HEY v HEY [2021] NZHC 263

HEY v HEY [2021] NZHC 263 [24 February 2021]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2020-412-000009[2021] NZHC 263UNDER the Declaratory Judgments Act 1908 and theTrustees Act 1956IN THE MATTER of the BMA and DCL HEY FAMILYTRUSTANDIN THE MATTER of an application for security for costsBETWEEN DOROTHY CATHERINE LOUISE HEYPlaintiffAND ALISTAIR WILLIAM HEYDefendantHearing: On the papersCounsel: C J G Lucas for PlaintiffM J Hammer for DefendantJudgment: 24 February 2021JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 24 February 2021 at 3.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Introduction[1] The plaintiff, Dorothy Hey (Dorothy), and the defendant, Alistair Hey(Alistair) are mother and son. They are in dispute concerning a family trust establishedby Dorothy and her now deceased husband, Brian Hey (Brian). Dorothy has purportedto remove Alistair as a trustee. Alistair does not accept Dorothy has the power toremove him. Litigation has ensued.[2] Dorothy has administered interrogatories. Alistair objects to answering someinterrogatories on the ground of privilege.1 Dorothy now seeks an order under r 8.38of the High Court Rules 2016 that Alistair answer those interrogatories.[3] A formal application under r 8.38 was not filed. To save costs, both partieswere content to have the Court proceed on written submissions. This was not asatisfactory approach. No affidavits have been filed. Counsels' submissions are notevidence and Alistair's claim to privilege is fact dependant.[4] I note also, by way of introduction, that in his counsel's written submissions,Alistair's objections to the interrogatories extend beyond the question of privilege. Healso argues the interrogatories are not relevant or are unnecessary.2Background[5] The facts as they can be gleaned from the pleadings are as follows.[6] Brian and Dorothy were husband and wife. They had two children namely,Alistair, and Christopher.[7] By Deed of Trust dated 25 May 2006, the BMA & DCL Hey Family Trust (theTrust) was settled. The settlors were Brian and Dorothy. The trustees were Brian,Dorothy and Alistair.1 Evidence Act 2006, s 54 and High Court Rules 2016, r 8.40(1)(c).2 High Court Rules, rr 8.36(1) and 8.36(3).[8] The only asset of the Trust is a house at 4 Coach Court, Cromwell whereDorothy resides.[9] Brian died on 27 February 2007 leaving a will dated 17 January 2007. By cl 7of his will, he provided:[u]nder clause 15 of the Trust Deed, I hold the power to appoint trustees of theTrust. I direct my trustees to transfer this power to ALISTAIR WILLIAMHEY.[10] On 25 August 2016, Dorothy, purporting to act in her capacity as appointorunder cl 15(e) of the Trust Deed, signed a notice removing Alistair as a trustee. Muchlater, in November 2019, Dorothy purported to appoint Christopher as a trustee.[11] By letter of 26 August 2016, Dorothy's lawyers, Berry & Co, advised Alistairthat he had been removed as a trustee and required him to sign documents to removehis name from the title of the Coach Court property.[12] On 23 September 2016, Anderson Lloyd, acting for Alistair, wrote to Berry &Co refusing to sign the documents. Alistair expressed concern about the manner ofoperation of the Trust and his position as a creditor of the Trust.[13] By letter dated 4 November 2016, Berry & Co made a further request thatAlistair sign the documents.[14] On 5 December 2016, Anderson Lloyd wrote to Berry & Co stating that,pursuant to cl 14 of the Trust Deed, Brian had transferred his power of appointment toAlistair under cl 7 of his will. They also stated that it was Brian's intention that Alistairwould have co-control of the Trust and its assets following Brian's death. Alistair didnot accept that he had been validly removed as a trustee.[15] On 24 February 2020, Dorothy filed proceedings seeking declarations that shehad validly exercised her powers under the Trust Deed.[16] Alistair filed a statement of defence on 29 May 2020.[17] On 1 October 2020, Alistair filed an amended statement of defence andcounterclaim. In his amended defence and counterclaim Alistair pleads:(a) that Dorothy's purported removal of him as a trustee is invalid;(b) as an affirmative defence, rectification of cl 14 of the Trust Deed (whichdeals with the transfer of Appointers' powers) to give effect to anintention "that [Dorothy] would have co-control of the Trust with either[Brian] or [Alistair]";(c) by way of counterclaim, that Dorothy had purported to exercise herpowers under the Trust Deed for an improper purpose; and(d) by way of counterclaim, that Dorothy is estopped from exercising herpowers under the Trust Deed.