100 Investments Ltd v Walker
[2022] NZHC 1379
•13 June 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001160 [2022] NZHC 1379
BETWEEN 100 INVESTMENTS LTD
First Plaintiff
………………Continued overleaf
AND
ROBERT BRUCE WALKER
First Defendant
……………….Continued overleaf
Hearing: 23-24 May 2022, amended statements of claim and further submissions filed on 1 and 3 June 2022 Appearances:
A Barker QC, R Selby and M Swan for First to Fourth Plaintiffs in CIV-2019-404-1160 and for First to Fourth Defendants in CIV- 2022-404-0274
D Cooper for First Defendant in CIV-2019-404-1160 and for Fifth Defendant in CIV-2022-404-0274
J Fitzgerald for Second Defendant in CIV-2019-404-1160 and for Sixth Defendant in CIV-2022-404-0274
N Frith for Third Defendant in CIV-2019-404-1160 and for Sixth Defendant in CIV-2022-404-0274
W Hofer for Fourth Defendant in CIV-2019-404-1160 and for Eighth Defendant in CIV-2022-404-0274J Moss for Fifth to Seventeenth Defendants in CIV-2019-404- 1160 and for First to Thirteenth Plaintiffs in CIV-2022-404-0274 M Hodge for Meredith Connell, a party to an interlocutory application in CIV-2010-409-123
Judgment:
13 June 2022
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie
On 13 June 2022 at 3.00 pm Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:…………………………
100 INVESTMENTS LTD v WALKER [2022] NZHC 1379 [13 June 2022]
CIV-2019-404-001160
FTG SECURITIES LIMITED
Second Plaintiff
RFD FINANCE LIMITED
Third Plaintiff
TOMANOVICH HOLDINGS LIMITED
Fourth Plaintiff
AND JOHN MARSHALL SCUTTER
Second Defendant
LPF GROUP LIMITED
Third DefendantSPF NO 10 LIMITED (In Liquidation) Fourth Defendant
KEVIN JOHN WHITLEY as Liquidator of Property Ventures Limited (In Liquidation)
Fifth Defendant
PROPERTY VENTURES LIMITED (In
Liquidation) Sixth Defendant
CASHEL VENTURES LIMITED (In
Receivership and Liquidation) Seventh Defendant
TAY VENTURES LIMITED (In
Receivership and Liquidation) Eighth Defendant
LIVINGSPACE PROPERTIES LIMITED
(In Liquidation) Ninth Defendant
TUAM VENTURES LIMITED (In
Liquidation) Tenth Defendant
CASTLE STREET VENTURES
LIMITED (In Liquidation) Eleventh Defendant
LICHFIELD VENTURES LIMITED (In
Liquidation) Twelfth Defendant
ST ASAPH VENTURES LIMITED (In
Liquidation) Thirteenth Defendant
BEECHNEST LIMITED (In Receivership and Liquidation)
Fourteenth Defendant
92 LICHFIELD LIMITED (In
Receivership and Liquidation) Fifteenth Defendant
MONTECRISTO CONSTRUCTION
COMPANY LIMITED (In Liquidation) Sixteenth Defendant
FIVE MILE HOLDINGS LIMITED (In
Liquidation) Seventeenth Defendant
CIV-2022-404-000274
KEVIN JOHN WHITLEY
First Plaintiff
PROPERTY VENTURES LIMITED (In
Liquidation) Second Plaintiff
FIVE MILE HOLDINGS LIMITED (In
Liquidation) Third Plaintiff
CASHEL VENTURES LIMITED (In
Liquidation and Receivership) Fourth Plaintiff
TAY VENTURES LIMITED (In
Liquidation and Receivership) Fifth Plaintiff
LIVINGSPACE PROPERTIES LIMITED
(In Liquidation) Sixth Plaintiff
BEECHNEST VENTURES LIMITED (In
Liquidation) Seventh Plaintiff
CASTLE STREET VENTURES
LIMITED (In Liquidation) Eighth Plaintiff
LICHFIELD VENTURES LIMITED (In
Liquidation) Ninth Plaintiff
92 LICHFIELD LIMITED (In
Liquidation) Tenth Plaintiff
ST ASAPH VENTURES LIMITED (In
Liquidation) Eleventh Plaintiff
MONTECRISTO CONSTRUCTION
COMPANY LIMITED (In Liquidation) Twelfth Plaintiff
TUAM VENTURES LIMITED (In
Liquidation) Thirteenth Defendant
AND 100 INVESTMENTS LIMITED
First Defendant
FTG SECURITIES LIMITED
Second DefendantRFD FINANCE LIMITED
Third Defendant
TOMANOVICH HOLDINGS LIMITED
Fourth Defendant
ROBERT BRUCE WALKER
Fifth Defendant
JOHN MARSHALL SCUTTER
Sixth Defendant
LPF GROUP LIMITED
Seventh Defendant
SPF NO 10 LIMITED (In Liquidation) Eighth Defendant
The applications
[1] LPF Group Ltd (LPF), the third defendant in proceeding CIV-2019-404-1160, has applied for an order under r 10.12 of the High Court Rules 2016, consolidating proceedings CIV-2019-404-1160, CIV-2021-404-2018 and CIV-2010-409-123 and directing that the consolidated proceedings be heard concurrently in Auckland. The application is:
(a)supported by the first defendant, Robert Walker (Mr Walker), by the second defendant, John Scutter (Mr Scutter) and by the fourth defendant, SPF No 10 Ltd (SPF);
(b)supported by Meredith Connell. It is the respondent to an interlocutory application in proceeding CIV-2010-409-123; and
(c)opposed by the plaintiffs (100 Investments Ltd, FTG Securities Ltd, RFD Finance Ltd and Tomanovich Holdings Ltd – jointly the plaintiffs), by the fifth defendant, Kevin Whitley (Mr Whitley) as liquidator of the sixth to seventeenth defendants, by the sixth defendant, Property Ventures Ltd (in liquidation) (PVL) and by the seventh to seventeenth defendants, all in liquidation and all subsidiaries of PVL (jointly the PVL subsidiaries).
[2] The plaintiffs have made separate application under r 8.25 seeking to set aside claims to confidentiality made by Mr Walker, Mr Scutter and LPF in the affidavits of documents each has filed. The application is:
(a)supported by Mr Whitley, PVL and the PVL subsidiaries;
(b)opposed by LPF and SPF.
Mr Walker and Mr Scutter have elected to abide the decision of the Court.
[3]I deal with each application in turn.
LPF’s consolidation application
(a) The proceedings it is sought to consolidate
[4] Proceeding CIV-2019-404-1160 (the Auckland proceeding) was commenced by the plaintiffs in June 2019. At the time Mr Walker was the liquidator of PVL and other companies in the PVL group, including the PVL subsidiaries. He ceased to be a licensed insolvency practitioner in late August 2021 and Mr Whitley was appointed in his stead, first as liquidator of PVL and then as liquidator of each of the PVL subsidiaries as well. Mr Whitley, PVL and the PVL subsidiaries were joined to the Auckland proceeding, initially as third parties and then as defendants.
[5] Mr Whitley, PVL and the PVL subsidiaries filed their own proceeding in Auckland under number CIV-2022-404-274 (Mr Whitley’s proceeding). By consent, Mr Whitley’s proceeding was consolidated with the Auckland proceeding in March 2022.
