Stewart v Stewart
[2022] NZHC 263
•23 February 2022
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2020-454-5
[2022] NZHC 263
BETWEEN TIMOTHY DAVID STEWART
First Plaintiff
SIMONE SUSAN STEWART
Second PlaintiffTIMOTHY DAVID STEWART and
SIMONE SUSAN STEWART as litigation guardians for their four children
Third Plaintiffs
AND
DAVID ALAN STEWART
First Defendant
JAMES ROBERT STEWART
Second DefendantJANET DOROTHY STEWART
Third DefendantJOHN NAYLOR
Fourth DefendantDAVID ALAN STEWART, JANET DOROTHY STEWART, JAMES ROBERT STEWART and
JOHN NAYLOR as trustees of the Hiwinui TrustFifth Defendants
Hearing: 17 September 2021 Appearances:
R J B Fowler QC and D M Brabant for plaintiffs T C Stephens and G M Richards for defendants
Judgment:
23 February 2022
STEWART v STEWART [2022] NZHC 263 [23 February 2022]
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction
[1] This is an opposed application by the plaintiffs concerning the defendants’ discovery.
[2] The factual background is not especially complicated. The Stewarts are a Manawatu farming family. Their mixed farming operation involves significant landholdings in the area. Structurally, the farm involves the members of the family, three companies (Stewart Farms Ltd, Stewart Dairy Lands Ltd and Hiwinui Country Estate (2003) Ltd) and a trust (the Hiwinui Trust).
[3] The members of the family that presently have governance of the farming operation are David and Janet Stewart. They have three adult children, James Stewart, Timothy Stewart, and Julia Stewart.1 The case concerns the manner in which David and Janet have allegedly dealt with James and his wife, Deborah, on the one hand, and Tim and his wife, Simone, on the other hand.
[4] At the risk of oversimplifying things, Tim and Simone say that having regard to the contributions that Tim in particular has made to the family farming operation over many years, promises or undertakings David and Janet have made to him, and understandings within the family, David and Janet are obliged to make certain arrangements for his future and have failed to do so. That contention has generated no fewer than ten causes of action as pleaded in the most recent iteration of the statement of claim. This dispute has resulted in a deep schism in the family. David and Janet remain involved in the farming operation, as do James and Deborah, but Tim and Simone are now off the farm. Julia and her husband operate a related business, and seem to be one step removed from the dispute.
1 For convenience in the balance of this judgment I will use Christian names to refer to the members of the Stewart family which I trust this will not be interpreted as discourteous.
[5] Tim and Simone commenced this proceeding on 31 January 2021. All parties have provided standard discovery in terms of pt 8 of the High Court Rules. The current amended notice of application was filed and served by the plaintiffs on 13 August 2021.2 The plaintiffs say that the defendants’ discovery is inadequate in a number of respects.
[6]In their application the plaintiffs seek the following orders:
(a)either an order setting aside claims to privilege in respect of certain documentation or alternatively an order pursuant to which the Court would review examples of the documentation in respect of which privilege is claimed and determine the validity or otherwise of the claims;
(b)a sworn explanation as to the nature of any documentation that the defendants are saying they cannot discover because it has been disposed of;
(c)an order for the production of documentation that the defendants say is not relevant or an order requiring them to provide more details of such documentation and the basis upon which they contend it is not relevant to any issue in the proceeding;
(d)an order requiring the defendants to discover certain categories of documents that the plaintiffs say they (the defendants) have previously agreed were relevant, but have not discovered; and
(e)An order for discovery of additional categories of documentation that the plaintiffs say they expected to see but which have not been discovered.
2 The original notice was filed and served in July 2020. A second notice was filed and served in March 2021.
[7] Mr Fowler’s synopsis of submissions helpfully reduced the scope of the application, whilst at the same time appearing to signal that orders were sought that go beyond what was foreshadowed in the notice of application:
(a)first, he addressed the question of whether the defendant’s discovery to date complied with the High Court Rules concerning who may swear affidavits or make affirmations of documents. He noted that James, the second defendant, had sworn affidavits of documents on behalf of David, Janet and John Naylor, as well as on his own behalf and on behalf of the trustees. Mr Fowler submitted that that was not proper discovery, essentially because James was not, except as a result of what he might have been told by David, Janet or Mr Naylor, in a position to provide the important assurances that are integral to an affidavit of documents;
(b)second, he challenged claims to privilege made in respect of certain categories of documentation by the fifth defendants, the trustees of the family trust;
(c)third, he sought clarification on the plaintiffs’ behalves in relation to the documentation said no longer to exist because it had been disposed of in one way or another. This aspect of the application relates particularly to discovery by Mr Naylor;
(d)fourth, he questioned the way in which James, as the deponent, had assessed relevance. Essentially, the contention is that the evidence indicates that James’ assessment of relevance was not appropriate and that the Court could not be satisfied that discovery was complete.
