Mitchell v Mitchell
[2018] NZHC 2665
•19 October 2018
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2017-463-61 [2018] NZHC 2665
BETWEEN HAMUERA WALKER MITCHELL,
HOKIMATE KAHUKIWA, PETER STAITE AND VERONICA BUTTERWORTH Plaintiffs
AND
AND
TE KIRI WHERO EWA MAKARETA MITCHELL
First Defendant
MALCOLM TUKINO SHORT AND ALEXANDER JAMES WILSON Second Defendants
CONTINUED OVERLEAF
Hearing: 5 October 2018 Appearances:
Further submissions completed:
A Warren for the Plaintiffs
S M Kinsler and S K Shaw for Fourth Defendant
C Marks and S Hayman for First, Second, Third and Fifth
Defendants
No appearance by or on behalf of John Kahukiwa or Corban
Revell8 October 2018
Judgment:
19 October 2018
JUDGMENT OF POWELL J [Application to restrain counsel]
This judgment was delivered by me on 19 October 2018 at 4.30 pm pursuant to
R 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
MITCHELL & ORS v MITCHELL [2018] NZHC 2665 [19 October 2018]
ANDWARWICK MOREHU, RIMINI DENIS PAUL, KATARINA KEREAMA AND DONNA HALL
Third Defendants
ANDTE KOTAHITANGA O NGATI WHAKAUE ASSETS TRUST
Fourth Defendant
ANDBRYCE MURRAY Fifth Defendant
[1] The fourth defendant, Te Kotahitanga o Ngāti Whakaue Assets Trust (“the Assets Trust”), has applied for an order restraining John Kahukiwa and his firm Corban Revell from continuing to act as counsel for the plaintiffs, Hamuera Mitchell, Hokimate Kahukiwa, Peter Staite and Veronica Butterworth, in their proceeding against the Assets Trust.
[2] There is no dispute that Mr Kahukiwa has provided a significant contribution to his iwi Ngāti Whakaue as an iwi member, a Treaty negotiator and as a barrister and solicitor. It is in that latter capacity that the present application arises because as well as acting for the plaintiffs in this proceeding, Mr Kahukiwa was until earlier this year also one of the solicitors for the Assets Trust, and indeed drafted the current Assets Trust Trust Deed (“AT Trust Deed”).1 As such the Assets Trust alleges Mr Kahukiwa obtained not only general information about the operations of the Assets Trust but also information specifically relevant to the present proceedings.
[3] The Assets Trust submits it would be inappropriate for this Court to allow
Mr Kahukiwa and his firm to continue to represent the plaintiffs against the Assets Trust in the substantive proceedings, relying upon the line of authority commencing with Black v Taylor which determined that the High Court is empowered to restrain counsel from acting through the exercise of its inherent jurisdiction.2 The other defendants, being the trustees of the Whakarewarewa Joint Trust (“WJT”) at the relevant time, support the application. The plaintiffs’ allegations against the WJT trustees in the substantive claim largely stand or fall on whether the Ngāti Whakaue trustees on the WJT were validly appointed by the Assets Trust. In practical terms, the application requires determining whether Mr Kahukiwa and Corban Revell should be restrained from acting in any capacity in the substantive proceedings.
[4] Opposing the application the plaintiffs have raised procedural and substantive objections. First, the plaintiffs argue that the application should not have been made as an interlocutory application in the substantive proceedings but, as it is directed at Mr Kahukiwa and his firm, by way of originating application. Secondly, the plaintiffs argue that the application is in any event premature as the issue of whether
1 First Amended Deed of Trust Te Kotahitanga O Ngāti Whakaue Assets Trust (2145951).
2 Black v Taylor [1993] 3 NZLR 403 (CA) at 403.
Mr Kahukiwa should be restrained is the subject of a “genuine dispute” for which notice had been given pursuant to the AT Trust Deed. The plaintiffs therefore contend that the issue stands to be determined under the dispute resolution provisions of the AT Trust Deed and until that has occurred the substantive proceedings should be stayed. Finally, the plaintiffs submit in the alternative that there is no valid reason to restrain Mr Kahukiwa or Corban Revell from continuing to act for the plaintiffs in the substantive proceeding, and on the contrary restraining Mr Kahukiwa would not only significantly prejudice the plaintiffs, but also be contrary to Ngāti Whakaue tikanga.
Background to the Substantive Issues
[5] The present application is brought in the context of a broader dispute within Ngāti Whakaue and in particular three Ngāti Whakaue hapū: Ngāti Hurungaterangi, Ngāti Taeotu and Ngāti Te Kahu O Ngāti Whakaue (“the three hapū”). At issue are the proposed arrangements for the transfer of the New Zealand Maori Arts & Crafts Institute (“MACI”),3 a part of the Te Puia tourism business operating at Whakarewarewa, from the Crown to Ngāti Whakaue (specifically the three hapū and the Pukeora Oruawhata Trust) and another collective group from within the Te Arawa waka, Tūhourangi Ngāti Wāhiao.4 Although the transfer is supported by both Crown and iwi in principle, the detail of the transfer has proved problematic since the idea was first mooted in the 1980s.
