Winton v Winton

[2018] NZHC 1323

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2016-485-419

[2018] NZHC 1323

BETWEEN

JAMES ANDREW WINTON, VICTORIA HOLLY LIBERTY WINTON AND JAMES HARRIS SAMUEL WINTON

Applicants

AND

VIRGINIA RUTH WINTON

Respondent

Hearing:

31 May 2018

Appearances:

J D Haig for Applicants

C S Chapman for Respondent

Judgment:

6 June 2018

JUDGMENT OF GRICE J

(Application for joinder of plaintiffs; order backdating joinder of plaintiffs)

[1]    James Winton (Mr Winton) is making a claim against his mother’s estate (Rachel Winton) and her related trusts. Mr Winton’s sister, Virginia Winton, is the trustee of their mother’s estate. Both Virginia Winton and Mr Winton have two children each.

[2]    Mr Winton filed earlier proceedings against his mother and her associated family trusts some years ago. Those proceedings were settled and concluded in 2012. The settlement terms were reduced to  a  written  Settlement  Agreement  between Mr Winton, Rachel Winton (as she was alive at this time), Virginia Winton, the trusts, companies and the children of both Mr Winton and Virginia Winton.

WINTON v WINTON [2018] NZHC 1323 [6 June 2018]

[3]    The current proceedings were filed in 2016. Mr Winton claims that various actions taken by Rachel Winton and the trusts have been instrumental in procuring the Riviera Trust to dispose of property in breach of the Settlement Agreement.

[4]    Initially the proceedings were directed toward specific performance, which would have required Rachel Winton to perform her obligations under the agreement. However, following Rachel Winton’s death, the claim changed to one seeking damages. The latest statement of claim (the fourth amended) claims damages in the sum of approximately $200,000 together with interest accrued and to be quantified prior to trial. It alleges various itemised breaches of the settlement agreement against Virginia Winton in her capacity as executor of the estate of Rachel Winton.

[5]    Mr Winton now seeks to join his adult children, Holly Winton (Victoria Holly Liberty Winton) and James Winton (James Harris Samuel Winton), as plaintiffs to this proceeding. Both children have consented to be joined to the proceedings. The second application before me seeks a backdating of the joinder of Holly Winton and James Winton. The latter is sought because two allegations which are pleaded as particulars are likely to be the subject of an affirmative defence under the Limitation Act 2010.

[6]    A statement of defence to the fourth amended statement of claim has not yet been filed, nor have any affirmative defences yet been pleaded.

What lead up to this point?

[7]    References to the possibility of Mr Winton’s children being joined as plaintiffs were made as far back as a teleconference on 9 June 2017 and the associated minute of 12 June 2017. Associate Judge Smith recorded in the relevant minute that Mr Haig indicated that James Winton’s children “… might be joined as the second and third plaintiffs…” but subsequently advised the Judge “…that his client [did] not at [that] stage propose any amendments to his pleading…”.1

[8]    A series of interlocutory applications concerning discovery and the pleadings followed. This ultimately resulted in the fourth amended statement of claim being

1 Minute of Associate Judge Smith CIV-2016-485-419, 12 June 2017 at [10].

filed recently on 9 March 2018. This most recent iteration of the statement of claim names Holly and James as plaintiffs. No application for leave to join them as plaintiffs was made at that time.

[9]    Mr Haig, acting for Mr Winton, says that he turned his mind further to the issue a joinder and decided out of an abundance of caution it was appropriate to join      Mr Winton’s children. Accordingly, Mr Winton then filed an application to join his children as plaintiffs by memorandum dated 22 March 2017. The memorandum sought that the joinder order be dated as at the date of the filing of the memorandum. Mr Winton did not indicate that there was any urgency in dealing with the application for joinder.

[10]   Virginia Winton was given until 28 March 2018 to respond to the applications. The applications were opposed. In a minute dated 23 April 2018, Simon France J directed that Mr Winton should provide evidence of his children’s consent to being joined as plaintiffs and that there be liaison as to a time table for submissions. A fixture was to be allocated unless there was agreement, in which case the applications were to be dealt with on the papers.2

[11]   The applications have come before me as defended matters. It became apparent when counsel filed memoranda the day before this hearing that the primary issue is whether the joinder of plaintiffs should be backdated.

