Estate of Kidd v Van Heeren
[2021] NZHC 2663
•6 October 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2014-404-725
[2021] NZHC 2663
BETWEEN THE ESTATE OF MICHAEL DAVID KIDD
by its administrator BRYAN JOHN COOPER
Plaintiff
AND
ALEXANDER PIETER VAN HEEREN
Defendant
Hearing: 9, 10 and 16 September 2021 Appearances:
S J Mills QC (on 16 September 2021), B O’Callahan and EJH Morrison for the plaintiff
M D O’Brien QC and S D Williams for the defendant R C Knight for Ms van Heeren-Hermans
Judgment:
6 October 2021
JUDGMENT OF JAGOSE J
[Ancillary interim payment and other issues]
This judgment was delivered by me on 6 October 2021 at 4.00pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Counsel/Solicitors:
S J Mills QC, Auckland
M D O’Brien QC, Auckland
B O’Callahan Barrister, Auckland S D Williams Barrister, Auckland R C Knight Barrister, Auckland
K3 Legal Limited (EJH Morrison), Auckland Fee Langstone (C Langstone), Auckland
Bell Gully (T B Fitzgerald and B J Ward), Auckland
THE ESTATE OF MICHAEL DAVID KIDD by its administrator BRYAN JOHN COOPER v VAN HEEREN [2021] NZHC 2663 [6 October 2021]
[1] This judgment is issued contemporaneously with my interim judgment partially determining the defendant’s (“Mr van Heeren”) interlocutory application for relief from disbursement to the plaintiff (for convenience, “Mr Kidd”, although in fact his estate by its administrator, Bryan Cooper) of USD 17.612 million from the USD 25 million interim payment paid into Court on Mr van Heeren’s account.1
[2] This judgment addresses outstanding issues relating to the balance of the interim payment — additional sums for disbursement under my interim substantive judgment; further sums for payment or disbursement; and if further disbursement to Mr Kidd should be stayed on grounds of my interim disbursement judgment — and formulation of separate questions for determination.
Background
[3]My interim substantive judgment found:2
… subject to adjustments for cash and interest, the partnership’s value as a whole at 18 January 1991 is USD 50.895 million, for allocation in equal shares of USD 25.448 million to each Mr Kidd and Mr van Heeren.
Noting Mr Kidd already to have the benefit of USD 7.836 million, “I would allow disbursement to him now on that account of USD 17.612 million from the USD 25 million interim payment”,3 the latter being a sum paid into Court on Mr van Heeren’s account,4 and I ordered accordingly “as an advance on a final accounting yet to be concluded”.5 As my interim disbursement judgment recounts,6 that disbursement was made. My judgment is subject to appeal and cross-appeal.
Additional sums for disbursement
[4] My interim substantive judgment invited Mr Kidd to seek additional disbursement of up to the balance of the interim payment,7 by reference to an interest
1 Kidd v van Heeren [2021] NZHC 2661 [Interim disbursement judgment].
2 Kidd v van Heeren [2021] NZHC 1414 at [201] [Interim substantive judgment].
3 At [203].
4 At [15].
5 At [242].
6 Interim disbursement judgment, above n 1, at [5].
7 Interim substantive judgment, above n 2, at [243].
calculation on non-cash values to 18 January 1991.8 I also reserved leave for further adjustment to the partnership cash balance calculation at that date.9
[5] The parties are agreed interest on those non-cash values reflected in line items 5.1.13–5.1.15 of Schedule 2 to my interim substantive judgment is to be accounted for as at 18 January 1991 in the amount of USD 102,006. An additional line item 5.1.11, inadvertently omitted by Mr Kidd’s counsel in closing, of USD 305,000 also is agreed, along with interest to 18 January 1991 in the amount of USD 29,544. Together, that is to increase the partnership asset value at 18 January 1991 by USD 436,550.
[6] Mr Kidd claims for adjustment line items 5.1.3 and 5.1.4 as not addressed in my judgment’s treatment of line item 5.07.10 But my judgment expressly was to “disregard” the difference.11 Similarly Mr Kidd claims line item 5.1.10 as a necessary corollary of my judgment’s treatment of line item 7.01.12 But my judgment there inferred equalisation between the parties, save for two “discrepancies”.13 And Mr van Heeren claims, for adjustment in the partnership asset value at 18 January 1991, line item 9.03 I allowed for subsequent deduction.14 If I erred in any of those respects, that is a matter for appeal, not adjustment. I will not allow adjustment on those grounds.
