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Poros v Bax [2015] NZHC 1579 (7 July 2015)

Last Updated: 10 August 2015

THIS JUDGMENT IS TO BE RELEASED TO THE PARTIES AT 4.30 PM, 7

_{JULY 2015 AND IS TO BE RELEASED PUBLICLY 48 HOURS LATER}

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-002698 [2015] NZHC 1579

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

_{as to an application for pre-commencement discovery}

This judgment was delivered by me at 4.30 pm on 7 July 2015 pursuant to Rule 11.5 of the High Court Rules

_{Registrar/Deputy Registrar}

POROS v BAX [2015] NZHC 1579 [7 July 2015]

The application

[1] Spyridon Poros (Mr Poros) applies for an order of pre-commencement discovery. Kylie Bax (Ms Bax) is named as the single intended respondent.

Mr Poros’s substantive claim

[2] The claim which Mr Poros wishes to pursue in this Court relates to relationship property arising from his marriage to Ms Bax. The basis of his claim as identified by Mr Poros is:

(a) Mr Poros and Ms Bax were married on 18 August 2004 and lived together until they separated on 28 May 2014.

(b) On 7 September 2013, Mr Poros and Ms Bax (“or nominee”) entered into a written agreement (the agreement) to purchase a Cambridge property (the property), both signing as purchasers.

(c) The agreement as typed indicated that Mr Poros and Ms Bax were purchasing as trustees of the Goldeye Trust, but the reference to a trusteeship was deleted when they executed the agreement (the amendment being initialled).

(d) Mr Poros and Ms Bax, on the written form of agreement, identified an

Auckland practitioner as their lawyer.

(e) The property was intended to and did become their family home. (f) Mr Poros was never requested to nominate another purchaser.

(g) After the parties’ separation, Mr Poros was served with a trespass notice in relation to property, issued on behalf of Ms Bax’s parents as trustees of the Goldeye Trust and as registered proprietors of the property.

(h) It has transpired that:

(i) Mr Poros was never registered as a proprietor of the property.

(ii) Upon settlement of the purchase, the title was on 29 November

2013 registered in the names of Ms Bax and her parents.

(iii) On 12 February 2014, the title was transferred into the names of Ms Bax’s parents alone, Ms Bax thereby ceasing to be a registered proprietor.

(iv) Three months later, the parties’ separation occurred.

(v) Mr Poros then discovered what dealings had occurred on the title – he caveated the title, claiming a beneficial interest jointly with Ms Bax by reason of a resulting or constructive trust arising from the circumstances identified above.

[3] These matters are all identifiable in affidavits filed by Mr Poros.

The procedural background

[4] Mr Poros, expressly under the Property (Relationships) Act 1976 (the PRA), filed in the Family Court the initial version of his present application.

[5] In the initial application, Mr Poros identified a number of New Zealand and foreign properties and entities. He sought pre-commencement discovery in relation to all of them. He has since abandoned all but his request for documents relating to:

(a) purchase of the Cambridge property; and

(b) the Goldeye Trust.

[6] I will be dismissing in any event the abandoned aspects of the application.

[7] The parties subsequently had the pre-commencement discovery application transferred to this Court.

[8] The initial application was pursued under r 140 Family Courts Rules 2002 but the application now falls to be determined under r 8.20 High Court Rules.

Pre-commencement discovery – High Court Rules, r 8.20

[9] Rule 8.20 High Court Rules provides for pre-commencement discovery in these terms:

8.20 Order for particular discovery before proceeding commenced

(1) This rule applies if it appears to a Judge that—

(a) a person (the intending plaintiff) is or may be entitled to claim in the court relief against another person (the intended defendant) but that it is impossible or impracticable for the intending plaintiff to formulate the intending plaintiff's claim without reference to 1 or more documents or a group of documents; and

(b) there are grounds to believe that the documents may be or may have been in the control of a person (the person) who may or may not be the intended defendant.

(2) The Judge may, on the application of the intending plaintiff made before any proceeding is brought, order the person—

(a) to file an affidavit stating—

(i) whether the documents are or have been in the person's control; and

(ii) if they have been but are no longer in the person's control, the person's best knowledge and belief as to when the documents ceased to be in the person's control and who now has control of them; and

(b) to serve the affidavit on the intending plaintiff; and

(c) if the documents are in the person's control, to make those documents available for inspection, in accordance with rule

8.27, to the intending plaintiff.

(3) An application under subclause (2) must be by interlocutory application made on notice—

(a) to the person; and

(b) to the intended defendant.

