Leeds v Richards
[2016] NZHC 2314
•23 September 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2016-404-140 [2016] NZHC 2314
UNDER the Insolvency (Cross-border) Act 2006 BETWEEN
MICHAEL THOMAS LEEDS AND NICHOLAS STEWART WOOD Applicants
AND
MURRAY RICHARDS First Respondent
STEINDLE WILLIAMS LEGAL LIMITED
Second Respondent
Hearing: 22 September 2016 Counsel:
S Bisley for Applicants
M Richards, in person, First Respondent
Appearance on behalf of Second Respondent excusedJudgment:
23 September 2016
Reasons:
29 September 2016
REASONS FOR JUDGMENT OF HEATH J
Solicitors:
Buddle Findlay, Auckland
Copy to:M Richards, First Respondent
P Davey, Auckland, Second Respondent
LEEDS v RICHARDS [2016] NZHC 2314 [23 September 2016]
CONTENTS
The application and outcome [1] Background
(a) The Vivendi debt [8] (b) The English bankruptcy proceeding [16] (c) The s 8 application [20] (d) Application to set aside English orders [24]
Analysis
(a) The nature of the application
(i) The scheme of the Cross-border Act [25] (ii) Section 8 of the Cross-border Act [34] (b) Should relief be granted? [37]
The application and outcome
[1] On the petition of Vivendi SA, a French company, Mr Murray Richards was adjudged bankrupt in England on 19 December 2014. After a period during which the Official Receiver was responsible for management of the bankrupt estate, Mr Leeds and Mr Wood (the joint trustees) were appointed as trustees, with effect from 5 February 2015.
[2] The debt on which Mr Richards was adjudicated bankrupt resulted from a contested hearing in the Chancery Division of the High Court of England and Wales. On 9 October 2013, Newey J entered judgment in favour of Vivendi in a sum of about £14 million.1
[3] Vivendi filed its bankruptcy petition on 4 March 2014. It alleged that Mr Richards was domiciled in England and Wales, or had a sufficient presence within that jurisdiction, for the Court to exercise jurisdiction in bankruptcy over him.2 Mr Richards claims the adjudication order was made without jurisdiction; and asserts that he has never resided or been domiciled in England or Wales. He was born in New Zealand and currently resides in Sydney, Australia. In the alternative, he asserts that the joint trustees are not impartial and ought not to be allowed to
continue to administer his bankruptcy.3
1 Vivendi SA v Richards [2013] EWHC 3006 (ChD).
2 Based on s 265(1) of the Insolvency Act 1986 (UK). See also, para [17] below.
3 See paras [11] and [14] below.
[4] On 3 November 2015, the County Court at Croydon (the English Court), exercising jurisdiction in bankruptcy, considered the joint trustees’ application to issue a Letter of Request (the Request) to this Court, to assist in the administration of the English bankruptcy. The English Court made an order on 16 November 2015. Relevantly, the Request states:4
3.This Court hereby requests that the High Court of New Zealand assists this Court by ordering that:
(a) the High Court of New Zealand act in aid of and be auxiliary to this request for assistance and, for this purpose, the Bankruptcy Order and appointment and office of the Joint Trustees be recognised in New Zealand.
(b) the Joint Trustees may exercise the powers conferred on the Official Assignee under sections 165(1) and 171 of New Zealand’s Insolvency Act 2006 to obtain from Steindle Williams Legal Limited information that is relevant to the Bankrupt’s bankruptcy, on payment by the Joint Trustees of Steindle Williams Legal Limited’s reasonable costs.
(c) leave be reserved for the Joint Trustees to apply to the High Court of New Zealand for further relief under section 8 of New Zealand’s Insolvency (Cross-border) Act 2006, if assets in New Zealand are located that the Joint Trustees require the Court’s assistance to realise, or if examination powers are required to obtain further information to identify any asset for realisation.
