Panoptic Vantage (NZ) Limited v Lisbet
[2021] NZHC 2755
•18 October 2021
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2012-488-882
[2021] NZHC 2755
BETWEEN PANOPTIC VANTAGE (NZ) LIMITED
Plaintiff
AND
PETER MICHAEL LISBET
First Defendant
PANOPTIC PRODUCTS LIMITED
Second Defendant
Hearing: 27 September 2021 Appearances:
P Biddle for the Plaintiff
M J Robinson for the First Defendant No appearance for the Second Defendant
Judgment:
18 October 2021
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 18 October 2021 at 11:00am
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Henderson Reeves (P Biddle), Whangarei, for the Plaintiff
Turner Hopkins (M J Robinson), Auckland, for the First Defendant
PANOPTIC VANTAGE (NZ) LIMITED v LISBET [2021] NZHC 2755 [18 October 2021]
[1] Under ordinary case management, applications under r 15.2 of the High Court Rules 2016 to dismiss for want of prosecution should be rare, but in this case there has been next to no activity from when a stay was ordered in August 2014 until the plaintiff, Panoptic Vantage (NZ) Ltd, filed an amended statement of claim in April 2021. Mr Lisbet, the first defendant, applied to dismiss in August. The main issue is whether Panoptic Vantage can reasonably explain its inactivity from 2015, when a stay came to an end, until this year.
[2] In my judgment there has been inordinate and inexcusable delay which has seriously prejudiced Mr Lisbet. A fair trial is not possible now. Accordingly, I dismiss the proceeding.
[3] In July 2020 the District Court suppressed identification of one party. To identify the others would also identify that person. Accordingly I have anonymised the parties and other aspects that would identify them.
[4] Mr Lisbet is a former director of Panoptic Vantage. It alleges that he embezzled its funds and property. There is, however, a family context. Mr Lisbet is the son-in- law of Mr Acker, Panoptic Vantage’s sole director.
[5] Panoptic Vantage was incorporated in July 2006. Mr Acker and Mr Lisbet were the directors. At the outset each held 50 shares. The company carried on a retail business in Whangārei using the trading name “Panoptic Products”. Mr Lisbet managed the business day-to-day. With later issues of shares, Mr Lisbet’s shareholding was reduced to 25 per cent. In November 2012 he resigned as an employee. His directorship came to an end in January 2013. Since then, his shareholding has been further diluted by more share issues.
[6] Panoptic Vantage says that while Mr Lisbet was a director and manager of the business, he sold company products but banked the proceeds into his personal bank account and did not account fully for the proceeds of sale. He sold products in return
for personal benefits without accounting to the company. He misappropriated products belonging to the company, misappropriated company property and started his own business using the name “Panoptic Products”. He incorporated the second defendant.
[7] Panoptic Vantage began this proceeding in January 2013, shortly after Mr Lisbet had resigned as director. The causes of action against Mr Lisbet were for breach of director’s duty under s 131 of the Companies Act 1993, breach of fiduciary duty, breach of s 137 of the Companies Act, breach of s 9 of the Fair Trading Act 1986 (for trading as “Panoptic Products”), intentionally causing loss by unlawful means, passing off, and conversion. Panoptic Vantage successfully applied without notice for interim relief requiring Mr Lisbet to surrender certain company assets.
[8] While Panoptic Vantage has had legal representation throughout, until this year Mr Lisbet represented himself apart from a short time in 2014. Panoptic Products Ltd was added as a second defendant. Another employee was added as a third defendant, but later removed as the claims against them came within the exclusive jurisdiction of the Employment Relations Tribunal. Because Mr Lisbet was not legally represented, the case required more intense case management than is usually required when all parties have legal representation. During the case management phases, Panoptic Products did not have a lawyer. There were discovery directions including as to confidentiality, orders for non-party discovery, further parties were joined, Panoptic Vantage applied for Mr Lisbet to be examined under r 17.12 of the High Court Rules, and it interrogated him. The close of pleadings date was 1 May 2014. The case was given a fixture for seven days beginning 13 October 2014. By August 2014 Panoptic Vantage had served its witnesses’ statements of evidence. It was ready to go to a hearing.
