Edel Metals Group Limited v Geier Limited

[2015] NZHC 1509

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-201 [2015] NZHC 1509

IN THE MATTER

of Part 18 of the High Court Rules and the

Companies Act 1993

BETWEEN

EDEL METALS GROUP LIMITED Plaintiff

AND

GEIER LIMITED First Defendant

MICHAEL JOHN JACOMB, TRENA KATHLEEN JACOMB and PETER REGINALD RICHARDS as trustees of the GENSET TRUST

Second Defendants

Hearing:	1 July 2015
Counsel:	BD Gustafson for plaintiff NW Ingram QC and CF Foote for second defendants
Judgment:	2 July 2015

JUDGMENT OF FAIRE J

This judgment was delivered by me on 2 July 2015 at 9 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:         Lowndes Jordan, Auckland

Kendall Sturm & Foote, Auckland

Edel Metals Group Limited v Geier Limited [2015] NZHC 1509 [2 July 2015]

The applications

[1]      Applications by the second defendants for tailored discovery by two persons who the court has directed be served with this proceeding require determination.

[2]      In the first application, dated 23 January 2015, the second defendants seek:

An order for tailored discovery against JA Sorensen as follows:

(a)       Within 21 days of the service of the sealed order, there shall be filed in this proceeding and served upon the plaintiff and the second defendants an affidavit of discovery sworn by JA Sorensen, which satisfies the requirements specified in Appendix 1 hereto

[3]      In the second application, dated 27 March 2015, the second defendants seek:

An order for tailored discovery against Kenneth David Wikeley as follows: (a)      Within 28 days of the service of the sealed order, there shall be filed

in this proceeding and served upon the plaintiff and the second defendants an affidavit of discovery sworn by KD Wikeley which satisfies the requirements specified in

the annexure attached to the application.

The persons against whom the orders are sought

[4]      No direct relief is sought against either JA Sorensen or KD Wikeley in the plaintiff’s statement of claim and in the second defendants’ counterclaim, although the consequences of any order made in terms of the relief claimed will affect both Mr Sorensen and Mr Wikeley.

[5]      In a minute, dated 8 August 2014, Fogarty J made an order based on an agreement between the plaintiff and the second defendants that these proceedings be served on JA Sorensen and others.  It is apparent from a reading of the minute that the order was made in reliance on the fact that the proceeding is a proceeding issued under Part 18 of the High Court Rules and that the order was made in reliance on r 18.8,  which  empowers  the  court  to  give  directions  as  to  service  of  Part  18 proceedings.

[6]      In a minute, dated 5 February 2014, made in respect of a without notice application by the plaintiff Associate Judge Christiansen made an order that Kenneth David Wikeley and others be served with the plaintiff’s statement of claim, notice of proceeding and affidavit of John Andrew Sorensen. The grounds recorded in the application are that the proceeding is a proceeding under the Companies Act 1993, that Mr Wikeley is an interested party for the relief sought by virtue of being either a shareholder and/or guarantor and in reliance on rr 18.7 and 18.8 of the High Court Rules.

[7]      Mr Sorensen and Mr Wikeley have been served with the application.  Neither has responded to it and no appearance has been entered on their behalf.

Notices of opposition

[8]      The plaintiff has filed a notice of opposition to the application for discovery by JA Sorensen.  It records that it does not oppose the making of the order.  It seeks an  order  that  the  second  defendants  pay  Mr Sorensen’s  solicitor/client  costs  in respect of this application and in complying with any order that is made on the application.  It pleads that Mr Sorensen is entitled to costs pursuant to r 8.22 of the High Court Rules.

[9]      The plaintiff has filed a notice of opposition to the application for discovery by KD Wikeley.  The grounds advanced are:

a)        Mr Wikeley is not a defendant in the proceeding;

b)The correct procedure is an application for non-party discovery under r 8.21 of the High Court Rules; and

c)       Mr Wikeley  is  entitled  to  request  the  applicant  pay  his  expenses, including solicitor/costs in relation to the application and complying with the order pursuant to r 8.22 of the High Court Rules.

