Kea Investments Limited v Wikeley Family Trustee Limited (in interim liquidation)
[2024] NZHC 163
•13 February 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-2086
[2024] NZHC 163
BETWEEN KEA INVESTMENTS LIMITED
Plaintiff
AND
WIKELEY FAMILY TRUSTEE LIMITED (IN INTERIM LIQUIDATION)
First Defendant
KENNETH DAVID WIKELEY
Second DefendantERIC JOHN WATSON
Third DefendantWIKELEY INC.
Fourth DefendantUSA ASSET HOLDINGS INC
Fifth Defendant
Hearing: 5 February 2024 Appearances:
D J Cooper KC for the Plaintiff
No appearance by or for the interim liquidators of the First Defendant - Mr Arthur excused from attending
A F Pilditch KC and E Armstrong for the Second Defendant
Judgment:
13 February 2024
JUDGMENT OF GAULT J
This judgment was delivered by me on 13 February 2024 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
KEA INVESTMENTS LTD v WIKELEY FAMILY TRUSTEE LTD (IN INTERIM LIQUIDATION) [2024]
NZHC 163 [13 February 2024]
[1] The plaintiff, Kea Investments Ltd (Kea), applies for an order under s 67 of the Evidence Act 2006 that it is not prevented by reason of any privilege asserted by the second defendant, Mr Wikeley, from using communications sent in certain WhatsApp messages. Kea says those messages were made or received for dishonest purposes. Kea wishes to rely on the messages (inter alia) as fresh evidence in its opposition to Mr Wikeley’s application to set aside this Court’s formal proof judgments dated 17 November 2023 and 5 December 2023 in this proceeding.1
[2] Although it would ordinarily be appropriate to hear the s 67 application first (even if it was not determined before hearing the application to set aside), counsel agreed that in the unusual circumstances of this case we should hear the application to set aside first (and necessarily reserve leave in relation to admission of further evidence following determination of the s 67 application).
Procedural background
[3] The course of this proceeding is set out in previous judgments and need not be repeated in full. In essence, Kea commenced proceedings against Wikeley Family Trustee Ltd (WFTL), Mr Wikeley and Mr Watson on 31 October 2022, and sought an urgent interim injunction without notice restraining the defendants from taking steps to perpetuate what Kea says is a massive worldwide fraud against it. Kea claimed that the defendants have engaged in a worldwide conspiracy to defraud Kea, including by obtaining a default judgment in favour of WFTL as trustee of the Wikeley Family Trust against Kea in Kentucky, USA for US$136,290,994 (default judgment) based on a purported 2012 Coal Agreement that Kea said is a forgery.
[4] On 4 November 2022, I made interim orders on a without notice basis pending the return date.2 My judgment addressed, among other things, jurisdiction, the appropriate forum and the requirements of comity given the anti-suit (indeed, anti-enforcement) nature of the relief sought.
1 Kea Investments Ltd v Wikeley Family Trustee Ltd (in interim liq) [2023] NZHC 3260 and [2023] NZHC 3532.
2 Kea Investments Ltd v Wikeley Family Trustee Ltd [2022] NZHC 2881.
[5]On 11 November 2022, the interim orders were varied and extended by consent
– the first and second defendants consented without prejudice to their protest and application to discharge the orders and dismiss the proceeding.
[6] On notice, Kea applied for further interim orders, and WFTL and Mr Wikeley (the Wikeley defendants) applied to dismiss or stay the proceeding on jurisdiction and forum grounds. Mr Watson did not enter an appearance.
[7] In my judgment dated 10 March 2023 (jurisdiction judgment),3 I declined the Wikeley defendants’ application to dismiss or stay the proceeding on jurisdiction or forum grounds and set aside the protest to jurisdiction. I continued the interim orders but dismissed Kea’s application for further interim orders.
[8] Following my jurisdiction judgment, a series of events occurred which resulted in:
(a)no statements of defence being filed and a formal proof hearing being allocated for 17 May 2023; and
(b)an application by Mr Wikeley seeking an extension of time and leave to appeal the jurisdiction judgment, and seeking interim relief (stay) pending appeal. His application was filed on 22 June 2023, after the formal proof hearing but before judgment was delivered.
