Powershares LP v Trustpower Limited
[2017] NZHC 998
•17 May 2017
IN THE HIGH COURT OF NEW ZEALAND
TAURANGA REGISTRY
CIV 2017-470-000013
[2017] NZHC 998
BETWEEN POWERSHARES LP
Plaintiff/Respondent
AND
TRUSTPOWER LIMITED
Defendant/Applicant
Hearing: 15 May 2017 Appearances:
P B Currie for the Plaintiff/Respondent
A R MacDuff for the Defendant/Applicant
Judgment:
17 May 2017
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
17.05.17 at 11:00am, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date……………
POWERSHARES LP v TRUSTPOWER LIMITED [2017] NZHC 998 [17 May 2017]
[1] The defendant (Trustpower) applies to transfer the plaintiff’s (Powershares) proceeding to the District Court. The Court has received the written submissions of counsel. This judgment rules upon that application.
[2] Section 94 of the District Courts Act 2016 permits a Judge of the High Court to transfer the proceeding to the District Court [by agreement of the parties], or if the subject matter of the proceeding is within the jurisdiction of the District Court.
[3] This proceeding is clearly within the District Court’s jurisdiction given it is a claim for only $45,466.78.
[4] The issue before the Court is whether discretion ought to be exercised to transfer the proceeding.
The proceeding
[5] Powershares’ original statement of claim filed on 1 February 2017 referred to offers having been directly made by it to shareholders of Trustpower in late 2010/early 2011. Shareholders have accepted the offer, signed an acceptance and a share transfer document which included granting an irrevocable power of attorney to obtain a Common Shareholder Number if that was not known to the seller of the shares.
[6]Powershares claims:
(a)Trustpower has refused to register quantities of the transfers of those shares it has purchased, and failed to follow the procedure set out in s 84(1) of the Companies Act 1993 (the Act).
(b)It has suffered a significant financial loss as a result of the failure to complete registration and to enable Powershares to trade with those shares.
(c)Calculates its claim on the basis of 24,484 share transfers not being registered.
[7] Powershares filed a “More Explicit Statement of Claim” on 27 May 2017. That document is four pages long but annexes 42 pages apparently as evidence in support of the proceeding. Usually that evidence would have been provided by way of initial discovery.
The “More Explicit Statement of Claim” details the names and numbers of shares that Powershares had purchased. It identifies the names of Trustpower's directors. It provides background of the structure controlled by Mr Bernard Whimp and another connected to that process by which Trustpower shares were purchased.
Statement of defence
[8] It notes that the shares which appear to be the object of the proceeding are the shares of Scarlett Limited (formerly Trustpower Limited) (Scarlett). Scarlett is in liquidation. Scarlett pleads that to the extent any financial liability arises against it, that is now a liability of Trustpower.
[9]Trustpower pleads it:
(a)Authorised Computershare to administer its share register as it was entitled to pursuant to s 87 of the Act.
(b)Is entitled to decline to accept a request to transfer shares if there is insufficient evidence of an entitlement to transfer the shares;
(c)Has a policy for processing off-market transfers including not accepting requests where there is insufficient evidence of an entitlement to transfer if a transfer form was incomplete; or if it did not include a valid Computershare Holder Number or if the signature of the transferor was missing; or if the signature was not witnessed; or was in respect of shares that were not held by the transferor; or if a certified copy of a power of attorney was missing.
[10] Trustpower pleads that Computershare accepted all complete transfer forms and declined to accept incomplete forms. Computershare advised Powershares and provided reasons when transfer forms were declined.
[11] Trustpower denies s 84 of the Act is supplemented by Scarlett’s constitution, and says its communications with Powershares were consistent with Scarlett’s constitution, the Act and the NZX Participant Rules.
[12] By way of affirmative defences Trustpower pleads Powershares’ claim was filed more than six years after the date on which the acts or omissions on which its claim is based and therefore the Limitation Act 1950 and Limitation Act 2010 apply. In the alternative Trustpower pleads laches and it says as a result of delays the relief sought by Powershares is unjust.
How should the discretion to transfer proceedings be applied?
[13] While there is no case law in relation to s 94 of the District Courts Act 2016, reliance can be placed on how its predecessor, s 46 of the District Courts Act 1947, has been applied. In Moodie v Lane1 Thomas J identified six relevant factors that should be considered in deciding which forum should be adopted:
(a)The nature of the case;
(b)The complexity of the case;
(c)Whether the case is of general or public importance;
(d)The amount in issue;
(e)The likely length of the hearing; and
(f)The financial resource of the parties.
1 Moodie v Lane HC Auckland CP 1484/87, 18 September 1990 at 4. These factors were adopted in Krzanic v Sullivan [2014] NZHC 2765.
[14] In Moodie, Mr Moodie had claimed that he had a contract with Mr Lane under which he allowed Mr Lane to enter his property and remove a quantity of topsoil. In a claim for damages upon breach, Mr Moodie claimed a sum of approximately $21,000 against Mr Lane. Thomas J agreed to transfer the proceedings to the District Court. The proceeding was considered “uneconomic” and neither counsel was opposed to a transfer. His Honour stated:2
In considering the nature of the case regard would need to be had, for example, to whether it is a simple claim for, say, breach of contract or whether it raises, perhaps, serious questions of fraud or the like. The former would be suitable for commencement in the District Court, the latter possibly not. Then, it would be a reason for preferring this Court if the outcome of a case would have an importance or ramifications beyond the case being considered or if it involves a question of public interest. Similarly, this Court might be thought appropriate when considering the complexity of the case if it gives rise to a difficult question of law, or if it is anticipated that some problems may be experienced in proving certain facts, such as, for example, complicated technical facts. No fixed rule can or should be laid down, but the question of whether or not a claim should be commenced in the District Court should almost invariably be addressed having regard to the above criteria.