[9] In the meantime, Mr Acker had complained to the police about Mr Lisbet’s alleged embezzlements. The matter came up in a case management conference on 26 August 2013. I said:
Plaintiff’s proposal to put the proceeding on hold
[1] In its memorandum for the conference the plaintiff proposed as the only direction to be given in this conference that it be adjourned for six
months, with leave reserved to either party to bring the matter back before the court.
[2] The plaintiff proposed this, because it said that Mr Acker, a director of the plaintiff, has laid a complaint with the Police as to Mr Lisbet’s conduct. The complaints go to matters in issue in this proceeding. The intention was that Mr Lisbet’s rights as a potential accused should not be compromised by any steps he took in this proceeding. I note in particular that the privilege against self-incrimination under s 60 of the Evidence Act might be engaged if Mr Lisbet were required to give information in this proceeding, which could be used against him in a later prosecution.
[3] Mr Lisbet rejected the proposal to put the proceeding off for the time being.
[4] Even if the Police later prosecute Mr Lisbet as a result of their investigation, it should be possible to make further progress in this proceeding, without impinging on Mr Lisbet’s rights as a potential accused under s 60 of the Evidence Act. Accordingly, I decline the plaintiff’s proposal to put this proceeding on hold in the interim.
[10] In August 2014, the police executed a search warrant on Mr Lisbet’s home. He was arrested and charged with three counts of theft, three counts of using a document for valuable consideration, four counts of theft by a person in a special relationship. A memorandum filed by lawyers he had instructed advised that, as the police had seized his records in executing a search warrant, he could not deal with the civil proceeding while the criminal charges were pending. In its memorandum of 12 August 2014, Panoptic Vantage agreed that this proceeding should be stayed and the October fixture should be vacated. By a minute of 18 August 2014, Lang J vacated the fixture with the consent of all parties. He directed a stay for 12 months from 18 August 2014 and directed counsel for Panoptic Vantage to file a memorandum as soon as possible after 18 August 2015 to update the court as to progress in relation to the criminal proceedings. Either side could also ask the court arrange a telephone conference at any time before 18 August 2015.
[11] There were no steps in the proceeding during the one year stay. In early 2015 the police withdrew the charges against Mr Lisbet and returned documents they had seized.
[12] On 19 August 2015, Panoptic Vantage filed a memorandum with the court, saying that the police had withdrawn the charges against Mr Lisbet but had advised Mr Acker that there would be new charges. The memorandum said that that step was
to be taken shortly. The memorandum proposed that the stay be extended for another three months. It would then be clear whether Mr Lisbet had been charged and whether it would be unfair to him for the civil case to proceed before the criminal charges were decided. That memorandum was not referred to a Judge. No directions were given in response to the memorandum.
[13] In May 2017, Panoptic Vantage obtained a charging order against Mr Lisbet’s interest in his home for costs that had been awarded against him in October 2013 and July 2014.
[14] There were other proceedings. Mr Acker’s company, Fort Dwellings Ltd, sued Mr and Mrs Lisbet in the District Court for payment for assistance given for house improvements and obtained summary judgment in December 2013. Mr and Mrs Lisbet did not defend that claim.
[15] In the Family Court, Mr Acker and his wife sought access to their grandchildren. They obtained an access order in March 2014 with a costs order. In April 2017, they decided to relinquish access to their grandchildren.
[16] In 2014, Panoptic Vantage began another proceeding against Mr Lisbet. This was a contempt application to have Mr Lisbet punished for breaching the order made in January 2013, requiring him to deliver the company’s property. He did not hand over a laptop when he was required to. The police found the laptop when they executed the search warrant in August 2014. Mr Lisbet admitted the breach of the court order and was fined $5,000, of which $3,000 was to go to Panoptic Vantage. He was also required to undertake 120 hours of community work and ordered to pay costs of $17,500 to Panoptic Vantage.
