SIEMER AND ANOR V FARDELL HC AK CIV.2003-404-5782

SIEMER AND ANOR V FARDELL HC AK CIV.2003-404-5782 18 July 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV.2003-404-5782BETWEEN VINCENT ROSS SIEMER AND JANE CHAPMAN SIEMER First Plaintiffs AND PARAGON SERVICES LTD (FORMERLY KNOWN AS PARAGON OIL SYSTEMS LTD) Second Plaintiff AND KATHLEEN MARY FARDELL AS EXECUTRIX OF THE ESTATE OF JOHN ROBERT FORTESQUE FARDELL Defendant AND MICHAEL PETER STIASSNY AND FERRIER HODGSON Non-Parties Hearing: 19 June 2006 Counsel: Mr Siemer in person for Plaintiffs P Hunt for Non-Parties Judgment: 18 July 2006 at 10:00amRESERVED JUDGMENT OF WILLIAMS JThis judgment was delivered by Hon. Justice Williams on18 July 2006 at 10:00ampursuant to Rule 540(4) of the High Court Rules..Registrar/Deputy Registrar Date: ... at am/pmA. The application for transfer to the Court of Appeal is dismissed. B. The non-parties are entitled to the costs of the application on a 2B basis with disbursements as fixed by the Registrar. C. The Registrar is now to set down the review application for a fixture (half a day). The review application requires a fixture irrespective of the outcome of the stay application brought by the defendant and set down for hearing on 26 June 2006.[1] The plaintiffs say the defendant, Mr Fardell, advised them to seek receivership of Paragon with Mr Stiassny as receiver. They claim Mr Fardell's advice was negligent, ill-conceived and breached his duty of care to them. They also claim Mr Fardell had an undisclosed conflict of interest because of his personal and professional relationship with Mr Stiassny. [2] Neither Mr Stiassny's firm, Ferrier Hodgson, nor Mr Stiassny have ever been parties to this claim. However, the plaintiffs sought non-party discovery against them – the history of which will require later review – and on 14 March 2005, Associate Judge Lang (as he then was) delivered a judgment ordering the plaintiffs to pay the costs of that application. [3] On 21 March 2005, the plaintiffs sought review of that decision. For various reasons, that review has not been completed – although it was set down to be heard immediately after the application with which this judgment is concerned should the present application be able to be decided orally and time being available to hear it. The reason for the delay in hearing included transfer of the file to Williams J and the necessity for him to familiarise himself with its detail, ongoing difficulties experienced by the plaintiffs in obtaining legal representation coupled with Mr Siemer's inability to appear for Paragon, a stay of proceedings sought by Mr Fardell, and Mr Fardell's death.[4] On 25 January 2006 the plaintiffs sought an order transferring their review application to the Court of Appeal for hearing. It is with that application that this judgment is concerned, a fixture for the same having been deferred by Williams J's commitments in the interim, principally by involvement in a lengthy criminal trial.Jurisdiction and Applicable Principles[5] In its terms, the transfer application claimed the Court's jurisdiction to make the order was to be found in the New Zealand Bill of Rights Act 1990, the Judicature Act 1908 and the Judicature Amendment Act 1998, RR 61A, 61C, 235, 252 and 254, and the inherent jurisdiction. [6] However, during the hearing, Mr Siemer accepted that the only provision of NZBORA conceivably relevant was s 27 – the right to justice –and he accepted that did not create the jurisdiction sought. The Judicature Amendment Act 1998 contains nothing relevant. The Rules cited define part of Associate Judge's jurisdiction, create the review power and deal with aspects of interlocutory applications. And it would not be right to revert to the inherent jurisdiction – even if it covers applications such as this – when there is express power covering the situation. [7] That power was formerly to be found in the Judicature Act 1908 s 26P (Childs v Hillock [1994] 2 NZLR 65, 67) and is now to be found in the Judicature Act 1908 s 64 which reads :64 Transfer of civil proceedings from High Court to Court of Appeal(1) If the circumstances of a civil proceeding pending before the High Court are exceptional, the High Court may order that the proceeding be transferred to the Court of Appeal. (2) Without limiting the generality of subsection (1), the circumstances of a proceeding may be exceptional if— (a) A party to the proceeding intends to submit that a relevant decision of the Court of Appeal should be overruled by the Court of Appeal: (b) The proceeding raises 1 or more issues of considerable public importance that need to be determined urgently, and