Von Brainich-Felth-Eilander v Ward
[2019] NZHC 1029
•10 May 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000008
[2019] NZHC 1029
BETWEEN WILLEMINA BRAINICH VON BRAINICH-FELTH-EILANDER
Plaintiff
AND
RUPERT RANNIE WARD
Defendant
Hearing: 10 May 2019 Appearances:
A M Halloran for Plaintiff
S N van Bohemen for Defendant
Judgment:
10 May 2019
JUDGMENT OF JUSTICE OSBORNE
(on leave to amend pleadings)
[1] This is a consolidated set of proceedings, representing two proceedings initiated in the Family Court in 2009 and 2010 respectively for spousal maintenance and relationship property orders. (The spousal maintenance claim was subsequently withdrawn).
[2] Upon transfer to this Court at the end of 2017, directions had to be made in relation to expert evidence, the completion of factual evidence, and the close of pleadings date. This Court ordered on 23 May 2018 that the close of pleadings date would be 1 November 2018. In the same Minute, directions were made as to allocation of a trial.
[3] The trial initially allocated was to commence on 18 February 2019. Subsequent amendments of the timetable led to the allocation of a later close of pleadings date (1 February 2019) and a later trial date (27 May 2019).
VON BRAINICH-FELTH-EILANDER v WARD [2019] NZHC 1029 [10 May 2019]
[4] There was further slippage by the defendant in relation to the new timetable as a result of which, in February 2019, further time was made available to the parties for completion of evidence. The close of pleadings date (1 February 2019) was not altered. Consistently with that, the last pleading filed was the plaintiff’s statement of defence to the defendant’s counterclaim, filed on 21 December 2018.
Defendant’s interlocutory application
[5] On 30 April 2019, a little under four weeks before the hearing date, Mr van Bohemen on behalf of the defendant filed an interlocutory application for leave to file an amended statement of defence and counterclaim (after the close of pleadings date). Filed with the application were a draft amended pleading and a memorandum of Mr van Bohemen explaining the various aspects of the defendant’s proposed amendments.
[6]The application for leave is opposed by the plaintiff.
The issues in the proceeding
[7]As summarised by Mr van Bohemen, the issues in the proceeding are:
(a)the division of relationship property owned by the parties;
(b)whether or not compensatory orders should be made pursuant to ss 15, 18B and 18C of the Property (Relationships) Act 1976 (PRA); and
(c)the plaintiff’s claim under s 182 of the Family Proceedings Act 1980 (FPA) in respect of a family trust the parties established during the course of the relationship.
The proposed amendments
[8] The defendant’s proposed amendments would effectively withdraw concessions made in his existing pleadings in relation to three matters;
(a)whether rights and powers of the parties in relation to the family trust are relationship property, by reference to Clayton v Clayton and other authorities;1
(b)whether the Court is precluded from making orders in relation to or orders which take account of two properties owned in the Netherlands; and
(c)whether three items (14, 15 and 16 being property received by the defendant out of an entity known as “Oceania” and some tax benefits) identified in the plaintiff’s Schedule B (in their statement of claim) were assets of the defendant at the time the parties ceased living together and whether it would be unjust to treat those items as relationship property.
[9] The defendant’s application was initially not supported by an affidavit but in the notice of appeal Mr van Bohemen stated as the grounds on which the leave to amend is sought:
(a)amendments are required to provide for a just division of the parties’ relationship property;
(b)amendments are required to ensure the resolution of questions under the PRA are resolved consistent with justice;
(c)amendments of the pleadings are required to ensure that the real controversy between the parties is addressed within the correct legal framework; and
(d)the amendments will not prejudice the plaintiff.
1 Clayton v Clayton [2016] NZSC 29, [2016] 1 NZLR 551.
Ground of opposition
[10]The plaintiff’s grounds of opposition are that:
(a)no reasons were given for the defendant’s delay;
(b)if the amendments are permitted, the plaintiff will suffer irreparable injury;
(c)the true contest between the parties is already before the Court;
(d)the granting of leave is not in the interests of justice.
[11] In her memorandum filed with the notice of opposition, Ms Halloran elaborated upon those grounds.