[9] That series of events is set out in detail in my judgment of 31 August 2023,4 dismissing the applications for extension of time, leave to appeal and interim relief, and is repeated here:
[10] On 17 March 2023, the solicitors for WFTL and Mr Wikeley, Wilson Harle, informed the Court that WFTL and Mr Wikeley intended to seek leave to appeal in respect of the dismissal of their application to dismiss or stay the proceeding and the setting aside of their protest to jurisdiction and that they intended to instruct new counsel. They sought that limited timetable orders be made to allow those steps to be taken.
[11]On 28 March 2023, Mr Wikeley incorporated Wikeley Inc.
3 Kea Investments Ltd v Wikeley Family Trustee Ltd [2023] NZHC 466.
4 Kea Investments Ltd v Wikeley Family Trustee Ltd (in interim liq) [2023] NZHC 2407 at [10]-[29].
[12] On 29 March 2023, I directed the defendants to file a defence by 14 April 2023 but deferred making discovery orders as sought by Kea.
[13] On 30 March 2023, Mr Wikeley as director of WFTL purported to assign the default judgment and the Coal Agreement to Wikeley Inc.
[14] On 3 April 2023, Wilson Harle filed an interlocutory application seeking an order declaring that Mr Browne had ceased to be the solicitor on the record for WFTL and Mr Wikeley, together with an (unsworn) affidavit in support.5
[15] On 4 April 2023, Wikeley Inc applied to the Kentucky Court to be substituted as plaintiff in the Kentucky proceeding on the basis of the purported assignments. That motion was filed by the Kentucky lawyers for WFTL (as trustee of the Wikeley Family Trust) and Wikeley Inc.6
[16] On 6 April 2023, Kea applied without notice to this Court for further interim orders having discovered that Mr Wikeley had taken steps purporting to divest WFTL of the default judgment and otherwise to avoid the effect of the New Zealand Court orders. I was satisfied that further interim orders should be made on a without notice basis.7 I found that it appeared likely that Mr Wikeley and WFTL had acted in breach of this Court’s earlier interim orders by assigning or purporting to assign the Coal Agreement and the very substantial default judgment.8 In the unusual circumstances, I considered it was just and equitable that WFTL be put into interim liquidation.
[17] On 11 April 2023, any application for leave to appeal the 10 March 2023 judgment was due (20 working days after judgment). No application was filed, nor was any other correspondence received.
[18] Also on 11 April 2023, Mr Wikeley incorporated USA Asset Holdings Inc in Kentucky, and the following day purported to appoint that company as the trustee of the Wikeley Family Trust and to change the law of the trust.
[19] On 12 April 2023, Kea commenced proceedings in the Supreme Court of Queensland seeking ancillary interim relief. That Court made without notice orders in support of this proceeding under s 25 of the Trans-Tasman Proceedings Act 2010 (Australia).
[20] On 13 April 2023, Mr Wikeley advised the interim liquidators of WFTL that he had replaced WFTL as trustee of the Wikeley Family Trust with the Kentucky company, USA Asset Holdings Inc. Mr Wikeley also stated to the interim liquidators that their appointment was an aspect of a campaign of oppression and intimidation by the directors of Kea. He called upon them to deliver up any assets or property under their control.
5 The accompanying memorandum indicated that the application and affidavit had not been served on Kea (referring to counsel’s fiduciary obligations and obligations of confidentiality) but that the plaintiff’s solicitors would be advised by email that the documents had been filed. The documents were subsequently released to the new solicitors.
6 Wikeley Inc also filed motions that it would bring upon substitution to compel discovery from Kea and an anti-suit injunction restraining Kea from continuing this proceeding.
7 These orders included adding Wikeley Inc as a defendant.
8 Minute dated 6 April 2023 at [7].
[21] Also on 13 April 2023, the Kentucky lawyers for Wikeley Inc filed a reply in the Kentucky proceeding pursuing the 4 April 2023 motion for substitution.
[22] On 14 April 2023, Mr Wikeley’s statement of defence in this proceeding was due. No statement of defence was filed. That same day, Kea filed a memorandum foreshadowing the possibility of an application for judgment by formal proof if no defence was filed.
[23] On 17 April 2023, following a telephone conference, I made an order declaring that Mr Browne had ceased to be the solicitor on the record for WFTL and Mr Wikeley, on terms including that unless and until Mr Wikeley filed an alternative address for service, any further documents may be served on Mr Wikeley by email.9
[24] At that telephone conference Kea indicated that, as the deadline for statements of defence by the first to third defendants had expired without defences being filed or served, it sought to proceed by way of formal proof but intended to notify those defendants so that they had an opportunity to seek leave to file a statement of defence.10 The minute following that telephone conference was provided to Mr Wikeley that evening.
