Gavin v Powell

[2018] NZHC 2866

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000272

[2018] NZHC 2866

BETWEEN

CHARLOTTE TERESA GAVIN

Plaintiff

AND

DANIEL JOHN POWELL

First Defendant

AND

PAUL JOSEPH DORRANCE

Second Defendant

Hearing:

26 October 2018

Appearances:

A F Grant for the Plaintiff

S Caradus and G K Raymond for the Defendants

Judgment:

6 November 2018

JUDGMENT OF NATION J

[1]    Daniel Powell is a trustee of the Daniel Powell Family Trust (DPT). Daniel and his family are discretionary beneficiaries of the DPT. Daniel’s sister, Charlotte Gavin and her children and grandchildren are also discretionary beneficiaries of the DPT. A judgment of the High Court required an independent professional trustee to be a co-trustee with Daniel. Janine Ballinger, a solicitor, was appointed.

[2]    At Daniel’s request, Ms Ballinger retired as a trustee of the DPT. In doing so, she and Daniel exercised powers as trustees under s 43 Trustee Act 1956 to appoint another trustee in her place. They appointed Paul Dorrance, a solicitor and partner in the firm of Duncan Cotterill, who had acted for Daniel in earlier proceedings concerning the DPT.

GAVIN v POWELL [2018] NZHC 2866 [6 November 2018]

[3]    Charlotte has issued proceedings asking the Court to remove Daniel and Mr Dorrance as trustees and for a sole trustee, potentially the Public Trustee, to be appointed in their place.

[4]    Charlotte seeks discovery of documents relating to the removal of Ms Ballinger as a trustee, the appointment of Mr Dorrance, and the “client file” that Ms Ballinger had while acting as a trustee. The application for such tailored discovery is opposed.

Background

[5]    The proceedings are a sequel to judgments in earlier proceedings in which a number of the current parties were involved.

[6]    Daniel and Charlotte’s father, John Powell, instigated the establishment of the DPT and, around the same time, of the Charlotte Powell Family Trust (CPT). The beneficiaries of that latter trust include Charlotte and her children and grandchildren, and Daniel and his children and grandchildren.

[7]    Charlotte says the DPT has a significant investment in a substantial cool store building in Christchurch owned by a company Kensal Investments Ltd (Kensal). Daniel is a director of Kensal. The allegation is that the directors of Kensal have made decisions in relation to the business to avoid capital and/or income from the company being available to the DPT where it could be applied for the benefit of the beneficiaries, including Charlotte.

[8]    John Powell and Charlotte are trustees of the CPT. The CPT’s major asset is shares in Investment Southland Ltd, which owns a cool store in Southland. John Powell said in an affidavit that, because of problems with the cool store, the CPT is not in a position to pay school fees and other expenses for Charlotte and her family. Charlotte, supported by her parents, says that, in these circumstances, the trustees of the DPT ought to be assisting her with household expenses, payment of school fees for her children and other expenses.

[9]    In 2013, John Powell, supported by Charlotte, sought through Court proceedings to have himself and Daniel as the then trustees of the DPT removed and

for the Court to appoint a substitute trustee or trustees. Daniel was represented in those proceedings by counsel from Duncan Cotterill.

[10]   In a judgment of 14 March 2014, Dunningham J refused to remove Daniel as a trustee but required an “independent professional trustee”, approved by the Court, to be appointed as a co-trustee.1

[11]   John Powell appealed. The Court of Appeal considered there had been an error in that Dunningham J had not considered whether a single corporate trustee should be appointed. The proceedings were remitted back to the High Court for reconsideration. In a judgment of 2 September 2014, Dunningham J confirmed her original decision “to order the removal of John Powell as a trustee, to be replaced by an independent professional trustee (whether an individual or corporate trustee)”.2

[12]   John Powell appealed the second judgment. By judgment dated 24 April 2015, the Court of Appeal dismissed that appeal.3

[13]   On 19 June 2015, the High Court, by consent, made an order appointing Ms Ballinger a trustee of the DPT. At the same time, counsel for Daniel asked the Court, in the exercise of its supervisory jurisdiction, to deal with a proposed protocol as to how communication should take place between Charlotte and the trustees of the DPT and as to how certain information should be provided to Charlotte. By consent, a protocol as to such matters was approved by orders of the Court made on 24 August 2015.

