Sain v Erceg
| Jurisdiction | New Zealand |
| Judge | Associate Judge Paulsen |
| Judgment Date | 12 May 2022 |
| Neutral Citation | [2022] NZHC 1010 |
| Court | High Court |
| Docket Number | CIV-2020-404-1350 |
[2022] NZHC 1010
Associate Judge Paulsen
CIV-2020-404-1350
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Civil Procedure — application for non-party discovery — family dispute over a property — plaintiff sought file and time records from the law firm which acted on the sale of the property to the second defendant trust — whether the non — party order was necessary — use of documents for a collateral purpose — High Court Rules 2016
V Bruton QC and P A Brown for Defendants
C Martin for Non-Parties, Lynette Therese Erceg and Darryl Edward Gregory
J E M Lethbridge for Covisory Trust (Erceg) Ltd
This judgment was delivered by me on 12 May 2022 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
This judgment concerns a defendants' application for non-party discovery. It arises in the context of a claim by Vinka Sain against Ivan Erceg and Millie Erceg Trustee Ltd concerning a property at 17 Withiel Drive, Epsom, Auckland.
The claim was previously the subject of an unsuccessful application by the defendants for summary judgment or strike out. In a judgment of 14 April 2021, Associate Judge Bell summarised the dispute in the following terms, which I adopt: 1
Vinka Sain says that she is the beneficial owner of the residential property at 17 Withiel Drive, Epsom, Auckland. Her late brother, Michael Erceg, paid for the property in 2004 but title was taken in the name of their mother, Millie Erceg. Although nothing was written down, Vinka says that Millie had only a life interest in the property, with the remainder to go to her. She sues as beneficiary of that trust. Millie has now died, but while she was alive, she transferred Withiel Drive to the trustees of the Millie Erceg No 1 Trust, herself and Millie Erceg Trustee Ltd. Ivan Erceg, the first defendant, is the executor of Millie's estate. Millie Erceg Trustee Ltd, the second defendant, is the remaining trustee of the Millie Erceg No 1 Trust.
The firm Jackson Russell acted on the purchase of the Withiel Drive property. There is an issue raised on this application whether Jackson Russell was acting for Michael Erceg or Millie Erceg. Michael Erceg passed away in November 2005, and Lynette Erceg and Darryl Gregory are the executors of his estate.
The orders sought are not conventional and are as follows:
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(a) That within seven days of the making of these orders Lynette Therese Erceg and Darryl Edward Gregory, as executor and trustees of the estate of the late Michael Anthony Erceg:
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i Depose, by way of verified affidavit, whether or not the Jackson Russell file and time records relating to the purchase of the property at 17 Withiel Drive, Epsom in 2004 still exists;
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ii If the file and time records still exist, that they provide the original file and time records to the defendants, or if the originals have been destroyed, they provide copies, together with a verified affidavit confirming that they have provided all the documents on the file.
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(b) Ivan Erceg has the right to use the contents of the original file relating to the purchase of Withiel Drive in the following proceedings:
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i The current proceeding;
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ii The proceedings issued by the plaintiff against the estate of Millie Martha Erceg under the Family Protection Act 1955 (FAM-2021–004–000253); and
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iii Any application by the plaintiff under s 21 of the Administration Act 1969 to have Ivan Erceg removed as executor of the estate of Millie Martha Erceg.
1 Sain v Erceg [2021] NZHC 761 at [1].
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(c) For costs.
The application is made under r 8.21 of the High Court Rules 2016, which provides:
8.21 Order for particular discovery against non-party after proceeding commenced
(1) This rule applies if it appears to a Judge that a person who is not a party to a proceeding may be or may have been in the control of 1 or more documents or a group of documents that the person would have had to discover if the person were a party to the proceeding.
(2) The Judge may, on application, 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 the documents 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 a party or parties specified in the order; and
(c) if the documents are in the control of the person, to make those documents available for inspection, in accordance with rule 8.27, to the party or parties specified in the order.
