Eckhoff v Orbell

[2021] NZHC 757

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-000133

[2021] NZHC 757

BETWEEN

PHILIPPA JANE ECKHOFF

Plaintiff

AND

RUTH ALICE ORBELL

First Defendant

AND

NICOLA ALICE HYSLOP

Second Defendant

AND

WILLIAM HAMISH ORBELL

Third Defendant

AND

RUTH ALICE ORBELL and WILLIAM

HAMISH ORBELL as trustees of the Hamish Orbell Family Trust
Fourth Defendants

AND

NICOLA ALICE HYSLOP, JONATHAN ANGUS HYSLOP and QA TRUSTEES

2012 LIMITED as trustees of the Hyslop Family Trust

Fifth Defendants

AND

JOHN DUNCAN MCFARLANE

Sixth Defendant

AND

JONATHAN ANGUS HYSLOP

Seventh Defendant

Hearing:

8 March 2021

Appearances:

D R Tobin and R M Reeve for Plaintiff M K Prendergast for First Defendant

M J Wallace for Second, Fifth and Seventh Defendants
S J Jamieson and J A Higby for Third and Fourth Defendants

Judgment:

13 April 2021

ECKHOFF v ORBELL [2021] NZHC 757 [13 April 2021]

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 13 April 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

The Applications

[1]This judgment concerns the following:

(a)an application by the second, fifth and seventh defendants for further particulars of the plaintiff’s statement of claim; and

(b)an application by the plaintiff for particular discovery from the first and second defendants.

[2]I will deal with the applications seriatim.

Further Particulars of Claim

Some context

[3]The protagonists in this proceeding are:

(a)The plaintiff (Philippa) is a daughter of William Orbell (William), who died in March 2003, and Ruth Orbell (Ruth).

(b)The first defendant is Ruth (William’s widow).

(c)The second defendant (Nicola) and the third defendant (Hamish) are the other children of Ruth and William (Philippa’s siblings).

(d)The fourth defendants (Ruth and Hamish) are the trustees of a trust associated with Hamish.

(e)The fifth defendants (Nicola, Jonathan and QA Trustees 2012 Ltd) are trustees of a trust associated with Nicola.

(f)The sixth defendant (John) is said to be an adviser to Ruth.

(g)The seventh defendant (Jonathan) is the husband of Nicola.

[4]Under William’s will:

(a)Ruth was appointed sole executrix and trustee;

(b)Ruth was granted a life interest in William’s estate (the Estate);

(c)5/11ths of the Estate was granted to Hamish;

(d)Philippa and Nicola were each granted 3/11ths of the Estate.

[5]        At the time of William’s death, the major assets of the Orbell family were shares in farm-owning companies called Clayton Station Ltd (Clayton) and Levels Estate Co Ltd (Levels). Relevantly:

(a)Clayton was comprised of 28,805 shares owned as to 9,205 shares by the Estate and 19,600 shares owned by the W A Orbell Trust (the Trust).

(b)Clayton owned a farm near Fairlie and it also owned all 999 shares in Levels.

(c)Levels owned a farm near Timaru.

(d)Ruth, Hamish and John were directors of Clayton.

(e)Nicola and Jonathan were directors of Levels.

[6]        Philippa pleads that on a date unknown to her Ruth, Nicola, Hamish and John entered into an oral agreement (referred to as the Farm Agreement) that:

(a)Hamish (or his nominee) would be granted the Estate’s shareholding in Clayton.

(b)Nicola (or nominee) would be granted Clayton’s shareholding in Levels.

[7]        Philippa then pleads that pursuant to the Farm Agreement the following transactions were entered into:

(a)On 18 June 2004, Ruth, Hamish and John, as directors of Clayton, authorised the sale of Clayton’s 999 shares in Levels to Nicola.

(b)Ruth and John as directors of Clayton advanced a loan to Nicola so she could acquire the shares in Levels.

(c)On 29 June 2004, the Estate sold its 9,205 shares in Clayton to Hamish.

