Gray v Gray HC Auckland M1835sd01

[2002] NZHC 526

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY M1835sd01

UNDER The Matrimonial Property Act 1963

BETWEEN M P GRAY
Plaintiff

AND I A D GRAY
Defendant

Hearing: 30 May 2002

Counsel:
R C Knight for plaintiff
R J Moody for defendant

Judgment: 4 June 2002

JUDGMENT OF MASTER FAIRE

Solicitors:
Knight & Associates, P O Box 6283, Auckland for plaintiff

Buddle Findlay, P O Box 1433, Auckland for defendant

[1] The plaintiff has filed two applications. Both relate to issues regarding discovery and inspection. One also includes an application to strike out certain parts of an affidavit as to merits filed by the defendant.

[2] This proceeding involves a claim by a wife, the plaintiff, against her husband, the defendant, in respect of relationship property. There are two specific inquiries required. The first relates to whether an agreement entered into approximately one month before the parties separated should be set aside. The second involves an inquiry as to what relationship property is not covered by the agreement and then how such property is to be divided and how all property is to be divided in the event that the property agreement is set aside.

[3] The property and the principal vehicles under which property was held are the following:

[a] The family home at 11 Minnehaha Avenue, Takapuna and chattels;

[b] Two motor vehicles;

[c] A motor launch;

[d] Shares and other interests in a company, Air National Limited;

[e] An investment property at 21a Capilano Place, Glenfield;

[f] An interest in a property at 127 Motu Capri, Pauanui;

[g] The Minnehaha Trust;

[h] The Jetstream Trust;

[i] The Aviation Trust.

[4] In addition, a company formed after the parties separated but alleged to be the recipient of relationship property, namely Air National Corporate Limited is also in issue.

[5] Without going into further detail, it is appropriate that I record that counsel agreed in the course of argument that the discovery and production issue could be resolved on a staged basis. The object of such exercise is to enable relevant documents to be produced so that a valuation of the items of property in issue can be obtained. In addition, the discovery process is designed to provide information relevant to the plaintiff’s allegation that there was not a full and proper disclosure at the time the parties signed the property agreement of all the relevant property.

[6] Accordingly, I record that to the extent that the specific documents exist the defendant will produce for inspection by the plaintiff’s advisor and the plaintiff the following documents within 14 days of this judgment, namely:

[a] The financial accounts for Air National Limited for the years 31 December 1999, 2000, 2001 and 2002;

[b] The financial accounts for Air National Corporate Limited from its incorporation down to the present time;

[c] The financial accounts for the Aviation Trust and the Jetstream Trust including the Trusts’ balance sheets for 2000, 2001 and 2002;

[d] In respect of Air National Limited and Air National Corporate Limited, the budget/financial forecasts for the financial years 1999 to 2002. In respect of Air National Corporate Limited, the requirement is to produce the documents for the period covering the date of its incorporation to its respective balance dates;

[e] The agreement for sale and purchase of shares between E C Menzies Ltd, the defendant and M G I Wilson Elliott Trustee Company Limited in their capacity as trustees of the Aviation Trust;

[f] All bank accounts in the name of the defendant or held for his benefit and recording the entries as at 25 May 2000, 26 June 2000 and 5 July 2000;

[g] Copies of the defendant’s income tax returns for the financial years ending 31 March 1999, 2000 and 2001.

[7] It is recognised that in respect of the 2002 accounts they are in the course of preparation and that further time for their production will be required. That and another matter, which I shall mention, are intended to be the subject of the leave application if counsel are not able to agree on a practical basis for the production of this information at an appropriate time.

[8] It is appropriate that I also record an agreement reached by counsel. The defendant will authorise Mr Doug Wilson of M G I Wilson Elliott Trust Company Limited and/or Wilson Elliott Limited to confer with the plaintiff’s expert, Mr Frankham, chartered accountant. He will authorise all files and materials that Mr Wilson holds in relation to the assets recorded in paragraphs 3 and 4 of this judgment to be provided together with any other information or explanation which Mr Frankham requires and which is necessary for a valuation of the relevant assets to be carried out both at the time of separation and up to and including the current time.

