Neubauer v Toner
[2024] NZHC 1870
•9 July 2024
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2023-470-000118
[2024] NZHC 1870
BETWEEN DORIS NEUBAUER
TE ATARANGI SAYERS
ApplicantsAND
MICHAEL JAMES TONER and EMILY
JANE SARAH TONER trading as TONER LAW
RespondentsJO-ANNE PAMELA AMREIN-PALAIRET JOHN HAMILTON PALAIRET
First Interested Party
ANA LUCIA DIAS-VIEIRA GEORGE HAMILTON GALL
Second Interested Party
Hearing: 28 February 2024 Appearances:
P Napier and P Shanahan-Pinker for the Applicants M Keall for the First Interested Party
Judgment:
9 July 2024
JUDGMENT OF WALKER J
This judgment was delivered by me on 9 July 2024 at 4.30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors:
P Napier, K3 Legal Ltd, Auckland
M Keall, Duncan King Law, Auckland
NEUBAUER & Anor v TONER & Ors [2024] NZHC 1870 [9 July 2024]
[1] This case concerns a co-ownership arrangement between three parties which has soured. The first interested party seeks sale of the property, being a 25-hectare block of land at 187 State Highway 29, Lower Kaimai, Tauranga (the Property). A caveat lodged by the applicants blocks dealings. That substantive issue is for another day.1 In the meantime, the applicants require the respondents (principals of the law firm known as Toner Law) to disclose documents relating to the co-ownership arrangements and the Property. They have filed an originating application on notice for a mandatory interim injunction seeking disclosure.2 This judgment determines that application.
[2] The applicants (the Neubauer/Sayers) are parties to the co-ownership arrangements along with the first interested party (the Palairets) and the second interested party (together the Collective).
[3] The Neubauer/Sayers contend that Toner Law acted for the Collective at all material times. If that proposition is correct, then the members of the Collective are entitled to documents held by Toner Law which are relevant to the matters on which the firm was engaged, unless one of the exceptions under rule 7 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules) applies. The essential question is whether that core proposition is correct and if any limitations or exceptions arise in the circumstances.
[4] Toner Law originally took the position that it only acted for the Palairets, not the Neubauer/Sayers or the Collective itself, and that disclosure would breach the confidence and/or legal professional privilege of those parties. It filed a Notice of Opposition.3 The grounds of opposition (in summary) were at that time:
(a)Toner Law was engaged by the Palairets to act for them on the purchase of the Property on the terms set out in a letter of engagement and was
1 Nothing in this judgment is intended to make factual findings in relation to the substantive dispute.
2 Originating application on notice for mandatory interim injunction seeking disclosure dated 1 September 2023. The application is expressed as an application for mandatory interim injunction although there is nothing “interim” about the order sought. The Court granted leave to bring the proceeding as an originating application to be served on all parties to the Collective by Minute of Campbell J dated 11 October 2023.
3 Notice of Opposition to application for mandatory interim injunction seeking disclosure of documents dated 7 November 2023.
not engaged by the other members of the Collective in relation to the purchase of the Property.
(b)Toner Law did not take any instructions from or provide any advice to members of the Collective in relation to the Kaimai Whenua Rakau Collective Agreement (the Collective Agreement) prior to its drafting, other than the Palairets.
(c)As it was aware that the other members of the Collective did not seek independent legal advice, Toner Law drafted a Waiver of Independent Legal Advice (the Waiver) relating to co-ownership arrangements, including the drafting of a Deed.
(d)As such Toner Law was instructed by the Collective under a limited retainer relating to co-ownership arrangements, with defined disclosure obligations and no others.
(e)The disclosure obligations were limited to the co-ownership arrangements in respect of which the members of the Collective had waived confidentiality.
(f)Toner Law had already disclosed to members those documents relevant to its limited retainer along with further documents which the Palairets had consented to disclose.