[25] On 21 April 2023, Kea’s solicitors emailed Mr Wikeley (and Mr Watson) advising that the hearing of the formal proof application had been fixed for 17 May 2023. The email expressly warned Mr Wikeley of the consequences of failing to take steps before the hearing. Mr Wikeley did not reply.
[26] On 15 May 2023, Mr Dowd [Mr Wikeley’s Queensland solicitor] received and acknowledged an email and attachment from Kea’s solicitors advising of the formal proof hearing to take place on 17 May 2023. The attachment was a copy of Kea’s submissions for the hearing.
[27] On 17 May 2023, the substantive one day hearing proceeded by way of formal proof. Judgment was reserved.
[28] On 1 June 2023, Mr Dowd filed in this proceeding a notice of change of solicitor and a memorandum recording that Mr Wikeley wished to seek a stay of the New Zealand proceedings pending the contempt hearing in Queensland and then to bring an application so that he could defend the proceeding in New Zealand that was subject to a formal proof hearing on 17 May 2023 and to file a defence and evidence and have the defence considered by the Court. That memorandum did not signal any intention to seek leave to appeal.
[29] On 22 June 2023, Mr Wikeley’s new solicitor, Mr Mullins, filed a notice of change of representation and the present application, seeking an extension of time and leave to appeal my judgment of 10 March 2023 and interim relief (stay) pending appeal, together with an affidavit from Mr Dowd. An amended interlocutory application was filed on 6 July 2023.
9 Minute dated 17 April 2023 at [4].
10 At [8], citing High Court Rules 2016, r 15.9(3). Kea also sought to abridge time for Wikeley Inc to file a statement of defence.
[10] On 28 September 2023, Mr Wikeley applied to the Court of Appeal for leave to appeal the jurisdiction judgment. That application is to be determined on the papers in the week of 19 February 2024.
[11] On 17 November 2023, I issued my substantive formal proof judgment, granting a permanent injunction, declarations and awarding damages to Kea. In respect of the permanent injunction, I reserved leave in relation to further relief necessary to give effect to the orders.11
[12] On 5 December 2023, pursuant to the reservation of leave granted in the judgment, I made a further order.
[13] On 8 December 2023, Mr Wikeley applied to set aside the formal proof judgments.
[14] On the same day, Mr Wikeley filed in the Court of Appeal a notice of appeal in respect of the formal proof judgments and the jurisdiction judgment.
[15] On 12 January 2024, Kea applied for an order under s 67 of the Evidence Act in respect of the WhatsApp messages.
WhatsApp messages
[16] The messages are WhatsApp communications dated between 22 March 2023 and 2 April 2023, exchanged between: (i) Mr Wikeley; (ii) Mr Andre Regard of the Kentucky law firm Regard Law Group, PLLC (Regard Group); and (iii) a Mr Michael Coleman. Regard Group were the lawyers for WFTL in the Kentucky proceedings. In summary, the messages involve a series of communications, in a group chat between these three persons, relating to the steps taken by the Wikeley defendants around that time, as set out in the paragraphs above.
[17] The messages came into Kea’s possession following disclosure to WFTL’s interim liquidators by order of the United States Bankruptcy Court and subsequent use
11 Kea Investments Ltd v Wikeley Family Trustee Ltd (in interim liq) [2023] NZHC 3260 at [156](a)(v).
by the interim liquidators in an application in the United States District Court dated 30 October 2023. As a result of that application, the messages became publicly available on the United States District Court’s Public Access to Court Electronic Records (PACER) website and came to the attention of Kea’s US counsel.
[18]Three issues arise:
(a)the applicable law;
(b)whether any privilege in the messages belonged to Mr Wikeley and/or WFTL; and
(c)whether the messages were made and/or received for dishonest purposes under s 67 of the Evidence Act.
