WORLDWIDE NZAND ANOR V QPAM LTD AND ORS HC AK CIV.2006-404-1827

WORLDWIDE NZAND ANOR V QPAM LTD AND ORS HC AK CIV.2006-404-1827 30 May 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV.2006-404-1827UNDER the Companies Act 1993 IN THE MATTER OF an application under Section 191 of the Companies Act 1993 BETWEEN WORLDWIDE NZ LTD LLC First Plaintiff AND JOHN JAMES GOSNEY Second Plaintiff AND QPAM LTD First Defendant AND JACOBSEN VENUE MANAGEMENT NEW ZEALAND LTD Second Defendant AND JACOBSEN F.T. PTY LTD Third Defendant AND JACOBSEN VENUE MANAGEMENT PTY LTD Fourth Defendant Hearing: 15 and 18 May 2006 Counsel: Michael J Fisher and Stephen Corlett for plaintiffs Peter Woodhouse QC and Adina Thorn for 1st Defendant Chris P Browne and Julia Carlyon for 2nd Defendant No appearance 3rd and 4th Defendants Judgment: 30 May 2006 at 3:00pmRESERVED JUDGMENT OF WILLIAMS J [Re: Application for interim injunction]This judgment was delivered by Hon. Justice Williams on30 May 2006 at 3:00pmpursuant to R 540(4) of the High Court RulesA. No case has been made out by the plaintiffs for any of the injunctive orders that they seek and their applications in that regard are accordingly dismissed. B. Memoranda as to costs are to be filed in the terms appearing in para [133]. C. Any order restricting availability of the judgment arising out of the hearings on 15 and 18 May 2006 to the parties only is extended for 14 days from delivery of this judgment and is then to expire unless extended by further Court order made on application. ____________________________________________________________________ I N D E X Paragraph Issues [1] Facts: (1) QPAM Constitution and QPAM Trust [10] (2) Narrative: [17] (a) To 26 April 2006 [17] (b) 26 April 2006 [43] (c) After 26 April 2006 [45] (d) Auckland City Council [50] Submissions [56] Discussion: (1) QPAM Constitution and Trust Deed [80] (2) Estoppel [118] Result [132]Issues[1] The Vector arena is under construction in Quay Park in Downtown Auckland. [2] It is a very expensive project. The Auckland City Council alone has contributed over $80m to it. [3] But the project has run into difficulties. Completion is now several months overdue although Practical Completion is currently in progress. There have been disputes involving the construction and the contractor, Mainzeal. [4] The arena is owned by Quay Park Arena Management Ltd ("QPAM"), the first defendant. At least up until 18 January 2006 the plaintiff, Worldwide NZ Ltd LLC, held 25% of the shares in QPAM. These are the "B" class shares. The remaining 75% of the shares in QPAM, the "A" class shares, are held by the third defendant, Jacobsen F.T. Pty Ltd. Each class of shares in QPAM are stapled to units in the Quay Park Arena Management Trust. Worldwide NZ holds the 50 "B" units in the Trust while Jacobsen F.T. holds 12 of the "A" units and the second defendant, Jacobsen Venue Management New Zealand Ltd, owns the remaining 33 "A" units. [5] Worldwide Entertainment Inc and the Entertainment Group Fund Inc were placed in receivership on 18 January 2006 by the United States District Court for the Southern District of Florida. A Mr Goldberg was appointed receiver. Worldwide Entertainment is the sole member/shareholder of Worldwide NZ. [6] Until 3 April 2006 a Mr Utsick was Worldwide NZ's director of QPAM. Mr Goldberg removed him from office on that day and appointed the second plaintiff, Mr Gosney, in his stead. [7] In the circumstances later discussed, a dispute arose between Worldwide Entertainment, Worldwide NZ and Mr Gosney on one side and QPAM and the Jacobsen interests on the other. That lead Worldwide NZ to seek an interiminjunction. Interim orders were granted by Baragwanath J on 11 May 2006 in the following terms : "[24] There will be an order of interim injunction: [a] That the board of the first defendant will not meet to transact any business before Wednesday, 17 May 2006; [b] The business of the unit trust and of the first defendant to be conducted as though the first plaintiff were still the holder of the "B" units; [c] The defendants undertake and I order that they will not enter into any transactions or pass any resolutions concerning the matters requiring unanimous approval (referred to in Schedule 3 of the Unit Trust Deed page 45)." [8] However, on 16 May 2006 a Minute was issued concerning those orders. It said :The application for an interim injunction came on for hearing on Monday, 15 May 2006. When, at the completion of the hearing (at about 6:30pm), counsel and those present were advised the decision on the interim injunction application would be reserved, Mr Fisher, leading counsel for the plaintiffs, sought an extension of Baragwanath J's cited orders until a reasonable period after delivery of the reserved judgment. [3] A decision on the extension application was reserved overnight with Baragwanath J's orders remaining in place in the meantime. [4] Having reflected on the continued appropriateness of Baragwanath J's orders in light of the matters advanced at the interim injunction hearing, it has been decided that no useful purpose will be served by a continuation of those orders and they are accordingly rescinded with effect from the emailing of this Minute.