Moleta v Darlow

[2021] NZHC 564

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-000858 CIV-2019-404-001469

CIV-2020-404-002264 [2021] NZHC 564

BETWEEN

DELLISSE MOLETA

Plaintiff/Defendant

AND

CHRISTOPHER DARLOW

First Defendant/Plaintiff

AND

JOLENE SCHOLLUM

Second Defendant

AND

LORRAINE MOLETA

Third Defendant

Hearing:

(On the papers)

Counsel:

Patrick Kennelly for the Plaintiff/Defendant Garry Williams for the First Defendant/Plaintiff

Peter Fuscic and Kate Thompson for the Second Defendant Kimberly Lawrence for the Third Defendant

Judgment:

18 March 2021

JUDGMENT OF MOORE J

This judgment was delivered by me on 18 March 2021 at 5:30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar / Deputy Registrar Date:

MOLETA v DARLOW & ORS [2021] NZHC 564 [18 March 2021]

Introduction

[1]    Dellisse Moleta (“Dellisse”) applies for an order adjourning the seven-day fixture due to start on 10 May 2021.

[2]    The second and third defendants, Jolene Schollum (“Jolene”) and Lorraine Moleta (“Lorraine”) oppose the application and, in the alternative, submit that in the event the application is granted unless orders should be made compelling Dellisse to comply with timetabling directions with a view to any new trial proceeding after mid- July 2021 on a priority basis. In any event they seek costs on a 2B basis with 50 per cent uplift.

[3]    The first defendant, Christopher Darlow, the substituted trustee, maintains a neutral position.

Background

[4]    I have previously described the background to these proceedings as in “tortuous”.1 The most recent developments add to that complexity. It is necessary to traverse them, albeit briefly, to provide the context for my conclusions which follow.

[5]    The proceedings relate to a challenge to the last will of Janette Moleta who died in Auckland on 15 July 2017. Probate was granted out of the Wellington High Court on 20 November 2017. Dellisse, Jolene and Lorraine are the children of Janette.

[6]    Janette left her entire estate to Dellisse who she appointed as sole executor. The estate is comprised of three residential properties in Auckland with a combined estimated value of between $4 million and $5 million.

[7]    In March and July 2018 respectively, Jolene and Lorraine brought applications in the Family Court under the Family Protection Act 1955 (“the FPA”) seeking an order that Janette had breached her moral duty by failing to make adequate provision for them in her will. Progress towards a fixture in the Family Court was slow, due

1      That please Minute of 12 February 2021. That is no overstatement.

largely to failures by Dellisse to meet various directions primarily, it appears, because of changes in her legal representation.

[8]    On 8 May 2019, that is about four months after Jolene had commenced her FPA proceedings, Dellisse filed in this Court a constructive trust claim against the estate. The parties agreed to transfer the FPA claims to this Court to be consolidated with Dellisse’s constructive trust claim.

[9]    There then followed a number of procedural skirmishes in this Court. These included the filing of an application for directions under s 33A of the Trustee Act 1956 at the direction of Associate Judge Andrew and, later, a parallel application brought by Lorraine, supported by Jolene, seeking the removal and replacement of Dellisse as executor and trustee.

[10]   I heard those applications and delivered my judgment on 13 October 2020.2 I granted the application to remove Dellisse and appointed Christopher Darlow, solicitor of Auckland, in her place. Given that result I dismissed the application for directions under s 33A as unnecessary.

[11]   However, matters did not end there. By memorandum dated 22 October 2020 Lorraine advised that after my judgment was issued she became aware that Dellisse had transferred the three estate properties into her personal name. This, apparently, occurred on 10 June 2020 nearly a month before I heard the application for removal. Other than Dellisse, it seems that this fact was not known to any of the parties or their legal representatives until Lorraine’s lawyer brought the matter to my attention.

[12]   A week later, on 29 October 2020, counsel for Mr Darlow filed a memorandum seeking directions. He advised that Mr Darlow intended to initiate summary judgment proceedings against Dellisse to recover the properties and obtain equitable compensation. Shortly afterwards, Dellisse’s solicitor sought leave to withdraw citing an irreconcilable breakdown of the solicitor/client relationship. I noted at the time that this was the latest in a long procession of solicitors and counsel who had withdrawn or who had had their services terminated by Dellisse.

