100 Investments Ltd v Walker
[2024] NZHC 93
•7 February 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2019-404-1160
[2024] NZHC 93
BETWEEN 100 INVESTMENTS LTD
First Plaintiff
Continued…
AND
ROBERT BRUCE WALKER
First Defendant
Continued…
Hearing: 5 February 2024 Appearances:
A Barker KC and R Hucker for the first to fourth plaintiffs in 1160 and the first to fourth defendants in 0274
D Salmon KC and N R Frith for the second defendant in 1160 and the sixth defendant in 0274
J MacGillivray and W Hofer for the third defendant in 1160 and the seventh defendant in 0274
D J Cooper KC as litigation guardian for Mr Walker
J Moss for the fifth to seventeenth defendants in 1160 and the first to thirteenth plaintiffs in 0274
Judgment:
7 February 2024
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 7 February 2024 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
100 INVESTMENTS LTD and OTHERS v WALKER and OTHERS [2024] NZHC 93 [7 February 2024]
CIV 2019-404-1160
FTG SECURITIES LTD
Second Plaintiff
RFD FINANCE LTD
Third PlaintiffTOMANOVICH HOLDINGS LTD
Fourth PlaintiffAND
LPF GROUP LTD
Second Defendant
SPF NO 10 LTD (In Liquidation) Third Defendant
KEVIN JOHN WHITLEY as Liquidator of Property Ventures Ltd (In Liquidation) Fourth Defendant
PROPERTY VENTURES LTD (In
Liquidation)
Fifth Defendant
CASHEL VENTURES LTD (In
Receivership and Liquidation) Sixth Defendant
TAY VENTURES LTD (In Receivership and Liquidation)
Seventh Defendant
LIVINGSPACE PROPERTIES LTD
(In Liquidation) Eighth Defendant
TUAM VENTURES LTD (In Liquidation) Ninth Defendant
CASTLE STREET VENTURES LTD (In
Liquidation) Tenth Defendant
LICHFIELD VENTURES LTD (In
Liquidation)
Eleventh Defendant
Continued…
ST ASAPH VENTURES LTD (In
Liquidation)
Twelfth Defendant
BEECHNEST LTD (In Receivership and Liquidation)
Thirteenth Defendant
92 LICHFIELD LTD (In Receivership and Liquidation)
Fourteenth Defendant
MONTECRISTO CONSTRUCTION
COMPANY LTD (In Liquidation) Fifteenth Defendant
FIVE MILE HOLDINGS LTD (In
Liquidation)
Sixteenth Defendant
CIV 2022-404-274
BETWEEN KEVIN JOHN WHITLEY
First Plaintiff
PROPERTY VENTURES LTD (In
Liquidation) Second Plaintiff
FIVE MILE HOLDINGS LTD (In
Liquidation) Third Plaintiff
CASHEL VENTURES LTD (In Liquidation and Receivership)
Fourth Plaintiff
TAY VENTURES LTD (In Liquidation and Receivership)
Fifth Plaintiff
LIVINGSPACE PROPERTIES LTD
(In Liquidation) Sixth Plaintiff
BEECHNEST VENTURES LTD (In
Liquidation) Seventh Plaintiff
Continued…
AND CASTLE STREET VENTURES LTD (In
Liquidation)
Eighth PlaintiffLICHFIELD VENTURES LTD (In
Liquidation) Ninth Plaintiff
92 LICHFIELD LTD (In Liquidation) Tenth Plaintiff
ST ASAPH VENTURES LIMITED (In
Liquidation)
Eleventh PlaintiffMONTECRISTO CONSTRUCTION
COMPANY LTD (In Liquidation) Twelfth Plaintiff
TUAM VENTURES LTD (In Liquidation) Thirteenth Plaintiff
100 INVESTMENTS LTD
First DefendantFTG SECURITIES LTD
Second DefendantRFD FINANCE LTD
Third DefendantTOMANOVICH HOLDINGS LTD
Fourth DefendantROBERT BRUCE WALKER
Fifth Defendant
LPF GROUP LTD
Sixth DefendantSPF NO 10 LTD (In Liquidation) Seventh Defendant
Introduction
[1] These two consolidated proceedings have been on foot for some time. One was commenced in 2019, the other in 2022. A four-week trial is scheduled to commence on 26 February 2024.