[9] As mentioned in the Minute, the application for an interim injunction was fully heard on 15 May 2006 when the orders sought were : a) That the defendants treat Worldwide NZ as continuing to be the lawful holder of the "B" shares in QPAM and the "B" class units in the QPAM Trust and be restrained from taking any steps to affect that or dispose of Worldwide NZ's legal or beneficial interest in the shares or units.b) That the defendants treat Mr Gosney as the duly appointed "B" director of QPAM and take no steps to remove him. c) That QPAM provides them with the records to which Worldwide NZ and Mr Gosney are entitled under the Companies Act 1993 ss 191 and 216. Certain other orders appeared in the application but were not pursued at the hearing.Facts: (1) QPAM Constitution and QPAM Trust[10] QPAM was incorporated on 9 March 2004. Its constitution divided its shares into "A" and "B" classes with each respectively being "stapled to corresponding class "A" (or "B") Units held by the "A" (or "B") Class Unit Holder". Clause 22.1 requires there to be at least three directors with the "A" shareholders having the right to appoint that number and the "B" shareholder having the right to appoint one director. Clause 13 deals with a transfer of shares and relevantly reads :13.1 Transfer generally: "A" class shares in the Company correspond and are stapled to corresponding class "A" Units held by the "A" Class Unit Holder and the "B" Class shares in the Company correspond to and are stapled to corresponding class "B" Units held by the "B" Class Unit Holder in the Trust and accordingly can only be transferred upon a transfer of corresponding Units by a Unit Holder, unless otherwise agreed to by Special Resolution. 13.2 Delivery of form of transfer: For the purpose of transferring shares, a form of transfer signed by the present holder of the shares or by his or her personal representative must be delivered to: a. the Company; or b. an agent of the company who maintains the Share Register 13.3 Signature by transferee: The form of transfer must be signed by the transferee if registration as holder of the shares imposes a liability to the Company on the transferee. 13.4 Duty upon receipt: On receipt of a form of transfer in accordance with Regulation 13.2, and if applicable Regulation 13.3, the Company shall forthwith enter or cause to be entered the name of the transferee on the Share Register as holder of the shares Para 13.4 gives QPAM certain rights not presently relevant to refuse or delay registration of such a transfer and cl 13.5 sets out the bases on which the board may so act including that the transfer is not accompanied by the share certificate or the board does not approve the transferee. [11] The QPAM Trust Deed of the same date describes the "A" and "B" Unit Holders as those "whose name for the time being is entered into the Register as the Holder" of the particular unit. Cl 9.2 imposes restrictions on transferability of the "B" units in the following terms :9.2.1 Except as expressly permitted by clause 9.3, no "B" Unit Holder is entitled to: (a) sell or Dispose of "B" Units in whole or in part; (b) sell or Dispose of any Relevant Interest in "B" Units; or (c) create or grant any options or similar rights over "B" Units. 9.2.2 A Change in Control is deemed to be Disposal of "B" Units by the "B" Unit Holder upon the occurrence of which the provisions of clause 10 will apply.[12] Importantly, as far as the injunction application is concerned, "Change in Control" is defined in the Deed in the following terms :"Change in Control" in respect of a "B" Unit Holder means: (a) in relation to a corporation: (i) any person who does not Control (as defined in the Companies Act) and gains Control (as defined in the Companies Act) of: (A) a member of that corporation; or (B) a member of the board of directors of that corporation; or (ii) any member of the corporation ceasing to be a subsidiary (as defined in the Companies Act) of the entity which is its ultimate holding company (as defined in the Companies Act).[13] Clause 9.3 permits "B" Unit Holders to sell or dispose of their units to affiliates but includes the following provision :9.3.2 (Pre-Emptive Rights) the Disposal is a transfer of "B" Units to "A" Unit Holders in accordance with the Pre-Emptive Rights or to a third party after the "B" Units have been offered to the "A" unit Holders in accordance with the Pre-Emptive Rights and the "A" Unit Holders have declined to purchase the "B" Units to be acquired by the third party on the same terms and conditions.[14] Clause 9.5.2 and 9.6 then provide :9.5.2 If a "B" Unit Holder sells or otherwise Disposes of any or all of its "B" Units to an "A" Unit Holder, then the Trustee must procure the re-classification of those "B" Units as "A" Units. 9.6 No RegistrationThe Trustee must not register a transfer of any Units unless the terms of this clause 9 have been complied with.[15] Clause 10 provides for pre-emptive rights and relevantly reads :10. PRE-EMPTIVE RIGHTS10.1 Transfer noticeAny "B' Unit Holder who wishes to sell all or any part of its "B" Units to an identified willing third party purchaser ("Purchaser") on arms' length terms must give notice in writing ("Transfer Notice") to the Trustee. 10.2 Relevant particularsA Transfer Notice must specify: 10.2.1 the name and address of the Purchaser; 10.2.2 the number of Relevant Units that are the subject of the proposed sale; 10.2.3 the proposed consideration for the sale of the Relevant Units ("Sale Consideration"); 10.2.4 that the Relevant Units will not on completion of the sale be subject to any Encumbrance. 10.3 Acceptance by "A" Unit HolderThe "A" Unit Holder has a right to acquire all or a part of the Relevant Units from the "B" Unit Holder by giving written notice of its willingness to purchase the Relevant Units to the "B" Unit Holder within 10 Business Days after receipt of the Transfer Notice from the Trustee.[16] Clause 12.2 provides that in the event of inconsistencies between QPAM's constitution and the Trust Deed, the latter prevails.