[5] In short, Toner Law’s position was that it had disclosed all the documents it was required to disclose. It says that any further information is subject to solicitor/client privilege belonging to the Palairets and disclosure requires the consent of the Palairets or a Court order.
[6] On the eve of the hearing, Toner Law filed a memorandum withdrawing its opposition and advising they intended to abide the decision of the Court. That memorandum stated:4
4 Memorandum of counsel on behalf of the respondent dated 27 February 2024
4The privilege at issue is the Palairets, not the respondents. The basis of the respondent’s opposition was therefore to maintain the Palairets’ legal privilege due to the Palairets not being a party to the proceeding and that the respondent had an obligation to maintain privilege on their former client’s behalf.
5On 11 December 2023, the Palairets filed a notice of opposition to the Application (the Palairets’ opposition).
6Due to the Palairets now being party to this proceeding (and in consideration of them having sought to consolidate this proceeding with their originating application for an order for sale and for the removal of a caveat and ancillary orders) and given that they are maintaining that their legal privilege in relation to the disclosure sought by the Application be upheld, Toner Law do not consider it to be necessary to oppose the Application. In line with its position taken in the Opposition, Toner Law confirm that they will abide by the Court’s decision.
[7]Toner Law was granted leave and excused from the hearing.
[8] The Palairets oppose the application.5 The second interested party abides the decision of the Court and played no part in the hearing.
[9]The issues the Court must determine are:
(a)What was the relevant scope and duration of Toner Law’s engagement with the Collective, if any?
(b)What does that mean for the disclosure requirements under the Rules or by virtue of the fiduciary relationship between legal advisor and client?
(c)Have the Neubauer/Sayers established an entitlement to wider disclosure than has been provided?
(d)Should the Court make the order sought by the Neubauer/Sayers?
5 The Palairets’ Notice of Opposition dated 11 December 2023 cross-referred to the Notice of Opposition originally filed by Toner Law. I accepted at the hearing that Toner Law’s withdrawal of its Notice of Opposition ought not prejudice the Palairets. They remain entitled to advance the grounds of opposition referred to.
Background
[10] Mr Sayers made an affidavit explaining the reason for the application. Ms Emily Toner, one of the principals of Toner Law, also made an affidavit with a chronological narrative from Toner Law’s perspective. Mrs Amrein-Palairet filed an affidavit, largely confirming the chronology in Ms Toner’s affidavit with a few further clarifications. Finally, Mr Sayers made a second affidavit addressing the assertions of Ms Toner and Mrs Amrein-Palairet.
[11] According to Mr Sayers’ affidavit, the Collective came together in or around September/October 2021 with a view to jointly owning the Property (contained in Record of Title Identifier SA24B/897, Lot 1 Deposited Plan South Auckland 26084).
[12] However, it was much earlier, in May 2021, when the Palairets had instructed Toner Law to act for them in connection with the Property purchase and had executed AML (Anti-Money Laundering) documentation for that purpose. Toner Law sent the Palairets a letter of engagement, as required under the Lawyers and Conveyancers Act 2006. Materially, that letter of engagement related both to the sale of the Palairets’ property and proposed purchase of the Property.
[13] The Palairets entered into a conditional agreement for sale and purchase of the Property on 29 May 2021.
[14] Clearly at that point the Palairets had instructed Toner Law solely on their own behalf and had gone some way down the track with the Property purchase before the Collective came together. This is notwithstanding that the purchase transaction was conditional on finance.
[15] It was not until October 2021 that the Palairets informed Toner Law that they wished to transfer the Property to a trust or another legal entity after settlement to enable them to share ownership with others. They requested advice on how to do that.
[16] The Neubauer/Sayers contend that the Palairets engaged Toner Law on or around 23 October 2021 to complete the purchase of the Property on behalf of the Collective and to advise on the legal arrangements between the members. This however is inconsistent with the evidence and documents produced by Ms Toner.