(d)The Estate advanced a loan to Hamish so he could acquire the shares in Clayton.

[8]        The kernel of Philippa’s complaint is the sales of the shares in Clayton and Levels were at an under value and on non-commercial terms. She says the transactions deprived her of her true entitlement under William’s will and the right as a discretionary beneficiary to have the Trust administered in accordance with its terms.

[9]        The statement of claim pleads what purport to be four causes of action. I summarise them as follows:

(a)The first cause of action (against Ruth, Nicola and John) alleges breach of fiduciary duties as actual or de facto trustees of the Estate and/or the Trust.

(b)The second cause of action (against Nicola, Hamish, the fourth defendants, the fifth defendants and Jonathan) alleges receipt of shares in Clayton and Levels with actual or constructive knowledge of breach of fiduciary duties owed by Ruth, Nicola and John in respect of the Estate and/or the Trust.

(c)The third cause of action (against all defendants) alleges dishonest assistance in the breach of fiduciary duties owed by Ruth, Nicola and John in respect of the Estate and/or the Trust.

(d)The fourth cause of action (against Nicola, Hamish, the fourth and fifth defendants and Jonathan) alleges the shares in Clayton and Levels in excess of Nicola’s and Hamish’s entitlement under William’s will are held on a constructive trust for Philippa.

[10]      By a written notice dated 5 May 2020 issued under r 5.21 High Court Rules 2016, the defendants (other than the sixth defendant) sought further particulars of the statement of claim.   Philippa responded with a memorandum of particulars dated   20 May 2020. In some respects the memorandum provides the particulars sought but in other respects it does not.

[11]      By notice of application dated 3 December 2020, the second, fifth and seventh defendants seek orders:

(a)directing Philippa to file and serve a more explicit statement of claim, which:

(i)includes all of the particulars requested by the notice of 5 May 2020; and

(ii)pleads separate causes of action against each of the defendants, where such distinct causes of action are founded on separate and distinct facts.

[12]      Mr Tobin’s submissions advanced a range of arguments in opposition to the application which I summarise as:

(a)the statement of claim is adequate;

(b)the statement of claim pleads separate causes of action where they are founded on separate and distinct facts;

(c)the defendants are seeking to force an artificially precise delineation of roles played by them in the impugned transactions;

(d)the particulars that can be required have been provided;

(e)the defendants have pleaded to the claims and must be able to understand them;

(f)to comply with the orders sought would require redrafting of the statement of claim to over twice its present length with flow-on effects in terms of other re-pleadings;

(g)any deficiencies in the statement of claim will be remedied by the exchange of briefs of evidence; and

(h)the defendants are seeking evidence, not particulars of the claim.

Relevant principles

[13]      Rule 5.21 High Court Rules provides that a party may require any other party by notice to give further particulars that may be necessary to give fair notice of the cause of action or ground of defence or particulars required by the Rules. Rules 5.21(3) and (4) relevantly provide:

(3)If the party on whom a notice is served neglects or refuses to comply with the notice within 5 working days after its service, the court may, if it considers that the pleading objected to is defective or does not give particulars properly required by the notice, order a more explicit pleading to be filed and served.

(4)Even if no notice has been given under this rule, the court may on its own initiative order a more explicit pleading to be filed and served.

[14]      Rule 5.26 sets out the requirements to which a statement of claim must conform and provides:

The statement of claim —

(a)must show the general nature of the plaintiff’s claim to the relief sought; and

(b)must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff’s cause of action; and

(c)must state specifically the basis of any claim for interest and the rate at which interest is claimed; and

(d)in a proceeding against the Crown that is instituted against the Attorney-General, must give particulars of the government department or officer or employee of the Crown concerned.

[15]      A plaintiff may include several causes of action in the same statement of claim. However, r 5.17 states:

5.17Distinct matters to be stated separately

(1)Distinct causes of action and distinct grounds of defence, founded on separate and distinct facts, must if possible be stated separately and clearly.

