Jacanna Holdings Ltd v Pacific Auto Carrier (NZ) Ltd
[2020] NZHC 3308
•14 December 2020
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2018-419-229
[2020] NZHC 3308
IN THE MATTER of an application to interplead under rr 4.58(1), 4.59(3), 4.63(2)(f) and 4.63(4) of
the High Court Rules 2016
BETWEEN
JACANNA HOLDINGS LIMITED
Plaintiff (Removed)
AND
PACIFIC AUTO CARRIER (NZ) LIMITED
First Defendant
Continued
Hearing: 15 October 2020 Appearances:
J W A Johnson for the First Defendant
J A MacGillivray for the Second Defendant
No Appearance for the Third Defendant (only joined by this Judgment)
M Branch for the First and Second Interested PartiesJudgment:
14 December 2020
JUDGMENT OF HINTON J
This judgment was delivered by me on 14 December 2020 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors/Counsel:
Wynn Williams, Christchurch Tompkins Wake, Hamilton Harkness Henry, Hamilton
JACANNA HOLDINGS LTD v PACIFIC AUTO CARRIER (NZ) LTD & ORS [2020] NZHC 3308 [14
December 2020]
AND IBC JAPAN
Second Defendant/Applicant
AND
AUTOTERMINAL INTERNATIONAL LIMITED
Third Defendant (Added)
AND
ROBERT DEVON STONE
First Interested Party
AND
LUCIANE DE SOUZA FERNANDES
Second Interested Party
[1] IBC Japan applies to discharge an interim injunction granted by Davison J on 30 April 2019.1 The Judge ordered that certain funds (the Jacanna Funds) were to be paid into Court and remain under the control of the Registrar pending further order of the Court, to allow a dispute over ownership to be resolved.
[2] Jacanna Ltd commenced the proceeding as an interpleader between IBC Japan and Pacific Auto Carrier (NZ) Ltd (PAC). Jacanna has since been removed as a party but the form of pleading remains. The interim injunction made by Davison J was sought by the interested parties, Mr Stone and his life partner Ms Fernandes.
The parties
[3] Until their relationship deteriorated in 2014, Mr Stone and Mr Hemi were jointly involved in the worldwide trade of used Japanese vehicles through a group of companies it suffices to describe as the Stone/Hemi group. All of the parties (except Jacanna) are related to that group.
[4] The third defendant, Autoterminal International Ltd (ATI) is one of two holding companies for the Stone/Hemi group.2 It is incorporated in the British Virgin Islands. ATI is half-owned by a company ultimately linked to Mr Hemi, and half- owned by a Cayman Islands company beneficially owned by Ms Fernandes.
[5] The second defendant IBC Japan is incorporated under the laws of Japan. It is half-owned by Mr Stone, and half-owned by Mr Hemi. It is involved in the sale, export, and shipping of used motor vehicles from Japan into a number of other territories. Until 2012, IBC Japan’s export of vehicles to New Zealand for further sale by third parties was the group’s only New Zealand business.
[6] In 2012 however, ATI became involved in the direct sale of imported Japanese vehicles to New Zealand customers, and incorporated PAC for this purpose. ATI wholly owns PAC.
1 Jacanna Holdings Ltd v Pacific Auto Carrier (NZ) Ltd [2019] NZHC 931.
2 ATI was not a party but later in this judgment (at [36]) I make an order for joinder, so have amended the intituling accordingly and hence refer to ATI as the third defendant. Not being a party at the time of the hearing, ATI is recorded as unrepresented but by the date of this judgment was represented by Mr Campbell, counsel for the first defendant, PAC.
[7] Jacanna is a freight forwarding company located in Auckland. It was used by IBC Japan as a customs and clearance broker for importation of used vehicles from Japan to New Zealand.
[8] Jacanna remained involved in the Stone/Hemi group’s activities post incorporation of PAC and collected funds accordingly, being the funds that are the subject of this proceeding. As at the date the injunction issued these funds stood in excess of $10,000,000. It appears that Jacanna continues to receive funds in respect of the Stone/Hemi group and that these are also being paid into Court by Jacanna, pursuant to Davison J’s orders of 30 April 2019.
[9] Following Jacanna’s issuing the interpleader proceedings, the interested parties applied for the interim injunction the defendants now seek to discharge, on the basis they had either brought or were bringing derivative actions regarding the Jacanna Funds, which proceedings they said concerned interests they held in the funds.