(3) An application for an order under subclause (2) must be made on notice to the person and to every other party who has filed an address for service.
Also relevant is r 8.30(4) of the High Court Rules, which provides:
8.30 Use of documents
4) A party who obtains a document by way of inspection or who makes a copy of a document under this rule-
(a) may use that document or copy only for the purposes of the proceeding; and
(b) except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).
Ms Bruton QC frames the issue in the proceeding as whether it was agreed that when Millie Erceg purchased the Withiel Drive property with funds advanced to her by Michael Erceg, she did so in trust for the plaintiff Vinka Sain. She submits that, obviously, the legal conveyancing file for the purchase is of central relevance to this issue, as are the associated time records.
Ms Bruton identifies the key differences between the defendants and nonparties on this application relate to whether Jackson Russell was acting for Millie Erceg or Michael Erceg on the purchase of the Withiel Drive property and who may assert privilege in respect of the contents of their file. She submits that “unquestionably” Jackson Russell acted for Millie Erceg. As the first defendant, Ivan Erceg, is the executor of Millie Erceg's estate, privilege in the Jackson Russell file has passed to him.
Jackson Russell have refused to hand over their file to Ivan Erceg, contending that they were acting on instructions from Michael Erceg which, Ms Bruton submits, is wholly improper and necessitated this application to obtain access to the file.
In response to submissions for the non-parties that the orders sought are unconventional, Ms Bruton says she has simply sought to short-circuit the process by which the defendants may access the file to avoid unnecessary cost and delay.
The non-parties' position is that Jackson Russell were the solicitors for Michael Erceg but that if they acted for Millie Erceg in some limited capacity it is not the case that all documents on Jackson Russell's file are ones in respect of which Millie Erceg has the right to assert privilege.
They say the orders sought are highly unconventional and not ones the Court may make under r 8.21, as they would require the non-parties to hand over original documents rather than to make them available for inspection, and to provide those documents to the defendants irrespective of whether privilege may be asserted. The non-parties submit if orders are to be made for non-party discovery, then they should be in accordance with the provisions of the High Court Rules in the usual manner.
The non-parties argue a non-party discovery order will only be made if it is “necessary” to do so. 2 Here, they say, the defendants have not demonstrated the orders sought are necessary. The affidavit filed in support of the application is unsatisfactory, they say, in that it does not set out the evidence that is currently available to the defendants on the issue to which the documents sought may be relevant, nor does it explain the respects in which the currently available evidence is said to be incomplete.
The orders sought are also inappropriate, the non-parties say, because they would give Ivan Erceg the right to use documents discovered in other proceedings (one of which has yet to be commenced) when there are no special circumstances that justify releasing him from the obligation not to use discovered documents for a collateral purpose. 3
The plaintiff neither consents to nor opposes the defendants' application. Counsel filed a memorandum noting that the application did not seek the typical orders sought on a non-party discovery application but rather appeared to be claiming a proprietary interest in the documents on Jackson Russell's file. The plaintiff asks to be included in the parties to whom production of documents should be made if an orthodox order for non-party discovery is made.
The plaintiff also submits the defendants have not followed the appropriate process to obtain an order authorising the use in other proceedings of documents they may obtain as a result of a non-party discovery order.
2 Vector Gas Contracts Ltd v Contact Energy Ltd [2014] NZHC 3171, [2015] 2 NZLR 670 at [30].
3 High Court Rules 2016, r 8.30(4).
The defendants' stance that Jackson Russell acted for Millie Erceg, and that Ivan Erceg (as Millie Erceg's executor) is entitled to possession of the file, immediately raises a difficulty for this application. As the non-parties' counsel, Mr Martin, points out in his submissions, non-party discovery can only be ordered against a non-party if they “may be or may have been in control of” documents to which the application relates. Here, the application is made against Michael...
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