[9] Counsel also agreed that the defendant will direct Mr Mark Roberts, the financial controller of Air National Corporate Limited, to provide the plaintiff’s expert, Mr Frankham, with such information as Mr Frankham may require in relation to documents provided by Mr Wilson and referred to above.

[10] In the orders that I shall make there will be provision for either party to apply on 24 hours’ notice if there is some problem concerning the carrying into effect of the agreement to produce the documents to which I have referred in the previous paragraphs.

[11] The remaining part of the application seeks the striking out of portions of the defendant’s affidavit dated 20 March 2002.

[12] When this proceeding came before me for the purposes of an initial conference in accordance with the Civil Case Management in the High Court Practice Note I made a number of directions. At the time of the initial conference the plaintiff had filed an affidavit which is entitled “First Narrative affidavit of Marlene Patricia Gray in support of statement of claim”. I directed that the defendant file his affidavit in opposition to the plaintiff’s affidavit dealing with merit issues. That resulted in the defendant’s affidavit of 20 March 2002.

[13] The sole reason for attacking portions of the affidavit of the defendant dated 20 March 2002 is relevancy.

[14] The jurisdiction to consider such an application was confirmed by McGechan J in Donovan v Graham 4 PRNZ 311. In that case he expressed reservations as to the appropriate timing of a consideration of the admissibility of affidavit evidence based on questions of relevancy. I will return to that issue shortly.

[15] It is appropriate that I set out the background as currently revealed in the affidavits.

[16] The parties were married in Melbourne, Australia, on 30 October 1970. Both were then aged 23. They have had two children who are now aged 29 and 27. Neither bought assets of particular value or significance to the marriage. There are allegations and counter-allegations as to the state of the marriage over its duration. The affidavits indicate that the parties separated on either 26 June or 5 July 2000. At this stage no precise significance appears to rest on which of those two dates was the date of separation.

[17] On 25 May 2000 a matrimonial property agreement was signed. At about the same time, property which was declared as the separate property of either the plaintiff or the defendant was then transferred to mirror trusts. It is claimed that some 500 shares in Air National Limited, which were owned by the defendant at the time of the matrimonial property agreement, have not been dealt with in that agreement. That opens up the question of whether there is property which is relationship property and which is outside the ambit of the agreement which still has to be divided.

[18] The pleadings were prepared on the basis that the Matrimonial Property Act 1976 applied. The first cause of action pleads that the matrimonial property agreement was unfair and/or unreasonable in light of all the circumstances in existence at the time the plaintiff signed it and should therefore be declared void. The second cause of action pleads that the agreement has become unfair and unreasonable by virtue of the separation of the parties and because it is alleged the plaintiff honestly believed that the marriage would continue and that the purpose of the agreement was primarily the protection of property from claims by creditors.

[19] Counsel acknowledged in the course of submissions that the pleadings clearly require amendment. The pleadings, as initially drawn, relied on s 21(8)(b) and (10) of the Matrimonial Property Act 1976. Counsel were agreed that the case now must be determined pursuant to the provisions of the Property (Relationships) Amendment Act 2001. This indeed is the effect of s 21S of the Property (Relationships) Amendment Act 2001. The significant difference between the provisions before amendment and after amendment are that instead of the Court being satisfied that it would be

“unjust to give effect to the agreement”

the Court must now be satisfied that giving effect to the agreement would cause

“serious injustice”.

In other respects, the provisions subsection (10) of s 21 of the Matrimonial Property Act 1976 are, for practical purpose, identical to the provisions of s 21(j)(4) of the Property (Relationships) Amendment Act 2001.

[20] What is important is that the pleading, as it currently exists, relies on an allegation that the agreement was unfair or unreasonable in light of all the circumstances that existed at the time it was made in the first cause of action. In the second cause of action it is alleged that the agreement has become unfair or unreasonable in light of specific pleaded circumstances since it was made.