What do the parties say?

[12]   The main thrust of the fourth amended statement of claim is that the settlement agreement was breached by Rachel Winton effecting interest free loans to family members. The cause of action is a breach of the settlement agreement, so the relevant act or omission on which the claim is based is the date of the breach of that agreement.3 The date of the settlement agreement itself is irrelevant for limitation purposes.

[13]Potential limitation issues arise in relation to two allegations:

2      Minute of Justice Simon France CIV-2016-485-419, 23 April 2018.

3      Limitation Act 2010, s 11(1).

(a)the 2 May 2012 variation of trust failed to designate Rachel Winton’s estate as a beneficiary in breach of the agreement;4 and

(b)on 7 May 2012 Mrs Winton made an interest free loan of NZ

$1,070,000 to Virginia Winton in breach of the agreement.5

[14]   Therefore, the date that a limitation defence could potentially have accrued on under s 11(1) of the Limitation Act 2010 is six years after the dates 2 May and 7 May 2012 (putting late knowledge to one side). The relevant dates, therefore, are 2 May and 7 May 2018 which passed two to three weeks before the hearing of these applications.

[15]   A potential limitation defence would not have been an issue had joinder occurred at the time of filing of the fourth amended statement of claim on 7 March 2018, or the date the application for joinder was made on 22 March 2018. This is why Mr Haig has argued the order for joinder, if made, should be backdated to the date the application for joinder was made.

[16]   Mr Haig argues there is no doubt the children have a commonality of interest with their father as they have an equal entitlement under the settlement agreement. Accordingly, their addition does not require any substantive repleading of the present fourth amended Statement of Claim.

[17]   Mr Chapman, for Virginia Winton, does not contest the commonality of interest. However, Mr Chapman says his client will be prejudiced by the delay to the proceedings if joinder of the children as plaintiffs is permitted. In particular he says that:

(a)there has been unreasonable delay by Mr Winton’s in his application to join the children as plaintiffs;

(b)there has been no satisfactory explanation for the delay;

4      Fourth amended statement of claim, at [52] and [80(e)].

5      At [61] and [80(f)].

(c)as a result of the delay, Virginia Winton has limitation defences to the children’s claims which will increase the length of any trial; and

(d)Virginia Winton  has at all times been clear as to  her position that   Mr Winton cannot claim for his children’s alleged losses without joining them. His inaction means he is entirely the author of his own misfortune.

[18]   Countering these points, Mr Haig argues the Limitation Act issues are not fatal because:

(a)the allegation concerning the 2 May 2012 variation of the deed is only a part of the factual pleading rather than a separate claim. Mr Haig said it was in the nature of a “legacy” pleading retained from the initial statement of claim which sought specific performance against Rachel Winton. The circumstances have now changed and therefore the allegation is more part of the narrative than anything else;

(b)the allegation concerning the 7 May 2012 loan remains alive because the loan was later converted to Australian dollars on a date within the limitation period. Mr Haig considers the Limitation Act issue will not operate to his client’s detriment;

(c)other allegations are made in the fourth amended statement of claim that are unaffected by any limitation defence; and

(d)Mr Winton’s children had late knowledge of the claim and therefore are entitled to pursue that claim within the extended late knowledge period under s 11(3) of the Limitation Act 2010.

Should the children be joined?

[19]A Court order is required to join a new plaintiff to a proceeding. In McLachlan

Justice Potter said:6

An application for joinder does not make the party the subject of the application, a plaintiff or defendant in the proceedings. That requires a Court order…

[20]   The Court has a wide discretion to join new plaintiffs. Rule 4.2 of the High Court Rules 2016 provides that:

4.2      Plaintiffs

(1)Persons may be joined jointly, severally, or in the alternative as plaintiffs,—

(a)if it is alleged that they have a right to relief in respect of, or arising out of, the same transaction, matter, event, instrument, document, series of documents, enactment, or bylaw; and

(b)if each of those persons brought a separate proceeding, a common question of law or fact would arise.