(e)Finally, Mr Fowler identified categories of document that he said the defendants had accepted were discoverable but had not been discovered.
[8] The purpose of summarising the plaintiffs’ extant application, and Mr Fowler’s submissions, is to provide a foundation for addressing a submission made by Mr Stephens on behalf of the defendants that they were not obliged to deal with matters not properly within the scope of the application, which Mr Stephens put in this way:
56.This hearing is to determine an amended application. This application was first made in March 2021 following receipt of the defendants’ affidavit of documents and documents for inspection in December 2020.
57.The plaintiffs’ submissions and Ms Kelly’s affidavit raise a number of new matters that have not been raised by the plaintiffs previously in either their March 2021 application or their August 2021 amended application, or in correspondence.
58.The defendants should not have to respond to matters that are not the subject of the application that is before the Court, and to which they have not had a proper opportunity to respond.
[9] The particular aspects of the plaintiffs’ application as developed by Mr Fowler in his submissions that Mr Stephens submitted were raised for the first time in argument are:
(a)the contention that the affidavits of documents sworn by James on behalf of David, Janet and Mr Naylor are inadequate and that those three parties should be required to file their own affidavits of documents;
(b)the contention that the searches apparently undertaken for discovery purposes as described by James in his affidavits of documents are insufficiently broad and that the Court should direct a broader search; and
(c)the additional categories of discoverable documents that two deponents put forward as expert witnesses by the plaintiffs, Margaret Bilsland and Lorinda Kelly, say should exist but do not feature in the defendants’ discovery.
[10] Mr Stephens’ submission that the amended notice of application did not expressly address these three matters is clearly correct.
[11] The principles governing pleading — which, for these purposes, I take to include interlocutory applications — are essentially that they must give the other party a fair indication of the scope of the claim, defence, application or opposition, as the case may be. If they do not, and the other party is thereby prejudiced, then the Court must intervene to avoid injustice.
[12] I accept that the defendants did not have an opportunity to consider and respond to those three aspects of the application prior to the hearing, and that the Court is obliged either to dismiss them or to decline to deal with them immediately.
[13] I prefer the latter course. In part at least I do so because in my preliminary assessment there is some force in the submissions advanced on the plaintiffs’ behalves by Mr Fowler in these three areas, though, by definition, I have not, at this point, heard what the defendants say about them. In any event, I decline to deal with the aspects of the application identified at [9] above, but grant the plaintiffs leave to amend their application and pursue the same, should they elect to do so. I expect that they will only do so if counsel cannot resolve matters, having cooperated as they are of course obliged to do in relation to discovery.
[14] That leaves for determination the following aspects of the plaintiffs’ notice of application:
(a)the defendants’ claims to privilege;
(b)documentation already agreed to be discoverable; and
(c)the requested additional discovery (other the categories to which Ms Bilsland and Ms Kelly point).
The defendants’ claims to privilege
[15] The defendants have discovered a number of categories of documents in respect of which they claim privilege. For the most part these are claims by David and Janet in respect of communications between them and the family solicitors or between the family solicitors and third parties on their behalves, and the privilege claimed is legal professional privilege. The plaintiffs challenge a number of these claims to privilege, essentially on the basis that the documentation involved is in the possession or control of the trustees of the Hiwinui Trust and the trustees are not entitled to maintain privilege in relation to it against beneficiaries (Tim and Simone are discretionary beneficiaries).
[16] In their notice of application, the plaintiffs identified a total of 18 categories of documents. I understand that by the time the matter was argued, this list of categories had grown.
[17] In relation to this aspect of the application, Mr Fowler refers me to the leading cases as to the limited circumstances in which trustees may maintain privilege against beneficiaries: Burgess v Monk and Lambie Trustee Ltd v Addleman.3
[18] As Mr Fowler submitted, following these cases, the only (commonly encountered) circumstances in which a claim to privilege can be maintained by trustees against beneficiaries is where the documentation in question consists of legal advice provided to the trustees regarding contemplated or actual litigation between them and the beneficiaries, which of course is not a claim to legal professional privilege but a claim to litigation privilege.
[19] Mr Fowler’s analysis of the current state of the law in this area was not challenged by Mr Stephens on behalf of the defendants.
[20] Rather, Mr Stephens focussed on the nature of the documents sought, contending that, in virtually every case, these were exchanges between David and Janet on the one hand and the family solicitors on the other, or between the family
3 Burgess v Monk [2016] NZHC 527; and Lambie Trustee Ltd v Addleman [2021] NZSC 54.
solicitors and third parties on David and Janet’s behalves, in their personal capacities concerning their personal affairs as opposed to in their capacities as trustees of the Hiwinui Trust concerning the Trust’s affairs.