[6] The plaintiffs in this proceeding are in fact attempting to challenge the current plan to transfer MACI to Ngāti Whakaue and Tūhourangi Ngāti Wāhiao. The land on which MACI operates, the Roto-a-Tamaheke Reserve, the Whakarewarewa Thermal Springs Reserve and the Southern Arikikapakapa Reserve, was in 2010 transferred by the Crown to the WJT.5 The WJT was established to hold those reserves on behalf of Ngāti Whakaue and Tūhourangi Ngāti Wāhiao until the respective interests of Ngāti Whakaue and Tūhourangi Ngāti Wāhiao in these lands had been determined by an adjudication panel in accordance with the beneficial entitlement determination procedure set out in the second schedule to the WJT Trust Deed. To date those interests
3 Established under s 4(1) of the New Zealand Maori Arts and Crafts Institute Act 1963.
4 As defined in the Schedule to the Deed of Settlement of the Historical Claims of the Affiliate
Te Arawa Iwi/Hapū (11 June 2008).
5 Pursuant to the Whakarewarewa and Roto-a-Tamaheke Vesting Act 2009.
have not been determined. A purported determination completed in 2014 was ultimately set aside by the Court of Appeal in 2017, and no new adjudication panel has been convened.6 As a result the appointment of trustees to the WJT continues to be determined by the first schedule of the WJT Trust Deed. In so far as Ngāti Whakaue is concerned, this means two of the WJT trustees are appointed by the Assets Trust to represent the three hapū, and two other trustees are appointed by the Pukeroa Oruawhata Trust to represent the descendants of one or more of the 295 listed owners set out in the decision of the Native Land Court in respect of the Pukeroa Oruawhata block.
[7] Notwithstanding the iwi interests in the reserve land remain unresolved, negotiations between the Crown, Ngāti Whakaue and Tūhourangi Ngāti Wāhiao for the transfer of MACI recommenced in 2013. The vehicle for Ngāti Whakaue and Tūhourangi Ngāti Wāhiao participation in these negotiations has been the through the WJT. An approval process for this to occur was undertaken with both Ngāti Whakaue and Tūhourangi Ngāti Wāhiao, following which negotiations commenced. The resulting negotiations have led to an Agreement to Introduce a Bill Vesting the Business of the Maori Arts and Crafts Institute (“the Vesting Agreement”), which was initialled by the parties on 1 June 2017. The effect of the Vesting Agreement was summarised by Riki Ellison on behalf of the Crown in the following terms:7
In summary, the Vesting Agreement proposes to vest the ownership of the MACI Business in the Te Puia/NZMACI Limited Partnership, 50 per cent of which would be owned by the Wahiao Tūhourangi o Whakarewarewa Trust (a new body representing [Tūhourangi Ngāti Wahiao], 25 per cent of which would be owned by HTK Te Puia Trust (a new body representing the Three Hapū) and 25 per cent of which would be owned by [Puheroa Oruawhata Trust], the existing body representing the owners of the Pukeroa Oruawhata land. The two new bodies have yet to be established.
The Vesting Agreement proposes that Te Puia/NZMACI Management Limited, the General Partner, and a wholly owned subsidiary of the Limited Partnership will manage the MACI Business on behalf of the owners. Shares in the business manager will be split in the same way as the ownership of the Limited Partnership.
The agreement provides that directorships of Te Puia NZMACI Limited (the business manager) are similarly allocated. Wahiao Tūhourangi o Whakarewarewa will provide four directors, and the Three Hapū and [Puheroa
6 See Ngāti Hurungaterangi v Ngāti Wahiao [2017] NZCA 429, [2017] 3 NZLR 770.
7 Affidavit of R J Ellison at [34]-[37].
Oruawhata Trust] each provide two. The Crown will appoint an independent Crown Representative as the Chairperson of the board for at least the first six years.
In this way, although the ownership of the Whakarewarewa Reserves and the ownership of the MACI Business are independent of each other, the proposed model for the ownership of the MACI business reflects the decision of the Adjudication Panel in respect of the land vesting, among other considerations.
[8] The ownership arrangements under the Vesting Agreement mirrored the then extant decision of the adjudication panel with regard to the respective iwi interests in the reserve land, but the interests were not reviewed when the adjudication panel’s decision was subsequently set aside by the Court of Appeal in September 2017.
[9] Despite this the Vesting Agreement underwent a ratification process. Although not a Treaty settlement it was ratified in a similar way through a series of information hui followed by a postal ballot. Overall the Vesting Agreement appears to have received overwhelming support from the postal ballot, with 89.5 per cent of those who voted from the three hapū, Pukeroa Oruawhata Trust, and Tūhourangi Ngāti Wāhiao voting in favour. Within the three hapū the result was closer, although of the 51.44 per cent of eligible three hapū voters who voted 75.3 per cent voted in favour of the Vesting Agreement, with 21.9 per cent against.
