Moon v Lafferty

[2020] NZHC 1652

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-404-002462

[2020] NZHC 1652

IN THE MATTER

of the Estate of COLLEEN PATRICIA LAFFERTY-HANNAH, Deceased

BETWEEN

JESSICA ELIZABETH AIMEE MOON and REBECCA DE MANNETTE HANNAH

Applicants

AND

LINDEN JOHN LAFFERTY and LANI ROSEMARY PATTERSON, as EXECUTORS OF THE ESTATE OF COLLEEN PATRICIA LAFFERTY- HANNAH

First Respondents

LINDEN JOHN LAFFERTY and LANI ROSEMARY PATTERSON as TRUSTEES OF THE COLLEEN LAFFERTY TRUST

Second Respondents

Hearing:

9 July 2020

Appearances:

A Cook for Applicants

J Naidoo for First and Second Respondents

Judgment:

10 July 2020

JUDGMENT OF VENNING J

This judgment was delivered by me on 10 July 2020 at 11.00 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:           O’Sheas, Hamilton

Norris Ward McKinnon, Hamilton

MOON v LAFFERTY [2020] NZHC 1652 [10 July 2020]

[1]    Jessica Moon and Rebecca Hannah (the applicants) apply for an order for discovery before commencing proceedings.

Background

[2]    The applicants are the daughters of Colleen Patricia Lafferty-Hannah (the deceased). Colleen Lafferty-Hannah was born on 11 November 1946 and passed away on 15 October 2018.

[3]    The only other child of the deceased is the applicants’ brother, Linden John Lafferty. Unfortunately the applicants and their brother Linden are estranged.

[4]    The deceased was predeceased by her husband who she had separated from. The deceased made her last will with Norris Ward McKinnon, Solicitors, on 2 August 2017. In that will she appointed her son Linden and her niece Lani Patterson as executors and trustees of the will.

[5]    After gifting personal and household items to the trustees to be distributed in accordance with any wishes made known to them, the deceased directed the trustees to repay any loans owed to her family trust at the date of death. She also forgave any debts owed by the trustees of her family trust, and directed that the residue of her estate was to be held on trust for the trustees of her family trust.

[6]    The family trust was the Colleen Lafferty Trust (the Trust) which she had established by deed of 2 August 2017, the same date as the date of her last will.

The application

[7]    The applicants consider they may have a claim under the Family Protection Act 1955 as there was no provision made for them by their mother’s last will. Despite the fact they are not beneficiaries of the Trust, they consider they may also have a claim against the Trust. In the application they seek:

(a)a copy of the will dated 2 August 2017, any notes or instructions made by the deceased and/or solicitors or persons who received the instructions and prepared the will;

(b)written confirmation that the deceased did not wish for any of her personal items to pass to them;

(c)details of the deceased’s assets and liabilities as at the date of death;

(d)details of the deceased’s funeral expenses;

(e)the Trust Deed for the Trust, including any related documents (deeds, minutes and accounts);

(f)the conveyancing file for the property purchased by the Trust in Ranfurly, including solicitor’s trust account records and statements of account in relation to the purchase.

The opposition

[8]    The application is opposed by the trustees of the deceased’s estate (who are now also trustees of the Trust). Inter alia, the application is opposed on the grounds:

(a)the applicants are not beneficiaries of the Trust and are not entitled to information about the Trust;

(b)the estate of the deceased does not have any assets; and

(c)further discovery is not necessary for them to formulate their claim.

[9]    In his affidavit in support of the opposition Linden Lafferty provided a copy of the deceased’s last will of 2 August 2017, a note and valuation of chattels and personal effects, and a note of the funeral expenses and debts of the estate as at 15 October 2018, supported by various invoices. Mr Lafferty deposes that the assets in the deceased’s estate were insufficient to meet the funeral expenses.

[10]   To that extent, the information requested at (a) and (d) has been partially supplied. Ms Naidoo also advised that Mr Lafferty has agreed to provide the confirmation sought at (b) if such a document can be located. The applicants maintain their application for the remainder of the information sought.

