Macalister v Macalister
[2021] NZHC 1446
•17 June 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-404-1948
[2021] NZHC 1446
UNDER Part 18 of the High Court Rules and the Trustee Act 1956 IN THE MATTER
of the Robert Lachlan Macalister Trust
BETWEEN
PHILIP DUNCAN MACALISTER
Plaintiff
AND
RICHARD FITZGERALD MACALISTER, ANDREW CHARLES MACALISTER and GRAEME MACDONALD MACALISTER
as trustees of the Robert Lachlan Macalister Trust
Defendants
Hearing: 17 June 2021 Appearances:
C T Gudsell QC and M Wolff for plaintiff/respondent J Tocher and A Butler for defendants/applicants
Judgment:
17 June 2021
EX TEMPORE JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[1] On 7 December 2011 the Robert Lachlan Macalister Trust was settled. The plaintiff, Philip Macalister, is one of a number of discretionary beneficiaries. A dispute has arisen between the plaintiff and the trustees of the Trust concerning the trustees’ sale of a trust property in the Marlborough Sounds. The plaintiff opposes this sale and says that it is unlawful or rather that in effecting the sale the trustees are acting in breach of trust. He commenced this proceeding on 16 October 2020 and on the bases now pleaded in his amended statement of claim dated 16 April 2021 he seeks relief primarily in the form of an order preventing the sale. He also seeks an order replacing
MACALISTER v MACALISTER, [2021] NZHC 1446 [17 June 2021]
the trustees with a new trustee or trustees. The case is set down to be heard on 2 August 2021.
[2] This being a proceeding commenced pursuant to pt 18 of the High Court Rules 2016, the parties are proceeding on the basis that evidence in chief will be by affidavit.
[3] The plaintiff has served an affidavit sworn by Peter Christopher Eastgate on 29 April 2021.
[4] The defendants have applied for an order that Mr Eastgate’s affidavit not be read on the grounds that his evidence — all of it — is inadmissible.
[5]This is opposed by the plaintiff.
[6] Following a case management conference on 28 May 2021, Gault J directed that the question of the admissibility or otherwise of Mr Eastgate’s affidavit be determined prior to trial. His Honour did so in these terms:
[4] Local law is, of course, a matter for submission rather than evidence. However, the grounds of opposition include that the expert evidence addresses matters of best and/or usual process/practice by trustees. Mr Wolfe confirms that the plaintiff’s position is that the opinion evidence in the affidavit is admissible on that basis. Mr Butler does not accept that is a fair characterisation of the affidavit and maintains the issue can and should be addressed pre-trial. As he appreciates, the issue as to whether expert opinion evidence of best/usual practice would be substantially helpful is best determined by the trial Judge and not by another Judge pre-trial.
[5] On the basis of that distinction as to what can be determined pre-trial, I direct the registry to allocate a one hour hearing on the first available date. I also make the following timetable directions by consent in relation to the application:
(a)the defendants are to file and serve a synopsis of submissions and authorities five working days before the hearing;
(b)the plaintiff is to file and serve a synopsis of submissions and any further authorities three working days before the hearing.
[7]I heard the application today.
[8] The grounds upon which the defendants seek to exclude Mr Eastgate’s affidavit are articulated in their application as follows:
2.The grounds on which the application is made are as follows:
2.1Mr Eastgate’s affidavit is inadmissible in its entirety, as it:
2.1.1comprises statements of law and / or legal opinion;
2.1.2includes opinions on the ultimate issue in a manner that is not substantially helpful to the fact finder;
2.1.3includes opinions outside his area of expertise or that have no proper evidential basis;
2.1.4includes speculation and partisan assertion; and
2.1.5generally lacks impartiality, including by implicitly assuming (without disclaimer) the truth and accuracy of the Plaintiff’s untested evidence on issues of fact that are likely to be in dispute.
2.2It is appropriate to determine the admissibility of Mr Eastgate’s evidence prior to the hearing because, in circumstances where the evidence is clearly inadmissible, the Defendants would be unfairly prejudiced if they had to brief expert evidence in response.
2.3The affidavit was filed after the close of pleadings date, so that Defendants were not able to bring this application before that time.
[9] As Mr Tocher developed the argument before me it became apparent that the defendants’ core contention is that Mr Eastgate’s affidavit purports to give evidence as to domestic law, and that any observations that he makes as to practice are necessarily predicated on his assessment as to the law and therefore fall outside s 25 of the Evidence Act 2006 which concerns evidence that may assist the “finder of fact”.
