Hey v Hey

[2021] NZHC 263

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2020-412-000009

[2021] NZHC 263

UNDER

the Declaratory Judgments Act 1908 and the Trustees Act 1956

IN THE MATTER

of the BMA and DCL HEY FAMILY TRUST

AND

IN THE MATTER

of an application for security for costs

BETWEEN

DOROTHY CATHERINE LOUISE HEY

Plaintiff

AND

ALISTAIR WILLIAM HEY

Defendant

Hearing:

On the papers

Counsel:

C J G Lucas for Plaintiff

M J Hammer for Defendant

Judgment:

24 February 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 24 February 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

HEY v HEY [2021] NZHC 263 [24 February 2021]

Introduction

[1]    The plaintiff, Dorothy Hey (Dorothy), and the defendant, Alistair Hey (Alistair) are mother and son. They are in dispute concerning a family trust established by Dorothy and her now deceased husband, Brian Hey (Brian). Dorothy has purported to remove Alistair as a trustee. Alistair does not accept Dorothy has the power to remove him. Litigation has ensued.

[2]    Dorothy has administered interrogatories. Alistair objects to answering some interrogatories on the ground of privilege.1 Dorothy now seeks an order under r 8.38 of the High Court Rules 2016 that Alistair answer those interrogatories.

[3]    A formal application under r 8.38 was not filed. To save costs, both parties were content to have the Court proceed on written submissions. This was not a satisfactory approach. No affidavits have been filed. Counsels’ submissions are not evidence and Alistair’s claim to privilege is fact dependant.

[4]    I note also, by way of introduction, that in his counsel’s written submissions, Alistair’s objections to the interrogatories extend beyond the question of privilege. He also argues the interrogatories are not relevant or are unnecessary.2

Background

[5]The facts as they can be gleaned from the pleadings are as follows.

[6]    Brian and Dorothy were husband and wife. They had two children namely, Alistair, and Christopher.

[7]    By Deed of Trust dated 25 May 2006, the BMA & DCL Hey Family Trust (the Trust) was settled. The settlors were Brian and Dorothy. The trustees were Brian, Dorothy and Alistair.

1      Evidence Act 2006, s 54 and High Court Rules 2016, r 8.40(1)(c).

2      High Court Rules, rr 8.36(1) and 8.36(3).

[8]    The only asset of the Trust is a house at 4 Coach Court, Cromwell where Dorothy resides.

[9]    Brian died on 27 February 2007 leaving a will dated 17 January 2007. By cl 7 of his will, he provided:

[u]nder clause 15 of the Trust Deed, I hold the power to appoint trustees of the Trust. I direct my trustees to transfer this power to ALISTAIR WILLIAM HEY.

[10]   On 25 August 2016, Dorothy, purporting to act in her capacity as appointor under cl 15(e) of the Trust Deed, signed a notice removing Alistair as a trustee. Much later, in November 2019, Dorothy purported to appoint Christopher as a trustee.

[11]   By letter of 26 August 2016, Dorothy’s lawyers, Berry & Co, advised Alistair that he had been removed as a trustee and required him to sign documents to remove his name from the title of the Coach Court property.

[12]   On 23 September 2016, Anderson Lloyd, acting for Alistair, wrote to Berry & Co refusing to sign the documents. Alistair expressed concern about the manner of operation of the Trust and his position as a creditor of the Trust.

[13]   By letter dated 4 November 2016, Berry & Co made a further request that Alistair sign the documents.

[14]   On 5 December 2016, Anderson Lloyd wrote to Berry & Co stating that, pursuant to cl 14 of the Trust Deed, Brian had transferred his power of appointment to Alistair under cl 7 of his will. They also stated that it was Brian’s intention that Alistair would have co-control of the Trust and its assets following Brian’s death. Alistair did not accept that he had been validly removed as a trustee.

[15]   On 24 February 2020, Dorothy filed proceedings seeking declarations that she had validly exercised her powers under the Trust Deed.

[16]Alistair filed a statement of defence on 29 May 2020.

