Rogers v Strongforth Investments Limited

[2014] NZHC 3186

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-740 [2014] NZHC 3186

IN THE MATTER

of the Trustee Act 1956

AND IN THE MATTER

of the inherent jurisdiction of the Court

AND IN THE MATTER

of the ROGERS FAMILY TRUST

BETWEEN

SUSAN ROGERS, KIERAN ANTHONY ROGERS, CHRISTOPHER PAUL ROGERS AND KIRSTEN LISA ROGERS

Plaintiffs

AND

STRONGFORTH INVESTMENTS LIMITED

First Defendant

GORDON RALPH STEWART Second Defendant

NEW ZEALAND TECHNOLOGY INVESTMENTS LIMITED

Third Defendant

Hearing:	10 December 2014
Counsel:	A S Butler and E M Watt for Plaintiffs I W Thorpe for Defendants
Judgment:	11 December 2014

JUDGMENT OF WILLIAMS J

[1]      The litigation to which this application relates is a dispute over assets owned or formerly owned by the Rogers Family Trust.   The plaintiffs, all family, are the trust’s beneficiaries.   The key assets are 665 shares in a software company representing 66.5 per cent of the company.  They are, it transpires, valuable.  They

were transferred by the trustee Strongforth Investments Limited (Strongforth) to the

ROGERS & ORS v STRONGFORTH INVESTMENTS LIMITED & ORS [2014] NZHC 3186 [11 December

2014]

third defendant, New Zealand Technology Investments Limited.  The plaintiffs say that transfer was as nominee only on behalf of the trust and the trust still holds beneficial title in them.  The defendants say the transfer to Strongforth was intended to be absolute.

[2]      Another question arises in respect of a much smaller package of 50 shares out of the 665, transferred by the beneficiaries of the trust to the second defendant, Mr Stewart  (a  director  and  guiding  hand  of  Strongforth).     The  transfer  was apparently by way of payment for his services to the trust as the trust at that stage had no cash.  The defendants once again say the transfer was absolute. The plaintiffs say it related only to the income from those shares but not title to them.

[3]      The defendants seek orders for discovery in respect of two categories of documents.   Underlying the application is the defendants’ belief that there is an affidavit or draft affidavit of Kieran Rogers (the father of the Rogers family and one of the plaintiffs) confirming that the second, smaller, package of shares was intended to be transferred absolutely to the second defendant.   It is believed this document would have been prepared in the context of tax litigation between Kieran Rogers and United Kingdom tax authorities.  It is believed that it may be within the control or possession of the plaintiffs, or one or other of them may know where it can be found.

[4]      The plaintiffs’ tax accountant,  Mr Wakeman, filed an affidavit.    In it he confirms that neither he nor his firm holds any documents other than those already disclosed.  It follows in particular that there is no affidavit relating to the transfer of the 50 shares, whether in draft or final form in his possession.  He has provided to the trust’s New Zealand solicitors five ringbinders of documents in relation to Kieran Rogers’ affairs at his firm.  The trust’s New Zealand’s solicitors have gone through the documents carefully and have provided some further disclosure.  But again no such document exists on the file.   A solicitor at Russell McVeagh has sworn an affidavit deposing that all relevant and non-privileged documents have now been disclosed from those files and there are no other relevant and non-privileged documents that have not been disclosed.

[5]      Mr Thorpe seeks an order entitling him to inspect the binders.  He says he is in a better position to decide relevance than the plaintiffs’ solicitors.   I decline to grant such an order.

[6]      Mr Butler for the plaintiffs has confirmed that the binders have been carefully perused by solicitors and anything of even peripheral relevance to the litigation has been disclosed unless it is privileged.  There is no reason whatever to doubt that this is  what  has  happened.    There  is  no  basis  for  Mr Thorpe  now  to  be  given  an opportunity to inspect the files for himself on the off chance that Mr Butler has got it wrong.

[7]      The second matter relates to the way in which the plaintiffs have described documents in respect of which privilege is claimed.  They are described by broad category rather than by document.   Mr Thorpe challenges this approach.   He says that such documents should be individually listed.  The plaintiffs separately claim both litigation privilege and legal advice privilege in relation to communications in all recorded forms between the plaintiffs and their solicitors.  This is uncontroversial. With only a very few exceptions any communications between the plaintiffs and their solicitors will necessarily have the benefit of one or other of those forms of privilege.  Listing would serve no purpose.  The new rules are designed to prevent the generation in discovery of needless information and documentation at great cost to the parties.

[8]     A second category for which further particulars are sought relates to communications between the settlor of the plaintiffs’ trust – Mr Bruce Hutchison – and the plaintiffs’ solicitors.   In that regard, joint privilege with the plaintiffs is claimed even though Mr Hutchison is not himself a party to the litigation.

[9]      Documents in relation to him in respect of which privilege is claimed should, Mr Thorpe submits, be individually listed.  That is so that if Mr Hutchison does not enjoy joint interest privilege with the plaintiffs, his entitlement to claim privilege in his own right can be challenged (perhaps) on the basis that it has been waived through disclosure to the plaintiffs.

[10]     I decline to require such listing as unnecessary and disproportionate.   As settlor of the trust, Mr Hutchison does enjoy joint interest privilege with the plaintiffs and he cannot unilaterally waive that.  The settlor and beneficiaries clearly have a joint  interest  in  communications  relating  to  the  broad  subject  matter  of  the proceeding between the settlor and the plaintiffs’ solicitors.  As Mr Butler advised, it was Mr Hutchison who first came to him with the issue that lead to the litigation. Section 66 of the Evidence Act  covers this subject and makes it clear that the plaintiffs can, on application, prevent disclosure.

[11]     The  defendants  finally  seek  an  order  requiring  the  plaintiffs  to  disclose whether there are relevant documents that are no longer in the plaintiffs’ control or possession, when possession or control was lost, and who now has control’ all in accordance with r 8.19(a)(ii).  It seems that the plaintiffs have failed to provide such information as required by rr 8.15(2) and 8.16 when discovery was first provided.  I make an order accordingly.

[12]     The plaintiffs have been largely successful in relation to this application and will be entitled to costs on a Category 2A basis, discounted for the limited success of

the defendants under r 8.19.

Williams J

Solicitors:

Russell McVeagh, Wellington

Hughes Robertson Solicitors, Wellington