Applicable law
[19] Mr Pilditch KC, for Mr Wikeley, submitted that the relevant legal privilege arises under Kentucky law. He submitted that, while New Zealand law recognises privilege in advice given by foreign lawyers, that does not mean the law governing this application is solely a question of New Zealand law. The privilege is for Kentucky legal advice. As Kea has not led any evidence of the applicable Kentucky law, he submitted the application ought to be dismissed. Further, while acknowledging that this application raises a question of evidence, he submitted the matters at issue are substantive rather than procedural. This is apparent from the breadth of the order sought by Kea: an order that Kea is not prevented by any reason of privilege from using the messages in these proceedings or for any other purposes whatsoever. He submitted that Kea seeks substantive findings as to the status of the messages that it intends to rely on in other proceedings, including in other jurisdictions.
[20] I am concerned only with Kea’s attempt to admit the messages in this proceeding by having privilege disallowed under s 67. As Mr Cooper KC submitted for Kea, questions of admissibility of evidence are matters of procedure governed by
the law of the forum.12 I accept that legal professional privilege has a special status. As the Privy Council said in B v Auckland District Law Society,13 it is much more than an ordinary rule of evidence. It is a fundamental condition on which the administration of justice as a whole rests. In that sense, it is a substantive right.14 Even so, whether described as a rule, a convention or a practice, it is the approach of the English Court to apply the lex fori to issues of privilege and has been so since the mid-19th century.15 This Court also applies the law of the forum to issues of privilege in New Zealand proceedings.16
[21] Here, I consider that the admissibility of the messages in this proceeding is governed by the law of the forum, that is New Zealand law. That includes determining, for the purposes of admissibility in this proceeding, whether any privilege in the messages belonged to Mr Wikeley and/or WFTL and whether any such privilege is disallowed under s 67 of the Evidence Act, a New Zealand statute, even though legal privilege is a substantive right as described and the relevant privilege here is that of advice given by a foreign lawyer – recognised by New Zealand law and claimed under s 54 of the Evidence Act. It makes no difference that Kea initially sought an order for purposes wider than this proceeding. Mr Cooper disavowed an order that purported to address admissibility in other proceedings, acknowledging that is not for this Court. Indeed, in Queensland a similar application has been made.
[22] Further, a party asserting that foreign law applies has an onus to prove it, and in the absence of satisfactory evidence, the Court will apply New Zealand law.17 Here, there is no evidence that US law differs from New Zealand law regarding either to whom the privilege belonged or when it is disallowed. For this reason too, the issues raised fall to be determined in accordance with New Zealand law.
12 Haines v Herd [2019] NZHC 342 at [18]-[19], upheld on appeal on other grounds: Herd v Haines [2020] NZCA 396 at [31]; Business Control (Schweiz) AG v Shibalova [2023] NZHC 3278 at [30]. See Dicey, Morris & Collins on The Conflict of Laws (16th ed, Sweet & Maxwell, London, 2022) at [4-023].
13 B v Auckland District Law Society [2003] UKPC 38, [2004] 1 NZLR 326 at [37] quoting R v Derby Magistrates Court ex p B [1996] 1 AC 487 (HL) at 507-8.
14 In re RBS Rights Issue Litigation [2016] EWHC 3161 (Ch), [2017] 1 WLR 1991 culminating at [174](2); and Business Control (Schweiz) AG v Shibalova [2023] NZHC 3278 at [26].
15 Re the RBS Rights Issue Litigation [2016] EWHC 3161 (Ch), [2017] 1 WLR 1991 at [169].
16 Business Control (Schweiz) AG v Shibalova [2023] NZHC 3278 at [26]. I also applied New Zealand law to disallow privilege in the formal proof judgment: Kea Investments Ltd v Wikeley Family Trustee Ltd (in interim liq) [2023] NZHC 3260 at [45], and n 18.
17 Schaeffer v Murren [2020] NZSC 98 at [9]-[12].
Whose privilege?
[23] The privilege claimed under s 54 of the Evidence Act is that relating to communications with legal advisers for the purpose of requesting or obtaining professional legal services.18 Accepting that Mr Regard is an overseas practitioner under s 51 and thus a legal adviser for the purposes of s 54, the issue is whether the messages were communications by and with Mr Wikeley in his personal capacity or as a director of WFTL, the party in the Kentucky proceeding. At the time, Mr Wikeley was the sole director and shareholder of WFTL.
[24] Mr Pilditch submitted that Mr Wikeley has a privilege in the messages under the Evidence Act and that any privilege also held by WFTL is a joint privilege, that WFTL cannot waive without Mr Wikeley’s consent.
