VINCENT ROSS SIEMER AND JANE CHAPMAN SIEMER AND ANOR V KATE FARDELL EXECUTRIX FOR THE ESTATE OF ROBERT FARDELL HC AK CIV-2003-404-5782

VINCENT ROSS SIEMER AND JANE CHAPMAN SIEMER AND ANOR V KATE FARDELL EXECUTRIX FOR THE ESTATE OF ROBERT FARDELL HC AK CIV-2003-404-5782 3 April 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2003-404-5782BETWEEN VINCENT ROSS SIEMER AND JANE CHAPMAN SIEMER First Plaintiffs AND PARAGON SERVICES LIMITED Second Plaintiff AND KATE FARDELL EXECUTRIX FOR THE ESTATE OF ROBERT FARDELL Defendant AND MICHAEL STIASSNY AND FERRIER HODGSON Non-Parties Hearing: 16 March 2007 Appearances: V R Siemer for First Plaintiffs A A Lusk QC and H M Rice for Defendant Judgment: 3 April 2007 at 11amJUDGMENT OF HON. JUSTICE JOHN HANSEN The application is granted. The trial will be before a Judge alone.____________________________________________________________________REASONS[1] This was an application by the defendant estate to have the matter tried before a Judge without a jury. The application is brought pursuant to s 19A(5) of the Judicature Act 1908.Background[2] The first plaintiffs held 40 per cent of the shares in the second plaintiff. The first plaintiffs had agreed to provide capital funding for the development of certain technologies said to be owned by Waterford Holdings Limited. The second plaintiff was formed as the vehicle for this. The first named plaintiffs invested substantial money, were apparently still minority shareholders, and remained potentially liable for a further significant sum. However, Mr Siemer's position is that notwithstanding the minority shareholding he and his wife effectively controlled the board of directors and, therefore, the company. [3] The first plaintiffs became concerned that they were being excluded from the business of the second plaintiff by two other shareholders, Ms McCaig and a Mr Rutherford. The first plaintiffs also had a number of other concerns regarding alleged misconduct on the part of Ms McCaig [4] They took their concerns to the law firm Brookfields, who acted for the second plaintiff. Brookfields continued to act for the second plaintiff, but recommended to the first plaintiffs they seek advice from Mr J R F Fardell, QC, a barrister practising in Auckland. [5] Mr Fardell ultimately accepted instructions to act for the first plaintiffs, and he was further instructed they required separate representation because there was a potential conflict of interest between them and the second plaintiff. It appears that the shareholders were deadlocked, and the company was unable to conduct its business. [6] Mr Fardell then took a number of urgent steps on behalf of the first plaintiffs. On 22 November 2000 he commenced proceedings pursuant to s 174 of the Companies Act 1993. On 15 December he obtained interim relief under the s 174 proceedings, and the Court appointed Mr Stiassny of Ferrier Hodgson as receiver for the second plaintiff. On 6 December 2000 he commenced misrepresentation proceedings against various defendants, including Ms McCaig, Mr Rutherford and other personnel associated with Waterford.[7] By reference to the relevant Court file (Hamilton Registry, CP80/00) it is apparent that the relief obtained on 15 December 2000 was by consent. The defendant's position is that this was negotiated at Court in the face of opposition from three of the defendants. There was also a memorandum of submissions from the defendants that the Court had no jurisdiction to grant the interim relief sought. [8] Apparently, Mr Stiassny reached a conclusion that if the second plaintiff was to continue in business it required significant additional funding. Mr Siemer declined to provide further funding. It appears that the second plaintiff carried out no trading from the end of February 2001, and remained in receivership until the substantive hearing of the s 174 application on 18 July 2001. [9] From a very early stage, continuing to the present, Mr Siemer was dissatisfied with the performance of Mr Stiassny and Ferrier Hodgson. He was concerned at the amount of fees charged, and there had been disputes and arguments in relation to these. Ultimately, on 9 August 2001 a settlement agreement was signed between the plaintiffs and Ferrier Hodgson purporting to resolve both the fees and documents issues. There was a confidentiality clause. That agreement took the form of a letter. The defendant alleges that Mr Fardell did not act for the plaintiffs, or Mr Stiassny/Ferrier Hodgson in relation to the settlement agreement, nor was he asked to advise or approve its contents. The plaintiffs strongly dispute this. [10] Notwithstanding the settlement agreement, disputes continued. In January 2002 Mr Siemer and his then lawyer gave notice to Ferrier Hodgson terminating the settlement agreement. On 15 October 2003 the first plaintiffs commenced the present proceedings against Mr Fardell. In August 2004, on their application, Paragon was joined as a second plaintiff. In April 2005 Mr Stiassny and Ferrier Hodgson commenced proceedings against Mr Siemer and Paragon under Auckland Registry, CIV-2005-404-1808. The causes of action were alleged breaches of the confidentiality clause in the 9 August 2001 settlement agreement and defamation. General damages of $1,250,000-00 are claimed, together with unspecified special damages, aggravated damages of $300,000-00, punitive damages of $150,000-00, an injunction and costs.