Trainor aka Tofilau v Leotuki
[2020] NZHC 2865
•2 November 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-2536
[2020] NZHC 2865
IN THE MATTER Of an application under sections 339(1)(a), 339(4), and 343 of the Property Law Act 2007 BETWEEN
RONGOPAIWAHINE LOIS TRAINOR
(formerly known as RAEWYN LOUISE TOFILAU and also known as RAEWYN TRAINOR
Plaintiff
AND
TIMOTHY JUNIOR LEOTUKI
First Defendant
STEVE TOFILAU
Second DefendantNICOLAU ALEX TOFILAU
Third Defendant
Hearing: 29 October 2020 Counsel:
N Woods for Plaintiff
U Kuddus for First and Second Defendants No appearance for Third Defendant
Judgment:
2 November 2020
JUDGMENT OF WHATA J
This judgment was delivered by me on 2 November 2020 at 4.00 pm,
pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: Rice Craig, Papakura
Inder Lynch, Papakura
TRAINOR v LEOTUKI [2020] NZHC 2865 [2 November 2020]
[1] This matter comes before me on the Duty Judge list. In his minute of 19 October 2020, Woolford J granted leave to the defendants to file further evidence. It was, however, noted Mr Woods wished to object to “the admissibility of the affidavit of Mr Daisley on the basis that he did not obtain or even seek to obtain the plaintiff’s waiver of joint solicitor and client privilege.” Woolford J then directed a one-hour hearing to determine issues of admissibility pre-trial, pursuant to r 9.7(5) of the High Court Rules 2016. It transpires that Mr Woods filed a notice of objection of much wider breadth and depth in respect of the proposed briefs of evidence of Mr Daisley and Mr Steve Tolifau.
[2] As indicated to Mr Woods, I did not consider it to be an efficient use of this Court’s time to address all of the objections, noting that, in respect of matters of detail, the trial Judge was much better placed to address those objections. I note in this regard that the matter has been set down for hearing on 17 November 2020.
[3]In the result, I addressed two related objections based on:
(a)privilege; and
(b)hearsay.
[4]I reserve to the trial Judge the remaining issues.
Background
[5] The background to this matter is helpfully set out in the judgment of Gault J, dealing with the application for leave by the defendants to appear to defend the claim.
That background is as follows:1
[1] The plaintiff, Ms Trainor, seeks an order for sale (and associated orders) of a property at 29 Lever Place, Weymouth, Manukau. Ms Trainor is the registered proprietor of a one-quarter share of the property. The defendants, three of her four sons, are each also registered proprietors of a one-quarter share.
1 Trainor v Leotuki [2020] NZHC 1574.
[2] The defendants did not file statements of defence and the proceeding was allocated a formal proof hearing, to take place on 24 June 2020.
[3] At the hearing, however, the first and second defendants (Timothy and Steve) appeared in person. Thus, the formal proof hearing became an application for leave to defend out of time.
Factual background
[4] Ms Trainor and her then husband, Mr Tofilau, purchased the property in 1975. In about 1983/1984, they separated and Ms Trainor moved to Australia.
[5] On 2 July 2008 Mr Tofilau died. Ms Trainor inherited the property by survivorship.
[6] On 21 July 2008 Ms Trainor and the four sons entered into an agreement for sale and purchase whereby she agreed to sell a one-quarter interest in the property to each of them for a total of $273,000, being half the market value. They each signed a deed of acknowledgement of debt acknowledging an on demand loan in respect of one-quarter of the total price, with provision for interest to be payable if demanded.
[7] Timothy and Steve have been living in the property. The third defendant, Nicolau, lives in Melbourne.
[8] On 4 September 2017, Ms Trainor demanded repayment. No repayments were made, and proceedings were commenced in the District Court seeking repayment.
[9] On 27 March 2018 the fourth son, Taroi, transferred ownership of his one-quarter share back to Ms Trainor in satisfaction of his debt.
