Pollock v Pollock

[2017] NZHC 2951

IN THE HIGH COURT OF NEW ZEALAND

TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV 2016-470-000195

[2017] NZHC 2951

UNDER

the Trustee Act 1950 and the Administration Act 1969

IN THE MATTER OF

a claim of undue influence and

applications to remove an estate executor and trustee of a trust

BETWEEN

NATHAN CHARLES POLLOCK AND LETITIA JANE POLLOCK

Plaintiffs

AND

CHERYL LINDA POLLOCK

First Defendant

AND

CHERYL LINDA POLLOCK AND PETER EDMUND WASHER AS

EXECUTORS AND TRUSTEES OF THE ESTATE OF REX DAVID POLLOCK

Second Defendants

Continued over/…

Hearing:

29 November 2017

Appearances:

P J Morgan QC/E Hudson for all Defendants/Applicants

D Fraundorfer/J Braithwaite for S R Pollock, the first-named plaintiff in CIV 2017-470-60

L J Pollock in person the second-named Plaintiff in CIV 2016- 470-195

Judgment:

29 November 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

N C POLLOCK AND L J POLLOCK v C L POLLOCK AND P E WASHER [2017] NZHC 2951 [29 November 2017]

AND

CIV 2016-470-000195

CHERYL LINDA POLLOCK, CLM
TRUSTEES LIMITED AND CHERYL LINDA POLLOCK AND PETER

EDMUND WASHER (AS EXECUTORS AND TRUSTES OF THE ESTATE OF REX DAVID POLLOCK) AS TRUSTEES OF THE JUDEA VALLEY TRUST

Third Defendants

UNDER

CIV 2017-470-000060

The Family Protection Act 1955, the Law Reform (Testamentary Promises) Act 1949, the Administration Act 1969 and Part 18 of the High Court Rules 2016

IN THE MATTER OF

The estate of REX DAVID POLLOCK

BETWEEN

STEVEN REX POLLOCK

Plaintiff

AND

CHERYL LINDA POLLOCK AND PETER EDMUND WASHER AS

EXECUTORS AND TRUSTEES OF THE ESTATE OF REX DAVID POLLOCK
First Defendants

AND

CHERYL LINDA POLLOCK

Second Defendant

AND

CHERYL LINDA POLLOCK and CLM TRUSTEES LIMITED AS TRUSTEES OF THE JUDEA VALLEY TRUST

Third Defendants

[1]    Applications for security for costs have been brought in both proceedings. The three Pollock plaintiffs are siblings. Nathan and Letitia are unrepresented in their separate proceeding.

[2]    Individual factors require consideration upon these present applications. Nathan resides out of New Zealand and apart from filing a notice of opposition to the security application he has taken no other steps. It is assumed he relies on the position taken by Letitia to oppose the security for costs applications. Letitia appears and relies on her written submissions and on the submissions of Steven’s counsel in opposition to the security for costs applications.

[3]    Their proceedings are similar but Steven also claims to have been the beneficiary of a testamentary promise.

[4]    The clear evidence is that none of the plaintiffs has the means to pay costs in those sums sought by the defendants’ security for costs applications.

[5]    Steven is in business but it appears could not pay security for costs if that was ordered.

[6]    Although no evidence has been provided by the siblings about what legacy if any they received from their mother’s estate when she died on 5 March 2016, it appears clear and the Court is satisfied that if they were required to pay security then these proceedings would be brought to an end.

Background

[7]    The plaintiffs are the children of Rex David Pollock (Rex) and his first wife Pauline. Steven was 19, Nathan 17, and Letitia 12 years of age when their parents separated in 1989. In 1990 Rex and Cheryl Pollock became a couple. The following year Cheryl commenced employment with Rex’s company, Todd and Pollock Builders Limited and in May 1992 the first Judea Valley Trust (JVT) was settled. In September 1995 Rex and Cheryl married.

[8]    Steven worked with the Todd and Pollock Group until 2002. In 2006 the Todd and Pollock group of companies was sold. It appears most of the sale proceeds were held in a trust.

[9]    In 2007 the assets of Rex’s first JVT were settled on its successor, bearing the same name (JVT). At that time, Rex completed a Memorandum of Wishes and he and Cheryl executed mutual wills. Soon after the company Pollock and Sons Crane Hire Limited was incorporated.

