Cherry v Police
[2012] NZHC 1125
•24 May 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2010-404-003178 [2012] NZHC 1025
BETWEEN PREMIER EVENTS GROUP LIMITED Plaintiff
ANDMALCOLM JAMES BEATTIE First Defendant
ANDANTHONY JOSEPH REGAN Second Defendant
ANDCT NZ LIMITED (PREVIOUSLY KNOWN AS CARTAN GLOBAL LIMITED)
Third Defendant
ANDPARNELL PARTNERS GROUP LIMITED Fourth Defendant
ANDSPORTS HOSPITALITY MANAGEMENT LIMITED Fifth Defendant
ANDPARNELL PARTNERS GROUP (NZ) LIMITED
Sixth Defendant
ANDCARTAN GLOBAL LLP Seventh Defendant
ANDCARTAN TOURS INC Eighth Defendant
ANDSPORTSMARK MANAGEMENT GROUP LIMITED
Ninth Defendant
CIV 2011-404-000474
AND BETWEEN ANTHONY JOSEPH REGAN First Plaintiff
ANDANTHONY JOSEPH REGAN JENNIFER ANNE REGAN AS TRUSTEES OF THE PICCADILLY TRUST
Second Plaintiffs
PREMIER EVENTS GROUP LIMITED V BEATTIE & ORS HC AK CIV 2010-404-003178 [15 May 2012]
ANDROBERT GILL First Defendant
ANDPREMIER EVENTS GROUP LIMITED Second Defendant
ANDBA PARTNERS LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Third Defendant
ANDDIGITAL PARTNERS LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Fourth Defendant
ANDCPG YORK LIMITED Fifth Defendant
ANDBRAND ADVANTAGE MEASUREMENT AND CONSULTING LIMITED
Sixth Defendant
ANDDIGITAL PARTNERS (NZ) LIMITED Seventh Defendant
Hearing: 16 April 2012
Counsel: Z Kennedy and M Pascariu for the Plaintiff in the First Proceeding J Eichelbaum for the First to Seventh Defendants in the First Proceeding
No Appearance for the Eighth and Ninth Defendants in the First
Proceeding
J Eichelbaum for the First and Second Plaintiffs in the Second
Proceeding
Z Kennedy and M Pascariu for the Defendants in the Second
Proceeding
Judgment: 15 May 2012
[RESERVED] JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie
On 15 May 2012 at 4.00 pm
Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date
INDEX
A. Introduction ...................................................................................................... 4
B. Proceedings CIV 2010-404-003178 ................................................................. 7
Discovery — existing orders. ........................................................................... 7
The first to seventh defendants’ application to vary the discovery orders
made on 23 November 2010 — application (g). .............................................11
PEG’s application for enforcement of discovery orders against the first to
seventh defendants — application (a). ........................................................... 15
The first to seventh defendants’ application for particular discovery —
application (e). ............................................................................................... 23
PEG’s application to discontinue the proceedings against the ninth
defendant and for non-party discovery — application (c)(i) and (ii). ........... 28
The first to seventh defendants’ application to add the Robert Gill Trust
as a counterclaim defendant — application (d). ............................................ 30
The first to seventh defendants’ application to file a fourth amended
statement of defence and counterclaim — application f(ii)............................ 30
C. Proceedings CIV 2011-404-000474 ............................................................... 34
The first to seventh defendants’ application to add Brand Advantage
Limited as a party to the proceedings — application (h). .............................. 34
D. General ........................................................................................................... 34
A. Introduction
[1] On 27 May 2010, Premier Events Group Limited (“PEG”) issued proceedings under number CIV 2010-404-003178 against Messrs Beattie and Regan, and various companies with which they are associated. PEG says that it was a specialist provider of travel and hospitality services for major sporting events worldwide. It alleges that Messrs Beattie and Regan were both directors of the company, that they resigned from PEG, and that they left taking with them its confidential information, in particular relating to the then pending 2011 Rugby World Cup and to the 2012
Olympic Games. In very broad terms, the proceedings allege breach of fiduciary obligation by Messrs Beattie and Regan, misuse of PEG’s confidential information by all defendants, and conspiracy to injure PEG’s business by unlawful means by all defendants.
[2] Subsequently, PEG joined Cartan Tours Inc and Sportsmark Management
Group Limited to the proceedings as eighth and ninth defendants respectively.
[3] On 2 February 2011, the second defendant in proceedings CIV 2010-404-
003178, Mr Regan, and Mr Regan and his wife as the trustees of a trust known as the Piccadilly Trust, issued separate proceedings under number CIV 2011-404-000474 against PEG’s director, Mr Gill, and various of his interests. Again broadly, Mr Regan was at one stage a director of PEG and he had guaranteed some of the borrowings of its related companies. He and his trust allege against the defendants, conspiracy to interfere with contractual relations by unlawful means, procuring a breach of the guarantee, asset stripping, breach of s 174 of the Companies Act 1993, and causing loss by unlawful means.
[4] The proceedings are to be heard one after the other and a substantive fixture for both was due to commence on 6 February 2012. That fixture was vacated for reasons which are detailed in a minute I issued dated 13 December 2011.
[5] Since that date, further interlocutory applications have been filed by both parties.
[6] The following matters are outstanding in proceedings CIV 2010-404-003178:
(a) PEG’s application for enforcement of existing discovery orders which are in place against the first to seventh defendants. This application is opposed.
(b)PEG’s application for leave to file a second amended statement of claim. This application is not opposed.
(c) PEG’s application for:
(i)leave to discontinue the proceedings against the ninth defendant, Sportsmark Management Group Limited. This is not opposed by any party, but the first to seventh defendants are seeking costs on the discontinuance; and
(ii)non-party discovery directing Sportsmark to provide at its own cost, discovery of all documents that are or have been in its control and relate to matters in issue in the proceeding, as pleaded in the amended statement of claim dated 7 March
2011. This application is not opposed.
(d) The first to seventh defendants’ application to add the Robert Gill
Trust as a counterclaim defendant. This application is opposed.
(e) The first to seventh defendants’ application for particular discovery.
This application is in two parts. Up to date discovery by PEG is sought. Further, telephone records held by PEG and its agents are sought. Both aspects of the application are opposed.
(f) The first to seventh defendants’ application for:
(i)leave to file a third amended statement of defence and counterclaim. This application is not opposed; and
(ii)leave to file a fourth amended statement of defence and counterclaim, including the Robert Gill Trust as a counterclaim defendant. This application is opposed.
(g)The first to seventh defendants’ application for a variation of the discovery orders made by me on 23 November 2010. This application is opposed.
[7] The following application is outstanding in proceedings CIV 2011-404-
000474:
(h)An application by the plaintiffs to add Brand Advantage Limited as a party to the proceedings. This application is opposed.
