Taylor v Vernon
[2023] NZHC 3445
•30 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1350
[2023] NZHC 3445
BETWEEN DIANNE FAYE TAYLOR
Plaintiff
AND
SCOTT FRANCIS VERNON
First Defendant
SCOTT VERNON and HORIZON HURSTMERE TRUSTEE LIMITED
as trustees of the SCOTT FR TRUST Second Defendants
SCOTT VERNON and HORIZON HURSTMERE TRUSTEE LIMITED as
trustees of the HORIZON HURSTMERE TRUST
Third Defendants
HORIZON THORNES TRUST LTD as
trustees of the HORIZON THORNES TRUST
Fourth Defendant
SCOTT VERON and HORIZON HURSTMERE TRUSTEE LIMITED as
trustees of the HORIZON FAMILY TRUST Fifth Defendants
Hearing: On the papers Appearances:
Jan McCartney KC/John Cox for the Plaintiff
Adam Ross KC/Nick Frith/ Olivia De Pont for the First Defendant Vivienne Crawshaw KC/Samantha Wilson for the Defendants
Judgment:
30 November 2023
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for leave to file amended statement of claim]
TAYLOR v VERNON [2023] NZHC 3445 [30 November 2023]
This judgment was delivered by me on 30 November 2023 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
TABLE OF CONTENTS
Paragraph
Introduction [1]
Is leave required under s 77.7(4) [4]
Plaintiff ’s submissions [4]
Defendants’ submissions [6]
Conclusion in respect of r 7.77(4) [7]
Should leave be granted? [9]
The plaintiff ’s submissions [9]
The Defendants’ submissions [11]
Conclusion in respect of grant of leave [16]
Orders [17]
Solicitors:
Rennie Cox (John Cox), Auckland, for the Plaintiff
Wilson Harle (Felicity Monteiro/Portia Baine), Auckland, for the Defendants
Counsel:
Jan McCartney KC, Auckland, for the plaintiff
Vivienne A Crawshaw KC / Samantha Wilson, Hobson Chambers, Auckland, for the Defendants
Introduction
[1]By a minute dated 20 October 2023, the Court made the following directions:
(a)Within 5 working days from the date of this minute, counsel for the plaintiff is to file and serve submissions as to why leave to file the amended statement of claim dated 30 August 2023 is not required under r 7.77(4) and, in the alternative, if the Court does not agree that leave is not required, submissions as to why leave should be granted.
(b)Counsel for the defendants are to file submissions in opposition within 5 working days of receipt of counsel for the plaintiff’s submissions.
[2] Ms McCartney KC, for the plaintiff, filed a memorandum with her submissions dated 19 October 2023, counsel for the defendants filed a joint memorandum in response dated 27 October 2023, Ms McCartney filed a further memorandum dated 30 October 2023 seeking leave to make further submissions in reply to the defendant’s submissions, and counsel for the defendants filed a joint memorandum dated 31 October 2023 opposing the granting of leave to the plaintiff to make further submissions.
[3] The Court granted leave to Ms McCartney to file the further submissions by minute dated 15 November 2023.
Is leave required under r 7.77(4)?
Plaintiff ’s submissions
[4] Ms McCartney, for the plaintiff, submits that the cause of action in the amended statement of claim filed on 30 August 2023, (ASOC) has not arisen since filing of the original statement of claim on 13 June 2023 and accordingly leave under r 7.77(4) is not necessary.
[5]Ms McCartney’s submissions as to why leave is not required are:
(a)The plaintiff filed substantive pleadings in the Family Court at Auckland, dated 8 June 2023, and these proceedings included orders seeking the setting aside of the relationship property agreements between the plaintiff and the first defendant on 4 April 2011 and 12 December 2016 (the Relationship Property Agreements).
(b)Under the Property (Relationships) Act 1976 (PRA) cancellation of a relationship property agreement is by notice to the other party to the agreement that the applicant (here, the plaintiff) is applying to set aside the agreement. The plaintiff gave this notice by her substantive application filed in the Family Court on 8 June 2023.
(c)The grounds for cancellation of the Relationship Property Agreements under the PRA are set out in the plaintiff’s application to the Family Court and include, inter alia, that the agreements are seriously unjust under s 21J of the PRA. Section 21J(3) of the PRA expressly provides that the statutory jurisdiction to set aside does not limit or affect any enactment or rule of law or of equity that makes a contract void, voidable, or unenforceable on any other ground.
(d)The pleading in the Family Court to set aside the Relationship Property Agreements is a notice of cancellation. The original statement of claim filed on 13 June 2023 at [27] confirms the notice of cancellation.
(e)By the ASOC, the plaintiff pleads a further cause of action, namely a declaration of cancellation of the Relationship Property Agreements for fraudulent misrepresentations under the Contract and Commercial Law Act 2017 (CCLA). The pleading commences at paragraph [80] of the amended statement of claim, with the plaintiff expressly repeating the paragraphs [1] and [79] which includes the pleading in [27] relating to setting aside the Relationship Property Agreements.