(2) Narrative: (a) To 26 April 2006[17] As mentioned, Mr Goldberg was appointed receiver of Worldwide Entertainment, Worldwide NZ and other companies by the US District Court on 18 January 2006. The order gave him, as might be expected, full power to administer the business affairs, funds and property of the companies in receivership and take immediate possession of their assets. Of significance as far as the injunction application is concerned, Mr Fisher, leading counsel for Worldwide NZ, said that for injunction purposes it was accepted that Mr Goldberg's appointment as receiver was a "change in control" in relation to Worldwide NZ's "B" Units in the QPAM Trust. [18] The US District Court made a further receivership order on 20 April 2006 including expanding Mr Goldberg's role but it was not argued there was any significance in that further order as far as the injunction application is concerned. [19] Upon taking office, Mr Goldberg gave attention to Worldwide NZ's holding in QPAM and the Unit Trust and quickly recognised the importance of forming a working relationship with the Jacobsen family who own 75% of the QPAM shares and Unit Trust and held three of the four positions on the QPAM board, Mr Utsick being the fourth. [20] About 13 March 2006 Mr Goldberg and his counsel, a Mr Berlin, travelled to New Zealand. They had a meeting in Auckland but there is a dispute as to who was present or, more precisely, whom they represented.[21] Mr Goldberg said they came to meet "representatives of QPAM including the Jacobsen family" but, instead of meeting the Jacobsen family members, "we were directed to meet with QPAM's solicitors", a Messrs Bamptom and Kersey of the Sydney firm Henry Davis York and Mr Germann, an Auckland solicitor. In a later affidavit he said that he met "QPAM's solicitor and with solicitors for the Jacobsen family interests". [22] Mr Germann said that his firm and Henry Davis York act for QPAM in Auckland and Sydney respectively. His firm has never acted for the Jacobsen family. Mr Germann said the only party represented at the meeting was QPAM and "nothing was said at the meeting which could have justified Mr Goldberg in thinking that representatives of Jacobsen companies were present". Messrs Bampton and Kersey were present as they were the authors of all the QPAM documents including the Development Agreement with Auckland City Council. He agrees with Mr Goldberg's description of the attendees but says Mr MacTaggart, QPAM's Chief Executive, participated for part of the meeting by telephone from London. [23] Mr Jacobsen, Executive Chairman of QPAM and a director of Jacobsen Venue Management, also said no representative of his family companies met Mr Goldberg in New Zealand and none of those who attended the 13 March meeting represented those companies or was authorised to act on their behalf. [24] The meeting was preceded by some stiff formal emails from the parties querying why QPAM first learned of the receivership only on 7 March 2006, requiring advance notice as to the parties' status and including a statement by Mr Berlin to Mr Germann that "any effort by you to withhold information unless paid by the Receiver would be viewed by the Receiver as a direct violation of the Receivership Order. Please govern yourself accordingly." [25] As a result of the 13 March meeting and a further meeting Messrs Goldberg and Berlin had in Sydney where they attempted to meet members of the Jacobsen family, Mr Goldberg said he reached the view that Worldwide NZ's interests would be best served by the appointment of an independent New Zealand director. However, before anything formal could occur in that regard, he learned fromMr MacTaggart that a QPAM board meeting was called for 5 April 2006. As a result, on 31 March 2006, Mr Goldberg wrote to Mr MacTaggart asking to be provided with what would appear to have been a substantial quantity of information concerning QPAM's financial position, including data relating to the dispute with Mainzeal, "communications from the Auckland City Council that reflect negatively" towards QPAM and other material. He said that if the information could not be provided in time for him to review it and communicate the same to his proposed director before 5 April "the proposed board meeting will obviously have to be adjourned until such time as the information can be provided sufficiently in advance of the adjourned meeting to enable the director to attend on a properly informed basis". [26] Mr MacTaggart replied the following day saying QPAM still regarded Mr Utsick as Worldwide NZ's director and advising that New Zealand law required directors' resignations in writing to be effective. He said Worldwide NZ was "merely a 25% shareholder in QPAM", its receivership had no legal status in this country and the meeting would occur because "life goes on". Mr Germann wrote similarly on 4 April saying that Mr Goldberg's written notification of 3 April removing Mr Utsick was ineffectual in New Zealand law since Mr Goldberg's appointment as receiver was not recognised here, his order of appointment did not specifically include Worldwide NZ, Mr Utsick had to file a written notice of resignation and Mr Gosney had to sign a consent to act, following which a directors' resolution was required. Though Mr Utsick and, " by courtesy of the chairman of QPAM", Mr Goldberg could participate in the 5 April meeting, Mr Gosney was not entitled to attend. [27] On 3 April 2006, Mr Goldberg appointed Mr Gosney in Mr Utsick's place. He said QPAM consented to the appointment and notified the Companies Office as required. Mr MacTaggart, however, in an affidavit sworn on 5 April 2006, said that QPAM had received no written resignation from Mr Utsick (or his alternate) nor had it received notice removing him. [28] Because Messrs Goldberg and Gosney regarded QPAM's provision of the requested information as necessary to enable Mr Gosney to function as a fully-informed QPAM director – and, in particular, to assess its solvency – on 4 April 2006 Mr Gosney gave notice to QPAM asking for immediate access to the information including the company's audited accounts for the year ended 31 March 2005, monthly management accounts since that date, budgets, cash flow forecasts and minutes. An injunction was forecast in default of immediate compliance. [29] The upshot was that Worldwide NZ commenced these proceedings on 4 April 2006 and sought, ex parte, interim orders permitting Mr Gosney to inspect the QPAM records and restraining the company from holding a board meeting until three days after compliance. [30] The ex parte application came before Frater J some time after 5:00pm on 4 