(2)If a party alleges a state of mind of a person, that party must give particulars of the facts relied on in alleging that state of mind.

(3)A state of mind includes a mental disorder or disability, malice or fraudulent intentions but does not include mere knowledge.

[16]      In Body Corporate 74246 v QBE Insurance (International) Ltd, Associate Judge Osborne set out the principles applicable to consideration of an application for further and better particulars, which I have had regard to and adopt.1 He said:

(a)The primary purpose of pleadings is to define the issues and thereby to inform the parties in advance of the case they have to meet and so enable them to take steps to deal with it.

(b)The statement of claim should state the claim in each case so that the Court has sufficient clarity and detail to understand the issues it has to rule on, and the defendant knows the case which is to be met and is able to prepare for trial. The function of particularised pleading therefore includes:

(i)limiting the scope of matters a party may put in issue of the trial (or in pre-trial settlement discussions);

(ii)enabling the other party to know the witnesses it will need to retain and to enable the party to start preparing ahead of the formal exchange of evidence; and

(iii)providing an opportunity for the other party to seek summary determination on the basis that the other party’s position is untenable.2

1      Body Corporate 74246 v QBE Insurance (International) Ltd [2015] NZHC 1360 at [18].

2      Platt v Porirua City Council [2012] NZHC 2445 at [19].

(c)Specifically required by r 5.26(b) High Court Rules are such particulars “… of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances as may suffice to inform the Court and the party or parties against whom relief is sought of the plaintiff’s cause of action.”

(d)The pleading must set out the facts or circumstances relied upon as giving rise to each cause of action alleged and the relief claimed as a consequence.

(e)The nature and level of particulars will depend on the facts of the individual case. In complex cases, over-pleading may obscure rather than clarify the issues.3

(f)The distinction between particulars and interrogatories is important

— particulars are matters of pleading, designed to make plain to the opposite party the case to be raised whereas interrogatories are sworn statements of fact, procured by the opposite party to assist that party in proving his or her case.

(g)A request for further particulars can be resisted if the request goes beyond the scope of particulars and probes for evidence.

(h)Questions which a Court can usefully ask itself are:

(i)Has sufficient information been provided to inform the other party of the case they have to meet and to enable them to take steps to respond?

(ii)Is there a real risk that the other party may face a trial by ambush if further particulars are not provided?

(iii)Is the request oppressive or an unreasonable burden upon the party concerned?

(i)In considering whether any party is likely to be taken by surprise, the Court is entitled to have regard to the fact that:

(i)If the particulars sought are within the knowledge or control of the requesting party an order for further particulars may be declined pending the completion of discovery or other matters;

(ii)Case management is available to ensure each side is fairly informed of what is in issue, with the Court able to require leading counsel to agree a list of issues;4

(iii)Briefs of evidence will be exchanged well in advance of the hearing.5 The Court is also entitled to take into account its

3      BNZ Investments Ltd v The Commissioner of Inland Revenue (2008) 23 NZTC 21,821 (HC) at [45].

4 At [45].

5      Petrocorp Exploration Ltd v New Zealand Refining Co Ltd (1992) 7 PRNZ 53 (HC).

ability in cases with substantial evidence to provide for defendants to have extended periods of time to digest and respond to the evidence of the plaintiff.

(j)Particulars of pleading should be approached in a practical and not a theoretical, mechanical or pedantic manner.6

The issues

[17]I intend to deal with this application under two headings:

(a)Is the statement of claim non-compliant with the requirements of the High Court Rules?

and

(b)Are the defendants entitled to further particulars sought in their notice of 5 May 2020 that have not been provided?

Is the statement of claim non-compliant with the High Court Rules?

[18]      The defendants’ notice did not require Philippa to file an amended statement of claim and no criticism can be made of her that she did not do so. That notwithstanding, the Court may of its own initiative order a more explicit pleading to be filed.7 My conclusion is that Philippa’s statement of claim is not compliant with the High Court Rules and to such an extent that she should be required to file an amended statement of claim.

