Station Properties Limited (in rec) v Kumar HC Auckland CIV 2009-404-000354

[2011] NZHC 555

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-000354

BETWEEN  STATION PROPERTIES LIMITED (IN RECEIVERSHIP)

Plaintiff

ANDVIKRAM KUMAR NIRUPAMA KUMAR Fourth Defendants

ANDROBERT JAMES SELWYN Fifth Defendant

AND  MICHAEL DONALDSON

PATRICIA BRONWYN DONALDSON Sixth Defendants

Hearing:         9 June 2011

Appearances: J S Cooper and S East for the Plaintiff

R Kelly for the Fourth, Fifth and Sixth Defendants on 9 June 2011 and
D Williams on 13 June 2011
M J Tingey for BOS International (Australia) Limited

Judgment:      13 June 2011

ORAL JUDGMENT OF WYLIE J

STATION PROPERTIES LIMITED (IN RECEIVERSHIP) V V KUMAR & ORS HC AK CIV 2009-404-000354

13 June 2011

[1]      These proceedings were commenced in January 2009.  They have a five-day fixture commencing on Monday, 20 June 2011 at 10.00 am.  This fixture date was allocated on 31 August 2010 by Associate Judge Doogue.   At the same time, a timetable  was  put  in  place  for  the  filing  of  any  outstanding  interlocutory applications.  The fixture date was confirmed on 19 November 2010 by Associate Judge  Sargisson  and  shortly  thereafter,  a  judicial  settlement  conference  was convened.   That conference was partially successful.   The result of the settlement conference and other unrelated matters is that the proceedings remain extant against only the fourth, fifth and sixth defendants.  Further interlocutory applications were filed and they proceeded to a hearing on 18 March 2011 before Associate Judge Abbott.   The decision  on  those  interlocutory applications  was  only released  on

27 May  2011.    The  decision  has  spawned  a  number  of  further  interlocutory applications.   Those applications and the unfortunate delay in the release of the decision are now threatening the fixture date.

[2]      The interlocutory applications are as follows:

(a)      The defendants’ application either for a ruling that an application they made for review of Associate Judge Abbott’s decision dated 27 May

2011 was filed within time, or alternatively, an  extension of time within which to seek a review of that decision.

(b)The  defendants’  application  seeking  to  review  Associate  Judge Abbott’s decision on the grounds either that he had no jurisdiction to make the same, or that the Court was misled as to the relevant facts;

(c)      The defendants’ application for third party discovery against BOS International (Australia) Limited (―BOSI‖);

(d)An oral application by the defendants to amend the application for third party discovery as well as an application for an adjournment in regard  to  the  hearing  of  that  application  in  the  event  that  it  is amended;

(e)       The defendants’ application for an adjournment of the substantive trial

due to commence on 20 June 2011.

(f)       An application by the plaintiff for unless orders.

[3]      I heard these various applications on 9 June 2011.  Given the pending fixture date, I am giving this oral decision this morning.

[4]      I deal with each application in turn:

A)      Did  the  defendants  file  their  application  to  review  Associate  Judge

Abbott’s decision in time?

[5]      The application to review Associate Judge Abbott’s decision was dated 7 June

2011.  It was sent to the Court by email on that day.  As I understand it, the original was filed on 8 June 2011 and the filing fee was paid on the same day.

[6]      Pursuant to r 2.3(2)(a), unless otherwise directed, notice of an application for review of an Associate Judge’s decision must be given within five working days of the decision being given.

[7]      As noted above, the decision was released on 27 May 2011.   Under the heading ―Judgment‖ on the title page, it states as follows, ―27 May 2011 at 5.00 pm‖. The date and time recorded on the title page must be the delivery time directed by Associate Judge Abbott.  It is common ground that the judgment was, in fact, sent by email to counsel at 5.17 pm on 27 May 2011.

[8]      Although there is no affidavit or other evidence before me in relation to this issue, Ms Kelly for the defendants tells me from the bar that she was not in her chambers at 5.17 pm on 27 May 2011.   She asserts that she did not receive the judgment until the morning of Monday, 30 May 2011.

[9]      I am surprised that there is no proper evidence before me as to these matters, but they were not challenged by Ms Cooper on behalf of the plaintiff, and I am prepared to proceed on the basis of Ms Kelly’s advice.