[14]   In an amended statement of claim in the current proceedings, Charlotte asserts the appointment of Mr Dorrance was invalid because he was not an independent professional trustee and thus did not meet the criteria for appointment that the High Court said was necessary with the earlier appointment. She also claims Daniel and Mr Dorrance have breached various obligations they had to her as trustees. Charlotte seeks various orders, including orders concerning Kensal and return to the DPT of a distribution of $243,281 made from the DPT to Daniel in February 2017.

1      Powell v Powell [2014] NZHC 476 (2014) 3 NZTR 23-011.

2      Powell v Powell [2014] NZHC 2096 at [36].

3      Powell v Powell CA546/2014 [2015] NZCA 133, [2015] NZAR 1886.

[15]   The defendants have filed a counterclaim in which they seek directions from the Court as to whether they are required to make a distribution to Charlotte or her family in certain circumstances, whether they were entitled to take into consideration various matters in deciding whether or not to make a distribution to Charlotte or her family and as to what information they have to provide to Charlotte with particular regard to the protocol the parties had agreed to and the High Court had approved for the exchange of trust information between the trustees and Charlotte.

The application for discovery

[16]The application seeks discovery of the following documents:

All documents concerning:

·   The decision to seek Janine Ballinger’s removal as a trustee of the Daniel Powell Family Trust and the reasons for that decision.

·   All communications with Ms Ballinger or agents on her behalf that were made by or on behalf of the first and second defendants to seek Ms Ballinger’s removal as trustee.

·   All documents recording the response(s) that Ms Ballinger made to the request that she should resign or be removed.

·   All documents relating to the decision that the second defendant should be appointed a trustee in Ms Ballinger’s place and documents recording communications between them.

·   All documents passing between the first and second defendants concerning the second defendant’s appointment as a trustee of the Trust in Ms Ballinger’s place.

·   All documents relating to the first defendant’s reasons for seeking Ms Ballinger’s removal as trustee.

·   The ‘client file’ that [Daniel] obtained from Cavell Leitch and which is referred to in paragraph 104 of the affidavit that [Daniel] swore on 25 July 2018.

[17]   In submissions, Mr Grant confirmed Charlotte was not seeking discovery of all documents relevant to decisions made by the trustees since Mr Dorrance was appointed.

[18]The grounds on which the orders sought were as follows:

(a)   The documents that are referred to (with the exception of the client file) are “relevant to [Daniel’s] suitability and fitness to be a Trustee of the Trust”; and “relevant to [Mr Dorrance’s] suitability and fitness to be a Trustee of the Trust.”

(b)   The documents on the client file are “relevant to the reasons why and how the Court-appointed Trustee was persuaded to relinquish her role as Trustee and be replaced by a person who did not have the Court’s approval and who did not comply with the criteria that the Court required for a Trustee of the Trust.”

(c)   The documents on the client file “are relevant to the defendants’ suitability and fitness to remain Trustees of the Trust as being people who were actively involved in circumventing an order of the Court without seeking the Court’s approval to their actions.”

[19]   In submissions, Mr Grant said that, whatever the precise pleadings, the High Court exercising its jurisdiction would want to know whether Daniel had been able to cooperate with Ms Ballinger as an independent trustee in the way Dunningham J had anticipated. He submitted, for that reason, evidence as to the way Daniel had communicated with her as a co-trustee would be relevant. He submitted this had been recognised by Daniel in evidence he had already provided by affidavit as to the reasons why he had asked her to retire as a trustee and appointed Mr Dorrance in her place. In doing that, he referred to certain communications with Ms Ballinger. He also referred to ways both Daniel and Charlotte in affidavits had given evidence as to certain communications between Charlotte and Ms Ballinger or Ms Ballinger’s then firm Cavell Leitch. Mr Grant argued that, if such communications were relevant to matters at issue between the parties, then there should be discovery of all documents on Ms Ballinger’s file relating to any such communications.

[20]The defendants oppose the application on the grounds:

(a)        the category of documents sought is so broad as to include documents to which a discretionary beneficiary is not entitled and is in the nature of a ‘fishing expedition’;

(b)        the documents are not necessary for the Court to determine the plaintiff’s claim;

(c)        the plaintiff’s pleadings do not allege the defendants are unsuitable or unfit to act as trustees;

(d)        the plaintiff had not demonstrated how the documents are relevant to the defendants’ suitability and fitness;

(e)        the defendants have acknowledged that a then partner at Duncan Cotterill and former counsel for Daniel asked Ms Ballinger to resign as a trustee, that Ms Ballinger and Daniel appointed Mr Dorrance as a replacement trustee, and that Ms Ballinger and Daniel did not seek the Court’s prior approval for this further appointment so that, whether or not Ms Ballinger’s retirement and the appointment of Mr Dorrance as trustee was in breach of trust, can be determined on the basis of admissions and denials without the need for the further specific discovery that is sought; and

(f)         the scope of discovery sought was not proportionate compared to the probative value of the documents, the application was unnecessary and oppressive and discovery was not appropriate in the exercise of the Court’s discretion.