[19]      The statement of claim fails to recognise the impugned transactions were effected under different arrangements, at different times, by different parties acting in different capacities. It does not plead distinct causes of action separately and clearly, as required by r 5.17. A number of distinct causes of action are pleaded together and the narrative of “facts” is diffuse.

6      Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 19.

7      High Court Rules 2016, r 5.21(4).

[20]      So, for instance, what purports to be the first cause of action pleads breach of fiduciary duties by Ruth, Nicola and John:

(a)as actual or de facto trustees of the Trust and/or the Estate:

(i)by authorising and/or permitting the sale of the Levels shares to Nicola;

(ii)by entering into the loan arrangements which allowed Nicola to acquire the shares;

(b)as actual or de facto trustees of the Trust and/or the Estate:

(i)by authorising and/or permitting the sale of the Clayton shares to Hamish;

(ii)by entering into loan arrangements with Hamish which allowed him to acquire the shares.

[21]      It should go without saying that claims against various defendants acting in various capacities in respect of distinct transactions must diverge into separate causes of action notwithstanding that to a degree they might share a common substratum.8

[22]      This approach permeates every cause of action. It is reflected in the first cause of action at paras 25, 26 and 27; in the second cause of action at paras 31 and 32; in the third cause of action at paras 34 and 36 and; in the fourth cause of action at paras 39 and 41.

[23]      Related to this, throughout the statement of claim there is a failure to identify the capacities in which each defendant is said to have been acting giving rise to their liability (compare para 15.1 with para 27 and para 16 with para 26). In Mr Tobin’s written submissions, it was asserted the sale of the Clayton shares was not in the best

8      Andrew Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR5.17.02].

interests of Clayton’s shareholders; potentially a different claim that is not expressly pleaded.

[24]      It is not the case, as is submitted, the defendants are seeking to force an artificially precise delineation of roles played by each of them in the impugned transactions. It is Philippa’s obligation to clearly plead the capacities in which each defendant is said to have been acting at each material time and in relation to each impugned transaction as that is the foundation for any liability they may have to her.

[25]      Throughout the statement of claim there is also a failure to distinguish between distinct legal concepts; for instance, that breach of duties of trustees to beneficiaries, on the one hand, and breach of fiduciary duties owed by trustees on the other are not one and the same.

[26]      Some of the allegations are so obscure the defendants cannot be expected to plead to them. An example is para 36. It reads:

It is pleaded that, by knowing receipt and/or wilful blindness, Ruth, Nicola, Hamish, Hamish’s Trust, Nicola’s Trust, John and Jonty dishonestly assisted Ruth, Nicola, Hamish, Hamish’s Trust, Nicola’s Trust, John and Jonty in committing breaches of fiduciary duty and/or knowing receipt outlined above.

[27]      The statement of claim also contains repetitious allegations of the existence of fiduciary duties and breaches of them (e.g. paras 25, 26, 27). The allegations are unnecessarily ponderous and often unsupported by further pleadings applying them to the facts of this case.

[28]      Philippa should be required to replead her claim for several reasons. First, the defects are substantial and the true bases of her claims are not clear.

[29]      Second, Philippa’s memorandum of particulars contains allegations without which it is difficult to understand her claims, such as the basis upon which it is said Ruth, Nicola and John were actual or de facto trustees of the Trust and the Estate.

[30]      Third, information provided in Philippa’s memorandum goes beyond particulars and contain new allegations. An example concerns para 21 of the statement

of claim in respect of which Philippa says the express terms of the Trust were modified by implied terms regulating the exercise of trustees’ powers and discretions.

[31]      I do not accept that requiring Philippa to replead her claim will result in an unnecessarily long or complex amended statement of claim. Properly pleaded this is not a complex case.

