Fairbank v Hagaman HC Christchurch CIV 2010-409-2070

[2010] NZHC 1841

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-002070

IN THE MATTER OF     an application under section 184 of the

Evidence Act 2006

BETWEEN  BARBARA JEAN FAIRBANK Applicant

ANDEARL RAYMOND HAGAMAN Respondent

Hearing:         4 October 2010

Counsel:         P F Whiteside and JWA Johnson for Applicant

T C Weston QC for Earl Raymond Hagaman and witnesses in opposition

Judgment:      5 October 2010

ORAL JUDGMENT OF PANCKHURST J

Introduction

[1]      At the outset and upon the application of Mr Weston QC I direct that Earl Raymond Hagaman be added as the named respondent in this proceeding.   The naming  of  a  respondent  was  left  open  by Fogarty J  when  he  granted  leave  to commence the proceeding by way of originating application last month.  It is now accepted that to name Mr Hagaman is the appropriate course.

[2]      Barbara  Fairbank  and  Earl  Hagaman  were  previously husband  and  wife. They were married in the United States of America in 1961.  They were separated and their marriage was dissolved by court order in the early 1980s.   However, a proceeding is still extant in the Superior Court of the State of California in the County of Los Angeles.   This is a relationship property proceeding, described in

New Zealand terms, or, in Californian terms, a proceeding as to the division of

BARBARA JEAN FAIRBANK V EARL RAYMOND HAGAMAN HC CHCH CIV-2010-409-002070  5

October 2010

community property.  Mr Hagaman is resident in New Zealand.  Ms Fairbank wishes to obtain evidence from eight witnesses who are also resident in New Zealand so that their evidence may be used in the course of the Californian proceeding.

[3]      The originating application which is before me is in response to a letter of request pertaining to these eight witnesses from the Los Angeles Court.  Six of the eight oppose the application for this Court to lend assistance and order that evidence be obtained from them.  Mr Hagaman likewise opposes the application.  Mr Weston appeared for six of the witnesses and also for Mr Hagaman in support of the notice of opposition.

The letter of request

Context

[4]      The parties were married on 24 November 1961.  After almost 20 years of marriage  they  separated  on  20  March  1981.     Proceedings  were  issued  by Ms Fairbank that same month.  Various issues, including at least the partial division of community property of the marriage, were resolved by the Court in the context of the proceeding.  A dissolution order in relation to the marriage was granted on 21

May 1982.

[5]      There  were  two  interim  property  agreements  concluded.    The  first  was termed an interim and partial distribution of community property and was dated

13 April  1983.    Then,  two  days  later  on  15  April,  a  supplementary  agreement concerning property located in New Zealand was also signed.   Then followed a hiatus of some years until 2005, when Ms Fairbank commenced proceedings in the Family Court in New Zealand.[1]    She sought a division of property which she considered  that  her  former  husband  had  brought  to  New  Zealand  following the breakup of their marriage.  In the result the proceeding was transferred to this Court [2] and John Hansen J, on 18 September 2006, decided that the appropriate forum for

[1] Fairbank v Hagaman FAM 2005-009-004873.

[2] F v H HC Christchurch CIV 2006-409-849, 10 November 2006.

the hearing of the case was California as opposed to New Zealand.   Hence, the proceeding already issued in that Court was revived.

[6]      I am told that there is a pending fixture to commence on 10 November 2010. In the meantime Mr Hagaman has agreed that a deposition will be taken in advance of trial from him.   But, of course, Ms Fairbank also seeks to examine the eight witnesses who are the subject-matter of the present application.  This must be done before  5  November  2010,  which  date  has  been  fixed  as  the  cut-off  date  for deposition evidence to be obtained.

The terms of the request

[7]      On 2 September 2010 the Honourable Frederick C Shaller of the Los Angeles Court requested the assistance of this Court.  The request sought the examination of the eight witnesses by way of the taking of oral depositions and in relation to two of the witnesses, the production by them of specified documents.  The letter proposed that the eight be examined and questioned by attorneys who had been retained by the parties; and that the proceeding be transcribed by a Californian court reporter in terms of the Californian Code of Civil Procedure.  The request ends on the note that:

IT IS HEREBY ORDERED that Judge Robert A. Schnider, a retired Judge of  the  Los  Angeles  County  Superior  Court,  is  appointed  by  this  court pursuant to CCP § 639 to preside and act as discovery referee over these depositions and to issue rulings under California law as to any objections to deposition questions or any issues relating to the conduct or procedure for the depositions.  The fees for Judge Schnider’s services shall be paid by the parties herein equally, subject to future allocation by this court in the dissolution proceeding.  Subject to any rulings or orders from the High Court of New Zealand, Judge Schnider shall apply California rules of procedure and evidence and the substantive law of California in presiding over these depositions.