[21]   In submissions, Mr Caradus referred to the way in which an application for discovery, pursuant to r 8.19 High Court Rules 2016, was to be approached, as set out in the judgment of Asher J in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd,4 and the way in which the Court had said a discovery application could be categorised as a fishing expedition in AMP Society v Architectural Windows Ltd.5 He argued the plaintiff should not, through discovery, be entitled to see documents that, as a beneficiary, she would not be entitled to, in accordance with the judgment of the Supreme Court in Erceg v Erceg.6 He also submitted there was inadequate evidence from the plaintiff that the documents sought actually exist. He submitted that Charlotte’s substantive claims were essentially without merit and said they were an attempt to relitigate issues that had already been determined through earlier Court proceedings.

4      Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14].

5      AMP Society v Architectural Windows Ltd [1986] 2 NZLR 190 at 196.

6      Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320.

Approach as to discovery

[22]   Mr Grant did not take issue with the way Mr Caradus said the Court must approach a discovery application as set out in Assa Abloy New Zealand Ltd. The Court has to assess four factors, namely:7

(a)        Are the documents relevant and, if so, how important are they?

(b)        Are there 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?

[23]   In assessing the relevance of the documents sought, the Court must first consider the pleaded claim. McGechan on Procedure sets out the applicable principle:8

Before any discovery application can be determined it is necessary for the issues arising on the pleadings to be identified, and for the categories of documents or particular documents to be assessed as to their relevance to those issues ...

[24]   The Courts do not permit discovery applications for ‘fishing expeditions’. In AMP Society v Architectural Windows, the Court defined this as arising when the applicant:9

… seeks to obtain information or documents by interrogatories or discovery in order to discover a cause of action different from that pleaded or in order to discover circumstances which may or may not support a baseless or speculative cause of action.

7      Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, above n 4, at [14].

8      McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at HR8.7.01, citing Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2013] NZHC 1034 at [15].

9      AMP Society v Architectural Windows Ltd, above n 5.

Discussion

[25]   There may be force in the defendants’ assertion that, through these proceedings, Charlotte and her parents, particularly her father John Powell, are seeking to relitigate factual and legal issues that were determined in the earlier proceedings. It is apparent from the judgments of the High Court and the Court of Appeal in the earlier proceedings that matters the witnesses refer to were likely to have been before the Court during those proceedings.

[26]   In her first judgment, Dunningham J considered the various criticisms that John Powell had made of Daniel as a trustee of the DPT and with regard to Kensal, of which he was a director. She referred to the strained relationship between Daniel and John Powell, which had led to a serious confrontation between them on 26 August 2012, and held:10

The ill will and animosity between the parties which led to this event, and the lack of reconciliation after it, make it clear that it is impossible for John and Daniel to work effectively as trustees together.

[27]   After considering other evidence, she concluded that, while she had reached that conclusion, it did:11

… not amount to evidence that it would be unwise to put Daniel in a position of working with any other professional trustee.

There is, in my view, minimal risk of future deadlocks if an independent trustee was appointed. Indeed, I expect that Daniel will go out of his way to work constructively and professionally with an independent trustee in order to demonstrate that the friction of the past was generated by inter-family dynamics, and not any broader personal shortcomings.

[28]   Dunningham J considered evidence as to the relationship between Daniel and Charlotte. As to that, she said:

[100]     Daniel frankly acknowledged in evidence that he and Charlotte had never been particularly close, in part, because of their very different personalities. However, he seemed well able to articulate his obligations, as a trustee, if Charlotte or her family was to make a request as a beneficiary of the Trust or was in need of support. He acknowledged that Charlotte “would most certainly … be given consideration” if she made a request, but that relevant

10     Powell v Powell, above n 1, at [77].

11     At [83]-[84].

considerations would include her level of need and the ability of the Charlotte Powell Family Trust to provide for her.

