VON BRAINICH-FELTH-EILANDER v WARD [2019] NZHC 1029

VON BRAINICH-FELTH-EILANDER v WARD [2019] NZHC 1029 [10 May 2019]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2018-409-000008[2019] NZHC 1029BETWEEN WILLEMINA BRAINICH VONBRAINICH-FELTH-EILANDERPlaintiffAND RUPERT RANNIE WARDDefendantHearing: 10 May 2019Appearances: A M Halloran for PlaintiffS N van Bohemen for DefendantJudgment: 10 May 2019JUDGMENT OF JUSTICE OSBORNE(on leave to amend pleadings)[1] This is a consolidated set of proceedings, representing two proceedingsinitiated in the Family Court in 2009 and 2010 respectively for spousal maintenanceand relationship property orders. (The spousal maintenance claim was subsequentlywithdrawn).[2] Upon transfer to this Court at the end of 2017, directions had to be made inrelation to expert evidence, the completion of factual evidence, and the close ofpleadings date. This Court ordered on 23 May 2018 that the close of pleadings datewould be 1 November 2018. In the same Minute, directions were made as to allocationof a trial.[3] The trial initially allocated was to commence on 18 February 2019.Subsequent amendments of the timetable led to the allocation of a later close ofpleadings date (1 February 2019) and a later trial date (27 May 2019).[4] There was further slippage by the defendant in relation to the new timetable asa result of which, in February 2019, further time was made available to the parties forcompletion of evidence. The close of pleadings date (1 February 2019) was notaltered. Consistently with that, the last pleading filed was the plaintiff's statement ofdefence to the defendant's counterclaim, filed on 21 December 2018.Defendant's interlocutory application[5] On 30 April 2019, a little under four weeks before the hearing date, Mr vanBohemen on behalf of the defendant filed an interlocutory application for leave to filean amended statement of defence and counterclaim (after the close of pleadings date).Filed with the application were a draft amended pleading and a memorandum of Mrvan Bohemen explaining the various aspects of the defendant's proposed amendments.[6] The application for leave is opposed by the plaintiff.The issues in the proceeding[7] As summarised by Mr van Bohemen, the issues in the proceeding are:(a) the division of relationship property owned by the parties;(b) whether or not compensatory orders should be made pursuant to ss 15,18B and 18C of the Property (Relationships) Act 1976 (PRA); and(c) the plaintiff's claim under s 182 of the Family Proceedings Act 1980(FPA) in respect of a family trust the parties established during thecourse of the relationship.The proposed amendments[8] The defendant's proposed amendments would effectively withdrawconcessions made in his existing pleadings in relation to three matters;(a) whether rights and powers of the parties in relation to the family trustare relationship property, by reference to Clayton v Clayton and otherauthorities;1(b) whether the Court is precluded from making orders in relation to ororders which take account of two properties owned in the Netherlands;and(c) whether three items (14, 15 and 16 being property received by thedefendant out of an entity known as "Oceania" and some tax benefits)identified in the plaintiff's Schedule B (in their statement of claim)were assets of the defendant at the time the parties ceased livingtogether and whether it would be unjust to treat those items asrelationship property.[9] The defendant's application was initially not supported by an affidavit but inthe notice of appeal Mr van Bohemen stated as the grounds on which the leave toamend is sought:(a) amendments are required to provide for a just division of the parties'relationship property;(b) amendments are required to ensure the resolution of questions underthe PRA are resolved consistent with justice;(c) amendments of the pleadings are required to ensure that the realcontroversy between the parties is addressed within the correct legalframework; and(d) the amendments will not prejudice the plaintiff.1 Clayton v Clayton [2016] NZSC 29, [2016] 1 NZLR 551.Ground of opposition[10] The plaintiff's grounds of opposition are that:(a) no reasons were given for the defendant's delay;(b) if the amendments are permitted, the plaintiff will suffer irreparableinjury;(c) the true contest between the parties is already before the Court;(d) the granting of leave is not in the interests of justice.[11] In her memorandum filed with the notice of opposition, Ms Halloranelaborated upon those grounds.