Busch v Zion Wildlife Gardens Limited (in receivership and liquidation)
[2012] NZHC 425
•14 March 2012
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2011-488-232 [2012] NZHC 425
BETWEEN CRAIG BUSCH First Plaintiff
ANDCRAIG BUSCH AND ILS TRUSTEES LIMITED AS TRUSTEES OF THE BUSCH WILDLIFE FOUNDATION TRUST
Second Plaintiffs
ANDZION WILDLIFE GARDENS LIMITED (IN RECEIVERSHIP AND LIQUIDATION)
First Defendant
ANDCOUNTRY DEVELOPMENTS LIMITED (IN RECEIVERSHIP)
Second Defendant
ANDPATRICIA BUSCH Third Defendant
Hearing: 14 March 2012
Counsel: N C King for plaintiffs
No appearance for first and second defendants (proceeding discontinued against them)
E Orlov for third defendant
K Stephen for Attorney-General
Judgment: 14 March 2012
(ORAL) JUDGMENT OF LANG J
[on interlocutory applications by third defendant]
CRAIG BUSCH V ZION WILDLIFE GARDENS LIMITED (IN RECEIVERSHIP AND LIQUIDATION) HC WHA CIV-2011-488-232 [14 March 2012]
[1] The primary issue for resolution in this proceeding is the ownership of animals kept at the premises formerly by Zion Wildlife Gardens Limited. That issue was due to be the subject of a two day hearing commencing on 14 February 2012. Allan J vacated that fixture after the third defendant, Mrs Busch, said that she needed to advance several interlocutory applications before trial.
[2] I now deal with those applications.
A. Application for further and better discovery by third defendant
[3] As I have already noted, the primary issue to be determined in this proceeding is the identity of the owner of the animals. Mr Busch contends that he originally acquired the animals himself, and then transferred them to the second plaintiff, the trustees of the Busch Wildlife Foundation Trust (“the trust”), by virtue of an agreement for sale and purchase dated 4 July 2005. His position is, therefore, that the trust presently owns the animals. In the event that the transfer was invalid, his fallback position is that, by default, he must still be the owner of the animals. One of the issues to be determined at trial is whether or not Mr Busch validly transferred the animals to the trust.
[4] Mr Orlov explained during the hearing today that his client will contend that the trust is effectively a sham, and that it has never actually taken possession of the animals. He believes that he will be able to demonstrate this by pointing to the absence of any documents indicating that the trust effectively assumed control of the animals. He has therefore sought discovery of several classes of documents relating to the activities of the trust and its corporate trustee. These are set out in Schedule A to Mrs Busch’s interlocutory application dated 24 February 2012.
1) The original trust deed and all subsequent gifting statements, IRD filings and documents regarding the establishment and operation of the trust
[5] The trust deed and agreement for sale and purchase were prepared by the law firm Metro Law. Mr Busch instructed that firm to prepare the trust deed and the
agreement for sale and purchase, together with a resolution that the trustees signed at the same time that they signed the agreement for sale and purchase.
[6] Counsel for Mr Busch has not personally inspected the files held by Metro Law in order to ascertain whether relevant documents might be on the files. That is obviously an issue that needs to be undertaken as soon as possible.
[7] I therefore direct that Mr Busch is to file and serve a further affidavit no later than 5 April 2012 listing any relevant documents from the file held by Metro Law relating to the operation of the trust and, in particular, to the assumption of control by the trust over the animals. The affidavit is also to specify whether or not the original deed of trust, together with the originals of the other documents already discovered, are held on the files of Metro Law.
2) The entire file held by the corporate trustees of the trust including, but not limited to, all documents regarding the operation of the corporate trustee, invoices and accounts. This includes all agreements deeds and documents between the corporate trustee and the trust.
[8] Counsel for the plaintiffs only acts for the present corporate trustee. It replaced the original corporate trustee, ML Trustees 2818 Limited, some years ago. Counsel for the plaintiffs is to ascertain whether any documents relating to the ownership of the animals are held on the corporate trustee’s file. If they are, the existence of such documents will need to be disclosed.
[9] I consider that the plaintiffs should take a broad view of discovery in this regard, particularly given the fact that Mr Busch will be alleging that the trust is a sham. It may be wise for Mr Busch and/or the corporate trustee to disclose the existence of all documents passing between them in order to counter the allegation of sham.
3) All bank accounts operated or opened on behalf of the trust, and all bank accounts operated by Craig Busch
[10] Counsel for the plaintiffs indicated during the hearing that he understands that no payments were made through the bank account of either Mr Busch or the trust in relation to the acquisition of the animals that are the subject of this proceeding. If that is the case, Mr Busch will need to confirm this in the affidavit that he is to file by 5 April 2012.
4) The files of the lawyers and advisers dealing with the establishment of the trust and the transfer of the animals to the trust including, but not limited to, the entire file at Metro Law
[11] This issue has already been dealt with under the first heading above.
5) The entire file and all documents concerning the establishment of ILS
trustees
[12] There can be no dispute that ILS Trustees Limited is a duly incorporated company. Documents relating to the establishment of the company have no relevance to the present proceeding. I therefore decline to extend the order to cover these items.
6) Copies of all documents, emails and file notes held by Craig Busch, his attorneys or agents regarding discussions with the receivers of Zion Wildlife Gardens Limited and concerning ownership of the animals
[13] Counsel for the plaintiffs indicated during the hearing that he understands that no such documents exist. If, however, there has been correspondence between Mr Busch and the receivers in which Mr Busch has made assertions regarding the ownership of the animals, the existence of such documents should be disclosed. If none exist, that fact should similarly be disclosed. Mr Busch will need to address those issues in his affidavit.