(d) there be such further or other relief as the High Court of
New Zealand thinks fit.
[5] On the basis of the Request, the joint trustees applied to this Court for assistance, under s 8 of the Insolvency (Cross-border) Act 2006 (the Cross-border Act). Mr Richards responded by seeking a stay. That application was based on his status as an Australian resident. Somewhat optimistically, he contended that the s 8 application should be heard in Australia.5 That application was dismissed by
Associate Judge Bell, in a judgment given on 3 June 2016.6
[6] I heard the s 8 application on 22 September 2016. I made the following orders to assist the joint trustees at the request of the County Court at Croydon:7
4 Sections 165(1) and 171 of the Insolvency Act 2006, are set out at para [37] below.
5 Under the Trans-Tasman Proceedings Act 2010, s 22.
6 Leeds v Richards [2016] NZHC 1191, [2016] NZAR 1016.
7 Leeds v Richards [2016] NZHC 2248 at para [6].
(a) I appoint Mr Michael Whale, Barrister and Solicitor of Auckland, as an independent solicitor to review all files held by Steindle Williams Legal Ltd (whether in paper based or electronic form), and any trust account records independent of them, and determine whether they are matters in respect of which the joint trustees may exercise Mr Richards’ powers to waive legal professional privilege.
(b) Mr Whale and Mr Steindle shall confer and Mr Steindle shall arrange for all files and other paper based or electronic documents to be delivered to Mr Whale’s office at a time to be agreed. Mr Whale may discuss any relevant issues with Mr Steindle in forming a view on questions of privilege.
(c) Mr Whale shall prepare a report for the Court, to be filed on or before 25 November 2016 which shall:
(i) Identify the documents or other information in respect of which the joint trustees are entitled to waive privilege held by Mr Richards and to obtain copies of them.
(ii) Identify those documents or other information in respect of which another entity (or entities) holds privilege and which the joint trustees are not entitled to obtain.
(iii) Identify those documents and information in respect of which the joint trustees ability to waive privilege is in doubt, with a brief summary of the issues to be resolved before a determination on that issue can be made.
(iv) Make such recommendations as he thinks fit with regard to the procedure to be followed to resolve outstanding issues, and to indicate whether he considers there is any impediment to providing a copy of his report to both Mr Bisley and Mr Richards.
(d) Leave is reserved to Mr Whale to apply for further directions, on notice to both the joint trustees and Mr Richards.
(e) This order shall lie in Court unsealed until such time as a memorandum has been signed by both Mr Bisley and Mr Whale confirming that acceptable arrangements have been entered into for fees incurred by Mr Whale to be paid by the joint trustees, in relation to the inquiries and reporting that he is required to undertake pursuant to this order. Leave to apply is reserved in the event of further direction on this issue being required.
(f) All questions of costs in relation to attendances undertaken by Steindle Williams Legal Ltd to comply with orders of the
Court and to participate in the proceeding as second respondent are reserved. A timetable to resolve any outstanding issues shall be fixed at the next call.
(g) In the event that Mr Richards’ application to annul his bankruptcy is successful, leave is reserved to him to apply to rescind this order, subject to any questions of costs that remain in issue involving either Mr Whale or Steindle Williams Legal Ltd.
(h) Mr Whale shall confer with Mr Bisley over the documents filed in this proceeding which he requires before embarking on his tasks and they shall be provided to Mr Whale at no cost.
(i) As between the joint trustees and Mr Richards, all questions of costs are reserved.
(j) The Registrar shall allocate a hearing before me at 9am on the first available date after 5 December 2016 for further directions to be made. Counsel for the joint trustees and Mr Richards personally shall file memoranda no later than
4pm on 1 December 2016 setting out the orders that they seek.
[7] I said that I would give reasons in writing for making those orders. These are my reasons.
Background
(a) The Vivendi debt8
[8] In 2000, Centenary Holdings III Ltd (Centenary3) became part of a group of companies operated by Vivendi. It is a Scottish company that, until May 2002, was known as Seagram Distillers plc.
