WINTON v WINTON [2018] NZHC 1323

WINTON v WINTON [2018] NZHC 1323 [6 June 2018]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-Ā-TARA ROHECIV-2016-485-419[2018] NZHC 1323BETWEEN JAMES ANDREW WINTON, VICTORIAHOLLY LIBERTY WINTON AND JAMESHARRIS SAMUEL WINTONApplicantsAND VIRGINIA RUTH WINTONRespondentHearing: 31 May 2018Appearances: J D Haig for ApplicantsC S Chapman for RespondentJudgment: 6 June 2018JUDGMENT 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 thetrustee of their mother's estate. Both Virginia Winton and Mr Winton have twochildren each.[2] Mr Winton filed earlier proceedings against his mother and her associatedfamily trusts some years ago. Those proceedings were settled and concluded in 2012.The settlement terms were reduced to a written Settlement Agreement betweenMr 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.[3] The current proceedings were filed in 2016. Mr Winton claims that variousactions taken by Rachel Winton and the trusts have been instrumental in procuring theRiviera Trust to dispose of property in breach of the Settlement Agreement.[4] Initially the proceedings were directed toward specific performance, whichwould have required Rachel Winton to perform her obligations under the agreement.However, following Rachel Winton's death, the claim changed to one seekingdamages. The latest statement of claim (the fourth amended) claims damages in thesum of approximately $200,000 together with interest accrued and to be quantifiedprior to trial. It alleges various itemised breaches of the settlement agreement againstVirginia 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 HollyLiberty Winton) and James Winton (James Harris Samuel Winton), as plaintiffs to thisproceeding. Both children have consented to be joined to the proceedings. The secondapplication before me seeks a backdating of the joinder of Holly Winton and JamesWinton. The latter is sought because two allegations which are pleaded as particularsare 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 yetbeen 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 plaintiffswere made as far back as a teleconference on 9 June 2017 and the associated minuteof 12 June 2017. Associate Judge Smith recorded in the relevant minute that Mr Haigindicated that James Winton's children " might be joined as the second and thirdplaintiffs" 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 pleadingsfollowed. This ultimately resulted in the fourth amended statement of claim being1 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 claimnames Holly and James as plaintiffs. No application for leave to join them as plaintiffswas made at that time.[9] Mr Haig, acting for Mr Winton, says that he turned his mind further to the issuea joinder and decided out of an abundance of caution it was appropriate to joinMr Winton's children. Accordingly, Mr Winton then filed an application to join hischildren as plaintiffs by memorandum dated 22 March 2017. The memorandumsought 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 applicationfor 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 Jdirected that Mr Winton should provide evidence of his children's consent to beingjoined as plaintiffs and that there be liaison as to a time table for submissions. A fixturewas to be allocated unless there was agreement, in which case the applications wereto be dealt with on the papers.2[11] The applications have come before me as defended matters. It becameapparent when counsel filed memoranda the day before this hearing that the primaryissue 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 settlementagreement was breached by Rachel Winton effecting interest free loans to familymembers. The cause of action is a breach of the settlement agreement, so the relevantact or omission on which the claim is based is the date of the breach of that agreement.3The 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'sestate 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 onunder s 11(1) of the Limitation Act 2010 is six years after the dates 2 May and 7 May2012 (putting late knowledge to one side). The relevant dates, therefore, are 2 Mayand 7 May 2018 which passed two to three weeks before the hearing of theseapplications.[15] A potential limitation defence would not have been an issue had joinderoccurred at the time of filing of the fourth amended statement of claim on 7 March2018, or the date the application for joinder was made on 22 March 2018. This is whyMr Haig has argued the order for joinder, if made, should be backdated to the date theapplication for joinder was made.[16] Mr Haig argues there is no doubt the children have a commonality of interestwith their father as they have an equal entitlement under the settlement agreement.Accordingly, their addition does not require any substantive repleading of the presentfourth amended Statement of Claim.[17] Mr Chapman, for Virginia Winton, does not contest the commonality ofinterest. However, Mr Chapman says his client will be prejudiced by the delay to theproceedings if joinder of the children as plaintiffs is permitted. In particular he saysthat:(a) there has been unreasonable delay by Mr Winton's in his application tojoin 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 thechildren's claims which will increase the length of any trial; and(d) Virginia Winton has at all times been clear as to her position thatMr Winton cannot claim for his children's alleged losses withoutjoining them. His inaction means he is entirely the author of his ownmisfortune.[18] Countering these points, Mr Haig argues the Limitation Act issues are not fatalbecause:(a) the allegation concerning the 2 May 2012 variation of the deed is onlya part of the factual pleading rather than a separate claim. Mr Haig saidit was in the nature of a "legacy" pleading retained from the initialstatement of claim which sought specific performance against RachelWinton. The circumstances have now changed and therefore theallegation is more part of the narrative than anything else;(b) the allegation concerning the 7 May 2012 loan remains alive becausethe loan was later converted to Australian dollars on a date within thelimitation period. Mr Haig considers the Limitation Act issue will notoperate to his client's detriment;(c) other allegations are made in the fourth amended statement of claimthat are unaffected by any limitation defence; and(d) Mr Winton's children had late knowledge of the claim and therefore areentitled to pursue that claim within the extended late knowledge periodunder 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 McLachlanJustice Potter said:6An application for joinder does not make the party the subject of theapplication, a plaintiff or defendant in the proceedings. That requires a Courtorder[20] The Court has a wide discretion to join new plaintiffs. Rule 4.2 of the HighCourt Rules 2016 provides that:4.2 Plaintiffs(1) Persons may be joined jointly, severally, or in the alternative asplaintiffs,—(a) if it is alleged that they have a right to relief in respect of, orarising 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, acommon question of law or fact would arise.(2) On the application of a defendant, the court may, if it considers ajoinder may prejudice or delay the hearing of a proceeding, orderseparate trials or make any order it thinks just.