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Van Heeren v Hermans [2023] NZHC 1557 (23 June 2023)

Last Updated: 28 July 2023

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 23 June 2023 at 11.am.

Pursuant to Rule 11.5 of the High Court Rules.

.............................. Registrar/Deputy Registrar

VAN HEEREN v HERMANS [2023] NZHC 1557 [23 JUNE 2023]

[1] The trustees of the Huka Trust seek leave to commence a proceeding for orders under s 133 of the Trusts Act 2019 by way of originating application, and associated directions for service and confidentiality. The substantive proceeding would have its genesis in prior judicial determinations of matters between the now late Mr Kidd and Mr van Herren, including my interim judgment of 17 June 2021 determining the value of the two men’s partnership at the date of its dissolution on 18 January 1991.¹

[2] Leave originally was sought without notice as is permitted,² but served on Mr van Heeren’s former wife, Ms Hermans, and the related estate of the late Michael David Kidd on a Pickwick basis, meaning those parties may have appeared only to assist the Court to the extent they could or wished to do, given the absence of notice.³ Without their concession, I was not satisfied the application could properly be dealt with without notice.⁴

[3] Ultimately the application proceeded effectively on notice and is opposed in various respects by Ms Hermans. The Kidd estate seeks to intervene in support of the application. Mr van Heeren, while one of the Huka Trust trustees, also personally supports the application.

Background

[4] The partnership’s assets at the date of dissolution included some held by the Huka Trust,⁵ which owned an appurtenant ‘Owner’s Cottage’ prior to its sale in connection with that of Taupō’s Huka Lodge business and retains proceeds from that sale. Under South African law, I had found “as a matter of perfect fairness and good faith, ... Mr van Heeren acquired the Owner’s Cottage for the partnership”.⁶

[5] The partnership’s final accounting remained for determination.⁷ The Kidd estate and Mr van Heeren since have settled issues between them as part of a larger

¹ Kidd v van Heeren [2021] NZHC 1414.

² High Court Rules 2016, r 19.5(2).

3. Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd [1972] 1 WLR 1213 (Ch) at 1214–1215.
4. Trustees of Huka Trust v Hermans HC Auckland CIV-2022-404-1839, 28 September 2022 (Minute of Jagose J).

⁵ Kidd v van Heeren, above n 1, at [13] – [15] and [173] – [174].

⁶ At [175].

⁷ At [245].

settlement agreement dated 16 September 2022. The agreement includes, subject to this Court’s order or direction, payment from the Huka Trust to the Kidd estate.

[6] Mr van Heeren’s former wife, Ms Hermans, is a beneficiary of the Huka Trust. She may not be bound by my interim judgment or be estopped from raising issues at odds with its determinations. She is not a party to the settlement agreement. Separately from her status as a beneficiary, she would assert a variety of relationship property type claims to the funds for payment from the Huka Trust to the Kidd estate.

Originating application procedure

[7] A proceeding in which relief is claimed solely under the Trusts Act is subject to pt 18 of the High Court Rules 2016.⁸ Rule 18.4(1) requires a proceeding under that Part be “commenced by statement of claim ... accompanied by an application for directions as to service and representation under rule 18.7”. But r 18.4(2) provides:

The application of this Part to a proceeding does not prevent the commencement of that proceeding by originating application if it is eligible to be so commenced under Part 19, in which event this Part does not apply.

[8] The Court of Appeal recently has observed:⁹

Proceedings in the High Court are normally commenced by filing a statement of claim. However, consistent with the overall objective of the Rules to secure the just, speedy and inexpensive determination of any proceeding or interlocutory application, rr 19.2 to 19.4 provide that various proceedings must be commenced by originating application. These include applications made pursuant to various specified enactments. ... However, r 19.5 provides that the court may permit any proceeding not mentioned in rr 19.2 to 19.4 to be commenced by originating application if it is in the interests of justice to do so.

A proceeding brought under s 133 of the Trusts Act is not one of those mentioned in rr 19.2 to 19.4. But, under rr 18.4(2) and 19.5(1), it may be commenced by originating application “if the interests of justice permit it”.¹⁰

⁸ High Court Rules, r 18.1(b)(xiii).