[17] Panoptic Vantage took no further steps in this proceeding until 2020. It filed a memorandum on 31 August 2020 advising that the police had continued their investigations and had reviewed the evidence provided by a private investigator. The police had laid a charge on 11 February 2020 but withdrew it on 23 July 2020. The police apparently considered the matter at an end. With that, Panoptic Vantage sought
to revive this proceeding and asked for a case management conference. No action was apparently taken in response to that memorandum.
[18] On 8 March 2021, Mr Lisbet filed a memorandum objecting to the case continuing and seeking a stay. That was referred to Brewer J who gave directions for the case to be called to see whether Mr Lisbet would apply for a stay.1
[19] On 25 March 2021, Brewer J granted leave to Panoptic Vantage to file an amended statement of claim and directed the matter to be called again, by which time Mr Lisbet was to advise whether he would apply for a stay. Panoptic Vantage filed a third amended statement of claim on 16 April 2021. Mr Lisbet instructed solicitors, who filed the present application in August.
The police investigations and prosecutions
[20] Mr Acker says that he lodged a complaint with the police as a result of what he had found out at the end of 2012. The police investigation seemed to move at a snail’s pace. The officer-in-charge always seemed to be “too busy” and seemed to be constantly roped into other files. There were long periods when the officer was on leave. While the Ackers gave the officer information whenever they were asked, they found they were being asked for the same information again and again. He could not understand it when the police dropped the charges. The police did not consult them or explain their decisions. Panoptic Vantage instructed a private investigator who made inquiries and gave the police information. The police said that they would look into the matter again. While the police charged Mr Lisbet again, they dropped the charge. Mr Acker considers that the police explanation for doing so was weak. It was only when the police dropped the charge that he decided to reactivate the present case.
[21] Mr Acker refers to a proceeding by the police in the District Court to obtain a direction as to the ownership of an item that the police had seized when executing the search warrant on Mr Lisbet’s property. After Mr Acker filed a detailed affidavit in support of Panoptic Vantage’s claim, Mr Lisbet withdrew his opposition.
1 Minute of 10 March 2021.
[22] Mrs Acker says that during the five years they were in regular contact with the police. They continued to follow up with the police who said that the criminal investigation and prosecution would continue against Mr Lisbet. She says that there were emails to and from the police just about every month from March 2015 to July 2020. She says there were more than 360 emails with the police over that period. They provided the police with information whenever asked. The detective dealing with the matter was often busy with other jobs. At other times she was on leave, undertaking training, sick or otherwise not employable because of injury. Matters moved very slowly. Mrs Acker identifies seven different files opened by the police, and says that she was aware that Mr Lisbet was interviewed in Auckland in November 2019. She says that the delays were attributable to the lack of speed by the police in their investigation.
[23] Mr Luke Mahon is the private investigator and former police officer who investigated for Panoptic Vantage some of the transactions on which Mr Lisbet was sued. He reported his findings to the police to use in prosecuting Mr Lisbet:
(a)Geoffrey transaction: statement to the police on 12 October 2016;
(b)Clematis transaction: statement to the police on 25 August 2017;
(c)Brown transaction: statement to the police on 13 October 2017;
(d)Rueben transaction: statement to the police on 16 January 2018.
[24] Mr Lisbet says that when the police contacted him in September 2016, he made a statement to the effect that he had nothing to say. He heard nothing further from the police until November 2019. The police interviewed him about one item worth approximately $5,500. (Mr Acker says that it was worth more). In February 2020 Mr Lisbet was charged with theft by a person in a special relationship in relation to that item. When the case was called in the District Court on 23 July 2020, the police offered no evidence and the charge was dismissed. The Judge also made a suppression order.
The approach under r 15.2
Rule 15.2 of the High Court Rules says:
15.2Dismissal for want of prosecution
Any opposite party may apply to have all or part of a proceeding or counterclaim dismissed or stayed, and the court may make such order as it thinks just, if—
(a)the plaintiff fails to prosecute all or part of the plaintiff’s proceeding to trial and judgment…
[26] The main requirements are well known. In Lovie v Medical Assurance Society New Zealand Ltd, Eichelbaum CJ said:2
…the applicant must show that the plaintiff has been guilty of inordinate delay, that such delay is inexcusable, and that it has seriously prejudiced the defendant. Although these considerations are not necessarily exclusive, and at the end one must always stand back and have regard to the interests of justice, in this country… it has been accepted that if the application is to be successful, the applicant must commence by proving the three factors listed.
