PARLANE v HAYES & ANOR CA356/2014 [2015] NZCA 341

PARLANE v HAYES & ANOR CA356/2014 [2015] NZCA 341 [30 July 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA356/2014[2015] NZCA 341BETWEEN DOUGLAS FREDERICK PARLANEAppellantAND KELLY SUZANNE HAYES ANDANDREW NATHANIEL HAYES INTHEIR CAPACITY AS THEEXECUTORS AND TRUSTEES OF THEESTATE OF MARLENE RUTH KEEYSRespondentHearing: 7 July 2015Court: Miller, Lang and Wylie JJCounsel: M B Dodds for AppellantJ G Ross for RespondentJudgment: 30 July 2015 at 11.30 amJUDGMENT OF THE COURTA The appeal is allowed. We declare that the Judge was wrong to refuse to read the affidavits of the defence witnesses whom counsel proposed to call at the hearing.B The application for leave to adduce fresh evidence is granted.C Costs in this Court will lie where they fall.D The costs award in the High Court is set aside, and costs are to be fixed there with regard to this judgment.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)Introduction[1] Douglas Parlane was a defendant in a civil proceeding. He agreed to a timetable for exchanging evidence but exchanged his late, notwithstanding that most of it had been prepared in affidavit form and sworn before the timetable was agreed. No attempt was made to extend time or excuse the delay.[2] The plaintiffs, Kelly and Andrew Hayes, objected to the affidavits being filed late and satisfied the trial Judge, Duffy J, that the delay would necessitate an adjournment. The Judge accordingly refused to read the affidavits. That decision left Mr Parlane without evidence and his counsel promptly sought and was given leave to withdraw. The hearing then proceeded as a formal proof, with a separate substantive judgment being delivered for the plaintiffs.1[3] The judgment under appeal is the decision of Duffy J, delivered orally on 3 June 20142 with reasons provided later,3 to refuse to read the affidavits. The substantive judgment, which was delivered on 3 October 2014, is not the subject of an appeal, but that appears to have been an oversight on the part of Mr Parlane'sadvisors.4[4] On appeal, Mr Parlane sought to file an affidavit of his trial counsel, Mr Swan, to explain and excuse the delay in exchanging the defence affidavits. The respondents filed no evidence in response and appeared by their trial counsel, Mr Ross, who resisted admission of Mr Swan's affidavit. There was no cross-examination.1 Hayes v Parlane [2014] NZHC 2416 [Substantive judgment].2 Hayes v Parlane HC Whangarei CIV-2013-488-269, 3 June 2014.3 Hayes v Parlane [2014] NZHC 1306 [Interlocutory reasons judgment].4 It is not in dispute that although the judgment under appeal was interlocutory in nature, and was followed by a substantive decision, it is properly the subject of an appeal brought under s 66 of the Judicature Act 1908: Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309.The narrative[5] The proceeding concerns a claim to the estate of Marlene Keeys, who died of illness, aged 66, on 18 November 2012. Mr Parlane had been in a relationship with Ms Keeys during the later years of her life, and her will left him a legacy of $20,000, with the residue going to her daughter and executor, Kelly Hayes.[6] The respondents, whom we will call the executors, were granted probate of Ms Keeys' will. Mr Parlane gave notice of a claim against the estate under s 61 of the Property (Relationships) Act 1976, founding his entitlement on a qualifying de facto relationship of more than three years duration. This led the executors to commence, on 13 May 2013, a proceeding in the High Court at Whangarei in which they sought a declaration that the relationship was not a qualifying de facto relationship. They accept that Mr Parlane and Ms Keeys, who was a widow, began a relationship of sorts around December 2007 but say the two separated, initially for a few months in 2008 and finally in April 2009. Mr Parlane met the claim with a defence and counterclaim in which he alleged that he and Ms Keeys were in a de facto relationship from 2007 until her death.[7] A first case management conference was scheduled for 24 September 2013. It does not appear that a conference was held; rather, Associate Judge Bell adopted timetabling directions agreed by counsel. The executors were to file and serve their affidavits by 24 March 2014, Mr Parlane was to file and serve his by 21 April 2014, and any in reply were to be filed and served by 5 May 2014. A fixture was set for three days beginning 2 June 2014.[8] The executors served 18 affidavits from no fewer than 15 witnesses. Sevenof the plaintiff's affidavits were exchanged by 24 March 2014, but some were delayed until 5 May although unsworn drafts had been provided earlier.