Biggs vs Biggs - Decision of the NZ High Court

In Biggs vs Biggs, one of New Zealand's biggest divorce settlements, the High Court examines issues of interim distributions, discovery costs and name suppression.

Background

  1. Mr and Ms Biggs had been together for six years, married for 5 years and had one child aged 3 when they separated in early 2016.
  2. Ms Biggs filed an application under the Property (Relationships) Act 1976 shortly after the separation and by March 2018 she had incurred in excess of $300,000 in legal and accounting expenses.
  3. In the proceeding Ms Biggs sought to share wealth owned by trusts and companies she said Mr Biggs controlled. Her claims used every legal device and strategy that might technically be available to obtain a share of the wealth including applications under sections 15, 17, 20E, 44, 44C and 32 of the Property (Relationships) Act 1976, section 182 of the Family Proceeding Act 1980 and the principles relating to constructive trusts.
  4. Mr Biggs sought to protect assets which he said represented wealth he held prior to the relationship.
  5. At the March 2018 interlocutory hearing there were a number of applications to be decided.
  6. The first was an application for an interim distribution of half the sale proceeds from the sale of the family home and for an order that Mr Bigg’s share of the proceeds were to be retained in a trust account pending determination of the substantive application.
  7. The second was for an additional interim distribution to Ms Biggs for $400,000 or an order Mr Biggs was to pay for her legal and accounting costs.
  8. Lastly, Ms Biggs sought an order for further discovery.
  9. In response Mr Biggs and the trustees asked the Court to ensure confidentiality and for an order suppressing the parties’ names.
  10. In its decision, the Court noted that the course of the proceedings illustrated how, in the pursuit of claims in a particular way, there can be scant recognition of the principle that questions arising under s 1N(d) of the Property (Relationships) Act 1976 about relationship property should be resolved as inexpensively, simply and speedily as is consistent with justice.

Interim distributions

  1. In her application Ms Bigg’s sought an order that on settlement of the sale of the family home, she was to receive half of the net sale proceeds while the other half was to be held pending resolution of the substantive dispute on the grounds that there was the potential for Mr Biggs to have to pay Ms Biggs a significant sum on account of her claims.
  2. In determining the questions relating to the requests for interim distributions the Court noted the distribution must be less than the applicant’s ultimate share of the relationship property and the Court can consider the following factors:
  • any possible prejudice that might arise from an order;
  • the purpose and principles of the Act including, in particular, the need to do justice between the parties;
  • the needs and circumstances of the applicant;
  • the purpose for which the distribution is sought;
  • the applicant’s likely share of relationship property;
  • the respondent’s ability to give effect to an order at that time;
  • the length of time until the substantive claim is likely to be heard;
  • any delays in proceedings to date and whether those delays are attributable to either of the parties; and
  • whether an interim distribution will cause further delays in finally determining the relationship property claim.
  1. An order on the terms sought by Ms Biggs was declined with the Judge finding that the risk of Mr Biggs not paying any judgment debt was negligible and deciding that if Ms Bigg was to receive a share of the sale proceeds there was no reason why Mr Biggs should not also.
  2. However, due to the outstanding issues including the accounting over drawings from a mortgage facility and the likelihood of a significant costs award, the Court decided only a portion of the sale proceeds should be distributed with the remaining amount to be held pending resolution of the substantive dispute.
  3. The Court also ordered an immediate payment of $200,000 from Mr Biggs to Ms Biggs as an interim distribution to assist with her legal and accounting fees. On the sale of the family home the $200,000 was to be repaid to Mr Biggs from Ms Biggs share of the sale proceeds.
  4. In making that decision the Court balanced the principle that the sum ordered should not be so small as to leave the applicant in such a financially disadvantaged position that financial stress makes it difficult for them to receive the reasonable and necessary legal and accounting advice required to resolve their claims on an adequately informed basis, nor should it be of an amount that encourages the mindset that there is an unlimited fund at their disposal which can be used to pursue claims through litigation which on its face is at odds with the principles of the Act.