[7] Rounding, the partnership assets value at 18 January 1991 thus is increased by USD 0.437 million to USD 51.332 million.15 I also would allow disbursement to Mr Kidd from the interim payment, on account of his 50 per cent share in the partnership’s 18 January 1991 value, of an additional USD 218,275.16
Further sums for payment or disbursement
[8] Each Mr Kidd and Mr van Heeren seek further sums for disbursement of or from the interim payment:
8 At [205].
9 At [130].
10 At [169]–[172].
11 At [171].
12 At [197]–[201].
13 At [200].
14 At [216].
15 See [201].
16 See [203].
(a)to Mr Kidd, the balance as ‘uncontroversially’ to be exceeded by Mr Kidd’s entitlement on a final accounting, Mr Cooper contending:
[I]t is about time [Mr Kidd’s family] saw some meaningful return from Mr Kidd’s entitlement and for them to have the financial freedom to finish recovery without the involvement of further ruinous litigation funding.
and
(b)to Mr van Heeren, for payment of due and payable litigation expenses for the period from 31 March 2021 to 30 September 2021 in the amount of NZD 526,610.47, NZD 333,401.53 having been expended to 31 July 2021 largely to conclusion of my interim substantive judgment (although including initial steps in addressing Mr Kidd’s disbursement from the interim payment).
[9] Mr van Heeren seeks disbursement of the larger sum from the interim payment to the extent, in the assessment of Worldwide Leisure Ltd’s (“WWL”) directors, WWL is not able to pay the full amount as previously directed.17 With that discretion, WWL does not oppose being directed so to pay Mr van Heeren, but prefers the amount be paid by disbursement from the interim payment to avoid “difficult predictions about WWL’s future expenses and the use of its limited remaining funds”, which amount to some NZD $1.340 million. On the basis all WWL’s funds are partnership assets, and their further depletion by Mr van Heeren no longer can be justified on any balancing of considerations in the wake of my interim substantive judgment,18 Mr Kidd opposes any payment or disbursement to Mr van Heeren.
[10] Mr van Heeren notes Mr Kidd has had some USD 2.510 million of his litigation expenses paid by WWL. Mr Kidd also is seeking to use some of the balance of the interim payment to maintain litigation in Liechtenstein, claimed necessary to secure any final judgment materially in excess of the interim payment. While the
17 At [15]–[16].
18 Relying on United Mizrahi Bank Ltd v Doherty [1998] 1 WLR 435 (Ch) at 439 (relying on Sundt Wrigley & Co Ltd v Wrigley CA Transcript 685, 23 June 1993), relied on in An Ying International Financial Ltd v Li HC Auckland CIV-2004-404-6952, 6 April 2005 at [86], noting:
… the difficulties of balancing on the one hand the basic entitlement of a litigant to instruct solicitors and counsel, and on the other the desirability of preserving, so far as is possible, a fund to which a plaintiff makes a proprietary claim …
parties are in dispute over the quantum of prospective litigation expenses in that jurisdiction, Mr Kidd evidences unpaid and prospective legal expenses approaching CHF 1.287 million (or presently USD 1.384 million).
[11] I am advised by the registry the interim payment sum it retains presently stands at approximately USD 7.091 million, or USD 6.872 million allowing for the further disbursement to 18 January 1991.19 My interim substantive judgment remains to be finalised, possibly requiring reconvening of the experts,20 for payment of whom some retention should be maintained. Noting expert fees drawn on the interim payment approached USD 0.300 million to date, generously perhaps USD 0.150 million should be retained on such account. Pending such finality, the balance remains in favour of accommodating the parties’ litigation expenses from the attainable subject of Mr Kidd’s proprietary claim, on certification by the respective party’s solicitors such properly are incurred in this proceeding, due and payable.21
[12] Given the result of my interim substantive judgment, I will extend such accommodation to Mr Kidd’s offshore legal expenses (as I had not previously been prepared to do)22 in prospective enforcement of final judgment in this proceeding, on comparable certification by Mr Kidd’s New Zealand solicitors.