[9] By now Mr Ross had become counsel for the executors. He and Mr Swan negotiated a variation to the timetable. On 6 May, just before a scheduled telephone conference with the Associate Judge, they filed a joint memorandum recording thathaving regard to the executors' delay the parties had agreed that Mr Parlane wouldfile his affidavits by Friday 9 May. There was no provision for reply affidavits.Associate Judge Bell adopted the consent memorandum without holding a conference. It appears that counsel did not inform the Court that the executors had 15 witnesses but at some point they did obtain confirmation from the registry that the hearing was to begin on 3 June (it having turned out that the original date, 2 June,was the Queen's Birthday holiday) and a fourth hearing day was available.[10] Mr Parlane neither complied with the agreed timetable nor sought to change it. His counsel served 16 affidavits from 15 witnesses on 20 May. His own affidavit, which was obviously central to his case, was served on 26 May, a draft having been provided on 23 May. That draft, which brought the total of his deponents to 17, was provided 10 clear days before the hearing was to commence. It was apparent from the affidavits that on 6 May Mr Swan or his instructing solicitor already held 14 of them; they had been sworn in 2013. It also became apparent that Mr Swan had subpoenaed two further witnesses who had declined to make affidavits; he did not tell opposing counsel about this or invoke r 9.75 of the High Court Rules, under which a party may seek an order that a witness appear and be examined on oath before the hearing.[11] By letter of 21 May 2014 Mr Ross notified Mr Swan that he was taking instructions about the late filing of the affidavits. By letter of 26 May Mr Rossnotified Mr Swan that "formal objection" was taken to late filing. Mr Swan did not move to extend time or seek a teleconference with the trial Judge.[12] The hearing duly began on 3 June. Notices had been given requiring all 35 deponents for cross-examination. Many of the affidavits were brief, but their number and disputed content must have made it near-impossible to complete the hearing in three or even four days.[13] In his opening synopsis, which had been served before the hearing, Mr Ross objected to the late filing of the defence affidavits, which he characterised as an ambush, and complained that the delay had embarrassed the executors. When the hearing began counsel asked the Judge to not read the affidavits; in the alternative, to adjourn the hearing so the executors could reply to the defence evidence.[14] As noted, Mr Swan had taken no steps to seek an extension of time. In his opening synopsis he simply rehearsed the procedural background and said that thefault was attributable to the executors' original delay, that he had been undulyoptimistic when agreeing to exchange on just three days notice, and that neither party had sought an adjournment. In his affidavit filed on appeal he stated that he did not appreciate that the executors' objection might result in the affidavits not being read at all.[15] It appears from the judgment below that when confronted with Mr Ross'srequest that the affidavits not be read Mr Swan explained from the bar that there hadbeen delays in getting Mr Parlane's affidavit prepared and sworn, largely becauseMr Parlane does not use email and is not readily contactable by cellphone.5 He confirmed that he had the other affidavits available when he agreed to the new timetable but said he thought it necessary to retain them so Mr Parlane could confirm their accuracy. There is nothing in the narrative to suggest that Mr Parlane actually did check them before they were filed; it seems none were altered, and it may be that counsel eventually decided he could not wait any longer. Counsel agree that Mr Swan also told the Judge that because not all of his deponents were available for cross-examination Mr Parlane would rely on eight affidavits only. It is implicit in this advice that Mr Swan had abandoned any idea of calling the two witnesses he had subpoenaed. He did not move for an adjournment.[16] It does not appear to be in dispute that not until the defence affidavits were served did the executors learn the factual basis for Mr Parlane's defence andcounterclaim. On that basis Mr Ross sought an adjournment in the alternative. It appears that a new fixture would not be available until March 2015. Further, Mr Swan conceded that in order to meet an order for wasted costs of the adjournment Mr Parlane would have to sell his house.[17] Duffy J ruled orally that the affidavits would not be read, but indicated that Mr Parlane could still take part in the proceeding and his counsel was free to cross-examine witnesses and make submissions. Mr Swan instead sought leave to withdraw, evidently having taken the view that he could achieve little without5 Interlocutory reasons judgment, above n 3, at [29].evidence, and leave was granted. The hearing proceeded by way of formal proof. As noted, the Judge gave written reasons on 11 June for her decision not to read the affidavits, and it is that decision that is the subject of this appeal.The Judge's reasons[18] Duffy J commenced her analysis by stating the conduct of Mr Parlane's case revealed "blatant and deliberate disregard" for the Court's rules of procedure, andthat his counsel must bear some responsibility for that state of affairs.6 She gave three reasons for this conclusion.