[6] Proceeding CIV-2021-404-2018 is an originating application brought by Mr Whitley against Mr Walker pursuant to ss 261, 266, 283A, 284, 373(2) and 373(4) of the Companies Act 1993 (the originating application). Mr Whitley is seeking an order that Mr Walker, as the former liquidator of PVL, some of the PVL subsidiaries and another company in the PVL group, deliver up all documents, file notes and emails in his possession or under his control relating to the liquidations.1
[7] Proceeding CIV-2010-409-123 is in Christchurch (the Christchurch proceeding). It is the liquidation file for PVL, the PVL subsidiaries and other companies in the PVL group. The proceeding was commenced in 2010 when the Commissioner of Inland Revenue and another company sought to place PVL into liquidation. A number of other parties have subsequently been added to the proceeding
1 The originating application was brought by Mr Whitley before he was aware of proceeding CIV- 2010-409-123. Mr Moss, for Mr Whitley, advises that Mr Whitley has “informally applied” to consolidate the originating application with proceeding CIV-2010-409-123. I do not know whether Mr Walker consents to this. Mr Cooper, appearing as litigation guardian for Mr Walker in the Auckland proceeding, has declined to accept appointment as his litigation guardian in relation to the originating application. The originating application has been before Sussock AJ. She has adjourned any further consideration of it pending the outcome of LPF’s consolidation application – see Whitley v Walker HC Auckland CIV-2021-404-2018, minutes dated 4 February 2022, 18 February 2022 and 21 March 2022.
and there have been multiple applications filed in the proceeding over the years (including by Mr Walker). Two extant applications are relevant for present purposes:
(a)on 23 November 2021, Mr Whitley filed an interlocutory application under ss 261(1) and (2)(b), and 284(1)(e) and (f) of the Companies Act seeking to review the remuneration and expenses charged by Mr Walker and Mr Scutter in the liquidation of PVL (the remuneration application). He seeks that they produce invoices, time records and invoices for disbursements, for all liquidators’ fees claimed and disbursements incurred, that the Court review their remuneration and the disbursements reimbursed and, if it is found that the amounts paid to them were unreasonable, an order that they refund any overpayments;2 and
(b)on 23 December 2021, Mr Whitley filed an interlocutory application under ss 261, 266(1) and (2)(b) and 393(2) of the Companies Act seeking an order that Meredith Connell produce any books, records or documents relating to the business or affairs of PVL in that firm’s possession (the Meredith Connell application). Mr Whitley asserts that Meredith Connell was instructed by Messrs Walker and Scutter and that it is required to produce the documents sought pursuant to notices issued under s 261 of the Companies Act.
Mr Whitley has signalled that he intends to bring other applications in the Christchurch proceeding. He has deposed that he has issued notices under s 261 of the Companies Act on other persons and entities and that they have either refused to respond or, in his view, to respond fully. As a result, he says that it is likely he will seek to bring further applications under s 266 of the Companies Act against these persons and entities.
2 Mr Moss acknowledged in the course of his submissions that, as a result of the decision of the Court of Appeal in Madsen-Ries v Salus Safety Equipment Ltd (in liq) [2022] NZCA 101 at [74], the Court will not be able to examine the expenses and disbursements claimed in the liquidation. He advised that the remuneration application is to be amended accordingly.
[8] The Christchurch proceeding cannot be finalised and the file closed until all applications have been dealt with and the liquidations of PVL, the PVL subsidiaries and other companies in the PVL group have been completed.
[9] LPF filed its application seeking to consolidate the Auckland proceedings (including Mr Whitley’s proceeding), the originating application and the Christchurch proceeding in mid-March 2022. Relevantly:
(a)I was told from the bar that LPF’s application was served on all parties to the Christchurch proceeding. As recorded above, Meredith Connell has filed a notice in support of the application.3 Messrs Walker and Scutter, albeit in their capacity as defendants in the Auckland proceeding, support it. No other party to the Christchurch proceeding has taken any steps; and
(b)all parties to the Auckland proceeding (and to Mr Whitley’s proceeding) have taken steps either supporting or opposing the application and I heard from counsel for all of them.
(b)Background
[10]I briefly summarise the Auckland proceeding and Mr Whitley’s proceeding.
[11]Broadly, the plaintiffs in the Auckland proceeding allege as follows:
(a)PVL was placed into liquidation in July 2010 and Mr Walker was appointed its initial liquidator. Mr Scutter was appointed a joint liquidator with Mr Walker as from 4 June 2013. He remained in that role until March 2018.
(b)PVL was the parent company of a number of subsidiaries (including the PVL subsidiaries) and, on various dates between December 2010 and
3 Mr Hodge, appearing for Meredith Connell, filed memoranda recording his client’s position. He asked to be excused from the hearing and I granted that application.
November 2012, the various subsidiaries were also placed into liquidation. Mr Walker was appointed as sole liquidator of each.
(c)In November 2012, Mr Walker, PVL and one of the PVL subsidiaries brought proceedings against PVL’s former directors, its auditors and valuers retained by it (jointly the PVL defendants). Separate proceedings were filed in April 2013 by the PVL subsidiaries and both sets of proceedings were consolidated in May 2014 (jointly the PVL proceedings).
(d)The PVL proceedings alleged breach of various duties said to have been owed to PVL and that the breach contributed to its collapse, the collapse of the PVL group and the collapse of the PVL subsidiaries.
(e)To fund the PVL proceedings, in October 2012, Mr Walker, then the sole liquidator of PVL, entered into a litigation funding agreement with SPF.
(f)SPF was a special purpose vehicle incorporated for the purpose of advancing the PVL proceedings. It was a wholly owned subsidiary of LPF. It was struck off the Companies Register but has since been restored for the purpose of the Auckland proceeding.
(g)On various dates between 2014 and 2018, Messrs Walker and Scutter, as the joint liquidators of PVL, reached confidential settlements with each of the PVL defendants whereby the PVL defendants agreed to pay various sums to settle the PVL proceedings. These sums were paid and, in 2018, the PVL proceedings were discontinued.
(h)The settlement proceeds were paid out, in part to SPF/LPF on account of “Project Costs and [a] Service Fee” and in part to Messrs Walker and Scutter on account of fees and expenses claimed by them. Nothing was paid to any creditor, secured or unsecured, of either PVL or the PVL subsidiaries.
(i)Mr Walker settled a voidable transaction claim. Pursuant to the settlement he received monies from another company, part of which was to be used to fund the PVL proceedings. In the event, all monies received were paid to SPF/LPF to reimburse them for claimed project costs for the conduct of the PVL proceedings.
(j)The PVL subsidiaries were plaintiffs in the PVL proceedings and they were entitled to share in the settlement proceeds.
(k)Mr Walker, Mr Scutter, SPF and LPF each had knowledge at all material times of the claims asserted by the PVL subsidiaries.
(l)They (the plaintiffs) are secured creditors of the PVL subsidiaries as a result of the assignment of a number of security interests originally held over one or more of the PVL subsidiaries by other creditors.
[12] Against this background, the plaintiffs seek to recover what they assert is the PVL subsidiaries’ share of the settlement proceeds from Messrs Walker and Scutter and from SPF and LPF. Seven causes of action are relied on:
(a)conversion by Messrs Walker and Scutter and by SPF and LPF;
(b)monies had and received by Messrs Walker and Scutter and by SPF and LPF;
(c)a declaration under the Personal Property Securities Act 1999 that the settlement proceeds were subject to the security interests which have been assigned to the plaintiffs;
(d)breach of fiduciary duty by Messrs Walker and Scutter and knowing receipt by Messrs Walker and Scutter and by SPF and LPF;
(e)a declaration that the funding agreement did not bind the PVL subsidiaries or the plaintiffs;
(f)breach of various duties owed by Mr Walker under the Companies Act, at common law and, as liquidator, to the Court; and
(g)breach of various duties owed by Messrs Walker and Scutter, also under the Companies Act, at common law and, as liquidators, to the Court.
[13] Mr Whitley’s proceeding largely relies on the plaintiffs’ statement of claim in the Auckland proceeding and many of the pleadings are adopted by Mr Whitley. Mr Whitley’s proceeding raises four causes of action:
(a)reversal and repayment of the amounts paid to SPF and LPF as being voidable preference payments;
(b)a declaration as to the ambit of the funding agreement;
(c)breach of various duties owed by Messrs Walker and Scutter under the Companies Act; and
(d)breach of fiduciary duty and knowing receipt by Messrs Walker and Scutter and by LPF and SPF.
[14] The primary difference between the claims made in the Auckland proceeding and in Mr Whitley’s proceeding is that the plaintiffs in the Auckland proceeding seek that the settlement proceeds or the share in the settlement proceeds (which they assert should have been paid to them) be paid to them. Mr Whitley seeks that the settlement proceeds or the share in the settlement proceeds be paid to him, as liquidator of PVL and the PVL subsidiaries.
[15] Each of the defendants, Mr Walker, Mr Scutter, LPF and SPF has filed a comprehensive statement of defence. It is not necessary for present purposes to outline the detail of these pleadings. Suffice it to say each relies on the funding agreement and asserts that all payments made were pursuant to its terms or as otherwise agreed. It is asserted that the payment to SPF was made by virtue of its status as a secured creditor of PVL. Messrs Walker and Scutter also say that their costs and expenses
reasonably incurred were required to be paid ahead of any return to any secured creditor of PVL or the PVL subsidiaries.