[27] I note some preliminary matters. In Panoptic Vantage’s amended statement of claim filed this year, Panoptic Products is still shown as a second defendant, but none of the causes of action are directed against it. It was originally sued for passing-off and under the Fair Trading Act for misrepresenting itself as the business of the plaintiff. Those causes of action have been dropped and there are no fresh allegations against it. Panoptic Vantage has accordingly abandoned its case against Panoptic Products. Ordinarily leave to discontinue under r 15.20(4) of the High Court Rules would be required, but here the matter is academic.
[28] The previous statement of claim, filed in 27 November 2013, pleaded against Mr Lisbet matters that occurred between 2008–2013. If Panoptic Vantage were to start a new proceeding, all those claims would be statute-barred. For those acts and omissions before 1 January 2011, when the Limitation Act 2010 came into force, the causes of action accrued more than six years ago.3 For acts and omissions after 1 January 2011, these money claims would be out of time under s 11 of the Limitation
2 Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 248.
3 Limitation Act 1950, s 4(1), saved under s 59 of the Limitation Act 2010 and s 2A of the Limitation Act 1950.
Act 2010. In Birkett v James,4 it was recognised that there is little point in applying to dismiss for want of prosecution until any limitation period for a cause of action has elapsed. That is because, if a claim is not statute-barred, a plaintiff can start again as of right. Birkett v James is not a bar to Mr Lisbet’s application.
[29] The third amended claim re-orders many of the allegations against Mr Lisbet but repeats the earlier causes of action. In addition, it adds a cause of action for a declaration. It pleads that its financial statements up to the year ending March 2015 showed that it was indebted to Mr Lisbet for $27,251. In its financial statements for March 2016, Panoptic Vantage applied various set-offs totalling $66,371.96 against Mr Lisbet’s shareholder’s account. While the pleading is not clear, I understand the intent is to have the court decide that Mr Lisbet is correctly indebted to the company once the set-offs of $66,371.96 are applied. For Panoptic Vantage, Mr Biddle accepted that all the set-off matters occurred while Mr Lisbet was a director of the company. Accordingly, this cause of action is also statute-barred. Under r 7.77(2) of the High Court Rules a pleading cannot be amended to add a cause of action that is statute- barred. This new cause of action cannot be used to defeat the application to dismiss for want of prosecution.
[30] While this case has been running a long time and there were long periods when nothing happened, there is no suggestion that Panoptic Vantage’s lawyers are responsible for the delays. Mr Acker decided to put this proceeding on hold while the police made their inquiries.
[31] Decisions on applications to dismiss for want of prosecution do not generally assess the merits of a plaintiff’s case. The often unstated assumption is that the plaintiff has a case worth taking to a hearing, but that a trial will be necessary to decide the merits. I apply that here. Panoptic Vantage appears to have a case with good prospects, but success is not assured. After all, it did not apply for summary judgment and the police withdrew the charges against Mr Lisbet.
[32] Part of the explanation for the case taking so long is that Panoptic Vantage was hoping that the police would prosecute Mr Lisbet. The police have not given evidence.
4 Birkett v James [1978] AC 297 (HL).
It would not be right to speculate or comment on the actions of the police. I have also disregarded comments made by the District Court Judge on 23 July 2020 when the charge against Mr Lisbet was dismissed. His statements were an obiter expression of opinion.
Has there been inordinate delay?
[33]In Allen v Sir Alfred McAlpine & Sons Ltd, Salmon LJ said:5
It would be highly undesirable and indeed impossible to lay down a tariff – so many years or more on one side of the line and a lesser period on the other. What is or is not inordinate delay must depend upon the facts of each particular case. These vary infinitely from case to case, but inordinate delay should not be too difficult to recognise when it occurs.
