Luxmore v Phillips HC Hamilton CIV 2009-419-1062
[2010] NZHC 694
•11 May 2010
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2009-419-1062
IN THE ESTATE of DOROTHY MAY PHILLIPS
IN THE MATTER OF Section 5(1) of the Administration Act
1969
BETWEEN MARION JEAN LUXMORE AND ROBIN KEITH PHILLIPS Plaintiffs
ANDJOHN LANCE PHILLIPS Defendant
Hearing: 6 May 2010
Appearances: D J Rooke for Plaintiffs
J H Hunter for Respondent
Judgment: 11 May 2010
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on 11 May 2010 at 3 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: David Rooke Law Office, PO Box 64342, Manukau, Auckland 2142
J H Hunter, William Martin Chambers, 152 Anzac Avenue, Auckland 1010.
LUXMORE AND PHILLIPS V PHILLIPS HC HAM CIV-2009-419-1062 11 May 2010
[1] The plaintiffs seek the recall of probate which was granted to their brother, the defendant, in the estate of their mother Dorothy May Phillips on 15 May 2009 in respect of her last will. Mrs Phillips died on 16 April 2009. This will was dated
4 August 2001, some 11 weeks after probate had been granted in her husband’s estate (he having died on 27 February 2001). Again, probate was granted to the defendant and he is thus the executor and trustee of Mr Phillips’ estate.
[2] The way in which Mrs Phillips’ 2001 will differed from her previous (1996) will was that it included a bequest to the defendant of her 600 shares in the privately held company Mackenzie & Phillips Ltd, which (inter alia) owns a block of seven commercial shops in Tairua. The defendant controls and operates that company.
[3] The plaintiffs’ claim contains two causes of action which can be summarised as follows:
a) That the attestation of the will by the defendant’s de-facto partner, in circumstances where that will appointed the defendant administrator of the estate and made provision for him as a beneficiary to a greater extent than the plaintiffs, means the defendant is not entitled to such appointment and/or benefit; and
b)The will was executed by the deceased under the undue influence of the defendant and should be declared void and of no effect.
The Discovery Applications
[4] The present application is one for particular discovery brought by the plaintiffs following upon what has already been a reasonably extensive discovery process. The application is necessarily founded in the second rather than the first cause of action, which largely turns on a legal question and in respect of which the defendant has filed a strike out application. It is thus the second cause of action that requires closer scrutiny in order that an assessment of the relevance of the documents now sought can be made. In my view, it is that issue of relevance that is the central matter upon which the determination of the plaintiffs’ application must be based.
[5] Also relevant at this point is the fact that the plaintiffs also made applications for non-party discovery against Mrs Phillips’ doctor, the rest home in which she lived at the time of her death and her lawyer. The first two of these applications appear largely to have been resolved but there have been difficulties with the third, because of the ill health of Mrs Phillips’ lawyer Mr Kendall. This is important because it seems to me that, to the extent there remain undiscovered documents that may be relevant to the plaintiffs’ claim, they are likely to be on Mr Kendall’s files.
[6] I understand from the bar that Mr Kendall had previously refused to give either party access to the relevant files. If that is the case then Ms Hunter is correct to say that the files are not within the defendant’s power, possession or control. Since his illness, which presently prevents him from practising, there have been discussions with Ms Yelavich of Brookfields (Brookfields, it seems, presently having custody of the files in question) and while it seems the files have been copied, they have not yet been disclosed. It was agreed before me that Brookfields should now formally be served with an application for non-party discovery.
[7] In an attempt to facilitate matters further I record my understanding that no issues of privilege can arise, at least in relation to any documents that evidence the reasons Mrs Phillips may have had for making the dispositions she did in her will: R v Cross[1] applied in a probate context in Re Creser[2].
Undue Influence: The Law
[1] R v Cross [1981] 2 NZLR 673 (HC).
[2] Re Creser HC Wellington CIV-2003-485-893, 2 February 2004.