[13] As entitlements to progressive payments for litigation expenses pending the final accounting, I will not disburse the balance of the interim payment as Mr Kidd seeks. The balance of the interim payment remains an important fund to ensure this proceeding’s conclusion. WWL’s funds need not now to be engaged.
Stay of disbursement to Mr Kidd
[14] Partly in reliance on his earlier stay applications, but also as relief on his third amended application dated 18 August 2021 as I have held,23 Mr van Heeren seeks any further disbursement to Mr Kidd (including that at [12] above) be stayed. Mr Kidd responds Mr van Heeren’s “best case” on appeal, after discounting any entitlement to
19 See [7] above.
20 Interim substantive judgment, above n 2, at [244(b)].
21 Kidd v van Heeren HC Auckland CIV-2014-404-0725, 12 February 2021 at [6]–[7].
22 Kidd v van Heeren [2020] NZHC 3198 at [13].
23 Interim disbursement judgment, above n 1, at [38].
go behind the Genan issue estoppel,24 is his substantive liability of USD 19.644 million (being his debt to Mr Kidd of USD 9.822 million as at 18 January 1991, plus interest calculated in accordance with the South African ‘in duplum’ rule).25
[15] With reference to well-comprehended principle on stay pending appeal,26 Mr Kidd argues there is no justification to stay disbursement of at least that sum, or beyond to at least the whole of the interim payment as exceeded by Mr Kidd’s contended “present day entitlement”. Mr van Heeren replies the present disbursements to Mr Kidd (of USD 17.612 million, and USD 2.510 million)27 already exceed that ‘best case’; success on the Genan argument would reduce Mr van Heeren’s liability on appeal to USD 12.900 million (or less, if also successful on the ‘illegality’ issue).28 A requirement for security should accompany any disbursement.29
[16] Standing back, I would not initially have stayed my ordered disbursement to Mr Kidd. Uncertainty of appeal’s outcome was countered by relative certainty of uplift in updating the account from 18 January 1991 to the present day. Security was unnecessary. Mr van Heeren’s delay in complying with this Court’s interim payment order reinforced the need to relieve Mr Kidd of his consequent litigation funding liability. Overall, the balance of convenience — by analogy with interim injunction considerations,30 if refusing stay pending appeal would be harder on a prospectively successful appellant than granting it would be on the successful respondent — favoured Mr Kidd as inevitable recipient of the net award on final accounting.
[17] Mr van Heeren’s entitlement to relief under my interim disbursement judgment does not materially shift that balance. But the entitlement still should not go ignored. Irrespective of what remedy may be obtained from LCM (alternatively, Mr Kidd)
24 Interim substantive judgment, above n 2, at [52].
25 At [36].
26 Keung v GBR Investments Ltd [2010] NZCA 396 at [11].
27 See [3] and [10] above.
28 Interim substantive judgment, above n 2, at [57]–[58].
29 Relying on Harmon CFEM Façades (UK) Ltd v Corporate Officer of the House of Commons QB 1996 ORB 1151, 29 June 2000 and Campbell v Mylchreest [1999] PIQR Q17 (CA).
30 Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV 2007-485-1756, 30 July 2008 at [4] citing Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 237.
under para 1.4 of the third amended application,31 condign relief under para 1.5 may be ordered in respect of the additional substantive disbursement.32 All the same, as part of that interim substance, stay goes too far. More appropriate is the proposed undertaking sought of LCM (or such alternative security as may be acceptable to the parties or the Court), that the disbursed sum be repaid to the extent necessary to address Mr van Heeren’s success on appeal. I will order accordingly.
Formulation of separate questions for determination
[18] Under r 10.15 of the High Court Rules 2016, Mr Kidd proposes the following question be formulated for separate determination:
(a) Whether following the Court’s determination that South African law is the proper law of the partnership between the parties, the election of remedy in [s] 79 of the Partnership Law Act 2019 […] is available to the plaintiff, either because it is part of the lex fori or because it is a statutory provision to which the New Zealand courts are required to give effect.
