Ryan v Lobb
[2021] NZHC 3294
•3 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001591
[2021] NZHC 3294
BETWEEN VERENA COLLEEN RYAN
Plaintiff
AND
STUART JAMES LOBB
First Defendant
AND
LOCKHART TRUSTEE SERVICES NO.56 LIMITED
Second Defendant
AND
PUBLIC TRUST
Non-Party
Hearing: On the papers Counsel:
W M Patterson for Plaintiff
P A Fuscic for First Defendant
A A H Low for Second DefendantJudgment:
3 December 2021
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 3 December 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
RYAN v LOBB [2021] NZHC 3294 [3 December 2021]
[1] On 27 August 2021, I issued a judgment in respect of an application by the first defendant (Mr Lobb) for orders requiring the plaintiff (Ms Ryan) and the second defendant (Lockhart) to provide tailored discovery, and that the non-party (Public Trust) provide particular non-party discovery.1 I did not make tailored discovery orders in the terms sought by Mr Lobb. I ordered the parties to provide standard discovery and that Public Trust was to provide particular discovery.
[2] Mr Lobb considers I was wrong not to order tailored discovery in the terms he sought. He seeks leave to appeal to the Court of Appeal.2 In an amended application he applies, in the alternative, under r 7.49 of the High Court Rules 2016, for an order varying or rescinding the discovery orders and substituting orders for tailored discovery in substantially the same terms as he previously sought.
[3]Mr Lobb’s application is opposed by Ms Ryan.
[4] Consistent with its stance throughout this proceeding, Lockhart abides the decision of the Court.
[5]Mr Lobb’s application has been dealt with on the papers.
[6] There are also issues of costs outstanding in respect of Mr Lobb’s discovery application.
Leave to appeal
[7]Section 56(3) and (4) of the Senior Courts Act 2016 relevantly provide:
56 Jurisdiction
…
(3)No appeal, except an appeal under subsection (4), lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court on application made within 20 working days after the date of that order or decision or within any further time that the High Court may allow.
1 Ryan v Lobb [2021] NZHC 2219.
2 Senior Courts Act 2016, s 56(3).
(4)Any party to any proceedings may appeal without leave to the Court of Appeal against any order or decision of the High Court
---
(a)striking out or dismissing the whole or part of a proceeding, claim, or defence; or
(b)granting summary judgment.
[8] The principles that apply to an application for leave to appeal under s 56(3) are set out by the Court of Appeal in Greendrake v District Court of New Zealand.3 There, the High Court had made an order for joinder of an additional respondent. An application for leave to appeal from the joinder decision was declined by the High Court.4 Declining leave to appeal, the Court of Appeal stated:5
[6] In Finewood Upholstery Ltd v Vaughan, to which Dunningham J referred to in the leave decision, Fitzgerald J appropriately observed that the requirement for leave to appeal should serve as a filtering mechanism to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.6 The following considerations were recognised as relevant on an application for leave to appeal:
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
[7] This Court in Ngai Te Hapu Inc v Bay of Plenty Regional Council7 indicated that considerations similar to the principles applicable to applications under the former s 24G of the Judicature Act 1908, as explained in Meates v Taylor [Leave],8 apply to applications under s 56(5) stating:
We agree that leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either
3 Greendrake v District Court of New Zealand [2020] NZCA 122. See also Lobb v Ryan [2021] NZCA 224 at [2].
4 Greendrake v District Court of New Zealand [2019] NZHC 2504.
5 Greendrake v District Court of New Zealand, above n 3.
6 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
7 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291.
8 Meates v Taylor (1992) 5 PRNZ 524 (CA) at 526.
for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.
Discussion
[9] This litigation is just one proceeding of several resulting from the breakdown of the marriage between Ms Ryan and Mr Lobb. It concerns the Lothbury Trust which was established in 2005 by Ms Ryan and Mr Lobb. The principal asset of the Lothbury Trust is the parties’ former family home.
