Shannon v Shannon
[2005] NZCA 83
•14 April 2005
IN THE COURT OF APPEAL OF NEW ZEALAND
CA192/04
BETWEENALAN LINDSAY SHANNON
First AppellantANDFOREST PARK (NEW ZEALAND) LIMITED
Second AppellantANDFOREST PARK FP2 LIMITED
Third AppellantANDFOREST PARK HOLDINGS LIMITED
Fourth Appellant
ANDCHRISTINE ROBYN SHANNON
First RespondentANDCHRISTINE FORBES
Second Respondent
Hearing:10 February 2005 and 3 March 2005
Court:Glazebrook, Hammond and O'Regan JJ
Counsel:A P Duffy QC for Appellants
H M Aikman and J J Manning (on 10 February 2005 only) for First Respondent
M S Anderson for Second Respondent (leave to withdraw granted on 10 February 2005)
Judgment:14 April 2005
JUDGMENT OF THE COURT
The appeal against the striking out of the statement of claim dated 6 July 2004 and the amended statement of claim dated 20 July 2004 is dismissed. Mr Shannon is to pay costs of $6,000 to Mrs Shannon plus reasonable disbursements, to be set by the Registrar in the absence of agreement.
REASONS
(Given by Glazebrook J)
Table of Contents
Para No
Introduction [1]
Procedural history [9]
Cartwright J’s judgment [21]
The original and amended statements of claim [48]
Potter J’s judgment on the strike-out application [53]
Mr Shannon’s submissions [71]
Mrs Shannon’s submissions [88]
The principles in England and Australia [102]
The principles in New Zealand [119]
Discussion [126]
Fraud adequately pleaded? [130]
New evidence? [132]
Reasonably discoverable? [142]
Material evidence? [144]
Decisive evidence? [152]
Other matters [153]
Conclusion and costs [155]Introduction
[1] This appeal is concerned with the circumstances in which an action alleging that a judgment has been obtained by fraud should be allowed to proceed.
[2] Mr and Mrs Shannon were married on 22 June 1974 and have one son, Grant, who was born on 14 June 1977. It is common ground that they separated in 1985 or 1986, at least for a period. Mr Shannon contends that they never reconciled and, indeed, that he was in a stable de facto relationship with another woman, Ms Donna Hamilton, between 1988 and 1993. Mrs Shannon, however, contends that she and Mr Shannon reconciled in 1988, eventually parting at Easter 1997 after a major disagreement.
[3] Mr Shannon accumulated significant assets between 1993 and 1997 as a result of his association with an American company involved in helicopter contracting work in Malaysia. Whether the parties separated in 1985 or 1997, therefore, has a major impact on the extent of the relationship property.
[4] Cartwright J (as she then was) dealt with the preliminary issue of the date of separation. In a judgment of 29 May 2000, she accepted Mrs Shannon’s version of events.
[5] Mr Shannon, on 6 July 2004, just as the substantive proceedings on the division of relationship property were finally to be heard, filed proceedings alleging that Cartwright J’s judgment was obtained by fraud. An amended statement of claim was filed on 20 July 2004.
[6] By judgment of 16 August 2004, Potter J struck out both statements of claim on the basis that they disclosed no reasonable cause of action and were an abuse of the process of the Court. Mr Shannon appeals against that decision.
[7] Potter J’s judgment of 16 August 2004 also dealt with a number of other interlocutory matters. The only other issue under appeal, however, is Potter J’s rejection of the application of the Forest Park group of companies for a waiver of Mrs Shannon’s legal privilege, insofar as it relates to the placing of a caveat on property held by those companies. The second respondent, Ms Forbes, abides the decision of the court in this matter and her counsel was given leave to withdraw.
[8] This judgment on the appeal deals only with the strike-out question. We will deal with the privilege issue at a later date. It is important that the parties have a decision on this part of the appeal as soon as possible so that the substantive hearing on the division of relationship property and related issues can go ahead as planned in May of this year. Although the caveat proceedings were also to be heard in May, the parties have acknowledged that those proceedings are discrete and that they can, if necessary, be heard at a later date.
Procedural history
[9] This appeal is one of a series of proceedings that have, over the last seven years, dealt with preliminary or ancillary issues relating to the division of Mr and Mrs Shannon’s relationship property.
[10] The litigation began with proceedings filed in October 1997, in which Mr Shannon sought a declaration that Mrs Shannon held title improperly to property in Mt Manganui. Mr Shannon claimed that Mrs Shannon had fraudulently converted his funds to her own use to purchase the property. Mrs Shannon then filed proceedings on 9 June 1998 seeking orders regarding the division of relationship property.
[11] Pursuant to a direction of Randerson J of 2 July 1999, and with the consent of the parties, a preliminary issue under r 418 of the High Court Rules was heard before Cartwright J in the following terms:
Did the parties to this action cease to live together as husband and wife in June/July 1985 (as the defendant husband asserts) or at Easter 1997 (as the plaintiff wife asserts)?
[12] On 29 May 2000 Cartwright J issued her judgment on that preliminary issue. As indicated above, that judgment determined that the parties separated in Easter 1997 and not in 1985 as Mr Shannon claimed. We discuss her judgment in more detail below.
[13] Mr Shannon appealed to this Court against Cartwright J’s decision. His appeal was dismissed on 19 December 2000, in a judgment now reported as Shannon v Shannon [2001] NZFLR 230. The Court observed that Mr Shannon had been able to advance a formidable case at trial but that each argument had been matched by an equally cogent and corresponding argument for Mrs Shannon. The Court said (at [54]) that it was a case that could have been decided either way but that it was satisfied that this was not one of those rare cases in which it would have been proper for the Court to interfere with findings of fact made at trial. The decision was, in this Court’s view, clearly open to Cartwright J on the evidence.
[14] Mr Shannon then applied to this Court for leave to adduce fresh evidence and for the judgment of 19 December 2000 to be recalled. The Court dismissed both applications on 20 August 2001. Mr Shannon then sought special leave to appeal from the Privy Council. That application was dismissed on 11 December 2001.
[15] On 27 February 2002, Mr Shannon issued separate proceedings alleging that Mrs Shannon gave perjured evidence in the hearing before Cartwright J. Mrs Shannon applied to strike out that claim. The parties agreed to submit the question of whether there was jurisdiction to hear the claim for the Court’s determination.
[16] On 2 August 2002 Potter J, in a judgment now reported as Shannon v Shannon [2002] 3 NZLR 567, held that the High Court did have jurisdiction to hear the fraud proceeding and that it was immaterial that Cartwright J’s judgment had been affirmed or otherwise dealt with by a superior Court. She held that fraud, if proven, displaces the principle of res judicata.
[17] Potter J said that she had considered carefully the concerns voiced by James LJ in Flower v Lloyd (1879) 10 ChD 327 (CA) at 333-4 about the risk of proliferation of litigation but considered that these concerns could be adequately dealt with at the next stage of the litigation. She said (at 575):
[51] ...The appropriate response to those concerns [about the proliferation of litigation] lies in the next step of the process. The threshold the plaintiff faces is high. The fraud alleged (in this case perjury) must be fully and distinctly pleaded and particularised. Unless the fraud alleged as fully particularised raises a reasonable prospect of success and was clearly discovered since the judgment complained of, the action will be stayed or dismissed as vexatious and an abuse of the process of the Court: refer Birch v Birch [1902] P 130, Boswell v Coaks and Ongley v Brdjanovic.
[52] At that stage the defendant, if she thinks fit, may pursue in a strike-out action, grounds included in the strike-out action before the Court, that the alleged perjury and fraud are insufficiently particularised and that the plaintiff’s pleading is frivolous and/or vexatious and/or an abuse of the process of the Court.
[18] Potter J made timetable orders, requiring Mr Shannon to pursue the perjury proceedings with urgency. These orders required Mr Shannon to file and serve an amended statement of claim and to provide further particulars of the perjury allegations within 21 days. Mr Shannon did not file an amended statement of claim but instead filed a notice of discontinuance of that proceeding on 23 August 2002.
