IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-009-002978 [2013] NZHC 1228

BETWEEN	TSB BANK LIMITED Plaintiff	

AND	
GARY OWEN BURGESS Defendant	

AND	
SUSAN NATALIE BEAVEN Third Party	

Hearing:	13 and 14 May 2013	

Appearances:	
N R W Davidson QC for Plaintiff/Respondent
G O Burgess as Defendant/Applicant on his own behalf
A M Corry for S N Beaven (excused in relation to this matter)	

Judgment:	
28 May 2013	

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
[as to defendant’s application for further and better discovery and plaintiff ’s
application for an order setting aside third party notice]

[1]       In  this  judgment,  I deal  with  two  interlocutory  applications,  one  by  the defendant for further and better discovery and one by the plaintiff for an order setting aside a third party notice issued by the defendant.

[2]       Out of the same hearing, I have previously issued a judgment relating to two further applications.1

What the plaintiff ’s case is about

[3]       The plaintiff (“the bank”) lent money to the defendant (“Mr Burgess”) in

2008.  It says that it subsequently suffered a short-fall of repayment after having sold

1	TSB Bank Ltd v Burgess [2013] NZHC 1070.

TSB BANK LIMITED v BURGESS [2013] NZHC 1228 [28 May 2013]

a secured property by mortgagee sale.  The bank claims a short-fall at 20 October

2010 of $22,909.77.  In addition, the bank claims continuing interest and expenses.

[4]       Mr Burgess defends the claim mainly on the basis that the bank unlawfully proceeded with the mortgagee sale.   He says it failed to give a compliant notice under s 119 Property Law Act 2007.   Mr Burgess also counterclaims for various heads of special and general damages.   The quantified aspects of his claim total
$395,000.  The bank had initially issued this proceeding against Mr Burgess in the District Court, but obtained an order to transfer the proceeding to this Court when Mr Burgess served his counterclaim.

[5]       The proceeding is being prepared for setting down for trial in relation to only the bank’s claim at present.  This arises because of a stay agreed between the parties. The stay is the subject of a consent order made on 17 May 2012.  On that date, the bank’s application for security for the costs on Mr Burgess’s counterclaim was to have been heard but Mr Burgess came to an agreement with the bank.  As a result, the security for costs application was adjourned.   Instead, the Court ordered by consent that the counterclaim be stayed until further order of the Court, to be made after determination of the bank’s claim.

[6]       Mr Burgess has joined as a third party in the proceeding his former wife (Ms Beaven).  He did so without leave, pursuant to r 4.4(2)(a) High Court Rules.  I will return to the detail of the third party claim, which is the subject of the second application to be dealt with in this judgment.

First application – further and better discovery by plaintiff

The application

[7]       The focus of Mr Burgess’s application concerns the discovery provided by the bank through its Credit Controller, John Kendall.  Mr Kendall’s verified list of documents included a claim of privilege over various documents.

[8]       Mr Burgess’s application for further and better discovery is focused on the

claim of privilege.

[9]	In his affidavit, Mr Kendall identified the documents over which the bank claims privilege in this way:

1.	Confidential documents and correspondence between the Plaintiff and its legal advisers for the purposes of obtaining or giving legal services. These documents are privileged under s 54 of the Evidence Act 2006.

2.	Documents subject to legal professional privilege in favour of the
Plaintiff, including:

a.	Confidential communications between the Plaintiff and its legal advisers;

b.	Memoranda, drafts and file notes of legal advisers;

c.	Documents prepared for the purpose of submission to legal advisers; and

d.	Documents recording or repeating communications subject to legal professional privilege in favour of the Plaintiff.

3.	Documents   and   correspondence   made,   received,   compiled   or prepared for the dominant purpose of preparing for proceedings, including the original District Court proceeding between the Plaintiff and Defendant, the current High Court proceedings between the Plaintiff and Defendant, and apprehended proceedings between the Plaintiff, Defendant and other parties.   These documents are privileged under s 56 of the Evidence Act 2006.

[10]	Mr Burgess makes five particular complaints in relation to the bank’s listing

of its privileged documents:

(a)       Paragraphs 1, 2 and 3 adopt a group listing approach rather than a listing of each document.

(b)	The reference to “legal advisers” in paragraphs 1 and 2 is insufficient,

particularly on the facts of this case.

(c)       Mr  Burgess  infers,  from  some  discovered  documents,  that  other relevant documents may not have been disclosed by the bank.

(d)	Some of the documents listed as involving the Bank’s legal advisers may not attract privilege, because they may relate to transactional correspondence (for instance, relating to the mortgagee sale) rather

than to confidential communications (privileged under s 55 Evidence

Act) or preparatory material for proceedings (privileged under s 56

Evidence Act).

(e)       Mr Burgess challenges the bank’s style of listing its open documents.

Group listing of privileged documents

[11]    Mr Burgess complains that each of the documents identified as privileged documents is not identified in the sense that there is no list of the documents by reference to parties and particular dates.  He nevertheless recognises that both under earlier High Court Rules and under the present High Court Rules group listing is, at least in some circumstances, permissible.   Mr Burgess complains that, on any approach, the bank’s current listing of its privileged documents is inadequate.

[12]     Mr Davidson QC, for the bank, submits that the group listing in this case was in accordance with established practices and relevant authorities.

The rules/principles as to listing privileged documents

[13]     I adopt what I have previously said in Vanda Investments Ltd v Logan when I

noted :2

…   the   Court   should   recognise   that   in   New   Zealand   the   adequate identification of discovered documents should achieve or facilitate at least the following purposes:

…

(c)	In relation to privileged documents:

i	To  enable  the  opposite  party  to  become aware of the documents claimed to be privileged.

ii.	To enable that party to meaningful consider a challenge to the claim of privilege.