[21] The first category of documentation is epitomised by document HT00099. Mr Stephens submits that this is correspondence between the Stewart family solicitors, Fitzherbert Rowe, and Mr Naylor’s firm, Naylor Lawrence, which provides a copy of legal advice given by Fitzherbert Rowe to David and Janet. It is not advice to David and Janet Stewart in their capacities as trustees of the Hiwinui Trust and there is no basis to set aside the claim for privilege. The same submission is made in relation to HT00100; HT00107; HT00165; HT00183; HT00206; and HT00214.
[22] There is no evidence that casts any doubt on what is said in relation to these categories of documents, and I am not prepared to make any order in relation to them.
[23] In relation to the documentation identified as HT00184, Mr Stephens’ submission is that this is correspondence between Fitzherbert Rowe and Naylor Lawrence with respect to the provision of advice concerning Stewart Dairy Lands Ltd. It is not advice to the trustees of the Hiwinui Trust and therefore there is no basis to set aside the claim for privilege. The same submission is made in relation to HT00185; HT00186; HT00202; HT00203; HT00204; HT00217; HT00357. The mere fact that these categories of correspondence relate to one of the farms is not an obvious basis for a claim to privilege. The Stewart companies are not themselves parties to this litigation. Plainly they are relevant in some way to the issues between the parties, or they would not have been identified at all. I propose to order the defendants to discover them.
[24] Finally, HT00758 and HT00854 are said to be correspondence between the defendants and their solicitors in which they received advice in relation to this proceeding after it had been commenced. There is no evidence raising any doubt as to this claim for privilege (litigation). I am not prepared to make any orders in relation to it.
Documentation that the parties have already agreed is discoverable
[25] The second category of documentation in respect of which the plaintiffs seek further discovery is referred to in their notice of application as documentation that the defendants have previously agreed is discoverable.
[26] In relation to this material, there would appear to be something of a disconnect between the plaintiffs’ and defendants’ as to what has and has not been discovered, as the defendants’ response in relation to most of this documentation is that it has already been discovered.
[27] At paragraph 6(a) the plaintiffs seek discovery of a deed of resettlement dated 18 January 2001. The defendants say that this document was discovered as HT00921. I accept that, and there is therefore no need for an order.
[28] At paragraphs 6(b) and (c) the plaintiffs seek discovery of accounting records for Stewart Farms Ltd and Stewart Dairy Lands Ltd. The defendants say that the formal financial statements for the relevant periods of time have been discovered. They acknowledge that they have not discovered the source documentation, by which I expect they are referring to invoices, vouchers and the like. Mr Stephens submits that on the face of the pleadings that source material is irrelevant because it is reflected in the formal statement of account. I agree. In any event, my view is that it would be disproportionately burdensome to order the defendants to discover all such source material. I decline to make the order sought.
[29] At paragraphs 6(d) and (e) the plaintiffs seek financial and accounting records for Tim’s current account and invoices in respect of legal and accounting services debited against his account. The defendants’ response is that this material has already been discovered and they have provided relevant references. I accept that, and there is therefore no need for an order.
[30] In paragraph 6(f) the plaintiffs seek discovery of a file note that the defendants have now indicated has been located though not previously disclosed. The defendants’ response is that they have already discovered a copy of this and they have provided appropriate references. I accept that, and there is therefore no need for an order.
The application for additional discovery
[31] This application is made pursuant to r 8.19 of the High Court Rules 2016, which provides:
8.19Order for particular discovery against party after proceeding commenced
If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—
(a)to file an affidavit stating—
(i)whether the documents are or have been in the party’s control; and
(ii)if they have been but are no longer in the party’s control, the party’s best knowledge and belief as to when the documents ceased to be in the party’s control and who now has control of them; and
(b)to serve the affidavit on the other party or parties; and
(c)if the documents are in the person’s control, to make those documents available for inspection, in accordance with rule 8.27, to the other party or parties.
[32] The principles governing the application of the rule are well settled. The starting point is a presumption that affidavits of documents, properly sworn, filed and served, are conclusive, so that the burden is on a party seeking further discovery to establish that the existing affidavit is incomplete.4 Relevance is the fundamental test as to whether documentation is discoverable, and this is assessed by reference to the pleadings. This requirement imposes a discipline on applications, ensuring that they do not descend into fishing expeditions. The questions that need to be addressed were reconfirmed relatively recently in Assa Abloy v Allegion (NZ) Ltd:5
(a)Are the documents sought relevant, and if so, how important will they be?
4 McCullagh v Robt. Jones Holdings Ltd [2015] NZHC 1462, (2015) 22 PRNZ 615 at [7] citing
Jones v The Monte Video Gas Co (1880) 2 QBD 556 (CA).
5 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760.
(b)Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that inference?