[32]      Nor do I accept that deficiencies in the statement of claim will be remedied by an exchange of briefs of evidence. There is a long way to go before briefs of evidence are exchanged and they are not a substitute for a proper pleading. Furthermore, the trial Judge will not have the benefit of the briefs before trial and one of the purposes of pleadings is to inform the Court, not just the opposing parties, of the nature of claim.9

[33]      Finally, Philippa seeks rescission of the impugned transactions. Clayton was the legal owner of the Levels shares and to pursue rescission Clayton would need to be added as a party. An amendment to the pleadings is inevitable if that is pursued.

Are the defendants entitled to the further particulars sought in their notice of 5 May 2020?

[34]      Several of the outstanding requests for particulars (e.g. in relation to paras 25, 26, 27 and 28 of the statement of claim) will be resolved by a direction that Philippa file an amended statement of claim pleading distinct causes of action separately. In so far as that is not the case, I turn now to deal with the outstanding requests for particulars.

Paragraph 13

[35]      The defendants requested particulars as to what “granted” means at para 13.1 of the statement of claim. Philippa’s response giving six options from a dictionary definition is unhelpful. However, it appears what is intended by the term is made sufficiently clear in para 15 of the statement of claim.

9      High Court Rules, r 5.26(b).

Paragraphs 17 and 19

[36]      The defendants are entitled to particulars of the allegations the sale prices were too low or at an under value. That information is relevant to the issues of whether there were breaches of duty as trustees and to the payment of compensation. Simply listing historical valuations without more does not provide this information. The particulars sought are to be provided.

Paragraphs 31, 32, and 36

[37]      In these paragraphs Philippa alleges the defendants acted with particular states of mind expressed in the alternative. Philippa refuses to specify which persons are said to have had actual or constructive knowledge of what is referred to as the Dishonest Conduct. She also refuses to provide particulars of actual knowledge. I do not see anything objectionable with Philippa alleging actual or constructive knowledge in the alternative. Philippa has provided particulars of the circumstances supporting the allegation of constructive knowledge. A party’s actual knowledge of some circumstance may not be able to be proved directly and may need to be inferred from circumstantial evidence. Under r 5.17(3) High Court Rules Philippa cannot be required to provide particulars to support her allegation of actual knowledge.10

The orders to be made

[38]      The application is granted and the orders that are made are set out in para [78] below.

Request for Further Discovery

The application

[39]      In her notice of application, Philippa seeks particular discovery from Ruth and Nicola in respect to the following categories of documents:

10     Jew v Wetherell [2020] NZHC 2085 at [14].

(a)All professional legal advice given to them as trustees of the Estate, or the Trust in connection with the sale or transfer of shares in Clayton or Levels to Nicola and the third defendants (and associated lending).

(b)All sets of account and financial records for the Estate (including, journal entries recording the indebtedness of any party to the Estate).

(c)All files associated with the administration of the Estate or the Trust from 2003-2020, or during the period they were trustees.

(d)All correspondence from either of them in any way touching on the sale of shares in Clayton or Levels, or received by them.

(e)That Nicola discover all financial records for Levels for the financial years 2004-2020.

[40]      Ruth and Nicola do not oppose the order sought in respect of category (b) and I understand Counsel agreed on a way forward in relation to that category during the hearing. The other categories are in issue.

Some further context

[41]      On 20 July 2020, Associate Judge Lester ordered the parties to provide standard discovery. Subsequently, at the suggestion of Philippa’s lawyers it was agreed the parties would not individually list documents for which privilege was claimed.

[42]      Ruth and Nicola provided discovery on 22 and 16 September 2020 respectively.

[43]      In October 2020, Philippa’s lawyers raised concerns about discovery. There was correspondence between Counsel following this. When agreement was not reached on her  requests  for  further  discovery,  Philippa  filed  her  application  on 2 December 2020.

[44]      Ruth and Nicola’s response to Philippa’s requests have been constructive. Ruth’s lawyers have taken the lead. They have actively responded to Philippa’s concerns, attempted to refine the issues, obtained and provided further documents and Ruth has sworn a further affidavit of documents.