April with Mr Woodhouse QC and Mr Germann attending on a Pickwick basis for QPAM. Following discussions, the application was adjourned overnight for Mr Germann to obtain instructions as to whether the requested information could be provided to Mr Gosney urgently and the meeting scheduled for 10:00am the following day postponed until later on 5 April or until 6 April. [31] On 5 April, counsel advised that because Schedule 2 cl 5 of QPAM's constitution required attendance of at least one "A" and one "B" director at any board meeting with automatic adjournment for at least two days in default, the 5 April 2006 meeting could not proceed. The Judge noted Mr Germann's undertaking on QPAM's behalf to provide audited accounts of QPAM to 31 March 2006 (admittedly a clerical error for 2005), and management accounts for November and December 2005 if Mr Gosney signed a confidentiality undertaking. Mr Hines, a QPAM employee, was also to make an informal presentation to Mr Gosney to advise him of QPAM's financial position. The application for interim orders was adjournedsine die on that basis. [32] Immediately after the meeting Mr Gosney went to QPAM's office and was handed a confidentiality undertaking. He sought legal advice and discussed the matter with Mr Goldberg. As a result, they both signed undertakings about 2:00pm on 5 April and faxed them to QPAM.[33] About 2:45pm Mr Germann faxed a response acknowledging receipt of the confidentiality undertakings and confirming the information recorded by Frater J would be made available at Mr Germann's offices but Mr Gosney "will not be able to copy anything". He was advised the QPAM board would meet on 7 April. [34] Mr Gosney went to Mr Germann's offices about 3:20pm on 5 April. He was shown some documents though the audited accounts for the year ended 31 March 2005 were absent. Mr Germann told Mr Gosney they were with the auditors and the QPAM board had not approved them. Mr Germann also objected to Mr Gosney handwriting notes concerning the documents. He was able to derive certain financial information from what he saw but, without comparative figures, they were of no great assistance in understanding QPAM's position. [35] Messrs Gosney and Goldberg discussed this position over night on 5-6 April. Mr Goldberg was concerned at what had occurred and wished to modify his undertaking to allow him to use any information disclosed by QPAM in relation to his receivership provided he gave QPAM 14 days' prior notice. Mr Gosney complained on 6 April 2006 at the paucity of information received, the bar on copying or note-taking, and notifying the proposed amendments to the undertaking. A few minutes later he was emailed by Mr MacTaggart saying he would address the request as soon as he could but had been dealing with a "significant and complex matter re the arena" which he expected to be "in pride of place on 1 News tonight, unfortunately". [36] By late on 6 April, Mr Gosney had decided not to attend the board meeting the following day because of lack of information as to QPAM's financial state and future prospects. [37] About 5:30pm that evening, Mr Gosney was told that QPAM would make Messrs McTaggart and Hines available at 8:00am the following day to discuss QPAM's financial position, if he agreed to attend the board meeting at 10:45am. He declined because he felt he would have had insufficient time to absorb any information given. He expressed a wish to meet when convenient but gave formal notice of his wish to inspect company records.[38] Having heard, they say, nothing further, on 13 April 2006 Mr Gosney served QPAM with formal notices under the Companies Act 1993 ss 191 and 216 to inspect the QPAM records. The records required to be kept by QPAM under s 189 were specifically included. [39] At about 7:35pm on 13 April – the day before Good Friday – Mr Germann responded, advising of Mr MacTaggart's absence overseas, the fact that QPAM had not opened the letters Mr Gosney had delivered earlier that day and continuing :4. You seem a nice person to me and I assure you that QPAM and its directors have no problem with you having been appointed as a director to represent the "B" shareholder. Indeed, it is fair to say that the directors welcome your appointment instead of having an aloof director in Florida. 5. I am advised that there is no intention on the part of QPAM to breach any Court order or direction. 6. You knew that a Directors' meeting took place on 7 April and yet all of this week you have not enquired what happened. 7. The current business matters are urgent, worrying and threaten QPAM's major asset and your helpful guidance would have been appreciated. Yet you still demand historical financial information which is out-of-date. You signed the Consent to Act as a Director unconditionally. However, the problem as you are well aware is that last week the Directors of QPAM learnt for the first time that Michael Goldberg has a website, he publishes his reports on it and, to make matters worse, Michael Fisher told me on 7 April that Mr Goldberg must report everything to the Court of Receivers in the US, and that all information is public; that is, there is no such thing as confidential information. Further, last week you withdrew your "clean" confidentiality undertaking and clearly stated through Michael Fisher that whatever QPAM gave you, told you or whatever you learned must be reported by you to MR Goldberg who then had the authority and unassailable onus to tell "the world", so any co- called confidential information would not be confidential at all. If you can provide an unequivocal undertaking that all information which may be provided to you by QPAM and which is not in the public domain will remain confidential to you alone and that you will not divulge its contents to Mr Goldberg or Mr Berlin or any other 3 rd party without the written consent of QPAM then I am sure that you will be able to contribute and provide your expertise and guidance without delay as a