[17]   On 1 October 2020, Alistair filed an amended statement of defence and counterclaim. In his amended defence and counterclaim Alistair pleads:

(a)that Dorothy’s purported removal of him as a trustee is invalid;

(b)as an affirmative defence, rectification of cl 14 of the Trust Deed (which deals with the transfer of Appointers’ powers) to give effect to an intention “that [Dorothy] would have co-control of the Trust with either [Brian] or [Alistair]”;

(c)by way of counterclaim, that Dorothy had purported to exercise her powers under the Trust Deed for an improper purpose; and

(d)by way of counterclaim, that Dorothy is estopped from exercising her powers under the Trust Deed.

[18]    On 15 October 2020, Dorothy administered interrogatories to Alistair. Alistair objected to answering several interrogatories.

[19]   There are now only two of the interrogatories still in issue. They concern whether Alistair’s lawyers, Anderson Lloyd, were in possession of the Trust Deed and Brian’s will when they prepared and sent their letter of 23 September 2016.

[20]   In a letter dated 22 December 2020, Anderson Lloyd proposed a way forward. Alistair would answer whether he (but not Anderson Lloyd) had copies of the relevant documents in his possession as at 23 September 2016. Anderson Lloyd advised:

Our client instructs that, to the best of his recollection:

(a)he obtained a copy of Mr Hey’s Will prior to 23 September 2016; and

(b)he is unable to recall when he received a copy of the Trust Deed.

[21]Dorothy does not accept Alistair’s proposal.

The interrogatories, the answers and s 54 of the Evidence Act 2006

[22]The interrogatories that are in issue are:

Did Anderson Lloyd have a copy of the Trust Deed in their possession when they prepared and sent the letter of 23 September 2016?

Did Anderson Lloyd have a copy of the father’s last will dated 17 January 2007 in their possession when they prepared and sent the letter of 23 September 2016?

[23]Alistair responded to both interrogatories as follows:

I object to answering this interrogatory pursuant to High Court Rule 8.40(1)(c), on the grounds that the information sought is privileged.

[24]Privilege is asserted in reliance upon s 54(1) of the Evidence Act. It provides:

54       Privilege for communications with legal advisers

(1)A person who requests or 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 requesting or obtaining professional legal services from the legal adviser; or

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

Alistair’s position

[25]   Ms Hammer submits that any information held by Anderson Lloyd as a result of communications between Alistair and Anderson Lloyd was intended to be confidential and made in the course of obtaining and giving legal advice and is therefore privileged. This includes, it is said, the date upon which such information was provided, as such information is related to the giving and receiving of legal advice and not collateral to it. To require Alistair to answer the interrogatories would “degrade the fundamental principle of client-solicitor privilege”.

[26]   It is also submitted that the interrogatories are unnecessary and oppressive in light of the information that has been provided as to Alistair’s recollection of what documents he possessed at the relevant time.

Dorothy’s position

[27]   Mr Lucas argues to attract privilege under s 54, a document must have been created or a communication made for the purpose of receiving or administering legal advice or assistance. This is because s 54 confers privilege on communications. He argues, Alistair does not claim privilege in respect to communications but information held by Anderson Lloyd as a result of communications. Section 54 has no application, he submits, to such information.

[28]    Mr Lucas refers to New Zealand Institute of Chartered Accountants v Clarke, which concerned whether privilege could be asserted under s 57(1) of the Evidence Act for a letter written to a case officer at the Disputes Tribunal that the defendant, Mr Clarke, had marked “without prejudice” and used the initials “CA” after his name.3 Mr Clarke had been charged with an offence against s 14(1)(a) of the Institute of Chartered Accountants of New Zealand Act 1996 of creating a misleading impression that he was a Chartered Accountant and a member of the Institute. In the District Court it had been held that the letter was inadmissible in evidence as the purpose of the letter was to advance a settlement offer without prejudice and Mr Clarke enjoyed the privilege given by s 57(1) of the Evidence Act.

