Bennett v Haven Vehicles Grays Road Limited HC Wellington CIV-2009-485-242
[2010] NZHC 2394
•16 December 2010
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2009-485-242
BETWEEN STEPHEN JAMES BENNETT Plaintiff
ANDHAVEN VEHICLES GRAYS ROAD LIMITED
First Defendant
ANDPINE ESTATE LIMITED Second Defendant
ANDPAUL MARTIN HARRIS Third Defendant
ANDSHIRLEY PAULINE HARRIS Fourth Defendant
ANDPHILIPPA ANNE CROPP Fifth Defendant
ANDTUTIRA HEIGHTS LIMITED Sixth Defendant
Judgment: 16 December 2010 at 10.00 am
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment is delivered by Associate Judge Gendall on 16 December 2010 at
10.00 am under r 11.5 of the High Court Rules.
Solicitors: Thomas Dewar, Solicitors, PO Box 31240, Lower Hutt
Langley Twigg, Solicitors, PO Box 446, Napier
SJ BENNETT V HAVEN VEHICLES GRAYS ROAD LIMITED AND ORS HC WN CIV-2009-485-242 16
December 2010
Introduction
[1] This proceeding concerns claims by the plaintiff, Mr Stephen Bennett, arising from an alleged joint venture or partnership formed to operate a farming business in Tutira between 2003 and 2005. All of the parties were participants in this alleged joint venture or partnership. The plaintiff alleges breaches of contractual and fiduciary duties by the defendants, unjust enrichment, and failure to account or conversion.
[2] An issue has arisen concerning certain documents disclosed by the second defendant, Pine Estate Limited, as part of its discovery in this proceeding. The documents are bank accounts of the second defendant for some of the period at issue in the proceeding. In particular, the plaintiff registers a complaint over a substantial number of redactions made by the second defendant on these bank statements.
[3] The documents in question have now been provided to the Court with a request from the parties that the Court provide its decision upon whether the redactions in question are appropriate or not. I have now had an opportunity to consider these documents both unredacted and with the redactions made, and give my decision on this question.
Background
[4] First, the plaintiff alleges that, in April 2003, he and the third defendant entered into a joint venture to purchase and stock a farm property in Tutira, and that the first defendant was to act as a vehicle for the plaintiff and the third defendant in matters relating to the joint venture. The first defendant was incorporated on 17 June
2003, with the plaintiff and the fourth defendant each holding 500 of the 1,000 shares and each being directors. The plaintiff claims that, although it had been arranged that he would purchase the Tutira Property, he was advised prior to settlement that the purchase was to be completed by the second defendant. He also claims that between April and July 2003 he purchased livestock for the joint venture.
[5] In relation to these allegations, the plaintiff contends that the second defendant has benefited from his actions and holds the Tutira Property, in part, as a
trustee on his behalf. Further he alleges that the third defendant has breached his fiduciary obligations to the plaintiff by excluding him from participating in ownership of the Tutira Property.
[6] And secondly, the plaintiff makes a further claim that, in July 2003, he and the third defendant commenced a second joint venture or partnership on the Tutira Property also involving the second defendant. He maintains that under this arrangement, it was agreed that the first defendant would act as a vehicle on behalf of the partnership/joint venture and that all revenue of the farming business would be paid into a bank account to be opened in the name of the first defendant. He says that in June 2004 the farming business was extended to a second property in Tutira, and that he contributed further capital and worked for the partnership/joint venture until it was dissolved in February 2005, when the fifth defendant appointed herself as a director of the first defendant and transferred the 500 shares previously held by the plaintiff to herself.