[19] In May 2004, at a directions conference in the main proceeding, Mr Shannon again foreshadowed fraud proceedings, and subsequently filed the statement of claim of 6 July 2004, again alleging that Cartwright J’s judgment had been obtained by fraud. As a result, the date fixed for the hearing of the main proceeding in July 2004 had to be vacated.
[20] Mrs Shannon applied to strike out the 6 July 2004 statement of claim. After the hearing of the strike-out application, but before the judgment was delivered, Mr Shannon filed an amended statement of claim, dated 20 July 2004. Potter J struck out both statements of claim on 16 August 2004.
Cartwright J’s judgment
[21] As indicated above, Mr and Mrs Shannon initially separated in 1985 (according to Mr Shannon) or 1986 (according to Mrs Shannon). Cartwright J held that the separation had occurred in 1986, although that date was of no real importance to the case before her.
[22] The issue for Cartwright J was whether the parties had reconciled, after the initial separation, in 1988. Mr Shannon contended that they had not and thus that separation had occurred in 1985. Mrs Shannon contended that they had and that separation had finally occurred at Easter 1997. It does not appear that any middle ground between these two extremes was advanced or considered.
[23] After a hearing spanning eight days with affidavits filed by over 50 witnesses, 29 of whom were called for cross-examination, Cartwright J held that the date of separation was Easter 1997.
[24] Looking at the parties’ contentions before Cartwright J in more detail, Mrs Shannon contended that, although their marriage was not traditional in the sense of a couple living together consistently in the one home, she and Mr Shannon nonetheless continued their marriage relationship and lived and holidayed together whenever Mr Shannon was able to. According to Mrs Shannon, Mr Shannon’s frequent and lengthy absences from home were due to his employment, first in sales based in Auckland and later in operating his helicopter business with contracts in foreign jurisdictions.
[25] Mrs Shannon’s evidence was that she and her husband kept in close touch by telephone and co-operated as a married couple would in decisions concerning the education of their son, the operation of their businesses and the acquisition of assets. Her evidence was that in 1997 they were planning to resume a more usual married life and had purchased an apartment in Mt Maunganui for that purpose, from which they intended to operate a deer farm at Taupo.
[26] Mr Shannon, on the other hand, claimed that he and Mrs Shannon had never resumed their marriage following their separation in 1985. Indeed, in 1988, he had entered into a stable de facto relationship with Ms Hamilton, which was inconsistent with the alleged reconciliation. He accepted, however, that, after a period of bitterness and resentment, he had begun to take a much closer interest in his son, resuming contact with Mrs Shannon to a stage where they were working together to acquire assets on Grant’s behalf and to ensure that Grant received a good education. He said that the apartment in Mt Maunganui and the deer farm were purchased for his son and not as matrimonial assets.
[27] Cartwright J largely accepted Mrs Shannon’s version of events. It appears that she was influenced to a significant degree in this assessment by her acceptance of the evidence of the couple’s son, Grant. In summary she said:
Credibility
[47] I have touched on general issues surrounding credibility but wish now to return to summarise my findings in relation to the principal witnesses. I am satisfied first, that although the plaintiff may well have exaggerated the closeness of her relationship with the defendant, nonetheless it was an ongoing marriage relationship from the time of reconciliation in 1988. I am satisfied from her evidence that she has described a picture of a marriage in which although of necessity there were frequent and lengthy physical separations, nonetheless particularly from the early 1990s there was an intensifying contact and regular discussions concerning all of their joint affairs whether they be business or personal. Basically I accept that the plaintiff was truthful in her evidence even if it is hard to believe that she did not suspect the defendant of having affairs or relationships with other women from time to time during the course of their marriage. That of itself, of course, does not necessarily imply the end to a marriage relationship. History is littered with examples to the contrary.
[48] The defendant’s evidence by contrast revised the history of the marriage relationship fundamentally. I do not accept that the regular periods of physical and telephone or fax contacts were all to keep in touch with Grant or, when they involved the plaintiff, purely in Grant’s interests. Nor am I satisfied that his relationship with Donna Hamilton supplanted his marriage with the plaintiff. I accept Bill Shaw’s assessment that this was a convenient arrangement for the defendant who lived in Donna Hamilton’s home and largely at her expense while continuing to keep in close contact, unbeknown to her, with the plaintiff. It is consistent with the defendant’s deceitfulness over his relationship with Donna Hamilton that Grant was completely oblivious of its nature. Although he met Donna Hamilton he never stayed in her home with the defendant and assumed that she was someone who worked for his father. Moreover, there is evidence that the defendant had other relationships some of which may even have overlapped with that with Donna Hamilton. It is clear that this was a man who wanted his marriage to continue but engaged in extra-marital affairs while being assiduous to keep this information from his wife. The friends who observed particularly the relationship with Donna Hamilton, clearly saw what he intended them to: namely that they were partners and his marriage was over. By the same token those who saw him with the plaintiff believed what they saw: namely that this was a marriage in all senses. And if the defendant engaged in relationships with other women from time to time this was not at the expense of his marriage with the plaintiff.
[49] Grant’s evidence I have already touched on. I was impressed with his honesty. He neither exaggerated and nor was he evasive. He is a young man of intelligence who in spite of a promise from his father to the contrary has been drawn into a dispute which has been very destructive for him emotionally and financially. It is clear that finding himself caught between his parents he came to a decision finally to tell the truth as he saw it, regardless of the consequences for him. As with all children caught in this situation, he has only his parents to blame for what has occurred and undoubtedly it will affect his relationship with each of them in the future.
Summary
[50] In summary then I accept the plaintiff’s evidence and in particular that of Grant Shannon. I find that there was a reconciliation between the parties in 1988 and that the marriage subsisted until a final parting of the ways at Easter of 1997. The parties therefore began to live apart for the purposes of the matrimonial property proceedings from Easter of 1997.
[28] Moving to her more detailed reasoning, Cartwright J held that there had been relatively frequent contact between the parties during the second part of 1988. In that period, and in the early part of 1989, Mrs Shannon and Grant had lived in Fielding. The Judge held that there had been family holidays at Taupo and Cooks Beach in that period.
[29] She also found that the couple had been together in 1989 when a work colleague of Mr Shannon’s, Mr Bill Shaw, visited them just after the Fielding house was sold and before Mrs Shannon moved to Tauranga to operate a motorcamp with her sister and brother in law. The Judge also pointed to unchallenged evidence that Mr Shannon had assisted in the negotiations for the purchase of the motorcamp. Although not on the title, he had also made a financial contribution to the purchase and he had arranged for or undertaken physical work on the property.
[30] The Judge was satisfied that the decision to move from Fielding to Tauranga was made so that Mrs Shannon could be closer to her own family so as to have their support while she raised their son, Grant. Mr Shannon would continue to work in and later operate his own business from Auckland and the Judge accepted that his work there required frequent absences from a home base. The Judge also recorded Mrs Shannon’s evidence that the couple had decided that she and Grant would remain in Tauranga as, from the early 1990’s, Mr Shannon had begun to work overseas in places that were unsuitable for raising a child. The Judge also noted that it was undisputed that, as Mr Shannon’s financial status improved, the couple would meet in various locations around the world and holiday together and that, on at least one such occasion, their son did not accompany them.
[31] The Judge recorded the independent evidence of family members and friends, which satisfied her that there was an apparent continuing commitment to the marriage by both parties. She also said that there was evidence from telephone records of numerous calls, particularly during the last few years, not all of which could, in her view, be explained by Mr Shannon’s wish to contact and speak to his son. She noted Mrs Shannon’s evidence of gifts, some expensive and some of sentimental value, given to her by Mr Shannon. Mr Shannon had denied that he had given her gifts of a sentimental nature and said that the expensive gifts were purchased during trips overseas when Mrs Shannon had inadequate funds.