[29]   On appeal, Keane J held that peripheral features of a without prejudice communication do not touch on the purpose for which the privilege is granted. Therefore, whilst the strict content of the letter was “sacrosanct”, peripheral features lay beyond the privilege that s  57(1) conferred.  The date of the letter, the fact of   Mr Clarke’s signature and the way in which he designated himself, were all aspects that did not enjoy privilege,4 as “they lie beyond the strict content of the letter to which the claim of privilege truly related”.5

3      New Zealand Institute of Chartered Accountants v Clarke [2009] 3 NZLR 264 (HC).

4 At [51].

5 At [57].

[30]   Mr Lucas argues the reasoning in Clarke applies here. He contends the privilege created by s 54(1) is concerned with protecting only communications but not peripheral or extraneous matters such as the date of physical delivery of documents which are independent facts.

[31]   Mr Lucas also argues the two interrogatories go to the heart of Alistair’s rectification case. He says the purpose of the interrogatories is to establish Alistair’s state of knowledge when Anderson Lloyd’s letter of 23 September 2016 was sent. The interrogatories are, he contends, simple to answer and not oppressive. They are also necessary and cannot be dealt with satisfactorily by cross-examination at trial. The content and direction of Dorothy’s submissions will turn on Alistair’s answers and Alistair could “dodge the questions” by avoiding making prior enquiries required to know the answers.

High Court Rules

[32]   A Judge has broad powers under the High Court Rules when ruling on contested interrogatories. The Judge may order that the answers are not required,6 require the applicant to specify on what grounds they object to answer an interrogatory, and determine the sufficiency of an objection.7 Under r 8.38, a Judge may require a party to answer to interrogatories. The interrogatories must relate to matters in question in the proceeding and the Judge must be satisfied the order is necessary at the time when it is made.

[33]Rule 8.38 reads:

8.38     Order to answer

(1)A Judge may, at any stage of any proceeding, order any party to file and serve on any other party (whether the interrogating party or not) a statement prepared in accordance with rule 8.39 in answer to interrogatories specified or referred to in the order.

(2)The interrogatories must relate to matters in question in the proceeding.

(3)The order may require the statement to be verified by affidavit.

6      High Court Rules, r 8.36(1)(a).

7      Rule 8.40(3).

(4)The Judge must not make an order under subclause (1) unless satisfied that the order is necessary at the time when it is made.

Relevance and necessity

[34]   An interrogatory will be relevant if it has some bearing on questions in issue and “a tendency to establish, or form a step in establishing, the allegations”.8 Dorothy wishes to argue that because in its letter of 23 September 2016 Anderson Lloyd did not assert Alistair held a power of appointment under the Trust Deed (the cl 14 argument) or that there was an intention that Alistair would, along with Dorothy, have co-control of the Trust after Brian’s death (the rectification argument), these were “developed subsequently”. It is thought that to advance this attack, Dorothy needs to know when Anderson Lloyd came into possession of Brian’s will and the Trust Deed.

[35]   Alistair’s cl 14 argument is that Brian transferred his power of appointment under the Trust Deed to Alistair in his will of 17 January 2007. Whether this is the case is a matter of construction of the will and the Trust Deed. When Anderson Lloyd was provided with copies of these documents does not appear relevant.

[36]   However, the rectification argument is based on an assertion of the existence of an intention at the time of the execution of the Trust Deed that Dorothy would have co-control of the Trust with either Brian or Alistair.9 Dorothy will argue there was no such intention, the rectification argument was only developed after 23 September 2016 and, the letter of 23 September 2016 reflects Alistair’s belief as to his position at that date. I accept that the information sought may strengthen Dorothy’s hand and counter any inference that Anderson Lloyd did not have the means to make the rectification argument when preparing the letter of 23 September 2016. On this basis, I accept the interrogatories are relevant to an issue arising in the proceeding.