2	Vanda Investments Ltd v Logan HC Dunedin CIV-2009-412-219, 27 November 2009 at [48].

[14]    Under the High Court Rules as they now stand, the following rules have application to the way in which privileged documents must be dealt with in an affidavit of documents:

(a)       The specific provisions of the rules as to the content of an affidavit of documents are subject to any modifications or directions contained in the discovery order: r 8.15(1).

(b)	The documents required to be discovered under a discovery order must be listed or otherwise identified in a schedule which complies with r 8.16 and Part 2 of Schedule 9: r 8.15(2)(e).

(c)       The schedule to the affidavit, as it relates to a claim of privilege, must state the nature of the privilege claimed: r 8.16(1)(b).

(d)	Documents of the same nature may be described as a group or groups

(subject to Part 2 of Schedule 9):  r 8.16(2).

(e)       The description of documents for which privilege is claimed must be sufficient to inform the other parties of the basis on which each document is included in a group: r 8.16(3).

(f)	Parties must agree on any specific privilege requirements for listing and exchange: clause 9(1) Schedule 9.

(g)	Documents must be given a description in accordance with clause

7(1), Schedule 9 (identifying seven fields being document ID/date/document type/author/recipient/parent document ID/privilege category) unless the description discloses information contained in a communication for which privilege is claimed.

[15]    I adopt, as an acceptable form of identification of a group of privileged documents, the example given by Master Williams QC in Attorney-General v Wang New Zealand Ltd:3

Correspondence between the defendant and its solicitors between (earliest date) and (latest date) prepared by solicitors/counsel for the party and addressed and forwarded to (eg, managing director) of client, all such documents being headed with or referring to this proceeding and requesting or giving legal advice in relation to it and assisting in the conduct of the litigation.

Absence of identifying dates in plaintiff ’s list

[16]     The example of good practice listing given by Master Williams in Attorney- General v Wang New Zealand Ltd4  provides a range of dates which defines the period of correspondence or the like.  While such an identification may be arguably unnecessary in relation to confidential correspondence between solicitor and client (which will be privileged, regardless of whether litigation is contemplated or not), the identification of dates is reasonably required, at least, in relation to situations
where third parties are involved in the correspondence.  Otherwise, the other party to the litigation does not have a meaningful opportunity to consider a challenge to that claim of privilege.

[17]     I will therefore be ordering that the relevant date ranges be specified.

Identification of the legal advisers in this proceeding

[18]     In this proceeding, the bank is at present represented by Clendons, and by Mr Davidson QC, and Mr Lester as its counsel from time to time.  The bank was before that represented by Auld Brewer Mazengarb & McEwen.   Before that, the bank’s notice of claim in the District Court was prepared in the name of Maude & Miller, with a debt collection firm, Credit Consultants Debt Services NZ Ltd (“CCDS”), also appearing on the front-sheet of the claim.  The notice of claim itself was signed
by one Rachael Hyett who described herself as “Legal Manager, Credit Consultants

3	Attorney-General v Wang New Zealand Ltd (1990) 2 PRNZ 245 (HC) at 252; See also Vanda
Investments Ltd v Logan, above n 2, at [53].
4	Attorney-General v Wang New Zealand Ltd, above n 3.

Debt Services NZ Ltd”.  Her company’s address was given as the bank’s address for service.  Maude & Miller were described as the “lawyer” for the bank.

[19]     It  appeared  from  his  submissions that  Mr Burgess  accepts  that  the legal position is that confidential communications between solicitors and client will be privileged.   However, he wishes to identify whether any of the documents over which privilege is claimed relate to communications between the bank and CCDS. That company appears to have functioned in the District Court proceeding as a debt collection agency rather than as a legal adviser (the “lawyer” referred to in the claim being Maude & Miller and not the debt collection company).  Mr Burgess wishes to identify clearly whether the plaintiff asserts that the debt collection company (or one of its staff) qualified as a “legal adviser” as that term is used in s 54 Evidence Act
2006 and defined by s 51(1) of the Act.  The particular identification of the various legal advisers referred to in the privilege claim is reasonably required in this case and I will be so ordering.

Allegedly missing documents

[20]     Mr Burgess seeks further and better discovery by the plaintiff by listing each and every document or communication from the bank and various other parties including Mr Burgess’s former wife and her agents and Mr Burgess’s own former solicitors.

[21]   Mr  Burgess  explains  the  origin  of  his  concern  by  reference  to communications in February 2010 in which the bank and its process server were attempting to identify Mr Burgess’s whereabouts for the purposes of serving the bank’s notice under the Property Law Act.   A communication from the bank’s solicitors at that time to the bank indicates that one of the addresses at which the process server had attempted service on Mr Burgess was at:

the address supplied by the barrister acting for his ex-wife.

[22]     In his evidence, Mr Burgess has referred to attempts he has made to obtain further documents under the Privacy Act 1993.  Those endeavours are not directly

relevant to this application which is to be dealt with under the discovery regime of the High Court Rules.

[23]     Furthermore, I am not satisfied that any further correspondence relating to the locating of Mr Burgess for the purposes of serving either a Property Law Act notice, or indeed any other document is relevant to an issue in this proceeding.  That is particularly so having regard to the fact that later in this judgment, I will be granting the bank’s application to set aside the third party notice which Mr Burgess served upon his former wife.  Any issues which Mr Burgess may (and appears from his submissions to) have in relation to any co-operation given by Ms Beaven to the bank do not bear upon the contractual claim of the bank for repayment.  That is the subject matter of this proceeding.  Whether documents of the sort pursued by Mr Burgess may be relevant in a claim which Mr Burgess wishes to pursue against Ms Beaven must be left to be determined in that context, not in this proceeding.