director of QPAM Limited. If you cannot then we all have a problem.Mr Gosney advised Mr Germann on 20 April of his wish to inspect the requisitioned records on 21 April and forwarded amended forms of the confidentiality undertaking obliging them to give QPAM 14 days' notice before disclosing any information. That was declined by Mr Germann about 5:15pm that day on the basis that Messrs McTaggart and Hines were unavailable and the form of the undertaking was unacceptable. [40] Mr Gosney repeated his inspection request on 21 April and went to QPAM's offices about 3:00pm that day for that purpose. He was referred to Mr Germann's office. He went there to be told that QPAM records would not be disclosed until the confidentiality undertaking question had been resolved. Mr Gosney demurred on the basis that all he wished to inspect were the records QPAM was obliged to disclose to Worldwide NZ as a shareholder. He said he would carry out the inspection on 24 April and offered amendments to the undertakings to meet QPAM's objection. The amendment proposed to Mr Goldberg's undertaking included his not publishing on any website any information about QPAM not already in the public domain without QPAM's prior consent. [41] On Monday, 24 April at about 2:24pm Mr Gosney emailed Mr Germann advising of his instructions from Mr Goldberg only to inspect QPAM's actual records as required by s 216. The email said Messrs Goldberg and Gosney regarded QPAM as being in default of the s 191 request as the undertakings offered were reasonable. About an hour later Mr Gosney returned an unopened courier package of documents Mr Germann sent him. [42] Later on 24 April, namely at about 4:15pm, Mr Gosney went to QPAM's office and was given the opportunity of inspecting what were said to be the company's records. They comprised of a number of shareholder and unit holder resolutions. He complained by email to Mr Germann about 5:20pm that evening, listing what he regarded as the documents to which he was statutorily entitled.(b) 26 April 2006[43] On 26 April 2006 Wilson Harle, the solicitors acting for Jacobsen Venue Management, emailed Worldwide NZ c/o Mr Goldberg. After recounting some of the factual background, the letter said the "appointment of a receiver amounts to a Change of [sic.] Control giving rise to our client's right of pre-emption and accordingly Worldwide no longer has any rights under the Deed" and continued :7. Since your appointment as Receiver, you control Worldwide. Therefore, the appointment of a receiver for Worldwide amounts to a change of control, which gives rise to our client's pre-emptive rights under clause 10 of the Deed. Because our client has pre-emptive rights to Worldwide's units in the event of a Disposal, you cannot have any rights to the units in the Trust unless our client has chosen not to exercise its pre-emptive rights and has consented to you having control of the units (see clause 10.4). 8. Clause 10 of the Deed sets out the process that the "B" unit holder (Worldwide) must follow in the event of a Disposal - Worldwide must give notice of transfer to the Trustee QPAM;, and the "A" unit holder (Jacobsen) has the right to acquire all or part of the units from the "B" unit holder. 9. The receivership amounts to a change of control in which the "B" units have been transferred at no cost to the Receiver. That transfer was not done in accordance with the Deed and so is not valid. 10. The change in control gives rise to Jacobsen's pre-emptive rights to the units, which it hereby exercises. Under clause 10.4.2 of the Deed, the terms of the transfer to a third party may not be any more favourable to the third party than those offered to Jacobsen. In this case, the purported transfer of units was a transfer at no cost. Accordingly, the terms of the transfer to Jacobsen must be on the same terms as those offered to the Receiver, i.e., Jacobsen is entitled to acquire the units at no cost. Although Jacobsen may be entitled to the units at no cost, it is prepared to pay Worldwide fair value for the units to avoid an argument over the issue. 11. Jacobsen hereby puts you on notice that it accepts Worldwide's "B" units in the Trust as of 18 January 2006, being the date of the receivership. Worldwide no longer has any rights in respect of the Trust or QPAM. It had no right to appoint Mr Gosney as a director and therefore his appointment is not valid and will not be recognised. The only issue remaining to be resolved is whether Jacobsen pays for the units and if so, how much it pays. Please let us know as soon as possible what Worldwide considers to be fair value for the units. If we do not hear from you, Jacobsen will arrange for a valuation of the units to be carried out.[44] Mr Goldberg claims that letter was a "complete about turn by QPAM and the Jacobsen family interests" since neither had previously raised the "Change of [sic.] Control" issue but had "conducted themselves in their dealings with me on the basis that Worldwide NZ continued to be a "B" shareholder in QPAM and a "B" Class Unit Holder in the Unit Trust and that it continued to enjoy all the rights attaching". He said as a consequence he had conducted the affairs of Worldwide NZ on the assumption and in the belief there would be no assertion that his appointment as Receiver constituted a deemed Change of Control.