Triezenberg v Mason
[2017] NZHC 2271
•19 September 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-1688 [2017] NZHC 2271
BETWEEN VICKI ANN TRIEZENBERG AND
PAUL MORLEY DODD Plaintiffs
AND
ALEXANDER CHARLES MASON First Defendant
WENDY ANNE MASON Second Defendant
Hearing: 11 September 2017 Counsel:
P Skelton QC and C McKay for Plaintiffs
G J Thwaite for First Defendant
No appearance for Second DefendantJudgment:
19 September 2017
JUDGMENT OF WHATA J
This judgment was delivered by me on 19 September 2017 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
Solicitors: Wilson McKay, Auckland
TRIEZENBERG AND DODD v MASON [2017] NZHC 2271 [19 September 2017]
[1] This case is about a dispute between trustees. It is due to be heard on 31
October 2017. Mr Thwaite for the first defendant sought and obtained a subpoena on
28 August 2017 in relation to the plaintiffs’ trial counsel, Janna McGuigan. The plaintiffs immediately sought to have that subpoena set aside and the matter was brought on for urgent hearing.
[2] Mr Thwaite did not file a notice of opposition to the plaintiffs’ application and indicated at the hearing that he no longer required the subpoena as, it appears, he had achieved his objective, namely the removal of the plaintiffs’ solicitor on the record, who was also the lawyer for the two trusts this proceeding concerns.
[3] In any event, I set aside the subpoena and reserved my position on costs, the plaintiffs having sought costs on an indemnity basis.
[4] This is my judgment on both matters.
Background
[5] The first and second plaintiffs, Vicki Triezenberg (Vicki) and Paul Dodd (Paul), and the first defendant, Alexander Mason (Alexander), are trustees of the Mamari Trust and Mamari (No 2) Trust. Wendy Mason, the second defendant, is also a trustee of the Mamari Trust.
Mamari Trust
[6] Alexander and Wendy were married on 21 November 1959 and have three children, including Vicki, the first plaintiff. In 1994 Alexander and Wendy settled the Mamari Trust to provide for themselves during their lifetime and to provide a capital distribution to each of their three children when they died.
[7] The trustees of the Mamari Trust are empowered to apply the Mamari Trust funds towards the personal support, maintenance, comfort, education, advancement in life or otherwise for the benefit of such of the beneficiaries as may from time to time be living, including to the exclusion of other beneficiaries up to the date of
distribution. The trustees are also generally empowered to manage the trust funds. The power to appoint and remove trustees is held jointly by Wendy and Alexander. Trustee decisions can be made by majority, but a trustee who is also a beneficiary may not exercise powers vested in them for their own benefit.
[8] The Mamari Trust holds a number of properties and had significant cash investments. At the time Alexander and Wendy settled a further trust in May 2013, the Mamari Trust had cash investments of approximately $3,300,000.
Mamari Trust No. 2
[9] About February 2012, Wendy was diagnosed as suffering from degenerative dementia. Alexander and Wendy determined to re-order their own and the Mamari Trust affairs. They spoke to Paul, the second plaintiff, about creating a new trust. Ultimately the Mamari (No 2) Trust was settled on 20 May 2013. Vicki and Paul were appointed as trustees, together with Alexander. Vicki also had an enduring power of attorney in relation to Wendy’s property and personal care and welfare, and Alexander’s personal care and welfare.
[10] Significant assets were transferred from the Mamari Trust to the Mamari (No
2) Trust. Like the Mamari Trust, the trustees of the Mamari (No 2) Trust have various powers to manage its assets. But the powers are not identical. For example, the trustees of the Mamari (No 2) Trust must be unanimous. Vicki says the assets in the Mamari (No 2) Trust were meant to be used to take care of Wendy. She also says her mother has limited assets outside the trusts.
