Mackintosh v Thomas
[2015] NZHC 2317
•23 September 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2012-409-000754 [2015] NZHC 2317
BETWEEN J B MACKINTOSH AND M C HALL
First Plaintiffs and Counterclaim
DefendantsAND
M W REED Second Plaintiff
AND
S T REED Third Plaintiff
AND
P D THOMAS
First Defendant and CounterclaimantAND
E M MARR Second Defendant
AND
A M SYME Third Defendant
Hearing: 14 September 2015 Appearances:
N A Till QC and S Mann for Applicant (Second Plaintiff) K W Clay for Applicant (Third Plaintiff)
J W A Johnson and H T Shaw for Respondents (First
Defendant)(Attendances of counsel for other parties and beneficiaries excused)
Judgment:
23 September 2015
JUDGMENT OF ASSOCIATE JUDGE OSBORNE AS TO PARTICULAR DISCOVERY
J B MACKINTOSH AND M C HALL v M W REED [2015] NZHC 2317 [23 September 2015]
[1] Until now the parties to this litigation have through their required co- operation satisfactorily advanced through the discovery and inspection process without the need for Court orders. 1
[2] This judgment deals with a small number of discovery issues which the parties have been unable to resolve.
The proceedings
[3] The proceedings concern the extended family of the late Norman Thomas. The existence of the various (consolidated) proceedings reflects the degree of estrangement and competing interests which arise between the family members. I shall refer to the various people, after first identifying them, by their first names.
[4] In his lifetime, Norman became a farmer in a substantial way on the outskirts of Christchurch.
[5] Amongst his interests, Norman owned in his own right two rural blocks involved in this litigation, which I will refer to as “Chesmars” and “Yaldhurst”.
[6] Norman had three children, namely Philip Thomas, Eleanor Marr and Alison
Syme.
[7] Norman farmed in partnership with Philip from the 1970s (a partnership known as “NT Farming”) and co-owned with Philip a number of blocks initially as joint tenants but now as tenants-in-common in equal shares.2 Two of these blocks, I will refer to as “Cridges” and “Halkett”.
[8] Two of Norman’s grandchildren, namely Mark Reed and Simon Reed (the sons of Alison Syme) were involved in farming work on properties owned by Norman either fully or with a part-interest. Mark was involved on Yaldhurst and
Halkett. Simon was involved on Chesmars and Cridges.
1 High Court Rules, r 8.2(1).
2 The severance of the joint tenancies is discussed in a judgment of this Court: see Thomas v Thomas HC Christchurch CIV-2011-409-2514, 14 December 2011; the judgment being subject to further orders in Thomas v Thomas HC Christchurch CIV-2011-409-2514, 19 December 2011.
[9] Some of the matters which follow are set out in the judgment of Dunningham J in Mackintosh v Thomas, in which the Court made interim orders.3 By those orders Mark has remained in possession of Halkett and Simon has remained in possession of Cridges.
[10] In 2010, Norman and Philip fell out. Norman gave a notice of dissolution of the NT Farming partnership resulting in its dissolution as at 3 March 2011. Norman issued proceedings against Philip for orders giving effect to the dissolution. Norman died on 24 May 2012 and was replaced as a plaintiff by his executors and trustees.
[11] By his will, Norman left his estate equally to Eleanor and Alison. Philip and
Norman’s 11 grandchildren were excluded from testamentary provision.
[12] Once the provisions of Norman’s final will (dated 22 December 2011) were
known, Mark and Simon commenced proceedings against the estate.
[13] In the form those proceedings now stand (through an amended statement of claim dated 25 May 2015), Mark and Simon’s claims may be summarised as follows:
(a) Testamentary promises claims4
· Simon claims upon the basis of work and services provided by him and promises made by Norman the vesting in him of Chesmars, Norman’s half-interest in Cridges, a lease of Cridges for 10 years and an option to purchase the other half, and the vesting of certain machinery.