[10] Granting the application for an injunction, Davison J considered there was a serious question to be tried as to the ultimate ownership of the Jacanna Funds as between IBC Japan, PAC, and ATI, and also a question in that respect arising from the interested parties’ derivative proceedings in various jurisdictions.3 He also considered the balance of convenience favoured relief issuing, as it would preserve the Jacanna Funds in Court, preventing any claim by the interested parties to those funds being rendered nugatory.4 I do not consider it necessary to delve further into the position between the parties and the reasoning of the Judge because as matters have developed, I do not consider it relevant.
The application to discharge the injunction
[11] Since Davison J gave judgment, IBC Japan, PAC and ATI have concluded a deed of settlement. Under the deed, those three parties agree ATI is the rightful owner of the funds and they settle any claims between them as to the funds.
3 At [93]-[106].
4 At [111]-[113].
[12] IBC Japan, with the support of PAC and ATI, seeks to discharge the interim injunction on the basis there is no longer a dispute over ownership of the Jacanna Funds. That is, all three agree the injunction should be discharged. I presume the application was made by IBC Japan because at that point ATI was not a party.
[13]By its interlocutory application of 23 March 2020, IBC Japan seeks orders:
(a)Discharging the order for an interim injunction made by Davison J in this proceeding on 30 April 2019 which ordered that the Jacanna Funds be paid into Court and shall remain in Court under the control of the Registrar;
(b)Directing that the Jacanna Funds held in Court be paid to the first defendant, Pacific Auto Carrier (NZ) Limited as agent for Autoterminal International Limited;
(c)Directing that Jacanna pay any further Jacanna Funds collected by it to PAC as agent for ATI;
(d)[Awarding] Costs.
[14] Mr Stone and Ms Fernandes filed a notice of opposition to the application to discharge.
[15] The hearing of IBC Japan’s application to discharge the injunction took place before me on 15 October 2020.
[16] At the hearing, the interested parties’ position was that PAC, ATI, and IBC Japan are colluding to deprive them of the Jacanna Funds, to which they said Mr Stone has a good claim by reason of the derivative proceeding he is bringing in Japan on IBC Japan’s behalf. Also, since Davison J’s judgment, Ms Fernandes had obtained leave from the Eastern Caribbean Supreme Court to commence derivative proceedings in New Zealand on ATI’s behalf. The interested parties’ position was that, owing to the pendency of these derivative proceedings, there remained a dispute as to the ownership of the funds, such that there had been no relevant change in circumstances warranting the discharge of the injunction. For the same reason, the interested parties said the application to discharge the injunction was an abuse of process and a collateral attack on Davison J’s judgment granting the injunction.
[17] Towards the conclusion of the hearing, I expressed some misgivings about the status of ATI; being concerned as to the appropriateness of the proposed order discharging the injunction, which would have ultimately resulted in the Jacanna Funds going to ATI when ATI was not, at that point, a party. I suggested it would be appropriate for ATI to be formally joined as a defendant. I also suggested it would be more satisfactory for any order made to direct the funds be paid directly to ATI, rather than to PAC as an intermediary.
[18]I reserved my decision.
Post-hearing developments
[19] In response to my comments at the hearing, Mr Campbell confirmed that he represented ATI, as well as PAC. By memorandum dated 16 October 2020, he advised that ATI consents to being added as a party to the proceeding if the Court considers that necessary and agrees with and adopts the position taken by PAC at the 15 October hearing, as set out above. Counsel for ATI also advised that two independent directors had been appointed to the board of that company (the company’s former lack of directors having been a basis of Ms Fernandes’ seeking leave to bring a derivative action in ATI’s name).
[20] On 9 November 2020, counsel for the interested parties filed an updating memorandum advising that on 27 October 2020, ATI’s directors had given an undertaking to the Eastern Caribbean Supreme Court that:
[…] pending agreement between the parties to the contrary or the winding up of the Company or further order they and the Company will retain from any funds received from what are known between the parties as the "Jacanna Funds" sufficient funds to cover (1) the claim in the derivative proceedings in New Zealand together with interest thereon, (2) the Applicant's costs in those proceedings, and (3) the Company's and its directors' costs in those proceedings
[21] Accordingly, counsel for the interested parties advised, the basis of Ms Fernandes’ opposition to the application to discharge the injunction and release the funds had been “made redundant”, the only issue being, “the amount to be retained and where those funds should be held.” On that basis, counsel submitted the
application to discharge the injunction could likely “be resolved without a decision being required”.
