Nelson v Gibson

[2017] NZHC 2715

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA

AHURIRI ROHE

CIV-2017-441-60 [2017] NZHC 2715

UNDER

PROPERTY RELATIONSHIPS ACT

1976

BETWEEN

RAEWYN ANN NELSON Applicant

AND

MARK COLIN GIBSON Respondent

CIV-2017-441-34

IN THE MATTER             of constructive trust claims by the plaintiff

BETWEEN  RAEWYN ANN NELSON Plaintiff

ANDPETER CARL NEUMEGEN AND MARK COLIN GIBSON

Second Defendants

ANDEXPLORER BUS LIMITED (RECENTLY RENAMED AS GIBBO LIMITED)

Third Defendant

Hearing:

19 October 2017

Counsel:

M E J Macfarlane for the applicant in proceeding CIV-2017-
441-60 (plaintiff in proceeding CIV-2017-441-34)
G Harrison for Mr M Gibson (respondent in proceeding CIV-

2017-441-60, and first defendant and second-named second defendant in proceeding CIV-2017-441-34), and for the third defendant in proceeding in CIV-2017-441-34

Judgment:

6 November 2017

NELSON v GIBSON [2017] NZHC 2715 [6 November 2017]

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      Ms Nelson is the applicant in an application for orders under the Property (Relationships) Act 1976 (the PRA proceeding) which was originally commenced in the Family Court but subsequently transferred to this Court.  She is also the plaintiff in a civil proceeding in this Court claiming relief under an alleged constructive trust or trusts (the constructive trust proceeding).   She seeks an order for particular discovery against Mr Gibson in both proceedings, and against the other defendants named in the constructive trust proceeding.

Background

[2]      Ms Nelson and Mr Gibson are former partners in a de facto relationship which began in or about August 1995 and ended in September 2014.  There is one child of their relationship.

[3]      At various times in their relationship Ms Nelson and Mr Gibson lived at addresses in both Napier and Auckland.  Ms Nelson and Cara presently reside in a Napier property owned by a trust called the Belladonna Trust.  The trustees of the Belladonna Trust are Mr Gibson and Ms Nelson, and the solicitor named as a second defendant in the constructive trust proceeding, Mr Peter Neumegen.

[4]      In  May  2000  Ms  Nelson  and  Mr  Gibson  each  contributed  $200,000  to purchase a property in Maryland Street, Auckland (the Maryland property).   They had previously been living in a property in Point Chevalier owned by the Gibbos Trust, the trustees of which are the second defendants named in the constructive trust proceeding.

[5]      The Gibbos Trust is a trust associated with Mr Gibson.   There is an issue between the parties as to whether Ms Nelson is also a beneficiary – the list of beneficiaries  includes  any “future wife” of Mr  Gibson,  but  Ms  Nelson  and  Mr Gibson never married.

[6]      In  or about  October 2006,  the Maryland  property was  transferred  to  the Gibbos Trust.  Ms Nelson received no payment on the transfer, and she says she is unsure what the purpose of the transfer was.

[7]      When Ms Nelson and Mr Gibson commenced their relationship, Mr Gibson operated a company called Explorer Bus  Limited (Explorer),  which is the third defendant in the constructive trust proceeding.  The Gibbos Trust owns 99 per cent of the shares in Explorer, and one share is owned by Mr Gibson.

[8]      During  the  relationship  between  Ms  Nelson  and  Mr  Gibson,  Explorer operated a successful sightseeing business in Auckland, picking up visitors on a “hop on, hop off” basis around the city.  Explorer had up to seven buses at various times, and employed drivers and other staff.  One of the sites used for Explorer’s business was a property in Moselle Avenue, Henderson (the Moselle property), which was owned by the Gibbos Trust.

[9]      Explorer’s business appears to have become very successful, and it realised

$4.0 million when it was eventually sold in 2016.