· Mark claims upon the basis of work and services provided by him and promises made by Norman the vesting in him of 50 acres of Yaldhurst, the lease of the remainder of Yaldhurst for 10 years, the lease of Halkett for 10 years and the vesting of certain machinery
and of a $31,280 EQC payment.
3 Mackintosh v Thomas [2015] NZHC 823.
4 Pursuant to the Law Reform (Testamentary Promises) Act 1949, s 3.
(b) Promissory estoppel
· Simon and Mark make alternative claims of promissory estoppel based on the same allegations.
(c) Unjust enrichment and restitution
· Mark and Simon seek an account for the benefits which accrued (in the case of Mark) to the owners of Yaldhurst and Halkett and (in the case of Simon) to the owners of Chesmars and Cridges. Both Mark and Simon also seek orders as to some machinery.
(d) Property Law Act 2007 (Simon only)
· Simon seeks orders under s 339 Property Law Act 2007 to effect division or purchase of Cridges, together with ancillary orders.
[14] Philip pursues counterclaims against the estate and against Mark and Simon. His causes of action include testamentary promises and estoppel, but he also seeks further provision under the Family Protection Act 1955. Against Mark and Simon, he claims rent for use of Halkett and Cridges and of partnership plant and machinery.
[15] There are also family protection claims by Mark and Simon’s cousins (being
Philip’s and Eleanor’s children respectively).
The issues
[16] In preparation for trial, counsel were directed to formulate the issues to be determined at trial. A joint memorandum was filed by counsel in May 2015. The issues relevant to the claims of Mark and Simon include:
(a) What actions were taken by the Reeds in reliance on the promises
Norman made?
(b) What was the value of the services or work provided by the Reeds to
Norman?
(c) What detriment will be suffered by the Reeds if the promises are not enforced? What losses have been suffered/opportunities foregone by the Reeds?
(d)What weight, if any, should competing claims to Norman’s estate have on the exercise of the Court’s discretion to grant the orders sought?
(e) What preference, if any, should the Reeds’ claims be given over those of other claimants?
(f) What weight should be given, if any, to any alleged benefits the Reeds obtained while farming with Norman?
(g) Are there any other matters that should affect the exercise of the
Court’s discretion, including any considerations of conscionability?
(h)What reasonable sum should the Court order to be paid, if any, in response to the promises made, having regard to all the circumstances?
[17] Counsel recognise the clash of claims which now exist in this proceeding. The nature of the claims, such as for the division of legal interests, the enforcement of testamentary promises and (family protection) awards for breach of moral duty in relation to provision, means that ultimate findings and findings of (theoretical) entitlement may have to be adjusted in the light of competing equities or entitlements.
The discovery application
[18] Philip Thomas sought discovery of the following documents:
(a) Financial documents for Mark Reed as a farmer, Hannor Farm Limited and Hannor Stock Feeds, including any trust that Mark has a direct or indirect interest in.
(b)Financial documents for Simon Reed as a farmer, Riverfields Sprayers Limited and Hitcham Farming Limited, including any trust that Simon has a direct or indirect interest in.
(c) A list of the current assets and liabilities of the Reeds.
(d) A list of all land leased, its size, location and a summary of its use.
(e) Business records concerning Norman’s farming with the Reeds
thought to have been contained within a filing cabinet. [19] Philip makes his application on two grounds:
(a) the requested documents are in the control of Mark and Simon or entities associated with them; and
(b)the documents sought are relevant to the assessment of the competing claims of the parties, including the benefits received by Mark and Simon and derived from Norman and his estate and to the assessment of their personal financial positions (including through any trust or corporate interest).
[20] For convenience, I will deal with the various categories of documents in a different order.
Lists of current assets and liabilities of the Reeds and of all land leased, its size, location and a summary of its use
[21] Mark and Simon oppose the application for lists upon the basis (amongst other things) that the subject-matter of the proposed lists is irrelevant and, should it be considered relevant at all, the production of lists would be out of all proportion to the relevance.