(c)Principles relevant to consolidation application
[16] The consolidation application is brought pursuant to r 10.12 of the High Court Rules. That rule provides as follows:
10.12When order may be made
The court may order that 2 or more proceedings be consolidated on terms it thinks just, or may order them to be tried at the same time or one immediately after another, or may order any of them to be stayed until after the determination of any other of them, if the court is satisfied—
(a)that some common question of law or fact arises in both or all of them; or
(b)that the rights to relief claimed therein are in respect of or arise out of—
(i)the same event; or
(ii)the same transaction; or
(iii)the same event and the same transaction; or
(iv)the same series of events; or
(v)the same series of transactions; or
(vi)the same series of events and the same series of transactions; or
(c)that for some other reason it is desirable to make an order under this rule.
Relevantly, r 10.13 provides as follows:
10.13Application of rule 10.12
Rule 10.12 applies even though—
(a)the relief claimed in the proceedings is not the same; or
…
[17] Rule 10.12 can be invoked by a party on application, as in this case, or by the Court of its own volition.
[18]It was common ground that at least one of the situations set out in r 10.12(a),
(b) or (c) must be engaged (although it was noted that r 10.12(c) is something of a catch-all, conferring a separate and very wide discretion).4 It was also common ground that if the Court is satisfied that one or more of the situations set out in r 10.12(a), (b) or (c) is met, the Court has a broad discretion to order consolidation in the interests of justice.5 Factors relevant to the exercise of the discretion can include the following:6
(a)the time and cost for the parties;
(b)the efficient use of judicial resources;
(c)whether there is a risk of inconsistent findings in separate proceedings and whether any such risk can be eliminated or reduced;
(d)any risk of confusion, prejudice or oppression from the size and complexity of any consolidated proceeding; and
(e)the readiness for trial of each of the proceedings it is sought to consolidate.
4 Amalgamated Finance Ltd v Wyness HC Wellington CP 156/86, 19 February 1987 at 12.
5 Medlab Hamilton Ltd v Waikato District Health Board (2007) 18 PRNZ 517 (HC) at [8]; and
Regan v Gill [2011] NZCA 607 at [10].
6 Medlab Hamilton Ltd v Waikato District Health Board, above n 5, at [8]; Callplus Ltd v Telecom New Zealand Ltd (2000) 15 PRNZ 14 (HC); Amalgamated Finance Ltd v Wyness, above n 4; Lawrence Riverside Ltd v Colliers International New Zealand Ltd HC Auckland CIV-2011-404- 1486, 30 June 2011; and see Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR 10.12.03].
[19] Mr Moss, for Mr Whitley, PVL and the PVL subsidiaries, asked me to bear in mind a caution expressed by McGechan J in Amalgamated Finance Ltd v Wyness, where it was noted as follows:7
However, as with all shortcuts, the Court must take care to see that consolidation in this way will not in the end result in confusion through multiplicity of parties and issues, and will not in the end cause injustice by comparison with separate hearings.
(d)Submissions
[20] Mr Frith, on behalf of LPF, submitted that the various proceedings it is sought to consolidate all arise out of the liquidations of PVL and the PVL subsidiaries and various actions taken in the course of those liquidations. He argued the PVL proceedings were by far the most significant action taken in the liquidations and that the settlement proceeds derived from the resolution of the PVL proceedings accounted for the overwhelming majority of all proceeds generated in the course of the liquidations. He submitted that the proceedings it is sought to consolidate give rise to common issues of fact and law and that the threshold in r 10.12(a) is met. He argued that the claims made in both the Auckland proceeding and the Christchurch proceeding involve the priority of various claimants to the settlement proceeds. He noted that, in the Christchurch proceeding, Mr Whitley is seeking, through the remuneration application, to recover monies paid to Messrs Walker and Scutter as liquidators and that the same issue arises in both the Auckland proceeding and Mr Whitley’s proceeding. It was argued that the priority of the various claimants to the settlement proceeds, any enquiry into the conduct of Messrs Walker and Scutter as liquidators and any review of their remuneration, should be dealt with in the one hearing. It was also argued that both the Auckland and Christchurch proceedings call into question the funding of the PVL proceedings by SPF, Mr Walker’s decision to obtain that funding, and Mr Walker’s and Mr Scutter’s conduct in relation to the funding agreement.
[21] Mr Frith also noted that both the originating application and the Meredith Connell application filed in the Christchurch proceeding involve requests by
7 Amalgamated Finance Ltd v Wyness, above n 4, at 12.
Mr Whitley for documents relating to the liquidation of PVL and various of the PVL subsidiaries. It was argued that almost all of the documents will relate to the PVL proceedings given that the PVL proceedings were the dominant event in the liquidations.
[22] It was submitted that consolidation is in the interests of justice because it will prevent any abuse of process from having the same issues determined in multiple proceedings, avoid the risk that parties affected by particular factual or legal allegations might not be bound by relevant findings, minimise the time and money expended by the parties, minimise the use of Court time and resources and appropriately safeguard the interests of Mr Walker. It was argued that any delay resulting from consolidation will not create material prejudice and that the orders sought will not create standing in the absence of pre-existing legal rights.
[23] Mr Cooper, as litigation guardian for Mr Walker, also argued that there is a substantial overlap between the Auckland and Christchurch proceedings. He submitted that the fees charged by Messrs Walker and Scutter as liquidators of PVL are squarely raised and challenged in both proceedings and that substantially the same relief is sought against them in respect of any fees (and/or disbursements) which the Court considers they were not entitled to. He also submitted that payments made to SPF under the funding and distribution agreements are in issue in both proceedings on substantially the same grounds, that the treatment of voidable preference recoveries is challenged in both proceedings and that, more generally, the priority of the claimants to the settlement proceeds is at issue in both proceedings. He argued that this commonality of issues satisfies the threshold ground for consolidation set out in r 10.12(a), and further that r 10.12(b) is met, given that both proceedings seek relief in respect of the same underlying events and transactions.
[24] Mr Cooper went on to point to the prejudice to Mr Walker, noting that he faces multiple proceedings in different cities raising substantially the same allegations. He noted that Mr Walker is currently incapacitated and that as a result, the prejudice to him is inevitably more significant. He also referred to the principle in Henderson v Henderson, namely that there should be finality in litigation and that a defendant
should not be vexed twice in the same matter.8 He argued that an order for consolidation will materially reduce the prejudice to Mr Walker caused by the multiple proceedings.
[25]Mr Hofer, for SPF, adopted the submissions made for LPF.
[26] Mr Barker QC, for the plaintiffs in the Auckland proceeding and a number of defendants in Mr Whitley’s proceeding, argued that there is a fundamental difference between the Auckland proceeding and the Christchurch proceeding. He submitted that the Auckland proceeding is intended to ensure that the plaintiffs’ share of the settlement proceeds arising from the resolution of the PVL proceedings is returned to the creditors of the PVL subsidiaries. He submitted that the Christchurch proceeding arises out of the liquidation of PVL and the PVL subsidiaries, and that the extant interlocutory applications filed in those proceedings arise because Mr Whitley is endeavouring to discharge his duties as liquidator and, for that purpose, to obtain documents from Mr Walker and/or Meredith Connell and to review the remuneration charged by Messrs Walker and Scutter and the expenses reimbursed to them. He argued that there is no reason to order consolidation and that, to the extent that there are any commonalities between the proceedings, those commonalities are minor and do not justify consolidation. He put it to me that the impact of consolidation would be significant, that it would create an unwieldy and uncertain proceeding and that it would result in inefficiency and delay.
[27] Mr Moss also argued that consolidation is inappropriate because it would involve bringing together two different sets of proceedings – one a complex High Court commercial panel claim and the other a relatively orthodox liquidation proceeding. He submitted that consolidation would bring together different parties, noting that there are only three parties common to both proceedings – Mr Walker, Mr Scutter and Mr Whitley. He pointed out that there are a number of other parties in the Auckland proceeding (the four creditor plaintiffs, LPF and SPF) and a number of additional parties in the Christchurch proceeding who were involved in the liquidations. He submitted that consolidation would lead to increased costs for all,
8 Henderson v Henderson (1843) 3 Hare 100 (Ch).
inefficient allocation of judicial resources and potential confusion arising out of different applications involving different principles, different facts and different parties.
(e)Analysis
[28] All counsel focused primarily on the overlap between the Auckland proceeding and the Christchurch proceeding.