[12] In the course of her submissions, Ms Halloran has identified the fact that thedefendant consistently from the outset of this relationship property litigation (in 2010)has adopted the classification of property from which he now seeks to withdraw. So,for instance, in his narrative affidavit in December 2011, he dealt specifically with thepowers that the parties hold in relation to the family trust and proposed that by reasonof those powers the trust interest in the Rangiora property be treated as theirrelationship property. In the same affidavit, he dealt with the Netherlands properties,which at that point were the subject of an application which the plaintiff hadcommenced before the Netherlands Courts. The defendant stated in his affidavit(December 2011) that he agreed to the New Zealand Court applying the PRA to allproperty the parties owned (meaning including the Netherlands properties).[13] Upon the eventual transfer of the proceedings to this Court in late-2017, theCourt recorded, having regard to the age of the proceedings, that it was unlikely thatany further extensions of timetable directions would be granted. The close ofpleadings date was nevertheless still distant.[14] In summary, Ms Halloran noted that the defendant had nine years, with thesame counsel, to state his position concerning all relationship property issues and thatthe defendant has consistently taken the position that all of the parties' property isrelationship property, within the jurisdiction of this Court.[15] Ms Halloran, by her memorandum, observed that the plaintiff has relied on theexisting pleadings in casting her claim and preparing her evidence for trial. If leave isgranted to the defendant to make all his proposed amendments, the plaintiff wouldneed time to reassess her position both in relation to evidence and other possible causesof action or reply. Ms Halloran submits that there will not be sufficient time to do thatbetween now and the scheduled commencement of trial. The plaintiff would sufferirreparable injury through not having a proper opportunity to meet the defendant'sreformulated case.Defendant's affidavit[16] Notwithstanding the requirements of r 7.20 High Court Rules, the defendantfollowing receipt of the notice of opposition purported to file a short affidavit insupport of his application. He briefly dealt with two of the amendments:(a) In relation to jurisdiction over the Netherlands properties, he deposedthat he now believes that the Court does not have jurisdiction to do thatand both parties have been mistaken in their belief concerningjurisdiction.(b) In relation to the Rangiora property, he deposed that since separation,he and the plaintiff have tried to seek a pragmatic division of assetswhich they own and control (including the family trust assets) and:To that end, I was prepared to agree to classification of thosepowers as relationship property.He deposes that he now believes that as a matter of law, the powers inrelation to the trust are not "property" as defined by the PRA (it is inrelation to this contention that Mr van Bohemen submits that Claytonv Clayton is distinguishable.(c) In relation to the items identified in the plaintiff's Schedule B, thedefendant makes no comment.[17] In his affidavit, the defendant then makes a brief comment on delay andprejudice:I do not believe that settlement of property issues between Willemina and mewill be delayed if leave is granted to me to amend my pleadings.Amendment after close of pleadings – the principles[18] Rule 7.7 High Court Rules provides that on amended pleading may be filedafter the close of pleadings date without the leave of a Judge. In Elders Pastoral Ltdv Marr, the Court of Appeal referred to the "three formidable hurdles" which anapplicant for leave must establish, namely, the applicant must show:2(a) the amendment is in the interests of justice;(b) it will not significantly prejudice the other party;(c) it will not cause significant delay.[19] The Court of Appeal referred also to the need for the Court to have regard tothe interests of the whole community in the efficient conduct of litigation.[20] The Court of Appeal referred also to the need for the Court to have regard tothe interests of the whole community in the efficient conduct of litigation.3[21] In the context of the High Court Rules, reference is appropriately made to r 1.2which declares that the objective of the rules is to secure the just, speedy, andinexpensive determination of any proceeding.2 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383.3 At 385.[22] In that context, the Court of Appeal in Elders Pastoral referred with approvalto the observation of Lord Griffiths in Ketteman v Hansel Properties Ltd, where hisLordship observed:4There is a clear difference between allowing amendments to clarify the issuesin dispute and those that permit a distinct defence to be raised for the first time.