[18] On 15 October 2020, Dorothy administered interrogatories to Alistair. Alistairobjected to answering several interrogatories.[19] There are now only two of the interrogatories still in issue. They concernwhether Alistair's lawyers, Anderson Lloyd, were in possession of the Trust Deed andBrian's will when they prepared and sent their letter of 23 September 2016.[20] In a letter dated 22 December 2020, Anderson Lloyd proposed a way forward.Alistair would answer whether he (but not Anderson Lloyd) had copies of the relevantdocuments in his possession as at 23 September 2016. Anderson Lloyd advised:Our client instructs that, to the best of his recollection:(a) he obtained a copy of Mr Hey's Will prior to 23 September 2016; and(b) he is unable to recall when he received a copy of the Trust Deed.[21] Dorothy does not accept Alistair's proposal.The interrogatories, the answers and s 54 of the Evidence Act 2006[22] The interrogatories that are in issue are:Did Anderson Lloyd have a copy of the Trust Deed in their possession whenthey prepared and sent the letter of 23 September 2016?Did Anderson Lloyd have a copy of the father's last will dated 17 January2007 in their possession when they prepared and sent the letter of 23September 2016?[23] Alistair responded to both interrogatories as follows:I object to answering this interrogatory pursuant to High Court Rule8.40(1)(c), on the grounds that the information sought is privileged.[24] Privilege is asserted in reliance upon s 54(1) of the Evidence Act. It provides:54 Privilege for communications with legal advisers(1) A person who requests or obtains professional legal services from alegal adviser has a privilege in respect of any communication betweenthe 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 legalservices from the legal adviser; or(ii) the legal adviser giving such services to the person.Alistair's position[25] Ms Hammer submits that any information held by Anderson Lloyd as a resultof communications between Alistair and Anderson Lloyd was intended to beconfidential and made in the course of obtaining and giving legal advice and istherefore privileged. This includes, it is said, the date upon which such informationwas provided, as such information is related to the giving and receiving of legal adviceand not collateral to it. To require Alistair to answer the interrogatories would"degrade the fundamental principle of client-solicitor privilege".[26] It is also submitted that the interrogatories are unnecessary and oppressive inlight of the information that has been provided as to Alistair's recollection of whatdocuments he possessed at the relevant time.Dorothy's position[27] Mr Lucas argues to attract privilege under s 54, a document must have beencreated or a communication made for the purpose of receiving or administering legaladvice or assistance. This is because s 54 confers privilege on communications. Heargues, Alistair does not claim privilege in respect to communications but informationheld by Anderson Lloyd as a result of communications. Section 54 has no application,he submits, to such information.[28] Mr Lucas refers to New Zealand Institute of Chartered Accountants v Clarke,which concerned whether privilege could be asserted under s 57(1) of the EvidenceAct for a letter written to a case officer at the Disputes Tribunal that the defendant,Mr Clarke, had marked "without prejudice" and used the initials "CA" after his name.3Mr Clarke had been charged with an offence against s 14(1)(a) of the Institute ofChartered Accountants of New Zealand Act 1996 of creating a misleading impressionthat he was a Chartered Accountant and a member of the Institute. In the District Courtit had been held that the letter was inadmissible in evidence as the purpose of the letterwas to advance a settlement offer without prejudice and Mr Clarke enjoyed theprivilege given by s 57(1) of the Evidence Act.[29] On appeal, Keane J held that peripheral features of a without prejudicecommunication do not touch on the purpose for which the privilege is granted.Therefore, whilst the strict content of the letter was "sacrosanct", peripheral featureslay beyond the privilege that s 57(1) conferred. The date of the letter, the fact ofMr Clarke's signature and the way in which he designated himself, were all aspectsthat did not enjoy privilege,4 as "they lie beyond the strict content of the letter to whichthe claim of privilege truly related".53 New Zealand Institute of Chartered Accountants v Clarke [2009] 3 NZLR 264 (HC).4 At [51].5 At [57].