Shed4 Trading Company Limited v Sanson
[2020] NZHC 2836
•29 October 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-652
[2020] NZHC 2836
UNDER the Companies Act 1993 IN THE MATTER OF
the liquidation of SOUTHERN MAN LIMITED (IN LIQUIDATION)
BETWEEN
SHED4 TRADING COMPANY LIMITED
Applicant
AND
CRAIG ALEXANDER SANSON
and
DAVID BRIDGMANRespondents
Hearing: 5 October 2020 Appearances:
B Norling and A Alipour for the Applicant
M J Tingey and J E M Lethbridge for the Respondents A S Botterill for Damien Grant,
(liquidator of Tuatara Trading New Zealand Ltd)
Judgment:
29 October 2020
JUDGMENT OF ASSOCIATE JUDGE R M BELL (No.2)
This judgment was delivered by me on 29 October 2020 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules
………………………….
Registrar/Deputy Registrar
Solicitors:
Norling Law (Brent Norling/Alice Alipour), North Harbour, for the Applicant Martelli McKegg (JEM Lethbridge), Auckland, for the Respondents
Copy for:
Murray J Tingey, Barrister, Auckland, for the Plaintiff
Adam Botterill, Waterstone Insolvency (liquidator of Tuatara Trading NZ Ltd)
SHED4 TRADING COMPANY LIMITED v SANSON and BRIDGMAN [2020] NZHC 2836 [29 October 2020]
[1] Mr Damien Grant, liquidator of Tuatara Trading NZ Ltd (in liq) applies for recall of my costs decision of 1 October 2020.1 His concern is adverse statements I made about him. He says that they cannot be justified, in the light of new evidence in his affidavit of 2 October 2020. He does not propose that I change the costs order but asks me to recall statements I made about him.
[2] Mr Grant is not a party to the proceeding but the case deals in part with steps he took as liquidator of Tuatara Trading NZ Ltd. Mr Grant swore an affidavit supporting the refusal of Shed4 Trading Company Ltd to disclose redacted parts of deeds of assignment from Tuatara to Mr Sheddan (its director) and from Mr Sheddan to Shed4 Trading Company Ltd. Mr Grant’s evidence was that he had seen unredacted copies of the deeds of assignment. Southern Man Investments Ltd’s liquidators could trust him that they did not need to see the full unredacted versions of the deeds of assignment.
[3] Following my decision ordering Shed4 Trading Company Ltd to provide unredacted copies of the deeds of assignment,2 the parties filed submissions as to costs. My costs decision was in a minute. That was because, as with most of my costs decisions, I did not consider that it raised matters of interest to anyone but the parties.
[4] On 2 October 2020, Mr Grant filed a memorandum seeking recall and a new affidavit. His affidavit sets out new matters not covered in his earlier affidavit, explaining decisions and steps in the Tuatara liquidation.
[5] As Mr Grant is not a party to the proceeding, there is a question whether as a witness he can ask the court to adjust its findings of fact. There are three decisions, each with their own approach.
1 Shed4 Trading Company Ltd v Sanson and Bridgman HC Auckland, CIV-2020-404-652, costs minute of 1 October 2020.
2 Shed4 Trading Company Ltd v Sanson and Bridgman [2020] NZHC 2363.
[6] First, the thesis, O’Regan v Lousich.3 The chairman of a Māori incorporation was granted certiorari to quash a decision of the Māori Land Court where a judge made adverse comments about the chairman without giving him the opportunity to be heard on criticism made by other parties. Tipping J said:4
The public are entitled to take the view, and do take the view, that if a Judge criticises someone in a judgment the Judge has carefully weighed the evidence after giving the person criticised the opportunity to be heard. Thus comments such as that which the Judge made in the present case carry considerable weight. The greater the apparent authority of the person making the finding the greater is the harm likely to ensue to the person criticised; the greater therefore is the responsibility of the person making the comment or finding not to do so without observing the rules of procedural fairness.
[7] Second, Quantum Laboratory Ltd v Dunedin District Court, is the antithesis.5 In an application for judicial review of a decision of the District Court, Panckhurst J did not accept that there was a general rule of procedural fairness in favour of non- parties in an adversarial process. He distinguished investigative and adversarial proceedings. Requiring a decision-maker to give a non-party an opportunity to be heard would be incompatible with the dynamics of the adversarial process. In its normal operation, the adversarial system does not inflict widespread abuse and only rarely do the available safeguards inherent in the process fail to deliver a less than satisfactory outcome. He relied extensively on a decision of the Ontario Court of Appeal, Hurd v Hewitt,6 which held that allowing witnesses and non-parties to seek review of adverse findings would make the adversarial process unmanageable. Carthy J said:
The practical consequence of any other conclusion would be chaotic. The tribunal cannot know at the outset what evidence may be relevant to the ultimate reasons. Every time an aspersion is cast at any person, the tribunal would have to reassure itself that the person is warned and given an opportunity to respond. The allegation might arise from the evidence of the last of a series of witnesses and be cast against earlier witnesses and others. This would mandate recalling those witnesses and calling the others, or imposing upon the tribunal the obligation to ignore what may be very cogent evidence. Taking it a step further, judgment might be reserved, and upon reflection, the tribunal might determine that a particular segment of the evidence is essential to the reasoning. The hearing would have to be reconstituted if that evidence involved misconduct on someone’s part and the
3 O’Regan v Lousich [1995] 2 NZLR 620 (HC).
4 At 631.
5 Quantum Laboratory Ltd v Dunedin District Court [2008] 2 NZLR 541 (HC).
6 Hurd v Hewitt (1994) 75 OAC 205 (CA).
allegation had not been put to that person. Alternatively, essential evidence for the reasoning would have to be ignored.