(4) The Judge may not make an order under this rule unless satisfied that the order is necessary at the time when the order is made.

[10] The three-point analysis which I adopt in relation to an application under r 8.20 requires me to be satisfied as to three matters:¹

(a) the intending plaintiffs are or may be entitled to claim relief against another person;

(b) it is impossible or impracticable for the plaintiff to formulate the claim without the documents sought; and

(c) there are grounds for belief that the documents may be or have been in the possession of the person concerned.

The adequacy of pleadings and particulars

[11] Of the test of “impossible or impracticable” under r 8.20(1)(a), the Court of Appeal has stated in Exchange Commerce Corporation Ltd v New Zealand News Ltd that what is meant is an “inability to plead the claim in accordance with the requirements of the rules”.²

[12] The terminology of r 8.20(1)(a) requires the Court to draw a distinction between documents which may be needed to sustain and pursue a claim to finality and those which may be needed for proper pleading. I adopt the distinction in terms of “finality” of Eichelbaum J in Gray v Crown Superannuation Fund, where his Honour said:³

Note that in terms of the rule the impracticability has to relate to the formulation of the claim, not its pursuit to finality.

[13] The requirements upon a plaintiff to state its case in a statement of claim are set out in r 5.26 High Court Rules which provides:

¹ Malayan Breweries v Lion Corp Ltd (1988) 1 PRNZ 629 (HC) at 631–632 per Wylie J, cited in Welgas Holdings Ltd v Petroleum Corp of New Zealand Ltd (1991) 3 PRNZ 33 (HC) at 40 per McGechan J.

² Exchange Commerce Corporation Ltd v New Zealand News Ltd [1987] NZCA 94; [1987] 2 NZLR 160 (CA) at

_{164; Hetherington Ltd v Carpenter [1997] 1 NZLR 699 (CA) at 705.}

³ Gray v Crown Superannuation Fund (1986) 1 PRNZ 239 (HC) at 240; adopted in Kerrendale Finance Ltd v DFC Ventures Ltd (No. 1) (1989) 2 PRNZ 674 (HC) per Barker J at 677; McLennan v Adams HC Greymouth CP6/97, 18 December 1997 per Master Venning.

5.26 Statement of claim to show nature of claim

The statement of claim—

(a) must show the general nature of the plaintiff's claim to the relief sought; and

(b) must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff's cause of action; and

(c) must state specifically the basis of any claim for interest and the rate at which interest is claimed; and

(d) in a proceeding against the Crown that is instituted against the Attorney-General, must give particulars of the government department or officer or employee of the Crown concerned.

[14] Accordingly, the particulars required by r 5.26(b) are such as will “inform the

Court and the [defendant] of the plaintiff’s cause of action.”

[15] The Court will insist upon as much certainty and particularity as is reasonable, having regard to the circumstances of the case.⁴

[16] In some circumstances, particulars can neither be reasonably expected nor appropriately sought by order from a plaintiff. The cases recognise that the usual expectation as to detailed particulars of a claim will give way in cases where the party which would be entitled to particulars has knowledge concerning those particulars which the other party does not have. This is an approach to the requirements of pleading recognised in both England⁵ and in New Zealand.⁶ The Courts recognise as adequate a pleading which pleads all material particulars other than those which can be derived only from information within the peculiar

_{knowledge or control of the defendant.}

⁴ Ratcliffe v Evans [1892] 2 QB 524 (CA) at 532-533 per Bowen LJ; adopted in Television New

_{Zealand Ltd v Newsmonitor Services Ltd (1992) 5 PRNZ 685 (HC) at 687 per Wylie J.}

⁵ _{Ross v Blakes Motors Ltd [1951] 2 All ER 689 (CA).}

⁶ Hickson v Scales (1900) 19 NZLR 202 (SC); see also McGechan on Procedure (online looseleaf ed, Brookers) at [HR 5.21.05] and the judgment of Master Faire in Prime v Hardie HC Auckland CP248sd01, 15 March 2002 at [12] adopting a passage from an older version of McGechan on Procedure at [HR 185.09].

[17] Ultimately, under r 8.20, the Court has a discretion (“the Judge may”)

whether or not to grant an order:⁷

The Judge may ... order .... The documents Mr Poros seeks [18] Mr Poros seeks:

(a) In relation to the Cambridge property:

(i) The Deed of Nomination (if it exists).

(ii) Bank and Tax records relating to the property. (iii) Mortgages and other debt.

(iv) Certificate of title.

(v) Executed copy of authority for the solicitor to act.