[10]     Although Ms Nelson has never owned shares in Explorer, she contends in the PRA proceeding and in the constructive trust proceeding that she made significant contributions to Explorer by way of unpaid work, including driving buses on occasions, carrying out some bookkeeping or accounting work, and selling tickets. She says that there was a substantial increase in the value of Explorer from the date she and  Mr Gibson  started living together until  the eventual  sale of  Explorer’s business, and that she contributed to that increase, both by the unpaid work she did for Explorer and by more indirect means, including domestic contributions which she says enabled Mr Gibson to spend more time developing Explorer’s business.

[11]     The Maryland property was sold in December 2007, and Ms Nelson says that the proceeds of sale were applied in the acquisition of a new double-decker bus for Explorer.   She says that she did not then receive, and has not since received, the

$200,000 she put into the acquisition of the Maryland property.

[12]     When the Maryland property was sold, Ms Nelson and Mr Gibson moved to live in residential quarters on the Moselle property.   Ms Nelson says that she continued to do work of various kinds for Explorer, but was paid nothing.  She says that such money as came to the family from Explorer went into a joint account with Mr Gibson and was used for household expenses.  It was only towards the end of their time living together that Mr Gibson agreed that she should have a personal allowance paid from this account.   In later years she has been drawing $500 per week for her personal use.

[13]     Ms Nelson’s broad contention is that the contributions she has made, whether in cash (for example, the $200,000 contributed to the acquisition of the Maryland property), unpaid work for Explorer, or her domestic contributions, entitle her to claim a one-half beneficial interest in the various assets of Mr Gibson, the Gibbos Trust, and Explorer.

[14]     One of the categories of documents Ms Nelson seeks by way of discovery is documents tending to show the value of Explorer at the time Ms Nelson and Mr Gibson commenced their relationship.  To the extent that the shares in Explorer were owned by the Gibbos Trust and Mr Gibson before the relationship between Ms Nelson and Mr Gibson began, Ms Nelson says that she is entitled, because of her contributions, to a share in the increase in value of Explorer from what was presumably a modest value in 1995, to the figure of $4.0 million for which the Explorer business was eventually sold.

[15]     Generally, Ms Nelson seeks documents showing the detail of all relevant property transactions conducted by Mr Gibson, the Gibbos Trust, or Explorer, which may show the use by them of relationship property.  She says that, since the sale of Explorer in 2016, Mr Gibson has applied part of the proceeds towards the purchase of some apartments in Gore Street, Auckland (the Gore apartments), and also to the purchase of an interest in a property in Queensland (the Queensland property).  She seeks details of all documents establishing the movement of funds associated with these transactions, and any other transactions involving the expenditure of relationship property.

The conduct of the PRA proceeding and the constructive trust proceeding

[16]     The two proceedings are being case-managed together.   On 7 July 2017 I made orders for standard discovery in both proceedings, with verified discovery lists to be filed and served by 7 August 2017.

[17]     Ms Nelson’s list was sworn on 7 August 2017, but Mr Gibson did not provide his discovery list until 21 August 2017.  It is not clear from the discovery list filed by Mr Gibson whether it was sworn solely on behalf of himself in his various capacities in the two proceedings, or whether it was also sworn on behalf of the third defendant in the constructive trust proceeding (Explorer Bus).

[18]     In his discovery affidavit, Mr Gibson deposed that he had conducted certain searches for discoverable documents, including past accounts for Explorer going back many years.   He also deposed that, even prior to the discovery order being made, he had located copies of documents held in storage for him, including trust deeds for the Gibbos Trust and the Belladonna Trust.  Mr Gibson went on to say that he would “endeavour to locate any other relevant documents that could be relevant to the issues in this proceeding between the parties”.

[19]     Mr Gibson’s list of documents in his control, and in respect of which he claimed neither privilege nor confidentiality, was fairly short.   Under a heading “Index of Documents” he listed “financial reports for Gibbos Limited (formerly Explorer, and now in liquidation)” for the years ended 31 March 2008 to 31 March

2017.  The list of documents for which no privilege or confidentiality was claimed then contained the following section:

OTHER RELEVANT DOCUMENTS

1.   The proceedings forming part of these proceedings  – notice of proceeding, statements of claim and defence, originating   applications,   affidavits   of   assets   and liabilities and narrative affidavits.