[8] The third, Hampton v Christchurch District Council, is the synthesis.7 A witness and not a party, who was the subject of adverse findings by a judge, sought judicial review of those findings. Whata J held:8
First, a witness has no general right to be heard about prospective criticism in a judgment. The scheme of the Evidence Act 2006 precludes the existence of such a right in a civil proceeding. Second, a witness may seek to review defamatory comments made by a Judge only in circumstances where the Judge did not ask questions about matters relating to the comments and where the omission was plainly wrong. Bearing in mind the overarching duty of a Judge to be and to appear to be impartial, the prospect of this court finding that the Judge erred in this way must be limited to cases where there was no evidence at all (circumstantial or otherwise) supporting a defamatory observation. Third, the review proceeding must not seek to collaterally challenge the outcomes of the judgment. A corollary of this is that in most, if not all cases, the only relief will be by way of declaration that the defamatory statements had no proper basis in the evidence.
By way of explanation for limiting the scope of review of adverse findings about a witness or non-party, Whata J said:9
Having said that, it seems to me that review on natural justice grounds could only arise in limited circumstances where the omission by the Judge to question a witness about potentially defamatory comments was plainly wrong or egregious. Bearing in mind the overarching duty of a Judge to be and to appear to be impartial, the prospect of this court finding that the Judge erred in this way must be limited to cases where there is no evidence at all (circumstantial or otherwise) supporting a defamatory observation. Any wider basis for review could imperil the integrity of the adversarial process by placing a burden on the Judge to enquire on matters properly left to the litigant parties.
[9] I gratefully follow the approach of Whata J. Pankhurst J’s reasons in Quantum Laboratory v Dunedin District Court generally count against allowing non-parties to seek review, but Hampton leaves scope for limited review in a way that does not require the court to consider fresh evidence and is not likely to lead to the difficulties that concerned Pankhurst J.
7 Hampton v District Court at Christchurch [2014] NZHC 1750, [2014] NZAR 953.
8 At [35].
9 Hampton v District Court at Christchurch [2014] NZHC 1750, [2014] NZAR 953 at [29].
[10] All three cases involved the review of decisions of inferior courts, the Māori Land Court and the District Court. The aggrieved non-parties and witnesses sought certiorari or judicial review. Those remedies are not, however, available for decisions of this court. As Mr Grant is not a party, he cannot appeal. But if witnesses and non- parties in tribunals and lower courts are to have a remedy, there is no reason why witnesses and non-parties in this court should also not have a remedy. It would be arrogant to assume that mistakes are made only in lower courts or tribunals. Accordingly, this court must also find a way to address complaints by witnesses and non-parties about adverse findings.
[11] Mr Grant has asked for recall under r 11.9 of the High Court Rules 2016. That allows a judge to recall a judgment at any time before a formal order is drawn up and sealed. Recall under r 11.9 is available for parties. It is applied in only limited circumstances, as recognised in Horowhenua County Council v Nash (No.2) and countless decisions that have followed it.10 The limitation, recall only before the order is sealed, is required to ensure that any adjustments, albeit in limited circumstances, are made before the judgment takes effect in a sealed order.11 Under Hampton a non- party or witness has a different interest, not in adjusting the result, but in having adverse findings declared unjustified. As that does not and cannot affect the terms of a sealed order, there seems to be no reason why a witness’s application to review should be tied to when a judgment is sealed. After all, unlike the parties, a witness or non-party may not become aware of the matter as soon as judgment is given. And an application by a non-party for judicial review of a decision of a lower court is not restricted by the sealing of an order. Accordingly, a safer course may be to not restrict the non-parties’ rights to r 11.9.
[12] There is no specific rule governing applications such as Mr Grant’s. But as there ought to be a remedy, r 1.6(2) of the High Court Rules 2016 can be applied:
1.6 Cases not provided for
(1)If any case arises for which no form of procedure is prescribed by any Act or rules or regulations or by these rules, the court must dispose of
10 Horowhenua County v Nash (No.2) [1968] NZLR 632 (SC) at 633.
11 Leaving aside correction of the sealed order under r 11.10 when it does accurately record the effect of the decision.
the case as nearly as may be practicable in accordance with the provisions of these rules affecting any similar case.
(2)If there are no such rules, it must be disposed of in the manner that the court thinks is best calculated to promote the objective of these rules (see rule 1.2).
