O'Brien v Parkinson
[2021] NZHC 1193
•27 May 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-002814
[2021] NZHC 1193
UNDER The Companies Act 1993 BETWEEN
LOUISA JANE O’BRIEN, on behalf of GENERAL DYNAMICS CORPORATION LIMITED
First Plaintiff
LOUISA JANE O’BRIEN
Second PlaintiffAND
KEVIN PARKINSON
First Defendant
KEVIN PARKINSON, as trustee of KEVIN PARKINSON FAMILY TRUST
Second DefendantANNA VALERIENA KEDRINSKAIA and LISTON TRUSTEE SERVICES LIMITED,
as trustees of ANNA KEDRINSKAIA TRUSTThird Defendants
Hearing: 21 April 2021 Appearances:
J McCartney for Plaintiffs (CIV-2019-404-002814) and Defendants (CIV-2020-404-002351)
S Morris and S Dodds for Defendants (CIV-2019-404-002814) S Jefferson QC for Plaintiffs (CIV-2020-404-002351)
Judgment:
27 May 2021
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
O’BRIEN v PARKINSON & ORS [2021] NZHC 1193 [27 May 2021]
CIV-2020-404-002351
UNDER The Property (Relationships) Act 1976
BETWEEN KEVIN JAMES PARKINSON
Plaintiff
AND LOUISA JANE O’BRIEN
First Defendant
GENERAL DYNAMICS LIMITED
Second Defendant
KEA GNSS LIMITED
Third DefendantKEVIN JAMES PARKINSON, as trustee of the KEVIN PARKINSON FAMILY
TRUST
Fourth DefendantLOUISA JANE O’BRIEN, as trustee of the LOUISA PARKINSON FAMILY
TRUST
Fifth Defendant
ANNA VALERIENA KEDRINSKAIA and LISTON TRUSTEE SERVICES
LIMITED, as trustees of ANNA KEDRINSKAIA TRUST
Sixth Defendants
This judgment was delivered by Associate Judge Andrew on 27 May 2021 at 9.30 am
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar
Date……………………….
Introduction
[1] These are relationship property and shareholder derivative proceedings under s 165 of the Companies Act 1993. They arise out of the dissolution of the marriage between Ms O’Brien and Mr Parkinson following a relationship of 29 years.
[2] Ms O’Brien claims that following their separation in 2013, Mr Parkinson caused General Dynamics Corporation Ltd (GDC) – owned by the respective family trusts – to cease trading. She says that he then incorporated another company just one month later, which took over the business and trading of GDC.
[3] Ms O’Brien contends that Mr Parkinson’s actions in transferring the property of GDC and its profits to interests associated with him was in breach of his fiduciary duty. She claims a resulting trust in relation to a property in Heuchan Lane, Wanaka that is owned by the third defendant trustees. One of those trustees, Ms Anna Kedrinskaia, is the de facto partner of Mr Parkinson. Ms O’Brien also seeks orders under s 44 of the Property (Relationships) Act 1976 setting aside the disposition of the Wanaka property to the trustees and other dispositions relating to GDC.
[4]There are five interlocutory applications for determination:
CIV-2020-404-2351 (Property (Relationships) Act (PRA) proceeding):
(a)Joinder of Anna Kedrinskaia and Liston Trustee Services Ltd;
(b)Strike out/costs for non-compliance with discovery orders;
(c)Application by Mr Parkinson to strike out Ms O’Brien’s application to strike out (ie a cross-strike out claim);
CIV-2019-404-2814 (Companies Act proceeding):
(d)Further and better discovery from the first-third defendants; and
(e)Non-party discovery.
Factual background
[5] A comprehensive factual background is set out in my judgment of 14 July 2020, granting leave to Ms O’Brien to bring the s 165 shareholder derivative proceedings.1
[6] Ms O’Brien and Mr Parkinson commenced their relationship in 1984. They were married in 1994 and separated in 2013.
[7] GDC was incorporated in about 1981. The nature of the GDC business and what Ms O’Brien says are successor companies is at issue between the parties. It was an electronic engineering company whose role, Mr Parkinson says, was predominantly to provide contractual professional engineering. Ms O’Brien says that GDC was involved in the design, development, manufacture and supply of electronic systems.
[8] On 28 November 2013, Mr Parkinson entered into an agreement for sale and purchase to buy the land at 21 Heuchan Lane, Wanaka. The purchase price was
$525,000. The trustees of the Anna Kedrinskaia trust are the current registered proprietors.
[9] The trustees are also the registered proprietors of property at 4 Kingstone Street, Wanaka. It was purchased by them in 2018. The Heuchan Lane property is security, in part, for the mortgage the trustees have over the Kingstone Street property.
[10] In November 2017, Mr Parkinson applied for orders in the Family Court under the Property (Relationships) Act to determine and divide the relationship property on a 50/50 basis.
[11] Attached is a schedule detailing the procedural history of both the PRA proceedings and the Companies Act proceedings since that time.
[12] In the Companies Act proceedings (CIV-2019-404-2814), Ms O’Brien alleges, as a first cause of action, breach of fiduciary duty, contending that Mr Parkinson removed or took property or profits of GDC for his benefit or for the benefit of interests associated with him. In her second cause of action, she alleges that Mr Parkinson breached s 131 of the Companies Act by failing to act in the best
1 O’Brien v Parkinson & Ors [2020] NZHC 1681 at [7]–[28].
interests of GDC, that he breached s 135 of the Companies Act for causing or allowing the business of GDC to be carried on in a manner likely to cause substantial risk of severe loss to the company’s creditors, and that he breached s 301 of the Companies Act 1993 by misapplying property of GDC.
[13] By way of remedy, Ms O’Brien seeks judgment for the sum represented by GDC property, value and profits diverted by Mr Parkinson or, alternatively, an accounting to determine the quantum of such property, value and profits diverted by him.
[14] In the third cause of action, namely one of dishonest participation, receipt and assistance, Ms O’Brien seeks against the trustees a resulting trust and an order directing the trustees to transfer the property into the names of GDC.
[15] In the PRA proceedings (ie the third amended cross-application CIV-2020-404- 2351) Ms O’Brien seeks to trace what she says is the relationship property, business and profits that originated in GDC to the accounts operated by and/or for the benefit of Mr Parkinson and Ms Kedrinskaia (whether in her personal trustee capacity and including to 21 Heuchan Lane, Wanaka). She also seeks to trace all other profits generated following the purchase of 21 Heuchan Lane and whether by GDC, or any successor company. She seeks declarations that she holds interests in 21 Heuchan Lane based on contributions to the purchase price and/or the reduction of the mortgage and she seeks orders transferring and restoring the property to herself. She seeks to set aside a number of dispositions under s 44 of the Property (Relationships) Act, including the transfer of 21 Heuchan Lane to the trustees and the nomination by Mr Parkinson to the trustees (with the result that the property reverts to Mr Parkinson).
Application by Ms O’Brien (as first defendant) for joinder of Anna Kedrinskaia and Liston Trustee Services Ltd as parties to the PRA proceedings - CIV-2020- 404-2351
[16] The application for joinder of Anna Kedrinskaia and Liston Trustee Services Ltd was filed in the Family Court on 23 March 2020.
[17] The relevant Family Court rule is r 133 of the Family Court Rules 2002. That rule provides:
Striking out and adding parties
(1) The Court may, on its own initiative or on an interlocutory application for the purpose, at any stage of the proceedings, and on any terms that the court considers just,–
(a)order that the name of a party improperly or mistakenly joined (whether as applicant or as respondent) be struck out:
(b)order that the name of a person who ought to have been joined, or whose presence before the court may be necessary to enable the court effectually and completely to adjudicate on and settle all questions involved in the proceedings, be added, whether as applicant or as respondent.
(2) However, nothing in subclause (1)(b) authorises the addition of a person as applicant without that person's consent.
[18]The equivalent High Court Rule is r 4.5(6) of the High Court Rules 2016.
[19] The approach to joinder is a liberal one, with the object of the rules being to provide for the inclusion of necessary parties.2
[20] In the relationship property proceedings, Ms O’Brien alleges that Ms Kedrinskaia and Liston Trustee Services Ltd received property and profits that represent and can be traced to original relationship property. That is, the property and business of GDC.
