Watt as Trustee of the Watt Family Trust v Dyer Whitechurch HC Auckland CIV 2007-404-000571

[2007] NZHC 1869

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2007-404-000571

BETWEEN  REGINALD JAMES WATT AS TRUSTEES OF THE WATT FAMILY TRUST

First Plaintiff

AND  REGINALD JAMES WATT AS TRUSTEE OF THE WATT FAMILY TRUST (NO.1)

Second Plaintiff

AND  DYER WHITECHURCH Defendant

Hearing:         18 June 2007

Appearances: D Grove for Plaintiffs

A Gilchrist for Defendants

Judgment:      19 June 2007

JUDGMENT OF COOPER J

This judgment was delivered by Justice Cooper on

19 June 2007 at 11.00 a.m., pursuant to r 540(4) of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Ellis Gould, PO Box 1509,  Auckland

Dyer Whitechurch, PO Box5547, Auckland
Copy to:

D W Grove, PO Box 130, Shortland Street, Auckland

WATT AND ANOR V DYER WHITECHURCH HC AK CIV 2007-404-000571  19 June 2007

[1]      The plaintiff filed an application for interlocutory orders on 7 June 2007. The first part of their application was for leave to join parties as the third to tenth plaintiffs and that was granted by Clifford J on 13 June 2007.  The other application was for an interim injunction requiring the defendant, forthwith, to deliver to the plaintiffs’ solicitors all documents and files, including minute books, deeds, documents, financial statements, trust account ledger print-outs and other records held by it on the plaintiffs’ behalf.

[2]      Although that application was also before Clifford J he accepted a submission made to him by Mr Gilchrist that it should be heard on a later date, given that Mr Gilchrist had only recently been instructed.  However, he also said:

[6]       Given, however, that this application would appear to follow very closely in the steps  of  the circumstances  which  gave rise to  the  earlier injunction granted by Winkelmann J, I   indicated that in my view it was appropriate that it be heard at short notice, and accordingly that it should be called on Monday June 18 in the Duty Judge’s List with a view, if at all possible, to being heard that morning.

[7]       In the meantime, I encouraged Mr Gilchrist to familiarise himself with the file and, in particular, the injunction that had already been granted. I expressed the hope that once he had done so the matter could be dealt with between counsel without the need for the further involvement of the Court.

[3]      His  reference  to  the  injunction  earlier  granted  by  Winkelmann J  was  a reference to her judgment, delivered on 15 February 2007 in this proceeding.   As with the present case, she had before her an application requiring that the defendant who had acted as the plaintiffs’ solicitors, hand over documents that they retained. Winkelmann J  recorded  that  urgency  was  necessary  because  the  plaintiffs  are currently engaged in litigation with a Mr Sharma, who is a former trustee of the plaintiff trusts, which has a fixture in August 2007.   It is alleged that Mr Sharma acted in breach of trust and the files that were sought before Winkelmann J were necessary in order to  show what had happened  in the transactions in which Mr Sharma had been involved, as well as to comply with the plaintiffs’ own obligations as  to  discovery  in  that  litigation.    As  I  understand  it,  the  present  application effectively rehearses the application that was before Winkelmann J, but casts the net wider because of the presence of the newly joined plaintiffs.

[4]      Winkelmann J ordered that the requested documents be provided, subject, however, to the payment into Court of $34,686.72, to be held on interest bearing deposit pending further direction of the Court.   That sum was allegedly owing in respect of unpaid fees and the plaintiffs agreed on that occasion to the payment of that amount into Court as a condition of the files being provided to them.

[5]      In the context of the present application, Mr Gilchrist has indicated that there would be no opposition to handing over the files in question, provided that any order requiring that to occur is again made conditional on the payment of a further sum in respect of fees claimed in the sum of $6,292.66.  Mr Grove, however, contends that there should be no such condition, on the basis that no such sum is owed.

[6]      In support of that contention he referred me to statements and invoices as well as correspondence attached to the affidavit of Mr Watt, sworn on 7 June 2007. First,  he  drew  my  attention  to  a  statement  dated  18  December  2002  on  the defendants letterhead concerning Suisse International Ltd (the fourth plaintiff now joined) and the sale of a property at 8-14 Willis Street, Wellington for the sum of

$9,631,714.80.   That showed the sum of $50,000 against the narration “estimated amount held for outstanding and current legal costs in relation to purchase, enforcement of securities by ASB, refinancing and sale”.   On 23 May 2007 the plaintiffs’ solicitors wrote to the defendants’ solicitors seeking an explanation as to when and how the sum of $50,000, which the statement showed had been retained, had been disbursed.

[7]      Next,   Mr   Grove   referred   to   another   statement   addressed   to   Suisse International Ltd.   The statement was undated, but by its cross references to other documents, must have been issued on about 21 August 2002.  In the statement, there were  references  to  two  invoices  in  the  respective  amounts  of  $11,586.05  and

$14,145.64 under a general heading “Refinancing – Elders Finance”.  The statement was evidently a record showing funds that had been received by way of mortgage advance from Elders Finance Ltd together with costs incurred in respect of the Willis Street transaction.  It showed as the “balance – amount required to settle”, the sum of

$6,292.66.

[8]      A further request had been made for information about the disbursement of the $50,000 retained by the defendant, on 25 May 2007.   No response had been received to that request, or to the earlier request.  However, Mr Grove referred to a statement of account dated 25 September 2006, this time addressed to Suisse Auckland International Ltd (but  apparently intended  for the  fourth plaintiff) and headed “Sale – Willis Street property” which recorded that a sum of $14,761.71 had been used to “clear outstanding accounts and disbursements”.  Mr Grove submitted in the  circumstances that  although the  defendant  claims  a  sum of $6,292.66  in respect of fees owed to it, the accounting records suggest that no such sum is owing. He relies also on the absence of explanation about the manner in which the $50,000 fund has been disbursed.

[9]      Mr Gilchrist  relied on an affidavit  in which a solicitor employed  by the defendant confirms that a balance of $6,292.66 is outstanding.   However, beyond making that assertion, there is no documentary evidence of the alleged debt beyond the statements that I have referred to.  Mr Gilchrist at one stage suggested that the request for information about the disbursement of the $50,000 sum had been comparatively recent.   That may be the case, but there has been sufficient time to furnish an explanation and none has been forthcoming.

[10]     In the circumstances it does not appear to me to be just that the plaintiffs should be required to pay the sum of $6,292.66 into Court in return for obtaining access to the documents which they need for the purposes already addressed and I decline to make any order to that effect.

[11]     I consider that the balance of convenience clearly favours the grant of the orders that the plaintiffs seek and that they are entitled to the documents in question. I  make  an order  in accordance  with paragraph 2  of the  plaintiffs’  interlocutory application of 7 June 2007, pending further order of the Court.  That order will be subject to the provision by the plaintiffs’ solicitors of a written undertaking to retain and hold the documents delivered by the defendant intact, pending further order of the Court, or agreement reached between the parties to some other course.   The documents should be delivered forthwith upon receipt of that undertaking.

[12]     At counsels’ request, questions of costs are reserved and if they cannot be agreed I will receive memoranda on the subject, filed on or before Tuesday 10 July

2007.