Markom PR Limited v CIT Administration Limited

[2015] NZHC 1863

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-001412 [2015] NZHC 1863

BETWEEN

MARKOM PR LIMITED

Applicant

AND

CIT ADMINISTRATION LIMITED Respondent

Hearing:	5 August 2015
Appearances:	T A Chubb for Applicant C L Haemmerle for Respondent
Judgment:	7 August 2015

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 6 August 2015 at 12.00 noon

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date………………………..

MARKOM PR LTD v CIT ADMINISTRATION LTD [2015] NZHC 1863 [7 August 2015]

Introduction

[1]      CIT Administration Ltd is the plaintiff and Markom PR Ltd the defendant in District Court proceedings in which CIT claims $56,000 plus interest in relation to expenses associated with office space the parties previously shared.   Markom has applied for an order transferring the proceedings to this Court.

[2]      Markom  asserts  that,  although  ostensibly  a  discrete  and  straightforward dispute, the District Court proceeding is properly viewed in the context of the much wider dispute between the respective directors of the parties: Sarah Sparks (the director of Markom) and Gregory Olliver (the director of CIT) were previously married and had interests in a number of properties through trusts and companies. The status of and control over those properties is the subject of proceedings in both this Court and the Family Court.  Markom says that it is desirable to have all of the proceedings involving property under Mr Olliver’s and Ms Sparks’ control case- managed and determined in the same Court.

[3]      CIT opposes the application on the ground that the prerequisites for transfer are not satisfied and that, in any event, it would be in appropriate to require the transfer of the proceedings because the dispute is a simple civil dispute for a nominal amount unrelated in any way to the other matters that are extant between Mr Olliver and Ms Sparks and, further, that transfer will cause undue prejudice, delay and expense for CIT.

Transfer of proceedings from the District Court to the High Court

[4]      The transfer of proceedings from the District Court to the High Court is governed by s 43 of the District Courts Act 1947.  Transfer under this section may be effected  in  three  ways.    The  first  is  by the  defendant  giving  notice  within  the prescribed time but Markom did not do that.  The second is by the leave of a District Court Judge but Markom’s application was refused in the District Court.  The third is by an originating application to the High Court under r 43(6) which provides:

Notwithstanding the foregoing provisions of this section, the High Court of a Judge thereof on the application of any party to the proceeding may order the removal into the High Court, by order for certiorari or otherwise, of a proceeding  commenced  in  a  District  Court,  if  the High  Court  or  Judge

thereof  thinks  it  desirable  that  the  proceeding  should  be  heard  and determined in the High Court.  Any such removal shall be on such terms as to payment of costs, giving security, or otherwise as the High Court or a Judge thereof thinks fit to impose.

[5]      Under s 43(6) this Court must first determine whether the prerequisite of desirability is satisfied and, if so, then exercise its discretion as to whether to grant an order requiring transfer.  In Fuehrer v Thompson the Court of Appeal identified the following factors relevant to both the inquiry as to desirability and the exercise of the discretion:1

While the section is not framed in terms of onus we think it is for the applicant to establish that desirability.   Under that head subs (6) has in primary contemplation the proceedings themselves.    It involves a consideration of such matters as the amount of the claim, its nature and complexity, the type of issue raised by the pleadings, as public or other importance and such other considerations as relate to the proceedings and render it desirable that they be so heard.  Once the Court is satisfied of the desirability of removal the discretion becomes exercisable.  Under that head other issues may arise relating more directly to the justice of the case in the particular circumstances.  Factors such as delay in making the application, the stage the proceedings have reached, the prejudice, if any, occasioned to the party opposing the application and such other considerations as bear on the justice of the case are material to be considered.   It is a  matter of balancing such factors against the established desirability that the action be heard in the High Court and in that balance the power in s 43(6) to direct removal on terms is to be borne in mind.   The imposition of terms and directions as to costs may in the particular case achieve justice.

The District Court proceedings

[6]      It is common ground that CIT and Markom shared leased premises in St Heliers between 2009 and 2013.  Ms Sparks and Mr Olliver were married for part of this period; they separated in 2012 and their marriage was dissolved in 2014.  For most of the relevant period Ms Sparks was a director of both CIT and Markom.  The central allegation in the District Court proceedings is that CIT and Markom entered into an agreement to share the leased office space in St Heliers and the cost of office administration and operating expenses.  CIT claims a total of $56,000 which it says is Markom’s share of the expenses for the period from 1 July 2011 to 31 March

2013.

1      Fuehrer v Thompson [1981] 1 NZLR 699 at 701.

[7]      CIT pleads that the alleged agreement was entered into on CIT’s behalf by Ms Sparks but that it is unable to provide details of the circumstances into which the agreement was entered until after the completion of interlocutory processes or even trial.  It invites an inference as to the existence of the agreement from the fact that Markom contributed to expenses for the period 7 May 2009 to 30 June 2010.

[8]      Markom’s defence, which appears from its statement of defence, is that the shared office space was used for the couple’s company and family trust entities during the course of their marriage and that the agreement as pleaded by CIT did not exist.  Instead, there was merely an informal agreement to the effect that whichever of the companies had the most readily available cash would meet the expenses for the requisite period.