[22] On 12 November 2020, counsel for PAC and ATI filed an updating memorandum confirming that ATI had given an undertaking in the Eastern Caribbean Supreme Court, and that the undertaking would be honoured if the interim injunction were discharged and the Jacanna Funds paid out. They submitted however that given the subject of the interpleader proceeding is the issue of ownership of the Jacanna Funds, absent the interested parties agreeing the issue of ownership had been resolved in ATI’s favour, the interpleader proceeding could not be resolved by consent. If, counsel observed, agreement was reached on that point, there would be no basis to impose conditions as to “the amount to be retained and where those funds should be held”.
[23] On 12 November 2020, counsel for IBC Japan filed a memorandum supporting PAC and ATI’s position as set out in their 12 November 2020 memorandum.
[24] By Minute dated 18 November 2020, I responded to counsels’ updating memoranda. I noted the possibility of both the application to discharge the interim injunction and the interpleader proceeding being resolved if the parties agreed to a Minute issuing, recording as follows:
(a)It is agreed between all parties to this proceeding that ATI owns the Jacanna Funds and by consent they are to be paid forthwith to ATI.
(b)ATI has given an undertaking to the Eastern Caribbean Supreme Court on terms outlined in paragraph 2 of a memorandum for the Interested Parties dated 9 November 2020, and ATI has confirmed by its counsel’s memorandum dated 12 November 2020 that it did give such an undertaking and it will honour that undertaking.
[25] On 20 November 2020, counsel for the interested parties filed a memorandum in response to my Minute of 18 November 2020. Counsel stated that the interested parties formally withdraw their Notice of Opposition to IBC Japan’s application to discharge, and agree to orders:
(a)Discharging the Order for an Interim Injunction made by Davison J in this proceeding on 30 April 2019 which ordered that the Jacanna
Funds be paid into Court and shall remain in Court under the control of the Registrar;
(b)Directing that the Jacanna Funds held in Court be paid to [ATI]; and
(c)Directing that Jacanna pay any further Jacanna Funds collected by it to [ATI].
[26] Counsel then recorded that the decision to withdraw the Notice of Opposition had been made for the following reasons:
The application was amended at the hearing to allow for the funds going to ATI and not to PAC;
As recorded by the solicitors for ATI and PAC, the interested parties’ position was that sufficient funds should continue to be preserved to meet the potential liability under the derivative proceeding and ATI has now given an undertaking which preserves the funds. Further, ATI has advised that the undertaking will be honoured and on that basis, it is submitted that the undertaking is now enforceable under New Zealand law.
[27] The interested parties went on to anticipate a request by the defendants that I proceed to deliver a judgment and said that is opposed because the application is moot, there is no wider public interest in a decision, and a decision on the application will not involve a finding of ownership.
[28]The interested parties then submitted that I should:
Record that the Notice of Opposition has been withdrawn, and on that basis order that:
The Jacanna Fund be released to ATI subject to the undertaking given; and
Timetable submissions regarding costs.
[29] On 24 November 2020, counsel for PAC and ATI filed a memorandum in response contending that the interested parties’ notice of opposition had been formally withdrawn. Counsel submitted that the opposition and evidence filed in support of the opposition should be disregarded and a brief judgment issue recording the Court’s findings.
[30] IBC Japan filed a memorandum also dated 24 November 2020 recording agreement with PAC/ATI.
Discussion
[31] Given the history of this matter I am of the firm view that a judgment is required.
[32] The Court may, either under the High Court Rules 2016 (on which IBC Japan relies),5 and also under its inherent jurisdiction, review the continuing appropriateness of the grant of ongoing interim relief where there has been a material change in circumstance.6 This involves consideration of whether, in the circumstances as they now stand, the orders previously made ought to stand. Here, the question is whether there remains a serious question to be tried as to the ownership of the Jacanna Funds, or, if so, whether the balance of convenience favours relief continuing to issue.7
[33] As noted, IBC Japan, PAC, and ATI have executed a deed compromising and settling any dispute between them as to the ownership of the Jacanna Funds in ATI’s favour. The interested parties have formally withdrawn their opposition (which necessarily means also the affidavits filed by them cannot be relied on), and so it cannot be argued that there is any more a serious question to be tried based on any claim on the part of Ms Fernandes or Mr Stone to ownership of the funds, whether evidenced by the derivative actions or by other means. In those circumstances therefore there remains no serious question for trial as to the ownership of the funds, being the question at issue in respect of whether the interim injunction should remain in place.