[19] First, she pointed out that Mr Parlane had agreed to the amended timetable set in the joint memorandum of 6 May 2014. At that time, counsel held 14 affidavits and had only three to prepare. In the circumstances, his failure to serve those affidavits in time was extraordinary. Further, counsel should have informed opposing counsel that Mr Parlane had 14 affidavits and expected to prepare others, as well as calling two witnesses under subpoena. The two counsel could then have discussed whether a three-day fixture would suffice (it seems the Judge may not have been aware that counsel did inquire of the registry at some point and were told that a fourth day was available). If the fixture was not sufficient, the Court should have been advised and an adjournment could have been negotiated, with valuable Court hearing time being made available for other litigants. She emphasised that had Mr Parlane complied with the timetable, the extent of his evidence would likely have caused someone to reassess the estimated hearing time.[20] Second, the Judge pointed to counsel's decision to subpoena additionalwitnesses. The hearing was to be held on affidavits, so r 9.75 should have been invoked for any reluctant witness. The subpoena procedure adopted might have prejudiced the plaintiffs because they would have no advance notice of the evidence. She did not find, however, that counsel had used subpoenas in an attempt to spring a surprise on his opponent.6 Interlocutory reasons judgment, above n 3, at [31].[21] Third, Mr Parlane took no action when he was given notice of the executors'objection to the late filing. The Judge took the view that the executors had given sufficient notice that they would object to the Court reading the affidavits. It was for Mr Parlane to supply the Court with some foundation on which it could exercise a discretion to extend time. He ought to have filed evidence. Instead, excuses were advanced from the bar. The Judge took them into account but found them weak; itwas no excuse to point to the executors' earlier delay, which had been remedied bythe consent memorandum of 6 May, and while Mr Parlane might need to approve the affidavits of other witnesses he could have done so much sooner. She added that shealso found telling Mr Swan's explanation that Mr Parlane would soon have funds topay wasted costs because he would be selling his house; that suggested that as at the fixture date Mr Parlane still had not secured the necessary funds to meet his legal costs.[22] For these reasons, the Judge concluded that Mr Parlane had failed to provide the Court with material upon which it could exercise its discretion to extend time in his favour.[23] The Judge accepted that the executors could not proceed with the hearing on 3 June given the amount of late evidence. She noted that they had no time to prepare reply evidence or to prepare to cross-examine the witnesses, let alone to consider how the evidence might affect their legal argument. The Court would have been left with no option but to adjourn the hearing if the affidavits were read, and the earliest available date was in March 2015.[24] The Judge acknowledged that to refuse to read Mr Parlane's affidavitseffectively undermined his defence and counterclaim with the result that his litigation would be brought to an end. But the injustice to him was considerably outweighed by the injustice that the executors and other litigants would suffer if the affidavits were accepted and the proceeding adjourned. She emphasised that it was not simply a matter of the executors waiting for a further fixture and having to delaydistribution of the estate in the meantime; hearing time is a valuable resource that is not to be squandered.7[25] The executors were given costs for their time and effort in opposing the reading of the defence affidavits.New evidence[26] We have chosen to admit the affidavit of Mr Swan. There is force in Mr Ross's submission that much of what Mr Swan has to say was said in theHigh Court and some of it could have been adduced in evidence there, presumablyvia an affidavit of Mr Parlane or counsel's instructing solicitor. Counsel who is faced with an objection to late evidence may be unwise to assume that the Court will entertain explanations from the bar.