(c)Is discovery proportionate, assessed in accordance with pt 1 of the discovery checklist in the High Court Rules?
(d)Weighing and balancing these matters, in the Court’s discretion and applying r 8.19, is an order appropriate?
[33]At paragraph 7(a) the plaintiffs seek discovery of:
Succession planning documents of Dave Stewart, Jan Stewart and James Stewart since 1992 whether superseded or not including but not limited to:
(i)Wills;
(ii)Memoranda of wishes;
(iii)Documents arising from or concerning succession planning;
(iv)Documents and email communications on the topic including solicitor’s correspondence.
[34] The plaintiffs have not made specific submissions in relation to this category of documentation.
[35] The defendants contend that on the pleadings this category of documentation is irrelevant, especially insofar as James is concerned, as there is no allegation to the effect that he has breached any obligations to Tim. However, the defendants say that all memoranda of wishes have in any event been discovered and that otherwise this category of documentation includes exchanges between David and Janet with their solicitors in respect of which they are entitled to maintain privilege.
[36] In my view, the defendants are obliged to discover all wills and memoranda of wishes of David and Janet. Whilst these may attract confidentiality, they do not attract privilege. On the other hand, correspondence involving advice as between David and Janet and their solicitors may attract legal professional privilege. I accept the contention that insofar as James is concerned that this category of documentation is irrelevant to any pleaded issue. The correct course seems to be to make an order that
David and Janet discover documentation in this category, making whatever claims to privilege in relation to the same that they may be in a position to make.
[37]At paragraph 7(b) the plaintiff seek discovery of:
Arrangements or transaction between the entities in which the Defendants have an interest for the tax years ended 31 March 2008 to 31 March 2021 (inclusive) including but not limited to:
(i)Loans;
(ii)Securities;
(iii)Subvention payments;
(iv)Shareholders’ loans or advances between entities.
[38] The plaintiffs say that, being discretionary beneficiaries, they are entitled to any documents that fall into this category that are in the power or possession of the trustees of the Hiwinui Trust.
[39] The defendants submit that they have discovered the Hiwinui Trust financial material from its inception and that above and beyond that the request is too broad seeking as it does financial and related information for all entities in which the defendants have an interest.
[40] In my judgement, an order in the terms sought by the plaintiffs would require the defendants to discover financial information about entities that may potentially have no connection at all with this litigation. I would be prepared to make an order to the effect that the defendants provide discovery of documentation in this category for the Hiwinui Trust and the three Stewart Farming Companies. However, the defendants’ position is that they have already provided discovery of that material, and there is no evidence suggesting that that is not the case. Accordingly, I decline to make any order in relation to this aspect of the application.
[41]At para 7(c), the plaintiffs seek an order that the defendants discover:
Bankers notes for all securities and loan agreements by Stewart Farms Limited and for any financing by Stewart Dairy Lands Limited involving security over land held by Stewart Farms Limited and all bankers notes regarding succession or the position and interests of Timothy Stewart.
[42] The plaintiffs have made no specific submission in relation to this category of documentation.
[43] The defendants’ submission is that they do not have possession or control of the bank records identified.
[44] In my assessment the defendants would be entitled to call for the banking records in relation to any banking accounts held by them or the Stewart farming entities over the years. It is true that the plaintiff may well be able to gain access to this material by other means, but discovery by the defendants appears to me to be the most obvious route. I propose to direct that the defendants discover banking records within this category of documentation.
[45]At para 7(d) and (e) the plaintiffs seek discovery of:
(d)Correspondence, file notes and other documents including solicitors’ correspondence relating to the General Security Agreement dated 21 May 1999 (HT 00046) pursuant to which Stewart Farms Limited guaranteed the National Bank loan to Stewart Dairy Lands Limited.
(e)Correspondence, file notes and other documents including:
(i)All solicitors’ correspondence relating to the Deed of Acknowledgement of Debt dated 24 May 1999 between David Stewart, Janet Stewart and John Naylor as lenders and Stewart Dairy lands as borrower (HT 00047);
(ii)The share transfer of 1 A share in in Stewart Farms Limited from David Stewart to Timothy Stewart (HT00048);
(iii)The appointment of Timothy Stewart as Director of Stewart Farms Limited (00049);
(iv)The Deed of Re-settlement dated 18 January 2001 which resulted in the transfer of 14850 B shares from Janet Stewart and Anthony Finnigan to David Stewart, Janet Dorothy Stewart and John Naylor dated 18 January 2001.
[46] It is unnecessary to deal with these two aspects of the application because the relevant documentation has been destroyed and the parties have apparently agreed on how to deal with non-existent documentation.