[8] Given the absence of opposition, I make an order granting PEG leave to file a second amended statement of claim in proceedings CIV 2010-404-003178. The application by the first to seventh defendants for leave to file a third amended statement of defence and counterclaim in the same proceedings is also granted. There is no order for costs in either of these applications.
[9] I propose to deal with the remaining applications in the following order, namely (g), (a), (e), (c), (d), (f) and (h).
[10] I record that there is also an outstanding dispute about the quantum of an outstanding costs order made by me on 30 September 2011. Although Mr Kennedy for PEG raised this issue orally, he had not filed any formal application in this regard. Rather, PEG had filed a memorandum dated 3 February 2011. Mr Eichelbaum, appearing for the first to seventh defendants, did not anticipate that it was to be raised before the Court and he was not in a position to deal with the matter. Accordingly, I decline to deal with it in this reserved judgment. I direct that any further memorandum PEG wishes to file in relation to this issue is to be filed and served within 10 working days of the date of this judgment. The first to seventh defendants are to file any memorandum in response within a further 10 working days. I will then finalise the quantum of the costs order on the papers unless I require the assistance of counsel.
B. Proceedings CIV 2010-404-003178
Discovery — existing orders.
[11] I have briefly summarised the proceedings above. Discovery has proved difficult with allegations being made by the one party against the other since the proceedings were filed.
[12] Shortly after it commenced the proceedings in May 2010, PEG applied without notice for a search order pursuant to rr 33.1 to 33.9 of the High Court Rules. Miller J granted the application and it was executed on 28 May 2010. In compliance with the search order, PEG’s solicitors inspected the materials seized and took copies of them, but did not disclose those copies to PEG or its representatives. Subsequently, PEG applied for leave to inspect and refer to the material, and in June
2010, Stevens J made orders allowing it to do so.[1]
[13] PEG then filed further interlocutory applications seeking: (a) an interim injunction;
(b) an order striking out the defendants’ counterclaim; (c) an order joining other parties; and
(d) various other ancillary orders, including an order for discovery.
[1] Premier Events Group Limited v Beattie HC Auckland CIV-2010-404-3178, 21 June 2010 at [40].
[14] The application for the interim injunction was initially filed on 16 July 2010. An amended application was filed on 15 November 2010. The balance of the interlocutory applications were filed on either 23 September 2010 or 27 September
2010.
[15] The defendants, for their part, sought rescission of the search order, together with costs and damages. They first tried to set aside the search order on 3 June 2010
when the proceedings came before the duty Judge. No order was made and they then applied formally to rescind the order on 11 June 2010. A first amended application to rescind was filed on 6 August 2010 and a second amended application to rescind was filed on 28 October 2010.
[16] The application to rescind the search order and the application for an interim injunction came before me on 22 and 23 November 2010. On 22 November 2010, I heard from Mr Eichelbaum and from Mr Kennedy in relation to the defendants’ application to rescind the search order. On 23 November 2010, I was due to hear from the parties in relation to PEG’s application for an interim injunction. In the event, there were discussions between the parties, and on the morning of
23 November 2010, I was advised that they had resolved PEG’s interim injunction application by agreement. I was also told that it had been agreed that, in the circumstances, there was no point in me giving judgment on the defendants’ application to rescind the search order. Mr Eichelbaum requested that this application should be discontinued. That request was not opposed by Mr Kennedy, and both parties agreed that the costs should lie where they fell. Other outstanding applications were also resolved between the parties. I made a series of orders by consent.
[17] Inter alia, in relation to an application by PEG for discovery and related orders, I recorded that the parties had agreed to the following order:
a)directing the defendants to disclose, in the manner provided for in paragraph (b) below, particulars of all contractual and proposed arrangements or obligations with the defendants and their associated entities and interests with the parties, being:
(i) Toyota New Zealand;
(ii) National Australia Bank; (iii) Australia Post;
(iv) Deutsche Bank; (v) Qantas Australia; (vi) BHP Billiton; (vii) Linklaters;
(viii) Telstra;
(ix) Cartan Tours Inc;
(x) Great Eagle Hotels (Auckland) Limited;
(xi) The New Zealand Olympic Committee; and
(xii) any entities related to the above
in respect of the Rugby World Cup 2011 programme and the London Olympics 2012 programme and their financial dealings with these parties including:
(i) the document(s) recording or evidencing the contractual arrangements or obligations;
(ii) the nature and extent of the income, revenue or other benefits to the defendants and their associated entities and interests arising out of those arrangements or obligations, whether the same be held in the names of the defendants or their associated entities or interests, separately or jointly with any other party or by any nominee or trustee or otherwise howsoever on their behalf;
(iii) identifying all bank or other accounts, whether held in the names of the defendants or their associated entities or interests, separately or jointly with any other party or by any nominee or trustee or otherwise howsoever on their behalf and the amounts standing to the credit in such accounts (the “bank accounts”);
(iv) copies of bank statements for the bank accounts from
21 January 2010 to the date of disclosure;
(v) copies of all correspondence between the defendants and their interests and the parties identified above from 28 May
2010; and
(vi) email messages from email accounts and any other documents to be specified by the plaintiff as from 1 January
2010.
(b) That continuing disclosure of the documents and information referred to in paragraph (a) be provided by affidavits sworn by the first defendant and/or the second defendant which shall be filed in this Court and served on the plaintiff’s solicitors within the next 15 days and every two months thereafter until the trial of this matter.
[18] While there was some discovery by the defendants in accordance with this order, it was sporadic, and in many respects, deficient.
[19] PEG applied for particular discovery and on 16 August 2011, I concluded that the defendants had failed to comply with their discovery obligations. I made further discovery orders as follows:
(a) The defendants are to file and serve within 10 working days of the date of this judgment an affidavit of documents discovering the following:
(i) The attachments identified as Regan AJ.pdf; 2012 Exec Overview updated 260510.xls and Beattie NJ.pdf, referred to in the email from Mr Regan to [email protected] sent on
26 May 2010, which email is annexed as Exhibit A to
Mr Gill’s affidavit dated 23 June 2011.
(ii) The document annexed as attachment NZL.pdf to the email from a Mr Greg Harney to a Mr Williams and a Mr Karolick, and copied to Mr Regan, which email is dated 8 December
2010, and is annexed as Exhibit B to Mr Gill’s affidavit of
23 June 2011.
(iii) The document referred to as NBA Tickets.xls referred to in an email from Mr Regan to [email protected] which email is dated 20 October 2010, and is annexed as Exhibit C to Mr Gill’s affidavit dated 23 June 2011.
(iv) If other documents have been discovered which had annexures or attachments, those annexures or attachments.
(v) All bank statements for all accounts held by the third to seventh defendants (inclusive) for the period February 2011 to 30 June 2011.