[10]     Mr Gustafson confirmed that the plaintiff’s opposition to the application was

limited to the question of costs.

Status of Messrs Sorensen and Wikeley

[11]     The  plaintiff’s  position  is  that  neither  Messrs Sorensen  nor  Wikeley  are defendants.   The consequence is that if they are not defendants, discovery orders should only be made in terms of r 8.21 dealing with orders for particular discovery against non-parties after proceedings are commenced.

[12]     The second defendants’ position is that both Messrs Sorensen and Wikeley, by virtue of the orders made directing service of the proceedings on them, and, in particular, the operation of rr 18.6, 18.8 and the definitions of defendant and party in r 1.3, mean that both are defendants in the proceeding and are therefore subject to the normal rules relating to discovery.  There is an immediate problem in that neither has filed a statement of defence which, in almost every case, is the position before the court is invited to make discovery orders.   That, in turn, arises from the fact that discovery orders are to be made at a case management conference by the operation of r 8.5.  Case management conferences are called where statements of defence are filed, but usually not otherwise, by virtue of r 7.3.

[13]     Counsel’s research located no case where this issue has been determined. There is, however, a comment in the Commentary to McGechan on Procedure at hr 4.1.01,  where  the  authors,  dealing  with  the  types  of  parties  and  non-parties observe:

Sometimes the Court permits “outsiders to the litigation” (that is, persons  other than the plaintiffs and the defendants) to  intervene, participate or be heard in the proceeding.   Various names are commonly used to describe persons in this position: “interested parties”, “interveners” or “interested persons”.  Strictly, these persons are not parties to the proceeding; it is simply that the court has granted them the right, to a greater or lesser extent, to participate and be heard in the proceeding.

[14]     It is not necessary that I determine the issue of the status of Messrs Sorensen and Wikeley before determining this application because:

a)        Neither the plaintiff nor the defendants oppose the orders that are sought;

b)Both  Messrs Sorensen  and  Wikeley  have  been  served  with  the application and have entered no appearance and have taken no steps in relation to the application;

c)       The orders sought are appropriate, whether they be viewed as inter partes discovery orders or in respect of orders for particular discovery involving a non-party; and

d)In view of the non-appearance of both Messrs Sorensen and Wikeley, the only real issue is the cost of compliance with any discovery order that  is  made.    Counsel  could  give  me  no  good  reason  why  that position could not be covered by an order reserving costs in relation to compliance  with  the  discovery  order  on  the  understanding  that Messrs Sorensen and/or Wikeley could apply pursuant to r 8.22 of the High Court Rules, or on such other basis as is appropriate.

[15]     When I consider these matters it is clear to me that an order in terms of the applications as moved, but reserving costs in the manner I have indicated, should be made.   I am also satisfied that the question of costs between the plaintiff and the second defendants on this application should be reserved.  The matter was resolved inside 30 minutes of hearing time.   Although counsel did not have instructions to consent to the orders that I propose, both indicated that there was no good reason for my not proceeding in the manner that I have indicated.

Orders

[16]     I order:

a)        John Andrew Sorensen:

i)shall, within 21 days of the service of a sealed copy of this order, file in this proceeding and serve upon the plaintiff and second defendants an affidavit of documents, sworn by him, which satisfies requirements specified in the annexure attached to this judgment and marked “A”; and

ii)may be served with the sealed order by email at [email protected];

b)        Kenneth David Wikeley:

i)shall, within 28 days of the service of the sealed order file in this proceeding and serve upon the plaintiff and the second defendants  an  affidavit  of  documents  sworn by him  which satisfies the requirements specified in the annexure marked “B” attached to this judgment; and

ii)may be served with the sealed order by email at [email protected].

c)       Costs in relation to compliance with the orders made are reserved on the  understanding  that  Mr Sorensen  and  Mr Wikeley  may  apply pursuant to r 8.22 of the High Court Rules, or on such other basis as is appropriate, for an order for costs in relation to compliance with the orders made;

d)       Costs in respect of the application are reserved.

JA Faire J