2      Molleta v Molleta and Ors [2020] NZHC 2680.

[13]   On 6 November 2020 I convened a telephone conference to discuss these developments.  By this time Dellisse was represented by new counsel, Ms Wroe.   Ms Wroe advised me that Dellisse wished to reassure the Court that there was no “ill intent” in the transfer of the titles. She had received legal advice that the properties should be transferred into her own name and her lawyers, acting on the estate issues, were unaware of the proceedings in this Court. Through Ms Wroe, Dellisse accepted that two of the properties should be transferred into Mr Darlow’s name but attempted, unsuccessfully, to persuade me that the third property should be retained in her name pending its sale.

[14]   That should have been the end of the matter. However, the properties were not transferred as had been agreed. Instead, Dellisse sent an email directly to the Court taking issue with various aspects of Mr Darlow’s conduct. Her complaints were couched in personal and insulting terms. They were utterly without foundation. The only excuse for Dellisse approaching the Court directly was that Dellisse was now acting for herself again, Ms Wroe having become the latest causality in Dellisse’s pattern of shedding her legal representation.

[15]   On 21 December 2020, I convened an urgent telephone conference at the request of counsel for Lorraine. This was because no timetabling directions had been made and given the proximity of the substantive fixture I considered that such orders were necessary before the commencement of the Christmas/New Year break to ensure the trial was not put at risk. That position was exacerbated by the fact that Dellisse was still unrepresented.

[16]   The telephone conference of 21 December 2020 was somewhat unsatisfactory in that Dellisse complained that she had not received the various memoranda of counsel. She continuously spoke over the parties despite being told not to and did not seem to have any real appreciation of how seriously the Court regards unfounded attacks of the sort Dellisse was alleging. She claimed she had not received the various memoranda and Minutes generated by the Court and parties because one of her former lawyers had not returned the files. She asked that the conference be adjourned. I directed that all documents were to be sent to her at the email address she gave. I made timetabling directions which required Dellisse to give discovery and inspection

of all documents in her possession, power or control relative to her constructive trust claim by 22 January 2021. These were particularised in my Minute. Lorraine and Jolene noted that it may be necessary for the parties to file further, updated affidavits but did not seek, at that time, the making of orders to that effect. I granted leave for parties to apply for discovery in respect of the FPA claims if, on reflection, they considered such an order was necessary. I also made directions in relation to the filing of further evidence and submissions.

[17]   On 12 February 2021, I converted Mr Darlow’s summary judgment application into a further case management conference. This was because in late December 2020 the properties had been transferred to Mr Darlow as trustee. None of the discovery orders in respect of the constructive trust claim had been complied with by Dellisse. Jolene and Lorraine had filed their affidavits of documents in accordance the timetabling directions. At the conference Dellisse was represented by new counsel, Mr Kennelly. I explored with the parties whether the trial was at risk. Mr Kennelly was at some disadvantage in this discussion given he had only very recently been instructed. However, he advised that Dellisse had been in touch with her accountants for the purposes of discovery. As I observed in my Minute of 12 February 2021, somewhat perversely, he advised that Dellisse would not, however, disclose to him the identity of her accountants. He also advised that the rest of the documents relevant for discovery purposes were in storage in Auckland but he was not permitted access to those documents unless Dellisse was physically present. Given that she is now resident in Australia, this posed something of a practical difficulty, particularly given the present travel restrictions.

[18]   While Mr Williams, for Mr Darlow, adopted a neutral position on the question of an adjournment, he pointed out that in the absence of relevant documentation relative to the constructive trust claim, Mr Darlow is unable to assess the merits of the claim and, more particularly, whether it should be pursued or abandoned by the estate.

[19]   As was pointed out by Jolene and Lorraine, the difficulties claimed by Dellisse were far from insuperable. The banking and accounting records would be easy to source and Mr Darlow had, himself, obtained documents in relation to two of the properties. Unsurprisingly, Jolene and Lorraine expressed their extreme frustration at

this turn of events, submitting that new timetabling orders were now required to be made and, ancillary to these, they should be made on an “unless” basis. The delays were prejudicing both sisters and Dellisse should not be permitted to continue to frustrate the Court’s processes as she has, so evidently and successfully, in the past.

[20]   I directed that if Dellisse intended filing an application for an adjournment this should be done expeditiously and with supporting evidence. I made timetabling orders.

[21]   The matter next came before me on 26 February 2021 for the purpose of considering the application for an adjournment which Dellisse had, by that time, filed. I directed that Lorraine and Jolene file any submissions in opposition and I granted leave to Dellisse to file evidence in reply to her sisters’ affidavits.