[12] In the course of her submissions, Ms Halloran has identified the fact that the defendant consistently from the outset of this relationship property litigation (in 2010) has adopted the classification of property from which he now seeks to withdraw. So, for instance, in his narrative affidavit in December 2011, he dealt specifically with the powers that the parties hold in relation to the family trust and proposed that by reason of those powers the trust interest in the Rangiora property be treated as their relationship property. In the same affidavit, he dealt with the Netherlands properties, which at that point were the subject of an application which the plaintiff had commenced before the Netherlands Courts. The defendant stated in his affidavit (December 2011) that he agreed to the New Zealand Court applying the PRA to all property the parties owned (meaning including the Netherlands properties).
[13] Upon the eventual transfer of the proceedings to this Court in late-2017, the Court recorded, having regard to the age of the proceedings, that it was unlikely that any further extensions of timetable directions would be granted. The close of pleadings date was nevertheless still distant.
[14] In summary, Ms Halloran noted that the defendant had nine years, with the same counsel, to state his position concerning all relationship property issues and that
the defendant has consistently taken the position that all of the parties’ property is relationship property, within the jurisdiction of this Court.
[15] Ms Halloran, by her memorandum, observed that the plaintiff has relied on the existing pleadings in casting her claim and preparing her evidence for trial. If leave is granted to the defendant to make all his proposed amendments, the plaintiff would need time to reassess her position both in relation to evidence and other possible causes of action or reply. Ms Halloran submits that there will not be sufficient time to do that between now and the scheduled commencement of trial. The plaintiff would suffer irreparable injury through not having a proper opportunity to meet the defendant’s reformulated case.
Defendant’s affidavit
[16] Notwithstanding the requirements of r 7.20 High Court Rules, the defendant following receipt of the notice of opposition purported to file a short affidavit in support of his application. He briefly dealt with two of the amendments:
(a)In relation to jurisdiction over the Netherlands properties, he deposed that he now believes that the Court does not have jurisdiction to do that and both parties have been mistaken in their belief concerning jurisdiction.
(b)In relation to the Rangiora property, he deposed that since separation, he and the plaintiff have tried to seek a pragmatic division of assets which they own and control (including the family trust assets) and:
To that end, I was prepared to agree to classification of those powers as relationship property.
He deposes that he now believes that as a matter of law, the powers in relation to the trust are not “property” as defined by the PRA (it is in relation to this contention that Mr van Bohemen submits that Clayton v Clayton is distinguishable.
(c)In relation to the items identified in the plaintiff’s Schedule B, the defendant makes no comment.
[17] In his affidavit, the defendant then makes a brief comment on delay and prejudice:
I do not believe that settlement of property issues between Willemina and me will be delayed if leave is granted to me to amend my pleadings.
Amendment after close of pleadings – the principles
[18] Rule 7.7 High Court Rules provides that on amended pleading may be filed after the close of pleadings date without the leave of a Judge. In Elders Pastoral Ltd v Marr, the Court of Appeal referred to the “three formidable hurdles” which an applicant for leave must establish, namely, the applicant must show:2
(a)the amendment is in the interests of justice;
(b)it will not significantly prejudice the other party;
(c)it will not cause significant delay.
[19] The Court of Appeal referred also to the need for the Court to have regard to the interests of the whole community in the efficient conduct of litigation.
[20] The Court of Appeal referred also to the need for the Court to have regard to the interests of the whole community in the efficient conduct of litigation.3
[21] In the context of the High Court Rules, reference is appropriately made to r 1.2 which declares that the objective of the rules is to secure the just, speedy, and inexpensive determination of any proceeding.
2 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383.
3 At 385.
[22] In that context, the Court of Appeal in Elders Pastoral referred with approval to the observation of Lord Griffiths in Ketteman v Hansel Properties Ltd, where his Lordship observed:4
There is a clear difference between allowing amendments to clarify the issues in dispute and those that permit a distinct defence to be raised for the first time.
[23] I add that in the assessment of the overall justice, it will be important to consider the merits of the proposed amendment (that is, its arguability).5 Related to that final consideration is the Court’s endeavour to ensure that the parties have every opportunity to ensure that the real controversy goes to trial so as to secure the just determination of the proceeding.6
Discussion
[24] I adopt the above principles as those which I should apply in relation to this application under r 7.7.
