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High Court of New Zealand Decisions |
Last Updated: 23 July 2019
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
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CIV-2018-409-000272 [2019] NZHC 1277
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BETWEEN
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CHARLOTTE TERESA GAVIN
Plaintiff
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AND
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DANIEL JOHN POWELL
First Defendant
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AND
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PAUL JOSEPH DORRANCE
Second Defendant
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Hearing:
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7 March 2019
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Appearances:
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A F Grant and J Moss for the Plaintiff
T Weston QC and S Caradus for the First and Second Defendants
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Judgment:
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7 June 2019
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JUDGMENT OF NATION J
[1] These proceedings well illustrate the intense emotional and financial cost that family members can exact through the relentless pursuit of Court proceedings to air their grievances, but also the potential for lawyers to reduce that damage in the way they advise and represent their respective clients.
Background
[2] The plaintiff (Charlotte) and first defendant (Daniel) are the children of John and Lyn Powell (John and Lyn). Daniel and the second defendant (Mr Dorrance) are
GAVIN v POWELL [2019] NZHC 1277 [7 June 2019]
trustees of the Daniel Powell Family Trust (DP Trust). That trust was established in late 1998. The settlor was the solicitor who acted for John and Lyn.
[3] In 1998, the Charlotte Powell Family Trust (CP Trust) was also established. Lyn was the settlor of the CP Trust.
[4] Both trusts had similar terms. In each case, the discretionary beneficiaries included Charlotte, Daniel, their children, grandchildren and spouses. The terms of the trusts enabled each sibling’s family to benefit if the other sibling died leaving no surviving children. Each sibling and his or her family could have recourse to the other’s trust if his or her trust, for any reason, failed. Daniel and Charlotte accepted that settlement of the trusts “was effectively their inheritance from their father”.1
[5] The main asset of each trust was a shareholding in companies John had established. In the case of the DP Trust, the company was Kensal Investments Ltd (Kensal) which owned a commercial cold store in Christchurch. The CP Trust owned the shares in Investment Southland Ltd (Southland). Southland owned a cold store in Bluff as well as various property interests in the Devondale Estate in Belfast, including one where in 2014 Charlotte lived with her family.2
[6] Daniel was appointed a director of Kensal in 2002. In 2007 John resigned as a director and was replaced by Mark Rountree, a qualified lawyer and accountant who had worked closely for John between October 1991 and December 2012.3
[7] John’s relationship with Daniel and Daniel’s wife Hayley deteriorated from late 2011.
[8] On 5 August 2013, John filed proceedings in the High Court seeking:
(a) an order removing Daniel as a trustee of the DP Trust on the condition that John would also resign as a trustee;
2 Court of Appeal judgment at [10].
3 Court of Appeal judgment at [11].
(b) an order appointing independent trustees to the trust in replacement of Daniel and John; and
(c) an order suspending until further order of the Court the power of John and Daniel in terms of the trust deed to appoint trustees to replace each of them.
[9] In a statement of defence and counterclaim, Daniel (represented by Duncan Cotterill, solicitors acting Stephanie Grieve/Stefanie Woods), by way of defence, opposed his removal as a trustee and, by way of counterclaim, sought an order removing John as a trustee and an order appointing Mr Rountree as a trustee or, alternatively, Mr Rountree together with an independent trustee.
[10] In a judgment of 14 March 2014, Dunningham J ordered the removal of John as a trustee to be replaced by an independent professional trustee.4 She rejected the application that Daniel be removed as a trustee and both John and Daniel be replaced by an independent trustee or alternatively independent trustees, and powers of appointment under the trust deed be suspended until further order of the Court.
[11] On John’s appeal, by minute, the Court of Appeal remitted the proceedings back to the High Court for the Court to deal with an issue as to who was to hold responsibility as trustee in the interim pending the removal of John as a trustee. In the second judgment of the High Court, Dunningham J said the sole issue for determination was whether, in light of the provisions of s 48 Trustee Act 1956 which allows a single corporate trustee to be appointed in place of the minimum of two trustees required by the trust deed, her findings in the first judgment should alter.
Dunningham J concluded:5
[33] In summary, I have considered the possibility and desirability of removing both trustees. For the reasons set out in my earlier decision, I remain of the view that it is only necessary to remove John to ensure the proper administration of the trust.
[34] It matters not whether the replacement trustee is an independent professional individual or a corporate trustee, although I acknowledge that corporate trustees such as the Public Trust will only normally accept a sole appointment. I do not see that as an issue bearing on my decision. A professional solicitor or accountant, with experience as a trustee, is envisaged
4 First judgment, above n 1.
5 Second judgment, above n 1.
to replace John by the terms of the Trust Deed, and such an appointment would achieve the purpose of ensuring the proper administration of the trust.
[35] Accordingly, the ability to appoint a single corporate trustee instead of two independent trustees does not change my findings on what is required to ensure the proper administration of the trust.
[36] I therefore confirm my decision to order the removal of John Powell as a trustee, to be replaced by an independent professional trustee (whether an individual or corporate trustee). I do not order the removal and replacement of Daniel Powell as a trustee.
[12] On 19 June 2015, by consent between the then parties, Dunningham J stated that she was satisfied Janine Ballinger6 was an appropriate appointee. She ordered, by consent, that Ms Ballinger be appointed as a trustee of the DP Trust effective immediately. She later dealt with costs issues.
[13] On 4 September 2015, by consent, she made an order for an information exchange protocol governing how information as to the operation of the DP Trust in Kensal was to be provided to Charlotte.
[14] In June 2016, Ms Ballinger resigned as a trustee. Contemporaneously, she and Daniel appointed Mr Dorrance, a partner in Duncan Cotterill, as a new trustee.
[15] On 7 May 2018, Charlotte filed new proceedings in the High Court. In her statement of claim, she claimed the appointment of Mr Dorrance was invalid because he was not qualified to be a “professional trustee” and was not “independent” because of the way Duncan Cotterill had acted for Daniel “in a partisan role to help him retain his trusteeship of the trust” in the earlier proceedings. She also claimed that Daniel and Mr Dorrance had been in breach of trust in a number of ways including an alleged failure to keep beneficiaries informed about the assets and financial performance of the trust and its business, seeking to defeat reasonable requests for a distribution from a beneficiary and seeking to subvert orders and directions that had previously been made by the High Court concerning the management and administration of the trust. In her particulars, Charlotte alleged that the trustees had wrongly delegated to and allowed the directors of Kensal to make certain investments, in particular the purchase of an industrial property in Auckland, and had allowed directors of Kensal to spend
6 Then a partner in the Christchurch law firm of Cavill Leitch.
considerable sums on Daniel when, she claimed, the directors had no authority to make decisions concerning payments to him and for his benefit.
[16] Charlotte also filed an application for a priority fixture and an affidavit in support. In that affidavit she referred to Mr Dorrance’s appointment as a trustee, the stresses that she and members of her family were under for various reasons, the difficulty she would face in paying private school fees for her daughter and what she said was the parlous state of the CP Trust’s investment in business associated with the Southland cool store.
[17] That application was also accompanied by affidavits from John and Lyn, each sworn on 4 May 2018. Charlotte swore a further affidavit on 22 June 2018.
[18] The proceedings were set down for first call in the duty Judge list on 21 May 2018.
[19] In a minute of 24 May 2018, I set out the background to the current proceedings. I referred briefly to the positions that had been adopted by the parties. I confirmed that it was not appropriate to then set down the application for a priority fixture or the substantive proceedings for hearing. I issued certain directions over the service and filing of affidavits for Daniel and Mr Dorrance. I noted these would, in effect, deal with both the application for a priority fixture and the substantive claim as set out in the statement of claim. I noted:
[24] For Charlotte, Mr Grant suggested it may be inappropriate for Duncan Cotterill to be the solicitors on the record for the defendants because the conduct of partners in Duncan Cotterill will be at issue during the trial.
[25] In counsel’s memorandum for the defendants, it was suggested that parts of the evidence included in the affidavits filed for Charlotte should be ruled inadmissible, having been evidence which was before the Court in the earlier proceedings and the subject of determinations made by Her Honour Justice Dunningham in those proceedings.
[26] As was appropriate, given the point at which the conference took place, I was not asked to make any determination on these issues. If the Court is required to make a ruling as to them, they should be the subject of specific applications supported by affidavits to the extent required.
[20] Daniel and Mr Dorrance (referred to together as “the trustees”) filed a statement of defence of 29 June 2018. Duncan Cotterill (solicitors Ayleath Foote/Stephen Caradus) were the solicitors acting for the trustees.
[21] The proceedings were adjourned for a further telephone conference on 30 July 2018.
[22] In a minute of 30 July 2018, after the telephone conference, I confirmed Charlotte was no longer applying for directions as to an urgent fixture but the proceedings should be set down for hearing early in 2019. I recorded Mr Grant’s “potential concern over Duncan Cotterill acting for the defendants in a situation where the conduct of a Duncan Cotterill partner is an issue”. I noted that Mr Dorrance had not filed any affidavit in the proceedings and the defendants appeared to be relying on an affidavit from Daniel in dealing with the substantive claims. My minute referred to a potential discovery issue. Amongst other directions, I directed that evidence in the proceedings would be given by affidavit and any application for discovery or any other interlocutory application was to be filed and served by 20 August 2018.