[11] On 11 December 2005 Mr Fardell died. [12] The latest pleadings are the third amended statement of claim filed on 12 February 2007, and the statement of defence to that document dated 2 March 2007.The pleadings[13] The third amended statement of claim contains two causes of action. It is alleged that Mr Fardell agreed to act on behalf of the first plaintiffs personally, and on behalf of the first plaintiff in his capacity as the managing director of the second plaintiff. Clause 18 alleges the second plaintiff was entitled to the benefit under the contract of retainer with the defendant by virtue of the Contracts (Privity) Act 1982. [14] Although being minority shareholders, it is alleged that at the time the plaintiffs consulted the defendant the board of directors of the second plaintiff was controlled by the first plaintiffs because Mr Siemer was chairman of the board, and as such held a casting vote. The plaintiffs take this to mean they had effective control of the company. Alternatively, it is said in the pleadings that the second defendant (sic) was controlled by the first plaintiffs and a director appointed by Far East Rim Group, who were opposed to the conduct of Mr Rutherford and Ms McCaig and their interests. It is further said that the second plaintiff had no business to conduct until the litigation with Ms McCaig and Mr Rutherford was resolved, and the intellectual property recovered, including various files. [15] The pleading particularises the application brought pursuant to s 174 of the Companies Act 1973, and the orders obtained by Mr Fardell. [16] Paragraphs [27], [28] and [29] set out the alleged breaches of duty in the following terms:27.0 THE Defendant breached his duty to the Plaintiffs in that: (a) The first named First plaintiff, as the managing director, could have issued proceedings in the name of the Second Plaintiff to restrain the disposal of the technology and sought an Anton Pillar order to recover stolen documentation and to obtainevidence of the technology transfer to assist the injunction proceedings. (b) The First Plaintiffs could have sought and obtained leave to issue proceedings in the name of the Second Plaintiff to restrain the conduct of Helen McCaig and Waterford Holdings Limited. (c) The Plaintiffs could have sought and obtained Anton Pillar orders against the said Helen McCaig, David Rutherford and Waterford Holdings Limited to secure and recover the stolen documents. (d) The First Plaintiffs suing in the Second Plaintiffs name could have achieved the timely recovery of the documents, interim restraining of the technology from being transferred to other parties by way of ex parte applications and/or an urgent on notice hearing of an inter partes (sic) application. 28.0 THE Defendant further breached his duty of care in that: (a) He failed to seek an urgent injunction to secure the technology. (b) He failed to seek an Anton Pillar order to recover the stolen documents and concealed documents that evidenced the attempt to transfer the technology. (c) He failed to initially advise the Plaintiffs of options other than liquidation, and then receivership, to secure the technology. 29.0 THE advice to appoint a receiver as a minority shareholder remedy was ill conceived and in breach of the Defendant's duty of care to the Plaintiff's in that: (a) The appointment of a receiver provides no protection or commercial or legal benefit to the Plaintiffs as it has no practical or legal effect stopping the illicit sale of the technology. (b) The application to appoint a receiver was misconceived as the First Plaintiffs controlled the Second Plaintiff or in the alternative could have obtained an order permitting the First Plaintiffs to proceed in the Second Plaintiffs name to injunct the transfer of the technology and recover the stolen documents and concealed documents that evidenced the attempt to transfer the technology. (c) The Defendant incurred substantial legal costs by the application without securing the technology and obtaining the stolen documents and the documents of the concealed attempt to transfer the technology. (d) The Second Plaintiff incurred substantial management costs without securing the technology. (e) The Second Plaintiff unnecessarily suffered substantial loss of credit reputation.(f) The appointment was unnecessary. (g) The receiver did not return the control of the Second Plaintiff to the First Plaintiff and worked against the Second Plaintiff recovering the technology. (h) The Defendant did not mitigate the damage caused by his initial advice of Receivership when it proved disastrous for the Plaintiffs but rather continued his wrongful advice to the Plaintiffs.[17] There is no [30] but [31] then particularises the plaintiffs' alleged loss. [18] The second cause of duty alleges that Mr Fardell owed the plaintiffs a fiduciary duty. Paragraph [33] particularises breaches that are said to have caused the plaintiffs' loss as follows:33.0 THAT the Defendant in breach of the fiduciary duty caused the Plaintiffs' losses by: 33.1 working in an undisclosed conflict of interest capacity in matters against the Receiver by representing Stiassny and the plaintiffs at a time when the parties were in legal conflict. 