[17]Ms Toner deposes:
(a)On 3 November 2021 the Palairets advised by email they had decided to purchase with two other couples but that to keep it simple, the Palairets would purchase from the Vendor and then sell the land to a trust once formed.
(b)The Palairets said they had a “collective agreement” drafted up and asked Ms Toner whether she would be happy to look over it.
(c)Ms Toner spoke with Mrs Amrein-Palairet. Ms Toner recorded handwritten comments on a copy of the (3 November) email from Mrs Amrein-Palairet by way of a filenote. The note records:6
Spoke to Jo – They are determined re: co-ownership. drafted by Te Atarangi Sayers (?) who has worked in law /works in law? Jo & John keen for me to look over for them to make sure no major issues. But will be v. temporary.
(d)It was made clear to her that the Collective Agreement was being organised by the Collective themselves and that they did not want lawyers involved in its drafting.
[18] On 15 November 2021 the Palairets instructed Ms Toner to confirm the finance condition of the agreement for sale and purchase of the Property. On the same day, they forwarded a copy of the unsigned Collective Agreement to her. In response Ms Toner provided comments by email to the Palairets on 17 November 2021. Among other things, she noted:7
6 Affidavit of Emily Toner dated 9 November 2023.
7 Above n 7.
I guess my concern would be around the enforceability at law; and if I were advising the other parties, I would be hesitant to recommend that [they] signed the agreement/invested in the property without more security (e.g. a deed giving a right to lodge a caveat on the title to secure their investment). But in saying that, I am not advising them – so, it makes my job easier there!!
[19] Ms Toner deposes that she did not give any advice to the Collective on the Collective Agreement, only to the Palairets, and she was not involved in its drafting.
[20] I pause to note that Mrs Amrein-Palairet properly acknowledges in her affidavit that she often shared Ms Toner’s advice to the Collective via the Collective WhatsApp group chat but without advising or discussing this with Ms Toner. She says that she always presented it as advice received by the Palairets from the Palairet’s lawyers. This included the email (from Ms Toner to the Palairets) of 17 November 2021 Mr Napier, counsel for the Neubauer/Sayers, did not expressly argue that any waiver of privilege in this manner opened the door to waiver of privilege for all communications between the Palairets and Toner Law, regardless of the subject matter.
[21] On 24 November 2021 the Palairets emailed Ms Toner advising that the Collective wanted security on the title to the Property prior to establishment of the trust and asking for an estimate of costs for various options.
[22] Toner Law set out the options in email correspondence dated 25 November 2021 and spoke with Mrs Amrein-Palairet the same day. Ms Toner’s file note of that discussion records:8
Phone call to Jo 25/11, as am concerned [at] speed this is all happening [-] risks of co-ownership. Indep[endent] legal advice for all parties. Proper agmts in place etc
[23] On 26 November 2021 Ms Toner called the Palairets about the arrangements and the drafting by Toner Law of a Deed giving rise to a caveatable interest and agreement to mortgage (the Deed). She notes that as far as she knew, this was a call between herself and Mrs Palairet. It transpires that Mr Sayers was present with Mrs Palairet during the call. There is no evidence to suggest that this was known or should have been known by Ms Toner.
8 Above n 7.
[24] Ms Toner produced a detailed typewritten file note of the discussion “with Jo re where to from here”. The file note records, among other things:9
The parties want to manage the co-ownership side of things themselves. Made clear they do not want separate solicitor involved.
Changes will need to be made [to the Collective Agreement] before the parties sign, but we not involved in that.
No legal involvement required from us in terms of Collective, other than to complete settlement and draft a deed giving rise to a caveatable interest – which they want us to draft (based on Collective Agreement they have prepared.)
Will need to ensure AML verification/instructions in regards to any funds rec from other parties – all a bit vague? Get one of the girls to sort plus waiver in regards to preparing Deed/Sett.