[8]      The eight witnesses comprise Mr Hagaman’s present wife, two New Zealand solicitors,  four  men  who  have  had  at  various  times  business  dealings  with Mr Hagaman and a woman who has assisted with secretarial tasks in relation to his personal affairs.

[9]      On behalf of the six  witnesses represented by him, Mr Weston raised  a number of grounds of opposition to the application for assistance.  The obtaining of evidence  for  use  in  overseas  civil  proceedings  is  governed  in  New  Zealand  by ss 184-186 of the Evidence Act 2006.  I shall return to the detail of these provisions in a moment.  As will become apparent the statutory regime is limited to the taking of evidence and a core requirement is that any order made by way of assistance to a foreign requesting court may not require any steps to be taken unless those steps are of a kind which can be required to be taken for the purposes of New Zealand civil proceedings.

[10]     The  first  ground  of  objection  reflects  this  requirement.    The  argument mounted  by counsel  is  to  the  effect  that  the  genesis  of  the  present  request  for assistance is to be found in the discovery processes of the Californian Superior Court.  In that jurisdiction discovery extends to taking evidence by oral depositions. Mr Weston characterised this as an investigatory process, not a process founded on the taking of evidence for the purposes of trial.  The argument continued that in New Zealand there is no comparable process whereby oral depositions may be taken in the course of discovery and since New Zealand witnesses cannot be required to submit to such a process in terms of New Zealand civil procedure, nor can they be required to do so in the present context.

[11]     There was, what seemed to me, to be a related argument directed to the relevance of the proposed evidence.   It was suggested that the evidence does not meet the threshold which exists under the Evidence Act and that this Court should not assist, therefore, by requiring that witnesses give evidence which was not even relevant.    As  I have  indicated  I think  this  is,  on  examination,  a  subset  of  the discovery-based argument.  Therefore I shall consider the two points together.

[12]     This argument might be described as fundamental in nature.   If upheld, it would suggest that no foundation exists to provide assistance to the Los Angeles Court.  The request would relate to a procedure which is simply not available in New Zealand.  No scope would exist, therefore, to provide the assistance sought.

[13]     The next two challenges are relevant to the content of the evidence sought to be taken, rather than to the fact of it being able to be taken.  A further principle of the statutory scheme is that evidence must be of a nature that witnesses in New Zealand are compelled to give in our courts and so, for example, where ss 52-56 of the Evidence Act recognise the existence of privilege, witnesses are entitled to claim such privilege and be relieved of the need to answer questions covered by such privilege.  Here, the two solicitors invoke privilege in relation to the communication of legal advice; and Mrs Hagaman and Ms McLachlan invoke privilege which is available to parties who become involved in preparatory work relating to a legal proceeding.

[14]     Next some of the eight witnesses are trustees of various trusts which are in some way connected to Mr Hagaman.   I think there are four witnesses who are trustees of such trusts.  The challenge is that Ms Fairbank is not a beneficiary of any of the trusts, which are New Zealand based.  Therefore, Mr Weston argued, she has no entitlement to information relating to such trusts.  The argument continued that it was not appropriate for the intended witnesses to have to disclose information pertaining to those trusts.

[15]     The next aspect of the objection concerned what I will term discretionary factors.    Mr  Weston  argued  that  the  application  is  in  the  nature  of  a  fishing expedition and that it is oppressive on that account.  He also contended that there has been inordinate delay from the early 1980s in relation to the Californian proceeding. He hinted that it would be inappropriate, therefore, if not an abuse of process, for this Court to lend assistance to the Californian Court by allowing evidence to be taken in this jurisdiction.  Also under this heading an argument was addressed relating to an outstanding costs award which was made by John Hansen J and I shall return to that aspect in due course.

[16]     Finally, assuming that assistance is to be given, there are procedural aspects which need to be considered.  The originating application contains proposed terms of a detailed order pertaining to the taking of the evidence.  Aspects of that order were criticised.  I think there may be common ground that in part at least the order should be reconsidered and redrafted.