[8] Before proceeding to consider the detail of the second cause of action itself it is important also to note the legal principles that govern a claim for undue influence insofar as they may dictate the parameters of the factual matters that may be relevant to such a claim. Mr Rooke referred me to the following recent summary of these by
Wylie J in Puru v Puru[3]:
[3] Puru v Puru HC Auckland CIV-2007-404-3881, 5 November 2008
[93] Even if a will-maker knows what the contents of the will are, if he or she has been forced to make it because of influence exerted by somebody
else, then the will can be declared invalid. This will occur when the influence is undue, in the sense that the will maker is coerced to make a will in particular terms. Coercion has the effect of destroying the will-maker’s freedom of action.
[94] When influence becomes undue was discussed in Hall v Hall (1868) LR 1 P&D 481 at p 482, where Sir J P Wilde noted as follows:
Persuasion, appeals to the affections or ties of kindred, to a sentiment of gratitude for past services, or pity for future destitution, or the like, these are all legitimate, and may be fairly pressed on a testator. On the other hand, pressure of whatever character whether acting on the fears or on the hopes, if so exerted as to overpower the volition without convincing the judgment, is a species of restraint under which no valid will can be made. Importunity or threats, such as the testator has not the courage to resist, moral command asserted and yielded to for the sake of peace and quiet, or of escaping from distress of mind or social discomfort, these, if carried to a degree in which the free play of the testator’s judgment, discretion or wishes, is overbourne, will constitute undue influence, though no force is either used or threatened. In a word, a testator may be led but not driven; and his will must be the offspring of his own volition, and not the record of someone else’s.
[95] The legal tests for undue influence were reduced to five propositions by Fisher J in Re Estate of Dudley; Irvine v Simeti HC Auckland, P 1042/92,
14 May 1993 where His Honour noted as follows:
(a) The key question is whether, because of extraneous pressure from others, the will-maker has signed a will contrary to his or her own wishes.
(b) Persuasion which has left the final choice to the will-maker is not undue influence. Where there is evidence of strong influence or pressure, the Court will approach the question of the will-maker’s own wishes with suspicion. However, if satisfied that the will- maker’s wishes have not been overborne, and that in the end he or she wanted the will in that form, the Court must uphold the will. In those circumstances the ultimate source of the will is not the external pressures but the exercise of the will-maker’s own free judgment.
(c) The onus of proof lies upon the proponent of undue influence. However direct evidence of undue influence is not to be expected. These cases usually turn upon the strength of the circumstantial evidence. The question is whether from all the surrounding circumstances, with particular emphasis upon the result of the will and the circumstances in which it was actually executed, undue influence is to be inferred.
(d) For this purpose all the circumstances bearing directly or indirectly upon the free will of the will-maker at the time of execution are relevant. These include illness, pain and suffering, physical weakness and mental deterioration falling short of
testamentary incapacity. They also include dependency upon others in legal, business, social, medical and/or domestic matters. One should view with special care any powerful need, obligation, or vulnerability on the part of the deceased which others might be in a position to exploit.
(e) However, it is not enough to show that others had the means and opportunity to unduly influence the deceased and that there has been a recent testamentary disposition in their favour. The Court must be satisfied both that the power was exercised and that the will would not have resulted but for that exercise.
[96] Generally, the issue of undue influence, like that of testamentary capacity is one of fact, which falls to be determined as at the date the will was made.
[9] In terms of the application before me, the following aspects of this summary appear particularly pertinent:
a) The existence (or not) of undue influence will likely be required to be determined by reference to circumstantial evidence, but with particular emphasis upon evidence as to the result of the Will and the circumstances in which it was actually executed;
b)Evidence of a testator’s dependency in legal and business matters is relevant;
c) The date the Will is made is likely to be the focus of the undue influence inquiry.
[10] It is against this background that the plaintiffs’ second cause of action and application for particular discovery fall to be considered.
Allegations in the Statement of Claim
[11] The amended statement of claim was filed by the plaintiffs on
29 January 2010. It contained extensive further particulars as a result of an application previously made by the defendants. The claim now occupies 10 single spaced pages.
[12] A number of the matters alleged appear to me to be peripheral to the undue influence issue but rather relate more to much wider concerns relating to the way in which the defendant has administered the estate of his father (and to a more limited extent, that of his mother) and his running of Mackenzie & Phillips Ltd. In the result I find myself in considerable sympathy with Ms Hunter’s submission that
The Plaintiffs are conducting an exercise revisiting every decision taken by the Defendant as director of McKenzie Phillips Limited, attorney for both his parents and indeed some decisions of his parents that pre date even the death of the parties’ father.