[10] In the meantime the plaintiffs, assisted by Mr Kahukiwa, had attempted to forestall the negotiations commencing through the WJT, and when that failed attempted to prevent the Vesting Agreement taking effect. First, in April 2014 a “three hapū hui” led to a request by Mr Kahukiwa for the Assets Trust “call a Ngāti Whakaue Hui a Iwi for the purposes of an election to refresh the four Ngāti Whakaue trustees on the [WJT]”. When the Assets Trust refused to call the hui, the plaintiffs sought to challenge the appointments of a number of the WJT trustees directly, and ultimately issued the present proceedings in which they allege that due to errors in the appointment process by the Assets Trust, the WJT did not have authority to enter into negotiations with the Crown, and that the Vesting Agreement is in consequence invalid.
[11] An application by the plaintiffs for interim orders to this Court was unsuccessful.8 The substantive proceedings are currently in the interlocutory phase with a number of significant interlocutory applications requiring determination of the next few months once the outcome of the present application is known.
Issue One – Was the correct procedure used to seek to restrain counsel?
[12] In submitting that the Assets Trust had used the wrong procedure Mr Warren, on behalf of the plaintiffs, relied upon the decision of McGechan J in Taylor v Black.9
In particular Mr Warren relied upon His Honour’s comments in the first part of that judgment that as the relief sought was against a non-party, it is best characterised as a stand alone application, not amenable to being an interlocutory application in a substantive proceeding.10 In that case McGechan J suggested the better course was to file an originating application to ensure the correct parties were named and represented, and able to conduct their cases in the usual way; Mr Warren submitted that this too was the appropriate course in the present proceedings.
Discussion – Issue One
[13] As Mr Kinsler noted on behalf of the Assets Trust, the issue of the appropriate procedure was in fact considered carefully by the Court of Appeal in Black v Taylor in light of McGechan J’s comments at first instance. Specifically, McKay J, with the approval of the other two members of the Court,11 confirmed:12
Further submissions were made on the subject of jurisdiction directed to the way in which the matter was brought before the Court. It was submitted that the Court had no jurisdiction to make an order against Mr Gazley on an interlocutory application brought in proceedings between the present parties, and that the proper approach would have been for the respondent to issue separate proceedings seeking relief on breach of confidence principles. No doubt proceedings could be brought directly against the barrister for a declaration or quia timet injunction where he was threatening the disclosure or misuse of confidential information. It does not follow, however, that the Court’s power to ensure the proper conduct of its business is limited to such cases. The application in the present case is concerned with the rights of the parties to the litigation. On the one hand, there is the right of the respondent
8 Mitchell v Mitchell [2017] NZHC 1759.
9 Taylor v Black HC Wellington CP157/92, 4 October 1992.
10 At 1-4.
11 Black v Taylor, above n 2, at 405 and 407.
12 At 419-420.
party to a fair hearing and to avoid being opposed by counsel who is in possession of confidential information so that justice may not be done or may not be seen to be done. On the other hand, there is the right of the appellants to the counsel of their choice. These issues are quite properly raised by an interlocutory application in the course of the proceedings.
The application was directed to the conduct of the substantive proceedings, and relied on the inherent jurisdiction of the Court. The application was not brought as one to restrain a threatened breach of confidence, but rather that the information he had received in confidence might influence his conduct of the proceedings as counsel in a manner detrimental to Mr M A Taylor, and that the Court should act to prevent such a situation from arising.
In this case the Judge considered that Mr Gazley ought himself to have the opportunity to be heard and to place evidence before the Court, and the way in which the matter was dealt with allowed him this right. The judgment records that counsel for the defendant trustees appeared also for Mr Gazley, and we were informed that counsel had in fact consulted with him and accepted instructions form him in respect of the application. Counsel for the trustees, who are the appellants in this Court, informed us that the same situation continued to apply. I agree with McGechan J that the procedure followed was expedient and caused no injustice. I am satisfied that the Court has jurisdiction, and that jurisdiction could properly be exercised on the interlocutory application before the Court.
[14] The issues considered by McKay J are directly relevant to the present application and there can be no doubt that the position set out by McKay J remains the law. The approach suggested has been followed in numerous cases.13 In this case
Mr Kahukiwa has sworn an affidavit in response to the allegations, although he has not sought to be separately represented on the application, nor has any party sought leave to cross-examine any witness. I am therefore satisfied that the procedure adopted by the Assets Trust in the present proceedings was appropriate and there is no basis to suggest the application should be withdrawn and recommenced as an originating application. I now move on to the other procedural issue raised by the plaintiffs.
Issue Two – Is the application premature as a result of the dispute resolution procedure in the Assets Trust Trust Deed?
[15] The evidence establishes that the Assets Trust first appeared to have raised the issue as to whether Mr Kahukiwa should continue to represent the plaintiffs in this
13 For example see New Zealand Māori Council v Foulkes [2014] NZHC 1225, Torchlight Fund No
1 LP (in rec) v NZ Credit Fund (GP) 1 Ltd [2014] NZHC 2552, [2015] NZAR 1486 and Morris v
Morris [2015] NZHC 2315, (2015) 23 PRNZ 604.
proceeding in March 2018. This occurred shortly after the Assets Trust had itself changed counsel. After an inconclusive exchange of correspondence the Assets Trust, through its solicitors, emailed a copy of the present application to the Registry in Rotorua at 5.20 pm on 19 June 2018 to which Mr Kahukiwa was copied. The email advised “the originals and filing fees follow by courier”. Supporting affidavits appear to have been emailed to the Court the next day and ultimately the application does not appear to have been accepted by this Court for filing until 21 June 2018.