[34] I should add here that I treat take the interested parties’ 20 November 2020 memorandum as at least a formal withdrawal of opposition that is not conditional. The “reasons” that are given, which refer to the undertaking, are just that, they are not conditions. Whether those reasons are right is not, in a case such as this, (as opposed
5 High Court Rules 2016, r 7.49.
6 Haylock v Patek [2010] NZCA 289, [2011] 1 NZLR 100 at [39], approving Foodtown Supermarkets Ltd v Tse (1987) 2 PRNZ 545 (HC) at 546; and Ryde Holdings Ltd v Sorenson (1995) 8 PRNZ 399 (HC); GP96 Ltd v F M Custodians Ltd [2019] NZHC 1183 at [84]-[85]. See, for discussion of the analogous proposition that attempting to bring a fresh proceeding seeking to relitigate a matter already determined “in a different garb”, Hunter v Chief Constable of the West Midlands Police [1982] AC 529 (HL) at 541; Collier v Butterworths New Zealand Ltd (1997) 11 PRNZ 581 (HC).
7 AMFL Ltd v Savill [2020] NZHC 2112 at [23].
to for example in the case of a self-represented party) a matter of concern for the Court. Also, the form of orders “submitted” by counsel can be viewed as no more than a submission and again does not import any “condition” regarding the Caribbean undertaking. At the telephone conference I convened with counsel today, Mr Branch confirmed that there is no issue over conditionality. It is understandable that other counsel read the 20 November 2020 memorandum differently.
[35] While it may even be that the interested parties have specifically consented to orders as set out at [25] above, I prefer not to rely on that aspect of their memorandum, again given the history of this matter.
[36] Furthermore, for the same reasons set out at [33] above, the balance of convenience has also materially altered in favour of the defendants. This also constitutes a material change in circumstances.
Orders
[37] Given these material changes of circumstance, it is appropriate to discharge the interim injunction, and, in the circumstances as set out above, I make the following orders sought by the defendants but replacing PAC with ATI (to which all parties have consented):
(a)Adding Autoterminal International Limited as the third defendant to this proceeding.8
(b)Discharging the order for an interim injunction made by Davison J in this proceeding on 30 April 2019, namely that the Jacanna Funds be paid into Court and shall remain in Court under the control of the Registrar.9
(c)Directing that the Jacanna Funds held in Court be paid to the now- joined third defendant, Autoterminal International Limited.
8 High Court Rules 2016, r 4.56(b)(ii). I note that, ATI having simply adopted PAC’s position, this will have no costs consequences for the interested parties.
9 Above n 1, at [115(a)]-[115(b)].
[38] As Mr Branch submits, and contrary to the submission for the defendants, these orders do not constitute a final judgment in the proceedings. They do not finally resolve the question of ownership of the Jacanna Funds. That is not something I am required to determine on the application to discharge the interim injunction.
[39] I also note that I am not required to determine whether the undertaking given by the directors of ATI to the Eastern Caribbean Supreme Court is enforceable in this jurisdiction or elsewhere and am not to be taken as doing so.
[40] As noted earlier, IBC Japan also sought an order directing that Jacanna pay to ATI any further funds that it might otherwise pay and remit to PAC. I decline to make that order primarily because Jacanna has been removed as a party to the proceeding. Any issue as to how Jacanna deals with any further funds received by it in relation to the Stone/Hemi group’s activities will need to be dealt with by agreement between the parties or as part of the substantive resolution of the interpleader proceeding.
Costs
[41] If there is any issue as to costs with respect to IBC Japan’s application to discharge, counsel for the defendants are to file and serve memoranda within ten working days from the date of this judgment, with counsel for the interested parties having ten working days to reply. Memoranda are not to exceed five pages, exclusive of intituling pages and supporting materials.
Timetabling
[42] The substantive proceeding is to be placed in a Chambers list in the week beginning 8 February 2021 to consider whether any further orders are required regarding future payments by Jacanna, and whether a discontinuance is to be filed or other directions are required.
Hinton J
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