[10]     Ms Kelly referred to rr 11.4(2) and 11.5.  She then referred to r 11.14(2) and noted that the Registrar did not endorse the judgment with a delivery time.   She submitted that this was a mandatory requirement which affects the time when the judgment is deemed by the Rules to have been delivered.   She accepted that the judgment was received by her by email at 5.17 pm on 27 May 2011, and suggested that because delivery was effected by email, by analogy the electronic service rules apply.   She noted r 6.6(3), and submitted that because the judgment was sent electronically after 5.00 pm on a working day, it must be treated as having been served on Monday, 30 May 2011, being the first subsequent working day.  She then said that pursuant to r 1.17(2), the Monday has to be excluded from the calculation of the five working-day period within which any review is required to be filed.  She argued that time began to run from Tuesday, 31 May 2011.  Monday, 6 June 2011 was the Sovereign’s birthday.   The Registry was shut on that day and it is not a working day as defined in the rules.  She submitted that the five working-day period therefore expired on Tuesday, 7 June 2011 when her application seeking to review Associate Judge Abbott’s decision was sent to the Court by email.

[11]     Ms Cooper submitted that the delivery time of the judgment was the date and time directed by Associate Judge Abbott, as the Judge responsible for it. This was 27

May 2011 at 5.00 pm, and she submitted that the judgment took effect at that time. She argued that it followed that the defendants had until Friday, 3 June 2011 to file the application and that they failed to do so.

[12]     I am unable to accept Ms Kelly’s argument.

[13]     Rule 11.4(2) provides as follows:

11.4     Time judgment given

…

(2)      A  written  judgment  is  given  at  the  delivery  time  directed  or nominated under r 11.5.

[14]     Rule 11.5 provides as follows:

11.5    Delivery time of written judgment

The delivery time of a written judgment is—

(a)       the date and time directed by the Judge responsible for it; or

(b)      if  no  direction  is  given  under  paragraph  (a),  a  date  and  time nominated by the Registrar under rule 11.14.

[15]     Here, the judgment records that it was given on 27 May 2011 at 5.00 pm. That must be the date and time directed by Associate Judge Abbott.  Rule 11.14(1) has no application.  That rule applies where no direction is given under r 11.5(b).  It follows that the judgment was delivered at 5.00 pm on 27 May 2011.   Friday, 27

May 2011 is excluded by r 1.17(2).   The five working-day period specified under r 2.3(2)(a) commenced on Monday, 30 May 2011 and expired on Friday, 3 June

2011.  The notice of application seeking to review Associate Judge Abbott’s decision was sent to the Registry by email on 7 June 2011.  The rules do not, as yet, permit e- filing. The original application was not filed until 8 June 2011.  It was out of time.

B)      Should an extension of time be granted?

[16]     Ms  Kelly’s  submission  was  commendably  brief.     She  argued  that  the application  for extension of time arose out of the Registrar’s failure to endorse the judgment under r 11.14(1), and that the defendants ought to be given some latitude under rr 1.4 and 1.5.   She argued that the application was only one day late, that there was no prejudice and that the short delay makes no material difference to the Court or to the parties.

[17]     Ms Cooper referred to r 1.19.   She argued that any extension should be declined given the impending trial which, as at the date of hearing before me, was only six working days away.  She argued that the application to review the Associate Judge’s decision was diverting the plaintiff’s resources from preparing for trial.  She was  also  critical  of the  form  of the notice seeking that  the decision  should  be reviewed.

[18]     The starting point is r 1.4(1).  It provides that the practice and procedure of the Court in all civil proceedings and interlocutory applications are regulated by the rules.   Where, as here, there is a failure to comply with a time limit fixed by the rules, the Court may, under r 1.19, in its discretion, extend the time fixed by the rules.  It can do so on such terms as it thinks just.

[19]     The rules of Court must prima facie be obeyed, and in order to justify a Court in  extending  time  within  which  some  step  must  be  taken,  there  must  be  some material upon which the Court can exercise its discretion.[1]

[1] Ratnam v Cumarasamy [1965] 1 WLR 8 (PC) at 12; Day v Ost (No 2) [1974] 1 NZLR 714 (SC);

Spicers Paper (NZ) Ltd v BPK & GA Buckley Ltd (1993) 6 PRNZ 16 (HC).