[10] On 25 June 2018 Ms Trainor’s solicitor notified the defendants that she required interest to be paid from 1 April 2018.
[11] Following service of this proceeding in November 2019, the parties attended a mediation in December 2019 and agreed terms of settlement whereby the defendants agreed to pay Ms Trainor $200,000 (including GST if any). However, this was conditional on Timothy and Steve using all reasonable efforts to obtain finance by 28 February 2020. Payment of the settlement sum was then to occur within a further 21 days.
[12] Timothy and Steve did not obtain finance by 28 February 2020. They sought an extension of time for the finance condition until 16 March 2020. Ms Trainor’s solicitor agreed to extend time on the condition that interest accrued from 20 March 2020 until settlement. At least expressly, that condition was not accepted.
[13] On 15 April 2020 Ms Trainor’s solicitor wrote to the defendants’ solicitor seeking information regarding reasonable efforts to obtain finance within five working days. No response was provided.
[14] On 4 May 2020 Ms Trainor’s counsel filed a memorandum seeking a formal proof hearing. About the same time, an application for a simplified trial
was also filed in the District Court. Subsequently the defendants’ solicitor sought leave to withdraw in the District Court proceeding.
[15] On 4 June 2020 Lang J directed that the proceeding be listed for a formal proof hearing on 24 June 2020 and directed the filing of evidence in support by 17 June 2020. These documents were also served on the defendants.
(footnotes omitted)
The proposed evidence
[6] The proposed evidence subject to objection are:
(a)the brief of evidence of Christopher John Daisley; and
(b)the brief of evidence of Steven Tofilau.
[7] This evidence, in short, refers to family arrangements which are said to bear on the plaintiff’s claim.
Mr Steve Tolifau
[8] Mr Woods raised objections to parts of the evidence of Mr Steve Tofilau which, he says, amount to hearsay and/or inadmissible opinion evidence, namely:
9. In late 2007 my father and brother Taroi mentioned that my mother wished to transfer her half share in the property to myself and my brothers in equal shares. I was pleased to hear that our mother had gifted us the property as we felt hard done by with her absence in our formative years and she stated she was ‘pleased to be doing the right thing’ given she had contributed little to our upbringing and virtually nothing to the maintenance or mortgage of the property.
…
14. … This was because my mother wanted to acknowledge her lack of contribution to the property, to her child support payments to our upbringing. She said she wanted to do the right thing by our father.
…
17. … but I believe he [Taroi] only did this as my mother was pressuring him.
[9] Annexures L and M (being letters between Mr Daisley and Mr Taroi Tolifau). are also objected to as inadmissible hearsay.
[10] I dismiss the objections to the alleged hearsay evidence at paragraph [9] as it relates to hearsay statements by Mr Tolifau’s father and at paragraph [14] as it relates to Mr Daisley. I exclude, however, the evidence of hearsay statements made by Mr Taroi Tofilau.
[11] Mr Daisley is a witness. There can be no objection to his evidence about what he said on hearsay grounds. Furthermore, as Mr Woods concedes, a witness may give evidence of what Mr Tolifau was told. What he heard is prima facie admissible as such. In respect of the statements made by the father, to the extent that the defendants rely on those statements as going to the truth of what is being said, the primary issue is one of threshold reliability – that is, whether the circumstances relating to the statement provide reasonable assurance that the statement is reliable.2 There is nothing before me to suggest that the circumstances of the statements are inherently unreliable. The evidence is that they took place in an ordinary familial context. I note, for completeness, that nothing I say here bears on the weight that might be afforded to the hearsay statements. That will be for the Judge hearing the matter, who will have the benefit of considering the evidence in its full context.