(f)Section 41 of the CCLA provides that cancellation of a contract does not take effect before the time at which the plaintiff cancelling the
contract shows, by some clear means, that it is reasonable in the circumstances, an intention to cancel the contract. The cancellation maybe made by either by words or by conduct, showing intention to cancel, or both. There is no element in the cause of action under the CCLA that requires a further cancellation notice when cancellation of the contract has already been given under another statute.
(g)A separate notice of cancellation is not required under the CCLA if there has been a previous notice of cancellation, effective for the purposes of any other cause of action, which gives a right of cancellation of the same agreement.
(h)The fact the plaintiff gave a further notice of cancellation on 29 August 2023 after the original statement of claim was filed on 13 June 2023, did not invalidate the notice of cancellation given by the plaintiff in her pleadings in the Family Court on 8 June 2023, and again in her statement of claim in the High Court on 13 June 2023.
(i)The plaintiff repleaded the cancellation in the ASOC. It follows that no element of the new cause of action, or declaration of cancellation of the agreements under the CCLA, has arisen after 30 June 2023 and r 7.77(4) is therefore not engaged.
Defendants’ submissions
[6] Counsel for the defendants submit that leave is required under r 7.77(4) as the ASOC introduces new causes of action which arose after the original statement of claim was filed for the following reasons:
(a)The original statement of claim was dated 13 June 2023. A notice purporting to cancel the Relationship Property Agreements was given on 29 August 2023. The ASOC contains two causes of action which seek declarations that the Relationship Property Agreements were cancelled on 29 August 2023, ie after the original claim was filed.
(b)The defendants have rejected the purported cancellation, and submit the plaintiff’s purpose in filing the ASOC is to circumvent the defendants’ applications for a stay, be seeking to remove one of the grounds for the stay, namely, the continued existence of the bar to claims in equity in the Relationship Property Agreements.
(c)The plaintiff’s contention that the Family Court claim was, in effect, an original notice of cancellation, and that the notice of 29 August 2023 was simply a “belts-and-braces” approach is not credible. To be effective, the notice of cancellation must be unequivocal and the plaintiff’s proceedings in the Family Court are premised on the Relationship Property Agreements remaining in effect. It is for that reason the plaintiff seeks to have the Relationship Property Agreement set aside or declared void under the PRA.
(d)The plaintiff has applied for an interim distribution in the Family Court, and in doing so has relied on the terms of the Relationship Property Agreements. The plaintiff’s conduct of the Family Court proceedings is consistent with an affirmation of the Relationship Property Agreements and is incompatible with cancellation.
(e)The 29 August 2023 notice was sent months after the Family Court claim and first High Court statement of claim were filed, and the ASOC seeks declarations that the Relationship Property Agreements were cancelled on 29 August 2023, not to any steps taken before then.
Conclusion in respect of r 7.77(4)
[7] I am of the view that leave is required under r 7.77(4). I do not accept Ms McCartney’s argument that the Family Court proceedings were effective notice of cancellation of the Relationship Property Agreements. For the purposes of the CCLA claim for declarations, at [79] and [89] of the ASOC, the cancellation relied on is the letter to the defendants of 29 August 2023.
[8] The cause of action seeking declarations of cancellation under s 37 of the CCLA is a new cause of action different from the cause of action seeking to set aside the Relationship Property Agreements under s 21J of the PRA. Under the terms of the pleadings themselves in the ASO it is clear that these causes of action have arisen from the cancellation letter of 29 August 2023, after the original statement of claim was filed.
Should leave be granted?
The plaintiff ’s submissions
[9] At [23] of her submissions, Ms McCartney sets out what she submits are the applicable principles to the granting of leave under r 7.77(4). She submits that in applying these principles to the present case leave should be granted for the following reasons:
(a)the proceedings are at an early stage;
(b)the plaintiff has not conducted herself in such a way that shows an intention to adopt one course and to definitively reject or relinquish any other;
(c)the evidence that supports the further cause of action is already before the Court – there are no surprises and no prejudice;
(d)the ASOC creates no delay in the proceedings;
(e)there is no prejudice to the defendants.
[10] Ms McCartney submits that the granting of leave in this case allows the real controversy in this case to come before the Court, there is no risk or prejudice, and there has been almost nil delay. Accordingly, she submits leave should be granted.
Defendants’ submissions
[11] Counsel for the defendants submit that leave should not be granted for the following reasons:
(a)the defendants have already suffered prejudice because the ASOC has caused significant delay to the Court hearing the defendants’ r 15.1 application. No further delay should be permitted, particularly as the plaintiff’s Family Court proceeding is progressing;
(b)the issues related to the validity and enforceability of the Relationship Property Agreements are before the Family Court. The plaintiff could have and ought to have raised her cancellation claims in the Family Court proceedings so that all issues of validity and enforceability of the Relationship Property Agreements are dealt with together. Counsel submits that the plaintiff has attempted to bring the new claims in the High Court in order to:
(i)avoid or undermine the defendants’ r 15 applications for a stay;
(ii)duplicate the Family Court proceedings and force the transfer those proceedings from a specialist tribunal to this Court by bringing more causes of action in this proceeding, which could have been dealt with in the Family Court without duplication;
(iii)enable the plaintiff to make use of the High Court disclosure and discovery to force the first defendant to produce documents to be used in the Family Court proceedings.