[25] Kea says that any privilege in the messages belonged to WFTL, rather than to Mr Wikeley personally, and that WFTL waived that privilege by filing the messages in the US District Court and thereby making them publicly available.
[26] Although Regard Group opposed the interim liquidators’ application to the US Bankruptcy Court including on the grounds that Regard Group also “represents Kenneth Wikeley, individually and as the Director of [WFTL]”, the US Bankruptcy Court’s order records that Regard Group “admits that it represented [WFTL] and the Wikeley Family Trust”. No mention is made in the Court’s order of any other client for whom Regard Group purported to act. The US Bankruptcy Court’s order weighs against Mr Wikeley’s claim to personal privilege.
[27] Nevertheless, the messages available on PACER bear the following annotation (apparently inserted by Regard Group): “Notice that Kenneth Wikeley asserts personal privilege on all documents and does not assent to sharing any documents with Kea or its attorneys”. Mr Cooper accepted it was difficult for the Court to determine to whom the privilege belonged on the limited evidence. There is no affidavit by or on behalf of Mr Wikeley containing even a bare assertion of a personal privilege. However,
18 Mr Pilditch did not pursue the submission that the messages are also privileged under s 56 (for the dominant purpose of preparing for the Kentucky proceedings). That would be inconsistent with a personal claim to privilege as Mr Wikeley is not a party to the Kentucky proceeding.
Mr Cooper accepted the notice on the documents may indicate that Regard Group could properly advance the privilege assertion. He also accepted that the messages themselves do not preclude a personal privilege claim by Mr Wikeley.
[28] In these circumstances, and having reviewed the informal messages, I consider it likely that Mr Wikeley and Mr Regard were not sufficiently distinguishing between Mr Wikeley’s different capacities. As Mr Pilditch submitted, the subject matter of the messages was relatively broad in scope, covering the setting up of new entities and transfer or assignment of assets. Although only WFTL was a party to the Kentucky proceeding (at least prior to Wikeley Inc’s motion for substitution) and Mr Wikeley personally was not a party, he was a party in the New Zealand proceeding and the reference to contempt likely related as much to him personally as to WFTL. Accordingly, despite the absence of an affidavit, I proceed on the basis that Mr Wikeley personally was also requesting and obtaining legal services from Regard Group and that any privilege was a joint privilege. I accept that WFTL cannot waive a joint privilege without Mr Wikeley’s consent.
Dishonest purpose
[29]Section 67(1) of the Evidence Act provides:
A Judge must disallow a claim of privilege conferred by any of sections 54 to 59 and 64 in respect of a communication or information if satisfied there is a prima facie case that the communication was made or received, or the information was compiled or prepared, for a dishonest purpose or to enable or aid anyone to commit or plan to commit what the person claiming the privilege knew, or reasonably should have known, to be an offence.
[30] Section 67 codifies the common law fraud or iniquity exception. The Court must disallow a privilege claim where the requirements of the section are made out. The “prima facie case” test reflects the common law.19 The scope of the provision, relevantly, is that “the communication was made or received … for a dishonest
19 O’Rourke v Darbishire [1920] AC 581 (HL), approved in Matua Finance Ltd v Equiticorp Industries Group Ltd [1993] 3 NZLR 650 (CA) at 653-4.
purpose”. As Goff J said in Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd, a dishonest purpose is one involving “all forms of fraud and dishonesty”.20
[31] However, a communication for the purpose of requesting or obtaining professional legal services is not made or received for a dishonest purpose unless “the right of access is abused so as to assist in an act of dishonesty”, as Kόs J said in Rollex Group (2010) Ltd v Chaffers Group Ltd.21 Kόs J added that a client’s confession to his or her lawyer of past offending would not qualify. Nor, normally, will a client seeking legal advice as to the boundaries of legitimacy in relation to future conduct. He concluded that the advice has to be part of the instrumentation of the illegal purpose for it to lose its ordinary protection.22 Where the communication concerns an instruction to the lawyer rather than advice, I would add that the client’s instruction has to be part of the instrumentation of the illegal purpose for it to lose its ordinary protection.