those issues are unlikely to be determined urgently if theproceeding is heard and determined by both the High Court and the Court of Appeal: (c) The proceeding does not raise any question of fact or any significant question of fact, but does raise 1 or more questions of law that are the subject of conflicting decisions of the High Court. (3) In deciding whether to transfer a proceeding under subsection (1), a Judge must have regard to the following matters: (a) The primary purpose of the Court of Appeal as an appellate court: (b) The desirability of obtaining a determination at first instance and a review of that determination on appeal: (c) Whether a Full Court of the High Court could effectively determine the question in issue: (d) Whether the proceeding raises any question of fact or any significant question of fact: (e) Whether the parties have agreed to the transfer of the proceeding to the Court of Appeal: (f) Any other matter that the Judge considers that he or she should have regard to in the public interest. (4) The fact that the parties to a proceeding agree to the transfer of the proceeding to the Court of Appeal is not in itself a sufficient ground for an order transferring the proceeding. (5) If the High Court transfers a proceeding under subsection (1), the Court of Appeal has the jurisdiction of the High Court to hear and determine the proceeding.[8] It appears the only extensive consideration of s 64 since its enactment is inVector Ltd v Transpower New Zealand Ltd (2000) 14 PRNZ 240, the effect of which is accurately summarised in McGechan on Procedure (para J64.01(2) p 3-125-6) where the following appears :Principles developed not expressly contained in s 64, but nevertheless helpful in applying it, are: (a) The power should be exercised only sparingly, and only exceptionally, for clear reasons applicable to the particular case. In the situation set out in s 64(2), transfer may be appropriate, but not necessarily so. (b) The likelihood – even inevitability – of an appeal is relevant but not determinative. Even if appeal is inevitable (and see nows 64(3)(b)), it has been held that the Court of Appeal should ordinarily hear cases only after there has been a reasoned judgment at first instance: Vector Ltd v Transpower NZ Ltd(2000) 14 PRNZ 240, citing Peters v Davison (19989) 18 NZTC 13,636, at p 13,641. (c) The parties are prima facie entitled to the benefit of both a determination at first instance and a review on appeal. (d) If the case is tried at first instance, the appellate Court has the advantage of primary fact finding at first instance plus the trial Court's views as to the law, both of which it values. Even where the case involves a novel legal point, the Court of Appeal normally expects a considered judgment for its review. (e) The need for a detailed inquiry into facts, including prolonged examination of witnesses, tells against transfer, but the jurisdiction to transfer extends to questions of fact. (f) The likelihood of burdening the Court of Appeal with numerous interlocutory matters also tells against transfer, interlocutory matters are appropriately dealt with by a first instance Court. Rights of appeal on interlocutory maters would also effectively be lost. (g) The fact that there are no unresolved legal issues to be decided further tells against transfer. (h) Urgency, and the inability to achieve it if the matter is heard first in the High Court and then on appeal in the Court of Appeal, is a factor.Judgment of 14 March 2005[9] Lang J commenced his consideration of the issues by reviewing the background in the following passages :[2] In August 2004 the first plaintiffs sought non-party discovery against Mr Stiassny and his firm, Ferrier Hodgson, in respect of documents they believed to be relevant to their claim. In particular, Mr Siemer contended that Ferrier Hodgson held documents relevant to the plaintiffs' assertion that Mr Fardell had a conflict of interest in recommending that Mr Stiassny be appointed as the receiver. This conflict of interest is said to have arisen by virtue of the fact that Mr Fardell allegedly had a close association with Ferrier Hodgson, and at material times had been acting for Mr Stiassny and his firm in relation to other matters. He therefore sought access to a wide range of documents likely to be relevant to this aspect of the claim. These included not only Ferrier Hodgson's files relating to the receivership but also all other documents (including correspondence, telephone records and electronic records) likely to show theexistence, and strength, of any relationship between Mr Fardell and Ferrier Hodgson. [3] The