[12] The evidence relating to what is said by Mr Taroi Tofilau is highly problematic to the extent that it is being relied upon to prove the truth of what it asserts. There is no evidence before me to suggest he is unavailable to give evidence, or that undue expense or delay would be caused if he were required to give evidence. I am advised he lives in Melbourne and that the defendants say he is unavailable. But no direct contact has been made by counsel with Mr Taroi Tofilau as to his availability, for example, to give evidence by AVL. Evidence about what he has said does not therefore fall within the qualifying criteria for admissible hearsay evidence per s 18(1)(b) of the Evidence Act 2006. I am fortified in this view because I consider that the plaintiff would be unfairly prejudiced by the admissibility of Mr Taroi Tofilau’s hearsay
2 Adams v R [2012] NZCA 386.
statements going to the issue of what was agreed unless he is available for cross- examination about those statements.
[13] It should be noted that this exclusion only applies insofar as the evidence is being used to prove the truth of what it asserts and does not preclude evidence of what was heard or seen. For example, what Mr Tolifau may have observed in terms of his mother pressuring Mr Taroi Tofilau, may be admissible. Similarly, subject to issues of privilege to which I will return to below, the communications between Mr Daisley and Mr Taroi Tofilau may be adduced as contextual evidence, that is, to help explain Mr Daisley’s narrative of what occurred.
[14] Accordingly, the evidence as it relates to the father is admissible. The evidence as it relates to Mr Taroi Tofilau is not admissible as evidence of the truth of what he is said to have asserted. The fact that he has said or communicated something in writing is, however, admissible insofar as it shows that it was said or provides context (but not the truth of what is asserted) to explain the narrative provided by Mr Tolifau.
Mr Christopher John Daisley
[15] Mr Woods also objects to the evidence of Mr Daisley on the basis that it is subject to legal/professional privilege. He says that Mr Daisley is a qualified legal executive and that his evidence relates to matters subject to communications between him and his clients, being the plaintiff and Mr Tim Tofilau Senior, at a time when they were still married. He submits that, generally, the effect of privilege is that neither the client nor the lawyer (without the client’s consent) can be compelled to disclose any communication between them if their communication was intended to be confidential and made in the course of professional legal services.
[16] Mr Woods then identifies the various paragraphs of the evidence that he says are subject to legal/professional privilege in respect of Ms Trainor, as follows:
9.The title of the property needed updating before anything could be done. It was still in the name of the Crown and there was an old AGC mortgage registered against it. The property was registered in the names of Tim Tofilau (Snr) and Raewyn Trainor on 13 December 2007. Annexed hereto and marked "B" is a true copy of a historical title search of the property.
10.In early 2008, a Transfer to convert ownership to tenants-in-common and Deeds of Acknowledgement of Debt were prepared. They were signed on 9 February 2008. It was explained to all parties that Raewyn could not simply transfer her half interest as that would constitute a gift and would be subject to gift duty. There needed to be Deeds of Acknowledgement of Debt from the four boys to Raewyn, even though it was understood she never intended to call in the debt. This was explained to Raewyn by me and the sequence of documents was also explained carefully. I was very aware that the procedure was not easy for a lay person to follow. Raewyn confirmed that she wanted to transfer her interest to her four sons and would not call in the debts.
[17] Mr Woods also submits that the following parts of the evidence are privileged communication with Mr Taroi Tofilau, and there is no evidence he has waived privilege:
21.On 5 February 2009 I wrote to Taroi Tofilau asking him to clarify a few questions that were raised by Mr Sanders in his letter and to confirm Raewyn's intentions in regard to the arrangement we had structured. Annexed hereto and marked "F" is a true copy of my email.
22.Taroi Tofilau responded in an email to me on 9 February 2009. Annexed hereto and marked "G" is a true copy his email. The email explains that Raewyn's decision to transfer her interest in the property to her sons in equal shares was 'her decision alone'. The email clarifies that Raewyn had decided to do so because she had never contributed anything financially to the property for the duration she had lived there or any time thereafter.
[18] There is no dispute that the impugned parts of the evidence relate to privileged communications. But the defendants submit that Ms Trainor waived privilege by way of having instituted a civil proceeding against a person who is in possession of the privileged communication, information, opinion or document with the effect of putting the privileged matter in issue in the proceedings. The defendants also emphasise that Ms Trainor initiated proceedings against the defendants who were in possession of the privileged information, refers to a family arrangement in her evidence (which is the subject matter of the privileged communications) and pleaded the particulars of the settlement agreement.