(2)On the application of a defendant, the court may, if it considers a joinder may prejudice or delay the hearing of a proceeding, order separate trials or make any order it thinks just.

[21]   It is common ground that the application for joinder of Mr Winton’s children satisfies r 4.2(1).

[22]   I am also satisfied that the proposed plaintiffs are necessary to ensure all matters in dispute between the parties can effectively and completely be determined. This meets the jurisdictional threshold of r 4.56 which provides:

4.56     Striking out and adding parties

(1)A Judge may, at any stage of a proceeding, order that—

(a)the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or

(b)the name of a person be added as a plaintiff or defendant because—

6      McLachlan v MEL Network Ltd HC Auckland CIV-1998-404-253, 9 December 2004, Potter J at [60].

(i)the person ought to have been joined; or

(ii)the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.

(2)An order does not require an application and may be made on terms the court considers just.

(3)Despite subclause (1)(b), no person may be added as a plaintiff without that person's consent.

[23]   The approach to applications for joinder under r 4.56 is liberal. The Court must be in a position to do complete justice by deciding upon and settling the rights of all persons interested in the subject of the suit. The Court of Appeal explained the reasoning for this approach in McKendrick Glass Manufacturing Company Ltd v Wilkinson per Richmond J:7

It is the constant aim of a Court of equity to do complete justice by deciding upon and settling the rights of all persons interested in the subject of the suit, to make the performance of the order of the Court perfectly safe to those who are compelled to obey it, and to prevent future litigation. For this purpose all persons materially interested in the subject ought generally to be parties to the suit, plaintiffs or defendants, however numerous they may be, so that the Court may be enabled to do complete justice by deciding upon and settling the rights of all persons interested, and that the orders of the Court may be safely executed by those who are compelled to obey them, and future litigations may be prevented.

[24]   Kós J in Newhaven Waldorf Management Ltd v Allen noted the Court of Appeal had previously said that r 4.56 imposes an “fairly low threshold”.8

[25]   In this case, it is appropriate that Mr Winton’s children have the opportunity to participate in the proceedings and be heard. This was even pointed out by Virginia Winton who was of the view that that the existing plaintiff could not make the claim on behalf of his children. They should, therefore, be joined to ensure all issues are properly dealt with.

[26]   Turning to the matters of  prejudice and delay,  I note that the joinder of     Mr Winton’s  children  will  necessarily  add  extra  matters  to  be  dealt  with  in the

7      McKendrick Glass Manufacturing Company Ltd v Wilkinson [1965] NZLR 717 (SC) at 723.

8      Beattie v Premier Events Group Ltd [2012] NZCA 257 at [24] as stated in Newhaven Waldorf Management Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [46].

proceedings. Mr Chapman indicated whether the children had “late knowledge” as defined in s 14 of the Limitation Act 2010 was the main issue that may prolong the proceedings.

[27]   I note that there may be extra discovery involved in relation to the late knowledge claim, this will be limited in scope and should be able to be dealt with reasonably efficiently. I also note that any further evidence required on that topic will also be limited in scope.

[28]   The main issues in the proceeding are common to the present plaintiff and his children. Joining the children will not unduly enlarge the scope of the proceedings in relation to the substantive matters before the Court. In the context of the proceedings I do not believe joining the children will result in any “undue delay” or add significantly more material to what is presently required to be put before the Court.

[29]   Mr Chapman correctly pointed out the application could have been made earlier. However, given the interlocutory toing and froing that has occurred, it probably would not have made much difference to the progress of the proceeding if the application had been made earlier. Virginia Winton is yet to plead to the fourth amended statement of claim, and the matter has not yet been set down for hearing. In the context of the proceedings, and progress as a whole, the addition of Mr Winton’s children as plaintiffs will not unduly delay the proceedings nor prejudice Virginia Winton. The importance of having all the appropriate parties before the Court outweighs any minor delay or prejudice that Virginia Winton may face.