[101]     Daniel had clearly made attempts to reach out to Charlotte and her family, including by involvement in triathlons which she and her children were training for, but the tensions created by this litigation have, I suspect, made real reconciliation impossible. That said, my overall impression is that Daniel, with a moderating influence of an independent Trustee, would be perfectly able to consider the needs of Charlotte and her family fairly, if they required, or requested, financial assistance or support.

[29]   Although the present proceedings can, in certain respects, be criticised as an attempt to relitigate issues already dealt with by the Court, a number of the allegations relate to the alleged conduct of Daniel since the earlier judgment of the High Court. To the fore of those are the allegations as to the removal of Ms Ballinger and the appointment of Mr Dorrance in her place.

[30]   Importantly, however, as far as the present application is concerned, there is no pleading that Daniel failed to work constructively and professionally with an independent trustee while Ms Ballinger was a trustee. The criticisms in the pleadings against both Daniel and Mr Dorrance are that they, through Duncan Cotterill, sought Ms Ballinger’s resignation as a trustee and the appointment of Mr Dorrance as a trustee in her place. It is alleged that Daniel and Mr Dorrance had various obligations as trustees, apart from obligations with regard to the appointment of an independent professional trustee, and that they have been in breach of those obligations. The allegations as to those breaches regard matters that are alleged to have occurred after Ms Ballinger resigned and Mr Dorrance was appointed in her place.

[31]In para 18(e)(i), there is an allegation in the pleadings:

Contrary to Daniel Powell’s representations to the Court that if he was permitted to remain a trustee of the Trust, he would work cooperatively with a Court appointed independent professional trustee he arranged for the person who was appointed by the Court to that role to be removed.

[32]   The allegation as to a failure to cooperate is thus in the pleadings expressly directed to an alleged breach, not through the way Daniel interacted with Ms Ballinger but to his arranging for her to no longer be a trustee.

[33]   In the pleadings, it is also alleged that Mr Dorrance was in breach of an alleged obligation “not to subvert the directions of a Court” through accepting appointment as a trustee. That is the basis on which it is alleged he was in breach of trust in accepting appointment. There is no pleading that he accepted appointment on the basis that he would exercise his duties as a trustee in a way that would put him in breach of trust. It is alleged that his appointment was in breach of trust because he was not an “independent” trustee because he and Duncan Cotterill were being paid by Daniel to assist him to retain his position as trustee. It is alleged he was not a “professional trustee” and he had not been approved by the High Court to be appointed an independent professional trustee.

[34]   Mr Grant accepted there was no pleading that Daniel had failed to work cooperatively with Ms Ballinger as a co-trustee in addition to or separate from his arranging for her to be replaced, but said such an allegation was implicit in the pleadings. He also said that, if this was to be a reason for refusing discovery, he would seek to amend the pleadings so the pleading would be “contrary to Daniel Powell’s representations to the Court that if he was permitted to remain a trustee of the trust, he would work cooperatively with a Court-appointed independent professional trustee” (he did not do so and) “he arranged for the person who was appointed by the Court to that role to be removed”.

[35]   I do not accept there is an implicit allegation as to a failure to cooperate. The current request for discovery has to be considered against the pleadings as they stand.

[36]   I also acknowledge the comprehensive way in Erceg v Erceg the Supreme Court discussed the obligations trustees have to make disclosure of trust documents and the limited information to which a discretionary beneficiary is entitled.12

[37]The Court, in the judgment of O’Regan J, said:

[51] We see the starting point as being the obligation of a trustee to administer the trust in accordance with the trust deed and the duty to account to beneficiaries. A beneficiary who seeks such an account may seek access to documentation necessary to assess whether the trustee has acted in accordance

12     Erceg v Erceg, above n 6.

with the trust deed. That can be expected to be the basis on which the beneficiary will seek disclosure of trust documentation.

[38]   I accept however Mr Grant’s submissions that the obligations on a trustee to provide disclosure to a beneficiary are not necessarily going to be the same as the obligation to provide discovery of documents relevant to matters at issue in proceedings involving the trustees.

