PATRICK DEAN NORRIS V REGISTRAR OF COMPANIES HC NEL CIV-2011-442-000138

PATRICK DEAN NORRIS V REGISTRAR OF COMPANIES HC NEL CIV-2011-442-000138 [29 August 2012]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYCIV-2011-442-000138[2012] NZHC 2193UNDER the Companies Act 1993IN THE MATTER OF an appeal pursuant to s 370 of theCompanies Act 1993 against the acts anddecisions of the Registrar of Companiesunder ss 286, 365 and 366 of the ActBETWEEN PATRICK DEAN NORRISAppellantAND REGISTRAR OF COMPANIESRespondentHearing: 23 August 2012Appearances: P D Norris in PersonN H Malarao for RespondentJudgment: 29 August 2012RESERVED JUDGMENT OF ASSOCIATE JUDGE MATTHEWS[1] This judgment determines an interlocutory application by Mr Norris for discovery by the Registrar of Companies. Part of the application is determined by consent.Orders by consent[2] By consent I order that the Registrar of Companies is to give discovery of documents to Mr Norris as follows:1. All documents that are relevant to the decision of the Registrar to commence an investigation.2. All documents that are relevant to disclosure by the Registrar of the results of the investigation to the Official Assignee.3. All relevant documents used by the Registrar to come to the decision that he should exercise his power to commence the subject investigation.4. To the extent not already covered by paragraph 3, all relevant documents used by the Registrar to prepare the relevant sections of the Report dated 25 July 2011.5. The ambit of discovery under paragraph 2 above will include alldocumentation that the Registrar's appointees obtained pursuant to s 365from the appellant and others. In respect of these documents a portion of them were documents obtained from the appellant: these documents will be listed and if requested the Registrar will make copies available to the appellant.6. By reference to paragraph 3 of the Report of the Registrar dated 25 July 2011, the documents used by the Registrar to make the decision set out in that paragraph.7. By reference to Exhibit A to the Report of the Registrar dated 25 July 2011, all documents received by the Registrar from South Canterbury Finance in relation to the issues on this appeal.8. By reference to points of appeal E and F in the appellant's Points of Appeal dated 17 May 2011, all documents relating to the Registrar'sdecision to make information available to the Official Assignee.9. In relation to point of appeal G in the Points of Appeal, all documents relating to authorities given by the Registrar to his appointees that allowed documents and/or information collected through the investigation into the activities of the appellant to be given to third parties.[3] Discovery is to be given by way of a sworn affidavit which is to be filed and served within 40 working days. The Registrar has agreed to consider givinginspection of documents in electronic format, with which Mr Norris agrees. If this course is followed the electronic record is to be served on Mr Norris at the same time.[4] If inspection is not given in electronic format a full set of copies is to be given by the Registrar to Mr Norris within a further 10 working days.Application for discovery of documents created after decisions under appeal[5] Mr Norris also seeks discovery of documents relating to the consequences of all the actions which he seeks to have reviewed in this appeal. Discovery is sought up to the present time.[6] Mr Norris argues that an appeal pursuant to s 370 of the Companies Act 1993 is by way of hearing de novo, and that the Court's function is to consider what, in itsview, is the correct order to make on the material before it which will include relevant facts whether occurring before or after "the exercise of the Registrar of Companies' act or decision". Mr Norris submits that in initiating an inspectionunder s 365 which lies at the heart of his appeal, the Registrar must weigh up the possible harm that might inadvertently result to a company from an investigation, and the possible consequences to shareholders, creditors or the public if it is not undertaken, and then decide whether the evidence before him justifies an exercise of his powers. He submits that the nature of the known default and the anticipated scope of the enquiry are to be taken into account.[7] On that basis Mr Norris submits that each and every act or decision of the Registrar of Companies or his inspectors from the time of the first act or decision made by the Registrar is within the scope of the appeal in relation to the effect of his decisions on the commercial and/or personal affairs of Mr Norris. On that basis Mr Norris submits that all documentation in relation to every act or decision by the Registrar of Companies or parties associated with him including his inspectors, since the filing of the notice of appeal in relation to the commercial and/or personal affairs of the appellant, is relevant and discoverable.[8] Mr Norris refers to Re Gem Exploration & Minerals N/L.1 In that case, Bowen CJ said at 587:If on the other hand, the Court's function is to consider what, in its view, isthe correct order to make on the material before it, it would seem that evidence of facts, whether occurring before or after the exercise of theCommissioner's discretion, assuming it is otherwise relevant to the issues,would be admissible in the proceedings before the Court, and would be taken into account by the Court in arriving at its own view.