Jindal v OM Financial Ltd

[2020] NZHC 1993

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-004-00628

[2020] NZHC 1993

UNDER

Lawyers and Conveyancers Act 2006 and Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008

BETWEEN

GAUTAM JINDAL

Intended Appellant

AND

OM FINANCIAL LIMITED

Intended First Respondent

NZX LIMITED
Intended Second Respondent

MINTER ELLISON RUDD WATTS

Intended Third Respondent

Hearing:

23 July 2020

Appearances:

The Intended Appellant in person

J J K Spring and C V Cooper for the Intended Respondents

Judgment:

7 August 2020

JUDGMENT OF POWELL J

This judgment was delivered by me on 7 August 2020 at 4 pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

JINDAL v OM FINANCIAL LIMITED [2020] NZHC 1993 [7 August 2020]

[1]    Gautam Jindal is the plaintiff in civil proceedings against the intended first respondent, OM Financial Limited (“OM Financial”). Mr Jindal seeks damages in a sum of $148,346 against OM Financial, represented by Minter Ellison Rudd Watts, for trading losses in the finance investment industry. In the course of these proceedings Mr Jindal sought non-party discovery against NZX Ltd (“NZX”), the operator of the New Zealand Stock Exchange with a regulatory function in respect of OM Financial. For the purposes of the non-party discovery application NZX also sought to instruct Minter Ellison Rudd Watts as its solicitors, the same firm acting for OM Financial in the District Court proceedings.

[2]    As a result, Mr Jindal applied to the District Court to disqualify Minter Ellison Rudd Watts from acting for  both  OM  Financial  and  NZX.  At  the  same  time OM Financial applied for additional security for costs against Mr Jindal, with both applications heard on the same day.

[3]    On 12 February 2020 Judge G  M  Harrison  issued  a  judgment  in  which his Honour declined to disqualify Minter Ellison Rudd Watts from acting for both OM Financial and NZX, and ordered Mr Jindal to pay a further $21,000 security for costs on the proceeding in addition to the $4,000 previously deposited. The proceedings were directed to be stayed until the additional security was provided, other than for a settlement conference to be convened, a step that has not yet occurred.

[4]    Mr Jindal now seeks to challenge both parts of Judge Harrison’s decision, but as his appeal was filed some eight weeks late he requires an extension of time to file the appeal out of time.

[5]Mr Jindal’s application is opposed by the intended respondents.

[6]    There is no dispute that the overall test for determining whether to extend time for bringing an appeal “is whether granting an extension would ‘meet the overall interests of justice’”,1 with a number of factors being relevant to a decision as to whether the time to appeal should be extended including:2

1      My Noodle Ltd v Queenstown Lakes District Council [2009] NZCA 224, (2009) 19 PRNZ 518 at [19].

2 At [19].

(a)the reasons for the delay;

(b)the length of the delay;

(c)the conduct of the parties; and

(d)the extent of any prejudice caused by the delay.

[7]    Added to these factors are the merits of the appeal, although this appears to be relevant in only the clearest of cases.3

The case for Mr Jindal

[8]    Mr Jindal submits that it is in the overall interests of justice for the extension of time he seeks to be granted. In particular:

(a)there was only a short delay in filing the appeal, between filing deadline of 11 March 2020 and the date the appeal was filed on 4 May 2020 and subsequently served on the intended respondents on 12 May 2020;

(b)there were good reasons for the delay: legal advice was still being sought by Mr Jindal at the time the appeal deadline passed and the imposition of the Covid 19 lockdown restricted his ability to file the appeal;

(c)there is otherwise no prejudice to the intended respondents; and

(d)there is considerable merit to the appeal.

[9]    With regard to the merits, with reference to the disqualification application Mr Jindal submitted that his proposed appeal raises important issues of principle with regard to the relationship between a regulator and a regulated party and allowing the same counsel to act for both parties is imprudent, potentially undermining the independence of the regulator before the Courts and in the eyes of the public at large.

3      Havanaco Ltd v Stewart (2005) 17 PRNZ 622 (CA).

In particular, Mr Jindal submitted that such a relationship gave rise to an inherent conflict of interest or “a more than negligible risk” of such a conflict in terms of r 6.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.

[10]   As a result, Mr Jindal submitted that Judge Harrison was wrong to dismiss his application on the basis that there was no evidence to support Mr Jindal’s assertion of a risk of a conflict of interest, as the assessment was inevitably forward looking and therefore not amenable to such proof. In any event Mr  Jindal  submitted  that  Minter Ellison Rudd Watts had already shown they had not acted with candour in not disclosing they were also acting for OM Financial’s insurers, and this gave rise to a further complication, a three-way obligation on the part of Minter Ellison Rudd Watts and that Minter Ellison Rudd Watts could therefore not be relied upon to carry out their professional duties as solicitors.

[11]   Likewise, Mr Jindal submitted the distinction drawn by Judge Harrison between OM Financial as a party and NZX as a non-party was not relevant, given  Mr Jindal indicated he may later seek to join NZX into the proceedings depending on the outcome of his non-party discovery application, while conceding that at the present time he had no basis to do so.

[12]   With regard to the second limb of the appeal Mr Jindal submits it was unreasonable for additional security to be ordered in the magnitude that it was given Mr Jindal had already paid $4,000 in security into Court prior to Judge Harrison’s order, and the amount ordered has the potential to halt Mr Jindal’s claim permanently.