[17]     Section 184 of the Evidence Act supplies the test for the exercise of the power to grant a request or, as it is also termed, an application for assistance.  There are in effect two requirements.   The first is the fact of an application seeking assistance from a requesting court in an overseas jurisdiction.   That, of course, is satisfied here.  The second requirement is that the request pertains to the obtaining of evidence for use in a civil proceeding which has either been instituted, or is contemplated, in the overseas court.  Again, there is no dispute in this instance that a proceeding is actually pending in the Los Angeles Court.

[18]     Section 185 contains the power to give effect to an application.  A Judge of this Court, in terms of subs (1) may order who is to obtain the evidence and how that evidence is to be taken.   Subsection (2) contains a non-exhaustive list of orders which the Court may make, including:

(a)[provision] for the examination of witnesses, either orally or in writing at any agreed time or at any specified time and place:

(b)     [provision] for the production of documents:

Subsections (3) and (5) are of particular importance and I therefore set them out in full:

(3)An order under subsection (1) may not require any particular steps to be taken unless they are steps which can be required to be taken by way of obtaining evidence for the purposes of civil proceedings in the High Court (whether or not proceedings of the same description as those to which the application for the order relates).

(4)     ...

(5)     An order under subsection (1) may not require a person –

(a)    to state what documents relevant to the proceedings to which the application for the order relates are or have been in the person’s possession, custody, or power:

(b)     to produce any documents other than particular documents specified in the order as being documents appearing to the court making the order to be, or to be likely to be, in the person’s possession, custody, or power and relevant to the proceedings.

As can be seen witnesses may be compelled to give evidence in order to produce documentary evidence, but not compelled to give evidence for the purpose of disclosing the existence of documents in a process akin to discovery.

Privileges of witnesses

(1)A person may not be compelled by an order under section 185(1) to give any evidence which the person could not be compelled to give –

(a)     in civil proceedings in New Zealand; or

(b)     in civil proceedings in the country or territory in which the requesting court exercises jurisdiction.

[20]     The  succeeding  subsections  provide  that  witnesses  must  assert  that  they would not be compellable in the requesting court to answer particular questions.  If they do so, and a basis for a claim of exemption is made out, but that claim remains contentious, the witness may be required to give the evidence; but transmission of such evidence may be withheld pending a determination of the claim for exemption: s186(3).  Hence, this provision reserves to the requesting court an ability to decide disputes concerning whether evidence provisionally taken is admissible and whether it should, therefore, be transmitted to the foreign court for use in the subject proceeding.

[21]     I note that ss 184-186 are new.   They were redrafted at the time of the enactment of the Evidence Act 2006.   Previously the relevant processes were contained in ss 48A-48E of the Evidence Act 1908.  Although the expression of the new provisions is quite different from that contained in the previous sections, it seems to me that the substance of the provisions is essentially similar.

[22]     I note as well that the scheme now applying in New Zealand is based on ss 1 and 2 of the Evidence  (Proceedings in  Other Jurisdictions) Act 1975,  a United Kingdom statute.   Hence, decisions decided in England may be of considerable assistance in interpreting the New Zealand provisions.

[23]     The principle of most importance in relation to letters of request is that of comity.   Applications for assistance from foreign courts are to be treated with sympathy and respect and for many years it has been recognised that they should be positively  accommodated  where  possible.    But,  comity  may  not  prevail  at  the expense of compliance with the statutory requirements now prescribed in the Evidence Act.   The challenges here amount to assertions that the application or

request should be denied, either in whole or in part, because it is in conflict with those statutory limitations.    I therefore turn  to  the challenges  which  have been advanced by Mr Weston.

Is the obtaining of evidence from the witnesses contrary to s185(3)?

The witnesses

[24]     The eight witnesses are:

Lianna-Merie (Lani) Hagaman, the wife of the respondent

Paul Simpson, a private investigator and previously a business associate of Mr Hagaman

Stuart McLauchlan of Dunedin, a company director

Simon Johnston, a solicitor

Alan Rhodes, a company director

Diana McLachlan, a secretary/assistant to Mr Hagaman

Trevor Scott of Wanaka, a company director, and

Alan MacAlister of Queenstown, solicitor.

Unless otherwise indicated, the witnesses are residents of Christchurch.

