Hagaman v Hagaman [2022] NZHC 3325 (9 December 2022)

Last Updated: 11 December 2023

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-531 [2022] NZHC 3325

IN THE MATTER	of the Estate of E R Hagaman
BETWEEN	DAMON CARLSON HAGAMAN, JENNIFER LYN HAGAMAN ELDERS, KIMBERLY RAE HAGAMAN and KEITH ERIC HAGAMAN Plaintiffs
AND	LIANNA-MERIE HAGAMAN, GILBRALTAR TRUST LIMITED and FJB TRUSTEES LIMITED, as trustees of the Naciemento Trust First Defendants LIANNA-MERIE HAGAMAN Second Defendant continued

Hearing:	(Determined on the Papers)
Appearances:	A R Galbraith KC, J Anderson KC and A V Foote for Plaintiffs M G Colson KC for First and Third Defendants J B M Smith KC and J L W Wass for Second Defendants V L Heine KC for Non Party – Estate E R Hagaman
Judgment:	9 December 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(applications for leave to appeal)

HAGAMAN v HAGAMAN [2022] NZHC 3325 [9 December 2022]

AND LIANNA-MERIE HAGAMAN,

GILBRALTAR TRUST LIMITED and

FJB TRUSTEES LIMITED, as trustees of the Sequoia Trust

Third Defendants

AND LIANNA-MERIE HAGAMAN, SIMON ANDREW JOHNSTON and FRANCIS

JOHN BURGESS, as executors of the Estate of Earl Raymond Hagaman

Introduction

• [1] This matter involves a family dispute which has produced two separate judgments¹ on s 66 of the Evidence Act 2006 (the Act) which provides:

66 Joint and successive interests in privileged material

(1) A person who jointly with some other person or persons has a privilege conferred by any of sections 54 to 60 and 64 in respect of a communication, information, opinion, or document—

(a) is entitled to assert the privilege against third parties; and

(b) is not restricted by any of sections 54 to 60 and 64 from having access or seeking access to the privileged matter; and

(c) may, on the application of a person who has a legitimate interest in maintaining the privilege (including another holder of the privilege), be ordered by a Judge not to disclose the privileged matter in a proceeding.

(2) On or after the death of a person who has a privilege conferred by any of sections 54 to 57 in respect of a communication, information, opinion, or document, the personal representative of the deceased person or other successor in title to property of the deceased person—

(a) is entitled to assert the privilege against third parties; and

(b) is not restricted by any of sections 54 to 57 from having access or seeking access to the privileged matter.

1. Hagaman v Hagaman [2021] NZHC 1782 [Interim Decision]; and Hagaman v Hagaman [2022] NZHC 2563 [Final Decision].

(3) However, subsection (2) applies only to the extent that a Judge is satisfied that the personal representative or other successor in title to property has a justifiable interest in maintaining the privilege in respect of the communication, information, opinion, or document.

(4) A personal representative of a deceased person who has a privilege conferred by any of sections 54 to 57 in respect of a communication, information, opinion, or document and any other successor in title to property of a person who has such a privilege, may, on the application of a person who has a legitimate interest in maintaining the privilege (including another holder of the privilege), be ordered by a Judge not to disclose the privileged matter in a proceeding.

• [2] In relation to s 66(3) of the Act, there are two decisions sought to be appealed; the Interim Decision,² which dealt with the meaning of the section, and the Final Decision,³ which applied the conclusions from the Interim Decision to the facts. In respect of s 66(4) of the Act, there only the Final Decision.

• [3] As far as research has disclosed, the Final Decision is the only decision in relation to ss 66(4) of the Act. The leave applications are opposed.

• [4] Counsel filed submissions in respect of each leave application and agreed both should be determined on the papers.

Considerations applying to the granting of leave

• [5] The Court of Appeal recently confirmed the following considerations apply to a determination whether to grant leave to appeal a decision on an interlocutory application:⁴

(a) the threshold for leave is a high one;

(b) the applicant must identify an error of law or fact capable of bona fide and serious argument;

² Interim Decision, above n 1.

³ Final Decision, above n 1.

4. McNaughton v Miller [2022] NZCA 273 at [3]. See also Moir v IHC New Zealand Inc [2018] NZCA 130, (2018) 24 PRNZ 45 at [6]; Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [15]- [17]; and Tomar v Tomar [2021] NZCA 419 at [6]- [7].

(c) the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d) the circumstances must warrant incurring further delay; and

(e) the ultimate question is whether the interests of justice are served by granting leave.

Timing of the application

• [6] The substantive hearing is set down for 10 weeks in August 2023. This represents a significant commitment of Court time. Because of conflicts, a Judge from Wellington will hear the case. This involves a significant re-organisation of judicial resources. The proceeding was commenced in 2018, meaning it will have taken five years to get to hearing. My priorities in this application are not to put the hearing date at risk and not to prejudice the plaintiffs’ preparation.

Section 66(3) Evidence Act 2006 decisions

• [7] The Estate of the late Earl Hagaman applied for orders under s 66(3) that it could assert against the plaintiffs the privilege Mr Hagaman held while he was living.

• [8] The Interim Decision determined the effect of s 66(3). In that decision I rejected the applicants’ submission that the Estate could seek an order maintaining privilege because the material had been privileged during the late Mr Hagaman’s lifetime. I determined that submission could not be reconciled with s 66(3) of the Act which uses clear and express wording restricting the continuation of privilege after death. In my view, the section was clear that privilege could only continue to the extent a personal representative established a justifiable interest in maintaining the privilege. I also determined it was the personal representative who had to demonstrate the justifiable interest in maintaining privilege and said:⁵

[42] Before an interest will support continuation of privilege it must justify that step with reference to the role and responsibilities of the personal representative. An executor applicant seeking the continuation of privilege

⁵ Interim Decision, above n 1.

has to show a justification for that continuation. That justification must relate to an interest they have as executor, that is, an interest linked to their role or responsibilities as executor.

