GFD I LLP v Melview (Kawarau Falls Station) Investments Ltd (in rec)
[2012] NZHC 1796
•23 July 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-7701 [2012] NZHC 1796
BETWEEN GFD I LLP Plaintiff
ANDMELVIEW (KAWARAU FALLS STATION) INVESTMENTS LIMITED (IN RECEIVERSHIP)
Defendant
CIV-2010-404-7702
AND BETWEEN ALAN FALL Plaintiff
ANDMELVIEW (KAWARAU FALLS STATION) INVESTMENTS LIMITED (IN RECEIVERSHIP)
Defendant
CIV-2009-404-6755 [2012] NZHC 677
AND BETWEEN MELVIEW (KAWARAU FALLS STATION) INVESTMENTS LIMITED & ORS
Plaintiff
ANDPENINSULA ROAD LIMITED Defendant
Hearing: On the Papers
Judgment: 23 July 2012
JUDGMENT OF POTTER J
on application by Mr David Yuen for access to Court files
GFD I LLP V MELVIEW (KAWARAU FALLS STATION) INVESTMENTS LIMITED (IN RECEIVERSHIP) HC AK CIV-2010-404-7701 [23 July 2012]
In accordance with r 11.5 High Court Rules
I direct the Registrar to endorse this judgment with a delivery time of 3.30 p.m. on 23 July 2012.
Solicitors: Hornabrook Macdonald, Auckland – [email protected]
Meredith Connell, Auckland – [email protected] and
[email protected]
Bell Gully, Auckland – [email protected]Glaister Ennor, Auckland – [email protected] and
MinterEllisonRuddWatts, Auckland – [email protected] and [email protected]
Chapman Tripp, Auckland – [email protected]
Copy to: B D Gray QC, Auckland – [email protected]
A Galbraith QC, Auckland – [email protected]
J A Farmer QC, Auckland – [email protected]
Introduction
[1] Hornabrook Macdonald have applied on behalf of Mr David Yuen (the applicant) for access to the pleadings in the following three proceedings:
(a) GFD I LLP v Melview (Kawarau Falls Station) Investments Ltd (in rec) CIV-2010-404-7701;
(b)Alan Fall v Melview (Kawarau Falls Station) Investments Ltd (in rec) CIV-2010-404-7702; and
(c) Melview (Kawarau Falls Station) Investments Ltd (in rec) v Peninsula
Road Ltd CIV-2010-404-6755.
[2] The application is made under r 3.11 of the High Court Rules because the proceedings have not yet reached a substantive hearing. I am advised the proceeding referred to in [1](c) above has been settled. The other proceedings are current. (The three proceedings are referred to as the “Melview proceedings”).
[3] Mr Yuen seeks access to the pleadings in the Melview proceedings to assist in anticipated litigation between him and Kawarau Village Holdings Ltd (KVHL) in which the enforceability of underwrite agreements entered into by Mr Yuen with Peninsula Road Limited in June 2006 will be the central issue.
[4] The plaintiffs in the current proceedings, Mr Fall and GFD I LLP, have no objection to the application. Melview, the defendant in the current proceedings and the plaintiff in the settled proceeding, opposes the application on the grounds set out in a memorandum dated 27 June 2012.
[5] On an application by Ho Kok Sun and others, the plaintiffs in other proceedings in this Court,[1] Winkelmann J granted access for the Ho Kok Sun plaintiffs to the pleadings in the Melview proceedings. I adopt the relevant background from that judgment.[2]
[1] Ho Kok Sun & Ors v Peninsula Road Ltd HC Auckland CIV-2011-404-7991.
[2] GFD I LLP v Melview (Kawarau Falls Station) Investments Ltd (in rec) [2012] NZHC 677 HC Auckland CIV-2010-404-7701, 5 April 2012.
[8] The Melview proceedings arise out of the failure of the Kawarau Falls Station property development. The development was to be a $1 billion luxury resort containing 13 different complexes supported by shared amenities. In April and May 2007, GFD and Alan Fall signed eight agreements for sale and purchase with Peninsula Road Limited, the company which had bought the land on which the development was to be built. Peninsula Road later transferred the land in question to Melview, which undertook to Peninsula to perform its obligations under the agreements for sale and purchase.
[9] Melview was placed in receivership in May 2009. Its receivers made the decision to continue with the construction of some of the buildings in the development. Following exchanges between the parties, GFD and Alan Fall purported to cancel the agreements for sale and purchase. When Melview did not accept those cancellations the proceedings in question were initiated.