[9] By 2003, Centenary3 was no longer trading. Nevertheless, it continued to hold valuable assets. They included a shareholding in a company that held the core film and entertainment industry interests operated by the Vivendi group. It also held leases over a number of properties in London. As at 31 December 2002,
Centenary3’s obligations under the leases represented a significant liability.
8 My summary is drawn from Newey J’s judgment in Vivendi SA v Richards [2013] EWHC 3006 (ChD).
Financial statements prepared as at that date disclosed “onerous property lease commitments of vacant London offices” totalling £41.8 million.9
[10] Mr Richards and his brother, Mr Peter Harrod,10 became involved in
arrangements for the disposal of the “non-core assets” of the Vivendi group. In
2003, a series of transactions were entered into on advice from Centenary3’s auditors, PricewaterhouseCoopers, whereby ownership of the shares in Centenary3 were transferred to a company that was owned beneficially by Mr Richards. That company was known as P4 Property Investments Ltd. On 3 March 2004, another company associated with Mr Richards, P4 Property Consulting Ltd contracted to provide consultancy services to Centenary3. In consideration for those services, P4 Property Consulting was to be paid £30,000 per month, with £600,000 to be paid immediately upon the arrangement commencing.
[11] Centenary3 was put into provisional liquidation on 14 June 2005. Later, a winding up order was made. Since 2008, its joint liquidators have been Mr Wood and Mr Caven. Mr Wood is also one of the joint trustees of Mr Richards’ bankrupt estate.11 Mr Richards bases his concern that Mr Wood has a conflict of interest.12
[12] In 2009, Centenary3 issued proceedings against Mr Constant and Mr Bloch (as directors of Centenary3), Vivendi and PricewaterhouseCoopers to recover a loan of £77.7 million made by Centenary3 to a company called Centenary6 Ltd. That money had been paid to Centenary6 as part of the series of steps taken to transfer beneficial ownership of the shares in Centenary3 to Mr Richards.
[13] That claim was settled on 30 September 2010. Vivendi and Mr Constant paid
£47 million to Centenary3. As part of the settlement arrangements, Centenary3 assigned to Vivendi all its “rights and interests in any choses in action relating to or in any way arising out of the” proceedings that Centenary3 had brought. The potential proceedings contemplated by that arrangement were listed in an appendix
to the settlement deed. That list included potential claims against Mr Bloch and
9 Vivendi SA v Richards [2013] EWHC 3006 (ChD), at para 13.
10 Newey J records that Mr Richards had, some time earlier changed his surname from Harrod to
Richards: see Vivendi SA v Richards [2013] EWHC 3006 (ChD) at para [9].
11 Ibid, at para [106].
12 See paras [3] above and [14] below.
Mr Richards. Mr Richards was alleged to have been a shadow director of
Centenary3.
[14] Although other parts of the assigned litigation were settled, Vivendi issued a proceeding against Mr Bloch and Mr Richards on 16 May 2011. Centenary3 was joined as an additional claimant, even though it had assigned its interest in the proceeding. The circumstances in which Mr Wood was involved in settling the initial proceeding and then participating in an assigned cause of action against Mr Richards is the basis of Mr Richards’ complaint about his alleged conflict of interest.
[15] In the trial before Newey J, much of Mr Richards’ evidence was rejected. The Judge found that Mr Richards was a shadow director of Centenary3, and had dishonestly assisted breaches of duty owed by Mr Bloch as a director. Judgment was entered against Mr Richards.
(b) The English bankruptcy proceeding
[16] Following non-compliance with a statutory demand, Vivendi issued a bankruptcy petition against Mr Richards. On 4 March 2014, the date on which the petition was filed, the amount outstanding to Vivendi was said to be £14,093,461.41.