[21] Ms O’Brien’s pleading claims directly against the property at 21 Heuchan Lane, registered in the names of Anna Kedrinskaia and Liston Trustee Services Ltd.
[22] In the circumstances, it is abundantly clear that it is necessary to join both Anna Kedrinskaia and Liston Trustee Services Ltd as parties to the relationship property proceedings. As Ms McCartney submitted, if the dispositions Ms O’Brien challenges are set aside under s 44 of the PRA, then Ms Kedrinskaia and Liston Trustee Services Ltd will need to be before the Court as parties. Their rights as the current registered owners will be directly affected by any orders of that kind. Both Ms Kedrinskaia and Liston Trustee Services Ltd are, of course, already parties to the Companies Act proceedings (CIV-2019-404-2814).
2 Westfield Freezing Co Ltd v Sayer & Co NZ Ltd [1972] NZLR 137 (CA) at 147.
[23] The amended opposition to the application lacks merit. The question of whether Ms O’Brien can obtain relief under s 44 of the PRA 1976 is a trial issue. Her claims are clearly arguable, and the joinder application cannot properly be resisted on the basis that there is no tenable relationship property claim in relation to Heuchan Lane.
[24] I accordingly grant the application for joinder and order that Anna Kedrinskaia and Liston Trustee Services Ltd are joined to the PRA proceedings (CIV-2020-404- 2351). The addition of those parties is necessary to do justice between those already party to the proceedings.
Application by Ms O’Brien to strike out Mr Parkinson’s defence and/or costs for non-compliance with discovery orders (CIV-2020-404-2351) – and cross- application by Mr Parkinson to strike out Ms O’Brien’s strike out application (CIV-2020-404-2351)
[25] Under r 7.48 of the High Court Rules the Court has broad powers to make such orders as may be required in the interests of justice where its orders are not complied with. The Court may make any order the Judge thinks just, including striking out a pleading or entering judgment if a party consistently fails to comply with a discovery order.3
[26]In the Court of Appeal in Parlane v Hayes,4 Miller J held, in referring to r 7.48:
The question is what the interests of justice require. They include, as this Court held in SM v LFDB,5 which dealt with “unless” orders, the interests of the injured party, notably in terms of delay and wasted costs, any injustice to the defaulting party, and the public interest in administering justice without unnecessary delay and expense.
[27]Miller J further held:6
… case management is a means to an end: the prompt and just disposition of cases, including a merits judgment for those that reach hearing. To compromise irretrievably a party’s right to a merits judgment for failure to meet some procedural obligation is a serious step that should be taken only when necessary to do justice to the other interests at stake.
3 Kidd v van Herren [2019] NZCA 275, (2019) 24 PRNZ 596 at [41].
4 Parlane v Hayes [2015] NZCA 341 at [30].
5 SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [31(f)].
6 Parlane v Hayes, above n 4, at [31].
[28] For reasons set out below, I find that there has been a failure by Mr Parkinson to comply with his discovery obligations. However, the high threshold that must be reached to take the “serious step” to strike out Mr Parkinson’s defence has not been met. This case is not the same or in substance similar to SM v LFDB,7 where the respondent continued not to adhere to an unless order and filed a series of applications to stay a second unless order. The Court commented that the respondent’s actions constituted a “protracted game of ‘chicken’ with the Court”.8
[29] In this case there have thus far been no “unless orders” and, although Mr Parkinson’s breach of his discovery obligations have been serious and substantial, I decline to strike out his defence. The better approach, which I address below, is to determine that costs should be paid by Mr Parkinson to Ms O’Brien and that he be required to provide further and better discovery.
[30] As to Mr Parkinson’s application to strike out Ms O’Brien’s strike out application (i.e. his cross claim), that too must be dismissed. Such application appears to have been a tactical one. In the circumstances, there is no need for me to address that issue further.
Application by plaintiffs (GDC and Ms O’Brien) for particular discovery (r 8.19)
CIV-2019-404-2814
[31] The categories of documents sought by Ms O’Brien that now remain at issue has reduced somewhat since her application of 12 February 2021. I deal below with each of the particular outstanding categories. However, before I do so, I address the relevant legal principles and how they apply in the broader context of these proceedings.
Relevant legal principles
[32]Rule 8.19 of the High Court Rules reads:
Order 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
7 SM v LFDB [2013] NZHC 3105.
8 At [10]; cited in SM v LFDB, above n 5, at [24].
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 –
(i)whether the documents are or have been in the party’s control; and
(ii)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.
[33] The starting position is a presumption that the affidavits of documents already filed are conclusive. The party seeking further discovery has the onus to establish that the existing affidavit of document(s) is incomplete.9
[34] The court conventionally adopts a four-stage approach in considering an application under r 8.19:10
(a)Are the documents sought relevant, and if so, how important will they be?
(b)Are there grounds to believe that the documents sought exist? This will often be a matter of inference. How strong is that evidence?
(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?
9 McCullagh v Robt Jones Holdings Ltd [2015] NZHC 1462, (2015) 22 PRNZ 615 at [7].
10 Assa Abloy NZ Ltd v Allegion (NZ) Ltd [2015] NZHC 2760 at [14]; see also Lighter Quay Residents’ Society Inc v Waterfront Properties (2009) Ltd [2017] NZHC 818 at [16].
[35] Further and helpful principles for determining the discovery application in this case were described by the Court of Appeal in Biggs v Biggs,11 (also a relationship property proceeding) as follows:
(a)Discovery should be proportionate to the subject matter and the parties must co-operate to facilitate discovery and manage its scope and burden;12
(b)There is no need to gloss the High Court Rules by emphasising a need for co-operation and economy in relationship property litigation, since the rules are now well aligned with the objectives of the PRA. It envisages that the parties will disclose relevant property and co-operate in ascertaining and dividing relationship property as inexpensively, simply and speedily as possible;13
(c)Relationship property litigation may exhibit characteristics that bear on discovery and may call for judicial management. This is always a question of fact. For example, one party, usually the wife, may have a valuable interest in property the details and value of which she knows little about.
[36] In Dixon v Kingsley,14 Kós J, in relationship property litigation, held that a “robust approach” should be taken to discovery consistent with the purposes and principles of the PRA: the need for just division, but also inexpensive and efficient access to justice. He also held that more substantial discovery may well be ordered by the Court where it has reason to believe that a party has concealed information or otherwise sought to mislead either the other party or the Court as to the scope of relationship property.
Application of the legal principles
[37] The context for applying all of these principles in this case is the troubling procedural history since the PRA proceedings were first filed in the Family Court in
11 Biggs v Biggs [2018] NZCA 546 at [30]–[31].
12 High Court Rules 2016, r 8.2.
13 Property (Relationships) Act 1976, s 1N(d).
14 Dixon v Kingsley [2015] NZHC 2044 at [20].
2018. That includes two further affidavits of documents from Mr Parkinson and Ms Kedrinskaia, sworn very recently on 14 April 2021, disclosing some further 650 documents.
[38] The assessment of relevance and importance is not to be determined by reference solely to the opposing party’s theory of its case or its statement of defence. The touchstone for relevance is the pleadings and, in particular, the issues defined by the pleadings – and it is the case of the party seeking discovery (here Ms O’Brien) that is assumed to be true.15
[39] The fundamental problem with the opposition by Mr Parkinson, the trustees and Ms Kedrinskaia to the r 8.19 application is that they seek to define relevance by their defence of both proceedings without due recognition given to the truly arguable matters at issue between the parties. This includes, as I held in my judgment of July 2020,16 an arguable case for a claim by Ms O’Brien to a resulting trust in Heuchan Lane and an arguable claim under s 44 of the PRA 1976 for orders setting aside various dispositions, including those relating to Heuchan Lane. As Ms McCartney submitted,
Ms O’Brien’s claims all involve established causes of action.17
[40] The explanation of the trustees, Mr Parkinson and Ms Kedrinskaia, as to how the acquisition of Heuchan Lane was purchased and their claim that Mr Parkinson has no beneficial interest in it, might ultimately prove to be correct. However, that is clearly a trial issue and not an answer, at this interlocutory stage, to the r 8.19 application. All of the evidence, including the belatedly disclosed trustee resolution of 29 April 2014,18 and the clearly arguable intermingling of funds between the various ASB bank accounts of Ms Kedrinskaia, are all important matters going to the critical issue of tracing and beneficial ownership, and will need to be tested at trial.