[22] The application is also opposed on the basis that the requested lists are documents which do not exist.
[23] This latter ground of opposition is sufficient to dispose of these aspects of the application. The rules dealing with discovery, whether standard or tailored involve discovery of documents which are or have been in a party’s control.5
[24] The very concept behind the application for these lists, which would involve Mark and Simon putting information into documentary form, points to the fact that the true nature of this part of the application is interrogatory. It is a request for information. It is not a request for documents which exist.
[25] These aspects of the application must be dismissed on that basis. It matters not whether the information sought might be considered relevant to the issues in the proceeding. Mr Till QC, for Philip, sought to invoke the principle of proportionality which was introduced through the 2011 procedural amendments.6
[26] The principle of proportionality relates to “the processes of discovery and inspection”, that is to say the processes prescribed by the High Court Rules. The Rules specifically provide for discovery of documents that are or have been in a party’s control. It is not for the Court to order “discovery” of a document that does not yet exist where a party or the Court considers it would be convenient or “more proportionate” if such a document did exist.
Business records from Norman’s filing cabinet
[27] This category of documents identified in Philip’s application encompasses business records concerning Norman’s farming with Simon and Mark. The documents were thought to have been contained within a filing cabinet possessed by Norman. Philip deposed that one of two things had happened. Either the filing cabinet had been taken by the Reeds (or one of them) or the Reeds otherwise knew
of the cabinet’s whereabouts.
5 High Court Rules, rr 8.7 and 8.10.
6 In particular, see High Court Rules, r 8.2(1)(a).
[28] The notice of opposition asserted that the contents of the filing cabinet are not in the possession or control of Mark or Simon. Simon filed an affidavit to that effect. Simon and Mark’s mother, Alison, filed a more detailed affidavit dealing with her understanding of the fate of four filing cabinets which had been in her father’s possession and of the contents of those cabinets. Her evidence indicated that neither Mark nor Simon has possession of the cabinets or their contents.
[29] Alison’s affidavit led to a reply affidavit of Eleanor. Eleanor identified the various cabinets and concluded that Simon had taken cabinet 3 on 5 July 2012 and had said that it contained papers concerning Simon and Mark’s farming, and had nothing to do with Norman’s estate.
[30] Other differences between the parties are to be found in further affidavits filed by Alison and Simon. Simon deposes that he did not take cabinet 3 and that he never had possession of any of Norman’s filing cabinets. He did take on 5 July 2015 a manila folder of documents containing seed certifications and farm maps which do not relate to the benefits or income Mark or Simon had from farming with Norman. He deposes that copies can be made available if necessary but he wishes to keep the original documents for sentimental reasons.
[31] On the basis of the evidence filed, I am not satisfied that Simon or Mark holds documents sourced from Norman’s filing cabinets which have relevance to the issues in the proceeding.
[32] Apparently anticipating a difficulty in this part of the application as it stood (in the light of the evidence), Philip informally sought to amend the application. Through Mr Till’s submissions (and in recognition of “the confusion” about the documents), Mr Till recorded that Philip now seeks discovery of:
· Mark’s “private business papers” held by Norman at the date of
his death concerning his farming with Norman; and
· any business papers detailing the relationship between Simon and
Norman’s operation, NT Farming, that were held by Norman at
the date of his death. [33] I return to that request shortly.
[34] Eleanor has joined in Philip’s application. Through Mr Clay’s submissions, Eleanor also pursued informally an amended form of application. She seeks an order that Mark and Simon be directed to file and swear an affidavit setting out their knowledge of the contents of the cabinets and providing copies of the contents.
[35] This suggested form of relief is inappropriate for a number of reasons. The central focus of an affidavit of discovery is on the documents over which the deponent has or has had control. The issue is not as to knowledge of documents which other people control (unless the deponent previously controlled them). In relation to the cabinets, there is evidence as to a number of people being involved in the sorting of their contents, including Eleanor herself (albeit with a dispute as to the treatment of cabinet 3).