application was initially opposed, principally on the ground that the non-parties were unclear as to the scope of discovery that was sought. Ultimately, however, the non-parties agreed to co-operate in providing discovery of all of their files in relation to the receivership. These included all files notes and communications between Mr Stiassny and Mr Fardell. They also agreed, sometimes with the assistance of directions given by the Court, to provide most of the other material sought by the first plaintiffs. At the hearing on 27 August 2004 I ordered discovery to be given by the non-parties in terms that were designed to minimise the cost of complying with the order. These orders were supplemented by directions given at later hearings. [4] At the hearing on 27 August 2004 Mr Hunt [counsel for the non- parties] also sought an order requiring the first plaintiffs to pay the reasonable costs incurred by the non-parties. I did not accede to that request at the time, but I recorded in a minute dated 30 August 2004 that Mr Siemer had undertaken to pay the amount ultimately determined by the Court (and subject to any rights of review and/or appeal) to be payable to the non-parties.[10] He then recorded the costs sought by the non-parties totalled $30,403.04 including GST and disbursements made up as follows :1. McElroys' invoice dated 30 September 2004 in respect of attendances up to that date $10,806.41 2. Ferrier Hodgson's invoice dated 7 October 2004 in respect of attendances to 30 September 2004 $9,418.88 3. McElroys' invoice dated 11 October 2004 for photocopying $249.92 4. McElroys' invoice dated 26 November 2004 in respect of attendances from 1 October to 25 November 2004 $8,518.75 5. Ferrier Hodgson's invoice dated 26 November 2004 for attendances from 4 October to 26 November 2004 $10,800.90 $30,403.84 _________[NOTE: These sums actually total $39,794.86 NOT $30,403.84][11] After noting that R 303 gives the Court power to order a party who seeks discovery from a non-party to pay the "person's expenses (including solicitor and client costs) of and incidental to the application and in complying with any order", Lang J noted authority that the intention of the Rule is to "reimburse the non-party for all his expenses and not merely his solicitor and client costs" (AMP Society v Architectural Windows Ltd [1986] 2 NZLR 190, 203) so that "third parties brought in as by a side wind should not be left to meeting their own expenses" (Clear Communications Ltd v Telecom Corporation of NZ Ltd [(1994) 8 PRNZ 200, 202) and with the non-party also being entitled to be reimbursed for "time or labour expended in complying with the order" (Berryman Properties ltd v Colonial Mutual General Assurance Co Ltd (1987) 1 PRNZ 196, 197). However, he went on to note that full recovery is not automatic and the Court must be persuaded the costs are reasonable in the circumstances. [12] The Judge then dealt at length with the legal costs incurred by the non- parties, noting (at [19]) that the "non-parties and their advisers cannot be criticised for adopting a cautious approach in their dealings with Mr Siemer" because they "would have appreciated from the outset that Mr Siemer was likely to insist that every aspect of the Court's order was complied with". He also recorded (para [25]) :[25] that I was concerned from the outset that in pursuing the application for non-party discovery the first plaintiffs were potentially exposing themselves to a very large award of costs. I raised this issue on several occasions with Mr Siemer. I stressed to him the importance of ensuring that he co-operated in the discovery process so that it was completed at a minimum of cost. Given the amounts that is now claimed, it is obvious that my initial concern was justified.[13] He allowed the non-parties' legal advisers costs at 85% of the total charged excluding GST but plus disbursements and the resultant GST. [14] After reviewing the claim for Ferrier Hodgson's costs in detail, the Judge made an order that they be paid $10,100 plus GST and disbursements.Submissions[15] Dealing with the statutory criteria for exceptionality, Mr Siemer submitted the judgment under review raised issues of considerable public importance as to the method of compliance with discovery obligations of non-parties and that such an issue could be determined more rapidly in the Court of Appeal than in this Court. [16] Of the transfer criteria in s 64(3), Mr Siemer submitted that transfer would be in the public interest (sub-para (f)). [17] Of the principles listed in McGechan the only one of assistance to the plaintiffs in this application was, again, urgency. [18] Urgency