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Pool v Eggers [2015] NZHC 620 (31 March 2015)

Last Updated: 28 April 2015

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

CIV-2014-443-000019 [2015] NZHC 620

_{JUDGMENT OF BREWER J}

This judgment was delivered by me on 31 March 2015 at 2:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors: Shaun Gifford (New Plymouth) for Plaintiff

(Defendant in person)

_{Counsel: Susan Hughes QC}

POOL v EGGERS [2015] NZHC 620 [31 March 2015]

Introduction

[1] Mrs Eggers is being sued to account for money which it is pleaded she holds on a constructive trust, in part for Mrs Pool. Mrs Eggers has applied for the trial of the case to be before a Judge sitting with a jury. This judgment decides whether there will be a jury in this case.¹

Discussion

[2] Section 19A of the Judicature Act 1908 (“the Act”) provides that certain civil proceedings may be tried by a jury. Civil proceedings to which the section applies are those “in which the only relief claimed is payment of a debt or pecuniary damages or the recovery of chattels”.

[3] The issue I have to decide is whether a claim for money allegedly held pursuant to a trust is a claim for payment of a debt or a claim for pecuniary damages.

[4] Section 19A preserves the rights of litigants who come to the Court in its common law jurisdiction, to have certain claims heard before a jury. Such a right existed in the common law courts in England prior to the passage of the Judicature Acts of 1873 and 1875 (collectively, the Judicature Acts)² which provided for a single Court which could administer both common law and equity. The Judicature Acts preserved the right to a trial by jury in cases which fell within the traditional

jurisdiction of the common law Courts, but did not extend it to matters which fell within the Court’s equitable jurisdiction.³ This right, which initially required all questions of fact to be determined by a jury, was significantly narrowed by the rules

_{of 1883 which limited the availability of a jury to certain specified cases. These}

¹ Mrs Eggers represents herself. There was no need for her to apply for the trial to be before a Judge sitting with a jury. Giving notice under s 19A(2) of the Judicature Act 1908 is sufficient (if the section applies). I will treat her application as the requisite notice and Mrs Pool’s notice of opposition as an application under s 19(5).

² Supreme Court of Judicature Act 1873 (UK) 36 & 37 Vict c 66; Supreme Court of Judicature Act

_{1875 (UK) 38 & 39 Vict c 77.}

³ However, the Judicature Acts did preserve the power of the Court at equity to submit questions of fact to a jury at its own discretion. See Coker v Farwell [1729] EngR 304; (1729) 1 Swans 403, 36 ER 435; Stace v Mabbot [1754] EngR 145; (1754) 2 Ves Sr 552, 28 ER 352.

rules were described by Lindley LJ, one of the Judges who sat on the committee which had drafted them, in the following terms:⁴

The effect of the Rules of 1883 was to make trial without a jury the normal

mode of trial except where trial by jury is ordered...

[5] His Lordship went on to make it clear that the effect of the Judicature Acts was to preserve the possibility of a jury trial where it had already existed and not to extend it to situations where no jury had been available.⁵

[6] A similar approach has been followed in New Zealand where the Courts have given s 19A a restrictive reading. In Dick and Sauer v Attorney-General (No 2), Somers J expressed this in the following terms:⁶

The natural and recognised forum for all equitable relief is a Judge alone,⁷ and a court should be slow to read a rule as intending to transfer claims for equitable relief to another forum.

[7] In applying s 19A, Courts have accepted that a jury may be available for cases involving exemplary damages, but not in cases for compensation under the Bill of Rights⁸ or an account of profits.⁹ Juries were initially refused in cases of contribution between joint tortfeasors on the view that contribution was an equitable remedy,¹⁰ but this was later overturned on the basis that contribution fell within the court’s common law jurisdiction.¹¹ Courts are not bound to accept the parties’ pleadings as proof that the claims fall within the requisite class, but are entitled to have regard to the true nature of the claim.¹² It is also accepted that where multiple remedies are claimed a jury will be unavailable unless all remedies sought fall within

_{s 19A.}¹³

⁴ _{Timson v Wilson (1888) 38 Ch D 72 (CA) at 76-77.}

⁵ _{At 76.}

⁶ _{Dick and Sauer v Attorney-General (No 2) [1956] NZLR 563}

⁷ _{See Stevens v Collinson [1938] NZLR 64 (SC).}

⁸ Simpson v Attorney-General [Baigent’s Case] [1994] 3 NZLR 667 (CA) at 677-678; Reekie v

_{Attorney-General HC Auckland CIV-2008-404-57575, 21 September 2009 at [8]-[9].}

⁹ _{Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd (1987) 5 PRNZ 87 (HC) at 91.}

¹⁰ _{Stevens v Collinson [1938] NZLR 64 (SC) at 66.}

11. Collinson v Wairarapa Automobile Association Mutual Insurance Company [1958] NZLR 1 (CA) at 8-9.

¹² _{Whitcher v State Fire Insurance General Manager [1956] NZLR 606 (SC) at 608.}

¹³ Dick and Sauer v Attorney-General (No 2), above n 6, at 578.