Reasons for delay
[25] Initially, the defendant failed to provide any evidence at all in support of his application. What the Court had – and it came in the form of a statement from the Bar
– is an explanation that the issues occurred to counsel only recently while preparing for the hearing. In response to that, Ms Halloran’s submission was that the question for the Court is whether that is an adequate explanation bearing in mind the long- standing nature of these proceedings, the agreements and concessions which the defendant had deliberately made years ago, and the judicial warning given by this Court in January 2018.
[26] To the extent that the defendant explained the reasons for the delay in adopting the position he now seeks to adopt, that is in his brief affidavit, the explanation reinforces the impression that he had with deliberation taken his stated position in relation to relationship property (both in pleadings and affidavits). As noted above, he explains the reason for his pleaded position as lying in his wish, following the
4 Ketteman v Hansel Properties Ltd [1987] 2 WLR 312 (HL) at 339.
5 See, for instance, Fordham v Xcentrix Communications Ltd (1996) 9 PRNZ 682 (HC) at 683.
6 Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd [1989] 3 NZLR 304 (CA) at 309.
separation, to seek a “pragmatic division” of assets, leading him to be “prepared to agree to classification” in the way he had pleaded.
[27] In short, the defendant viewed the position over the years that subsequently passed as a robust or pragmatic endeavour on the part of the parties to have everything in the mix so that there could be a final determination of respective rights at one trial.
[28] The defendant’s affidavit explanation for now deciding to plead the opposite position on assets is not a satisfactory explanation for his delay. These are far from modest amendments clarifying issues in dispute. In terms of Lord Griffiths’ approach in Ketteman, the amendments would constitute distinctly different defences in relation to the preponderance of assets which the couple had. He invites the parties to embark on a very different case.
Irreparable injury or prejudice
[29] Faced with this late application, Ms Halloran has identified the alternative claims and matters of evidence which she would wish to consider for the plaintiff. There are issues relating to positions taken by the respective parties in proceedings which were commenced in the Netherlands. Ms Halloran would have to source documents prepared and filed in the Dutch language. She understands there may be one or more documents in the nature of a protest to the jurisdiction of the Netherlands Courts by the defendant, consistently with his affidavit evidence in this proceeding that he wanted everything dealt with in New Zealand. There has not been time for Ms Halloran to explore that factual material. She would also need to further consider provisions of the PRA (around ss 44 – 44C) and the evidence she might lead relevant to such relief.
[30] Ms Halloran’s proper consideration and advice on those matters is unlikely to be able to be attended to in the period between now and the scheduled trial. If there is to be any amendment of the defendant’s pleadings, it must accommodate the reasonable needs of the plaintiff to be ready for any trial. The extent to which the defendant’s case will have substantively changed if all the amendments are permitted would inevitably prejudice the plaintiff if the present trial date is maintained.
[31] Alternatively, if the trial is adjourned, there is an immediate prejudice to the plaintiff in terms of wasted costs that she will have incurred through counsels’ preparations to date.
[32] The adjournment of the trial would also cause an ongoing prejudice to the plaintiff because of the likelihood that a trial of this length will be unavailable for the remainder of 2019.
Considerations of justice – the true contest between the parties
[33] To do justice between the parties on the present application, I need to consider the three aspects of the defendant’s application.
(1)The properties in the Netherlands
[34] The potential issue in relation to the properties in the Netherlands is that they constitute immovable property and are by implication in terms of s 7(2) of the PRA not property to which the PRA applies. There is Court of Appeal authority establishing that foreign immovable cannot be taken into account as relationship property and that the proportions of entitlement of the parties have to be applied to the relationship property without reference to any foreign immovable.7 The defendant’s proposed amendments would include an assertion that the Court has no jurisdiction over the two Netherlands properties.