[24]     A  final  category  of  documents  which  Mr  Burgess  pursues  relates  to documents  concerning  the  role  of  the  real  estate  agency  which  acted  on  the mortgagee sale.  Mr Burgess pursues written communications relating to the reserve price and the decision to accept the highest bid at the auction (which was lower than the reserve which had been set).

[25]     Mr Burgess points to the identification of the auction reserve figure which was confirmed in an email from the bank to the agent the day before the auction.  Mr Burgess notes that when bidding at the auction did not reach the reserve figure, there was a pause in the auction while the agent took instructions from the bank.  Mr Burgess explained in his submissions that it was his expectation that there would have been further documentation approving the acceptance of a lower bid.

[26]    I do not accept, on the evidence, that there is any basis for Mr Burgess’s expectation that the discussions which would have taken place under some urgency at the auction would have been recorded in some way in writing.  There is no reason on this basis to doubt the accuracy of the comprehensiveness of the bank’s affidavit of documents sworn by Mr Kendall on 14 June 2012.

Documents relating to the mortgagee sale

[27]     Mr Burgess’s concern is that privilege has been claimed in relation to the bank’s lawyers’ communications concerning the transaction of the mortgagee sale. To  the extent  these  are  communications  with  other parties,  he submits  that  the claimed privilege should be set aside, because they did not come into existence at a time when litigation was contemplated.

[28]     It is unnecessary at this point of the proceeding to determine that objection. Documents relating to the transaction of the mortgagee sale are likely to become relevant as and when the stay of Mr Burgess’s counterclaim is lifted, but not before. At present, the claim of the bank proceeding to a hearing relates to the balance of indebtedness.   Mr Burgess’s defence to that relates to the alleged invalidity of the Property Law Act notice.  Documents relating to the transaction of mortgagee sale are not relevant to the currently active part of this proceeding.

[29]     Mr  Burgess’s  rights  to  pursue  further  or  better  discovery  of  documents

relevant to his counterclaim will arise, if the stay is lifted.

The bank’s style of listing its open documents

[30]     The focus of Mr Burgess’s submissions as to an inadequate style of listing in the bank’s affidavit was upon the privileged documents.  To the extent that his interlocutory application might be read as encompassing a criticism of the style in relation to all documents, including documents in the open category, I record that I find the bank’s listing of its open documents to be entirely satisfactory.   The list adopts the standard six fields (that is, the fields identified in clause 7 of Schedule 9
High Court Rules (excluding the seventh field which relates to privileged documents only).

Request for an unless order

[31]     Mr Burgess’s interlocutory application proposed that any order made by the Court in relation to further and better discovery should be in the form of an unless order.  Responsibly, he did not pursue that suggestion at the hearing.  The limited

nature of the directions which I will be making as to further discovery is such that a timetable should be imposed in the ordinary way and not subject to an unless order for which there is no justification.

Order as to plaintiff ’s privileged documents

[32]     I order:

(a)	The  plaintiff  is  to  file  and  serve  within  10  working  days  a supplementary affidavit in relation to discovery in which:

   it provides in relation to the documents referred to at paragraphs 1,

2 and 3 of Part 2 of the affidavit of documents of John Andrew
Kendall  dated  14  June  2012  the  names  of  the  legal  advisers referred to; and

   in relation to each set of legal advisers identifies the dates between

which the documents were made or sent.

(b)	If CCDS is not identified by the plaintiff as one of its legal advisers, the plaintiff is by way of further discovery to list individually all documents  in  its  possession  or  control  which  represent correspondence or communication between CCDS as the plaintiff.

(c)	Except  to  the extent  of this  order,  the defendant’s  application  for

further and better discovery dated 27 January 2013 is dismissed. (d)	There is no order as to the costs of the application.
Plaintiff ’s application to set aside third party notice

The plaintiff ’s application

[33]     After Mr Burgess, as of right, issued a third party notice against his former wife (Ms Beaven), the bank filed this application for an order setting aside the third party notice.

[34]     Because the third party notice was issued without leave, the application may be made by the bank under r 4.16(2).

The jurisdiction to set aside a third party notice

[35]     The Court’s jurisdiction to set aside a third party notice arises under r 4.16(3)

which provides:

(3)	In either case, the court may—

(a)	set the third party notice aside and dismiss the defendant's statement of claim against the third party—

(i)	on the merits; or

(ii)       without prejudice to the right of the defendant to pursue that claim against the third party in an independent proceeding; or

(b)	give other directions.

[36]     In approaching the jurisdiction in relation to third party-proceedings, the most important background is the general functions of third party proceedings.  Those functions were identified by Scrutton LJ in Barclays Bank Ltd v Tom:5

(a)       To safeguard against differing results, and to ensure that the third party is bound by the decision between the plaintiff and the defendant. If instead separate proceedings are taken, the Court hearing the second action is not bound by the decision in the first action;

(b)	To ensure the question between the defendant and the third party is decided as soon as possible after the decision between the plaintiff and the defendant; and

(c)      To save the expense of two trials. A party commencing separate proceedings unnecessarily where an additional claim could have been
used may be penalised in costs.

5	Barclays Bank Ltd v Tom [1923] 1 KB 221 (CA) at 224.

[37]     It is sometimes observed that orders setting aside third party notices are granted on the same principles as applications to strike out pleadings under r 15.1
High Court Rules.6   That observation is correct in relation to a significant proportion

of orders setting aside third party notices.  But the statement is incomplete in that it does not recognise the broader considerations, such as convenience and overall justice, which may separately justify an order setting aside a third party notice.