2.   All on record exchanges between lawyers for me and the Plaintiff going back to 2014.

3.   Base documents that, in turn, generated the accounts referred to in the above “index of documents” – bank statements, invoices and the like.

[20]     No documents in the power of Mr Gibson personally, or in the power of the

Gibbos Trust, were disclosed.

[21]     In  two  “Notes” to  this  part  of Mr  Gibson’s  list,  he stated  that  the base documents were unlikely to be in existence beyond the seven year period required, and that a search for documents, in particular old wage and similar records, was continuing.

[22]     Ms Nelson was not satisfied with either the form of Mr Gibson’s discovery list or the extent of the disclosure in it.   On 11 September 2017, she filed the application for particular discovery which is the subject of this judgment.

Ms Nelson’s application for particular discovery

[23]     Ms Nelson asks for an order for further and better discovery by way of particular discovery, addressing all the issues in the proceedings and including:

1.All  the  documents  by  which  the  movement  of  money involving the parties and [Explorer] and each of the Gibbos and Belladonna Trusts were recorded.   This would require access to journals and ledgers as well as trustee minutes and resolutions.

2.All the bank statements relevant to the acquisition and/or disposal of property, and in Mr Gibson’s case particularly the personal bank statements (including those which he used although they were in the name of other people) relevant to property  acquisition,  contribution  and  separate  date balances.

3.The documents by which [Ms Nelson’s] $200,000 fed into the purchase of the Maryland Street property then found its way into one or other of both of the Trusts including by way of the double-decker bus purchase for [Explorer’s] business (of which by way of the defendants’ pleading some form of acknowledgement   which   has   not   been   disclosed   or discovered is referred to).

4.The use  by Mr  Gibson  or  the  other  defendants  of funds credited to [Ms Nelson] by way of salary but not actually paid to her.

5.The Gibbos Trust financial statements from the first year of the parties’ relationship and each subsequently.  (Copies of these from 2006 to 2015 only have been received but are incomplete.)

6.The documents which show the acquisition and sale of the various  properties  (including  by  [Explorer]  and  the  two trusts) dealt with during the relationship and the destination and use of the funds (this to include as well the recent sales of the sections referred to in [the PRA proceeding], and the acquisition by [Mr Gibson or the defendants in the constructive  trust  proceeding]  of  various  properties following the sale of [Explorer’s] business).

7.The trustee minutes and resolutions in Gibbos Trust and the agreements, journals, ledgers, and other records which explain the movement in and out of that Trust to/from [Mr Gibson and/or the other defendants in the constructive trust proceeding] or their interests of the money used or obtained.

8.Documents representing the purchase and holding by [Mr Gibson and/or the other defendants in the constructive trust proceeding] of property acquired during the relationship either from the Gibbos Trust or the [Explorer] money or from any other source.

9.Documents evidencing the value of [Explorer’s business] at the commencement of the relationship of [Ms Nelson and Mr Gibson].

The defendants’ positions

[24]     Although he is a party to the constructive trust proceeding, Mr Neumegen, a trustee of the Gibbos Trust, has taken no steps in the proceedings.

[25]     Mr Gibson filed a notice of opposition to Ms Nelson’s particular discovery application, but the notice of opposition does not directly challenge Ms Nelson’s claim to the particular discovery she seeks.  Indeed, Mr Harrison acknowledged at the hearing that all of the categories of documents sought by Ms Nelson can be regarded as relevant to the issues in the PRA proceeding and/or the constructive trust proceeding,  with  the  possible  exception  of  post-separation  acquisitions  by  Mr Gibson.  But even in that case, Mr Harrison advised that Mr Gibson was prepared to disclose any relevant documents, “for the sake of transparency”.

