TEAM BARRY LIMITED AND ORS V KEMP AND ANOR HC AK CIV 2003-404-5593

TEAM BARRY LIMITED AND ORS V KEMP AND ANOR HC AK CIV 2003-404-5593 4 May 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2003-404-5593BETWEEN TEAM BARRY LIMITED First Plaintiff AND TUAMAN INC LIMITED Second Plaintiff AND MARTIN PUGH Third Plaintiff AND KEVIN BARRY Fourth PlaintiffCont Hearing: (on papers) Appearances: D Chisholm and P Chisnall for Second Plaintiff A P Molloy QC and L Kemp for Third Defendant J Turrall for Midlands Funds Management Limited Judgment: 4 May 2009 at 3:00 p.m.JUDGMENT OF WOODHOUSE J (Costs and disposal of interlocutory matters)This judgment was delivered by me on 4 May 2009 at 3:00 p.m. pursuant to r 11.5 of the High Court Rules 1985. Registrar/Deputy Registrar Solicitors / Counsel / Parties: Mr D Chisholm, Barrister, Auckland Mr PRW Chisnall, Gibson Sheat, Solicitors, Wellington Mr M Pugh, Sydney, New South Wales, Australia Mr K Barry Mr L Kemp, Kemp Barristers and Solicitors, Auckland Mr A Molloy QC, Barrister, Auckland Mr Z Kennedy / Ms S K Hindle, Minter Ellison Rudd Watts, Solicitors, Auckland Mr J G Turrall, Solicitor, Auckland Mr R Pickmere, Minter Ellison Rudd Watts, Solicitors, AucklandCont AND LUKE ANDREW BOWELL KEMP Second Defendant AND MAFAUFAU SITA Third Defendant AND SALLY FERGUSSON CROSS AND MARK GILL AS TRUSTEES OF THE BARON AND LUNAR TRUST Counterclaim Defendant[1] This judgment deals with costs arising from my judgment dated 10 February 2009, the manner in which payment of future costs to Tuaman should be dealt with, disposal of interlocutory matters and related matters dealt with in the following memoranda: a) Memorandum filed by third and fourth plaintiff's dated 9 February 2009. b) Memorandum for Midland Funds Management Limited dated 24 February 2009. c) Second plaintiff's memorandum dated 27 February 2009. d) Third defendant's memorandum dated 13 March 2009. e) Counterclaim defendant's memorandum dated 13 March 2009. f) Third and fourth plaintiffs' memorandum dated 15 March 2009. g) Second plaintiff's memorandum dated 16 March 2009 (as to outstanding costs). h) Second plaintiff's memorandum dated 16 March 2009 (pursuant to para [70] of the judgment). i) Mr Pickmere's memorandum dated 16 March 2009. j) Third defendant's memorandum dated 18 March 2009. k) Second plaintiff's memorandum dated 23 March 2009.Costs on the judgment[2] Tuaman seeks costs and disbursements totalling $8,200. This is on the grounds set out in Mr Chisholm's memorandum dated 27 February 2009. Mr Molloy did reserve Mr Tua's position "on the knowing receipt issue foreshadowed at the 15 September 2008 hearing", but there was no challenge from any party to the quantum of costs sought. In these circumstances I am satisfied that there should be an order for the sum sought. [3] Mr Chisholm submitted that the formal order should provide for payment by Mr Tua to Tuaman as part of the final resolution of the dispute and when accounts between the parties have been settled. This was to take account of the fact that, pursuant to the substantive order, Tuaman's actual costs are to be paid out of the fund and this is a fund which Tuaman claims it is entitled to in any event. In addition, I consider there is need to take account of the opposite contention by Mr Tua in respect of the substantive order; if Mr Tua is completely successful, Tuaman will have been paid out of Mr Tua's money. Aspects of that are adverted to in Mr Tua's reservation of the knowing receipt issue. There will be a formal order along the lines proposed by Mr Chisholm to take account of these matters.Payment of Tuaman's actual costs for the period April 2008 to February 2009[4] These costs are noted in para [51] of the substantive judgment. Tuaman seeks approval of a further payment from the fund of $60,108.75 for Mr Chisholm's legal costs and $35,936.08 for Gibson Sheat's legal costs. This is fully itemised in the first memorandum for Tuaman dated 16 March 2009. No issue in this regard is raised in the subsequent memoranda for Mr Tua (or any other party). There will be an order for payment of these costs from the fund.Buddle Findlay costs[5] The orders already made for payment of Tuaman's actual costs from the fund are in respect of the fees of its current solicitors and counsel, Gibson Sheat and MrChisholm. Tuaman also seeks an order for payment of costs it has incurred with its former solicitors, Buddle Findlay. This is in respect of three invoices from Buddle Findlay annexed to the affidavit of Mr Haig sworn on 16 April 2008. [6] I am not satisfied that an order should be made for payment of those invoices for the following reasons. First, an order for payment of a party's costs from a frozen fund is made when that is necessary to enable that party to have legal representation. It is not apparent that it is necessary that Buddle Findlay's earlier invoices be paid to enable Tuaman to have legal representation. Second, there are some issues in relation to Buddle Findlay's earlier representation of all of the plaintiffs which would need to be resolved in order to assess the appropriateness of payment of costs from the frozen fund to Buddle Findlay. Related to the last point is the possibility that the invoices are for services provided to plaintiffs in addition to Tuaman. This was noted in Mr Chisholm's memorandum of 16 March 2009. There would also be need for costs for services provided prior to 19 April 2007 to be deducted from at least two of the invoices. This is because Williams J has already ruled that costs incurred up to 18 April 2007 should not be paid from the fund. However, one of the Buddle Findlay invoices is for a period commencing on 10 January 2006, another is for a period commencing on 21 November 2006, and the date of commencement of the third is not recorded.Future costs for Tuaman Inc.