Merona Trustees Limited
[2022] NZHC 724
•8 April 2022
ORDER THAT THE LEGAL OPINIONS PROVIDED TO THE COURT ARE TO BE SEALED AND ARE NOT TO BE INSPECTED BY ANY PERSON WITHOUT ORDER OF A HIGH COURT JUDGE. IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-000345
[2022] NZHC 724
UNDER Part 18 of the High Court Rules 2016 and Section 133 Trusts Act 2019 IN THE MATTER
of the M & R Cooper No. 2 Trust application
BY
MERONA TRUSTEES LIMITED and
HAMISH PATRICK BENNETT as trustees of the M & R COOPER NO. 2 TRUST
Hearing: On the papers Counsel:
A S Butler and K H Lawrence for Plaintiffs
J V Ormsby for Raymond Moody (party directed to be served)
Judgment:
8 April 2022
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 8 April 2022 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
RE MERONA TRUSTEES LTD [2022] NZHC 724 [8 April 2022]
[1] The plaintiffs are the trustees of the M & R Cooper No. 2 Trust (the Trust). They have brought this proceeding for directions under s 133 of the Trusts Act 2019 as to the correct interpretation of clauses of the trust deed defining the class of discretionary and final beneficiaries.
[2] Counsel for the plaintiffs and counsel for Raymond Moody (a person directed to be served) disagree as to the extent to which the plaintiffs are required to disclose certain legal opinions and whether redactions to those opinions are permitted.
[3] Counsel have filed memoranda of submissions and the Court has been provided with the unredacted legal opinions. The parties ask the Court to resolve the disagreement and seek a ruling on the papers.
Background
[4] The Trust was established by deed dated 27 April 2002. Mervyn Cooper (Mervyn) and his wife, Sylvia Cooper (Rona), were the settlors of the Trust.
[5] Mervyn and Rona had two children together. Rona also had two children from a previous marriage, namely Robert Cooper (Robert) and Raymond Moody (Raymond). Robert was raised by Mervyn and Rona. Raymond was raised by extended family from a young age.
[6] Mervyn and Rona have now died. Robert has also died, leaving a wife, children and grandchildren. Raymond is alive and married with two children.
[7] One of the matters that will be decided in this proceeding is whether Raymond is a beneficiary of the Trust.
[8]Clause 1 of the trust deed provides as follows:
DEFINITIONS
In this Deed the following terms where the context admits shall have the following meanings:
(a)“child, children and issue” shall include children by adoption as well as natural born children.
(b)“the Discretionary Beneficiaries” shall mean:
(i)the Settlors, the said Mervyn Nathaniel Cooper and Sylvia Rona Lorraine Cooper or either of them;
(ii)any of the children of the Settlors;
(iii)any child or children of whom either or both of the Settlors may have been appointed guardian;
(iv)any grandchild of the Settlors;
(v)any person whom any of the children or grandchildren of the Settlors marries but not if such person is separated from such child or grandchild nor if the marriage is dissolved.
The Settlors declare that the principal purpose for the trust is to benefit beneficiaries for whom they have “natural love and affection” and that his principal purpose shall always apply in exercising the power of appointment or removal of beneficiaries.
(c)“the Settlors” shall include the Settlors or Settlor for the time being hereof together with any other person or persons who subsequently transfer assets to the trustees by way of sale, gift or otherwise.
…
(h) “the Final Beneficiaries” shall mean the children of the said Mervyn Nathaniel Cooper and Sylvia Rona Lorraine Cooper”.
[9] The plaintiffs received legal opinions as to whether clauses 1(b)(ii) and 1(h) include Robert and Raymond. It is thought there is ambiguity in the terms “the children of the Settlors” and “the children of the said Mervyn Nathaniel Cooper and Sylvia Rona Lorraine Cooper” which might mean:
(a)the two children of Mervyn and Rona together;
(b)the two children of Mervyn and Rona together, as well as Robert, the son they raised together who was the natural child of only Rona; or
(c)the two children of Mervyn and Rona together, as well as Robert and Raymond, who were both natural children of only Rona.
[10] Raymond has filed a statement of defence in the proceeding, asserting he is a discretionary and final beneficiary of the Trust.
[11] The plaintiffs have legal opinions obtained from four lawyers between 2016 and 2020. Those opinions dealt with a range of matters, including whether Robert and Raymond were beneficiaries. The plaintiffs have filed those legal opinions in this proceeding as exhibits to affidavits but with redactions, so as not to disclose the contents of the opinions to the extent the plaintiffs consider they are not relevant to matters in issue.
[12] No formal discovery order has been made. This is not hostile litigation and counsel have attempted to resolve any discovery issues between themselves. They have managed to do so, except in respect of disclosure of the legal opinions. Raymond considers the legal opinions must be disclosed to him in their entirety. The plaintiffs do not agree.