[10] In this proceeding, Ms Ryan is seeking a declaration as to the meaning of cl 2.5(3) of the trust deed. That clause is concerned with the resettlement of the trust assets in the event Ms Ryan and Mr Lobb separate or divorce (as they have). The clause allows for the resettlement of the trust assets as the trustees “consider fair and equitable having regard to the respective contributions of the Settlors (whether by gifting, inheritance or otherwise) to the total assets of the Trust.”
[11] Specifically, Ms Ryan seeks a declaration that the enquiry the trustees must make under cl 2.5(3) is “what assets were owned and contributed to the Trust” by her and Mr Lobb respectively. Ms Ryan’s position is the trustees are only required to consider the legal ownership of assets when they were contributed to the Trust. Mr Lobb takes a very different view as to what can be considered contributions to the trust assets.9 He argues the trustees must consider contributions to the original acquisition of trust assets and also to their post-settlement maintenance, development and improvement, as well as what he describes as “negative contributions.” Importantly, however, while the Court is asked to identify relevant contributions for the purposes of cl 2.5(3), it is not required to make any finding as to the amount of each party’s contributions, nor what part of the trust assets it is fair and equitable to resettle having regard to the respective contributions. Those issues will have to be determined at a later date. The issue before the Court, then, is a very narrow one.
[12] As a result of a difference of opinion between the parties as to whether discovery was required to determine the issue, Associate Judge Sussock directed
9 Ryan v Lobb, above n 1, at [17]-[19].
Mr Lobb to file an application for discovery.10 The application, as filed, sought tailored discovery of a startling range of documents spanning decades. The application was determined by me in the judgment which Mr Lobb seeks to challenge.
[13] My starting point in considering this leave application is that the orders made were procedural in nature and in the exercise of the Court’s broad discretion to make orders for discovery under the High Court Rules. The discretion is one which is to be exercised consistently with the overall objective “to secure the just, speedy and inexpensive determination of any proceeding or interlocutory application”.11
[14] Mr Lobb’s counsel has filed comprehensive submissions arguing there are three principal errors in the judgment. None of them raise an issue of public or general importance, nor will an appeal be dispositive of this proceeding. I also do not consider any of the alleged errors of law are of sufficient significance to the parties’ interests in this proceeding as to justify the granting of leave to appeal. I refer to the parties’ “interests in this proceeding” as one of my findings was that Mr Lobb’s discovery application was made for collateral purposes.
[15] The first proposed ground of appeal is I gave insufficient weight to the requirements of rr 8.8 and 8.9 of the High Court Rules. Rule 8.8 provides that tailored discovery must be ordered when the interests of justice require an order involving more or less discovery than standard discovery would involve. Rule 8.9 establishes a presumption of tailored discovery in certain circumstances “unless the Judge is satisfied to the contrary.” Both rules were acknowledged in my judgment, notwithstanding that r 8.9 did not feature at all in counsels’ arguments.
[16] The second ground, and the kernel of the proposed appeal, is that an order for standard discovery was biased in favour of Ms Ryan’s narrow interpretation of cl 2.5(3). I do not accept the submission. The standard discovery order goes beyond what Ms Ryan would consider necessary upon the case she advances and, as I noted in my judgment, requires the parties to disclose documents relevant to their respective contributions to the original acquisition, maintenance, development and improvement
10 Ryan v Lobb HC Auckland CIV-2019-404-1591, 19 March 2021 (minute).
11 High Court Rules, r 1.2 and James Hardie New Zealand Ltd v White [2020] NZCA 142 at [56].
of the trust assets. That is consistent with the interpretation of cl 2.5(3) that Mr Lobb advances. I therefore do not accept Mr Lobb would be prejudiced at trial in advancing his contention as to the meaning of cl 2.5(3).