7) The entire file and name of the accountants for the trust
[14] Counsel for the plaintiffs has advised me that two firms of accountants have acted for the trust. The first firm, Apollo Accountants, apparently acted for the trust from its inception until their services were terminated, or they retired, during 2007 or
2008. Thereafter, a second firm of accountants was instructed to act on behalf of the trust.
[15] Accounting records created by the accountants may be relevant to the issue of ownership of the animals. If, for example, the trust’s financial statements recorded the animals as assets of the trust, that fact would tend to suggest that the trust was the owner of the animals. If they do not, it may suggest that the trust was not. Either way, the financial statements of the trust, if any have been prepared, together with any other documents held by the trust’s accountants relating to the ownership of the animals, are clearly relevant.
[16] Counsel for the plaintiffs is therefore to make enquiries of the two firms of accountants in order to ascertain whether relevant documents exist. If none exist, the affidavit that Mr Busch is to file by 5 April 2012 should disclose that fact. Alternatively, it should list the relevant documents.
A. Application for joinder of Country Developments Limited
[17] Country Developments Limited (“Country Developments”) was originally the second defendant in this proceeding. It is currently in receivership. The receivers reached agreement with the plaintiffs regarding their position in relation to the animals. They then expressly withdrew, released and surrendered any interest that they had in the animals. Toogood J recorded this in a minute that he issued on
27 January 2012. Toogood J also granted Mr Busch leave to discontinue the proceedings against Country Developments. He did so on the express basis, however, that Country Developments would be bound by the outcome of this proceeding, and that its receivers would comply with their discovery obligations in relation it. That has now occurred.
[18] Mrs Busch seeks an order granting her leave “to stand in the shoes” of Country Developments. She points out that she is a director of that company, and that the receivers have apparently accepted that the animals were not subject to the security under which they were appointed. She therefore contends that it remains open to her to continue in this proceeding on the basis that she is entitled to represent the interests of the company in relation to assets that are not subject to the security.
[19] I reach no final conclusion regarding this issue, because it is a matter in respect of which the receivers should be heard. They have received a copy of Mrs Busch’s application, and their counsel has filed a memorandum saying that they oppose any suggestion that Mrs Busch be permitted to stand in their shoes.
[20] I do not consider it necessary at this stage for Country Developments to be joined as a party. It remains open to Mrs Busch to endeavour to prove at trial that the animals belong to Country Developments, and not to Mr Busch or the trust. She can do that without Country Developments being joined.
[21] In the event that the Court ultimately determines that Country Developments is not the owner of the animals, no prejudice will have been suffered by it from not having been party to the proceeding given that Mrs Busch effectively intends to represent its interests. If, however, the Court determines that some or all of the animals belong to Country Developments, it will be a matter for Mrs Busch and the receivers to determine how control over the animals should thereafter be exercised.
[22] I decline to grant leave for Mrs Busch to stand in the shoes of Country
Developments in this proceeding.
B. Application for joinder of Wildlife Pictures Limited
[23] Wildlife Pictures Limited holds the intellectual property in respect of the animals by virtue of an agreement that it entered into with Mr Busch and his mother on 5 April 2007. Counsel for Mrs Busch submits that it will be vitally affected by the outcome of the proceeding, and that its interests need to be recognised by an order joining it as a party to the proceeding.
[24] The only issue to be determined at this stage, however, is that relating to ownership of the animals. I accept that determination of that issue may well have flow-on effects for Wildlife Pictures, but that is an issue that can only properly be confronted once the issue of ownership has been determined.
[25] For that reason I am not prepared to make an order joining it as a party to the proceeding at this stage. It may be that it should be joined once the issue of ownership has been determined, but that is a matter for another day.
Costs
[26] Counsel for Mrs Busch contends that his client is entitled to an award of costs on the basis that she was the successful party in relation to the application for further and better discovery. He points out that, although discovery was undertaken informally, nevertheless Mr Busch and his legal advisers ought to have been aware of the relevance of the documents sought in the application.
[27] This submission has some force, and had the discovery application been the only application with which the Court was concerned, it would undoubtedly mean that Mrs Busch would be entitled to an award of costs in her favour.
[28] The application was, however, multi-faceted. Mrs Busch was unsuccessful in the other applications that she advanced today, and I therefore consider that honours have been evenly shared. For that reason I have concluded that costs in respect of the present interlocutory application should lie where they fall. I make no order as to costs in relation to it.
Trial date
[29] The trial of the substantive issue as to the ownership of the animals will now commence in this Registry on 23 July 2012 at 10 am. Two days have been allocated for the trial, but the Registry is to ensure that provision is also made for a third day should that be required.
Pre-trial directions
[30] The plaintiffs have already served their evidence, but may need to amplify it to take account of matters that they are now aware of. For that reason I direct that the plaintiffs are to re-serve their evidence no later than 9 June 2012.
[31] Mrs Busch is to serve her evidence no later than 9 July 2012.
[32] Counsel for the plaintiffs is to file a synopsis of his opening submissions, together with a chronology and bundle of documents no later than 16 July 2012.
Next event
[33] A telephone conference will be conducted before the trial Judge, Gilbert J, on
17 April 2012. The purpose of that conference will be to monitor compliance with the above directions and to ensure that the proceeding is on track for trial.
Lang J
Solicitors:
King Law, Auckland
JT Law, WellingtonEquity Law, Auckland
Crown Law Office, Wellington
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