[34] There is no question of delay in starting the proceeding. While Mr Acker’ evidence shows that he had concerns about transactions by Mr Lisbet in 2011, matters came to a head in 2012. Mr Lisbet stopped working at Panoptic Vantage in November 2012. The proceeding was started promptly afterwards. Until August 2014, Panoptic Vantage pursued its case diligently, in good time and without delay.
[35] But from August 2014 until this year, the only steps Panoptic Vantage took to advance the proceeding were its memoranda of August 2015 and August 2020. Its charging order on Mr Lisbet’s home and its contempt application do not count as advancing its embezzlement claims against Mr Lisbet. The lengthy period of minimal inactivity between April 2014 and the first quarter of this year counts as delay.
[36] In Tabata v Hetherington,6 it was said that inordinate delay meant a period of time which had elapsed which was materially longer than the time which was usually regarded by the courts and the profession as an acceptable period of time. By ordinary standards, more than five years of inactivity with only two memoranda filed counts as inordinate delay.
5 Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 (CA) at 268.
6 Tabata v Hetherington [1983] TLR 764 (CA).
Was the delay inexcusable?
[37]In Allen v Sir Alfred McAlpine & Sons Ltd, Salmon LJ said:7
As a rule, until a credible excuse is made out, the natural inference would be that it is inexcusable.
Panoptic Vantage has an excuse for the year from August 2014 until August 2015. That is the period of the stay ordered by Lang J to which all parties agreed in the light of the police charges against Mr Lisbet. In his minute of 18 August 2014, Lang J stated the purpose of the stay:
Both counsel agree that the criminal proceedings should be resolved before the civil proceedings are determined.
[38] The period requiring explanation is from the end of the stay in August 2015. By then Panoptic Vantage knew that the police had withdrawn the charges against Mr Lisbet. There were no longer any pending criminal proceedings. Its memorandum of 19 August 2015 said that Mr Acker understood that Mr Lisbet would be charged with fresh charges and some previously withdrawn charges might be reintroduced. That step was to be taken shortly. The memorandum proposed a stay for another three months. It would then be clear whether Mr Lisbet had been charged and, if so, whether it would be unfair to Mr Lisbet for the civil case to proceed before those criminal charges were determined.
[39] The memorandum of August 2015 was apparently not referred to a Judge, and the court took no action. I assume in favour of Panoptic Vantage that if a Judge had considered the memorandum, he or she might have accepted the proposal to wait for a further three months. But, at the end of that three months, the police had not laid any charges against Mr Lisbet. Panoptic Vantage did nothing. It took no further steps in the proceeding. Instead, Panoptic Vantage put its efforts into persuading the police to prosecute Mr Lisbet, including having Mr Mahon compile information and submit it to the police. As their affidavits show, Mr and Mrs Acker were keener on Mr Lisbet being prosecuted than the police were.
7 Allen, above n 5, at 268.
[40] The issue here is whether it was excusable for Panoptic Vantage to await the outcome of police action, rather than pushing ahead with the civil proceeding. McGechan on Procedure notes examples of acceptable excuses including “awaiting the result of a related civil proceeding or criminal prosecution”, but also notes as an example of an unacceptable excuse “pursuing another remedy in preference to commencing and prosecuting a proceeding, unless done with the defendant’s acquiescence”.8 There is no evidence of any acquiescence by Mr Lisbet from 2015 onwards. His silence does not count against him. He was entitled to wait to see if Panoptic Vantage would resume its case against him.9
[41] Conduct that gives rise to both civil and criminal liability can lead to criminal and civil proceedings. Unlike some other legal systems – such as the French where both criminal and civil liability are determined in single proceeding – in our system they are kept distinct. While private prosecutions are possible, by far the bulk of criminal prosecutions are brought by public authorities, such as the police. While investigating and prosecuting authorities act on complaints by the public, they operate independently of the complainants. The purpose of a criminal prosecution is to establish whether the accused has committed an offence under the law, and, if guilt is proved, to see that the offender receives an appropriate sentence. While restitution to the victim is a part of criminal proceedings, it tends to be secondary. Investigating and prosecuting authorities carry out their functions according to general public objectives, rather than on the instructions of individual members of the public. They are accountable to the public generally for the way they carry out their functions, not to individual complainants. They often have to ration their resources. They are publicly funded.