[23] In a counterclaim filed on 28 September 2018, the trustees sought directions from the Court as to the circumstances in which they were required to consider making a distribution to Charlotte or her family and as to whether they were entitled to take certain matters into account. They also sought directions as to the extent to which they were required to provide Charlotte with financial accounts and other information where they alleged Charlotte was in breach of the information exchange protocol.
[24] On 26 October 2018, there was a hearing over Charlotte’s application for tailored discovery, in particular, documents relating to the removal of Ms Ballinger as a trustee, the appointment of Mr Dorrance and the “client file” that Ms Ballinger had while acting as a trustee. I ordered tailored discovery in a judgment of 6 November 2018.7
[25] On 5 December 2018, the proceedings were set down for a four day hearing to commence on 4 March 2019. On 7 December 2018, affidavits in opposition to
7 Gavin v Powell [2018] NZHC 2866.
Charlotte’s substantive applications were sworn by Daniel, his wife Hayley and Mr Rountree. On 14 December 2018, Duncan Cotterill filed an affidavit from Mr Dorrance in opposition to Charlotte’s applications. On 20 December 2018, Duncan Cotterill filed a memorandum for the trustees acknowledging that, contrary to earlier expectations, an affidavit had been filed in the proceedings from Mr Dorrance. They sought leave for Duncan Cotterill to continue acting as solicitors and advised that Mr Weston QC was to act as lead counsel in the remainder of the proceedings.
[26] On 31 January 2019, Charlotte swore and filed a detailed affidavit in reply.
[27] On 22 February 2019, Charlotte filed an interlocutory application for leave to file an amended statement of claim. The amended statement of claim included allegations that the trustees had failed to have sufficient regard to the intentions and purposes of John and Lyn when the trust was established, that Daniel had failed to objectively consider Charlotte’s interests and needs, and the trustees had failed to exercise their powers reasonably and in good faith.
[28] On 23 January 2019, Mr Grant for Charlotte filed a memorandum in opposition to Duncan Cotterill’s application for leave. He also said there were issues as to the possible amendment to the statement of claim and whether four days would be long enough for the trial. A further memorandum was filed for the defendants on 31 January 2019 and for the plaintiff on 12 February 2019.
[29] The trustees filed a notice of opposition to the application for leave to amend the statement of claim on 1 March 2019.
[30] I convened a telephone conference on 13 February 2019 to discuss issues that had emerged from these memoranda. Those issues were:
(a) a potential application by the plaintiff for leave to amend pleadings;
(b) a potential application for an order pursuant to r 9.75 that Janine Ballinger attend Court to give evidence;
(c) the issue over whether Duncan Cotterill can continue as solicitors on the record;
(d) the defendants’ objections to the admissibility of evidence currently included in affidavits; and
(e) whether the currently allocated hearing time of four days for the trial would be sufficient.
[31] It was agreed that, as matters stood, the hearing would take more than four days. By agreement, the substantive hearing scheduled to begin on 4 March 2019 was vacated. A hearing was scheduled for 7 March 2019 to deal with anticipated applications over:
(a) the plaintiff’s application to amend the statement of claim;
(b) the defendants’ application for rulings as to the admissibility of evidence in affidavits from and for Charlotte; and
(c) the application for leave for Duncan Cotterill to continue as solicitors on the record.
The application for leave to amend pleadings
[32] In earlier pleadings, the focus of Charlotte’s complaint was the resignation of Ms Ballinger as a trustee and the appointment of Mr Dorrance in her place, and her concern that Mr Dorrance was not a professional independent trustee. There was also a major issue as to whether the trustees had fulfilled their obligations in decisions they had made over Charlotte’s request for financial assistance from the DP Trust and over information she had sought. In the proposed amended pleading, there was a substantial new area of complaint and allegations broadly that while Ms Ballinger had been a trustee Daniel had obstructed Ms Ballinger’s ability to function as a trustee and had sought to promote his own interests.
[33] Mr Grant explained the need for a late amendment to the pleadings by saying it arose out of the information which became available to Charlotte and her advisors
through the further discovery which was ordered late in 2018 and from evidence which had become available from Ms Ballinger.
[34] Mr Weston said the application for leave to amend was strongly resisted in the context of a substantive hearing scheduled for 4 March 2019. With that hearing being vacated and it now being likely there would be significant delay until a further hearing, Mr Weston acknowledged that the objection could not be as strong.
[35] Mr Weston indicated that, with the vacating of the scheduled trial date in March, there was unlikely to be an objection to the filing of an amended statement of claim but the appropriate course should be for Charlotte to provide a draft statement of claim in the form which she now wishes to pursue. He was concerned that, in the amended statement of claim, there could be reference to matters which were at issue in the earlier proceedings. He did not consider it would be useful for the Court to deal with potential issues as to that at this stage.
[36] During submissions over evidence, Mr Weston objected to certain evidence on the basis it did not relate to a particular pleading. Mr Grant said that objection could be met through an amendment of the pleadings. It thus seemed the amended statement of claim in its current draft form may itself require amendment.
[37] The issues for determination in these proceedings and the scope of evidence relevant to them will have to respect and reflect the determinations made in the High Court and confirmed by the Court of Appeal.
[38] Dunningham J’s findings in summary form include a determination as to how the DP Trust and CP Trust were formed, the assets that each acquired, and John and Lyn’s intentions with regard to the trusts. Dunningham J found that it was unlikely John intended Daniel and Charlotte’s individual efforts in each trust would then have to be split with the less successful sibling as of right.8
[39] As will become apparent, with my ruling over the admissibility of evidence in various affidavits, Charlotte will need to file new affidavits in support of her
8 First judgment, above n 1, at [9]-[14].
substantive claims. Through doing that, she will have the opportunity to provide the evidence in support of the added allegations included in her amended statement of claim. The defendants will have the opportunity to respond.
[40] In the circumstances, I indicate now that Charlotte will be able to file an amended statement of claim but her application as to that is adjourned for counsel to settle on the final form of the proposed amended statement of claim.
Admissibility of evidence
Res judicata, issue estoppel, abuse of process
[41] The trustees contend that significant portions of the evidence for Charlotte is inadmissible because the evidence relates to issues that were determined in the earlier proceedings. They contend that to admit the evidence would be to permit Charlotte to relitigate those issues, contrary to the doctrines of res judicata and issue estoppel, and the evidence should be ruled inadmissible as an abuse of Court proceedings.
[42] Counsel had helpfully marked up in colour coding the evidence objected to and the basis on which objection was made. Counsel noted however that, in some instances, while the colour coding indicated the primary objection was on one ground, for instance res judicata or an abuse of process, the evidence could also be objected to on another ground, for instance that it included hearsay statements.
[43] Charlotte contends:
(a) to the extent issues were determined in earlier proceedings, the doctrine of res judicata does not apply because she was not a party to the earlier proceedings, nor was she John’s privy in the earlier proceedings;
(b) the allegations in the current proceedings are “quite different” from the issues in the earlier proceedings;
(c) the doctrine of res judicata operates to prevent fundamental findings of fact or law from being disputed in later proceedings; an issue is considered to be fundamental if the determination of the issue was essential and necessary to resolve the ultimate issue. If a fact was not fundamental, it was considered to be subsidiary or collateral; matters of law or fact that were subsidiary or collateral were, in Mr Grant’s submission, not covered by res judicata estoppel;
(d) for res judicata to bar a subsequent proceeding, the issues raised in the previous proceeding must be identical to the issues raised in the new litigation. The claims in the two proceedings are not identical;
(e) Charlotte’s evidence was not fundamental to the determination of the earlier proceedings. Dunningham J did not make any clear or precise decisions about the nature of Daniel and Charlotte’s relationship or whether Daniel would be even-handed towards Charlotte given his animosity towards her;
(f) where a case concerns continuing conduct, a litigant is not prevented from relying on incidents of that conduct that were the subject of a previous trial in order to judge conduct in the light of the whole course of conduct;
(g) admission of the evidence does not involve an attack on Dunningham J’s decisions; and
(h) to exclude the evidence would cause an injustice. In the exercise of its discretion, the Court should not enforce any estoppel. In that regard, Mr Grant submitted the purpose of the current proceedings:
... is to show that Daniel is not an appropriate person to be a trustee as he is unable to treat Charlotte and her children fairly due to persistent animosity between himself and Charlotte.
The evidence that Charlotte gave in the 2014 proceedings provides context to her current allegation that Daniel has persistently been hostile towards her for many years and he is incapable of treating Charlotte and her children fairly.
Was Charlotte a party or John’s privy in the earlier proceedings?
[44] I am satisfied that Charlotte was a party to the earlier proceedings when involved in those proceedings.