For drafting of deed – most to be drawn from Collective Agreement. But needs to give rise to right to lodge caveat to protect contribution from individual parties. Also, to cover payments to our trust account, will be under one matter – but will need to record individual contributions of parties. Funds to be held by us for settlement/legal costs. Balance to be paid out to joint collective account (once set up – will need ensure consents obtained). Or per specific instruction. Parties’ contributions may vary so important to protect each party’s funds for that party – and each party’s contribution to determine ownership share at moment in time.
We will not be involved in how funds managed within Collective but do need to (i) protect each party’s contribution and (ii) record/assign payments made by or to individual party’s (sic).
[25] A handwritten annotation on the file note adds a postscript in relation to the Waiver (shown by a drawn arrow) reading “Do we need? Very unclear as to whether we are acting for other parties at this stage?” Ms Toner did not explain in her evidence whether that was a contemporaneous annotation or made later.
[26] Ms Toner says that it was agreed with the Palairets that Toner Law would prepare the Deed on behalf of the Palairets based on a final version of the Collective Agreement that the Palairets had provided to Ms Toner. At that time, Ms Toner told the Palairets that if Toner Law was going to receive funds from the members of the Collective then AML due diligence on the other members would be required.
9 Above n 7.
[27] Ms Toner deposes that by this time she had concerns about the other parties being self-represented and that they may not take independent advice but rely on the advice from Toner Law. She therefore asked a legal executive at the firm to draft a waiver of independent legal advice (the Waiver).
[28] The Waiver was signed by all members of the Collective between 6 and 8 December 2021 and reads as follows:
WAIVER OF INDEPENDENT LEGAL ADVICE
Nature of the Instruction:
Names of Client(s): JO-ANNE PAMELA AMREIN-PALAIRET & JOHN
HAMILTON PALAIRET (“Party One”);
DORIS NEUBAUER and TE ATARANGI SAYERS
(“Party Two”);
ANA LUCIA DIAS-VIEIRA and GEORGE
HAMILTON GALL (“Party Three”) Description of matter on which Toner Law is instructed:
Co-Ownership Arrangement in respect of purchase SH 29, Tauranga including Deed of Caveatable Interest & Agreement to Mortgage
Acting for more than one client:
If two or more parties wish to instruct Michael J Toner Solicitor, this means we are providing legal services to more than one client. We can act for more than one client if there is no conflict of interest between the clients and we have explained what this means and advised each client to take independent legal advice.
Each of you needs to be aware:-
· This is a limited retained which means that in acting for more than one client, we are only required to provide the legal services as described above.
· We will report to you and we will give you advice in respect of that information which may/may not include advice on the wisdom of a course of action. If we give advice on the wisdom of a course of action, this will only be to the extent that this meets the clients’ combined interests or is of no detriment to any of the clients’ interests. This is a change from the duty of loyalty you can see in the New Zealand Law Society information for clients.
· All information received from a client in this matter may be disclosed to another client in this matter which is a change to the duty of confidentiality in the New Zealand Law Society information for clients.
· If any conflict of interest arises in this matter, each client must be referred for independent advice and the costs of the lawyer each client instructs,
will need to be met by that client separately. Only one of you can continue to instruct us after each client has received independent legal advice and with the consent of the other clients.
Independent Legal Advice:
In these circumstances, we have advised you all to seek independent legal advice.
Acknowledgement:
In signing this waiver, we acknowledge:-
1.Toner Law has explained the issues which arise when they are acting for more than one client, and its consequences. We understand those consequences.
2.Toner Law has requested and advised us to obtain independent legal advice.
3.We have decided not to take independent legal advice with respect to this matter. We confirm our consent for Toner Law to continue acting for both parties in this transaction.
4.We have entered into this instruction voluntarily, understanding its implications.
Consent
We therefore consent to Toner Law acting for all parties in this transaction.
[29] On 1 December 2021 the Collective signed the Collective Agreement and on the same date, they also signed the Deed prepared by Toner Law. This Deed recorded among other things:
(a)The members of the Collective wish to share in the ownership of the Property for which the Palairets had entered into an agreement for sale and purchase.