15 Robert v Foxton Equities Ltd [2014] NZHC 726.
16 O’Brien v Parkinson & Ors, above n 1.
17 They include claims similar to those made in Clayton v Clayton [2015] NZCA 30, [2015] 3 NZLR 293; Nation v Nation [2005] 3 NZLR 46 (constructive trust); and Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 (s 44 of the Property (Relationships) Act).
18 That resolution records that the purpose of the transaction [purchase of the Heuchan Lane property] is for the Trust to purchase and hold the property as a bare trustee for Anna Valeriena Kedrinskaia and Kevin Parkinson. The resolution was adopted one day before the settlement of the purchase on 30 April 2014 and the registration of the title in the name of the trustees. In her affidavit in the Family Court, Ms Kedrinskaia claimed that Mr Parkinson had no beneficial interest in Heuchan Lane but no reference was made to the 30 April 2014 resolution, which at that time had not been disclosed.
[41] In addressing the Assa Abloy19 criteria, and, in particular, the issue of whether there are grounds to believe that the documents sought exist, Ms McCartney contended that Mr Parkinson had deliberately withheld relevant documents and that his evidence about them when requests were made, is dishonest. She further submitted that his and Ms Kedrinskaia’s accounts about the beneficial ownership of the Heuchan Lane property are dishonest and that documents to support the accounts are fraudulent.
[42] Those are, of course, serious allegations. I accept that there is a proper evidential basis to support them,20 but these claims are trial issues and it would not be appropriate in the context of these interlocutory applications to make any particular findings about them. However, I do find that on the evidence before me, that both Mr Parkinson and Ms Kedrinskaia can properly be regarded as unreliable witnesses and the starting position of a presumption that their affidavits of documents are conclusive has been rebutted. There is a sound evidential basis for concluding that disclosure to date has been incomplete and that the efforts made by Mr Parkinson and Ms Kedrinskaia to meet their discovery obligations have been inadequate. For example, no adequate explanation has been provided for the late disclosure of the 2014 trustee resolutions and Mr Parkinson’s claim that the mortgage on Heuchan Lane was repaid in full in 2018 was an incomplete explanation. He did not refer to the very relevant factor that Heuchan Lane was then used as security for the purchase of the property in Kingstone Street.
[43] I am of the view that it has been clear since the 2018 discovery application in the Family Court, that Ms O’Brien has been seeking documents relating to the acquisition and funding of the purchase of Heuchan Lane and to what she says is the diversion of relationship property proceeds to GDC and successor companies. She has, to her credit, been dogged in her attempts to obtain the necessary documentation and the results of that determination, now in the form of documents before the Court, provides further evidential basis for her claims and further undermine the contrary contentions advanced by Mr Parkinson that her claims have no prospect of success.
[44] On the basis of the protracted and lengthy procedural history of this case I find that Mr Parkinson has been in breach of his obligations under the High Court Rules to
19 Assa Abloy NZ Ltd v Allegion (NZ) Ltd, above n 10.
20 Schmidt v Pepper NZ (Custodians) Ltd [2012] NZCA 565.
co-operate (r 8.2) and the parallel obligations under the Property (Relationships) Act to disclose relevant property and co-operate in ascertaining and dividing relationship property as inexpensively, simply and speedily as possible. On the odd occasion, the requests made by Ms O’Brien may have overreached but that does not justify the obstructive approach taken by Mr Parkinson and Ms Kedrinskaia and, in particular, the serial delayed and drip-feed manner of providing discovery through multiple affidavits of documents.21 This includes the critical ASB Orbit bank statements, being the bank account for the mortgage over Heuchan Lane, which were only provided, and on an informal basis, on 30 November 2020.22 It is equally clear that Mr Parkinson’s affidavit of assets and liabilities initially filed in the Family Court was incomplete. He did not disclose, as he should have, his Australian bank accounts.
[45] I agree with Ms Morris that the shareholder derivative proceedings are “relatively fresh” (i.e. filed some time after the PRA proceedings) and that my discovery orders were only made in those proceedings in August last year. However, that provides no justification for the approach adopted by Mr Parkinson and Ms Kedrinskaia. In their affidavits of documents filed on 28 October 2020, Mr Parkinson produced 84 documents and Ms Kedrinskaia 121. Discovery was not complete. On 30 November 2020, and during the course of settlement negotiations, they provided further informal discovery. I accept that this was on the basis that formal discovery would follow. This included a number of bank statements for GDC, Mr Parkinson’s invoices for his consultancy services and bank statements from Ms Kedrinskaia’s ASB Orbit account. Such documents were, however, clearly relevant and ought to have been provided in the original affidavits of documents.23 Furthermore, as noted, as recently as 14 April 2021, Mr Parkinson and Ms Kedrinskaia both provided substantially further documents.
21 The total number of affidavits of documents filed by Mr Parkinson and Ms Kedrinskaia in the shareholder derivative proceedings is six (i.e. three each).
22 I also note that it was not until 9 September 2020 that Mr Parkinson provided, as part of the Family Court discovery, copies of statements for ASB bank accounts in the name of Anna Kedrinskaia numbered 12-XXXX-XXXXX X-50, -52 and -53. Those bank accounts are clearly relevant to the contentions of Ms O’Brien that profits of GDCL and other successor companies were being diverted.
23 See also Affidavit of Lorraine Mary Casey affirmed 10 November 2020, referring to documents provided by way of discovery from Ms Kedrinskaia in her Affidavit of Documents dated 28 October 2020. The affidavit listed documents of direct relevance to the Heuchan Lane purchase and Mr Parkinson’s interest in it.
[46] I reject Ms Morris’ submission that the most recent affidavit of documents of Mr Parkinson and Ms Kedrinskaia of 14 April 2021 contain non-relevant material but were filed on a “pragmatic basis” to try and avoid unnecessary cost and expense. In my view the documents only recently disclosed were always relevant. I have already referred to the initial application for discovery in the Family Court as putting all parties on notice as to the matters in dispute.
[47] In addition, there have been a number of further applications and memoranda from Ms McCartney on behalf of Ms O’Brien setting out very clearly the types of documents that she is seeking and the basis for the contention that they are relevant. This includes the checklist that I annexed to my minute of 10 August 2020, when I made an order for discovery in the CIV-2019-404-2814 proceedings.24
[48] The complaints that Mr Parkinson and Ms Kedrinskaia make about Ms O’Brien’s “repeated” and “wide-ranging” requests for documents and ones directed at entities not parties to the proceeding are of a highly technical nature and ultimately lacking in any real merit. As the Court of Appeal noted in Biggs v Biggs, it is not unusual that one party, usually the wife (and here Ms O’Brien) has little knowledge of the detail and value of property and assets which might legitimately be the subject of a relationship property claim. The approach of Ms O’Brien is entirely understandable and justified.
[49] I also reject Mr Parkinson’s submission that the two proceedings here are “fundamentally distinct” with different discovery obligations. I accept that in principle the proceedings are different, but the claim they are fundamentally distinct is, in the context here, an unhelpful overstatement and an artificial one. Here there is substantial overlap between the two proceedings and the fundamental matters at issue are of a substantially similar nature. A claim that the proceedings are distinct cannot be used as an excuse to fail to comply with the duties of co-operation and the need to
24 See also Memorandum of Ms McCartney QC dated 9 December 2019 (75 categories of documents sought); Memorandum of Counsel for Mr Parkinson dated 10 December 2019, confirming his agreement to provide some of the documents; see Memorandum of Mr Parkinson dated 18 January 2020 (on discovery); see also Memorandum of Ms McCartney dated 5 October 2020 (amended discovery checklist); see also Affidavit of Ms O’Brien dated 25 August 2020 (updating the Court on discovery defaults).
provide disclosure that ensures the inexpensive, simple and speedy division of relationship property.
