Latumbo v Pacific Auto Carrier (NZ) Limited

[2018] NZHC 2325

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV 2018-419-45

[2018] NZHC 2325

UNDER

The Companies Act 1993

IN THE MATTER

Of an application for interim injunction and for leave to bring derivative action

BETWEEN

MELANIE ELEANOR LATUMBO

Applicant

AND

PACIFIC AUTO CARRIER (NZ) LIMITED

First Respondent

RENATA IMMANUEL KAHUROA

Second Respondent

HOHUA WARREN HEMI

Third Respondent

Hearing:

On the papers

Counsel:

M D Branch and K Shaw for Plaintiff J Gurnick for First Defendant

J A MacGillivray and S Jass for Second and Third Defendants

Judgment:

5 September 2018

JUDGMENT OF VAN BOHEMEN J

(ON APPLICATION FOR LEAVE TO ADDUCE FURTHER EVIDENCE)

This judgment was delivered by me on 05 September 2018 at 2pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors:

Harkness Henry, Hamilton Guernell Harrison Law Ltd Tompkins Wake

MELANIE ELEANOR LATUMBO v PACIFIC AUTO CARRIER (NZ) LIMITED [2018] NZHC 2325 [5 September 2018]

[1]    On 10 May 2018, I heard the applications by Melanie Latumbo for summary judgment for orders relating to the question of whether Ms Latumbo is a director of Pacific Auto Carrier (NZ) Ltd (“PAC”) and for leave to bring a derivative action on behalf of PAC against PAC and the second and third respondents, Renata Kahuroa, a director of PAC, and Hohua Hemi, whom Ms Latumbo alleges is a deemed director of PAC. I reserved my decision. I am in the process of writing my judgment on those applications.

[2]    By memorandum dated 13 August 2018, Mr Branch, counsel for Ms Latumbo, seeks leave in reliance on s 98 of the Evidence Act 2006 to file by way of affidavit a document from David Roberts, the authorised representative of G. P. Ltd, a company registered in the Cayman Islands. G. P. Ltd is a director of Autoterminal International Ltd (“ATI”), which is also registered in the Cayman Islands. ATI is the 100 per cent shareholder of PAC.

[3]    By memorandum dated 20 August  2018,  Mr  MacGillivray,  counsel  for  Mr Kahuroa and Mr Hemi, submits this is not a case where the requirements of s 98 of the Evidence Act have been met and leave should not be given.

[4]    I had intended to hold a telephone conference with counsel to discuss the application before issuing this decision. However, as I am advised that Mr Branch will not be back from overseas until 12 September 2018, I have made my decision on the basis of counsels’ memoranda.

The evidence and its relevance

[5]    The document from Mr Roberts is a director’s certificate dated 31 July 2018 certifying that at a meeting in the Cayman Islands on 23 May 2016, the directors of ATI passed a resolution cancelling any prior authorities given to others to act or sign on behalf of ATI and confirming that all future authorities would be given in writing by the Director. The document attaches a certified extract of the minutes of the meeting of 23 May 2016 and states that since 23 May 2016 no written authority has

been issued by the directors of ATI to act on ATI’s behalf or sign any document in ATI’s name.

[6]    In his memorandum, Mr Branch refers to submissions made at the hearing on 10 May 2018 by Mr MacGillivray in which Mr MacGillivray submitted there is a factual dispute between the parties as to whether Mr Hemi is authorised to act as effective CEO/representative shareholder of  ATI  in  relation  to  certain  matters.  Mr Branch says this matter is now put beyond doubt by the document Ms Latumbo seeks leave to file.

[7]    Mr Branch submits it is in the interests of justice that the document be produced because it relates to a key issue and could not reasonably have been obtained earlier. He also submits there is no possibility of the defendants being prejudiced because there can be no dispute about the document and what it says.

[8]    In his memorandum, Mr MacGillivray submits there are no exceptional circumstances in this case and the evidence is not fresh evidence that was not previously available. He also questions the relevance of the evidence to the issue of whether Ms  Latumbo  is  a  director  of  PAC  and  to  the  transactions  to  which  Ms Latumbo refers in support of her application for leave to bring a derivative action. Mr MacGillivray says that the main transactions complained of by Ms Latumbo occurred in the period from 2014 to 2016.

[9]    Mr MacGillivray refers to the time pressures under which the respondents had to prepare their answer to Mr Latumbo’s application and says the justice of the case does not require that this further evidence be adduced at this late stage. He submits that if the Court is minded to allow the further evidence, the respondents should be given leave to file further evidence in reply and to file further submissions as to what the court should or should not take from the evidence Ms Latumbo seeks to adduce.

The Evidence Act 2006

[10]   Under s 98 of the Evidence Act, a party may not offer further evidence after closing its case without the permission of the Judge. In a civil proceeding, that permission may be given at any time until judgment has been given. However, a Judge

may not grant permission if any unfairness caused to any other party cannot be remedied by an adjournment or an award of costs or both.

[11]   As discussed by the learned authors in Mahoney on Evidence: Act and Analysis,1 decisions on the application of s 98 have referred to the purpose and principles in ss 6 – 8 of the Act,2 to the view of the Law Commission when preparing the report that led to the Act3 that in most civil trials, and barring any irremediable unfairness to other parties, a judge should permit a party to call further evidence,4 and to common law principles on the discretion to admit late evidence.5 Those common law principles include consideration of whether the new evidence could with reasonable diligence have been adduced at trial and whether the new evidence is likely to be conclusive of the case or to have a substantial bearing on a central issue.6

Discussion

[12]   In considering the application, I have had regard principally to the resolution passed on 23 May 2016. The director’s certificate of 31 July 2018 repeated the substance of the earlier resolution and attached a certified copy of the minutes of the meeting of 23 May 2016. The only relevant new information in the director’s certificate is that no further authorisation has been issued by the director of ATI since the adoption of the 23 May 2016 resolution.