(vi) All accounting and/or management records kept by the third to seventh defendants (inclusive) for the period 28 May 2010 to 30 June 2011.
(vii) All invoices issued by the third to seventh defendants
(inclusive) during the period 28 May 2010 to 30 June 2011.
(b) If any of these documents have already been discovered by the defendants, then within the same 10 working day timeframe the defendants are to file and serve an affidavit identifying where the document(s) has been discovered.
(c) The defendants are to make hard copies of discovered documents available to the plaintiff for inspection on request and as required by r 8.33. The costs of complying with this direction are to be addressed at the conclusion of the substantive hearing.
(d) For the avoidance of doubt, I record that the orders made by me in November 2010 remain in place. In particular, the order requiring continuing disclosure remains in place.
If there are any ongoing difficulties with discovery or inspection, I reserve leave to the parties to come back and apply for further orders.
[20] Against this background, I turn to consider the present discovery related applications.
The first to seventh defendants’ application to vary the discovery orders made on
23 November 2010 — application (g).
[21] On 13 December 2011, by consent, I directed that all outstanding interlocutory applications were to be filed and served with supporting affidavits on or before 5.00 pm on Friday, 16 December 2011. On 15 December 2011, Mr Kennedy for PEG requested an extension of that time limit through to
21 December 2011 for all parties. I granted that extension.
[22] On 16 December 2011, the first to seventh defendants applied to vary the discovery order made on 23 November 2010. Although the application is expressed to be an amended application, I cannot find an earlier application on the Court file.
[23] The application recorded that a variation was sought to bring the discovery order made on 23 November 2010 into line with the new discovery rules for the conduct of proceedings in this Court. Specifically, it was sought that the order should be varied to require that:
(a) adverse documents be provided once every three months; and
(b) a summary of financials and bank statements be provided bimonthly.
It was asserted in the application that the discovery order needed to be varied to “a less oppressive format”, so that the first to seventh defendants would not be unduly distracted from their core business.
[24] An affidavit by Mr Regan was filed in support of the application.
[25] A notice of opposition was filed by PEG on 23 January 2012. A supporting affidavit was sworn by Mr Gill.
[26] On 4 April 2012, a document said to be a second amended application was filed by the first to seventh defendants along with an affidavit from Mr Beattie. There was no application for leave to file either document. No explanation for the delay was offered. Mr Kennedy submitted that they should be ignored.
[27] The second amended application and the accompanying affidavit were filed outside the time limit put in place by me. Moreover, by the time the second amended application was filed, all outstanding applications had already been allocated a hearing date on 16 April 2012.
[28] Because the second amended application was filed out of time, and in breach of my earlier order, I decline to consider the same.
[29] Mr Beattie’s affidavit did not purport to be in reply to Mr Gill’s affidavit. It did not raise any new evidence, nor evidence which had not been in existence as at
16 December 2011 when Mr Regan’s affidavit was filed. Rather, it simply addressed the same matters afresh.
[30] The late filing of the affidavit was in breach of r 7.20. It provides that any affidavit in support of an application must be filed at the same time as the application. The rule is expressed in mandatory terms. There is no right to file affidavits in support of an interlocutory application at a later stage. The purpose of the rule is to ensure that the opposing party is not taken by surprise. If I were to accept Mr Beattie’s affidavit, I would place PEG at a disadvantage. It has not sought to respond to the affidavit and Mr Kennedy’s written submissions did not refer to it. As a result, I have not taken Mr Beattie’s affidavit into consideration in dealing with this matter.
[31] I now turn to the submissions.
[32] Mr Eichelbaum, in support of the application, submitted that much has changed since the order was made by consent in November 2010. He pointed to the following:
(a) The hearing date had to be vacated, and it is now unlikely that the matter will be heard until late 2012 at the earliest.
(b)Related proceedings in the Employment Court, which were due to be heard in early May 2012, were adjourned at PEG’s request. It is unlikely that those proceedings will be heard until October 2012.
(c) New High Court Rules regarding discovery were introduced as from
1 February 2012 pursuant to r 4 of the High Court Amendment Rules (No.2) 2011.[2] He referred specifically to r 8.2 which requires the parties to co-operate to ensure that the processes of discovery and inspection are proportionate to the subject matter of the proceeding, and are facilitated by agreement on practical issues.
[2] SR2011/351.
(d)While there is outstanding discovery in relation to quantum, final discovery in this regard cannot be meaningfully resolved because 70 of the hotel rooms pre-purchased by the defendants for the Olympic Games which begin in July 2012, remain unsold.
Mr Eichelbaum argued that the present order is proving oppressive, in a way which could not have been anticipated when it was made. He proposed as an alternative that there should be one final wash up discovery one month after the closing ceremony of the Olympic Games, when all documents relating to quantum could be made available.
[33] Mr Kennedy for PEG noted that the new discovery rules introduced as from
1 February 2012 do not contain any transitional or saving provision. He argued that the Rules Committee cannot have intended that the new rules should operate retrospectively, and that it would be awkward to attempt to apply the provisions to proceedings that are well progressed. He submitted that the plaintiff in the proceeding is seeking primarily an account of profits, and that such a claim will require an assessment of such evidence as is adduced. He submitted that the alternative discovery suggested by the defendants is neither adequate nor appropriate for the purpose. He also noted that the existing discovery orders were made by consent, and as part of the settlement of various interlocutory applications which were then in issue as between the parties. He submitted that the defendants are bound as a matter of contract to provide discovery in terms of the consent order, and that it is not appropriate to permit them to now resile from the terms of the
settlement.
[34] I am not prepared to vary the discovery order made on 23 November 2010 in the manner sought by the first to seventh defendants.
[35] New discovery rules have recently been put in place. The new rules introduce several major changes to the discovery regime. Significantly, the scope of “standard” discovery has been narrowed, with an “adverse documents” test replacing the previous test which required discovery of documents that were or might be relevant to issues in the proceeding or which could lead to a chain of inquiry.
[36] The variation proposed by the first to seventh defendants seeks to introduce the new adverse documents test into the maelstrom of ongoing litigation commenced well before the amendments to the rules. It also seeks to alter the ongoing disclosure regime put in place in November 2010.
[37] There are no express transitional or saving provisions in the new rules. Nevertheless, in my judgment, the new rules do not apply retrospectively to discovery orders already in place. I agree with the authors of McGechan on Procedure[3] that it would be awkward to attempt to apply the new rules in proceedings that have reached an advanced stage.
[3] McGechan on Procedure (looseleaf ed, Brookers) at [HRPt8Subpt1.03]; and see David Friar, Andrew King and Laura O’Gorman New Discovery Rules (papers presented to a New Zealand Law Society Seminar, October 2011).
[38] In my view, the previous rules must continue to apply to discovery being undertaken pursuant to orders already in place. This is consistent with the principles contained in ss 7, 17 and 18 of the Interpretation Act 1999.