[25]     Two have been required, in terms of the originating application, to produce documents.  These are:

Lani Hagaman to produce –

i.    all pre-marital, pre-nuptial or relationship property agreements entered into with Earl Raymond Hagaman; and

ii.   all documents evidencing transfer of any assets or interest in property from Earl Raymond Hagaman to Lianna-Merie Hagaman;

Alan MacAlister to produce –

i.    all  evidence  of  any  funds  transferred  or  deposited  by  or  from  Earl Raymond Hagaman into any trust account of Alan Perry Michael MacAlister or any firm of which he was, or is, a partner;

[26]     Five  of  the  witnesses  have  filed  affidavits  in  opposition  to  their  being required to give evidence.  The exceptions are Messrs Simpson and Rhodes, and

Lani Hagaman, although her concerns it seems to me are covered to some extent by an affidavit made in opposition by her husband.

[27]     A  common  theme  of  the  affidavits  is  that  the  deponents  first   met Mr Hagaman in New Zealand in the mid to late 1980s.  They had a professional or business connection with him, as a result of which they have only limited knowledge of Mr Hagaman’s personal assets and affairs, at least in a sense which might appear relevant to the pending community property dispute in Los Angeles.  This is even the case, it seems to me, in relation to Mrs Lani Hagaman who did not marry the respondent until 1990 or thereabouts.   Mr MacAlister, I note, met Mr Hagaman a little earlier, perhaps as early as 1980, at which time he provided professional advice in his capacity as a solicitor.

[28]     Aside from this common theme the affidavits also make a number of claims of exemption (to use the terminology of the statute) where witnesses claim that they are not compellable to answer questions in particular areas.   For example the two legal advisors claim legal advice privilege, Mrs Hagaman spousal privilege and the trustees claim what might be termed confidentiality in relation to any obligation to disclose trust information.

[29]     The   evidence   of   the   distance   between   the   witnesses’   dealings   with Mr Hagaman  and  the  events  in  California  provides  the  essential  basis  for  the argument that the proposed exercise is not founded on obtaining evidence for trial in the normal sense, but is rather an investigatory process akin to obtaining discovery.

Some further context

[30]     Affidavits have also been sworn by two Los Angeles attorneys, Mr Brian Brandmeyer who represents Ms Fairbank, and Mr William Glucksman who is an attorney for Mr Hagaman.  From their affidavits it is common ground that the basis of the request made by Judge Shaller is certain provisions in the Code of Civil Procedure which permit oral depositions to be taken as an aspect of the Californian discovery process.  Mr Brandmeyer states, however, that a deposition taken in this manner is evidence and can be admissible at trial.  It follows that the nomenclature

of discovery is not necessarily decisive in determining whether the obtaining of evidence falls foul of s185(3); rather the issue is whether, in substance, what is obtained is evidence for trial or not.

[31]     Mr Brandmeyer made a second affidavit which addresses issues pertaining to the pending hearing.   He makes the point that Mr Hagaman pursued a motion to enter judgment on the basis that there had already been a full and final settlement between the parties, but that motion was apparently denied.

[32]     He also proferred some opinion evidence concerning what is going to unfold in the context of the substantive hearing which is to commence in November.  He said this:

7.In order to ensure a fair division of community property, Californian law allows for the tracing of assets.   Accordingly, although these witnesses may not have known Mr Hagaman at the time the marriage dissolved, they will have knowledge of his assets and the assets of interests associated with him.   Some, like Mr Macalister (sic), will have knowledge of transactions that took place from the mid 1980s on.

8.The fact some assets are held in trusts and other vehicles will not necessarily be the end of the matter as far as Californian law goes.  It will consider whether the assets held by those vehicles can be traced back to undivided property and adjudicate accordingly.

9.      In terms of the procedure for dealing with these issues in California, the trial in this case will commence and the issue of whether there was any undivided property, and what that property is, will be determined. An interim decision will be made on that issue.   If the applicant is successful then the trial moves to consider the tracing of the undivided property straight away.   There will be no delay to allow for the gathering of further evidence.

[33]     He also expresses the opinion that Judge Shaller in issuing the request has expressed himself satisfied that the evidence proposed to be obtained from the New Zealand witnesses is relevant in the eyes of the Los Angeles Court.

Evaluation

[34]     Mr Weston was not dissuaded, however,  from  arguing that  the evidence lacked relevance and, indeed, that the obtaining of it should be characterised as a fishing expedition.   He cited the English case of First American Corporation v

Zayed.[3]   This case concerned a request from an American to an English court for the oral examination of accountants employed by an international accountancy firm. They had been involved in providing audit services for a group of companies.  The First American Corporation alleged that this group had been involved in fraudulent conduct in an endeavour to mount a takeover of it.