[36] I view Mr Clay’s request for an affidavit of Simon and Mark setting out “their knowledge of the contents of the cabinet”, in parallel with the request for lists, as akin to an interrogatory. It should be dismissed on that basis alone.
[37] I then return to Mr Till’s identified categories, being Mark’s private business papers which Norman held at the date of his death and any business papers detailing the relationship between Simon and NT Farming which Norman held at the date of his death.
[38] Given that this request was made informally in a synopsis of submissions filed on 9 September 2015 there is, unsurprisingly, no evidence which replies to the specific request.
[39] I am not satisfied that a proper foundation has been laid for the proposition that there exist in this category documents which ought to have been discovered and have not been. Mr Till’s submission included the acknowledgement that “it is not known what types of documents these [categories] will include”.
[40] On that basis, I am not satisfied that the orders sought through the informally amended application are justified.
Financial documents for Mark and Simon as farmers (including related companies and trusts in which they have direct or indirect interests)
The basis of the application
[41] For Philip, Mr Till submitted that Mark’s and Simon’s financial records are
relevant to issues to be determined in the proceeding for at least two reasons.
[42] First, in assessing the testamentary promise claims, the Court will need to assess the value of provision made by Norman for Simon and Mark alongside the value of work and services which they performed for Norman. It is common ground that recorded remuneration received by Mark and Simon from the NT Farming partnership will fall for consideration by the Court. But Philip and Eleanor also contend that Simon and Mark, effectively farming alongside their grandfather’s operations, will have received valuable benefits which were not accounted for as between themselves and the partnership. Examples focused upon by Mr Till in his submissions related to fuel and fertiliser (of the NT Farming partnership) which may have been applied to Mark’s and Simon’s farmed land. More broadly, Mr Till submitted that the overall financial position of Mark and Simon is relevant in that it will provide a means of assessing the extent to which Mark and Simon have been enabled to develop their respective assets upon of earlier receipt of benefits from their grandfather.
[43] Secondly, Mr Till and Mr Clay submit that the Court, in assessing competing claims under the Family Protection Act and the Law Reform (Testamentary Promises) Act, will step back in order to resolve the conflict in such manner as will best meet the justice of the particular case and produce a just result as between all the parties.7 To do such justice, Mr Till submits, requires the other parties and the Court
to have access to the financial information of Mark and Simon as sought.
7 Relying on Re Hayward [1989] 1 NZLR 759 HC at 767 per Thorpe J.
Particular discovery principles
[44] Rule 8.19 High Court Rules, dealing with particular discovery, provides:
8.19Order for particular discovery against party after proceeding commenced
If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document 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, the Judge may order that party … to file an affidavit stating [of documents and] … make those documents available for inspection… to the other party or parties.
[45] I adopt in relation to the present applications the following principles which were not contentious between counsel:
(a) Documents sought must be relevant to the matters that are in issue before the Court, with relevance assessed according to the pleadings.8
(b)A document relevant to one party’s case on the pleadings is relevant in the proceeding.9
(c) Whether a document “should have been discovered” in terms of r 8.19 should normally relate to the standard discovery test under r 8.7 or to any stricter test imposed by way of tailored discovery, imposed under r 8.8.10
(d)As reflected in the wording of r 8.19 (“the Judge may order”), the making of any order is discretionary.11
[46] Matters which will be considered by the Court in its discretion include:
8 Robert v Foxton Equities Ltd [2014] NZHC 726 at [8] per Kós J.
9 Coote v Murray [2013] NZHC 91 at [16]–[19] per Associate Judge Osborne.
10 Cares Appliances Ltd v Smiths City (Southern) [2014] NZHC 1979 at [19] per Associate Judge
Matthews.