[17] Vivendi’s petition alleged that Mr Richards’ “centre of main interests” was in England and Wales and that, at the time the petition was presented, he was resident in that jurisdiction. The petition also averred that Mr Richards had had “a place of residence in England and Wales in the period of three years ending with the day on which the petition was presented”. A statutory demand was served on Mr Richards. It was said that, on 11 November 2013, he had been served personally by a Mr Faulkner “at the offices of Pinsent Masons LLP” at a named address in London.
[18] On 30 September 2014, Mr Richards applied to strike out the petition. While the documents relating to that application are not before me, I do have a transcript of the hearing of the petition and cross application on 19 December 2014. At that hearing, Vivendi was represented by counsel, but no appearance was entered by or on behalf of Mr Richards. It is apparent that the presiding judicial officer, Registrar
Dennett, investigated the jurisdictional issue as fully as was possible on the evidence available. Mr Richards’ application to strike out the petition was dismissed. An order was made adjudging Mr Richards’ bankrupt.
[19] Subsequently, the joint trustees applied to the English Court for an order that time cease to run for the purpose of determining a date of automatic discharge. An order to that effect was made on 26 January 2016 (the cessation order). Mr Richards was not heard on that application. That order remains in force. Mr Richards also challenges the English Court’s jurisdiction to make that order.
(c) The s 8 application
[20] Following issue of the Request, the joint trustees applied to this Court for orders under s 8 of the Cross-border Act. In opposing the s 8 application, Mr Richards contended:
(a) Both the order of adjudication and the cessation order were obtained as a result of false affidavits or witness statements provided to the English Court. On that basis, the application should be regarded as an abuse of process, and relief refused.
(b)Mr Richards’ does not have his “centre of main interests” in England or Wales, and did not at the time the bankruptcy order was made. He asserts that he has never been resident or domiciled in England or Wales. As the orders made in the English Courts were made without jurisdiction, this Court lacks jurisdiction itself to hear and determine the s 8 application.
(c) The information that the joint trustees seek from the solicitors is privileged, and not disclosable to them.
[21] The third argument which is based on legal professional privilege goes to the Court’s discretion to make an order under s 8 of the Act. The ground advanced by Mr Richards was put in these terms:
6.That the information sought by the [joint trustees] from [solicitors] is privileged Instructions and Advice between Solicitor and Client, and therefore not discloseable (sic), and that in the event the Court is minded to issue an order for disclosure, that such Order is specific in respect of Confidentiality and Relevance to the Bankruptcy, and is within the English 5 years Limitation period prior to the Bankruptcy Order, and in any case not before July 2011 being the date when [Mr Richards] learned there was a Claim raised against him, in respect of each Instruction sought and advice given that is sought to be disclosed to the [joint trustees].
[22] The New Zealand solicitors have been served with the proceeding. They have participated in interlocutory steps. In particular, they have complied with orders made by Hinton J to provide affidavits explaining the nature of the documents that they hold.13
[23] Subject to a reservation of costs, I excused counsel for the New Zealand solicitors’ appearance at the 22 September 2016 hearing. They abided the decision of the Court. Given the background, the New Zealand solicitors understandably prefer to deal with questions of disclosure with the protection of an order from a New Zealand Court.
(d) Application to set aside English orders
[24] On 16 September 2016, Mr Richards filed an application in the English Court in which he seeks to annul his bankruptcy and set aside the cessation order. Those applications are yet to be heard.