33.2 failing to disclose information to the Plaintiffs to the detriment of the Plaintiffs' interest. 33.3 Failing to disclose to the plaintiffs that he was legally representing the receiver, then advising the second plaintiff: 33.3.1 to sign a so-called unsatisfactory settlement agreement with the receiver that was detrimental to the interests of the second plaintiff, but favoured the interests of the receiver with whom the second plaintiff was then in conflict. 33.3.2 that the only alternative to this settlement agreement with the receiver was a long protracted legal action with the receiver that would additionally require the use of another lawyer. 33.3.3 to urgently reaffirm this settlement agreement with the receiver some six months later despite full knowledge of the receiver's chronic fundamental breach of the agreement and that Brookfields were now legally acting in this dispute for the second plaintiff.[19] In addition to the losses claimed under the first cause of action, the first named plaintiff and the second plaintiff seek indemnity for any sums found to be owed by them to Mr Stiassny and Ferrier Hodgson in the other proceedings.The application[20] On 4 December 2006 the first plaintiffs stated at [7]:7. Recognising that Williams J. had some time ago acknowledged the fact of the defendant's personal influence over the Auckland judiciary, the plaintiffs submit that it would be proper that His Honour designate a judge and jury trial in the interests of justice, recognising that by the criteria laid out in the Memorandum of Williams J. dated 28 November 2006 the plaintiffs are unlikely to get a fair trial from a judge alone under the circumstances.[21] Mr Lusk, on behalf of the defendant, accepted this was a sufficient jury notice to comply with r 435 of the High Court Rules. [22] As a consequence, the defendant has brought its application pursuant to s 19A of the Judicature Act 1908. That section reads:[19A Certain civil proceedings may be tried by jury(1) This section applies to [civil proceedings] in which the only relief claimed is payment of a debt or pecuniary damages or the recovery of chattels. (2) If the debt or damages or the value of the chattels claimed in any [civil proceedings] to which this section applies exceeds [$3,000], either party may have the [civil proceedings] tried before a Judge and a jury on giving notice to the Court and to the other party, within the time and in the manner prescribed by the [High Court Rules], that he requires the [civil proceedings] to be tried before a jury. (3) Notwithstanding anything in subsection (2) of this section, in any case where, after notice has been given pursuant to that subsection but before the trial has commenced, the debt or damages or the value of the chattels claimed is reduced to [$3,000] or less, the [civil proceedings] shall be tried before a Judge without a jury. (4) If, in any [civil proceedings] to which this section applies, the defendant sets up a counterclaim, then, unless pursuant to this section the [civil proceedings] and the counterclaim are both to be tried before a Judge without a jury, the following provisions shall apply:(a) On the application of either party made with the consent in writing of the other party, both the [civil proceedings] and counterclaim shall be tried before a Judge without a jury, or before a Judge with a jury, whichever is specified in the application: (b) If no such application is made, the [civil proceedings] and the counterclaim shall, subject to any direction of the Court or a Judge under section 19B of this Act, be tried in accordance with the foregoing provisions of this section: Provided that if the Court or a Judge orders that the [civil proceedings] and the counterclaim be tried together, they shall be tried before a Judge with a jury. (5) Notwithstanding anything to the contrary in the foregoing provisions of this section, in any case where notice is given as aforesaid requiring any [civil proceedings] to be tried before a jury, if it appears to a Judge before the trial— (a) That the trial of the [civil proceedings] or any issue therein will involve mainly the consideration of difficult questions of law; or (b) That the trial of the [civil proceedings] or any issue therein will require any prolonged examination of documents or accounts, or any investigation in which difficult questions in relation to scientific, technical, business, or professional matters are likely to arise, being an examination or investigation which cannot conveniently be made with a jury,— the Judge may, on the application of either party, order that the [civil proceedings] or issue be tried before a Judge without a jury.Section 19B is also relevant because it provides that all trials, other than those dealt with under s 19A are to be tried before a Judge alone.The applicable principles[23] The parties were not really at odds as to the applicable principles. Rather, the defendant takes the view that complexity of the proceedings is such the matter is not suitable to be heard by a jury. Mr Siemer, on behalf of the plaintiffs, takes the view