[47]At para 7(f) the plaintiffs seek discovery of:
Correspondence, file notes and other documents including solicitor’s correspondence relating to the Farm Business Plan prepared by Wilson Keeling dated January 2003 (HT00068), including, but not limited to:
(i)the letter dated 23 July 2003 from Wilson Kelling to Dave and Jan Stewart; and
(ii)the proposal to purchase the Coombs property in the Pohangina Valley;
(iii)Correspondence, file notes and other documents including solicitor’s correspondence relating to re-organisation of the properties anticipated by the letter dated 30 September 2005 from Fitzherbert Rowe to the National Bank (HT 00089) and the draft share transfers numbered HT00090 to HT000098, HT00101 to HT00105, the appointment of James Stewart as Trustee of the Hiwinui Trust (HT00112).
[48] My understanding is that it is agreed that this category of documentation has been discovered.
[49]At para 7(g) the plaintiffs seek discovery of:
Correspondence, file notes and other documents including solicitor’s correspondence relating to the share transfers recorded in the letter from Naylor Laurence to Dave and Jan Stewart dated 1 May 2008 (HT00129).
[50] The plaintiffs have made no specific submission in relation to this category of documentation.
[51] The defendants’ submission is that the letter specifically identified in this category of documentation refers to share transfers from David and Janet Stewart (concerning shares they held personally) to James and Timothy Stewart.
[52] It is not obvious to me the sense in which that is an objection to discovery of the letter. The defendants go on to say that any other documentation is material in respect of which they are entitled to claim privilege. The appropriate response appears to be to make an order for discovery of the documentation in this category, recognising that the defendants may be entitled to claim privilege in respect of aspects of it.
[53]At para 7(h) the plaintiffs seek discovery of:
Correspondence, file notes and other documents including solicitor’s correspondence, advice, relating to the Deed of Appointment of Trustee dated 3 November 2008 (HT00146) pursuant to which James Stewart was appointed as Trustee of the Hiwinui Trust.
[54] The plaintiffs’ submission in relation to this category of documentation is that as beneficiaries of the trust they are entitled to the same.
[55] The defendants’ position is that all documentation in this category that still exists has already been discovered.
[56] I can see no evidential basis for concluding that the defendants’ discovery in this category of documentation has been inadequate. I decline to make any order.
[57]In para 7(i) the plaintiffs seek discovery of:
Correspondence, file notes, and other documents including solicitor’s correspondence relating to:
(i)the change of shareholding and directorships in all the Stewart companies anticipated by the Deed of Acknowledgement of Debt and partial forgiveness of loan (HT00166 and HT 00167);
(ii)Deed of Distribution (HT00168) Registration of Director (HT00169 00170, resolutions HT00171, 00172, 00173, 00174, 00175; and
(iii)share transfers HT00176 to 00187.
[58] The plaintiffs have made no specific submission in relation to this category of documents.
[59] The defendants’ position is essentially that all documents have been discovered, though claims to privilege have been made in relation to some.
[60] On the evidence, there seems to be no reason to question that. I am not prepared to make an order in relation to this category of documents.
[61]At para (j) the plaintiffs seek discovery of:
All file notes and all other documents which relate to the Triple Jump Limited engagement regarding estate and ownership planning plan dated 12 September 2011, including but not limited to:
(i)All documentation produced in respect of the terms of engagement with Triple Jump Limited and the scope of their engagement;
(ii)Minutes of meetings taken by Triple Jump Limited during their engagement with the Plaintiffs and Defendants;
(iii)Interview notes and files notes of meetings and telephone calls with the Plaintiffs and the Defendants;
(iv)All correspondence with Triple Jump and the Defendants regarding their engagement including the provision of draft reports for approval.
[62]The plaintiffs seek discovery of this documentation.
[63] The defendants’ contention is that they have discovered the Triple Jump report and that they do not have any further documentation which is relevant, discoverable and not privileged.
[64] It is not obvious to me the basis for any claim for privilege in relation to material connected with arrangements between parties and Triple Jump Ltd. Of course, to the extent that the defendants engaged their solicitors, there may be scope for claims to privilege. The appropriate course seems to me to make an order that the defendants discover the documentation in this category, subject to claims to privilege of course.
[65]At paragraph 7(k) the plaintiffs seek discovery of:
Correspondence, file notes and other documents including solicitor’s correspondence relating to:
(i)The Deed of Transfer of shares and transfer of shares (HT00328, 00361, 00366, 00368, 00369, 00371, 00372, 00375) Consent of Debbie Stewart to be director of Stewart Farms Limited (HT00359 00360);
(ii)Resignation of Jan Stewart as director of Stewart Farms Limited (HT 00365) company resolutions (HT00329, 00331, 00333, 00376, 00377, 00379);
(iii)Resolution of the Trustees of the James Stewart Family Trust (HT00378) and Term Loan Agreement dated 22 October 2014 pursuant to which Dave Stewart lends $1m to James and
David Stewart as Trustees of James Stewart Family Trust (00367); and
(iv)Purchase security agreement (HT00370,) all dated on or about 22 October 2014.