[38]     The principles which I adopt in relation to the jurisdiction to set aside a third party notice under r 4.16 are as follows:

(a)	The Court has a wide discretion to set aside third party notices.7

(b)	Analysis of the merits of an application conveniently commences with the criteria (in relation to the issuing of a third party notice) set out in
r 4.4(1) High Court Rules which permits issue where:

   under r 4.4(1)(a) there is a right of contribution or indemnity from

the third party;

   under r 4.4(1)(b) there is an entitlement to relief relating to or connected with the subject matter of the proceeding, or the relief or remedy is substantially the same as that claimed by the plaintiff
against the defendant;

   under r 4.4(1)(c) there is a question in the proceeding which ought to  be determined as between all three parties or as between the defendant and the third party or as between the plaintiff and the
third party;

   under  r  4.4(1)(d)  there  is  a  question  or  issue  between  the

defendant  and  the  third  party  relating  to  or  connected  to  the

6	For instance, see McGechan on Procedure at HR 4.16.01.
7	Bank of New Zealand v Equiticorp Industries Group Ltd (in statutory management) [1994] 3
NZLR 548 (CA) per Cooke P at 552; Turner v First Fifteen Holdings Ltd (1991) 3 PRNZ 145 (HC) at 149.

subject matter of the proceeding that is substantially the same as a question  or  an  issue  arising  between  the  plaintiff  and  the defendant.

(c)      Where the application is based on one or more of the grounds for dismissing a pleading under r 15.1 High Court Rules, the application to set aside the third party notice will be considered on the same principles as apply under that rule.8

(d)	Where the third party claim is based on the r 4.4(1)(a) ground that the defendant is entitled to a contribution or indemnity from the third party, the concepts of contribution or indemnity are those as traditionally understood to arise between co-obligors such as joint debtors, co-sureties, and joint tort-feasors under the Law Reform Act
1936.9

(e)       Where the third party claim is based on the r 4.4(1)(b) ground that the relief claimed from the third party is connected with the subject matter of the proceeding and is substantially the same as that claimed by the plaintiff    against    the    defendant,    important    considerations    in
determining whether the relief falls within such categories are:

   the degree of factual overlap;

   whether the joinder of the third party will determine the ultimate imposition of financial burden.10

(f)	The test of “substantially the same relief or remedy” is not merely met
by the defendant including a claim for damages which is equal to the claim by the plaintiff against the defendant.11   Nor when the defendant

8	Strathmore Group Ltd v Fraser (1991) 5 NZCLC 67,163 (HC).
9	Mammoet Shipping B V v Compter HC Whangarei CP13/86, 6 July 1987 at 9-10.
10	Mammoet Shipping B V v Compter, above n 9, at 10-11, adopting Myers v N & J Sherick Ltd [1974] 1 All ER 81 at 83 and Allison v Church of England Hospital Inc HC Christchurch A399/76, 25 August 1980 (HC).
11	McAllister v Peat Marwick Management Consultants Ltd HC Dunedin CP148/88, 26 February

pursues a form of relief, such as specific performance, which is identical  to  that  claimed  by  the  plaintiff  against  the  defendant.12
There must also be a similarity of facts whereby the third party claim is  intended  to  determine whether the defendant  or the third party should ultimately bear the plaintiff’s loss.13

(g)	Where the third party notice is based on a common question or issue under r 4.4(1)(c) or questions or issues under r 4.4(1)(d) which are substantially the same as between plaintiff and defendant on the one hand and defendant and third party on the other hand, the Court will consider the extent to which the claims are independent or are interrelated.

(h)	The justification of a third party notice under any one of the heads of r 4.4(1), such as there being a common issue or question, is closely related to the desirability of comprehensively dealing with Mammoet Shipping B V v Compter but such considerations may have to yield to others including the weighing of the convenience to the parties, including in relation to matters such as unreasonable delay.14

(i)	The Court may in the balancing consider in most cases the strength of the defendant’s case, both in defending the plaintiff’s claim and in pursuing the third party claim.15   This may not be so where the setting aside  application  is  made  on  a  strike  out  basis.     On  such  an application, the third party claim should not be set aside unless it is clear beyond doubt that it cannot succeed.16

(j)	The  weighing  of  the  convenience  to  the   parties  will  involve considerations such as whether the third party will, if the third party

1991, at 6.
12	Chatsworth Investments Ltd v Amoco (UK) Ltd (1968) Ch 665 (CA).
13	McAllister v Peat Marwick Management Consultants Ltd, above n 11.
14	Mammoet Shipping B V v Compter, above n 9, at 16.
15	At 16.
16	Nissan Datsun Holdings Ltd v R Savory Ltd HC Auckland A336/84, 6 October 1986 at 4.

notice is sustained, be idly involved in a trial involving issues as between the plaintiff and defendant, and vice versa.17

(k)	The  weighing  of  the   convenience  to   the   parties   will   include considerations of any delay to the plaintiff   - this is an express consideration arising under r 4.8(1) when the Court is considering an application for leave to issue a third party notice.  The context of the consideration of delay was explained by Smellie J in Nissan Datsun
Holdings Ltd v R Savory Ltd:18

It [the determination of whether to grant leave to issue a third party notice] is a question of weighing the respective interest of the parties and in this case comparing the prejudice of delay and possible escalation of issues to be argued so far as the Plaintiff is concerned against the danger faced by the Defendant of having to conduct two trials with possible inconsistent results.

(l)	The Court should be forward-looking when considering delay to the plaintiff. What matters is the prospect of future delay.19

(m)	When all the circumstances of a proposed third party joinder have been taken into account, the overriding consideration is the interests of justice.  In KPMG Peat Marwick v Cory-Wright & Salmon Ltd (in Rec) the Court of Appeal said:20

The   interests   of   justice   between   all   parties   must   be paramount … if there is delay it will be regrettable … but the attainment of justice by the most efficient means has to be the overriding consideration.