(vi) Any instructions Ms Bax gave in respect of the purchase including any from her parents, Mr and Mrs Bax and any other person.

(b) In relation to the Goldeye Trust: (i) The trust deed.

(ii) Trust accounts.

(iii) All trustee resolutions. (iv) Beneficiaries.

The relationship property context

[19] Mr Poros deposes that he made the application so that he could obtain all the relevant information needed to provide the basis for an application for the division of relationship property. He deposes that the requested information was that which he believed to be in Ms Bax’s possession or to which she had access.

[20] Given that Mr Poros and Ms Bax were parties to a qualifying relationship in terms of the PRA, Mr Poros will be able to pursue one or more of the orders available under Part 7 of the PRA.⁸

[21] The orders which the Court may make include:

(a) section 44 – an order setting aside dispositions;

(b) section 44B – an order requiring disclosure of information about dispositions of property to a trust; and

(c) section 44C – an order of compensation for property disposed of to a trust.

[22] As Mr Godinet (for Ms Bax) notes, the substantive claim Mr Poros intends to file will be filed in the Family Court in accordance with r 388 Family Courts Rules (and following).⁹ Such an application adopts the forms provided in Schedule 8 of the PRA. The application for orders is generally a succinct document setting out the basis of the claim. It is supported by narrative affidavit evidence and an affidavit of assets and liabilities.

[23] It is my experience that when such Family Court proceedings are transferred to this Court, the procedure commonly adopted is that which applies to originating

⁸ By reason of the Court’s jurisdiction under s 25 of the PRA to make orders on an application

_{under s 23 of the PRA.}

⁹ The claim is required to be initially filed in the Family Court by reason of r 390 Family Courts

Rules (and the definition of “court” in r 8).

applications.¹⁰ This Court will have jurisdiction to make an order for disclosure of the information, pursuant to s 44B of the PRA.

Analysis of Mr Poros’s ability to formulate his claim

Summary

[24] The discovery sought by Mr Poros fails to meet the threshold requirement that without the discovery it would be “impossible or impracticable” for him to formulate his claim.

[25] I find that even on the traditional approach applied to the threshold requirement in ordinary civil litigation, Mr Poros’s application must fail. But, beyond that, I also accept the thrust of Mr Godinet’s submission which was to the effect that the regime for relationship property claims involves a lesser definition of heads of claim at the outset than occurs in ordinary civil litigation. The identification of the basis of Mr Poros’s intended claim, as summarised above at [2], is clearly a basis on which to state a claim for relief under the PRA to be more fully flushed out by affidavit evidence and later discovery.

[26] For Mr Poros, Mr Green submits that there is a risk that Mr Poros’s claim will be the subject of a strike out application if he has to plead his claim without access to the requested documents concerning the transfer to the Goldeye trust. Even were there likely to be some material omissions in identifying the relevant sequence of events in a statement of claim or originating application, the legislative provision for disclosure of such information under s 44B PRA strongly indicates that a Court would have little sympathy for a strike out application where disclosure under s 44B has been sought but not yet obtained. As it is, to the extent that there are gaps in Mr Poros’s present understanding of what has occurred, I am satisfied that they are either matters within the peculiar knowledge of Ms Bax or go to matters of evidence rather than material pleading.

The Cambridge property

[27] The six categories of documents sought by Mr Poros in relation to the property illustrate the extent to which the requested documents go beyond what is required by way of material pleadings.¹¹ Mr Poros clearly knows already the essential facts required to plead what he says was a dispossession of his interest. He was a party to the agreement (and holds a copy). He can plead the contractual details by which he and Ms Bax came to own the property in equity, pending acquisition of the legal title. Documents such as a Deed of Nomination, if any (in which Mr Poros deposes he was not involved), and authorities to a solicitor to act on the

conveyancing may well be of ultimate evidential value. But their contents will not of themselves alter the essential story which Mr Poros must relay in order to justify one or more of the orders under Part 7 PRA. Documents which show how the property has subsequently been dealt with (including documents relating to debt and taxation) are in a similar category. In an age of e-dealing, the request for a “Certificate of Title” is plainly outside the reach of pre-commencement discovery. Mr Green responsibly did not pursue that particular item – Mr Poros has already exhibited an historical search copy of the title which identifies all relevant dealings.

The Goldeye Trust

[28] Mr Poros requested, from Ms Bax’s solicitors and the trustees, information relating to the Goldeye Trust. This request has been refused. The documents he seeks, including centrally the Goldeye Trust deed, would allow him to confirm details of the trusteeship and of the objects of the trust (including whether and to what extent Ms Bax has interests).