9. Siemer v Attorney-General [2022] NZCA 200, (2022) 26 PRNZ 113 at [2], referring to High Court Rules 2016, r 1.2.

¹⁰ Public Trust v Kain [2018] NZHC 1547, (2018) 4 NZTR 28-012 at [21].

[9] The originating application procedure is “generally used for cases where it is not necessary to have full pleadings and interlocutory steps such as discovery for the proper determination of the issues”.¹¹ Such a case:¹²

... tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory tests. It is not well suited to cases involving multiple parties, and cases where there is a possibility of crossclaims or counterclaims.

“[A]ppropriate case management directions” can address such interlocutory issues as may arise,¹³ but the originating application procedure “is nevertheless, in relation to contested proceedings not listed in r 19.2, an exceptional procedure”.¹⁴ The “truncated procedure” is not to be used “as a shortcut for urgent cases”,¹⁵ and “[i]t is not appropriate where factual issues are in dispute”.¹⁶ Finally, “the Court will generally adopt a conservative approach” to interlocutory applications in proceedings commenced by originating application.¹⁷

Discussion

[10] It is not for me now to second-guess the settlement agreement’s content. To the extent it relies on my interim judgment, that judgment only determined the value of the partnership’s assets at the date of dissolution (and ordered disbursement to Mr Kidd “as an advance on a final accounting yet to be concluded”).¹⁸ I found, under South African law, “[a]fter dissolution, the former partners’ relationship is that of co-owners of the partnership assets until they are realised and distributed for division between them”.¹⁹

¹¹ Fisk v X [2014] NZHC 2797 at [18] citing Groves v TSSN Ltd (in Liq) [2012] NZHC 2402, [2013] 1 NZLR 111 at [25], and Hong Kong v Shanghai Banking Corporation v Erceg [2010] NZHC 1352; (2010) 20 PRNZ 652 (HC) at [26]. See also Public Trust v Kain, above n 10, at [35].

¹² Hong Kong v Shanghai Banking Corporation v Erceg, above n 11, at [25].

¹³ Fisk v X, above n 11, at [19].

¹⁴ Hong Kong v Shanghai Banking Corporation v Erceg, above n 11, at [26].

¹⁵ At [26].

¹⁶ Jones v O’Keeffe [2019] NZCA 222, (2019) 24 PRNZ 529 at [52].

¹⁷ Public Trust v Kain, above n 10, at [35].

¹⁸ Kidd v van Heeren, above n 1, at [242].

¹⁹ At [61].

[11] Payment from the Huka Trust to the Kidd estate, in settlement of aspects of a mutually-agreed final accounting between the former partners, is not a necessary consequence of my interim judgment. Rather, I found “under South African law, ‘on dissolution each partner is entitled to a share of the surplus according to the proportion of his contribution to the total pool of contributions’”.²⁰ Those are the individual entitlements of each former partner. My judgment, or any principled final accounting, cannot be reduced to the granular proposition the Huka Trust was bound to transfer its assets or any of them to the Kidd estate.

[12] If the trustees nonetheless should be directed to do so will turn in part on the “guiding principle” of trustee duties in “the context and objectives of the trust”,²¹ in which the trustees at least must: “act honestly and in good faith”;²² deal with trust property “for the benefit of the beneficiaries, in accordance with the terms of the trust”;²³ and exercise their powers “for a proper purpose”.²⁴ Default duties also may bear consideration.²⁵

[13] Those each are intensively factual issues yet to be determined. They are not issues open to being determined on the basis of my interim judgment alone, even if that provides some context. I apprehend from Ms Hermans’ opposition they are likely to be disputed. On that basis, I anticipate even the voluminous discovery in the former partners’ proceeding will need to be supplemented in directions wholly unanticipated by the matters in issue in that proceeding. From my overview of the parties’ participation in litigation to date, I expect there will need to be additional interlocutory applications and I doubt they will be surgical in their proposed operation.

[14] All those factors tend against permitting the proceeding to be commenced by originating application. I can identify no significant countervailing factor, other than the trustees’ desire to conclude their function under the settlement agreement. I do not know where such performance may fit in achieving finality of the settlement

²⁰ At [208].

²¹ Trusts Act 2019, s 21.

