Michael Wilson & Partners Limited v Sinclair

[2020] NZHC 1819

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-157 CIV-2020-485-158 CIV-2020-485-159 CIV-2020-485-160

[2020] NZHC 1819

UNDER

the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Thomas Ian Sinclair

BETWEEN

MICHAEL WILSON & PARTNERS LIMITED

Judgment Creditor

AND

THOMAS IAN SINCLAIR

Judgment Debtor

Hearing:	20 July 2020
Counsel:	K P Sullivan for judgment creditor J D Dallas for judgment debtor
Judgment:	24 July 2020

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]                  This is an application for orders setting aside four bankruptcy notices, all dated 17 April 2020, served by Michael Wilson & Partners Ltd on Mr Thomas Sinclair on or around that date. The judgments on which the bankruptcy notices are founded were originally foreign judgments, but registered as judgments in New Zealand pursuant to orders dated 14 December 2016 and 23 February 2017. Together, the four bankruptcy notices claim $1,714,791.29 plus interest and costs.

MICHAEL WILSON & PARTNERS LIMITED v SINCLAIR [2020] NZHC 1819 [24 July 2020]

[2]                  I do not propose to describe the background in any more detail than necessary. For present purposes, it is sufficient to record that Michael Wilson & Partners, its Managing Director, Mr Michael Wilson, Mr Sinclair and a group of his professional colleagues have, for years, been embroiled in an intellectual property dispute arising from a partial break up of Michael Wilson & Partners’ business, in which they were all formerly involved. The scale of the litigation that has been generated is truly astonishing. It has involved claims in several jurisdictions. Courts in those jurisdictions have levelled serious criticism at Mr Wilson, Mr Sinclair and others, calling into question their truthfulness and the veracity of their evidence in strong terms. I do not propose to add to this.

[3]                  A core component of the dispute was the subject of arbitral proceedings in the United Kingdom. The parties to the arbitration were Michael Wilson & Partners and one of Mr Sinclair’s colleagues, a Mr John Emmott.

[4]                  The outcome of that arbitration was an award against Michael Wilson & Partners in favour of Mr Emmott. The award was substantial. It was expressed in UK£ and US$. In NZ$ the principal amount is in the order of approximately

$2,292,000.00.1 Costs are still to be dealt with. On any view, they are likely to add substantially to the award.

[5]                  Apparently, Mr Sinclair provided Mr Emmott with financial assistance in the course of the arbitral proceedings, and the arrangements between them in relation to this are important for Mr Sinclair’s application.

[6]                  In a nutshell, Mr Sinclair’s case is that he is the assignee of a proportion of the arbitral award against Michael Wilson & Partners, and that his claim exceeds the collective amounts of the judgments against him.

[7]                  In advancing Mr Sinclair’s case, Mr Dallas relied on three aspects of the evidence.

1      Calculated at an exchange rate of 19.1, published on 6 July 2020.

[8]                  First, in their affidavit evidence, both Mr Sinclair and Mr Emmott say that in consideration of the former’s support, Mr Emmott agreed to assign to him 30 per cent of the proceeds of a successful claim. I regard this evidence as being in the nature of mere assertions. In the absence of supporting documentary evidence, I am not inclined to place great weight on it.

[9]                  Second, Mr Dallas relies on a document which appears to be a draft deed. The provenance of this document is entirely unknown. It is clearly a draft as the absence of certain content is highlighted in the document itself, and it may well be part of an iterative process and one of several drafts. It appears to have been created in April 2007. It is unsigned. It contemplates a loan between Mr Sinclair and Mr Emmott in order to assist the latter with the funding of the arbitration. The loan is to be at commercial interest rates. In their affidavit evidence, Mr Sinclair and Mr Emmott say that this reflects the  funding  agreement,  and  Mr  Emmott  says  that  it  “makes  Mr Sinclair an actual rightful party to the various awards in my favour”. It does nothing of the sort. In any event, an unauthenticated document of this sort can have no status and is of no legal consequence.

[10]              Third and finally, Mr Dallas relied on  a recent letter dated 1 May 2020  to  Mr Sinclair from Mr Emmott which was said to confirm these arrangements. In that letter, Mr Emmott says that in  consideration  of  Mr Sinclair’s  financial  support, Mr Emmott agrees that Mr Sinclair should have 30 per cent of whatever Mr Emmott recovers against Michael Wilson & Partners in the arbitral proceedings. In my view, that letter does not support the contention that Mr Emmott has assigned anything. What it says is that, in consideration of Mr Sinclair’s financial assistance, Mr Emmott will assign 30 per cent of his interest in any monies recovered from Michael Wilson & Partners pursuant to the arbitral award. For a start, it appears to be common ground that nothing has yet been recovered under the arbitral award. If and when there is any recovery, Mr Sinclair may, on the strength of the arrangement reflected in this letter, be entitled to require Mr Emmott to assign the interest in question. But the letter itself could not and does not confer on Mr Sinclair any right to claim against Michael Wilson & Partners, and most certainly is not evidence of any assignment.

[11]              On the strength of the evidence before the Court, it is impossible to conclude that Mr Sinclair can make out a triable case to the effect that he is, by reason of assignment, entitled to enforce any claim at all against Michael Wilson & Partners.

[12]              Mr Dallas also submitted that even if, as I have concluded, Mr Sinclair cannot establish a triable case that he has a claim against Michael Wilson & Partners which equals or exceeds the judgments against him, the Court can and should nevertheless make an order staying bankruptcy proceedings on the grounds that the global litigation between the parties (along with others) has some way to go and it would be unjust for him to be bankrupted in New Zealand until that litigation comes to an end and there is a final wash-up between all parties.

[13]I can to see no force in this contention.

[14]              When Michael Wilson & Partners originally sought to have their foreign judgments registered in this country, their application was declined by Mallon J, essentially on the basis of a similar contention. The company successfully appealed to the Court of Appeal. Here is what the Court of Appeal said in relation to the proposition that Michael Wilson & Partners should await the outcome of all litigation before having its judgments registered in this country:2

[37] We acknowledge the temptation to follow the English line  of  preserving the status quo while the litigation between these parties grinds inexorably onwards. However, we are satisfied that MWP is entitled to execute its final and binding judgments against Mr Sinclair without further delay or awaiting the result of litigation which may never proceed further or conclude in Mr Sinclair’s favour. Enforcement of MWP’s right should not be suspended indefinitely against the uncertain contingency of future litigation. And there is no evidence that execution of MWP’s judgments in New Zealand in satisfaction of his indisputable  liability  to  the  company  would  cause Mr Sinclair a substantial miscarriage of justice, or that he would not be able to pursue his claims against MWP in England.

[15]              Mr Dallas’ secondary submission appears to be a further attempt to achieve the same outcome. The Court of Appeal’s judgment in those earlier proceedings appears to me to apply equally here. Michael Wilson & Partners have judgments of this Court that the company and is entitled to enforce through the processes available to them

2      Michael Wilson & Partners Ltd v Sinclair [2016] NZCA 376, [2016] NZAR 1186 at [37] (footnotes omitted).

here. I decline to exercise any jurisdiction which the Court may have to stop that happening.

[16]Mr Sinclair’s application is dismissed.

[17]              As to costs, my preliminary view is that Michael Wilson & Partners is entitled to a costs order on a 2B basis together with such disbursements as may be allowed by the Registrar. I am presuming that counsel will be able to resolve costs. But if that is not possible they may come back to me by memorandum and I will deal with them on the papers.

Associate Judge Johnston

Solicitors:

Langford Law, Wellington for judgment creditor J D Dallas Law, Wellington for judgment debtor