[9] Mr Norris also produces a copy of Re Reid Development Co Ltd,2 which referred to Gem Exploration, but a reading of the judgment indicates that no specific reference was made to the above observation, nor was it relevant to the decision in that case.[10] Mr Malarao submits that Mr Norris is substantially overstating the ambit of an appeal under s 370 of the Companies Act 1993. He submits that a reading of the section makes it clear that the right of appeal relates to an act or decision of the Registrar and this, together with the time limit imposed for bringing an appeal,makes it clear that s 370 does not trigger a general enquiry into the Registrar'sactions or decisions beyond those specified in the appeal.[11] Mr Malarao submits that the judgment in Re Gem Exploration indicates that a Court may consider evidence not before the Registrar at the relevant time, or factsoccurring after the Registrar's act or decision, but does not stand for the propositionthat every act or decision following those being appealed against will also fall within the ambit of the appeal.[12] Mr Malarao refers me to Vicom NZ Ltd v Vicomm Systems Ltd,3 where the Court of Appeal said:As to the scope of the appeal to the High Court, Tompkins J held that it required a consideration de novo and was not restricted to determining whether the Registrar exercised his discretion properly on the material before him. Disagreeing with the view taken by Mahon J and Quilliam J in1 Re Gem Exploration & Minerals N/L [1975] 2 NSWKR 584.2 Re Reid Development Co Ltd HC Christchurch M164/77, 19 August 1977, Roper J.3 Vicom NZ Ltd v Vicomm Systems Ltd [1987] 2 NZLR 600.two unreported High Court cases, he held that the Court could not take into account facts occurring after the Registrar's decision. Bearing in mind that s9B gives a general, unrestricted right of appeal and enables the Court to confirm the decision of the Registrar or give such directions or make such determination as the Court thinks fit, we agree that the appeal hearing is de novo in the sense that the Court is not confined to deciding whether theRegistrar's decision could be successfully challenged in judicial reviewproceedings: see Shotover Gorge Jet Boats Ltd v Marine Enterprises Ltd(unreported CA196/86 23 June 1987); Re Gem Exploration & Minerals N/L[1975] 2 NSWLR 584, [at] 587, 589. But, as the decisions just cited pointout, weight can still properly be given to the Registrar's opinion. We willassume, again without deciding, that facts occurring after his decision are not to be taken into account except to the extent that they were reasonably foreseeable.[13] Mr Malarao submits that the Court of Appeal did not see its role as being any wider than conducting a de novo hearing on the Registrar's decision regarding thename of the company which was under review in that case.[14] Mr Malarao then refers to the notice of appeal, and the points of appeal, filed by Mr Norris. These, he submits, clearly refer back to acts or decisions of the Registrar prior to 24 March 2011, the date of filing of the notice of appeal. In his submission the notice and points of appeal are confined to the decision of the Registrar to commence an investigation, the decision of the Registrar to disclose information gathered during the investigation to the Official Assignee, and acts by the Registrar in and around those two decisions.[15] Mr Malarao then submits that an appeal to the court under s 370, and indeed any other form of appeal to a court, can only be against identified decisions or acts in the notice of appeal. If it were otherwise, he submits it would be impossible for a respondent coming into an appeal hearing to know what was being appealed against.To the extent that Mr Norris's understanding of the scope of his appeal differs from that, Mr Malarao submits that he is wrong. Consequently he says that any obligation on the Registrar to give discovery is similarly confined.Discussion[16] Section 370 of the Companies Act provides:Appeals from Registrar's decisions(1) A person who is aggrieved by an act or decision of the Registrar under this Act may appeal to the Court within 15 working days after the date of notification of the act or decision, or within such further time as the Court may allow.(2) On hearing the appeal, the Court may approve the Registrar's act ordecision or may give such directions or make such determination in the matter as the Court thinks fit.[17] It will be noted that this refers to a person being aggrieved "by an act ordecision of the Registrar under this Act". It will also be noted that there is a 15working day time limit from the date of notification of that act or decision, within which an appeal to the Court may be made (unless time is extended by the Court). It is clear on the wording of this section that the right of appeal is directed specifically at an act or decision of the Registrar about which a person is aggrieved. On the face of the section the scope of an appeal is confined to events before it is filed.