[35] I have heard competing submissions as to the detail of the correct jurisdictional position and whether the Court might nevertheless be in a position to consider aspects of the Netherlands properties. Mr van Bohemen relies upon the line of authority flowing from the Court of Appeal decision as establishing that remedies under the PRA which are derivative from a proprietary claim in relation to foreign immovable property are precluded.8 Ms Halloran on the other hand referred to a judgment of the Family Court in which the Court divided property “in the usual way” after the parties had agreed to submit to the New Zealand jurisdiction in relation to immovable
7 Samarawickrema v Samarawickrema (1994) 12 FRNZ 482.
8 See, for instance Burt v Yiannakis [2015] NZHC 1174 (2015) 30 FRNZ 696 at [68].
property in France.9 Mr Halloran refers to the possibility that s 7A of the PRA may have application.
[36] It is clear that a real jurisdictional issue arises which the defendant had not previously raised. If Mr van Bohemen’s submissions were to be established as correct, the consequence is that this Court would be without jurisdiction to take the Netherlands properties into account. Concessions of the parties would not cloak the Court with jurisdiction.
[37] The jurisdiction question is not one which can properly to be determined on this interlocutory application, which relates only to whether leave should be granted to amend.
[38] The needs of justice require that the defendant be allowed to amend his pleading to have the jurisdiction question determined, subject to a decision I will make as to the costs implications.
(2)Family trust rights and powers
(3)Three items in the plaintiff ’s Schedule B
[39] Both sets of proposed pleadings as to these categories of claimed property interests involve mixed factual and legal considerations which might reasonably lead the plaintiff to adduce further evidence and/or amend her pleadings as to relief.
[40] I am satisfied that, as Mr van Bohemen submits, there are arguable propositions as to a distinction between the family trust powers in this case and those which were under discussion in Clayton v Clayton. There also appears to be room for argument as to factually whether or not the identified items in the plaintiff’s Schedule B were indeed assets of the defendant at the time the parties ceased living together.
[41] Mr van Bohemen in his submissions recognised the factual nature of the pleadings in relation to the plaintiff’s schedule B items and the ability of the parties to bind themselves in relation to those matters. He submitted nevertheless that the
9 ADR v JMC FC Wellington FAM-2007-85-393, 25 June 2009.
plaintiff’s pleadings in relation to the parties’ powers over the trust raise jurisdiction issues in a similar way to the Netherlands properties. He then submitted that even were the Court to refuse the defendant leave to amend his pleading to deny that the trust powers were relationship property, he would still be entitled to take his case to trial on the basis that the Court has no jurisdiction over these trust powers. In the context of the argument I heard on this interlocutory application, I do not recognise any sound basis for the comparison between the parties’ powers over the trust and their ownership of properties which are in the Netherlands. Nonetheless, if Mr van Bohemen is correct in his submission, then he will have that ability at trial regardless of the ruling made on this present application. That does not alter the conclusion which I reach in this judgment that it would be unjust to allow the defendant to amend his pleadings in relation to the trust powers.
[42] For many years the parties have conducted this litigation and over the last year prepared for trial upon the basis of the pleadings as reflected in the defendant’s existing statement of defence and counterclaim. The parties, with the benefit of legal advice, must be taken to have considered carefully their appropriate and acceptable positions in relation to each item of property. It is clear from the defendant’s 2011 affidavit that he made “pragmatic” decisions as to what position to adopt in relation to the full range of items. While the defendant now wishes to advance a different position in relation to these two categories, his informed view as contained in his most recent statement of defence and counterclaim dated 14 December 2018 remained as it had been for years before.
[43] These categories of property are in an altogether different category to the Netherlands properties which raise a fundamental issue as to the Court’s jurisdiction. In relation to these various items of property, the parties had accepted from the outset that, as a matter of fact, they are to be treated as relevant property. Their negotiations since must have been on that basis. Their preparation for trial has definitely been on that basis.
[44] I am satisfied that it would be unjust in relation to these items to allow the defendant to reverse what has been the pleaded position for a long time and on which the parties have completed their evidence and closed their pleadings.
[45] There would be a demonstrable prejudice to the plaintiff in facing a trial some ten years after the commencement of the proceeding on matters which were conceded from the outset and in relation to which the plaintiff has therefore not had to seek out and adduce the evidence which would have been relevant if the matters were in issue.