11 Robert v Foxton Equities Ltd, above n 8, at [8](e).
(a) the long-established concern to avoid the making of an order which is oppressive; and
(b) the focus under the present discovery rules on proportionality.12
Assessing whether the documents sought “should have been discovered”
[47] In assessing whether particular documents “should have been discovered”, I adopt the approach which I set out in Southland Building Society v Barlow Justice Ltd, when I held:13
[24] I reject the inherent proposition that the words “should have been discovered” should be narrowly construed so as to mean something along the lines that there cannot be an order for particular discovery unless the respondent is in breach of a discovery order.
[25] The needs of litigation often evolve. Such is reflected in r 8.18 which imposes continuing obligations of discovery upon parties, even if the party has filed and served a compliant affidavit of documents.
[48] Formal discovery orders have not been made in this proceeding. To the credit of counsel and the parties, they have simply got on with the task of identifying and disclosing relevant material. The Judges who have had the case management of the litigation (including myself) have not imposed a discovery order. None was sought.
[49] A lot of people, however, now face a lengthy trial against the background of three streams of litigation which have evolved over a lengthy period.
[50] A theme which emerged in the course of this hearing (although it is not formally an aspect of the application) is that the applicants may harbour the suspicion that, had an order for standard discovery been made, one or more of the other parties may have had to disclose further documents under the adverse
documents regime.
12 Karam v Fairfax New Zealand Ltd [2012] NZHC 887 at [142] per Associate Judge Osborne; Southland Building Society v Barlow Justice Ltd [2013] NZHC 1125 at [16]–[17] per Associate Judge Osborne.
13 At [24]–[25].
[51] This has caused me to reflect on an approach (which I have certainly adopted) which I believe is not unusual in practice. That is that, when the parties are clearly co-operating and do not ask the Court to make a discovery order, none is made.
[52] The specific provision which requires consideration in such a situation is r
8.5 which provides:
8.5 Discovery orders to be made at case management conferences
(1) A Judge must make a discovery order for a proceeding unless he or she considers that the proceeding can be justly disposed of without any discovery.
(2) An order under subclause (1) must be made at the first case management conference that is held for the proceeding, unless there is good reason for making the order later.
[53] The Court of Appeal has recognised that the Courts should encourage informal discovery because it is likely to be cheaper than formal discovery.14
[54] However, where discovery occurs on an informal basis, it would be good practice, before the close of pleadings, either that counsel confirm at the final case management conference that all parties are satisfied that an appropriate level of informal discovery has taken place or that the parties and the Court consider to what extent a further order should be made. My present view, as I indicated to counsel in the course of this hearing, is that if any party around the close of pleadings has a concern that adverse documents may exist but have not been discovered, the Court should consider whether to make an order in the nature of a standard discovery order under r 8.7. The focus would specifically be on the category of documents which is of concern, such as the documents which adversely affect the other party’s case.
[55] Upon discussion with counsel, that is an order which I will be making in this case. The appropriateness of that course is reinforced by the fact that aspects of the application before me would effectively apply a “chain of enquiry” relevance test,
commonly referred to as the Peruvian Guano test.15
14 Wilson v White [2005] 3 NZLR 619 (CA) at [28].
15 Derived from Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882)
Relevance of Mark’s financial documents to the value of Mark’s benefits received
[56] Philip applied for an order that Mark’s (and his related entities’) financial accounts for the years 2000 to date be discovered. Philip anticipates that those would illustrate benefits Mark had received from farming with Norman.
[57] By his affidavit in opposition, Mark deposed that he has already disclosed the profit-share documentation and that his annual accounts do not break down income and expenditure so as to indicate such matters as costs per block. He points to a number of significant variables which occur each year. By implication they would make the extraction of more specific conclusions difficult or impossible. He deposes that no documentation exists which would identify benefits (such as the value of the use of machinery) which he derived from farming with Norman.