[29] At the time SPF filed its application for consolidation, the operative statement of claim in the Auckland proceeding was the plaintiffs’ third statement of claim. In my judgment, under the third amended statement of claim, there were a number of common questions of law and fact arising in both the Auckland proceeding and the Christchurch proceeding. I note as follows:
(a)In the Christchurch proceeding, Mr Whitley, through the remuneration application, is seeking to review Mr Walker’s and Mr Scutter’s remuneration. Mr Whitley also puts in issue, albeit obliquely, the priority of Mr Walker and Mr Scutter’s claim to remuneration.
(b)In the Auckland proceeding, the plaintiffs (in the third amended statement of claim) assert:
(i)that Mr Walker owed them fiduciary duties and that in breach of those duties, he exercised his powers as liquidator to secure the payment of his fees to the exclusion of creditors of the PVL subsidiaries, that he signed the funding agreement for the purposes of securing payment of his fees, that he agreed to the distribution of the settlement funds for the purpose of securing his fees and that he failed to get Court approval for the funding agreement, the payments made under the funding agreement and the payment of his fees. Inter alia, damages are sought against Mr Walker;
(ii)that Mr Scutter owed them fiduciary duties and that he acted in breach of those duties by allowing Mr Walker to breach the duties he (Mr Walker) owed and by agreeing to or acquiescing in the actions Mr Walker took in relation to his fees. Again, inter alia, damages are sought against Mr Scutter;
(iii)that SPF/LPF knew or ought to have known that Messrs Walker and Scutter were acting in breach of their fiduciary duties and that SPF/LPF nevertheless negotiated the division of the settlement proceeds between themselves and Messrs Walker and Scutter, with knowledge that no part of the settlement proceeds would be paid to any creditor of PVL or the PVL subsidiaries. Damages are sought from SPF/LPF;
(iv)that Mr Walker owed other duties to them and that he breached those duties in various ways. Inter alia, an enquiry is sought into whether the fees and expenses incurred in the liquidation of the PVL subsidiaries were fair and reasonable and properly charged to them. A further order is sought that Mr Walker pay back any fees and expenses that were not properly charged to the PVL subsidiaries;
(v)that Messrs Walker and Scutter owed other duties to them and that Messrs Walker and Scutter breached those duties, inter alia, by distributing all of the settlement proceeds either to themselves in payment of their fees and expenses or to SPF/LPF; and
(vi)that neither Messrs Walker and Scutter, nor SPF/LPF, had priority claims to the settlement proceeds.
(c)As noted, Mr Whitley’s proceeding largely supported the plaintiffs’ assertions in the Auckland proceeding. Mr Whitley adopted the relevant pleadings.
[30] Given the commonality of issues between the remuneration application in the Christchurch proceeding and the Auckland proceeding (as disclosed in the third amended statement of claim), in my judgment, the threshold criterion set out in r 10.12(a) was met.
[31] Further, in my judgment, the remuneration application filed in the Christchurch proceeding and the Auckland proceeding (as pleaded in the third amended statement of claim) arise out of the same series of events and transactions – the liquidation of PVL and the PVL subsidiaries, the funding agreement, the bringing and settlement of the PVL proceedings, and the distribution of the settlement proceeds to SPF/LPF and to Messrs Walker and Scutter. The threshold criterion set out in r 10.12(b) was also met.
[32] At the hearing, both Mr Barker and Mr Moss advised that they intended to file amended statements of claim, seeking to clarify their respective clients’ pleadings. Both asserted that it was not their clients’ intention to challenge the reasonableness of the fees charged by Messrs Walker and Scutter, nor the reasonableness of the disbursements claimed by them. Rather, it was their intention to put in issue whether or not Mr Walker and Mr Scutter were entitled to charge a fee at all.
[33] Rather than deal with the consolidation application on pleadings which would be overtaken if amended pleadings were filed, I gave both Mr Barker and Mr Moss the opportunity to file amended pleadings.
[34] Neither the plaintiffs nor Mr Whitley filed amended statements of claim. Rather, I received memoranda from Mr Barker and Mr Moss.
(a)The plaintiffs recorded amendments they said they propose to make to the third amended statement of claim when all issues relating to the pleadings have been resolved.
(b)Mr Whitley agreed with the plaintiffs’ approach, namely that the filing of the amended statements of claim should wait until issues regarding the provision of further particulars are resolved. He filed a draft
amended statement of claim and advised that it could be filed if the Court so required.
[35] Both proposed to amend the pleadings to remove the prayer for relief seeking an enquiry into the reasonableness of the fees and expenses incurred. The alleged breach of duty by Mr Walker and the particulars of that alleged breach remained in issue as did Mr Scutter’s alleged involvement and the alleged actions of SPF and LPF in negotiating the division of the settlement proceeds between themselves and Messrs Walker and Scutter.
[36] I reserved to Mr Walker, Mr Scutter, LPF and SPF the opportunity to comment. In a joint memorandum, they noted as follows:
(a)the plaintiffs had not filed and served amended pleadings as indicated by their counsel in the course of the hearing and as directed by the Court. Rather they had provided draft amended pleadings, but given no commitment to make the amendments;
(b)the proposed amendments did not address the majority of the concerns raised by them and even if the proposed amendments are made, there will still be significant overlap between the Auckland proceeding and the Christchurch proceeding.
[37] Both the plaintiffs and Mr Whitley filed memoranda in reply. They did not seek or have leave to do so and I have not taken those reply memoranda into account.
[38] In the absence of amended pleadings, I deal with the issues raised by the plaintiffs in the third amended statement of claim as it currently stands (and with the same issues raised in Mr Whitley’s proceeding). I am satisfied that the threshold criteria set out in r 10.12(a) and (b) are met. I agree with a submission made by Mr Cooper. The threshold put in place in r 10.12 is low. The actions taken by Messrs Walker and Scutter, whether they were entitled to charge a fee in respect of their actions, whether the fees they charged were reasonable and whether they should have and/or did obtain Court approval for their proposed fees and for taking them out
of the settlement proceeds, are currently in issue in the Auckland proceeding and in whole or in part in the remuneration application in the Christchurch proceeding. Further, the right to the relief claimed in both proceedings arises out of the same series of events and transactions. As a result, it is open to the Court to consolidate the Auckland proceeding and the Christchurch proceeding.
[39] I am not however persuaded that there is any common question of law or fact between the Auckland proceeding and the originating application.
[40] Mr Whitley’s originating application is straightforward. He seeks documents held by Mr Walker in his capacity as a former liquidator of PVL, some of the PVL subsidiaries and another company in the PVL group. The issues raised by the application are limited in scope. They are likely to be: does Mr Walker hold any relevant documents?; is Mr Walker entitled to retain them?; is Mr Whitley entitled to them? None of these issues arise in the Auckland proceeding. There is no common question of law or fact arising. Further, the originating application does not arise out of the same event or transaction or the same series of events or transactions. The originating application arises out of the change in liquidator. It does not arise out of the events and transactions pleaded in the Auckland proceeding. Nor in my view is there any other reason that makes it desirable to consolidate the originating application with the Auckland proceeding. I am not satisfied that any of the threshold criteria in r 10.12 are met in respect of the Auckland proceeding and the originating application.
[41] It may be sensible to consolidate the originating application with the Christchurch proceeding. It could then be heard together with the Meredith Connell application. Both applications appear to raise common questions of law and fact: did Mr Walker, acting as liquidator, retain Meredith Connell?; do Mr Walker/Meredith Connell hold any relevant documents?; are Mr Walker/Meredith Connell entitled to retain them?; is Mr Whitley entitled to them? They also arise out of the same series of events: Mr Walker ceasing to be the liquidator of PVL and its subsidiaries; Mr Whitley being appointed in his stead.
[42] No party before me sought consolidation of the originating application with the Christchurch proceeding. I could of my own volition order that the two
proceedings be consolidated but I am mindful that no counsel addressed me on the issue. Mr Cooper is not Mr Walker’s litigation guardian in respect of the originating application and Mr Walker did not appear and give me his views on whether consolidation of the originating application with the Christchurch proceeding is appropriate. Nor did Mr Hodge in his memoranda filed on behalf of Meredith Connell. Accordingly, I do not order consolidation of the originating application and the Christchurch proceeding. The originating application will be called again before an Associate Judge. If consent to consolidation is not forthcoming, formal application can be made by Mr Whitley.