Care of Wendy
[11] Wendy’s health has greatly deteriorated in recent years, culminating in hospitalisation in 2015 and then placement in a rest home. Vicki claims that about this time Alexander began to drain Wendy’s savings accounts and became aggressive toward Wendy’s carers, to the point that she was evicted from the rest home. Alexander does not directly contest these allegations, but seeks to justify the amounts he withdrew and stresses his concern for Wendy’s welfare at the rest home.
[12] By this time Alexander and Vicki had fallen out. Vicki had cancelled Wendy’s EFTPOS card. Alexander claims he was shut out of the Trusts. Alexander revoked Vicki’s power of attorney over him. Proceedings in the Family Court ensued, with an application to remove Vicki’s power of attorney over Wendy. Vicki’s decision to remove Wendy as a Trustee of the Mamari (No 2) Trust was also challenged. This appears to have precipitated a complete breakdown in the relationship between Alexander and Vicki, though following a lengthy mediation, a number of orders were obtained through the Family Court. These included orders that:
(a) the No 2 Trust would meet the costs of Wendy’s care; and
(b)Mr Allen of Sureplan Ltd would be appointed attorney and welfare guardian for Wendy and his fees were to be met by the Mamari (No 2) Trust.
[13] Wendy was then placed in the care of a professional carer, Kate McLean Homecare Agency Ltd. This arrangement did not last, Vicki claims because of Alexander’s interference and refusal to authorise payment of the carer’s bills. This meant, according to Vicki, that the Mamari (No 2) Trust was in constant default. Vicki also says that Alexander was very obstructive in terms of making payments for other professional fees associated with Wendy’s care, including Mr Allen’s fees and the fees of her doctor.
The present proceedings
[14] Vicki and Paul have commenced these proceedings because they say the Trusts simply cannot function with Alexander’s interference. Alexander denies this, and counterclaims that Vicki’s power of attorney was invalid, because Wendy was not suffering from dementia, and because it was invalidly activated. He also seeks removal of Vicki and Paul because, in short, of the way they have treated him. He further claims that, among other things, Mr Allen has been using Wendy’s funds to benefit the plaintiffs, including the payment of the plaintiffs’ counsel’s fees.
[15] The matter came before Churchman J for case management on 2 August
2017. The Judge resolved to set the matter down urgently given the background and a fixture on 31 October 2017 was allocated.
The subpoena
[16] The application for subpoena was made on 28 August 2017 and served on the plaintiffs on 8 September 2017. It appears the main reason for the subpoena was to enable Mr Thwaite, counsel for Alexander, to obtain information relating to invoices rendered by trial counsel. In particular, he wanted to know who they were addressed to, and for what purpose they were rendered. There was an ancillary purpose, namely to show that the plaintiffs’ solicitors were conflicted, because as the Trusts’ lawyers they could not act against Alexander’s interests.
[17] As soon as the plaintiffs learned of the application for a subpoena, but in advance of having actually been served with the subpoena, the plaintiffs advised defence counsel by letter dated 4 September 2017 that there was simply no merit to the application given:
(a) Ms McGuigan could not give helpful or relevant evidence;
(b)Ms McGuigan was bound by privilege and so could not give evidence; and
(c) section 72(2) of the Evidence Act 2006 provides a person who is acting as counsel in a proceeding is not eligible to give evidence without the permission of the judge.
[18] They then filed an interlocutory application to set aside the subpoena on 7
September 2017.
Argument
[19] Mr Thwaite submitted the subpoena was necessary to support Alexander’s claim that the second defendant’s funds were being used by the plaintiffs for the
conduct of the proceedings, and to expose the position of conflict occupied by the plaintiffs’ solicitor on the record, who was also the Trusts’ solicitor. Mr Skelton responded that a subpoena was not necessary or appropriate to achieve those outcomes. To illustrate, Mr Skelton offered to supply a copy of Ms McGuigan’s invoices, with appropriate redactions to remove privileged information.
[20] It transpires Mr Thwaite was content to proceed without the subpoena on learning that the Trusts’ solicitors withdrew as solicitors on the record. He did not file a notice of opposition to the plaintiffs’ application, which had only been served on him on the Friday before the call before me.