[45] Mr Grant submitted Charlotte was not a party to the proceedings because of her status in the proceedings as an “interested party”. Importantly he submitted, referring to a statement of Thomas J in Capital and Merchant Finance Ltd v Perpetual Trust Ltd, she did not have a right of appeal.9 He also referred to how the High Court Rules recognise the status of defendants as opposed to interested parties through the stipulation that, in trust or estate litigation, the only defendant that may be named in the statement of claim is the personal representative or trustee.10
[46] The Rules recognise that a person who the Court has directed to be served may become a defendant but need not be named as a defendant.11
[47] “Defendant” is defined in the Rules as meaning “a person served or intended to be served with a proceeding”.12
[48] I accept the submissions for the trustees that Charlotte took all the steps in the earlier proceedings that a party to the proceedings would typically take. She filed a notice of appearance “to provide an independent position” for herself and her children. She filed evidence which generally supported John’s claims. In doing so, she said that, while generally supporting her father’s application, she was representing beneficiaries of the DP Trust who she said had an interest in the outcome independent of the views of her father. In her evidence, Charlotte raised a number of points in support of or in addition to John’s evidence. At the hearing, she was represented by her own counsel. Her counsel filed opening submissions, cross-examined witnesses extensively, led Charlotte’s evidence and presented closing arguments.
10 High Court Rules 2016, r 18.5.
11 High Court Rules, r 18.6.
12 High Court Rules, r 1.3.
[49] Dunningham J noted in her first decision that:13
... Charlotte supported her father’s view of what had occurred, but was at some pains to explain that she was participating in her capacity as a discretionary beneficiary of the Trust (along with her children) and not simply there to support her father.
[50] Dunningham J noted that Charlotte had raised various further arguments independently and in addition to matters raised by John.
[51] Charlotte was named as second respondent on John’s appeal. When the proceedings were remitted back to the High Court, she was represented again. Dunningham J referred to the submissions made on Charlotte’s behalf by her counsel.
[52] Contrary to Mr Grant’s submission, Charlotte, as a party directed to be served and who took an active part in the earlier proceedings, had the right to lodge and pursue an appeal although she did not do so.14
[53] In Capital and Merchant Finance Ltd v Perpetual Trust Ltd, a barrister, Mr Stewart QC, applied by interlocutory application to be joined as an interested party in certain proceedings on grounds including that his financial and reputational interests were likely to be adversely affected if the Court made a certain finding as to an issue in the proceedings. Thomas J said:15
It is important at the outset to note that Mr Stewart does not seek to be added as a plaintiff or a defendant, but as an interested party. The difference is significant. Whereas additional plaintiffs or defendants have a right to appeal, an interested party or intervener has no such right.
[54] That was followed by the Judge saying:
The High Court Rules do not specifically provide for the addition of interested party to a proceeding. However, the Court has recognised the existence of this jurisdiction both under the rules and in the exercise of the Court’s inherent jurisdiction.
13 First judgment, above n 1, at [50].
15 Capital and Merchant Finance Ltd v Perpetual Trust Ltd, above n 9, at [8].
[55] There, her Honour was not dealing with trust or estate litigation where the High Court Rules require a plaintiff to obtain directions from the Court for directions for service on parties who have an interest in the proceedings. The Court then makes such directions and, pursuant to r 18.6, a person becomes a defendant to a proceeding by being served under a direction of the Court.
[56] I accept the submissions made by Mr Weston that, as a party directed to be served and participating in the proceedings, Charlotte had “the ability to appear, give evidence, make submissions and seek relief” in the earlier proceedings, all of which she did. While Charlotte was referred to in the intituling in the High Court at times as an interested party, she need not have been mentioned in the intituling at all or she could have been referred to as “a party directed to be served”, as often occurs in similar proceedings.16
[57] I also accept the submission for the trustees that, even if Charlotte was not a party to the earlier proceedings, the doctrine of res judicata, issue estoppel and abuse of process can apply to her as John’s privy.
[58] For there to be privity for the purposes of issue estoppel:17
... there must be shown such a union or nexus, such a community or mutuality of interest, such an identity between a party to the first proceeding and the person claimed to be estopped in the subsequent proceeding, that to estop the latter will produce a fair and just result having regard to the purposes of the doctrine of estoppel and its effect on the party estopped.
[59] Mr Grant submitted that Charlotte was not John’s privy in the earlier proceedings. A number of the points Mr Grant advanced in this regard did not address whether she was John’s privy in the earlier proceedings. Rather, they went to whether she should be estopped from bringing the current proceedings even if she was his privy.
[60] However, in submitting there was not the community or mutuality of interest between the privy and the plaintiff in the earlier litigation, Mr Grant submitted John
16 High Court Rules, r 18.6.
17 Shiels v Blakeley [1986] 2 NZLR 262 (CA) at 268.
and Charlotte’s interests in the earlier proceedings were different. Charlotte’s interest was as a beneficiary in the DP Trust. John’s interest was as a trustee in a deadlocked trust.
[61] In the earlier proceedings, both Charlotte and John sought to have Daniel removed as a trustee of the DP Trust. Through her counsel’s submissions, Charlotte was supportive of the arguments advanced by John for both Daniel’s removal and the appointment of an independent trustee or trustees in his place. Charlotte provided further evidence and advanced her own reasons for seeking the same relief as John but they were supportive of and consistent with John’s case.
[62] I am satisfied that, in the earlier proceedings, there was such a community or mutuality of interest between John and Charlotte that it could potentially be fair and just for Charlotte to be estopped with regard to those parts of the current proceedings to which estoppel might apply.
[63] The trustees are not suggesting there would be an estoppel in relation to the whole of the current proceedings, only those aspects where it is claimed Charlotte is seeking to relitigate issues that were or could have been properly determined in the earlier proceedings.
Discussion as to the balance of the issues as to res judicata, issue estoppel, abuse of process
[64] Mr Weston submitted there was limited fresh evidence in this case and, in reality, Charlotte was seeking to rerun the original proceeding. He also submitted an aspect of res judicata was abuse of process. In that regard, he referred to the Court of Appeal in Beattie v Premier Events Group Ltd, adopting what was said in Henderson v Henderson: 18
The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
18 Beattie v Premier Events Group Ltd [2014] NZCA 184, [2015] NZAR 1413 at [43] quoting
Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100, 67 ER 313 (Ch).
[65] In Meates v Taylor, the Court of Appeal referred to Hunter v Chief Constable of the West Midlands Police as the leading authority in the area of abuse of process.19 It said:
The Hunter case illustrates but one aspect of abuse of process, namely an attempt at collateral attack upon a final decision of a Court of competent jurisdiction. Other aspects have been discussed in this Court in such cases as New Zealand Social Credit Political League Inc v O’Brien [1984] 1 NZLR 84 and Shiels v Blakeley [1986] 2 NZLR 262. The overriding principle was explained by Lord Diplock in the opening words of his speech in Hunter at p 536:
“My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the Court has a duty (I disavow the word discretion) to exercise this salutary power.”
The principle is designed to achieve finality of litigation and also fairness in the use of the Court’s procedures. It is not however itself to be used as an instrument of unfairness. Its role is defensive rather than aggressive. To take the words of Lord Halsbury LC in Reichel v Magrath (1889) 14 App Cas 665, 668 it is appropriately invoked:
“... if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again.”
[66] In New Zealand Social Credit Political League Inc v O’Brien, Somers J in the Court of Appeal said:20
Estoppel per rem judicatam, issue estoppel, and abuse of process in at least one of its manifestations, may be seen as exemplifying similar concepts – that a matter once determined may not be again litigated, that a matter which could and should have been raised in proceedings which have been determined should not be allowed to be raised subsequently, and that a collateral attack upon a final decision in other proceedings will not be permitted. The dual objects are finality of litigation and fair use of curial procedures.
20 New Zealand Social Credit Political League Inc v O’Brien [1984] 1 NZLR 84 (CA) at 95.
[67] In Beattie v Premier Events Group Ltd, the Court of Appeal quoted the House of Lords, saying that considering whether further proceedings should be struck out as an abuse of process to ensure finality in litigation, in deciding what constituted abuse, required:21
... a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.
[68] A number of those dicta appear in judgments where the Court was considering the strike out of certain proceedings or claims. They must also apply to the Court’s consideration of what issues might properly be before the Court when determining the relevance and admissibility of evidence as to those issues.
[69] I find that, with Charlotte’s involvement in the earlier proceedings, she was contending, as was John, that Daniel was not fit to be a trustee of the DP Trust. Insofar as she was making that submission based on her relationship with Daniel, she was free to refer in those earlier proceedings to any aspect of her relationship or incidents that had occurred between them that were or could have been relevant to the determination the Court was to make as to Daniel’s fitness to be a trustee.
[70] There are significant portions of evidence in the affidavits filed for Charlotte (marked up in yellow by the trustees’ counsel) that would be relevant to issues in the current proceedings only if the Court were to permit Charlotte to relitigate issues that were before the Court in the earlier proceedings and on which determinations were made by both Dunningham J and the Court of Appeal. To the extent the evidence seeks to relitigate issues that were before the Court in the earlier proceedings, that evidence is a collateral attack on the determinations made by the Court in the earlier proceedings. In a number of respects, there is no attempt to suggest otherwise.
[71] In Charlotte’s first affidavit sworn on 4 May 2018, she quotes from Dunningham J’s first judgment in which her Honour referred to Charlotte’s concerns
about Daniel and the concerns Charlotte had as to how he would consider Charlotte, her children and grandchildren as beneficiaries.22 She also referred to her Honour’s reference in the judgment to evidence given by Daniel’s wife Hayley in this regard.
