Strachan v Denbigh Property Limited HC Palmerston North CIV-2010-454-232

[2010] NZHC 2367

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2010-454-232

IN THE MATTER OF     the Companies Act 1993

BETWEEN  ELIZABETH GRACE STRACHAN Plaintiff

ANDDENBIGH PROPERTY LIMITED Defendant

Hearing:  29 November 2010

Appearances:              R.A. Moodie - One of the Intervening Shareholders

P. Churchman - Counsel for Plaintiff

Reasons for Judgment:          30 November 2010 at 3.30 pm

REASONS FOR JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge D.I. Gendall dated 30 November

2010 at 3.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Rainey Collins, Solicitors, PO Box 689, Wellington

Moodie & Co, Solicitors, PO Box 376, Feilding 4740

EG STRACHAN V DENBIGH PROPERTY LIMITED HC PMN CIV-2010-454-232  30 November 2010

Introduction

[1]      On 26 November 2010 the plaintiff applied to this Court for orders:

(a)That  counsel  for  the  intervening  shareholders  Mr  RA  Moodie  be prohibited by order of this Court from acting as counsel in this matter.

(b)Alternatively  that  the  affidavit  evidence  of  Mr  RA  Moodie  also solicitor  and  counsel  for  the  intervening  shareholders  dated  15

November  2010  be  removed  from  the  record  of  the  Court  and prohibited from being read or relied on at the substantive hearing on 2

December 2010.

[2]      This application was supported by a memorandum from Mr Churchman, counsel for the plaintiff, also dated 26 November 2010.      That          memorandum suggested  that  this  matter  might  be  dealt  with  by  way  of  urgent  telephone conference.   I directed the Registrar to convene an urgent teleconference of the parties and this took place on 29 November 2010.

[3]      At the telephone conference hearing of this matter, it was confirmed that the plaintiff’s application was opposed by the intervening shareholders and by Mr RA Moodie in particular.

Background and Submissions of the Parties

[4]      The 26 November 2010 memorandum from Mr Churchman, counsel for the plaintiff, stated that on 18 November 2010 he had received a substantial affidavit sworn by Mr RA Moodie dated 15 November 2010 and three large volumes of attachments.

[5]      Mr Churchman referred to r 13.5.1 of the Lawyers & Conveyancers Act

(Lawyers: Conduct and Client Care) Rules 2008 (“the rules”) which provides:

Independence in Litigation

13.5      A  lawyer  engaged  in  litigation for  a  client  must  maintain  his  or  her independence at all times.

13.5.1    A lawyer must not act in a proceeding if the lawyer may be required to give evidence of a  contentious nature (whether in person or by affidavit) in the matter.

13.5.2    If,  after  a  lawyer  has  commenced  acting  in  a  proceeding,  it becomes apparent that the lawyer or a member of the lawyer’s practice is to give evidence of a contentious nature, the lawyer must immediately inform the court and, unless the court directs otherwise, cease acting.

13.5.3    A lawyer must not act in a proceeding if the conduct or advice of the lawyer or of another member of the lawyer’s practice is in issue in the matter before the court.   This rule does not apply where  the  lawyer  is  acting  for  himself  or  herself,  or  for  the member of the practice whose actions are in issue.

13.5.4    A lawyer must not make submissions or express views to a court on any material evidence or material issue in a case in terms that convey or appear to convey the lawyer’s personal opinion on the merits of that evidence or issue.

[6]      The grounds advanced by the plaintiff in support of her present application are that Mr RA Moodie is acting as barrister and solicitor for the Moodie Family Trust (his client) as intervening shareholders in this matter and his substantial 15

November 2010 affidavit purports to give evidence the majority of which is in contention between the parties.  As a result it is suggested that while remaining as counsel, Mr Moodie is in clear breach of r 13.5.1 noted above.

