McCallum v McCullum
[2021] NZHC 2104
•12 August 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-372
[2021] NZHC 2104
UNDER Part 18 of the High Court Rules BETWEEN
WILLIAM FRASER McCALLUM JNR AND FIONA CATHERINE JANE McCALLUM
Plaintiffs
AND
CARRICK ROBERT ZACHARY McCALLUM AND CALLUM FRASER McCALLUM AS EXECUTORS AND
TRUSTEES OF THE ESTATE OF WILLIAM FRASER McCALLUM SNR
First Defendants
Cont:/
Hearing: 11 March 2021 Appearances:
D A T Chambers QC for the First-Named Plaintiff
S L Robertson QC and A J Donovan for Second-Named Plaintiff K G Davenport QC and A M Camerson for First, Second, Third and Fourth Defendants
T C Weston QC and S C I Jeffs for Fifth Defendants
Judgment:
12 August 2021
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 12 August 2021 at 4:00pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Kelly Flavell Law, Auckland BSA Law, Auckland McVeagh Fleming, Auckland
McCallum v McCallum [2021] NZHC 2104 [12 August 2021]
AND Cont:/
CARRICK ROBERT ZACHARY McCALLUM AND CALLUM FRASER McCALLUM AND McCALLUM INDEPENDENT TRUSTEES LTD AS
TRUSTEES OF THE CALLUM FAMILY TRUST
Second Defendants
AND
CARRICK ROBERT ZACHARY McCALLUM
Third Defendant
AND CALLUM FRASER McCALLUM
Fourth Defendant
AND
ANDREW ROBERT GILL, CALLUM FRASER McCALLUM AND JAN MAUREEN McCALLUM AS TRUSTEES OF THE CF & JM McCALLUM FAMILY TRUST
Fifth Defendants
Introduction
[1] This is a dispute between family members regarding their interests and entitlements to assets transferred from one trust to another shortly before the death of the settlor, who was the plaintiffs’ father. The plaintiffs as beneficiaries of both trusts now seek further discovery and disclosure of documents held by the defendants as trustees and executors for which they claim privilege.
[2] Orders requiring tailored discovery by the first to fourth defendants were made by Associate Judge Bell on 15 July 2020. He said:1
I am satisfied that a tailored discovery order is appropriate to ensure that disclosure is focused on matters truly in issue. The tailored discovery by the defendants is to cover the documents in the schedule to [plaintiff’s counsel’s] memorandum. The defendants say they will claim privilege for some of those documents, but that does not mean that they should not be disclosed. Questions of privilege can be decided later.
[3] On 5 November 2020 Associate Judge Bell made an order directing the fifth defendants to provide standard discovery and to have regard to the categories of documents set out in a memorandum filed by the plaintiffs’ counsel.2
[4] All five defendants have filed affidavits of documents pursuant to the discovery orders.
[5] The plaintiffs, William Fraser McCallum Jnr (William Jnr) and Fiona Catherine Jane McCallum (Fiona), apply for orders directing the first and second defendants to file amended affidavits of documents, particularising the documents for which they claim either legal professional privilege or litigation privilege.3 The plaintiffs say that by “bulk listing” the documents without specifying, particularising, or describing the documents for which they claim privilege they have failed to comply with their discovery obligations as required by the High Court Rules 2016, rule 8.16.
1 Minute of Associate Judge RM Bell 15 July 2020.
2 Minute of Associate Judge RM Bell 5 November 2020.
3First Amended Interlocutory Application by Plaintiffs in relation to bulk listing and disclosure of privileged documents and interim distribution of trust funds (7 December 2020).
[6] The defendants oppose the making of the orders sought by the plaintiffs. They say that the affidavits of documents they have filed do comply with the requirements of HCR 8.16 and Part 2 of Schedule 9. They say further that the orders sought by the plaintiffs requiring individual documents to be listed and the basis upon which privilege for each is claimed to be specified, would go beyond the requirements of the High Court Rules and require the disclosure of information contained in communications for which privilege is claimed and thereby defeating the purpose of describing privileged documents as a group as permitted by HCR 8.16(2).
Other orders
[7] The plaintiffs do not pursue their application for an order authorising the second defendants as trustees of the McCallum Family Trust to distribute funds to the applicants for the purpose of meeting legal fees, and an order that they will not personally be at risk for any potential adverse costs arising out of the proceedings.4
Background
[8] The plaintiffs are brother and sister, and the children of William Fraser McCallum (Bill Snr) and Heather Diane McCallum (Heather). Bill Snr died on 15 January 2017 aged 81. Heather died later that year on 28 August 2017.
[9] Upon their mother’s death the plaintiffs were the only remaining discretionary and final beneficiaries of the WF McCallum Trust which had been settled by their father on 3 December 1986 (the Original Trust).
[10] In their statement of claim5 the plaintiffs allege that shortly prior to his death their late father collaborated with his younger brother Carrick Robert McCallum (Robert) and his nephew Callum McCallum6 (Callum), and undertook an asset restructuring programme designed to transfer the legal and equitable ownership of Bill Snr’s and their mother Heather’s collective property assets to ownership by other
4First Amended Interlocutory Application by Plaintiffs (7 December 2020) paragraph 1(c), (d) and (e).
5 First amended statement of claim (22 December 2020).
6Callum McCallum is the younger of two sons of John and Shirley McCallum. John McCallum, who died in 2012, was the eldest brother of William Fraser McCallum (Bill Snr).
entities, for the benefit Robert, Callum, and Callum’s children. The plaintiffs say that a central part of the 2016 restructuring was Bill Snr’s settlement of a new trust on 18 August 2016 known as the McCallum Family Trust, (the New Trust). The discretionary beneficiaries of the New Trust were Bill Snr himself, Heather, William Jnr and Fiona. The final beneficiaries of the New Trust are any child of William Jnr or Fiona, any charitable trust or charitable purpose classified as “charitable” in accordance with the laws of New Zealand. Robert and Callum are named in the New Trust as limited interest beneficiaries, and Callum’s children are named as the final beneficiaries of the New Trust.
[11] The trustees of the New Trust from the date of settlement were Bill Snr, Robert and Callum. Robert and Callum are sued as first defendants in their capacity as executors of Bill Snr’s estate, and sued as the second defendants in their capacity as trustees of New Trust. Robert and Callum are also sued in their personal capacities as third and fourth defendants respectively. Callum, his wife Jan McCallum, and Andrew Gill are named as fifth defendants and sued as the trustees of the CF and JM McCallum Family Trust.
[12] When Bill Snr initially proposed the restructuring, the trustees of the Original Trust were himself, William Jnr and Robert. Callum was subsequently appointed a trustee of the Original Trust on 4 November 2016. On the same day Bill Snr instructed counsel to apply to the High Court for an order removing William Jnr as a trustee of the Original Trust.
[13] The plaintiffs allege that the overriding objective of Bill Snr, Robert, Callum and their legal advisor ASCO Legal,7 was to maximise the advantage of the restructuring for the benefit of Robert and Callum personally and for the beneficiaries of Callum’s family trust8 and Callum’s children.