The application

[22]   Mr Kennelly, for Dellisse, advances a range of grounds in support of her application for an adjournment. However, these can be summarised as follows;

(a)Dellisse would be prejudiced if the fixture proceeded because she cannot readily comply with the directions made to produce documents to Mr Darlow nor comply with the discovery orders relative to her constructive trust claim;

(b)the directions for the filing of evidence and compliance with discovery were made five months out from trial;

(c)the fault for any failure to comply with timetabling directions rests with all parties, not just Dellisse;

(d)when the December directions were made, Dellisse was in Australia and the issues/complications of travelling to New Zealand were not considered or addressed by the Court;

(e)Dellisse’s home in New Zealand is the subject of a re-clad which started in September 2020 and is not expected to be completed before July

2021. If she was to return to New Zealand she would have nowhere to stay and she has no funds to meet the costs of rental accommodation; and

(f)Dellisse left New Zealand for Australia after the July hearing because she had nowhere to live in New Zealand.

[23]   In opposition, Jolene and Lorraine jointly submit that it is Dellisse, through her delaying and other tactics, who has placed the Court in the position it now finds itself. They submit that she has not taken a single proactive step to progress her own claim but, instead, has attempted to obstruct Mr Darlow, failed to maintain legal representation in progressing her own claim and taken up valuable time in October and November 2020 which could more usefully have been applied to progress her claim.

[24]   Furthermore, they submit that she has made no attempt whatsoever to comply with the discovery timetable orders. Instead, she has made an informed decision not to take steps to comply, a situation which is entirely of her own making and which should count against the granting of an adjournment even if she was to suffer some prejudice.

[25]   On the question of prejudice to Dellisse, her sisters submit that other than the costs of complying with the timetable, there is no discernible prejudice. She could appear at the trial by AVL. Her lawyers can scan any documents to discuss them with her either by telephone or email, or by Zoom or other remote participation facility.

[26]   Lorraine submits there is significant prejudice to her if an adjournment was granted. She and her sister are of limited means. They have borrowed significantly to fund this litigation. Lorraine will incur additional interest costs of approximately

$60,000 if the trial is delayed. Furthermore, given Dellisse’s conduct to date, it is all but inevitable there will be further interlocutory hearings.

[27]   They point out that there is a strong public interest in the expeditious resolution of disputes, particularly disputes of this kind which have “hung over [the sisters’] heads for far longer than any FPA claim should have”.

[28]   Both claim they are ready to proceed with the current fixture and do not oppose adjusting the timetable so that Dellisse can provide discovery prior to the hearing. They set out a proposed timetable.

[29]   Alternatively, in the event the adjournment is granted, Lorraine and Jolene submit that unless orders should be imposed and that striking out the constructive trust claim is a proportionate response having regard to all of the circumstances of the litigation and, in particular, Dellisse’s conduct.

[30]   In any event, costs should be awarded to them in respect of all memoranda filed and appearances required since December 2020 on a 2B basis. They submit a 50 per cent uplift is appropriate.

Legal principles

[31]Rule 10.2 of the High Court Rules 2016 provides:

“10.2   Adjournment of trial

The court may, before or at the trial, if it is in the interests of justice, postpone or adjourn the trial for any time, to any place, and upon any terms it thinks just.”

[32]   As Tipping J observed in O’Malley v Southern Lakes Helicopters Limited, in determining where the interests of justice lie the Court is required to undertake a balancing act weighing the respective interests of the parties.3

[33]   However, as this Court has previously noted, the interests of the parties are not the only matters which require consideration particularly where a trial is expected to occupy a week or more. In such cases there is something of a “knock on” effect in

3      O’Malley v Southern Lakes Helicopters Limited HC Christchurch CP513/89, 4 December 2019 “… one must not overlook that not only is it necessary is it to do justice to the party who was seeking the adjournment but also justice to the party who wishes to retain the benefit of the fixture. It is essentially a balancing exercise”.

terms of other litigation. If an adjournment is granted, further time needs to be allocated for its hearing. Litigants in unrelated proceedings will, necessarily, be affected if the hearing of their matter is consequentially delayed.4 Relatedly, this Court has finite resources in terms of the availability of courtrooms, staff, logistics and judicial capacity. These are all matters a Court must consider when determining where the interests of justice may lie in a particular case.