[39] Here, the position is reinforced by the fact that the existing order of
23 November 2010 is tailored to the requirements of this case. The order was drafted by the parties and agreed between them. (I note that the new rules provide for the Court to make orders allowing for a tailored discovery regime where the interests of justice require either more or less discovery than is provided for under
the standard discovery regime).[4]
[4] Rule 8.8; and see r 8.9(f).
[40] The new rules, and in particular r 8.2, promote cooperation, and
Mr Eichelbaum sought to rely on this.
[41] Unfortunately, there has been little cooperation in these proceedings. The number and variety of interlocutory applications attest to that. Indeed, it is abundantly clear that the parties are very much at loggerheads. I very much doubt that it is possible for the parties to now agree on a new approach to discovery.
[42] Further, there is force in Mr Kennedy’s submission that the discovery orders made on 23 November 2010 were consent orders, entered into as part of a negotiated package agreed between the parties, to settle a number of interlocutory applications which were then before the Court. PEG abandoned its application for interim relief in return for the first to seventh defendants agreeing to provide discovery in terms of the order, on an ongoing basis. The settlement would be undermined if the discovery order were now to be varied.
[43] Accordingly, I decline the first to seventh defendants’ application to vary the discovery order made on 23 November 2010.
[44] PEG is entitled to its costs in regard to this application, to be assessed on a
2B basis.
PEG’s application for enforcement of discovery orders against the first to seventh
defendants — application (a).
[45] Since my order of 16 August 2011, in partial compliance with the continuing discovery order, albeit late, the first to seventh defendants filed and served two affidavits of documents which it was asserted provided discovery from June 2011 to November 2011.
[46] Copies of the documents listed in these affidavits were provided for inspection shortly thereafter.
[47] PEG considered that the affidavits of documents provided by the defendants did not comply with the High Court Rules, and that the first to seventh defendants’ discovery was still deficient. It filed an application dated 21 December 2011 seeking
to enforce the existing orders, and seeking indemnity costs. It filed two affidavits in support, one from a Mr Harris, and the other from a Mr McLoughlin.
[48] Mr Harris’ affidavit was also dated 21 December 2011. He is a solicitor retained by PEG. He advised that he had reviewed the documents provided by the defendants. He noted the following areas in which he considered discovery to have been deficient:
(a) There were no copies of paper documents. All of the documents discovered were print outs of email correspondence along with some, but not all, of their attachments.
(b)Between 30 to 50 percent of the 9,000 pages discovered were duplicates.
(c) There were four sets of documents that were all numbered beginning at (1).
(d) Many of the documents were illegible.
(e) There were numerous irrelevant documents.
(f) Many relevant documents, such as contracts, financial reports and invoices had not been provided for inspection.
(g) Copies of attachments to a number of emails had not been discovered.
(h)Documents that were discovered indicated that the defendants had entered into other agreements, arrangements or business relationships relating to the London Olympics, and the Rugby World Cup programme. Documents in relation to the agreement were not discovered.
(i)While the defendants provided copies of invoices, there was no other financial or contractual information discovered, despite specific Court orders in this regard.
[49] Mr McLoughlin is a specialist litigation services consultant, and a principal of WHK Corporate Finance. He is a member of the Institute of Chartered Accountants of New Zealand, and holds various qualifications in that regard. He has been briefed by PEG. In his affidavit dated 20 December 2011, he set out the documents that he considered were necessary in order to enable him to quantify and reasonably estimate PEG’s claim for an account of profits.
[50] On 20 January 2012, the first to seventh defendants filed a notice of opposition to PEG’s application. The grounds on which the notice of opposition was based were not stated. However, Mr Regan filed an affidavit in support, which addressed the issues raised by PEG. Mr Regan asserted as follows:
(a) the nature of the defendants’ business is that documents are produced to be communicated via email, either internally, or externally;
(b) there are no handwritten documents pertaining to the matters in issue;
(c) while the defendants may have occasionally duplicated documents, this was a rare occurrence;
(d)documents were clearly segregated in the indexes and also by separate files;
(e) while there may have been cases where the documents were illegible, these cases were isolated;
(f) the defendants were using their best efforts to minimise and prevent any irrelevant documentation;
(g)a number of the documents which Mr Harris said were missing do not exist; and
(h) other documents sought by PEG had already been discovered.
[51] An affidavit in reply was filed by Mr Harris on 26 January 2012. He continued to assert that there were deficiencies with the first to seventh defendants’
discovery. He noted that Mr Regan had not identified documents which he said had already been discovered by number or by reference to existing lists. He accepted that some financial information had been provided, but asserted that not all relevant financial documentation had been discovered.
[52] On 24 February 2012, the first to seventh defendants filed a further affidavit from Mr Regan. The affidavit did not include a list of documents, but rather annexed as an exhibit a picture of a USB memory stick. The affidavit stated that the USB stick contained an “electronic blueprint” of all transactions and accounting records.
[53] No prior agreement had been reached between the parties in relation to electronic discovery.
[54] The original of the affidavit exhibiting the actual memory stick was filed in Court. It is unfortunate that a duplicate memory stick containing the same data was not annexed to the affidavit served on PEG. It should have been. A physical duplicate containing the data was only provided to PEG following a request made by its solicitors.
[55] It then transpired however that the information on the memory stick had been provided in a file format suitable for use with a piece of accounting software called “QuickBooks”. While PEG’s solicitors could see that the files were on the memory stick they did have the requisite software to open the files on the memory stick. They sought assistance from WHK. WHK did have the required programme, but were unable to open and retrieve the data as it was password protected. On
1 March 2012, PEG’s solicitors asked the first to seventh defendants for the password. There was no response until 3 April 2012, when Mr Eichelbaum provided a password. WHK were then able to access two of the three electronic QuickBooks files contained on the USB stick. They considered these files and reported that no financial statements have been provided for Parnell Partners Group (NZ) Limited, and Sports Hospitality Management Limited, that there are no electronic accounting records for either of those companies, that there are no internal management accounts setting out the financial results by month or by customer or by event, that no budgets have been provided, that there are no audit opinions or audit letters for
any of the defendant companies, and that there are no detailed costing calculations by the first to seventh defendants as to their anticipated costs.
[56] On 12 April 2012, Mr Regan filed a further affidavit. In that affidavit, he provided the password for the third file. He also recorded that, on request, the first to seventh defendants are able to provide the information either electronically, or in any other format to assist in PEG’s review of the documents. He also asserted that some of the financial information which WHK asserted was missing, was not in the first to sevenths defendants’ control or did not exist.
[57] The password for the third file was provided so late that it was not possible for WHK to assess what information was or was not on the third file as at the date of the hearing, namely 16 April 2012.