[19]Relevant passages of Ms Trainor’s evidence include the following statements:
7.After Tim’s death, it was decided I would ‘sell’ the property to our four adult sons, the three Defendants and their younger brother Taroi. An agreement for sale and purchase was drawn, dated 21st July 2008, a true copy of which is annexed marked “C”, by which I agreed to sell
to each of the Defendants and their brother a one-quarter interest in Leaver Place for a total sale price of two hundred and seventy-three thousand dollars ($273,000). The price was at clause 15.0 of the agreement “half the value of the property according to an estimate from QV valuations dated 7 May 2007.” Thus, I was conceding that our four children – rather than me – should inherit their father’s half interest in the property so that all they were required to compensate me for was my unrealised half interest.
8.The lawyers involved then drew acknowledgements whereby each of the Defendants and their brother confirmed a debt to me of sixty-eight thousand two hundred and fifty dollars ($68,250), to tally to the total
$273,000 purchase price, repayable upon demand. True copies of the acknowledgements, each dated 21st July 2008, are annexed marked “D”, “E”, “F” and “G”. This documentation was consistent with the terms my sons and I had signed which recorded at clause 16.0 of the 21 July 2008 agreement for sale and purchase that “It is the intention of the parties that the transfer to the Purchasers Timothy Junior Leotuki, Steve Tofilau, Nicolau Alex Tofilau and Taroi Roy Tofilau shall not be a gift in whole or part…”
9.Ownership of Leaver Place was then transferred to the Defendants and their brother as is confirmed by the historical search of Identifier NA27A/657, annexed marked “H”.
10.In or around August 2008, after the property was transferred to the Defendants and their brother, I was removed from Leaver Place by Timothy and Steve with the assistance of the Police. I have been prevented since from going to or living at the property by Timothy and Steve, who would refuse me access, and be just really nasty.
11.In 2017 I instructed a solicitor to assist me to realise what had been my interest in Leaver Place. I was born on 27 April 1951, so at this stage was sixty-six years old. I am employed by New Zealand Rail, as an inspector on Auckland suburban routes. I have worked for New Zealand rail for the last ten years, but have recently been made redundant. I am temporarily living with family in Thames. However, I will be moving into a rental property in Thames in a weeks’ time where I will be flatting with two friends, also pensioners. I have a car and some personal effects but no home or assets of value. I need the money my sons owe me so I will be able to retire with some security in my old age. I am hoping the repaid debt will allow me to purchase a retirement property, not of course in Auckland, but somewhere with modest property values.
12.By notices to the Defendants and their brother, Taroi, dated 4th September 2017, true copies of such noticed being annexed marked “I”, “J”, “K” and “L”, I required the Defendants and Taroi to repay me the sixty-eight thousand two hundred and fifty dollars ($68,250) each owed me to my solicitor’s trust account on my behalf, on or before 29th September 2017, such notices being attached to letters dated 4th September 2017 from my solicitor, copies being annexed marked “M”, “N”, “O” and “P”.
[20] Her statement of claim also alleges:
5.Originally the plaintiff with her first husband TIM TOFILAU, the defendants’ father, had purchased Leaver Place from the Crown under a long term agreement dated 15 September 1975.
6.In about 1983/1984 the plaintiff and Tim Tofilau separated, the plaintiff leaving Tim Tofilau and the first, second and third defendants, and the defendants’ younger brother, Taroi Roy Tofilau, living at Leaver Place.
7.On 2 July 2008, Tim Tofilau died, and the plaintiff inherited the ownership of Leaver Place by survivorship.
