Kidd v Van Heeren

[2015] NZHC 1270

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND- REGISTRY

CIV-2014-404-725 [2015] NZHC 1270

BETWEEN

MICHAEL DAVID KIDD

Plaintiff/Respondent

AND

ALEXANDER PIETER VAN HEEREN Defendant/Applicant

Hearing:

3 June 2015

Counsel:

B D Gray QC and A J Wakeman for Defendant as Applicant

S J Mills QC, B J O'Callahan and E J H Morrison for Plaintiff as Respondent

Judgment:

9 June 2015

JUDGMENT OF FOGARTY J

This judgment was delivered by me on 9 June 2015 at 11.00 a.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Kirkland Morrison O’Callahan Limited, Auckland

Jones Fee, Auckland

KIDD v VAN HEEREN [2015] NZHC 1270 [9 June 2015]

[1]      On 14 April 2015, this Court declared that the defendant (the applicant in these proceedings), is issue estopped from denying: a partnership with the plaintiff, (the respondent in these proceedings); and, the accumulated worldwide assets of the partnership, as found by Satchwell J of the South Gauteng High Court of South Africa.1  A number of orders were made, the principal being:2

An  account  is  to  be  taken  between  the  plaintiff  and  the  defendant  to determine the amount due to the plaintiff arising out the plaintiff’s claim as a partner against the defendant.

[2]      Subsidiary orders required the defendant to account to the plaintiff by filing in  the  High  Court  and  serving  on  the  plaintiff  a  list  of  all  the  assets  of  the partnership.

[3]      The defendant has applied, by interlocutory application, for orders restricting access to the Court file. The application seeks these orders:

(a)      The Court file not be read until further order of the Court, including in particular the second affidavit of Alexander Pieter van Heeren, sworn on 11 May 2015; and that

(b)      The second affidavit of Alexander Pieter van Heeren, sworn 11 May

2015, detailing the defendant’s personal assets and liabilities be confidential to the parties to the proceedings, their legal advisors, and the Court, and to be used solely for the purposes of this proceeding.

[4]      The application is made in reliance on rr 3.9(3), 3.12 and 3.16 of the High

Court Rules and the inherent jurisdiction of the Court.

[5]      Proceeding  on  the  presumption  that  where  confidential  information  is contained in material filed in Court then, absent a hearing, the Court is reluctant to allow access to the Court file:3 I began the hearing on the initial view that the onus to

prevent an order for confidentiality lay on the plaintiff.  So I heard Mr Mills QC first.

1      Kidd v van Heeren [2015] NZHC 517.

2 At [172].

3      Schenker AG v Commerce Commission [2013] NZCA 114, McGechan on Procedure (online looseleaf ed, Brookers) at [HR3.16.04].

[6]      Rule 3.9(1) begins with these words, “this rule applies during the hearing of a proceeding (other than the hearing of an interlocutory application …)”.   The commentary to the rule says: 4

This  period  is  regarded  as  the  “open  justice”  stage  of  the  proceedings because the matter has been tried in public.  During the substantive hearing stage, there is a right to access documents filed in the Court and evidence presented  in  the  proceeding,  subject  to  any  direction  of  the  Court  or objection raised by any party to the proceeding.

[7]      Mr Mills argued that because the order of the High Court was the taking of account, and because the taking of account is a continuous process, that the taking of account, the whole process thereof, is “during the hearing of a proceeding”.   He argued that the opening words of r 3.9(1) creates a binary distinction between the hearing of a proceeding and the hearing of an interlocutory application.

[8]      I do not think that is the correct interpretation of r 3.9(1).  As the Court of Appeal in Schenker observed, the open justice rule has a common law basis. 5   That basis is articulated by the House of Lords in the case of Scott v Scott.6   The basis of the rule is that judicial work should be done in public, transparency being the best surety against any corruption of the process.  For that reason, it is only in exceptional circumstances that a trial or substantive hearing will be heard in private.

[9]      On the other hand, there is no principle that affidavits filed in anticipation of a public hearing can be read by anybody, whether a party or not to the proceedings, prior to the hearing.  The judgments do not usually bother to explain why that is so. But, it seems to me, the answer is fairly obvious.  There is an absolute privilege to say anything in a Court.   But, equally, any evidence, whether tendered first by affidavit or simply given orally, is subject to testing in a hearing by cross- examination.  Thus, damaging statements which may appear in an affidavit can be neutralised or placed into context in the course of the hearing.  This is the reason why the High  Court Rules distinguish between access to documents  during the substantive hearing stage which favours disclosure (r 3.9) and access to documents

other than at a hearing stage where access is restricted to consent by a judge (rr

4      McGechan on Procedure (online looseleaf ed, Brookers) at [HR3.9.01].

5      Schenker AG v Commerce Commission , above n 3 at [36].

6      Scott v Scott [1913] AC 417 (HL).

3.11).  The “binary” being substantive hearing stage (r 3.9) and “in other cases” (r

3.11).

[10]     I see no reason to depart from the normal meaning of the word “hearing”.  It is referring to a judge sitting and hearing the case by way or oral and written submissions from counsel and evidence by witnesses.  That definition of “hearing” is qualified in r 3.9 by excluding interlocutory applications.

[11]     I am of the view that the applicable rules at this stage prior to any hearing is governed by rr 3.11 – 3.16.  Rule 3.11 provides:

3.11      Access to court files,  documents, and formal court  record in other cases

If a person is not eligible to access a document, court file, or any part of the formal court record under any of rules 3.7  to  3.9, the person may access the document, court file, or any part of the formal court record with the permission of the court, given on an application made under rule 3.13.