[29] In his submissions, Mr Green noted in relation to the trust that –

... if there is a real possibility of the existence of a claim against someone

there may well be intended defendants in addition to [Ms] Bax.

[30] Mr Green therefore submits that there ought to be pre-commencement discovery of trust documents.

[31] At least three matters necessitate the rejection of Mr Green’s submissions,

namely:

(a) The only intended respondent identified in the application filed by Mr Poros is Ms Bax (although Mr Green’s submissions now identify Ms Bax’s parents as possibly intended respondents).

(b) The test under r 8.20(1)(a) High Court Rules is not whether an intending plaintiff definitely has a claim against another person. It is whether the intending plaintiff may be entitled to claim against the other person. On the basis of Mr Green’s submissions, Ms Bax’s parents come within that category. Rule 8.20(3)(b) requires that notice of the interlocutory application be given to such an intended defendant. They therefore ought to have been joined in the application so that they might take steps and be heard.

(c) If Ms Bax’s parents were the persons from whom some or all of the trust documents were sought, r 8.20(2) also requires that they be given notice of the application in relation to their documents.

Conclusion

[32] I am not satisfied that Mr Poros requires further documents for the purpose of articulating and properly pleading his relationship property claim against Ms Bax. Given the way the application has been brought, it would also be inappropriate to order pre-commencement discovery against Ms Bax’s parents.

[33] While every application for pre-commencement discovery must ultimately turn on its own circumstances, I accept the submission of Mr Godinet that the decision of Associate Judge Sargisson in Kinney v Pardington, represents a principled application of r 8.20 High Court Rules in somewhat analogous circumstances.¹²

[34] Ms Kinney was an intending plaintiff. She wanted to commence a proceeding to seek orders replacing the executors of her father’s estate. She also wanted a declaration that assets which were jointly owned by her father and his wife, Mrs Pardington (not her mother) were relationship property and that a half-share of such assets belonged to her father’s estate. Ms Kinney sought pre-commencement discovery against Mrs Pardington and Mrs Pardington’s sons. The documents sought were those which touched on the extent of assets now owned by Mrs Pardington which could have been or might be the subject of relationship property orders under s 25 PRA.

[35] Ms Kinney’s application for pre-commencement discovery failed because Ms Kinney was in a position to formulate her claim by reference to the documents and information she already possessed. Associate Judge Sargisson found:¹³

In my judgment, these documents [already held by Ms Kinney] coupled with the refusal to disclose details of the assets are sufficient to formulate the claim. If discovery is required, it can be done in accordance with usual practice after the claim is formulated. Whether or not that will provide her with the incentive she seeks to continue with the claim will be something she will no doubt need to consider, but that does not (in my assessment) warrant a discovery order under r 8.20.

[36] The ability of Ms Kinney in Kinney v Pardington to formulate her claim on the basis of existing information is similar to that of Mr Poros in the present case. The summary of Mr Poros’s claim as summarised above at [2] constitutes a proper formulation for the purposes of a substantive application under the PRA.

[37] To the extent that, for Mr Poros, Mr Green also focuses on documents held by Ms Bax’s parents, it would be inappropriate to consider a late amendment of Mr Poros’s application (and I record that Mr Green did not make an application for amendment). It has taken almost a year for the pre-commencement application to be brought on for hearing. There appear to have been delays in the Family Court which accounted for at least some of that slippage but on any view, it would be appropriate that Mr Poros now either commence his substantive proceeding or decide against it. If he commences a substantive proceeding and it is transferred to this Court, and discovery establishes that relief against Ms Bax alone will be insufficient, Mr Poros

will have the opportunity to pursue other parties (whether in a separate or consolidated proceeding). For the time being, it would be inappropriate, through amendment of the application and service on Ms Bax’s parents, to further delay the disposal of this application.

Costs

[38] Counsel addressed me on costs at the conclusion of their submissions. Both accepted that this is appropriately a Category 2B case and that the appropriate order is that costs follow the event.

Order

[39] I order:

(a) The interlocutory application initially filed in the Family Court on 16

July 2014 is dismissed in its entirety.

(b) The applicant shall pay the respondent’s costs on a 2B basis together

with disbursements to be fixed by the Registrar.

Associate Judge Osborne

Solicitors:

Dyer Whitechurch, Auckland

Counsel: J L W Green, Barrister, Auckland

Duggan & Murphy, Auckland

Counsel: C F L Godinet, Barrister, Auckland