[12] Counsel for the defendants submits that an ASOC is an abuse of the Court’s processes, and refers to the decision in Edwards v Edwards1 where, counsel submits,
1 Edwards v Edwards [2012] NZHC 1630.
the High Court held that proceedings before it (which were brought to enforce a heads of agreement reached between parties to a PRA proceeding in the Family Court) were abusive as duplicative of the Family Court proceeding. Counsel for the defendants submits that there is a real risk of inconsistent findings between this Court and the Family Court on disputed facts and legal consequences arising from those facts.
[13] Counsel for the defendants applications such as the matters between the plaintiff and the first defendant are the “bread-and-butter” of the Family Court and the Family Court is the specialist tribunal having excusive originating jurisdiction under the PRA. The appropriate court for any cancellation claim is the Family Court because if the contracting-out agreements are set aside, declared void or cancelled, any division of the property will occur under the PRA. Counsel relies on the decision in Reid v Reid2 where the Court stated that permitting the cancellation claims to proceed in the High Court, alongside the Family Court proceedings under the PRA, would amount to “an artificial avoidance of the Family Court’s priority jurisdiction which has been mandated by Parliament”.
[14] Counsel for the defendants submits the Family Court can and should deal with all issues of the enforcement and validity of the Relationship Property Agreements, including whether the Relationship Property Agreements have been cancelled or remain in force. Counsel for the defendants submits that the plaintiff does not need to bring new cancellation claims through the High Court’s declaratory jurisdiction – if there are grounds the cancellation of the Relationship Property Agreements and notice of the cancelation has been properly given, the Family Court can make findings of cancellation and then determine the sharing of relationship property between the parties.
[15] Counsel for the defendants submits the following further reasons why leave should be declined:
(a)the ASOC relies on privileged communications between the first defendant and his solicitor in the new causes of action for declarations of cancellation and in the disclosure provided, along with the amended
2 Reid v Reid [2013] NZHC 1019 at [66].
claim. The first defendant has already brought applications for the exclusion of privileged materials in both the Family Court and the High Court. In attempting to bring the amended claim in reliance of that similar privileged material, the Plaintiff has repeatedly disregarded the first defendant’s claims for privilege to be respected and protected;
(b)in seeking declarations the plaintiff must be relying on the Declaratory Judgments Act 1908 or the High Court’s inherent jurisdiction. In either case the Court can only grant the declaration on issues of law, not issues of mixed fact and law, and only in circumstances where there are no disputed facts. Counsel for the defendants submits that whether or not there is a right to cancel the Relationship Property Agreements is a question of mixed issue of fact and of law which requires findings on disputed facts as to the representations said to give rise to the right to cancel and therefore cannot be the subject of declarations.
Conclusion in respect of grant of leave
[16] I am of the view that the plaintiff’s application for leave to file the ASOC should be granted. This is for the following reasons:
(a)The ASOC has been filed early in the proceedings and does not, in my view, cause any significant prejudice or delay to the defendants.
(b)Consistent with the principle that the pleadings should allow the real controversy between the parties to be before the Court, the plaintiff’s causes of action relating to cancellation of the Relationship Property Agreements under the CCLA should properly be brought before the Court and the plaintiff is entitled to have them heard.
(c)The defendants’ objections to the new causes of action in the ASOC being duplicative of the Family Court proceedings to set aside the Relationship Property Agreements are the issues to be determined in
the forum of the defendants’ application for a stay of the proceedings, not in this leave application.
(d)Whether the issue of the setting aside or cancelling of the Relationship Property Agreement should be dealt with exclusively by the Family Court is an issue to be determined after a hearing of the defendants’ application for a stay of the proceedings.
(e)Submissions by the defendants that the declarations sought by the plaintiff might not be available as a matter of law should be determined following a full hearing of the issue, not as part of this leave application. Similarly, the alleged use of privileged material by the plaintiff should be resolved in the context of a hearing on the merits of the matter, not on the papers in relation to the leave application.
Orders
[17]I make the following orders:
(a)The plaintiffs’ application for leave pursuant to r 7.77(4) to file the amended statement of claim dated 30August 2023 is granted.
(b)The directions set out at [13](c) to (h) of the Court’s minute of 20 October 2023 continue to apply.
(c)The position regarding the defendants’ obligation to file an amended statement of defence to the plaintiffs’ amended statement of claim will be determined after hearing counsel at the next case management conference .
(d)Costs are reserved, to be dealt with upon determination of the defendants’ stay application.
…………………………….. Associate Judge Taylor