[45]      An issue raised concerned files held by RSM Law (RSM) in relation to the administration of both the Estate and the Trust. On around 4 February 2021, complete copies of RSM’s files were provided with only limited information redacted on the grounds of relevance or privilege.

[46]      As far as refining the issues is concerned, and in an effort to resolve this application without a hearing, on 17 February 2021 Mr Prendergast identified 11 items, in respect of which he wrote to Philippa’s lawyers:

… am I correct in understanding that you and your client are seeking the following information (and that if it is all provided to your client’s satisfaction she will withdraw her interlocutory application) …

[47]Mr Tobin replied on 18 February 2021 adding two items.

[48]      In emails on 23 February 2021, Mr Prendergast responded to each of the now 13 items; in some instances accepting them and in other instances not and providing reasons. He also advised that Ruth would provide a second affidavit of documents and asked whether in light of the correspondence: “Do you also want to circulate an amended notice clarifying that the scope of the application has been narrowed?”

[49]On 25 February 2021, Ruth filed a second affidavit of documents.

[50]      Philippa did not file an amended application refining the scope of the discovery orders sought.

Relevant principles

[51]      Standard discovery only requires disclosure of documents of actual and direct relevance.11 The pleadings set the outer limits of what is relevant. The concept of

11     Pyne Gould Corp Ltd v Bath Street Capital Ltd [2020] NZHC 1247 at [13].

relevance is broader than the test for admissibility and can include “something that is directly connected, related or pertinent to “the matter in hand”.”12 Inadequately particularised pleadings may not trigger a particular discovery obligation if the defect means that a matter has not been sufficiently put in issue.13

[52]      Under r 8.2 parties must co-operate to ensure discovery and inspection are proportionate and facilitated by agreement on practical arrangements. Rule 8.14 requires that a party must make a reasonable search for documents within the scope of a discovery order. Under r 8.14(2) what amounts to a reasonable search will depend on the circumstances including the following factors:

(a)the nature and complexity of the proceeding; and

(b)the number of documents involved; and

(c)the ease and cost of retrieving a document; and

(d)the significance of any document likely to be found; and

(e)the need for discovery to be proportionate to the subject matter of the proceeding.

[53]Philippa relies upon r 8.19. It provides:

8.19Order for particular discovery against party after proceeding commenced

If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party ---

(a)to file an affidavit stating ---

(i)      whether the documents are or have been in the party’s control; and

(ii)     if they have been but are no longer in the party’s control, the party’s best knowledge and belief as to when the

12 Attorney-General v Institution of Professional Engineers New Zealand Inc [2018] NZHC 74;  [2018] NZAR 275 at [28]. See also Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2013] NZHC 1054 at [15]; Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614; (2016) 27 NZTC 22-084 at [21].

13 Hoyle v Hoyle [2017] NZCA 516 at [19] and [42] cited in Gavin v Powell [2020] NZHC 3017 at [15].

documents ceased to be in the party’s control and who now has control of them; and

(b)to serve the affidavit on the other party or parties; and

(c)if the documents are in the person’s control, to make those documents available for inspection, in accordance with rule 8.27, to the other party or parties.

[54]      The key issue in applications under r 8.19 is whether there are grounds for believing a party has not discovered documents that should have been discovered. The Court generally adopts the following four-stage approach as outlined in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd:14

(a)Are the documents sought relevant, and if so how important will they be?

(b)Are the grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?

(c)Is discovery proportionate, assessing proportionality in accordance with Part 1 of the Discovery Checklist in the High Court Rules?

(d)Weighing and balancing these matters, in the Court’s discretion applying r 8.19, is an order appropriate?

The plaintiff ’s approach

[55]      In reliance upon Burgess v Monk,15 Mr Tobin submits Ruth and Nicola must discover every document that could “conceivably fall” within r 8.7 as it is impossible for Philippa to show why a document is relevant to the proceeding without first being able to assess its contents. Any other approach, he submits, leaves it open to a party to resist discovery of damaging documents on the basis of an assessment of relevance that is inevitably partial. I do not accept these submissions.