that the matters are relatively straight forward, the relevant documents are relatively few and easily understood, and cases such as Bearman v Dunn [1974] 2 NZLR 405, are outmoded because the Courts now operate with greater transparency. [24] Section 19A(5) requires a two stage inquiry. It is for the defendant to satisfy the Court that grounds under either (a) or (b) have been made out. That is therequisite jurisdictional basis for the order. If that has been established it is then for a defendant to satisfy the Court that its discretion ought to be exercised to make the order sought. [25] Prima facie, a plaintiff has a right to trial by Judge and jury pursuant to s 19A(2). [26] In Guardian Assurance Company Limited v Lidgard [1961] NZR 860 (CA) the Court of Appeal considered the scope of subs (5)(a). At page 863 Cleary J, in delivering the decision of the Court, stated:Paragraph (a) speaks of "the consideration of difficult questions of law". The word used is "consideration" and not "determination". Therefore it seems to us that the paragraph is dealing with practical problems likely to arise during the progress of the trial, and is not concerned with questions of law, however difficult, which the Judge may have to decide before a final judgment can be entered, and which do not make it inconvenient to have a jury as the tribunal of fact for the trial itself. Thus, a claim founded on negligence may give rise not only to the question of fact as to whether there was a failure to use proper care, but also to questions of law, as, for example, whether the law recognises any duty owing by the defendant to the plaintiff, or whether the damage suffered is too remote in law. Such questions of law are ordinarily quite separate and distinct from the issues of fact, and, indeed, only arise after findings of fact in favour of the plaintiff. They do not affect the nature of the jury's task as the tribunal of fact. The cases which come within para. (a) are, we think, cases where the questions of law are of such a nature that it becomes difficult to keep the respective functions of Judge and jury separate from one another. There are cases where matters of law and matters of fact so merge into one another that the task of the jury becomes complicated in the application to the facts of questions of law which it is difficult for the Judge to explain in language they could be expected to appreciate and apply. There are other cases where, during the course of the trial, the Judge will be called upon to give consideration to difficult questions of law and where it is not possible to isolate satisfactorily questions of fact for submission to the jury. These are broadly the cases to which, we think, para. (a) applies. It should be added, however, that it is not possible to describe exhaustively any category of cases in which the power conferred by the paragraph might properly be exercised, but we have said enough to show that, in our opinion, the principal matter for consideration under the paragraph must be the extent to which the exposition and application of matters of law may cause difficulty to the Judge and the jury in the discharge of their respective functions. We think this construction of para. (a) enables effect to be given to the word "difficult" in the phrase "difficult questions of law". If, as Mr Wilson's argument suggested, this phrase related only to the consideration of questions of law by the Judge for the purpose of determining those questions, it would not seem to be material whether the questions could bedescribed as easy or difficult. If, however, as we think, the paragraph contemplates the effect which questions of law may have on the convenient discharge of their respective tasks by both Judge and jury in the course of a trial, then the more difficult the questions of law become the more complex those tasks may become, especially when matters of law and matters of fact are inextricably mingled. An apt illustration may be found in the case mentioned in the judgment appealed from, Whitcher v State Fire Insurance[1956] NZLR 606, where the question was whether a person was an employee or an independent contractor.[27] This approach has been confirmed in McInroe v Leeks [2000] 2 NZLR 721 (CA) and TVNZ v Haines CA96/06 6 September 2006. [28] The words of s 19(5)(b) speak for themselves. [29] Mr Lusk referred to two New Zealand decisions dealing with proceedings against solicitors. The first is Bearman v Dunn. The negligence alleged was a failure to commence an action in respect of a possible claim by the plaintiff under the Law Reform (Testamentary Promises) Act 1949, against the estate of his uncle who had died in October 1967. The defendant sought to have the matter heard by a Judge alone. Cooke J (as he then was), concluded that the case required trial before a Judge alone. At 411 the Judge stated:Further, discussion during the argument also drew attention to the likelihood that the plaintiff would wish to add to issue 1 an alternative asking whether there were reasonable prospects that the plaintiff would have been able to establish such a promise. The point is that there is a line of cases showing that, when a solicitor is sued for alleged negligence in not bringing action, as