[58] For Philip, Mr Till emphasises the existence of a particular issue relating to the benefits received by Mark. Mr Till notes that Mark has deposed that he will be providing “further updating evidence” to the Court before trial regarding the income he earned from farming with Norman. Mark deposed that such may require the assistance of an accounting or agricultural expert and would involve estimates and assumptions based on the limited documents he has. Mark had added that “there are no documents which provide an exact answer to the question of what benefits I have derived from farming with Norman”. (Emphasis added)
[59] I infer that Mark’s observation that no documents provide “an exact answer” was deliberately worded. Mark’s reference to “estimates and assumptions” clearly suggests that his experts will be drawing conclusions from some records which do exist.
[60] Mr Till submits that a reasonable way of deriving some conclusions as to benefits received during the period of Mark’s farming with Norman is to compare Mark’s expenditure on identified items (fuel and fertiliser have been specifically
identified) before and after Norman’s death.
11 QBD 55 at 63, an approach superseded through the High Court Amendment Rules (No 2)
2011.
[61] The discovery of financial records which Philip seeks would enable Mr Till and any expert witness to compare such expenditure and to seek to draw conclusions as to any effective subsidisation by Norman or the NT Farming partnership.
[62] I have focused on the specific examples of expenses identified by Mr Till, namely fuel and fertiliser. I am satisfied that to the extent that such are identified as expenses in the financial statements of Mark and his associated entities, they are relevant to an issue in the proceeding. There is nothing disproportionate in requiring discovery of the relevant parts of the records. Furthermore, I consider the interests of justice. This is a case where it appears to be common ground that record keeping on Norman’s side was somewhat desultory. There is a need for Philip’s advisers to have access to records held on the other side (Mark’s records) which may be the only body of documents able to support reliable inferences. Mark and his advisers have free access to such documents.
[63] For Mark and Simon, Mr Johnson raises issues as to commercial sensitivity. Those of course are not in themselves grounds for resisting discovery. To the extent that the focus of this part of my judgment is on specific expenses such as fuel and fertiliser, that information is now of a largely historical nature. I do not find there to be such commercial sensitivity that inspection should be limited to Philip’s advisers. In the context of civil litigation where parties are engaged in the same or similar discipline (in this case, farming), the party himself may be best able to discuss the implications of disclosed information.
[64] I will be ordering discovery of that part of Mark’s financial records which relates specifically to expenses concerning fuel and fertiliser. There will not be a restriction precluding Philip from inspecting such information.
[65] As discussed with counsel, I am mindful that Mr Till has responsibly limited his identification of two particular areas of expense on the basis that the financial significance of those items is most likely to identify (if it exists) any apparent benefit derived by Mark from the use of fuel or fertiliser. An order for discovery of material relating to those two items is proportionate. An adjournment of the application will enable the parties (and if the Court is involved, the Court) to later consider whether
documentary records relating to other items of expense may be appropriate (on a proportionate basis) for further disclosure.
Relevance of Mark’s and Simon’s documents in relation to “opportunities foregone”
[66] Mr Till submits that the financial records of both Mark and Simon are relevant to evidence which each intends to give as to opportunities which they say they forewent in response to their grandfather’s suggestions and in continuing to work with him.16
[67] In Mark’s case, Mark views the Yaldhurst block (and his grandfather’s willingness to split it up for Mark’s benefit) as of critical importance to him. In his brief of evidence he says that he gave up other opportunities to buy nearby property as a base of operation. He says that values have now gone up 300 per cent and it would not be feasible to purchase a nearby property from which the farming operation could be financed. He says that “the opportunity has been lost”.
[68] In the way Mark proposes to give evidence, his income and expenditure is relevant because it is from that base that he must be saying that he could not any longer finance his farming operation should he have to purchase a place of operation in the vicinity of Yaldhurst.
[69] I will be directing, subject to undertakings as to commercial sensitivity, that there be discovery and inspection of Mark’s recent and current income and expenditure figures.