[56]      Under r 8.19, the party seeking particular discovery must at least show grounds for a belief the documents sought exist and are relevant (not conceivably could possibly be relevant) to issues before the Court.

14     Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [14].

15     Burgess v Monk [2016] NZHC 527 at [8].

[57]      It is correct that it is for the party giving discovery to make an assessment of the relevance of its documents. However, the concern that this may lead to incomplete disclosure due to a partial assessment of relevance overlooks the responsibility of solicitors conducting litigation to ensure their clients understand and fulfil their discovery obligations.16

[58]      Although the notice of application seeks further discovery of five categories of documents, there was refinement of documents in at least categories (a) and (c) in the email exchanges between Counsel. Philippa’s written submissions did not recognise this. It would have been helpful had she amended her application to reflect refinement of the categories of documents sought.17

[59]      In addition to that matter, I have had some difficulty dealing with this application for the following reasons. First, Philippa’s evidence in support of it is not detailed. Correspondence between lawyers is in the agreed bundle but the correspondence is not confined to the matters before me and is often difficult to understand. Second, in so far as the correspondence pre-dates the filing of Ruth’s second affidavit it was not adequately explained how any deficiencies in Ruth’s and Nicola’s discovery had not been addressed. Third, I would have been assisted by an analysis from Philippa of each category with reference to the accepted four-stage approach in Assa Abloy.

Category (a) documents

[60]      In her second discovery affidavit of 25 February 2021, Ruth deposes to the steps that she has taken to address Philippa’s discovery application. She lists additional documents by way of discovery. She explains the reasons why she has discovered further documents not included in her first affidavit.

[61]      Importantly, Ruth deposes that RSM was asked to provide all documents held in her capacities as an individual, trustee of the Trust, trustee of the Estate and director of Clayton. Those files were provided by RSM and then sent to Philippa’s lawyers.

16     High Court Rules, r 8.13 and McGechan on Procedure, above n 8, at [HRPt8Subpt1.06(1)].

17     L&M Coal Holdings Ltd v Bathurst Resources Ltd [2017] NZHC 2315 at [15].

Ruth deposes, and her lawyers also explained in a letter to Philippa’s lawyers of 4 February 2021, that limited redactions were made from the files as the information was irrelevant or subject to privilege. I see no reason to doubt their advice.

[62]      I am satisfied that Ruth has taken reasonable steps to discover all files containing legal advice given to the trustees of the Estate or the Trust in connection with the impugned transactions.

[63]      Philippa considers that further relevant documents in this category may exist. She has sought any record of advice given to the trustees of the Estate by RSM that has been filed to an RSM client code associated with members of the wider Orbell family (and any associated entities), or an unrelated third party client. Her position is that RSM may have incorrectly filed documents.

[64]      Philippa has failed to demonstrate grounds for a belief that such further documents exist or that they may be relevant to the issues. I agree with Mr Prendergast that Ruth (and Nicola also) has no authority to instruct RSM to discover files listed under another client code and to require an unlimited review of files that are associated with the wider Orbell family and its entities would be disproportionate.

[65]      Second, Philippa seeks any advice given by RSM about RSM’s professional duty to not act on both sides of the impugned transactions. I am satisfied no such advice exists.

[66]      Third, an issue was raised concerning the absence of email correspondence to/from a Mr Wallace. Mr Wallace was employed at RSM at relevant times. Ruth has listed further emails to and from Mr Wallace that are relevant and not subject to litigation privilege, including emails that were in the control of Ruth or made available by RSM. Further, I understand all working papers, draft correspondence and final copies of Mr Wallace’s written communication have been disclosed. No submissions were made to me that would suggest any further documents/correspondence exist and have not been discovered.

Category (c) documents

[67]      Ruth and Nicola agree that documents on files of RSM associated with the administration of the Estate and the Trust may be relevant and discoverable. However, they say, and Ruth deposes, all relevant files have been discovered. I accept that.