8.On 21 July 2008 the plaintiff and the first, second and third defendants, and the defendants’ younger brother Taroi Roy Tofilau entered into an agreement for the sale and purchase by which the plaintiff agreed to sell to each of the defendants and their brother a one-quarter interest in Leaver Place for a total price of two hundred and seventy-three thousand dollars ($273,000). (“The Agreement for Sale and Purchase”).
9.The terms of the Agreement for Sale and Purchase included:
(a) The purchase price was recorded as clause 15.0 of the 21 July 2008 agreement as payable by each of the defendants and their younger brother giving to the plaintiff deeds acknowledging that each owed the plaintiff $68,250 “making
$273,000 in total being half the value of the property according to an estimate from QV valuations dated 7 May 2007”.
(b) at clause 16.0: “It is the intention of the parties that the transfer to the Purchasers Timothy Junior Leotuki, Steve Tolifau, Nicholau Alex Tolifau and Taroi Roy Tolifau shall not be a gift whether in whole or part …”
10.Each of the defendants then signed acknowledgements dated 21 July 2008 whereby each of the defendants and their brother confirmed a debt to the plaintiff of sixty-eight thousand two hundred and fifty dollars ($68,250), repayable “upon demand”, such acknowledgments each including a clause whereby: “The Borrower will on the 31st of March in each year become liable to pay to the Lender interest on the said loan and further advances from time to time outstanding. The interest payable shall not exceed the first mortgage interest rate charged by the Lender’s trading bank from time to time in respect of residential loans taking such rate applying at the preceding first day of October. Interest shall be calculated with quarterly rests on the last days of March, June, September and December from the date of the advance. No interest shall be payable if the Lender shall fail to make written demand for payment of interest by 30th June in any year”.
11.On 30 July 2008 the registered title of Leaver Place was transferred from the plaintiff to the first, second and third defendants and their brother.
12.By notices dated 4th September 2017, the plaintiff by her solicitor required the first, second and third defendants and their brother to each repay her the sixty-eight thousand two hundred and fifty dollars ($68,250) each owed, to her solicitor’s trust account, on or before 29th September 2017. No repayments were made.
[21] The defendants claim that there was much more to this than a simple debt arrangement. They claim by way of affirmative defence that the parties entered into a family arrangement that she transfer her interest in the property and that it is unconscionable for the plaintiff to go back on this arrangement. This is denied in full by the plaintiff in reply to the statement of the defence.
Assessment
[22] Section 54 provides for privileged communications with legal advisers, it states:
54 Privilege for communications with legal advisers
(1)A person who requests or obtains professional legal services from a legal adviser has a privilege in respect of any communication between the person and the legal adviser if the communication was—
(a)intended to be confidential; and
(b)made in the course of and for the purpose of—
(i)the person requesting or obtaining professional legal services from the legal adviser; or
(ii) the legal adviser giving such services to the person. (1A) The privilege applies to a person who requests professional legal
services from a legal adviser whether or not the person actually
obtains such services.
(2)In this section, professional legal services means, in the case of a registered patent attorney or an overseas practitioner whose functions wholly or partly correspond to those of a registered patent attorney, requesting or obtaining or giving information or advice concerning intellectual property.
[23] This privilege is based on the principle that a person must be able to consult with a lawyer in confidence and is a fundamental condition on which the administration of justice rests.3
[24]Waiver of this is expressly addressed at s 65, which states:
65 Waiver
(1)A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly.
(2)A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.
(3)A person who has a privilege waives the privilege if the person—
(a)acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or
(b)institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.
(4)A person who has a privilege in respect of a communication, information, opinion, or document that has been disclosed to another person does not waive the privilege if the disclosure occurred involuntarily or mistakenly or otherwise without the consent of the person who has the privilege.
(5)A privilege conferred by section 57 (which relates to settlement negotiations or mediation) may be waived only by all the persons who have that privilege.