[43] The originating application aside, as I have noted, I am satisfied that the threshold criteria put in place by both r 10.12(a) and (b) are met in respect of the Auckland proceeding and the Christchurch proceeding. I now turn to consider the exercise of my discretion.
[44] I accept the submission made by Mr Barker and Mr Moss that the Auckland proceeding is very different from the Christchurch proceeding. The Christchurch proceeding is the overarching liquidation file. The Auckland proceeding puts in issue matters which occurred in the course of the liquidations, but the matters raised are only an aspect of the liquidations. The only link is the remuneration application and, but for that application, it is unlikely that consolidation would have been considered. The remuneration application is only a small part of the Christchurch proceeding.
[45] The remuneration application cannot, in my view, be dealt with until the Auckland proceeding has been finally determined. This is because any finding that Messrs Walker and Scutter acted in breach of duties owed by them as liquidators could mean that either they were not entitled to any remuneration at all, or that they were not entitled to remuneration at the level claimed by them. This however does not compel the conclusion that the Auckland and Christchurch proceedings should be consolidated. Another option identified in r 10.12 is to stay one or other of the proceedings until after the determination of the other of them.
[46] In my judgment, there are numerous factors which tell against consolidation. I note the following:
(a)there are a large number of parties to the Christchurch proceeding. All would have to be served; some might have no interest in the Auckland proceeding; others might seek to join the plaintiffs in the Auckland proceeding in the hope of obtaining an unanticipated recovery. In this event, further pleadings and interlocutory applications could reasonably be anticipated. The resolution of the Auckland proceeding could be delayed;
(b)if Mr Whitley’s originating application is joined to the Christchurch proceeding and the Auckland and Christchurch proceedings are consolidated, the Court would have to deal with Mr Whitley’s originating application as well as the Meredith Connell application in the course of the hearing into the consolidated proceedings. The plaintiffs and most of the defendants in the Auckland proceeding (and in Mr Whitley’s proceeding) will have no interest in these applications. The documents sought in Mr Whitley’s originating application and in the Meredith Connell application will not be the same as the documents already discovered in the Auckland proceeding (and in Mr Whitley’s proceeding). Mr Whitley has signalled that there could be additional interlocutory applications in the Christchurch proceeding. Whether any such applications would be opposed is unknown. The majority of the parties in the Auckland proceeding are unlikely to have any interest in the further applications. All but Mr Whitley’s originating application will be interlocutory applications and any decisions could be appealed. The resolution of matters irrelevant to the Auckland proceeding could delay the resolution of that proceeding;
(c)there are potential difficulties with the disclosure of confidential material discovered in the Auckland proceeding. Counsel (and experts retained) in the Auckland proceeding have given undertakings. If the Christchurch proceeding is consolidated with the Auckland proceeding, the parties to the Christchurch proceeding will become entitled to the discovered materials. Undertakings will be required in respect of some of those materials. If undertakings are not forthcoming, the Court could
be asked to make confidentiality orders. This could delay the Auckland proceeding;
(d)the matters raised in the Auckland proceeding and in the Christchurch proceeding call for different types of hearing. The Auckland proceeding will require consideration by a Judge who is a member of the commercial panel. The hearing will proceed in the normal adversarial way, in open Court, with evidence being led and witnesses being cross-examined and then re-examined. An inquisitorial approach will likely be appropriate for the remuneration application.9 Such applications often do not require a hearing or oral argument.10 The originating application and the Meredith Connell application are both straightforward applications not uncommon in liquidation proceedings. Without consolidation, all of Mr Whitley’s applications would be dealt with by an Associate Judge. Associate Judges routinely deal with such matters and they have the expertise required to deal with them.11 If the originating application and the other interlocutory applications were to be dealt with by a High Court Judge, he or she would likely be venturing into unfamiliar territory;
(e)the Auckland proceedings have been allocated a three week fixture in February 2024. Were the Christchurch proceeding to be consolidated with the Auckland proceeding, resolution of the originating application (if joined to the Christchurch proceeding), the Meredith Connell application and any other interlocutory applications which Mr Whitley may bring, would be delayed. Mr Whitley would be impeded in carrying out his tasks as liquidator. It is in the public interest that liquidators should be able to obtain information with as little expense as possible and in an expeditious manner.12 Consolidation might also
9 Madsen-Ries v Salus Safety Equipment Ltd (in liq), above n 2, at [47], citing Re Roslea Path Ltd (in liq) [2013] 1 NZLR 207 (HC) at [175].
10 Madsen-Ries v Salus Safety Equipment Ltd (in liq), above n 2, at [50].
11 At [80].
12 ANZ National Bank Ltd v Sheahan [2012] NZHC 3037, [2013] 1 NZLR 674 at [56].
mean that the three weeks allocated for the Auckland proceeding might not be enough to deal with all matters;
(f)there would be a risk of confusion and oppression if the Auckland and Christchurch proceedings were to be consolidated, given the size of the Christchurch proceeding (as disclosed by the Court record) and the likely complexity (both legal and factual) of the Auckland proceeding;
(g)there is no obvious advantage in terms of time or cost for the parties. As Mr Moss pointed out, there are only a few parties common to both the Auckland and Christchurch proceedings. The majority of the parties in the Auckland proceeding (and in Mr Whitley’s proceeding) have no interest in the Christchurch proceeding. If the proceedings are consolidated the majority of the parties would incur additional costs and waste time while matters relevant to only a few are heard;
(h)consolidation is unlikely to result in a more efficient use of judicial resources. Indeed, the opposite result is more likely. Consolidation is likely to expand the time required to hear and resolve the Auckland proceeding, without any equivalent saving of judicial time in the Christchurch proceeding;
(i)there is no appreciable risk of inconsistent findings if the Christchurch proceeding and the Auckland proceeding remain separate. All parties to the Auckland proceeding will be bound by the final judgment of the Court given in those proceedings. If they are or seek to become engaged in the remuneration application, there will be an estoppel per res judicatam in respect of those issues that are the same. Even if it can be successfully argued that the objects of the Auckland proceeding and the remuneration application are different, there could still be issue estoppel. Other parties in the Christchurch proceeding would not be bound by any final ruling in the Auckland proceeding but no other party to the Christchurch proceeding has, to date, expressed any interest in the matters raised by the Auckland proceeding; and
(j)while there is likely to be some additional stress and perhaps cost for Messrs Walker and Scutter if the Auckland and Christchurch proceedings are not consolidated, that stress and cost can be largely avoided if an order is made staying resolution of the remuneration application until after the Auckland proceeding is finally determined.
[47] For these various reasons, I am not persuaded that consolidation of the Auckland proceeding and the Christchurch proceeding is appropriate.
(f)Result – consolidation application
[48]I decline LPF’s consolidation application.
(g)Stay of the remuneration application/the originating application/the Meredith Connell application
[49] One possibility is to stay the remuneration application. Mr Whitley was prepared to consent to a stay and agreed that this was a sensible resolution of the issues raised by the application. The plaintiffs did not oppose a stay. Messrs Walker and Scutter and LPF and SPF accepted that a stay is appropriate and that it will reduce (albeit not resolve) the immediate prejudice arising from the overlap in the proceedings.
[50] In my view, the remuneration application cannot be dealt with fully until the Auckland proceeding is finally resolved. I agree with counsel that a stay reduces the prejudice arising from the overlap between the Auckland proceeding and the Christchurch proceeding. Accordingly, I make an order pursuant to r 10.12 staying the remuneration application pending final resolution of the Auckland proceeding.
[51] There is however no reason to stay the originating application or the Meredith Connell application. They stand or fall in their own terms and they are not dependent on any determination in the Auckland proceeding.
The plaintiffs’ application to set aside claims to confidentiality
(a)The documents in respect of which confidentiality is claimed
[52] In their respective affidavits of documents, Mr Walker, Mr Scutter and LPF claimed confidentiality in respect of various documents. Subsequent claims to confidentiality have been made in respect of further documents discovered by Mr Walker and LPF. The documents in respect of which confidentiality has been claimed are as follows:
(a)the settlement agreements entered into in the PVL proceedings with the PVL defendants;
(b)documents relating to the payment of the settlement proceeds by the PVL defendants;
(c)the funding agreement;
(d)agreements entered into with Dominion Finance Group Ltd (DFG);
(e)a draft deed of undertaking between SPF and PVL;
(f)a deed recording the assignment of securities between SPF and PVG Securities Trustee Ltd.