[14] The plaintiffs allege that Bill Snr, Robert and Callum with the assistance of their solicitor and in breach of trust, entered into a series of transactions pursuant to which Bill Snr’s personal assets and the assets of the Original Trust were transferred
7 Alastair van Schalkwyk of ASCO Legal.
8 The CF & JM McCallum Family Trust.
to and settled on either the New Trust or the defendants personally, with the result that Bill Snr’s estate and the value of the assets held by the Original Trust were reduced from around $24 million to approximately $1.7 million.
[15] The plaintiffs allege that the restructuring was undertaken without proper or any consideration being given by Bill Snr and Robert as trustees of the Original Trust regarding the plaintiffs’ interests as the final beneficiaries of the Original Trust, and that the restructuring and transfer of assets to the New Trust was significantly disadvantageous to them. The substantive assets of the Original Trust having been transferred to the New Trust, they went from being the only final beneficiaries of the Original Trust, and had become merely discretionary beneficiaries of the New Trust.
[16] The plaintiffs allege that but for the 2016 restructure, they would have inherited assets worth approximately $22 million as the final beneficiaries of the Original Trust, and would also have inherited a residential property at Chilton Place Howick, as the beneficiaries of their late mother’s estate.
[17] In their statement of claim the plaintiffs plead seven causes of action.9 They allege: unconscionable conduct by Robert and Callum in their dealings with William Snr to bring about the 2016 restructuring in order to advantage their own interests to the detriment of the plaintiffs and the consequent creation of a constructive trust for the plaintiffs; undue influence, alleging that Robert and Callum applied undue influence on William Snr in relation to the 2016 restructure at a time when he was terminally ill with cancer and suffering the side effects of treatment; fraud on a power, alleging that the actions of the trustees of the Original trust undertaking the 2016 restructuring and Bill Snr’s settling of the New Trust, including the transferring of assets held by the Original Trust to the New Trust was invalid.
[18] The defendants deny all of the plaintiffs’ claims and say that the transfer of the assets of the Original Trust to the New Trust was approved by the High Court which observed that the proposed deed of exchange was in the best interests of the beneficiaries of the original trust.10
9 First Amended Statement of Claim in relation to McCallum Family Property (22 December 2020).
10 McCallum v McCallum [2016] NZHC 2929.
[19] In his reasons Judgment delivered on 6 June 2017 regarding the application by Bill Snr seeking an order for removal of William Jnr as a trustee of the Original Trust, Woodhouse J noted that the application was not opposed and explained the context as follows:11
[9] It is unnecessary to record the circumstances in detail. The background to the difficulties which William senior and Robert say they encountered with William junior was a proposal by William senior. He had been diagnosed with a terminal illness and wanted to make changes to the trust’s assets to make better financial provision for his wife and two children as beneficiaries of the trust. The essence of the proposal was that one asset of the trust, a one-third interest in a property known as Lismore, be exchanged for other assets of equivalent value. Lismore produced no income and required significant expenditure for maintenance (part of which had been met personally by William senior over the years). The assets proposed to be acquired by the trust in exchange were income producing and more readily realisable than the one- third interest in Lismore.
…
[11] The unchallenged evidence establishes that, when William senior endeavoured to discuss the proposal with William junior, William junior simply refused to discuss it. The evidence of William senior in this regard is confirmed in material respects by the evidence of Robert. Some of Robert’s evidence relating to his discussions with William junior is noted below when considering the grounds for removing William junior as a trustee.
…
[17] The unchallenged evidence of William senior and Robert satisfied me that the Court’s inherent jurisdiction should be exercised to remove William junior because the welfare of beneficiaries and of the trust property required his removal.
[18] William junior was and is unfit to continue to act as a trustee. The proposal from William senior was a prudent one and plainly in the interests of the beneficiaries. The proposal was accepted as being in the best interests of the trust by Robert as one of William senior’s two co-trustees at the time. I am satisfied that Robert assessed the proposal objectively and independently. And Robert, like William senior, has no interest as a beneficiary.
[20] The plaintiffs say however, that although the defendants obtained orders of this Court removing William Jnr as a trustee of the Original Trust and vesting the title to the land owned by the trust in their names as remaining trustees on an unopposed basis, they failed to inform the Court that:
11 McCallum v McCallum [2017] NZHC 1218, at [9], [11] and [17] - [18].
(a)The real purpose for removing William Jnr as a trustee of the original trust was to enable them to implement the restructuring scheme and transfer the assets of that trust to the New Trust for the personal benefit of Robert and Callum and Callum’s family trust and family, to the detriment of the plaintiffs’ interests as the final beneficiaries of the Original Trust.
(b)The trustees of the Original Trust had previously been advised that a sale of that trust’s one-third share of the Lismore farm property to Callum’s family trust at an undervalue would be a breach of trust.
(c)Bill Snr also intended to gift his own personal share of the Lismore farm property to Callum personally, to the detriment of the plaintiffs.
(d)The New Trust would include a provision stipulating that any beneficiary who challenged the New Trust, including the resettlement, would be removed as a beneficiary of the New Trust.
[21] As an alternative cause of action, the plaintiffs as executors of Heather’s estate also make a claim pursuant to the Property (Relationships) Act 1976, and the Family Protection Act 1955 should the New Trust be held to be valid, and also seek an order removing Robert and Callum as the trustees of the New Trust.
The defendants’ lists of documents
[22]The defendants have filed the following affidavits of documents:
(a)Affidavit of Documents by Robert McCallum on behalf of the first and second defendants sworn on 1 November 2020.
(b)Supplementary affidavit of documents by Robert McCallum on behalf of the first defendants sworn on 18 November 2020.
(c)Supplementary affidavit of documents by Robert McCallum on behalf of the second defendants sworn on 18 November 2020.
(d)Affidavit of documents of the third defendant Robert McCallum, sworn 18 November 2020.
(e)Affidavit of documents of the fourth defendant Callum McCallum, sworn 18 November 2020.
(f)Affidavit of documents on behalf of the fifth defendants by Callum McCallum, sworn 18 November 2020.
[23] In Robert McCallum’s affidavit of documents on behalf of the first and second defendants sworn on 1 November 2020 he states:
In Part 2 of the Schedule, I list the documents that are in our control and for which we claim privilege and state in relation to each document the nature of the privilege that applies.
[24] In the section of Robert McCallum’s affidavit headed, “Part 2: Documents that are in my control and for which I claim privilege”, he lists the documents in a table in which an unspecified number of documents are identified by a single Document ID reference, for example: “MCC.007.0001”. The table contains fields in which the names of the authors and recipients of the legal documents are stated, and the category of privilege claimed is specified.12
[25] In his supplementary affidavit of documents on behalf of the first defendants, Robert McCallum states:
In Part 2 of the Schedule, I list the documents (further to those already listed) that are in the first defendants’ control and for which they claim privilege and state in relation to each group of documents the nature of the privilege that applies.
[26] The same wording as used by Robert in his supplementary affidavit of documents on behalf of the first defendants is used in each of the affidavits of documents sworn and filed on behalf of the other defendants other than the fifth defendants.
