Wiltshire Investments Limited v Symons
[2012] NZHC 3225
•3 December 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-1011 [2012] NZHC 3225
BETWEEN WILTSHIRE INVESTMENTS LIMITED Plaintiff
ANDROBERT MICHAEL SYMONS First Defendant
ANDGREGORY JOHN SYMONS Second Defendant
CIV-2010-404-1572 [2012] NZHC 3225
AND BETWEEN WILTSHIRE INVESTMENTS LIMITED Plaintiff
ANDROBERT MICHAEL SYMONS AND ANNETTE SYMONS AS TRUSTEES OF THE ST ANTHONY TRUST
First Defendants
ANDGREGORY JOHN SYMONS, CLAIRE ANNE SYMONS AND LORRAINE JEAN SYMONS AS TRUSTEES OF THE DRAKENSBERG TRUST
Second Defendants
Hearing: 30 November 2012
Appearances: J K Goodall/Hena Lees for Plaintiff
S P Bryers/M A Karam for defendants
Judgment: 3 December 2012
JUDGMENT OF ASSOCIATE JUDGE BELL
This judgment was delivered by me on 3 December 2012 at 12:30pm
pursuant to Rule 11.5 of the High Court Rules.
...................................
Registrar/Deputy Registrar
WILTSHIRE INVESTMENTS LIMITED V SYMONS HC AK CIV-2010-404-1011 [3 December 2012]
INDEX
Paragraph
Introduction [1] The discovery application [12] Interrogatories [23] Joinder of third parties [24] Outcome [25]
Introduction
[1] This is the decision on three interlocutory applications by the second defendant:
1 For particular discovery;
2 For interrogatories; and
3 For leave to issue third party proceedings.
The applications are made in the context of a summary judgment application.
[2] I gave the plaintiff summary judgment in my decision of 26 July 2010. The defendants succeeded in their appeal to the Supreme Court. The point on which they succeeded was that the plaintiff ought to have disclosed the settlement agreement it had entered into to settle the litigation with Hats Holdings Ltd. In its judgment of
17 October 2012 the Supreme Court clarified the basis on which the proceeding could continue. It said:[1]
There is no need for the respondent to lodge a new summary judgment application. The appellants are to be treated as if the settlement agreement had been disclosed when summary judgment was first sought. They are thus entitled to resist the application on the basis of arguments arising out of, or associated with, the settlement agreement and to adduce affidavit evidence accordingly. It is unclear whether the appellants intend relying on any other defences – that is defences which could have been but were not raised at the first hearing. If so, they will require the leave of the High Court to do so. They otherwise have such rights as summary judgment defendants have to pursue interlocutory applications.
[1] Symons & Ors v Wiltshire Investments Ltd [2012] NZSC 86.
[3] Following the Supreme Court’s initial decision of 9 August 2012, the plaintiff disclosed the settlement agreement. The affidavit of Paul Sills, the receiver, attaches copies of two agreements dated 18 December 2009. The first is between Opus Fintek Ltd, Opus Fintek Investments Ltd, and Hats Holdings Ltd. The second
document is also a settlement deed. The parties to this deed are Alan Wiltshire,
Wiltshire Investments Ltd, Wiltshire Property Management Ltd and Hats Holdings
Ltd.
[4] The first settlement deed, the one with Opus Fintek Ltd and Opus Fintek
Investments Ltd, provides for Hats Holdings Ltd to make payments totalling
$1,400,000 for the sale of shares in Hopscotch Money Ltd. The terms of this deed are terms typically found in agreements settling disputes and providing for the transfers of shares.
[5] In the appeal to the Supreme Court, the defendants had run the argument that the plaintiff had not excluded the possibility that there was some kind of side-deal, and that the plaintiff may have received collateral benefits which had not been brought into account in its claim against the defendants. On the basis of the first settlement deed, the defendants no longer run that argument.
[6] The focus has instead moved to the second settlement agreement with Alan Wiltshire, Wiltshire Investments Ltd and Wiltshire Property Management Ltd. This settlement deed was entered into as part of the settlement of the dispute with Hats Holdings Ltd. Mr Wiltshire and his companies gave these undertakings:
2 Alan, WIL and WPML will:
(a) Cease all funding of OFL and/or OFIL other than for funding of the receiver regarding the receivership of OFL and/or OFIL;
(b) Cease all funding of the Symons’ Interests, together with their respective wives and Robert Symons’ parents.
3Alan, WIL and WPML will take all reasonable steps to enforce the Securities held by WIL against the Symons’ Interests. Those steps will include the bankruptcy of Greg Symons and Robert Symons should they not be in a position to repay what is due and owing to Alan, WIL and WPML on demand. Any bankruptcy proceedings shall be enforced within a reasonable period and there shall be no undue delay by Alan, WIL or WPML in making demand and pursuing their remedies against Greg and Robert Symons.