well as the relatively straightforward alternative findings that the possible action must have succeeded or must have failed intermediate findings may be open – such as that there were sufficient prospects of success to make the action advisable. For the bearing on liability and quantum, see Kitchen v Royal Air Force Assn [1958] 1 WLR 563; [1958] 2 All ER 241; Yardley v Coombes (1963) 107 Sol Jo 575; Gregory v Tarlo (1964) 108 Sol Jo 219;Buckley v National Union of General and Municipal Workers [1967] 3 All ER 767; Star Candy Store Pty Ltd v Chaniotis [1968] SASR 1; Yeoman v Ferries 1967 SC 255; and cf Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113; [1970] 2 All ER 471. These authorities had not been considered by counsel before the argument of the motion and it would not be right for me to do more than mention them. Suffice it that they show that even if Mr Keesing is right in maintaining that a New Zealand jury would find the concept of a trial within a trial as easy to master as he says an Elizabethan audience found a play within a play, the present trial would not be as straightforward. The trial is likely to involve some questions of pure fact, perhaps turning on credibility, which a Judge might be glad to be relieved of the obligation ofdeciding: for example, questions about what the defendant said to the plaintiff and when. But at this stage one cannot know how significant these questions will be in the ultimate outcome. Answers favourable to the defendant might possibly dispose of the whole case, but if the answers are favourable to the plaintiff, more will certainly have to be proved before the present action can succeed. In my view the Court should not under s 2(5) leave selected issues to be submitted to a jury unless they are of sufficient importance in the case to warrant a jury and can be satisfactorily defined in advance of the trial and clearly isolated from the issues to be tried by the Judge. For the reasons already given, importance is here doubtful. But, even disregarding that altogether, it is plain that definition would be beset by difficulties. The list of "substance of issues" suggested for the plaintiff, though already numerous and still subject to the incompletely defined amendments already mentioned, would admittedly be unsuitable for an actual formulation of issues for the jury. To take but two illustrations: whereas the statement of claim alleges a promise by the deceased to leave the plaintiff certain farm properties and other assets, the first of the issues in the list refers more vaguely to a promise to reward the plaintiff for his services; and substantial reconstruction and changes of wording would be needed to make plainly apparent the relationship between the various issues in the list and the five specific allegations of negligence in the statement of claim. As to isolation, I do not think this can be satisfactorily achieved in the present case. Under the testamentary promises legislation, if an award is called for the Judge ultimately has to decide on "such amount as may be reasonable, having regard to all the circumstances of the case, including in particular the circumstances in which the promise was made and the services were rendered or the work was performed, the value of the services or work, the value of the testamentary provision promised, the amount of the estate, and the nature and amounts of the claims of other persons in respect of the estate, whether as creditors, beneficiaries, . . . next-of-kin, or otherwise." Or, in a case where specific relief is available, he may have to consider a vesting order. Evaluation and judgment by the Judge are of the essence of the jurisdiction. It would be altogether artificial to require a Judge in a professional negligence action to attempt to decide, partly on the basis of answers by a jury to a multiplicity of issues, what would probably have been decided by a Judge in a hypothetical testamentary promises action which by statutory requirement would have been tried without a jury. In short I am driven to conclude that to investigate the present claim with a jury would be more likely to lead to confusion than to justice. The defendant is a practitioner with much specialised experience in jury cases. It may seem ironical that in spite (or perhaps because) of his experience he or those conducting his defence evidently regard a jury as unsuitable for trying this case against him; but I have no doubt that they are right[30] The second case is Rawlinson v Purnell Jenkinson & Roscoe (1996) 10 PRNZ 177 (CA), where the Court of Appeal allowed an appeal from a High Court Judge who had ordered a matter be tried by a Judge alone. The Court of Appeal found that the trial would not require a prolonged examination of documents and theconcentration at hearing would be whether or not the lawyer involved had maliciously instituted civil proceedings and prosecuted them. [31] In Williams v Beesley [1973] 3 All ER 144, a client brought an action for damages against his solicitor alleging professional negligence in respect of advice given, or steps taken in litigation in which the client's wife was involved. The defendant in this matter relies particularly on the following passage in Diplock LJ's speech at 146:My Lords, it would, at any rate at first sight, seem difficult to conceive a case less suitable for trial by jury, or more appropriate to be tried by a judge alone. The issues which it raises are as to whether in a number of detailed steps taken in the course of three separate, though inter-related legal proceedings, the appellant, through his employee, acted with the professional skill and competence to be expected of a solicitor; and, if he did not, what effect the negligent act or omission is likely to have had on the proceedings. Furthermore, the claim for special and general damages itself raised a number of complicated questions of law. It is hard to see how issues of this kind could be left to the determination of a jury with fairness to either side.