[42] On the other hand, the purpose of civil proceedings is to obtain redress for wrongs suffered by the claimant. The person suffering the wrong decides whether to sue and runs the proceedings directly, invariably with the assistance of lawyers. The purpose of the proceedings is to obtain redress for the wrong they have suffered.
8 AC Beck McGechan on Procedure (online loose-leaf, Thomson Reuters) at [HR15.2.03(3)].
9 Allen, above n 5, at 258.
Usually the person suffering the wrong pays the costs of the proceeding, unless they have legal aid, insurance or some similar arrangements.
[43] Civil and criminal proceedings are not alternatives. A wrongdoer may be both sued and prosecuted for the same matter. The courts have had to work out how to deal with concurrent civil and criminal proceedings against an alleged wrongdoer. In Luo v Shiu, Brewer J recorded the principles the courts apply when a civil defendant seeks a stay because of a pending criminal prosecution:10
… Mr Bigio sets out in convenient summary form the well-established principles governing an application for stay in these circumstances:11
15.In McMahon v Gould, Wootten J reviewed the existing authorities in Australia and elsewhere (including Jefferson Ltd v Bhetcha) and set out the following guidelines for the Court on an application for stay:
(a)There is a rebuttable presumption that a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court. The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff’s ordinary rights should be interfered with;
(b)The court’s task is one of “the balancing of justice between the parties”, taking account of all relevant factors. Each case must be judged on its own merits;
(c)One factor to consider is the accused’s “right of silence” and the reasons that right exists. Some consequences of the right are not legitimate reasons for its existence and amount to mere tactical advantages which an accused may wish to avail himself of at a criminal trial. The court need not be concerned to preserve such advantages. Rather, the focus should be to avoid the causing of “unjust prejudice” through continuance of civil proceedings;
(d)Further, the plaintiff is not debarred from pursuing their action merely because to do so would, or might, result in the defendant (if he wishes to defend the action), having to disclose what his defence is likely to be in the criminal proceeding;
(e)The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings;
10 Luo v Shiu [2019] NZHC 2620 at [14]–[15].
11 Citing principles set out in McMahon v Gould (1982) 7 ACLR 202 (NSWSC); and applied in cases such as Commissioner of Police v Burgess [2011] 2 NZLR 703 (HC); and Commissioner of Police v Wei [2012] NZCA 279. Citations are omitted from the excerpt.
(f)In this regard factors which may be relevant to this case include:
(i)the proximity of the criminal hearing;
(ii)the possibility of a miscarriage of justice e.g. by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses;
(iii)the burden on the defendant of preparing for both sets of proceedings concurrently; and
(iv)whether the defendant has already disclosed his defence to the allegations.
The problem for Ms Shiu, which Mr Bigio recognises, is that the Courts seldom grant a stay in circumstances such as these:
17.To date, this Court has placed little weight on the fact that a defendant may be required, in the course of civil proceedings, to disclose before a criminal trial his or her defence to the charges faced, and/or other information that he or she is not otherwise required to disclose in the criminal proceedings. In particular, the High Court has held that:
(a)There is no right not to disclose a defence;
(b)The right of silence is not directly engaged where the potential disclosure is to be made in civil proceedings. The right protects an accused from being compelled to disclose information. A civil defendant is under no legal compulsion to disclose any information as she can choose not to defend the civil claim;
(c)The ability of an accused to delay disclosure of her defence is a consequence of the right to silence that is a mere tactical advantage, the loss of which is not sufficient to merit a stay; [and]
(d)if the position of the defendant is that there is a positive defence to the criminal charges then any material disclosed in the civil proceedings is likely to be exculpatory, rather than incriminatory and there can be no prejudice in putting it forward. Also, the defendant has a privilege against self- incrimination.