[20]     The extension sought in the present case is relatively short.  It is from 3 June

2011 to 8 June 2011.   Moreover, only one of those days was a working day as defined  by the  rules.    Nevertheless,  I decline  to  extend  time  for  the  following reasons:

(a)      In the context of these proceedings, time was critical. Associate Judge Abbott’s decision only became available on 27 May 2011.  The trial was scheduled for 20 June 2011.  As noted, the trial date had been set in August 2010.   It was confirmed in the course of subsequent telephone conferences, including a telephone conference before Associate Judge Abbott  on  1  June 2011  and  a  further  conference before Lang J on 7 June 2011.   Time was critical and in the circumstances,  the  delay,  while  short,  had  consequences  for  the further conduct of these proceedings.

(b)There  is  no  evidential  foundation  on  which  I  can  exercise  the discretion conferred by r 1.19.   The defendants did belatedly, and during the course of the hearing before me, attempt to file an affidavit from a Ms Martin.  Ms Cooper opposed the late filing of that affidavit. I accepted the same de bene esse and I have read it.   It does not advance  any  explanation  for  the  delay  in  filing  the  notice  of

application seeking to review Associate Judge Abbott’s decision. As I

have noted above, in order to justify and exercise this Court’s discretion under r 1.19, the Court requires a proper evidential foundation be laid, and where a failure to comply with the rules is not explained, a party will not generally be entitled to any indulgence.

(c)       The defendants were not sitting on their hands for the period 27 May

2011 until 8 June 2011.

On 3 June 2011, Ms Kelly sent a facsimile to Mr A Galbraith QC who acted for the plaintiffs  before Associate Judge Abbott.    Ms  Kelly referred to the fact that the judgment had been delivered ―late last Friday‖.  She asserted that Mr Galbraith had inadvertently misled the Associate Judge.   She referred to the ―unfortunate timetabling pressures‖ and requested an immediate response.   She received one virtually immediately.   Mr Galbraith advised that he was no longer engaged, that he had not read the judgment and that he had not seen the documents Ms Kelly had referred to in her facsimile.  Ms Kelly was clearly aware of at least one of the issues raised in her application seeking a review of Associate Judge Abbott’s decision on 3 June 2011 and of the plaintiff ’s counsel’s response.  However, she did not pursue the issue by issuing the appropriate application in a timely fashion.

Further, on the same day, Ms Kelly served a notice to admit facts on the plaintiff.  In her supporting letter, she advised that if the facts were admitted,  the  defendants  would  not  seek  non-party  discovery  by BOSI.  In another letter sent at much the same time, Ms Kelly invited the  plaintiff  to  cooperate  ―so  that  any further  interlocutory steps‖ could be avoided.   One of the interlocutory steps identified in the letter was an application seeking review of Associate Judge Abbott’s decision.  Again, it is clear that the defendants were considering their options and that they were aware of the same and of the looming deadlines.

(d)      The notice of application seeking to review Associate Judge Abbott’s

decision is inadequate.  It asserts as follows:

Order for review

1.        Review of the decision of Associate Judge Abbott delivered (after close of business) on 27 May 2011, specifically that part of the decision recorded at paragraphs

74 and 120(b).

On the grounds that

1.1      Associate Judge Abbott did not have jurisdiction to determine the application for orders restraining Bell Gully from acting for the Plaintiff;

1.2      The Plaintiff misled the Court as to the extent of Bell Gully’s previous involvement in the matters in issue before the Court and in particular in the dealings between the parties at a time when Bell Gully was acting for a third party.

The grounds for review are not well articulated and they would not have been clear to the plaintiff.  No supporting affidavit was filed and the plaintiff had no more than the decision given by the Associate Judge and the bald assertion contained in the notice of application. This does not comply with r 2.3(1).

(e)       The application has no obvious substantive merit.

First, it alleged that Associate Judge Abbott did not have jurisdiction to determine the defendants’ interlocutory application for a ruling that the solicitors, Bell Gully, should be ordered to cease acting for the plaintiff.  Ms Kelly submitted that the defendants’ application was, in effect, an application for injunctive relief, and that as such, it was not an application that could be dealt with by an Associate Judge.   She relied on s 26J(4)(c) of the Judicature Act 1908.