12 See Schedule attached to this judgment.
[27] The first, second, third and fourth defendants have all adopted the same manner of describing the documents for which privilege is claimed in their respective affidavits of documents. In Part 2 of the affidavits the deponent has referred to the documents by reference to headings. An example taken from the affidavit of Robert McCallum filed on behalf of the first and second defendant is attached to this judgment as Schedule 1. The documents are described simply as “legal documents” and they are grouped by reference to date ranges, author and recipient, with a brief statement of their applicable privilege category. Legal professional privilege and litigation privilege pursuant to ss 54 and 56 of the Evidence Act are claimed in respect of different groups of documents. For example:
(a)Document ID: MCC.007.0001.
(b) Date: 01/03/2016 – 19/11/2019.
(c)Document type: Legal documents.
(d)Author: TGT Legal, Bill McCallum.
(e)Recipient: Bill McCallum, TGT Legal, Rob McCallum, Callum, McCallum.
(f)Parent document ID:
(g)Privilege category: Legal professional privilege – s 54 Evidence Act.
Rules 8.15 and 8.16 High Court Rules 2016
[28]Rule 8.15 of the High Court Rules 2016 relevantly provides:
8.15Affidavit of documents
(1)Each party must file and serve an affidavit of documents that complies with this rule, subject to any modifications or directions contained in a discovery order.
(2)In an affidavit of documents, the party must –
(a)refer to the discovery order under which the affidavit is made; and
…
(e)list or otherwise identify the documents required to be discovered under order in a schedule that complies with rule
8.16and Part 2 of the Schedule; and
…
[29]Rule 8.16 of the High Court Rules 2016 relevantly provides:
8.16 Schedule appended to affidavit of documents
(1)The schedule referred to in rule 8.15(2)(e) must, in accordance with that discovery order, list or otherwise identify documents that –
(a)are in the control of the party giving discovery and for which the party does not claim privilege or confidentiality:
(b)are in the control of the party giving discovery for which privilege is claimed, stating the nature of the privilege claimed:
…
(2)Subject to Part 2 of Schedule 9, documents of the same nature falling within subclause (1)(b), (d), or (e) may be described as a group or groups.
(3)The description of documents for which privilege is claimed under subclause (1)(b) must be sufficient to inform the other parties of the basis on which each document is included in a group under subclause (2).
…
[30] The object of a list of documents was explained by Tompkins J in Guardian Royal Exchange Assurance of NZ v Stuart.13 Referring to the former rule 298(4) he said:
An affidavit of documents serves two objects. For documents discovered in the first part of the first schedule, it enables the disclosure of their nature and significance so that the parties seeking discovery can decide whether to seek production. It also enables the Court to order their production and to ensure that such order is enforced.
For documents discovered in the second part it enables the parties seeking discovery to become aware of the documents for which privilege is claimed
13 Guardian Royal Exchange Assurance of NZ v Stuart [1985] 1 NZLR 596 (CA) at 607.
and to judge whether that claim should be challenged. This object will only be achieved if the documents are described with sufficient particularity.
For this reason, the documents discovered in the second part of the schedule should be described with at least the same degree of particularity as those in the first part. Some categories need not be listed document by document. This will be so where there can be no challenge to the privilege such as:
‘Correspondence between defendant and its solicitors.’
In all other cases, the documents should be described in a way that informs the parties seeking discovery and the Court of the nature of the document, the date it came into existence, the person who created it and the person to whom it was addressed, if any.
The global manner of describing privileged documents adopted in the present case is not appropriate. It did not enable the object I have described to be achieved. It required the Judge to obtain from the appellant a schedule containing a proper description of the documents. It was only then that he was able to rule on whether the privilege had been properly claimed.
[31] In Todd Pohokura Ltd v Shell Exploration NZ Ltd, 14 the defendant sought an order that the plaintiff be required to file a further affidavit of documents, and for each document for which privilege was asserted identify the relevant legal adviser and the other party or parties to the communication, and the nature of the communication, including whether to, from, or copied to the legal adviser concerned. The plaintiff’s list contained over 750 internal communications and the description of each was simply from “Todd” to “Todd” on “X” date. The defendant argued that it could not adequately test the plaintiff’s claim of privilege because of what was an inadequate description. Justice Dobson citing Guardian Royal Exchange Assurance said:15
[38] The details reasonably required in respect of documents for which privilege is claimed will conventionally be greater than those in respect of open documents that are to be inspected by the opposing parties. For documents where privilege is claimed, sufficient detail is required for the opposing party to consider the validity of the grounds for the claim of privilege.
…
[50] The reality is that a list will be in breach of the Rules if it does not list individual documents. The recognised exception to this requirement is for groups of documents with a common character such as invoices, or periodic recordings such as of temperature or weights over a period to which the litigation refers. There is no justification for extending such a group listing to individual items reflecting who conveyed what to whom, and when.
14 Todd Pohokura Ltd v Shell Exploration NZ Ltd (2008) 18 PRNZ 1026 (HC) at [50].
15 At [38].
…
[58] Listing privileged documents as a group is another recognised exception to the requirement for individual listing. This will be unexceptional where the category of documents grouped is inarguably all entitled to privilege, such as “counsel’s file”. However, where there is an issue about the entitlement to claim privilege, the necessary particularity will generally extend to the sequence of communications, and the extent of non-lawyer participants.
[32] In Vanda Investments Ltd v Logan, Associate Judge Osborne referring to Part 8, subpart 3 of the former High Court Rules and specifically to the former rule 8.21 now replaced by r 8.16 of the current rules, observed:16
[16] Discovery in particular has long been recognised in New Zealand as serving slightly different objects for different categories of documents:
(a)For open documents in the control of the discovering party, it enables disclosure of the nature and significance of the documents so that the party seeking discovery can decide whether to seek production and it enables the Court to order production and to ensure that such order is enforced.
(b)In relation to privileged documents it enables the party seeking discovery to become aware of the documents for which privilege is claimed and to judge whether the claim should be challenged: see Guardian Royal Assurance v Stuart at 607; Hunyady v Attorney-General at 1173-1174; Attorney- General v Wang NZ Ltd at 250.
…
[48] Collecting together those discussions, the Court should recognise that in New Zealand the adequate identification of discovered document[s] should achieve or facilitate at least the following purposes:
(a) To ensure (to the reasonable satisfaction of the Court and other parties) that all disclosure has been given. …
(c)
In relation to privileged documents –
(i) To enable the opposite party to become aware of the documents claimed to be privileged.
(ii) To enable that party to meaningfully consider a challenge to the claim of privilege.
16Vanda Investments Ltd v Logan HC Dunedin CIV 2009-412-219, 27 November 2009 at [16] and [48].