[10] The Ho Kok Sun proceedings also relate to the sale of Kawarau Falls Station Development in Queenstown. The plaintiffs in that proceeding (the applicant in the current instance) entered into agreements to purchase units in Stage 1, relying on representations made that Stage 2 and Stage 3 would be subsequently completed, providing communal resort facilities which would add value to all the units. At the heart of the Ho Kok Sun proceedings, says counsel for those plaintiffs, is the enforceability or otherwise of agreements for sale and purchase of the units in Stage 1 of the development. The pleaded matters included breaches of s 9 and s 14 of the Fair Trading Act 1986, and s 27(1) Securities Act 1978. These, they say, are the same or similar issues to those involved in the Melview and settled proceedings.
[6] In a memorandum in support of his application dated 16 July 2012, Mr Yuen’s involvement with this property development is summarised. In June 2006 he signed two Marketing and Underwrite Agreements with Peninsula Road Limited. These agreements related to the units in the Kingston West and Lakeside West buildings, then still to be built in Stage 1 of the development. Peninsula Road
Limited later transferred the land in question to Melview, which is alleged to have
undertaken to Peninsula Road Limited to perform its obligations under the Marketing and Underwrite Agreements. After Melview was placed in receivership in May 2009 its receivers decided to complete the construction of the buildings in Stage 1 of the development, including Kingston West and Lakeside West, but not the two remaining stages of the development.
[7] On or about 23 February 2010, following exchanges between the parties, the applicant notified cancellations of the Underwrite Agreements. Those cancellations were not accepted. Melview’s interest in the Marketing and Underwrite Agreements was subsequently transferred to KVHL. KVHL issued call notices pursuant to the provisions of the Underwrite Agreement. On 26 June 2012 KVHL purported to issue Settlement Notices requiring settlement within 12 working days and making time of the essence. The applicant has not settled. He says it is likely that proceedings will be issued in which the enforceability of the Underwrite Agreements will be a central issue, both as a result of representations that the Stage 2 and Stage 3 units would be completed and alleged breaches of the Securities Act 1978. He submits that as the underwriter and guarantor of the units in issue in the Ho Kok Sun proceeding he has an identical interest to the plaintiffs in those proceedings.
Relevant principles
[8] Subpart 2 of Part 3 of the High Court Rules, as amended by the High Court
(Access to Documents) Amendment Rules 2009 governs this application.
[9] Rule 3.9 governs access to court documents during the “substantive hearing stage” of a proceeding which does not apply in this case as none of the proceedings have reached the substantive hearing stage.
[10] Rule 3.11 provides that a person who is not entitled to access under the preceding rules may access a court file with the permission of the Court on application being made under r.13.
Application for permission to access documents, court file, or formal court record other than at hearing stage
(1) This rule applies whenever the permission of the court is necessary under these rules and is sought to access a document, court file, or any part of the formal court record, except where access may be sought under rule 3.9.
(2) An application under this rule is made informally to the Registrar by a letter that—
(a) identifies the document, court file, or part of the formal court record that the applicant seeks to access; and
(b) gives the reasons for the application.
(3) The application is heard and determined by a Judge or, if a Judge directs the Registrar to do so, by the Registrar.
(4) On receipt of an application made in accordance with subclause (2), the Judge or Registrar may direct that the person file an interlocutory application or originating application.
(5) The applicant must give notice of the application to any person who is, in the opinion of the Judge or Registrar, adversely affected by the application.
(6) The Judge or Registrar may dispense with the giving of notice under subclause (5) if it would be impracticable to require notice to be given.
(7) The Judge or Registrar may deal with an application on the papers, at an oral hearing, or in any other manner the Judge or Registrar considers just.
[12] Rule 3.16 sets out the matters to be taken into account in determining an application under 3.13. It provides:
Matters to be taken into account
In determining an application under rule 3.13, or a request for permission under rule 3.9, or the determination of an objection under that rule, the Judge or Registrar must consider the nature of, and the reasons for, the application or request and take into account each of the following matters that is relevant to the application, request, or objection:
(a) the orderly and fair administration of justice:
(b) the protection of confidentiality, privacy interests (including those of children and other vulnerable members of the community), and any privilege held by, or available to, any person:
(c) the principle of open justice, namely, encouraging fair and accurate reporting of, and comment on, court hearings and decisions:
(d) the freedom to seek, receive, and impart information:
(e) whether a document to which the application or request relates is subject to any restriction under rule 3.12:
(f) any other matter that the Judge or Registrar thinks just.
[13] In Commerce Commission v Air New Zealand Ltd[3] Asher J considered the correct approach to the application of the r 3.16 factors. He concluded that none has automatic primacy although some may assume primacy given the particular facts. Asher J observed that:[4]
[3] Commerce Commission v Air New Zealand Ltd [2012] NZHC 271 at [27].
[4] Ibid at [30].