[39]In Lewin on Trusts, the authors state:13

On the other hand, documents which are normally, or may in the discretion of the court, be withheld under the trust supervisory jurisdiction, may come within the scope of standard disclosure, or a wider (or narrower) order made by the court. Confidentiality may be a powerful reason for refusing or limiting disclosure under the trust supervisory jurisdiction. In general, however, though the court has a discretion, confidentiality, even of third parties, is not a reason for excluding or limiting disclosure or inspection under Part 31 of the Civil Procedure Rules. Further, the rule under the trust supervisory jurisdiction, that the court will not order disclosure in favour of a beneficiary of the trustees’ reasons for exercising a power or discretion, and normally will not order disclosure of documents concerning the trustees’ reasons, does not exclude the obligation to give disclosure of documents under Part 31 of the Civil Procedure Rules in litigation when the validity or propriety of the trustees’ actions is impeached or otherwise some other relief is sought beyond the provision of disclosure itself. Similarly, in such litigation the trustees can be required under Part 18 of the Civil Procedure Rules to provide further information about the reasons, and can be cross-examined at trial about them.

[40]In Equity and Trusts in Australia and New Zealand it is said:14

Yet if a decision taken by trustees is directly attacked in legal proceedings, the trustees may be compelled legally, through discovery or subpoena, to disclose the substance of the reasons for their decision. Moreover, if a plaintiff puts forward a prima facie case that the trustee’s discretion has miscarried, the absence of reasons and the absence of any evidence before the court as to what happened will tend to make that prima facie case “a virtual certainty”. So trustees may be compelled practically to disclose reasons for the decision in issue in order to avoid adverse inferences from being drawn. If the trustees divulge reasons for their decisions, the court may then assess the correctness of the reasoning.

[41]   I nevertheless consider that the trustees’ obligations as to disclosure and a beneficiary’s right to information will be relevant in determining whether discovery

13     Lynton Tucker, Nicholas Le Poidevin and James Brightwell Lewin on Trusts (19th ed, Sweet & Maxwell, London, 2014) at 23-099. Citations omitted.

14     G E Dal Pont and D R C Chalmers Equity and Trusts in Australia and New Zealand (2nd ed, LBC Information Services, Sydney, 2000) at 622. Citations omitted.

of certain documents sought would be oppressive or disproportionate and in determining, in the exercise of my discretion, whether discovery is appropriate.

[42]   I have had regard to the above in considering the specific requests and discovery sought with the current application.

The Cavell Leitch “client file”

[43]   Discovery is sought of the “client file” that Ms Ballinger maintained regarding her role as a trustee. There is no doubt that the file exists because Daniel has said in an affidavit of 25 July 2018 that he received a partial client file from Cavell Leitch on 30 May 2017 and an addendum on 7 July 2017. He believes the file is incomplete as Charlotte has produced several emails in her affidavit of 4 May 2018 between her and Ms Ballinger that are not included in either the file or the addendum.

[44]   There are no pleadings as to alleged breaches of trust on the part of Ms Ballinger or as against Daniel with regard to their conduct as trustees in respect of which documents on the Cavell Leitch file might be relevant. Discovery is not being sought on the basis disclosure of documents on the Cavell Leitch file might be necessary to assess whether either Ms Ballinger or Daniel “has acted in accordance with the trust deed”.

[45]   Despite those matters, I consider it likely there will be documents on the Cavell Leitch file relevant to matters that will be at issue when the current proceedings are heard.

[46]   Charlotte is asking the Court to accept that, given the way in which the High Court decided it would be appropriate for Daniel to continue as a trustee in conjunction with an independent professional trustee, the appointment of Mr Dorrance as an independent professional trustee was either invalid or a breach of trust. It is clear from Dunningham J’s judgment that the High Court considered it would be appropriate for Daniel to continue as a trustee on the basis he would “work cooperatively with a Court- appointed independent professional trustee”. If the Court accepts Charlotte’s challenge to the appointment of Mr Dorrance, the Court would have to decide whether or not Daniel should now continue as a trustee or be replaced, as Charlotte seeks with

her pleadings. The Court would need to consider whether Daniel had in fact been able to cooperate with an independent professional trustee.

[47]   Ms Ballinger, as a solicitor trustee, is likely to have received communications from or on behalf of Daniel as a trustee. She is also likely to have made notes as to any verbal communications or representations she received from him as a trustee. There are thus likely to be documents as to communications which she had with Daniel as a trustee. Given the particular background to these proceedings, such documents are likely to be relevant as to the issue of whether Daniel has been able to cooperate with an independent professional trustee in the way the High Court expected of him when Dunningham J decided it was appropriate for him to continue as a trustee.