[66] The plaintiffs’ say that they are entitled to this information because it consists of documentation within the possession or power of the trustees of the Hiwinui Trust.
[67] The defendants say first that the documentation identified in para 7(k)(iii) is not documentation in the power or possession of the trustees of the Hiwinui Trust. Over and above that, they say that all the documentation in this category has been discovered subject only to claims to privilege.
[68] The privilege is based on the contention that the documentation is question was provided to David and Janet in their personal capacities as opposed to their capacities as trustees of the Hiwinui Trust. I can see no evidential foundation for doubting the position adopted by the defendants. I decline to make any order in relation to this category of documents.
[69]In paras 7(l)–(n), the plaintiffs seek:
(l)correspondence, file notes and other documents including solicitor’s correspondence relating to the Memorandum of Wishes (HT00374) dated 22 October 2014.
(m)correspondence, file notes and other documents including solicitor’s correspondence relating to the ANZ refinance in or about February/March 2015 contained at HT003942 to HT00410.
(n)In the shareholder resolution anticipated by the Director’s Resolution of Stewart Farms Ltd dated 9 March 2015 (HT00410).
[70] The plaintiffs have not any specific submissions in relation to any of these documents in any of these categories.
[71] The defendants’ contention is that they have discovered all documentation in these categories and I can see no foundation for doubting this.
[72] I decline to make any order in relation to these categories of documents as there is no evidence raising a doubt about the reliability of the defendants’ discovery.
[73]At para 7(o) the plaintiffs seek:
Correspondence, file notes and other documents including solicitor’s correspondence relating to Deed of Transfer of Part of Loan (HT00411) Deed of Appointment of Beneficiaries of the James Stewart Family Trust, (HT00412) Deed of Appointment of Beneficiaries of the Timothy Stewart Family Trust (HT00413) and Deed of Appointment of Beneficiaries of the Julia Stewart Family Trust (HT00418).
[74] The plaintiffs’ submission is that they are entitled to this documentation in their capacities as discretionary beneficiaries of the Hiwinui Trust.
[75] The defendants say that the documentation in this category is not documentation in the possession or power of the trustees of the Hiwinui Trust. Otherwise they say they have discovered all relevant and discoverable documentation, subject to justify claims to privilege.
[76] I am not aware of any evidence casting doubt on the adequacy of discovery in relation to this category of documentation and I decline to make the order sought.
[77]At para 7(p) the plaintiffs seek discovery of:
Correspondence, file notes and other documents including solicitor’s correspondence relating to Stewart Farms Limited sale of land to Hiwinui Country Estate (2003) Limited (HT00414 and HT00415).
[78] The plaintiffs have made no specific submission in relation to this category of documents.
[79] The defendants say that they provided further discovery on 27 August 2001 in relation to this transaction and that they have discovered all relevant documentation subject only to legitimate claims to privilege.
[80] I have no reason to question the defendants’ position in relation to this and decline to make the order sought.
[81]At para 7(q) the plaintiffs seek discovery of:
The General Security Agreement provided by Stewart Farms Limited in favour of Stewart Dairy Lands Limited referred to in the letter from Fitzherbert Rowe to ANZ dated 10 March 2015.
[82] The plaintiffs have made no specific submission in relation to this category of documentation.
[83]The defendants say they have discovered this document at HT00406.
[84]I decline to make any order in relation to this category of documents.
[85]In para 7(r), the plaintiffs seek discovery of:
Correspondence, file notes and other documents including solicitor’s correspondence relating to Memorandum of Wishes (HT00469) dated 30 March 2015.
[86] The plaintiffs made no specific submissions in relation to this category of documentation.
[87] The defendants’ submission was effectively that they do not have within their possession or power any documentation in this category that has not already been discovered (whether as open documentation or documentation in respect of which they are entitled to claim privilege).
[88] I am not prepared to make an order for discovery in relation to this category of documentation.
[89]In paragraph 7(s) the plaintiffs seek discovery of:
File notes and any other documents which relate to the discussion referred to in an email from John Naylor to Jan Stewart dated 11 March 2019 (HT000657) and Jan Stewarts email to James and Debbie of 11 March 2019 (HT00658).
[90] The plaintiffs made no specific submissions in relation to this category of documentation.
[91] The defendants say that they have discovered all documentation in this category (whether open or privileged).
[92] I am not prepared to make an order in relation to this category of documentation.
[93]At para 7(t) the plaintiffs seek discovery of:
Correspondence, including but not limited to: file notes and other documents including solicitor’s correspondence which relates to the ANZ finance anticipated by email correspondence from ANZ to Debbie Stewart dated 17 October 2018 (HT00630) and from Debbie Stewart to the ANZ dated 2 November 2018 (HT00641).
