SNEDDEN v REID [2018] NZHC 2976

SNEDDEN v REID [2018] NZHC 2976 [16 November 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-1159[2018] NZHC 2976BETWEEN DAVID WARWICK SNEDDEN andBENJAMIN NESBIT SNEDDENPlaintiffsAND SUSAN LYNETTE REIDFirst DefendantJASMINE HANAWYSecond DefendantCHRISTINE LAGARDEThird DefendantHearing: 15 November 2018Counsel: E Heaney for PlaintiffsA M Cameron for First DefendantNo appearance for Second and Third DefendantsJ Cundy for Marie DawsonJudgment: 16 November 2018JUDGMENT OF WHATA JThis judgment was delivered by me on 16 November 2018 at 1.00 pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate: .Solicitors: TGT Legal, AucklandWilson McKay, AucklandLee Salmon Long, Auckland[1] The matter comes before me as Duty Judge. The plaintiffs have made anapplication for Beddoe Orders. The application is due to be heard on 22 November.There is an issue of standing. I must necessarily deal with the present matter urgently.[2] The Beddoe application is one of many proceedings concerning the estate ofMr Gallais and the Gallais Family Trust (the Trust). The plaintiff trustees areexecutors under his will. The defendants are beneficiaries under the Will and the Trust.The object of the application is to obtain and use Trust funds in litigation commencedby Ms Dawson against the Trust.1 Ms Dawson claims to be Mr Gallais adopteddaughter. She also claims, in short, the Trust is void, with the result that the Will isinvalid. If so, she adds, Mr Gallais died intestate and she will be a primary beneficiaryin intestacy. She also has a Family Protection claim against the Will.[3] Ms Dawson seeks to appear at the Beddoe application to oppose it. She saysthat if granted, Trust monies belonging to her will be diverted to pay for the litigation.In effect, she says she will be funding their case. The plaintiffs and the defendantsoppose Ms Dawson's involvement in the application, claiming that she has no standingto appear. They say any interest she has in the Trust is entirely contingent in fact andlaw.Process[4] This matter initially came before Churchman J on 18 July 2018. It appears thathe (or Judge Andrews in the Dawson proceedings) set down both the issue of standingand the Beddoe application to be heard on 15 October 2018. The hearing date wassubsequently shifted to 22 November 2018. Recently however, the plaintiff trusteessought a pre-hearing ruling on whether Ms Dawson had standing. That was resolvedby Lang J on 9 November 2018. He directed a separate hearing on the issue ofstanding. That is how it came to be before me. I was not content to hear the matter onthe papers.1 Dawson v Snedden CIV-2018-404-419.Assessment[5] The parties could point to no local authority directly on point. Mr Cundy,however, refers a decision of Court of Appeal of Gibraltar in STG Valmet Trustees Ltd.That Court stated:2Summary of the lawThe effect of the authorities is to support the general proposition that theunusual and (as it may appear to some) arcane procedure of a Beddoeapplication survives in our law as a valuable facility for trustees, but theexercise of this specialised jurisdiction is subject to two guiding principles:(a) Claimants to the trust fund, whether they be beneficiaries or strangersto the trust, should be allowed the maximum opportunity to be heardon the application consistent with the need to maintain confidentialityon matters which properly arise for consideration between the trusteeand the Court alone.(b) Orders that the trustee is to have his costs paid out of the trust fund inany event should be made sparingly, with due regard to the principleswhich apply to the analogous case of pre-emptive costs orders soughtin the general jurisdiction.[6] Ms Heaney sought to distinguish this authority on the basis that it was dealingwith a claim by a creditor against a Trust. She added that involvement of a third-partyat a Beddoe application is unprecedented and in this case, is tantamount to enabling ahostile, otherwise disinterested, third party to make a pre-emptive strike against theTrust without any proper basis for doing so.[7] For my part, the observations made by the Court of Appeal, with respect,accord with the principles applying more generally to intervenor applications in thisjurisdiction. As Thomas J said in Capital and Merchant Finance Ltd the underlyingissue is whether it would be unjust to adjudicate on the matter in dispute without theintervener being heard.3 Relevant considerations include whether the intendedintervenor's legal rights against or liabilities in relation to the subject matter will bedirectly affected and whether s/he or it can rely on existing parties to protect their2 STG Valmet Trustees Ltd v Brennan 4 ITELR 337 at 351.3 Capital and Merchant Finance Ltd (in liq) v Perpetual Trust Ltd [2014] NZHC 3205; [2015]NZAR 228 at [41].interests. Furthermore, the form of any intervention may be tailored to ensure thatinvolvement of the intervenor is strictly in proportion to its interest in the proceedings.4[8] Does Ms Dawson have a direct legal interest or liability in relation to thesubject matter of the proceeding interest in the proceedings? I am prepared to acceptfor argument's sake that she has at least contingent interest in any Estate property –there is evidence that she was legally adopted by Mr Gallais. Problematically for her,as matters presently stand, the Trust holds no assets deriving from Mr Gallais' estatethat might presently be subject to a Beddoe Order. The corollary of all of this is that aBeddoe Order will have no direct legal effect on Ms Dawson. While the making of theBeddoe Order may assist the trustees in defending Ms Dawson's claim against theTrust, it will not directly affect any of her existing legal interests or liabilities.[9] There is, however, an air of unreality to this analysis. The Executors of theEstate are also the Trustees of the Trust. They intend to lend the Trust the litigationfunds. Inevitability, it appears, Estate funds will be diverted to the Trust litigation. Adecision to decline standing will simply delay an inevitable challenge to a Beddoeorder.[10] I have come to the view therefore that pragmatic approach is warranted. I amsatisfied, in terms of rule 7.43A, that Ms Dawson has a sufficient contingent interestfor the purpose for appearing, as a non-party, at the Beddoe application to makesubmissions only. I further direct that the appearance should be limited to one halfhour only (which is the amount of time Mr Cundy said was needed to be heard) andsubject to the confidentiality orders already in place.[11] As to timetabling, I expect the parties should be able to agree a timetable forexchange of submissions. Dispute about this is discouraged, but leave is granted toobtain further assistance from me if that proves necessary.4 Wilson v Attorney General [2010] NZAR 509.Costs[12] I reserve to the Judge hearing the Beddoe application any issue as to costs,including costs on the standing issue. In my view, the Judge hearing the applicationwill have the best perspective on the merits of Ms Dawson's interests in the Beddoeapplication and whether her attendance at the hearing was an unnecessary indulgence.