[48]   In his affidavit of 25 July 2018, Daniel sets out his reasons for forming a view that Ms Ballinger “was not the best fit” for the DPT. In doing so, he gives evidence as to how he perceived Ms Ballinger had acted as a trustee and as to certain ways he interacted with her:

(a)        he asserted the replacement of Ms Ballinger “was neither rushed nor hostile”. He says Ms Ballinger and he:

… agreed that she was not suited to remain as a Trustee of the Trust. She agreed that [Mr Dorrance] would be a good replacement. There were no conspiracies, no agendas, and the whole process was quite vanilla.

(b)        he refers to a communication from Cavell Leitch to a solicitor acting for Charlotte of 20 October 2017 as indicating that Ms Ballinger and solicitors in her firm were of the view that s 43 of the Trustee Act enabled the continuing trustees for the time being to appoint a replacement trustee without the need to go back to Court;

(c)        he had reviewed Ms Ballinger’s files, such as they are, and referred to contacts between Charlotte and Ms Ballinger between 30 June 2015 and 1 July 2016, and said none of these emails had been forwarded to him;

(d)        he considered Ms Ballinger was not an appropriate fit as a trustee because, in his view, she seemed to think there was a way to reach “family

harmony” and, by appeasing Charlotte, reconciliation on a family level was possible. He considered this was unreasonably optimistic;

(e)        he had a concern that Charlotte was in breach of the agreed protocol as to how the trustees were to communicate with beneficiaries;

(f)         Charlotte was corresponding with Ms Ballinger, indicating that she expected Ms Ballinger to “even out the benefits derived by each family from their respective trusts”. Daniel says this was not what had been intended when the two trusts were set up and Daniel was not told of these communications;

(g)        Charlotte was trying to influence the manner in which Kensal was operated and had tried to instruct Ms Ballinger on appropriate terms of Kensal’s new lease and invited her to dissolve Kensal;

(h)        Ms Ballinger seemed open to including Charlotte in decision making rather than treating Charlotte as a discretionary beneficiary of the DPT (which is what she was);

(i)          Ms Ballinger was charging for her communications with Charlotte, which resulted in unnecessary costs to the DPT. While he was aware of some limited communication between Charlotte and Ms Ballinger, he was not aware of the extent of Charlotte’s communications nor what she was seeking from Ms Ballinger;

(j)          he had a particular concern that Ms Ballinger had arranged to meet Charlotte along with an accountant for Kensal, and the accountant for the DPT to discuss draft accounts for the DPT when Charlotte had no right to meet with the accountant or to the draft accounts; and

(k)        Daniel also says that while, in his view, Ms Ballinger gave a lot of time and attention towards Charlotte, she did not always get around to doing things he thought important to the daily business of the trust, such as signing off accounts and addressing correspondence. Daniel says that, after the bitter High Court proceedings in 2014/2015 and all the other

litigation, he believed it was in everyone’s best interests to keep things process-oriented.

[49]   With her affidavit, Charlotte has produced some correspondence she sent to Ms Ballinger. She gives evidence as to certain statements made to her by Ms Ballinger. That evidence is not necessarily inconsistent with the concerns that Daniel says he had as to the way Charlotte was communicating with a trustee, and as to the way Ms Ballinger dealt with those communications, both regarding Charlotte’s limited right to disclosure of information as a beneficiary and the protocol which was in place for the provision of certain information to her.

[50]   For all these reasons, I have decided there should be discovery by the defendants of documents on the Cavell Leitch files which were provided to Daniel as to:

·      documents recording Daniel’s communications with Ms Ballinger and her responses to them;

·      documents or correspondence recording communications as between Charlotte and Ms Ballinger;

·      the decision to seek Ms Ballinger’s removal as a trustee of the DPT and the reasons for that decision;

·      all communications with Ms Ballinger or agents on her behalf made by or on behalf of the first and second defendants in seeking her removal as trustee; and

·      all documents recording the responses of Ms Ballinger or agents on her behalf to the request that she should resign or be removed.