… a court will be less sympathetic to an application which does not have a
recognisable and legitimate public or private purpose.
This application
[14] The applicant submits that the matters set out in r 3.16 most relevant to his application are the orderly and fair administration of justice and the freedom to seek and receive information. He submits that the latter factor is directly relevant when an interested private party is seeking information for his own purposes.[5] The applicant accepts that the matters set out in r 3.16(b) (protection of confidentiality and privacy) may have limited relevance to his application but notes that confidentiality was not accepted by Winkelmann J as a reason for refusing access to the pleadings by the plaintiffs in the Ho Kok Sun proceeding.
[5] Ibid at [31] and [32].
[15] Under the heading of the orderly and fair administration of justice, the applicant says that access to the pleadings in the Melview proceedings will assist because:
(a) The Melview proceedings and the anticipated proceeding between the applicant and KVHL all related to the failed Kawarau Falls Station development in Queenstown. Only Stage 1 was completed before the developer was placed into receivership, and subsequently liquidation.
(b) The applicant entered into underwrite agreements for the Kingston West and Lakeside West units in Stage 1, relying upon representations made that Stage 2 and Stage 3 would be completed, resulting in a destination resort village that contributed to the value of the units underwritten by the applicant and provided communal facilities in an otherwise isolated area. The fact that Stages 2 and 3 were not completed made the benefit or burden of the underwrite agreement substantially different from that represented or contracted for.
(c) The anticipated proceedings will inevitably concern the enforceability of the underwrite agreements for units in Stage 1 of the Development, both as a result of the representations referred to above and alleged breaches of the Securities Act 1978.
(d) The Melview proceedings are understood to concern the same or similar issues and the pleadings in those proceedings will therefore likely enable the applicant to identify the “most speedy and cost- effective procedures to resolve the dispute” underlying his anticipated litigation thereby facilitating the orderly and fair administration of justice.
(e) The application is limited to the pleadings in the Melview proceedings. In Commerce Commission v Air New Zealand Ltd, Asher J considered whether access to a court file by a private non- party would assist in the orderly and fair administration of justice and recognised that “The purpose of pleadings is to set out the key elements relied on by each side and access to them can usually be expected to be in accordance with the principle of open justice”.
(f) A review of the pleadings in the Melview proceedings may also assist the applicant in his preparation of the anticipated proceedings because of the identity of parties and issues.
(g) The applicant as the underwriter and guarantor of the units in issue in the Ho Kok Sun proceeding has an identical interest to the plaintiffs in those proceedings who have been granted access to the pleadings in the Melview proceedings.
(h) For those reasons the applicant has a recognisable and legitimate private interest in the proceedings in the Melview proceedings.
[16] The applicant further submits that the application is consistent with his freedom to seek and receive information which, he submits, is not outweighed by any counterveiling matter set out in r 3.16.
Melview’s opposition
[17] Melview argues:
(a) Mr Yuen is not a party to any current relating proceedings and in any event the Melview pleadings are not relevant to his role and contractual obligations.
(b)The present application engages only private and not public or media interests.
(c) Mr Yuen is the guarantor of the underwriter of the sales of a number of hotel rooms in lakefront apartment units (Lakeside West and Kingston West) which form part of Stage 1 of the Melview developments which are not the subject matter of the Melview pleadings.
(d)Mr Yuen has no role or contractual obligation in relation to any of the specific property the subject of the Melview pleadings.
(e) Parties take steps up to a substantive hearing on the basis that those steps are generally not open to scrutiny by non-parties.
(f) Co-operation between parties is encouraged by not allowing scrutiny by non-parties before a substantive hearing.
(g)Mr Yuen’s application is premature and discloses no good reason why it would assist the orderly and fair administration of justice for him to have access to the Melview pleadings at this stage.
Decision
[18] Balancing the competing interests of the applicant and Melview, I consider that access to the pleadings in the Melview proceedings should be granted to Mr Yuen but subject to conditions as set out below:
(a) Any copies of the pleadings in the Melview proceedings are to remain confidential to Mr Yuen, his solicitors Hornabrook Macdonald, and his counsel Mr B D Gray QC and any counsel who may be assisting Mr Gray in relation to the proceedings proposed by Mr Yuen.
(b)Access to the pleadings will be available following the expiration of 5 working days from the date of this judgment unless within that period Melview by memorandum filed in this court and served on the applicant’s solicitors identifies any specific matters in the pleadings which require protection of confidentiality, or privacy interests of or in relation to Melview. If such a memorandum is filed and served this judgment will not take effect until I have considered and ruled on issues properly raised by Melview.
Result
[19] Accordingly, the applicant may have access to the pleadings in the Melview proceedings subject to the terms and conditions set out in [18].
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