4Alan, WIL and WPML shall procure that any person controlled by any of them or who is a relative of any of them will comply with the provisions of clauses 2 and 3 as if any such persons had directly entered into such covenants under this agreement in favour of HHL.
5Alan, WIL and WPML will, if requested by HHL, provide written evidence of the fact that WIL and WPM are the sole funders of the Dispute. HHL shall use that information only in relation to any costs claim by Greg Symons or Robert Symons in relation to the counterclaims brought by Hopscotch Money Limited and Hopscotch Money NZ Securities Limited against Greg Symons and Robert Symons.
[7] The defendants say that these are unusual provisions to find in a settlement deed. They say that these provisions of the Wiltshire settlement deed are new matters that enable them to oppose the application for summary judgment.
[8] They advance three affirmative defences:
1They are discharged from the guarantee on which they are sued because the plaintiff acted in bad faith towards them;
2the actions of the plaintiff amount to oppressive conduct under s 118 of the Credit Contracts and Consumer Finance Act 2003; and
3the plaintiff interfered in the conduct of the receivership and became a party to the receivers’ breaches of fiduciary duties under ss 18 and 19 of the Receiverships Act 1993.
[9] The application for particular discovery set out five classes of documents to be discovered. However, in the hearing, the defendants’ application focused on two classes:
(b) Copies of all documents leading to the entry into and execution of the settlement agreement, including, but not limited to, all correspondence, emails, file notes and other documents recording negotiations and discussions regarding settlement; and
...
(e) Copies of all correspondence between the plaintiff (and its director Mr Wiltshire) and the receiver of Opus Fintek Limited in the period from the appointment of the receiver until the conclusion of the receivership.
[10] The interrogatories to be answered are 23 questions under the following heads:
1 July 2008 discussion.
2 Subsequent discussion with Mr Munroe.
3 Meeting on 21 August 2008.
4 Discussions with Richard Bradley in September 2009.
5 Other discussions or communications.
6 2009 settlement.
7 Receivership of Opus.
[11] In the application to join third parties, the defendants seek leave to issue third party notices against Alan James Wiltshire, the director of the plaintiff, and against Paul David Sills, the receiver of Opus Fintek Limited.
The discovery application
[12] The defendants say that the plaintiff has generally run a policy of withholding information from the defence. That has been highlighted in the secrecy given to the conduct of the settlement negotiations, the refusal to disclose the settlement agreement, and the continued refusal to provide information about the settlement negotiations. They say that without discovery they will be handicapped in being able to present arguments in opposition to the summary judgment application, because the plaintiff is withholding relevant information and documentation from them. They say that the two particular classes of document they seek are relevant to the defences they have raised.
[13] The plaintiff opposes on two broad fronts:
1the plaintiff contests whether it is open to the defendants to run the defences now pleaded. The plaintiff’s argument is that most of the defences are not available to the defendant under the judgment of the
Supreme Court. The plaintiff does concede that the paragraphs quoted above from the settlement agreement may be relevant to a plea of bad faith but it says that otherwise none of the defences can be properly run; and
2 the court ought not to order discovery in any event.
[14] To decide these interlocutory applications, I treat the defendants’ pleadings as raising live issues. That is, for these interlocutory applications I assume that all the matters pleaded by the defendant may be relevantly raised to oppose the summary judgment application. These interlocutory applications are not the place for a strike- out application. I have not heard sufficient argument to persuade me that on these applications I ought to strike out parts of the defences raised by the defendant. That is not to say that at the hearing of the summary judgment application, the plaintiff will not be able to raise those arguments. At that hearing it will be able to argue that the defences are misconceived. But they are premature at this interlocutory stage.
[15] Nothing I say in this decision is intended to decide whether the pleadings are viable or not for the purpose of the summary judgment hearing. I note the defendants’ argument that the disclosure of the Wiltshire settlement deed has thrown up fresh information; some of that information can be linked to other information that the defendants had before; and the fact that it can be linked to information they already had can give them arguments that they may not have been able to raise before. For present purposes, that is a potential argument available to the defendants. The classes of documents to be discovered are potentially relevant to the issues in the summary judgment application.
[16] That leaves the question whether discovery ought to be ordered in the context of this summary judgment application. There is helpful guidance in the judgment of McGechan J in NZI Bank Ltd v Philpott:[2]
[2] NZI Bank Ltd v Philpott (1988) 1 PRNZ 560 at [11].