[70] On the pleadings, and having regard to the briefs of evidence provided, there is not a basis for ordering discovery and inspection in relation to Mark’s earlier income and expenditure figures. Mr Till submitted that it might have been possible for Mark to take up Yaldhurst purchase opportunities earlier if his financial statements indicate that he was making a large profit. But Mark’s contention as to the opportunity he forewent is quite simply that he did not need to acquire a
Yaldhurst property by reason of his grandfather’s assurances.
16 Briefs of evidence having been exchanged.
[71] Simon has a similar (but not identical) claim to that of Mark in relation to an opportunity foregone. It relates to Simon’s contract spraying business, Riverfields Sprayers Ltd (RSL).
[72] By his brief of evidence, Simon identifies a crucial discussion with his grandparents in September 2008. He says his grandfather proposed to get Simon on the road to farming. He says that his grandfather instructed him not to buy any more contracting machinery.
[73] Simon says that in reliance on that 2008 conversation with Norman, he did not take the opportunity to grow RSL but rather sold off the fertiliser business and one sprayer run. He forewent an opportunity to purchase at least one spraying run. He says that he now has no ability to expand RSL because of the number of contractors in the district who have followed the RSL lead in terms of machinery, technology and work standard.
[74] The way Simon puts this case is not one which calls for a consideration of his ability to finance the purchase of land (as in Mark’s case). Rather, Simon’s case is that he will not be expanding RSL because of the other competition now in the market. What Simon says does not render his current income relevant.
[75] There will be no order in relation to documents relating to Simon’s income.
The financial positions of Mark and Simon
[76] Mr Till submitted that there should also be discovery of Mark’s and Simon’s financial records in relation to the disclosure of assets and the build-up of assets. Mr Till submitted that the financial records which identify the build-up and current extent of assets are relevant to the extent of benefit which Mark and Simon have each received. Another way of putting that submission is that Philip wishes to show that the benefits received at the time from Norman (perhaps $X) are today worth substantially more (say, $Y).
[77] There will be a number of sources which have contributed to the
establishment of Mark’s and Simon’s current asset positions compared to the time
each first began working with Norman. Those sources will include any equity they already had (including in Simon’s case in a business such as RSL), successful investments that they may have made along the way, and the introduction of their own work and income (and that of their families). Any attempt to establish probable conclusions as to the particular contribution which one particular asset has made to the current asset position will not emerge from summarised information such as that which is found in the financial statements. I suspect that it is unlikely that reliable conclusions would emerge even if all the prime records of Mark and Simon were located and discovered. Any relevance of the financial statements themselves for this purpose would be marginal. Any attempt to go beyond the financial statements to prime records would involve a disproportionate exercise. The core issue in relation to benefits received by Mark and Simon is what they received at the time and its value then. The most reliable conclusions as to a current day value are of a nature which can be provided by expert evidence.
[78] In one way, however, the overall asset positions of Mark and Simon are relevant. These proceedings in part involve family protection claims. The financial circumstances of all children and grandchildren are relevant to the Court’s assessment of breach and (if breach is established) of relief. It is appropriate that the balance sheet position of Mark and Simon be disclosed, at least through the evidence which will be contained in the statements for the years of Norman’s death and for the most recent complete year. In the context of family protection proceedings, the overall asset position of a family member is not a matter which should be the subject of special confidentiality restrictions, and I will not impose such.
Costs
[79] I indicated to counsel I will in the circumstances be reserving costs.
[80] Directions will follow as to submissions if counsel are unable to resolve costs in the light of this judgment. The parties on either side have had a measure of success. My tentative view is that it would be appropriate that costs lie where they fall but that the filing fee incurred by the applicants be paid as a disbursement by Philip and Eleanor jointly.
Orders
[81] I order:
(a) Within 10 working days the second plaintiff, third plaintiff and first defendant shall each file and serve an affidavit by which either:
(i)they confirm that through the process of informal discovery they have disclosed to opposing parties all documents which fall within the category of standard discovery under r 8.7 High Court Rules; or
(ii)if they have not so disclosed all documents, they list the additional documents which the party has or has had in his or her control constituting documents covered by standard discovery;
and at the same time as serving his affidavit shall make available copies of any documents so discovered.