[3] First American Corporation v Zayed [1999] 1 WLR 1154.

[35]     At first instance the request for assistance was refused on the express basis that it amounted to a fishing expedition.  I interpolate that the context from which the request sprang was similar to that in the present case, that is it was a request based on the ability of American attorneys to obtain evidence by oral depositions relying upon discovery practice in the United States.

[36]     In the Court of Appeal, however, the decision of a first instance judge was not accepted at least in relation to the point that the obtaining of the evidence was a fishing expedition.  The Vice Chancellor, Sir Richard Scott, delivered the decision of the Court.  He doubted a number of previous decisions, including the subject one, where a fishing expedition analogy had been used.   In particular, he questioned whether it was apt to use that analogy in the context of an application to take oral testimony.  At 1163-1164 he said this:

If oral evidence is being sought for the purpose of use at trial and if there is good reason to believe that the intended witness has knowledge of matters in issue at the trial so as to be likely to be able to give evidence relevant to those issues, I do not understand how an application to have the intended witness  orally  examined  can  be  described  as  “fishing”.    It  cannot  be necessary that it be known in advance what answers to the questions the witness can give.   Nor can it be necessary that the answers will be determinative of one or other of the issues in the action.  Section 2(2) of the Act of 1975 bars the court from making an order for oral testimony to be taken pursuant to a letter of request unless the order is of a type that could have been made for the purpose of obtaining oral testimony for domestic litigation.   In the case of a witness who there is reason to believe has relevant evidence to give, a subpoena served on the witness in order to obtain his evidence for trial could not be set aside on the ground that it was “fishing”. (emphasis added)

A little later he added at 1166:

In relation to oral testimony I do not think an objection of “fishing” has substance except in a case in which the conclusion can be reached, whether

from the terms of the request or from other sources, that the intention underlying the request is not one of obtaining evidence for use at trial.  The width of a request may indicate the absence of that intention.  But, equally, the width of a request may be an inevitable consequence of the complexities of the issues and of the witness’s involvement in them.

[37]     I gratefully agree with, and adopt, this approach.  However, in one respect, I prefer what was said later in the first quotation rather than what the Vice Chancellor said at an earlier point.  In the first instance he said that if a witness is “likely to be able to give evidence relevant to the issues” then the fishing analogy was inappropriate.  That, I think, may be to pitch the test too high.  At a later point he, to my mind, restated the test by stating that where there was “reason to believe that relevant evidence” may be obtained from the witness, then the request should not be denied on the ground that it is a fishing expedition.  Subject to this quibble I adopt the observations contained in the judgment.

[38]     I note also that the outcome of the First American Corporation case remained unchanged.  The decision at first instance was upheld, albeit on other grounds.  In the end result the request from the American Court was viewed as oppressive.   The witnesses from the accountancy firm were viewed to be potential defendants in the proceeding.  No undertaking had been given by the plaintiff not to seek their joinder. Especially in the context of a fraud case it was therefore considered to be inappropriate to obtain evidence which may subsequently be used against the witnesses as defendants.  As it was put, the plaintiff could not continue to “sit on the fence”.   On account of the risk of oppression the request was denied.   That, of course, is not a feature of the present case, although there is an oppression argument raised on quite different grounds.

[39]     I turn then to the application of the test I have adopted to the particular circumstances of this case.  Those circumstances are, of course, quite different and I do not think that the application of the test is altogether straight-forward.  It seems to me   that   an   important   consideration   is   the   two-part   inquiry   described   by Mr Brandmeyer.  The first part, he indicated, will be as to whether there is undivided community property.  He anticipates that a ruling will be given upon that question. If Ms Fairbank obtains a positive response, then the second part of the inquiry, being the tracing of undivided property, will follow.   The attorney made the point that

although there are two parts to the case, one will follow upon the other and there will be no opportunity to gather evidence between the respective parts.

[40]     My impression is that the proposed evidence from New Zealand witnesses is material, if at all, to the tracing exercise which would comprise the second part of the inquiry.  I doubt that their evidence is likely to be relevant to the establishment of the first issue - whether there is undivided community property.  In that regard it may be, of course, that the evidence of Mr Hagaman to be taken shortly on deposition, could be most relevant to that first aspect.