(c) After 26 April 2006[45] Mr Germann said that on 5 May 2006 he received formal notice from Wilson Harle on behalf of Jacobsen Venue Management asking that QPAM give notice to Worldwide NZ that all the "B" units would be transferred to the Jacobsen interests as at 18 January 2006 and to reclassify those units as "A" units. The letter also notified him that QPAM had transferred Worldwide NZ's shares to the Jacobsen interests as Worldwide's agent and that Mr Gosney's appointment as director was invalid as the "A" shareholders could appoint three directors. [46] Mr Germann advised QPAM to act in accordance with Wilson Harle's letter, removing "Mr Gosney's name from the register as a director and transferring the shareholding of Worldwide NZ to JVM NZ" though the company search for QPAM dated 8 May 2006 he put in evidence, whilst showing the three Jacobsens as the only directors, still showed Worldwide NZ as holding 25 shares. [47] On 3 May, Mr Gosney received an email from Mr McTaggart with an attachment he was unable to open and on the evening of 5 May received a letter from Mr McTaggart in the following terms :Dear John As you are no doubt aware, Jacobsen Venue Management Pty Limited has exercised its pre-emptive rights in relation to the "B" shares formerly held by Worldwide NZ LLC in QPAM Limited with effect from 18/1/06. As a result, I am advised that your appointment as a Director of QPAM Limited is invalid. In order to regularise our records and the CompaniesOffice file, I request that you sign the attached resignation letter and return it to me no later than 12 noon on Friday, 5 May 2006.[48] Worldwide NZ's claim reverted to Court on 11 May 2006. After reviewing the history of the matter, Baragwanath J made the orders earlier recounted and also recorded that difficulties over the form of the undertaking had been resolved (though without prejudice to Worldwide NZ's right to argue for a more limited form of undertaking authorising Mr Gosney to disclose information to Mr Goldberg on the latter's appropriate undertaking) and directing QPAM to provide Mr Gosney with the "most complete" accounts to 31 March 2005 plus management accounts to November or December 2005 and the latest management accounts which had gone to the directors. The Judge also directed an informal presentation of information to take place the following day and the fact that the "defendants will not dispose of the "B" units in the Trust until further order of the Court". [49] Certain consequential orders relating to the submission of information to experts were made the following day.(d) Auckland City Council[50] The position of Auckland City requires consideration. [51] As mentioned, it has contributed a very considerable amount of money to the construction of the arena pursuant to a comprehensive Development Agreement signed on 21 May 2004. It is unnecessary to consider the agreement in any detail save to note that, pursuant to cl 29.1 (a) any change in QPAM's shareholding which alters its effective control "or any entity which owns directly or indirectly any holding in the company" or any "change altering the effective control of an entity which owns directly or indirectly any Units" is deemed to be both an assignment and, pursuant to cl 33.1 (h), a default. [52] Following notice from Council, amongst other rights, under cl 33.4 unremedied defaults give the City the option to terminate the agreement or "step into possession and control" of the Agreement and expel QPAM from the land.[53] On 10 March 2006 Auckland City's solicitors wrote to QPAM saying Mr Goldberg's appointment as receiver of Worldwide NZ triggered cl 29.1 but advising that council would refrain from exercising its rights at that stage. It put QPAM on notice that it "must not take any steps to prejudice any of Council's rights under the Development Agreement which may have arisen due to Worldwide NZ's insolvency" and requiring Mr Goldberg to be put on notice in that respect. [54] On 11 May 2006 Council's solicitors wrote to the defendants saying it would be premature for Council to give its "retrospective consent to the deemed assignment in January and also approval of Jacobsen's exercise of its pre-emptive rights" in view of this litigation. Council sought written assurances as to their funding contributions to QPAM by its shareholders both in terms of initial equity and debt contribution. The Jacobsen interests have provided such an undertaking. There is nothing in evidence from Mr Goldberg specifically addressing that point. [55] Alongside that again, Mr MacTaggart gave evidence that negotiations with Mainzeal and others involved in the arena are at a critical stage with possibly a significant impact on the project. All in all there is force in Mr Jacobsen's statement that if Auckland City were to exercise its right to take over the arena, QPAM will lose its only asset and be worthless and its 40-year management agreement with Council will be at an end.Submissions[56] Mr Fisher submitted that given the plaintiffs' concession for the purpose of the injunction application that there has been a "Change in Control" under the Unit Trust Deed, the serious questions to be tried were whether the "A" unit holders were estopped from exercising their pre-emptive rights and, if not, whether pending completion of the pre-emptive rights process and any transfer of the units and shares, Worldwide NZ continued to be their legal and beneficial owner enjoying the rights attached to them including the right to appoint a "B" director. [57] He submitted an estoppel by the defendants arose through representations at the 13 March 2006 meeting including on behalf of the Jacobsen family. He relied onMr Goldberg's removal of Mr Utsick and his appointment of Mr Gosney on 3 April 2006, QPAM's acknowledgment of Worldwide NZ's status as a "B" class shareholder and unit holder, and Mr Gosney's appointment as director in papers filed on QPAM's behalf in this Court on 5 April, the s 191 and 216 notices of 13 April 2006 and the purported compliance by QPAM on 24 April. [58] He asserted all defendants were involved in those representations and because the Jacobsen family was aware of the significance of Mr Goldberg's appointment as a receiver and in light of Auckland City's letter of 10 March 2006, they could have asserted the Change of Control and the triggering of the pre-emptive rights at that point but chose not to do so. [59] He submitted Worldwide NZ relied on the representations to its detriment, by incurring the costs of retaining Mr Gosney as a director and bringing these proceedings, and that it would accordingly