[26]     Mr Harrison confirmed at the hearing that there is no objection on any other ground (for example, oppression) to the making of the orders sought in respect of categories 1 – 4 and 7 in paragraph [23] of this judgment, and that, subject only to the point to which I now refer, there is no reason why the Court should not make orders in respect of those categories.  That point was that the orders are said to be

unnecessary, because Mr Gunn, the chartered accountant who has acted for Mr Gibson, the Gibbos Trust, and the Belladonna Trust, is prepared to meet with Ms Nelson and her advisors and show them whatever documents he has that are relevant to the dispute.  Mr Harrison advised at the hearing that, regardless of the outcome of Ms Nelson’s present application, the offer is open to Ms Nelson and her advisors to meet with Mr Gunn to look at the records he is holding.

[27]     In respect of categories 5, 6, 8, and 9 as set out in paragraph [23] of this judgment, the only issues raised by Mr Harrison were (i) whether any documents exist in those categories, and (ii) whether documents relating to post-separation property acquisitions are relevant.

Mr Gunn’s evidence

[28]     There was a late affidavit by Mr Gunn, sworn on 9 October 2017, after Mr Macfarlane had filed his written submissions.  Mr Macfarlane did not object to the affidavit being read at the hearing.

[29]     Mr Gunn gave details of his qualifications, and said that he had been the tax agent and accountant for Ms Nelson, Mr Gibson, the Belladonna Family Trust, the Gibbos Family Trust, and Explorer since 2006.

[30]     Mr Gunn said that Explorer was in the process of being wound up.  It is now just a shell company.  Following the sale of Explorer’s business in 2016, there was a small sum of about $30,000 owing by Explorer to the Belladonna Family Trust. There is also a liability to the Gibbos Trust.  Mr Gunn said that the various remaining steps required to complete the winding up have not been carried out,  however, because of the “shadow of this litigation”.

[31]     Mr Gunn addressed the categories of documents sought by Ms Nelson in her particular discovery application, generally saying that, to the extent that he holds copies in his office, it is just a matter of Ms Nelson and her lawyer arranging to come along and look at the documents.  He said that Ms Nelson has already collected a number of documents and bank statements relating to category 2 in her particular discovery application.

The draft orders

[32]     At  the hearing Mr Harrison  submitted some  draft  orders for the Court’s consideration.   The draft orders invited the Court to declare and record that Mr Gibson, through his counsel, has already provided Ms Nelson and her advisors with annual accounts covering the period from approximately 2006 through to 2016/2017 for the Belladonna Trust, the Gibbos Trust, and Explorer.  The Court would further record in its orders that these disclosure obligations are ongoing, particularly as they relate to the final wind-up accounts for Explorer.  Under the draft orders, the Court would further declare and record that the above documents are relevant and admissible in this proceeding without any requirement for Ms Nelson to subpoena the creator of the accounts to establish their validity.

[33]     The  draft  orders  proposed  that  in  consideration  of  the  defendants  being required to provide any additional discovery lists in relation to the resolutions and related disclosures (category 1) in Ms Nelson’s particular discovery application), the application would be adjourned pending disclosure and analysis by Ms Nelson and her advisors of the documents Mr Gunn is able to show them.1

[34]     In respect of the conveyancing and other files referred to in categories 8 and

9 of the particular discovery application, the draft orders proposed that, if the documents are available, the Court would order that they be disclosed to Ms Nelson and her advisors “(a) noting that their relevance, in terms of this proceeding, is in doubt and (b) recording that “summary” disclosure of the files would be permissible in the first instance.

Discussion and conclusions

Particular discovery – general principles

[35]     Rule 8.19 of the High Court Rules provides:

1      With reference to the documents in category 1 of Ms Nelson’s application, Mr Gunn had said in his affidavit that “these documents can all be provided to the accountant for [Ms Nelson] or to her and her lawyer directly – I hold copies here at my office in Taradale – and it is just a matter of being phoned and organising a time.”

8.19Order for particular discovery against party after proceeding commenced

If at any stage of the proceeding it appears to a Judge, from evidence or  from  the  nature  or  circumstances  of  the  case  or  from  any document  filed  in  the  proceeding,  that  there  are  grounds  for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party –

(a)       to file an affidavit stating –

1.        whether  the  documents  are  or  have  been  in  the

party’s control; and

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

(b)       to serve the affidavit on the other party or parties; 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 other party or parties.