[18] In my opinion Re Gem Exploration does not alter this position. Whilst it permits the Court to consider evidence that was not before the Registrar, as one would expect on a hearing by way of appeal de novo, the reference to the admission of evidence of facts occurring after the decision under appeal is confined by the Court to those facts relevant to the issues, and the issues are those raised in the notice of appeal. The notice of appeal is necessarily directed specifically at the act or decision of the Registrar which is called into question. It is plain, therefore, that the decision in Re Gem Exploration is tightly confined in its ambit.[19] At first instance in Vicom NZ Ltd v Vicomm Systems Ltd Tompkins J held the Court could not take into account facts occurring after the Registrar's decision. Onappeal the Court accepted, without deciding, that facts occurring after the decision are not to be taken into account except to the extent that they were reasonably foreseeable.[20] The judgment in Re Gem Exploration confines the admissibility of subsequent facts to those which are relevant. The assumption of the Court of Appeal is that facts occurring after the decision under appeal are not to be taken into account except to the extent that they were reasonably foreseeable. The test of reasonable foreseeability, in my opinion, expresses a basis upon which such facts might berelevant. In my opinion the correct position is that facts occurring after the decision under review are excluded, as they will generally be irrelevant to a decision on whether the act or decision of the Registrar was correct or not, but there may be cases where facts occurring after the act or decision under review can properly be seen by a court as relevant to its determination of the issue before it. The fact that they were reasonably foreseeable at the time the act was done or the decision made may be a strong indication of relevance. However, nothing in the authorities supports a proposition that the filing of an appeal against an act or decision of the Registrar is a gateway to an enquiry into everything that has followed, nor can that be inferred from s 370 of the Companies Act. The position is quite the opposite. The ambit of discovery is confined to the scope of the appeal.Outcome[21] Discovery of documents by the Registrar of Companies is limited to the nine categories of documents set out in paragraph [2] above. Discovery is limited, within those categories, to documents relevant to acts or decisions of the Registrar prior to 24 March 2011, being the date Mr Norris filed his notice of appeal.Procedural directions[22] I make the following further orders in relation to future conduct of this appeal, also by consent:(a) Within 25 working days of receiving the Registrar's discovery,Mr Norris will swear and file an affidavit in which he gives evidence on all the factual issues he wishes to raise on the appeal, with relevant documents cross-referred to either by way of annexure to the affidavit or by way of cross-reference to a separate book of documents.(b) At the same time Mr Norris will file and serve an amended statement of points on appeal which will take the form of a list of all the points Mr Norris will argue on the appeal. This document will, to the extent necessary, cross-refer to facts and/or documents which are relevant to each of the points to be argued.(c) Within 20 working days after receipt of these documents from Mr Norris the Registrar will file and serve one or more affidavits inreply to Mr Norris's affidavit.(d) Within 10 working days of the receipt of the Registrar's affidavit inresponse, Mr Norris may file and serve an affidavit in reply.[23] Mr Norris is asked to carefully note the distinction between evidence to be given in the affidavit, and points to be raised on the appeal which are not themselves facts, but may of course be derived from facts referred to in the affidavit.[24] At the hearing before me Mr Norris indicated that he would wish to call at least six persons who have been involved in the investigation into his actions, for cross-examination. The intention of the above directions in relation to presenting factual matters to the Court is to isolate exactly what facts are to be put in issue, and to have all relevant facts before the Court. At this point it is not appropriate to make any orders, or further comments, in relation to cross-examination, beyond the directions which follow.[25] Upon the filing of Mr Norris's affidavit in reply, the case will be set down forhearing. The Registrar is asked to allocate two days, on a preliminary basis.[26] The Registrar and Mr Norris will consider whether either wishes to cross- examine any persons who have sworn affidavits. This will be an issue for the trial Judge to determine. Once a fixture has been allocated, the Registrar is asked to arrange a pre-trial conference with the trial Judge if either the Registrar or Mr Norris has given notice of a wish to cross-examine. The trial Judge's decision on that issuewill impact on the likely duration of the hearing of the appeal which, consequently, will be reviewed.[27] The costs of this application are reserved._______________________J G MatthewsAssociate Judge____________________________________________________________________Solicitors:Mr P D Norris, PO Box 1575, Nelson. pd.norris@xtra.co.nzMeredith Connell, PO Box 2213, Auckland 1140. nick.malarao@meredithconnell.co.nz