[16] In the meantime, at 7.24 pm on 19 June 2018, one of the plaintiffs, Hokimate Kahukiwa emailed Katie Paul, an Assets Trust trustee and the Chair of the Assets Trust. The email stated:
I see that you and your fellow Trustee’s of the Assetts Trust are going to try and remove John Kahukiwa from the case.
As a Ngati Whakaue and of Ngati Taeotu descent I dispute that you are acting correctly and for the benefit of Ngati Whakaue and it’s Hapu, accordingly I raise the Dispute Resolution Procedure, under the Assett’s Trust Deed to urgently address my dispute.
Please let me have your proposal for how the process will be undertaken and urge that you and your fellow Trustee’s respond as soon as possible.
[17] Ms Paul responded:
Thank you for your email.
As this is an issue already before the Court and is a Court process is already in train, your request has been referred to the Trust solicitors who will respond on our behalf.
[18] Mr Warren submitted a notice of dispute under cl 18 of the AT Trust Deed was given before the present application was filed and therefore proceeding with the present application contravenes cl 18 of the AT Trust Deed which provides:
18 DISPUTE RESOLUTION
18.1 In the case of a genuine dispute between the Trustees or between any person of Ngati Whakaue and the Trustees a party may not commence any Court proceeding relating to the dispute until:
(a)Firstly, the party raising the dispute (“the first party'”) has given written notice to the other party (“the second party”) specifying the nature of the dispute (“Dispute Notice”) and the parties undertake in good faith to use all reasonable endeavours (including meeting on at
least on one occasion) to resolve the dispute within 60 days of the
Dispute Notice; and
(b)Secondly, if the genuine dispute has not been satisfactorily resolved by the date which is 60 days after the date of the Dispute Notice the first party may requisition the trustees of Te Komiti Nui O Ngati Whakaue .in writing to convene the Ngati Whakaue Registered Voting Hui in order to settle the genuine dispute by way of resolution in accordance with the Ngati Whakaue Voting Procedure.
[19] Mr Warren submitted this clause constitutes a fundamental “restriction on the [Assets Trust] trustees’ powers”, including in particular the power to file an interlocutory application, and enables the trustees to fulfil the “fundamental duty” set out in cl 8.2 of the AT Trust Deed that “each trustee will act in good faith and in a manner that is always consistent with Ngāti Whakaue tikanga,” and the principles of Whanaungatanga, respect for the mana held by others, and open communication. In Mr Warren’s submission by not agreeing to deal with the dispute in terms of cl 18 the AT Trust Deed, the trustees have not only breached cl 18 itself, but also cl 8.2.
[20] In the event that the dispute resolution procedures are given a chance to take effect it is Mr Warren’s submission that the application may not ultimately be required to be determined. In consequence the plaintiffs contend that the substantive proceedings should be stayed until the dispute resolution process has run its course.
Discussion – Issue Two
[21] For cl 18.1 to apply there must be not just a “genuine dispute” but a genuine dispute either between the trustees or between any person of Ngāti Whakaue and the trustees. Whenever it applies, no party “can commence any court proceedings relating to the dispute” until the dispute resolution process set out in cls 18.1(a) and (b) has run its course.
[22] Clause 18.1(a) and (b) in turn make it clear that in the event the dispute cannot be resolved by agreement a “voting hui of Ngāti Whakaue” can be convened to settle the genuine dispute by way of resolution in accordance with Ngāti Whakaue voting procedure.
[23] Taken together these provisions give rise to a number of problematic considerations in this case that go well beyond whether ‘notice of dispute’ was given before or after the present application was filed. First, cl 18.1 only purports to prevent the issue of “court proceedings relating to the dispute”. While court proceedings are not defined in the AT Trust Deed, “proceeding” is defined in r 1.3 of the High Court Rules 2016 (unless the context otherwise requires) as:
… any application to the court for the exercise of the civil jurisdiction of the court other than an interlocutory application.
[24] In the present case there have clearly already been proceedings issued and, for the reasons given above, I have already concluded the Assets Trust application has been correctly brought as an interlocutory application in the present case. As I explained at the hearing the plaintiffs chose to invoke the civil jurisdiction of this Court by filing the substantive proceedings: by doing this they not only chose to bring their own dispute with the trustees of the Assets Trust to the Court but also consented to be bound by the processes that apply to such proceedings, not only those set out in the High Court Rules, but also those involving the inherent jurisdiction of the Court of the type at issue in the present application. Viewed in that context the present application by the Assets Trust is therefore required to address an issue that has arisen in the course of the plaintiffs’ own proceeding against the Assets Trust and WJT trustees. It has no independent life outside those proceedings brought by the plaintiffs and I am satisfied it is not therefore a “court proceeding” in its own right. This conclusion is sufficient to deal with the procedural issue raised by the plaintiffs.