[21] Mr Skelton nevertheless seeks costs on an indemnity basis given the subpoena process was plainly wrong and the plaintiffs had set out the grounds for opposition in the 4 September letter. Mr Skelton said that because Mr Thwaite refused to concede the point, he was engaged under urgency as with the subpoena activated, Ms McGuigan could not continue to act as counsel.
[22] Mr Thwaite opposes the costs application on the basis that:
(a) There was a legitimate underlying purpose, namely secure information supporting a claim of improper use or application of the second defendant’s moneys or funds towards the litigation.
(b)He did not in fact oppose the application and had there been more time before it was heard may have withdrawn it.
(c) The proper withdrawal of the former solicitor on record was achieved as a consequence of the subpoena process.
Assessment
[23] Assuming for present purposes Ms McGuigan could give relevant evidence, the application for subpoena should never have been made without first obtaining an order from the Court as to her eligibility to give evidence. Section 72 of the
Evidence Act is clear. Trial counsel is ineligible to give evidence in proceedings without leave of the court.
[24] The threshold for calling evidence from trial counsel is high. As Miller J
stated in Beggs v Attorney-General:1
… the Court will not lightly remove existing counsel at the instance of an opposing party, it is incumbent on the applicant to do more than speculate that it will call counsel. It must establish that counsel is likely to be required as a witness. There are two elements to that requirement: a plausible assertion that counsel is a material witness, and confirmation that the applicant presently intends to call counsel.
[25] Applications brought without proper grounds, merely as a weapon to discomfort the opposite party by adding to the length and cost of litigation are considered a serious abuse of process.2
[26] The proper course would have been to make an application pursuant to s 72 of the Evidence Act for leave to call trial counsel to give evidence, and only seek a subpoena, if necessary, following a finding of eligibility.
[27] One clear benefit of this approach is the requirement to call trial counsel can be thoroughly examined, without the need for counsel to stop preparation for trial. The problem with the approach taken in this case, which should have been abundantly clear to Mr Thwaite, is that it prevented Ms McGuigan, with immediate effect, from continuing to act without the leave of the Court until the subpoena was set aside.3 Ms McGuigan, realising this problem, was forced to engage independent counsel under urgency. Additionally, no prior notice of the subpoena application was given to the plaintiffs, and the subpoena was not served on Ms McGuigan until 8
September 2017, almost two weeks after it was issued.
[28] I am also very doubtful Ms McGuigan could have given helpful evidence on the pleaded issues. Her engagement in these proceedings by the plaintiffs was not
disputed. Any issue as to who paid her, or the source of the payments, has nothing to
1 Beggs v Attorney-General [2006] 2 NZLR 129 (HC) at [41].
2 Black v Taylor [1993] 3 NZLR 403 (CA) at 420, per McKay J.
3 See Rule 13.5 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules
2008.
do with Ms McGuigan. She can add nothing, as far as I can apprehend at this distance, to the defendant’s case. Her invoices are in the possession of the plaintiffs and if admissible (which is also disputable), could have been produced pursuant to s
19(1) of the Evidence Act or by consent.
[29] In those circumstances, costs on an indemnity basis are appropriate. I rely in this respect on r 14.6(4)(a) of the High Court Rules. Mr Thwaite should not have proceeded with the subpoena. In doing so, he acted improperly and unnecessarily. Mr Thwaite was on notice of the main reason for objection. By pressing on regardless, he assumed the risk of failure. Furthermore, the decision by counsel to engage in the subpoena process against trial counsel with the hearing just over one month away was improper without first seeking leave of the Court in terms of eligibility.
[30] Accordingly, an indemnity award is appropriate. I have seen a memorandum as to costs filed by Mr Skelton, which set out actual costs at $6,065.00. I am satisfied the costs incurred were reasonable in the circumstances. As Mr Skelton points out, this is only a little more than 2B scale costs, which are calculated on the application at $5,340 plus a $200 filing fee.
Orders
[31] There shall be orders accordingly.
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