(b)Within 10 working days the second plaintiff shall file and serve an affidavit (which may be incorporated in the affidavit required at [81](a) above) identifying the financial statements of which he has or has had control in relation to himself personally and in relation to Hannor Farm Ltd and Hannor Stock Feeds for the financial years which have ended in 2011, 2012, 2013, 2014 and 2015.
(c) At the same time as serving the affidavit required at [81](b) above, the second plaintiff shall make available copies of:
(i)redacted pages of the discovered financial statements for the years ended in 2011, 2012, 2013, 2014 and 2015 which show expenditure on or involving fuel and/or fertiliser or their application or use (material other than relating to those matters
being redacted) which redacted pages shall be available for inspection by counsel, experts and the parties;
(ii)the unredacted statement of financial performance (or profit and loss) for the years ended in 2014 and 2015, which shall be available for inspection only by counsel and experts on the basis of confidentiality undertakings to be agreed between counsel or, failing agreement, to be settled by the Court on memoranda filed;
(iii)the unredacted pages (from the discovered financial statements) of financial position (balance sheets) for the last financial year ending prior to 24 May 2012 and for the most recent financial year for which financial statements are complete, which shall be available for inspection by counsel, experts and the parties; and
(iv)redacted pages (from the discovered financial statements) of financial performance (profit and loss) showing without supporting detail the figures of net income for the last financial years ending prior to 24 May 2012 and for the most recent financial year for which financial interests are complete, which shall be available for inspection by counsel, experts and the parties.
(d)Within 10 working days the third plaintiff shall file and serve an affidavit (which may be incorporated in the affidavit required to at [81](a) above), identifying the financial statements of which he has or has had control in relation to himself personally and in relation to Riverlands Sprayers Limited and Hitcham Farming Limited for the financial years which have ended in 2011, 2012, 2013, 2014 and
2015.
(e) At the same time as serving the affidavit required at [81](d), the third plaintiff shall make available copies of:
(i)the unredacted statements (from the discovered financial statements) of financial position (balance sheets) for the last financial year ending prior to 24 May 2012 and for the most recent financial year for which financial statements are complete, which shall be available for inspection by counsel, experts and the parties themselves; and
(ii)redacted pages (from the discovered financial statements) of financial performance (profit and loss) showing without supporting detail the figures of net income for the last financial year ending prior to 24 May 2012 and for the most recent financial year for which financial statements are completed, which shall be available for inspection by counsel, experts and the parties.
(f) In relation to the order at [81](c)(i), leave is reserved to the first and second defendants by supplementary application and supporting evidence, to seek discovery of supplementary detail at present to be redacted from financial statements in the event that documents discovered pursuant to the said order are found to be of material assistance to the first and or second defendants’ cases and there is reason to believe that disclosure of further details of the second plaintiff’s expenditure may similarly assist.
(g)If, before the delivery of this judgment, the parties have negotiated terms of settlement of the issues in this proceeding the above orders are not to speak unless the negotiated settlement is not effected.
(h)Except to the extent granted by the orders at [81](a) to (f) above, the first and second defendants’ applications are dismissed.
(i)Costs are reserved. In the event of disagreement, submissions (four pages maximum) are to be filed and costs determined on the papers. The applicants to file first and the respondents within three working days thereafter.
Associate Judge Osborne
Solicitors:
Meares Williams, Christchurch.
Counsel: G M Brodie, Barrister, Christchurch. Wynn Williams, Christchurch.
Young Hunter, Christchurch Counsel: N Till QC, Christchurch. Russell Moon & Fail, Ashburton
Counsel: K W Clay, Barrister, Christchurch. Mortlock McCormack Law, Christchurch.
Counsel: RJB Fowler QC, Wellington.
Ian Robertson, Christchurch.
Counsel: S Marsden, Barrister, Christchurch. White Fox & Jones, Christchurch.
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