[33] Thus, where documents are described in groups, the description of the grouping must provide sufficient detail to enable opposing parties to assess the basis on which privilege is claimed, and the basis on which each privileged document is included in a group. To justify the use of group discovery, the documents must be “of the same nature”.17 There is no difference in the listing requirements for documents subject to solicitor-client privilege and documents subject to litigation privilege.18 The particular grounds of privilege applicable to each document should be sufficiently stated in the list so that, together with the description of the document, it is possible to make an assessment of the claim of privilege.19
Submissions
The plaintiffs
[34] Relying on HCR 8.16(3), Ms Chambers QC for the plaintiffs submits that the defendants are required to describe the grouped documents in a manner sufficient to inform the plaintiffs and the Court of the basis on which each document is included in the group for which privilege is claimed, and the basis on which privilege is claimed. The plaintiffs say that the manner in which the defendants have described the documents for which they claim privilege is vague and general. As regards the documents for which legal professional privilege is claimed, the plaintiffs say that description of the documents in that group does not particularise whether the legal advice was provided to the first and second defendants in their personal capacities or in their roles as trustees or whether it related to the management, administration, or terms of the trust. The plaintiffs submit that the description of the documents as simply “legal documents” is wholly inadequate and provides no information as to what the documents actually are. Moreover, say the plaintiffs, the general and unspecific information provided by the defendants regarding the documents does not provide any foundation for the defendants’ claim that there is a proper basis for a claim of privilege to be made in respect of the plaintiffs as beneficiaries of the Original and New Trusts.
17 Endeavour Productions Ltd v Petersen (1990) 2 PRNZ 366 (HC) at 373.
18 Redwood Group Ltd v Queenstown Gateway (5M) Ltd [2018] NZHC 3439 at [75].
19 Guardian Royal Exchange Assurance of NZ Ltd v Stuart [1985] 1 NZLR 596 (CA).
[35] The first and second defendants have divided the documents for which they claim privilege into several time periods. These are: 1 March 2016 – 19 November 2019 (legal advice privilege claimed – s 54); 4 November 2016 – 1 July 201720; and 12 July 2017 to the present date (litigation privilege claimed). The third and fourth defendants have adopted the same date ranges of 4 November 2016 – 8 June 2017; and 12 July 2017 to the present date. The fifth defendant whose affidavit of documents is sworn by Callum does not refer to a date range, and claims litigation privilege pursuant to s 56 of the Evidence Act 2006.
The 1 March 2016 – 19 November 2019 (legal advice privilege), and 4 November 2016
– 8 June 2017(litigation privilege) time periods
[36] As regards these time periods the plaintiffs submit that the defendants cannot justifiably assert or maintain either legal advice privilege or litigation privilege against the plaintiffs during the period between 1 March 2016 to November 2019. They note that the litigation that took place during that period was an unopposed application by Bill Snr to remove William Jnr as a trustee of the Original Trust, and any correspondence or information obtained by the defendants in relation to that application for removal of William Jnr as a trustee was in relation to a proceeding undertaken for the benefit of that trust. As such, says Ms Chambers, it must be disclosed to the plaintiffs as the beneficiaries of that trust. The plaintiffs submit that, as trustees the first and second defendants cannot assert or maintain a claim of privilege against them as beneficiaries of the Original Trust unless the legal advice or communications for which privilege is claimed was provided to them as trustees personally and paid for by them personally.
[37] The plaintiffs submit that there is no proper basis for the first and second defendants as trustees to assert litigation privilege in relation to the legal proceedings brought by Bill Snr in 2016 on behalf of the trustee of the Original Trust to obtain an order for the removal of William Jnr as a trustee. They say that as the application to remove William Jnr was unopposed it is difficult to see how the legal advice at issue could be for anything other than for the purposes and benefit of the Original Trust, and
20The period commencing 4 November 2016 is amended in the first and second defendants’ separate supplementary affidavits of documents (both sworn 18 November 2020), to end on 8 June 2017.
that was the basis on which the application to the Court was made. They submit that the Court was not told of the New Trust or of the fact that the plaintiffs were only named as discretionary beneficiaries.
[38] The plaintiffs further submit that in any event, any litigation privilege that attached to documents relating to the removal proceeding ended once the litigation ended, and the purpose and justification for litigation privilege was at an end. They say that thereafter any privilege could not continue to apply as between the trustees and the plaintiffs as beneficiaries of the trust because of their special relationship.
12 July 2017 to the present date
[39] As regards litigation privilege claimed by the defendants in their capacity as trustees for the period between July 2017 and the present, the plaintiffs note that the defendants have not asserted that the legal advice they have obtained was personal to them or whether it relates to the management and administration or terms of the trust. The plaintiffs also say that the first and second defendants have not discovered any documents relating to the management and administration of the trust.
[40] The plaintiffs say that from the financial statements disclosed by the defendants it appears that a significant amount of legal costs were incurred during the periods for which litigation privilege is claimed. The plaintiffs note that the first and second defendants’ affidavits of documents do not separately claim legal advice privilege, and they submit that therefore it is reasonable to assume that all of the documents for which privilege is claimed must fall within the group of documents for which the defendants have claimed litigation privilege. The plaintiffs also note that the defendants have proceeded on the basis that the litigation costs were appropriately met out of trust funds and not by them personally.
[41] The plaintiffs say that the Beddoe orders made by the Court authorising legal costs to be met from the assets of the New Trust is limited to meeting the defendants legal costs for providing all relevant factual information and legal submissions on relevant legal principles in relation to the causes of action alleging invalid resettlement of assets of the Original Trust, and undue influence on Bill Snr by the first and second
defendants, but not to actively defend the substantive proceedings or merits of the claims.21 Referring to the undue influence cause of action, Gwynn J said:
[79] There is a significant gap between the evidence currently filed and the legal threshold which must be met to prove undue influence on the balance of probabilities. I consider this warrants provision of information by the trustees and some clarification of legal principles, but incurring costs with a more active defence is not in the best interests of the trust.
[80] The Beddoe application is granted in relation to the eighth cause of action, to the extent necessary for the defendants to put all relevant information before the Court and to make submissions on the legal principles relevant to a claim of undue influence, but not to actively defend the merits of the claim.
[42] Justice Gwynn did however grant Beddoe orders entitling the first and second defendants to apply trust funds to meet the reasonable legal and associated costs of defending the causes of action based on the Family Protection Act 1955 and alleging breach of moral duty by Bill Snr, and the cause of action by the plaintiffs seeking Robert’s and Callum’s removal as executors of Bill Snr’s estate.22
[43] I note however, that since hearing, the Court of Appeal has delivered its decision on the appeal by William Jnr against the judgment of Gwynn J in which her Honour made Beddoe orders. The Court of Appeal allowed the appeal in relation to the fourth and seventh causes of action, and cancelled the Beddoe orders made in the High Court in respect of those two causes of action.23 I do not apprehend that the outcome of the appeal alters the fundamental basis of the plaintiffs’ submission that the application of trust funds by the first and second defendants to meet legal fees is indicative that the fees relate to the affairs of the trust rather than to them personally.
[44] The plaintiffs say that given the terms of the Beddoe orders it is difficult to see how the legal advice that has been obtained and paid for during the relevant period could relate to the first and second defendants in their personal capacities as opposed to their trustee capacities. The plaintiffs submit that the defendants cannot maintain privilege over documents containing legal advice sought and provided to the defendants in their capacity as trustees, so far as the plaintiffs are concerned.
