McCullagh v Robt Jones Holdings Ltd

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3475 [2015] NZHC 1462

IN THE MATTER OF

the liquidation of NORTHERN CREST

INVESTMENTS LIMITED (IN LIQ)

BETWEEN

ANTHONY JOHN MCCULLAGH AND STEPHEN MARK LAWRENCE Applicants

AND

ROBT. JONES HOLDINGS LIMITED Respondent

Hearing:	19 February 2015
Appearances:	D Chesterman for the Respondent B P Keene QC and L Van for the Applicants
Judgment:	26 June 2015

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on   26 June 2015  at  4:00pm

Pursuant to Rule 11.5 of the High Court Rules

………………………………………….

Registrar/Deputy Registrar

Solicitors:

Anthony Harper, Auckland, for Applicants

Gillespie Young Watson, Lower Hutt, for Respondent

Counsel:

Brian Keene QC, Auckland, for Applicants

Damian G Chesterman, Auckland, for Respondent

MCCULLAGH AND  LAWRENCE v ROBT. JONES HOLDINGS LIMITED [2015] NZHC 1462 [26 June

2015]

[1]      The respondent applies for discovery orders:

(a)       For particular discovery of documents under r 8.19 of the High Court

Rules; and

(b)      Setting aside the applicants’ claim to privilege under r 8.25.

[2]      This is a voidable transaction proceeding.  The liquidators of Northern Crest Investments  Ltd,  ordered  into  liquidation  on  2  June  2011,  apply  to  set  aside payments  made  to  Robt.  Jones  Holdings  Ltd  between  22 January  2010  and

5 November 2010 totalling $751,941.12.   So far, the liquidators have provided two affidavits of documents.  The first one, sworn on 16 April 2014, runs for 40 pages. A supplementary affidavit sworn on 28 May 2014 runs for 10 pages.  The liquidators say that they have disclosed over 1400 pages of documents.  Notwithstanding that, Robt. Jones says that discovery is incomplete and the liquidators have made an invalid claim to privilege.

Discovery in voidable transaction cases

[3]      Discovery orders are not standard in voidable transaction proceedings.  That is because voidable transaction claims must be brought by originating application.1

Unlike general proceedings brought by notice of proceeding and statement of claim, discovery is not available as of right in an originating application.   In a general proceeding a judge must make a discovery order unless satisfied that the proceeding can be justly disposed of without any discovery.2     Part 19, which deals with originating applications, is directed at providing a speedy and inexpensive mechanism.  On an application for directions the court may in its discretion order

discovery.3

1      High Court Rules, r 19.2(c).

2      Rule r 8.5.

3      Rules 7.43A and 19.11.

[4]      In  Katavich  v  Meltzer4   Duffy  J  held  that  there  is  a  reluctance  to  order discovery, except in a narrow band of marginal cases where the court has genuine difficulty in determining whether a party has made out its case, and where there is substantial reason to believe that discovery would or might well assist that determination.  The judgment referred to summary judgment cases and applications under s 290 of the Companies Act to set aside statutory demands.  In those cases, the court is typically concerned only with whether the plaintiff has established that the defendant has no defence, or whether a debt…