[7] I refer here to the matters noted at [46]-[49], [52] and [65]-[66] of my judgment of 10 February 2009. I have received a comprehensive and helpful memorandum from Mr Chisnall with the particulars requested, so far as counsel is able to provide them at this point: (memorandum of 23 March 2009). No issue is taken for any of the other parties in respect of the particulars and estimates. [8] The proposed hourly rates and estimates of costs for completion of interlocutory matters and for disbursements do not appear unreasonable. For that reason, and in the absence of any objection, the hourly rates and estimates are approved. The particulars set out in Mr Chisnall's memorandum will be incorporated into the formal order, largely by reference to the memorandum itself.This will provide an appropriate guide to Minter Ellison who will be responsible for payment of the invoices. I also intend to make provision for referral of any dispute back to the Court. A dispute in respect of a bill would not necessarily be resolved by the Court; it might be more appropriate to refer the bill for review under s 132(2) of the Lawyers and Conveyancers Act 2006. [9] There is no estimate for the costs of preparation for trial and the trial itself. I accept that it is appropriate for this to be considered once the interlocutory applications have been disposed of and the broad shape of the hearing is known.Pleadings[10] Because of the volume of pleadings to date, it is convenient to record the current pleadings as well as pleadings still required. If there is any error or omission in the following summary I would be grateful if counsel would please advise.Tuaman's claims[11] There is a fourth amended statement of claim dated 7 April 2008, a statement of defence by Mr Tua dated 1 October 2008 and a reply by Tuaman dated 16 March 2009. [12] Tuaman's first and fifth causes of action are against Mr Kemp as well as Mr Tua. A statement of defence is required from Mr Kemp. That should be filed within 21 days of the date of this judgment.Mr Tua's counterclaims[13] There is an amended counterclaim dated 18 December 2008 and a statement of defence by Tuaman dated 16 March 2009. [14] Mr Tua's third cause of action is against Mr Pugh and the counterclaim defendants, the trustees of the Baron and Lunar Trust. Mr Tua's fourth cause ofaction is against those parties together with Ms Cross in her personal capacity. Statements of defence by those parties are to be filed within 21 days.Claims of Messrs Pugh and Barry[15] There is a purported amended statement of claim by Messrs Pugh and Barry dated 18 September 2008. I have described it this way because it purports to include Mr Molloy QC as a new fourth defendant, but there has been no order permitting that to happen as is required by r 4.56. There would also appear to be a question of some substance as to whether the claims of Messrs Pugh and Barry which they are entitled to advance should be dealt with as part of the main contest between Tuaman and Mr Tua, or deferred. I will give appropriate directions to deal with these questions.Interlocutory applications[16] In this section I will record what I understand to be the outstanding applications, together with some other matters which may require to be dealt with prior to trial. In the next section I will give directions in that regard with a view to having all of these matters dealt with at a single hearing. [17] There is an application by Mr Tua dated 11 April 2008 for an order that issues arising from Mr Tua's challenge to the EMA be determined as separate questions and before trial of any other questions. Tuaman and Messrs Pugh and Barry filed notices of opposition on 16 and 21 April 2008 respectively. [18] There is Mr Tua's "show cause application" dated 28 August 2008. There is a notice of opposition from Tuaman dated 12 September 2008. This application requires determination of substantive issues raised by Mr Tua in his first cause of action in the amended statement of claim dated 18 December 2008. It is also an application which seeks to put the onus on Tuaman, as defendant to the counterclaim, to establish that Mr Tua's substantive contentions in respect of a fiduciary relationship, breach of it, and entitlement to rescind the EMA, will not succeed. The application also assumes that there is jurisdiction to proceed in thisway. In respect of this show cause application, the hearing to be allocated for all interlocutory applications is to address preliminary issues in respect of the show cause application; namely whether the Court has jurisdiction to proceed as proposed and, if so, whether it is appropriate to do so in this case. [19] Documents recently filed for Tuaman and Messrs Pugh and Barry raise what I will describe as "estoppel issues", although the contentions go beyond estoppel and may include arguments of abuse of process. The estoppel issue is raised in a formal way in Tuaman's reply to Mr Tua's statement of defence to Tuaman's fourth amended statement of claim. It