[27] However, some of the affidavit explains the conduct of counsel and could not realistically have been the subject of evidence below. To that extent it is fresh.8Much of it fleshes out the narrative and is not controversial — for example, Mr Ross accepts that the Judge was told that only eight witnesses would be called for Mr Parlane. To the extent that the affidavit is controversial — for example, as to Mr Swan's claims that he delayed filing affidavits to ensure they were not 'drip fed'to his opponent and that he did not anticipate the challenge to the affidavits being read — it is not necessary to our decision and we have not relied upon it.The appeal[28] Mr Dodds acknowledged that the Judge had a discretion to not read late affidavits but submitted that she exercised it in error: she gave insufficient weight tothe executors' default under the original timetabling directions and did not recognise that they had no right to file reply affidavits under the directions made on 6 May 2014; she gave insufficient weight to the fact that only eight of Mr Parlane's7 Aon Risk Services Australia Limited v Australian National University [2009] HCA 27, (2009) 239 CLR 175, cited in the interlocutory reasons judgment, above n 3, at [48]–[49].8 Court of Appeal (Civil) Rules 2005, r 45; and Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192.witnesses were to be called at the hearing; and she failed to acknowledge that Mr Parlane had a strong case.The High Court's jurisdiction to refuse to receive late evidence[29] New Zealand courts have long asserted an implied power to reject evidence tendered otherwise than in accordance with procedural rules or judicial directions.9The rationale was well expressed by Gleeson CJ:10A power to direct that certain steps be taken in relationship to adducing evidence necessarily carries with it a power to refuse to permit a party to adduce evidence otherwise than in accordance with those steps.Rule 7.48 of the High Court Rules confirms the existence of this power. The rule provides that should a party fail to comply with an interlocutory order or case management direction a judge may make any order that he or she thinks just. By way of example only, the rule provides that the judge may order that any pleading of the party in default be struck out.11 So it cannot be doubted that Duffy J had thepower to respond to the late filing of Mr Parlane's affidavits by refusing to readthem, although that had the practical effect of bringing his defence and counterclaim to an end.[30] The question is what the interests of justice require. They include, as this Court held SM v LFDB, which dealt with "unless" orders, the interests of the injured party, notably in terms of delay and wasted cost, any injustice to the defaulting party, and the public interest in administering justice without unnecessary delay and expense.12 As the Court there explained, judges should recognise, as Duffy J did here, that case management matters to the immediate parties, other litigants and the public at large:[27] Case management plainly matters to the immediate parties in any given case. It matters to litigants in other cases too, because it affects the time their cases will take to come to trial and influences their expectations of the Court; expectations matter because they influence the settlements in which the majority of civil proceedings end. And it matters to potential9 See Samoa Insurance Co Ltd v Boston Marks Group Ltd (1996) 9 PRNZ 405 (HC).10 State Pollution Control Commission v Australian Iron & Steel Pty Ltd (1993) 29 NSWLR 487 (CA) at 492, cited in Samoa Insurance Co Ltd v Boston Marks Group Ltd, above n 9, at 407.11 High Court Rules, r 7.48(2)(a).12 SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [31](f).litigants — the public at large — because they should feel confident that the Court can try cases fairly, quickly and efficiently. From the perspective of a judge dealing with any given case, all these interests are relevant; all form part of the interests of justice.[31] That said, case management is a means to an end: the prompt and just disposition of cases, including a merits judgment for those that reach hearing. Tocompromise irretrievably a party's right to a merits judgment for failure to meetsome procedural obligation is a serious step that should be taken only when necessary to do justice to the other interests at stake.[32] In this context, we think the Judge's reliance on Aon Risk Services v Australian National University was somewhat misplaced. That decision of the High Court of Australia recognised, as New Zealand courts have long done,13 that the interests of justice include the public interest in the efficient use of court time. By recognising that, the Court encouraged judges to take control of case management from the parties, for whom the public interest seldom matters. The question in this case is not whether the Court might invoke the public interest but whether the interests of the public and the plaintiffs together outweighed those of Mr Parlane. It must be said too that until the trial Judge became involved the Court itself did not take control of the case or exhibit any particular concern for court time.