[12]     The criteria in r 3.16 apply to applications under r 3.9 and under r 3.13.  But they get a different weighting, depending on whether the application is of r 3.9 or

3.13.  Rule 3.16 provides:

3.16     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]     Mr Mills relied on the judgment of Asher J in Peters v Birnie.7   But this was an argument addressed to confidentiality in relation to the reporting of a hearing.

[14]     Recognising the prospect that I would not find the concept of  “hearing” extending to the filing of affidavits in the process of taking of account, as distinct from a public hearing of a judge examining those affidavits, Mr Mills moved onto a second argument in opposition to confidentiality.  He said that this case has attracted public interest in New Zealand and in South Africa and elsewhere in the world.  That his client has already had information volunteered to it as to the wherewithal of Mr van Heeren.  That it was in the public interest for the affidavits of Mr van Heeren to be capable of being read by the public.  Access in this manner would deter Mr van Heeren from saying anything other than the truth.  He also appealed to the quality of justice that is obtained when it is administered in the open, and subject to the full

scrutiny of the media, relying on the dicta of Asher J in Peters v Birnie.8   He referred

to the quote from Jeremy Bentham, cited by Asher J:9

Publicity is the very soul of justice. It is the keenest spur to exertion, and the surest of all guards against improbity. It keeps the judge  himself, while trying, under trial.

[15]     Mr Gray QC, in response, argued that this case was not in a hearing phase. He went further and argued that in fact no liability had been found against his client at this stage.  In this context, he was referring, I think, to quantum.  This Court has ordered the remedy of account between these two men, based on the findings of partnership made by the South African Court. Account is a remedy given here by the Court to give effect to the finding of partnership, the fact that the relationship is broken down, and the fact that there has been no rendering of accounts between the parties.  That is the judgment of the Court.  It has a liability quality.  As I quoted at

the outset of the judgment, it presumes that the net accounting between the two men

7      Peters v Birnie HC Auckland CIV-2009-404-8119, 19 March 2010.

8      Peters v Birnie, at [21].

9      Peters v Birnie, at [24].

underpins the order of this Court for an interim payment of USD25m.

[16]     I do, however,  agree with  Mr Gray that  this  taking of account  is  not  a continuous “hearing” as that word is used in r 3.9.  Mr Gray also relied on Peters v Birnie.  He submitted it would be an exceptional step to allow the Court file to be accessed by the public, outside of a Court hearing.  I agree, with one qualification, namely, as to whether or not the application pending before the Court to vary the Court orders should be regarded as a statement of claim and released.

[17]     As part of my balancing of the criteria in r 3.16, I take into account (c), that in the next few months there will be a public hearing.  The full scope of that hearing is not yet defined but it will include hearing Mr van Heeren’s application to vary the judgment  of  the  High  Court.    This  is  an  application  which  seeks  to  vary  his obligation to pay an interim payment of USD25m.   It also seeks orders setting a timetable for the filing of affidavits of both parties as to what steps have been taken to obtain documents relevant to the account between the plaintiff and the defendant.

[18]     At that hearing, counsel will, at counsel’s discretion, select material from the affidavits and other documents that have been filed in these proceedings for the purpose of relying upon the same, in an effort to obtain or oppose the orders.  That hearing will be in public.  So that the extent to which the documents filed are used, they will become public.

[19]     For these reasons, the Court does make orders restricting access to the Court file, but in different terms than as moved. The Court orders are:

(a)      The Court file not be read by any member of the public until further order of the Court.  This restriction does not apply, of course, to any judgments of this Court, on these matters.

(b)      “Member  of  the  public”  does   not   include  the  parties  to   the

proceedings, their legal advisers, and their commercial advisers and

10     Kidd v van Heeren, above n 1 at [172].

the material in Court to conduct further investigations, check the veracity and accuracy of the content of the material.  Such checking can include showing that material to other persons, including other government agencies, in the course of pursuing enquiries.

[20]     I regard (b) as spelling out what is commonplace in all civil proceedings; that affidavit  evidence  from  one  party  is  capable  of  being  checked,  critiqued  and evidence solicited in response to answer it, from other persons.  Nothing in this order is intended to constrain that normal adversarial process.   For clarification, what it does not include is extraordinary use of Court material such as publishing in the media extracts from the affidavits and calling for persons to come forward to critique the same.   Such an extraordinary step would require an order of the Court which would be made only after an interlocutory application in that regard was made.

[21]     At the request of Mr Gray, the orders that I have made will have no effect for ten working days, to enable Mr Gray and Mr van Heeren’s solicitors to take instructions from his client.  If his client elects to appeal this judgment to the Court of Appeal, there will need to be a further application for a stay of this judgment, independently of any exercise of the right of appeal.

[22]     Mr van Heeren has been partially successful in his application.  Mr Kidd’s

counsel have obtained qualifications to the orders sought.  Costs lie where they fall.

Miscellaneous

[23]     Counsel drew my attention to two minor errors in [172] of the orders.  The word “deposed” in [172](d) is corrected to “disposed”.  The reference in [g] to “e” is corrected to “f”. The judgment has been recalled and corrected to that end.

[24]     With reference to the pending application to vary the judgment and other orders, discussed above, the timing of that hearing has been left to counsel to discuss and liaise with the Registry so that a hearing can be fitted in as soon as is possible, consistent with counsel’s commitments and my own commitments, the intent being that I will hear that application.  To that end, counsel and/or their solicitors will keep

in that regard or in regard to any other matters at all times.