[25] In addition, and perhaps even more fundamentally, it is difficult to see how the matters at issue in the present application could otherwise come within the type of dispute contemplated by cl 18. As will be detailed in the next section of this judgment, at issue is this Court’s inherent jurisdiction to control its officers, which is what
Mr Kahukiwa and the other solicitors that make up his firm are. The issue in dispute is not therefore a dispute between the trustees and a member of Ngāti Whakaue but rather whether the Court is satisfied, in terms of Mr Kahukiwa’s obligations to this Court, it is appropriate for him and his firm to continue acting for the plaintiffs. An issue like this is ultimately not capable of resolution “in accordance with the Ngāti Whakaue voting procedure” as provided for in cl 18.1(b), as the outcome of any
vote does not assist the Court in determining whether it is appropriate for
Mr Kahukiwa to continue acting for the plaintiffs as it is required to do once the issue has been raised.
[26] I therefore conclude the dispute resolution procedures contained in cl 18 do not prevent determination of the Assets Trust application. As a result I now turn to consider the substantive objection raised by the plaintiffs.
Issue Three – Should Mr Kahukiwa and Corban Revell be restrained from continuing to act for the plaintiffs?
[27] In the event that the procedural arguments on behalf of the plaintiffs were not accepted Mr Warren submitted that Mr Kahukiwa did not possess any information of the kind that would disqualify him from continuing to act for the plaintiffs. While acknowledging Mr Kahukiwa had acted for the Assets Trust as one of its solicitors for a considerable period, during which time he had drafted the AT Trust Deed, he had acquired neither information relevant to the Court proceedings nor intimate details of the parties.
[28] Mr Warren went on to submit that the decision of Williams J in New Zealand
Māori Council v Foulkes is particularly relevant, involving as it did Māori issues and trust structures.
Legal principles
[29] The legal principles are well established having been reviewed and applied in a number of recent cases.14 The starting point remains Black v Taylor, where the Court of Appeal confirmed that this Court has an inherent jurisdiction to disqualify a solicitor from acting against a former client where counsel’s representation of one party against the other may impair the integrity of the judicial process.15 The cases are clear that the integrity of the justice system will be impaired where counsel has a conflict of interest or there is an appearance of a conflict of interest such that justice will not be
14 Torchlight Fund No 1 LP (in rec) v NZ Credit Fund (GP) 1 Ltd, above n 13, Morris v Morris, above n 13, and SO Systems Ltd v Soluxury HMC [2017] NZHC 280.
15 Black v Taylor, above n 2, at 412.
seen to be done.16 In a number of cases the test is couched in terms as to whether a fair minded, reasonably informed member of the public would conclude the proper administration of justice requires that a legal practitioner should be prevented from acting.17
[30] Recent authority in the High Court has also gone on to apply the House of Lords decision in Prince Jefri Bolkiah v KPMG (a firm).18 In that case the House of Lords concluded that a party seeking to restrain a former solicitor must establish:19
(a)that the solicitor is in possession of information which is confidential to [the plaintiff] and to the disclosure of which he [or she] has not consented; and
(b)that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own.
[31] As Lord Millet observed in Prince Jefri, the burden on a party in meeting both limbs of that test is not a heavy one. The former may be readily inferred and the latter will often be obvious.20
[32] As Edwards J observed in Morris v Morris, the test articulated by Lord Millet is consistent with r 8.7.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (“Client Care Rules”):21
8.7.1 A lawyer must not act for a client against a former client of the lawyer or of any other member of the lawyer's practice where—
(a)the practice or a lawyer in the practice holds information confidential to the former client; and
16 At 418.
17 Black v Taylor, above n 2 at 412; Deliu v Auckland Standards Committee 1 [2014] NZHC 2530 at
[22]; SO Systems Ltd v Soluxury HMC [2017] NZHC 280 at 15.
18 Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 (HL). I note this decision rejected the conclusion of the New Zealand Court of Appeal in Russell McVeagh McKenzie Bartleet & Co v
Tower Corporation [1998] 3 NZLR 641 (CA) in which the Court of Appeal had declined to restrain
Russell McVeagh from acting against a former client. The case against Russell McVeagh was however expressly not brought on the basis that the Court’s inherent jurisdiction was invoked, but rather on what basis a law firm could be prevented from acting when a Black v Taylor situation did not exist. See Russell McVeagh McKenzie Bartleet & Co v Tower Corporation [1998] 3 NZLR
641 (CA) at 659. Prince Jefri, on the other hand, was concerned with the exercise of the Court’s inherent jurisdiction and therefore provides assistance in the contemporary interpretation of Black v Taylor.
19 At 235.
20 At 235.
21 Morris v Morris, above n 13, at [21].
(b)disclosure of the confidential information would be likely to affect the interests of the former client adversely; and
(c)there is a more than negligible risk of disclosure of the confidential information; and
(d)the fiduciary obligation owed to the former client would be undermined.