Discussion

[34]   From the chronology set out above, I am easily satisfied that Dellisse’s application for an adjournment has, all but entirely, been caused by the dilatory nature of her participation in virtually all aspects of this litigation. Right up to the present, including her most recent affidavit, Dellisse complains that her sisters’ FPA claims are wholly without merit and have been brought directly against the clear and unequivocal wishes and directions of her mother. This may explain, at least in part, her lamentable conduct throughout the course of those proceedings in the Family Court and more recently in this Court. It may also explain what can only be described as the most extraordinary procession of changes in legal representation. I shall not attempt to calculate the number of lawyers who have acted for Dellisse. In her affidavit she has pointed out that while she dispensed with the services of some, others elected to withdraw. As I have previously noted, every litigant is entitled to terminate their instructions, but the adverse consequences of that course should not be visited on the other litigants.

[35]   In that context I am particularly conscious of the financial impost on Lorraine and Jolene who have borrowed extensively to fund their claims and have pursued them without delay and in general compliance with the various timetabling orders. And yet it would seem that Dellisse is unwilling to utilise her own, and arguably, greater resources to progress her own claim. There is some force in her sisters’ submission that Dellisse’s conduct amounts to an attack on the integrity of the system of justice. There is also a strong public interest in the expeditious resolution of this destructive

4      Gray v Thom (1997) 20 PRNZ 373 (HC) at 379: Commissioner of Inland Revenue v Patel [2013] NZHC 477.

intra-familial dispute which has been hanging over everyone’s heads for longer that than it ever should.

[36]   I also do not accept Dellisse’s claim that by reason of her dislocation in Australia she has been unable to comply with my discovery orders. That assertion does not bear scrutiny for the following reasons. First, Dellisse says that the accounting and financial records are with her accountants. I assume they are local. However, for some reason which remains unexplained, she apparently refuses to disclose to Mr Kennelly their identify. That is extraordinary and, on its face, a patent repudiation of this Court’s orders. The process of completing discovery is not frustrated by Dellisse’s dislocation but is, instead, frustrated by her manifold unwillingness to co-operate. It would be a relatively simple task for Dellisse to instruct her accountants to co-ordinate their efforts with Mr Kennelly to ensure that proper discovery is given of the financial and related records. Secondly, Dellisse advises that the balance of the discoverable documents is in storage in New Zealand, I assume Auckland. However, Dellisse apparently refuses to permit Mr Kennelly access to them unless she is physically present. That, too, is an extraordinary stance for her to adopt. On its face, without further explanation, it is entirely unacceptable. It is not only routine, but an absolutely necessity, for parties to give their legal representatives unrestricted access to such material for the purpose of determining its discoverability. It is the role of lawyers to review all of the available material for that purpose. In doing so they will, of course, consult with their client. That does not require the physical presence of the client. Indeed, it is not at all uncommon for the discovery process to occur remotely where clients maybe domiciled offshore. Modern communication technology has greatly facilitated this in recent years. No reason has been advanced, either by Dellisse or Mr Kennelly, as to why such a process could not or should not work in the present circumstances and in relatively short order.

[37]   The only other issue which might operate in favour of an adjournment is the position of Mr Darlow as the replacement trustee. Mr Williams, for Mr Darlow, has rightly adopted a neutral position on the question of an adjournment. However, he did point out that in the absence of relevant documentation relative to the constructive trust claim, Mr Darlow is unable to properly assess the merits of the claim and whether

the estate should defend it or not. However, once the relevant documentation is in counsel’s hands he will be in a position to make that assessment.

[38]   The fixture is still approximately two months away. That is ample time for all discovery to be completed by Dellisse and for this matter to be in a fit state ready to proceed as scheduled. Naturally,  it  will  place  pressure  on  counsel,  particularly Mr Kennelly, but that is unavoidable in the circumstances.

[39]   The ability to make discovery is Dellisse’s primary ground for an adjournment. This relates to Dellisse’s constructive trust claim. The discoverable material will be relatively limited. Much of the evidence has already been filed, particularly in relation to the FPA claims. There will be a considerable evidential cross over between the FPA claims and the constructive trust claim. The discoverable material relative to the constructive trust claim will largely be confined to matters such as to when the properties were acquired, at what price, where the funds for the purchases were derived from and Janette and Dellisse’s banking records. There will, of course, be other relevant material but it has not been suggested to me that this is likely to be extensive or difficult to source.