[17] The third ground is that the interests of justice favoured the making of a tailored discovery order. My assessment was the interests of justice did not require tailored discovery and certainly not in the terms sought by Mr Lobb. There were several reasons for this. First, I considered the categories of documents sought by way of tailored discovery were defined too broadly. Second, the categories of documents did not relate to the issue before the Court; that is the discovery categories encompassed largely irrelevant documents. Third, the proceeding concerned one confined issue only. The discovery Mr Lobb sought was directed to the resolution of issues that are not before the Court in this proceeding. Fourth, the case does not encompass a wide factual ambit but concerns arrangements made by private parties upon the establishment of a family trust involving very few assets. The disclosure sought was not proportionate. Fifth, the discovery application was made for collateral purposes. Sixth, it was not appropriate for the Court to attempt to redraft the categories for tailored discovery within proper bounds. In this respect, it is to be noted that given the highly dysfunctional relationship that exists between Ms Ryan and Mr Lobb, there was no apparent attempt by them to achieve a consent position as to the scope and method of delivery of discovery.12
[18] The next factor weighing against granting leave to appeal is delay. The need for resolution of the litigation between Mr Lobb and Ms Ryan has been commented on by this Court and the Court of Appeal. In an earlier judgment in this proceeding, when refusing Mr Lobb’s application for leave to appeal from a decision of Associate Judge Smith, Associate Judge Bell noted:13
[14] While this is a trust dispute, the context is the division of assets on the failure of a marriage. When a marriage fails, the law favours a clean break with a clear division of the assets so that the parties may disengage and go their separate ways. Delay works against that. The re-settlement provision in the trust deed is intended to give a clear mechanism for the division of family assets held in the trust. But it is now nearly five years since their separation,
12 High Court Rules, sch 9 pt 1 and Commerce Commission v Cathy Pacific Airways Ltd [2012] NZHC 726 at [8] and [11].
13 Ryan v Lobb [2021] NZHC 496.
and the parties have made no progress at all in carrying out the resettlement. The sooner a definitive ruling on the interpretation of the resettlement provision, the better.
[15] Mr Lobb’s affidavit in support of his application shows a disturbing history of litigation with Ms Ryan in the Family Court, this Court and the Court of Appeal, including:
(a) Several applications for protection orders in the Family Court;14
(b) A contested dissolution application and Mr Lobb’s unsuccessful appeal to this Court against the dissolution order;15
(c) Applications for occupation and spousal maintenance and Mr Lobb’s unsuccessful appeal to this Court;16
(d) Further appeals by Mr Lobb to the Court of Appeal;17
(e) This Court finding contempt by Mr Lobb;18 and
(f) An application to remove a caveat lodged by Mr Lobb against the title to a property owned by Ms Ryan’s new partner.19
[16] In her decision removing the trustees and appointing a receiver, Edwards J said:20
[28]… [T]he extent of the dysfunctional relationship between Mr Lobb and Ms Ryan… is evidenced by the multiplicity of proceedings between Mr Lobb and Ms Ryan. Nine separate proceedings between the couple have been listed in Mr Lobb’s affidavit. These include applications by each spouse for a protection order against the other.
…
[30] The interests of the beneficiaries are directly compromised by the ongoing dispute between the two primary trustees. The level of acrimony and dysfunction is such that there is really no other option but to remove all trustees.
[17] In the light of that history Mr Lobb’s proposal to appeal to the Court of Appeal offers more litigation and delay in carrying out the resettlement. Given the history of protracted disputes and Mr Lobb’s tendency to appeal every decision that goes against him, the question whether Associate Judge Smith was correct that this matter could not go to arbitration is relatively unimportant when considered against the need to have this case disposed of promptly. The circumstances do not warrant further delay.
14 Detailed in Lobb v Ryan [2020] NZFC 7202 at [4].
15 Lobb v Ryan [2020] NZHC 348.
16 Lobb v Ryan [2020] NZHC 834, [2020] NZFLR 211.
17 Lobb v Ryan [2020] NZCA 244.
18 Lobb v Ryan [2020] NZHC 2841.
19 MacDonald v Lobb [2020] NZHC 2206.
20 Lockhart Trustee Services No.56 Ltd v Ryan [2020] NZHC 1823, (2020) 5 NZTR 30-019 at [28].
[19]That decision was upheld by the Court of Appeal which noted:21
[18] The more significant consideration is the delay that would result from an appeal. It is evident from both Edwards J’s decision and Associate Judge Smith’s decision that virtually no progress has been made towards the resolution of the issues between the parties. Five years after separation, they are still engaged in a number of proceedings, resolution of which is an ongoing cost to both. Had Mr Lobb acceded to the proposal for arbitration in 2017 it is very likely that the issues between the parties, including his contention as to the basis on which resettlement should proceed under cl 2.5, would have been resolved by now. After so long, and given the history of the dispute, the interests of justice make prompt resolution of the substantive proceeding the determinative factor.