[41]     It follows that there is a contingency which affects the evidence sought from the New Zealand witnesses.  Whether their evidence will prove to be required, and prove to be of moment, in the proceeding will, it seems to me, depend upon it being established that there is undivided property.  I am, of course, in no position to make a judgment as to this.  Nor, indeed, to defer determining the present application until that issue has been decided in Los Angeles.

[42]     I confess to some concern as to whether the evidence which is proposed to be obtained will indeed prove to be of relevance in the proceeding.   I certainly hold concerns  as  to  my  ability  to  gauge  this,  sitting  in  judgment  on  the  present application.  This is by no means an obvious case as, for example, was the situation in First American Corporation.   There the witnesses were audit partners of the international firm.  There was no question that they had had an active involvement in auditing the accounts of the group of companies whose conduct was alleged to be fraudulent.

[43]     It  is  by no  means  as  obvious  here that  the  proposed  witnesses,  whether business  associates  of  Mr  Hagaman,  his  professional  advisors  or  his  closer confidants, have knowledge which will prove to be of positive value in the proceeding.  In general they had contact with him in the mid-1980s, soon after the time when he had relocated to New Zealand.  He was, I assume at that time, in the process of establishing a new asset base here.  The extent of their knowledge may vary as between witnesses and, in some cases, may be quite limited.

[44]     I think it material at this point to refer to the New Zealand test of relevance. Section 7 of the Evidence Act provides as a fundamental principle of our law that relevant evidence is admissible. Subsection (3) provides that:

Evidence is relevant in a proceeding if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.

That test seems to me to be potentially relevant in two ways.  First, it indicates that the threshold of relevance is not high; and I think the threshold must be applied in approaching the taking of evidence of New Zealand witnesses in a New Zealand court.  Secondly, it shows that evidence may be either positive or negative in that it may either prove or disprove something.  This must also be borne in mind when it comes to assessing the relevance of evidence which these witnesses might supply.  In short, it is entirely conceivable that evidence given by the witnesses may prove to be helpful to Mr Hagaman in disproving a proposition which is of consequence to him.

[45]     Although I have on the one hand expressed some concerns about the cogency of the likely evidence that this group of witnesses might be able to give, I do not on the  other  hand  see  anything  oppressive  in  requiring  them  to  participate  in  the process.  They are entitled to witness expenses and costs, as are all witnesses in New Zealand civil proceedings.  The inquiry which is indicated in relation to each of them seems to me to have a relatively narrow focus, albeit in the case of some witnesses it may cover quite a span of years.

[46]     For these reasons  I find that there is no basis to find that obtaining the evidence would involve a breach of s185(3).  I turn therefore to the specific grounds of opposition which are raised with reference to individual witnesses.

Privilege for communications with legal advisors

[47]     Section 54(1) provides:

A person who obtains professional legal services from a legal adviser has a privilege in respect of any communication between the person and the legal adviser if the communication was –

(a)     intended to be confidential; and

(b)     made in the course of and for the purpose of –

(i)     the person obtaining professional legal services from the legal adviser; or

(ii)     the legal adviser giving such services to the person.

[48]   A companion section deals with preparatory materials for use in legal proceedings.  This is s56 which relevantly provides in subs (2):

A  person  (the  party)  who  is,  or  on  reasonable  grounds  contemplates becoming, a party to the proceeding has a privilege in respect of –

(a)     a communication between the party and any other person:

(b)     a  communication  between  the  party’s  legal  adviser  and  any  other person:

(c)information compiled or prepared by the party or the party’s legal adviser:

(d)information compiled or prepared at the request of the party, or the party’s legal adviser, by any other person.

[49]     Subsection   (1)   provides   that   a   “communication”   or   “information”   is privileged only if it is “made, received, compiled or prepared for the dominant purpose of preparing for a proceeding”.   Legal privilege is the only privilege of relevance under the New Zealand Act.  There is no provision for spousal or marriage privilege, although Lani Hagaman asserts such a privilege based on Californian law.

[50]     Section 186(1) confirms that witnesses cannot be compelled to give evidence if they could not be compelled to give that evidence in a New Zealand civil proceeding.    Messrs  Johnston  and  MacAlister,  as  solicitors  who  have  acted  for Mr Hagaman in relation to both his personal and business affairs, are very likely to have occasion to assert the privilege.  Mr Hagaman has confirmed in advance that a waiver of privilege will not be forthcoming.  Indeed, both of these witnesses have already deposed that they anticipate any knowledge they have relating to relevant assets is likely to be the subject-matter of a claim to privilege.