[58] Nevertheless, Mr Eichelbaum in effect conceded that not all documentation detailed in the orders made on 23 November 2010 and on 16 August 2011 has been discovered. He submitted that discovery should be viewed as a pragmatic process directed to an end point — in this case, the substantive hearing. He argued that PEG “is becoming fully informed”. He explained the first to seventh defendants’ failure to discover fully by saying that both he and the defendants’ offices have been “run off their feet” and that they were “physically stretched to the extreme”.
[59] While there are disputes between the parties, I am satisfied that the first to seventh defendants have failed to comply not only with the original discovery order made on 23 November 2010, but also with the further order made by me on
16 August 2011. They have not complied with timetables set by the Court. They have not provided continuing discovery on a two-monthly basis. They have not discovered all annexures to documents discovered. When PEG has complained that documents are missing, they have repeatedly said that at least some of those documents have already been discovered. However, they have not clearly identified where those documents were discovered. That seems to be because their discovery is chaotic and because the High Court Rules governing the format of discovery affidavits have not been complied with. They have not made hard copies of documents available. Not all documentation required to be discovered has been discovered.
[60] Rule 7.48 provides for the enforcement of interlocutory orders. Inter alia, it provides that if a party in default fails to comply with an interlocutory order, a Judge may, subject to any express provision in the rules, make any order the Judge thinks just.
[61] Mr Kennedy seeks an “unless order”. He acknowledged that unless orders should generally be reserved for cases where a breach or continuing breach is objectively measureable and unchallengeable,[5] but submitted that such order is appropriate in the present proceedings. He accepted that some of the matters which PEG raises are simply irritants, but submitted that other matters are more significant. He was particularly critical of Mr Regan’s affidavit sworn on 24 February 2012
[5] Anderson v Mainland Beverages Ltd (2005) 17 PRNZ 757 (CA).
annexing a photocopy of the memory stick. He pointed out that there was no list of documents as such, that the electronic data was not provided in a format agreed by the parties, that it was password protected, and that the first to seventh defendants failed or refused to provide all passwords required until just four days before the hearing. Further, he submitted that some of the data was partially corrupted, and that a number of the files were inaccessible.
[62] Mr Eichelbaum in reply submitted that PEG’s application should be adjourned pending completion of the London Olympics. He argued that the true profitability of the first to seventh defendants would only be defined with certainty when the Olympic Games are concluded, and that a great deal of work would be usefully saved in having one final wrap up discovery after the closing ceremony. He submitted that the first to seventh defendants have provided PEG with its QuickBooks formatted accounting records, and that this should give the plaintiff all of the information it seeks. He submitted that it would be constructive to adjourn matters to a one-day conference before an Associate Judge, where each party’s accounting advisors could “attempt to wrestle to the ground” any remaining areas of difficulty. He submitted that it was impossible for the Court to resolve the “incessant back and forth request after request” made by the parties for further information, and that resolution at mediation, with the assistance of experts, was the best solution.
[63] I can see the attraction of Mr Eichelbaum’s proposed solution. Mr Kennedy has not foreclosed on the possibility of a meeting. The fact remains that the first to
seventh defendants are in breach of existing Court orders. The Court cannot simply ignore those breaches.
[64] Nevertheless, I am not, at this stage, prepared to make an unless order. If I were to make such an order as part of an order for further discovery, it would be all but impossible as discovery stands at the moment, to objectively determine whether or not the first to seventh defendants had breached the same. Rather, the history of these proceeding suggests that the Court would be faced with competing assertions which it would be very difficult to resolve. The consequences of an unless order would be serious. The first to seventh defendants’ statement of defence would be struck out. An unless order should not be made, unless it can be objectively established that there has or has not been a breach.
[65] Nevertheless, it is appropriate to make a further order for discovery, generally in the terms sought by Mr Kennedy. I make the following additional discovery order:
On or before Friday, 8 June 2010, the first to seventh defendants are to provide an affidavit of documents compliant with r 8.21 of the High Court Rules listing all financial, accounting, management and contractual documents and records held by the first to seventh defendants relating to the
2011 Rugby World Cup and 2012 London Olympic Games which have not yet been discovered, including in particular:
(a) All periodic financial statements for the first to seventh defendants for the period between 1 April 2010 and the date of the affidavit specifying:
(i) the revenue; (ii) cost of sales;
(iii) operating expenses; (iv) finance costs; and
(v) taxation and profit made by the defendants.
(b) Any and all internal management accounts for the same period detailing financial results:
(i) by month;
(ii) by project/contract; and
(iii) by event.
(c) Any and all electronic accounting records for the same period including in electronic form:
(i) trial balances;
(ii) summary general ledgers; and
(iii) detailed general ledgers.
(d) The first to seventh defendants’ management forecasts and budgets for the next 12 months setting out the forecasted profits or contributions from the 2012 London Olympic programme.
(e) Copies of invoices for goods and services supplied to the seventh defendant relating to:
(i) 2011 Rugby World Cup; and
(ii) 2012 London Olympic Games.
(f) All contractual documents and records relating to arrangements between the first to seventh defendants or any of them and all corporate entities for which services have been provided by the first to seventh defendants or any of them relating to:
(i) 2011 Rugby World Cup; and
(ii) 2012 London Olympic Games.
(g) If any of the material listed in the order has already been discovered, the affidavit is to identify clearly and precisely where that material has been discovered.
(h) The first to seventh defendants, on request, are to make hard copy of any of discovered document or documents available to the plaintiff.
(i) The discovery orders made by the Court on 23 November 2010 and
16 August 2011 remain in place.
[66] The first to seventh defendants should be under no misunderstanding in relation to this issue. Their discovery to date is woefully inadequate and in breach of Court orders. They are entirely responsible for that. If the further discovery order made above, and the existing discovery orders made on 23 November 2010 and
16 August 2011 are not complied with in their terms, and as required by the High Court Rules, an unless order will be made. The Court will not countenance ongoing breaches of its orders. The first to seventh defendants are effectively being given one last chance to put their discovery in order.
[67] Mr Kennedy also referred to r 8.13. That rule sets out the obligations of solicitors when a party becomes bound to comply with a discovery order. Solicitors
must take reasonable care to ensure that the party understands the party’s obligations under the order, and fulfils those obligations. Those obligations were commented on in Rockwell Machine Tool Co Ltd v EP Barrus (Concessionaires) Ltd.[6] Given the state of the discovery undertaken to date by the first to seventh defendants, it is appropriate to remind the solicitors for the first to seventh defendants of their obligations.
[6] Rockwell Machine Tool Co Ltd v EP Barrus (Concessionaires) Ltd [1968] 1 WLR 693 (EWHC)
at 694.