²² Section 25.

²³ Section 26(a).

²⁴ Section 27.

²⁵ Section 28.

agreement’s arrangements. No one asserts determination of the proceeding has any particular urgency.

[15] The interests of justice thus are not served by permitting the proceeding to be commenced by originating application. I will not permit it. I will dismiss the trustees’ principal application.

[16] I therefore need not to determine pt 19 service requirements or the Kidd estate’s application to intervene. While I recognise the parties’ consent to service directions, I am unsure if it is maintained for issue of pt 18 proceedings. If so, that need not to engage the Court. So far as service on Alexandra Sylvia van Heeren is concerned, while I acknowledge her reported personal circumstances, it may be proposed service on her spouse without her consent requires reconsideration. Last, if the Kidd estate seeks to intervene must be decided on any pt 18 proceeding.

[17] Given those factors, I do not see any particular benefit is gained by shortcutting the usual steps for issuing and managing proceedings. This proceeding falls a long way short of the compacted timeline to an early fixture date elsewhere directed “to retain the benefit of [service] efforts”.²⁶

Non-access/non-publication orders

[18] The settlement agreement exhibited at AVH-001 to Mr van Heeren’s affidavit sworn 23 September 2022 expressly is confidential to the parties to it. I additionally am satisfied it has “the requisite quality of confidence”.²⁷ I can identify no legitimate public interest in its content.

[19] The translated divorce agreement and its original Dutch document exhibited respectively at the affidavit’s AVH-163 and AVH-168 would, in correlative proceedings in New Zealand, arise as documents in proceedings brought under

²⁶ Hong Kong v Shanghai Banking Corporation v Erceg, above n 11, at [37] – [39].

²⁷ Skids Programme Management Ltd v McNeill [2012] NZCA 314, [2013] 1 NZLR 1 at [78], citing

Coco v A N Clark (Engineers) Ltd [1969] RPC 41 (Ch) at 47.

enactments to which access is restricted.²⁸ So too may the settlement agreement exhibited at the affidavit’s AVH-030.

[20] The documents each were referred to during the leave application’s substantive hearing at which there were no observers, but not materially relied on here in my determination of that application.

[21] Under Rule 5(2) of the Senior Courts (Access to Court Documents) Rules 2017, notwithstanding prescribed public and party rights to access documents held on the court file, I may “direct that judgments, orders, documents, or files of any kind may not be accessed without the permission of the Judge”. I also have inherent power to control the proceeding.²⁹

[22] To the extent the considerations in rr 12 and 13 have application to such pre- emptive direction, I also am satisfied open justice after the substantive hearing is not affected, but the protection of confidentiality and privacy interests is furthered, by making the sought orders in relation to the identified documents.

Result

[23] Under r 5 of the Senior Courts (Access to Court Documents) Rules 2017, I direct the documents exhibited at pages AVH-001, AVH-030, AVH-163 and AVH- 168 to Mr van Heeren’s affidavit sworn 23 September 2022 not be accessed or published without the permission of a Judge sought on notice to the respondents to this proceeding.

[24] Otherwise, the trustees’ application dated 23 September 2023 is dismissed.

Costs

[25] In my preliminary view — from what I presently know, and particularly given likely pt 18 proceedings to come, and the various prospective claims to the trust

²⁸ Senior Courts (Access to Court Documents) Rules 2017, r 7.

²⁹ Rule 5(1).

property — costs should lie where they fall or fell in preference to the unsuccessful trustees bearing any additional costs liability to be met from the trust property.

[26] If that is not accepted by the parties and they cannot otherwise agree, costs are reserved for determination on short memoranda each of no more than five pages — annexing a single-page table setting out any contended allowable steps, time allocation and daily recovery rate — to be filed and served by Ms Hermans within ten working days of the date of this judgment, with any response or reply to be filed within five working day intervals after service.

Jagose J

Counsel/Solicitors:

Mark O’Brien KC, Auckland

September Daisy Williams, Barrister, Auckland Ross Caine Knight, Barrister, Auckland

Peter John Napier, Barrister, Auckland Tompkins Wake, Hamilton | Auckland Chapman Tripp, Auckland

Fee Langstone, Auckland K3 Legal Limited, Auckland