[72] The passages referred to illustrate the extent to which Charlotte’s concerns, as to Daniel’s ability to act appropriately as a trustee in the context of the relationship he had with his sister, were an issue in the earlier proceedings.
[73] Having, in her affidavit, drawn attention to her Honour’s comments, Charlotte says:
I regret to say that the Judge’s perception of Daniel’s attitude to me and my children was mistaken. As for Hayley’s evidence, it was wrong. These are some illustrations of Daniel’s attitude to me and my children.
[74] Charlotte then refers to events which she says occurred between her and Daniel during their childhood, culminating in complaints as to certain events at Christmas 2011 and discussions she had with Daniel in 2012. A number of those incidents were referred to in an affidavit in the earlier proceedings. There were some that were not referred to but they could have been if she and her then counsel had considered they would have usefully advanced her case. There are three pages of evidence of this nature.
[75] In another portion of her evidence in that affidavit, Charlotte referred to evidence Daniel had put before Dunningham J as to what he said were his ambitions as far as taking funds out of Kensal was concerned. After referring to that evidence in the earlier proceedings, Charlotte said “I consider all this evidence to be untrue”. Her opinions in this regard were also before the Court through an affidavit she had filed in the earlier proceedings.
[76] In submissions, Mr Grant took me to the evidence Charlotte gave in an affidavit in the earlier proceedings and parts of the transcript from the hearing in the earlier proceedings. He did this to demonstrate how evidence she wishes to put before the Court in the present proceedings is additional to the evidence she gave in the earlier
22 First judgment, above n 1.
proceedings. The exercise in fact demonstrated to me the extent to which, in participating in the earlier proceedings, Charlotte had put before the Court issues and evidence in ways that she is seeking to repeat in the current proceedings.
[77] For instance, in her first affidavit in the earlier proceedings, she began by saying:
In summary, it is not appropriate for Daniel to remain as trustee for the following reasons:
(a) His mental state and the animosity that he holds against the rest of the family impacts on his ability to carry on his duties as trustee ...;
(b) The clear conflict between Daniel’s position as trustee of the DP Trust, director of Kensal, and beneficiary of the DP Trust ...
[78] In that first affidavit in the earlier proceedings, there are some 18 paragraphs of evidence under the heading “My relationship with Daniel”, with her opinion as to Daniel’s personality, mention of events going back to when he was 12 to 15 years of age and discussions as to a psychological report for Daniel that had been put before the Court.
[79] In her affidavit of 22 June 2018 Charlotte begins with the statement, “the present proceeding is not the only recent illustration of the ill will that Daniel’s family and Mark Rountree have for me and Dad”. She then refers to the earlier proceedings, making the submission “the antagonism that Daniel, Hayley and Mark Rountree have for me and Dad is evident from the evidence in that proceeding”. Later in that affidavit, Charlotte speculates as to what Hayley and Mr Rountree’s thoughts were towards her and referred to the number of emails Mr Rountree had sent her between 1 March and 8 July 2013, expressing the opinion “it was a deliberate policy of harassment”. There was detailed reference to the email communication. All of this could have been the subject of evidence in the earlier proceedings.
[80] Mr Grant referred me to a paragraph of Charlotte’s affidavit in the earlier proceedings of 24 January 2014. She said:
Given Daniel’s previous behaviour, I believe that if a professional trustee was appointed in John Powell’s place and Daniel remained the other trustee, then
the professional trustee is likely to be subject to abuse, threats and potential harm if Daniel does not get his own way.
[81] She gave detailed evidence as to his alleged previous behaviour in the earlier proceedings to support that statement. She is seeking to do that again with extensive reference to numerous aspects and events during their childhood and later, all of which were or could have been addressed in the earlier proceedings.
[82] By far the greater proportion of John’s affidavit of 4 May 2018 is marked in yellow. There is a significant section on how the DP Trust and CP Trust came to be established, his purpose in establishing the trusts and their particular investments. There was evidence as to this in the earlier proceedings. Dunningham J’s findings in this regard were apparent from her first judgment.
[83] There was then a significant section on Daniel’s personality where John refers to a particular incident in August 2012 when he was attacked by Daniel. That incident was at the forefront and of significance in the earlier proceedings both as to the breakdown in the relationship between John and Daniel as trustees and as to the basis on which John contended Daniel was unfit to continue as a trustee.
[84] John referred to the fact he had given evidence in earlier proceedings and to his having had:
... a firm belief that Daniel should be removed as trustee, rather than kept on with an independent professional co-trustee and I told the Court so. In retrospect, I believe that my evidence on this subject has been vindicated.
[85] There is then a significant section in the affidavit where John articulates his concerns about Daniel’s role as a trustee. He expresses the opinion that:
Daniel has not changed significantly from the way he was in his youth. He was selfish as a child and prone to violent anger when crossed and he remains so now. He had a confrontational relationship with Charlotte and it is clear to me that he has not grown out of it.
[86] John refers to the way he says Daniel has distanced himself from his parents, referring to incidents that were the subject of evidence in the earlier proceedings. He expresses his opinion as to the way Daniel lives and works, indicating that Daniel does not meet his expectations. In doing so, he speculates as to what might happen if Daniel
remains a trustee, opinions which were the subject of evidence and cross-examination during the earlier proceedings. Later, he refers to evidence he gave in the earlier proceedings as to how he thought Daniel would operate the trust and the evidence Daniel gave on the issue, then says Daniel’s evidence “was wrong”.
[87] There is then some five pages of evidence under the heading “False evidence”, beginning with his opinion “I believe that Daniel has managed to achieve control of the Trust in part by false or misleading evidence that he gave to the Court”. He refers to evidence that was given by Daniel and Mr Rountree in the earlier proceedings and then refers to matters in the past or expresses opinions as to why, in his view, Daniel’s evidence was wrong. He also refers to a report that had been produced at the earlier trial from a clinical psychologist and gives his evidence as to why the psychologist’s opinions were unjustified, criticising the psychologist’s report that Daniel was “very bright academically” by referring to Daniel’s final school report of November 1988. Under the heading “How the Trust was hi-jacked” is a page of evidence, including the circumstances in which John had resigned as a director in March 2007 and what his expectations had been at the time. These were matters which were the subject of evidence in the earlier proceedings.
[88] In the earlier proceedings, John sought the removal of Daniel as a trustee. There were allegations that Daniel had failed to ensure his own interests did not prevail over various duties it is alleged he had as a trustee. There was a pleading that John had real concerns about Daniel’s conduct and his ability to act in a manner consistent with his duties as a trustee. These are all matters which Charlotte, through her own affidavit and affidavits filed in support, seeks to traverse again in the new proceedings with regard to conduct and allegations which were either dealt with in the earlier proceedings or could reasonably have been if John, Charlotte and their respective advisors had considered this would usefully advance their cases.
[89] Elsewhere there is discussion where John expresses his strong opinions about a salary that the directors of Kensal agreed to pay to Daniel’s wife Hayley and minutes as to that from 24 April 2012. This was a significant issue in the earlier proceedings, referred to in John’s statement of claim and considered by Dunningham J.
[90] Lyn swore an affidavit of 4 May 2018 on behalf of Charlotte. Some six of the seven pages relate to matters that were or could have been the subject of the earlier proceedings. Again, there is evidence and opinions expressed as to the way Daniel related to Charlotte as a child, incidents that were the subject of affidavit evidence in the earlier proceedings, criticisms of Daniel’s personality and, as with John, criticisms of the way Daniel has chosen to live his life. In doing this, Lyn is effectively disagreeing with the conclusions reached by Dunningham J. For example, she says in her affidavit “I did not believe the evidence that Daniel gave at the trial to the effect that if he was given a second chance he would be objective and consider the interests of Charlotte and her children dispassionately”. She then explains that opinion by referring to past events and conversations, matters that have not arisen since the determination of the earlier proceedings.
[91] In her affidavit, Lyn says “Daniel’s account of his childhood [in the earlier proceedings] was in many respects a pack of lies”. She refers to three what she calls “falsehoods” in Daniel’s evidence, leaving it to others to identify more.
[92] One of the affidavits sworn in support of Charlotte’s case is from her husband Nigel Gavin. In that affidavit of 21 September 2018, he suggested there might be an issue as to the way Daniel uses Kensal to pay expenses that Daniel incurs with motor racing. This was an issue which was discussed by Dunningham J in her first judgment.23 Through Mr Gavin’s affidavit, Charlotte seeks to refer to an incident that occurred in 2004 to 2005.
[93] In a schedule provided to the Court with his submissions, Mr Weston identified passages in affidavits in the current proceedings where the evidence before the Court matched, sometimes word for word, evidence that was before the Court in the earlier proceedings. They are related to allegations about events in Daniel’s childhood, Daniel’s character and abilities, family relationships, Daniel’s relationship with John, allegations about Mr Rountree, the issue over a salary paid by Kensal to Hayley and attacks that were made on Daniel’s role in the administration and management of the DP Trust and/or Kensal.