[9]     CIT commenced its proceedings in the District Court in August 2014. Unfortunately, Markom’s statement of defence was lost in the District Court, with the result that the proceedings did not progress until early 2015.  In February 2015

Markom applied to the District Court for an order transferring the proceedings to the Family Court so that they could be case managed along with proceedings brought by Ms Sparks against Mr Olliver and various of the trusts associated with the couple under s 182 of the Family Proceedings Act 1980.

[10]     Markom’s application to transfer the District Court proceedings to the Family Court was subsequently amended to seek transfer of the proceedings to the High Court, so that it could be case managed with proceedings brought by CIT against Ms Sparks personally and another company under her control.  In those proceedings CIT makes allegations against Ms Sparks of breach of fiduciary duty in respect of CIT and alleges that Ms Sparks received monies due to CIT.  That amended application was heard on 24 March 2015 and dismissed by Judge David J Harvey.  The present application under s 43(6) is an originating application, not an appeal from Judge Harvey’s decision.  I record the Judge’s reasons simply for completeness.

[11]     Judge Harvey determined the application on 2 bases: first, as an application for leave to abridge time for giving notice under s 43(1) which, if granted, would have  entitled  Markom  to  have  the  proceedings  transferred  and,  secondly,  as  an

application under s 43(2) for an order that the proceedings be transferred.  On the question of abridging time he considered that there was no reasonable excuse for the delay in giving notice under s 43(1) and that there was prejudice to the plaintiff in making the application which counted against abridging time for giving notice.  The prejudice  identified  by  the  Judge  was  that  CIT should  be  entitled  to  bring  the proceedings in the forum of its choice, that managing the proceedings in the High Court would result in extensive costs and a longer time before the matter could be resolved.   The application for an order under s 43(2) was dismissed for much the same reasons.

Application to transfer proceedings to the High Court

Desirability of transfer

[12]     I note, first, that although Mr Olliver is the sole director of CIT, he has no beneficial interest in CIT.   The shareholders of CIT are the trustees of the Glover Trust,  the  beneficiaries  of  which  are  Ms  Sparks  and  the  children  of  her  and Mr Olliver.  Mr Olliver is not a beneficiary of the trust.  As a result the beneficial interest in the debt that CIT sues for in the District Court ultimately belongs to Ms Sparks and the children. It follows that if CIT is successful the money will fall to be accounted for as an asset of the Glover Trust which is a defendant in the Family

Court proceedings.2

[13]     Secondly,  determination  of  CIT’s  District  Court  claim  will  turn  to  a significant extent on Ms Sparks’ evidence and, as Ms Haemmerle, for CIT, acknowledged, Ms Sparks’ credibility will likely be under challenge.   Ms Sparks’ credibility will also be under challenge in the High Court proceedings, which were also commenced in August 2014, within a day of the District Court proceedings being commenced.

[14]     Whilst the High Court proceedings are, strictly, unrelated to the alleged debt in  the  District  Court  proceedings  there  is  a  common  thread  apparent  from  the

respective statements of defence.   In the District Court proceedings the pleaded

2      Ms  Sparks  has  applied  to  the  Family  Court  for  an  order  that  those  proceedings  also  be transferred to the High Court. That application is to be heard later this month.

defence rests on the assertion that CIT and Markom had arranged their affairs to reflect the practicalities of their family interests.  In the High Court proceedings Ms Sparks’ defence is, in part, that any money she is said to have wrongfully used was used for relationship purposes.  In these circumstances I consider there to be a real risk that efforts to impugn Ms Sparks’ credibility will, either deliberately or inadvertently, bring in matters that will also arise in the other proceedings.

[15]     In  these  circumstances  I  consider  it  desirable  that  the  District  Court proceedings are case managed with the High Court proceedings. It makes little sense to have proceedings extant in three different courts when there are common underlying dynamics.

Exercise of the discretion

[16]     Ms Haemmerle’s submission on prejudice turned mainly on the assertion that CIT would be deprived of the opportunity to have a straightforward contractual claim disposed of within a short time in the District Court and would be put to greater expense if the matter were case managed and heard in the High Court.

[17]     The District Court and High Court proceedings are currently at a similar stage in terms of pre-trial process, with statements of defence filed in both and discovery having been completed in both.  There is nothing to indicate when a trial in the District Court might be available.   I accept that disposition in the District Court is likely to be quicker in that Court because the hearing time required for the High Court proceedings is likely to be longer.  However, there is nothing to suggest that the difference in the time to disposition will be extreme and any delay is readily addressed by interest on the judgment debt if CIT succeeds.

[18]     Nor  do  I  expect  that  managing  matters  in  the  High  Court  will  create significant additional expense.  If case management conferences and trial dates can be aligned there is likely to be greater efficiency which will benefit both parties.  CIT is the plaintiff in both proceedings and represented by the same solicitors in both proceedings.  As a result, I cannot see any basis for thinking that having the present

District Court claim heard at the same time as the present High Court proceedings will be anything other than an efficient use of time and resources.

Result

[19]     The  application  is  granted.    There  is  an  order  under  s  43(6)  that  the proceedings  in  the  District  Court  at Auckland  under  number  2014-004-1184  be transferred to the High Court and that the proceeding be case managed with the proceedings in this Court under CIV-2014-404-2077.

[20]     Ms Sparks is entitled to costs on the application on a 2B basis.

P Courtney J