[50] Against all of that background, I now turn to address each of the particular outstanding categories of discovery. This has regrettably been more difficult and challenging than should have been the case, because of a continuing lack of cooperation between the parties.
[51] At the conclusion of the hearing, I directed that the parties were to confer with a view to filing a joint memorandum recording their agreement as to those categories of documents which should be provided – and with a corresponding reduced list of outstanding categories for me to address.
[52] In response, I received further and separate memoranda from the parties with lengthy schedules (contrary to my expectations), which are not easy to reconcile but, nevertheless, must be addressed. In the circumstances I adopt a robust approach, informed by the general findings I have made above, and with a view to ensuring that all outstanding discovery issues are now brought to a conclusion.
[53] It is apparent from the amended schedules received that it is agreed that a number of the outstanding categories are relevant. What is at issue in many instances is Mr Parkinson’s and the trustees’ position that documents that Ms O’Brien seeks, have already been produced or there is no basis for inferring that further documents exist. Also at issue is whether there is a need for a consolidated affidavit of documents.
[54]I address the particular categories in terms of the following three schedules:
(a)Schedule A (PRA proceeding CIV-2020-404-2351) – discovery sought by Ms O’Brien from Mr Parkinson;
(b)Schedule B (Companies Act proceeding CIV-2019-404-2814) – discovery sought by Ms O’Brien from the first and second defendants, namely Mr Parkinson in his personal and trustee capacity;
(c)Schedule C (Companies Act proceeding CIV-2019-404-2814) – discovery sought from the third defendants, namely the trustees of the Anna Kedrinskaia Trust.
[55] In making the orders set out in the following schedules, I am satisfied that the four relevant criteria in Assa Abloy NZ Ltd v Allegion,25 have been made out. This includes findings that there is a proper basis for inferring that the documents sought exist and they are sufficiently important to order their production.
Schedule A – PRA proceedings – CIV-2020-404-2351 - discovery sought from Mr Parkinson
Item Description Order of the Court 1 Bank statements and
financial accounts for GD Corp from 2017 to date.
I order that these documents are to be provided. This is to
include further statements from 1 April 2020 to the present date.
2 Statements for all Australian and other accounts in Mr Parkinson’s name from January 2012 to
May 2013.
I order that these documents are to be discovered. They are to include bank statements from the ANZ branch UNSW account 2001-XXXXX and account 5215-XXXXX and any other account held by Mr Parkinson. 3 Statements for credit cards and debit cards in Mr
Parkinson’s name being Global Plus.
I order that these documents are to be discovered. I record the parties’ agreement that this category is relevant. 4 Bank statements for accounts into which monies of GD Corp were credited. I order that these documents are to be discovered. I record the parties’ agreement that this category is relevant. 5 Loan facility or mortgage account involved with the
purchase of 21 Heuchan Lane, Wanaka.
I order these documents are to be discovered. 6 Bank accounts associated with Mr Parkinson and/or his interests out of which legal costs are being paid. I order that these documents are to be discovered but with the legal fee payments redacted.26 7 Bank accounts associated with Mr Parkinson’s
interests out of which Global Plus Visa and Amex.
I order that these documents are to be discovered. I record the parties’ agreement that this category of documents is relevant. 8 NZ Customs Service passenger movements for Mr Parkinson from 1 May 2012 to date. I order that these documents are to be discovered. I record Mr Parkinson’s agreement to copy in counsel for Ms O’Brien to his request to NZ Customs Service for his travel records and that he is to ask that the travel records are provided to him and counsel for the parties simultaneously.
25 Assa Abloy NZ Ltd v Allegion, above n 10.
26 At the hearing, Ms McCartney agreed to the redaction of the legal fee payments. I see no need in the circumstances for any confidentiality orders. The position is covered by the redaction I have directed.
Schedule B – Companies Act proceedings – CIV-2019-404-2814 - discovery sought from first defendant Mr Parkinson in his personal and trustee capacity
Item Description Order of the Court 1 All bank accounts in NZ and overseas in Kevin Parkinson’s name and that he is a signatory of.
Statements of account 12-XXXX- XXXXX XX-51.
Statements of account 12-XXXX- XXXXX XX-00
I order that these documents are to be discovered. I record the parties’ agreement that this category is relevant.
I record Ms O’Brien’s position that she will seek discovery of these documents from the third defendant trustees, namely the trustees of the Anna Kedrinskaia Trust.
I record Ms O’Brien’s position that she will seek discovery of these documents from the third defendant trustees, namely the trustees of the Anna Kedrinskaia Trust.
2 Statements for credit cards in Mr Kevin Parkinson’s name.
Statements for credit cards the Mastercard paid from Anna Kedrinskaia’s account 12-XXXX- XXXXX XX-52.
BNZ credit card paid out of Anna Kedrinskaia’s account 12-XXXX- XXXXX XX-52.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered. If Mr Parkinson and the trustees’ position is that the account 12-XXXX-XXXXX XX-52 does not repay any credit card associated with BNZ, then a sworn statement to that effect is required in a further
affidavit of documents.
3 Letter of authority to NZ Customs to show Mr Parkinson’s travel
records from 1 January 2012.
I order that these documents are to be produced/discovered in accordance with the orders set
out in relation to Schedule A.
4 Copies of all NZ Courier invoices and statements from 1 January 2013 for GD Corp.
Copies of all NZ Courier invoices and statements from 1 January 2013 for GDL and Kea GNSS.
I order that all documents in this category are to be discovered.
I order that all documents in this category and within Mr Parkinson’s control are to be discovered by him. To the extent that Mr Parkinson does not have control of such documents, then a sworn statement to that
effect is required.
5 Copies of FEDEX invoices to GD Corp from 1 January 2013.
Copies of FEDEX invoices to GDL and Kea GNSS from 1 January 2013.
I order that these documents are to be discovered. I record the parties’ agreement that these documents are relevant. To the extent that Mr Parkinson claims that no further documents exist in this category (beyond those already produced) then a sworn statement to that effect is required.
I order the documents in this category are to be discovered. To the extent that Mr Parkinson is not in control of these documents, then he is required to file
and serve a sworn statement to that effect.
6 Copies of applications for bank funding or borrowing including for the Heuchan Lane, Wanaka
property and any other property purchased from 1 January 2013.
I order the documents in this category are to be produced.
7-8 Copies of original invoices to GPSAT Systems Ltd and Gravity Ltd from 1 January 2013.
Copies of original invoices to PMS Ltd from 1 January 2013.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered. If there are no further documents in this category because PMS Ltd ceased trading after 31 March 2014, then Mr Parkinson is to provide a sworn statement to that effect.
9 Copies of original invoices and shipping confirmation for all supplies from PMS Ltd from 1 January 2013 to:
(a) Kevin Parkinson
(b) GDL
(c) GD Corp
(d) Other interests associated with Mr Parkinson.
I order that documents in this category are to be discovered. If there are no documents in this category after 31 March 2014, then Mr Parkinson is to file and serve a sworn statement to that effect. 10 Copies of original invoices and statements including shipping information for all suppliers that provide services and products including Triode Group Ltd from 1 January 2013 to:
(a) GDL;
(b) GD Corp; and
(c) Mr Parkinson or any interests associated with him.
(a) I order that documents in this category are to be discovered.
(b) I order that documents in this category are to be discovered.
(c) I order that documents in this category are to be discovered.
11 Financial accounts for GD Corp for the year ending 31 March 2020.
31 March 2021
I order that documents in this category are to be produced and on an ongoing basis. I record the parties’ agreement that documents in this category are relevant.
I order that documents in this category are to be discovered and on an ongoing basis. I record the Mr Parkinson’s agreement that GD Corp’s financial accounts for the year ending 31 March 2021 will be
produced once finalised.
12 All documents produced to Des Chia for the purpose of preparing the accounts for:
(a) Mr Parkinson and GD Corp
(b) GDL
I order that documents in this category are to be discovered. 13 All breakdowns prepared and produced by Des Chia including trial balances. I order that documents in this category are to be discovered. 14 Copy of detailed general ledger showing all transactions by account for:
(a) KP;
(b) Kevin Parkinson Family Trust;
(c) GD Corp; and
(d) GDL
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered
15 Copy of all physical records in relation to the preparation of the accounts for:
(a) Kevin Parkinson
(b) Kevin Parkinson Family Trust
(c) GD Corp
Copies of all physical and electronic records in relation to the preparation of the accounts for GDL.