This submission is, in my view, misconceived.  The application filed by the defendants did not in its terms seek an injunction.   The arguments before the Associate Judge did not proceed on that basis,

and there was no suggestion by the defendants or by the plaintiff that the Associate Judge did not have jurisdiction to deal with the application.  Moreover, such applications have commonly been dealt with by Associate Judges.[2]     Such applications are commonly dealt with by Associate Judges because the Court is not being asked to grant  injunctive  relief.    Rather,  it  is  being  asked  to  exercise  its

[2] Pioneer Insurance Company Ltd v Anderson (2008) 19 PRNZ 45 (HC); Greenmount Manufacturing Ltd v Southbourne Investments Ltd (2008) 19 PRNZ 84 (HC). (The decision of the Associate Judge confirmed on review by Harrison J in the High Court); Iron Ore New Zealand Ltd v Rio Tinto Mining and Exploration Ltd HC Christchurch CIV-2009-409-1947, 24 February 2010; Strachan v Denbigh Property Ltd HC Palmerston North CIV 2010-454-232, 25 August 2010; Miro Property Holdings Ltd v Fletcher Construction HC Wellington CIV 2010-485-2540, 5 April 2011.

inherent jurisdiction to control its own proceedings.  Inter alia, a Court can give directions to any person acting or seeking to act as an officer of the Court.[3]    Under s 26IA(1) of the Judicature Act, an Associate Judge has, in all proceedings properly before him or her, jurisdiction to make any order or to exercise any authority that might be made or exercised by a Judge of the High Court.   In the present case, there were a number of interlocutory applications properly before Associate Judge Abbott.   He had the inherent power to give directions as to

[3] Black v Taylor [1993] 3 NZLR 403 (CA) at [408]–[409]; Clear Communications Ltd v Telecom Corp New Zealand Ltd (1999) 14 PRNZ 477 (HC) at 482 and 483; Re Securitibank Ltd (inLiq) [1978] 1 NZLR 97 (SC) at 106.

whether any person could act as an officer for the Court in those proceedings.[4]

[4] Judicature Act 1908, s 16; Cordova v Wenzel (2005) 18 PRNZ 184 (HC).

The second ground relied on by the defendants in the notice of application is that the Associate Judge was misled.  Ms Kelly referred me to a number of documents which were discovered by the plaintiff consequent on the Associate Judge’s decision.   She said that those documents proved that Bell Gully had a role in drafting the sale and purchase agreements which the plaintiff is suing on.

I have considered the various documents referred to by Ms Kelly.  In my judgment, there is simply no basis for  any assertion that Associate

Judge Abbott was misled.  At the relevant time, Bell Gully was acting

for BOSI.   BOSI had been approached to finance the development proposed by the plaintiff.  The plaintiff had its own solicitors.   It is clear that Bell Gully advised BOSI about the sale and purchase agreements and that BOSI requested that aspects of the agreements be re-drafted to comply with its loan proposal.  The plaintiff’s solicitors however drafted the agreements relied on by the plaintiff in the proceedings against the defendants.  There was clearly disclosure of these  matters  to  Associate  Judge Abbott.    I  refer  to  [69]  of  his judgment.  Relevantly, it reads as follows:

Counsel for Station Properties informed me from the bar (with the consent of counsel for the defendants) that Bell Gully was advising BOS International on transactional documents from around the end of July 2006, and those documents included the May 2006 agreements and a draft of the variation that the defendants signed in late August or early September 2006, but there is no evidential basis on which the defendants can contend that Bell Gully had any knowledge of what happened between Station Properties and the defendants…

What is in issue in these proceedings is whether the plaintiff can rely on the sale and purchase agreements and later collateral agreements. The defendants say that they were not obliged to settle the agreements because of the conduct of a director of the plaintiff company and because of the conduct of other agents or employees of the plaintiff. This conduct has been pleaded in various further affirmative defences alleging breach of fiduciary duty, unconscionability, misleading and deceptive conduct, misrepresentation and repudiation of the collateral contracts in respect of an underwrite fee.