[13]   Clearly, evidence of the 2016 resolution could, with reasonable application, have been adduced at the hearing on 10 May 2018. The same applies to evidence that no further authorisation has been issued since the adoption of the 23 May 2016 resolution. In that respect, I do not accept Mr Branch’s submission that the evidence could not reasonably have been obtained earlier. However, that is not the end of the matter.

1McDonald and others Mahoney on Evidence: Act and Analysis (Thompson Reuters, Wellington, 2018) at [EV 98.02].

2      Goldsmith v Carter [2012] NZHC 1693 at [23]-[24].

3Law Commission Evidence Law: Codification, Hearsay and Principles for Reform (NZLC R55, 1999) at [C359].

4      Maranathan Charitable Trust v Cawthray Motors Ltd [2016] NZHC 1069 at [28].

5Jackson v Te Rangi [2014] NZHC 2918, [2015] 2 NZLR 351 at [113]; Antons Trawling Ltd v Dawson & Associates Ltd [2016] NZHC 980, (2016) 23 PRNZ 255 at [11]

6      Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 (HC) at 291-292

[14]    Having regard to the purpose and principles of the Evidence Act, I am satisfied that evidence of whether Mr Hemi had authority to act on behalf of ATI, especially in relation to its relationship with PAC, has a tendency to prove or disprove an issue of consequence to the determination of the proceeding, namely the basis on which Mr Hemi conducted himself in relation to the activities of ATI and PAC. I have yet to determine whether the evidence has a substantial bearing on the matters at issue in Ms Latumbo’s applications, let alone whether it is conclusive of the case in either application. In those respects, however, the matters identified by Mr MacGillivray in his memorandum as noted at [8] are clearly relevant.

[15]   To grant Ms Latumbo permission to adduce the additional evidence will delay the issue of my judgment, which has already taken longer to deliver than I had intended. However, I do not consider this will prejudice the respondents.

[16]   Like Muir J in Maranathan Charitable Trust v Cawthray Motors Ltd,7 I consider my decision on Ms Latumbo’s application must ultimately be informed by the justice  between  the  parties.  I  have  concluded  that  to  grant  permission  to Ms Latumbo to adduce the evidence would not constitute an injustice to Mr Hemi, who has taken the lead in opposing Ms Latumbo’s application, or to Mr Kahuroa.

[17]   There are two reasons for that conclusion. The first is that the adoption of the resolution by the directors of ATI on 23 May 2016 is a matter of fact that ought to have been known to Mr Hemi given:

(a)Mr Hemi’s ownership position in the larger enterprise as shown in the Corporate  Structure  diagram  found  at  RK  1  in  the  exhibit  to   Mr Kahuroa’s affidavit of 4 April 2018; and

(b)The activities Mr Hemi acknowledges in his affidavit of 2 April 2018 that he took on behalf of ATI.

7      Maranathan Charitable Trust v Cawthray Motors Ltd [2016] NZHC 1069 at [28].

[18]   The second and even more compelling reason is that the fact of the adoption of the resolution and the content of the resolution are already before the Court in evidence filed by Ms Latumbo and endorsed by Mr Hemi.

[19]   Attached as Exhibit C to Ms Latumbo’s affidavit of 8 February 2018 is a letter dated 29 July 2016 to Jacanna Holdings Ltd from Gurnell Harrison Law Ltd, solicitors for NPLH (NZ) Ltd. That letter expressed concern about Jacanna’s withholding of funds that NLPH (NZ) considered should have been paid to ATI. In paragraph 6 of the letter, the solicitors set out the text of the resolution adopted by ATI’s directors in terms almost identical to that set out in the certified extract of the minutes attached to the Director’s Certificate signed by Mr Roberts.8

[20]   Mr Hemi has taken no issue with the letter in his affidavit of 2 April 2018. To the contrary, at paragraph 48 of his affidavit, Mr Hemi refers to Jacanna’s withholding of money and states:

NPLH (NZ) Ltd, as holder of my 50% interest in ATI, instructed solicitors to write to Jacanna protesting (see exhibit C to Ms Latumbo’s affidavit).

[21]   There can be no doubt, therefore, that Mr Hemi was aware of the letter of    29 July 2016 from Gurnell Harrison Law to Jacanna. It follows he must also have been aware of the resolution of 23 May 2016 quoted in that letter. He cannot be prejudiced, therefore, by the production of the certified minutes of the ATI Board recording the adoption and content of the resolution.

[22]   For these reasons, I grant leave to Ms Latumbo to file by way of affidavit the document from David Roberts attached to Mr Branch’s memorandum of 13 August 2018.

8The only difference between what is set out in the letter of 29 July 2016 and what is set out in the certified extract of the minutes of 23 May 2016 is that the letter refers to previous authorities given outside of “the Sole Director” whereas the certified extract refers to previous authorities given outside of “the Directors”. Since it is not argued that Mr Hemi was ever a director of ATI, that difference would appear to be of little consequence.

[23]   Since the fact of the resolution and the text of the resolution of 23 May 2016 were in evidence at the hearing on 10 May 2018, I do not see a case for the defendants to adduce evidence in reply or for counsel on either side to make further submissions on the significance of that evidence. I reserve leave to the parties, however, to apply no later than 5 pm on Monday, 17 September 2018.

G J van Bohemen J