(11) In practical terms, it may well be that discovery will have only minor importance in summary judgment matters. Generally, I suggest, it will not be granted prior to first hearing of the summary judgment
application itself. Even at that hearing, such orders will not be granted at all unless “necessary”. Such orders hardly will be “necessary” where a defendant, bereft of any significant defence framework, simply wishes to go fishing oceanwide to see if something can be trawled up. It will not be necessary in the converse situation where quite apart from questions of discovery the Court is not satisfied the defendant has no defence, and the summary judgment application therefore is to be dismissed on ordinary principles. Its likely significance will be in the relatively narrow band of marginal cases where an outline defence is made out, but the Court encounters genuine difficulty in determining whether or not there is no defence, and has a substantial reason to believe discovery in the proceeding will or may well assist that determination. Even in that limited range of situations, a Court encountering such difficulties might prefer to dismiss the summary judgment application under its general discretion, as a simple matter of caution and justice, rather than prolong matters through discovery, but the latter course would be open. Unjustified applications for discovery can of course be suitably dealt with by costs.
[17] That decision was given in the early days of summary judgment applications. Experience since then is that discovery is rarely ordered in summary judgment applications.
[18] The plaintiff says that discovery would be arduous. It says, for example, that the settlement discussions went on for a period of nine months. It is concerned that if it is required to make discovery, that might open up new issues. The defendants took that as an example of the plaintiff covering matters up. I do not take such a dark view of it. There is rather the risk that once discovery is ordered, questions may arise as to whether discovery has been completed and whether further discovery should be ordered.
[19] The High Court Rules allow for summary judgment applications to secure the just, speedy and inexpensive determination of a proceeding. A plaintiff is allowed to obtain summary judgment if the plaintiff can show that the defendant does not have any defence to the plaintiff’s cause of action. The burden of proof remains on the plaintiff. To succeed on a defended summary judgment application, the plaintiff has to be able to show that no useful purpose would be served by allowing the case to go to an ordinary hearing. The plaintiff’s case has to be that going through the ordinary interlocutory processes, such as discovery and interrogatories, and having a full hearing with witnesses giving evidence, would not serve any useful purpose. It is
not enough for a plaintiff to show that it would be likely to win on a defended hearing. It must be able to show that the defendant will be bound to lose. If the plaintiff can discharge that onus, then it is entitled to summary judgment.
[20] An application for summary judgment is not to be turned into a mini-trial. To allow it to become a mini-trial would subvert the summary nature of the procedure.
[21] In my judgment, for the plaintiff to maintain its application for summary judgment, it should be able to show that no useful purpose would be served by making discovery. Mr Goodall, for the plaintiff, said that the plaintiff was prepared to continue with its summary judgment application on that basis. He acknowledged the point that McGechan J made in the Philpott case that in cases of genuine difficulty, rather than order discovery, a court might instead dismiss an application for summary judgment. That approach seems consistent with the judgment of the
Court of Appeal in Lennan v Lennan[3] where the Court of Appeal held that the
plaintiff’s unwillingness to disclose information meant that it could not dismiss the possibility of viable defences for the defendants and held that summary judgment was not appropriate.
[3] Lennan v Lennan (1993) 4 NZBLC 103,095.
[22] Accordingly, to avoid this application for summary judgment being turned into a mini-trial, and to preserve the summary nature of the process, I do not order discovery at this stage. I observe that at the hearing of the summary judgment application, the plaintiff will need to persuade the court that judgment can be entered summarily, without giving the defendants the opportunity to go through ordinary interlocutory processes plus a defended hearing with cross-examination of witnesses.
Interrogatories
[23] Given my findings on the discovery application, I decline to order interrogatories for the same reasons. I also accept the plaintiff’s submission that some of the interrogatories were in effect directed at trying to obtain a brief of
evidence from the plaintiff – See Wilson v Broadcasting Corporation of New
Zealand.[4] I accordingly do not order interrogatories at this stage.
Joinder of third party
[4] Wilson v Broadcasting Corporation of New Zealand (1987) 1 PRZN 368 at 369-370.
[24] Mr Bryers accepted that it was premature to make any orders for the joinder of third parties at this stage. The joinder of third parties can be considered at or following the decision on the summary judgment application.
Outcome
[25] I decline to make orders for discovery or for interrogatories at this stage, but that does not prevent the defendants later seeking discovery and interrogatories if the plaintiff’s application for summary judgment is not successful.
[26] Similarly, the application to join third parties is stood over, to await the decision on the summary judgment application.
[27] I also record that one day will be required to hear the summary judgment application.
........................................
R M Bell
Associate Judge
Solicitors:
Hornabrook MacDonald (Mark Hornabrook) P O Box 91 845 Auckland 1142, for Plaintiff
Email: [email protected]
Rogers & Rutherford (S Rutherford) P O Box 2330 Auckland 1010, for Defendants
Email: [email protected]
Copy for:
J K Goodall, P O Box 1778 Auckland 1140
Email: [email protected]
Hena Lees, 33 Shortland Street Auckland 1140
Email: [email protected]
S P Bryers/M A Karam, PO Box 5444 Auckland 1141
Email: [email protected] and [email protected]
0
0
1