[30] Mr Lucas argues the reasoning in Clarke applies here. He contends theprivilege created by s 54(1) is concerned with protecting only communications but notperipheral or extraneous matters such as the date of physical delivery of documentswhich are independent facts.[31] Mr Lucas also argues the two interrogatories go to the heart of Alistair'srectification case. He says the purpose of the interrogatories is to establish Alistair'sstate of knowledge when Anderson Lloyd's letter of 23 September 2016 was sent. Theinterrogatories are, he contends, simple to answer and not oppressive. They are alsonecessary and cannot be dealt with satisfactorily by cross-examination at trial. Thecontent and direction of Dorothy's submissions will turn on Alistair's answers andAlistair could "dodge the questions" by avoiding making prior enquiries required toknow the answers.High Court Rules[32] A Judge has broad powers under the High Court Rules when ruling oncontested interrogatories. The Judge may order that the answers are not required,6require the applicant to specify on what grounds they object to answer an interrogatory,and determine the sufficiency of an objection.7 Under r 8.38, a Judge may require aparty to answer to interrogatories. The interrogatories must relate to matters inquestion in the proceeding and the Judge must be satisfied the order is necessary at thetime when it is made.[33] Rule 8.38 reads:8.38 Order to answer(1) A Judge may, at any stage of any proceeding, order any party to fileand serve on any other party (whether the interrogating party or not)a statement prepared in accordance with rule 8.39 in answer tointerrogatories specified or referred to in the order.(2) The interrogatories must relate to matters in question in theproceeding.(3) The order may require the statement to be verified by affidavit.6 High Court Rules, r 8.36(1)(a).7 Rule 8.40(3).(4) The Judge must not make an order under subclause (1) unless satisfiedthat the order is necessary at the time when it is made.Relevance and necessity[34] An interrogatory will be relevant if it has some bearing on questions in issueand "a tendency to establish, or form a step in establishing, the allegations".8 Dorothywishes to argue that because in its letter of 23 September 2016 Anderson Lloyd didnot assert Alistair held a power of appointment under the Trust Deed (the cl 14argument) or that there was an intention that Alistair would, along with Dorothy, haveco-control of the Trust after Brian's death (the rectification argument), these were"developed subsequently". It is thought that to advance this attack, Dorothy needs toknow when Anderson Lloyd came into possession of Brian's will and the Trust Deed.[35] Alistair's cl 14 argument is that Brian transferred his power of appointmentunder the Trust Deed to Alistair in his will of 17 January 2007. Whether this is thecase is a matter of construction of the will and the Trust Deed. When Anderson Lloydwas provided with copies of these documents does not appear relevant.[36] However, the rectification argument is based on an assertion of the existenceof an intention at the time of the execution of the Trust Deed that Dorothy would haveco-control of the Trust with either Brian or Alistair.9 Dorothy will argue there was nosuch intention, the rectification argument was only developed after 23 September 2016and, the letter of 23 September 2016 reflects Alistair's belief as to his position at thatdate. I accept that the information sought may strengthen Dorothy's hand and counterany inference that Anderson Lloyd did not have the means to make the rectificationargument when preparing the letter of 23 September 2016. On this basis, I accept theinterrogatories are relevant to an issue arising in the proceeding.[37] It is argued the interrogatories are unnecessary because of the informationAlistair has provided (at [20] above). I do not accept that submission. The8 Bank of New Zealand v Gardner (1990) 2 PRNZ 278 (HC) at 283, citing Shore v Thomas [1949]NZLR 690, 695.9 For a summary of principles governing rectification see Swainland Builders Ltd v FreeholdProperties Ltd [2002] EWCA Civ 560 and in a trust context Re Butlin's Settlement Trusts [1976]2 All ER 483 (CA).interrogatories are proper and relevant. The information Alistair proffers does notdeliver the information Dorothy seeks. She is not required to accept Alistair'sreformulation of the interrogatories.Privilege[38] A party claiming privilege bears the onus of proving privilege applies.10 In thiscase, that is Alistair.