[10] The plaintiff opposes the application on these grounds as set out in his notice of opposition:
3.The grounds on which the Plaintiff opposes the making of the orders are as follows:
a. In all circumstances, including those addressed below, the affidavit of Peter Christopher Eastgate (“Mr Eastgate”) dated 29 April 2021 (“Mr Eastgate’s affidavit”) meets the substantial helpfulness test for the admissibility of expert evidence under s 25 of the Evidence Act 2006.
b. In denying the alleged breaches of fiduciary duty, the Defendants expressly plead that:
i.“They obtained and relied upon legal advice that they had a right to sell the property to one or more of the trustees”; and
ii.“they obtained and relied upon legal advice as to the appropriate sale process in those circumstances, which they followed”.
c. Mr Eastgate is a suitably qualified independent expert witness, who has agreed to comply with the code of conduct for expert in Schedule 4 of the High Court Rules.
d. Mr Eastgate’s expert evidence is based on his professional experience and directed to matters of best and/or usual process/practice by trustees, specifically:
i.The best and/or usual process by which trustees would go about selling trust property to a fellow trustee;
ii.Whether:
A.any specific clauses of, or circumstances regarding, the RLM Trust might alter the best and/or usual practice in the circumstances;
B.the legal advice provided by Greg Kelly Law to the RLM trustees aligns with that best and/or usual practice; and
C.the process the trustees followed in these circumstances with regard to the purported sale of the property aligns with best and/or usual practice and/or the legal advice provided by Greg Kelly Law.
e. Mr Eastgate has refrained from expressing any opinion on the ‘ultimate issue’, expressly stating at para 51 of his affidavit, that “I consider that whether the trustees had in fact breached their legal obligations and the terms of the Deed, and whether the trustees could ratify such conduct, will ultimately be a matter for the Court to decide”.
f. The opinions expressed by Mr Eastgate are within his expertise and have proper evidential foundation, being based upon documentary evidence including correspondence with Mr Greg Kelly and the legal opinion provided by Mr Kelly.
g. Mr Eastgate’s affidavit does not, as alleged by the Defendants, include “speculation and partisan assertion”.
h. Mr Eastgate’s affidavit does not, as alleged by the Defendants, lack “impartiality, including by implicitly assuming (without disclaimer) the truth and accuracy of the Plaintiff’s untested evidence on issues if [sic] fact that are likely to be in dispute”:
i.Mr Eastgate’s evidence is based upon documentary evidence, which he identifies.
ii.The Defendants are entitled to call evidence putting in issue the evidence relied upon by Mr Eastgate, which Mr Eastgate, will then reply to if necessary.
iii.The Defendants are entitled to cross-examine Mr Eastgate at trial, together with the Plaintiff’s other witnesses.
[11] Mr Gudsell’s essential submission is that Mr Eastgate’s evidence is directed at best practice for trustees and that to the extent that he discusses the law this is necessary context for his conclusions as to practice. He also emphasises the distinction drawn by Gault J in his minute of 28 May 2021 quoted above, between evidence which can be excluded as clearly inadmissible prior to trial and evidence that may or may not be admissible depending on the conclusion the trial judge reaches as to its probative value, and contended that Mr Eastgate’s evidence falls into the latter category.
[12] In the end, the issue is whether there are aspects of Mr Eastgate’s affidavit which can and should be excluded prior to trial. I am obliged to say that the pre-trial assessment of the admissibility of evidence by a judge who is not to be the trial judge is not an especially easy task. Whilst acknowledging Mr Tocher’s submission that legal principle should enable the Court to determine the admissibility or otherwise of Mr Eastgate’s evidence in its totality prior to trial, in the interests of fairness it is often necessary to hear all the evidence before determining the admissibility and probative value of impugned evidence.
[13] Mr Eastgate is a Christchurch solicitor. He is a partner in the firm of Cavell Leitch. He specialises in estates and trusts work.
[14] In the introductory paragraphs of his affidavit (paragraphs 1–8) Mr Eastgate introduces himself, explains that he has been engaged by the plaintiffs’ solicitors to provide expert evidence and says that he has read the Code of Conduct for expert witnesses contained in Schedule 4 of the High Court Rules 2016 and agrees to comply with it. He confirms also that the matters on which he proposes to give evidence are within his area of expertise. Mr Eastgate then sets out his qualifications and experience. There is no need to go into these. No one suggests that Mr Eastgate is
not suitably qualified to give admissible evidence in relation to estates and trusts practice.
[15] Then, at paragraph 9, Mr Eastgate records the plaintiff’s solicitor’s instructions to him in these terms:
9.The plaintiff has instructed me to provide my independent expert opinion as to:
9.1The best and/or usual process by which trustees would go about selling trust property to a fellow trustee (“Part 1”).
