim should be struck out at

this preliminary stage. This claim raises novel issues, which warrant further exploration at trial.

[7]    Applications for discovery against the first and second defendants were filed on 14 June 2016. No opposition has been filed to that application. On behalf of the second defendants counsel has filed a memorandum advising the second defendants will abide any order of the Court made in respect of that discovery application.

[8]    The plaintiffs want access to the files of the first and second defendants to obtain details of documents made and advice given in relation to the setting up of the family trust, the transfer of the deceased’s property to that trust including any deed of acknowledgement of debt arising there from and any gifting made in relation thereto.

[9]    The plaintiffs also want documents relating to the fixing of the sale price of the property, and the collecting of the assets of the estate including monies owed pursuant to the deed of acknowledgement of debt. The plaintiffs want to know what advice by any means was given to the first defendant as trustee of the estate as to the need or otherwise to collect estate assets or any monies owed to the estate and how such monies should be held by the family trust. The plaintiffs want to know the extent of the personal liability of the first defendant to the estate pursuant to the deed of acknowledgement of debt.

[10]   The evidence provided to the Court shows the first defendant in his capacity as sole executor and trustee of the estate has refused to make a copy of the deceased’s Will available. It is alleged and the family Court has held that testamentary documents made by the deceased were forged and contained untruths.

[11]   The plaintiffs claim the first defendant has threatened them and their families with physical violence. The proceeding asserts the first defendant was responsible for the creation of a family trust and the transfer of the estate property to it. Further, that he has kept the sale proceeds of $372,000 from the sale of the estate property.

[12]   The plaintiffs seek to bring derivative actions to pursue claims on behalf of the estate. They say they need access to the first defendant/second defendants’ files for the estate to obtain details of documents and advice. As Woolford J noted derivative

actions can be brought in special circumstances and where collusion or conflict of interest or duty is in issue. In such cases a beneficiary can sue on behalf of the estate but their personal representative must be a party to that proceeding.

[13]   In this case the first defendant will not sue himself nor would he sue the second defendants whom it is alleged acted on the sale of the property and paid the proceeds to the first defendant.

[14]   Clearly the document sought by discovery must be relevant to the issues here. There can be no suggestion amongst this case that they are not.

[15]   The documents in question are in the control of the first defendant and likely will be held on the file of the second defendants who acted as solicitors for the deceased and the estate.

[16]   No doubt such documents would be subject to a claim of legal professional privilege and therefore are confidential. In the present case no steps have been taken by or on behalf of the second defendants to oppose the application. Properly, it seems to the Court, they have filed a notice advising they will abide any order made.

[17]   In this case the plaintiffs are beneficiaries as a result of judgments obtained in the Family Court. The impact of those judgments effectively makes them beneficiaries of the estate and entitled to be treated equally with other beneficiaries. In that capacity they are entitled to have the trust property managed properly and to ensure that the trustees are held to account if it is necessary to do so. It follows that whatever information is needed to hold a trustee to account in a particular case will depend on the obligation in issue.

[18]   In the circumstances the Court agrees that all the documentation sought by the schedule attached to the plaintiffs’ discovery application shall be ordered to be made available to the plaintiffs and because in the circumstances claims of litigation privilege concerning those documents would no longer prevail. In that regard the Court has received, reviewed and hereby approves the making of orders for discovery and service of those orders in terms provided by counsel for the plaintiffs.

[19]   The plaintiffs seek and the Court directs this Order shall apply first to the first defendant who shall, from the date of service of these documents upon him be required to provide the schedule of documents within 21 days.

[20]   Service of the order upon the first defendant shall be effective by leaving a sealed copy of this judgment and sealed copies of the orders for discovery in the letterbox for Apartment 11, of the Ocean Breeze Apartments, which is in the lobby of the building at 87 Clyde Road, Browns Bay.

[21]   If discovery is not provided by the first defendant as required then that shall be provided by the second defendants within 20 working days of a request on behalf of the plaintiffs. It follows from this order that the second defendants will not, except for the purpose of completing discovery obligations to the plaintiffs, release any of the documents in their possession to any other person at all without an order of this Court.

Costs

[22]   The costs of this application shall be paid on a 2B basis by the first defendant. Costs against the second defendant are reserved.

Associate Judge Christiansen