[32] The Judge was also satisfied that, in the last phase of their marriage, the couple, both separately and together, made detailed plans to acquire, design, furnish, and ultimately live in a Mt Maunganui apartment when Mr Shannon returned to work in New Zealand. A Taupo deer farm was acquired as an investment and work opportunity for Mr Shannon. The title to the apartment was in Mrs Shannon’s name while Forest Park (NZ) Ltd, a company in which Mrs Shannon has no interest, was the registered proprietor of the deer farm. Nevertheless, Cartwright J was satisfied that Mrs Shannon had been involved in discussions concerning the acquisition of the farm and that she had purchased plant and machinery for it.
[33] Throughout this latter period the Judge was also satisfied that Mr Shannon remitted large sums to Mrs Shannon’s bank account and that she made payment from that account for the acquisition and furnishing or equipping of both properties. Cartwright J was further satisfied that Mr and Mrs Shannon shared the apartment when Mr Shannon returned briefly to New Zealand for the 1996/1997 Christmas and New Year period. During this transitional period of returning to New Zealand and planning for the future, the Judge held that, from any standpoint, it was clear that the assets in question were acquired for the benefit of Mr and Mrs Shannon and not, as Mr Shannon asserted, for Grant.
[34] Mrs Shannon called a large number of witnesses to confirm her close relationship with Mr Shannon. For example, Mr Shaw, a former employee of Mr Shannon (and a relative of Mrs Shannon’s), gave evidence that he was privy to much of Mr Shannon’s life between 1900 and mid-1996. Cartwright J accepted that, from Mr Shaw’s perspective, the parties had a functional, if somewhat unconventional, marriage and that the marriage nevertheless continued, despite Mr Shannon’s extra-marital affairs. Mr Shaw had personally observed, when he saw them together in Fielding, at the motorcamp and in Malaysia, that Mr and Mrs Shannon slept together and behaved as a married couple.
[35] Mr Shannon had suggested that the fact that Mr Shaw had been dismissed from his employment gave him an incentive to corroborate Mrs Shannon’s version of events. Cartwright J gave careful consideration to that submission and rejected it. She did not consider that Mr Shaw had the level of sophistication that would be required to lie convincingly and consistently. She was also satisfied that Mr Shaw and Mr Shannon had continued to work together even after the last date of separation.
[36] The Judge noted that there was a great variation in the evidence regarding the 1996/1997 Christmas holiday period. Mrs Shannon gave evidence that she had lived with Mr Shannon in their new apartment but spent little time there during the day due to heavy work commitments. There were a number of people staying at the apartment. All witnesses observed both Mr and Mrs Shannon at the New Years Eve party held at the apartment but Mr Shannon’s witnesses denied that she had slept at the apartment at night. Cartwright J weighed up all the evidence and concluded that Mrs Shannon’s evidence was more reliable and that it was supported by Grant’s evidence. She was satisfied that, when Mr Shannon returned to live permanently in New Zealand, he and Mrs Shannon resumed occupation of the apartment together, a period which only ended when they had a violent disagreement at Easter 1997.
[37] The most critical issue in relation to Mr Shannon’s evidence concerned his relationship with Ms Hamilton. Cartwright J accepted that it was unlikely that Mr and Mrs Shannon had reconciled if Mr Shannon had been in a relationship in the nature of marriage with Ms Hamilton for a period of years from 1988. The Judge accepted that Ms Hamilton lived in Auckland and that Mr Shannon lived with her on many weekends when he was in Auckland. During the week, he was consistently absent on sales trips.
[38] Cartwright J accepted that Ms Hamilton was an honest witness. From Ms Hamilton’s viewpoint, she was living together with Mr Shannon in a serious relationship, which Mr Shannon wished to continue after he began living and working away from New Zealand. The relationship, however, ended. Cartwright J inferred that Ms Hamilton had not been prepared to relinquish her career in New Zealand, without a complete commitment from Mr Shannon. Although Mr Shannon spoke in his evidence of wanting to marry Ms Hamilton, he had taken no steps to initiate divorce proceedings with Mrs Shannon and apparently gave Ms Hamilton no indication that marriage was a prospect.
[39] Cartwright J was satisfied that Mr Shannon carefully concealed each relationship from the other. Ms Hamilton sincerely believed that Mr and Mrs Shannon had no contact with each other, except perhaps concerning their son. Mrs Shannon had no inkling of Mr Shannon’s relationship with Ms Hamilton. Grant also was not aware of any emotional relationship between his father and Ms Hamilton, believing her to be one of his secretaries. Cartwright J concluded that, although Mr Shannon and Ms Hamilton had a meaningful relationship, Mr Shannon did not abandon his marriage with Mrs Shannon.
[40] She found that, following the end of the relationship between Mr Shannon and Ms Hamilton, contact between Mr and Mrs Shannon intensified. Cartwright J rejected Mr Shannon’s evidence that any holidays spent together were only to facilitate contact with Grant. She noted that there were numerous references to an ordinary marriage relationship in the evidence, such as that of Grant’s friend, Mark Mayston, who, the Judge said, had no particular reason to be observant of Mr and Mrs Shannon sharing bedrooms.
[41] In addition, Cartwright J considered that Mr Shannon was in great difficulty when he tried to explain the acquisition of the Mt Maunganui apartment, the motor vehicle, and the Taupo deer farm as being entirely for Grant’s benefit. In her view, these were extremely expensive acquisitions for an 18 year old, entirely unsuitable for his way of life, and Grant had little part in decisions concerning their acquisition or furnishing. When these properties were acquired, Grant had qualified as a helicopter pilot and was living and working overseas. In Cartwright J’s view, it was unlikely that he would purchase an apartment costing in excess of $1m and a deer farm at around $2m for his occasional visits to New Zealand. She said at [37]:
Even setting aside his [Grant’s] evidence I have come to the view that had the defendant [Mr Shannon] wished to bestow on him [Grant] such a large proportion of his assets, he would not have acquired a very large apartment and a Deer Farm when his son looked likely to live and work overseas for the forseeable future.
[42] Cartwright J then discussed Grant’s evidence. At the date of the hearing Grant was almost 23. He had completed three affidavits in the proceeding, the first supporting his father dated 3 May 1999, the second, dated 26 May 1999, supporting his mother, and a final affidavit supporting his father on 17 August 1999. He resiled from the third affidavit in his evidence in Court (which, at his request, was given in the absence of his parents).
[43] Grant gave evidence of holidays with his mother and father at the end of his schooling in Queenstown, of holidays skiing in the United States, of the family holiday in Singapore and of his parents visiting him together when he was flying in Malaysia. He recalled a further holiday when his friend, Mark Mayston, had accompanied him and his parents. On all of these occasions his parents slept together and he agreed with counsel that they were just like a regular family. Grant also confirmed gifts given to his mother by his father, including at least one sentimental gift. Grant’s evidence was that he was oblivious to the fact that his father had apparently acquired the apartment and the deer farm for him. He also considered the second bedroom in the apartment to be his rather than the master bedroom.
[44] The Judge considered that it was necessary to put Grant’s evidence in the context of his relationship with his parents. Until he left secondary school, Grant’s main contact was with his mother who had raised him with the support and assistance of his father, but usually at a distance. Later, Grant had spent significant periods of time in his father’s company and employment while attaining his helicopter pilot qualifications. Despite now working independently of his father and living in a relationship, Grant had remained in contact with both of his parents until the proceedings gathered momentum.
[45] Cartwright J recognised that it was necessary to exercise some caution in relation to Grant’s evidence and his recollections of family time together. He undoubtedly loved and appreciated both of his parents and did not want them to separate. She noted that Grant had a financial motive to side with his father. On the other hand, she also recognised that Grant was very close to his mother who had shouldered the main responsibility for his upbringing.
[46] Cartwright J concluded that Grant, in his evidence in Court, was doing his best to tell the truth as he saw it, setting aside any feelings of pressure that he may have felt from his parents. She noted that some of his evidence was independently confirmed by Mark Mayston and Ms Hamilton and she was satisfied that Grant saw no reason to suspect that his parents were living apart during the relevant period. She also accepted his evidence relating to the apartment and the deer farm.