23 First judgment, above n 1, at [98].
[94] I am satisfied there is significant commonality between the allegations being made in the current proceedings and those that were before the Court in the earlier proceedings.
[95] In her first judgment, Dunningham J summarised what she considered the key issues were from John’s perspective, referring to seven major topics. Dunningham J then said:
[50] Charlotte appeared as an interested party. Generally Charlotte supported her father’s view of what had occurred, but was at some pains to explain that she was participating in her capacity as a discretionary beneficiary of the Trust (along with her children) and not simply there to support her father.
[51] Aside from agreeing with her father’s concerns, she also raised the following issues:
(a) she believes that Daniel considers the Trust is his property to the exclusion of the other beneficiaries, being Charlotte and her children. In particular, she considers Daniel is jealous towards her and has a sense of entitlement from the Trust which she does not have in respect of her own Trust,
(b) she is concerned about the “excessive expenses” of Kensal, which goes beyond the concern John raises about the payment to Hayley,
(c) she believes that if Daniel is allowed to remain as Trustee alongside an independent Trustee then a state of deadlock could arise again because the Trustees are required to be unanimous in order to do anything.
Those topics are all the subject of evidence in the current proceedings with extensive reference to issues and evidence that were before the Court in the earlier proceedings.
[96] For Charlotte, Mr Grant sought to demonstrate a significance in the difference in pleadings and Charlotte’s concerns in the earlier proceedings from those that are before the Court in the current proceedings. He referred me to [51] of the first judgment and the conclusion Dunningham J came to. He also referred me to [101] of Dunningham J’s judgment where she made a determination as to the relationship between Daniel and Charlotte, and that the relationship was such that Daniel would be able to consider the needs of Charlotte and her family fairly with the moderating influence of an independent trustee.
[97] Mr Grant contrasted Charlotte’s case in the earlier proceedings, as summarised by Dunningham J, with the emphasis in Charlotte’s current pleadings on issues relating to the resignation of Ms Ballinger as a trustee, the appointment of a partner from Duncan Cotterill as an independent trustee and the trustees’ refusal to assist Charlotte with the payment of school fees.
[98] In these respects, Charlotte alleges that the trustees have been in breach of their duties. The trustees are not however asserting that she has no right to make her claims in respect of the decisions the trustees have made or with regard to the retirement of Ms Ballinger, and they are not objecting to the admission of her evidence as to those matters. Their objection is as to the admissibility of evidence which was or could reasonably have been adduced in the earlier proceedings.
[99] Mr Grant submitted the principles and policies relating to res judicata and abuse of process, which I have referred to already, should not apply with regard to the evidence Charlotte wishes to put before the Court because she was only an interested party in the previous proceeding, so was not required to present her “whole case” to the Court. He also submits the earlier proceedings involved a different subject of litigation (an application by a trustee to remove a trustee when the two trustees were in a state of deadlock).
[100] I do not accept those submissions. Charlotte was a party and privy in the earlier proceedings. She was seeking to remove Daniel as a trustee and was contending that for a number of reasons he was not fit to be a trustee of the DP Trust. In supporting John’s case and advancing her own, Charlotte could have put all the evidence she considered relevant and necessary to her case before the Court in those proceedings.
[101] Mr Grant acknowledges that Charlotte did put some of the evidence which she is presenting in the current proceedings before the Court in earlier proceedings but she says she wants to be able to present further evidence in greater detail. To permit her to do that, in order to relitigate issues that were evidential issues before the Court in the earlier proceedings, would be an abuse of the current proceedings.
[102] Mr Grant for Charlotte submitted there was a significant difference between the pleadings in the earlier proceedings and the pleadings in the current proceedings. There are differences in the pleadings, however, I do not regard the differences as being so significant as to detract from the force of the trustees’ submission that much of the evidence currently in the affidavits for Charlotte are an attempt to relitigate issues which were before the Court in the earlier proceedings.
[103] Mr Grant submitted that, in the present case, the issue is whether Daniel is an appropriate person to be a trustee. In 2014 the issue was whether, in circumstances where the DP Trust was deadlocked as a result of Daniel’s attack on his father, Daniel was an appropriate person to be a trustee. It had nothing to do with the various allegations that Charlotte has made in the present litigation.
[104] The way Mr Grant summarised the earlier case and compared it to the present case is quite at odds with Dunningham J’s summary of the issues that were before her.
[105] Charlotte contends that evidence she gave in the first proceedings should be admitted as giving context to a current allegation that Daniel has persistently been hostile towards her and her children. Mr Grant referred to a judgment in the Probate, Divorce and Admiralty Division in Molesworth v Molesworth.24 This was a case involving an allegation of persistent cruelty. On an earlier occasion a Court had held the conduct did not constitute persistent cruelty. In a subsequent case, the conduct from the earlier occasion was relied upon in addition to subsequent conduct. Lord Merriman said that, in considering whether persistent cruelty was established in the later case, it was appropriate for the Court to have regard to the cruelty which had been the subject of earlier proceedings. In the particular circumstances of that case, he considered it appropriate for the Court to hear evidence as to matters which had been the subject of evidence in the earlier proceedings. In taking that approach, he said he was “not laying down any general rule”.25
24 Molesworth v Molesworth [1947] 2 All ER 842.
25 At 845.
[106] In Richards v Richards, again a case where a wife was alleging persistent cruelty, Lord Merriman took a similar approach.26 On the first occasion the wife went to Court with her allegations, her application was dismissed. She went back to the Court a little later, relying on the original allegations of persistent cruelty together with some subsequent alleged cruelty.
[107] In Mills v Cooper, Lord Parker CJ held that the Court was concerned with a prosecution against a man “being a gypsy” (meaning “a person living a nomadic life without fixed abode”) who had left litter on a highway on a date three months after a finding had been made in another case that he was not at an earlier time a gypsy.27 Lord Parker CJ said a Court’s finding that he was not a gypsy at an earlier date could not create an issue of estoppel as to whether he was a gypsy at a later date. He also said that, in relation to the later prosecution, the Court was entitled to hear evidence that had also been before the Court for its earlier determination.
[108] With the particular issues that were before the Court in later proceedings in those cases, it is easy to see why evidence as to matters that were before the Court in the earlier proceedings was relevant and admissible in the subsequent proceedings. Nevertheless, as Lord Merriman said in Molesworth, the particular rulings in those cases do not lay down a general rule as to either admissibility or relevance.
[109] For evidence to be relevant in the later proceedings it has to be relevant to an issue which is properly before the Court in those proceedings. For evidence to be admissible in any proceedings, it must be relevant.28 Evidence is relevant in a proceeding if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.29 For evidence to be admissible as relevant it must relate to an issue which is properly before the Court and not an abuse of the Court process.
[110] Contrary to Mr Grant’s submissions, I do not accept that the Court should in subsequent proceedings be more accepting of evidence that was the subject of judicial
26 Richards v Richards [1952] 2 All ER 904.
27 Mills v Cooper [1967] 2 All ER 100 (QB).
28 Evidence Act 2006, s 7.
29 Section 7(3).
determination in earlier proceedings because the evidence relates to trustees and the administration of a trust. It is not in the interests of trust beneficiaries that there be needless relitigation of issues that have been the subject of judicial consideration or that trusts’ funds should have to bear the costs of repeated consideration of complaints that have already been the subject of earlier consideration between the parties. That may be particularly so in the context of family trusts where the litigation can aggravate intra-family conflict and all the stresses associated with that.
[111] There was evidence in both the current and earlier proceedings as to how a number of people within John and Lyn’s family have been emotionally and psychologically damaged by the situations they are in. That is not surprising given the tone, detail and nature of the personal attacks made in affidavits filed in these proceedings, to a large extent, going over matters that were before the Court in the earlier proceedings.
[112] It is also not necessary for the challenged evidence to be admitted to do justice between the parties on the pleadings which can properly be before the Court. Essentially, Charlotte’s complaint is that the trustees have failed to appropriately consider requests she has made for financial assistance from the DP Trust, the trustees have failed to provide her with information to which she is entitled, and Daniel and Duncan Cotterill breached or assisted Daniel in breaching his duties as a trustee in bringing about Ms Ballinger’s resignation as a trustee and the appointment of Mr Dorrance as a trustee.
[113] Those allegations and the trustees’ counterclaim can all be addressed through evidence as to what has occurred since Dunningham J’s judgments in the earlier proceedings and the Court of Appeal’s dismissal of an appeal against her judgments. Admission of evidence that was or could have been before the Court in the earlier proceedings would be of little, if any, relevance to what is now properly in dispute.
[114] Key to resolution of the current proceedings will be Dunningham J’s finding that there would be a minimal risk of deadlock if Daniel were to continue as a trustee
with the appointment of an independent professional trustee and Dunningham J’s expectation that Daniel would:30
... go out of his way to work constructively and professionally with an independent trustee in order to demonstrate that the friction of the past was generated by inter-family dynamics, and not any broader personal shortcomings.