[32] In Williams v Beesley the House of Lords also considered the concerns of Mr Beesley that Judges as a class may be prejudiced, or biased, against him. That is not dissimilar from the present case where Mr Siemer considers specified Judges to be biased against him, and has expressed concerns that other Judges may be subconsciously biased because of their knowledge of Mr Fardell, or their desire to protect the institution of Queens Counsel. The jury notice of the plaintiffs at [20] shows that this belief continues. Effectively, he was submitting that it would be better for a jury to hear the matter to relieve the Judges from being put in such a position. At 146 of Williams Diplock LJ stated:My Lords, in deciding whether a civil action ought to be tried by judge and jury instead of the usual mode of trial by a judge alone, the duty of the court is to act fairly to all parties to the action. If, as in the instant case, all rational considerations point to the conclusion that trial by judge alone would involve a shorter and less expensive hearing and would be more likely to achieve a just result than trial by jury, it would be the height of injustice to the defendant to deprive him of his right to have his case tried by the appropriate method merely because of the mistaken belief of the plaintiff that judges as a class are likely to be biased against him or in favour of his opponent. To allow the court's decision as to the mode of trial to be swayed by the existence of such a belief by one of the parties, however sincerely it might be held, would be to acknowledge that there was some substance in it and that our system of justice lacks the firm foundation of an impartial judiciary.[33] The matter, therefore, falls to be considered against those expressions of principles. [34] Mr Lusk submitted that the focus of the trial on the first cause of action would be the steps taken by Mr Fardell as counsel in the s 174 litigation. He submitted the issue was whether they were taken with professional skill and competence expected by a barrister, and if they were not what alternative steps might be available. It would also involve a consideration of whether the alternative steps were likely to be successful. He said, further, there were questions of causation as to whether any negligent act or omission of Mr Fardell was causative of loss to the plaintiffs, and if so, which of the plaintiffs. He finally submitted in relation to this that the damages question raised numerous difficult questions of law. [35] Mr Siemer argued that this would be a case where there would be expert evidence available to the jury as to the steps taken by Mr Fardell, and the jury would be readily able to understand this evidence and determine it. [36] Next, Mr Lusk, while accepting the common law immunity for barristers had gone, submitted that there remained considerable difficulties confronting plaintiffs attempting to establish breaches of care expected of counsel. He relied onMoy v Pettman Smith [2005] 1 All ER 903, which has been approved by the Supreme Court in Chamberlains v Lai [2006] NSZC 70 at [78]. He submitted thatMoy established that a plaintiff must show that any error by Mr Fardell was one which no reasonably competent barrister would make. It had to be more that a mere error of judgment. He submitted that a barrister in Mr Fardell's situation was working in difficult circumstances under significant time restraints. He said in this particular case Mr Fardell was at Court facing defences of some merit, but managed to negotiate a consent order. He further submitted in cases against advocates the Court can assume to rely on its own knowledge and experience of advocacy to determine whether the conduct has fallen short. He submitted there were complex issues surrounding this that needed to be considered and determined.