[21] It is common ground that the application for joinder of Mr Winton's childrensatisfies r 4.2(1).[22] I am also satisfied that the proposed plaintiffs are necessary to ensure allmatters 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 defendantbecause the party was improperly or mistakenly joined; or(b) the name of a person be added as a plaintiff or defendantbecause—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 benecessary to adjudicate on and settle all questionsinvolved in the proceeding.(2) An order does not require an application and may be made on termsthe court considers just.(3) Despite subclause (1)(b), no person may be added as a plaintiffwithout that person's consent.[23] The approach to applications for joinder under r 4.56 is liberal. The Court mustbe in a position to do complete justice by deciding upon and settling the rights of allpersons interested in the subject of the suit. The Court of Appeal explained thereasoning for this approach in McKendrick Glass Manufacturing Company Ltd vWilkinson per Richmond J:7It is the constant aim of a Court of equity to do complete justice by decidingupon 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 whoare compelled to obey it, and to prevent future litigation. For this purpose allpersons materially interested in the subject ought generally to be parties to thesuit, plaintiffs or defendants, however numerous they may be, so that the Courtmay be enabled to do complete justice by deciding upon and settling the rightsof all persons interested, and that the orders of the Court may be safelyexecuted by those who are compelled to obey them, and future litigations maybe prevented.[24] Kós J in Newhaven Waldorf Management Ltd v Allen noted the Court of Appealhad 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 toparticipate in the proceedings and be heard. This was even pointed out by VirginiaWinton who was of the view that that the existing plaintiff could not make the claimon behalf of his children. They should, therefore, be joined to ensure all issues areproperly dealt with.[26] Turning to the matters of prejudice and delay, I note that the joinder ofMr Winton's children will necessarily add extra matters to be dealt with in the7 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 WaldorfManagement Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [46].proceedings. Mr Chapman indicated whether the children had "late knowledge" asdefined in s 14 of the Limitation Act 2010 was the main issue that may prolong theproceedings.[27] I note that there may be extra discovery involved in relation to the lateknowledge claim, this will be limited in scope and should be able to be dealt withreasonably efficiently. I also note that any further evidence required on that topic willalso be limited in scope.[28] The main issues in the proceeding are common to the present plaintiff and hischildren. Joining the children will not unduly enlarge the scope of the proceedings inrelation to the substantive matters before the Court. In the context of the proceedingsI do not believe joining the children will result in any "undue delay" or addsignificantly more material to what is presently required to be put before the Court.[29] Mr Chapman correctly pointed out the application could have been madeearlier. However, given the interlocutory toing and froing that has occurred, itprobably would not have made much difference to the progress of the proceeding ifthe application had been made earlier. Virginia Winton is yet to plead to the fourthamended statement of claim, and the matter has not yet been set down for hearing. Inthe context of the proceedings, and progress as a whole, the addition of Mr Winton'schildren as plaintiffs will not unduly delay the proceedings nor prejudice VirginiaWinton. The importance of having all the appropriate parties before the Courtoutweighs any minor delay or prejudice that Virginia Winton may face.[30] Therefore, I grant the application for joinder of Ms Victoria Winton as thesecond 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 theview of Justice Potter in McLachlan.99 McLachlan v MEL Network Ltd, above n 9.[32] Mr Haig points to Credit Suisse Private Equity LLC v Houghton as supportinghis 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 therepresentative order is made, to ensure that the Court's process does not disqualifythose on behalf of whom a representative pleading is brought.11[33] Mr Haig said this reasoning is analogous to an application for joinder. Headvised that the reason for the failure to obtain an order for joinder earlier was due toa combination of doubt as to whether the application was necessary at all andinadvertence as to the importance of the particular dates of the relevant allegations. Inaddition to the points set out above concerning the relevance of the limitation periodto the two relevant allegations, Mr Haig noted that due to "late knowledge" MrWinton's children will not be the subject of a time bar on those allegations in anyevent.[34] In those circumstances, I am of the view the usual rule that the order appliesfrom the date it is made, rather than being backdated, should apply. The limitationregime contained in the Limitation Act 2010 is carefully designed to enable thebalancing 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 ofthat, 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. Dealingwith them at the time of the joinder is not appropriate. The full picture is not availableto 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 thatMr Winton represents his two children (for whom joinder was sought) under r 4.24but the fourth amended statement of claim mistakenly did not note that Mr Wintonwas suing in a representative capacity under r 4.35.12 He, therefore, submitted thatr 1.9 should be used to amend the fourth amended statement of claim. I would notentertain this oral application as no warning had been given to the Court orMr Chapman that this argument would be made. I will not cover this point in anygreater detail for that reason.Costs[37] Mr Chapman argued the application for joinder is seeking an "indulgence" andtherefore costs should be awarded to Virginia Winton. He was unable to provide anyauthority for the proposition in relation to this application. Mr Haig submitted thatcosts on these interlocutory applications should be dealt with as usual. He rejectedany tenet based on "indulgence" to deprive the successful party of costs.[38] The matter has already been allocated a 2B categorisation. As the applicationfor joinder was successful there is no reason that costs should not be awarded toMr Winton. Similarly, the application for backdating the joinder was not successfuland 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 Haigthat 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 primarilyon the arguments of prejudice and delay in the proceedings. Therefore, I can see noreason why the order should not follow the successful joinder application.[40] Accordingly, costs on a 2B basis are awarded to Mr Winton on the applicationfor joinder. Costs on a 2B basis are awarded to Virginia Winton on the application forbackdating 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 bereferred back to me._________________Grice JSolicitors:Nowland Gordon & Associates, WellingtonBrandons, Wellington