(b)The members have entered into a Collective Agreement recording their commitment to hold the land equally and collectively to develop the life support capacity and Mauri of the identified lands.
(c)Despite the intention for a collective form of ownership, on settlement the legal title will transfer to the Palairets temporarily and for practical purposes only.
(d)As soon as practically possible but no later than 18 months from the date of settlement, the Palairets will transfer the legal ownership of the Property to a yet to be formed trust or other such entity as unanimously agreed between the parties.
(e)The members shall make payment of stipulated cash advances to the trust account of Toner Law which holds such funds as an independent stakeholder with instructions to make payment for the stated purposes.
(f)The Palairets authorise the other members to lodge and maintain a caveat over the Property for the protection of the respective party’s rights under the Deed, subject to that party’s payment of the cash advance.
[30] The Neubauer/Sayers transferred $350,000 into Toner Law’s trust account on 7 December 2021 to obtain their one third interest in the Property. The Palairets transferred $530,000 to the Toner Law trust account (the Trust Account) on 9 December 2021, said to be $310,000 on their behalf and $220,000 on behalf of the second interested party.10
[31] The Toner Law trust account into which payment was made recorded the Palairets as the Trust Account client.
[32] Settlement of the Property purchase took place on 16 December 2021. All attendances in respect of settlement took place between Toner Law and the Palairets. Toner Law invoiced the Palairets in respect of those attendances. Ms Toner deposes that she had no direct contact with the other parties to the Collective Agreement. Nor were they copied into any correspondence from Toner Law.
[33] By early January 2022, conflict had arisen within the Collective. The source of that conflict need not be detailed here. Nor does this judgment intend to make any findings on performance or non-performance of the Collective Agreement. It suffices
10 The Palairets had already paid a deposit of $40,000 to the Trust Account on 15 November 2021, so the total of funds paid by them equaled $350,000.
to record that the conflict led to a fundamental break down in the relationship between the members of the Collective.
[34] On 13 January 2022, the Neubauer/Sayers tried to instruct Toner Law to register a caveat over the title to the Property. Unsurprisingly, Toner Law declined to accept that instruction asserting a conflict of interest because the firm acted for the Palairets.
[35] On 14 January 2022 K3 Legal registered a caveat on behalf of the Neubauer/Sayers. That caveat obstructed the registration of an easement pursuant to an Easement Agreement between the Palairets and the vendor of the Property. The Neubauer/Sayers consented to registration on 8 February 2022.
[36] On 14 February 2022 the Palairets instructed Toner Law to serve notice of cancellation of the Collective Agreement for breach and to offer repayment of the Neubauer/Sayers contribution. Toner Law did so. The Neubauer/Sayers did not accept cancellation nor repayment of their contribution.
[37]On 11 March 2022 the Palairets instructed Toner Law to transfer to them
$80,000 held in the Trust Account as part of the Collective’s funds remaining after settlement of the Property purchase. This sum represented the share of the Collective members other than the Neubauer/Sayers.11 The surplus owed to Neubauer/Sayers remained in the Trust Account.
[38] On 4 April 2022, Toner Law was contacted by solicitors acting for the second interested party requesting copies of correspondence, documents and advice relating to the Collective Agreement. Toner Law provided this to them with consent of the Palairets. There is no evidence about what was provided, or the terms on which it was provided. It is not clear whether the same material has also been disclosed to the Neubauer/Sayers.
Disclosure requests
11 In her affidavit dated 11 December 2023 Mrs Amrein-Palairet disposed that the second interested party had authorised the Palairets to receive their half share of the $80,000 payment on their behalf.
[39] On 10 October 2022 Mr Sayers wrote to Toner Law by email stating that they had yet to receive disclosure of the transactions through the Trust Account concerning the Property purchase and payments under the Collective Agreement despite repeated requests.