21 McCallum v McCallum [2020] NZHC 907 at [58], [69], [79], [80]-[81](c), (d), (f) and (g).
22 At [50] and [74].
23 McCallum Jnr v McCallum [2021] NZCA 237.
[45] The plaintiffs also say that the defendants have not provided any information in their affidavits of documents in relation to whether the documents for which they claim privilege were created for the dominant purpose of litigation. The plaintiffs submit that notwithstanding that the defendants bear an onus of showing what the dominant purpose of the documents was, there is no factual basis to support their assertion that all documents created during the period for which privilege is claimed were created for the dominant purpose of litigation.
[46] The plaintiffs submit that it is unclear from the generalised description of the documents for which they claim privilege, whether any of the legal advice at issue was of a personal nature or whether it relates to the management and administration of the terms of the trusts. Moreover, the defendants’ affidavits do not provide any particularised information to show that the documents are privileged against the beneficiaries of the trusts. The plaintiffs say that mere assertions of privilege are insufficient, and in order to maintain their claim of privilege, the defendants are required to provide the characteristics of each document by means of admissible direct evidence and not hearsay statements.
[47] The plaintiffs accordingly seek orders: directing the defendants to list and describe the documents individually and to provide evidence in support of the privilege claimed in respect of each document by means of admissible direct evidence; and an order directing the defendants to provide inspection of the documents.
Submissions for the second plaintiff
[48] Ms Robertson QC for the second plaintiff, submits that in the absence of proper individual listing by the first and second defendants of the documents for which they claim privilege, the Court should order the production of the documents. She submits that directing the first and second defendants to file a detailed list of the privileged documents would be a ‘fallback position’. She says that the plaintiffs have been seeking a properly particularised list of privileged documents from the first and second defendants over a period of at least a year, and there has been well sufficient time for the defendants to have properly established the basis for their claim of privilege.
Ms Robertson relies on Hancock v Reinhart (Privilege)24 and the explanation of Brereton J regarding what is required to be established by a trustee seeking to establish litigation privilege. The Judge said:
[5] It was not in issue that Mrs Reinhart, as the person making the claim, bears the onus of proving the facts on which the claim for privilege is said to be founded, and that involves establishing that the disputed documents comprised or contained confidential communications made for the dominant purpose of obtaining legal advice and/or conducting anticipated or pending litigation.
[6]Moreover, Mrs Reinhart is not entitled to maintain against [her daughter]
– as a beneficiary, and a fortiori as replacement trustee – a claim of privilege in respect of trust documents: [her daughter] as new trustee is as much entitled to them as her predecessor, Mrs Reinhart. Legal advice obtained by a trustee for guidance in the administration of the trust or the proper exercise of trust powers belongs to the trust, not the trustee personally. On the other hand advice obtained for the trustee’s personal assistance, such as resisting litigation brought against the trustee by a beneficiary belongs to the trustee alone. Thus to make good her claim Mrs Reinhart must establish not only that the disputed documents were privileged, but that the privilege was hers personally, and not that of the trustee of the trust. The issue is whether Mrs Reinhart has done so.
[7] To sustain a claim of privilege, the claimant must not merely assert it; but must prove the facts that establish that it is properly made. Thus a mere swon assertion that the documents are privileged does not suffice, because it is an inadmissible assertion of law; the claimant must set out the facts from which the court can see that the assertion is rightly made, or in other words “expose
…facts from which the [court] would have been able to make an informed decision as to whether the claim was supportable. The evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed, and must do so by admissible direct evidence, not hearsay.
[49] Ms Robertson submits that based on the affidavits of documents filed on behalf of the first and second defendants it is impossible to analyse the claim for privilege on the broad basis set out in the affidavits. Ms Robertson notes that although Robert McCallum and Callum McCallum have both sworn affidavits in opposition to the plaintiffs’ application, neither of them say anything substantive about the claims for privilege, saying only that the trustees of the New Trust …”oppose the application for orders in relation to bulk listing of privileged documents, which I understand will be developed through legal submissions.”25
24 Hancock v Reinhart (Privilege) [2016] NSWSC 12.
25Affidavit of Carrick Robert Zachary McCallum, sworn 21 January 2021 [First and second defendants bundle tab 8 – paragraph 105, page 155]
[50] Ms Robertson adopts the submissions made by Ms Chambers and submits that where a trustee asserts privilege against a beneficiary of the trust, the beneficiary is entitled to a description and particulars of the basis on which the privilege is claimed and particulars of the basis on which it is asserted that the documents fall within the subset of privileged documents in respect of which a trustee can maintain privilege as against a beneficiary.
Submissions for first and second defendants
[51] Ms Davenport QC for the first and second defendants says that her clients have been proactive in attempts to provide the plaintiffs with the discovery and disclosure they have requested. She says that copies of basic trust information, financial information, will instructions, as well as legal advice obtained by the second defendants has already been disclosed to the plaintiffs. Counsel says that to date over 4,500 pages of relevant material has been disclosed by the first and second defendants to the plaintiffs, including documents relating to legal advice obtained by Bill Snr in his personal capacity prior to his death.
[52] Ms Davenport says that the first and second defendants have carefully complied with their discovery obligations. Counsel says that the documents already provided are sufficient to enable the plaintiffs to isolate the two periods in which they say that litigation privilege should not attach to the documents created, being the periods between December 2016 and June 2017, and July 2017 to the present.
[53] The first and second defendants say that requiring them to individually list and disclose all privileged documents and communications over a four year period between July 2017 to the present, would undermine the underlying privilege attaching to the documents required to be listed, and would be oppressive and inconsistent with the relevant provisions of the High Court Rules and the Evidence Act.
[54] As regards their ‘bulk listing’ of the documents for which they claim privilege, the first and second defendants say that the purpose of the requirement for individual listing of documents for which neither privilege or confidentiality is claimed is so that the other parties can identify which documents they wish to inspect and determine,
and whether there appear to be any gaps in the disclosure that require an application to be made for further and better discovery to be provided.
[55] In relation to the first period (November 2016 – June 2017), the defendants note that there is no challenge to the litigation privilege claimed as attaching to the documents created prior to the date of the hearing before Woodhouse J on 5 December 2016, and they submit that it is therefore inconsistent for the plaintiffs to challenge the privilege claimed in the period following the hearing through until delivery of the reasons judgment on 6 June 2017. Furthermore say the defendants, there is no tenable basis for the plaintiffs’ proposition that the removal proceedings were ‘non-hostile’ in nature. They say although there was no animosity between the parties involved and William Jnr did not defend the proceeding, they were nevertheless by their very nature ‘hostile’ in that the defendants sought orders for William Jnr’s removal as a trustee of the Original Trust and for vesting orders following his refusal to cooperate with his father and sign the documents required for the transfer of the property. Ms Davenport says that the fact that William Jnr chose not to oppose the application seeking his removal as a trustee is irrelevant to the question of whether or not it was litigation between the parties that would attract litigation privilege. She submits that it clearly was hostile litigation and the date range within which litigation privilege is claimed commences (4 November 2016) with the date when counsel was instructed to commence the proceedings and ends with date on which Woodhouse J’s reasons judgment was delivered (6 June 2017).