[39] The rationale for legal professional privilege is stated by Lord Taylor CJ in R vDerby Magistrates' Court ex parte B as follows:11The principle which runs through all these cases, and the many other caseswhich were cited, is that a man must be able to consult his lawyer inconfidence, since otherwise he might hold back half the truth. The client mustbe sure that what he tells his lawyer in confidence will never be revealedwithout his consent. Legal professional privilege is thus much more than anordinary rule of evidence, limited in its application to the facts of a particularcase. It is a fundamental condition on which the administration of justice as awhole rests.[40] The essential concept under s 54 is "communication". The section confersprivilege on communications. Communication is not defined in the Act but it is not tobe interpreted narrowly.12 Privilege commonly extends to verbal communicationsbetween lawyer and client or to documents created during the course of a personobtaining legal advice, such as letters, emails, fee notes13 and, working papers.14However, documents that are not initially privileged and given to a lawyer for thepurposes of obtaining legal advice will not cause those documents to attract10 See Kupe Group Ltd v Ariadne Australia Ltd (1991) 4 PRNZ 135; Sky City InvestmentsChristchurch Ltd v Thomas (2004) 17 PRNZ 411, citing T D Haulage v New Zealand RailwaysCorp (1986) 1 PRNZ 668.11 R v Derby Magistrates' Court ex parte B [1996] 1 AC 487 (HL) at 507 cited in B v AucklandDistrict Law Society [2003] UKPC 38, [2004] 1 NZLR 326 at [37] and Gowing & Co LawyersLtd v Police [2013] NZHC 2177 at [10].12 Newland v Henderson Steele Ltd HC New Plymouth CIV-2009-443-2990, 18 November 2011;New Zealand Institute of Chartered Accountants v Clarke, above n 3, at [29]; Simunovich FisheriesLtd v Television New Zealand Ltd [2008] NZCA 350 at [167].13 Dixon v Kingsley [2015] NZHC 2044 at [43].14 Bain v Minister of Justice [2013] NZHC 2123, (2013) 21 PRNZ 625 at [143].privilege.15 Here, it is not suggested that Brian's will and the Trust Deed are privilegeddocuments.[41] I do not know how or when Anderson Lloyd took possession of the will andTrust Deed. There is no evidence about that. That would ordinarily be fatal toAlistair's reliance upon s 54. However, doing the best I can, there is correspondencethat shows Anderson Lloyd is in possession of the will and the Trust Deed. Mostlikely, and I infer, the documents came into Anderson Lloyd's possession as a resultof Alistair providing them in the course of seeking advice following receipt ofDorothy's lawyer's demand that he sign documents to remove him from the title of theCoach Court property.[42] One can readily see that what Dorothy seeks can be distinguished from theusual communications that pass between lawyer and client in the course of requestingreceiving, preparing or giving legal advice. What has not been adequately explainedby Alistair is how it can be said the fact a document is delivered on a particular dateamounts to a communication and what information has been conveyed or exchangedas a result of it that should be protected from disclosure.[43] In Cooper v R it was held that a failure by Mr Cooper to advise his solicitor'srepresentative that he was removing a document from his file was not acommunication protected by privilege.16 The Court of Appeal said:17Further it is entirely unclear what the protected communications could be. Thedeception occurred by omission. It is not that Mr Cooper said something ona privileged occasion that should be protected, The nub of the first charge isthat he failed to say he was taking the form.[44] Mr Lucas seeks to draw a distinction between protected communications andinformation that is peripheral to them. Such a distinction may not always be easy tomake. The approach I adopt is that merely because some fact becomes known by a15 Gowing & Co Lawyers Ltd v Police, above n 11, at [16], referring to Pearce v Foster (1885) 15QBD 114 at 118-119.16 Cooper v R [2018] NZCA 159.17 At [28].lawyer as a result of the lawyer/client relationship does not mean it is privileged.18However, in some instances, facts learned may be sufficiently closely connected to thegiving or receiving of legal advice that privilege attaches to them.19 This may be thecase where disclosure of a fact will reveal communications that