be unconscionable to permit the Jacobsen entities to assert that the pre-emptive rights had been exercised on 26 April. [60] Clause 10 of the Unit Trust Deed, he suggested, required the parties to follow the pre-emptive rights procedure and until that was completed Worldwide NZ continued to be the legal and beneficial owner of the "B" units with the rights attached to them including the director's appointment. He submitted that the deemed disposal in cl 9.2.2 meant no more than an indication by Worldwide NZ of an intention to sell. The Deed did not provide for the manner of sale in circumstances such as this and it was not clear at the beginning of the procedure that the transaction would be concluded because the "A" unit holder might not accept the proposed consideration or be able to complete the transaction. The Unit "B" holder was obliged to offer the shares for sale at fair market value with the "A" unit shareholder entitled to dispute the price and the parties left to litigate any disagreement. When cl 10.2.4 spoke of "completion of the sale" that must be taken to mean payment and delivery of the transfer notice. He relied on a number of old cases but, most particularly, on the decision of the Court of Appeal in Bevin v Smith [1994] 3 NZLR 648.[61] He supported those submissions with detailed reference to the evidence including submissions that QPAM was in breach of its undertaking to this Court as recorded by Frater J and its statutory obligations pursuant to ss191 and 216. He was also critical of QPAM and its advisers for their approach to the confidentiality undertaking wording. [62] Mr Browne, for the Jacobsen interests, carried the principal part of the argument on the defendant's behalf. He stressed the conventional principles applying to interim injunctions but also noted that where the consequences of an injunction are likely to have final effect, the balance of convenience is a more important consideration (M W L Ltd v Woods [1979] 3 All ER 614). He noted the court's reluctance to grant injunctions which might affect third parties (Dunedin Taxis (1965) Ltd v Dunedin Airport Ltd (1990) 3 PRNZ 391). [63] Mr Browne submitted there could be no seriously arguable question that a Change of Control had not occurred and accordingly that the Jacobsen entities were entitled to, and had, validly exercised their rights of pre-emption. What occurred on Mr Goldberg's appointment was, he submitted, not merely a deemed disposal but an actual disposal of the Worldwide NZ shares, they having passed to the receiver by operation of law. It was incontestable, he submitted, that "control" had not passed as that term is defined by the Companies Act 1993 s 7. Clause 10 of the Trust Deed, he submitted, did not apply until the disposal had already occurred so the suggestion it required a giving of notice of intended sale of the "B" units was incorrect. It was unclear, he suggested, whether a transfer notice was required but, even if it were, Worldwide NZ failed to give such, though it could still issue a notice specifying the consideration it sought, that consideration being fixed by the transfer notice mechanism and the willingness of the "A" unit holder or, in default, a third party, to pay that price. [64] He accepted that there was at least an implied obligation on the part of his clients to pay a fair value for the units but that, he submitted, did not justify the legal position for which Mr Fisher argued.[65] The QPAM Deed could not, he submitted, mean that when a disposal had already occurred the former controller of the "B" Units could continue their control and affect the affairs of QPAM until such time as it chose to give a price notice. Such, he suggested, was commercially unrealistic and would mean the pre-emptive rights could be easily avoided. [66] The delay in giving the 26 April notice was, he submitted, largely because none of the defendants were aware of Worldwide NZ's receivership until early March. Action after that date had been reasonably rapid. [67] Because notice under cl 10.3 had been given, the "B" units had been reclassified as "A" units and there were no longer any "B" units for the "B" shares or their rights to attach to. [68] Turning to estoppel, he submitted that none of the representations on which Worldwide NZ relied were made by or on behalf of the Jacobsen interests. None were precise and unambiguous (Lind v Ward McCullough Solicitors Nominees Ltd(1999) 8 NZCLC 261,922) and accordingly it was not unconscionable for the Jacobsen interests to assert their rights. [69] He submitted the only persons with rights were the holders of the "A" units, the Jacobsen interests. QPAM's role was limited to giving notices and acting as required by the Trust Deed. Even if it represented to Worldwide NZ that the receivership had not constituted a change of control – not shown in the evidence, he suggested – Jacobsen Venue Management's rights were not affected. Yet, despite that, the plaintiffs were seeking orders which would affect the second defendant's rights. There was no representation by word or conduct by Jacobsen Venue Management that it would not assert its rights and accordingly no estoppel could arise against it. All the conduct relied on was earlier than the 26 April notice and none of the pleaded representations arose from the pleaded conduct. Travel to New Zealand was to represent Worldwide NZ's rights in endeavouring to establish a working relationship with the Jacobsen interests. All matters relating to this litigation were in furtherance of Worldwide NZ's rights as were the ss 191 and 216 notices.