[47] As to the divergence in evidence given by Grant in affidavit form prior to the hearing, Cartwright J was satisfied that Grant had not wished to be involved in the proceedings but that he had come under pressure from his father to do so. She was also satisfied that his being involved had had serious repercussions for him. Mr Shannon had cut off all contact with his son and had changed his will to disinherit him. The Judge was satisfied that Grant had been put under intense pressure from his father to complete the third affidavit, including warnings of serious consequences from the alleged perjury in his second affidavit. She accepted that the third affidavit was, in Grant’s words, “rubbish basically”.
The original and amended statements of claim
[48] The statement of claim dated 6 July 2004 makes allegations that perjured evidence had been given by Mrs Shannon and Grant. The amended statement of claim, dated 20 July 2004, deals with the same allegedly perjured evidence as the original statement of claim, but also includes further particulars as to the basis for the allegations that the evidence was perjured, including references to allegedly new evidence to support that conclusion.
[49] The amended statement of claim alleges that the following evidence in the High Court and this Court was perjured in that evidence was given and/or relied on when it was known by Mrs Shannon to be false or in circumstances where Mrs Shannon was recklessly careless as to whether the evidence given was true or false:
(a)Mrs Shannon’s evidence that the Mt Maunganui apartments were purchased as a matrimonial home and that they were not purchased for Grant when Mrs Shannon had earlier made admissions to her banker, Mr Bailey, that the apartments were purchased by Mr Shannon for Grant. Mrs Shannon had also, through her agent, Mr Hamilton, countermanded Mr Shannon’s instructions to put the apartments in Grant’s name;
(b)Mrs Shannon’s evidence that Mr Shannon regularly transferred funds from his overseas account to her bank account for the general purpose of the marriage when she knew that funds were transferred for specific purposes only;
(c)Mrs Shannon’s evidence relating to various foreign fund transfers when contemporaneous bank records (including records as to the destination of funds transferred by Mr Shannon) show this evidence to be false;
(d)Mrs Shannon’s evidence that Westpac Banking Corporation had lent her $85,000 to make a payment in relation to the apartments on the basis that it was to assist in the purchase of a matrimonial home and where notes by the bank officer involved show that was not the case. No such loan was required or requested by Mr Shannon;
(e)Mrs Shannon’s evidence that Mr Shannon requested her to borrow $70,000 from her mother so that she could make payments on the apartments and that the loan was given on the basis it was to assist in the purchase of a matrimonial home and her evidence that Mr Shannon had directed payment towards the above $70,000 loan from foreign funds of his. No such payment was made and contemporaneous banking records show that there was only one and not two transfers to Mrs Shannon’s account;
(d)Mrs Shannon’s evidence that Mr and Mrs Shannon were together at the Tauranga branch of Westpac on 11 December 1996 and that, at this time, a letter of credit advice notice from Westpac bank was given to her. This document showed a direct payment of $50,000 being made from Mr Shannon to the bank account of Mrs Shannon’s mother. No such document has been provided on discovery by Westpac and the document produced in the High Court was a sham or altered to support Mrs Shannon’s untruthful evidence on this topic. In addition, airport records show that Mr Shannon could not have been in Tauranga at that time;
(e)Mrs Shannon’s evidence that a Holden Senator car purchased in December 1996 was the family car, when it was purchased for Grant as is shown by purchase and insurance records;
(f)Mrs Shannon evidence that the helicopter acquired in April 1996 by Mr Shannon was purchased for himself when it is clear that it was purchased for Grant as is shown by Civil Aviation Authority and various financial records;
(g)Mrs Shannon’s evidence that Mr Shannon communicated with her by telephone on a regular basis while he was living overseas when that was not so as is shown by mobile telephone records recording the relevant telephone as being Grant’s;
(h)Mrs Shannon’s evidence that she and Mr Shannon had joint insurances after 1987 and were therefore still married, when that was not so. Any assets purchased by Mr Shannon and contained within Mrs Shannon’s insurance policies were solely for the benefit of their son or in Mrs Shannon’s capacity as agent for Mr Shannon and this is shown by the insurance records and evidence from the insurance agents;
(i)Mrs Shannon’s evidence that she had made payments of $5,000 and $3,000 towards the purchase of the Taupo deer farm to support the inference that this was a matrimonial property asset, when that was not so, as is shown by bank records;
(j)Mrs Shannon’s evidence that she was unaware of any relationship between Mr Shannon and Ms Donna Hamilton until the r 418 hearing when she had made admissions to Ms Lisa Kahia (an ex-employee of Mr Shannon who also had a brief relationship with him) that she knew of the affair.
[50] The amended statement of claim, in relation to Grant’s evidence, alleges that his evidence that the apartments, the helicopter, the Holden Senator and the farm property were not bought for him, was (to the knowledge of his mother) perjured in that:
(a)He had at various times (including on 9 January 1997) signed written agreements in which he acknowledged that Mr Shannon had lent him US$850,000 for the purchase of a helicopter, NZ$70,000 for the purchase of a Holden Senator car, NZ$1.5m for the purchase of apartments, and 50% of the purchase of a farm property;
(b)Various documents from Westpac Banking Corporation, from Forest Park company records and the files of Mr Hamilton show that Grant was kept informed of matters relating to the Forest Park group’s interests and activities and that he was fully involved in the group’s business.
[51] Mr Shannon also makes allegations of perjured evidence in this Court in affidavits filed in opposition to Mr Shannon’s application to adduce new evidence. We have difficulty seeing how this evidence is relevant as it can have had no effect on the Cartwright J judgment or, indeed, on that of this Court on appeal as it was adduced after the appeal had been disposed of. Be that as it may, Mr Shannon alleges that the following evidence in this Court was perjured:
(a)Mrs Shannon’s evidence in this Court denying that she had told Ms Kahia that she was aware of the relationship between Mr Shannon and Ms Hamilton prior to the r 418 hearing and denying that she had told Ms Kahia that the apartments were for Grant and that she had deliberately put them in her own name;
(b)Mrs Shannon’s evidence in this Court that the taped conversation between her and Ms Kahia represented the entirety of the conversation when this was not correct. It is alleged that Mrs Shannon tampered with the tape of the conversation and that this is shown by an analysis of the tape undertaken by Dr Guillermin on 2 December 2003.
(c)Mrs Shannon’s evidence in this Court that she was in constant telephone contact with Mr Shannon while he was overseas in early 1993 when this was not so as Mr Shannon was in New Zealand; and
(d)Grant’s evidence in this Court that he had no financial or operational knowledge about the Forest Park Group of companies when that was not correct.
[52] The amended statement of claim states that the perjured evidence was material to the r 418 judgment and that, without such evidence, the Court would have found for Mr Shannon. It further alleges that the evidence upon which Mr Shannon relies to prove the perjured evidence was evidence that was not available or was not available with reasonable due diligence at the time of the r 418 hearing before Cartwright J.
Potter J’s judgment on the strike-out application
[53] Potter J set out the following principles relating to strike out and fraud pleadings at [23]:
(a)The Court will normally assume that the allegations made in the statement of claim are true but, if the allegations are entirely speculative and without foundation, that stance need not be adopted.
(b)The jurisdiction to strike out is to be exercised sparingly and only in a clear case where the Court is satisfied it has the requisite material.
(c)Where fraud is alleged the allegations must be fully and distinctly pleaded and particularised.
(d)Unless the fraud alleged as fully particularised raises a reasonable prospect of success and was clearly discovered since the judgment complained of, the action will be stayed or dismissed as vexatious and an abuse of process of the Court (Birch v Birch [1902] P 130; Boswell v Coaks (No 2) (1894) 86 LT 365 (HL); Ongley v Brdjanovic [1975] 2 NZLR 242). This principle was, we note, also stated by her in Shannon v Shannon [2002] 3 NZLR 567 at [51] – see at [17] above.
(e)Where the Court is satisfied that in reality an allegation of fraud is a delayed application for a new trial or an attempt to relitigate matters already determined by the Court, the Court may exercise its discretion to strike out under r 186(b) or (c) or both.