[23] I add that in the assessment of the overall justice, it will be important toconsider the merits of the proposed amendment (that is, its arguability).5 Related tothat final consideration is the Court's endeavour to ensure that the parties have everyopportunity to ensure that the real controversy goes to trial so as to secure the justdetermination of the proceeding.6Discussion[24] I adopt the above principles as those which I should apply in relation to thisapplication under r 7.7.Reasons for delay[25] Initially, the defendant failed to provide any evidence at all in support of hisapplication. What the Court had – and it came in the form of a statement from the Bar– is an explanation that the issues occurred to counsel only recently while preparingfor the hearing. In response to that, Ms Halloran's submission was that the questionfor the Court is whether that is an adequate explanation bearing in mind the long-standing nature of these proceedings, the agreements and concessions which thedefendant had deliberately made years ago, and the judicial warning given by thisCourt in January 2018.[26] To the extent that the defendant explained the reasons for the delay in adoptingthe position he now seeks to adopt, that is in his brief affidavit, the explanationreinforces the impression that he had with deliberation taken his stated position inrelation to relationship property (both in pleadings and affidavits). As noted above, heexplains the reason for his pleaded position as lying in his wish, following the4 Ketteman v Hansel Properties Ltd [1987] 2 WLR 312 (HL) at 339.5 See, for instance, Fordham v Xcentrix Communications Ltd (1996) 9 PRNZ 682 (HC) at 683.6 Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd [1989] 3 NZLR 304 (CA) at 309.separation, to seek a "pragmatic division" of assets, leading him to be "prepared toagree to classification" in the way he had pleaded.[27] In short, the defendant viewed the position over the years that subsequentlypassed as a robust or pragmatic endeavour on the part of the parties to have everythingin the mix so that there could be a final determination of respective rights at one trial.[28] The defendant's affidavit explanation for now deciding to plead the oppositeposition on assets is not a satisfactory explanation for his delay. These are far frommodest amendments clarifying issues in dispute. In terms of Lord Griffiths' approachin Ketteman, the amendments would constitute distinctly different defences in relationto the preponderance of assets which the couple had. He invites the parties to embarkon a very different case.Irreparable injury or prejudice[29] Faced with this late application, Ms Halloran has identified the alternativeclaims and matters of evidence which she would wish to consider for the plaintiff.There are issues relating to positions taken by the respective parties in proceedingswhich were commenced in the Netherlands. Ms Halloran would have to sourcedocuments prepared and filed in the Dutch language. She understands there may beone or more documents in the nature of a protest to the jurisdiction of the NetherlandsCourts by the defendant, consistently with his affidavit evidence in this proceedingthat he wanted everything dealt with in New Zealand. There has not been time for MsHalloran to explore that factual material. She would also need to further considerprovisions of the PRA (around ss 44 – 44C) and the evidence she might lead relevantto such relief.[30] Ms Halloran's proper consideration and advice on those matters is unlikely tobe able to be attended to in the period between now and the scheduled trial. If there isto be any amendment of the defendant's pleadings, it must accommodate thereasonable needs of the plaintiff to be ready for any trial. The extent to which thedefendant's case will have substantively changed if all the amendments are permittedwould inevitably prejudice the plaintiff if the present trial date is maintained.[31] Alternatively, if the trial is adjourned, there is an immediate prejudice to theplaintiff in terms of wasted costs that she will have incurred through counsels'preparations to date.[32] The adjournment of the trial would also cause an ongoing prejudice to theplaintiff because of the likelihood that a trial of this length will be unavailable for theremainder of 2019.Considerations of justice – the true contest between the parties[33] To do justice between the parties on the present application, I need to considerthe three aspects of the defendant's application.(1) The properties in the Netherlands[34] The potential issue in relation to the properties in the Netherlands is that theyconstitute immovable property and are by implication in terms of s 7(2) of the PRAnot property to which the PRA applies. There is Court of Appeal authority establishingthat foreign immovable cannot be taken into account as relationship property and thatthe proportions of entitlement of the parties have to be applied to the relationshipproperty without reference to any foreign immovable.7 The defendant's proposedamendments would include an assertion that the Court has no jurisdiction over the twoNetherlands properties.