[36]     The  expression  “grounds  for  believing”  in  the  introductory  paragraph  of r 8.19 requires only that an applicant must show that there is some credible evidence that the documents that are sought exist.2   The applicant is not required to prove that the documents actually exist.3

[37]     In Assa Abloy New Zealand Limited v Allegion (New Zealand) Limited, the

Court followed a four-stage approach in considering an application under r 8.19:4

(a)      Are the documents sought relevant, and if so how important will they be (a criterion described as “materiality” in Robert Jones Holdings Limited v McCullagh [2016] NZHC 2529)?

(b)Are there grounds for belief that the documents sought exist?   This will often be a matter of inference.  How strong is that evidence?

2      Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [12].

3      Simunovich Fisheries Ltd v Television New Zealand Ltd (No 6) HC Auckland CIV-2004-404-

3903, 3 August 2007 at [11].

4      Assa Abloy New Zealand Limited v Allegion (New Zealand) Limited [2015] NZHC 2760 at [14].

(c)       Is  discovery proportionate, assessing proportionality in  accordance with Part 1 of the Discovery Checklist in the High Court Rules?

(d)      Weighing  and  balancing  these  matters,  in  the  Court’s  discretion

applying r 8.19, is an order appropriate?

[38]     The first three stages identified by Asher J in Assa Abloy are each necessary, but not of themselves sufficient, conditions of jurisdiction under r 8.19 – they are still subject to the weighing and balancing exercise in the fourth stage.5

[39]     In determining the appropriate scope of discovery in Property (Relationships) Act claims, Mallon J in J v P summarised the following principles:6

(a)       relevance is likely to be approached robustly and at a greater level of generality than in civil proceedings where issues are more precisely pleaded;

(b)      sometimes wide-ranging discovery will be necessary; and

(c)       there is a need for “complete transparency” in relationship property disputes.

Application of the principles in this case

[40]     There is no dispute over the orders sought in respect of the documents in categories 1 – 4 and 7 of paragraph [23] of this judgment.   I am satisfied that discovery of those documents should be made by Mr Gibson and the defendants in the constructive trust proceeding, and there will be orders accordingly.

[41]     Turning to categories 5, 6, 8 and 9, the relevance of the documents is not in

issue, except in respect of Mr Gibson’s post-separation acquisitions (in category 6).

[42]     Category 5 comprises the financial statements for the Gibbos Trust from the first year of the parties’ relationship (1995 according to Ms Nelson).  Mr Gunn stated in his affidavit that financial statements for the years 2003 to 2005 have now been located.  He observed that the previous accountant did not keep the trust’s permanent

records, and speculated that either Ms Nelson or Mr Gibson should have them.

5      Lyttelton Port Company Limited v Aon New Zealand [2016] NZHC 2996 at [8].

6      J v P [2013] NZHC 557 at [22].

[43]     Given that financial statements for the Gibbos Trust were prepared for the years 2003 to 2015, there seems to be no reason why financial statements would not have been prepared for the years 1995 to 2002.  Indeed, Mr Gibson has not said that they do not exist (and have never existed).  The documents must be (or must have been) in the control of Mr Gibson and the other trustees of the Gibbos Trust.   In those circumstances, Ms Nelson has met the “grounds for believing” test in r 8.19,

and there is no significant “proportionality” issue.7    The balancing of the relevant

factors clearly favours an order for particular discovery.  To the extent that they have not already been discovered, an order will be made for particular discovery of the category 5 documents.

[44]     The category 6 documents are:

6.The documents which show the acquisition and sale of the various  properties  (including  by  [Explorer]  and  the  two trusts) dealt with during the relationship and the destination and use of the funds (this to include as well the recent sales of the sections referred to in [the PRA proceeding], and the acquisition by [Mr Gibson or the defendants in the constructive  trust  proceeding]  of  various  properties following the sale of [Explorer’s] business).

[45]     Category 6 relates to documents which show the “acquisition and sale” by Mr Gibson, the Gibbos Trust, the Belladonna Trust or Explorer, of property dealt with during the relationship.   It is also concerned with the destination and use of the proceeds of sales, and with the (necessarily post-separation) acquisition of various properties following the sale of Explorer’s business.