[7] The plaintiff claims that he has been attempting unsuccessfully to obtain an account of the financial affairs of the partnerships/joint ventures, and of the balance of his share of the capital and the profits, since March 2005. He seeks the return of the balance of his capital and his share in the profits for the period July 2003 to February 2005. In his statement of claim the plaintiff lists remedies against the second defendant specifically under his first cause of action (the first joint venture Tutira property held in Trust and damages), his third cause of action (second joint venture profits disgorged), his fourth cause of action (failure to account/conversion of the Partnership’s/Joint Venture’s funds), and his fifth cause of action (unjust enrichment from both Tutira property farming operations and use of the plaintiff’s capital and livestock). It is interesting to note also that at para [16] of the statement of defence to the plaintiff’s claim filed 19 October 2009, the defendants plead that the farming activity on the first Tutira property “was undertaken by the first defendant a share farming arrangement with the second defendant”.
[8] The defendants dispute that there was at any time either a joint venture or a partnership as alleged by the plaintiff and generally deny the plaintiff’s allegations.
Discussion
[9] The redacted bank statements that have been disclosed to me for consideration are for the second defendant’s current account (“the 00 account”) and its online saver account (“the 90 account”) in each case for the period 1 July 2003 to
30 January 2005. The plaintiff submits that all transactions involving both accounts should be disclosed, because the first defendant’s funds were transferred to these accounts and farming operation deposits to and withdrawals from these accounts were made. Essentially, the plaintiff contends that the money flows in and out of the bank accounts of the second defendant should be known to him and the Court so it can be determined where the funds of the first defendant “ended up” and what the true financial position was for the joint venture/partnership for the relevant period.
[10] The second defendant responds that the accounts contain transactions concerning a range of different business activities which have no relevance to the plaintiff or his business activities with the first defendant. It submits that the transactions recorded in the statements, other than those involving the first defendant, are not material to matters at issue in the proceeding, and that there is therefore no need for the plaintiff to know the full extent of the transactions flowing in and out of its bank accounts. The second defendant argues that the plaintiff’s “curiosity about the other business activities of the second defendant should not be indulged”.
[11] It is my understanding that the defendant’s objection to disclosing the redacted parts of its bank accounts is based not on a claim of confidentiality, but on the contention that the redacted transactions are not relevant to the proceeding, although I do note that the second defendant has also expressed concerns that some of the entries in question are of a personal nature.
[12] Turning now to the authorities in this area, it is clearly permissible for parties on discovery to redact irrelevant parts of a document, so long as the irrelevant part can be redacted “without destroying the sense of the rest or making it misleading...”: GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 2 All ER 993 (CA) at 996; see also McGechan on Procedure at HR8.18.04. The long–accepted test
as to whether a document is relevant, in that it relates to a question in the proceeding, as required by r 8.18(2) High Court Rules is a wide one and is set out in Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 at
63:
It seems to me that every document relates to matters in question in the action which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may — not which must — either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words ‘either directly or indirectly’ because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary if it is a document which may fairly lead him to a train of inquiry which may have either of those two consequences.
[13] As I have noted, this concept of relevance is an expansive one: M v L [1999]
1 NZLR 747 at 750.
[14] Turning now to the two accounts held by the second defendant that are in issue here, it appears that the plaintiff has not been provided with any statements for the first account (“the 00 account”), and only with redacted statements for the second account (“the 90 account”).
The 00 Account
[15] In relation to the 00 account, I consider that at the very least, any transfers from the first defendant to that account are directly relevant and that records of these transactions should be provided. On this, as best I can tell there would seem to be at least three: $2,000 on 29 June 2004, $15,000 on 22 October 2004 and $3,500 on 22
February 2005. As to the remaining transactions, which by my rough calculation total 214 entries, it is not clear to me that any of these transactions (other than the many small banking fee and bank transaction entries) are not relevant to the proceeding in any way and therefore do not require disclosure.
[16] A significant number of the transaction entries simply provide a cheque number, date and amount and no explanation to assist is given. There are repeat entries for debits to “Mitre 10 Finance”, “Ravensdown”, “Wrightson Limited” and “Versatile Buildings” which arguably might relate to farming operations and thus be
potentially relevant to the plaintiff’s broad claim here under the wide Peruvian
Guano test.