[40]   The second ground supporting Dellisse’s application relates to the pragmatics of her attending the trial in person. That is her stated preference. As already noted, the travel restrictions between Australia and New Zealand are likely to mean that Dellisse will be required to undertake two weeks quarantine isolation if she is to travel here. It is common knowledge that reserving a place for that purpose is complex and likely to incur delay. It is conceivable that even if Dellisse was to initiate that process today, she may not, in fact, be free to move about in this jurisdiction before the fixture commences. While that circumstance may, in the past, have presented as an obstacle, that is now no longer the case. As a consequence of the elevated alert levels under COVID-19, this Court and its users have become relatively sophisticated users of remote participation technology. Indeed, a number of the appearances in this matter were by way of VMR. It is now commonplace for substantive proceedings to be conducted and evidence taken from parties who are overseas. Indeed, at the present time, a multi-week civil trial is being conducted in this Court where the parties are domiciled in and giving evidence from South Africa. Witnesses have given evidence

from other parts of the globe. The Court has modified its sitting hours to accommodate the parties. I can see no reason why these proceedings cannot be conducted with Dellisse appearing remotely. Given that the bulk of her evidence will be before the Court in affidavit and statement form, her only direct participation will be when cross- examined. That is easily accommodated by remote appearance. For the balance of the hearing, Dellisse can be connected by an audio-visual link to ensure her effective participation in the process. It will be for her to ensure there is proper and timely liaison with the Civil Registry to ensure the technology is in place at her cost to facilitate that course.

[41]   Relatedly, such a course will answer Dellisse’s concern that she has nowhere to live whilst in Auckland, pending the completion of the work on her property. It also answers her concern that she does not have sufficient funds for rented accommodation.

[42]   Finally, I note (as I advised to counsel at the last hearing) the earliest date this matter could proceed if adjourned would be in April next year. Given the lengthy and avoidable delays to date, to further delay the determination of these issues by more than another year is wholly unacceptable. It would bring the system of justice into disrepute. It would also add unnecessarily to the “churn” of matters waiting to be heard in this Court and thus adversely affect litigants in other unrelated proceedings.

[43]   I have considered whether unless orders relative to Dellisse’s obligations to give discovery should be made. My initial inclination was not to make such an order now that Dellisse is represented by someone of Mr Kennelly’s experience. However, on reflection, I have determined that given Dellisse’s chronic history of default and proclivity to terminate the services of her legal representatives, unless orders will provide the only effective mechanism to encourage compliance. The spectre of being unable to pursue her constructive trust claim will, I hope, reinforce in Dellisse’s mind that judicial directions are not some vague target for the parties to aim at but are, in fact, serious and enforceable orders the breach of which will have material consequences. There is no room for further slippage in this case. Unless orders are necessary to ensure that does not happen. This fixture must go ahead as scheduled, with or without the constructive trust claim.

Conclusion

[44]   Accordingly, the application for an adjournment is declined. The following orders are made:

(a)all outstanding discovery by Dellisse is to be completed by

29 March 2021;

(b)Dellisse’s evidence is to be filed and served no later than 5:00 pm on 9 April 2021;

(c)Lorraine and Jolene’s evidence is to be filed served no later than

5:00 pm on 19 April 2021;

(d)common bundle nominations are to be made no later than 5:00 pm on 3 May 2021 and are to be prepared by counsel for Mr Darlow (with costs reserved);

(e)Dellisses’s submissions in respect of the constructive trust claim and Lorraine and Jolene’s submissions in respect of the FPA claims are to be filed and served no later than 5:00 pm on 3 May 2021;

(f)any reply submissions in respect of both claims and Mr Darlow’s submissions, are to  be filed  and  served  no later  than  5:00  pm  on 6 May 2021; and

(g)as noted in Lorraine and Jolene’s memorandum of 8 March 2021 they are willing to adjust the schedule 9 Listing and Exchange Protocol from electronic format to the provision of hard copies of the information sought.

[45]   I accept the above timetable is tight, particularly in relation to discovery. It is, however, readily achievable given the date for trial.

Costs

[46]As noted, I have received some submissions on the question of costs.

[47]   Lorraine and Jolene, as successful parties are entitled to costs. My initial view is that scale 2B costs with a 50 per cent uplift is appropriate and I invite the parties to consult with a view to reaching agreement and filing a consent memorandum. In the event of disagreement, if any party wishes to file any further memoranda on this issue, I direct that these be filed and served no later than 21 days from the date of this judgment. I also require Lorraine and Jolene to confirm that their actual costs do not exceed scale. No memorandum, exclusive of tables, is to exceed three pages. I shall determine the question of costs on the papers.

Moore J

Solicitors/Counsel:

Mr Kennelly, Auckland Mr Williams, Auckland

Mr Allen, Grove Darlow, Auckland Mr Fuscic, Auckland

Ms Thompson, Auckland Mr Kelly, Wellington

Ms Lawrence, Wellington