[10]   In 2009 a Memorandum of Wishes was completed by which no provision was to be provided by Rex for Nathan. Again, and at about that time mutual wills were executed by Rex and Cheryl, as they were subsequently in 2012. Shortly after that Nathan was removed as a final and discretionary beneficiary of the JVT.

[11]   In October 2013 Steven ceased employment with Pollock and Sons. Within two weeks he was removed as a discretionary and final beneficiary of Rex’s trusts including the JVT, and Nathan was also removed as a discretionary and final beneficiary of another of Rex’s Trusts. By a “memorandum to my trustees” dated 11 November 2013 Rex provided JVT’s reasons for excluding Steven.

[12]In January 2014 Rex was given a terminal diagnosis due to cancer.

[13]   Later and by a Record of Events, Rex provided his reasons for excluding Steven from his estate and his trusts claiming that, inter alia:

(a)Rex had contributed $15,000 – 20,000 for each of the two houses Steven had purchased while married.

(b)He believed Steven had a relationship with a Todd and Pollock office lady who was later found to be defrauding the business.

(c)Steven was arrogant “to my second wife Cheryl”.

(d)Steven became erratic and could not come to work and was not paying his creditors.

(e)Steven and his family left and moved to Auckland but returned within about six months and lived in a JVT house for cheap rent.

(f)Steven’s wife left him after it was found she had been secretly stashing money into her mother’s account preparing to leave Steven.

(g)From July – September 2013 he showed signs of being on drugs, he was anxious, moody, not copying at work and some customers were annoyed with his forgetfulness.

(h)He was planning to set up business in opposition.

(i)In April 2014, he received a phone call from the Katikati Police saying a farmer had found Steven up a dead-end road sweating profusely and showing signs of paranoia. The Police were arranging to take him to hospital.

(j)Steven admitted taking amphetamine drugs.

(k)Steven’s journeys in life had cost Rex a lot with professional fees but Steven was never there for Rex in his hard or bad times.

(l)“Because of the heartache, stress and Steven’s selfish ways, my wishes are the Steven… receives nothing from my estate or my trusts because in the past he has had plenty and got nothing to show for it.”

[14]   In April 2014 Rex transferred 150 shares in his company TP Group Limited to JVT, as did Cheryl. At the same time, he completed a JVT Memorandum of Wishes and transferred his shares in Pollock and Sons Crane Hire Limited to Cheryl.

[15]   By his will, Rex gave all his personal chattels, including motor vehicles and bank accounts to Cheryl. He also gave to Cheryl, as replacement appointer, a statutory power of appointment of trustees of the two Trusts. The remainder of his estate was to be held on trust to pay debts, with the residue to be paid to the trustees of the JVT.

[16]Rex died on 8 February 2015. His first wife Pauline died on 5 March 2016.

[17]   Essentially it is the case of the defendants that Cheryl’s assets and the assets of Rex’s estate and any assets of the JVT were built up during that 25-year relationship of Rex and Cheryl between 1990 and Rex’s death in 2015.

[18]   In 2014 Rex’s former wife Pauline brought proceedings in the Family Court attempting to set aside a relationship property agreement entered into in 1992. When Pauline died that proceeding was continued by her executors, her sons Nathan and Steven. That proceeding failed and costs were awarded which became the responsibility of the sons. These totalled about $22k and remain unpaid.

Overview of claims

[19]   The present proceeding of Nathan and Letitia is about claims of undue influence affecting Rex’s decisions regarding transfer of property in disposition of his estate. Nathan and Letitia seek orders to remove the executors and trustees of Rex’s estate and to remove the trustees of the JVT.

[20]   Steven claims insufficient testamentary disposition, but also includes a claim of undue influence and remedial constructive trust.

[21]   Essentially those claims assert that property now held by Cheryl and by the JVT should by the order of the Court become the property of Rex’s estate and be available to the plaintiffs.

[22]   Steven’s case is about having worked for his father from the age of 16 and being promised he would inherit the family business and become a shareholder of the Todd and Pollock company. That changed when Rex married Cheryl who, he says, prevented Rex from communicating with his children.

[23]   Steven says he worked for Rex in the family business for 28 years until 2013 and on numerous occasions Rex confirmed to Steven he would inherit the family business and be made a director and shareholder of Rex’s companies.

[24]   Steven says Cheryl was openly hostile to them throughout the duration of her relationship with Rex and made threats to Rex that she would leave him if Rex continued to have a relationship with his children.