Copies of all electronic records in relation to the preparation of the accounts for Mr Parkinson and GD
Corp.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered.
16 Copies of correspondence with IRD in relation to Mr Parkinson, the Kevin Parkinson Family Trust and GD Corp.
Copies of correspondence with IRD in relation to GDL.
I decline to make any order in relation to this category. I record Ms McCartney’s agreement at the hearing that this category is about the non-payment of tax and Ms O’Brien accepts that it is not going to affect value.
I decline to order discovery documents in this category.
17 All GST returns for Mr Parkinson and Kevin Parkinson Family Trust.
GDL
I order that documents in this category are to be discovered. To the extent that there are no documents in this category, Mr Parkinson is to provide a sworn statement to that effect.
I order that documents in this category are to be discovered.
18 All invoices for freight and courier for purchases and subcontracting from 1 January 2013. I order that documents in this category are to be discovered.
Schedule B – documents sought from the second defendant, Mr Kevin Parkinson, as trustee of the Kevin Parkinson Family Trust
Item Description Orders of the Court 1 All statements for the bank account to which the payment of $60,000 was made from GDL 01-XXXX-XXXXX XX-00 to
Barter Law on 22 January 2014.
I order that documents in this category are to be discovered. I record Mr Parkinson’s agreement that he will contact Barter Law to provide
statements relating to the receipt of the $60,000 transfer.
2 All financial accounts for the Kevin Parkinson Family Trust. I order that documents in this category are to be discovered. 3 Any amendments to the Kevin Parkinson Family Trust deed. I order that documents in this category are to be discovered. 4 All Kevin Parkinson Family Trust trustee resolutions. I order that the trustees are to provide discovery of documents in this category. 5 All Kevin Parkinson Family Trust minutes. I order discovery of documents in this category. To the extent that documents do not exist, then a sworn statement to that effect is to be provided
by Mr Parkinson.
Schedule C – Companies Act proceedings – CIV-2019-404-2814 - discovery sought by Ms O’Brien from the third defendant trustees, the trustees of the Anna Kedrinskaia Family Trust
Item Description Order of the Court 1 Any amendments to the Anna Kedrinskaia Family Trust deed. I order that documents in this category are to be discovered. 2 All Anna Kedrinskaia Family Trust minutes. I order that documents in this category are to be discovered. I record Ms O’Brien’s agreement that documents in this category were discovered on 14 April 2021, but I direct that they are to be included
in a consolidated affidavit of documents filed and served on behalf of the trustees.
3 All Anna Kedrinskaia Family Trust resolutions and trust deeds.
The solicitor’s file and file notes relating to the Anna Kedrinskaia Family Trust deed of record prepared in 2019 and 2020.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered. To the extent that the defendant trustees claim privilege, then such privilege is to be
described in terms of the orders I make on the issue of privilege in this judgment (see [65] above).
4 All bank account statements for the Anna Kedrinskaia Family Trust from 1 January 2013 to date. I order that documents in this category are to be discovered. This is to include bank account statements for accounts where Ms Kedrinskaia has
allowed funds/revenue from either GDL or GD Corp to be held in her name or the trustees’ name.
5 All financial accounts for Anna Kedrinskaia Family Trust from 2012 to date. I order discovery of documents in this category. 6 All documents that establish the purchase of plant for and on behalf of GDL and purchase price/documents showing transfer to:
(a) GDL
(b) GD Corp
(c) Other
I order that documents in this category are to be discovered. 7 All bank statements for Anna Kedrinskaia from October 2013 to December 2018: in her personal capacity.
In her capacity of trustee of Anna Kedrinskaia Family Trust.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered. This is to include account 12-XXXX-
XXXXX XX-51 to the extent that those documents are in the control of Ms Kedrinskaia.
8 Documents showing the assets of the Anna Kedrinskaia Family Trust as at 1 January 2012 to date. I order discovery of documents in this category. 9 Documents showing liabilities and borrowings of the Anna Kedrinskaia
Family Trust from 1 January 2012.
I order that documents in this category are to be discovered. 10 Documents showing sale and disposal of assets of Anna Kedrinskaia Family Trust from 1
January 2012 including solicitors trust account ledgers.
I order documents in this category are to be discovered.
11-
12
Documents showing the application of the proceeds of sale or disposal of assets of Anna Kedrinskaia Family Trust into a bank account or other
from 1 January 2012.
I order that documents in this category are to be discovered. 13 The documents showing:
(a) The source of funds of $140,000 paid on 22 January 2014 to the trust account of Barter Law
(b) The bank statements holding the funds before payment to show the
source.
I order that documents in this category are to be discovered. 14 Documents showing the source of funds repaid on 26 November 2018: (a) $89,000
(b) $150,000
(c) For a period of 12 months beforehand for the $89,000.
(d) For a period of 12 months beforehand for the $150,000.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered.
I order that documents in this category are to be discovered.
15 Copies of the Omni account that replaced the Orbit account from the date of start to present. I order that documents in this category are to be discovered except that legal fees may be redacted. 16 Copies of all application for funding or borrowing from:
(a) Any bank
(b) The purchase of the Wanaka property
I order that documents in this category are to be discovered.
I order documents in this category are to be discovered.
17 Copy of solicitor’s file for the purchase of the Wanaka property. I order that documents in this category are to be discovered. 18 Copies of all correspondence requesting the letter from the ASB. I order that all documents in this category are to be discovered.
Consolidated affidavit of documents
[56] I find that Mr Parkinson and Ms Kedrinskaia should be required to file consolidated and updated affidavits of documents. There should be two affidavits: one from Mr Parkinson, in both his personal and trustee capacity, the other from Ms Kedrinskaia in both her personal and trustee capacity. Ms Kedrinskaia is of course now a party to both proceedings. The affidavits should include all of the documents relevant to both proceedings and be filed and served in both proceedings. The documents to be discovered include, of course, those which are the subject of the discovery orders I make in this judgment.
[57] I note that there are already electronic indexes and all entries are hyperlinked. In the circumstances, and as a matter of proportionality, it would appear that consolidated affidavits would not be particularly onerous to prepare.
[58] I acknowledge that in my directions made in the Companies Act proceedings, I directed that Mr Parkinson and the trustees were not required to provide disclosure of documents already discovered in the Family Court proceedings. That was obviously an attempt to try and reduce unnecessary cost. However, given the failures by Mr Parkinson and Ms Kedrinskaia to comply with their discovery obligations to date, and the need for some rigour and order in relation to discovery (which to date has been piecemeal and serial, as Ms McCartney described it), the better approach is to require, as I do, consolidated affidavits of document.
[59] I direct that the parties are to confer and try and reach agreement on the issue of inspection of the documents the subject of the consolidated affidavits of documents. It may be because all the entries are hyperlinked that inspection is not really an issue. Leave is reserved to apply to the Court for further directions if agreement cannot be reached.
Challenge by Ms O’Brien to schedule appended to Mr Parkinson’s affidavit of documents – listing of solicitor’s file – r 8.16(3)
[60] Ms O’Brien contends that Mr Parkinson’s affidavit of documents does not sufficiently describe documents he has claimed as privileged and, in particular, the solicitor’s file of Barter & Co. She contends that the description of the solicitor’s file as a group document and claiming privilege in relation to that group does not meet the requirements of r 8.16(3). That rule provides that the description of documents for which privilege is claimed must be sufficient to inform the other parties of the basis on which each document is included in the group.
[61] Ms O’Brien says that her concern about this issue arose after she became aware of document AK110, which is an invoice from Barter & Co. That invoice relates to services performed generally in relation to the purchase of Heuchan Lane. The narration to the invoice includes a description of services involving the drafting of a “property sharing agreement”. Ms O’Brien is naturally interested to know whether
the property sharing agreement relates to Heuchan Lane. The invoice is rendered to both Mr Parkinson and the trustees.
