Wagner v B Property Group Limited

[2024] NZHC 911

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-425-22

[2024] NZHC 911

UNDER

Section 178 of the Companies Act 1993 and Part 19 of the High Court Rules 2016

BETWEEN

KURT BRADLEY WAGNER

Applicant

AND

B PROPERTY GROUP LIMITED

Respondent

Hearing:	(On the papers)
Counsel:	M Kersey and V V Kumar for Applicant P W G Ahern for Respondent
Judgment:	24 April 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(in respect of application for leave to appeal)

WAGNER v B PROPERTY GROUP LIMITED [2024] NZHC 911 [24 April 2024]

[1]    This proceeding was commenced by an originating application heard by Dunningham J on 17 July 2023  with  her  Honour’s  judgment  being  released  on 20 July 2023.1 Dunningham J made detailed orders pursuant to s 178 of the Companies Act 1993 (the Act), requiring B Property Group Ltd (BPG) to provide documents and records to Kurt Wagner (Mr Wagner).

[2]    The sole director of BPG is Andrew McIntosh (Mr McIntosh). Mr McIntosh is a 50 per cent shareholder in BPG, along with Mr Wagner.

[3]    Dunningham J’s orders went further than requiring simply the production of documents. One order called for the provision of information including emails or documents, while another required an explanation as to how accounting records were kept.

[4]    Order [2] made by Dunningham J granted the applicant leave to apply for further information.

[5]    Mr Wagner was dissatisfied with BPG’s compliance with Dunningham J’s orders and, by an interlocutory application, sought orders requiring compliance with Dunningham J’s orders and further categories of documents. That opposed application was heard  by  me  on  8 November  2023.  Further  orders  were  made  requiring  Mr McIntosh to provide further information to Mr Wagner.

[6]    BPG seeks leave to appeal my decision released on 15 November 2023 (the November judgment).2

Application for leave to appeal

[7]    The application for leave to appeal is made on four grounds, the last three broadly covering the same grounds.

[8]    The first and main ground relates to jurisdiction and asserts that an Associate Judge does not have jurisdiction to deal with that application under s 178 of the Act

1      Wagner v B Property Group Ltd [2023] NZHC 1898.

2      Wagner v B Property Group Ltd [2023] NZHC 3230 [November judgment].

and the application which I determined was not an interlocutory application and therefore, I did not have jurisdiction to deal with the application. Further, it is asserted that even if the application was interlocutory in nature, that fact could not confer jurisdiction on me when such a jurisdiction was not  conferred  by  the  Senior  Courts Act 2016 — s 178 of the Act not being a section listed in s 20(2) of the Senior Courts Act in relation to Associate Judge’s jurisdiction.

[9]    It is said that the issue of whether the Court had jurisdiction and whether jurisdiction can be conferred on an Associate Judge through r 2.1 of the High Court Rules 2016 (the Rules) is an arguable error of law and of general and public importance.

[10]   The alternative grounds are that in the event the Court did have jurisdiction, some of the orders made were against Mr McIntosh personally who was not a party to the proceeding. It is then said that other orders went beyond the information that was actually sought by the respondent and further went beyond what was reasonably and properly required. Finally, one of the orders went beyond what could properly described as “information” under s 178 of the Act.

Principles applying to an application for leave to appeal

[11]   The principles are well established and can be found in Greendrake v District Court of New Zealand:3

In Finewood Upholstery Ltd v Vaughan, to which Dunningham J referred to in the leave decision, Fitzgerald J appropriately observed that the requirement for leave to appeal should serve as a filtering mechanism to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made. The following considerations were recognised as relevant on an application for leave to appeal:

(a)a high threshold exists;

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

3      Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].

(d)the circumstances must warrant incurring further delay; and

(e)the ultimate question is whether the interests of justice are served by granting leave.

Jurisdiction

[12]   Mr Ahern, counsel for the respondent, submitted the main ground of his client’s proposed appeal is that there is a reasonably arguable case that I did not have jurisdiction to hear Mr Wagner’s application. Mr Ahern submitted there is an issue as to whether r 2.1 can confer jurisdiction to make orders under r 178 of the Act when such jurisdiction is not otherwise included under the Senior Courts Act.

[13]   “Interlocutory application” is defined in s 4 of the Senior Courts Act as follows:

interlocutory application—

(a)means any application to the High Court in any civil proceedings or criminal proceedings, or intended civil proceedings or intended criminal proceedings, for—

(i)an order or a direction relating to a matter of procedure; or

(ii)in the case of civil proceedings, for some relief ancillary to that claimed in a pleading; and

(b)includes an application to review an order made, or a direction given, on any application to which paragraph (a) applies.