(f)Fraud, if proved, overcomes res judicata. Lord Denning in Lazarus Estates Limited v Beasley [1956] 1 QB 702 at 712 stated that fraud unravels everything – it vitiates judgments. Potter J adopted the definition of fraud from Derry v Peek (1889) 14 App Cas 337 at 374 (HL), which held that fraud is a false statement made knowingly, or without belief in its truth, or recklessly, careless as to whether it be true or false.
[54] Potter J then turned to discuss the 6 July 2004 statement of claim. She recorded that Mr Shannon alleged that the perjured evidence was given in affidavit and viva voce evidence and through the production of documentary evidence, which purported to establish that Mr and Mrs Shannon were living together as husband and wife until March 1997. She also noted that each allegation was particularised by reference to the affidavit or pages of the notes of evidence where the false testimony was alleged to appear, followed by a general reference to all evidence on the topic by Mrs Shannon or Mr Grant Shannon.
[55] Potter J held that the statement of claim did not contain particulars of perjury, but merely repeated assertions made before this Court that Mrs Shannon and Grant did not tell the truth at the r 418 hearing. In Potter J’s view, those issues had already been determined. Cartwright J had made clear findings of credibility in favour of Mrs Shannon. She had also preferred the evidence of Ms Hamilton and Mrs Shannon to that of Mr Shannon relating to Ms Hamilton’s relationship with Mr Shannon. Cartwright J further had considered Grant to be an honest witness.
[56] Potter J commented that the decision of this Court dismissing the appeal, and that denying the subsequent application to adduce new evidence, reflected the importance attached to the advantage the trial judge has of hearing and seeing the witnesses. She found it particularly relevant that Cartwright J relied not only on the evidence of Mr Shannon, Mrs Shannon and Grant Shannon, but that she had also taken into account the evidence of more than 50 witnesses, and then reached her conclusions on the basis of the totality of the evidence.
[57] Potter J concluded that the statement of claim was not fully particularised and did not raise a reasonable prospect of success.
[58] Potter J recorded counsel’s submission that there was critical new evidence which was not available at the r 418 hearing and that this evidence had only became available through third party discovery from Westpac Banking Corporation and from ‘informal’ discovery in another proceeding whereby a solicitor’s file relating to his son had been inadvertently made available to Mr Shannon. She noted that Mr Shannon had placed this allegedly new evidence before the Court to substantiate his perjury allegations.
[59] Potter J found it puzzling that when Mr Shannon brought the earlier fraud proceeding in 2002, which resulted in the jurisdiction judgment in his favour, he was not then in a position to particularise the pleaded allegations of perjury. She thought it self-evident that Mr Shannon would have anticipated that, if he were successful in his argument on jurisdiction, the Court would require the perjury allegations to be fully particularised and promptly pursued. Mr Shannon also did not explain why the statement of claim in the latest perjury proceeding was not filed until 6 July 2004, when the allegedly new evidence had become available to Mr Shannon in June 2003.
[60] Potter J then went on to discuss the additional evidence put before her by Mr Shannon, which was annexed to his affidavit of 20 May 2004, sworn in support of his application for an adjournment of the substantive relationship property proceedings. The first set of documents comprised 11 pages of bank history sheets from Westpac. Several of those history sheets described Mr Shannon as Mrs Shannon’s “ex-husband”. Another history sheet referred to Mrs Shannon as the agent for Grant and stated that the “ex-husband” was financing the purchase of the apartment for Grant. Also exhibited was a copy of what is said to be a loan agreement dated 9 January 1997 between Mr Shannon and Grant which recorded a loan of US$850,000 for a helicopter, a loan of NZ$1.5m for Grant’s apartments, and a loan of 50% of the purchase price of a farm property. Cellphone accounts in the name of Mr G. Shannon were also exhibited covering a period between the end of 1996 and the beginning of 1997.
[61] Potter J noted that, on a strike out application, the Court assumes the truth of the pleaded allegations. However, since the allegations were simply assertions that Mrs Shannon and Grant did not tell the truth at the r 418 hearing and, in her view, did not raise a reasonable cause of action, Potter J took the further step of referring to the evidence which Mr Shannon relied on in support of the allegations of perjury.
[62] With regard to that evidence, Potter J said that it was not new or fresh evidence but was available at the time of the r 418 hearing through third party discovery. Although Mr Shannon may not have accessed it for the purposes of the hearing, it was open for him to do so if he considered that the evidence could be relevant and assist in establishing his credibility. Mr Shannon’s previous counsel stated that he did not consider it necessary or appropriate to conduct non-party discovery on matters which, in his opinion, were irrelevant to the determination of the date of separation. Potter J held that this did not alter the fact that the evidence on which Mr Shannon now relied was then available. Further, the property and financial transactions of the parties during the relevant period were very much a focus of the factual background upon which Cartwright J made her determination.
[63] The Judge was in any event of the view that the evidence from the Bank history notes was inconclusive. The manner in which a Bank officer described the marital relationship of Mr and Mrs Shannon was hardly definitive. Clearly the Bank’s interest and concern was with the financial arrangements. Relevant to those arrangements was the longstanding relationship of the customers concerned with the Bank and with each other. The precise nature or state of the customers’ relationship with each other was not, in her view, the Bank’s focus.
[64] She held further that the loan agreement between Mr Shannon and Grant existed at the time of the r 418 hearing but that no attempt had been made to access it through Grant or his solicitor. Further, the loan agreement now relied upon to found allegations of perjury was not even mentioned by Mr Shannon when he was asked a direct question by the Judge about whether such a document existed. Even in the absence of the loan agreement (if it had indeed gone missing), Grant could have been cross-examined about it.
[65] With regard to the telephone records, the Judge then said that the fact that the mobile phone was in Grant’s name was of little probative value for it did not prove who used the phone at any time. Phone calls between the parties were very much in issue in the r 418 hearing and were the subject of conclusions reached by Cartwright J on the evidence before her.
[66] The Judge also said that Mrs Shannon would undoubtedly contest the “new” evidence produced by Mr Shannon. Although the Court should not assess the veracity or weight of the evidence on a strike out application, even taken at face value, the evidence did not support the allegations of perjury.
[67] Potter J concluded that the perjury proceeding was yet another attempt by Mr Shannon to relitigate the date of separation after he had identified some further evidence, which he thought might support his view. She further concluded that the allegations in the statement of claim were merely assertions of perjury and that the evidence upon which Mr Shannon relied did not substantiate those allegations. She held that, even uncontested, the evidence relied on was not significant or substantial, but would simply have added to the extensive documentary evidence that had earlier been adduced and which was far from decisive. In any event, although the evidence of Mrs Shannon and Grant was clearly important, there were many other witnesses and extensive documentary evidence that had been considered by Cartwright J.
[68] Potter J, therefore, granted the strike out application, as the 6 July 2004 statement of claim disclosed no reasonable cause of action and was an abuse of process. She also held that the filing of the amended statement of claim, after the strike out application had been heard and the Court had reserved judgment, was an abuse of the Court’s processes. In any event, as the evidence upon which Mr Shannon relied did not substantiate allegations of perjury, this was not a situation where the Court could have been persuaded that amendment by Mr Shannon would cure inadequate pleadings.
[69] Potter J recorded that she had heard further submissions from counsel on the amended statement of claim. She concluded that it repeated the fundamental flaws in the original statement of claim and, like the original statement of claim, in essence sought to relitigate matters and evidence which were before the Court in the r 418 hearing.
[70] Accordingly, Potter J also struck out the amended statement of claim, both because it was an abuse of the process of the Court and because it disclosed no reasonable cause of action.
Mr Shannon’s submissions
[71] Ms Duffy QC, for Mr Shannon, submitted that there were no grounds for Potter J to strike out the claim alleging that the judgment by Cartwright J was obtained by fraud on the part of Mrs Shannon. In her submission, the claim discloses a reasonable cause of action and does not constitute an abuse of process. She submitted that the allegations if proven (and on a strike out application they must be treated as capable of proof) reveal serious fraudulent conduct on the part of Mrs Shannon and a court will hear such an allegation, notwithstanding that higher courts have heard and determined appeals from the judgment sought to be set aside: Shannon v Shannon [2002] 3 NZLR 567.