[2] On 12 and 13 December 2023, I heard ten interlocutory matters, including applications by two of the defendants (LPF and SPF) for better discovery from the Whitley parties. I declined those applications in a judgment delivered on 15 December 2023.1 The background to the two proceedings, and various abbreviations used in this judgment, are found in that judgment.
[3] On 20 December 2023, LPF filed two applications: an application for leave to appeal my discovery decision and an application to adjourn the trial. SPF supports both applications. Mr Walker supports the adjournment application. The Whitley parties oppose both applications. The secured creditors oppose the adjournment application.
Legal principles governing the applications
[4] LPF applied under s 56(3) of the Senior Courts Act 2016 for leave to appeal my discovery decision. In Lendlease Capital Services Pty Ltd v Arena Living Holdings Ltd,2 the Court of Appeal said leave to appeal under s 56(3) should not be granted unless the proposed appeal:
(a)raises some question of law or fact capable of bona fide and serious argument in a case involving some interest (public or private) of sufficient importance to outweigh the cost and delay of the appeal; and
(b)has some reasonable prospect of success.
[5] LPF sought an adjournment under r 10.2 of the High Court Rules 2016. This empowers a court to adjourn a trial if it is in the interests of justice to do so. A decision
1 100 Investments Ltd v Walker [2023] NZHC 3732.
2 Lendlease Capital Services Pty Ltd v Arena Living Holdings Ltd [2020] NZCA 471 at [4].
to grant or decline an adjournment involves a balancing exercise between the parties. Relevant to that exercise is whether the applicant has acted reasonably and done everything practicable to avoid the need for an adjournment. The court must also consider the interests of litigants in other cases before the court.
Grounds for applications
[6] LPF said I had erred in declining its discovery application. It said any delay caused by granting leave to appeal my decision would be justified, because the documents it had sought in its application would contain relevant and important material that it (and all the other parties) needed for there to be a fair trial.
[7] LPF advanced two principal grounds for seeking an adjournment. First, it said that on 15 December 2023 the Whitley plaintiffs had resiled from a prior general waiver of privilege. LPF said this had prejudiced its briefing of evidence, as its witnesses had intended to rely on the documents that were subject to the Whitley parties’ change of heart on waiver. Secondly, LPF said an adjournment was needed to allow it to pursue its proposed appeal from my discovery decision.
[8] It will be convenient to address the privilege ground of the adjournment application first. I will then turn to the discovery ground, as this is intertwined with the application for leave to appeal.
Adjournment application: privilege ground
[9] There is no merit to the first of LPF’s grounds for an adjournment. LPF was timetabled to serve its evidence by 19 December 2023. I am told the parties had informally agreed to extend that to 21 December 2023. Whichever of these dates applied, LPF’s briefing of its witnesses must have been well advanced by 15 December 2023, when it is said the Whitley parties resiled from a prior general waiver of privilege. If, as LPF contends, there had been a prior general waiver,3 there was
3 I do not have to decide whether there was a prior general waiver. However: (i) to the extent that LPF said there had been a waiver in the briefs served by the Whitley parties, reference to privileged communications in a served brief is not necessarily inconsistent with a claim of confidentially, given that the brief might be amended or might not be read at trial (Capital + Merchant Finance Ltd v Perpetual Trust Ltd [2015] NZHC 1233 at [22] per Katz J) and (ii) LPF appears to have misconstrued a statement made by Mr Whitley in an affidavit dated 6 November 2023.
nothing to stop LPF from taking the position that the Whitley parties could not withdraw that waiver, complete and serve its briefs before Christmas, with any waiver dispute addressed thereafter. In any event, any disagreement over waiver of privilege by the Whitley parties was resolved by, at the latest, 22 December 2023. Any issues that the disagreement may have temporarily caused for LPF completing its briefing should not have prevented it from serving briefs before this hearing. They certainly do not provide a reason for adjourning the trial.