[37] Once more, Mr Siemer submitted that there would be expert evidence, and a jury would be well equipped to make the necessary decisions on the evidence they heard. [38] Mr Lusk next submitted that the pleadings put in issue the appropriateness of the s 174 procedure recommended by Mr Fardell. He referred to part of the decision of Hammond J which he submitted showed that the choice of this form of proceeding, rather than a derivative action, as the plaintiffs contend, was the correct one. Hammond J in his judgment dated 19 July 2001 said at [22], [23] and [32]:[22] The statutory remedy against oppression, unfair discrimination and unfair prejudice - usually compendiously referred to as "the oppression remedy" - is a relatively recent creation of statute. The relevant provisions are now contained in ~~174-176 of the Companies Act 1949. [23] By this remedy, this Court is given a wide discretion to review any type of corporate activity and to grant a wide range of relief. It is not necessary to commence a derivative action. The remedy is intended to protect minority shareholders from exploitation, and against being deprived of their fair share of the enterprise. But, in exercising the remedy, this Court must keep firmly in view the traditional reluctance of this Court - for good and sufficient reasons - to unduly intervene in the management of corporate affairs. [32] Having regard to all these considerations, I am of the clear view that there has been oppression within the meaning of the Statute; and that the relief sought by the plaintiffs is appropriate, and indeed the only effective relief which is available to them. In my view, ~174 is wide enough to make the orders applied for.[39] Hammond J also had recorded in the Minute of 18 July 2001 that the interim relief sought was "the sensible course then taken". [40] On this basis, Mr Lusk argued that the Court at trial will have to consider in detail the history of the s 174 proceeding, and the circumstances in which the consent interim orders were negotiated. He said there will also necessarily be a detailed consideration of expert evidence as to the suggested alternative remedies, whether or not they were available, and whether or not they could likely be obtained. [41] Mr Lusk also submitted that there would need to be detailed considerations of the criticisms at [24] to [29] of the third amended statement of claim relating to the recommended procedure, including the interim relief of appointing a receiver with wide powers, and the availability, or otherwise, of each of the suggested alternatives. The Court would also have to consider the efficacy of the alternatives, and whether they would have created a better outcome for the plaintiffs. Mr Lusk submitted that these were legal issues of complexity, and while assistance may be available from experts, a Judge would be likely to be influenced by his own, or her own, experience and judgment. Finally, in relation to the first cause of action he referred to the second plaintiff claiming the benefit of the contract of retainer pursuant to the Contracts (Privity) Act 1982. He submitted, again, that this raised difficult legal questions, particularly in circumstances where he submitted Mr Fardell never acted for Paragon. Indeed, he pointed out that in the s 174 proceedings Paragon was named as the first defendant. He accepted that the answer may be so straightforward that it may not raise difficult questions of law, but the full complexity was not yet apparent. [42] Again, Mr Siemer submitted that a jury, with the benefit of expert evidence, were quite able to cope with the questions raised. He submitted they were not complex or difficult, and would be readily understood by the jury. [43] In relation to the second cause of action, Mr Lusk submitted that it again raises difficult questions of law.[44] Paragraph [33] is set out earlier, and Mr Lusk submitted that it will require the Court to examine Mr Fardell's involvement in transactions unrelated to the plaintiffs, and then determine as to whether there was any conflict between the interests of the plaintiffs and interests of Ferrier Hodgson and Mr Stiassny in the separate proceedings. [45] He also submitted that any inquiry into fiduciary duty and conflict of interest issues falls into the category of examination of professional matters which cannot conveniently be examined with a jury and satisfy the provisions of s 19A(5)(b). [46] Mr Lusk argued that even if a breach of fiduciary duty is established, difficult questions of law arise in relation to causation and assessment of loss. He citedChirnside v Fay [2006] NZSC 68, which discusses at length the choices of remedies available for breach of fiduciary duties which highlights the difficult legal issues involved. He submitted in the circumstances of this case, it was even more complex. He said was Mr Fardell to be held liable for anything more than the usual remedy for breaches of duty of loyalty (i.e., being stripped of costs), should the plaintiffs receive equitable damages in circumstances where their loss was caused by their own deliberate acts of breaching the confidentiality obligations, rather than Mr Fardell inducing them to enter into that agreement? Both these matters were complex he submitted. [47] Finally, Mr Lusk submitted that there were difficult questions relating to damages, including: the value of the loss of the technology; the loss of share value to the first plaintiffs; the loss of overhead expenses incurred; whether the defendant is entitled to set off for the benefits obtained by the plaintiffs, as pleaded in the statement of defence, being the cancellation of an obligation to pay a further $500,000-00 pursuant to the Deed of Subscription, the transfer to them without payment of the shares in the second plaintiff held by Waterford, McCaig, and the Rutherford Estate, the control and ownership