[72] Ms Duffy accepted that Mr Shannon must fully and distinctly plead his claim of fraud by perjury and provide proper particulars. She submitted that the amended statement of claim meets all the criteria for such a pleading, as it provides ample particulars to inform the court and the opposing party of the facts, which, if proven, will entitle Mr Shannon to the relief sought. If this Court were of the view that it still did not meet those criteria, then Ms Duffy relied on Marshall Futures Ltd v Marshall [1992] 1 NZLR 316 as authority for the proposition that a claim will not be struck out because of insufficiency of particulars alone.
[73] Ms Duffy further submitted that Mr Shannon’s actions in filing an amended statement of claim cannot amount to an abuse of process. It is a well recognised practice when strike out applications are being appealed for a plaintiff to provide a draft of a proposed pleading that ameliorates the deficiencies of the pleading that has been struck out. In any event, Ms Duffy submitted that the original statement of claim provided sufficient particulars, as it identified a series of actions on the part of Mrs Shannon and Grant which were alleged to amount to the giving of perjured evidence.
[74] Ms Duffy submitted that there is nothing about the claim to suggest that this is a case where the court is not required to assume the truth of the pleaded allegations because they are so entirely speculative and without foundation. Ms Duffy referred to Sulco Ltd v E S Redit & Co Ltd [1959] NZLR 45 where the applicant sought to have a judgment recalled for various reasons, including that it had been obtained by fraud. Both the High Court and this Court expressed concerns over the difficulties of resolving factual allegations of perjury on affidavit evidence. They held that the appropriate course was for the applicant to commence a separate proceeding to set aside the judgment. Ms Duffy submitted that Sulco supports the view that a court should not rely on affidavit evidence relating to the substance of the claim when it comes to determining whether or not to strike out such a claim.
[75] Ms Duffy claimed that there is no New Zealand authority on the principles that apply when determining whether a judgment should be set aside due to fraud. She referred to Phipson on Evidence (15th ed 2000) which sets out the criteria in England. According to that text, a plaintiff must prove that (see para 38.08):
(a)The judgment was obtained by fraud through the giving of perjured evidence; and
(b)The evidence to prove perjury is fresh evidence that was not available to the plaintiff and could not have been discovered with reasonable diligence before the judgment was delivered (Owens Bank Ltd v Bracco [1992] 2 AC 443).
[76] Ms Duffy submitted that the amended statement of claim satisfied the first requirement as it gave Mrs Shannon clear notice of the matters on which Mr Shannon based his allegations of perjury. Ms Duffy further submitted that the allegations did not merely allege that Mrs Shannon’s evidence was untrue, but pleaded that it constituted evidence that is defined as perjured evidence in terms of the usual legal principles relating to fraud. The pleading expressly alleges that Mrs Shannon intentionally gave evidence as well as relied on the evidence of another witness in circumstance where either she knew it was false or was recklessly careless as to whether it was false or not. Ms Duffy therefore submitted that Potter J’s conclusion that the particulars did not found allegations of perjury was wrong. The amended statement of claim properly particularised the evidence said to be fraudulent and explained why it was fraudulent.
[77] The amended statement of claim also pleaded that the perjured evidence was material in securing the judgment. Ms Duffy accepted that the question of the materiality of the perjured evidence to the judgment obtained is a question of law and should be capable of resolution in a strike out application. She submitted that the perjured evidence was material because this Court, on the appeal from Cartwright J’s judgment, said that the case could have gone either way. Therefore, in her submission, the judgment may well have tilted the other way had Cartwright J known that the successful party had given perjured evidence on issues upon which she had relied.
[78] As to the second requirement, that the evidence to prove fraud be fresh evidence, Ms Duffy noted that Owens Bank Ltd is a case about setting aside a foreign judgment on the ground it was obtained by fraud. Therefore, the statements regarding what is required when setting aside an English judgment were obiter. She pointed out that Australia takes a different view of the relevant legal principles. In Australia, there is no “due diligence” requirement when it comes to setting aside a judgment on the ground it was obtained by fraud (see McDonald v McDonald (1965) 113 CLR 529 (HC), citing Hip Foong Hong v H Neotia & Co [1918] AC 888).
[79] Ms Duffy submitted that the second limb of the Phipson criteria, especially the due diligence requirement, raises serious policy considerations and should not automatically be adopted in New Zealand. These policy considerations were recognised by the High Court of Australia in McDonald v McDonald. Ms Duffy therefore submitted that the second limb of the Phipson criteria should not be adopted in NZ. The tests for setting aside a judgment on the ground of fresh evidence should not be superimposed on the tests to be applied for setting a judgment aside on the ground it was obtained by fraud. To do so would, in her submission, be to render this latter ground for setting aside a judgment otiose.
[80] Ms Duffy further submitted that adopting a due diligence test would permit decisions obtained through a party’s fraudulent conduct to stand simply because the unsuccessful party failed to meet this test. This approach would effectively permit a fraudulent successful party to contend that his or her fraud is immune in these circumstances. The public interest in ensuring that judgments are not obtained by fraud should, in her submission, prevail over the public interest in the finality of litigation.
[81] Should this Court find that a due diligence test is a requirement for setting aside a judgment on the ground of fraud, she submitted that a lower threshold should be applied than in the case of an application for a rehearing on the ground of fresh evidence. Otherwise, litigants would be required to guard against perjury and a judgment fraudulently obtained would stand simply because the unsuccessful party failed to guard against perjured evidence – see the remarks of this Court in Sulco at 74.
[82] In any event, in her submission, the amended statement of claim pleads that the evidence to prove perjury was not available or reasonably discoverable at the time of the hearing before Cartwright J. The pleading is therefore sufficient in that regard.
[83] Ms Duffy submitted that the freshness of the evidence involves factual questions not capable of resolution on a strike out application. This is because until all the evidence to prove perjury is identified – which requires it to be placed before the court – it is not possible to determine if it is fresh evidence. She submitted that it would go well beyond the usual practice for strike out applications for a plaintiff to file all the evidence he or she relies upon to prove the allegations in the statement of claim. Further, the trier of fact would have to examine the evidence originally filed or then available to the plaintiff to determine whether the new evidence was fresh. In addition, at least some of the fresh evidence is likely to be in dispute.
[84] Ms Duffy submitted that whether the evidence was reasonably discoverable at the time of the hearing (if this is part of the test) is also a factual question that cannot be resolved on a strike out application. It requires an assessment of the conduct of the litigation at the time and how a reasonable practitioner would have conducted the litigation. The Court cannot assess whether the allegedly fresh evidence was reasonably discoverable at the original hearing until the evidence is identified and the court is informed of the circumstances of its discovery.
[85] In this case, Mr Shannon has put before the Court only part of the evidence upon which he will rely. This was put before the Court to herald the raising of the fraud allegation and to support an application for an adjournment. In Ms Duffy’s submission, there is nothing in the authorities that suggests a requirement to file all the evidence to be relied on where a strike-out application is opposed. Pleading the existence of the new evidence is sufficient. If, however, this Court holds that all evidence should be put before the Court at a strike out stage, then Mr Shannon should be given the opportunity to file further evidence.
[86] Ms Duffy also submitted that the claim does not constitute an abuse of process. In her submission, it is irrelevant that Mr Shannon commenced a similar proceeding in 2002 and then discontinued it. A plaintiff who considers a claim commenced ill advisedly for whatever reason can always discontinue and recommence when it is more appropriate. Further, Mr Shannon is not, in her submission, obliged to explain the delay between obtaining evidence from Westpac in 2003 and the filing of the proceedings in 2004. The present proceeding fell within the time limit imposed by the Limitation Act 1950. In Ms Duffy’s submission, fraud should not, in any event, go unexamined simply by reason of delay.
[87] Finally, Ms Duffy submitted that the pleading is not so hopeless that it could not succeed at trial. In her submission, it raises worrying issues of real concern as the allegations, if proven, reveal serious fraudulent conduct on the part of Mrs Shannon. Therefore, the fraud claim should not have been struck out.