The   defendants   entered   into   the   principal   sale   and   purchase agreements and the collateral agreements.   The plaintiff obtained approval from its financiers to those agreements.   The plaintiff company is now in receivership at the suit of its financiers and the receivers have appointed the financiers’ lawyers to act in this litigation on behalf of the plaintiff.   The fact that those lawyers advised the financier when considering whether or not to approve the sale and

purchase agreements and the collateral agreements has no bearing on the enforceability of those agreements.

In my view, whether or not Bell Gully can act is very much a smokescreen and there is no obvious merit in the proposed review. This  is  not  one  of  the  exceptional  cases  which  would  justify interfering with the plaintiff’s right to be represented by lawyers of its choosing.

[21]     For all of these various reasons, I decline to allow an extension of time in which to file an application for review of Associate Judge Abbott’s decision on

27 May 2011.  I therefore do not proceed to a full review of the Associate Judge’s

decision.

C)      Third Party Discovery

[22]     The defendants seek an order in the following terms:

Order for non-party discovery

3.        An  order  that  the  BOS  International  (Australia)  Ltd  (hereafter referred to as ―BOSI‖) file and serve on the Defendants an affidavit in terms of Rule 8.26 High Court Rules and make available the documents listed in the said affidavit to the Defendants for inspection.

On the grounds:

3.1      Set out in correspondence from the Defendants to the Plaintiff dated

2 June 2011 (attached and marked ―A‖) and again requested by correspondence  from  the  Defendants  to  the  Plaintiff  on  3  June  2011 (attached hereto and marked ―B‖);

3.2      That as of the time of filing this application, no positive response has been received (refer Plaintiff’s solicitors’ letter dated 3 June 2011, attached hereto and marked ―C‖);

3.3      As financier of the Plaintiff in respect of the project which is the subject of the proceedings, it is highly likely that BOSI had and has documents relevant to the matters in issue between the parties.

3.4      The documents sought are either documents which originated from

BOSI or were sent to BOSI.

3.4      The orders sought are necessary because the Plaintiff’s discovered documents are incomplete, and critically important documents are missing from the records now available to the Plaintiff’s receivers.

[23]     No supporting affidavit was filed.  Rather, the correspondence referred to in

[3.1] and [3.2] was annexed to the application.

[24]     The plaintiff opposes the application.   So did Mr Tingey who appeared on behalf  of  BOSI.    Mr  Tingey  advised  me,  and  Ms  Kelly  confirmed,  that  the documents  identified  in  annexures A and  B  to  the application  have been  made available to the defendants.

[25]     The defendants’ application must fail for the following reasons:

(a)      The application is lacking in specificity.   It is made under r 8.26.

Relevantly that rule provides as follows:

8.26Order for particular discovery against non-party after proceeding commenced

(1)       This rule applies if it appears to a Judge that a person who is not a party to a proceeding may be or may have been in the  control  of  1  or  more  documents  or  a  group  of documents that the person would have had to discover if the person were a party to the proceeding.

Here, the application does not detail what documents or group of documents are sought to be discovered.[5]     The only documents identified are those in annexures A and B and they have been made available.

[5] AMP Society v Architectural Windows Ltd [1986] 2 NZLR 190 (HC) at 202; White v Spafford & Co (1901) 2 KB 241 (CA) at 245–246.

(b)Beyond stating that BOSI is the plaintiff’s financier, there is nothing in the application to suggest that any documents that BOSI might have in its possession are relevant to any matter in issue in the proceedings. There   is    no    obvious    issue   in    the   proceedings    to    which

communications between the plaintiff and BOSI can be relevant.

(c)      Under r 8.26(4) a Judge cannot make an order under r 8.26 requiring third party discovery unless he or she is satisfied that the order is necessary at the time when the order is made.[6]     There is nothing before me on which I can be so satisfied.  If an application is made simply as a fishing expedition, it must be refused because it cannot be reasonably necessary.[7]

[6] F & L Valks Ltd v Bank of New Zealand Officers’ Provident Association [1996] 1 NZLR 735 (HC) at 737.

[7] Baby Hammock Co Ltd v AJ Park Law HC Auckland CIV 2008-404-3581, 24 March 2010.