[33] The case law demonstrates that where the lawyer only holds information of a “generalised nature” with “little relevance to the determination of the substantive proceeding”, that will not be sufficient to justify disqualification.22 But where the lawyer holds “a considerable quantity of information” and has acted for the parties over a lengthy period there will be grounds for disqualification.23 Ultimately however, as the Court of Appeal emphasised in Black v Taylor, the decision to disqualify is not dependent on any finding of culpable conduct on the lawyer's part; rather it turns on whether it is necessary to protect the interests of the parties and the wider interests of justice. It follows:24
Where the integrity of the judicial process is perceived to be at risk from the proposed or continuing representation by counsel on behalf of one party, disqualification is the obvious … remedy …
Discussion – Issue Three
[34] I begin my analysis by considering the allegations made by the plaintiffs against the defendants, both the Assets Trust and trustees of the WJT.
[35] The second amended statement of claim filed on 21 May 2018 states in relation to the Assets Trust:
119. In the circumstances, the Assets Trust has breached the Assets Trust Fiduciary Duty and/or the Assets Trust Duty of Care in that, at all material times, the Assets Trust:
119.1 Failed to take reasonable care when exercising the
Power including failing to:
(a) Ascertain its duties in exercising the Powers;
22 At [32]-[33].
23 Black v Taylor, above n 2, at 407; and Torchlight Fund No 1 LP (in rec) v NZ Credit Fund (GP) 1
Ltd, above n 13, at [27]
24 At 412.
(b)Ascertain the relevant facts and/or the law regarding the Purported [appointment of Bryce Murray] and/or the Assets Trust Refusal;
(c)Appoint [Veronica Butterworth] and/or [Hokimate Kahukiwa] as WJT trustees when obliged to do so;
(d)Remove [Kiri Mitchell] as a WJT trustee when obliged to do so.
119.2 Appointed [Bryce Murray] as a WJT trustee without any valid and/or lawful reason for doing so;
119.3 Exercised the Appointment Power for the benefit of the Assets Trust, being an improper exercise of the Assets Trust Fiduciary Duty;
119.4 Failed to consult the 3 Hapu through the tikanga institution of the hui, or in reliance on such a hui (at tikanga) having taken place, in making the [appointment of Bryce Murray] …
[36] In short, the plaintiffs allege that the Assets Trust failed to accept that the first defendant, Kiri Mitchell, was no longer a trustee of the WJT after 17 November 2017 and wrongfully appointed the fifth defendant, Bryce Murray, as a trustee to the WJT. As a result the plaintiffs contend, amongst other things, that the Vesting Agreement is “void ab initio” or “voidable/invalid/avoidable/unable to be proceeded with for want of legitimate consent …”.25
[37] The relief against the Assets Trust and the WJT trustees, pleaded as it is in terms of a breach of a fiduciary duty and/or negligence, therefore depends to a significant degree on what steps the Assets Trust trustees had taken to ascertain their powers and duties under the AT Trust Deed. In this regard it is not disputed that after drafting the current AT Trust Deed Mr Kahukiwa provided advice to the Assets Trust trustees about their powers and duties under it. The detail of the advice provided is not before the Court but the nature and extent of that advice has clearly been put in issue in the proceedings as they are currently drafted, and it is to be expected that the advice provided by Mr Kahukiwa would be a matter for detailed cross examination at hearing. In those circumstances it is difficult to see how Mr Kahukiwa could possibly
continue as counsel in order to cross-examine the Assets Trust trustees about their
25 Second Amended Statement of Claim at paragraph 124.2(h).
understanding of their powers and duties under the AT Trust Deed without the detail of his advice to them coming up, with considerable possibility for conflict if
Mr Kahukiwa was to disagree with any evidence given by an Assets Trust trustee over the advice he (Mr Kahukiwa) had or had not given. Even the fact that Mr Kahukiwa knows what advice was given to the Assets Trust trustees about their powers and duties provides a significant advantage in the cross-examination of the Assets Trust trustees and remains such whether or not Mr Kahukiwa directly cross-examines the Assets Trust trustees or acts as a solicitor and briefs counsel, as his knowledge comes from the confidential, legally privileged relationship between him and those trustees on that issue.
[38] Similar issues arise over the Assets Trust’s appointment of Bryce Murray as a
WJT trustee. In particular Assets Trust trustee Jason Rogers gave evidence:
I spent a bit of time on the phone talking to Mr Kahukiwa about the appointment of Bryce Murray to the WJT trust and the shareholding structure and proposed vesting of Te Puia in 2017, in particular between July and September of that year. In phone conversations with Mr Kahukiwa I recall asking him questions about what the shareholding should be in Te Puia and Mr Kahukiwa expressing his own view on how the shareholding should be allocated. He said to me that Ngāti Whakaue should receive 75 per cent of the holding. I recall asking him how would you go about establishing that, and he said something like oh we just need to call a hui or that he was sure he could get some affidavits from kaumātua in the tribe. He told me about their frustration with the incumbent trustees not meeting their expectations and that they were not happy with them.