Mr Burgess’s third party claim

[39]     Mr Burgess’s statement of claim against Ms Beaven is at present relatively discursive and contains, not unusually for someone self-represented, a relatively discursive statement of factual material including matters which are strictly in the
nature of evidence rather than of material allegations.  The statement of claim does

17	Mammoet Shipping B V v Compter, above n 9, at 16.
18	Nissan Datsun Holdings Ltd v R Savory Ltd, above n 16, at 4.
19	Mammoet Shipping B V v Compter, above n 9.
20	KPMG Peat Marwick v Cory-Wright & Salmon Ltd (in rec) CA77/94, 20 May 1994 at [5].

helpfully identify towards the end the three causes of action on which Mr Burgess relies.  Two of them are closely related, namely an allegation of breach of equitable duties and an allegation of breach of fiduciary duty. The remaining cause of action is in the tort of negligence.

[40]     I will  summarise what  I take to  be the key allegations  in  Mr Burgess’s

statement of claim.

Mr Burgess’s key allegations

[41]     Mr Burgess asserts:

(a)	Mr Burgess and Ms Beaven were previously married.

(b)	They	formed	a	business	partnership	(“the	Beaven-Burgess

partnership”) at the time the property was purchased.

(c)	The Beaven-Burgess partnership remains in existence.

(d)	Ms Beaven and Mr Burgess separated as a couple and agreed upon a division of relationship property.   The loan was obtained from the bank to refinance an existing loan, because Ms Beaven refused to implement the property division.

(e)       The property division was then the subject of Family Court, Court of Appeal and Supreme Court rulings resulting in a division of property which was essentially the same as had been initially agreed on separation.

(f)	Ms Beaven and Mr Burgess then entered into a further agreement, one term of which was that Mr Burgess would hold the property as trustee with Ms Beaven the primary beneficiary.

(g)	Ms Beaven lodged a caveat and a notice of claim under the Property

(Relationships) Act  against  the title to  the  property.	Ms  Beaven,

through her counsel, threatened the bank with legal action should the bank advance further funds to Mr Burgess.

(h)	The property has remained undistributed relationship property with Ms Beaven the beneficial owner in terms of Family Court and High Court rulings.

(i)	Ms Beaven is legally a co-owner of the property, notwithstanding that the registered proprietorship is in the name of Mr Burgess alone.

(j)	The mortgage to the bank is accordingly a joint liability of Ms Beaven and Mr Burgess.

(k)	Ms Beaven has blocked Mr Burgess’s access to funds to sustain and operate the property through refusing to transfer outright ownership to Mr Burgess and interfering with Mr Burgess’s relationship with the bank.

(l)	Ms Beaven has failed and refused to make any payment in relation to

the Bank’s loan.

(m)	Ms Beaven received $36,250 from the loan obtained from the bank, but has failed or refused to return that sum.

(n)	In terms of the division of relationship property ordered by the Court of Appeal, Ms Beaven had no entitlement to retain the $36,250.

(o)	Ms Beaven obtained the $36,250 from her solicitor’s trust account by a fraudulent misrepresentation that the transfer of the funds was required by a Family Court order, when no such order existed.

(p)	Ms  Beaven  has  breached  duties  she  owes  to  Mr  Burgess,  being fiduciary, equitable and legal duties.

(q)	Ms Beaven, with knowledge of the mortgage arrears and the Bank’s notice of default, took no apparent steps to avert the pending mortgagee sale, but instead used her notice of claim to endeavour to obtain additional money or property for herself, either from Mr Burgess or directly from the bank.

(r)	Ms Beaven opposed the bank’s application to remove her notice of claim resulting in additional expenses incurred by the bank when it was inevitable that the sale process would continue and result in the notice of claim being removed in any event.

The relief claimed by Mr Burgess

[42]	Mr Burgess, in relation to each of his three causes of action, (breach of equitable duties; breach of fiduciary duty; negligence) claims:

(a)       an order that Ms Beaven contribute to or indemnify Mr Burgess for any sum or damages payable to the bank resulting from the mortgagee sale;

(b)	that  Ms  Beaven  compensate  Mr  Burgess  for  any  and  all  losses suffered by him as a consequence of the mortgagee sale, in a sum to be set upon trial;

(c)       that  Ms  Beaven  be  found  solely liable  to  the  bank  for  any sum, including costs, awarded to the bank; and

(d)	such further or other relief as may be granted.

The grounds of the Bank’s application for an order setting aside the third party
notice

[43]	The bank asserts that the third party notice should be set aside because:

(a)       the joinder of Ms Beaven is contrary to the exclusive jurisdiction of the Family Court to hear and determine relationship property disputes;

(b)	the  Supreme  Court  has  heard  and  conclusively  determined  the essential dispute between Mr Burgess and Ms Beaven, so that the doctrines of res judicata and issue estoppel apply;

(c)       none of the criteria in High Court Rule 4.4(1) is satisfied so that joinder is improper; and

(d)	that  joinder  was  an  unnecessary  step  is  irrelevant  to  the  current (bank’s) claim, lacks merit, and was made with detailed prior notice of these factors.

[44]     The  bank’s  opposition  is  supported  by  an  affidavit  of  Mr  Kendall  who deposes as to a lack of dealings between the bank and Ms Beaven in relation to the loans.  He deposes that Mr Burgess was the sole borrower.  He exhibits the relevant loan documentation.   He exhibits a letter of 18 February 2009 from Ms Beaven’s barrister to the bank through which Mr Kendall says the bank learned of unresolved matters between Mr Burgess and Ms Beaven regarding relationship property.  He refers to Mr Burgess’s litigation over a period of 10 years concerning relationship property and states that the bank’s concern is that it will become involved in matters within the exclusive jurisdiction of the Family Court with potentially conflicting judgments between the jurisdictions.