(citations omitted)
[44] In the light of those considerations, the stay of this proceeding in August 2014 is understandable. The police had seized Mr Lisbet’s documents and other property when they executed the search warrant. They did not return them to him until 2015.
In 2014 he could not have defended the claims against him in this proceeding without those documents.
[45] By August 2015, Mr Lisbet was not facing any criminal charges. Nor was he three months later. Mr and Mrs Acker hoped that the police would prosecute him. They provided the police with information, but apparently with little effect. At a stage where no criminal charges had been laid, there was no good reason for Panoptic Vantage to put its civil case on hold. If the police did lay charges, it might be proper to review whether the civil proceeding should continue, but it would be for Mr Lisbet, the defendant, to seek a stay. He would not necessarily have sought a stay. After all, in 2013 he rejected Panoptic Vantage’s proposed stay after Mr Acker made his first complaint to the police. Even if Mr Lisbet had applied for a stay after the police charged him, it is not certain that the court would have stayed the civil proceeding. Any right of silence12 which Mr Lisbet might invoke might be considered as only a tactical advantage and as not standing in the way of his fair trial rights. When the police did charge Mr Lisbet, it was for only one item. Panoptic Vantage was suing him for other transactions as well. The single charge would not have prevented Panoptic Vantage from proceeding on the other matters.
[46] As the plaintiff, Panoptic Vantage had to keep its case going. It could not put its case on hold on the speculative basis that Mr Lisbet might successfully apply for a stay because of a possible police prosecution. It did not consult with him about that. In this regard, this case is much like Stewart v Grey River Gold Mining Ltd where Master Hansen said:13
It is quite clear that the plaintiff made a conscious decision to pursue the alternative remedies in preference to prosecuting this claim. It seems to me in circumstances where a plaintiff chooses to prosecute other remedies to allow a High Court proceeding to go to sleep in circumstances where he makes no efforts to obtain the acquiescence of the defendants, it cannot be said that the delay is excusable.
There was, accordingly, an inordinate and inexcusable delay from August 2015.
12 For the right to silence, see s 23(4) and s 25(b) of the New Zealand Bill of Rights Act 1990.
13 Stewart v Grey River Gold Mining Ltd HC Christchurch A517/78, 19 December 1991 at 8.
Has Mr Lisbet been seriously prejudiced by the delay?
[47] In August 2014, Panoptic Vantage was ready to go to a hearing. It says that it is as ready to go to trial now as it was in 2014. It also has the benefit of Mr Mahon’s investigations. It has not confirmed that all the witnesses it briefed are still available, but I put that to one side. If its witnesses are not available, that is Panoptic Vantage’s problem, not Mr Lisbet’s.
[48] Mr Lisbet says that in 2015 the police returned the documents they had seized. He did not check whether all the seized documents have been returned. Panoptic Vantage has an answer to that. On discovery it inspected Mr Lisbet’s documents. Even if Mr Lisbet no longer held relevant documents, Panoptic Vantage could make its copies available to him for his defence. That answer goes only so far. Panoptic Vantage may have kept copies of non-privileged documents in Mr Lisbet’s control, but it would not have seen documents Mr Lisbet prepared for the proceeding, those privileged under s 56 of the Evidence Act 2006.
[49] Mr Lisbet also refers to the stress of facing the proceeding afresh. He had assumed that the civil proceeding was dormant and that once the criminal charge against him was dismissed, that was the end of the matter. The revival of the civil proceeding has caused him stress and he gives evidence as to medication he takes for stress.
[50] While the cases have referred to the stressful effect of ongoing civil proceedings, with references to Damocles’ sword, it needs to be borne in mind that being sued for embezzlement is always going to be stressful. It would have been stressful for Mr Lisbet if there had been no criminal prosecution and this case had gone to trial as planned in October 2014. There will not necessarily be increased prejudice, because he may face that stress in 2021 and 2022.
[51] In my judgment, the most relevant head of prejudice is the effect of fading memory. In Lovie, Eichelbaum CJ commented:14
14 Lovie, above n 2, at 254.
One needs to guard oneself against the danger of discounting the arguments based on the dimming of memories, simply because often they cannot be adequately demonstrated.