would otherwiseattract privilege. Such an approach is consistent with Clarke.20 It is consistent alsowith the view of the Court of Appeal in Simunovich Fisheries Ltd v Television NewZealand Ltd that the privilege created by s 54(1) "should be as narrow as its principlenecessitates".21[45] In Simunovich, the issue was whether TVNZ had to produce for inspection, aspart of discovery, draft scripts sent to lawyers seeking advice and the subsequentversions of scripts reflecting the advice given. TVNZ successfully argued the draftsbecame privileged because they would tend to reveal the content of privileged legalcommunications when each successive version of the script would reflect the legaladvice given on the previous version and thereby reveal the lawyer's line of reasoning.[46] The Court said:[169] We readily accept that the draft scripts were sent to Simpson Griersonon a privileged occasion. TVNZ sought advice about them. But where aclient's document was not prepared for the purpose of seeking advice, it doesnot attract privilege merely because it was sent to the lawyer as an adjunct toa communication in which advice was sought or given. It is privileged onlyif in the circumstances its disclosure would reveal the content of the privilegedcommunication.[47] Another case of interest is Gowing & Co Lawyers Ltd v Police, where the issuewas whether a letter written by an accused to a girl he had been charged withindecently assaulting was privileged on the basis the accused had subsequently giventhe letter to his lawyer.22 It was held the letter was not a communication between alegal adviser and his or her clients made for the purposes of obtaining or giving legaladvice or services and not privileged. However, the accused argued that the relevant18 Dwyer v Collins (1852) 7 Exch 639 at 648; Re Cathcart, ex parte Campbell (1870) LR 5 Ch App703.19 Hodge M Malek (ed) Phipson on Evidence (19th ed, Thomson Reuters, London, 2018) at 722.20 New Zealand Institute of Chartered Accountants v Clarke, above n 3.21 Simunovich Fisheries Ltd v Television New Zealand Ltd, above n 12, at [165].22 Gowing & Co Lawyers Ltd v Police, above n 11.communication was not simply the letter. As the accused's intent was to hand the letterto the lawyer for the purposes of seeking legal advice, the whole communication wasto be considered as confidential and made in the course of and for the purposes ofseeking advice from the lawyer. Katz J rejected this submission as the letter wasseparable from the total package of the meeting and any advice given at the meetingand disclosure of the letter would not tend to reveal the content of any legal advicegiven. In addition, the letter was not intended to be confidential. Katz J distinguishedSimunovich on the basis that the accused could not provide an explanation, even in theabstract, as to how disclosure of a solitary non-privileged document could tend toreveal the content of legal advice.[48] I have no evidence and have received no submissions on behalf of Alistair asto how it could possibly be the case that disclosure of information sought in theinterrogatories could reveal the content of any communication between him andAnderson Lloyd and, in particular, either his instructions to Anderson Lloyd or legaladvice that he received. I cannot see how that could be the case. I accept that Dorothymay ask the Court to draw inferences at trial from the answers to the interrogatories,but she is entitled to do so and such inferences will relate to Alistair's state of mind asto the existence of the now pleaded intention; not as to content of any communicationsbetween Alistair and Anderson Lloyd. I therefore do not consider that Alistair's claimto privilege can be maintained.[49] In addition, under s 54(1), the communication to or from the legal adviser mustbe intended to be confidential for privilege to apply. Alistair has not shown that thedate on which the documents were supplied to Anderson Lloyd was intended to beconfidential. On this ground, also, Alistair's claim to privilege is rejected.Result[50] I order that Alistair shall, within 14 days, file and serve on Dorothy a statementprepared in accordance with r 8.39 in answer to the interrogatories (a) and (b) in thenotice dated 15 October 2020.[51] Counsel should attempt to reach agreement on costs. If they cannot do so, theymay address me on the matter when this case is next called on 17 March 2021._______________________O G PaulsenAssociate JudgeSolicitors:Lucas & Lucas, Dunedin.Anderson Lloyd, Queenstown