having been invoked, it must immediately be said that, although there have been delays in this Court in dealing both with the review and transfer applications, they have, and will be, dealt with much more quickly in this Court than in the Court of Appeal having regard to the pressure of business in that Court. [19] That notwithstanding, Mr Siemer submitted : a) That the judgment under appeal dealt with matters of law not matters of fact and according was more susceptible to first argument in the Court of Appeal; b) That the non-parties had significantly failed to comply with their discovery obligation, particularly through failure to number all the documents discovered or provide a verified list. That, in its turn, required more numerous appearances and thus more time and cost on the part of the non-parties and their advisers. c) That with the substantive trial then pending, it became "obvious to the plaintiffs that Master Lang would not order proper discovery" and accordingly the plaintiffs "gave up" on their efforts to obtain the same.d) That the judgment of 14 March 2005 failed to recognise that the non- parties had not provided proper discovery and the amounts charged were unreasonably high. e) That the Judge should have permitted the plaintiffs to cross-examine the non-parties as to the adequacy of discovery and should have permitted the recording of the discovery hearings. All of that, he submitted, led to "such a radical departure from the law of discovery that if not corrected by the Court of Appeal, it would undermine the legal framework that gives courts their credibility and substance". [20] He made a number of other submissions concerning the administering of interrogatories to the defendant and the suggestion Mr Stiassny attempted to over- charge Paragon for his services but, since they can form no part of the present application, they are put to one side. [21] He said that the breaches of the "fundamental aspect concerning discovery requires a definitive ruling from the Court of Appeal" and that unless a higher court decides the issue it may "hound the court for years to come". It would, he submitted, be "impossible for an objective observer to say proper discovery was given" by the non-parties in this case, something in which the Judge was complicit. He went so far as to assert bias and pre-determination against Lang J, though such formed no ground in the application. [22] For the non-parties, Mr Hunt reviewed the history of the Court's minutes in this matter to found a submission that the parties agreed that the non-parties would provide discovery by the means now criticised by the plaintiffs. In particular, he said, the parties agreed that all the non-parties' documents would be provided without a verified list and without numbering. There was accordingly, he submitted, no basis for suggesting the non-parties and their advisers failed to comply. [23] He submitted there was no basis for suggesting a review could be heard more quickly in the Court of Appeal than in this Court.[24] He made the point that Lang J was exercising a discretion in making the orders under review and accordingly, unless it was patently wrong, the exercise of the discretion should not be interfered with (Wilson v Neva Holdings Ltd [1994] 1 NZLR 481, 491) noting the reductions made by the Judge in the amounts claimed. [25] He said Mr Siemer's submission that the costs were increased by additional appearances stemming from the non-parties' failure to comply was simply unsubstantiable. [26] In response, Mr Siemer claimed the passages in the Court's minutes recording agreement referred only to agreements reached between Lang J and Mr Hunt, not agreements in which the plaintiffs participated. [27] Both Messrs Siemer and Hunt dealt at some length with details of the judgment under review and the evidence filed in support but, since that matter remains for decision – either in this court or in the Court of Appeal – it would not be right at this stage to do more than record some of the passages in Lang J's minutes. [28] After recording in the Minute of 25 August 2004 the filing of the non-parties' discovery application and the fact it was opposed, Lang J's Minute of 30 August 2004 said :[1] The purpose of this minute is to record the agreement that has been reached in relation to the plaintiffs' application for non-party discovery against Michael Stiassny and Ferrier Hodgson. [2] Mr Stiassny and Ferrier Hodgson have agreed to make available to Mr and Mrs Siemer all of their files in relation to the receivership. This will include all file notes and communications between Mr Stiassny. Mr Garrett and Mr Fardell. [3] In order to minimise expenditure Mr Siemer is to inspect the two boxes of documents presently in Mr Hunt's possession. He will then meet the reasonable photocopying costs of any documents of which he requires copies. [4] Mr Hunt is to remove from the boxes any privileged documents and is to place these in a sealed envelope. These are to be filed in Court and marked for my attention. I will then determine whether or not the claim to privilege should be upheld.