[51]     Lani  Hagaman  and  Diana  McLachlan  have  each  deposed  that  they have assisted Mr Hagaman in relation to the preparation of his defence for the Californian proceeding.   Assistance of this kind has the potential to engage the privilege recognised in s56, that is the privilege in relation to communications made and information obtained for the dominant purpose of preparing for a court proceeding. It is, of course, common ground that privileged evidence cannot be obtained or taken

from any of the witnesses.   At this point, however, what they are to be asked is unknown and their evidence, in that sense, is prospective.  Whether all or some of the evidence will be shown to be privileged must await the process of examination.

[52]     In  my view  it  will be for  Justice Robert Schnider  to  decide in  the first instance whether witnesses are obliged to answer particular questions.  Ultimately, however, in the event of difficulty arising, such issues can be referred to this Court for  determination  since,  of  course,  they concern  the  metes  and  bounds  of  New Zealand provisions which govern this difficult aspect of the law.  Nonetheless, I can find no basis, on account of the likelihood of privilege claims being made by a number of the witnesses, to decline the present application for assistance in advance of its hearing.

[53]     It will also be for Judge Schnider to decide in the first instance whether any claim to marriage privilege made by Lani Hagaman should be upheld.  Again, in the event of a ruling which is disputed, there is provision for the matter to be referred to the requesting court and for the transmission of evidence taken pursuant to the provisional ruling to be delayed, pending an authoritative ruling from the Californian Court.

Provision of trust information by trustees

[54]     Mr Weston argued that information in this category raised problems as well. I note on re-reading his submissions that he did not go so far as to say that witnesses could not be compelled to give evidence of this nature.   There are four witnesses who  have  deposed  to  their  being  trustees  of  various  trusts  connected  with Mr Hagaman.   They are his wife, Diana McLachlan, Mr Johnston and Mr Trevor Scott.

[55]     The submission made by counsel was that Ms Fairbank “has put forward no proper  basis  to  seek  to  have  trustees  disclose  information  to  her  as  a  non beneficiary”.  Counsel added that the only way Ms Fairbank could seek disclosure of trust information was to join the trustees as parties, but that this would require a sustainable cause of action and nothing had been advanced to this effect.

[56]     He then cited an Australian authority Hartigan Nominees Pty Ltd v Rydge,[4] and  a  New  Zealand  one  Manukau  City  Council  v  Lawson,[5]   in  support  of  his argument.  Both cases concerned the rights of beneficiaries to obtain what in broad terms  might  be  called  trust  information  in  the  context  of  a  proceeding.    The

proceeding in the Australian case was instituted by a disappointed beneficiary who had sought information, been denied it and then sought a declaration as to the extent of the trustee’s obligation.  In the New Zealand case a proceeding had been instituted challenging various actions of the trustees, and the decision was given in the context of an application for discovery of information which the trustee declined to provide. Hence, it is to be noted, the cases do not concern whether trustees appearing as witnesses are compellable to answer questions concerning the affairs of the trust.  I was not referred to any authorities which concern the compellability of trustees.

[4] Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405.

[5] Manukau City Council v Lawson HC Auckland CP400/98, 30 June 2000, Williams J.

[57]     Those two cases, incidentally, were decided by reference to the conventional principle that it is a basic duty of trustees to give complete and accurate information as to the administration of the trust to beneficiaries.  Hence, trustees are required to disclose what the trust property comprises and how they have dealt with it.

[58]     But the issue in the present context is whether trustees appearing before Judge Schnider can be compelled to give evidence by way of disclosure of trust information.   This impresses me  as a  rather different issue.   Section 71 of the Evidence  Act  provides  that  “any  person”  is  eligible  to  give  evidence  in  New Zealand, and is also a compellable witness.  The sections which follow define certain categories of person who are an exception to this general rule.   The exceptions include, for example, judges, an accused standing trial and bank officers; but there is no exemption from the general compellability rule in relation to trustees or anyone akin to trustees.

