Snedden v Reid

[2018] NZHC 2976

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1159

[2018] NZHC 2976

BETWEEN

DAVID WARWICK SNEDDEN and BENJAMIN NESBIT SNEDDEN

Plaintiffs

AND

SUSAN LYNETTE REID

First Defendant

JASMINE HANAWY
Second Defendant

CHRISTINE LAGARDE

Third Defendant

Hearing:

15 November 2018

Counsel:

E Heaney for Plaintiffs

A M Cameron for First Defendant

No appearance for Second and Third Defendants J Cundy for Marie Dawson

Judgment:

16 November 2018

JUDGMENT OF WHATA J

This judgment was delivered by me on 16 November 2018 at 1.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:           TGT Legal, Auckland

Wilson McKay, Auckland

Lee Salmon Long, Auckland

SNEDDEN v REID [2018] NZHC 2976 [16 November 2018]

[1]    The matter comes before me as Duty Judge. The plaintiffs have made an application for Beddoe Orders. The application is due to be heard on 22 November. There is an issue of standing. I must necessarily deal with the present matter urgently.

[2]    The Beddoe application is one of many proceedings concerning the estate of Mr Gallais and the Gallais Family Trust (the Trust). The plaintiff trustees are executors under his will. The defendants are beneficiaries under the Will and the Trust. The object of the application is to obtain and use Trust funds in litigation commenced by Ms Dawson against the Trust.1 Ms Dawson claims to be Mr Gallais adopted daughter. She also claims, in short, the Trust is void, with the result that the Will is invalid. If so, she adds, Mr Gallais died intestate and she will be a primary beneficiary in intestacy. She also has a Family Protection claim against the Will.

[3]    Ms Dawson seeks to appear at the Beddoe application to oppose it. She says that if granted, Trust monies belonging to her will be diverted to pay for the litigation. In effect, she says she will be funding their case. The plaintiffs and the defendants oppose Ms Dawson’s involvement in the application, claiming that she has no standing to appear. They say any interest she has in the Trust is entirely contingent in fact and law.

Process

[4]    This matter initially came before Churchman J on 18 July 2018. It appears that he (or Judge Andrews in the Dawson proceedings) set down both the issue of standing and the Beddoe application to be heard on 15 October 2018. The hearing date was subsequently shifted to 22 November 2018. Recently however, the plaintiff trustees sought a pre-hearing ruling on whether Ms Dawson had standing. That was resolved by Lang J on 9 November 2018. He directed a separate hearing on the issue of standing. That is how it came to be before me. I was not content to hear the matter on the papers.

1      Dawson v Snedden CIV-2018-404-419.

Assessment

[5]    The parties could point to no local authority directly on point. Mr Cundy, however, refers a decision of Court of Appeal of Gibraltar in STG Valmet Trustees Ltd. That Court stated:2

Summary of the law

The effect of the authorities is to support the general proposition that the unusual and (as it may appear to some) arcane procedure of a Beddoe application survives in our law as a valuable facility for trustees, but the exercise of this specialised jurisdiction is subject to two guiding principles:

(a)Claimants to the trust fund, whether they be beneficiaries or strangers to the trust, should be allowed the maximum opportunity to be heard on the application consistent with the need to maintain confidentiality on matters which properly arise for consideration between the trustee and the Court alone.

(b)Orders that the trustee is to have his costs paid out of the trust fund in any event should be made sparingly, with due regard to the principles which apply to the analogous case of pre-emptive costs orders sought in the general jurisdiction.

[6]    Ms Heaney sought to distinguish this authority on the basis that it was dealing with a claim by a creditor against a Trust. She added that involvement of a third-party at a Beddoe application is unprecedented and in this case, is tantamount to enabling a hostile, otherwise disinterested, third party to make a pre-emptive strike against the Trust without any proper basis for doing so.

[7]    For my part, the observations made by the Court of Appeal, with respect, accord with the principles applying more generally to intervenor applications in this jurisdiction. As Thomas J said in Capital and Merchant Finance Ltd the underlying issue is whether it would be unjust to adjudicate on the matter in dispute without the intervener being heard.3 Relevant considerations include whether the intended intervenor’s legal rights against or liabilities in relation to the subject matter will be directly affected and whether s/he or it can rely on existing parties to protect their

2      STG Valmet Trustees Ltd v Brennan 4 ITELR 337 at 351.

3      Capital and Merchant Finance Ltd (in liq) v Perpetual Trust Ltd [2014] NZHC 3205; [2015] NZAR 228 at [41].

interests. Furthermore, the form of any intervention may be tailored to ensure that involvement of the intervenor is strictly in proportion to its interest in the proceedings.4

[8]    Does Ms Dawson have a direct legal interest or liability in relation to the subject matter of the proceeding interest in the proceedings? I am prepared to accept for argument’s sake that she has at least contingent interest in any Estate property – there is evidence that she was legally adopted by Mr Gallais. Problematically for her, as matters presently stand, the Trust holds no assets deriving from Mr Gallais’ estate that might presently be subject to a Beddoe Order. The corollary of all of this is that a Beddoe Order will have no direct legal effect on Ms Dawson. While the making of the Beddoe Order may assist the trustees in defending Ms Dawson’s claim against the Trust, it will not directly affect any of her existing legal interests or liabilities.

[9]    There is, however, an air of unreality to this analysis. The Executors of the Estate are also the Trustees of the Trust. They intend to lend the Trust the litigation funds. Inevitability, it appears, Estate funds will be diverted to the Trust litigation. A decision to decline standing will simply delay an inevitable challenge to a Beddoe order.

[10]   I have come to the view therefore that pragmatic approach is warranted. I am satisfied, in terms of rule 7.43A, that Ms Dawson has a sufficient contingent interest for the purpose for appearing, as a non-party, at the Beddoe application to make submissions only. I further direct that the appearance should be limited to one half hour only (which is the amount of time Mr Cundy said was needed to be heard) and subject to the confidentiality orders already in place.

[11]   As to timetabling, I expect the parties should be able to agree a timetable for exchange of submissions. Dispute about this is discouraged, but leave is granted to obtain further assistance from me if that proves necessary.

4      Wilson v Attorney General [2010] NZAR 509.

Costs

[12]   I reserve to the Judge hearing the Beddoe application any issue as to costs, including costs on the standing issue. In my view, the Judge hearing the application will have the best perspective on the merits of Ms Dawson’s interests in the Beddoe application and whether her attendance at the hearing was an unnecessary indulgence.