of the second plaintiff, and the sum of $40,000-00 damages from the Rutherford Estate. [48] Again, Mr Siemer said a consideration of these issues did not raise such complex issues that they could not be adequately dealt with by a jury, having heardappropriate expert evidence. He did not accept that the accounting evidence was complex. He said the documents and any evidence would be relatively straight forward. [49] I consider that the defendant has satisfied the criteria of both sections (5)(a) and (b). The consideration of the amended statement of claim shows that a number of difficult and complex questions of law will need to be considered at trial. While some may be considered relatively straight forward, others of them are particularly difficult. It would not be easy for a jury to consider the appropriateness, or otherwise, of the s 174 Companies Act procedure that was recommended by, and followed by, Mr Fardell. Nor will it be easy for a jury to grapple with, or understand, the pressures applying immediately before a hearing when the application was faced with an apparently meritorious defence. A jury would have difficulty comprehending and understanding whether the consent agreement negotiated by Mr Fardell was the best course of action for the plaintiffs in the circumstances. Equally, the jury would face difficulties as to both the availability, and the appropriateness of any alternative procedures and remedies. I consider they would also struggle to understand the likelihood of any alternative procedures being granted. [50] In relation to the second cause of action, difficult questions of the extent of fiduciary duty and its scope arise. Is there a duty to the second plaintiff who was not a party to the contract of retainer? If, in fact, Mr Fardell did advise the first named plaintiffs to sign the compromise agreement can he be liable for losses sustained from them breaching that agreement? Could Mr Fardell be liable for prospective losses? Is the compromise agreement unenforceable against them, or did they terminate it? These questions, individually and in combination, are complex. [51] It seems to me that the defendant has established the jurisdiction under both s 19A(5)(a) and (5)(b). In terms of (5)(a) this is a case where it would be difficult, if not impossible, to keep the respective functions of Judge and jury separate. To my mind this particular case is on all fours with the citations earlier fromBearman v Dunn and Williams v Beesley. The multitude of complex issues raised on the pleadings make this a case unsuitable for consideration by a jury.[52] The starting point is, of course, the plaintiffs' right to trial by jury. But all of the issues raised are such that as Diplock LJ said in Williams v Beesley it is "difficult to conceive a case less suitable for trial by jury, or more appropriate to be tried by a Judge alone". [53] I am very conscious of Mr Siemer's concern as to the possibility of obtaining a fair trial before Judge alone. He is concerned by actual, sub-conscious or potential bias of Judges, both because they knew Mr Fardell, or because they wished to protect the rank of Queens Counsel. I have no doubt that those views are firmly and sincerely held by Mr Siemer, but I consider them to be incorrect. Again, the matter is met by the citation from Diplock LJ in Williams at [33]. In any event, it seems to me that Mr Siemer's concerns in this regard, although I do not accept or share them, could well be met by the matter being heard by a Judge from out of the Auckland Registry. [54] Accordingly, the defendant's application is granted, and there is an order that this matter is to be tried by a Judge alone. [55] At the end of the hearing both parties indicated to me that the matter could not proceed at the fixture date in June. Accordingly, I advised the Registry that the matter is to be vacated. [56] Mr Siemer also sought the right for a counsel to file further submissions on his behalf in this regard. He said that Mr Brian Henry was to represent him, but could not attend at the hearing because he was in Australia. I pointed out to Mr Siemer that there is no solicitor on the record. I did allow him the right to have a solicitor file a notice of appearance within one day and for submissions to be filed, along with a leave application by a barrister within 14 days. A notice of change of solicitor was filed on 19 March. Nothing else has been received. [57] Both parties agreed the matter could not proceed in June and the fixture is vacated. Both parties also agreed that this matter required close case management. There are still outstanding issues of discovery, and I direct that any further interlocutory applications by all parties relating to discovery are to be filed within 14working days of the handing down of this decision. Those matters are to be allocated an urgent hearing date. Any other interlocutory applications are to be filed within the same period. Once they have been filed I will review the matter by telephone conference. Solicitors D.J. Gates, Auckland for Plaintiffs (Counsel: B.P. Henry, Auckland) V.R. Siemer in Person for First and Second Plaintiffs (Fax: (09)428 2521) Heaney & Co., Auckland for Defendant McElroys, Auckland for Non-Parties.