[37] It is argued the interrogatories are unnecessary because of the information Alistair has provided (at [20] above). I do not accept that submission. The

8      Bank of New Zealand v Gardner (1990) 2 PRNZ 278 (HC) at 283, citing Shore v Thomas [1949] NZLR 690, 695.

9      For a summary of principles governing rectification see Swainland Builders Ltd v Freehold Properties Ltd [2002] EWCA Civ 560 and in a trust context Re Butlin’s Settlement Trusts [1976] 2 All ER 483 (CA).

interrogatories are proper and relevant. The information Alistair proffers does not deliver the information Dorothy seeks. She is not required to accept Alistair’s reformulation of the interrogatories.

Privilege

[38]   A party claiming privilege bears the onus of proving privilege applies.10 In this case, that is Alistair.

[39]   The rationale for legal professional privilege is stated by Lord Taylor CJ in R v Derby Magistrates’ Court ex parte B as follows:11

The principle which runs through all these cases, and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests.

[40]   The essential concept under s 54 is “communication”. The section confers privilege on communications. Communication is not defined in the Act but it is not to be interpreted narrowly.12 Privilege commonly extends to verbal communications between lawyer and client or to documents created during the course of a person obtaining legal advice, such as letters, emails, fee notes13 and, working papers.14 However, documents that are not initially privileged and given to a lawyer for the purposes of obtaining legal advice will not cause those documents to attract

10 See Kupe Group Ltd v Ariadne Australia Ltd (1991) 4 PRNZ 135; Sky City Investments Christchurch Ltd v Thomas (2004) 17 PRNZ 411, citing T D Haulage v New Zealand Railways Corp (1986) 1 PRNZ 668.

11 R v Derby Magistrates’ Court ex parte B [1996] 1 AC 487 (HL) at 507 cited in B v Auckland District Law Society [2003] UKPC 38, [2004] 1 NZLR 326 at [37] and Gowing & Co Lawyers Ltd v Police [2013] NZHC 2177 at [10].

12 Newland v Henderson Steele Ltd HC New Plymouth CIV-2009-443-2990, 18 November 2011;  New Zealand Institute of Chartered Accountants v Clarke, above n 3, at [29]; Simunovich Fisheries Ltd v Television New Zealand Ltd [2008] NZCA 350 at [167].

13 Dixon v Kingsley [2015] NZHC 2044 at [43].

14 Bain v Minister of Justice [2013] NZHC 2123, (2013) 21 PRNZ 625 at [143].

privilege.15 Here, it is not suggested that Brian’s will and the Trust Deed are privileged documents.

[41]   I do not know how or when Anderson Lloyd took possession of the will and Trust Deed. There is no evidence about that. That would ordinarily be fatal to Alistair’s reliance upon s 54. However, doing the best I can, there is correspondence that shows Anderson Lloyd is in possession of the will and the Trust Deed. Most likely, and I infer, the documents came into Anderson Lloyd’s possession as a result of Alistair providing them in the course of seeking advice following receipt of Dorothy’s lawyer’s demand that he sign documents to remove him from the title of the Coach Court property.

[42]   One can readily see that what Dorothy seeks can be distinguished from the usual communications that pass between lawyer and client in the course of requesting receiving, preparing or giving legal advice. What has not been adequately explained by Alistair is how it can be said the fact a document is delivered on a particular date amounts to a communication and what information has been conveyed or exchanged as a result of it that should be protected from disclosure.

[43]   In Cooper v R it was held that a failure by Mr Cooper to advise his solicitor’s representative that he was removing a document from his file was not a communication protected by privilege.16 The Court of Appeal said:17

Further it is entirely unclear what the protected communications could be. The deception occurred by omission. It is not that Mr Cooper said something on  a privileged occasion that should be protected, The nub of the first charge is that he failed to say he was taking the form.