(b) If the election under s 79 is available to the plaintiff, is the plaintiff entitled to elect to have a final judgment entered on the basis of the amount determined in the interim judgment to be due to Mr Kidd at dissolution (including any further amount held to be due in accordance with [130] and
[205] of the interim judgment) plus interest on that sum at 5% per annum to the date of final judgment on the account, or such other date as is determined by the Court.
(c) In the event that the election under s 79 is not available to the plaintiff, or the plaintiff is for some other reason not now entitled to exercise the election […], is the plaintiff is entitled to treat Mr Kidd’s entitlement at dissolution as a money claim and elect to have a final judgment entered on the basis of the amount due to Mr Kidd at dissolution plus interest on that sum to the date of judgment, or such other date as is determined by the Court.
(d) If the answer is yes to question (c), what is the interest rate that applies.
(e) Whether, under South African law, the defendant has “wrongfully retained” partnership assets or is otherwise required to account for the gains made on the partnership assets retained by the defendant, or on the reinvestment of those assets.
The application is brought in “the apprehension that the South African law finding does not determine remedy, as remedy is generally governed by the lex fori”.
31 Interim disbursement judgment, above n 1, at [9].
32 See [7] above.
[19] My interim substantive judgment observed the impact of ‘wrongful retention’ under South African law remained to be determined on a final accounting, bringing the 18 January 1991 valuation up to date.33 I invited counsel to consider “if further expert evidence is necessary on ‘wrongful’ retention under South African law”.34 For that reason, Mr van Heeren does not oppose the formulation at (e) above, accepting it is “a question preliminary to the task of bringing the account up to date”, and would conveniently be determined in advance of appeal. I agree.
[20] So far as formulations (a)–(d) above are concerned, however, each attempts to advance Mr Kidd’s position beyond the pleadings and my determinations on them. I observed Mr Kidd’s election “may be affected by my finding as to the applicable law”.35 I determined “the proper law of the partnership law here plainly is South African law”, and Mr Kidd’s claim is “not yet a debt claim”.36 The proposed questions (a)–(d) seek to make an end-run around those determinations. Specifically, they would avoid my direction for conclusion of the accounting “in accordance with [my interim substantive] judgment”.37 Separate determination of questions (a)–(d) by me now is not efficient or expeditious. I recognise they nonetheless may be questions for determination on or after successful appeal (or cross-appeal).
[21] For Mr van Heeren, Mark O’Brien QC also argues it is an “open question” if remedy stands jurisdictionally to be separated from the right to be enforced,38 noting Ms Snyman van Deventer’s advice such segregation was impermissible. But I already have held a jurisdictional alternative is available.39
Result
[22]I therefore order:
33 Interim substantive judgment, above n 2, at [208]–[209] and [222].
34 At [244].
35 At [4]. For what it is worth, in drafting that phrase, I prevaricated between “may be” and “will be”, ultimately opting for the former as not indicating predetermination of election’s availability.
36 At [43] and [64].
37 At [245].
38 Relying on Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105 at 124.
39 Interim substantive judgment, above n 2, at [231]–[234].
(a)conditionally on receipt of Mr Cooper’s personal undertaking to repay if and to the extent Mr van Heeren succeeds on appeal (or such alternative security as may be acceptable to the parties or the Court), disbursement to Mr Kidd in the amount of USD 218,275 from the balance of the interim payment retained by the Court, as a further advance on a final accounting yet to be concluded;
(b)subject to retention by the Court of at least USD 0.150 million of the interim payment, payment to each party’s solicitors of any sum certified by either as due and payable litigation expenses incurred by their client in this proceeding or in prospective enforcement (whether or not in New Zealand) of its final judgment; and
(c)separate decision if, under South African law, Mr van Heeren has “wrongfully retained” partnership assets or is otherwise required to account for the gains made on the partnership assets retained by him, or on the reinvestment of those assets.
Next steps
[23]I direct:
(a)the registry to set down a one-day hearing before me, on a date convenient to counsel, for separate decision of the question identified at [22](c) above; and
(b)the parties to propose a timetable for steps leading up to the hearing.
Costs
[24] I reserve costs until after determination of Mr van Heeren’s third amended application dated 18 August 2021.
—Jagose J
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