[46]     Mr Gunn stated in his affidavit that the documents referred to in category 6 are in the possession or either Mr Gibson, or are comprised in “lawyer records”.

[47]     The test of “grounds for believing” that the category 6 documents exist and are or have been in the power of one or more of Mr Gibson or the defendants in the constructive trust proceeding, is obviously met.  Quite clearly there will be solicitors’ settlement statements showing the amounts paid to acquire the various properties

that have been acquired, and the proceeds of sale of properties that have been sold.

7      The third stage of Asher J’s four-stage approach in Assa Abloy (at [37] above).

Equally clearly there will be bank statements showing where the proceeds of the sales have gone.  And Mr Gunn says that Mr Gibson and/or the solicitors have these documents.

[48]     Again, there is no significant proportionality issue over whether Mr Gibson and  the  defendants  in  the  constructive  trust  proceeding  should  be  required  to discover the category 6 documents.   There will be a limited number of relevant acquisitions and sales, and given the amounts likely to be in issue in the PRA proceeding and the constructive trust proceeding I do not consider the task of providing this discovery to be excessively onerous.   Balancing the various factors identified by Asher J in Assa Abloy the result clearly favours the making of the order sought in respect of the category 6 documents.   The only exception to that is the post-separation acquisitions of properties, where Mr Gibson mentioned (but appears to have elected not to take) a point over the relevance of the documents.  No order is presently necessary in respect of this excepted subcategory, however, as Mr Gibson has said he will be providing these documents voluntarily, in the interests of “transparency”.  The application will accordingly be adjourned to the extent that it seeks discovery of documents relating to post-separation acquisitions by Mr Gibson or  any  of  the  other  defendants  in  the  constructive  trust  proceeding,  with  leave reserved to Ms Nelson to apply by memorandum, on five working days’ notice, to have that part of her application brought back on for hearing if necessary.

[49]     The category 8 documents are:

8.Documents representing the purchase and holding by [Mr Gibson and/or the other defendants in the constructive trust proceeding] of property acquired during the relationship either from the Gibbos Trust or the [Explorer] money or from any other source.

[50]     Mr Gunn does not specifically address the documents in category 8, but there is clearly a substantial overlap between categories 6 and 8.  It appears that the only difference might be that category 8 refers to the “holding”, as well as the “acquisition”, of properties acquired during the relationship.   Clearly documents relating to properties still “held” by Mr Gibson and/or the other defendants in the constructive trust proceeding must (a) exist and (b) be in the power of Mr Gibson

and/or that other defendant.  The “grounds for believing” test is obviously met, there is no relevance issue (except as discussed above in respect of post-separation acquisitions), and the proportionality considerations are broadly the same as those applicable to category 6.  There will accordingly be an order for particular discovery in  respect  of the category 8  documents,  except  those  relating to  any properties acquired post-separation.   The application will be adjourned in respect of that subcategory of category 8 documents, on the same basis as that set out above in respect of the category 6 documents.

[51]     Category 9 consists of the following documents:

(9)      Documents  evidencing  the  value  of  [Explorer’s  business]  at  the

commencement of the relationship of [Ms Nelson and Mr Gibson].

[52]     Mr  Gunn  did  not  specifically  address  the  category  9  documents  in  his affidavit.    In  her narrative affidavit,  Ms  Nelson  annexed  a company search  for Explorer, showing that Explorer was incorporated on 11 September 1990.

[53]     It seems to me that there must be financial statements for Explorer showing its assets and liabilities going back a long way before the March 2008 – March 2017 period referred to by Mr Gibson in his affidavit of documents.   Explorer was a trading entity which appears to have operated profitably, and clearly it would have had annual financial statements prepared so that it could lodge income tax returns each year.   To the extent that Explorer may have owned real property there will obviously be certificates of title, and chattels such as buses will have been listed in registers of assets, necessary for Explorer to make appropriate depreciation claims. The underlying accounting records will presumably include historical cost figures for assets of any significant value.