Adjournment application and application for leave to appeal: discovery
[10] LPF’s second principal ground for an adjournment depends on its application for leave to appeal my decision on LPF’s discovery application.
My decision on LPF’s discovery application
[11] LPF’s discovery application focussed on two categories of documents.4 The first was a file referred to as MC File 1. This was a file held by Meredith Connell, a firm of solicitors which had acted for PVL and the PVL companies (at a time when Mr Walker and Mr Scutter were the liquidators of those companies) on the PVL proceedings and other matters relating to those companies’ liquidations. MC File 1 was the file that related to the PVL proceedings. The second category consisted of documents held by Mr Walker and/or Mr Scutter (as former liquidators). Of these, the documents held by Mr Walker were the primary concern of LPF.
[12] The Whitley parties did not have possession of any of these documents. This meant that a key issue on the discovery application was whether they had a “right to possess” the documents – that is, a presently enforceable legal right to obtain the documents without the need to obtain the consent of anyone else. If they did, the documents were within the control of the Whitley parties and so potentially discoverable.5
[13] In determining whether Mr Whitley had a right to possess the documents, I addressed steps that Mr Whitley had taken, soon after his appointment as
4 SPF’s discovery application was, in material respects, identical.
5 100 Investments Ltd v Walker [2023] NZHC 3732 at [37].
(replacement) liquidator of PVL and the PVL subsidiaries, to obtain the documents. It will be helpful to set those out again in this judgment.
[14] On 30 September 2021, Mr Whitley wrote to Mr Walker (as former liquidator) and formally requested, under ss 261 and 283A of the Companies Act 1993, all documents in Mr Walker’s possession for those companies. Mr Whitley followed this up by bringing, in October 2021, an originating application in this Court for orders under ss 261, 266 and 283A, requiring Mr Walker to deliver up those documents (the Walker originating application). Jason Goodall KC was appointed Mr Walker’s ligation guardian in that proceeding.
[15] Soon thereafter, Mr Whitley asked Meredith Connell to deliver up the documents that it held as solicitor for PVL and the PVL companies. Meredith Connell declined to provide the documents, taking the position that they belonged to Mr Walker rather than the PVL companies. In December 2021, Mr Whitley filed, in the PVL liquidation proceeding, an interlocutory application under ss 261 and 266 of the Companies Act seeking orders requiring Meredith Connell to deliver up the documents (the Meredith Connell application).
[16] The Meredith Connell application was heard in September 2022. By that time, Mr Whitley’s application against Mr Walker had not been resolved or heard. Mr Whitley told the Court that he was pursuing the Meredith Connell application because of the delays he was experiencing in obtaining the documents from Mr Walker and because he suspected that Meredith Connell’s files would be complete, whereas he had no such confidence with Mr Walker’s files.6
[17] Meredith Connell resisted the application on three main grounds. First, they contended that the files belonged to Mr Walker, not the PVL companies. Secondly, they said there were hundreds of thousands of pages on their files, that the files would contain privileged material (including material for which Mr Walker, rather than the PVL companies, would enjoy the privilege) and that separating privileged from non- privileged documents would require a costly and time-consuming review. Thirdly, they asserted a lien over the files for unpaid fees of about $300,000.