[11]   A letter of 31 July 2019 from the deceased’s solicitors, Norris Ward McKinnon, annexed to the affidavit of Ms Moon, provides further information. It refers to settlement funds of $388,871 the deceased received from litigation between her and Jessica. The letter says the deceased gifted $300,000 of that settlement to the Trust. The letter refers to a deed of gift dated 2 August 2017. The Trust then purchased the property at Ranfurly. The remaining funds were applied to the deceased’s personal account.

Jurisdiction for the application

[12]The application is made under HCR 8.20:

8.20     Order for particular discovery before proceeding commenced

(1)This rule applies if it appears to a Judge that—

(a)a person (the intending plaintiff) is or may be entitled to claim in the court relief against another person (the intended defendant) but that it is impossible or impracticable for the intending plaintiff to formulate the intending plaintiff’s claim without reference to 1 or more documents or a group of documents; and

(b)there are grounds to believe that the documents may be or may have been in the control of a person (the person) who may or may not be the intended defendant.

(2)The Judge may, on the application of the intending plaintiff made before any proceeding is brought, order the person—

(a)to file an affidavit stating—

(i)whether the documents are or have been in the person’s control; and

(ii)if they have been but are no longer in the person’s control, the person’s best knowledge and belief as to when the documents ceased to be in the person’s control and who now has control of them; and

(b)to serve the affidavit on the intending plaintiff; and

(c)if the documents are in the person’s control, to make those documents available for inspection, in accordance with rule 8.27, to the intending plaintiff.

(3)An application under subclause (2) must be by interlocutory application made on notice—

(a)to the person; and

(b)to the intended defendant.

(4)The Judge may not make an order under this rule unless satisfied that the order is necessary at the time when the order is made.

Trust documents

[13]   As noted, the applicants seek disclosure of the Trust Deed for the Trust (and related documents) and the conveyancing file for the Trust’s purchase of the Ranfurly property.

[14]   The sworn evidence before the Court from Mr Lafferty is that he is a trustee of the Trust. He confirms that neither the applicants (nor their children) are beneficiaries of the Trust. As such they have no entitlement to Trust documents or documents relating to the operation of the Trust or its purchase of the property at Ranfurly.1

[15]   Ms Cook nevertheless submitted the Trust documents could be relevant to the applicants’ proposed claim under the Family Protection Act. I cannot accept that submission. In the present circumstances where the deceased’s estate is otherwise insolvent, evidence involving the Trust could only be relevant in relation to the Family Protection claim if the Trust owed the deceased money at the date of her death. If that was the case then the debt would be an asset in the deceased’s estate. That would be a relevant fact in any Family Protection claim as would who the ultimate beneficiaries of the Trust were.

[16]   However, the solicitor’s letter confirms that the deceased gifted $300,000 to the Trust during her life. Mr Lafferty has also deposed that the solicitor’s letter correctly stated the deceased’s assets were insufficient to meet her liabilities at the date of death. The evidence before the Court is there was no debt owing by the Trust

1      Erceg v Erceg [2017] NZSC 28.

to the deceased as at her death. There is no basis for the applicants to be entitled to information relating to a Trust they have no interest in. That deals with the documents sought at (e) and (f).

Family Protection claim

[17]   That leaves the remaining documents sought under (a), (c) and (d). They are said to be necessary to enable the applicants to formulate their claim under the Family Protection Act 1955. As children of the deceased the applicants are prima facie entitled to pursue a claim under the Family Protection Act. Whether that claim has any merit will depend on whether the deceased had a duty to make adequate provision from her estate for the applicants in her will.

[18]   I return to the legal basis of the application. In Exchange Commerce Corporation Limited v New Zealand News Ltd the Court of Appeal discussed the application of the predecessor to HCR 8.20.2 The Court stated:3

The rule is plainly intended to make a substantial inroad on the witness rule while at the same time imposing limits in the interests of the privacy of documents before action is commenced.