[56] In response to the plaintiffs’ submission that the first and second defendants had obtained advice that the proposed 2016 restructuring would amount to a breach of trust, Ms Davenport say that the advice the defendants received related to a proposed sale of property by the trustees at an undervalue, which had it proceeded would have been a breach of trust, but that it did not proceed.
[57] Ms Davenport also notes that the first defendants’ supplementary list of documents, lists a series of documents for which neither confidentiality nor privilege is claimed and which fall within the date range for which litigation privilege is claimed in respect of the removal proceedings. Counsel submits that this demonstrates that the documents for which litigation privilege is claimed are counsel’s and solicitors’
correspondence and that they are not documents relating to the administration and management of the trust which have been properly disclosed in the other section of the affidavit of documents.
[58] As regards the second time period (12 July 2017 to present), the first and second defendants say that the plaintiffs contention that litigation privilege cannot attach to documents which have been paid for with trust (or estate) funds cannot succeed for three reasons.
[59] Firstly the defendants note that the plaintiffs’ application as regards this period is for an order directing the first and second defendants to discover and provide inspection of:
all communications and information between the first and second defendants and/or their legal advisors and/or third parties during the periods 12 July 2017
– present and 4 November 2016 – 8 June 2017 other than communications made, received, compiled, or prepared for the dominant purpose of a proceeding or apprehended proceeding.
(emphasis added)
The defendants say that it is significant that the plaintiffs’ application does not claim that litigation privilege cannot attach to documents prepared for the dominant purpose of a proceeding, and yet their submission inconsistently claims the opposite.
[60] Secondly, they say that an order requiring them to individually list the documents for which privilege is claimed is so broad that it would attach to every email between junior and senior counsel, or between senior counsel and the first and second defendants. It would require: the date of the communication; the author and recipient; the specific solicitor-client relationship or apprehended proceeding on which the claim of litigation privilege was based, all for the sole purpose of deciding whether or not the communication was prepared for the dominant purpose of preparing for the proceeding. They submit that, that level of detail would completely undermine the privileged nature of those communications, and go well beyond informing the plaintiffs of the nature of the privilege claimed so as to enable them to make a meaningful challenge to the claim of privilege.
[61] Thirdly, the first and second defendants reject the plaintiffs claim that they cannot claim litigation privilege against beneficiaries for documents arising from legal services in connection with litigation and paid for out of trust funds where the beneficiaries are suing the trustees of the funds. The defendants submit that a beneficiary is not entitled ‘as of right’ to disclosure of trust documents, and say that they are entitled to assert privilege in the usual way.
[62] The first and second defendants say that their claim of litigation privilege commences from 12 July 2017 as on that date Ms Chambers wrote to ASCO Legal who were acting for the first and second defendants, to advise that she had been engaged as counsel to advise and represent William Jnr. In her letter Ms Chambers requested copies of William Snr’s will and any memorandum of wishes he had signed as well as documents relating to the appointment of Callum as a trustee of the Original Trust and any minutes and resolutions of the trustees and the deed of “any new trust settled by William Snr around or since August 2016.”
[63] Ms Davenport says that although no party had in fact decided to commence legal proceedings as at that date, it was nevertheless reasonable for the defendant trustees to conclude that litigation was probable from that date. Ms Davenport says that it is no answer for the plaintiffs to say that the proceedings were not commenced for some 18 months, as throughout that period the parties were engaged in correspondence and without prejudice communications and discussions to seek a resolution of William Jnr’s complaints as foreshadowed in Ms Chambers letter of 12 July 2017. Ms Davenport says that furthermore, the first and second defendants have not made a blanket claim of litigation privilege in respect of all documents created after that date, and any documents not created for the dominant purpose of the litigation have been discovered and disclosed with inspection copies provided.
[64] The first and second defendants also say that contrary to the plaintiffs’ submissions, basic trust and transaction documents were provided to them commencing July 2017, and further requests for disclosure by the plaintiffs were made and responded to during 2018. Ms Davenport also notes that following the filing of proceedings, William Jnr who was the sole plaintiff at that time, sought discovery of “legal opinions and advice in relation to the administration of the [Original] and New
Trusts, and the estate.” Associate Judge Bell determined William Jnr’s application for discovery orders and in a judgment delivered on 30 July 2019 ordered the defendants to discover an opinion they had obtained in November 2017 when they were intending to resettle the assets of the Original Trust on the New Trust.26
[65] Ms Davenport says that the plaintiffs have already been provided with in excess of 4,500 pages of discovery commencing before the proceedings were filed and by way of voluntary initial disclosure and also following the making of discovery orders. She submits that the plaintiffs’ application is an attempt to gain an unfair advantage over the first and second defendants by obtaining documents which would “lift the hood on their defences”, and it should be dismissed.
[66] Ms Davenport further submits that as the plaintiffs have not pursued their application seeking distribution by the first defendants from the trust for the payment of legal fees and disbursements, that application too should be dismissed.27
Submissions for the fifth defendants
[67] Mr Weston QC for the fifth defendants while noting that his clients are not themselves the subject of the plaintiffs’ discovery application, supports the submissions made on behalf of the first and second defendants. He notes that the plaintiffs do not seek any orders directing the fifth defendants to individually list the documents for which they claim privilege. He says that in correspondence on 17 December 2020 the fifth defendants provided the plaintiffs with date ranges in respect of their privileged documents, and that the plaintiffs’ counsel has confirmed that they were satisfied with the information and did not request an amended affidavit of documents.
[68] He also notes that the plaintiffs have not pursued their application seeking an order for distribution of funds by the second defendants to enable them to meet legal
26 McCallum v McCallum [2019] NZHC 1925, at [45] - [48].
27Following the hearing Ms Davenport filed a memorandum drawing the Court’s attention to: Easton v The New Zealand Guardian Trust Company Ltd [ 2021] NZHC 519and to Lambie Trustee Ltd v Addleman [2021] NZSC 54.
fees and disbursements and submits that as this part of the plaintiffs’ application has not been formally withdrawn, it should be dismissed, with costs reserved.
[69] Mr Weston acknowledges that his written submissions setting out the fifth defendants’ responses to the plaintiff’s submission that information was withheld from Woodhouse J in relation to the application for removal of William Jnr as a trustee of the old trust; that the transfer of Bill Snr’s interests in the Lismore farm property proceeded in the face of legal advice that they would be in breach of trust; and that the fifth defendants have subsequently engaged in “bad behaviour”, are made to summarise the fifth defendants’ rebuttal of the plaintiffs arguments, but he accepts that they are not relevant to the discovery application and issues.
Discussion
Adequacy of the description of the documents for which privilege is claimed
[70] The first and second defendants have employed the approach of grouping all of the documents for which they claim privilege in Part 2 of their affidavits of documents. The privileged documents are divided into three groups by reference to a date range spanning: three years six months; seven months; and four years respectively. The documents are described simply as “legal documents”. The only other information provided is the name or names of the author and the names of the recipients. In respect of each group the “Privilege category” is stated as either “Legal professional privilege – s 54 Evidence Act” or, “Litigation privilege – s 56 Evidence Act”.