The plaintiffs’ submissions
[13] The plaintiffs’ position is that until Raymond’s status as a beneficiary is confirmed by the Court, he has no entitlement to disclosure of trust information on the basis of his status as a beneficiary.1 They contend the only basis on which Raymond can have any entitlement to trust information is in the context of what is relevant to the determination of this proceeding. Their primary position, then, is that only legal advice directly relevant to matters in this proceeding can or should be disclosed in it.
[14] The plaintiffs accept it is appropriate they disclose legal advice directly addressing the status of Raymond or Robert, as beneficiaries of the Trust. However, they consider no other material is relevant to the litigation, and no other material is required to make sense of, or understand, the passages in the legal opinions which have been disclosed.
1 Trusts Act 2019, ss 50-53. See also Lambie Trustee Ltd v Addleman [2021] NZSC 54, (2021) 32 FRNZ 826 at [72]-[75].
[15] The plaintiffs also state they consider, in so far as they relate to other issues, the legal opinions are privileged (legal advice privilege)2 and do not need to be disclosed because:
(a)the legal opinions address several discrete issues;
(b)only advice relating to the issue of Raymond’s status as a beneficiary of the Trust has been provided; and
(c)the remaining issues upon which advice is provided are severable from the issue of Raymond’s status as a beneficiary.
[16] The plaintiffs do not accept that by disclosing those aspects of the legal opinions they consider are relevant and material to this litigation, they have waived privilege in the entirety of the legal opinions. They accept it is not open to a party to disclose parts of a document which are to its advantage and withhold the remainder, but say this does not apply where it can be shown the material which was withheld relates to a different issue from that which is the subject of disclosure. In that event, they contend, a document may be severed and disclosure of only a portion of a document ordered.3 Here, they take the view the issue is whether Raymond is a beneficiary of the Trust and legal advice privilege has been waived to the extent it relates to that issue. The plaintiffs say it has not been waived in relation to any other issue relating to the administration of the Trust.
Raymond’s submissions
[17] Raymond submits that under the usual rules of discovery, a trustee involved in litigation must discover relevant documents to the other party, whether or not the other party is a beneficiary, unless the documents are privileged.4 This is so even where
2 Evidence Act 2006, s 54.
3 Northpower Ltd v ABB Ltd HC Auckland CIV-2003-404-5630, 28 August 2006 at [48]-[49] citing Fulham Leisure Holdings Ltd v Nicholson Graham & Jones (a firm) [2006] 2 All ER 599; Mudgway v New Zealand Insurance Co Ltd [1988] 2 NZLR 283; McCallum v McCallum [2019] NZHC 1925 at [46]-[48].
4 Burgess v Monk [2016] NZHC 527; Gavin v Powell [2018] NZHC 2866; and Gavin v Powell
[2020] NZHC 3017.
sensitive and confidential material exists within them. In such circumstances, the appropriate remedy is to impose suitable confidentiality restraints.
[18] Raymond does not accept the plaintiffs can assert privilege against him. I understand this is because, he contends, as a beneficiary he was jointly interested in advice relating to the administration of the Trust.5 But, he says, if privilege can be asserted against him, by disclosing the opinions the plaintiffs have waived privilege in respect of their contents, and they must now be disclosed in full.
[19] Raymond relies upon what he asserts is a longstanding rule that a person cannot waive only part of a privileged document because competing parties are entitled to review the information relied upon in the context of which it was given.6
[20] Raymond submits it is unsatisfactory for the plaintiffs to provide opinions that are clearly highly relevant to his status as a beneficiary, but to redact them in the manner that has occurred. This is because both he and the Court cannot make assessments of the material disclosed based on incomplete information.
My assessment
[21] No discovery order has been made. Had standard discovery been ordered, that would have required the plaintiffs to disclose documents of actual and direct relevance.7 However, relevance of the legal opinions is accepted by the plaintiffs to the extent they concern the status of Raymond as a beneficiary of the Trust.
[22] I agree with the plaintiffs that Raymond’s status as a beneficiary has not been established, and he cannot assert an entitlement to trust information as a beneficiary under the Trust. His entitlement to trust information must be limited to material relevant to the subject matter of this proceeding.
5 Lambie v Addleman, above n 1, at [81].
6 PCP Capital Partners v Barclays Bank [2020] EWHC 1393 (Comm) at [47]-[49] and Great Atlantic Insurance Co v Home Insurance Co [1981] 2 Lloyd’s Rep 138, [1981] 1 WLR 529 (CA).
7 Subject, of course, to any sustainable claims to privilege.
[23] The plaintiffs would ordinarily be entitled, as against Raymond, to assert legal advice privilege in respect of the opinions.8 Having chosen to disclose them in part, the issue that arises is to what extent has privilege in the legal opinions been waived.