[115] Also included in that part of her judgment were these statements:
[99] The more important concern raised by Charlotte was her concern if either she or her children were to make a request for distribution from the Trust, it would be rejected out of hand by him if he remained a trustee. If correct, that would be a compelling reason for him to be removed as trustee. While she said that she did not “currently have any intention of making a request”, she correctly pointed out that her father set up the two trusts at the same time, with the same beneficiaries, “to allow for the possibility that if one or other of the trust’s failed or did substantially worse than the other, the successful trust could still provide support for all of the (same) beneficiaries”.
[100] Daniel frankly acknowledged in evidence that he and Charlotte had never been particularly close, in part, because of their very different personalities. However, he seemed well able to articulate his obligations, as a trustee, if Charlotte or her family was to make a request as a beneficiary of the Trust or was in need of support. He acknowledged that Charlotte “would most certainly ... be given consideration” if she made a request, but that relevant considerations would include her level of need and the ability of the Charlotte Powell Family Trust to provide for her.
[101] Daniel had clearly made attempts to reach out to Charlotte and her family, including by involvement in triathlons which she and her children were training for, but the tensions created by this litigation have, I suspect, made real reconciliation impossible. That said, my overall impression is that Daniel, with a moderating influence of an independent Trustee, would be perfectly able to consider the needs of Charlotte and her family fairly, if they required, or requested, financial assistance or support.
[116] Dunningham J said it was her expectation and determination that:
[112] ... with the independence and the rigour brought by a professional trustee working alongside Daniel, there will be sufficient oversight of the Trust’s decisions and investments to ensure the welfare of the beneficiaries, which, of course, include Charlotte and her family.
[117] In her second judgment, Dunningham J stated:
[30] Again, the submissions from Charlotte’s counsel sought to revisit the factual findings in the first decision. Her concern was that any request to Daniel as trustee, or any decision made by Daniel as trustee, concerning
30 At [84].
Charlotte and her children and grandchildren as beneficiaries, would revive the inter-family conflict. I do not agree. While the relationship between Daniel and Charlotte will never be warm, I am satisfied that Daniel appreciates his obligations towards her as beneficiary. More importantly, there was no evidence that there is any animosity held by him towards her children. Indeed, I am satisfied that the reverse is true, and if the children were in circumstances where it was appropriate for the Daniel Powell Family Trust to make a distribution to meet their needs, then that would be done.
[31] It should also be remembered that Daniel and his children are beneficiaries of the Charlotte Powell Family Trust and this element of reciprocity is a further factor which satisfies me that Daniel will consider the interests of all the beneficiaries in his role as trustee.
[118] On appeal, it was submitted for John that Dunningham J had been in error with a number of the determinations she made in both judgments. The Court of Appeal rejected each ground of appeal. In doing so, it referred to Dunningham J’s statement that she was satisfied that Daniel would have proper regard for the welfare of all the beneficiaries including Charlotte’s children. As to that, the Court of Appeal said:
[78] ... the appointment of a new independent trustee will mean that Daniel will not be acting on his own, and make it even more unlikely that the obligations the trustees owe to Charlotte and her children will be overlooked. If they are, Charlotte will have remedies available to her.
[119] The judgments of Dunningham J and the Court of Appeal provide an appropriate starting point against which Charlotte’s complaints and allegations as to the trustees’ conduct since the earlier proceedings can be considered. The Court can do this without having to address extensive evidence that was also presented in the earlier proceedings or which could have been presented then if the parties had chosen to do so.
[120] In their challenges to the admissibility of evidence, the trustees are not seeking to interfere with Charlotte’s right to seek remedies for her new complaints through bringing the proceedings. What they are seeking to do is to prevent her relitigating matters that were before the Court in the earlier proceedings. Ruling out the evidence to which objection is taken, because of the way it would require a relitigation of issues that have already been determined, will not prevent Charlotte seeking the remedies which the Court of Appeal said will be available to her if the trustees acted in breach of obligations they had as trustees to Charlotte and her children.
[121] For all those reasons, to permit Charlotte to present, as admissible evidence, evidence from herself or others as to matters that predated the second hearing before Dunningham J that began on 11 August 2014, would be to permit an abuse of process.
Opinion and argument
[122] The starting point is that a statement of an opinion is not admissible in a proceeding except as expressly provided for in the Evidence Act or other legislation.31 The Court may refuse to read an affidavit that unnecessarily sets forth any argumentative matter or copies of or extracts from documents.32
[123] In the past, the Court has struck out parts of affidavits which “might be described as gratuitous, egregious and provocative”.33 In Re Mulcock, the Court struck out an entire affidavit filed by the trustee in a family protection proceeding, challenged for containing inadmissible, tendentious and argumentative material.34
[124] I respectfully adopt the observation of Peters J in Mike Pero Mortgages Ltd v Pero:35
... an affidavit is for evidence, not argument. Counsel’s submissions are to assist the Court in determining the issues which arise. Neither an affidavit nor submissions should contain pejorative characterisations of the conduct of the opposing party, or speculation, or indeed anything not directed to the purposes to which I have referred.
[125] Priestley J, in Walker v Walker, said:36
An affidavit is a mechanism to place relevant factual matters before the Court. It is not a device to score points, denigrate or indulge in advocacy.
Solicitors preparing, and counsel settling affidavits in the Family Court in my view have a professional obligation, regardless of what their “instructions” may be, to ensure that affidavits remain focused. Relevance is the first filter. Overt advocacy and submissions have no place in an affidavit.
31 Evidence Act, s 23.
32 High Court Rules, rr 9.7(4)(d) and (f), r 9.7(5).
33 Donovan v Graham [1991] 4 PRNZ 311 (HC) at [314].
34 Re Mulcock HC Christchurch M362/88, 1 September 1989.
35 Mike Pero Mortgages Ltd v Pero [2018] NZHC 528 at [38].
36 Walker v Walker [2006] NZFLR 768 (HC) at [11]-[13].
[126] In Lipinski v Weiss, Miller J said:37
The temptation to settle historical scores can be strong in Family Court proceedings, and part of the Court’s task (and counsel’s duty) is to ensure the litigation is kept within proper bounds established by the statutory criteria that the Court must apply.
[127] Some of those comments were made in the context of relationship property proceedings but they are just as apposite in trust litigation such as these where at the heart of the proceedings is a family dispute.
[128] Mr Weston highlighted parts in Charlotte’s affidavit which he submitted were opinion, submission or speculation. An example of this was near the beginning of her first affidavit which begins with the hearsay statement that Ms Ballinger says that in May 2016 Daniel’s barrister, Stephanie Grieve, asked her to resign her trusteeship. That is then followed by the comment, which Mr Weston characterises as speculation: “Faced with opposition from the litigation partner from Duncan Cotterill who had been acting for Daniel, Ms Ballinger agreed to resign, which she did on 2 June 2016”. She then says Daniel arranged for her to be replaced by a partner in Duncan Cotterill “so that he could have what appears to be, unhindered access to the DP Trust’s income”, which Mr Weston characterises as opinion or submission.
[129] Later, Charlotte referred to the way Daniel’s solicitors had written to her legal advisors requesting copies of the Deeds of Trust for the CP Trust and another trust, and for financial statements for the two trusts and some companies. This is followed by the comment:
Knowing Daniel as I do, I believe he went down this path because of the criticisms that had been made of him at the trial and in the Judgment. He was looking for material to effect some revenge on Dad and me for criticising his conduct and for seeking to have him removed as a trustee.
[130] Charlotte refers to the 2017 financial statements for Kensal and to material or significant related-party transactions but the lack of information on the part of Mr Rountree, and then expresses an opinion and speculates as to reasons for that in a manner which is both argumentative and pejorative.
37 Lipinski v Weiss HC Nelson CIV-2005-442-322, 8 September 2005, at [23].
[131] In a section under the heading “The Daniel Powell Family Trust and its ownership of Kensal Investments Limited” are numerous statements from Charlotte which I accept are not evidence but expressions of opinion or by way of submission.
[132] In another section Charlotte refers to Daniel’s passion for motor racing and his adoption of a brand name for his racing persona, Red Mist Racing, in a way that involves opinion, argument and speculation, in terms that are of no evidential value and are antagonistic.
[133] As an example of the way Lyn has included expressions of opinion in her evidence, I refer to the last paragraph in her affidavit of 4 May 2018.
[134] There are numerous passages in John’s evidence where he is expressing his opinion on various matters. As an example, I refer to paragraph 38 of his first affidavit.
[135] The final paragraph in John’s affidavit in reply of 24 September 2018 begins with an implicit attack on the earlier High Court judgments as frustrating his ability to ensure co-equality of treatment for Daniel and Charlotte. It ends with the submission and opinion “From that time onwards Daniel has been able to manage the Trust with the cooperation of a “friendly” trustee who will apparently do what Daniel wants”. John then sets out his feelings about that.
[136] Mr Grant said that, in accordance with what I infer to be his normal practice, Charlotte’s expressions of opinion were associated with an intent to present her case in a more logical way so that it would be easier to see how her evidence was relevant to the contention she was putting before the Court.
[137] I accept that it will often assist the Court if evidence is presented in an organised fashion. Care should however be taken to avoid this being done in a way which is unnecessarily antagonistic towards another party or which involves the witness becoming an advocate for her own cause. The last of these matters is a feature of the evidence from Charlotte, John and Lyn.