[13] Be that as it may, the essence of the material allegations appears to be that (undue) influence was able to be exerted as a result of the defendant’s control of Mr Phillips’ estate (and of Mrs Phillip’s income from the estate) and the fact that he had sole power of attorney for his mother. The claim says that Mrs Phillips was reliant on the defendant in making financial decisions and on his de-facto partner for assistance with her financial affairs and in making property and financial decisions. To the extent there exists a link between the wider issues I have noted in the preceding paragraph and the undue influence claim that link is tenuous at best, and not evident on the face of the pleadings.
The Subject Matter of the Application
[14] The application for particular discovery has to some extent been narrowed since the application was filed as a result of ongoing discussions between counsel for the plaintiffs and counsel for the defendant. Nonetheless it remains in part reflective of the broad ambit of the statement of claim which immediately gives rise to questions of relevance.
[15] The categories of documents now sought were set out by Mr Rooke at paragraph 7 of his synopsis of submissions. For someone coming to them fresh the categories were themselves difficult to understand. However they were clarified somewhat during the hearing and accordingly I attempt to summarise them as follows:
a) The timesheets that underlay invoices issued by the defendant and/or his trading business Phillips Consultants, for services rendered to Mackenzie & Phillips Ltd and to the estate of Mrs Phillips;
b)All bank statements for the various bank accounts that held funds from his father’s estate or were administered for Mrs Phillips by the defendant;
c) Any public company shares held by the defendant in his capacity as executor and trustee of the estate of his father from the date of probate onwards;
d)All the documents held by the defendant in his capacity as sole executor and trustee of his mother’s estate in relation to the same types of documents (bank statements and public company shares);
e) All documents held by the defendant in his capacity as director and shareholder of McKenzie & Phillips Limited from the date of death of his father (27 February 2001) until now including, in particular, records of all invoices from and payment to the defendant personally or his business or to his de-facto partner or her business, and all notes and correspondence and other documents relating to ventures taken by the company between 2001 until the present; and
f) All documents held by the defendant in his capacity as attorney for his mother from 1996 until her death in 2009.
[16] Affidavits have been filed by the plaintiffs in support of the application. The later affidavit of Mr Robin Phillips is particularly relied on.
[17] The defendant’s position is that:
a) The categories of documents sought are too vague;
b)In the context in particular of estate litigation the application is oppressive;
c) To the extent these documents exist and/or can be located they have been discovered either by him to the plaintiffs or by the plaintiffs to him;
d) The documents sought are not in any event relevant to the claim.
Discussion
[18] Rule 8.24 stipulates that a Judge may order particular discovery if it appears
... from evidence or from the nature or circumstances of the case or from documents filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered.
[19] The requirement in the former rule that the particular discovery sought be necessary at the time the order is made has been removed and it has been held that this constitutes a “significant relaxation” of the previous threshold: ANZ National Bank Ltd v Tower Insurance Ltd.[4] That said, however, it seems difficult to see on what basis the Court’s discretion would be exercised in favour of discovery under r 8.24 unless it could be satisfied that such an order was “necessary” in the particular
circumstances of the case.
[4] ANZ National Bank Ltd v Tower Insurance Ltd HC Auckland CIV-2008-404-7271, 1 September 2009 at [22].
[20] Although it has recently been held that an applicant for particular discovery does not need to prove that the documents sought actually exist (Simunovich Fisheries Ltd v Television New Zealand Ltd (No 6)[5]), it has also been held that there should be at least a prima facie indication that the documents concerned are or have been in the other party’s possession or control (Beecham Group Ltd v Bristol Myers Co[6]). As well, the onus is on the applicant to establish grounds for believing that the
documents sought should have been discovered (i.e. that they relate to a matter at issue in the proceedings).
[5] Suminovich Fisheries Ltd v Television New Zealand (No 6) HC Auckland CIV-2004-404-3903, 3 August 2007
[6] Beecham Group Ltd v Bristol Myers Co [1979] VR 273, 279.