[68] Mr Kennedy seeks indemnity costs in relation to this application. While Mr Eichelbaum resists that suggestion, in my view, there can be no proper basis for such opposition. PEG’s application was necessitated by the first to seventh defendants’ repeated failures to comply with their discovery obligations. Rule 14.6(4)(b) is engaged. I award costs in favour of PEG on an indemnity basis. It is entitled to be reimbursed for its solicitor and client costs reasonably incurred and its disbursements. If there is any dispute as to whether or not the costs sought were reasonably incurred, the same can be referred to me.
The first to seventh defendants’ application for particular discovery — application
(e).
[69] On 16 December 2011, the first to seventh defendants sought orders that: (a) PEG provide up to date discovery, and
(b)PEG provide up to date discovery, and copies of telephone records from all its land-based, cellular, or internet-based phones and from all the phones of its employees, director, and advisors, between 1 June
2010 and the date of the application.
[70] In the application it was asserted that PEG’s discovery had not been updated since 27 May 2011, and that no telephone records had been provided. It was asserted that they were required in relation to mitigation of loss issues.
[71] In a supporting affidavit, Mr Regan asserted first, that PEG had not made any further discovery since May 2011, and secondly, that PEG had encouraged or
initiated a negative press campaign directed at the defendants. In regard to the latter point, it was asserted that “this conspiracy” consisted of repetitive public allegations that the first to seventh defendants stole various clients from the plaintiff. Copies of the articles referred to were annexed. It was alleged that the reporter responsible for the articles was either working at the behest of Mr Gill, or PEG’s advisors, and that either or both were providing input into or otherwise encouraging the articles. It was alleged that the reporter was on very friendly terms with PEG’s counsel, Mr Kennedy, and that he had reported favourably on other cases in which Mr Kennedy has been involved. It was asserted that the telephone records are required to prove the first to seventh defendants’ allegation that PEG has failed to mitigate its loss.
[72] A notice of opposition was filed by PEG, and a supporting affidavit was sworn by Mr Gill. Mr Gill asserted that PEG had complied with all of its discovery obligations to date, and that it had provided discovery of all documents and information that were relevant to the issues between the parties. He also stated that PEG had not instructed its solicitors to conduct any media campaign.
[73] An affidavit was also filed in relation to this issue by Mr Beattie dated 4 April
2012. As I have explained above, I have not taken this affidavit into account.
[74] The application does not specify which rule is relied on by the defendants. Presumably, it is r 8.19. It provides as follows:
8.19Order for particular discovery against party after proceeding commenced
If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—
(a) to file an affidavit stating—
(i) whether the documents are or have been in the party's control; and
(ii) if they have been but are no longer in the party's control, the party's best knowledge and belief as to when the documents ceased to be in the party's control and who now has control of them; and
(b) to serve the affidavit on the other party or parties; and
(c) if the documents are in the person's control, to make those documents available for inspection, in accordance with rule 8.27, to the other party or parties.
[75] An applicant must establish grounds for belief that the party from whom particular discovery is sought is in, or has been in possession of a document or class of document that should have been discovered. The grounds for belief may be established from evidence, or from the nature or circumstances of the case, or from any documents filed. The grounds for belief should be specified in an affidavit by a person who has knowledge of them, so that the Court can form the appropriate
belief.[7]
[7] Australian Mutual Profit & Society v Architectural Windows Ltd [1986] 2 NZLR 190 (HC).
[76] I deal first with the aspect of the first to seventh defendants’ application seeking that PEG should provide up to date discovery.
[77] Mr Regan in his affidavit simply asserted that no up to date discovery has been received from PEG. He did not set out the grounds for any belief that there are further documents in PEG’s possession.
[78] Mr Gill for his part has asserted that PEG has complied with all of its discovery obligations to date.
[79] Mr Regan’s bald assertion does not advance matters in terms of r 8.19. Moreover, Mr Eichelbaum did not develop an argument in relation to this issue in either his oral or written submissions. On the materials available, I cannot be satisfied that there are grounds for any belief that PEG is in, or has been in, possession of a document or class of documents that should have been discovered. I decline this aspect of the application. PEG is entitled to costs on a 2B basis in this regard.
[80] I now turn to second aspect of the the first to seventh defendants’ application
which seeks that PEG discover its telephone records.
[81] In the course of his oral submissions, Mr Eichelbaum confined the application to the records of two particular cellphone numbers, one belonging to Mr Gill, and the other belonging to Mr Kennedy.
[82] Mr Eichelbaum submitted that if PEG has instigated a malicious press campaign against the first to seventh defendants, then it has failed in its duty to mitigate its loss. He submitted that all of the media articles were favourable to PEG. I was asked to draw the inference that there has been communication between the reporter and PEG or its advisors.
[83] Mr Kennedy argued that PEG is not under a legal obligation to mitigate its loss. Rather, he submitted that it is seeking an account of profits. He argued that Mr Regan has simply made an assertion based on his subjective belief that certain information may have been communicated by PEG to the media. He submitted that this assertion makes little sense, because the media were present at each of the interlocutory hearings. He also asserted that the records sought are irrelevant.
[84] I do not accept Mr Kennedy’s assertion that PEG has no duty to mitigate. While its primary cause of action seeks an account of profits, for breach of fiduciary duty, it relies on other causes of action in its proceeding, which are based in tort and contract. There is an obligation to mitigate when a cause of action is based in contract or tort. The first to seventh defendants have clearly raised this issue in their third amended statement of defence and in their counterclaim. PEG did not oppose the filing of this document. It expressly refers to the alleged adverse media campaign.
[85] Nor do I accept Mr Kennedy’s argument that the telephone records are necessarily irrelevant. If they show contact with media representatives in relation to these proceedings, they could be relevant given the third amended statement of
defence and counterclaim.[8]
[8] I note that a similar application was made in the Employment Court proceedings Premier Events Group Ltd v Beattie [2012] NZEmpC 50. Chief Judge Colgan did express reservation, albeit obiter, about the relevance of such records if they exist to the individual parties’ defences in
those proceedings.
[86] I am however sympathetic to Mr Kennedy’s submission that Mr Regan’s concerns are no more than his subjective assessment, requiring the drawing of inferences. In my view, that assessment does not stand close analysis. The interlocutory applications in these proceedings have been heard in open Court. Media representative have invariably been in attendance. Under r 7.35 they were entitled to report on the applications. Except on one occasion, the first to seventh defendants have not sought confidentiality orders. On one occasion they did seek an interim confidentiality order in relation to the disclosure of the names of certain companies. This was not opposed by PEG, and I made an interim order. The application was subsequently withdrawn by the first to seventh defendants. They cannot complain about the media coverage.
[87] To obtain an order under r 8.19, the first to seventh defendants must advance grounds for belief that either PEG, or its agents, have been in possession of a document or class of document that should have been discovered.