Analysis
(a) The nature of the application
(i) The scheme of the Cross-border Act
[25] The fact that the joint trustees seek relief under s 8 of the Cross-border Act is significant. The approach taken avoids the need for them to establish, in this Court,
that Mr Richards’ centre of main interests was (or is) in England or Wales.14
13 Leeds v Richards [2016] NZHC 2118, at para [22].
14 Compare with arts 15(1) and 17 of Schedule 1 to the Insolvency (Cross-border) Act 2006.
[26] The Cross-border Act was enacted primarily to adopt the Model Law on Cross-border Insolvency (the Model Law) that had been developed by a Working Group of the United Nations’ Commission on International Trade Law (UNCITRAL). Schedule 1 to the Cross-border Act is based on the Model Law. Some minor changes have been made to adapt the Model Law to New Zealand
circumstances.15
[27] The Cross-border Act creates procedural, rather than substantive, rights. It is designed to facilitate efficient disposition of cases in which an insolvent debtor is subject to a collective insolvency process and has assets or debts in more than one country.16 In order to seek recognition of a “foreign proceeding” in New Zealand, it is necessary to establish that that proceeding is either a “foreign main proceeding” or a “foreign non-main proceeding”.17
[28] If an application were made to recognise a foreign proceeding, it is brought under art 15(1) of Schedule 1 to the Cross-border Act. Recognition as a foreign main proceeding requires proof that a person’s “centre of main interests” was in the State in which the asserted order was made.18 In the case of individuals, in the absence of proof to the contrary, that will be a person’s place of “habitual residence”.19
[29] In Williams v Simpson,20 I adopted a similar approach to ascertainment of “habitual residence” to that taken by our Court of Appeal in relation to the interpretation of the same words in the Hague Convention on the Civil Aspects of
Child Abduction, which is incorporated as part of our Care of Children Act 2004.21
15 Insolvency (Cross-border) Act 2006, s 3(b) and Schedule 1.
16 Ibid, s 3(b).
17 Ibid, art 2(b) and (c) of Schedule 1, which contain the definitions of “foreign main proceeding” and “foreign non-main proceeding” respectively. The definitions of “foreign proceeding”, “foreign main proceeding” and “foreign non-main proceeding” set out in art 2(a), (b) and (c)
(respectively) of Schedule 1 to the Insolvency (Cross-border) Act 2006.
18 Ibid, art 17(2)(a) of Schedule 1.
19 Ibid, art 16(3) of Schedule 1. See also the definition of “establishment” in art 2(f).
20 Williams v Simpson [2011] 3 NZLR 380 (HC), at para [42].
21 Ibid. See also Care of Children Act 2004, s 105(1)(d) and Basingstoke v Groot [2007] NZFLR
363 (CA).
[30] If “centre of main interests” cannot be established, a “foreign proceeding” may be recognised as a “foreign non-main proceeding” if, at the relevant time, the debtor had an “establishment” in the country of origin of the relevant insolvency proceeding.22
[31] I have explained the background to enactment of the Model Law in New Zealand because the difference between the Model Law regime and the s 8 procedure is sufficient to dispose of arguments advanced by Mr Richards that he did not have his “centre of main interests” in England or Wales at the time the bankruptcy order was made. They are beside the point. There is no need to resolve that point on a s 8 application. The issues under s 8 is whether a qualifying Request
has been made and whether assistance should be given in respect of it.23
[32] Williams v Simpson24 is an illustration of a case in which s 8 was applied. I found, for reasons set out in that judgment, that Mr Simpson had his habitual residence in New Zealand at the time that the order adjudging him bankrupt in an English Court had been made and that, because he was not carrying on any business of the type contemplated by the term “establishment” at the relevant time, his bankruptcy could not be recognised as either a foreign main proceeding or a foreign non-main proceeding. The “recognition” application was dismissed but an alternative application under s 8 was granted.
[33] The importance of Williams v Simpson lies in my determination that a foreign representative who applies for assistance under the Cross-border Act may rely on s 8 if they cannot bring themselves within the ambit of Schedule 1 to the Cross-border Act. I said:25
[68] The Request for Aid falls to be considered in terms of s 8 of the Act. Section 8 is a provision which can be applied in the rare circumstances in which sch 1 is not engaged. Parliament made a deliberate decision to retain an old remedy in order to ensure that co-operation did not wither through a lacuna in sch 1. Section 8 is in similar terms to s 135 of the Insolvency Act
1967. When the Law Commission reported to Parliament, it recommended
22 Insolvency (Cross-border) Act 23006, Schedule 1, art 17(2)(b). See also Williams v Simpson
[2011] 3 NZLR 380 (HC), at para [50]–[66].