9.2Whether:
9.2.1any specific clauses of, or circumstances regarding, the Robert Lachlan Macalister Trust (“RLM Trust”) might alter the best and/or usual practice in the circumstances;
9.2.2the legal advice provided by Greg Kelly Law to the RLM trustees aligns with that best and/or usual practice; and
9.2.3the process the trustees followed in these circumstances with regard to the purported sale of the property aligns with best and/or usual practice and/or the legal advice provided by Greg King Law.
[16] I can see no objection to an experienced estates and trusts solicitor providing evidence in relation to best practice for trustees when selling trust property to a fellow trustee (see Mr Eastgate’s paragraph 9.1). The way in which Mr Eastgate foreshadows the evidence he proposes to give in his paragraphs 9.2.1–9.2.3 points to possible difficulties, in particular whether he has been asked to stray into giving evidence as to domestic law. However, the real issue is whether the evidence he offers is admissible and I therefore turn to that.
[17] In Part I of his affidavit (paragraphs 12–32) Mr Eastgate says that he is describing best practice for trustees for selling trust property to a trustee.
[18] In paragraphs 12–25 of this section, Mr Eastgate simply describes the law. He references the Trustee Act 2019 and makes a series of observations as to its affect and application, particularly as it applies to dealings with trust assets by trustees. He then elaborates on his understanding of the law, referring to decided cases in the process.
Whilst it is not objectionable for an expert witness who is a lawyer to refer to the legal framework for his or her evidence, care must be taken that this is done in an uncontroversial way to avoid the trap which it appears to me that Mr Eastgate has fallen into in this case which is to offer, by way of evidence, sustained submissions as to the law. Mr Gudsell says that this evidence is merely setting out the orthodox legal position so as to contextualise his subsequent evidence. In my view, Mr Eastgate goes well beyond that. To that extent, it appears to me that this evidence is fundamentally objectionable and inadmissible.
[19] Between paragraphs 26 and 32 of his affidavit Mr Eastgate focusses more directly on practice. Whilst these paragraphs also include some references to the law, on balance I take the view that the thrust of Mr Eastgate’s evidence is an attempt to describe what he says is best practice. I am not prepared to exclude this evidence pre-trial.
[20] Part II of Mr Eastgate’s affidavit (paragraphs 33–51) is headed “Best and/or usual practice observed in these circumstances?”
[21] At least in paragraphs 33–36, Mr Eastgate appears to revert to the legal position. In these paragraphs, he identifies clauses in the RLM Trust deed which may be inconsistent with best practice, and offers views about their interpretation. Whilst this evidence is not as obviously inadmissible as the earlier evidence referred to between paragraphs 12–25, nevertheless, it too appears to me to go too far. Having offered his evidence as to best practice it would have been preferable for Mr Eastgate to leave the trial judge to determine whether there are any clauses in the trust deed which might affect the position, assisted as necessary by counsel’s submission.
[22] Between paragraphs 37–48 of his affidavit Mr Eastgate effectively carries out a peer review of Greg Kelly Law’s advice to the trustees. Again, the correctness or otherwise of Greg Kelly Law’s advice to the trustees is in my view a question for the trial judge and not a matter for expert evidence.
[23] Between paragraphs 49 and 51 Mr Eastgate asks whether the trustees in this case adhered to best practice (or the advice provided to them by Greg Kelly Law as
their solicitors). This evidence is not as to the law. However, what Mr Eastgate is doing is identifying the relevant facts and assessing these against the standards he has earlier suggested apply. This evidence is certainly evaluative, and goes well down the path of reaching conclusions as to matters that the trial Judge will have to determine. However, there are aspects of this evidence that appear to me to fall within the category of evidence to which s 25 of the Evidence Act 2006 applies. In accordance with the principles discussed in Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd1 that Gault J clearly had in mind when making the order that he did, it is appropriate to leave it to the trial judge to determine what value if any to place on it. I decline to strike it out pre-trial.
[24] The balance of Mr Eastgate’s evidence (paragraphs 52 and 53) involves summarising his conclusions, and I need not address that.
[25] My conclusions are therefore that paragraphs 12–25 and 33–48 of Mr Eastgate’s evidence are inadmissible and should be removed, but the balance of his affidavit is to remain. I do not perceive that as a result of this ruling the plaintiff will need to re-cast Mr Eastgate’s affidavit. However, if the plaintiff’s solicitor and counsel conclude that that is necessary they may apply informally by memorandum.
[26]Costs are reserved.
Associate Judge Johnston
Solicitors:
Morrison Kent, Wellington for plaintiff/respondent
Wadham Partners, Palmerston North for defendants/applicants
1 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] 2 NZLR 730 at [94].
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