[33] As noted, counsel accept that the Court has jurisdiction to hear this appealalthough the trial Judge's decision was interlocutory and discretionary in nature.14Appellate courts ordinarily defer to trial Judges in such matters, but they have long been willing to intervene where the effect of some case management decision is todefeat a party's rights.15 This is plainly such a case.Application to the facts[34] Most of the particulars relied upon in support of the appeal can be discounted shortly:13 See for example Bevan-Smith v Reed Publishing (NZ) Ltd (2006) 18 PRNZ 310 (CA) at [34].14 Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309 and Bevan-Smith v Reed Publishing (NZ) Ltd, above n 13.15 Maxwell v Keun [1928] 1 KB 645 (KB) and Bevan-Smith v Reed Publishing (NZ) Ltd, above n 13, at [26].(a) The executors' default under the original timetabling directions did not contribute to Mr Parlane's delay; to the limited extent that the executors did delay, that was known on 6 May and cured by directions that extended the time for Mr Parlane to file his affidavits andeliminated the executors' right to file reply affidavits.(b) The Judge did not fail to recognise that the executors had already lost their right to file reply affidavits; she mentioned their need to reply in her reasons, but only when explaining why an adjournment was now necessary having regard to the evidence filed by Mr Parlane.(c) The Judge did not mention counsel's advice that only eight witnesseswere available for the defence, but she did not cite difficulty completing the hearing in the limited time available; she relied ratherupon the executors' difficulty in meeting the defence case at shortnotice. There may be something in Mr Dodds's point that Mr Ross had adequate time to prepare for the hearing and should have been called on to confront the eight witnesses whom the defence wanted to call, but the Judge took a different view and we are not persuaded that she was wrong.(d) The Judge did not examine the strength of Mr Parlane's case, but shedid state that an injustice was being done to him, implicitly recognising that the defence and counterclaim may have had merit.[35] Ultimately, Mr Dodds's challenge to the judgment came down to this: on thefacts, the Judge's opinion that the interests of justice favoured exclusion was plainlywrong.[36] We begin our examination of this contention by emphasising that although the Judge found that Mr Swan had most of the defence affidavits on 6 May andflouted the Court's directions by choosing to delay service, she did not find that he delayed to ambush his opponent; rather, she accepted counsel's explanation that hewanted to have Mr Parlane check the affidavits. We observe too that the last of theevidence was disclosed in draft form ten clear days before the fixture. Had the Judgeaccepted Mr Ross's submission that Mr Swan was trying to take him by surprise, theappeal would have confronted greater, perhaps insurmountable, difficulty.[37] Given that the Judge accepted counsel's explanation for delay, we think sheattached too much weight to his attempt to subpoena two witnesses to give evidence at the hearing instead of invoking r 9.75. It is debateable whether there was sufficient time to have witnesses appear pursuant to that rule for examination before the hearing. In any event, the attempt to call the witnesses was not pursued at the hearing; Mr Swan accepted that his case would be limited to eight of the witnesses who had sworn affidavits. The issue of subpoenas accordingly was of no consequence for the executors or the hearing.[38] We agree with the Judge that counsel should have taken steps to cure his default, whether by filing an application for extension of time or, perhaps more appropriately given the impending fixture, requesting an urgent conference with thetrial Judge. We agree too that had the Court's attention been drawn to the delay itmight have taken action, either to preserve the fixture or to schedule another one to ensure the assigned court time was not wasted. We do not think the fault is entirelythat of Mr Swan, however. The executors had not sought the Court's permission fordelay in exchanging their own evidence, and the Court unquestionably ought to have been told on 6 May that they had a very large number of witnesses. Had the Court learned of that, we expect that it would have convened a conference to check on compliance, to isolate the issues, to confirm the hearing duration, and to inquire whether settlement was in prospect.