[24]In this regard ss 65(1) and (2) of the Evidence Act 2006 provide:
65 Waiver
(1)A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly.
(2)A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.
[25] Under s 65(2) of the Evidence Act the focus is on inconsistency between the conduct alleged to amount to a waiver and the continuation of the claim to the privilege.
[26] In Ophthalmological Society of New Zealand Inc v Commerce Commission, the Court of Appeal noted that where a claim that privilege has been waived is made, the Court has to make an objective judgment as to whether the conduct of the party who is said to have waived privilege was inconsistent with maintaining the privilege or constituted an abuse of the privilege.9 The Court said:10
The fairness factor has, however, rightly been treated as of particular importance in cases where partial disclosure of legal advice raises questions over whether natural justice requires disclosure of the whole advice. In the end, …. it is the Court’s objective judgment as to the consistency of the conduct with maintaining the privilege which must be assessed in all the circumstances. That requires close analysis of the particular context: what is the issue in relation to the privilege; how does the evidence relate to that issue and is there inconsistency that could lead to injustice if the privilege is upheld. The weight to be given to fairness in the Court’s exercise of judgment will
8 Evidence Act 2006, s 54.
9 Ophthalmological Society of New Zealand Inc v Commerce Commission [2003] 2 NZLR 145 at [38]. This case was decided before the introduction of the Evidence Act 2006, and in particular s 65, but was applied in Shannon v Shannon [2005] 3 NZLR 757 where the Court of Appeal also considered the then proposed waiver provisions in the draft Evidence Code (NZLC R55 vol 2, 1999). It will be noted s 65 does not refer to a fairness criterion but to “circumstances that are inconsistent with a claim of confidentiality”.
10 At [30].
differ according to the circumstances including the character of the privilege it is said has been waived …
[27] Raymond’s submission, that it is a long-standing rule that a person cannot waive only a part of a document, goes too far. The plaintiffs submit, and I accept, there may be no waiver in circumstances where a document deals with several issues and privilege is asserted in respect to material that is withheld which relates to a different issue from that which is the subject of the disclosure. Ultimately, the question is whether the disclosure that has been made is inconsistent with the continuation of the claim to confidentiality in those parts that are withheld such that privilege must be regarded as having been waived.
[28]Several authorities were relied upon by the plaintiffs. Perhaps most relevant is
Northpower Ltd v ABB Ltd, where Allan J said:11
[47] … The general rule is that a party is not entitled to disclose only those parts of the document which are to its advantage, and withhold the remainder. Both the Court and the opposing party are entitled to know whether the material released from privilege represents the whole of the material relevant to the issue in question …. The party concerned will be taken to have waived privilege in the whole of the document.
[48] But there is an exception to that principle. Where it can be shown that the withheld or excised material relates to a different issue or transaction from that which is the subject of disclosure, then it may be appropriate to sever the document and to order disclosure of a portion only of the document concerned
…
[29] In my view, the kernel of the matter is the plaintiffs’ submission that the issue in this litigation is whether Raymond is a beneficiary of the Trust and legal advice privilege has been waived to the extent it relates to that issue only. I would define the issues more broadly. Whether Raymond is a beneficiary is, of course, a matter that will be decided, but that turns on what is meant by the words “children of the Settlors” (in cl 1(b)(ii)) and “children of the said Mervyn Nathaniel Cooper and Sylvia Rona Lorraine Cooper” (in cl 1(h)).
11 Northpower Ltd v ABB Ltd, above n 3, citing Great Atlantic Insurance Co v Home Insurance Co, above n 6; Equiticorp Industries Ltd v Hawkins [1990] 2 NZLR 175 (HC) and Fulham Leisure Holdings Ltd v Nicholson Graham & Jones (a firm), above n 3. See also McCallum v McCallum, above n 3, and Mudgway v The New Zealand Insurance Co Ltd, above n 3, at p 10-11.
[30] These are matters of construction of the trust deed and, generally speaking, the same principles that apply to the construction of contracts also apply to the construction of trust deeds. 12 The Court is concerned to give effect to the intention of the settlors as ascertained from the terms of the trust deed construed in the context of the facts known to them. The approach is objective and the interpretive task is contextual, but the text, viewed as a whole, remains centrally important.
[31] Beyond information the plaintiffs argue is directly relevant to the status of Raymond as a beneficiary, I consider the legal opinions also contain contextual material that is needed to provide a full picture of the advice and that may also shed light upon the settlors’ intentions in so far as that is said to have been manifest in things said and done by them. There is, for instance, evidence in the affidavit of Mr Bennett that Mervyn expressed disappointment that Raymond might be considered a beneficiary and said words to the effect that Rona wouldn’t have wanted that either. It appears to me that information Mervyn had been given by his legal advisors, concerning, say, the purposes of the Trust, might shed some light on such comments. Similarly, as Mervyn took no steps to actively exclude Raymond as a beneficiary, it is important to know what options were given to him concerning that (if any) in the legal advice. These are only examples, of course.