23 Section 8 is set out at para [34] below.
24 Williams v Simpson [2011] 3 NZLR 380 (HC), at paras [67]–[87].
25 Ibid, at para [68].
repeal of s 135 “so that the only procedure which will be available for cross- border insolvency applications in cases of personal bankruptcy will be “via” the Insolvency (Cross-border) Act.
(ii) Section 8 of the Cross-border Act
[34] Section 8 of the Cross-border Act provides:
8 High Court to act in aid of overseas courts
(1) This section applies to a person referred to in article 1(1) of Schedule 1. (2) If a court of a country other than New Zealand has jurisdiction in an
insolvency proceeding and makes an order requesting the aid of the High
Court in relation to the insolvency proceeding of a person to whom this section applies, the High Court may, if it thinks fit, act in aid of and be auxiliary to that court in relation to that insolvency proceeding.
(3) In acting in aid of and being auxiliary to a court in accordance with subsection (2), the High Court may exercise the powers that it could exercise in respect of the matter if it had arisen within its own jurisdiction.
[35] In Williams v Simpson, noting that there were no criteria by which this Court was to exercise its s 8 discretion, I called in aid the purposes of the Cross-border Act, as set out in s 3(b):
3 Purpose
The purpose of this Act is to—
…
(b) provide a framework for facilitating insolvency proceedings when—
(i) a person is subject to insolvency administration (whether personal or corporate) in 1 country, but has assets or debts in another country; or
(ii) more than 1 insolvency administration has commenced in more than 1 country in relation to a person.
I took the view that this Court will generally exercise its discretion to give assistance, unless there were some compelling reason not to do so.26
26 Ibid, at para [74]. See also Batty (Trustee in Bankruptcy of Reeves) v Reeves [2015] NZHC 908; [2015] BCC 6568 at para [10].
[36] As I indicated to Mr Richards during the course of argument, I was not prepared to embark upon a reconsideration of whether the English bankruptcy order was properly made. I have before me a sealed order of an English Court confirming that Mr Richards is bankrupt in that jurisdiction, something that is necessary implicit in its Request also. Unless that order were annulled or otherwise set aside by a Court of competent jurisdiction in England and Wales, I am satisfied that I should act on it
and grant relief under the Request, if otherwise appropriate to do so.27
(b) Should relief be granted?
[37] The English Court has asked this Court to exercise powers conferred on the Official Assignee by ss 165(1) and 171 of the Insolvency Act 2006 to obtain information from the New Zealand solicitors that is relevant to administration of Mr Richards’ bankrupt estate. Sections 165 and 171 of the Insolvency Act provide:
165 Assignee may summon bankrupt and others to be examined
(1) The Assignee may at any time, before or after a bankrupt’s discharge,—
(a) summon any of the persons listed in subsection (2) to appear before the Assignee, another Assignee, or a District Court Judge to be examined on oath in relation to the bankrupt’s property, conduct, or dealings; and
(b) require that person to produce and surrender to the Assignee or District Court Judge before whom that person appears any document in that person’s possession or control that relates to the bankrupt’s property, conduct, or dealings.
(2) The persons referred to in subsection (1) are—
(a) the bankrupt:
(b) the bankrupt’s spouse:
(c) a person known or suspected to possess any of the bankrupt’s property or any document relating to the bankrupt’s property, conduct, or dealings:
(d) a person believed to owe the bankrupt money:
(e) a person believed by the Assignee to be able to give information regarding—
(i) the bankrupt; or
27 See para 3(a) of the Request, set out at para [4] above. See also, para [24] above.
(ii) the bankrupt’s property, conduct, or dealings:
(f) a trustee of a trust of which the bankrupt is a settlor or of which the bankrupt is or has been a trustee.