[59]     In these circumstances I am at least of the tentative view that the right to refuse to disclose trust information is to be found, if at all, in subpart 8 of the Evidence Act.  This part contains the sections I have already referred to in relation to privilege.   Following those sections are a number of sections which deal with the

related topic of confidentiality.   Of most relevance is s69 which provides an overriding discretion for a Court to make a direction that confidential information need not be disclosed.  This is, of course, a judicial discretion.  A judge may direct that either confidential communications, or confidential information, need not be disclosed by a witness who has been subpoenaed to give evidence.  The test to be applied is a public interest one.  The Judge must balance on the one side the value of the evidence which will be obtained if confidentiality is not allowed to prevail; and on the other the general harm which may result from a requirement that the confidence be breached.  The application of this case has, for example, given rise to anxious decisions where persons in a confidential relationship with criminals have obtained information which is of potentially crucial importance in a criminal trial. Judges  in  that  context  have  been  required  to  balance  whether  the  value  of  the evidence outweighs the harm to the particular relationship which is at stake if the confidence is breached.

[60]     I express no view as to whether s69 could be applied in relation to trustees, save to say that I have doubts about it.  The section is not prescriptive as to the type of relationship it might cover.  It presupposes the existence of a confidence which is worthy of protection.  Beyond that, the nature of a relationship which might give rise to a need to embark upon the balancing exercise is left at large.

[61]     Having parted company from Mr Weston’s approach, I am clearly of the view that his arguments do not provide a basis to decline the present application. My tentative view is that witnesses who happen to be trustees of trusts may be asked questions and may be compelled to answer them unless, against the tentative view I have just expressed, s69 might avail them.   Nothing I have said is intended to encourage a claim of exemption based on that section.

The residual discretion

[62]     Under this heading Mr Weston referred to a number of matters.  He described the application to obtain evidence from the witnesses as a fishing expedition and oppressive  on  that  account,  a  matter  to  which  I  have  already  referred.    He emphasised the extraordinary delay which has occurred in relation to finalisation of

Ms Fairbank’s proceeding before the Los Angeles Court.   He suggested that in a New Zealand context that delay could well have resulted in the characterisation of the  proceeding  as  an  abuse  of  process.    However,  he  did  not  argue  that  the Californian proceeding should be branded as such in the context of the present application; but rather contented himself with the observation that the delay was of such magnitude, and concern, as to be a highly relevant discretionary factor in the determination of the application for assistance.

[63]     I must say I again think there is considerable merit in this point and it has at least caused me to pause.  However, I am very conscious of the fact that I am dealing with a Californian proceeding where, it seems, that a delay, even of this magnitude, is not treated as a matter of such great concern.  This Court has been asked to lend its assistance in obtaining evidence from New Zealand witnesses.  I am not persuaded that I should decline to do so on account of a delay which would have serious consequences in New Zealand, but which, apparently, does not have such consequences in the requesting court.  For these reasons I do not find that there are discretionary factors which suggest that the application should be declined in the exercise of a discretionary judgment.

[64]     Also under this heading Mr Weston submitted that at the very least, if the application to obtain evidence was granted, there should be a term imposed that Ms Fairbank make payment of the costs which were ordered against her by John Hansen J in 2006.  The amount of such costs is $21,049.  There is no explanation before me as to why this amount has not been paid.  To my mind the proposition that before  seeking  the  assistance  of  this  Court  it  is  only right  and  proper  that  the applicant should meet the order, is unanswerable.  I therefore make it a condition of the grant of the application for assistance, that such costs are to be paid forthwith.

[65]     It only remains to consider certain of the terms of the order proposed in the originating application.  I have already indicated to counsel that it seemed to me to be common ground in the course of submissions yesterday that in a number of respects the order requires an element of redrafting.  I have also expressed the view that I think the better course is for counsel on both sides to confer as to this aspect.  It seems to me that it will be in the interests of all concerned that the conduct of the

taking of evidence is facilitated before Judge Schnider to the greatest extent possible. One of the ways in which that may be achieved is if the drafting of the order, which provides the structure under which he must operate, is fine-tuned so as to give the best guidance possible.

[66]     As I see it paragraphs 1 (d) and (e) and 1 (i) and (j) which deal with rulings on claims of exemption made by the Judge, and the definition of documents to be produced by Lani Hagaman and Mr MacAlister, respectively, are most in need of redrafting.  There may be a need for other sub-paragraphs to be refined as well.

[67]     I reserve this issue for counsel to consider and to submit a revised order.  I

reserve as well the question of costs.  If there is no agreement memoranda may be filed.

Solicitors:

Wynn Williams & Co, PO Box 4341, Christchurch for Applicant

Meares Williams, PO Box 3976, Christchurch for Respondents

Counsel: Mr T C Weston QC, PO Box 3976, Christchurch