[54]     It may be that there will not be any formal reports on the value of the Explorer shares, although there is some force in Mr Macfarlane’s submission that the company’s banker would have been interested in its value from the point of view of having adequate security for any banking accommodation it may have provided, and if that is right there would probably have been valuation exercises undertaken at various times over the past 20 years or so.  In any event, there must have been annual

financial statements, supported by bank statements and other accounting records, from  which  a  chartered  account  could  now  work  in  producing  a  valuation  for Explorer as at the date Ms Nelson and Mr Gibson commenced their relationship. The “grounds for believing” threshold is accordingly met.

[55]     I do  not  think  requiring Mr Gibson  and  Explorer to  locate  and  disclose documents in category 9 would be unduly onerous, or disproportionate to the importance of the documents.  The extent of Ms Nelson’s contributions to the apparent increase in the value of Explorer over the course of her relationship with Mr Gibson is an important part of her claims in the proceedings, and to properly assess those contributions the Court will need to assess the value of Explorer at or about the time Mr Gibson and Ms Nelson commenced their relationship.   There will be an order for discovery of the category 9 documents.

The submission that orders under r 8.19 are not necessary

[56]     Mr Harrison submits that the orders sought are not necessary, given the extent of informal voluntary disclosure.  That may be a relevant consideration where the amounts in issue between the parties are relatively small, and there is an issue of keeping the costs of the proceedings proportionate to the amounts at stake, and/or where the parties have consented to discovery being provided on an informal basis. But neither of those considerations apply here.  Ms Nelson has not consented to the informal approach taken by Mr Gibson, and there is no evidence that requiring formal compliance with the rules, in respect of all of the categories of documents sought by Ms Nelson, would involve disproportionate costs for the defendants.

[57]     Weighing  the  various  factors  (relevance,  the  existence  of  the  documents which are sought, and the proportionality of the further discovery which is sought), I am satisfied that Ms Nelson is entitled to the orders she seeks (subject only to the orders relating to post-separation acquisitions, where orders of the Court are not presently necessary).

Result

[58]     I make the following orders:

(a)       By no later than 15 December 2017, Mr Gibson and the defendants in the constructive trust proceeding are to file and serve on Ms Nelson

an affidavit stating:

1.	whether the documents described in paragraphs 1.1 to 1.9 of Ms Nelson’s interlocutory application for further and better
discovery dated 11  September 2017  (with the exception of
documents    relating     to    post-separation     acquisitions     of properties  by  Mr  Gibson  or  any  of  the  defendants  in  the
constructive trust proceeding), are or have been in their control (and if so, listing the documents); and
2.	if and to the extent such documents have been but are no longer in their control, their best knowledge and belief as to
when the documents ceased to be in their control, and who now has control of them.
(b)	Ms	Nelson’s  application  for  particular  discovery  of  documents

relating to post-separation acquisitions of properties by Mr Gibson or any of the other defendants in the constructive trust proceeding is adjourned, with leave to Ms Nelson to apply by memorandum, on five working days’ notice, to have that part of her application brought back on for hearing if necessary;

(c)      The  defendants  are  to  make  available  for  inspection  the  (non- privileged) documents disclosed in the affidavit referred to in order (a) above, promptly after service of that affidavit on Ms Nelson;

(d)Costs – Mr Harrison submitted that costs should be reserved, but I am not prepared to do that.   Unless there is special reason, costs on an interlocutory application are to be fixed when the application is determined.8    Mr  Macfarlane  submitted  that  there  is  a  case  for

increased costs, having regard to the defendants’ failure to comply

8      High Court Rules, r 14.1(1)(a).

with the discovery order made by the Court.   I do not consider the case is (quite) made out for an increased costs order, although Mr Gibson’s discovery list was quite inadequate and was filed and served late.   The defendants should appreciate, however, that any further defaults on their part will likely result in increased orders for costs being made against them.  Costs are awarded to Ms Nelson on a 2B basis, with disbursements as fixed by the registrar.

Associate Judge Smith

Solicitors:

Sainsbury Logan & Williams, Napier for the applicant/plaintiff