[35] I have heard competing submissions as to the detail of the correct jurisdictionalposition and whether the Court might nevertheless be in a position to consider aspectsof the Netherlands properties. Mr van Bohemen relies upon the line of authorityflowing from the Court of Appeal decision as establishing that remedies under thePRA which are derivative from a proprietary claim in relation to foreign immovableproperty are precluded.8 Ms Halloran on the other hand referred to a judgment of theFamily Court in which the Court divided property "in the usual way" after the partieshad agreed to submit to the New Zealand jurisdiction in relation to immovable7 Samarawickrema v Samarawickrema (1994) 12 FRNZ 482.8 See, for instance Burt v Yiannakis [2015] NZHC 1174 (2015) 30 FRNZ 696 at [68].property in France.9 Mr Halloran refers to the possibility that s 7A of the PRA mayhave application.[36] It is clear that a real jurisdictional issue arises which the defendant had notpreviously raised. If Mr van Bohemen's submissions were to be established as correct,the consequence is that this Court would be without jurisdiction to take theNetherlands properties into account. Concessions of the parties would not cloak theCourt with jurisdiction.[37] The jurisdiction question is not one which can properly to be determined onthis interlocutory application, which relates only to whether leave should be grantedto amend.[38] The needs of justice require that the defendant be allowed to amend hispleading to have the jurisdiction question determined, subject to a decision I will makeas to the costs implications.(2) Family trust rights and powers(3) Three items in the plaintiff's Schedule B[39] Both sets of proposed pleadings as to these categories of claimed propertyinterests involve mixed factual and legal considerations which might reasonably leadthe plaintiff to adduce further evidence and/or amend her pleadings as to relief.[40] I am satisfied that, as Mr van Bohemen submits, there are arguable propositionsas to a distinction between the family trust powers in this case and those which wereunder discussion in Clayton v Clayton. There also appears to be room for argumentas to factually whether or not the identified items in the plaintiff's Schedule B wereindeed assets of the defendant at the time the parties ceased living together.[41] Mr van Bohemen in his submissions recognised the factual nature of thepleadings in relation to the plaintiff's schedule B items and the ability of the parties tobind themselves in relation to those matters. He submitted nevertheless that the9 ADR v JMC FC Wellington FAM-2007-85-393, 25 June 2009.plaintiff's pleadings in relation to the parties' powers over the trust raise jurisdictionissues in a similar way to the Netherlands properties. He then submitted that evenwere the Court to refuse the defendant leave to amend his pleading to deny that thetrust powers were relationship property, he would still be entitled to take his case totrial on the basis that the Court has no jurisdiction over these trust powers. In thecontext of the argument I heard on this interlocutory application, I do not recogniseany sound basis for the comparison between the parties' powers over the trust and theirownership of properties which are in the Netherlands. Nonetheless, if Mr vanBohemen is correct in his submission, then he will have that ability at trial regardlessof the ruling made on this present application. That does not alter the conclusion whichI reach in this judgment that it would be unjust to allow the defendant to amend hispleadings in relation to the trust powers.[42] For many years the parties have conducted this litigation and over the last yearprepared for trial upon the basis of the pleadings as reflected in the defendant's existingstatement of defence and counterclaim. The parties, with the benefit of legal advice,must be taken to have considered carefully their appropriate and acceptable positionsin relation to each item of property. It is clear from the defendant's 2011 affidavit thathe made "pragmatic" decisions as to what position to adopt in relation to the full rangeof items. While the defendant now wishes to advance a different position in relationto these two categories, his informed view as contained in his most recent statementof defence and counterclaim dated 14 December 2018 remained as it had been foryears before.[43] These categories of property are in an altogether different category to theNetherlands properties which raise a fundamental issue as to the Court's jurisdiction.In relation to these various items of property, the parties had accepted from the outsetthat, as a matter of fact, they are to be treated as relevant property. Their negotiationssince must have been on that basis. Their preparation for trial has definitely been onthat basis.[44] I am satisfied that it would be unjust in relation to these items to allow thedefendant to reverse what has been the pleaded position for a long time and on whichthe parties have completed their evidence and closed their pleadings.