[14]   I note Mr Ahern’s written submissions do not engage with the definition of interlocutory application in the Senior Courts Act.

[15]   The definition of “interlocutory application” in the Rules is an application made in accordance with rr 7.19 or 7.41.

[16]Rule 2.1 provides:

2.1      Jurisdiction and powers

(1)An Associate Judge has the jurisdiction and powers of a Judge in chambers conferred by the Act or these rules or another enactment.

(2)The jurisdiction and powers referred to in subclause (1) are in addition to the jurisdiction and powers conferred by section 20 of the Act.

[17]   I note that r 2.1(2) is clear that the fact an area of jurisdiction is not mentioned in s 20 of the Senior Courts Act does not prevent jurisdiction being created by r 2.1(1).

[18]The synopsis of the rule in McGechan states:4

Associate Judges have the jurisdiction and powers of a judge sitting in chambers. Rule 1.3 defines a hearing in chambers as one where the general public is not admitted, except with the leave of the Judge. Rule 7.34(1) provides that an interlocutory application for which a hearing is required must be heard in chambers unless a Judge otherwise directs. Associate Judges do not have jurisdiction or powers in respect of the matters specified in s 22(4) of the Senior Courts Act 2016. Nor do Associate Judges have power to strike out a proceeding before service under rr 5.35A to 5.35C. The jurisdiction and powers conferred on Associate Judges under this rule are additional to the powers conferred by s 20 of the Senior Courts Act 2016.

[19]   The relief sought by Mr Wagner in his original application was “An order requiring the respondent, B Property Group Ltd, to supply information; and costs”. The information sought was defined as follows:

2.(c)    On  16 March 2023 the applicant made  a written request  to  the respondent under s 178 of the Companies Act 1993, for the following information held by the respondent:

(i)the respondent’s balance sheet as at 16 March 2023;

(ii)any relevant bank statements of the respondent since the applicant’s investment on 31 May 2022;

(iii)the respondent’s last financial year’s financial statements and annual report;

(iv)the respondent’s current business plan; and

(v)any other documents which evidence how the applicant’s investment has been used, including any company records held at the respondent’s registered office

(together, the “Information”).

[20]   The application I heard was called “Interlocutory Application Seeking Further Information”. In response to that application, BPG filed a document called “Notice of Opposition by Respondent to Application Seeking Further Information”.

4      Robert Osborne and others McGechan on Procedure (online ed, Thomson Reuters, accessed    23 April 2024) at [2.1].

[21]   Accordingly, at least in terms of form, both parties approached Mr Wagner’s application on the basis that it was an interlocutory application.

[22]   Originating applications are controlled by pt 19 of the Rules. Rule 19.10 identifies the rules concerning interlocutory applications that are to apply with all necessary modifications to originating applications. Included in those rules is r 7.19 which,  it  will  be  recalled,  is  one  of  the  rules   referred  to  in  the  definition     of “interlocutory application” in r 1.3.

[23]   Accordingly, the fact that a proceeding has been commenced by way of originating application is not a barrier to an interlocutory application being made in that proceeding. Therefore, r 2.1 is capable of conferring jurisdiction on an Associate Judge to determine an interlocutory application made in an originating application.

How did the judgment approach jurisdiction?

[24]In the November judgment, I said the following in respect of jurisdiction:5

[6]      I note here that s 178 of the Act is not one of the sections listed in     s 20(2) of the Senior Courts Act 2016 in relation to which Associate Judges have jurisdiction. However, the present application is by way of an interlocutory application for enforcement or pursuant to leave reserved. Prior to the hearing, Ms Pope, counsel for Mr Wagner, set out why she considered an Associate Judge had jurisdiction to hear this application. Mr Ahern, counsel for BPG, did not take issue with Ms Pope’s conclusion.6

[25]   To the extent that Mr Wagner sought orders enforcing the orders made by Dunningham J, I am satisfied that no arguable issue in respect of jurisdiction exists. The enforcement of Dunningham J’s orders was for “some relief ancillary to that claimed in a proceeding”. The “relief ancillary” sought was the enforcement of the orders made by Dunningham J, which I concluded had not been fully satisfied by BPG.

5      November Judgment, above n 2.

6      Section 22 of the Senior Courts Act 2016 and Rule 2.1 of the High Court Rules 2016, provides an Associate Judge has the jurisdiction and powers of a High Court Judge in Chambers. This application is a chambers matter by virtue of High Court rule 7.34(1).

