Hawkins v Hawkins - [2021] NZHC 1248

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-553

[2021] NZHC 1248

UNDER the Trustee Act 1956 and Part 18 of the High Court Rules 2016

IN THE MATTER

of the Heads Trust settled by deed 3 June 2010

BETWEEN

ANGELA MAREE HAWKINS and ST MARTINS TRUSTEE

SERVICES LIMITED, as trustees of the HEADS TRUST)
Plaintiffs

AND

SAMUEL WILLIAM HAWKINS

First Defendant

AND

MORHAWK (2017) LIMITED

Second Defendant

AND

ST MARTINS LAW LIMITED

First Third Party

AND

ERROL WILLIAM HAWKINS and DENISE JUNE HAWKINS

Second Third Party

Hearing:
25 May 2021

(In-person Conference)

Appearances:

G A Cooper and S C Cowan for the Plaintiffs

J R Pullar and M P Davis for the First Third Party P J Shamy for the Second Third Party

Judgment:

31 May 2021

REASONS JUDGMENT OF ASSOCIATE JUDGE LESTER

HAWKINS v HAWKINS [2021] NZHC 1248 [31 May 2021]

Introduction

[1] This reasons for judgment involves an objection to the admissibility of an affidavit on the grounds that it breaches legal professional privilege. The objection was taken to the affidavit prior to the hearing of the first defendant’s application for summary judgment scheduled for Tuesday 8 June 2021.

[2] It is necessary to set out the background so that the nature of the evidence and the objection can be understood.

Background

[3] The plaintiffs and the first defendant are alleged to be trustees of the Heads Trust (the Trust). I say “alleged” because, as I will outline below, there is a claim that the Trust is a sham.

[4] The plaintiffs sue to recover funds they allege were improperly taken from the Trust by the first defendant. The plaintiffs say the first defendant used a little over
$170,000 to buy a business and a further $248,000 to support or maintain that business, or for personal use. The plaintiffs say the funds were used without their knowledge or consent. The causes of action are against the first defendant for breach of trust and against the second defendant, being the first defendant’s company, for purchasing the business in knowing receipt.

[5] The first defendant is the brother of the first named plaintiff. Their parents are named as the second third parties (Errol and Denise Hawkins). The first defendant pleads the Trust is a sham or, if it is valid, that Errol and Denise were trustees de son tort.

[6] The Trust was settled on 3 June 2010. Errol and Denise had become bankrupt the previous year. The first defendant says the Trust was created to protect assets from Errol and Denise’s bankruptcy but that they remained controllers of the Trust and owners of its assets of which they were the source.

[7] The first defendant says it was Errol and Denise who instructed the first third party, St Martins Law Limited (St Martins Law), to disburse the Trust funds which are the subject of this claim.

[8] The funds used by the business were disbursed by St Martins Law…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 1248
Decision Date: 31 May 2021

CaseChat Overview and Summary

The case of Hawkins v Hawkins involves a dispute over the validity of a trust and the use of funds held within it. The plaintiffs, Angela Maree Hawkins and the trustees of the Heads Trust, are suing the first defendant, Samuel William Hawkins, and the second defendant, Morhawk (2017) Limited, for the alleged improper use of trust funds. The first defendant is the brother of the first named plaintiff, and the parents of both are named as the second third parties. The plaintiffs claim that the first defendant used over $170,000 to buy a business and a further $248,000 to support or maintain that business or for personal use without their knowledge or consent. The first defendant argues that the trust is a sham or, if it is valid, that the parents were trustees de son tort. The legal issues in this case include whether the trust is a sham, whether the parents were trustees de son tort, and whether the first defendant breached the trust by using the funds for personal purposes. The court found that the affidavit of Ms Clinch, the director of St Martins Law, was admissible as it did not contain privileged communications or opinion evidence. The court also noted that the application for summary judgment by the first defendant may turn on factual matters that are in dispute. The costs of the evidentiary challenge were reserved, and the court made an observation that counsel for the applicant would have to confront the issue of factual disputes at the hearing of the application.

Orders