[71] All documents falling in each of the three categories has a single document identification number, so there is no information as to the number of documents that are grouped together in that particular grouping. As the documents are not listed individually there are no dates provided for any individual documents. As no particulars are given as to the nature of the communications other than they are “legal documents” there is no information as to whether they are letters, emails, hand-written correspondence, legal opinions or advice, or whether they were copied to any other recipient than the parties specified.
[72] Although the robustness of a party’s own assessment of whether communications and documents satisfy the criteria justifying a claim of privilege is conventionally to be respected, that does not mean that they are not required to provide a sufficiently detailed description of the documents for which privilege is claimed such as will inform the opposing party of the nature of the communication and assess for itself whether it considers the claim of privilege is justified or should be challenged.
[73] In hostile litigation such as the present where the plaintiffs allege that the first and second defendants knowingly collaborated with their late father (Bill Snr) to plan and execute a restructuring of Bill Snr’s affairs, including the resettlement of almost all of the assets of the Original Trust into a new trust which would hold and administer the assets on terms which were significantly disadvantageous to the plaintiffs, there is an obvious need for correct categorisation of documents for which privilege is claimed.
[74] It is relevant to note in this context that the New Trust settled by Bill Snr on 18 August 2016 includes a provision stating that should any of the discretionary beneficiaries commence or join any legal proceeding against the trustees of the new trust in relation to the validity of any matter concerning distributions from the trust, the trustees would record that the beneficiary would cease to be a member of the class of beneficiaries they were otherwise within.28 The provision is as follows:
23.EXCLUSION OF BENEFICIARIES
23.1.If for any reason any of the Discretionary Beneficiaries commence or join any legal proceedings against or involving the trustees (or any of them) in relation to:-
(a)the validity of or any matter relating to the making or not making of any distributions from the Trust Fund by the Trustees to any of the Discretionary Beneficiaries; or (without limiting the foregoing)
(b)the exercise or non-exercise of any of the Trustees’ powers or discretions
then the Trustees shall record by way of a Deed that the class of Discretionary Beneficiaries ceases to include that particular person unless the Trustees (or a majority of them resolve to the contrary).
28 Deed Creating the McCallum Family Trust (2016), at paragraph 23.
23.2 For the purposes of this clause the term “distribution” includes distributions of both capital and income and also includes deciding or allowing any accumulation to the Trust Fund.
[75] This “exclusion of beneficiaries” provision clearly shows that the settlor and the first and second defendants anticipated that the plaintiffs would not accept the resettlement which effectively removed them as the final beneficiaries of the assets held by the original trust and limited their interest to that of discretionary beneficiaries in the new trust, and be likely to challenge the restructuring arrangements. The fact that the first and second defendants were trustees of the New Trust put them in a position where they were likely to have had knowledge of Bill Snr’s concern about this. At the time that these arrangements were made and the New Trust was settled, William Jnr was still a trustee of the Original Trust although an application to the High Court seeking an order for his removal as trustee was shortly to be commenced.
[76] The plaintiffs allege in their causes of action that the first and second defendants collaborated with Bill Snr to carry out the restructuring in an unconscionable manner and in breach of their duties owed to the plaintiffs. Accordingly allegations regarding the bona fides of the actions taken by the first and second defendants in relation to the 2016 restructuring and the application to the Court for removal of William Jnr lie at the heart of this proceeding. In this regard it is relevant to note that in his reasons judgment delivered on 6 June 2017, Woodhouse J proceeded on the basis that the reason why Bill Snr wanted William Jnr removed as a trustee of the Original Trust was because he had refused to co-operate with him regarding his proposed transfer of assets (specifically a one-third share in the Lismore farm property) from the Original Trust in exchange for income producing assets, and that Bill Snr wished “to make the changes to the Original Trusts assets to make better financial provision for his wife and two children as beneficiaries of the trust.”29 That observation of the Judge provides strong support for the plaintiffs’ submission that the real reasons for the transfer of assets from the Original Trust were not disclosed to the Judge and the terms of the New Trust which had already been established, rather than making better provision for Heather and the plaintiffs, effectively extinguished their
29 McCallum v McCallum [2017] NZHC 1218 at [9].
interests as final beneficiaries and contained a provision stating that if they challenged the trustees they would be removed as beneficiaries.
[77] In these circumstances the plaintiffs are in my view entirely justified in wishing to subject the first and second defendants claims of privilege to close scrutiny. As beneficiaries of both the Original trust and the New Trust they are entitled to access any documents created by or for the trustees of those trusts which relate to the administration and management of the trusts. This will include any legal advice obtained by the trustees regarding the performance and discharge of their obligations as trustees. Whether or not litigation privilege properly attaches to any of the documents included within the groups established by the first and second defendants cannot be assessed by the plaintiffs on the basis of the limited information provided by the defendants in their affidavits.
[78] In the recently decided Lambie Trustee Ltd v Addleman30 the Supreme Court reviewed the application of legal professional and litigation privilege as between trustees and beneficiaries. Explaining the circumstances in which the joint interest exception to legal professional privilege is engaged the Court cited the following passage from Lewin on Trusts with approval:31
Normally disclosure will be ordered of cases submitted to, and opinions of, counsel taken by the trustees, and other instructions to and legal advice obtained from the trustees’ lawyers, for the guidance of the trustees in the discharge of their functions as trustees and paid for from the trust fund. Even though such advice is privileged, the privilege is held for the benefit of the beneficiaries, not for the personal benefit of the trustees, and so privilege is no answer to the beneficiary’s demand for disclosure. A beneficiary should, of course, seek disclosure from the trustee, or if necessary in proceedings to which the trustee is a party, and not directly from the lawyer who gave the advice since the lawyer is bound by privilege and is in no position to waive it at the instance of a beneficiary.
[79]The Supreme Court went on to observe:32
[92] We accept that the joint interest exception may cease to apply prior to litigation being commenced, for instance where the parties have reached the point in which their positions are sufficiently conflicting to justify the
30 Lambie Trustee Limited v Addleman [2021] NZSC 54.
31At [73], citing Lewin on Trusts (19th ed, Sweet & Maxwell, London, 2015) at [23-048] (footnotes omitted).
32 At [92] and [95].
conclusion that the trustees are taking advice for the purpose of resisting claims or demands by the beneficiary. Although we do not see the concept of litigation privilege as directly applicable, the dominant purpose approach as applied for the purposes of litigation privilege may provide a sensible basis for identifying that point. On this basis, that litigation is a possibility or even a likelihood at the time advice is taken is not of controlling significance. What is required for the joint interest exception not to apply is that the advice be sought for the dominant purpose of defending litigation. Given the obligations of a trustee to act appropriately and in the interests of the trust as a whole, the starting point for the courts should be the assumption that trustees seeking advice in respect of contemplated litigation are looking for guidance as to the right course of action (in respect of which the joint interest exception will apply). And the courts can expect trustees not to seek advice as to how to resist litigation without having first sought advice (to which point the joint interest exception will apply) as to the appropriate stance to take on the point at issue.