The position of Ms Beaven

[45]     Through her counsel, Ms Beaven filed a memorandum reserving her position in this proceeding.  Ms Corry, for Ms Beaven, then sets out matters of public record in the form of 14 Court decisions from 16 May 2007 to 9 August 2012.  Ms Corry identifies also a further, pending hearing in the Family Court in relation to an application by Mr Burgess to set aside an agreement.  Ms Beaven asserts no legal or beneficial interest in any of Mr Burgess’s assets or liabilities other than that she awaits Mr Burgess’s acceptance of the amount due to him under a judgment of the
Supreme Court dated 9 August 2012.21

21	Burgess v Beaven [2012] NZSC 71.

Mr Burgess’s opposition

[46]	Mr Burgess filed opposition to the bank’s application.  I summarise:

(a)	The criteria for joinder under High Court Rule 4.4(1) are satisfied:

   Ms Beaven was an equitable owner of undistributed relationship

property.

   Ms Beaven owed equitable and other duties to Mr Burgess.

   Her presence is desirable to the current proceedings as her rights and	obligations	over	relationship	property	(including	the
mortgage) may be affected by the outcome of the Bank’s claim.

(b)	The  bank  was,  at  the  time  of  the  mortgagee  sale,  aware  of  Ms
Beaven’s status as an equitable owner and caveator, so that the bank under the Property Law Act owed Ms Beaven a duty of care.

   If  the  third  party  notice  is  dismissed,  Mr  Burgess  could  be prejudiced through different outcomes in relation to the different claims, a risk particularly acute because the bank’s objective is to bankrupt Mr Burgess which would deprive him of the capacity to
bring proceedings against Mr Beaven for recovery.

   Mr Burgess is entitled to seek contribution and indemnity against Ms Beaven on the basis of co-trusteeship and of the relationship of trustee and beneficiary and upon the basis that Ms Beaven has
breached her fiduciary duty.

   The bank is unable to demonstrate prejudice through delay.

   The interests of justice, including the just, speedy, and inexpensive determination  of  proceeding  favour  the  upholding of  the  third party notice.

   The matters to be pursued by Mr Burgess against Ms Beaven are not matters within the jurisdiction of the Family Court.  Reliance
is placed on ss 4 and 51 Property (Relationships) Act 1976.

The conclusion I have reached

[47]     On the pleadings as they stand, I find that Mr Burgess has an at least arguable case that his claim against Ms Beaven has a connection with the bank’s claim against him, and that connection gives rise to jurisdiction to issue a third party notice under at least one or more limbs of r 4.4(1).  But when the nature of the connection of the two cases is considered and the circumstances are weighed, this is clearly a case in which the third party notice should be set aside.  I will come to those considerations shortly.

What the Court does not need to decide

[48]     By reason of the conclusions I reach, there are certain matters covered in the application and in the opposition and the submissions which I have heard which do not call for determination.   I refrain from reaching a concluded view in regard to these as they may arise for determination later.  I will identify the matters which I do not decide, but on which I heard argument:

Issue 1: Do Mr Burgess’s claims against Ms Beaven fall within the exclusive jurisdiction of the Family Court?

[49]     Mr Burgess relies upon the decisions of the Court of Appeal in Mosaed v Mosaed22  and Kerridge v Kerridge23  as establishing that claims based on fiduciary duty and on torts are not part of property transactions between the parties caught by s 4 Property (Relationships) Act.

[50]     Mr Davidson QC, for the bank, submits, in reliance upon Country Lane Ltd v
Blackley24 and Shirtliff v Albert25 that the Family Court has exclusive jurisdiction in relation to Mr Burgess’s claim against Ms Beaven.   Mr Davidson said this is so,

22	Mosaed v Mosaed [1997] NZFLR 97 (CA).
23	Kerridge v Kerridge [2009] NZCA 14.
24	Country Lane Ltd v Blackley [2012] NZHC 898.
25	Shirtliff v Albert [2011] NZFLR 971 (HC).

because Mr Burgess’s claim is truly about the division of relationship property.  Mr Davidson asks the Court to view the causes of action identified in the third party claim as nothing more than the “dressing up” of what is truly a relationship property claim so as to avoid the jurisdictional bar.   Most, if not all, of Mr Burgess’s allegations that Ms Beaven has acted unlawfully appear weak.  But, if established, they could conceivably lead to a claim of the Mosaed or Kerridge kind.

Issue 2: Are Mr Burgess’s claims against Ms Beaven precluded as res judicata?

[51]     Mr Davidson, for the bank, asserts that Mr Burgess’s third party claim cannot succeed by reason of the doctrines of res judicata and issue estoppel.  Mr Davidson refers to a passage in the judgment of the Supreme Court on 9 August 2012 when he says that the Court expressly dealt with the subject matter of Mr Burgess’s present claim under a heading:26

Should Mr Burgess be awarded compensation associated with the mortgagee sale of Medbury?

[52]     The Court found that it would not be just to seek to apportion between Mr Burgess and Ms Beaven blame for the loss of Medbury, and on that basis to award a financial adjustment.  The Court observed that it would be distinctly unfair to Ms Beaven to do so as:27

It would, retrospectively, make her a hostage to Mr Burgess’s entrepreneurial
activity in relation to Medbury …

[53]     The Court observed that Mr Burgess had been “over-litigious” and had not

always focussed on what is truly relevant, observing:28

… he has undoubtedly contributed to the imbroglio.

[54]   The Court observed that Ms Beaven had been merely insisting on the enforcement of judgments in her favour which were then in place, as she was entitled
to do. The Court concluded:29

26	Burgess v Beaven, above n 21, at [48]-[50].
27	At [50].
28	At [50].
29	At [50].

… to put this another way, her insistence on enforcing the judgments in her
favour does not give rise to a claim against her for the consequences.