Not much difficulty can arise in the case of an intending plaintiff who makes it appear to the Court that he is entitled to claim relief against another but cannot formulate his claim without reference to a particular document or class of document. This must we think embrace circumstances where the actual defendant is not known as well as cases where some date, figures or other fact or circumstance is necessary in order to plead the claim as the rules require. This part of the rule postulates that the plaintiff has a claim but cannot adequately formulate it or name the defendant.

More difficulty arises when the intending plaintiff seeks to make it appear to the Court that he or she may be entitled to relief against another but cannot formulate a claim without reference to such document or class of documents. The words "may be entitled" cannot be read as enabling any disgruntled person to obtain a discovery in the hope that it may provide material to mount a claim. Apart from the fact that it is inherently unlikely that such a thing would ever be intended it seems clear from the rule itself. What must be shown is an inability to refer to a particular document or class of documents which inability inhibits formulation of the applicant's claim. It follows that the words "may be entitled" contemplate evidence of circumstances showing at least the real probability of the existence of a claim against someone.

…

2      Exchange Commerce Corporation Limited v New Zealand News Ltd [1987] 2 NZLR 160.

3      At 164.

Then there are the words "impossible or impracticable". There is some, but not much, difference between these words in ordinary parlance. A thing is said to be impracticable when it cannot be done, when it is practically impossible to do it. The words "impossible or impractical" are used in R 299 with reference to an inability to formulate a claim without resort to the document or class of documents sought to be discovered; that is to say an inability to plead the claim in accordance with the requirements of the rules. If without reference to the document that is impossible or not practicable then the condition will be satisfied.

This construction of R 299 is, we think, reinforced by a more general consideration. Once an action is begun a witness cannot be compelled to produce documents before trial. Rule 299 allows discovery, before action is commenced, against one who is not to be a party for the purpose of enabling a claim to be formulated. The inroad on the witness rule is confined to what is necessary to get an action on foot in accordance with the rules of pleading. Further than that we do not think it is necessary or desirable to go in this case.

[19]An applicant for pre-commencement discovery must satisfy the Court that:

(a)they are or maybe entitled to bring a claim;

(b)it is impossible or impracticable to formulate the claim without reference to certain documents;

(c)there are grounds to believe the documents are or were in the control of the respondents; and

(d)an order is necessary at the time.

[20]   The applicants rely in particular upon the cases of Lee v Chan and G v P.4 Lee v Chan also concerned a claim under the Family Protection Act. Judge Callaghan considered it would have been impracticable for the applicants to have formulated their claim against the estate without information concerning the value of the estate. In the course of his decision Judge Callaghan referred to the following comments of Barker J in W v Counties Manukau Health Ltd:5

“Counsel for the defendant submitted, if discovery were available as requested, then the criteria under r 299 would not have been met because it had not been shown to be 'impracticable' for the plaintiff to formulate his claim without reference to the document. I do not think that that is a valid argument.

4      Lee v Chan [2000] NZFLR 887, (2000) 19 FRNZ 394; and G v P [2015] NZFLR 423.

5      Lee v Chan, above n 4, at 399-400, citing W v Counties Manukau Health Ltd (1995) 8 PRNZ 512.

The rule must not be interpreted by saying that it would be impossible for the plaintiff accurately to formulate his or her claim without reference to the document. Whilst the court should not be seen as encouraging people to issue speculative claims, a proper claim based on hard information is impracticable for the plaintiff presently to formulate without access to these documents.”

And later:

“The ultimate objective is to ensure that pleadings are properly drawn to ensure justice for the party: the concept of impracticability should not be interpreted strictly.”

[21]   Judge Callaghan concluded that the fact the applicant could file a pro-forma statement of claim did not preclude them from obtaining pre-issue discovery. The Judge noted the rules required the claim to be supported by an affidavit and the affidavit was required to “flesh out” the claim.

[22]   In the second case, in G v P, Ms G sought discovery of Mr G’s commissions as a real estate agent to assist with her review of his child support payments. Collins J considered that Ms G needed the basic information about Mr P’s commissions and how he had structured his financial affairs during the relevant period. It would have been impracticable for her to formulate her claim without recourse to such documents. The question should have been resolved in her favour. The Judge directed discovery.