Discovery

  1. A vast majority of the High Court’s judgment in Biggs v Biggs centered on the extensive discovery requests relating to the various trusts and companies.
  2. Ms Biggs, largely driven by her advisers, sought further disclosure from Mr Biggs and the trusts and companies. The nature of the discovery requests was to effectively allow Ms Biggs’ accountant to audit how the trusts and companies had been established, and how they had operated during and after the marriage. The accountant wanted to do that by not only looking at the usual records such as annual accounts, but by also examining documents such as bank statements, email correspondence, the accountant’s work papers and the general ledgers.
  3. An element to these requests was the position taken my Ms Biggs and her advisers that Mr Biggs was being obstructive.
  4. This position was not accepted as being reasonable and it was noted that the background was such that Ms Biggs and her advisers should not have assumed Mr Biggs would refuse to cooperate or resist providing information.
  5. The Court considered Mr Biggs had cooperated in providing information. He had continued to provide information in a manner which indicated he wanted to see issues resolved on an informed basis. While he had refused to provide some documents on the basis they were confidential, his refusal was not motivated by an intent to be obstructive.
  6. It was not a case of a husband trying to use his financially advantaged position to pressure a claimant to accept what might be less than a just legal entitlement.
  7. The High Court largely declined the discovery requests noting the principles governing discovery in relationship property litigation were:
  • A robust approach should be taken to discovery consistent with the purposes and principles of the Act: the need for just division, but also inexpensive and efficient access to justice.
  • Discovery must not be unduly onerous.
  • Discovery must be reasonably necessary at the time sought.
  • The scope of discovery should therefore be tailored to the need of the Court to dispose, justly and efficiently, of relationship property issues under the Act.
  • More substantial discovery may well be ordered by the Court where it has reason to believe that a party has concealed information or otherwise sought to mislead either the other party or the Court as to the scope of relationship property. But even here, the scope of discovery should be no more than is required for the Court to fairly and justly determine relationship property rights. It is just that in such a situation, more is likely to be required to meet that requirement.
  • The discovery sought must be relevant to the issues in the proceeding.
  1. The Court decided the discovery that had been provided was extensive and sufficient to allow Ms Biggs to determine the scope of her claims.
  2. Ultimately the discovery requests were excessive and disproportionate to what was reasonably required to allow the parties to advance their case. The Judge did not consider any of the further discovery would usefully advance matters for either of the parties, and some of the information was already available from disclosed documents or could be given at trial through cross-examination without the detailed documentation sought.
  3. It was noted that the insistence on providing the discovery had led to delays and significant costs. It had made resolution of the proceedings more difficult and had led to an intensely adversarial approach to the resolution of claims.
  4. There was a question as to whether Mr Biggs had control over certain documents relating to one of the companies.
  5. In determining that question the Court considered the concept of “control” as defined in rule 1.3(1) of the High Court Rules, which means possession, a right to possess or a right to inspect or copy a document.
  6. It was found Mr Biggs did not have control as he was a director of the relevant company and therefore was under an obligation to exercise powers for a proper purpose and to protect trade secrets and confidential information.
  7. Further it was found to require discovery by the company itself would be inconsistent with the governing principles which prevents discovery where significant inconvenience would be caused to an entity not directly involved in the proceeding.
  8. In conclusion on discovery matters the Court summarised:

The value of further discovery and whether what is sought is disproportionate or oppressive is not to be measured just by the potential monetary value of a claim that a party is making. Primarily, what must be considered is the time, expense and difficulty of providing such further discovery against the extent to which further discovery might assist the party seeking discovery to advance his or her case as to the actual issues in the proceedings.Confidentiality

  1. The Judge made directions to ensure the confidentiality of documents but allowed Ms Biggs to discuss the information with her brother who was experienced in business and was providing support and advice to her. It was considered, due to his experience, Ms Biggs’ brother would likely assist settlement.

Name suppression

  1. Mr Biggs sought an order for name suppression making reference to his young child.
  2. However, as the proceeding was not about the parties’ child, her privacy interests were unlikely to be affected to her detriment as in accord with section 11C of the Family Courts Act there was to be no publication of the child’s name.
  3. The principle of open justice was important and therefore the request for name suppression was denied.

Role of professional advisers

  1. In this case the Court made some comment about the role of legal and other professional advisers noting that counsel, in advising clients as to what would be in their best interests, has a responsibility to try to ensure proceedings are resolved as inexpensively and efficiently as is achievable, commensurate with the just resolution of what is in dispute.
  2. In a relationship property context, experts should be mindful of section 1N(d) of the Act and they should be ready to engage with other professionals to obtain information which reasonably and realistically needed in a manner which is cost-effective, and which is likely to promote respect and trust between the parties as they attempt to resolve matters in dispute.

This case has since been appealed to the New Zealand Court of Appeal.

First published in The Family Advocate, Volume 20, Issue 2.

Related Posts.

Ready to Get Things
Moving?

Request a consultation, we'll take care of it.