Mrs Shannon’s submissions
[88] Ms Aikman, for Mrs Shannon, submitted that Potter J’s findings were correct and that neither the original nor the amended statement of claim meets the stringent tests for setting aside a judgment on the basis of fraud. In her submission, the amended statement of claim adds nothing to the substance of the original statement and does not cure the original defective pleading. Therefore, although it was not the subject of full argument at the hearing, the contents of the amended statement of claim have essentially been considered and rightly rejected by Potter J.
[89] Ms Aikman then discussed the principles involved in setting aside a judgment on the grounds of fraud:
(a)Judgments are not lightly set aside on the ground of fraud. There must be discovery of something material that prima facie would be a reason for setting the judgment aside if it were established by proof. Any allegation of fraud must be pleaded with precision (Prosser v NZ Investment Trust Ltd [1937] GLR 93).
(b)Where fraud is alleged, there are some special considerations in addition to the usual principles that apply to striking out a new cause of action. The threshold for the case proceeding will not simply be whether the causes of action are so untenable that they cannot possibly succeed (AG v Prince & Gardiner [1998] 1 NZLR 262 at 267), but whether there is sufficient evidence to overturn an existing judgment of the court (Boswell v Coaks).
[90] Ms Aikman submitted that the evidence put forward by Mr Shannon in this case does not meet these tests. She submitted that Potter J was correct to hold that the bank documents, the alleged loan agreement, and the telephone records do not nearly meet the threshold required to overturn the Court’s earlier findings based on claims of perjury.
[91] Examining the alleged new evidence put forward by Mr Shannon, Ms Aikman submitted that little reliance can be placed on isolated comments in bank documents as to the status of the parties’ marriage. Mr Shannon did not provide evidence as to why the bank officer would have any particular knowledge of the relationship and marriage status between Mr and Mrs Shannon. There is nothing to indicate that Mrs Shannon had any knowledge of what the bank officers had written or of the loan agreement.
[131] No reasons are given for the assertion, however, that Mrs Shannon knew the evidence was false or was careless as to its falsity. It does not automatically follow that evidence that is untrue meets that added criteria. When perjury is alleged, because of the concerns discussed at [105], [111] and [112] above, the party alleging fraud should give some detail in the pleadings as to why it is alleged that the evidence is perjured rather than merely untrue. In this regard the current pleadings would appear to be deficient.
New evidence?
[132] The authorities are very clear. Claims to set aside judgments on the basis of fraud must be based on new evidence, in the sense that the evidence must have been newly discovered by the plaintiff since the original trial. As the existence of new evidence is part of the claim, it must be pleaded (see [107] above). It was not pleaded in the 6 July 2004 statement of claim and thus an element of the cause of action was missing. The amended statement of claim pleads the existence of evidence allegedly showing perjury and the evidence in question is particularised in some detail. To this extent the pleading is adequate.
[133] The amended statement of claim then pleads that the evidence was new and not reasonably discoverable at trial. We do not consider that, even when considering a strike-out application under r 186(a), the Court is obliged to accept a bare allegation that the evidence is new as capable of proof. Enough information has to be put forward in the pleadings or by affidavit to explain why it is alleged that the evidence is new. This was not done here. The amended statement of claim merely asserts that the evidence is new and that it was not reasonably discoverable without specifying any reasons why that was the case. The amended pleading is therefore inadequate in that regard. We understand, however, that the evidence has come to light as a result of third party discovery in the substantive relationship property proceedings and informal discovery in another proceeding and that it was not therefore available to him at the hearing before Cartwright J.
[134] From the description of the evidence in the amended statement of claim, it is clear that much of the evidence is not new, as it was in Mr Shannon’s control or otherwise available to him at the time of the original hearing. The evidence referred to in the amended statement of claim includes documents which were clearly under Mr Shannon’s control (such as passport records and joint insurance records). It also includes documents to which he was a party (such as the loan agreement between him and Grant), and material peculiarly within his knowledge (such as airline records). These types of records, in our view, must also be seen as having been effectively available to Mr Shannon at the time of the original hearing. This evidence is therefore not new and cannot be adduced to support the allegations of perjury at any trial of the fraud action. A fraud action does not give a licence to run the whole trial a second time with the introduction of evidence that, although available to Mr Shannon, was not, for whatever reason, adduced the first time around.
[135] That leaves, in terms of the amended statement of claim, insofar as Mrs Shannon is concerned, evidence that was in the control of third parties, such as the bank records (but only to the extent they do not relate to bank records of Mr Shannon’s such as those relating to funds transfers made by him) and perhaps evidence from witnesses such as Ms Kahia as to alleged admissions made by Mrs Shannon, although as an ex-employee of Mr Shannon it is likely that her evidence should be seen having been in his control at the time of the r 418 hearing and therefore not new.
[136] Insofar as Grant is concerned, reliance is placed on a loan agreement said to be signed by Mr Shannon and by Grant (although we understand Mrs Shannon questions its authenticity). This document records a loan of US$850,000 for the purchase of a helicopter, NZ$70,000 for the purchase of a “Holen [sic] Senator car” and NZ$1.5m “for Grant’s apartments at Oceanside Towers, Mount Maunganui” and 50% of the purchase price of a farm property to be placed in a company owned by Grant and his father. The loan agreement was apparently located in a Sharp Tudhope file relating to Grant and had, we understand, been provided to Mr Shannon’s sister under informal discovery relating to another matter.
[137] Leaving aside whether it is proper to use items obtained on informal discovery on one matter for the purposes of another, there is, as indicated above, no basis for holding that the loan agreement is new evidence. Mr Shannon was a party to the agreement. It must therefore be seen as available to him at the r 418 hearing. Indeed, we note that Sharp Tudhope were, at the time of the r 418 hearing, Mr Shannon’s solicitors as well as his son’s. The situation may have been different if Mr Shannon had testified at the r 418 hearing about the existence of the agreement but had said that it was lost. He did not. Instead, in response to questions by Cartwright J, he said that he did not have a document relating to the helicopter loan but that it was in the company accounts. Ms Duffy attempted to explain that exchange by suggesting that Mr Shannon meant he did not have the document in Court with him. We are unable to read it in that way. If that was what he meant, then he would and should have said so.
[138] This leaves only two possible conclusions with regard to the loan agreement. Either Mr Shannon was holding it in reserve or he had forgotten its existence. If the former is the case, then he cannot now produce it. If the latter was the case, it is very difficult to see the loan agreement as evidence showing that Grant committed perjury at the r 418 hearing. If his father, an experienced businessman, could forget about the existence of the document then how much more likely it was that a young man with little business experience would do so. Even if he had not forgotten its existence it is also possible that Grant just did not understand the nature of the arrangements. Forgetfulness or lack of understanding does not equate to perjury.
[139] The other documents referred to in the amended statement of claim as showing Grant’s perjury are company, bank and other documents allegedly showing Grant’s involvement in and knowledge of the Forest Park group and the deer farm. Mr Shannon was the other major shareholder in the Forest Park group. As such, he must have been fully involved in all the group’s affairs, including the financing arrangements with the banks. He was thus fully aware of the existence of evidence showing Grant’s level of involvement. The evidence now sought to be relied on was thus clearly available to Mr Shannon at the time of the original trial.
[140] This means that, insofar as Grant is concerned, there is no new evidence to support the allegation of perjury relating to him, apart from possibly the Civil Aviation records and the registration records relating to the car. These records would not, however, in our view be sufficient to support allegations of perjury on Grant’s part. The allegations of perjury relating to Grant must therefore in our view be struck out.
[141] For completeness, we acknowledge the possibility that, although Mrs Shannon was aware the assets in question were for Grant, Grant was not. On this scenario, it could be alleged that Mrs Shannon allowed Grant to give evidence she knew was false (even if he did not). Mr Shannon has, however, never put his case on that basis. His case was that Grant had full knowledge of and involvement in the transactions. It is not therefore a possibility that we can take into account.
Reasonably discoverable?