[40] Ms Toner responded the same day by email asking that communications be between solicitors only, denying receipt of “repeated requests” and stating that a copy of the Trust Account would be provided on request of Neubauer/Sayer’s solicitors. Ms Toner emailed again later that day copying in K3 Legal, seeking confirmation that K3 Legal was still acting for the Neubauer/Sayers.
[41] On 11 October 2022, in the absence of any confirmation from K3 Legal, Toner Law wrote directly to the Neubauer/Sayers. The letter expressed hesitation regarding communicating directly with the Neubauer/Sayers if K3 Legal was still representing them. The letter noted that the Neubauer/Sayers were fully entitled to a statement setting out how the funds they had paid into the Trust Account were accounted for. The letter enclosed a statement in respect of their share of the funds received and paid. It also stated that Toner Law wished to repay funds of approximately $40,000 belonging to the Neubauer/Sayers rather than continuing to hold them on their behalf and asked for account details to repay funds.
[42] In September 2022, the second interested party offered a right of first refusal to the Palairets and the Neubauer/Sayers to purchase their share in the Property. Correspondence between the respective parties followed.
[43] On 14 October 2022, K3 Legal questioned the $80,000 payment to the Palairets from the Trust Account, alleging that the disbursement was made in breach of the stakeholder provisions requiring all stakeholders’ agreement and seeking recall of the funds. It further noted that Toner Law had charged $6,000 for legal services to the Collective and deducted this sum from the Collective funds.
[44] Toner Law provided a copy of its invoice dated 2 March 2022. At that stage, it appears that all that had been disclosed to the Neubauer/Sayers was the Trust Account statement and invoice.
[45] Sometime in April 2023 the Palairets and Neubauer/Sayers agreed to attend a mediation. K3 Legal suggested that pre-mediation disclosure was needed to enable the mediation to be productive. That included disclosure of all information about the Collective. The mediator appointed by AMINZ pointed out that he had no power to compel discovery.
[46]On 21 July 2023 K3 Legal wrote to Toner Law in the following terms:12
Re: Collective Agreement – State Highway 29, Tauranga
As you are aware, we act for Dorothy Neubauer and Te Atarangi Sayers. You acted for our clients, along with Jo Amrein-Palairet, John Hamilton Palairet, Ana Lucia Dias-Vieira and George Hamilton Gall in respect of the Co- Ownership Arrangement in respect of purchase SH 29, Tauranga.
We request copies of all documents that you have for your files for the above matters including, but not limited to, trust account details and all communications.
We do not understand there could be any defense (sic) to the application, because you are obligated to provide your clients, or former clients, with copies of all relevant documents (Rule 7 and 7.2 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008). This includes documents and information coming from the other parties when there is a joint instruction. If an application had to be made, in the circumstances, increased costs would be sought.
[47] Toner Law’s response on 25 July 2023 advised that the solicitor for the second interested party took the view that the consent of all three parties was required to the joint disclosure instruction and that party did not consent save for the Trust Account ledger. Toner Law raised the issue of potentially privileged communications and other parties’ interests and that it needed two months to undertake a review of the documents. It noted that it would also require an undertaking from K3 regarding costs of that review.
[48] K3 Legal responded on 25 July 2023 reiterating the request, denying that there was any issue of privilege given the terms of the Waiver and agreeing to pay the photocopying costs.
12 Affidavit of Te Atarangi Sayers dated 30 August 2023.
[49] Between 25 July and 2 August 2023 Toner Law provided some disclosure. The Neubauer/Sayers considered that this was not comprehensive:
(a)The disclosed correspondence was dated from 1 November 2021 (after they say the Collective had already engaged Toner Law) until settlement of the Property in December 2021.
(b)There was a large gap in the correspondence until an email dated 18 October 2022 from solicitors acting for the second interested party.
(c)There was no documentation relating to Toner Law’s engagement with the Collective or the Palairets such as any letter of engagement or terms and conditions.
(d)There was no correspondence showing the Palairets’ instructions for transfer of funds out of the trust account nor dealing with the second interested party’s compliance with the terms of the Agreement.