[5] Mr Stiassny and Ferrier Hodgson will also make available for inspection by Mr Siemer all of their telephone records detailing calls from Ferrier Hodgson to either Mr Fardell or Mr Morris for the relevant periods. Again Mr Siemer is to be entitled to obtain copies of individual records provided he meets the reasonable photocopying costs. [6] Mr Siemer has today undertaken to me to meet the reasonable costs of Ferrier Hodgson and Mr Stiassny in relation to this application and in relation to the implementation of the orders. He therefore undertakes to pay the amount ultimately determined by this Court (and subject to any rights of review and/or appeal) to be payable to the non-party.[29] Mr Siemer said he received only 111 copies but was charged $249.92 for them. [30] After noting difficulties that had arisen in relation to the non-parties' discovery in his Minute of 17 September 2004, on 27 October 2004 Lang J dealt with non-party discovery issues relating to telephone records (agreed to be provided in amended form), database electronic records (to be deposited with the Court), logs of emails and faxes ("at this stage Mr Siemer does not wish to obtain these"), Telstra Clear records (available but expensive to be captured and "Mr Siemer does not wish to incur the expense of obtaining these records at this time") and Ferrier Hodgson's electronic database ("Mr Siemer does not accept that the text of emails sent between November 2000 and November 2001 would be difficult to obtain"). [31] Aspects of non-discovery were dealt with extensively in a Minute of 30 November 2004. For reasons already given, it would be inappropriate to record the detail of that Minute. It is sufficient to note that a number of the issues discussed were resolved, in several instances by the Judge deciding to take the matter no further and in others on the basis the plaintiffs opted to take the issue no further on grounds of cost.Discussion and Decision[32] Putting aside the dispute as to the matters recorded by Lang J as being agreed, it is apparent from that résumé, the course which the non-parties' discovery application followed and the judgment on that topic, that it was a relativelystraightforward application for discovery by non-parties, though one which was conducted in an atmosphere of mutual suspicion and one which encountered difficulties having regard to the breadth of the discovery sought by the plaintiffs. [33] Mr Siemer now disavows any agreement on the part of the plaintiffs such as was recorded by Lang J in his minutes. If orders or directions are not made with the agreement of all parties, it would be unusual for minutes to record matters being agreed. If they are directions by the Court over parties' opposition, minutes say so. Even if they are directions by the Court without unanimous agreement of the parties, minutes usually record that fact. [34] What may have contributed to the problems the non-parties' discovery encountered was the lack of any verified list of documents. By inference from the minutes, that occurred because the parties agreed such would not be provided. However, even if, as Mr Siemer asserts, the plaintiffs did not agree, it is noteworthy the minutes appear not to record any later application for a verified list. [35] Next, it is to be noted that there is no suggestion in the minutes of an application to cross-examine Mr Stiassny or any other member of Ferrier Hodgson as to the adequacy of discovery. No doubt, as Mr Hunt submitted, that was because no verified list had been directed and accordingly there was no affidavit on which a notice to cross-examine could be given. [36] Mr Siemer, as noted, was strongly critical not only of the lack of a verified list but also the non-parties' failure to number all their documents. Without such, he asked rhetorically, how could the plaintiffs be assured discovery was complete and comprehensive and all the third parties' documents were available for inspection? [37] Though not referred to in the minutes or by counsel, there is at least some precedental support for the approach which may have been taken by the non-parties in this case. In its present form, R 298 