[53] The parties and LPF managed to reach agreement in respect of the disclosure of some of these documents but others remained in issue. Copies of all documents had previously been made available on a confidential basis to counsel and counsel made copies available to me. I will not be the trial Judge and, at counsels’ request, I have considered the documents.
[54] A copy of the plaintiffs’ application was sent (albeit late) to the counterparties to some of the documents in respect of which confidentiality has been claimed and a number of the counterparties responded expressing their views. The plaintiffs have filed an affidavit detailing the responses they have received. None of the counterparties took any formal steps in the application.
(b)Principles relevant to setting aside confidentiality claims
[55]There was agreement between counsel as to the relevant legal principles.
[56] Under r 8.15(2)(f), a party providing discovery must state any restrictions proposed to protect a claim to confidentiality in any document and, under r 8.28(3), a party can limit inspection of confidential documents to persons specified in the affidavit of documents and subject to the restrictions imposed in the affidavit.
[57] A counterparty can challenge confidentiality claims under r 8.25. Relevantly, that rule provides as follows:
8.25 Challenge to privilege or confidentiality claim
(1)If a party challenges a claim to … confidentiality made in an affidavit of documents, the party may apply to the court for an order setting aside or modifying the claim.
(2)In considering the application, a Judge may require the document under review to be produced to the Judge and may inspect it for the purpose of deciding the validity of the claim.
(3)The Judge may—
(a)set aside the claim to … confidentiality; or
(b)modify the claim to … confidentiality; or
(c)dismiss the application; or
(d)make any other order with respect to the document under review that the Judge thinks just.
[58] Applications under r 8.25 call for a two-stage approach. This approach was summarised by Gault J in Payment Express Ltd v Paymark Ltd as follows:13
[21] On a challenge to confidentiality claims in discovery, the Court must first decide whether the documents are confidential. As Mr Hodder accepted, the party claiming confidentiality bears an initial onus to make out the requirements for its confidentiality claims. Once that is done, there is a
13 Payment Express Ltd v Paymark Ltd [2019] NZHC 2027; and see Talley’s Group Ltd v Biomex Trustees Ltd [2021] NZHC 2922 at [40].
balancing exercise in relation to prejudice. At that balancing stage, to the extent there is an onus, it is on the applicant seeking to set aside the confidentiality claim. But that is not to downplay in the balancing exercise the importance of the interests of justice in ensuring that a party is able to prepare and present its case. … advisers are agents in the matter and strong grounds must be required for excluding the principal from knowledge which its agents properly acquire on its behalf.
(citations omitted)
[59] The onus is on the party asserting a restriction on inspection because of confidentiality to show that the documents have the necessary confidential character. A proper evidential foundation for the claim must be laid.14 The basic principle, in civil law, is that information of a requisite character will be protected as confidential where the complainant has a reasonable expectation of confidentiality or privacy and the defendant has agreed to keep the information confidential or has notice of its confidentiality.15 Section 69 of the Evidence Act 2006 is relevant. It provides that a Judge can make a direction that confidential information not be disclosed in a proceeding. Confidential information is information which has “the necessary quality of confidence about it” in the sense that it is not “something which is public property and public knowledge”.16
[60] If confidentiality is made out, the Court must then balance the interests of the party claiming confidentiality and seeking to safeguard confidential information, against those of the party seeking to set the claim aside. The Court can consider various factors – for example, the importance of open justice,17 the ability of the party seeking to lift the restrictions to fully understand his or her case and the case against him or her, the ability of his or her legal advisors to take full instructions,18 and any prejudice that could arise from disclosure.19 In considering the interests of justice and where any prejudice lies, the Court will bear in mind the obligation that all parties have pursuant to r 8.30(4). That rule provides that any party who obtains a document
14 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 348.
15 R v X (CA553/2009) [2009] NZCA 531, [2010] 2 NZLR 181 at [45]; and Greenbaum v Southern Cross Hospitals Ltd [2019] NZCA 438 at [28].
16 AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 515 (CA) at 525, citing
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 (CA) at 215.
17 Erceg v Erceg [Publication restrictions] [2016] NZSC 135, [2017] 1 NZLR 310 at [5]–[6].
18 Minister of Foreign Affairs v Benipal [1984] 1 NZLR 758 (CA) at 767.
19 Port Nelson Ltd v Commerce Commission, above n 14, at 348.
by way of inspection can use that document only for the purposes of the proceeding and must not make it available to any other person.
(c)Submissions
[61] Mr Barker went through each of the documents in respect of which confidentiality is claimed, recording the modified position reached between the parties in respect of some documents and the position taken by counterparties to some of the documents. He submitted that, with the redactions now proposed, arguments that the documents should remain confidential are no longer tenable. He submitted that confidentiality needs to be set aside so that he can fully discuss the documents with his clients and obtain their full and informed instructions in relation to the Auckland proceeding.
[62] Mr Moss endorsed the submissions made by Mr Barker. He did not seek to add to them.
[63] Mr Frith argued, in respect of those documents that contain a confidentiality clause, that the parties to those documents had a reasonable expectation of confidentiality in them and that, in respect of all documents, the claims to confidentiality should not be set aside because the plaintiffs failed to articulate any reason why they need access to the documents in circumstances where their counsel and experts already have access to them. He argued that LPF and the parties to the confidential documents have a strong interest in preserving their confidential nature and that setting aside the claims to confidentiality would undermine the public interest in encouraging the settlement of disputes on terms that can remain confidential.
[64]Mr Hofer adopted the submissions made by Mr Frith.
[65] Mr Walker and Mr Scutter did not wish to be heard separately on the issue because the confidentiality they assert is also asserted by LPF and because the Court’s decision in relation to LPF’s claims to confidentiality will apply equally to the documents they have discovered. As already noted, both abide the decision of the Court.
(d)Analysis
[66] I go through each of the documents in respect of which confidentiality has been claimed.
(i)The settlement agreements entered into with the PVL defendants
[67] There are three settlement agreements. Each contains a clause recording that the terms of the settlement agreement were confidential as between the parties to the agreement.
[68] Initially the plaintiffs sought to set aside the confidentiality claims in respect of each of the agreements. In the event, they modified their position. They no longer sought to set aside the confidentiality claims in respect of the settlement agreements. Nor did they seek to set aside the claims to confidentiality in respect of the individual contributions made to the overall settlement by each of the PVL defendants. Rather, they sought to set aside any confidentiality in respect of the total sum paid pursuant to the settlement agreements (the total settlement sum).
[69] LPF did not oppose the claim to confidentiality in respect of the total settlement sum paid pursuant to the settlement agreements being set aside. The counterparties to the settlement agreements were not however unanimous in their view.
[70] The parties to the settlement agreement with the former directors were Messrs Walker and Scutter, PVL, LPF and SPF, the PVL subsidiaries, the former directors and Vero Liability Insurance Ltd.
(a)I have set out above the position of Messrs Walker and Scutter.
(b)Mr Moss confirmed that Mr Whitley, as liquidator of PVL and the PVL subsidiaries, waived any claim to confidentiality.
(c)The position of LPF and SPF is set out above.
(d)The directors were not unanimous in their views. One director did not respond. Two did not oppose the plaintiffs’ application. Another
wished to see confidentiality maintained but had less concern about the total settlement sum being disclosed. Another opposed the plaintiffs’ application, arguing that the agreement was entered into following a lengthy and contentious proceeding with many accompanying discussions in the course of which concessions and compromises were made by all parties. He argued that no satisfactory reasons had been provided by the plaintiffs as to why confidentiality should be set aside, nor why the settlement agreement and the details in it should be disclosed.
(e)Vero Liability Insurance Ltd did not consent to the plaintiffs’ application. It considered that the confidentiality clause in the settlement agreement is appropriate. It adopted the same stance as was taken by the director opposed to confidentiality being set aside.
[71] There were five parties to the settlement agreement with the auditors – Messrs Walker and Scutter, PVL, SPF and LPF and the auditors.
(a)I have already noted the stance taken by Messrs Walker and Scutter, by Mr Whitley, as liquidator of PVL, and by SPF and LPF.
(b)The auditors did not object to the total settlement sum being disclosed, as long as there was no disclosure of the individual settlement sums paid or the dates of payment. There were two subsequent documents between the same parties relating to the settlement – documents JMS.01602 and JMS.02607. The auditors did not expressly advise whether they agreed to these documents being disclosed, but in the event nothing turns on this. The plaintiffs abandoned this aspect of their application.