is discussed in the second memorandum for Tuaman dated 16 March 2009 at paragraphs 3.2, 4.6-4.9 and 5.6-5.7. Broadly similar issues are raised in the memorandum of Messrs Pugh and Barry dated 15 March 2009. At 5.7 Mr Chisholm submitted:If there is to be any one issue to be resolved in advance of trial it would be the issue as to whether Mr Tua is still entitled to advance a resulting trust (or any other beneficial ownership) claim following him [sic] abandoning his constructive and resulting trust arguments in October 2004.The hearing for interlocutory applications should address the question as to how the estoppel issue should be dealt with. If Tuaman's advisers consider that this is an issue which should be determined as a preliminary separate question, then a formal application should be filed. [20] Tuaman has revived an earlier application for an order for discovery against Mr Tua. Tuaman wishes to pursue this if Mr Tua is able to pursue what is described as the "beneficial ownership" claim which is central to the estoppel issue. [21] There is an application by Messrs Pugh and Barry dated 1 May 2008 effectively for reinstatement of the payments that were earlier made to them and to Mr Tua. [22] There is an application dated 13 May 2008 by the counterclaim defendants for orders rescinding the orders made on 12 August 2005 requiring part of the proceeds of sale of 18 O'Neills Avenue, Takapuna, to be held in trust.[23] There is the application by Midland Funds Management Limited dated 12 August 2005 and discussed in my judgment of 10 February 2009 at [53]-[58]. There are notices of opposition from Tuaman and from Messrs Pugh and Barry. Midland has advised that it wishes to pursue the application. [24] There is a memorandum dated 9 February 2009 purportedly filed on behalf of Tuaman, Messrs Pugh and Barry, and the counterclaim defendants. However, the document was filed by e-mail from Mr Pugh and both Tuaman and the counterclaim defendants are represented separately from Messrs Pugh and Barry (who are acting on their own behalf through Mr Pugh). The status of this memorandum and its purpose needs to be resolved and that can be addressed at the hearing. [25] It will be helpful, at the hearing, to receive submissions as to the scope and structure of a trial on the assumption that all liability issues are to be dealt with at one hearing. Some of these matters are discussed in section 5 of the second memorandum for Tuaman dated 16 March 2009. There is also a question as to whether there should be some form of sequential hearing as discussed in the judgment of Williams J of 20 November 2006 at [38]. [26] The hearing should also deal with issues relating to disposal of the claim of Messrs Pugh and Barry, as noted at [15] above. [27] There is an application of Messrs Pugh and Barry dated 18 April 2008 that the Court summon them and Mr Tua to appear personally at the next conference. I will deal with that application now. The hearing to deal with outstanding applications will be, in part, a case management conference. I make an order now that Messrs Pugh, Barry and Tua attend the hearing on the date that will be fixed unless application is made in writing to be excused from attending, and the application is granted. If application is made to be excused from attending this should be supported by an affidavit from the party concerned setting out the reasons.Procedure / case management directions[28] Case management directions are set out in the next paragraph. There has been no input from the parties on these directions. For this reason the directions are made subject to any objection and provision to that effect is contained in the directions themselves. [29] I make the following directions: a) The directions that follow shall apply unless there is objection in writing for a party which objection is to be filed and served within 7 days of the date of this judgment. If there is an objection a case management conference is to be allocated on the first available date, with the conference to be conducted by telephone. The parties are to file memoranda at least 2 working days before the conference addressing the matters dealt with in the following sub-paragraphs and seeking any other directions for disposal of interlocutory and related applications. b) Subject to a), a fixture is to be allocated before me on the first available date after 5 June 2009, for two days, to deal with: i) All of the matters referred to in [17] to [27]. ii) Any other applications any party considers should be made before trial. c) Any formal applications required to deal with matters referred to in [17] to [27], and not already filed, and any further applications a party may wish to make, together with any necessary supporting affidavits, shall be filed and served by 19 May 2009. d) Any notices of opposition and supporting affidavits shall be filed and served by 26 May 2009.e) A synopsis of argument for any party bringing an application is to be filed and served at least 7 working days before the hearing. A synopsis of argument for any respondent is to be filed and served at least 5 working days before the hearing. Each synopsis from a party supporting an application must cover all applications supported by that party. Each synopsis for a party opposing an application must cover all applications opposed by that party. A synopsis addressing more than one application shall not exceed 25 