[7]      In his submissions, Mr Churchman for the plaintiff went on to refer to the Supreme Court decision in Vector Gas v Bay of Plenty Electricity Limited (2010) NZSC 5. There, three of the five Supreme Court Justices commented on the inappropriateness of counsel acting in cases where they had personally been involved with the questions to be determined or drafted the documents in issue. Wilson J at [146] onwards commented that counsel should not appear in litigation where they have been personally involved in the matters which are being litigated and McGrath J at [99] and Tipping J at [51] confirmed a similar approach that counsel should not appear where they have been “personally involved in matters in issue”.

[8]      Whilst counsel for the plaintiff has rightly drawn the attention of the Court and the intervening shareholders to the provisions of r 13.5.1 and the Vector Gas decision, in my view to a certain extent these do not apply in the present case.  As I

see the position, Mr R.A. Moodie, as a trustee of the Moodie Family Trust, the intervening shareholder  is entitled to act for himself here, effectively as a self- represented litigant in his capacity as one of the trustees.

[9]      As such, I take the view that he is not “acting in the proceeding as a lawyer”, or in terms of r 13.5 “engaged in litigation for a client”, but instead is acting as a self-represented litigant.  It follows therefore that in acting on his own behalf, he is entitled to provide evidence by way of affidavit or otherwise, to test the opposing parties arguments and to make submissions.   The prohibition in r 13.5.1 does not apply here.

[10]     Before me, Mr Churchman for the plaintiff contended that Mr R.A. Moodie was not acting for himself but was in fact acting on behalf of the Moodie Family Trust which in Mr Churchman’s words is “a separate legal entity”.   On this last point, with respect, I disagree.   A trust is clearly not a separate legal entity.   As Potter J noted in Ellison v Scott High Court Tauranga, 19 August 2010, CIV-2009-

470-1153 at para [19] and [20]:

[19]       Garrow and Kelly[1]states:

[1] NC Kelly, C Kelly and G Kelly Garrow and Kelly: Law of Trust and Trustees (6th ed, LexisNexis, Wellington 2005) at [1.4.3].

... the correct legal categorisation is that a trust is a “fiduciary relationship”

– not an entity in its own right.  In other words the trustees hold property in their own names but subject to the rights of the beneficiaries ...

[20]       In NZHB Holdings Ltd v Bartells Baragwanath J said:[2]

Recent experience in more than one case suggests that the concept of trust is used more often than it is understood. Unlike a company or incorporated society a  “trust” is  not  a  legal  person recognised as  distinct  from the humans who direct their affairs.  On the contrary, trustees can contract only in their own right; either they do so and are personally liable to the extent provided by the ordinary law which the agreement may modify or there is no agreement at all.

[2] NZHB Holdings Ltd v Bartells (2005) 5 NZCPR 506 (HC) at [34].

[11]     In the present case I am satisfied that Mr Moodie can appear and act for himself as one of the trustees of the Moodie Family Trust.  So far as the other trustee is concerned, this is his wife.  Technically speaking he should not act on her behalf

in light of the provisions of r 13.5.1 but in my view the interests of Mr and Mrs Moodie as trustees are effectively the same and it adds little here to note that he may also be representing her interests as a joint trustee.

[12]   It follows therefore that Mr Moodie can act for himself in this matter notwithstanding the 15 November 2010 affidavit he has filed.

[13]     I  confirm  the  order  made  on  29  November  2010  that  the  plaintiff’s application to this Court seeking an order for Mr Moodie to be prohibited from acting in this matter is therefore dismissed.

[14]     Similarly,  given  that  Mr  R.A.  Moodie  has  filed  the  15  November  2010 affidavit effectively as a self-represented litigant in this proceeding there is no basis for it to be removed from the Court record nor should the Court be prohibited from reading it at the substantive liquidation hearing to take place on 2 December 2010.  I confirm also that the application to that effect by the plaintiff similarly is dismissed.

‘Associate Judge D.I. Gendall’