6 Whitley v Meredith Connell [2022] NZHC 2994 at [24].
[18] Most of the hundreds of thousands of pages were on MC File 1.7 Mr Whitley decided to “park” the Meredith Connell application in respect of that file. The application was determined in respect of six other files in Whitley v Meredith Connell, a judgment delivered by Associate Judge Paulsen on 16 November 2022. The Judge held that:
(a)The files came into existence during and in the course of the performance by Mr Walker of his duties as liquidator. They therefore belonged to the PVL companies.8
(b)A liquidator’s powers to access documents were not to be exercised beyond the point where unfairness resulted. An order should not be made which will be wholly unreasonable, unnecessary or oppressive.9 Although the files belonged to the PVL companies, it was possible that on the files there were documents in respect of which Mr Walker was entitled to assert privilege (for example, because they related to advice given to him in relation to his personal affairs).10 However, Mr Whitley had limited the files he was seeking, and importantly was not seeking MC File 1, the largest of the files. Reviewing the remaining files would not impose an unacceptable burden on Meredith Connell.11
(c)Section 263 of the Companies Act prevented Meredith Connell from enforcing, as against Mr Whitley as liquidator of the PVL companies, any lien over the files.12
[19] Mr Whitley’s application in respect of MC File 1 was adjourned pending further order of the Court.13 He has not advanced it further.
7 At [32].
8 At [68].
9 At [45].
10 At [75].
11 At [76].
12 At [88].
13 At [126].
[20] Mr Walker can be expected to hold documents that will generally correspond to MC File 1, as he was the liquidator instructing Meredith Connell (and previous solicitors) on behalf of the PVL companies through the course of the PVL proceedings. But Mr Whitley has not obtained any documents through the Walker originating application. Mr Walker has offered (through his litigation guardian Mr Goodall) to deliver the documents on conditions, but the conditions are not acceptable to Mr Whitley. The Walker originating application has not been heard. Mr Whitley appears to have parked it, just as he has parked the Meredith Connell application in respect of MC File 1.
[21] In my discovery decision, I held that, in these circumstances, the Whitley parties did not have a presently enforceable legal right to obtain MC File 1 from Meredith Connell or to obtain the documents from Mr Walker. I reasoned that:
(a)To the extent that Mr Whitley would have to rely on provisions in the Companies Act to obtain possession of the documents from Meredith Connell or Mr Walker, this was not a presently enforceable legal right. It was merely a right to apply for an order from the Court, and a liquidator does not have an unqualified right to such an order.
(b)A liquidator’s powers to require a person to deliver up documents of the company were found exclusively in the Companies Act. Mr Whitley could not sidestep the Act’s provisions by demanding, as agent of the PVL companies, that Meredith Connell deliver up MC File 1.
[22] I therefore concluded that the documents were not within the control of the Whitley parties. On that ground, I declined the discovery application. I did not have to address the other issues that arose on the application.14
Applications for leave to appeal and for an adjournment
[23] LPF said that I arguably erred in both the reasons (set out at [21] above) that led to my finding that the documents were not within the control of the Whitley parties.
14 At [50].
It said its application seeks documents that are important for all parties to see in order for there to be a fair trial, and that this outweighs the delay that will result from an appeal. And it said its appeal has reasonable prospects of success.
[24] I accept that LPF’s proposed appeal would raise questions of law (namely, whether my two reasons were correct) that are capable of bona fide and serious argument. The first reason involved a legal issue on which there is modest High Court and no appellate authority. The second reason involved a legal issue on which there is no direct authority. Further, LPF (and the other parties supporting its applications) have raised cogent arguments as to why I may have erred with my second reason.
[25] That there are questions capable of bona fide and serious argument does not, of course, suffice for leave to appeal to be granted. First, the appeal must also involve an interest (public or private) of sufficient importance to outweigh the cost and delay of the appeal. Here, if leave to appeal is granted, an adjournment of the trial will follow, so the question is whether the resultant delay is justified by the interests at stake on the appeal. Secondly, the appeal must have reasonable prospects of success. Here, while there are reasonable prospects of LPF succeeding in showing that my reasons were in error, for its appeal to succeed LPF will also have to succeed on the other issues that were raised on the discovery application. Those issues include whether the discovery orders sought by LPF are proportionate, given that making the orders (which are not tailored) would likely lead to an adjournment of the trial.
[26] The prospect of delay is therefore a central concern in assessing whether to grant leave to appeal.