[21] As I have said, Mr Robin Phillips’ lengthy affidavit sets out the grounds he has for believing that the documents sought should have been discovered. One of the difficulties with it is that many of the grounds advanced are premised on:
a) An assumption that all documents that have already been discovered are relevant, when in my view that is not the case. What this means is that while grounds may be established for believing that certain of the documents sought exist or should exist, it is not established that they should have been discovered;
b)Mr Phillips’ subjective views that other documents “must” exist (“I am sure he has this somewhere”) notwithstanding affidavits sworn by the defendant which state that they do not; and
c) Assertions of relevance without explaining the basis for those assertions.
[22] It will be evident from what I have said in (a) and (c) above that I struggle with the relevance of the majority of the documents sought to the plaintiffs’ claim. Attempts to elucidate their relevance during the hearing were not particularly successful. As I have said, a distinction needs to be drawn between the undue influence claim and concerns that the plaintiffs might have relating in particular to the way in which the defendant has administered the estate of his father (and to a more limited extent, that of his mother) and his running of Mackenzie & Phillips Ltd. Although Mr Rooke submitted to me that such matters are “relevant to understanding the surrounding circumstances” I consider that that is too vague an assertion of relevance to found an order for particular discovery.
[23] I consider that:
a) To the extent the defendant seeks to deny or limit the extent of control he exercised over Mrs Phillips’ business affairs, documents showing the existence and extent of that control are relevant (I would include in this category documents executed under the power of attorney held by the defendant but note that these are likely to be on Mr Kendal’s files);
b)Documents which evidence any testamentary instructions given by Mrs Phillips in respect of her last will and the reasons for those instructions are relevant (these will also likely be on Mr Kendal’s files);
c) Documents which evidence a motive that the defendant might have for influencing his mother to change her will are also relevant. On that basis I accept that some documents relating to the defendant’s administration of his father’s estate (whether personally or through his company) may be discoverable under this heading, but only those coming into existence between the date of Mr Phillips’ death and Mrs Phillips’ execution of her new will in August 2001;
d)To the extent they exist, documents that might be seen as evidencing any influence or pressure that was brought to bear by the defendant on Mrs Phillips before signing her 2001 will are relevant. In particular I accept that bank account records might prove or disprove the allegation that Mrs Phillips was being “starved” of funds from her husband’s estate prior to her death, and are relevant; and
e) Documents that post-date the execution of Mrs Phillips’ will in August 2001 are not (in the absence of a specific and cogent reason to the contrary) relevant to the claim. By way of example only I consider that documents relating to the sale of Mr Phillips’ stamp collection are not relevant.
[24] For the avoidance of doubt, documents that have not already been discovered and which relate to or have been generated by Mackenzie & Phillips are not relevant unless they fall within one of the categories (a) to (d) above. Documents relating to the administration of Mrs Phillips’ estate are not relevant (as to which see Re Creser (supra) at [27]).
[25] On that basis I am not prepared to make the orders presently sought by the plaintiffs. I am simply not satisfied that, to the extent the documents sought do not fall within the categories of relevance I have identified above, that they can fairly be said to relate to a matter at issue in the proceedings.
[26] Nonetheless, and in the hope that it may finally bring some resolution to this matter, I am prepared to require the defendant to swear a further affidavit whereby, in relation to each of the categories of relevance I have set out in [23]a) to [23]d) above:
a) He states whether any documents falling within each category exist and the steps he has taken to ascertain this; and,
b) To the extent that such documents do exist –
i)He lists those documents that have not already been included in a schedule to some other affidavit of documents sworn in these proceedings; or (as the case may be) -
ii)He states why and how those documents are no longer in his power, possession or control and where it is believed those documents can be located.
[27] In requiring a further affidavit to be sworn in this way I am also mindful of the duties to the Court owed by the defendant’s solicitor on the record in relation to such an exercise. Those duties are, of course not limited to those now contained in rule 8.19. I simply record my expectation that the defendant’s solicitor will not only ensure that a careful and thorough inquiry is made but that the solicitor will also
personally assess the relevance of any further documents that are located as a result of that search.
[28] Costs are reserved.
Rebecca Ellis J
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