Application for leave to appeal

• [9] The grounds for appeal against the Interim Decision are that I was in error in concluding that Parliament had intended to displace the longstanding common law on when a personal representative was entitled to invoke a deceased’s privilege; was in error in concluding that justifiable interest for the purposes of s 66(3) had to be an interest of the personal representative concerning their role as executor; generally that I did not have sufficient regard to the interests of the deceased in the maintenance of privilege; and erred in dismissing the submission maintaining privilege after death was a justifiable interest.

• [10] I do not consider any of these proposed grounds of appeal confront the plain wording of s 66(3) which drove the conclusions I reached.

• [11] Leave is also sought to appeal the Final Decision which applied the principles from the Interim Decision to the facts. It is not suggested the principles from the Interim Decision were incorrectly applied to the facts, rather it is argued the reasoning and decision in the Final Decision was in error as it applied the erroneous findings of the Interim Decision.

• [12] The application for leave to appeal is therefore in essence, in respect of the Interim Decision. Had the application for leave to appeal the s 66(3) decision been made on a stand-alone basis, it would have been declined. But that is not the case.

Application for leave to appeal s 66(4) decision

• [13] The documents that were subject to the s 66(4) application overlap with the documents subject to the s 66(3) application.

• [14] Ms Lani Hagaman and the first defendants applied pursuant to s 66(4) for an order that the executors of Mr Hagaman’s estate not disclose certain documents.
• [15] In the s 66(4) decision I had to deal with the meaning of “legitimate interest” under s 66(4) of the Act. As the judgment notes, s 66(3) uses the term “justifiable interest”.

• [16] The application for leave to appeal asserts I adopted an unduly narrow or restrictive approach to the meaning of “legitimate interest”.

• [17] There are a number of alleged factual errors said to have been made in the judgment but I read those as the applicants taking issue with the outcome reached as a result of my conclusion as to the meaning of “legitimate interest”.

• [18] The s 66(4) decision also dealt with a question of joint interest privilege. It is said that I erred in finding the joint interest privilege described in Lambie Trustee Ltd v Addleman,⁶ which applies generally to all types of discovered documents held by the first defendant trust. The proposed appellants say the joint interest privilege only applies to disclosure of documents relating to the administration of the trust.

• [19] In respect of the alleged error in respect of the application of Lambie, I do not accept the application for leave to appeal identifies an error warranting leave to appeal. The proposed appellants’ argument would give the principles in Lambie little, if any, life beyond the obligation a trustee has to disclose documents relating to the administration of the Trust pursuant to the Trusts Act 2019.

• [20] The Lambie decision is a thorough and comprehensive discussion of the joint interest privilege by the Supreme Court. There is no need for that issue to be re-visited by the Court of Appeal.

• [21] I decline leave for the application of Lambie to be subject to appeal.

• [22] That leaves the interpretation I adopted to s 66(4) of the Act.

⁶ Lambie Trustee Ltd v Addleman [2021] NZSC 54, [2021] 1 NZLR 307.

• [23] The application asserts that the correct interpretation and application of s 66 is a matter of general or public importance being a matter on which there was no appellate authority.

• [24] I consider the meaning I gave to s 66(4) a matter warranting leave to appeal. At its most basic, the reason for that view is the meaning of the section is simply not clear cut – there is room for debate as to the meaning of the section.

• [25] Given granting leave in respect of s 66(4) opens the inter-relationship between the meaning of “justifiable interest” in s 66(3) and the meaning of “legitimate interest” in s 66(4), I consider it appropriate that the meaning of both sections be before the Court of Appeal.

• [26] Accordingly, I grant leave for the decisions concerning s 66(3) and (4) to be appealed but upon strict conditions. The conditions are designed to meet the priorities I set out the outset of this judgment.

• [27] The conditions are as follows:

(i) The appellants are to file their appeals forthwith.

(ii) The documents that the appellants would have to produce as a result of the decisions under appeal are to be provided to senior counsel for the respondents. The documents are to be viewed by senior counsel only. The purpose of this condition is to ensure the respondents are not prejudiced in their preparation for the hearing in the event the appeals fail. It also has the practical effect of ensuring the appellants will bring their appeal with all possible urgency. In the event the appeal succeeds, the documents provided, along with all copies, are to be returned to the appellants as if not seen and are not to be used at the hearing for any purpose.

Costs

• [28] The applications for leave to appeal did not seek costs and, accordingly, there is no issue as to costs on those applications.

Associate Judge Lester

Solicitors:

Duncan Cotterill, Christchurch (for Plaintiffs)

Cameron & Co, Christchurch (for Second Defendants) Mears Williams, Christchurch (for First Defendants) South Law, Dunedin (for Third Defendants)

Copy to counsel:

A R Galbraith KC, Barrister, Auckland (on behalf of Plaintiffs)

M G Colson KC, Barrister, Wellington (for First and Third Defendants) J B M Smith KC, Barrister, Wellington (for Second Defendant)

O W Jacques, Barrister, Wellington (for Second Defendant) J W Wass, Barrister, Wellington (for Second Defendant)

V L Hein KC, Barrister, Wellington (for non-party Estate E R Hagaman)