[26]In Lange v Lange:7

Orders in relation to enforcement are treated as orders for ‘some relief ancillary’ to that claimed in a proceeding’ [within s 4(a)(ii) of the Senior Courts Act 2016].

[27]   Gault J in Lange gave a footnote for the above proposition saying such being at least implicit in Hampton v Minter Ellison Rudd Watts.8 Gault J’s decision went on appeal, where the above quote was included in the judgment without critical comment.9

[28]   The meaning of “some relief ancillary to that claimed in the pleading” in s 4(1) of the Senior Courts Act is discussed in the Court of Appeal’s Lange decision as follows:

[22]      Turning to the second limb of the interlocutory application definition, this was also considered by this  Court  in  Trotter  v Telfer  Electrical  Nelson Ltd:10

[21]       In respect of the second limb, we also consider that the relief sought in the protest was “ancillary” to the relief sought in the Statement of Claim. The definition of “ancillary” in the Shorter Oxford Dictionary is subservient or subordinate. In the rules context, the word “ancillary” is used to mean collateral to but flowing out of the relief claimed in the pleadings (for example, r 5.50 — appearance for ancillary matter), or necessary to support or respond to the relief claimed in the pleadings (for example, s 20 of the Senior Courts Act — ancillary powers of Associate Judge).

[22]       The relief sought in the application can be seen as ancillary to that sought in the pleading. It responds to the relief sought but is collateral to it

— the application for stay (or dismissal) does not engage directly with the relief sought, but rather responds that it is relief which should be pursued in another forum.

(Footnotes omitted).

[29]   The November judgment dealt with Mr Wagner’s application in two separate sections; the first being under the heading “Compliance disclosure”. As I have said,  I consider the compliance section of the November judgment concerned the enforcing of the orders made by Dunningham J and was therefore properly brought by way of interlocutory application.

7      Lange v Lange [2020] NZHC 3151 at [22].

8      Hampton v Minter Ellison Rudd Watts [2020] NZCA 291.

9      Lange v Lange [2021] NZCA 104.

10     Trotter v Telfer Electrical Nelson Ltd, [2018] NZCA 231, [2019] NZAR 476 at [20].

[30]   The second part of the November judgment was under the heading “Further application” and dealt with new categories of documents sought by Mr Wagner.

[31]   The relief sought by Mr Wagner in his originating application, in particular para 2(c)(iv) set out at [19] was in the broadest of terms. I will return to the fact that clause refers to documents rather than information, when I address that aspect of the leave application.

[32]   An application to dismiss for want of prosecution is an interlocutory application, as is an application to strike out an application for relief ancillary to that claimed in the pleading.11 In my view, if an application to strike out a pleading is an application ancillary to relief sought in a pleading, then giving effect to the leave reserved by Dunningham J, and given the broad relief sought in the originating application, Mr Wagner’s application for further information was for some relief ancillary to that claimed in the proceeding.

[33]   This is a separate issue from whether the decision should be regarded as final for the purposes of the need for leave — see Stewart v Eversons International Ltd (in liquidation).12

[34]   An interlocutory hearing may have the effect of a final ruling in respect of     a proceeding such that leave is not required, but that does not mean that an Associate Judge did not have jurisdiction to deal with the matter in an interlocutory hearing.

[35]   To the extent there were further substantive orders sought pursuant to s 178 of the Act, I am satisfied that jurisdiction existed for such relief to be sought by interlocutory application pursuant to the leave reserved by Dunningham J and that was ancillary to the broad relief sought in the original originating application.

[36]   As leave was reserved for Mr Wagner to apply for further information, he did not have to file an amended originating application. The further documents sought were within the relief claimed in the originating application (see paras [25], [29], [32],

11     Mathews Corp Ltd v Edward Lumley & Sons Ltd (1994 7 PRNZ 541).

12     Stewart v Eversons International Ltd (in liquidation) [2024] NZCA 104.

[33], [35] and [36] of the November judgment). All of these paragraphs, to some extent, are aimed at allowing Mr Wagner to understand what happened to the money he paid to the company.

[37]   Accordingly, I am satisfied that the application brought by Mr Wagner was an interlocutory application as  defined  in  the  Senior  Courts Act  and  therefore  was a matter that I had jurisdiction to deal with. I do not consider this issue meets the test for leave to appeal, assuming leave is required, as I do not consider there was an arguable error of law on this point.