[21] The next aspect that must be mentioned that indicates some further consideration of the pleadings is required is that, as a result of completion of discovery in a partial way, shares in Air National Limited have been identified as having been owned by the husband at the time the agreement was signed and do not appear to have been covered by it. The current pleading does not specifically take this into account. There is another aspect that I add. Mr Knight made reference to the fact that evidence would be lead suggesting that the plaintiff may have been under some impediment at the time of the signing of the agreement. That was not spelled out in any detail save to say expert evidence might well be lead. I raise these matters because it is clear, in this case, that until the interlocutory procedures have been completed and the pleadings have been finally settled it will not be possible to dissect precisely what issues are required to be determined by the Court. I agree with the observations of McGechan J in Donovan v Graham (supra) that because of this situation questions of relevance at this point of time are somewhat hypothetical. His Honour also observed that to apply a piecemeal approach to question of relevance before the pleadings had been completed is not at all attractive.

Conclusion

[22] I have reached the conclusion therefore that rather than my going through and analysing each paragraph of the affidavit which has been questioned by Mr Knight, it is appropriate that I reserve this question until the pleadings are complete and it becomes possible to define precisely what issues the Court is required to determine. It is, however, appropriate to record the salient parts of Rule 510 of the High Court Rules relating to affidavit evidence. Such affidavit evidence

“(d) Shall be confined-

(i) To such matters as would be admissible if given in evidence at trial by the deponent”

Further the Court

“(a) May refuse to read an affidavit that-

(i) Unnecessarily sets forth any argumentative matter”

Some of the material appears to be of doubtful relevance and is unhelpful. However, for the reasons given, I propose to adjourn this application sine die reserving leave to have it brought back on for hearing at the completion of interlocutory steps and when all amendments to the pleadings have been filed.

Orders

[23] I now make the following orders:

[a] The defendant shall produce for inspection by the plaintiff’s adviser and the plaintiff, the documents listed below within 14 days of the date of this judgment:

[i] The financial accounts for Air National Limited for the years 31 December 1999, 2000, 2001 and 2002;

[ii] The financial accounts for Air National Corporate Limited from its incorporation down to the present time;

[iii] The financial accounts for the Aviation Trust and the Jetstream Trust including the Trusts’ balance sheets for 2000, 2001 and 2002;

[iv] In respect of Air National Limited and Air National Corporate Limited, the budget/financial forecasts for the financial years 1999 to 2002. In respect of Air National Corporate Limited, the requirement is to produce the documents for the period covering the date of its incorporation to its respective balance dates;

[v] The agreement for sale and purchase of shares between E C Menzies Ltd, the defendant and M G I Wilson Elliott Trustee Company Limited in their capacity as trustees of the Aviation Trust;

[vi] All bank accounts in the name of the defendant or held for his benefit and recording the entries as at 25 May 2000, 26 June 2000 and 5 July 2000;

[vii] Copies of the defendant’s income tax returns for the financial years ending 31 March 1999, 2000 and 2001;

[b] Leave is reserved to apply for further orders, if they are required, in respect of documents not yet in existence but which are expected to be prepared shortly;

[c] Leave is also reserved to apply, in the event that the matters set out in paragraphs 8 and 9 of this judgment are not brought to a satisfactory conclusion;

[d] The leave reserved above is granted on the basis that in the event that a problem arises the party seeking further directions may apply on 24 hours’ notice by memorandum. In that case the Registrar shall schedule an urgent conference before myself;

[e] That part of the application seeking orders striking out the affidavit of the defendant is adjourned sine die. Leave is granted to apply to have it re-listed on the conclusion of interlocutory steps and the completion of all amendments to the pleadings;

[f] The proceeding is adjourned for a telephone conference with counsel to review any outstanding interlocutory matter to 9am on 15 July 2002.

Costs

[24] Because this is an interim judgment, I reserve costs at this stage. My intention is that costs in relation to the matters covered by this judgment should be fixed on the completion of the interlocutory matters which are referred to in it. For that reason leave to apply is reserved.