[142] Potter J found that all of the evidence referred to by Mr Shannon was in existence and reasonably discoverable at the time of the r 418 hearing. She held that it could have been obtained through third party discovery and that it was relevant to the r 418 hearing. Potter J noted in particular that the financial dealings between Mr and Mrs Shannon in 1996 to 1997 were relevant to the question to be determined by Cartwright J and seen as significant by her. We agree with Potter J’s assessment. In such circumstances, the fact of reasonable discoverability supports the inference, which Potter J drew, that Mr Shannon is merely seeking to re-run the case he had already lost before Cartwright J with material he now wishes he had accessed at the time of the original hearing and which would clearly have been discoverable by him with due diligence at that time.
[143] While we have a discretion to allow the action to proceed even if the evidence to be relied upon was reasonably discoverable, we do not consider it should be exercised in this case. As Ms Duffy acknowledged, there is no “smoking gun” among the evidence Mr Shannon now wishes to adduce. The evidence is thus not highly material (and even less so if one leaves out the evidence that is not even new). In addition, Mr Shannon agreed that the r 418 question would be tried before the main proceeding and therefore in the absence of full discovery. He cannot, in our view, now complain about the consequences of that decision. We note too that it is not as though Mr Shannon had no suspicions about his wife’s financial dealings. The whole set of proceedings started after all with Mr Shannon’s action alleging fraudulent dealings by Mrs Shannon.
Material evidence?
[144] The case before Cartwright J was a case where there was documentary and other evidence pointing both ways and, as this Court said, where every argument for Mr Shannon was countered by an equally powerful argument for Mrs Shannon. We do not, however, consider that Cartwright J saw the case as closely balanced. To the contrary, she made very clear credibility findings in favour of Mrs Shannon, although she did consider that Mrs Shannon may have exaggerated the closeness of the relationship between herself and her husband and she expressed some reservations about Mrs Shannon’s evidence that she did not suspect her husband of having affairs. Cartwright J also made very strong credibility findings in favour of Grant, backed up, in the case of the alleged economic dealings between Mr Shannon and his son, with the unlikelihood of Mr Shannon benefiting Grant in the manner alleged, given his youth and the fact that Grant would be living and working out of the country for some years. Ms Duffy’s submission that any new evidence would likely have turned the case in Mr Shannon’s favour must therefore be rejected. In our view, any evidence would have to have been of real significance to do that. We do not consider that it meets this test, even had it been new and not reasonably discoverable.
[145] The evidence on which Mr Shannon seeks to rely to sustain his fraud allegation relates to the financial dealings between the parties in 1996 and 1997 and to aspects of the relationship with Ms Hamilton. There is no doubt that the issues relating to the financial arrangements between Mr and Mrs Shannon in that period and the question of whether Mrs Shannon was aware of the relationship with Ms Hamilton were important.
[146] We agree, however, with Potter J, that much of the “new” evidence does not even affirmatively prove falsity, let alone fraud. It is also hardly conclusive. For example, we agree with Potter J that the fact that the cell phone was in Grant’s name does not prove who was using it at the relevant time. Further, it is inconclusive that a bank officer referred to Mr Shannon as Mrs Shannon’s ex-husband. There are no particulars detailing why the bank officer referred to Mr Shannon in this way. He could simply have assumed that Mr and Mrs Shannon were separated since Mr Shannon had been overseas for a substantial period of time. The question whether or not there was a loan from Mrs Shannon’s parents would seem to us to be very much a subsidiary issue. The foreign exchange dealings are perhaps of more significance but cannot be seen as having been central to Cartwright J’s decision.
[147] Further, even if Mr Shannon could prove that Mrs Shannon gave untrue evidence on particular financial dealings, this does not equate to perjury. Perjury requires the additional subjective element of knowledge or recklessness as to the falsity of the statement. Mrs Shannon may have forgotten the details of the financial dealings with her husband, she may have been deluding herself as to Mr Shannon’s intentions, she may have convinced herself that her version was the true one or she may have mistaken the nature of the dealings.
[148] Insofar as Mrs Shannon’s alleged knowledge of Mr Shannon’s relationship with Ms Hamilton is concerned, mere knowledge of the affair may not have changed Cartwright J’s view. As indicated above, Cartwright J was doubtful of Mrs Shannon’s claim that she knew nothing of Mr Shannon’s affairs. It would only be actual knowledge of the extent of the affair that may have had an effect on Cartwright J’s evaluation of that part of the evidence. Even then the issue was not so much Mrs Shannon’s knowledge of the affair but Mr Shannon’s mental state as to the abandonment of the marriage relationship.
[149] Insofar as Grant is concerned, for the reasons set out above, the evidence that supposedly supported the allegations of Grant’s perjury is not new. In addition it could not support the allegations of perjury – see at [137] – [140] above. This would mean that Cartwright J’s findings with regard to Grant’s evidence would remain intact.
[150] In addition, as pointed out by Potter J, Cartwright J’s decision was influenced by a number of factors that are not affected by the alleged new evidence. These are:
(a)Her findings as to the holidays Mr and Mrs Shannon spent together, including on one occasion alone without Grant and the intensifying nature of the contact between them after 1993.
(b)The evidence of Mr Shaw and Mr Mayston as to their view of the state of the marriage.
(c)The finding that Mr Shannon contributed financially to the Tauranga motorcamp and undertook or arranged for physical work on the property.
(d)The finding (independent of Grant’s evidence) as to the extreme unlikelihood that Mr Shannon would provide for Grant such unsuitable assets to his likely situation for the foreseeable future.
(e)The finding that Mr Shannon had taken no steps to free himself from his marriage to marry Ms Hamilton.
[151] We conclude therefore that the evidence Mr Shannon seeks to put forward would in any event have failed the test of materiality. As a consequence, his action would have had no reasonable prospect of success.
Decisive evidence?
[152] The next part of the test requires that the new evidence be decisive and not merely corroborate the evidence already given at trial. In our view, the evidence fails this test also. It seems to us that the documentary evidence referred to in the amended statement of claim merely adds to the documentary evidence that was before Cartwright J. Nor can it be said that the evidence Mr Shannon now seeks to produce would be decisive, even if accepted. Much of it relates to subsidiary issues and Cartwright J’s decision, as indicated above, was in any event based on other evidence, which either has not been or cannot be challenged.
Other matters
[153] We consider that it was open to Potter J to have taken the view that the filing of the amended statement of claim was an abuse of process. Any such amended pleadings should have been filed at the time of the hearing of the strike out application.
[154] It was also open to Potter J to have taken into account the delays in filing the proceedings after the alleged new evidence had come to light, particularly when the earlier proceedings had been abandoned. She relied on this to reinforce her conclusion (again one open to her) that Mr Shannon was merely trying to avoid the finalising of the substantive relationship property case.
Conclusion and costs
[155] The evidence Mr Shannon seeks to rely on is both not new and was reasonably discoverable at the time of the original hearing. This means that two of the requirements for an action to set aside a judgment on the grounds of fraud are not met and thus that the pleadings show no reasonable cause of action. In addition, even had those requirements been met, the evidence that Mr Shannon seeks to adduce (as described in the amended statement of claim) was not material and certainly not significant enough to convince us that Mr Shannon would have a reasonable prospect of success in his action. Further, the evidence does not meet the requirement that exists in perjury cases of being decisive. The evidence is essentially of the same nature as that produced at the original hearing and merely corroborates that earlier evidence. The pleadings should also be struck out as frivolous and vexatious and as an abuse of process.
[156] We thus consider (as did Potter J) that the fraud pleadings (both the original and amended statements of claim) do not disclose a reasonable cause of action and that they are an abuse of process. The appeal is therefore dismissed.
[157] Mr Shannon is to pay costs of $6,000 to Mrs Shannon plus reasonable disbursements, to be set by the Registrar in the absence of agreement.
Solicitors:
Wendy Galvin & Associates, Auckland for Appellants
Nola Dangen & Associates, Auckland for First Respondent
Phillips Fox, Wellington for Second Respondent
3
2
0