[62] The solicitor’s file at issue is not the file of Morris & Co, the instructing solicitors for Mr Parkinson and the trustees in both proceedings. Barter & Co were the solicitors acting in relation to the Heuchan Lane purchase, a transaction and an alleged s 44 Property (Relationships) Act disposition directly at issue in this litigation. That is the context for applying subss 2 and 3 of r 8.16.
[63] In Vanda Investments Ltd v Logan,27 Osborne AJ rejected an argument that what is now r 8.16 does not require documents to be described in the list. His Honour held that the adequate identification of discovered documents, in relation to privileged documents, should achieve or facilitate the following purposes:28
(a)To enable the opposite party to become aware of the documents claimed to be privileged;
(b)To enable that party to meaningfully consider a challenge to the claim of privilege.
[64] I accept the submission of Ms McCartney that Mr Parkinson has failed to file a rule-compliant list of documents in relation to the Barter & Co file, because he has failed to adequately identify the documents for which privilege was claimed. This is not a case where the general description given is sufficient to enable the opposite party (here Ms O’Brien) to determine whether the claim for privilege is properly based.
[65] For reasons set out below, I find that Mr Parkinson should be required to file a consolidated affidavit of documents, one that is rule-compliant, and which adequately identifies documents for which privilege is claimed. That will then allow Ms O’Brien to meaningfully consider a challenge to the claim of privilege, should that become relevant.
27 Vanda Investments Ltd v Logan HC Dunedin CIV-2009-412-219, 27 November 2009.
28 Vanda Investments Ltd v Logan, above n 27, at [48(c)(i)–(ii)].
Application by Ms O’Brien dated 12 February 2021 for non-party discovery (r 8.21) – CIV-2019-404-2814
[66]Rule 8.21 of the High Court Rules provides:
Order for particular discovery against non-party after proceeding commenced
(1) This rule applies if it appears to a Judge that a person who is not a party to a proceeding may be or may have been in the control of 1 or more documents or a group of documents that the person would have had to discover if the person were a party to the proceeding.
(2)The Judge may, on application, 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 the documents 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 a party or parties specified in the order; and
(c)if the documents are in the control of the person, to make those documents available for inspection, in accordance with rule 8.27, to the party or parties specified in the order.
(3) An application for an order under subclause (2) must be made on notice to the person and to every other party who has filed an address for service.
[67] The power to make an order for non-party discovery is discretionary, with the jurisdiction exercised where there are grounds for belief that a non-party had or has documents that would be discoverable if the person was a party. The key principles of relevance and proportionality apply. A non-party discovery order must be necessary, in the sense that other sources of evidence are unlikely to be sufficient because they are materially incomplete or unreliable.29
[68]Ms O’Brien seeks non-party discovery orders against the following non-parties
– each of whom has been served with the application:
29 Vector Gas Contracts Ltd v Contact Energy Ltd [2014] NZHC 3171, [2015] 2 NZLR 670.
(a)ASB Bank Ltd;
(b)ANZ New Zealand Ltd;
(c)Westpac New Zealand Ltd;
(d)Des Chia & Associates Ltd (accountant);
(e)Gravity Ltd; and
(f)Precision Manufacturing Solutions Ltd and Triode Group Ltd (which are essentially one and the same business).
[69]The non-party banks have advised will abide the Court’s decision.
[70] Mr Parkinson and the Trustees also abide the Court’s decision but contend that to the extent that any non-party discovery is ordered, it must be produced in accordance with the High Court Rules and, in particular, r 8.21. They say that the documents to be discovered should relate strictly to the allegations pleaded against the defendants and must be necessary.
[71] In addressing each of these applications, my findings above in relation to the particular discovery (r 8.19) are relevant. There has been a breach by Mr Parkinson of his discovery obligations and his evidence and that of Ms Kedrinskaia is unreliable. That is an important context for assessing whether the non-party discovery orders are necessary in the sense that other sources of evidence (namely Mr Parkinson and Ms Kedrinskaia themselves) are unlikely to be sufficient because they are materially incomplete or unreliable. There is also a clear need for a robust approach and to bring all outstanding discovery issues to a conclusion.
[72] Many of the non-parties are of course trading banks and the documents sought include bank statements. They are clearly relevant to the issue of tracing and whether Mr Parkinson has a beneficial interest in Heuchan Lane; they may well be the primary evidence that supports Ms O’Brien’s principal contention.
[73] Ms Morris submitted that any non-party discovery orders should not concern the affairs of Mr Parkinson or the Trustees in any capacity other than that in which they are sued. She argued that, for example, the Trustees are sued as Trustees of the
Anna Kedrinskaia, yet Ms O’Brien is seeking all personal bank accounts and credit cards of Ms Kedrinskaia. However, that submission takes no account of the fact that there is a credible basis on the evidence before me for Ms O’Brien to allege that a number of the personal bank accounts of Anna Kedrinskaia (including the ASB Orbit mortgage account), received profits/funds from GDL – and indeed, that there was substantial intermingling of those funds amongst the various personal bank accounts of Ms Kedrinskaia. The submission of Ms Morris that these materials have no relevance to the allegations is rejected. Substantial funds from GDL appear to have been paid into the personal ASB Orbit account in Ms Kedrinskaia’s sole name.
[74] I find that the grounds for all of the non-party discovery orders sought have been made out. There are grounds for belief that all of the non-parties have documents that would be discoverable if they were parties, and such orders are, in these circumstances, necessary. The terms of the orders I make are set out below.
[75] I accept, as Ms Morris submitted in her memorandum of 20 April 2021, that Westpac has advised that it does not hold any information relating to Ms Kedrinskaia or the third defendant. That is confirmed in the email from Westpac dated 16 April 2021. The non-party discovery orders I make in relation to Westpac do not extend to Anna Kedrinskaia, the Anna Kedrinskaia Family Trust or to Liston Trustee Services Ltd.
Costs of the non-party discovery and whether formal affidavits of documents are required from the non-parties
[76] In accordance with r 8.22 of the High Court Rules 2016, if it is manifestly unjust for a party to have to meet the costs of complying with an order for non-party discovery, the Court may order that another party meet those costs.
[77] In the circumstances here I find that it would be manifestly unjust for Ms O’Brien, as the applicant, to meet the costs of the non-party discovery orders I am making in this case. I find that Mr Parkinson should meet those costs. He has been in breach of his discovery obligations to date and his failures have contributed in a significant way to the need for Ms O’Brien to seek the non-party discovery orders. The account given by Mr Parkinson as to steps taken to locate relevant documents are, as I have recorded elsewhere in this judgment, unreliable. This includes the very late
disclosure of some Triode Group Ltd invoices which are of direct relevance to one of the principal issues in dispute in the proceedings, namely manufacturing versus consultancy (referred to at [7] above).
[78] I note that the Court of Appeal in Biggs v Biggs,30 held, in making discovery orders against Mr Biggs, that should he swear that the information in dispute was not within his control and that a non-party discovery application might become relevant and necessary, and that it would be appropriate for the High Court to consider whether he should pay the costs of such discovery to give him an appropriate incentive to obtain the material at less cost. The same incentive clearly applies in this case and provides further support for the order that I make under r 8.22.
[79] Ms McCartney has been corresponding with the three non-party trading banks and reached agreement with them that the documents they are to discover can be provided on an informal basis without the need for the filing of a formal affidavit of documents. However, Ms Morris contended that in accordance with r 8.21, I must order that all the non-parties be required to provide disclosure and file an affidavit of documents.
[80] I reject Ms Morris’ submission and find, as negotiated between Ms McCartney and the three non-party trading banks, that the discovery order can be provided on an informal basis. In reaching that conclusion I apply the governing “yardstick”, namely r 1.2 (the objective of the High Court Rules).31 Such a conclusion is also consistent with the objectives of procedural law as expressed in Halsbury’s Laws of England:32
What practitioners seek for their clients when they resort to the courts is to use the machinery of justice to obtain a just result, and what their clients seek, in addition to vindicating or protecting their rights, to avoid is unnecessary expense, delay and excessive technicality in the process of obtaining that just result.
