Internet Traders Limited v Williams

[2015] NZHC 229

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2014-404-000187 [2015] NZHC 229

BETWEEN

INTERNET TRADERS LIMITED

First Plaintiff

IT PHARMACEUTICAL SUPPLIES LIMITED

Second Plaintiff

JOHN ROULSTON HEALE Third Plaintiff

AND

NICOLE JEAN WILLIAMS First Defendant

GLENCOVE (2014) LIMITED (formerly

Casper47 Holdings Limited) Second Defendant

TENTACLE ENTERPRISES LIMITED Third Defendant

KIWIPHARMA LIMITED Fourth Defendant

Hearing:	17 February 2015
Appearances:	Jonathan Temm for the Plaintiffs Dr Rodney Harrison QC for the Defendants
Judgment:	20 February 2015

RESERVED JUDGMENT OF MOORE J

This judgment was delivered by  on 20 February 2015 at 1:00pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

INTERNET TRADERS LIMITED & ORS v WILLIAMS & ORS [2015] NZHC 229 [20 February 2015]

[1]      Dr Harrison QC, for the defendants, seeks an adjournment of the trial in this matter which is set down to commence on 9 March 2015 with an estimated duration of five days.  Dr Harrison submits that for a variety of reasons, principally relating to recent  amendments  to  the  statement  of  claim  and  outstanding  issues  around discovery,  his  clients’ defence will  be prejudiced  if  the trial  was  to proceed  as presently scheduled.  Furthermore, he submits that in light of recent developments the allotted time for the hearing is inadequate and a new trial date must, in any event, be  allocated  if  the  trial  is  not  to  be  adjourned  part  heard.    Mr Temm,  for  the plaintiffs, submits that his clients are ready to proceed, that Dr Harrison’s complaints are exaggerated and that the time allocated is more than sufficient to accommodate the trial.

Background

[2]      The first defendant, Ms Williams, and the third plaintiff, Mr Heale, were business partners in several ventures between 1999 and 2014.   The present proceedings relate to the circumstances in which that relationship ended.

[3]      For a number of years, Ms Williams and Mr Heale were both directors and shareholders of the first and second plaintiff companies.   These companies were involved in selling pharmaceutical products online.  It appears the businesses were fairly successful.   They also owned a partnership together which held shares in a further company.

[4]      In early 2014, Ms Williams offered to buy out Mr Heale's interest in the companies.   He refused.   Mr Heale alleges that Ms Williams then sabotaged the companies before resigning as a director and going on to set up several of her own companies in competition to those she owned with Mr Heale.  Mr Heale claims that Ms Williams breached her obligations as a director and under a shareholder's agreement.    He  also  makes  allegations  of  unjust  enrichment.    On  these  claims Mr Heale and the plaintiff companies seek remedies which include a mixture of damages and injunctions.  Mr Heale also seeks an order requiring Ms Williams to buy his interest in the first and second plaintiffs because of her alleged prejudicial conduct.

Recent developments

[5]      The trial was originally set down for one week commencing 9 March 2015. Counsel subsequently agreed that this timeframe would be insufficient for the whole hearing and at a pre-trial conference before Faire J it was agreed that the hearing in March should proceed on the issue of liability only.  At the same conference, Faire J directed that the plaintiffs should file an amended statement of claim by 10 February

2015 to further particularise their claims.

Defence position

[6]      Following the filing of the amended statement of claim, Dr Harrison sought an urgent telephone conference before me as the Judge listed to hear the case.  He submits that the hearing cannot go ahead as scheduled for several reasons.   First, contrary to his expectation that the number of causes of action would be reduced, the amended statement of claim still contains eight causes of action.   He says he anticipated that the amended claim would simplify and reduce the issues for determination permitting the liability trial to be dealt with in the five days allocated. Dr Harrison no longer considers this is possible.  Secondly, Dr Harrison is concerned that the plaintiff now seeks permanent injunctive relief.   This was not pleaded in either the original statement of claim or the earlier amended statement of claim of 14

November 2014.  He submits this addition will add to both the complexity and the duration of the trial and will require additional evidence to be adduced, for example the prejudice to the plaintiffs’ future trading interests.  Finally, Dr Harrison claims that a completely new unjust enrichment claim relating to dividend payments from a different company (which he labelled the PHG dividends claim) has now been added which will require additional discovery from both sides.

[7]      As   noted,  Dr  Harrison   expresses   particular   concern   with   the  unjust enrichment claim which, as now particularised, includes a claim for dividends paid by a Vanuatu company.  He submits this is a new issue which will require additional discovery and additional evidence.

Plaintiffs’ position

[8]      Mr Temm submits that his clients are ready to proceed.   In particular, he submits that Dr Harrison’s complaint in relation to permanent injunctive relief will not be dealt with at the liability hearing and thus is not a factor which should be taken into account in terms of extending the estimated duration of the trial.

[9]      In terms of the amended statement of claim he submits that the plaintiffs have, in fact, reduced their claim by withdrawing one cause of action and the second cause of action involving the claim of unjust enrichment has been more specifically pleaded.  He points out that a claim of unjust enrichment was pleaded in the earlier statements of claim but is now particularised to include the PHG dividends.