[27] Delay is also, of course, a central concern on the adjournment application. If the upcoming trial is adjourned, a new hearing will be at least 12 months away. One of the proceedings has already been in progress for six years, the other for four years. The plaintiffs will be prejudiced merely by the further delay in having their claims determined. They will also likely experience some prejudice in terms of their
witnesses’ ability to recollect events.15 Other users of the court’s limited resources will clearly be prejudiced if a four-week trial is adjourned.
[28] LPF said this delay was worth it, because the documents were likely to be not only relevant but important. Accordingly, if the documents were not discovered the trial would not be fair for the defendants (or for the plaintiffs). LPF also said that it had acted reasonably and done everything practicable to avoid the need for an adjournment.
[29] Whether the delay is worth it, and whether LPF has done everything practicable to avoid the need for an adjournment, are in my view key to the determination of LPF’s applications.
Is the delay worth it? Has LPF done everything practicable to avoid it?
[30] The plaintiffs’ substantive claims include that Mr Walker and Mr Scutter breached their duties as liquidators of the PVL companies and that LPF and SPF are liable for knowing receipt or dishonest assistance in respect of those breaches. LPF said it was crucial to have the full record available so that it (and SPF) can defend these claims. For example, it was important to be able to see what steps the liquidators did and did not take and whether the liquidators obtained legal advice in relation to the acts or omissions that the plaintiffs contend were in breach of duty. LPF said that MC File 1 and Mr Walker’s documents would contain relevant and important documents on such matters.
[31] LPF also said that it had acted promptly in applying for further discovery. The Whitley parties had provided discovery in mid-August 2023, in response to a discovery order I made in July 2023. LPF raised issues about the scope of that discovery by correspondence in September 2023 and, when dissatisfied with the response, made an application on 13 October 2023.
15 I accept that the witnesses for whom the plaintiffs have served briefs rely primarily (though not entirely) on the documentary record. However, I understand the plaintiffs intend to subpoena other witnesses who do not.
[32] I accept that MC File 1 and Mr Walker’s documents are likely to contain relevant, perhaps in some cases important, documents. Further, no criticism can be made of the steps that LPF took after the Whitley parties served their discovery affidavit in August 2023. But assessing the importance of the documents sought, and whether LPF has done everything practicable to avoid a delay, requires consideration also of events before August 2023.
[33] In 2021, orders were made for discovery in the secured creditors’ proceeding. Mr Walker provided some discovery in August 2021. The secured creditors applied for further discovery from Mr Walker.
[34] At that point Mr Walker was self-represented. Soon thereafter, in late 2021, Mr Cooper KC was appointed as Mr Walker’s litigation guardian. At about the same time, Mr Walker ceased being the liquidator of PVL and the PVL subsidiaries, and Mr Whitley became the liquidator of those companies. As earlier noted, on 30 September 2021 Mr Whitley wrote to Mr Walker requesting, under ss 261 and 283A of the Companies Act, all documents in Mr Walker’s possession for those companies. Mr Whitley’s request came to LPF’s attention. It filed a memorandum in this proceeding expressing concern that some of the documents sought by Mr Whitley would be subject to a privilege shared by LPF.
[35] The secured creditors’ application for further discovery from Mr Walker was resolved, by consent, in February 2022. In a minute dated 8 February 2022, Wylie J made further discovery orders to reflect that resolution. These orders did not require Mr Walker to discover the entirety of the documents in his possession, and so did not extend to all the documents that LPF now seeks in its discovery application against Mr Whitley. While LPF had not brought the discovery application against Mr Walker, it could of course have sought discovery orders against him. Wylie J’s minute records that LPF’s only concern about the discovery orders was one of joint privilege over some documents.
[36] By that time LPF was also aware that Mr Whitley had taken steps to obtain documents from Mr Walker and Meredith Connell by bringing the Walker originating
application and the Meredith Connell application. It referred to both applications in a memorandum dated 4 February 2022.