[20] I am advised that this case has now been set down for hearing on 13 and 14 June 2022. If Mr Lobb was granted leave to appeal, the trial would inevitably be delayed and potentially for a substantial period. I can see no justification for that.
[21] Also, since the issue of my judgment there have been several developments that bear on this application. First, all parties and Public Trust have now provided discovery. Second, Mr Lobb has filed an amended statement of defence which substantially recasts his defence. His original statement of defence was substantially unhelpful.
[22] The parties’ discovery obligations continue throughout all stages of a proceeding and must respond to developments as the case develops.22 If Mr Lobb considers that any parties or Public Trust have failed to disclose particular documents that ought to have been discovered (as he has indicated he does) then he may apply for particular discovery under r 8.19. That this is a far more appropriate course is illustrated by Mr Lobb’s position in relation to Public Trust. He has filed an affidavit asserting Public Trust’s discovery is not complete. If he is correct, documents he has identified are ones Public Trust would have been expected to disclose pursuant to the discovery order. Such documents will be more promptly obtained by way of an application for particular discovery than by the indirect route of an appeal to the Court of Appeal. Similarly, Mr Lobb may apply for further discovery if his amended statement of defence raises issues justifying further discovery from the parties (subject, of course, to questions of relevance and proportionality).
21 Ryan v Lobb, above n 3.
22 High Court Rules, 8.18.
[23]I do not grant Mr Lobb leave to appeal.
Application to vary or rescind the discovery order
[24]This application is made in reliance on rule 7.49(1) which provides:
7.49 Order may be varied or rescinded if shown to be wrong
(1) A party affected by an interlocutory order (whether made on a Judge’s own initiative or on an interlocutory application) or by a decision given on an interlocutory application may, instead of appealing against the order or decision, apply to the court to vary or rescind the order or decision, if that party considers that the order or decision is wrong.
[25] An application under r 7.49 must be made within five working days after the relevant order was made or the decision was given.23
[26] The authors of McGechan on Procedure note that the rule provides an alternative to appeal to the Court of Appeal from interlocutory orders and is appropriate:24
… where some additional point not raised before has emerged or there are facts, whether or not arising from a change of circumstances, which were not previously before the Court and should be considered.
[27] For Mr Lobb, it is submitted there are four matters that are relevant in this case namely:
(a)the value of the property at stake (the trust assets) was not identified and given due attention at the hearing;
(b)there is now before the Court a “full and articulate” amended statement of defence so the relevance to the pleadings of tailored discovery requires a fresh assessment of the appropriateness of the standard discovery orders;
23 Rule 7.49(3).
24 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR7.49.02].
(c)recently filed affidavits of Mr Lobb and Anthony Bruce Davis commenting on shortcomings in the discovery from Public Trust and confirming the relevance and need for the discovery sought by Mr Lobb; and
(d)that the parties have not provided their affidavits of documents in compliance with the discovery orders.
[28] I do not accept it is appropriate to vary or rescind the discovery orders. The application is out of time. It is submitted that time might be extended. I accept that is the case, but no satisfactory explanation for the failure to apply timeously is provided. I also do not accept any of the matters relied upon justify varying or rescinding the discovery orders.
[29] The value of the trust assets was before the Court and had Mr Lobb relied upon it in support of his argument that tailored discovery should be ordered it would not have altered my view that the discovery sought was inappropriate.