[30]   Therefore, I grant the application for joinder of Ms Victoria Winton as the second named first plaintiff and Mr James Winton as the third named first plaintiff.

Should the order for joinder be backdated?

[31]   The usual position is that the order dates from the date it is made. This was the view of Justice Potter in McLachlan.9

9      McLachlan v MEL Network Ltd, above n 9.

[32]   Mr Haig points to Credit Suisse Private Equity LLC v Houghton as supporting his proposition that the order for joinder in this case should be dated 22 March 2018 (the date he filed his application).10 Credit Suisse involved a representative action. Glazebrook J commented that it may be necessary to back date a representative order, should a limitation defence accrue between the date of filing and when the representative order is made, to ensure that the Court’s process does not disqualify those on behalf of whom a representative pleading is brought.11

[33]   Mr Haig said this reasoning is analogous to an application for joinder. He advised that the reason for the failure to obtain an order for joinder earlier was due to a combination of doubt as to whether the application was necessary at all and inadvertence as to the importance of the particular dates of the relevant allegations. In addition to the points set out above concerning the relevance of the limitation period to the two relevant allegations, Mr Haig noted that due to “late knowledge” Mr Winton’s children will not be the subject of a time bar on those allegations in any event.

[34]   In those circumstances, I am of the view the usual rule that the order applies from the date it is made, rather than being backdated, should apply. The limitation regime contained in the Limitation Act 2010 is carefully designed to enable the balancing of various rights and interests to ensure the proceedings are dealt with fairly. The merits or otherwise as to whether the allegations are within time and the effect of that, as well as whether the children’s position falls within the “late knowledge” period, are all matters which should be dealt with at the substantive hearing. Dealing with them at the time of the joinder is not appropriate. The full picture is not available to the Court at this stage.

[35]Accordingly, the application for backdating the order for joinder is dismissed.

10     Credit Suisse Private Equity LLC v Houghton 1 NZLR 541 (SC).

11     As per Glazebrook J at [128].

Representative action?

[36]   During his oral submissions, Mr Haig attempted to make the argument that Mr Winton represents his two children (for whom joinder was sought) under r 4.24 but the fourth amended statement of claim mistakenly did not note that Mr Winton was suing in a representative capacity  under r 4.35.12  He, therefore,  submitted that  r 1.9 should be used to amend the fourth amended statement of claim. I would not entertain this oral  application  as  no  warning  had  been  given  to  the  Court  or  Mr Chapman that this argument would be made. I will not cover this point in any greater detail for that reason.

Costs

[37]   Mr Chapman argued the application for joinder is seeking an “indulgence” and therefore costs should be awarded to Virginia Winton. He was unable to provide any authority for the proposition in relation to this application. Mr Haig submitted that costs on these interlocutory applications should be dealt with as usual. He rejected any tenet based on “indulgence” to deprive the successful party of costs.

[38]   The matter has already been allocated a 2B categorisation. As the application for joinder was successful there is no reason that costs should not be  awarded to   Mr Winton. Similarly, the application for backdating the joinder was not successful and therefore costs should go to Virginia Winton in relation to that application.

[39]   I note that Mr Chapman, for Virginia Winton, had earlier indicated to Mr Haig that he might consent to the order for joinder if it was subject to conditions. However, at the hearing Mr Chapman maintained the opposition to the joinder based primarily on the arguments of prejudice and delay in the proceedings. Therefore, I can see no reason why the order should not follow the successful joinder application.

[40]   Accordingly, costs on a 2B basis are awarded to Mr Winton on the application for joinder. Costs on a 2B basis are awarded to Virginia Winton on the application for backdating of the order for joinder.

12     High Court Rules 2016.

[41]Disbursements are to be fixed by the Registrar.

[42]   If there are any issues arising from the award of costs the matter should be referred back to me.

Grice J

Solicitors:

Nowland Gordon & Associates, Wellington Brandons, Wellington