[37] By 25 March 2022, the Whitley parties had commenced the liquidator’s proceeding (CIV-2022-404-0274). At a teleconference that day, Wylie J ordered by consent that the liquidator’s proceeding be consolidated with the secured creditors’ proceeding. An issue also arose as to whether the trial then scheduled to commence on 27 June 2022 should be adjourned. In a memorandum dated 23 March 2022, LPF submitted that the trial should be adjourned. It put forward eight reasons. Those reasons did not include any concern that the parties had not had discovery of documents held by Meredith Connell or all of Mr Walker’s documents. This was despite LPF’s memorandum recording that the secured creditors’ pleading included allegations of breach of duty by the liquidators and knowing receipt by SPF and LPF. Wylie J adjourned the June 2022 trial.
[38] By March 2022, LPF had also applied for an order that two other proceedings should be consolidated with the secured creditors’ proceeding and the liquidator’s proceeding, with all the proceedings heard in Auckland. The proceedings it sought to consolidate were the Walker originating application and the Meredith Connell application. SPF and Mr Walker supported LPF’s consolidation application. The application was heard by Wylie J in May 2022 and declined in a judgment dated 13 June 2022.16
[39] Therefore, LPF did not seek discovery in February 2022 of the entirety of the documents in Mr Walker’s possession; in March 2022 it expressed no concern that the lack of discovery of Mr Walker’s documents or MC File 1 prejudiced the trial scheduled for June 2022; and in May 2022 LPF, SPF and Mr Walker were taking the position that Mr Whitley’s rights to obtain those documents need not be determined before these two proceedings were heard. All this is remarkably inconsistent with the position that LPF now takes, that it is crucial that Mr Walker’s documents and MC File 1 be discovered in order for there to be a fair trial of these two proceedings.
16 100 Investments Ltd v Walker [2022] NZHC 1379.
[40] These events and the inconsistency were not addressed in LPF’s affidavits or submissions in support of its discovery application. I raised them with Mr Salmon KC, counsel for LPF, at the hearing. He said that the obligation was always on the Whitley parties to discover these documents. That is true (assuming for the moment that I erred in declining LPF’s discovery application.) But it does not explain the position that LPF (and SPF and Mr Walker) took in 2022.
[41] Mr Cooper candidly acknowledged that the parties should have addressed the discovery of these documents back in 2022. He said the defendants had assumed that Mr Whitley would pursue the Walker originating application and the Meredith Connell application. That may be true. But, again, it does not explain the position that the defendants took in 2022.
[42] Further, the defendants showed, for some considerable time, little interest in obtaining discovery from the Whitley parties. The Whitley parties commenced their proceeding in early 2022. The defendants did not seek a discovery order until July 2023. I accept that the Whitley parties bore the obligation to discover documents, but the defendants’ lack of action is nonetheless of some note.
[43] Finally, the importance of the documents sought by LPF has to be assessed in the context of the other documents and evidence that is available to LPF. LPF has access to the documents from Mr Walker of which it was content, in 2022, to obtain discovery. During the course of the PVL proceedings, LPF was copied into a considerable amount of correspondence from the lawyers acting for the liquidators. LPF intends to call Mr Smith KC, lead counsel for the liquidators in the PVL proceedings, as a witness. It is apparent that Mr Smith has been able to shed light on some questions such as whether the liquidators took advice on the value of claims made by PVL subsidiaries and on the need for a pooling order.
[44] Taking all these matters into account, I am not satisfied that the documents sought by LPF are as important as it contended or that the consequent delay is worth it. Nor am I satisfied that LPF did everything practicable to avoid the need for an adjournment. On balance, the interests of justice do not favour an adjournment.
Result
[45]I decline LPF’s applications.
[46]The secured creditors and the Whitley parties are entitled to costs.
[47] At the hearing, Mr Salmon indicated that if the applications were declined, it would still take some for LPF to serve its briefs. Mr Cooper indicated that further time was also likely to complete Mr Walker’s brief (though he acknowledged that the difficulties in completing that brief were not a result of the issues raised in LPF’s applications). Directions for briefs and any other matters can be addressed at the pre- trial conference that is scheduled for 13 February 2024.
Campbell J
3
5
1