[138] Allowing a witness to present himself or herself as an advocate in their own cause has the potential to damage their credibility as to the matters on which they can give relevant evidence as to events they have witnessed, communications to which they have been party with relevant others or as to their own relevant circumstances.
[139] When it is necessary and appropriate to provide evidence as to how a witness feels or thinks about certain events, it will be appropriate for it to be clear from the evidence that this is what the witness is doing rather than implicitly or expressly attacking another party in a way which may be unnecessarily confrontational. There is a difference between a witness saying “I felt humiliated” and her saying another party “humiliated me” or even worse “deliberately humiliated me”.
[140] I accept that in the affidavits from Charlotte, John and Lyn there are expressions of opinion, submission and speculation to an extent that is unacceptable. As McGechan J noted in Donovan v Graham, courts should be able to expect that experienced counsel, including senior counsel, should be punctilious in ensuring that affidavits filed in proceedings such as these do not include statements which are objectionable for these reasons.38
Hearsay
[141] Counsel for the trustees marked, in green, passages in the affidavits that they challenge as hearsay. I accept that a number of those passages are hearsay. In Charlotte’s affidavit, there is also implicit hearsay through information she sets out as to aspects of the relationship between Daniel and his parents or events that occurred in the course of that relationship. She does not claim to have witnessed such incidents. The information she provides must therefore be based on what she has been told by others. In that sense, it is hearsay although I note, to the extent she may be relaying what her parents have told her, they are also witnesses in the proceedings.
[142] Not all passages marked as hearsay by Daniel’s counsel were necessarily inadmissible on that basis. For instance, there were passages in Charlotte’s first affidavit where she referred to statements which she said had been made to her by Ms
38 Donovan v Graham, above n 33, at 314.
Ballinger, then a trustee of the DP Trust. Amongst those statements were comments reportedly made by Ms Ballinger as to how Daniel and others had been conducting themselves. Those statements were hearsay if included to show as evidence that others had acted in the way referred to in Ms Ballinger’s statements. They are not hearsay as to the way Charlotte and Ms Ballinger communicated with each other while the latter was a trustee.
[143] Belatedly, Ms Ballinger has purportedly, independently of the parties, filed a brief affidavit as to her role as a trustee. I say purportedly because during the hearing I was told Ms Ballinger was taking her own legal advice in relation to her evidence. The barrister from whom she was taking advice was Mr Ormsby. Mr Ormsby, as a solicitor, had acted for John in the earlier proceedings. For the trustees, Mr Weston said there was a strong objection to Mr Ormsby acting in this way.
[144] Charlotte gave evidence as to what was said in various documents which were also to be part of the evidence. Mr Weston criticised this, saying that the best and primary evidence was what was in the documents themselves, so that evidence as to what was in those documents should have been given simply by reference to the document and production of the relevant document. He said that, at least on occasions, Charlotte’s summary of what was in the document was misleading.
[145] I accept that, in providing relevant narrative, it might assist the Court and the parties for a witness to briefly describe the nature of the document when referring to it. When such evidence is to be provided by affidavit, that affidavit should comply with the requirements of r 9.7 High Court Rules. It must avoid the recital of the contents or a summary of documents that are to be produced in any event.
[146] Much of the hearsay evidence to which the trustees object is evidence that would be inadmissible with the ruling I have just made over abuse of process. There was some evidence which the trustees had identified as hearsay which could properly be admitted as evidence of a communication that was made to Charlotte but not as evidence as to the truth of what was said in that communication.
Conclusion as to admissibility of evidence on these grounds
[147] Consistent with the above discussion, I find there are significant parts of the affidavits before the Court from and for Charlotte that, in seeking to relitigate issues that were before the Court in the earlier proceedings, are an abuse of the Court process. I consider the admission of that evidence is not required for the Court to be able to do justice between the parties on the allegations and claims Charlotte wishes to pursue regarding the administration of the DP Trust and the conduct of the trustees in the period after 2 September 2014.
[148] In the affidavits of John, Lyn and Charlotte, there are also expressions of opinion, submission and argument to an extent that is unwarranted, unnecessary and of no probative value as far as their evidence is concerned.
[149] The affidavits also include hearsay evidence which would have been better avoided, particularly so where the best evidence as to matters relevant to current pleadings can more appropriately be given by the witness directly involved, particularly Ms Ballinger.
[150] Mr Weston accepted that, in their affidavits in reply, Daniel and Mr Rountree refer to matters that Mr Weston contended should not properly be before the Court in these proceedings so that this evidence in reply is also not relevant to issues that should properly be before the Court.
[151] The issue is what should be done with the evidence, given the conclusions I have reached.
[152] Mr Weston argues that Charlotte should effectively have to start again. Mr Grant argues this is not necessary and that to rewrite affidavits would be a huge and unnecessary task.
[153] The dilemma which counsel and ultimately the Court faces when there is a challenge to the admissibility of evidence in affidavits on grounds that are relevant
here, was articulated by McGechan J in Donovan v Graham.39 McGechan J noted that pretrial objections to evidential matters are not common:40
The more usual situation is one where the Judge picks his way through the total material at ultimate trial stage, discarding the dross. Where, however, pretrial objection is indeed taken the Judge must act in a manner which will best promote the overall interests of justice given the facts of the particular case. The Judge must bear in mind risks involved in premature exclusion of evidence which on the more fully informed basis emerging at trial might be seen as admissible. He must keep in mind the desirability of the case being kept within bounds, and open to efficient disposal. It is important affidavits not be allowed to mushroom, with irrelevance piled upon irrelevance, accusation upon accusation, and with the parties becoming increasingly and unproductively inflamed. Having said that, it also is important the Court not become buried in extensive interlocutory battles over evidential points of relatively trivial importance, without time to decide substantive disputes. There is room for pretrial pragmatism, particularly over lesser matters. Each case must depend very much upon its own facts.
[154] The Court is primarily concerned with preventing an abuse of its process.
[155] On balance, I consider it necessary to order that Charlotte effectively start again with the evidence she wishes to put before the Court and that she do this once the final form of her amended statement of claim is settled. I have reached that view:
(a) because of the extent of deletions to current evidence that would be required to ensure that only properly admissible evidence is before the Court;
(b) to make it more difficult for Charlotte and John to relitigate issues that were considered by the Court in the earlier proceedings, as they appeared determined to do through the affidavits that have been filed in the current proceedings;
(c) to ensure that the scope and cost of the current proceedings is no wider than it needs to be to deal with the complaints and claims Charlotte wishes to put before the Court with regard to the way the DP Trust has been administered since 2014;
39 Donovan v Graham, above n 33.
40 At 313-314.
(d) because, while there will be a cost to Charlotte in preparing new affidavits, that work will be less onerous than the preparation of the earlier affidavits. It will largely involve an editing of those earlier affidavits rather than starting from scratch. To the extent there will be a cost to her, it is a cost that has resulted from her attempting to relitigate issues which were before the Court in the earlier proceedings in ways that I have held to be an abuse of process. The burden will also not be Charlotte’s alone. With Charlotte having to start again, so will the trustees. They will have to file fresh affidavits in reply dealing with what is appropriately before the Court in these proceedings; and
(e) because, with the proposed amendment to the statement of claim, significant further evidence would have had to be provided in any event.
The trustees’ application for leave for Duncan Cotterill to continue as solicitors
Submissions
[156] For Charlotte, Mr Grant submitted Duncan Cotterill should not be permitted to act as solicitors for the trustees. He relied on a recent judgment of the Court of Appeal in Li v Liu.41 He referred to the way Duncan Cotterill had represented Daniel in the earlier litigation; the involvement which a former partner, Stephanie Grieve allegedly had in speaking to Ms Ballinger leading to Ms Ballinger both resigning and appointing Mr Dorrance as a replacement trustee; Mr Dorrance now being a witness in the proceedings through the affidavit he filed in December 2018; cases where the courts have emphasised the undesirability of having lawyers acting in proceedings where they might also be required to give evidence;42 the undesirability of a firm representing a client in litigation where its own actions were in question;43 and the way those statements from the Court are reflected in the Conduct and Client Care Rules.44 He submitted that, with Charlotte’s pleadings as they are, the evidence of Mr Dorrance will be contentious.
41 Li v Liu [2018] NZCA 528, [2019] NZAR 259.
42 Referring to Li v Liu, above n 41.
43 Kooky Garments Ltd v Charlton [1994] 1 NZLR 587 (HC).
[157] For the trustees, Mr Weston acknowledged the need for Duncan Cotterill to seek leave of the Court to continue as solicitors, consistent with r 13.5.2 Conduct and Client Care Rules, although that rule refers to the need for an individual lawyer to seek leave of the Court to continue rather than a firm.
[158] Mr Weston submitted the continued involvement of Duncan Cotterill would not impair the integrity of the judicial process and would not lead to a risk that the solicitors from Duncan Cotterill would be unable to comply with their duties to the Court. He emphasised that the threshold for removal is high, requiring something extraordinary.45 He submitted the Court should not lightly interfere in a party’s fundamental right to counsel of their choice, particularly where considerations of delay in the application, inconvenience, or sunk costs favour the affected party.46 He acknowledged that the appointment of senior counsel for the lawyer (or firm) whose involvement is at issue is not determinative of whether the firm or a solicitor should be allowed to continue as solicitor in the proceedings but submitted the appointment of senior counsel was a matter to be taken into account in the overall assessment.