Where the case is straightforward, and the amount in issue is not substantial, it will therefore be appropriate for every reasonable endeavour to be made by solicitors and counsel to have the proceeding heard and resolved in the District Court. Apart from the fact that this course will in all probability be in the best financial interests of both parties, it is necessary that it be fully considered if solicitors and counsel are to properly discharge their duty to this Court.
[15] Shortly after Moodie, Tompkins J in Tapp v Elders Real Estate suggested that Parliament’s amendment to the jurisdictional threshold for claims heard in the District Court (from $50,000 to $200,000, which at time of judgment was a proposal) evidenced an intention to encourage civil litigation to be heard in that Court. His Honour stated:3
A further relevant factor is the general policy, as evidenced by the increase in the District Court’s jurisdiction to $50,000, the recommendation in the Law Commission’s report on the Courts, and the proposal in the bill currently before Parliament to increase that Court’s jurisdiction again to $200,000, of encouraging more suitable civil litigation to be heard in the District Court than has been hitherto the case. I recognise that the ability of the District Court to handle a significantly increased volume of civil litigation will depend upon whether the facilities and ancillary support that Court will require to enable to do so is made available. But I consider that this Court should act on the assumption that, the general policy being to increase the civil jurisdiction role
2 At 4-5.
3 Tapp v Elders Real Estate HC Whangarei CP70/90, 15 October 1990 at 5.
of the District Court, the Justice Department will make available to that Court the facilities and other support it will require.
[16] Wylie J declined to transfer a proceeding from the District Court to the High Court in Bridon New Zealand Ltd v Bryan E Williams Marketing Ltd,4 because the case was not sufficiently complex, being simply a claim in contract and counterclaim for breach of contract. One of the factors relied on by his Honour was the relatively short delay in obtaining a fixture in the District Court as against the High Court.
Considerations
[17] A recent amendment to the District Court’s jurisdiction as to quantum claimed, from $200,000 to $350,000 reflects the confidence that parliament has in the District Court to determine civil claims.
[18] A civil proceeding should start in the lowest court of jurisdiction. Clearly claims for smaller amounts can be more conveniently heard in the District Court.
[19] This proceeding does not involve complex questions of fact or law. Counsel for Trustpower submits a one day hearing should suffice, and that limited and highly tailored discovery would enable the matter to come to a hearing in an expedited manner.
[20] Trustpower’s position is it would be less expensive and more expeditious to have the claim heard in the District Court. Certainly the costs of proceeding in the District Court are lower than in the High Court. Counsel submits that if an appeal was needed it would in the circumstances be best heard in the High Court, particularly given the current heavy workload of the Court of Appeal.
[21] Counsel for Powershares submits the proceeding is novel because it relates to the registrability of off-market share transfers. Their main concern is not with the regulation of unsolicited offers, but rather with the processes undertaken by
4 Bridon New Zealand Ltd v Bryan E Williams Marketing Ltd HC Auckland M1372/90, 30 November 1990.
Trustpower’s registry services, an issue they consider to be of such importance as to warrant the attention of this Court.
Conclusions
[22] Although the issues are between two companies this fact alone should not mitigate against transferring the proceeding. Although transactions entered into by companies often involve complex issues, this Court considers it should be the complexity itself rather than the legal status of the parties that determines the appropriate forum for the claim.
[23] The District Court has previously considered claims related to contestable company law issues. One such example is Crazy Town Limited (In liqn.) v Jaques5, in which Judge T J Broadmore was required to determine a claim brought by liquidators for the recovery of around $70,000 from former directors and shareholders of the company. The funds in question were said by the liquidator to be loans repayable on demand, a claim which the defendants disputed because they said they used the money for the purposes of the company or in payment of wages properly owed to them.
[24]In this Court’s view:
(a)The proceeding does not appear to be complex.
(b)Claims that Trustpower refused to transfer shares will focus on an application of ss 84 and 85 of the Act to ascertain how those sections should apply to the events in question.
(c)Although s 84 may raise issues in terms of establishing liability to pay damages for a breach at present that provision appears only to contemplate penalty upon breach, and does not expressly permit a right to claim damages upon breach.
5 DC Wellington CIV 2011-085-449, 18 December 2012.
(d)No novel questions of law are involved with this proceeding,
(e)The amount in issue is very low and a trial is likely to last less than a day.
Summary
[25] Whether a proceeding is transferred is discretionary. However, some regard needs to be made as to why proceedings are demarcated between the District Court and High Court. The District Court is entrusted to deliver judgments expediously, usually in matters that do not require a consideration of complex legal argument.
[26] There are no sufficient elements of complexity or importance in this case to justify the matter being heard in the High Court.
Result
[27]There is an order transferring the proceeding to the District Court.
[28]Costs are reserved for consideration upon application.
Associate Judge Christiansen
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