[52] I cannot assume that the case for Panoptic Vantage is so strong that nothing Mr Lisbet could say by way of defence could count in his favour. After all, Panoptic Vantage did not apply for summary judgment. While the police laid charges, they did not take them through to defended hearings. These suggest that Panoptic Vantage’s case is not a lay-down misère.
[53] Mr Lisbet says that he does not now recollect things as well as he could in 2014. That is understandable with the passage of time. His memory will be important if this case goes to trial. Mr Lisbet had not served his statements of evidence when the case was stayed in 2014. He says he no longer has notes to refer to for what he would have said in evidence. If required to give evidence now, he will be at a disadvantage as a result of the lapse in time.
[54] In the way of many cases alleging misappropriation, much of Panoptic Vantage’s case is built on circumstantial documentary evidence. To answer the case against him, Mr Lisbet will have to give an explanation. His inability to provide an answer will count against him. A judge may draw the inferences Panoptic Vantage invites if Mr Lisbet does not give a plausible alternative explanation. Mr Lisbet’s ability to remember matters showing a proper explanation for the transactions is accordingly important to ensure that there is a fair trial. If the case had gone to trial in 2014 and Mr Lisbet said in response to the allegations against him that he could not remember, a judge would likely regard him as dissembling and not put any weight on his evidence. The same would not apply for a trial in 2022. Mr Lisbet may not be able to give good answers, but that need not be dissembling. His memory is likely to let him down. There are real risks whether there would be a fair hearing:
(a)his protestations of lack of memory may still be dismissed as dissembling;
(b)attempted explanations of what happened may be dismissed as confabulation; and
(c)he may no longer be able to explain matters for which he had a proper explanation in 2014.
[55] The lapse of time has weakened Mr Lisbet’s ability to defend the case. He cannot be expected now to give evidence with a clear recollection of events and transactions that took place between 2008 and 2012. There is no assurance that he would be able to explain transactions in a clear way to the same extent that he could have in a trial in 2014 or 2015. Accordingly, he has been seriously prejudiced by the delay.
Can justice be done despite the delay?
[56] It follows from my finding of serious prejudice that I do not consider that a fair trial is possible now. While Panoptic Vantage still appears to have a case against Mr Lisbet, it has wrongly delayed because of a misguided reliance on the police to prosecute Mr Lisbet instead. That was not a good reason for delaying in bringing this case to a hearing. Mr Lisbet’s ability to provide an effective defence has been significantly weakened. That means that a fair trial is no longer possible.
[57]Accordingly, the case will be dismissed for want of prosecution.
[58] In his submissions for Mr Lisbet, Mr Robinson also submitted that this proceeding was an abuse of process under r 15.1 of the High Court Rules. Mr Lisbet did not, however, apply for strike-out and dismissal under that rule, and it would not be fair to Panoptic Vantage to decide the application under that rule. The abuse of process Mr Robinson has in mind was that identified by Lord Evershed MR in Re Majory:15
[C]ourt proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist; and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused.
15 Re Majory [1955] Ch 600 (CA) 623–624.
[59] While Mr Lisbet accuses Mr Acker of being vindictive, that goes to motive, not to the purpose of the proceeding. The case has always been run on the basis that Mr Lisbet is accountable to the company for alleged breaches of duty. That is a proper purpose for which he could be sued.
Outcome
[60] Under r 15.2 of the High Court Rules, I dismiss this proceeding for want of prosecution.
[61] Mr Lisbet is entitled to costs, but only for those steps where he had legal representation. If the parties cannot agree costs, memoranda may be filed. I shall retire on 22 October and therefore will not be available to decide costs. To assist the parties in working out costs, this case is category 2. Mr Lisbet should have costs for his lawyer’s memorandum filed in August 2014, as well as the usual costs on a successful interlocutory application. I see no basis for increased costs under r 14.6 or for reduced costs under r 14.7 of the High Court Rules.
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Associate Judge R M Bell
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