Conclusion
[46] I discussed with counsel towards the conclusion of the hearing my tentative conclusions so that there was the opportunity for both in their submissions to work through the permutations which would flow.
[47] My conclusion is that leave should be granted to the defendant to amend his pleading in relation to the jurisdiction issue relating to the Netherlands properties but not in relation to the other two categories of property referred to in the application. The consequence of that amendment is still significant for the plaintiff – Ms Halloran needs the opportunity to consider whether she can in the very limited time remaining before the trial date have everything in order (including pleadings, additional evidence and submissions) to deal with the jurisdiction issue. It would be unreasonable to impose on the plaintiff any expectation that she will be ready by 27 May 2019 but the plaintiff should have the opportunity to consider the possibility so as not to lose the benefit of the trial date.
[48]The directions I make will accommodate that possibility.
Wasted costs
[49] In the event the trial has to be adjourned, there will be wasted costs. Mr van Bohemen did not submit that this would be an inappropriate case in which to award wasted costs.
[50] For her part, Ms Halloran accepted that a significant proportion of her preparation will not have been wasted and would be of value in the event of an adjourned trial. While any estimate of wasted costs is just that – an estimate – Ms Halloran estimated that the professional time that will have been wasted in preparation for the imminent trial date and in shaping the plaintiff’s case previously to meet the
defendant’s case with the various concessions it contained, would be four to five days. That is partly informed by the fact that counsel had agreed that the proceeding was likely to involve a trial of up to nine days.
[51] On my assessment, now having some appreciation of the pleadings and having inspected the very substantial file including the affidavit evidence, an estimate of four days would appropriately represent wasted costs.
The costs of the leave application
[52] Mr van Bohemen accepted that the defendant is seeking an indulgence and should pay the costs of the leave application. Counsel agreed that those should be calculated on a 2B basis.
Orders
[53]I order:
(a)The defendant has leave to file and serve by 5.00 pm, 14 May 2019 an amended statement of defence and counterclaim which amends his pleading to the extent of the matter identified at paragraph [10](d) of his draft amended pleading dated 30 April 2019.
(b)The defendant’s interlocutory application dated 30 April 2019 is otherwise dismissed.
(c)The plaintiff will have until noon, 20 May 2019 to determine on advice whether she is in a position to continue to trial on 27 May 2019. In the event she determines that she is not, counsel for the plaintiff is to file and serve by that time a memorandum as to that decision, whereupon the trial will be adjourned (without further order) to a date to be allocated by the Deputy Registrar on discussion with counsel. In the event that the plaintiff determines to proceed to trial on 27 May 2019, she is to:
(i)file and serve her defence to the amended claim by noon, 22 May 2019;
(ii)file and serve any supplementary evidence rising from the amendment by 22 May 2019.
(d)In the event the trial is proceeding, counsel for the plaintiff is to file and serve a synopsis of opening submissions by 22 May 2019 and counsel for the defendant is to file and serve a synopsis of opening submissions by 23 May 2019.
(e)In the event the proceeding is not going to trial on 27 May 2019, then there is an order that upon the filing of the relevant memorandum by counsel for the plaintiff on or before 20 May 2019, the defendant (without further order) is to pay to the plaintiff forthwith upon the sealing of this order and in any event, the sum of $8,920 on account of the costs wasted through the adjournment.
(f)In the event that this proceeding is to go to trial on 27 May 2019, the defendant is to pay in any event to the plaintiff the costs of any amended pleading she files in response to the defendant’s amended pleading, which I fix in the sum of $2,230.
(g)The defendant is to pay to the plaintiff in any event the costs of the interlocutory application which I fix in the sum of $3,679.50.
[54] At the interlocutory hearing, counsel did not discuss with me the state of preparation of the trial bundle. Having regard to the matters which have arisen in the course of this interlocutory proceeding, counsel are to confer as to the bundle required if the hearing is proceeding on 27 May 2019. Following such conference, counsel are to file a joint memorandum as to their proposal in that regard.
Osborne J
Solicitors:
Pitt & More, Nelson
Lane Neave, Christchurch Counsel: S N van Bohemen, Barrister, Christchurch
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