[8] In sum, there is an established view that a claim cannot be directed to a jury unless it falls within the traditional jurisdiction of a court of common law.

[9] Clearly, claims for debt or for pecuniary damages are claims available under the common law. A claim that money is held in trust is a claim in equity. The claimant asks the Court to recognise that the legal owner or possessor of property (in this case, money) owes a duty in equity to the claimant to hold the property upon trust for the claimant as beneficiary. There is no relationship of debtor and creditor, and the property held in trust is not due to the claimant as pecuniary damages.

[10] Nevertheless, the merging of the Courts of common law and equity continues to erode distinctions which are of principle but not of substance. The Courts have now regularly suggested that distinctions between equitable and legal remedies are unhelpful. This is evident in the comments of Tipping J in Premium Real Estate Ltd v Stevens, where his Honour observed:¹⁴

[111] I close by saying that I have throughout these reasons used the single unqualified word “damages” without reference to the historical source of the cause of action upon which they are based. I do not regard it as necessary or appropriate to speak any more of common law damages, equitable damages or, indeed, equitable compensation. An understanding of the historical source of the cause of action will often be helpful for substantive purposes but, when monetary relief is being referred to, the single word “damages” can be used, with the descriptor confined to the nature of damages rather than their historical origin.¹⁵

[11] These comments should give the Court pause in determining the question of whether a jury is available solely on the basis that the claim falls within the traditional jurisdiction of the equitable courts. Rather, the Court should be willing to consider the true nature of the relief to determine whether, either at equity or law, it amounts to pecuniary damages or the payment of a debt. As such, claims for equitable compensation or even account of profits may be amenable to determination

_{by jury.}

¹⁴ _{Premium Real Estate Ltd v Stevens [2009] NZSC 15, [2009] 2 NZLR 384 at [111].}

¹⁵ “In saying this I recognise that historically damages at law were as of right but in equity compensation was discretionary, albeit in a practical sense the discretionary element was more theoretical than real once this form of remedy was found to be appropriate.”

[12] The claim in the present case is for an account of money said to be held on constructive trust. The essence of a constructive trust is that the court must determine that the money or property was acquired in circumstances such that it would be unconscionable for the legal owner to assert her legal rights to the property. A finding of a constructive trust will put the legal owner in the position of a trustee and may lead to the possibility of further remedies if the trustee has been guilty of misfeasance with the assets of the constructive trust. Such a claim does not, therefore, generally sound in damages (although equitable compensation may be ordered in appropriate circumstances to compensate for the subsequent actions of the trustee).

[13] In my view, notwithstanding the fusion of law and equity, a constructive trust remains distinct from debt and from pecuniary damages and so s 19A is not available, even by analogy. I find that s 19A does not apply to the present claim and trial by jury is not available.

[14] For completeness, if I am wrong in this, I would nevertheless order that the trial be by Judge without a jury because, in my view, the proviso in s 19A(5)(a) applies. This is a case which will involve mainly the consideration of difficult questions of law. That is one of the points taken by Mrs Pool in her notice of opposition to Mrs Eggers’s application (I am taking Mrs Pool’s notice to be an application for an order that the case be tried before a Judge without a jury).

[15] There will be issues of fact in the case which could be resolved by a jury, even if getting to the facts requires the analysis of accounting records and bank records. Juries routinely consider complex financial records in criminal jury trials. However, the primary issue will be whether, on the proven facts, Mrs Eggers stands as trustee for Mrs Pool. The critical allegation in the statement of claim is to the effect that Mrs Eggers withdrew $500,000 in cash from TSB Bank from an account which was relationship property. In her statement of defence, Mrs Eggers admits withdrawing the money. She pleads it was on the instructions of Mrs Pool’s ex- husband.

[16] The decision whether a relationship of trustee and beneficiary exists can be a difficult one. The law on constructive trusts is relatively new and is still evolving. There can be a need for careful weighing of competing considerations which have greater or lesser significance depending on legal principles. I have no doubt that the crucial decision in this case (whether or not, by her actions, Mrs Eggers must be seen as a trustee for Mrs Pool) is a decision which should be made by a Judge.

Decision

[17] This proceeding will be tried by a Judge sitting without a jury.

Costs

[18] Normally, costs follow the event. However, this is a case with some complexity, practical as well as legal. I think it best that costs be determined overall

_{by the Judge who presides at the trial. I reserve costs accordingly.}

Brewer J