[17] Credit entries on 12 February 2004, 4 March 2004, 20 April 2004 and 29 July
2004 from Whitireia Polytech are unexplained and they may well prove ultimately to have no relevance to the plaintiff’s claim. With no present explanation provided by the second defendant for these entries, however, there is simply no way of telling this now.
[18] Similarly, there is simply no evidence before me regarding any of the other transaction entries in this bank account to determine relevance other than the general unsubstantiated claims made by Paul Martin Harris in his 29 November 2010 affidavit on behalf of the second defendant that:
8. The bank accounts concerned were used by the Second Defendant for transactions involving trading and business activities other than those with the Plaintiff and the First Defendant. The transactions involving the Plaintiff and First Defendant related to rent payment that was due to it by the First Defendant and through the Plaintiff. They also involved payments in the nature of reimbursement of costs due to it in respect of the farming activities undertaken by the Plaintiff in association with the First Defendant.
9.I am unwilling to allow the Plaintiff to receive information concerning the other transactions undertaken by the Second Defendant. It is a company operated for the benefit of a number of members of my family. The relationship between my family and the family of Mr Bennett was once close and amicable but regrettably that is no longer the case. I do not wish to disclose to him any information which is not relevant to this proceeding.
In my view, that is not good enough here. All the transaction entries in those 00 account bank statements (other than perhaps the minor banking fee payments required by the bank) may turn out either directly or indirectly to assist the plaintiff in advancing his case here or damaging the second defendant’s case and thus, as I see it, should be disclosed unredacted. An order to this effect is to follow.
The 90 Account
[19] In relation to the second account, the 90 account, the second defendant has already acknowledged that redacted entries for three transfers that were received from the first defendant in September 2004 did not in fact require redaction.
Counsel for the defendant was quick to point out however that there was no concealment of these funds, as the transactions had also been recorded in the accounts of the first defendant. Apart from two further transactions, namely payments of $24,000 and $5,000 to the first defendant’s account on 2 February 2004 and 6 September 2004 respectively, all these other transactions would seem to be transfers to and from the second defendant’s 00 account and another account No.
0502-0289975-00 and interest payments.
[20] Again, there is virtual0ly no evidence before me from the second defendant to assist in determining the question of relevance here. Whilst the entries in this 90 account appear to be either transfers to/from other accounts or interest credits, I am unable to say that they are not relevant to the plaintiffs’ overall claim in terms of the wide test to be applied.
[21] Apart from the specific minor matters that I have noted, above, I confirm that for the reasons I have outlined, further disclosure of the unredacted 00 account and
90 account bank statements as sought by the plaintiff is required here. Funds suggested to belong to the first defendant appear to have been transferred to the bank accounts of the second defendant. In addition, deposits and payments relating to farming operations, which may well include the “share farming arrangements” acknowledged by the defendants to have been undertaken between the first defendant and the second defendant, would also appear to have been made to these accounts. Thus, all entries from these accounts should be disclosed.
Conclusion
[22] Orders are now made that within 10 working days of the date of this judgment the second defendant is to provide to the plaintiff by way of discovery and for inspection unredacted copies of the second defendant’s bank account statements for the 00 account and the 90 account in each case for the period 1 July 2003 to 30
January 2005 as exhibited as exhibits “A” and “B” to the 29 November 2010 affidavit of Paul Martin Harris filed in this proceeding.
[23] I have not addressed the other issue of whether the defendants should provide discovery of further bank records beyond those provided, and in particular for the period from January 2005 up to June 2005, on the assumption that this will form part of the plaintiff’s application for further and better discovery set down for hearing in this Court on 28 February 2011.
[24] Leave is reserved however for any party on 2 days notice to approach the Court for any further directions that may be required on other discovery and inspection issues.
‘Associate Judge D.I. Gendall’
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