[68]      There is an issue concerning RSM’s time records and invoices for Estate and Trust files. RSM’s files, I understand, include invoices and the evidence does not satisfy me that there is reason to believe there are further relevant undisclosed invoices. Further, Philippa has not satisfied me as to the relevance of invoices or time records to the pleaded allegations. There is no dispute the impugned transactions took place, nor is there a pleaded allegation putting legal advice or RSM’s role in the transactions in issue.

Within category (d)

[69]      Philippa considers that Ruth and Nicola have withheld correspondence in a number of respects. First, Nicola has not disclosed advice from her lawyers, Gresson Dorman & Co, who acted for her in relation to the purchase of Levels. Second, a failure to disclose correspondence relevant to a family mediation in 2014 in an attempt to resolve the dispute. Third, a cross-referencing of the defendants’ discovery shows “shortcomings” with certain emails disclosed by some defendants and not others. Fourth, Philippa’s lawyers are incredulous there is so little email correspondence between the defendants following Philippa raising her concerns in 2012. Fifth, Philippa challenges Ruth’s and Nicola’s claims to privilege in respect of certain documents. In the circumstances, none of these matters suggest to me that Ruth and Nicola are withholding discoverable correspondence.

[70]      As to the first matter, neither the Estate nor the Trust were involved in the transactions under which Nicola purchased shares in Levels but, in any event, advice Nicola received from Gresson Dorman was in her capacity as purchaser and not as a trustee. As Mr Tobin correctly submits, Ruth and Nicola could not resist under s 54 of the Evidence Act 2006 “disclosure of all professional advice given to them as trustees” but that is not what Nicola is doing.

[71]      As to second and third matters, the defendants are not required to disclose correspondence that may reasonably be assumed to be in the Philippa’s possession.18

[72]      As to the fourth matter, both Ruth and Nicola depose their discovery is complete and Nicola makes the point that communications between family members happened over the phone or in person.

[73]      Finally, as to the fifth matter, this application is made under r 8.19. Any challenge to privilege claims must be made under r 8.25.

Category (e)

[74]      Philippa argues the financial records for Levels for the financial years 2004- 2020 are relevant to her claims for compensation and rescission of the Levels sale.

[75]      As noted earlier, as far as the claim for rescission is concerned I fail to see how any such claim can be advanced when Clayton is not a party.

[76]      Philippa’s pleaded claim for compensation presently relates only to the loss of her entitlement under William’s will resulting from the alleged sale of the shares in Clayton and Levels at an under-value. I am prepared to accept that financial records of Levels for some period that reflect upon the value of its shares as at the date of their sale to Nicola are relevant to that issue. There is no evidence as to what that period might be.

[77]      I direct Counsel to confer in light of my comments to reach agreement on what records are to be disclosed and for what period and will reserve leave to refer the matter back to me if agreement is not reached.

Result

[78]The orders I make are as follows:

18     High Court Rules, r 8.16(5).

(a)Philippa is to file an amended statement of claim within 28 days of the date of this judgment;

(b)The amended statement of claim is to:

(i)plead distinct causes of action separately;

(ii)incorporate the particulars provided in Philippa’s memorandum of particulars dated 20 May 2020; and

(iii)provide the further particulars as required in this judgment.

[79]      Philippa’s application for further discovery is dismissed except to the extent that:

(a)it is agreed that the documents in category (b) of the application will be supplied by consent; and

(b)in regard to the documents in category (e), Counsel shall confer to reach agreement as to which financial records of Levels (and for what period) shall be disclosed in light of my comments above. Leave is reserved to apply for further directions if agreement is not reached.

[80]      Counsel shall confer on costs. If they cannot agree they may file memoranda within 21 days which are to be no longer than 5 pages.

O G Paulsen Associate Judge

Solicitors:

Wilkinson Rodgers Lawyers, Dunedin Simpson Grierson, Christchurch

Gresson Dorman & Co, Timaru

Tavendale and Partners, Christchurch