[81] As Ms McCartney submitted, the rules in relation to discovery require co- operation between the parties and it is not unusual for the parties to reach agreement that informal procedure should be adopted with a view to reducing cost. I fail to see why the Court should not sanction a similar approach in relation to non-party
30 Biggs v Biggs, above n 11, at [75].
31 See Schmidt v BNZ Ltd [1991] 2 NZLR 60 at 63.
32 Halsbury’s Laws of England (5th ed, 2020) vol 11 Civil Procedure at [3].
discovery, particularly where the non-party is co-operating, is legally represented and there is no basis for doubting the non-party’s willingness to comply with its obligations.
[82] Mr Parkinson contended that given the very serious allegations made against him by Ms O’Brien (including concealing relationship property), that it was important to have formal affidavits of documents from the non-parties, particularly those relating to bank statements. However, I do not see that the procedure agreed between the non- party trading banks and Ms McCartney might prejudice Mr Parkinson where the banks are all legally represented. If Mr Parkinson is genuinely concerned about this issue, it remains open to him to meet the reasonable costs of the non-party trading banks filing formal affidavits of documents. He and Ms Kedrinskaia do of course have a formal relationship with the banks involved, given that they are clients of them.
[83] In relation to the other non-parties, namely Des Chia & Associates Ltd, Gravity Ltd and Triode Group Ltd, I find that all three should file and serve affidavits of documents. Mr Parkinson has a direct relationship with all three parties (he is a client of Des Chia & Associates Ltd (the accountants) and co-operation from him may well assist in reducing their costs.
Case management directions
[84] The parties agree that there needs to be further case management directions to ensure that the trial scheduled for February 2022 remains on track.
[85] In accordance with the memoranda of the parties (12 May 2021 and 18 May 2021) I make, by consent, the directions set out below for the filing of amended pleadings and interlocutory applications.
[86] At the hearing, there was some with discussion with and between counsel as to whether an order for consolidation should be made. Consolidation does not seem to have been pursued by either party in the subsequently memoranda. Leave is reserved to make application for consolidation should that be relevant.
Costs
[87] Ms O’Brien has succeeded with all four of her applications the subject of this judgment. She has also succeeded in having Mr Parkinson’s cross-strike out
application dismissed. Having succeeded on all applications, in my view she is entitled to costs.
[88] Ms O’Brien seeks costs on an increased or indemnity basis. As Ms McCartney accepted at the hearing, the question of the quantum of any costs will need to be addressed by way of further submissions (with appropriate supporting documentation).
[89] I reject the submission of Mr Parkinson and the trustees that costs should be reserved and determined at trial. I find that there is a proper basis for an award of costs at this stage, having regard to my findings in my judgment that Mr Parkinson and Ms Kedrinskaia are and have thus far been in breach of their discovery obligations.
[90] Relevant timetable directions for the filing of submissions on costs are set out below.
Result
[91]I make the following orders and directions:
(a)The application by Ms O’Brien for the joinder of Ms Anna Kedrinskaia and Liston Trustee Services Ltd to the relationship property proceedings (CIV-2020-404-2351) is granted;
(b)The application by Ms O’Brien in the relationship property proceeding (CIV-2020-404-2351) to strike out Mr Parkinson’s claims and defence, is dismissed. The question of costs for non-compliance with discovery orders made in the relationship property proceeding is to be determined in accordance with the timetable set out below;
(c)The application by Mr Parkinson in the relationship property proceeding (CIV-2020-404-2351) to strike out Ms O’Brien’s application to strike out, is dismissed;
(d)Ms O’Brien’s application pursuant to r 8.19 for particular discovery from the first to third defendants in the Companies Act proceeding (CIV-2019-404-2814) is granted on the terms set out at Schedules A, B and C at [55] above;
(e)Ms O’Brien’s application for non-party discovery pursuant to r 8.21 in the Companies Act proceeding (CIV-2019-404-2814) is granted on the terms set out below;
(f)Mr Parkinson, in both his personal and trustee capacity, and Ms Anna Kedrinskaia, in both her personal and trustee capacity, are to file consolidated and updated affidavits of documents in both proceedings, which are to include discovery from any previous discovery and to provide discovery in terms of the orders I have made at Schedules A, B and C above. Mr Parkinson’s affidavit is to adequately identify documents for which privilege is claimed. The affidavits are to be filed and served by 25 June 2021;
(g)The ANZ Bank NZ Ltd is to provide non-party discovery, pursuant to r 8.19, on the terms set out in the amended Schedule E attached to the memorandum of counsel for ANZ Bank NZ Ltd, dated 21 April 2021. The reasonable costs of the ANZ Bank NZ Ltd are to be met by Mr Kevin Parkinson in accordance with r 8.22, and the discovery is to be provided by 30 June 2021;
(h)Westpac NZ Ltd is to provide non-party discovery on the terms set out in Schedule F of the memorandum of counsel for Westpac NZ Ltd, dated 20 April 2021. The reasonable cost of Westpac NZ Ltd are to be met by Mr Kevin Parkinson in accordance with r 8.22, and the discovery is to be provided by 30 June 2021;
(i)The ASB Bank Ltd is to provide non-party discovery pursuant to r 8.21 in accordance with the memorandum and amended Schedule D of the memorandum of counsel for the ASB Bank, dated 19 April 2021. The reasonable costs of the ASB Bank are to be met by Mr Kevin Parkinson in accordance with r 8.22, and the discovery is to be provided by 30 June 2021;
(j)Des Chia & Associates Ltd is to provide particular discovery as a non- party pursuant to r 8.21 and to file and serve an affidavit of documents by 30 June 2021, stating:
(i)Whether the documents set out in Schedule D attached to Ms O’Brien’s application for non-party discovery dated 12 February 2021, are or have been in its control; and
(ii)If the documents have been but are no longer in its control, its best knowledge and belief as to when the documents ceased to be in its control and who now has control of them;
(iii)If the documents are in its control, to make those documents available for inspection, by electronic transmission of the documents to all the parties in the proceedings;
(iv)The reasonable cost of Des Chia & Associates Ltd are to be met by Mr Kevin Parkinson in accordance with r 8.22;
(k)Gravity Ltd is to provide non-party discovery pursuant to r 8.21 by filing and serving an affidavit of documents by 30 June 2021, stating:
(i)Whether the documents set out at Schedule H to the application for non-party discovery dated 12 February 2021, are or have been in its control; and
(ii)If the documents have been but are no longer in its control, its best knowledge and belief as to when the documents ceased to be in its control and who now has control of them;
(iii)If the documents are in its control, to make those documents available for inspection by electronically emailing them to all parties.
The reasonable costs of Gravity Ltd are to be met by Mr Kevin Parkinson in accordance with r 8.2.
(l)Triode Group Ltd,33 is to provide non-party discovery pursuant to r 8.21 and to file and serve an affidavit of documents by 30 June 2021, stating:
(i)Whether the documents set out in Schedule J to the application for non-party discovery dated 12 February 2021, are or have been in its control;
(ii)If the documents have been but are no longer in its control, its best knowledge and belief as to when the documents ceased to be in its control and who now has control of them; and
(iii)If the documents are in its control, to make those documents available for inspection by electronically transmitting them to all of the parties.
The reasonable costs of Triode Group Ltd are to be met by Mr Kevin Parkinson in accordance with r 8.22.
(m)Mr Parkinson is to file and serve in the relationship property proceeding (CIV-2020-404-2351) by 18 June 2021 a formal statement of claim;
(n)Ms O’Brien is to file and serve a statement of defence and counterclaim/cross claim in the relationship property proceeding (CIV- 2019-404-2814) by 2 July 2021;
(o)Mr Parkinson is to file and serve a statement of defence to any counterclaim in the relationship property proceeding (CIV-2019-404- 2814) by 9 July 2021;
(p)Any further interlocutory applications in the relationship property proceeding (CIV-2020-404-2814) are to be filed and served by 16 July 2021;
33 Ms McCartney advises that Precision Manufacturing Solutions Ltd and Triode Group Ltd are one and the same business and that Precision Manufacturing Solutions Ltd has been wound up. In the circumstances, I apprehend there is no need to make any orders in relation to Precision Manufacturing Solutions Ltd.