[10]     Mr Temm submits that the trial issues relating to this matter can be reduced to three namely:

(a)      Were  the  third  plaintiff  and  the  first  defendant  partners  in  the shareholding to a value of 10 per cent, a fact which Mr Temm said he understood was not disputed?

(b)Has  the  first  defendant  taken  dividends  from  the  shareholding partnership exclusively to herself?

(c)      Has there been unjust enrichment in favour of the first defendant and to the detriment of the third plaintiff?

[11]     He submits that a closer examination of the amended statement of claim filed on 10 February 2015 demonstrates that all of the previously pleaded causes of action have been retained save one which has been deleted  and another where further particulars   have   been   added.      He   emphasises   that   the   factual   matrix   is straightforward and can easily be accommodated within the allocated time.

[12]     On the question of discovery he accepts that there is some disagreement between the parties in relation to the breadth and extent of the disclosure obligations.

He advised that the plaintiff has made available discovery and has carried out its own

inspection of the defendants’ documents. The matter is thus ready for trial.

[13]     He accepted that there were some issues around what he described as “the fringes  of  discovery”,  noting  that  Dr  Harrison  had  discovered  some  documents which he thought should probably be discovered by the defendants and was taking steps to remedy that position.   He noted that on behalf of the plaintiffs he had challenged the extent of some of the discovery that had been provided but was of the view that none of these outstanding matters was sufficient either on its own or taken collectively to derail the trial.

Decision

[14]     In my view it is clear that the addition of the dividend claim to the unjust enrichment claim places the legal partnership between Mr Heale and Ms Williams in issue.  As such, a number of matters which would have been relatively incidental now assume greater prominence in the proceeding.

[15]     I also accept Dr Harrison’s submission that further discovery will now be required.  The defendants, at least, did not consider it necessary to discover evidence relating to the Vanuatu company and will now do so.  There may also be requests for further and better discovery in relation to this company or to the partnership more generally.  In any event, I am satisfied that there is at least a realistic risk that the present state of discovery will not be sufficient to deal with this issue and that the defendants may be prejudiced in their defence if I was to require the trial to proceed as presently scheduled.

[16]     As to whether five days is sufficient to hear the liability phase I accept Dr Harrison’s submission.   He says that the evidence of the two main witnesses, Mr Heale and Ms Williams, is likely to occupy three days alone.   Each party will also call three to four further witnesses albeit of less significance and duration.  As a result, he submits it is difficult to see how the matter could possibly be completed in the allocated time.

[17]     Based on Dr Harrison’s projections I am of the view the Court can have no

confidence this trial would be completed within the allocated time.

Relevant Law

[18]     Rule 10.2 of the High Court Rules provides for the adjournment of a trial before its commencement:

10.2     Adjournment of trial

The court may, before or at the trial, if it is in the interests of justice, postpone or adjourn the trial for any time, to any place, and upon any terms it thinks just.

[19]     This power is broad and allows the Court to order an adjournment for a wide range of reasons linked to the interests of justice.   However, I accept the power should be applied cautiously and regard must be had to the interests of all parties affected by the decision.  Due regard should also be had to those other litigants who will be disadvantaged by the parties receiving a new allocation for a hearing.1    As such, an adjournment should not be ordered unless there is a clear benefit and propose in doing so.

[20]     Given my conclusions as to discovery and the length of the hearing, I must consider whether these issues with the current hearing date mean that it is in the interests of justice to grant the adjournment.  In particular, I must consider whether these difficulties justify the inevitable consequential inconvenience that the adjournment will cause, both to the plaintiffs and also to other litigants who will be forced to wait longer as a result.

Conclusion

[21]     Not without some misgivings I am persuaded by Dr Harrison an adjournment should be granted.  I readily accept an adjournment will cause a significant delay and considerable inconvenience especially given the matter is unlikely to be able to be heard before June this year.  An adjournment will also result in the waste of Court

time, a factor which cannot be ignored.

1      Commissioner of Inland Revenue v Patel [2013] NZHC 477 at [21]-[33]; Gray v Thom (1997) 10

PRNZ 373 (HC).

[22]     However, despite these unfortunate consequences, I consider that it is in the interests of justice to grant the adjournment for the reasons discussed above.   It is unlikely that five days would be sufficient to complete the liability hearing, and there is now also a need for the defendant to respond to new allegations, to fulfil its own discovery obligations and take instructions.  In these circumstances there is little to be gained by forcing the defendant to go to trial in early March.

Result

[23]     I therefore make an order adjourning the hearing on 9 March 2015 and direct the parties to organise a new date for the hearing with the Registrar.  It appears that seven days commencing 23 July 2015 are available.   Mr Temm signalled he may have some difficulties with that date and a possible clash with a criminal fixture.  A new timetable will also need to be set.  I record my exhortation to both counsel to co-operate with each other in obtaining agreement on timetabling orders.   If the parties remain unable to agree they are to file memoranda for my determination.

[24]     Costs are reserved.

Moore J