[72] The settlement agreement with the valuers involved five parties – DFG, PVL, the valuers, the individual valuer involved and QBE Insurance (International) Ltd.
(a)Receivers and liquidators were appointed to DFG and both the receivership and the liquidation have been completed. The plaintiffs advised both the receivers and the liquidators of their application. The receivers have retired from practice. The head of their previous firm’s Legal and Regulatory Team advised that the firm is not authorised to respond on behalf of DFG. Similarly, one of the liquidators responded advising that he and his fellow liquidator have ceased to act. DFG was deregistered as from 19 March 2019 and he and his fellow liquidator no longer have legal standing regarding its affairs. As a result, he could neither agree or disagree to anything in DFG’s name.
(b)I have recorded above the position taken by Mr Whitley, as liquidator of PVL.
(c)The valuers and QBE Insurance (International) Ltd had no objection to any claim for confidentiality in respect of the total settlement sum received pursuant to the settlement agreements being set aside, as long as there was no disclosure of the individual settlement sums paid by each of the PVL defendants or the dates of payment.
(d)The plaintiffs wrote to the solicitors for the individual valuer involved, albeit very late in the day. There was no response from or on behalf of that valuer at the time of the hearing.
[73] I first consider whether there is any confidentiality in the total settlement sum paid pursuant to the settlement agreements.
[74] Messrs Walker and Scutter and LPF and SPF in their respective affidavits of documents did not assert confidentiality over the total settlement sum paid by the PVL defendants pursuant to the settlement agreements. Indeed, Mr Walker disclosed a document that disclosed the total settlement sum and he did not assert confidentiality over it. Further, there has been relatively accurate media speculation as to the total settlement sum. I cannot see that any individual PVL defendant has any expectation of confidentiality in the total settlement sum. I readily accept that each has a
reasonable expectation of privacy in respect of his, her or its contribution to the total settlement sum and in respect of the other terms of settlement. However, given the plaintiffs’ amended stance, the settlement agreements and how much each of the PVL defendants contributed to the total settlement sum will remain confidential. There are three settlement agreements and disclosing the total settlement sum will not enable anyone interested to work out how much each of the PVL defendants contributed. The total settlement sum is simply an arithmetical calculation. I am not persuaded that any of the parties to the settlement agreements can claim confidentiality in the calculation.
[75] If I am wrong in this regard, I briefly consider the interests of the parties, the interests of justice and any prejudice if confidentiality is set aside in regard to the total settlement sum.
[76] I cannot see that the interests of the parties to the individual settlement agreement are harmed, or that there is any prejudice to the individual PVL defendants, if confidentiality in the total settlement sum is set aside. As I have noted, confidentiality will be preserved in respect of each settlement agreement. The terms of the agreements and the individual contributions to the total settlement sum will remain confidential. Further, the interests of justice require that confidentiality in the total settlement sum be set aside. Disclosure of the total settlement sum will better inform the plaintiffs and enable them to better consider the future conduct of the Auckland proceeding. They will be better able to instruct their counsel.
[77]Accordingly, I order as follows:
(a)the claims for confidentiality and the restrictions on inspection in respect of the settlement agreements (and the two additional documents involving the settlement with the auditors – documents JMS.02602 and JMS.02607) are to remain in place; but
(b)any claims to confidentiality and the restrictions on inspection in respect of the total settlement sum paid by the PVL defendants jointly pursuant to the settlement agreements are set aside.
(ii)Documents relating to the payment of the settlement proceeds by the PVL defendants
[78] Mr Walker, Mr Scutter, LPF and SPF have claimed confidentiality in a series of agreements and emails relating to the payment and distribution of the settlement proceeds received from the PVL defendants.20
[79] The plaintiffs argued that most if not all of the documents are not confidential. They accepted that references to individual contributions to the total settlement sum contained in the documents should be redacted. LPF pointed out that one of the documents contains a confidentiality clause and a confidential watermark. It argued that there was a clear and reasonable expectation that that document would be kept confidential and that it (LPF), and the other parties to the document, are obliged to respect that confidentiality.
[80] I have considered each of the documents, bearing in mind that the onus was on LPF to establish why each of the documents should be considered to be confidential.
(a)Document LPF.01.05838 contains three references to the amount paid pursuant to one of the settlement agreements. If these references are redacted, there is nothing else in the document which is confidential. The document simply discloses agreements reached between SPF and Mr Walker relating to the distribution of part of the total settlement sum and directions as to how the monies were to be paid.
(b)Document LPF.01.14754 is a payment direction with an attached document headed “Agreement on Distribution of Resolution Sum”. The payment direction has a reference to the amount paid by one of the PVL defendants, and references to the amounts paid to SPF and PVL. If these references are redacted, there is nothing else in the payment direction which is confidential. The Agreement on Distribution of Resolution Sum records a further agreement between SPF,
20 The documents in respect of which confidentiality has been claimed include documents over which LPF initially asserted privilege. The plaintiffs applied to set aside the privilege claim. LPF then abandoned this claim and now relies only on the claim to confidentiality.
Messrs Walker and Scutter, PVL and the PVL subsidiaries, entered into pursuant to the funding agreement. Clause 1.1 in the agreement contains a reference to the amount paid by one of the PVL defendants. This needs to be redacted, but again there is nothing else in the document which is confidential.
(c)Document RPWPVL.0354 is an email which annexes an illegible scan of what may be the last page of the agreement of the document LPF.01.14754. There is nothing confidential in the email or the scanned part of the document.
(d)Document RPWPVL.0355 contains a reference to the amount paid by one of the PVL defendants. That sum needs to be redacted. There is nothing else in the document which is confidential.
(e)LPF.01.19253 is also headed “Agreement on Distribution of Resolution Sum”. It is perhaps another copy of document LPF.01.14754. There is a reference in clause 1.1 to the amount paid by one of the PVL defendants which needs to be redacted, but apart from that there is nothing else in the document which is confidential.
(f)Document LPF.01.19282 is a payment direction given to Meredith Connell by SPF and Mr Walker. There is a reference in clause 2 to the amount paid by one of the PVL defendants which needs to be redacted, and further references to amounts paid to SPF, PVL and Mr Walker in clause 4 which also need to be redacted. If the latter sums were to be left in, anybody considering the document would be able to ascertain the total amount paid by the PVL defendant in issue. There is nothing else in the document which is confidential.
(g)Document RPWPVL.0357 is an email from Mr Walker to Jonathan Woodhams at SPF. It relates to the distribution of the settlement proceeds, but contains no reference to the amounts paid by
any of the PVL defendants. There is nothing in the document which is confidential.
(h)Document RPWPVL.0358 is a further email from Mr Walker to Mr Woodhams, annexing a copy of an earlier email. Again, there is nothing disclosing the amounts paid by any of the PVL defendants. No redactions are required. There is nothing confidential in the document.
(i)Document LPF.01.47786 is an ASB payment slip recording the payment of part of the total settlement sum. It records an amount received from a solicitor’s trust account. The amount represents a payment made by one of the parties to one of the settlement agreements and it should be redacted. Apart from that, there is nothing confidential in the document.
(j)Document LPF.01.17787 is a payment direction from SPF to Meredith Connell. The amount paid by one of the parties to one of the settlement agreements is recorded in clause 2 and it should be redacted, but there is nothing else in the document which is confidential.
(k)Document LPF.01.17804 is an email from Mr Walker to Mr Woodhams. It contains two calculations. The first records the amounts paid by a number of parties to one of the settlement agreements. The amounts contributed by the various parties need to be redacted, but the net sum set out in the first calculation can remain. So can the amount paid into PVL’s bank account and the amounts retained by Mr Walker as set out in the second calculation. The amount paid by one of the directors which is set out in the second calculation needs to be redacted. Subject to these redactions, the calculations and resulting payments do not seem to me to be confidential. The figures set out are the result of arithmetical calculations, showing monies paid out and percentages retained. Confidentiality does attach to amounts paid pursuant to the settlement agreements by individual parties to the settlement agreements but not to what happened to the total settlement sum.
(l)Document LPF.01.17814 is an email from Mr Walker to various persons. It refers to an amount paid by one of the directors and to the total amount received from all of the directors. There is also a reference to the total amount held in a trust account at the time. These various figures need to be redacted, but beyond that, there is nothing in the document which is confidential.