[39] When deciding where fault lay, we consider that the Court ought to have attached rather more weight to the procedural history; the parties had been allowed to negotiate their own timetable and vary it by agreement and there was no history of default by Mr Parlane. It was also apparent that counsel rather than his client was at least partly responsible for the delay, and that he evidently had not sought to take his opponent by surprise. The delay was not long and, all of the affidavits having been exchanged at least 10 days before the hearing, an adjournment was not inevitable.[40] Mr Ross sensibly conceded that the Court is not presently in a position to saythat Mr Parlane's case lacks merit. That is not to suggest that his case is strong; itappears from Duffy J's substantive decision, for example, that on various occasionsduring the alleged relationship he had claimed that he was single or that he and Ms Keeys were merely friends.16[41] So far as the executors were concerned, we accept that an adjournment would have delayed administration of the estate and increased the costs they would ultimately pay, but there is nothing to suggest that these things could not be compensated for in costs.[42] The Judge attached significance to Mr Parlane's inability to pay costs immediately. We agree that inability to pay an opponent's wasted costs may be animportant consideration in some cases, but here it was a question of timing and the Court had an alternative available. It was contemplating an adjournment of some nine months and it might have fashioned an unless order under which the defence and counterclaim would be struck out if costs were not paid in the interim. We observe too that Mr Dodds pointed to evidence that the executors had earlier demanded that Mr Parlane not sell his house because, if he were to succeed in these proceedings, it might be relationship property.[43] For these reasons, we respectfully differ from the Judge's assessment ofwhere the interests of justice lay. In our opinion the injustice of denying Mr Parlane a hearing on the merits plainly outweighed the consequences of adjournment in the circumstances of the case.Result[44] The appeal is allowed. We declare that the Judge was wrong to refuse to read the affidavits of the defence witnesses whom counsel proposed to call at the hearing.16 Substantive judgment, above n 1, at [77] and [79].Implications for the substantive judgment[45] Having regard to the obvious implications of this decision for the High Court's substantive judgment we invited counsel to agree on how an appealagainst that judgment should be disposed of. Mr Ross maintained, however, that his clients intend to resist any appeal on the ground that it would be futile; among other reasons, he contends that Mr Parlane is now long out of time to commence a relationship property proceeding against the estate in the Family Court, which has exclusive jurisdiction.17[46] We invite counsel to reconsider his stance in light of this appeal, the lesson of which is that those who follow a shortcut to success sometimes get there, if at all, only after making a long journey. A defence to the effect that a declaration would be futile would require a substantial amendment to the pleadings, which this Court might be unwilling to entertain in the circumstances. Such amendment might well be made in the High Court, of course, were the appeal to be allowed. The trial Court would also be in a position, as this Court is presently not, to determine theconsequences in law of the parties' original decision to resolve their dispute via adeclaration in the High Court. We strongly encourage both counsel to negotiate an approach to the substantive appeal that avoids needless additional delay and expense, with associated implications for costs in this Court.Costs[47] Mr Ross sought costs whatever the result and pursued an uplift on scale costs, complaining that Mr Parlane pursued a waiver of security for costs without notice, that consultation over the casebook was belated and inadequate, that an attempt was made to file an amended appeal that extended to the substantive decision, and that the affidavit of Mr Swan was sworn some months before it was filed. None of these grounds justify departure from the usual rule that costs follow the result, still less an uplift on costs.[48] There is a difference of view among the panel on costs. My view is that although Mr Parlane should have paid the costs of an adjournment in the High Court,17 Property (Relationships) Act 2007, ss 22(1) and 90.that being an indulgence to him, the position is different in this Court; his appeal was well founded and the executors, having chosen to resist it, should pay costs in the normal way. The view of the majority is that costs should lie where they fall, on the ground that he should not have needed an indulgence in the first place. There will be an order accordingly. The award of costs in the High Court is set aside, and costs in that Court will be fixed there with regard to this judgment.Solicitors:Websterlaw Limited, Auckland for AppellantSwanLaw, Whangarei for Respondents