[32] Before turning to the purpose of the messages, I note that Mr Pilditch disputed the relevance of the messages in this proceeding on the basis that the application to set aside is not contesting my earlier findings that Mr Wikeley’s delay in seeking leave to appeal was inexcusable. He submitted that s 67 is part of the Evidence Act as a whole and so relevance is a prerequisite. Even if relevance is a prerequisite in the sense that the Court is being asked to disallow privilege in the context of this proceeding, which would be unnecessary if the messages were irrelevant, the concession is not determinative of relevance. Mr Cooper submitted the issue of delay is relevant irrespective of the concession. Kea seeks to rely on delay in opposing the application to set aside. The messages address delay. I also accept the messages are relevant to whether the breach of the Court’s interim orders was deliberate. Both issues are relevant to the application to set aside (and to Kea’s pending application for indemnity costs).
20 Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553 (Ch D) at 565. See also Red Bull Gmbh v Manhaas Industries Ltd HC Wellington CIV-2010-485-1886, 29 July 2011 at [40]; Rollex Group (2010) Ltd v Chaffers Group Ltd [2012] NZAR 746, [2012] NZHC 1332 at [32]; and Cityside Asset Pty Ltd v 1 Solution Ltd [2013] 1 NZLR 722, [2012] NZHC 3162 at [44]; Icepak Group Ltd v QBE Insurance (International) Ltd [2013] NZHC 3511 at [44]–[47]; and Smallbone v London (2015) 22 PRNZ 768, [2015] NZCA 391 at [57].
21 Rollex Group (2010) Ltd v Chaffers Group Ltd [2012] NZAR 746, [2012] NZHC 1332 at [35].
22 At [45].
[33] I also do not accept the assertion, unsupported by evidence, that there might be some restriction – aside from privilege – on Kea’s use of the documents obtained from the US District Court’s PACER website.
[34] Kea says there is a prima facie case that the messages were made and/or received for dishonest purposes and therefore any claim of privilege should be disallowed under s 67 of the Act. Kea relies on two distinct dishonest purposes:
(a)the messages were made for the purpose of furthering a fraudulent scheme of Mr Wikeley; namely, seeking to procure the enforcement of and otherwise benefit from the default judgment which was itself obtained by fraud; and
(b)the messages were made and received for the deliberate purpose of Mr Wikeley breaching, and causing or procuring WFTL to breach, this Court’s interlocutory orders.
[35] Kea need only establish a prima facie case under one of these limbs to obtain an order under s 67.
[36] In either case, it is necessary to focus on the purpose of the communication. For that reason, I accept Mr Pilditch’s submission that it is insufficient for Kea simply to point to the Court’s findings in the formal proof judgment. Those findings did not address the messages, which were not in evidence. I also acknowledge that the findings in the formal proof judgment were made in the absence of Mr Wikeley. However, those findings are binding on Mr Wikeley unless and until they are set aside. Further, Mr Wikeley has not sought to adduce any evidence to challenge those findings. Even on his application to set aside, his challenge is based on submission (including that some evidence was inadmissible against him) rather than evidence. In any event, to establish a prima facie case in relation to the purpose of the communications, Kea may rely on the evidence filed in this proceeding.
[37] In relation to the first purpose alleged by Kea, it does not allege that Renard Group is party to the allegedly fraudulent scheme. As Mr Cooper submitted, however,
a communication may be made or received for a dishonest purpose whether or not the lawyer is complicit. The question is whether there is a prima facie case that the communication was “made or received” for a dishonest purpose. A client’s dishonest purpose in making or receiving the communication suffices.
[38] I also accept Mr Cooper’s submission that in the case of this series of communications between Mr Wikeley and Mr Regard (and an unknown third person) it would be artificial to ‘slice and dice’ the messages into individual communications. It is appropriate to view them as a series in the round. Indeed, Mr Pilditch also sought to characterise the communications in this way. He submitted that Mr Wikeley was communicating his proposed steps and seeking to understand the implications, asking about the legal consequences. This was expressed in more detail in the written submissions – in essence that the communications show Mr Wikeley legitimately seeking and obtaining legal advice on the extent to which the orders of this Court bind him and WFTL in Kentucky and on the legal avenues available to him in the Kentucky proceeding, and steps available in Kentucky, as a result of this Court’s orders.