details the groups of documents which must be included in the schedule attached to an affidavit of documents but sub-rule (2) says the documents in four of those categories "may be described as a group or groups if all documents concerned are of the same nature". In Hunyady v Attorney-General [1968] NZLR 1172, 1173-1174, each departmental file in issue was discovered as one item but without the documents in the files being individually listed, detailed or numbered. The majority of the Court of Appeal held : the affidavit of discovery must identify the documents discovered sufficiently to enable the party having the benefit of the discovery, and if necessary the Court, to call for the production of any of them individually. To comply with this requirement it is not sufficient to refer e.g. to "one bundle of documents" or "one file" with some distinguishing mark or letter for the whole; the proper course is at least to number or letter the individual pages or documents of the file or bundle, so as to enable any one of them to be specified in a subsequent application for inspection or production.[38] To somewhat similar effect, in Attorney-General v Wang NZ Ltd (1990) 2 PRNZ245, 251, the following appears :The overriding consideration is the ability of the opposite party or the Court to specify the document in any application for inspection or production. If the nature of the group of documents is such that identification for those purposes is possible by doing no more than describing the group, then the group rather than its constituents only needs to be described. Such might occur, for example, in a case involving the production of a number of identical documents where it would be sufficient to describe them in the list of documents and include the number held without enumerating every one. Another example might be the production of a receipt book numbered sequentially where it would be a sufficient description to describe it as a receipt book containing receipt numbers sequentially a-b and issued between certain dates. But where the nature of the documents is such that identification for the purposes mentioned is not possible globally, then the proper course is for the documents to be enumerated separately.(See also Endeavour Productions Ltd v Petersen (1990) 2 PRNZ 366, 373-374;McGechan on Procedure para HR298.04 p 1-1514). [39] In light of all of that, and returning to the statutory criteria and considerations shown to be relevant by the authorities, in the circumstances of this case the plaintiffs have failed to persuade that the issues raised by the review are of considerable public importance or that they require to be determined urgently or that they raise issues of law on which decisions of this Court conflict. [40] While those comments are not intended to give any indication as to the outcome of the review application, they do demonstrate that it would be difficult to characterise the non-parties' discovery in this matter as being extraordinary. Theprocess leading to Lang J's judgment may have been difficult, but such is not infrequently the case when persons or bodies outside those directly involved in litigation find themselves forced by Court order to participate to the extent of discovering documents which belong to them or over which the have control when they have no wish to become involved. [41] The view must accordingly be that the public interest is not engaged by the matters raised on review. All the other principles in s 64 point against the transfer of the review application to the Court of Appeal. The authorities demonstrate that the power of transfer should be exercised sparingly and that, even if the plaintiffs currently intend to appeal whatever decision this Court reaches on the review application, that is not determinative. [42] Accordingly, nothing about the review has been shown to be exceptional and the application for transfer must be and is accordingly dismissed. [43] The non-parties are entitled to the costs of the application on a 2B basis with disbursements as fixed by the Registrar. [44] The Registrar is now to set down the review application for a fixture (half a day). The review application requires a fixture irrespective of the outcome of the stay rescission application brought by the defendant set down for hearing on 26 June 2006. ..WILLIAMS JSolicitors: McElroys (P Hunt), P O Box 835 AucklandCopy for:A A Lusk QC, P O Box 1379 Auckland (Email: aalusk@xtra.co.nz)Mr and Mrs V R Siemer, 27 Clansman Terrace, Gulf Harbour, Auckland – Fax: 09 428 2521( Email: vsiemer@hotmail.com )Tanusha Iyengar, High Court Auckland (Email: Tanusha.Iyengar@justice.govt.nz