[45] There would be a demonstrable prejudice to the plaintiff in facing a trial someten years after the commencement of the proceeding on matters which were concededfrom the outset and in relation to which the plaintiff has therefore not had to seek outand adduce the evidence which would have been relevant if the matters were in issue.Conclusion[46] I discussed with counsel towards the conclusion of the hearing my tentativeconclusions so that there was the opportunity for both in their submissions to workthrough the permutations which would flow.[47] My conclusion is that leave should be granted to the defendant to amend hispleading in relation to the jurisdiction issue relating to the Netherlands properties butnot in relation to the other two categories of property referred to in the application.The consequence of that amendment is still significant for the plaintiff – Ms Halloranneeds the opportunity to consider whether she can in the very limited time remainingbefore the trial date have everything in order (including pleadings, additional evidenceand submissions) to deal with the jurisdiction issue. It would be unreasonable toimpose on the plaintiff any expectation that she will be ready by 27 May 2019 but theplaintiff should have the opportunity to consider the possibility so as not to lose thebenefit of the trial date.[48] The directions I make will accommodate that possibility.Wasted costs[49] In the event the trial has to be adjourned, there will be wasted costs. Mr vanBohemen did not submit that this would be an inappropriate case in which to awardwasted costs.[50] For her part, Ms Halloran accepted that a significant proportion of herpreparation will not have been wasted and would be of value in the event of anadjourned trial. While any estimate of wasted costs is just that – an estimate – MsHalloran estimated that the professional time that will have been wasted in preparationfor the imminent trial date and in shaping the plaintiff's case previously to meet thedefendant's case with the various concessions it contained, would be four to five days.That is partly informed by the fact that counsel had agreed that the proceeding waslikely to involve a trial of up to nine days.[51] On my assessment, now having some appreciation of the pleadings and havinginspected the very substantial file including the affidavit evidence, an estimate of fourdays would appropriately represent wasted costs.The costs of the leave application[52] Mr van Bohemen accepted that the defendant is seeking an indulgence andshould pay the costs of the leave application. Counsel agreed that those should becalculated on a 2B basis.Orders[53] I order:(a) The defendant has leave to file and serve by 5.00 pm, 14 May 2019 anamended statement of defence and counterclaim which amends hispleading to the extent of the matter identified at paragraph [10](d) ofhis draft amended pleading dated 30 April 2019.(b) The defendant's interlocutory application dated 30 April 2019 isotherwise dismissed.(c) The plaintiff will have until noon, 20 May 2019 to determine on advicewhether she is in a position to continue to trial on 27 May 2019. In theevent she determines that she is not, counsel for the plaintiff is to fileand serve by that time a memorandum as to that decision, whereuponthe trial will be adjourned (without further order) to a date to beallocated by the Deputy Registrar on discussion with counsel. In theevent that the plaintiff determines to proceed to trial on 27 May 2019,she is to:(i) file and serve her defence to the amended claim by noon, 22May 2019;(ii) file and serve any supplementary evidence rising from theamendment by 22 May 2019.(d) In the event the trial is proceeding, counsel for the plaintiff is to file andserve a synopsis of opening submissions by 22 May 2019 and counselfor the defendant is to file and serve a synopsis of opening submissionsby 23 May 2019.(e) In the event the proceeding is not going to trial on 27 May 2019, thenthere is an order that upon the filing of the relevant memorandum bycounsel for the plaintiff on or before 20 May 2019, the defendant(without further order) is to pay to the plaintiff forthwith upon thesealing of this order and in any event, the sum of $8,920 on account ofthe costs wasted through the adjournment.(f) In the event that this proceeding is to go to trial on 27 May 2019, thedefendant is to pay in any event to the plaintiff the costs of any amendedpleading she files in response to the defendant's amended pleading,which I fix in the sum of $2,230.(g) The defendant is to pay to the plaintiff in any event the costs of theinterlocutory application which I fix in the sum of $3,679.50.[54] At the interlocutory hearing, counsel did not discuss with me the state ofpreparation of the trial bundle. Having regard to the matters which have arisen in thecourse of this interlocutory proceeding, counsel are to confer as to the bundle requiredif the hearing is proceeding on 27 May 2019. Following such conference, counsel areto file a joint memorandum as to their proposal in that regard.Osborne JSolicitors:Pitt & More, NelsonLane Neave, Christchurch Counsel: S N van Bohemen, Barrister, Christchurch