[44]   Mr Lucas seeks to draw a distinction between protected communications and information that is peripheral to them. Such a distinction may not always be easy to make. The approach I adopt is that merely because some fact becomes known by a

15     Gowing & Co Lawyers Ltd v Police, above n 11, at [16], referring to Pearce v Foster (1885) 15 QBD 114 at 118-119.

16     Cooper v R [2018] NZCA 159.

17 At [28].

lawyer as a result of the lawyer/client relationship does not mean it is privileged.18 However, in some instances, facts learned may be sufficiently closely connected to the giving or receiving of legal advice that privilege attaches to them.19 This may be the case where disclosure of a fact will reveal communications that would otherwise attract privilege. Such an approach is consistent with Clarke.20 It is consistent also with the view of the Court of Appeal in Simunovich Fisheries Ltd v Television New Zealand Ltd that the privilege created by s 54(1) “should be as narrow as its principle necessitates”.21

[45]   In Simunovich, the issue was whether TVNZ had to produce for inspection, as part of discovery, draft scripts sent to lawyers seeking advice and the subsequent versions of scripts reflecting the advice given. TVNZ successfully argued the drafts became privileged because they would tend to reveal the content of privileged legal communications when each successive version of the script would reflect the legal advice given on the previous version and thereby reveal the lawyer’s line of reasoning.

[46]The Court said:

[169] We readily accept that the draft scripts were sent to Simpson Grierson on a privileged occasion. TVNZ sought advice about them. But where a client’s document was not prepared for the purpose of seeking advice, it does not attract privilege merely because it was sent to the lawyer as an adjunct to a communication in which advice was sought or given. It is privileged only if in the circumstances its disclosure would reveal the content of the privileged communication.

[47]   Another case of interest is Gowing & Co Lawyers Ltd v Police, where the issue was whether a letter written by an accused to a girl he had been charged with indecently assaulting was privileged on the basis the accused had subsequently given the letter to his lawyer.22 It was held the letter was not a communication between a legal adviser and his or her clients made for the purposes of obtaining or giving legal advice or services and not privileged. However, the accused argued that the relevant

18     Dwyer v Collins (1852) 7 Exch 639 at 648; Re Cathcart, ex parte Campbell (1870) LR 5 Ch App 703.

19     Hodge M Malek (ed) Phipson on Evidence (19th ed, Thomson Reuters, London, 2018) at 722.

20     New Zealand Institute of Chartered Accountants v Clarke, above n 3.

21     Simunovich Fisheries Ltd v Television New Zealand Ltd, above n 12, at [165].

22     Gowing & Co Lawyers Ltd v Police, above n 11.

communication was not simply the letter. As the accused’s intent was to hand the letter to the lawyer for the purposes of seeking legal advice, the whole communication was to be considered as confidential and made in the course of and for the purposes of seeking advice from the lawyer. Katz J rejected this submission as the letter was separable from the total package of the meeting and any advice given at the meeting and disclosure of the letter would not tend to reveal the content of any legal advice given. In addition, the letter was not intended to be confidential. Katz J distinguished Simunovich on the basis that the accused could not provide an explanation, even in the abstract, as to how disclosure of a solitary non-privileged document could tend to reveal the content of legal advice.

[48]   I have no evidence and have received no submissions on behalf of Alistair as to how it could possibly be the case that disclosure of information sought in the interrogatories could reveal the content of any communication between him and Anderson Lloyd and, in particular, either his instructions to Anderson Lloyd or legal advice that he received. I cannot see how that could be the case. I accept that Dorothy may ask the Court to draw inferences at trial from the answers to the interrogatories, but she is entitled to do so and such inferences will relate to Alistair’s state of mind as to the existence of the now pleaded intention; not as to content of any communications between Alistair and Anderson Lloyd. I therefore do not consider that Alistair’s claim to privilege can be maintained.

[49]   In addition, under s 54(1), the communication to or from the legal adviser must be intended to be confidential for privilege to apply. Alistair has not shown that the date on which the documents were supplied to Anderson Lloyd was intended to be confidential. On this ground, also, Alistair’s claim to privilege is rejected.

Result

[50]   I order that Alistair shall, within 14 days, file and serve on Dorothy a statement prepared in accordance with r 8.39 in answer to the interrogatories (a) and (b) in the notice dated 15 October 2020.

[51]   Counsel should attempt to reach agreement on costs. If they cannot do so, they may address me on the matter when this case is next called on 17 March 2021.

O G Paulsen Associate Judge

Solicitors:

Lucas & Lucas, Dunedin. Anderson Lloyd, Queenstown