(d)There has been inordinate delay by the defendants in making  the application.  The issue of whether discovery of documents in relation to the plaintiff’s financing arrangements with BOSI was required, was first  made  in  a  letter  from  Ms  Kelly  for  the  defendants,  dated

28 September 2010.  Counsel for the plaintiff replied on 21 October

2010 stating that documents relating to the terms of finance from BOSI to the plaintiff were not relevant to the proceedings, except to the extent that they were provided to the defendants and were within the common knowledge of both parties.    There was further correspondence on this and other issues, and counsel for the plaintiffs advised in a letter dated 8 November 2010 that if the defendants wished  to  make any application  in  relation  to  these matters,  they should do so without delay.   Despite this, the application was only filed on 8 June 2011, 12 days before trial.  It is simply too late.

(e)      The defendants have not made any offer to reimburse BOSI’s costs in discovering any documents.  Rule 8.27 provides that when an order is made under r 8.26, the Judge may order the applicant to pay the person from whom discovery is sought the person’s expenses in complying.   Such orders are the norm.[8]    Here, the defendants have been asked to provide an undertaking or security to meet BOSI’s

costs. They have failed to respond.

[8] Clear Communications Ltd v Telecom Corp New Zealand Ltd (1994) 8 PRNZ 200 (HC) at 202; CarlinvEnterprises Ltd v Fright Aubrey Ltd HC Christchurch CIV 2007-409-2030, 13 December 2010 at [6].

[26]     Accordingly, the defendants’ application for third party discovery is declined.

D)      Amended Application for Third Party Discovery

[27]     In recognition of the  obvious problems in the application for third party discovery, Ms Kelly sought to amend it to read as follows:

An order that BOSI discover all of those documents contained in [91] of the

Associate Judge’s orders insofar as they are in the control of BOSI.

[28]     Paragraph 91 of the Associate Judge’s decision reads as follows:

I make an order that Station Properties discover documents in its control relating to the funding of the project bearing upon the issue as to whether the full terms of the ―Qualifying Pre-sale Contracts‖ referred to in BOS International’s terms of finance for the project were concealed from or not disclosed to BOS International in the period up to the point in time that BOS International committed itself to provide funding for the project.

[29]     There is an illogicality in the oral application.   How can BOSI discover documents  in  its  control  which  were  concealed  from,  or  not  disclosed  to  it? Ms Kelly’s application is declined for this reason and also for the delay noted above. It is simply too late to try and seek non-party discovery at this stage.

E)      An adjournment

[30]     Ms Kelly applied for an adjournment of the trial.  She argued that time is now unreasonably tight and that it is very difficult for both parties to be ready for trial by

20 June 2011.   She argued that there would be no great prejudice if the trial was adjourned for a further brief period to give the parties breathing space and to enable them to take an orderly approach to the preparation required for trial.

[31]     Ms Cooper initially opposed any application for an adjournment.

[32]     At the end of the hearing on Thursday last, I put in place a timetable to ensure that the matter could be ready for trial and I issued a minute in that regard.   On Friday,  10  June  2011,  the  plaintiff  filed  two  memoranda,  at  different  times,

indicating that it considered that that timetable was too tight.  The plaintiff joined the defendant in seeking an adjournment.  It also sought costs.

[33]     I received one of the memoranda on the morning of Saturday, 11 June 2011. This morning Ms Cooper has referred me to the second memorandum which was also filed by the plaintiff on 10 June 2011.

[34]     Ms Kelly is not in Court.   She sought and obtained my permission to be absent and she has Ms Williams appearing on instruction as a courtesy to the Court. It would be unfair to put this issue to Ms Williams.

[35]     In view of the belated request from the plaintiff, I will defer making any order in relation to an adjournment until I have heard from Ms Kelly.  To that end, I direct that a telephone conference be held at the first available time today to deal with this issue.

F)       Unless orders

[36]     Given the recent change in stance by the plaintiff, this issue is also left for the telephone conference as well.

Costs

[37]     The plaintiff is entitled to costs on each of the applications dealt with in A), B), C) and D) above.  BOSI is entitled to costs in relation to the matters dealt with in C) and  D).    I will  deal  with  the issue of costs  in  the course of the telephone

conference as well.

Wylie J