[55]     Mr Burgess rejects the suggestion that the subject matter of his claims against Ms Beaven is a res judicata.  He refers to what the parties and counsel in the various Family Court proceedings came to refer to as the “A”, “B”, and “C” streams.  He describes the Supreme Court judgment as “a very tightly focussed decision”, on one particular issue, namely whether or not the Court of Appeal was correct in using the separation date to value the relationship property and in departing from the date adopted by Judge Strettell in the first substantive Family Court hearing.  Mr Burgess referred me to the judgment of the Supreme Court on his application for leave to
appeal.30

[56]     Mr Burgess submits that the Supreme Court’s decision is on a more limited basis than Mr Davidson suggests.  Mr Burgess suggests, for instance, that the “C” stream litigation is, in terms of issue estoppel, unaffected by the Supreme Court judgment.

[57]     While it is clear from the Supreme Court judgment that that Court considered there had been more than enough litigation on Mr Burgess’s part of his issues with Ms Beaven, it is well arguable that there is no res judicata or issue estoppel on the subject matter of Mr Burgess’s third party claim.  That is, because, by the nature of the limited appeal issues before the Supreme Court, that Court could not bring a comprehensive determination to all issues whether they were fully alive or simply lingering.

Issue 3: Are Mr Burgess’s claims against Ms Beaven justifiable as third party claims
under any limb of r 4.4(1)?

[58]     Although Mr Burgess relies on most, if not all, of the limbs of r 4.4(1), it would, in fact, be sufficient to justify the third party notice if his claim satisfies one limb.

[59]     While Mr Davidson presented detailed submissions in relation to each limb of r 4.4(1), to the effect that none was satisfied, he recognised that his strongest

30	Burgess v Beaven [2011] NZSC 114.

ground on this particular application may be the wide discretion which the Court holds to reject third party claims which have only slight connection to the claim of the plaintiff against the defendant.  As I will be accepting Mr Davidson’s invitation to set aside the third party notice on that broader basis, I will comment very briefly why I consider it appropriate and necessary to deal with the matter pursuant to the broad discretion.

[60]     To take but one limb of r 4.4(1)(a) as an example, it is not beyond argument that the third party claim which Mr Burgess makes against Ms Beaven is a claim for contribution as between co-obligors.  Mr Burgess’s pleadings and submissions do not assist the task of distilling an arguable aspect of his third party claim.  At points, he suggests that Ms Beaven, as a beneficiary, owed him some form of duty as a trustee. But, at least at points he asserts a relationship which might, if established factually, be of the kind to give rise to a co-obligation.  In particular, Mr Burgess pleads a subsisting business partnership in relation to the property, a state of co-ownership and an approval by Ms Beaven of the loan contract with the bank (notwithstanding that Mr Burgess as registered proprietor entered into the contract and the mortgage). Mr Burgess reinforces his argument by reliance on the potential for a claim by one spouse against another in tort for deceit, negligence or breach of duty (see Kerridge v
Kerridge) and for breach of fiduciary obligations (see Mosaed v Mosaed).31

[61]     As tenuous as Mr Burgess’s causes of action against Ms Beaven may appear, particularly   when   viewed   in   the   light   of   the   Supreme   Court’s   considered observations, the present summary jurisdiction does not lend itself to dismissing the claim under the first (r 4.4(1)(a)) limb for third party notices.

Why the third party notice should be set aside

The lack of close connection between the claims

[62]      I have  found,  by  reason  of  the  principle  relating  to  strike  out,  that  Mr Burgess’s pleadings provide the jurisdictional basis for the issue of his third party notice.  On his pleadings at least, a third party notice can be justified by reference to
the assertion that Ms Beaven was in some way involved contractually (that is to say

31	Above at [49].

by contract between Ms Beaven and Mr Burgess) in the borrowing from the bank. When one examines the real nature of the two sets of claims, however, there is a distinct lack of close connection between the two.   On the one hand, the bank through a contract with Mr Burgess lent him money and simply wants to recover the shortfall of repayment after a mortgagee sale.  The primary issue Mr Burgess raises by way of defence is that the notice served by the bank under the Property Law Act
2007 was defective.   As Mr Davidson observed, that litigation involves a set of issues which, although giving rise to a legal issue of some importance, calls for evidence only as to the involvement of the two contracting parties, the bank and Mr Burgess.

[63]     On the other hand, there are an essentially discrete set of issues between Mr Burgess and Ms Beaven.  The public record of judgments involving the couple’s relationship, so far as it concerned property, indicates that the way in which Mr Burgess will seek to explore the factual background as a basis for relief under a wide range of concepts (fiduciary duty, equity, tort, contract) indicates there will be much focus on Ms Beaven’s conduct.  That will be the significant issue on the third party claim.

The escalation of issues

[64]     By retaining Ms Beaven in the proceeding as a third party there will be, for both the bank and for Ms Beaven, an “escalation of issues” to use the expression of Smellie J in the Nissan Datsun Holdings case.32

[65]     The bank understandably wishes to run a relatively straightforward contract claim, albeit needing to deal with the defence raised in relation to Property Law Act notices.  If Ms Beaven has to defend Mr Burgess’s claim against her in relation to their alleged property dealings stemming from their spousal relationship, it is clear that  a  very  extended  range  of  issues  will  arise.     There  is  the  fundamental jurisdictional issue of whether the claims belong in the Family Court’s exclusive jurisdiction, which I do not determine in this application. There is similarly the
argument  as  to  issues  being  res  judicata,  an  argument  which,  although  having

32	Nissan Datsun Holdings Ltd v R Savory Ltd, above n 16, at 4.

difficulty, Ms Beaven will be entitled to pursue.   There are then legal matters of some complexity and novelty as to the applicability of tortious and equitable principles.  Finally, there will be a need for the extensive testing of the witnesses in evidence.  The joining of the two claims in one proceeding will lead to an escalation of each. The huge escalation will be to the bank’s claim against Mr Burgess.