[94] The plaintiffs have made no express submissions in relation to this category of documents.
[95] The defendants say that this category of documentation relates to specific borrowing by two of the Stewart farming companies which are not parties to this litigation, and they say that this category of documentation is irrelevant.
[96] It appears to me that on the pleadings virtually any financial dealing by the Stewart Farming entities may have some relevance. I propose to order that the defendants discover any documentation within this category.
[97]The applications set out in paras 7(u) and 7(v) are not pursued.
[98]In para 7(w) the plaintiffs seek:
Financial and accounting records for the tax year ended 31 March 2007, particularly those related to: Tim’s Current Account $312,403 was transferred from Stewart Farms to Hiwinui Trust, and the same transaction occurred between James and Debbie’s current account in Stewart Dairy Lands and Hiwinui Trust.
[99]This duplicates the application made in 7(d) and has already been dealt with.
[100]At para 7(x), the plaintiffs seek discovery of:
In respect of Timothy Stewart’s current account attributed to Timothy Stewart’s current account for the tax years ended 31 March 2002 to 31 March 2021, including but not limited to:
(a)All journal entries,
(b)Source documentation for transactions including but not limited copies of all accounting and legal invoices, invoices for repairs and maintenance to the accommodation, and
(c)Ledger entries.
[101] The plaintiffs do not say why they say it is necessary to secure discovery of the source documentation for Mr Timothy Stewart’s current account for nearly 20 years when they have the formal accounting record reflecting all such documentation.
[102] The defendant’s submission is that this application would place on them an unnecessary burden and that it is by no means obvious that anything would be achieved.
[103] For the same reasons as I outlined in relation to the plaintiffs’ application in their paras 6 (b) and (c) I am not prepared to make an order for the discovery of the source documentation for Timothy Stewart’s current account for the years in question.
[104]That deals with the three live issues identified above.
The Bilsland and Kelly affidavit evidence
[105] Although this judgment does not deal with the categories of documentation addressed by Margaret Bilsland and Lorinda Kelly in their affidavit evidence, it may be helpful to address the issue of the status of their affidavits.
[106] Both Ms Bilsland and Ms Kelly are well qualified and experienced chartered accountants, and both offer opinion evidence. The broad sweep of their evidence is that from an accounting perspective there are categories of documentation that they would have expected to see in discovery but which are not there. Thus, their evidence is relied upon by the plaintiff to overcome the burden discussed at [32].
[107] The defendants challenge the admissibility of Ms Bilsland’s affidavits, and raise consequential issues as to the degree of reliance that the Court can place on Ms Kelly’s affidavit.
[108]Taking my lead from counsel, I do not propose to go into these issues in depth.
[109] The objection raised to the admissibility of Ms Bilsland’s affidavits (there are two, dated 30 March and 14 May 2021) boil down to a contention that she is not independent and that her evidence is unreliable.
[110] First, in her first affidavit Ms Bilsland did not refer to the Code of Conduct for Expert Witnesses contained in the fourth schedule to the High Court Rules, and nor did she aver that she was familiar with and prepared to comply with the same. By the time she swore her second affidavit, this oversight, if that is what it was, had obviously become apparent, and she referred to and swore that she was prepared to adhere to those rules.
[111] There is no suggestion that Ms Bilsland set out in any way to deceive, and, in any event, no evidence that would support any such suggestion. But, nor should strict compliance with the requirements imposed on expert witnesses be treated as unimportant — the courts rely heavily on expert evidence in relation to technical matters, and must be able to have complete confidence in their independence. Compliance with the procedure is a critical part of that.
[112] I would not be inclined to exclude Ms Bilsland’s affidavits merely because of her failure to refer to the fourth schedule in the first of these.
[113] However, there is a further point raised by Mr Stephens on behalf of the defendants. Up until recently, counsel for the defendants has been Mr John Maassen. The impression I have is that Mr Maassen may yet expect to play a role. I am informed that Mr Maassen and Ms Bilsland are husband and wife. Ms Bilsland has said in her most recent (third) affidavit that this did not influence her evidence, and that both prior affidavits complied with the Code. In a memorandum filed and served prior to the hearing Mr Maassen has offered some further explanation as to how this all unfolded.
[114] In my view, the fact that Mr Maassen and Ms Bilsland are married does not necessarily mean that there is any conflict of interest. I am prepared to accept that, in such a situation, both parties, as professional people, are capable of putting their domestic connection to one side, and I do not doubt that Mr Maassen and Ms Bilsland have attempted to do just that.
[115] A final point is that Mr Maassen and Ms Bilsland are apparently acquainted socially with Simone’s parents, seemingly rather fleetingly.
[116] I would have thought it elementary that in circumstances such as this for both counsel and the witness to ensure that the other parties to the proceeding and the Court were fully and fairly informed of all these circumstances, so as to give them an opportunity to raise any concerns that they might have.