[50] The mediation process faltered. The Neubauer/Sayers maintain that the parties are not able to proceed with a mediation without full disclosure of information from Toner Law.
Respective arguments
[51] The gist of the Neubauer/Sayers’ case is that they were clients of Toner Law in respect of “property matters” and consequently entitled to disclosure of information as clients pursuant to r 7 of the Rules. They maintain they are entitled to see all correspondence, communication or instructions given by the Palairets to Toner Law relating to the Property.13 The Neubauer/Sayers contend that the information they seek will establish the financial situation of the Collective, the management of the Property and whether any party has breached the Agreement.
13 They also say that, to the extent some of the information may be confidential, they will provide undertakings as to confidentiality as required.
[52] As Mr Napier put it, the requirement for disclosure goes further than r 7 because of the fiduciary relationship that exists between clients and their solicitors. He points out that a fundamental element of the fiduciary relationship is to avoid divided loyalties.14
[53] The Palairets say that there is no serious question to be tried because there was only a limited joint engagement of Toner Law – limited both in scope and duration. That limited joint engagement ended in early January 2022 when a conflict arose. They contend that the r 7 disclosure requirements relate only to the period of the Toner Law’s engagement, with no continuous disclosure obligation after termination of the engagement. They also say that Toner Law fulfilled all disclosure requirements before the applicants filed this application and protest that the applicants appear to be seeking legally privileged communications between Toner Law and the Palairets after the limited retainer came to an end.
[54] As to the balance of convenience, the Palairets argue that the motivation for this application is a “work-around” to avoid the high threshold for pre-commencement discovery under r 8.20 of the High Court Rules (HCR) which the Court ought not permit.
Determination
[55] As a preliminary point, although both parties adopted an orthodox interim injunction approach, I doubt that is the correct approach. First, the relief sought is not preservation of the status quo. Secondly, the injunction is framed in mandatory terms. Thirdly, the outcome will determine the application since, once documents are disclosed, there is no turning back the clock. The order sought in substance amounts to a final order.
[56] A mandatory injunction is available when required by justice.15 Mr Napier relies on Commerce Commission v Viagogo to support his assertion that it is unhelpful
14 Relying on Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 (CA) 90 and Moody v Cox
[1917] 2 Ch 71, at 81.
15 TV3 Network v Eveready New Zealand Ltd [1993] 3 NZLR 435 at [438].
and beside the point to characterise an injunction as prohibitive or mandatory.16 However, Viagogo was a very different kind of case concerned with the jurisdiction to grant an interim injunction against a defendant outside of New Zealand and not necessarily of such a general application.
[57] For those reasons, I consider that the Neubauer/Sayers must establish on the balance of probabilities that the scope and duration of the engagement of Toner Law entitles the Neubauer/Sayers to the documents they seek, namely all documents, deeds, correspondence, trust account records and all other information relating to:
(a)the purchase of the Property;
(b)the co-ownership arrangement;
(c)the management and maintenance of the Property since 16 December 2021; and
(d)any dispute, issues or any actions whatsoever that relate to the Property.
[58] The Neubauer/Sayers say that Toner Law was acting on behalf of the Collective in relation to the conveyance of the Property, the holding of funds in its Trust Account and advising on matters relating to the Collective’s co-ownership of the Property. They say this included assisting in the preparation of the Collective Agreement and drafting the Deed.
[59] I do not accept that fundamental description of the engagement of Toner Law as the contemporaneous material does not support it. The scope of the Collective’s engagement of Toner Law is set by the terms of the Waiver. The joint instruction began only when the parties returned the signed Waiver to Toner Law, on or around 8 December 2021. Up to that point, the contemporary documentation consistently points to Toner Law acting only for and on the instructions of the Palairets.