[51]   This will not necessarily require the defendants to disclose all the Cavell Leitch files, although it may do so. There may be documents on the files, such as draft accounts, notes of discussions or correspondence between Ms Ballinger and other parties such as accountants or other family members which came into existence

through Ms Ballinger’s role as a trustee. There need not be discovery of such documents because:

(a)        they would not be relevant to matters currently at issue in the proceedings. To require discovery of such documents would be to allow what would be essentially a fishing expedition as to matters not at issue; and

(b)        discovery of such documents could require the trustees to disclose reasons for trustee decisions that are not at issue in the proceedings or to disclose information that Charlotte, as a beneficiary, would not normally be entitled to with due regard to obligations and rights as to disclosure as set out by the Supreme Court in Erceg v Erceg.15

Other documents sought

[52]   Daniel, in his pleadings and in evidence, admitted to the way in which Duncan Cotterill communicated with Ms Ballinger and Cavell Leitch over her retirement as a trustee and the appointment of Mr Dorrance. There is also no dispute that Duncan Cotterill had been advising Daniel regarding issues concerning the DPT as between him and Charlotte, and also as between him and his parents. It is likely there are documents held by Duncan Cotterill as to advice he sought from them as the solicitors in this regard. He may have personally made notes or have some other documentary record as to advice he sought or was given in this regard.

[53]   Daniel and Mr Dorrance have admitted, in basic terms, how Duncan Cotterill asked Ms Ballinger to retire and appointed Mr Dorrance as a trustee in her place. Daniel has however given detailed evidence as to the manner in which that request was made and how it occurred. There are likely to be documents on Duncan Cotterill’s file or perhaps held by Daniel that are either consistent or inconsistent with the evidence he has given and which, on that basis, would be relevant to that at issue in the proceedings.

[54]   I accept there are likely to be in existence documents held either by Daniel or by Duncan Cotterill as to Daniel’s reasons for seeking the retirement of Ms Ballinger

15     Erceg v Erceg, above n 6.

and the appointment of Mr Dorrance in her place. Given Daniel’s assertions as to his reasons for seeking her removal, such documents might well have been relevant to matters that are at issue in the proceedings. Given the pleadings from all parties, it is likely that most, if not all, such documents would have been brought into existence for the purpose of obtaining legal advice and/or when it was contemplated there could be proceedings over the new appointment. It is also likely there are documents in existence as to the advice Duncan Cotterill gave Daniel in this regard and their conclusions as to whether and how Mr Dorrance could be appointed as a new trustee.

[55]   Documents that came into existence in such a context would be privileged and not available for inspection. It would be unduly onerous and disproportionate to require the defendants to list, by way of discovery, such documents only for them to claim privilege in respect of such documents. I am not willing to order discovery of such documents.

[56]   If there are any documents held by the defendants that are relevant to Daniel’s reasons for wanting to replace Ms Ballinger that did not come into existence in the course of seeking or being given legal advice, those documents should be discovered. The defendants should also make discovery of all documents as to:

(a)        communications with Ms Ballinger or agents on her behalf, made by or on behalf of the first and second defendants, to seek Ms Ballinger’s retirement or removal as trustee; and

(b)        all documents recording the response(s) Ms Ballinger or agents on her behalf made to the request that she should resign or be removed.

[57]   It is inherent in the defendants’ pleadings and through Daniel’s evidence that the defendants assert Mr Dorrance is able to fulfil his obligations and exercise his powers as a professional trustee and not as a legal adviser to Daniel. It is inherent in the pleadings and Daniel’s evidence that the defendants claim Mr Dorrance has been appointed on the basis he will act as a trustee in this way. There are likely to be documents held either by Daniel or on files held by Duncan Cotterill that record the basis on which Mr Dorrance was asked to accept appointment as a trustee and the basis on which he accepted that appointment. Such documents will be relevant to matters

at issue in the proceedings. They are not likely to be extensive. It would not be disproportionate or unduly onerous for the defendants to produce such documents. I require them to make discovery of such documents to the extent they exist.

[58]   I thus order discovery of documents held by Duncan Cotterill or held by Daniel recording communications with Mr Dorrance as to Mr Dorrance’s appointment as a trustee of the DPT in Ms Ballinger’s place.

Orders

[59]   Leave is reserved for the parties to seek further orders that may be necessary to give effect to this judgment. If there are any issues in this regard, they are to be addressed in memoranda. If need be, I will convene a telephone conference to discuss any issues.

Costs

[60]   The plaintiff has, to a significant extent, been successful with her application. She is entitled to costs on a 2B basis on this application. If there is any issue as to what those costs should be, a memorandum is to be filed for the plaintiff by 23 November 2018. A memorandum for the defendants in reply is to be filed within 14 days of receipt of the plaintiff’s memorandum. The memoranda are to be no longer than four pages.

Solicitors:

A Grant, Barrister, Auckland. Duncan Cotterill, Christchurch.