[23]   Ms Naidoo is correct that it would not be impossible for the applicants to formulate a claim under the Family Protection Act. The applicants could file a claim against the estate without reference to the value of the estate. It would however be a bare claim. In principle I agree with the approach taken by Judge Callaghan in Lee v Chan. I consider the test of “impracticable” must mean something different to “impossible”.

[24]   It follows I accept that, in a particular case, an application for pre- commencement discovery may be appropriate before commencing a Family Protection claim. If, for example, the trustees refuse to provide any information concerning an estate’s financial position to a family member of the deceased. To determine any Family Protection claim the Court will have to consider the assets of the estate as at date of death, the financial position of the applicants, their relationship

with the deceased, and competing claims on the deceased’s moral bounty. The assets of the estate as at the date of death are a particularly relevant consideration.

[25]   To force a party to file a claim in order to obtain financial information about the estate and then perhaps discontinue once the position was disclosed would be a waste of resources and inconsistent with the object of the rules of the Court, which are to secure the just, speedy and inexpensive determination of proceedings and applications.6 It could also expose the applicants to costs if the proceedings are subsequently discontinued.7

[26]   However, each application for pre-commencement discovery must be determined on the basis of the evidence before the Court at the time. In the present case, evidence has been provided about the financial position of the deceased’s estate as at the date of her death. The evidence before the Court is that the deceased’s estate was insolvent at the date of her death. The issue in this case is that the applicants just do not accept that evidence. They want to go behind the affidavit evidence of their brother Linden and the statements in the solicitor’s letter.

[27]   Where parties seek pre-commencement discovery in order to go behind such evidence, a strong foundation for the order will be required. There is no such foundation in this case.

[28]   The principal asset the deceased had during her life appears to have been the settlement proceeds. The deceased’s lawyers have confirmed that $300,000 from the settlement was gifted to her Trust. The property she was living in at the date of death was owned by the Trust. There is no suggestion the deceased had other substantial assets. There is some reference to chattels and antiques, but again Linden Lafferty as a trustee of the estate has deposed to the chattels held by the estate and provided a schedule. He has also deposed that his mother sold other chattels to him during her life. While the applicants do not accept the evidence deposed to by their brother and as recorded by the solicitor’s letter, that is the evidence before the Court and without more that suspicion by the applicants does not support the orders sought.

6      High Court Rules 2016, 1.2.

7      O’Connor v O’Connor HC Dunedin CIV-2010-412-402, 6 October 2011.

[29]   The Court should not make orders for pre-trial discovery to enable applicants to test evidence in that way. That is not the purpose of the rule. The purpose is to enable a party to formulate a claim.

[30]In summary, and by reference to the documents sought:

(a)the last will has been provided. Also an affidavit from the solicitor who attended the deceased has been provided to the applicants. The solicitor says the notes of instructions cannot be found. The solicitor is no longer employed by Norris Ward McKinnon. A partner in Norris Ward McKinnon is to confirm the position;

(b)the trustees have agreed to provide a copy of any direction the deceased made about her personal items (if such exists);

(c)Mr Lafferty (and the solicitors) have confirmed the estate was unable to meet funeral expenses. There is no basis to go behind that evidence and require disclosure of the deceased’s bank accounts. Nor is there any basis or requirement to go behind the evidence regarding the motor vehicles, Mr Lafferty’s payment for the chattels or to provide insurance information;

(d)details of the funeral expenses have been provided by Mr Lafferty in his affidavit;

(e)& (f) the Trust documents and the file relating to the purchase of the Ranfurly property are not relevant.

[31]   For the above reasons, I do not consider the Court should make the order in the present case. Nor can it be said an order is necessary at this time.

Result

[32]The application is dismissed.

Costs

[33]   The applicants have not been successful in the application but I accept that certain further relevant information has been provided during the course of the application and after it was filed. In the circumstances the applicants are to pay the respondents one half of scale costs calculated on a 2B basis together with full disbursements as fixed by the Registrar.

Venning J