[30] It is correct Mr Lobb has filed an amended statement of defence and, as noted, the parties need to consider their obligation of continuing disclosure in light of the matters pleaded. If there is an issue in relation to that it can be dealt with by way of an application for particular discovery. It is not, in my view, a basis to revoke the discovery orders previously made.
[31] I have read the affidavits of Mr Lobb and Mr Davis which do nothing to alter my view that the tailored discovery sought was not appropriate. As noted, if Public Trust has failed to discover relevant documents Mr Lobb can apply for particular discovery. Mr Davis affidavit is unhelpful. His evidence proceeds on the same erroneous basis Mr Lobb advanced that to determine the issue before the Court requires a meticulous examination of the parties’ financial and business interests going back to at least 1984. It does not. Furthermore, issues he says he was asked to consider, such as the amount of contributions of the parties and third parties to the trust assets do not arise in this proceeding.
[32] Finally, all parties and Public Trust have filed their affidavits of documents in compliance with the discovery orders. The orders are effectively spent and no purpose would be served in revoking them.
Costs
[33] Issues of costs on Mr Lobb’s discovery application have not been determined as between Ms Ryan, Mr Lobb and Lockhart.
[34] Ms Ryan argues that costs should be awarded against Mr Lobb on a 2B basis because his application for tailored discovery was refused and standard discovery ordered. It is submitted costs in respect of compliance with the discovery orders should be reserved.
[35] Mr Lobb’s submission is that costs should be reserved pending the outcome of his application for leave to appeal and that the costs of compliance with the discovery orders, whether or not varied on appeal, should also be reserved. Mr Lobb argues it will be material to the issue of costs whether the positions advanced by the parties as to their possession and the existence of documents are borne out in the formality of their affidavits of documents. In the alternative, he submits that if the Court proceeds to determine costs, he is the successful party as he obtained discovery orders and therefore limited success. Further, he argues the application for discovery was required because Ms Ryan opposed any order for discovery. As far as Lockhart is concerned, Mr Lobb argues that unlike Public Trust it did not purely abide the decision of the Court but showed resistance to providing an affidavit of documents.
[36] Lockhart seeks costs both in respect of Mr Lobb’s application and also compliance with the discovery order made against it. Lockhart argues the proceeding was commenced against it as a trustee, and although it is no longer a trustee, it is entitled to the benefit of an indemnity for its costs out of the trust assets. In the alternative, it applies for costs under r 8.22 arguing that it would be manifestly unjust for it to be required to bear the cost to comply with the discovery orders.
[37] As between Ms Ryan and Mr Lobb, the Court record does indicate that Ms Ryan initially took the position the case should proceed to a hearing without discovery and this led to a direction being made that Mr Lobb was to apply for discovery. On the other hand, the scope of discovery sought by Mr Lobb went well beyond anything that was required and was rightly opposed by Ms Ryan. On balance, costs between them should be reserved.
[38] The position is different in respect of Lockhart. Neither Ms Ryan nor Mr Lobb have responded to Lockhart’s submissions that an order be made for payment of its costs from the trust assets or under r 8.22. They should do so and I will make directions accordingly before determining the matter.
[39] Finally, an additional application was made by Ms Ryan for the imposition of a costs penalty against Mr Lobb due to the late filing of his affidavit of documents. I do not consider a punitive order is justified.
Result
[40] Mr Lobb’s application for leave to appeal or to vary/rescind the discovery orders is dismissed. Ms Ryan is entitled to her costs on that application on 2B basis plus reasonable disbursements.
[41] As between Ms Ryan and Mr Lobb, costs on Mr Lobb’s discovery application are reserved pending final determination of this proceeding.
[42] As far as Lockhart’s claim for costs is concerned, I direct that Ms Ryan and Mr Lobb shall have 14 days to respond to Lockhart’s submissions. In the absence of further submissions, or a request for a hearing, I will make a decision on Lockhart’s claim for costs on the papers.
O G Paulsen Associate Judge
Solicitors:
Patterson Hopkins, Auckland for Plaintiff McVeagh Fleming, Auckland for First Defendant
Alexandra Low & Associates, Auckland for Second Defendant
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