Parties idly sitting by

[66]     To again adopt the imagery of Smellie J in the Nissan Datsun Holdings case, the pursuit by Mr Burgess of his third party claim in this proceeding will inevitably lead to the bank and its counsel and witnesses being idly involved in a trial involving issues between the defendant and the third party.  Such would occur even were Mr Burgess to become represented in the proceeding.  As it is, Mr Burgess’s self- representation and his pleadings to date reinforce the prospect of substantial wasted involvement of the bank.  Mr Burgess’s argument against Ms Beaven is not the Bank’s argument, but it will be constrained, if the third party notice is upheld, to participate in a trial in which Mr Burgess focuses, not on one source of remedy but on numerous, and in which Mr Burgess can be expected to pursue through evidence and cross-examination justification of the argument he has pursued in numerous jurisdictions over recent years that Ms Beaven has wronged him in the way she has dealt with him in the years since their marriage.  The High Court will become the arena for the claim for compensation which Mr Burgess has not, to date, been able to obtain in other jurisdictions.

The prejudice of delay

[67]     Delay for the bank, through the sustaining of the third party notice, will be inevitable.

[68]     There will be the delay of some days through an extended trial when the case finally comes to trial.

[69]     More significantly, there is the likelihood of delays both before and after trial. Before trial, there will be inevitable interlocutory delays.  Ms Beaven would have to be brought into this proceeding and become an active party in it.   Discovery and

inspection, given the factual allegations Mr Burgess makes, may be time consuming. Interrogatories  will  be  a  real  likelihood  given  that  the  nature  of  some  of  Mr Burgess’s allegations makes it unlikely that all of the alleged transactions will be documented.  In relation to a contractual claim for repayment in which a trial could have been expected in some months’ time, it is unlikely that the litigation with a third party claim could be readied for a trial in much under a year.

[70]     Then, there is the real likelihood of appeal.  I need to consider what happens if the bank is successful in its claim against Mr Burgess, but he is unsuccessful in the third party claim.  In that situation, it may be unlikely that Mr Burgess would obtain an order staying execution of the bank’s judgment pending the hearing of his appeal. But it remains possible that a stay would be granted.   Given the history of the litigated issues between Mr Burgess and Ms Beaven, I consider it probable that Mr Burgess would pursue an appeal in the event of an unsuccessful third party claim.

[71]     If this proceeding continues with its third party claim, there is a probability of the prejudice of delay to the bank through delay before trial, and at least some likelihood of delay afterwards.

The risk of inconsistent results in different proceedings

[72]     The relatively discrete  nature of Mr Burgess’s  claim  against  Ms  Beaven makes it unlikely that any factual issue in the plaintiff/defendant claim will be a factual issue in the defendant/third party claim.   No finding which a Trial Judge would have to make on the evidence and, in particular, on hearing the witnesses is likely to have to be revisited. That arises simply because Mr Burgess’s claim against Ms Beaven turns on the nature of his separate dealings with Ms Beaven in which the bank had no involvement whatsoever.

[73]     In the event Mr Burgess is found liable to the bank, he will be liable because of his contract with the bank and a legal finding that the bank’s Property Law Act notice was valid or that any invalidity in the notice does not affect the Bank’s contractual claim.  While Mr Burgess, if the bank obtains judgment against him, would ideally like to have an issue estoppel running against Ms Beaven, the legal nature of the issue in this case makes it extremely unlikely that inconsistent verdicts

would be reached, if there were separate proceedings.  Put another way, Ms Beaven is in the event of a separate trial, is unlikely to be able to persuade a later Court that the adverse finding as to Mr Burgess’s liability in the earlier trial should in fact have been a positive finding.

The overall balance in the interests of justice

[74]     When the nature of the third party claim in this case is considered, it is clear that the interests of justice favour separate proceedings.  Separate proceedings will be the most efficient means of delivering a fair result to the various parties.  The negligible risk of inconsistent findings in this case is far outweighed by the distinct disadvantage to the bank of having a relatively straightforward issue dealt with at a trial into which the complications of Mr Burgess’s complaints against Ms Beaven are introduced.

[75]     That this is the just and fair outcome is reinforced by Ms Beaven’s own position.  Notwithstanding that the setting aside of the third party notice may expose her to a separate civil proceeding, in which none of the potential benefits of her counsel working alongside counsel for the bank will be present, Ms Beaven’s stated preference (through counsel’s memorandum) is that the third party notice should be dismissed.

Outcome

[76]     The bank is entitled to an order setting aside the third party notice.

Costs

[77]     In relation to the setting aside application, costs must follow the event.   In relation to the discovery application, in which Mr Burgess has had a measure of success, the appropriate outcome is that there be no order as to costs as Mr Burgess is self-represented.

[78]     The plaintiff will therefore be entitled only to those items which relate to the setting aside application.  In that regard, I certify the hearing as being a half-day hearing.

[79]	I  have  already  incorporated  in  my  order  as  to  the  plaintiff’s  privileged

documents an appropriate direction in relation to costs.33

Order as to setting aside of third party notice

[80]	I order:

(a)       The third party notice issued by the defendant against the third party is set aside.

(b)	The defendant is to pay to the plaintiff the costs of the setting aside application on a 2B basis together with disbursements to be fixed by the Registrar.

Associate Judge Osborne

Solicitors:
Clendons, Auckland
Counsel: NRW Davidson QC, Christchurch
Mr G O Burgess, Waipara

33	Above at [32](d).