[32] Looking at the matter through, perhaps, a broader lens than applied by the plaintiffs, I consider the disclosure that has been made is in some respects inconsistent with the claim to confidentiality over other parts of the legal opinions where confidentiality continues to be asserted. I set out the additional disclosure that I consider should be made below.
[33] In the hope that it provides certainty as to my intentions, for the purpose of identifying the additional disclosure, I have started from the position that each opinion is to be disclosed in its entirety and then identify those parts that may continue to be withheld. This does not reflect a bias towards disclosure.
12 Greg Kelly and Chris Kelly Garrow and Kelly Law of Trusts (LexisNexis, 8th ed, Wellington 2022) at [8.20] citing Bulley v Attorney-General [2012] NZHC 615 at [48] referring to Re Sigma Finance Corporation [2009] UKSC 2; Firm PI 1Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand [2014] NZSC 147, [2015] 1 NZLR 432 at [60]-[63].
[34] In respect to the Dean Palmer opinion of 22 April 2016, I consider it should be disclosed in its entirety apart from the following:
(a)paragraph 3 dealing with the diversification of the trust assets;
(b)paragraph 4 dealing with conflict issues;
(c)paragraph 7 which contains no relevant advice;
(d)paragraph 8 concerning his offer of services;
(e)paragraph 11 concerning diversification of trust assets;
(f)paragraph 12 concerning conflict issues; and
(g)paragraph 14 and following which contains no relevant advice.
[35] In respect to the Harmans Lawyers opinion of 2 June 2016, I consider it should be disclosed in its entirety apart from the following:
(a)the paragraphs under the heading “Appointment of Charities as Beneficiaries”;
(b)the paragraphs under the heading “Merv’s De Facto Partner”;
(c)the paragraph under the heading “Conflict of Interest Matters with Regards to Marriotts and Harmans”;
(d)the paragraphs under the heading “The Vesting Date of the Trusts vs the wishes of Merv in his Memorandum of Guidance”; and
(e)paragraphs 1, 2, 3, 6 and following under the heading “Conclusions”.
[36] In respect to Katherine Ewer’s letter of 16 November 2016, I consider it should be disclosed in its entirety apart from the following:
(a) paragraphs 1.2(b)-(e) and (g), 1.5, 1.7, 1.8;
(b)all paragraphs under the heading “Vesting Day”;
(c)all paragraphs under the heading “Mervyn’s Property held outside of Trust”;
(d)all paragraphs under the heading “Cash Gifts”;
(e)all paragraphs under the heading “Gift to Wendy”;
(f)all paragraphs under the heading “Power to Appoint and Remove Trustees of the M & R Cooper No. 2 Trust”;
(g)all paragraphs under the heading “Residuary Estate and Provision for Charities”; and
(h)schedule A to the extent it has already been withheld.
[37] In respect to Katherine Ewer’s legal opinion dated 30 November 2016, I consider it should be disclosed in its entirety apart from the following:
(a)the paragraphs 1.1 under the heading “Vesting Day”;
(b)the paragraphs 1.2 under the heading “Deed of Variation”;
(c)the paragraphs 1.3 under the heading “Distributions to Charities”;
(d)the paragraphs 1.4 under the heading “Payment to Mervyn”;
(e)the paragraphs 1.5 under the heading “Provision for Wendy Elizabeth Halliday”; and
(f)the first, fourth and all following paragraphs under 1.7 headed “Summary of Position”;
[38] In respect to Katherine Ewer’s legal opinion dated 20 April 2017, I consider it should be disclosed in its entirety apart from the following:
(a)paragraphs 1.2, 1.3 and 1.4 under the heading “Executive Summary”;
(b)paragraphs 3.1, 3.2, 3.4 and following under the heading “Proposed Distributions”;
(c)all paragraphs under the heading “Assets to remain in the Trust”;
(d)paragraphs 5.1(c) and following under the heading “Outcome”;
(e)all paragraphs under the heading “Further Considerations”;
(f)all paragraphs under the heading “Next steps”; and
(g)appendix A and appendix B.
[39] In respect to the opinion of Greg Kelly Law dated 15 April 2020, I do not consider any further disclosure beyond that provided is required.
Result
[40] The result is that the plaintiffs are to provide further disclosure as provided in paragraphs [34]-[38] above.
[41] There are no issues of costs as between the parties and no orders are made in that respect.
[42] There shall be an order that the legal opinions provided to the Court for my consideration are to be sealed and are not to be inspected by any person without order of a High Court Judge.
[43] If there is any confusion as to my intentions concerning disclosure counsel may, of course, ask for a telephone conference to work through those issues at any time.
O G Paulsen Associate Judge
Solicitors:
Greg Kelly Law Limited, Wellington
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