(q)If any further interlocutory applications are filed, then:
(i)Within 15 working days of service of the application, a notice of opposition and evidence in opposition are to be filed;
(ii)Within 10 working days of service of the notice of opposition, any reply is to be filed;
(iii)The applicant is to file and serve any submissions 10 working days before the hearing;
(iv)The respondent is to file and serve written submissions five working days before the hearing.
[92] Ms O’Brien is to file written submissions addressing the issue of costs on the interlocutory applications, the subject of this judgment, by 18 June 2021.
[93] Mr Parkinson, Ms Kedrinskaia and the trustees, are to file submissions in response by 2 July 2021.
[94] The Court will then determine the question of costs on the papers, subject to any application for the parties to be heard on the question of costs.
[95] I further order that unless Mr Kevin Parkinson complies with the orders and directions made in this judgment, including the order that he meet the reasonable costs of the non-parties in relation to their discovery, and files and serves a consolidated affidavit of documents, then his PRA proceedings (he is the applicant) will be struck out and he will be debarred from defending the Companies Act proceedings pursuant to r 7.48(2) of the High Court Rules.
[96]Leave is reserved to apply for further directions.
Associate Judge P J Andrew
SCHEDULE OF PROCEDURAL CHRONOLOGY
Date Detail 10
November 2017
Mr Parkinson applies for orders under the Property (Relationships) Act 1976 (PRA) to determine and divide the relationship property on a 50/50 basis. 14 February
2018
Ms O’Brien files a notice of defence and made cross applications for orders pursuant to ss 15, 18B, 33 and 44 of the PRA. 14 May 2018 Ms O’Brien files an interlocutory application for an order for discovery against Mr Parkinson, interrogatories from Mr Parkinson, the joinder of General Dynamics Limited (GDL) and Kea GNSS Limited (Kea) and for an
interim distribution of $240,000.
14 May 2018 Mr Parkinson files an interlocutory application for discovery orders against Ms O’Brien 18 May
2018
Mr Parkinson files an interlocutory application for interim distribution of
$240,000.
28 May 2018 Mr Parkinson consents to Ms O’Brien’s application for interim distribution of $240,000. 28 May
2018
The parties file a joint memorandum of counsel seeking discovery orders by
consent.
30 May 2018 Judge Partridge makes discovery orders by consent. 20 June
2018
Ms O’Brien files a notice of opposition to Mr Parkinson’s interim
distribution application.
22 June 2018 Mr Parkinson files a notice of opposition in respect of the application for joinder of GDL and Kea. 28 June
2018
Affidavit of documents by Mr Parkinson filed and served in the Family
Court.
18
September 2018
GDL, Kea, Mr Parkinson in his capacity as trustee of the Kevin Parkinson
Family Trust (KPF Trust) and Ms O’Brien in her capacity as trustee of the Louisa Parkinson Family Trust are joined as parties to the proceeding.
10 October 2018 Ms O’Brien files an amended cross-application for orders under the PRA. 5 February 2019 Mr Parkinson files a notice of defence to Ms O’Brien’s amended cross- application dated 10 October 2018. 23 March 2019 Ms O’Brien files a second amended cross-application for orders under the
PRA. Delays between November 2017 and March 2020 can at least be part attributed to Ms O’Brien refining her claim.
15 May 2019 Ms O’Brien files without notice for Mr Parkinson to attend an examination regarding matters required to be disclosed in his affidavit of assets and
liabilities dated 20 October 2017.
9 October 2019 Mr Parkinson attends examination in the Family Court. 19
December 2019
Ms O’Brien, on behalf of General Dynamics Corporation Limited (GDC),
filed a shareholder derivative action in the High Court (company proceeding).
17 January 2020 Morris Legal files a notice of change of representation for Mr Parkinson. 18 February
2020
Memorandum of counsel for Mr Parkinson and the trustees filed in the Family Court responding to discovery and annexing certain documents to
the memorandum.
27 February
2020
A 2-hour hearing is set down for 15 May 2020 in the Family Court for transfer application, joinder and costs.
3 March 2020 Morris Legal writes to Jan McCartney QC on 3 March 2020 seeking clarification of the joinder application. 5 March
2020
Mr Parkinson files a notice of opposition to Ms O’Brien’s application to
transfer.
20 March 2020 The defendants in the company proceeding file a notice of opposition. 23 March 2020 Ms O’Brien files an application for:
· joinder of Anna Kedrinskaia in her personal capacity and in her capacity as a trustee for the Anna Kedrinskaia Family Trust (AKF Trust); and
· strike out of Mr Parkinson’s claims and debarring him from defending.
23 March 2020 Ms O’Brien made a second amended cross-application for orders under the PRA. 6 April 2020 Mr Parkinson files a notice of opposition to the joinder application. 6 April 2020 Mr Parkinson files a notice of opposition to the strike out application and debar defence application and made a cross claim for strike out and costs. 24 April
2020
Mr Parkinson files a notice of defence to Ms O’Brien’s second amended
cross-application dated 23 March 2020.
12 May 2020 The parties file a joint memorandum of counsel seeking adjournment of the short cause hearing in the Family Court set down for 15 May 2020. 21 May
2020
A hearing is held for the company proceeding before Associate Judge
Andrew.
25 June 2020 The parties file a joint memorandum of counsel seeking adjournment of the short cause hearing set down for 9 July 2020. 14 July 2020 Associate Judge Andrew grants the plaintiffs in the company proceeding
leave to bring a shareholder derivative action on behalf of GDC.
20 July 2020 A short cause hearing is set down on 10 September 2020 to determine the parties’ interlocutory applications (first hearing). 22 July 2020 The plaintiffs file a statement of claim. 28 July 2020 Order for discovery made by Associate Judge Andrew in High Court shareholder derivative proceeding. 10 August 2020 The defendants file a notice of appeal in the Court of Appeal. 10 August 2020 Associate Judge Andrew makes standard discovery order. 20 August 2020 The plaintiffs file a notice of appearance in the Court of Appeal. 3 September
2020
The defendants file an interlocutory application for security for costs. 9 September
2020
The Family Court emails counsel and cancels the first hearing as there was no available Judge. 9 September
2020
Affidavits of documents filed and served by Mr Parkinson in Companies Act proceeding. 25
September 2020
The defendants file a statement of defence. 1 October
2020
The plaintiffs file a notice of opposition to the defendants’ interlocutory
application for security for costs.
16 October 2020 Affidavit of Mr Parkinson in relation to security for costs application filed and served. Exhibits documents not formally discovered. 28 October
2020
Affidavit of documents of Mr Parkinson filed and served in Companies Act
proceeding.
28 October 2020 Affidavit of documents of Anna Kedrinskaia filed and served in shareholder
derivative proceeding. The trustees’ resolution of 29 April 2014 disclosed for the first time.
2 November
2020
Ms O’Brien files a third amended cross-application. 3 November
2020
The parties file a joint memorandum of counsel seeking directions for the proceeding to be transferred to the High Court by consent. 3 November
2020
Judge Muir makes the directions sought by consent and the proceeding is transferred to the High Court. 12
November 2020
A hearing is held before Associate Judge Andrew to determine the defendants’ interlocutory application for security for costs. 30
November 2020
Email from Mr Z Kennedy, barrister, to J McCartney QC, attaching documents not previously discovered. 18
December 2020
Associate Judge Andrew orders Ms O’Brien and GDCL to provide an
undertaking to the High Court regarding security for costs. Application by Mr Parkinson that Ms O’Brien pay $150,000 by way of security rejected.
21
December 2020
The High Court sets down an interlocutory one-day hearing on 21 April 2021 to hear all outstanding interlocutory applications from the Family Court. 3 February 2021 The plaintiffs file an interlocutory application to adduce further evidence in the Court of Appeal. 12 February
2021
The plaintiffs file an application for further and better discovery from the defendants and discovery from non-parties. 18 February
2021
The defendants file a notice of opposition to the plaintiffs’ interlocutory application to adduce further evidence in the Court of Appeal. 24 February
2021
The parties attend appeal hearing in the Court of Appeal. 5 March 2021 The defendants file a notice of opposition to the plaintiffs’ discovery application. 14 April 2021 Further affidavit of documents from Anna Kedrinskaia filed and served. 14 April 2021 Further affidavit of documents from Mr Parkinson filed and served.
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