Discussion

[13]   Having considered the matters raised by Mr Jindal I do not consider a sufficient basis for extending time for appeal has been established.

[14]   First, as Mr Spring has submitted on behalf of the intended respondents, the reasons provided for the delay in filing the appeal do not stand scrutiny. The filing deadline for an appeal against Judge Harrison’s decision occurred well before the Covid-19 lockdown and clearly could not have affected Mr Jindal’s decision not to

appeal within the time limit specified. There is in fact no evidence that Mr Jindal was continuing to receive legal advice on the appeal at the time the deadline passed. Instead the evidence shows that he had already sought and received advice in relation to the appeal prior to the filing deadline. This was evidenced by a letter from a solicitor instructed by Mr Jindal, Aaron Nicholls. Mr Nicholls wrote to Minter Ellison Rudd Watts on 9 March 2020, two days before the filing deadline, and advised:

My client has considered appealing the refusal of the debarment application. He reserves his position to apply for extension of time to appeal if a conflict of interest arises in the course of the non-party discovery process. If it cannot be resolved, because it continues to be unreasonably contested with your firm in the middle, he may apply for leave to appeal, or he may renew his debarment application to the District Court on fresh grounds. Presently, he prefers to resolve the underlying issue of non-party discovery in a focused manner. He reserved his right to produce a copy of this letter to the Court on any application for leave to appeal.

[15]   Mr Nicholls letter makes it clear that Mr Jindal was aware of the deadline for the filing of an appeal against Judge Harrison’s decision and he had in fact decided at that time not to appeal, albeit that Mr Nicholls advised Mr Jindal may subsequently seek leave to appeal at some later date. There is no suggestion by Mr Nicholls that he was seeking the consent of all or any of the intended respondents to extending the filing deadline, and the fact that Minter Ellison Rudd Watts did not ultimately respond to Mr Nicholls letter until 9 April 2020 is therefore irrelevant to the issue of whether time should be extended. I note in particular that while a five day response was requested not only was an agreement to an extension of the time for filing not requested, but the filing deadline would have in any event passed within the five days specified by Mr Nicholls for a reply to be filed. Furthermore the response by Minter Ellison Rudd Watts made it clear that any attempt by Mr Jindal to appeal out of time or otherwise attempt to revisit Judge Harrison’s decision would be opposed, and yet a further month elapsed before Mr Jindal’s application was filed.

[16]   This is not then a case where a party has made a genuine error in calculating the appeal time frames or was otherwise not responsible for the delay in filing, or a situation where the other party or parties bear some responsibility for the delay in filing the appeal. On the contrary the evidence shows clearly Mr Jindal made an informed decision prior to the filing date not to file the appeal, and to now extend the time for

bringing the appeal defeats the purpose of having a time limit on appeals in the first place.

[17]   My conclusions on this point are sufficient to dispose of Mr Jindal’s application. In any event I am satisfied there is no merit in either of Mr Jindal’s proposed appeals. Contrary to his submissions he is not able to show there is a more than negligible risk of a conflict of interest requiring the disqualification of Minter Ellison Rudd Watts from acting for NZX on the non-party discovery application. Mr Jindal has in fact not been able to demonstrate any risk at all, because the fact that NZX is not a party to the proceedings means that it has no interest in the proceedings, as Judge Harrison indeed noted. Mr Jindal’s belated suggestion that depending on the outcome of the non-party discovery application he may seek to join NZX to the proceedings indicates a lack of understanding about the non-party discovery process, as it is clearly inappropriate to use such a process as a fishing expedition against a non- party like NZX.

[18]   Leaving these matters aside, I note that both OM Financial and NZX have consented to Minter Ellison Rudd Watts acting for both parties and in the event that a conflict does emerge, of whatever type, there is no basis to suggest that Minter Ellison Rudd Watts will not bring that to the attention of both OM Financial and NZX and, as appropriate, to the Court.

[19]   Likewise, there is no prospect of the appeal succeeding in relation to the imposition of further security. As Judge Harrison’s decision on the issue makes clear, and as Mr Jindal confirmed before me, Mr Jindal did not in fact oppose the imposition of further security in the hearing before Judge Harrison4 but takes issue only with the amount of security imposed.

[20]   As Mr Jindal acknowledged, he does not have the funds to pay the costs that may be imposed, thus satisfying the pre-condition  for  the  award  of  security.  Judge Harrison exercised his discretion in awarding half of the additional security sought by OM Financial, based on the likely costs if the proceeding goes through to a

4      At [22], noting that Judge Harrison did not award costs on the application because the application for further security was not opposed by Mr Jindal.

trial (excluding the current application). No material has been placed before the Court, then or subsequently, to suggest that Judge Harrison exercised his discretion inappropriately, or the details of Mr Jindal’s financial position so as to prove that he is unable to raise the security sought.

[21]   Taking these matters together I have no hesitation in concluding there is no basis for extending the time for Mr Jindal to appeal and Mr Jindal’s application must therefore be dismissed.

Decision

[22]The application to extend time is dismissed.

[23]   The intended respondents are entitled to costs on the application. Any memorandum in support is to be filed within ten working days of the date of this judgment, following which Mr Jindal will have 10 working days to respond. I will then determine the issue on the papers.

Powell J