…
171 Assignee may obtain documents
In addition to the power contained in section 165(1)(b), the Assignee may, by notice in writing, require the bankrupt, the bankrupt’s spouse, or any other person to deliver to the Assignee any document relating to the bankrupt’s property, conduct, or dealings in that person’s possession or under that person’s control.
[38] Section 8(3) of the Cross-border Act permits this Court to “exercise the powers that it could exercise in respect of the matter if it had arisen within its own jurisdiction”.28 If Mr Richards had been adjudged bankrupt in New Zealand, the combined effect of ss 165(1) and (2)(c) would allow the Official Assignee to summon a principal of the New Zealand solicitors to appear, either before an Assignee or a District Court Judge, to be examined on oath in relation to the
bankrupt’s property and to produce documents in his or her possession or control.
[39] Section 171 enables the Official Assignee to bypass that procedure in the event that only documents are required. So, in the present case, under a bankruptcy commenced in New Zealand, the Official Assignee could, by notice in writing, require the New Zealand solicitors to deliver to him or her “any document relating to the bankrupt’s property, conduct, or dealings in that person’s possession or under that person’s control”.29
[40] While the New Zealand solicitors, as officers of the Court, would be expected to comply with any such notice, a problem necessarily arises over whether particular files that a solicitor may hold which, broadly, could be considered as “relating to the bankrupt’s property, conduct, or dealings” might nevertheless not be disclosable to the Official Assignee because they are protected by legal professional privilege that
cannot be waived by the Official Assignee.30
28 Insolvency (Cross-border) Act 2006, s 8(3), set out at para [34] above.
29 Insolvency Act 2006, s 171, set out at para [37] above.
30 Re Wong (A Bankrupt) v Official Assignee [1997] NZFLR 300 (HC) at 304–305, applying Re Konigsberg (A Bankrupt) [1989] 3 All ER 289 (ChD) and Kupe Group Ltd v Auckland City Council (1989) 2 PRNZ 60 (HC).
[41] There is no doubt that, if the bankrupt held the privilege jointly with another person, the ability to waive the privilege would pass to the Official Assignee. The position is different if the privilege were held by some other party, and no basis existed for the Court to override the privilege by exercising powers under s 67 of the Evidence Act 2006. Another aspect is the extent to which trust account records
might attract privilege. The general rule is that they do not.31
[42] In my view, there are no compelling reasons why the joint trustees should not be able to access all documents held by the New Zealand solicitors which relate to Mr Richards’ property, and in respect of which either they can waive privilege or there is no privilege. But, the New Zealand solicitors are rightly concerned that they should not wrongly provide information to the joint trustees in cases where Mr Richards is not someone who holds the benefit of privilege. The provision of such documents to the joint trustees in those circumstances might inadvertently infringe the rights of third parties. That being so, some steps must be taken to ensure that privilege questions are addressed independently before any files are delivered up to the joint trustees.
[43] Where questions of privilege are straightforward, the New Zealand practice is, generally, to summon the solicitor to be examined before a District Court Judge, during which rulings on privilege may be given.32 However, in cases where an extensive examination of solicitors’ records is required in order to determine those to which the Official Assignee is entitled, a different approach is required. It is unlikely that the District Court could provide an early date for examination of that type to take place.
[44] One approach that has been taken to the determination of privilege in like cases is the appointment of an independent solicitor to act as a filter for the benefit of
the Court. That approach found favour in some conditions that were attached to
31 Henderson v Official Assignee [2016] NZHC 1452, at para [27]. Further, see Re The Coachman Tavern (1985) Ltd (1990) 5 NZCLC 66,320 (HC) and Re Merit Finance and Investment Group Ltd [1993] 1 NZLR 152 (HC). See also Evidence Act 2006, s 55.
