Heatley v Heatley

[2012] NZHC 2728

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2592 [2012] NZHC 2728

BETWEEN  KATHERINE MARY HEATLEY Applicant

ANDCRAIG LEONARD HEATLEY Respondent

Hearing:         16 October 2012

Counsel:         DAT Hollings QC and I Hikaka for Applicant

AE Hinton QC for Respondent
DS Alderslade and JF Anderson for parties to be joined

Judgment:      18 October 2012

JUDGMENT OF RODNEY HANSEN J

This judgment was delivered by me on 18 October 2012 at 3.30 p.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:          Lee Salmon Long, P O Box 2026, Auckland for Applicant Gilbert Walker, P O Box 1595, Auckland for Respondent Chapman Tripp, P O Box 2206, Auckland 1140 for Trustees (Email:  [email protected] )

Copy to:             Ms DAT Hollings QC  [email protected]

Mr I Hikaka  [email protected]
Ms AE Hinton QC  [email protected]

Ms JF Anderson  [email protected]

KATHERINE MARY HEATLEY V CRAIG LEONARD HEATLEY HC AK CIV-2012-404-2592 [18 October

2012]

[1]      This  proceeding  was  commenced  in  the  Auckland  Family  Court  and transferred pursuant to an order made by Fogarty J under s 22(3) of the Property (Relationships) Act 1976 (the Act).[1]   He held that the Family Court Judge had erred in refusing to transfer the proceeding.

[1] KMA v CLH [2012] NZLR 688.

[2]      The proceeding in the Family Court comprised what was described as “a relatively standard application” seeking relief under the Act.[2]    There was also an application for an order imposing a remedial constructive trust over the assets of various trusts and a separate application for orders under s 182 of the Family Proceedings Act 1980.

[2] At [9].

[3] The applicant applies to add as parties to the proceedings the trustees of eight trusts against which she seeks relief or which may be affected by the claims against the respondent. It is accepted that joinder is appropriate: the trustees have an interest in property that would be affected,[3] and that their presence is necessary to enable the Court to effectually adjudicate on and settle all questions involved in the proceedings.[4]   However, there are differences between the parties as to the basis on which  joinder  should  be  ordered,  in  particular,  whether  the  order  should  be associated with a direction that the applicant file a statement of claim setting out the basis of her claim against the trusts and the relief sought.

[3] Property (Relationships) Act 1976, s 37.

[4] High Court Rules, r 4.56(1)(b)(ii).

[4]      At the first case management conference in this Court I made an order by consent that the applicant file points of claim.  This has been filed.   It sets out in considerable detail the basis of the applicant’s  claim under the Act and also in relation to the various trusts and trust property.  In addition to the constructive trust claim in claim under s 182 of the Family Proceedings Act, the points of claim allege that the trusts are the alter ego of the respondent and are shams.  The respondent has

filed a comprehensive reply to the points of claim.

[5]      The issue I was asked to resolve is whether the applicant should be required to file a statement of claim setting out her claim against the trustees or whether, as Ms Hollings QC contends, the points of claim already filed is a sufficient pleading of the applicant’s case against the trustees.  Having come to a clear view on the issue at the hearing, I made an order for joinder on the basis that the points of claim already filed would constitute the applicant’s pleading of her claim against all parties.  In the balance of this judgment I will explain my reasons for doing so.

[6]      The   High   Court   Rules   undoubtedly   now   apply   to   the   proceedings. Section 22(5) of the Act provides:

Proceedings transferred to the High Court continue in that Court as if they had been properly commenced there.

It is not clear, however, that the rules require a statement of claim to be filed in circumstances such as the present.   The effect of s 22(5) appears to be that the applications filed in the Family Court are to be regarded as compliant with the High Court Rules.   The Rules themselves do not provide otherwise.   Rule 5.25, which stipulates the way in which a proceeding is to be commenced, does not assist.  Nor do rr 5.64 – 5.69 which relate to proceedings transferred to this Court under ss 43, 44 or 45 of the District Courts Act 1947.

[7]      In Redding v Redding[5] proceedings transferred under s 22(3) of the Act also included claims against trust property and allegations that the trusts were a sham. Master Lang (as he then was) noted that the Act and the Matrimonial Property Rules

1988 contemplate that pleadings will be relatively spartan and that full disclosure of the precise basis of a party’s claim is made through detailed affidavits.[6]    He said proceedings under the Act are normally conducted on the barest pleadings and the case for both parties “fleshed out” by means of the substantive affidavits filed in support  of  each  party’s  claim.[7]      While  observing  that  a  reasonable  degree  of flexibility should be accorded to the form of the pleadings,[8] he nevertheless accepted

that the proceeding should be given a framework so that the issues could be properly

identified and responded to.[9]     He directed the filing of a statement of claim, a statement of defence and counterclaim and a statement of claim against a trustee who had been joined as a third party.

[5] Redding v Redding HC Auckland CP20-02, 7 November 2002.

[6] At [14].

[7] At [28].

[8] At [16].

[9] At [26].

[8]      I had  ordered  that  the  application  for  joinder  be  served  on  the  trustees. Mr Alderslade, assisted by Ms Anderson, appeared and made helpful submissions. He argued that the same procedure should be followed as in Redding.  He pointed out that one of the claims – that a constructive trust arises – could only have been brought in the High Court.  Had that claim, and the other claims against the trustees, been  commenced  separately,  a  statement  of  claim  would  have  been  required. Mr Alderslade  said  that  the mere convenience  of  joining the  claims  against  the trustees with the claims against Mr Heatley personally is no reason to dispense with the trustees’ entitlement to a statement of claim setting out all the necessary ingredients of such a document.  He submitted that a properly particularised pleading is particularly important for a claim that some of the trusts are shams, as this is

tantamount to an allegation of fraud.[10]

[10] KA No 4 Trustee Ltd v Financial Markets Authority [2012] NZCA 370.

[9]      Ms Hollings contended that such a document already exists in the form of the points of claim.  That document runs to 11 pages and sets out in some detail the basis of Mrs Heatley’s claim against both Mr Heatley and the trustees.  Ms Hollings said that a statement of claim in relation to the claims against the trustees would simply replicate the relevant parts of the points of claim.

[10]     Mr  Alderslade  rejoined  that  the  document  is  deficient,  referring  to  the absence of a prayer for relief identifying the orders sought against the trustees and to the lack of particulars supporting the claims.

[11]     There is no question that the trustees are entitled to a fully particularised claim.   Had the points of claim not been filed, I would have had no hesitation in directing the filing of the statement of claim.  However, I consider it would be highly undesirable for there to be two separate documents separately pleading the multiple

overlapping claims against Mr Heatley and the trustees.  The points of claim already

filed  sets  out  the  basis  of  the  claims  against  the  trustees.    It  may not  provide everything the trustees require or that they would be entitled to if the High Court Rules required the filing of a statement of claim.11    However, any deficiency in the points of claim can easily be remedied by an application for further particulars.

[12]     In the circumstances that have arisen, I see the points of claim as a surrogate for a properly particularised statement of claim.  That is the way it has been treated by the respondent, whose reply is in the nature of a statement of defence.   The nomenclature adopted does not affect the purpose and function of these documents. Subject to due allowance being made for the peculiar nature of claims under the Act, there should be little to distinguish the points of claim from a statement of claim which meets the requirements of the Rules.

[13]     For these reasons I ordered joinder on the basis that the points of claim shall

constitute the applicant’s pleading of its case against the trustees as well as the respondent.

11     Rule 5.26.