[39] I characterise the messages somewhat differently. The messages were not merely seeking Kentucky legal advice. They contain Mr Wikeley’s explicit instructions and indicate that his purpose was for WFTL to “get out of NZ” by forming Wikeley Inc and assigning the default judgment and Coal Agreement from WFTL to Wikeley Inc, so that they could say “WFT has NO assets and NO New Zealand Jurisdiction”. Mr Wikeley said “WFTL needs to be removed as the Trustee completely urgently this week. Then its got nothing just a shell.” That is consistent with the evidence of what occurred. Some of what occurred was clearly governed by New Zealand law. Mr Coleman added a message: “The board resolution states your recognition of your overriding duty including your fiduciary duty which illustrates that you were actually not in contempt of nz court albeit that you did what they forbade”. Mr Wikeley replied “OKAY make sense”. He then asks a question:
KEA 100% will show KY judge that WFTL and Mr Wikeley are under Court injunction in NZ, and are not allowed to transfer the Judgement/ Contract to Wikeley Inc.
*What do you tell the KY judge answer to this challenge ?
You have some LEGAL precedents to quote that NZ Court cannot legally stop WFTL doing what it has done. Yes its against a Court Order ,but nothing they can do about it legally ? Michael you say its Legal 100% just naughty…
[40] After Mr Coleman’s response, Mr Regard said “The transfer is effective when it is made and that happened on 3/30. You may be held in contempt but the Trust has the right to distribute to beneficiaries according to the advice you have received.”23
[41] Mr Wikeley subsequently said “We always have one ace up our sleeve if we fail we REMOVE WFTL as Trustee and appoint a Newco or Wikeley Inc as Trustee or another idea?”
[42] I accept there is no mention of Mr Watson or Mr Hussain in these messages, but that does not preclude a dishonest purpose on the part of Mr Wikeley. Given the evidence that the Coal Agreement was a forgery and that the default judgment was obtained by fraud (and leaving aside for present purposes evidence of conspiracy that Mr Wikeley submitted is inadmissible against him), I am satisfied there is a prima facie case that the communications were made and/or received by Mr Wikeley for the dishonest purpose of pursuing and benefitting from the forged Coal Agreement and the fraudulent default judgment by seeking to assign them, and move the Trustee of the Wikeley Family Trust, away from the reach of the New Zealand Court. There is a prima facie case that Mr Wikeley’s instructions in the messages were part of the instrumentation of that purpose and Mr Regard’s advice was received by Mr Wikeley for that purpose.
[43] Turning to the second purpose alleged by Kea, that the messages indicate a prima facie case of deliberate breach of this Court’s orders amounting to a dishonest purpose, I do not accept the submission that a deliberate breach of Court orders would at most amount to a civil wrong and not meet the threshold for a dishonest purpose. Accepting that not every breach of a Court order is deliberate or dishonest, I consider that a deliberate breach of a Court order that has financial consequences such as removing assets from reach, may well be dishonest.24
23 This may be a reference to New Zealand advice that has been disclosed, but Mr Cooper submitted that advice was given on the basis there was no New Zealand Court order.
24 See Akhmedova v Akhmedov [2019] EWHC 3140 (Fam), [2020] 4 WLR 15 at [26].
[44] The messages indicate an awareness by Mr Wikeley that the steps proposed (and taken) were forbidden and a contempt. I am satisfied that, as Mr Cooper submitted, there is also a prima facie case that the communications were made and/or received by Mr Wikeley for the dishonest purpose of deliberately breaching this Court’s 12 December 2022 interim order, which provided that:
none of the defendants shall sell, assign, gift, grant any security interest in or over, or otherwise in any way whatsoever transfer or encumber any interest any of them may have, directly or indirectly, in any rights any of them may have under or in connection with the Coal Agreement and/or the Default Judgment.
[45] On either ground raised by Kea, I am satisfied there is a prima facie case that the communications were made and/or received by Mr Wikeley for a dishonest purpose and therefore I must disallow the claim of privilege in this proceeding.
[46] As Kea acknowledges, the admissibility of the messages in relation to Mr Wikeley’s application to set aside will require leave on fresh evidence grounds. If leave remains opposed, I consider that given the 2 February hearing leave can be determined on the papers following memoranda. Kea is to file a memorandum addressing leave within five working days and Mr Wikeley is to respond within a further five working days.
Result
[47]Orders accordingly.
Gault J
Solicitors / Counsel:
Mr D J Cooper KC, Barrister, Auckland
Mr M D Arthur and Mr J Marcetic, Chapman Tripp, Auckland Mr A F Pilditch KC, Barrister, Auckland
Mr T Mullins and Ms E Armstrong (Mr Wikeley’s instructing solicitor), LeeSalmonLong, Auckland
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