[159] Mr Weston accepted that r 13.5.2 does require Duncan Cotterill to obtain leave to continue as solicitors because Mr Dorrance is giving evidence which is contentious. However, he submitted it is relevant that the “degree of contention (as witness) is minimal because relevant communications involving Mr Dorrance, almost exclusively, have been in writing”. He suggested the real issue in the case was a legal one, whether Mr Dorrance was validly appointed, given Dunningham J’s expectation that an independent professional trustee would be appointed as Daniel’s co-trustee.
[160] Mr Weston submitted that r 13.5.3 makes it clear that one partner in a firm can represent another partner who happens to be a named party. He submitted that Duncan Cotterill would thus be entitled to act as solicitors for Mr Dorrance. He further submitted that there was no conflict between the interests of Mr Dorrance as a party and those of Daniel as a defendant. Both Daniel and Mr Dorrance contend that
46 Li v Liu, above n 41, at [23] and [36].
Mr Dorrance’s appointment was proper. Both contend they have properly met their obligations as trustees during the time they have been trustees.
[161] Mr Weston submitted that the threshold for refusing leave should be particularly high in this case with the application having been made so late and the objection to Duncan Cotterill’s involvement being so late.
Discussion
[162] In Li v Liu, the Court of Appeal restated the principles that are to be applied when there is an issue as to whether a solicitor should be permitted to continue acting as a solicitor in the proceedings:
[23] The essential applicable principles are not in debate. The court has inherent jurisdiction to disqualify counsel or solicitors from acting where to allow them to do so would impair the integrity of the judicial process. That said, the court should not lightly interfere in a party’s fundamental right to counsel of their choice, particularly where considerations of delay in the application, inconvenience, or sunk cost favour the affected party. Further, the court should be vigilant in preventing objections whose purpose is only to disrupt or inconvenience the other side. To allow the judicial process to be played in this tactical fashion would itself be an unacceptable impairment.
[163] The Court must be concerned with protecting the integrity of the judicial process. Hence, it is undesirable for practitioners to appear as counsel in litigation where they have been personally involved in the matters which are being litigated47 or where a counsel or solicitor may be required to give relevant evidence of a contentious nature.48
[164] Here, the trustees will be represented by senior counsel, Mr Weston, in the proceedings. If a solicitor for Duncan Cotterill were to appear as junior counsel, it is most unlikely that such a solicitor could or would be a witness in the proceedings.
[165] I do not discount the possibility that Charlotte’s objection to Duncan Cotterill’s continuing involvement as solicitors has been an attempt to obtain a tactical advantage and to cause Daniel to incur further expense in the proceedings and defending the
47 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.
48 High Court Rules, r 13.5.1; Li v Liu, above n 41, at [25].
claims she is making. Even without the latest amendment to the pleadings, the role of several lawyers within Duncan Cotterill in bringing about the resignation of Ms Ballinger and the appointment of Mr Dorrance was going to be an issue in the proceedings. There was, even then, the potential for solicitors within Duncan Cotterill to be giving evidence of a contentious nature. Although Mr Grant had flagged the appropriateness of Duncan Cotterill’s involvement as an issue at the outset of the proceedings, Charlotte was content for Duncan Cotterill to remain involved as solicitors and, in that capacity, to be responsible for discovery, and the other responsibilities which, at that time, the firm had assumed both as solicitors and as counsel. Mr Caradus from Duncan Cotterill appeared for the trustees at the hearing where Charlotte sought further discovery.
[166] That delay is not determinative. With the issue having been raised, it was not over only to Charlotte and her advisors to decide what, if any, steps they would take over the issue. Duncan Cotterill also had to consider its position. It elected to continue as solicitors until Mr Dorrance had sworn an affidavit when it then, quite properly, sought leave of the Court to continue as solicitors.
[167] It was thus not only Charlotte who was responsible for Duncan Cotterill’s involvement becoming an issue for the Court to consider only a short time before the proceedings were due to go to trial.
[168] The delay is also not now so prejudicial to the timely resolution of these proceedings. With the rulings I have made as to admissibility, Charlotte is effectively having to start again. If there has to be a change in the solicitor representing the trustees, it is an appropriate time for that to happen.
[169] I also do not accept Mr Weston’s submission that the evidence of Mr Dorrance or another witness, either now or previously a partner of Duncan Cotterill, would necessarily be largely non-contentious. With the allegations Charlotte is making, Mr Dorrance’s experience, personality and approach to his role as trustee will be of importance. The evidence he gives as to such matters and what a trial Judge makes of him as a witness will be important to the determinations that will ultimately have to
be made. Those determinations will not be made just on the basis of the written record apparent from documents that have been discovered.
[170] Duncan Cotterill does have an interest in the proceedings. Generally, that interest coincides with the interests of Daniel but they may not be entirely consistent. Lawyers within Duncan Cotterill, not necessarily Mr Dorrance, must have advised Daniel as to the appropriateness of the steps that led to the resignation of Ms Ballinger and the appointment of Mr Dorrance.
[171] It is likely there will be cross-examination as to why, in the context of this bitter family dispute and litigants as determined as both Charlotte and John, Mr Dorrance and others at Duncan Cotterill thought it would be prudent for a partner of Duncan Cotterill to become a trustee when that had at least the potential to lead to further litigation within the family.
[172] Evidence already with the Court indicates that several lawyers from Duncan Cotterill had discussions with Ms Ballinger before she resigned as trustee and, with Daniel, appointed Mr Dorrance as a new trustee. Ms Ballinger does not suggest that she was pressured into resigning, but indications are that this may not be accepted by Charlotte. Evidence as to how she came to resign is likely to be contentious. There is real potential for lawyers from Duncan Cotterill to be called as witnesses with regard to this. Their evidence could well be contentious.
[173] There is also a risk that Duncan Cotterill’s involvement will detract from the integrity of the proceedings. Indeed, this may have already happened. The trustees, represented by Duncan Cotterill, resisted tailored discovery on grounds that I held were not justified. As I would have expected, Duncan Cotterill did meet its obligations in terms of the particular discovery that was ordered but the trustees initial resistance to the further discovery Charlotte was seeking resulted in further delay and costs.
[174] It was also of concern to me that, until December, Mr Dorrance had not filed any affidavit in the proceedings. As I noted earlier, it appeared that the trustees were going to rely on evidence from Daniel as to the appropriateness of Mr Dorrance becoming a trustee, his experience and qualifications for the role and on what Daniel
had to say about how Mr Dorrance had conducted himself as a trustee. The best and potentially most persuasive evidence as to all of that should have come from Mr Dorrance himself. It appeared that, while acting as solicitors for Daniel, Duncan Cotterill had chosen not to put that evidence before the Court. It seems likely they may have made that tactical decision because of their being solicitors for the trustees and their awareness that, if Mr Dorrance filed an affidavit, they would then have to seek leave of the Court to continue as solicitors.
[175] Neither of the trustees should be inhibited in the evidence they can put before the Court through Duncan Cotterill continuing as solicitors in the proceedings.
[176] For all these reasons, I decline leave to Duncan Cotterill to remain as solicitors on the record for the trustees or as solicitors for Daniel.
Conclusion
[177] The plaintiff is granted leave to file an amended statement of claim but the application is adjourned so that her counsel can settle on the final form of that amended claim and that draft statement of claim can be considered by the defendants.
[178] Because of the extent to which evidence in affidavits filed for the plaintiff is objectionable and inadmissible, I rule now that the Court will not read those affidavits or the affidavits in reply. Once the plaintiff has settled her amended statement of claim and the Court has granted leave for her to file a further amended statement of claim, the parties are to begin again the process of filing affidavits in support of the claim and counterclaim and evidence in reply.
[179] The defendants are denied leave to continue with Duncan Cotterill as solicitors in the proceedings. They are to arrange new representation. The solicitors instructed are to forthwith file a memorandum with the Court as to their involvement. For the avoidance of doubt, I make it clear that nothing in this judgment should be taken to mean that Mr Weston QC cannot continue to represent either or both of the trustees as counsel.
[180] If no agreement is reached over costs, a memorandum for either party seeking costs is to be filed within four weeks. A memorandum for the other party or parties is to be filed within six weeks. Any reply is to be filed within a further eight weeks. If both parties seek costs, a memorandum from the plaintiff is to be filed first. I do observe that by far the greater proportion of the hearing, and the preparation of documents for the hearing, related to the trustees’ objection to the admissibility of evidence.
[181] The proceedings are adjourned for a further case management conference on 10 July 2019 at 9.15 am. Counsel are to file a memorandum or, if need be, memoranda setting out a timetable for the orderly progression of the proceedings in light of this judgment.
Solicitors:
A Grant, Barrister, Auckland
T Weston QC, Barrister, Christchurch J Moss, Barrister, Christchurch
Duncan Cotterill, Christchurch Layburn Hodgins, Christchurch.
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