32 Insolvency Act 2006, s 165(1), set out at para [37] above. See also Heath & Whale, Insolvency Law in New Zealand (2nd ed, LexisNexis, Wellington, 2014) at para [6.10(f)] and Stubbs Enterprises Ltd v Springfield Acres Ltd (1992) 6 NZCLC 67,886 (HC).
Anton Piller orders; and to conditions for search warrants issued to enable a law
enforcement agency to seize evidence from solicitors’ offices.33
[45] I took the view that a senior and independent solicitor should be appointed as the Court’s agent to receive all relevant files from the New Zealand solicitors and to advise the Court whether any questions of privilege arose. On that basis, I appointed Mr Michael Whale to review all files held by the New Zealand solicitors, whether in paper or electronic form, and any trust account records independent of them, to determine whether they comprised information in respect of which the joint trustees could exercise Mr Richards’ powers to waive legal professional privilege. To assist me to undertake that task, I directed that he and Mr Steindle confer and discussion relevant issues for the purpose of enabling Mr Whale to form a view on whether
questions of privilege arose.34
[46] I directed Mr Whale to prepare a report for the Court. In general terms, the purpose of the report is to identify documents or other information in respect of which the joint trustees can waive privilege, those in respect of which they cannot waive privilege, and those in respect of which disputes may arise. For those documents (or other information) in respect of which disputes might arise, Mr Whale
was asked to make recommendations for dispute resolution.35
[47] Leave was reserved to Mr Whale to apply for any further directions he may require. The order was to lie in Court until satisfactory arrangements had been made for Mr Whale’s costs to be met. I reminded counsel for the joint trustees that his clients had previously agreed to pay up to £7,500 in costs incurred by Mr Richards in complying with the Request. An undertaking to that effect was recorded in the order of the English Court made on 3 November 2015, pursuant to which the Request was issued. Those moneys should be available to meet costs incurred by Mr Whale.
[48] Mr Whale will need to consider the various types of privilege to which reference is made in ss 54–57 of the Evidence Act 2006. I also draw attention to
33 See generally A Firm of Solicitors v District Court at Auckland [2006] 1 NZLR 586 (CA) at paras [105]–[108].
34 Leeds v Richards [2016] NZHC 2248 at para [6](a) and (b), set out at para [6] above.
35 Ibid, at para [6](c). The precise terms of all orders are set out at para [6] above.
ss 53, 65 and 66 of that Act; they deal respectively with the effect and protection of the privilege; and waiver of, and joint interests in, privileged material.
[49] Although the orders were not crafted for this particular purpose, the time it will take Mr Whale to review the information and report will enable Mr Richards to prosecute, in a timely manner, his application to annul or set aside the bankruptcy order made in England. Unless the English Court makes an order requesting that this Court not take further steps on its earlier Request pending resolution of Mr Richards’ annulment application, I shall continue to deal with issues arising out of Mr Whale’s report. In the event that the bankruptcy is annulled, Mr Richards has leave to apply to rescind my order, subject to questions of costs that remain in Court involving either Mr Whale or the New Zealand solicitors.
[50] Questions of costs in relation to attendances undertaken by the New Zealand solicitors have been reserved. I record that the Request makes it clear that the New Zealand solicitors’ reasonable costs of complying with obligations case on them as a result of the Request are to be paid by the joint trustees.36
[51] After receipt of Mr Whale’s report, I shall convene a hearing on the first available date after 5 December 2016 to make further directions. Those directions will be made to promote the purposes of the Request.
[52] I have explained in some detail why I made the orders I issued on 23
September 2016. Primarily, that has been done to ensure that both the English Court and Mr Whale are aware of the basis on which I have proceeded, and the inquiries
that must be undertaken before substantive relief can be considered.
P R Heath J
36 See para 3(c) of the Request, set out at para [4] above.
5
4
0