[25]   The defendants say there was a degree of estrangement between Rex and the plaintiffs each of whom lived their own lives, such that the testamentary dispositions and the disposition of property during Rex’s lifetime should not be the subject of interference by the Court.

The applications for security

[26]   It is clear that, Nathan and Letitia are without means to fund legal counsel and would be unable to pay costs if their claims were unsuccessful. It also appears clear that Steven too would be unable to meet costs if his claim is unsuccessful.

[27]   Separate applications are required in respect of each plaintiff. Security may be ordered in relation to one or more of the plaintiffs.

[28]   Issues focus upon the actions of Rex and Cheryl. Often a Court will make some assessment about whether the pleading claims or some of them could succeed. It is the plaintiffs’ case that but for the conduct of the defendants the plaintiffs would have been financially secure.

[29]   In the circumstances Mr Morgan submits this is an appropriate case for an order for security against all three plaintiffs; that none of the plaintiffs have been forthcoming about his/her financial position and has not disclosed what each has received from their mother’s estate.

Opposition

[30]   Letitia confirms she remains a final beneficiary of the JVT and another of her father’s Trusts; and says that by a letter dated 11 October 2017 her solicitor requested distribution to her from those trusts. She says despite being a final beneficiary of those, the trustees have never enquired as to her circumstances. She believes Cheryl is preventing her from obtaining funding so that she can continue with her claim; that

Cheryl influenced her father to transfer his assets out of his personal estate into the JVT and to herself. She believes that if each of the siblings are successful with their claim then share transfers will be reversed and more than $5.5M will be returned to the trusts.

[31]   Steven’s claim like Letitia’s is that all of Rex’s assets were transferred to entities in the control of Cheryl. Steven believes he has provided clear evidence of Rex’s testamentary promises that Steven would inherit the family business and be made a director and shareholder of the family companies.

[32]   Steven says Cheryl was openly hostile to him throughout the duration of her relationship with Rex.

[33]   Steven believes that costs in the order of $150,000 sought by way of security would effectively bar him from pursuing his case.

Conclusions

The focus of this judgment is whether it is just in all the circumstances to make the orders sought. A broad assessment is required. Usually some assessment of prospects of success is considered for if the proceeding is without merit security is usually ordered.

[34]   The merits of the siblings’ claims are unclear but there is much more to the factual background than was provided by the affidavits already received upon the security for costs applications. More evidence will be required.  Mr Morgan submits a three-week trial would be required. Mr Fraundorfer disagrees but in this Court it would appear that at least two weeks ought to be scheduled. Trial costs will be significant. Evidence from experts will be required. Each side could incur proceeding and trial costs exceeding $100,000.

[35]   On behalf of the defendants it has been estimated that security should be fixed in the sum of $150,000. That is based upon an assessment of costs on a category 3 basis.

[36]   The Court considers a 2B costs to be sufficient for categorisation purposes. It is likely however that two counsel will need to be engaged to represent separate defendants.

[37]   It is not clear that the plaintiffs’ claims are without all merit. It is the Court’s view that when the respective interests of the opposing sides are considered and in the balance of those, the position of the plaintiffs is to be preferred for present purposes.

[38]   The grant of orders requiring security would effectively bring the proceeding to an end. By contrast it would appear the defendants have considerable resources at their disposal.

[39]   This is a case which needs to be heard and which will require personal relationships to be reviewed over a lengthy period. Ultimately the Court’s focus will be upon whether there was proper reason to preclude any entitlement at all to Steven and Nathan while reserving a modest amount for Letitia as a final beneficiary.

[40]   This is not the sort of proceeding that should be brought to an end because of the imposition of orders for security that the plaintiffs clearly are unable to pay.

Judgment

[41]The applications for security are dismissed.

[42]   In the circumstances it is appropriate that the making of any further order for costs on these applications is left until these proceedings are concluded.

Other orders

[43]These two proceedings are to be case managed together hereafter.

[44]   For the purpose of progressing any interlocutory applications, and to schedule a trial, counsel are requested to confer and provide a memorandum to the Court with suggestions for:

(a)Directions to be made including for the provision of discovery;

(b)The filing of interlocutory applications, if necessary; and

(c)Pre-trial timetable orders.

[45]   Counsel should accept that an estimate of 10 – 13 days of trial time will be needed.

[46]   The Court requests this matter be scheduled for a telephone conference on   13 February 2018 to assess management progress.

Associate Judge Christiansen