Under r 1.2 of the High Court Rules, the objective of the rules is to secure the just, speedy and inexpensive determination of the proceedings. In this context, justice can be considered to apply not only to the parties but also to non-parties and witnesses. Accordingly, I deal with the matter under r 1.6(2) by considering Mr Grant’s application on the papers.
[13] I record that I gave the parties the opportunity to submit on Mr Grant’s application. The liquidators submitted. Shed4 Trading Ltd did not. Mr Grant also applied to be joined as a further party to the proceeding. As I consider that he has standing under the approach I have outlined above, I do not consider it necessary to join him as a party after judgment.
[14] As to the merits of his application, Mr Grant has cleared two of the requirements set by Whata J in Hampton. First, he does not ask the court to set aside or vary the costs decision in my minute of 1 October 2020. This is not a collateral challenge to the outcome.
[15] Second, statements in my costs decision are defamatory of Mr Grant. Minutes are not normally published in the same way as judgments, nevertheless they are part of the court record and can be accessed as of right under the Senior Courts (Access to Court Documents) Rules 2017.12 While the statements were published on a privileged occasion, they were critical of Mr Grant. They would make other insolvency practitioners and members of the business community (who may consider whether Mr Grant should be appointed as liquidator, administrator or receiver) think less well of him. I do not, however, intend to repeat what I said in my costs minute. In this case, there is no reason to re-publish the earlier statements. As Mr Grant considers that my comments were not justified, it would be wrong to throw oil on the fire.
12 Senior Courts (Access to Court Documents) Rules 2017, r 8(1).
[16] The question is whether Mr Grant can review my defamatory statements in the circumstances contemplated by Whata J in Hampton. As mentioned, Mr Grant made an affidavit on 27 August 2020 in opposition to the discovery application. As is standard with hearings of interlocutory applications, deponents were not cross- examined. Mr Grant does not take issue with any statements I made in my decision of 3 September 2020, although I did say that I found some aspects of Mr Grant’s work as Tuatara’s liquidator curious and odd.13
[17] The case was called in the companies miscellaneous list on 25 September 2020. Counsel for Shed4’s liquidators advised that the liquidators had been provided with unredacted copies and told me the substance of the matters that had been covered up. Written submissions as to costs had been filed. In my costs decision of 1 October 2020, at[5](a)-(f), I set out uncontroversial matters on which my original decision was based. In paragraph [5](g), I stated a matter that arose out of what I had been informed at the call on 25 September 2020. I drew inferences from these matters. Those inferences were adverse to Mr Grant as well as to Mr Sheddan, Shed4’s director.
[18] Mr Grant says that I could not have drawn those inferences if I had been aware of the matters set out in his second affidavit, made on 2 October 2020. In that affidavit, he has set out matters relating to Tuatara’s liquidation and given explanations for his decisions. On the other hand, Mr Grant does not submit that I was not entitled to draw the inferences on the information available at the time of my costs decision. In short, he relies on his fresh evidence to invite me to revise the inferences I drew against him. That approach does not fall within the test set by Whata J in Hampton. Under that test the question is whether there was no evidence at all (circumstantial or otherwise) to support my statements critical of Mr Grant. There was an evidential basis, admittedly circumstantial, which entitled me to infer that there were bad reasons for redacting the deeds of assignment. Whata J’s approach does not contemplate the adversely affected witness or non-party introducing fresh evidence and requiring the court to reconsider the matter afresh. That would involve a disruption to the adversarial process that both Pankhurst and Whata JJ were concerned to avoid. Accordingly, because Mr Grant’s application relies on my accepting fresh evidence to come to different findings, he has
13 At [15] and [30].
not met the test in Hampton. Allowing any wider scope for witnesses and non-parties to seek review of adverse findings would undesirably undermine the adversarial process.
[19] The point remains that Mr Grant claims to be adversely affected by what I said in my costs decision. Members of the public are entitled to read my costs decision, as it is part of the formal court record and can be inspected as of right. As Mr Grant believes that they may gain the wrong impression about him if they do not know what he has said in his new affidavit, his concern can be addressed by allowing any member of the public wishing to inspect the court file also to read his initial affidavit of 27 August 2020 and his affidavit of 2 October 2020. That will allow any member of the public reading the costs minute to decide whether I was entitled to draw the inferences in my costs decision.
[20] Accordingly, while I dismiss Mr Grant’s application to review my findings about him in my costs decision, I give these directions, if the Registrar receives any request under the Senior Court (Access to Court Documents) Rules 2017 to access my costs decision:
(a)The Registrar may give access to Mr Grant’s affidavits as well as my costs decision;
(b)The Registrar need not refer the application to the parties, as they have already submitted on this matter;14
(c)The Registrar may decide the access request without referring the matter to a judge.15
………………………………
Associate Judge R M Bell
14 Senior Court (Access to Court Documents) Rules 2017, r 11(3) and (4).
15 Senior Court (Access to Court Documents) Rules 2017, r 11(7)(c).
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