16 Commerce Commission v Viagogo AG [2019] NZCA 472; [2019] 3 NZLR 559 at [90].
[60] I accept that the joint instruction was brought to an abrupt end no later than 13 January 2022 when the relationship of members of the Collective broke down. Whether or not Toner Law was entitled to continue to act for the Palairets from that point does not inform the key question of whether the joint engagement came to an end.
[61]I find that Toner Law in fact acted in three capacities:
(a)As solicitors for the Palairets only in respect of all matters up to 8 December 2021 and after 13 January 2022.17
(b)As advisors to the Collective between 8 December 2021 and 13 January 2022 in respect of the Deed and settlement/conveyance of the purchase of the Property.
(c)As independent stakeholder for the Collective pursuant to cl 1.4 of the Deed.
[62] Documents created after 13 January 2022 and confidential instructions given or received by the Palairets to Toner Law are protected by legal professional privilege unless that privilege has been waived by the Palairets. Whether Toner Law ought to once again have acted again for the Palairets given the express terms of the Waiver is not determinative of the existence of legal professional privilege. It is more material that Toner Law ceased to act for the Collective.
[63] I accept that Mr Keall’s submission for the Palairets that the scope of the engagement is narrower than advanced by the Neubauer/Sayers. The disclosure obligation is spelt out in the Waiver in clear terms. It is that:18
All information received from a client in this matter may be disclosed to another client in this matter which is a change to the duty of confidentiality in the New Zealand Law Society information for clients.
(Emphasis added)
17 Whether Toner Law was entitled to act for the Palairets after 13 January 2022 is another question.
18 Waiver of Independent Legal Advice.
[64] This “matter” is described in the preamble as the “Co-ownership Arrangement in respect of purchase SH 29, Tauranga including Deed of Caveatable Interest & Agreement to Mortgage.” This limited retainer came to an end when the conflict of interest arose.
[65] Applying those principles, I conclude that the Neubauer/Sayers are entitled to disclosure of all documents, deeds, correspondence, Trust Account records and all other information relating to the co-ownership arrangements and the settlement of the Property purchase, created in the period between 8 December 2021 and 13 January 2022 including communications from and to Toner Law for that duration. No member of the Collective is entitled to assert legal professional privilege against the other members of the Collective in relation to those documents.
[66] In addition, all members of the Collective who paid funds into the Trust Account are entitled to copies of Toner Law’s trust ledger recording the Collective’s funds. This is not however an entitlement derived from the limited retainer and it is not limited to the period of that retainer. Instead, it derives from Toner Law’s role as independent stakeholder under cl 1.4 of the Deed and remains for so long as retained funds include funds of the member of the Collective seeking copies. That particular disclosure entitlement includes documents or instructions directing Toner Law to pay out any of the retained funds.
[67] I find the disclosure obligation or entitlement does not extend beyond those categories. It does not extend to documents created outside the date range in [65] other than those within the description in [66] above.
[68] I record that the Palairets have in fact disclosed other categories of documents such as documents relevant to the purchase of the Property from the date that Toner Law was engaged by the Palairets until settlement. It has also disclosed other material, presumably with the consent of the Palairets, as part of the response to this application. It was not argued that this further disclosure by Toner Law effectively waives privilege in all material held by Toner Law in regard to their retainer with the Palairets.
[69] In conclusion, and in response to the manner in which the application is framed, I decline to make the orders in the terms sought in paragraph (1)(b)(i), (iii) and (iv) of the originating application for mandatory injunction.
[70] I make an order that, to the extent not already disclosed, Toner Law is to disclose to the Neubauer/Sayers all documents, deeds, correspondence, Trust Account records and other information relating to the co-ownership arrangements and management and maintenance of the Property held by it, which were created and/or communicated between 8 December 2021 and 13 January 2022.
Costs
[71] Provisionally, as no party has been completely successful, it may be more appropriate that costs lie where they fall. However, if questions of costs have not been agreed between the parties, they may file memoranda of no more than five pages each plus schedules. In that event, costs will be determined on the papers.
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Walker J
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