Mr Kahukiwa also approached me for information about documents that are now subject to the current litigation, including copies of the appointment letter, and the letter Ana Morrison sent to him refusing to call a Hui a Iwi in
2014 and I provided him with some documents after discussing it with the other trustees in early July 2017. He approached me directly as he said our Chairperson had not responded to him satisfactorily. At that time he had also been receiving correspondence from East Brewster, who we had engaged as our solicitors at that time.
We were advised that Mr Kahukiwa on behalf of the plaintiffs had brought this proceeding against us on or around 20 July 2017. He called me in September 2017 to seek our position on the election process for the WJT called in the Daily Post earlier that month. He told me that he considered our lawyers, East Brewster, were conflicted as they have provided advice to the WJT.
[39] In his own affidavit Mr Kahukiwa does not deny the conversations with
Mr Rogers occurred as described but simply asserts “that in none of those conversations was I acting as lawyer for Assets Trust”. Mr Kahukiwa went on:
… no invoice was rendered to AT for such calls since no advice was sought, and none given. Rather, I had called Mr Rogers for information since there were growing concerns about how Mr Bryce Murray had become a trustee on the WJT, seemingly in place of Mr George Mutu when no hui of the 3 Hapu had been called previously to discuss and support that appointment. In my view we were conversing as Ngati Whakaue. And, in other conversations that Mr Rogers and I had over the years, again which he has cared to mention, I say that those conversations, from my memory, were of the same kind- Ngati Whakaue members talking about Ngati Whakaue issues. I would also like to make clear that any commercial opportunities that arose for the 3 Hapu and for Ngati Whaukaue, again which Mr Rogers says that he and I discussed, were as a result of the work being done by the leadership in higher level conversations with the Crown, government and the Councils. To some extent my knowledge about these things was coming from my role as a negotiator for Ngati Whakaue.
[40] Mr Kahukiwa’s response illustrates the difficulty of keeping his different roles within Ngāti Whakaue separate. Mr Kahukiwa may have thought it was clear what hat he was wearing at the time he spoke to Mr Rogers, but it is less clear that others would have perceived it that way given he continued to act as a solicitor for the Assets Trust through until early 2018, well after the issue of proceedings against the Assets Trust and the WJT trustees. Quite clearly difficulties arise in trying to explore what was said by Mr Rogers and Mr Kahukiwa if Mr Kahukiwa was cross-examining
Mr Rogers, an eventuality that would clearly be inappropriate in the circumstances.
[41] Furthermore, significant issues arise not just as between Mr Kahukiwa and the Assets Trust trustees. In his evidence in opposition to the Assets Trust application the first named plaintiff, Hamuera Mitchell, made the following assertion:
I do not contest that Mr J Kahukiwa provided legal services to the Assets Trust especially in its formative years and later in relation to a couple of commercial transactions. But my understanding is that his advice was confined to ensuring that the legal contractual documents that the trust was entering into were properly and legally executed. At no stage during these proceedings was Mr Kahukiwa asked for his advice of a policy or governance nature. This remained the prerogative and responsibility of the trustees alone to decide.
[42] No basis for Mr Mitchell’s assertion is given. Leaving aside that the comment is, on the face of it, inadmissible hearsay, it suggests Mr Mitchell has discussed the
scope of the advice given to the Assets Trust trustees with Mr Kahukiwa. That such may have occurred is in fact not surprising; Mr Kahukiwa after all is under a legal duty pursuant to r 7 of the Client Care Rules which provides:
A lawyer must promptly disclose to a client all information that the lawyer has or acquires that is relevant to the matter in respect of which the lawyer is engaged by the client.
[43] As Mr Kinsler noted even if Mr Kahukiwa has not yet spoken about the extent of the advice provided to the Assets Trust trustees with the plaintiffs, he is required to, thereby placing himself into a state of significant conflict for the purposes of the current proceedings. This issue in turn illustrates the Court must be concerned not just with the potential prejudice to the Assets Trust (and the follow on effects to the WJT trustees), but also the possibility of significant prejudice to the plaintiffs as well. In this regard it is noted that both the original and amended statements of claims filed on behalf of the plaintiffs included the claim that the Assets Trust had:
Failed to exercise the Ngati Whakaue Hui a Iwi Power when called upon to do so and/or when obliged to do so, including at times when WJT trustees numbered 1-4 inclusive were acting in breach of the WJT Trustee Defendant Fiduciary Duties, by among other things, failing to act in the best interests of Ngati Whakaue.
[44] That allegation does not feature in the second amended statement of claim of
21 May 2017, notwithstanding paragraph 47 of the current pleading still records that the Assets Trust had declined to call a Ngāti Whakaue Hui a Iwi when requested to do so in July 2014. No reason for the removal of this allegation against the Assets Trust has been given. What is clear however is, as previously noted, it was Mr Kahukiwa who requested that a Ngāti Whakaue Hui a Iwi be convened. Specifically
Mr Kahukiwa emailed Ana Morrison, a trustee of the Assets Trust, about the power (contained in the WJT Trust Deed). When queried by Ms Morrison that she was unaware of the power referred to by Mr Kahukiwa, Mr Kahukiwa responded:
In accordance with your request I am sending through the deeds for both the WJT and Te Komitinui O Ngati Whakaue. This email attaches the WJT. A second subsequent email will attach the current rules of Te Komitinui.