Remaining grounds of appeal

[38]   These were referred to at para [10] above. The first is that the orders were made against Mr McIntosh personally who is not a party in the proceeding.  This is  a matter of form over substance. Indeed, even as a matter of form, the only person who could give an affidavit on behalf of BPG was Mr McIntosh, he being its sole director and sole shareholder for much of the period covered by Mr Wagner’s application. A company cannot swear an affidavit. Someone with authority and knowledge of the affairs of the company must do so.13

[39]   As discussed in the November judgment, Mr McIntosh has asserted that much of the information sought by Mr Wagner does not exist in writing. Mr McIntosh did not suggest any other person such as the company’s solicitor or account has the requisite knowledge to provide an affidavit.

[40]   In any event, I do not consider this to be a matter of substance. If this issue was considered a real one by Mr McIntosh then an application to recall the November judgment on the basis that the judgment named Mr McIntosh and not the company, would have been the appropriate response. Mr McIntosh’s attempt to appeal on this point smacks of an attempt to delay. I do not consider this matter meets the threshold for leave to appeal as it is Mr McIntosh who will have to provide an affidavit even if the order was that his company do so, because he is sole director and on the evidence, is the only person with the ability to give the affidavit.

13     See r 9.82 of the High Court Rules.

[41]   As to the other grounds which relate to the extent of the information sought, being that it went beyond what was sought by the respondent and beyond what was “reasonably and properly required”, it is clear from the  November judgment that   the orders were in part a response to Mr McIntosh’s incredible claim that much of the information sought did not exist in written form. That orders were shaped to address matters that were raised in submission is not a ground for appeal. Mr Ahern does not assert that he did not have a chance to be heard on the matters and indeed, the scope of relief was debated. These are not matters of general or public importance.

[42]   As to what is covered by information under s 178 of the Act, Mr Ahern does not point to any authority suggesting that information in s 178 should be restrictively interpreted. As noted at the outset, Dunningham J’s orders were not limited to documents.  Mr Ahern submits: “The section cannot be an unbridled opportunity for a shareholder to delve into every facet of a company’s operation or decision making process”. What will properly be subject to an order under s 178 must be context driven. BPG’s conduct here called for it to provide narrative explanations given its assertion documents do not exist. The company and Mr McIntosh cannot rely on what appears to be their failure to keep proper records to assert that they cannot be ordered to provide explanations by way of narrative.

[43]   I do not consider arguable errors exist in relation to what I accept are subsidiary grounds of appeal with Mr Ahern classifying the jurisdictional issue as the primary submission. Nor, as I have said, are these matters of general or public importance as they turn on the facts of this case.

[44]   I am satisfied that leave to appeal should be declined. There is already Court of Appeal authority addressing the meaning of interlocutory application. Mr Wagner sought further orders by way of an interlocutory application which was responded to by way of a notice of opposition. The issue of jurisdiction was canvassed by counsel for Mr Wagner with no issue being raised by Mr Ahern. I do not consider that it is in the interests of justice to allow an appeal to be lodged in respect of a point raised by Mr Wagner’s counsel where no opposition was taken by Mr Ahern. That is not to say that jurisdiction can be created by consent where there is none, but, if the jurisdictional

point was held in reserve in case the decision went against BPG, such is not a factor that makes the granting of leave in the interests of justice.

[45]   Indeed, I am satisfied that the circumstances of this case overall mean the interests of justice do not favour the granting of leave to appeal. Mr McIntosh is resisting providing the information to which Mr Wagner  is  undoubtedly entitled.  Mr Wagner invested $10,000,000 into Mr McIntosh’s company and in one form or another, all of that money has gone to benefit Mr McIntosh or entities associated with him. Mr McIntosh cannot be surprised that he is required to give an explanation as to what happened to the funds, and his attempts to delay doing so speaks for itself.

[46]   Mr Wagner was not, in seeking further information pursuant to the leave reserved, bringing an application that would have required (as I have said) an amended originating application. Leave was reserved to avoid the need for Mr Wagner to establish afresh that he was entitled to information under s 178 of the Act. An interlocutory application was an appropriate means of exercising that leave.

Costs

[47]   There is no reason why costs should not follow the event. Mr Wagner is entitled to costs on a 2B basis and disbursements as fixed by the Registrar, unless  Mr Wagner files a memorandum as to costs within five working days, not more than three pages. If such a memorandum is filed, BPG is to respond within a further five working days again, not more than three pages.

Associate Judge Lester

Solicitors:

Russell McVeagh, Auckland for Applicant Morrison Kent, Auckland for Respondent