(m)Document LPF.01.17815 is a settlement statement from Meredith Connell. It records amounts received in relation to the directors’ overall settlement figure from the solicitors for some of the directors. Those amounts and the total sum need to be redacted, but beyond that, there is nothing confidential in the document.
[81] In my judgment, LPF/SPF and Messrs Walker and Scutter cannot claim confidentiality in respect of any of the documents relating to the payment and distribution of the settlement funds, once the redactions are made as proposed. With the redactions, the documents are not confidential and LPF has not met the onus on it in this regard.
[82] I acknowledge that some of the counterparties to the settlement agreements opposed disclosure of the date or dates on which various payments were made. The documents relating to the payment and distribution of the settlement funds disclose some of those dates. No argument has been advanced as to why the dates are confidential nor is there any evidential foundation for the confidentiality claimed. I cannot see that there is any confidentiality in the dates on which some of the various payments were made. They are a matter of record and disclosure of the dates does not reveal who paid what nor any other terms of the settlement agreements.
[83] In the event that I am wrong in my conclusion that there is no confidentiality in the documents, I record that nevertheless, in my view, the interests of justice require that the payment and distribution documents be disclosed. If there is confidentiality in the documents, it can only be a limited claim to confidentiality, once the various redactions I have noted above are made. Any prejudice arising from disclosure is slight. As against this, if confidentiality is set aside and counsel can disclose the
documents to the plaintiffs, the plaintiffs will be better informed, better able to consider the future conduct of the litigation and better able to instruct their counsel.
[84] Accordingly, I set aside any claims for confidentiality and restrictions on inspection in respect of documents LPF.01.05838, LPF.01.14754, RPWPVL.0354, RPWPVL.0355, LPF.01.19253, LPF.01.19282, RPWPVL.0357, RPWPVL.0358, LPF.01.47786, LPF.01.17787, LPF.01.17804, LPF.01.17814 and LPF.01.17815 are set aside, but subject to the various redactions set out above first being made.
(iii)Funding agreement
[85] LPF withdrew its claim for confidentiality in respect of an unredacted copy of the funding agreement. I need take this aspect of the plaintiffs’ application no further.
(iv)Documents involving DFG
[86] There are three documents in this category – documents JMS.02575, JMS.02597 and JMS.02609.
[87] Mr Barker advised me that the plaintiffs will be alleging that DFG is involved in the overall transaction in two ways.
(a)It lent monies to the PVL group and, along with PVL, it had a claim against the valuers. An agreement was reached between DFG and Messrs Walker and Scutter as liquidators as to how they would apportion any recoveries received from any settlement with the valuers between them.
(b)DFG lent to one of the PVL subsidiaries and took security over its assets. It also took a guarantee from PVL and it held security over some of PVL’s assets. When LPF entered into the funding agreement, there was concern that DFG might have a prior claim to any settlement proceeds and, as a consequence, SPF acquired and took an assignment
of DFG’s security over PVL, thereby becoming a secured creditor of PVL.21
[88] Document JMS.02575 is a settlement deed between DFG, PVL and the PVL subsidiaries and Messrs Walker and Scutter. It relates to the distribution of any settlement proceeds received as a result of the PVL proceedings and DFG’s separate claim against the valuers. It does not contain any confidential figures. It does however contain a confidentiality clause.
[89] DFG was placed in receivership and liquidation as noted above. The liquidation has been completed and the company has been removed from the Companies Register. I have set out above the position of both the receivers and the liquidators. Neither Mr Walker nor Mr Scutter actively sought to protect confidentiality in the document. LPF can have no confidentiality in the document. It is not a party to it. When I queried what confidentiality LPF could assert in the document, Mr Frith could do no more than point to the confidentiality clause and reiterate his argument that the parties to the document had a clear expectation that it would remain confidential. There is no ongoing evidential foundation for the claim to confidentiality and, in my view, LPF has failed to meet the onus which was on it to show that the document was confidential.
[90] If I am wrong in this regard, I would nevertheless have found that the interests of justice require that the confidentiality be set aside. Any claim to confidentiality must be slight and there is no obvious prejudice to any of the parties to the document if confidentiality is set aside. On the other hand, if the plaintiffs are able to inspect the document, they will be better informed, better able to make decisions for the future conduct of the proceeding and better able to instruct their counsel.
[91] Document JMS.02597 was the settlement deed entered into between DFG, PVL, the valuers, the individual valuer and QBE Insurance (International) Ltd. It contains a confidentiality clause. Clauses 1 and 2(b) contain detail of the amounts the valuers, the individual valuer and QBE Insurance (International) Ltd agreed to pay to settle the claims brought by DFG and PVL. As I have noted above, the valuers and
21 See PricewaterhouseCoopers v Walker [2017] NZSC 151, [2018] 1 NZLR 735 at [44]–[51].
QBE Insurance (International) Ltd did not object to the total settlement sum being disclosed. They did not however consent to the settlement agreement being disclosed. I have accepted that the terms of the settlement agreements are confidential and that the parties had a reasonable expectation that they would remain confidential. There is nothing to distinguish this settlement agreement from the others and I cannot see that it is necessary to set aside the claim to confidentiality.
[92] Document JMS.02609 is an unsigned copy of the deed recording the transfer of DFG’s debt and securities to SPF. I was advised by counsel that an executed version of the agreement was provided to the Supreme Court in the course of earlier proceedings. It is difficult to see why an unsigned draft should be subject to a claim for confidentiality in these circumstances. Mr Frith accepted that LPF could not claim confidentiality in the document and noted that it disclosed, on an open basis, an executed copy of the deed. Under the circumstances, no claim to confidentiality can be maintained in respect of the document.
[93]Accordingly, I order as follows:
(a)any claims to confidentiality and any restrictions on inspection in respect of documents JMS.02575 and JMS.02609 are set aside but subject to the redactions which I have noted above first being made;
(b)the claim for confidentiality and the restriction on inspection on document JMS.02597 are to remain in place.
(v)Draft deed of undertaking between SPF and PVL
[94] This document – LPF.01.19258 – is between SPF and PVL. It records various undertakings entered into between the parties. Mr Frith accepted that the document was not confidential and he abandoned the claim to confidentiality in respect of it. Accordingly, I order that the claim to confidentiality in respect of document LPF.01.19258 be set aside and that it be made available for inspection.
(vi)Deed recording the assignment of securities between SPF and PFG Securities Trustee Ltd
[95] LPF asserted confidentiality over a deed between SPF and PFG Securities Trustee Ltd relating to the assignment of various securities to PFG Securities Trustee Ltd – document LPF.01.18267. It appears that the document was intended to record the transfer of the DFG debt (and of another financier’s debt) after the PVL proceedings had settled and SPF/LPF had been paid under the funding agreement.
[96] The sole basis for asserting confidentiality was that the document has a watermark recording that it is confidential, although counsel acknowledged that there is no clause in the deed recording that it was confidential.
[97] Again, I cannot see on what basis confidentiality can be claimed in respect of the document. It does not cover matters which are of a confidential nature. It does not contain a provision recording that its terms are confidential. The fact that the word confidential is stamped over the pages of an unsigned draft of an agreement does not carry the matter very far. LPF has failed to meet the onus imposed on it.
[98] Accordingly, I set aside any claim for confidentiality and restriction on inspection in respect of document LPF.01.18267.
Costs
[99] Both LPF and the plaintiffs have had a measure of success in their respective applications, although it is my preliminary view that the plaintiffs have been the more successful party. It is also my preliminary view that costs should be fixed on a 2B basis.
[100] If counsel accept these preliminary views, I would invite them to endeavour to agree costs. If they are unable to do so, then I direct as follows:
(a)any application for costs is to be advanced by way of memorandum, to be filed and served within 10 working days of the date of this judgment;
(b)any response(s) to the application for costs is to be advanced by way of memorandum, to be filed and served within a further 10 working days;
(c)memoranda are not to exceed five pages.
I will then deal with the issue of costs and disbursements on the papers unless I require the assistance of counsel.
Wylie J
Solicitors/counsel:
Hucker & Associates/A Barker QC, Auckland Wotton Kearney, Wellington
Tompkins Wake, Auckland MinterEllisonRuddWatts/D Bigio QC, Auckland Shaun Cottrell Law/J Moss, ChristchurchD Cooper, Auckland
Meredith Connell/M J Hodge, Auckland
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