[25] Submissions on the application of ss 54 and 65 was relatively sparse. Mr Woods conceded he was not in a position to submit at length on the operation of s 65. Mr Kuddus referred to some authorities which tended, however, to be directed to a situation where the party put the privileged advice in issue. I therefore approach the issue of admissibility in terms of s 65 with some caution. Peters J, in Messenger v Stanaway Real Estate Ltd,4 adopted the approach favoured by Asher J in Body
3 See discussion Elisabeth McDonald and Scott Optican (eds) Mahoney on Evidence: Act and Analysis (Thomson Reuters, Wellington, 2018) at [EV54.01].
4 Messenger v Stanaway Real Estate Ltd [2014] NZHC 2103 at [20].
Corporate 191561 v Argent House Ltd,5 that is, a clean slate approach, so that the Court should go no further than the words of the section, without an additional overlay of fairness considerations. On the limited argument before me, I am not sure about that. Given the importance of the principle of confidentiality underpinning privilege, the requirement for fairness ensures that the principle is only infringed when necessary on justness grounds. So, I approach the issue of waiver in this case on the basis there must be a pleading that opens up as an element of the cause of action the issue of what advice was received, and the pleaded issue must be incapable of fair resolution without reference to that advice.6
[26] In this regard, Ms Trainor denies the existence of the alleged family arrangement and, in particular, denies that the defendants entered into the deeds of acknowledgement for the purpose of managing their exposure to gift duty only. Prima facie then, Ms Trainor has put the privileged communication and/or a privileged matter in issue, insofar as her state of knowledge of the alleged family arrangement is necessary to resolve the defendants’ purported defence. Furthermore, the issue raised by the defendants cannot be fairly resolved without referring to the privileged communications. As the relevant privileged communications are already in the possession of the defendants, s 65(3)(a) and/or (b) is engaged.
[27] In the end, Mr Woods did not strongly disagree with this analysis. He acknowledges that Ms Trainor may be cross-examined on her understanding of the family arrangement and if she denied there was such an arrangement, the advice she received from Mr Daisley would come squarely into focus. Furthermore, the evidence of Mr Daisley’s explanation of the position to the family is admissible in any event. This mitigates the extent of the infringement the principle of confidentiality, given that the advice was already known (at least on the defendants’ case) by the defendants. In this regard, it is not contended that communications directly with the defendants, and the record of that, are privileged. So, evidence from Mr Daisley may be led about that.
[28] As to Mr Taroi Tofilau, there can be no suggestion he has waived privilege, either expressly or by necessary implication. That evidence remains subject to
5 Body Corporate 191561 v Argent House Ltd (2008) 19 PRNZ 500 (HC) at [31]-[33].
6 See discussion in Shannon v Shannon [2005] 3 NZLR 757 at [33].
privilege and is inadmissible. However, to the extent that it is necessary to make sense of the sequence of events, that fact that advice was given, is admissible. Also, as noted, any communication directly with the defendants about what was said is not privileged.
Other complaints
[29] Mr Woods’ other complaints relating to Mr Daisley’s evidence are better dealt with within the context of an assessment of the evidence as a whole by the trial Judge, where relevance and admissibility may be better assessed.
Outcome
[30]In terms of Mr Tolifau:
(a)The evidence as it relates to the father is admissible.
(b)The evidence as it relates to Mr Taroi Tofilau is not admissible as evidence of the truth of what he is said to have asserted.
(c)Subject to issues of privilege, the fact that Mr Taroi Tofilau has said or communicated something in writing is, however, admissible insofar as it shows that it was said or provides context (but not the truth of what is asserted) to explain the narrative provided by Mr Tolifau.
[31]In terms of Mr Daisley:
(a)The evidence of privileged communications with Ms Trainor is admissible.
(b)The evidence of privileged communications with Mr Taroi Tofilau is not admissible.
(c)However, to the extent that it is necessary to make sense of the sequence of events, that fact that advice was given to Mr Taroi Tafilau, is admissible.
(d)Any communication directly with the defendants about what was said is not privileged and is admissible.
[32] The briefs will need to be amended accordingly. I reserve leave to the parties to come back to me for further assistance if necessary.
[33]Costs are reserved.
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