[117]The fact that these things were not disclosed is unsatisfactory.
[118] However, I do not necessarily take it from any of this that Ms Bilsland’s evidence is fatally tainted, and, at least for the purposes of dealing with this interlocutory application, I would be prepared to consider her evidence and that of Ms Kelly who appears to have been brought in at a late stage to bolster Ms Bilsland’s evidence because of the concerns raised about it.
Outcome
[119] Following the hearing of this matter on 17 September 2021, under cover of a minute dated 21 December 2021, I sent this judgment (down to paragraph [118]), in draft form, in order to get counsel’s confirmation that I had covered all necessary matters and not dealt with matters that the Court was not required to deal with.
[120] Regrettably, as a result of the holiday period, counsel were unable to come back to me until relatively recently. I then received memoranda from both Mr Fowler and Mr Richards earlier in February 2022 indicating that they were close to agreeing as to the necessary orders.
[121] I convened a teleconference on 22 February 2022, during which counsel indicated that they had resolved all outstanding matters and sought consent orders essentially in line with my draft judgment but dealing also with matters that that judgment could not deal with.
[122]By consent I make orders for discovery set out in the schedule hereto.
[123] This matter is currently set down for a 10-day trial commencing on 2 May 2022 in the High Court at Palmerston North. Counsel are agreed that, having regard to the need for further interlocutory steps, that fixture will have to be vacated.
[124] Counsel are of course well aware of the inconvenience that this will cause to scheduling, and the risk that a trial may be delayed for some time. I accept however from Mr Fowler and Mr Steven that there is no alternative in the circumstances, and that it would be unjust to force the parties to trial prior to such matters as discovery being dealt with. I have indicated to counsel that I will ask the Registrar to do what can be done to ensure that the delay in allocating an alternative fixture is minimised.
[125]By consent I make the following orders or directions:
(a)the defendants are to provide discovery of the documents referred to in the Schedule to this judgment by 15 March 2022;
(b)the plaintiffs are to file and serve any amended application relating to discovery by 31 March 2022;
(c)the defendants are to file and serve any notice of opposition by 14 April 2022;
(d)the Registrar is to liaise with counsel with a view to allocating a half-day hearing as soon as possible after 1 May 2022 to determine any such application;
(e)the 10-day trial commencing 2 May 2022 in Palmerston North registry is vacated. The Registrar is to liaise with counsel with a view to arranging an alternative fixture either in Wellington or Palmerston North;
(f)the following timetabling directions for the trial are to apply:
(i)the plaintiffs are to serve their briefs of evidence and draft common bundle index (for including in the electronic casebook) 13 weeks prior to trial;
(ii)the defendants are to serve their briefs of evidence and propose additions to the common bundle seven weeks prior to trial;
(iii)the plaintiffs are to serve any reply briefs of evidence four weeks prior to trial;
(iv)the plaintiffs are to file and serve the electronic casebook for the hearing four weeks prior to trial;
(v)the plaintiffs’ opening and chronology are to be served three working days prior to trial;
(vi)the parties have leave to come back to the Court by memorandum in relation to any of the above orders or directions, should that be necessary.
[126] Costs are reserved. This is a case in which costs may prove more complicated than is usually the case. I will leave it to counsel to liaise in relation to these. If it becomes necessary, they may come back to the Court in relation to costs by memorandum in the usual way.
Associate Judge Johnston
Solicitors:
Wadham Partners, Palmerston North for plaintiffs Fitzherbert Rowe, Palmerston North for defendants
SCHEDULE
1.Category 1 — Documents HT 00184; HT00185; HT00186; HT00202; HT00203; HT00204; HT00217; and HT00357.
2.Category 7(a) — subject to the identification of any privilege claims that may arise, succession planning documents of David Stewart and Janet Stewart since 1992 whether superseded or not including but not limited to:
(a)wills;
(b)memoranda of wishes
(c)documents arising from or concern succession planning;
(d)documents
3.Category 7(c) — Bankers notes for all securities and loan agreements by Stewart Farms Ltd and for any financing by Stewart Dairy Lands Ltd involving security over land held by Stewart Farms Ltd and all bankers notes regarding succession or the position and interests of Timothy Stewart.
4.Category 7(g) — Subject to privilege claims, correspondence, file notes and other documents including solicitor’s correspondence relating to the share transfers recorded in the letter from Naylor Lawrence to David and Janet Stewart dated 1 May 2008 (HT00129),
5.Category 7(j) — All documents sought relating to the Triple Jump Ltd engagement as specified in category 7(j) of the application, subject to claims to privilege.
6.Category 7(t) — all correspondence and other documents as specified in category 7(t) of the application relating to the ANZ finance anticipated by documents HT00630 and HT00641.
0
4
0