I don’t know of any other Deeds of Trust that Assets Trust is “in”.
I do not understand your comment that “you are not impressed that this is the first you have heard of this”. As you know (or at least I hope you do know) I
am always too happy to meet with trustees to go over anything trustees wish to. This includes the structure that Ngati Whakaue put in place in 2008, and which continues today. All you have to do is ask, and I will be there. I don’t recall being asked to provide a briefing to the present trustees. I am therefore unable to “know” what you claim you don’t know.
As to the “power” to call the Hui a Iwi- that’s all it is. To that extent, it is an administrative function in which the interests of these 3 Hapu are served, and who by the way are part of the reason why Assets Trust has in its care a capital base of $9m, deriving from their territory into Tokorangi Block and Whakarewarewa State Forest.
As counsel, I nevertheless continue to be this trusts most humble servant.
(Emphasis added)
[45] Had the allegations the Assets Trust trustee breached their duties by not calling a Ngāti Whakaue Hui a Iwi remained in the second amended statement of claim there could be no doubt that Mr Kahukiwa would not have been able to continue acting in the substantive proceedings given his role on that issue, and in particular his explanation of the Assets Trust trustees powers which specifically noted that he remained counsel to the Assets Trust. As Mr Kinsler submitted the removal of the allegation also arguably provides an example that “the conflict the Assets Trust alleges in this application is already exerting its pressure on the shape of the claim in an inappropriate way”; that other than to avoid disqualifying Mr Kahukiwa the allegation about the refusal to call a Ngāti Whakaue Hui a Iwi would have otherwise remained part of the plaintiffs’ substantive claims against the Assets Trust.
[46] Ultimately the legal test does not require me to make final conclusions on any of these matters as the focus is on the perception of the integrity of the justice system in the eyes of the fair minded, reasonably informed observer. The situation is quite different from that in New Zealand Māori Council v Foulkes, referred to me by
Mr Warren. That case, in contrast to the present, involved a dispute between trustees who had all received the same advice from the trust solicitor who was the subject of a restraint application.26 Furthermore in that case, the issue was over the direction of
the trust and as such it was not a case where one set of trustees was suing the other in
26 New Zealand Māori Council v Foulkes, above n 13, at [43](e).
any real sense.27 Finally the most significant issues that could potentially have given rise to a conflict had in fact already been determined in other decisions by the Court.28
[47] The situation is quite different in the present case. The examples set out above show that Mr Kahukiwa is in possession of information which could be considered to be confidential, which is clearly relevant to the proceedings, and which the Assets Trust has not consented to disclose. For the reasons detailed above, because of his involvement in the matters in dispute there is a high likelihood that Mr Kahukiwa will need to give evidence in the substantive proceedings which is sufficient to require
Mr Kahukiwa to immediately cease acting.29 Even if he is ultimately not so required,
it is difficult to see how he could carry out his role as counsel without breaching his duties to either the Assets Trust or to the plaintiffs, while restraining Mr Kahukiwa without also restraining his firm does not provide sufficient protection for any of the parties.
[48] Taken together I have no hesitation in concluding that a fair minded, reasonably informed member of the public would conclude that the proper administration of justice requires Mr Kahukiwa and Corban Revell to be restrained from acting further for the plaintiffs in this proceeding. I acknowledge that this is unfortunate for the plaintiffs as they will now have to brief other counsel who will not be as familiar with the specific matters at issue, or indeed broader Ngāti Whakaue issues as Mr Kahukiwa obviously is. It is not clear whether tikanga would have allowed Mr Kahukiwa to choose to act for one part of Ngāti Whakaue against another as no evidence of relevant Ngāti Whakaue tikanga has been produced, but ultimately it is not necessary to determine that issue. As a Māori and indeed Ngāti Whakaue solicitor, Mr Kahukiwa necessarily walks in two worlds; not only must he endeavour to act in a manner consistent with Ngāti Whakaue tikanga but also, in the context of the present application, in a matter consistent with his professional obligations as a barrister and solicitor of the High Court, and it is my conclusion on the facts before me that he
cannot do so in this case.
27 At [43](d).
28 At [43](a) and (c).
29 Client Care Rules, r 13.5.2.
Decision
[49] The application is granted. Mr Kahukiwa and Corban Revell are not to act as either solicitors or counsel for the plaintiffs in proceeding CIV-2017-463-61.
[50] The Registrar is to schedule a telephone conference before me in one months’ time to discuss arrangements for the hearing of the remaining interlocutory applications. In the interim the plaintiffs are to arrange to brief new solicitors and counsel so that the conference and the hearing of the remaining interlocutory application can proceed without further delay.
[51] The Assets Trust is entitled to costs on the application which I fix on a 2B basis. In the event there is any dispute with regard to the amounts to be paid I will determine the issue following receipt of memoranda of not more than five pages each.
Powell J
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