[88] The difficulty for the first to seventh defendants is that they can point to nothing more than inference and suspicion. They say that the reporting favours PEG. I have read the newspaper articles. I am not persuaded that they are unduly critical of the first to seventh defendants or that they unduly favour PEG. I note that if the first to seventh defendants consider that the reporting is unfair or biased, there are other avenues open to them. There is nothing to suggest that PEG, Mr Gill, or Mr Kennedy, have had any part to play in the articles.
[89] If there was any telephone contact with the media by PEG, either through Mr Gill or its agents, then the relevant telephone records should be provided. If there has been no such contact, then it is not necessary for PEG or its solicitors to disclose their telephone records, because they are not documents which should have been discovered. They would not be adverse documents. Nor, if the old test applies, would they be documents that are, or might be relevant to an issue in the proceedings, or which could lead to a chain of inquiry.
[90] In the circumstances, I am not persuaded that there are grounds for believing that PEG has not already discovered all documents that should have been discovered.
Accordingly, I decline the aspect of the application made by the first to seventh defendants for particular discovery of the telephone records.
[91] PEG is entitled to its costs on a 2B basis in relation to this second aspect of the application.
PEG’s application to discontinue the proceedings against the ninth defendant and for
non-party discovery — application (c)(i) and (ii).
[92] The ninth defendant, Sportsmark Group Limited, was joined to the proceedings following a judgment I gave on 24 June 2011.[9]
[9] Premier Events Group Ltd v Beattie HC Auckland CIV-2010-404-3178, 24 June 2011.
[93] PEG had made application to join both the eighth and ninth defendants to the proceedings. That application was opposed by the first to seventh defendants. As explained in my judgment, I dealt with the matter under r 7.9. I found that PEG was entitled to serve the proceedings on the eighth and ninth defendants without the leave of the Court under r 6.27(h)(i). I expressed the preliminary view that costs should lie where they fell. I reserved the right to either party to seek costs within 10 working days of the date of the release of the judgment if they disagreed.
[94] Neither party sought costs.
[95] In the event, PEG has reached agreement with the ninth defendant. It has agreed to discontinue its claim against it. The ninth defendant has agreed that it will not oppose an application by PEG for an order for non-party discovery against it, and both parties have agreed that costs relating to the proceeding into the provision of discovery by the ninth defendant will lie where they fall.
[96] PEG endeavoured to obtain the first to seventh defendants’ consent to its discontinuance of the proceedings against the ninth defendant. The first to seventh defendants, through Mr Eichelbaum, advised that they were happy to sign a notice of discontinuance, provided the costs of the interlocutory hearing the subject of my
judgment on 24 June 2011 were met by PEG.
[97] PEG took the view that the first to seventh defendants’ request for costs was not justified, first, because the issue of costs on the discontinuance was a matter between PEG and the ninth defendant, and secondly, because PEG’s application to serve the ninth defendant was brought for a proper purpose. PEG asserted that the decision to reach an agreement with the ninth defendant was made after it received sworn evidence from a Mr Skubic, which indicated that the ninth defendant was considerably less involved with the matters at issue in the proceeding than the eighth defendant.
[98] In my view, there is no proper basis on which the first to seventh defendants can claim costs on the discontinuance. They did not seek costs at the appropriate point of time, and in my view, it is too late for them to now seek to improve their position. Further, I note that the Court of Appeal has granted leave to the first to seventh defendants to appeal this aspect of my judgment of 24 June 2011. The Court of Appeal will be able to deal with costs in relation to the hearing before me if it considers it appropriate to do so.
[99] PEG is given leave to discontinue its proceedings against the ninth defendant. It has been forced to apply for leave to discontinue its claim against the ninth defendant, when there was, in my view, no proper basis for the first to seventh defendants to claim costs on the discontinuance. PEG is entitled to its costs in relation to this aspect of its application on a 2B basis.
[100] PEG is also entitled to an order for non-party discovery against the ninth defendant, requiring the ninth defendant to provide at its own cost, discovery of all documents that are, or have been in its control and that relate to the matters in issue in this proceeding, as pleaded in the amended statement of claim dated 7 March
2011.
[101] Mr Kennedy has not suggested a timeframe within which such discovery should be provided. I will leave it to PEG and the ninth defendant to fix that timeframe. If there is any difficulty, the issue can be referred back to me.
[102] I record that this part of the application was not opposed by Mr Eichelbaum, and no order for costs is made in relation to this aspect.
The first to seventh defendants’ application to add the Robert Gill Trust as a
counterclaim defendant — application (d).
The first to seventh defendants’ application to file a fourth amended statement of defence and counterclaim — application f(ii).
[103] The background to these applications is comparatively straightforward.
[104] In June 2003, PEG was incorporated by Mr Gill, together with the first defendant, Mr Beattie, and the second defendant, Mr Regan. The initial shareholding in PEG was split equally between Mr Beattie and a company known as Corporate Partnership Group Limited, which was jointly owned by Mr Gill and Mr Regan. On 1 December 2004, Mr Beattie sold all of his shares in PEG to Corporate Partnership Group Limited. The agreement for sale and purchase included an “earn out provision” whereby Mr Beattie was entitled to an additional payment in the event that certain financial targets were met. In 2006, 80 percent of the shares in Corporate Partnership Group Limited were sold to the Robert Gill Trust. The remaining 20 percent was sold to the Piccadilly Trust, which is the trust established by Mr Regan and his wife. Piccadilly Trust is the second plaintiff in proceedings CIV 2011-404-000474.
[105] In their pleadings, the first to seventh defendants assert by way of counterclaim that PEG, and Mr Gill as its Chief Executive Officer, conspired by unlawful means to breach the terms of the sale and purchase agreement with Mr Beattie, by manipulating PEG’s earnings. It is alleged that the effect of the manipulation was to lower the buyout price of Mr Beattie’s shares.
[106] In support of the application, Mr Eichelbaum argued that the beneficiary of the alleged unlawful means conspiracy was the Robert Gill Trust, and that it is therefore appropriate that it be included as a counterclaim defendant.
[107] Mr Kennedy responded by referring to r 4.56. He submitted that it is trite law that, in order for a party to bring a claim against another party, the first party must have the necessary legal standing to do so. He noted that the tort alleged in the counterclaim is unlawful means conspiracy. He argued that the first to seventh
defendants cannot succeed against the Robert Gill Trust, because there is no evidence of any independent unlawful act by the Trust. Rather, the allegation is that it was a beneficiary of the acts in question. He also pointed to the share purchase agreement, which was exhibited by Mr Regan. He noted that pursuant to that share purchase agreement, Corporate Partnership Group was liable for the payment of the purchase price to Mr Beattie. He put it to me that it as a matter of law, the Robert Gill Trust cannot be liable for the debts or other obligations of the company by reason only of being a shareholder. He argued that an incorporated company and its shareholders are separate legal entities, and that there is simply insufficient proximity in law between the Trust as a shareholder, and Mr Beattie, for the alleged cause of action to be reasonably arguable by Mr Beattie. He argued that as a consequence, the Trust’s presence before the Court is not necessary to enable the Court to adjudicate and settle all questions involved in the proceeding. He also argued that there was no factual basis for joining the trust.