….
[95] The authorities generally support the view that once a beneficiary commences litigation concerning the administration of a trust, the litigating beneficiary is not entitled to disclosure of legal advice received by the trustees in relation to that litigation. The judgments on the point tend to be succinctly expressed but they must proceed on the basis that, from that point, the beneficiary and trustees no longer have a joint interest in the subject matter of the litigation.
[80] Here the issue of whether the common interest exception applies to any of the documents and communications for which the first and second defendants’ claim privilege cannot be determined on the basis of the limited information contained in the defendants’ affidavits of documents. I find that the information provided by the first and second defendants as being the basis on which they claim privilege is inadequate and fails to meet the standard required of enabling the plaintiffs to become aware of the documents claimed to be privileged and meaningfully consider a challenge to the claim of privilege.
[81] In the circumstances here where the actions of Bill (Snr) and the first and second defendants in their roles as trustees lie at the heart of the dispute between the parties, and where the validity of the resettlement of the assets of the original trust into the new trust, along with other dispositions and assets transfers are being challenged, the question of whether the privilege claimed for each document is justified and correct requires each document to be separately listed and identified in a further list of documents contained in a further affidavit sworn and filed by the first and second defendants. The particulars and details provided in respect of each document will require the following information to be provided: the date of the document; the
author/s of the document; the recipient/s of the document (including in the case of emails and correspondence any other parties to whom the email or correspondence was also sent; the nature of the contents of the document to explain the basis on which the first and second defendants assert that it is privileged; the legal basis for the claim of privilege; whether privilege is claimed for the whole of the contents of the document/s or only parts of the document.
[82] I reject the first and second defendants’ submission that an order requiring them to individually identify each document for which they claim privilege would be oppressive and disproportionate to the utility of the discovery process in this case. The first and second defendants have not provided any information as to the number of documents they have grouped within their three categories of privileged documents, and I do not consider that an order requiring them to individually identify and list the documents for which they claim privilege is oppressive. The value of the assets and the nature of the issues in dispute are such that it is in the interests of justice that the dispute between the parties regarding whether the first and second defendants have provided proper discovery is determined on an appropriately informed basis.
Sale of the yacht ‘Thistle’ and distribution of the net proceeds to the plaintiffs
[83] In his affidavit in opposition to the plaintiffs’ application33 Robert McCallum states that the trustees of the Bill Snr’s estate and the McCallum Family Trust met on 21 January 2021 and resolved to sell Bill Snr’s yacht, ‘Thistle’ with the net proceeds to be evenly distributed between the plaintiffs. He said that once the resolution was drawn up copies would be provided to the Court and counsel for the plaintiffs, and distribution will be made once the yacht was sold.
[84] At the hearing of the plaintiffs’ application for discovery orders, Ms Robertson produced an unsigned Joint Memorandum of Counsel Seeking Orders by Consent. The memorandum stated that the parties had agreed that the second defendants would proceed to sell the yacht ‘Thistle’ through a marine broker and the net proceeds would be distributed to the plaintiffs equally. However as the parties were unable to agree on a provision of the memorandum that reserved leave to the plaintiffs to bring on an
33 Affidavit of Carrick Robert Zachary McCallum (sworn 21 January 2021).
application for interim distribution from the trust in the event the yacht had not been sold by June 2021, the matter was not pursued. I simply record this matter having been raised.
Result
[85] I accordingly grant the plaintiffs’ application dated 7 December 2020 and make the following orders:
(a)I direct the first and second defendants to file and serve an amended affidavit of documents in which they:
(i)Separately and individually list and identify each document for which they claim privilege as against the plaintiffs.
(ii)Provide the date of the document (or in the case of an undated document/s provide any other information in their possession that would inform the issue of when the document was created
– for example, computer data from which the creation date of the document can be ascertained).
(iii)The name/s of the author of the document/s.
(iv)The name of the recipient/s of the document/s (including the names of any party to whom a copy of the document was sent or provided.
(v)Describe the nature of the contents of the document to explain the basis on which the first and second defendants say that it is covered by legal advice or litigation privilege, including the specific solicitor-client relationship and/or the legal proceeding in respect of which litigation privilege is claimed, and the basis of a claim that the dominant purpose of the communication was in respect of that proceeding.
(vi)Specify the legal basis for the claim of privilege.
(vii)Specify whether privilege is claimed for the whole of the contents of the document/s or only parts of the document.
(viii)Provide such further or other information and in the format specified in Part 2 of Schedule 9 of the High Court Rules 2016.
[86] I decline the plaintiffs’ application for an order requiring the first and second defendant to provide inspection of any documents. The issue of whether the plaintiffs challenge any of the first and second defendants claims of privilege can appropriately be considered following their compliance with the terms of these orders.
[87] I dismiss without prejudice the plaintiffs’ application for an order authorising and directing the trustees of the McCallum Family Trust to distribute funds to meet the plaintiffs legal fees, and the application for an order that the plaintiffs will not be personally at risk for any potential adverse costs arising out of the proceedings.34 As a result of the plaintiffs not pursuing these applications their merits have not been addressed or determined, and the plaintiffs are not precluded from renewing the applications at a future date.
[88] The plaintiffs having succeeded with their application are entitled to an award of costs. I direct the plaintiffs to file and serve their costs memorandum within 10 working days following delivery of this judgment. The defendants are to file and serve their costs memoranda within seven working days following the date of their receipt of service of the plaintiffs’ costs memorandum. The costs memoranda are not to exceed three pages in length excluding any schedule or attachments.
[89] Upon receipt of the costs memoranda, I shall determine the plaintiffs’ costs on the papers.
Paul Davison J
34Plaintiffs First Amended Interlocutory Application (dated 7 December 2020) paragraphs 1(c), (d) and (e).
SCHEDULE 1
PART 2 : Documents that are in my control and for which I claim privilege
| Document ID | Date | Document type | Author | Recipient | Parent document ID | Privilege category | Redacted |
| MCC.007.0001 | 01/03/2016 - 19/11/2019 | Legal documents | TGT Legal, Bill McCallum | Bill McCallum, TGT Legal, Rob McCallum, Callum McCallum | Legal professional privilege – s 54 Evidence Act | ||
| MCC.008.0001 | 4.11.2016 – 1.07.2017 | Legal documents | ASCO Legal, Kate Davenport QC, Bill McCallum, Rob McCallum | Bill McCallum, Callum | Litigation privilege – s 56 Evidence Act | ||
| MCC.009-0001 | 12.07.2017 - present date | Legal Documents | ASCO Legal, Churton Hart Divers Law, Kate Davenport QC, Rob McCallum, Callum McCallum, Kelly Zhang, Aidan | ASCO Legal, Churton Hart Divers Law, Kate Davenport QC, Rob McCallum, Callum McCallum, Kelly Zhang, Aidan | Litigation privilege – s 56 Evidence Act | ||
| Cameron, Jovana Nedejikov | Cameron, Jovana Nedejikov |
9
1