pages. A synopsis addressing one application shall not exceed 10 pages. f) The solicitors for Tuaman are to compile a bundle of all documents relied on by an applicant or by a respondent, for all applications. This is to include copies of any document, including pleadings and affidavits, which may have been filed in Court. The bundle is to be indexed and paginated. Copies of the bundle are to be filed and served at least 2 working days before the hearing. The costs and disbursements incurred in this regard are to be paid out of the fund. g) Except as provided above, r 7.39 of the High Court Rules shall apply in respect of synopses of argument and other matters dealt with in that rule. h) Messrs Pugh, Barry and Tua are to attend the hearing unless an application is made, supported by affidavit, to be excused from attending and that application is granted.Mr Pickmere's memorandum dated 16 March 2009[30] I thank Mr Pickmere for his memorandum in respect of the funds held pursuant to the Court order and payments made. [31] In respect of the directions sought in paragraph 10:a) For the reasons earlier dealt with no payment is to be made from the funds in respect of the invoices from Buddle Finlay. b) I consider that the best way of dealing with any question relating to investment of the money held by Minter Ellison Rudd Watts is for Mr Pickmere to report at appropriate intervals to the solicitors for Tuaman, the solicitors for Mr Tua, and to Mr Pugh on behalf of Messrs Pugh and Barry. It will then be for any of those parties to raise issues with the Court or if there is any matter of concern. Subject to any submission from a party to the contrary, I suggest that those reports be made quarterly. c) I do not consider that any further directions are required in respect of Mr Pickmere's responsibilities.Result[32] The third defendant is to pay the second plaintiff a sum of $7,600 for costs and $600 for disbursements on the second plaintiff's application for its actual costs to be paid out of the fund. This total of $8,200 is to be paid by the third defendant to the second plaintiff at the time of and as part of the final resolution of the state of accounts between the third defendant and second plaintiff. [33] The second plaintiff's actual costs and disbursements of $96,044.83, referred to in [4] of this judgment, are to be paid from the fund. [34] The application for payment from the fund of the costs of Buddle Findlay, referred to in [5] and [6] of this judgment, is dismissed. [35] The further costs and disbursements of the second plaintiff shall be paid from the fund subject to the following:a) The solicitors and instructed counsel for the second plaintiff will charge their fees at their standard hourly charge-out rates as recorded in the memorandum for the second plaintiff dated 23 March 2009. b) Without leave of the Court, payments should not be made in excess of the following: i) $80,000 for legal fees, plus GST, in respect of all matters other than preparation for trial and trial. ii) $50,000 plus GST in respect of accounting services including expert evidence. iii) $13,000 for costs associated with a Nevada Boxing Commission witness, inclusive of costs of travel and accommodation. iv) $2,500 inclusive of GST for photocopying and binding. v) $26,000 for Court fees, including hearing fees. c) On a monthly basis the costs for legal services rendered and disbursements, including experts' costs, incurred by the second plaintiff in this proceeding, may be submitted for payment to Minter Ellison Rudd Watts from the moneys held by Minter Ellison Rudd Watts pursuant to the order dated 9 September 2005. d) Copies of the invoices for fees and disbursements shall be sent at the same time to the third plaintiff, on behalf of the third and fourth plaintiffs, and to the solicitor for the third defendant. e) The third plaintiff, fourth plaintiff and the third defendant may object to any payment claim by the second plaintiff to Minter Ellison Rudd Watts. Such objection must be made by notice in writing to the solicitors for the second plaintiff and to Minter Ellison Rudd Wattswithin 5 days of receipt of a copy of the claim. The second plaintiff may refer the objection to the Court for determination if the parties are unable to resolve it. Pending determination of an objection payment shall not be made by Minter Ellison Rudd Watts in respect of any part of the claim in dispute. Undisputed portions may be paid. f) If there is no objection to a payment claim, payment shall be made by Minter Ellison Rudd Watts within 14 days of receipt of the claim. g) No payment shall be made in respect of the second plaintiff's costs and disbursements for preparation for trial and for the trial itself pending further directions from the Court to be made following application by the second plaintiff once interlocutory applications have been determined. [36] The second defendant is to file a statement of defence to the second plaintiff's fourth amended statement of claim within 21 days of the date of this judgment. [37] The third plaintiff, the counterclaim defendants, and the counterclaim defendant Sally Fergusson Cross are to file statements of defence to the amended counterclaim of the third defendant dated 18 December 2008 within 21 days of the date of this judgment. [38] There are directions as set out in [29] of this judgment. ____________________________________ Peter Woodhouse J