[108] The application relies on r 4.56. it provides as follows:
4.56 Striking out and adding parties
(1) A Judge may, at any stage of a proceeding, order that—
(a) the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or
(b) the name of a person be added as a plaintiff or defendant because—
(i) the person ought to have been joined; or
(ii) the person’s presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
(2) An order does not require an application and may be made on terms the court considers just.
(3) Despite subclause (1)(b), no person may be added as a plaintiff
without that person’s consent.
[109] I am not persuaded that the Robert Gill Trust ought to have been joined to the proceedings, or that the Trust’s presence before the Court is necessary, so that it can adjudicate on and settle all questions involved in the proceeding.
[110] Mr Beattie’s contractual arrangement was with Corporate Partnership Group
Limited. The agreement for sale and purchase was entered into on 1 December
2004. At the time, the shares in that company were owned by Mr Gill and Mr Regan. The Trust only became a shareholder in 2006. There is nothing to suggest that the Robert Gill Trust as a shareholder agreed in 2006 to assume liability for the company’s obligations to Mr Beattie.
[111] Mr Eichelbaum referred me to an undated letter, which was exhibited by Mr Gill in an affidavit filed on 26 May 2010. The letter was from Corporate Partnership Group Limited and PEG to Mr Beattie. It recorded agreements reached between the parties. It is signed by Mr Beattie. While the letter was undated, it referred to an email dated 11 December 2006. It must have been written some time thereafter. In the letter, Mr Beattie confirmed that he was obliged to abide by the terms of the agreement entered into between him and Corporate Partnership Group Limited dated 1 December 2004. Corporate Partnership Group Limited for its part undertook to pay Mr Beattie an advance of $250,000, subject to performance conditions, in consideration for him signing a new employment agreement with PEG. Mr Beattie agreed that the definition of the word “employer” in the employment agreement was to include Corporate Partnership Group Limited.
[112] Mr Eichelbaum suggested that the agreement for sale and purchase of the shares in PEG dated 1 December 2004 may have been varied in 2006, and that the Robert Gill Trust as a shareholder in Corporate Partnership Group Limited may have agreed to assume liability for the company’s obligations to Mr Beattie.
[113] There is nothing in the letter which suggests this. Rather, the letter in its terms suggests that the 1 December 2004 agreement between Mr Beattie and Corporate Partnership Group Limited remained in effect, and that Corporate Partnership Group Limited remained the contracting party in respect of the obligations owed to Mr Beattie.
[114] There is nothing to suggest that the Robert Gill Trust accepted those obligations by novation or otherwise. The fact that the Robert Gill Trust as a shareholder may have been the beneficiary of whatever did or did not occur, cannot suffice to impose any liability on it.
[115] There are other difficulties in the way of the application. The first to seventh defendants’ counterclaim asserts the tort of unlawful means conspiracy. Inter alia, the first to seventh defendants will have to show that there was a combination of two or more persons made with the purpose of injuring them in their trade, by an act
which was independently unlawful, and that they were so injured.[10]
[10] SSC & B Lyntas (NZ) Ltd v Murphy [1986] 2 NZLR 436 (HC) at 461; Stephen Todd (ed) The
Law of Torts in New Zealand (5th ed, Thomson Reuters, Wellington, 2009) at [13.4.02].
[116] There is nothing in the papers which have been filed to suggest any combination, or any independently unlawful act by the Robert Gill Trust, or any intention to injure the first to seventh defendants or any one or more of them. Rather, the allegation is simply that the Trust was a beneficiary of whatever (if anything) occurred.
[117] In my view, there is no tenable cause of action which can be raised against the Robert Gill Trust. I am not persuaded that the Trust ought to have been joined to the proceedings, or that the Trust’s presence before the Court is necessary to enable the Court to adjudicate on and settle all questions involved in the proceeding.
[118] It would be wrong to order joinder in a situation where the evidence offered to the Court in support of the application clearly does not, and could not at trial, support the cause of action alleged against the parties sought to be joined.[11]
[11] O’Sullivan v NZ Ostriches Ltd (2000) 14 PRNZ 593 (HC).
[119] The first to seventh defendants’ application to add the trust as a counterclaim defendant is declined. PEG is entitled to its costs on a 2B basis in relation to this application.
[120] It also follows that the first to seventh defendants’ application for leave to file a fourth amended statement of defence and counterclaim, including the Robert Gill
Trust as a counterclaim defendant is declined.
C. Proceedings CIV 2011-404-000474
The first to seventh defendants’ application to add Brand Advantage Limited as a
party to the proceedings — application (h).
[121] Mr Regan and the Piccadilly Trust sought leave to add Brand Advantage
Limited as a defendant in these proceedings. [122] PEG filed a notice of opposition.
[123] At the hearing, Mr Eichelbaum responsibly accepted that the application could not succeed. Rather, he proposed that Brand Advantage Limited should provide limited pre-trial discovery of six bank statements he says must be in its possession. This proposal had not been discussed with Mr Kennedy in advance. Mr Kennedy for his part submitted that there was no basis on which Brand Advantage Limited could be joined to the proceedings. He took the view that Mr Regan and his trust were simply seeking additional documents to see if they could make out the claim against Brand Advantage Limited. He did not accept that it was appropriate to give targeted pre-trial discovery, because in his submission, no claim could be brought against Brand Advantage Limited at all.
[124] I do not need to consider further Mr Eichelbaum’s application to join Brand Advantage Limited to the proceedings. The position has in effect, been conceded. The requirements of r 4.56 cannot be made out. Nor am I not prepared to order discovery by a third party, where there was no formal application, no prior notice and when counsel for the existing defendants before the Court does not consent to that course.
[125] PEG is entitled to its costs on a 2B basis in relation to this application.
D. General
[126] I have made a number of costs orders. I would expect counsel to be able to agree costs. If they are unable to do so, any application for costs by the party entitled to the same is to be filed and served within 10 working days of the date of
release of this judgment. Any memorandum in reply is to be filed and served within a further 10 working days. I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.
[127] Subject to:
(a) the hearing in the Court of Appeal;
(b) the eighth defendants’ protest to jurisdiction; and
(c) any further application PEG may make in relation to any further breaches of the various discovery orders,
all interlocutory matters have now been dealt with. I invite counsel to discuss a timetable to manage the proceedings through to a fixture date. I propose to discuss
those issues with them when I hear the eighth defendant’s protest to jurisdiction.
Wylie J
Z Kennedy: [email protected]
M Pascariu: [email protected]
J Eichelbaum: [email protected]