[70] The facts of this matter did not support the implication of terms into the Unit Trust Deed as none were necessary to give business efficacy, and none were so obvious they went without saying (B P Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363, Devonport Borough Council v Robbins [1979] 1 NZLR 1). The terms the plaintiff sought to imply to that effect would, Mr Browne submitted, undermine the express provisions of the Deed. [71] There was no necessity to delay the transfer of the units to the "A" holder since an immediate transfer achieves the underlying intent of cll 9 and 10 and a "B" holder becomes an unpaid transferor protected by the fact that under the Development Agreement and its undertaking to the Court, Jacobsen Venue Management is unable to dispose of the units without the consent of Auckland City or this Court. [72] As to the balance of convenience, he submitted, the question was whether Worldwide NZ should be able to exercise the rights of a unit holder and influence the affairs of QPAM when it will not ultimately hold the rights. Damages, he submitted, were the only appropriate remedy. [73] On the "clean hands" principle he was also critical of the actions of the plaintiffs and their advisers, particularly by failing to respond to the 26 April invitation to treat concerning consideration for the "B" units. [74] Mr Woodhouse stressed that for the plaintiffs to be granted the interim relief they seek would be condoning their own breach of the Unit Trust Deed because Worldwide NZ had disposed of the "B" units without compliance with the Deed yet, despite that, they sought to overlook their breach and obtain orders entitling them to control the "B" units contrary to the Deed or the intention of the Deed. The interim relief, he submitted, was inconsistent with the only ultimate relief to which Worldwide NZ was entitled, namely receipt of payment for the units. [75] He submitted that QPAM's position would be prejudiced by the making of the orders. He pointed to difficulties in company governance over the past two months or so, the difficulties for the company management in dealing with creditors and Auckland City, QPAM's duties as trustee and the vital necessity for maintenanceof the Parent Guarantee under the Development Agreement, something on which Auckland City was insistent. [76] He, too, said the representations on which the plaintiffs relied were all those of QPAM and were not made in reference to the Trust Deed. [77] The risk to QPAM of making the orders sought was a matter to be taken seriously into account in considering the balance of convenience. There was a real risk it would lose the arena and its current management rights, the right to future funding and the long-term management rights of the arena should the plaintiffs succeed. He submitted that it would add nothing to the governance of the company for Mr Gosney to be a director given his lack of experience in the history of the company and when the project was into Practical Completion. [78] He submitted Worldwide NZ's undertaking is essentially valueless since it was backed by insufficient funds and commitment from Mr Goldberg to be commercially realistic. He pointed to the fact that Mr Gosney, though a plaintiff, has yet to provide any undertaking as to damages. [79] Mr Woodhouse was critical of the plaintiffs for lack of any constructive commercial communication to resolve this issue coupled with the badgering of QPAM for full compliance with their demands and what Mr Woodhouse submitted was an over-ready resort to litigation.Discussion: (1) QPAM Constitution and Trust Deed[80] There are two pivotal aspects of this matter: the construction of QPAM's constitution and the Unit Trust Deed against Jacobsen Venue Management's actions on 26 April and thereafter and, secondly, whether an estoppel arises. [81] Dealing first with the construction point, Worldwide NZ's receivership on 18 January 2006 was admitted to be a Change in Control pursuant to cl 9.2.2 of the Unit Trust Deed. That concession was rightfully made. The placing of Worldwide NZ into receivership on that day meant that a person who did not formerly controlWorldwide NZ, Mr Goldberg, gained control of the company. That amounted to a Change in Control both generally and by analogy with the subsidiary company definition in the Companies Act 1993 s 7. [82] Worldwide NZ was accordingly deemed to have disposed of its "B" units in the QPAM Trust Deed by that Change in Control. Accordingly the pre-emptive provisions of cl 10 applied to that occurrence. The deemed disposal effected by c. 9.2.2 and the Change in Control said nothing about the mechanical means by which that disposal was to be effected nor as to fixing the price. [83] In terms of cll 10.1 and 10.2, there was no obligation on Worldwide NZ to provide a transfer notice to QPAM since it was not proposing to dispose of its units to a third party purchaser. [84] However, Jacobsen Venue Management, as the "A" unit holder, had the right pursuant to cl 10.3 to acquire all or part of Worldwide NZ's "B" units by giving written notice of its willingness in that regard. Though the clause required acceptance within 10 business days after receipt of a transfer notice, not from Worldwide NZ but from QPAM, as Baragwanath J observed in his Minute of 11 May 2006 (at para [9]), the construction of the clause must be read mutatis mutandis and given the strong pre-emptive provisions of the Unit Trust Deed protecting the "A" unit holder's position, the giving of notice by Jacobsen Venue Management on 26 April that it had accepted the deemed disposal in its favour of Worldwide NZ's "B" units, coupled with an invitation to treat as to consideration, must, at least for the purposes of an interim injunction, be treated as arguably satisfying the requirements of the Trust Deed in that regard. [85] Jacobsen Venue Management having accepted the deemed disposal of Worldwide NZ's "B" units in its favour, is the argument for the plaintiffs' correct that, at law, Worldwide NZ nonetheless retains the legal and beneficial ownership of those units? [86] Though the findings in many of the authorities about to be discussed are affected by the necessity under the Land Transfer Act 1952 for registration to effecttransfer of legal title to realty or the creation of other interests in land, the principles they enunciate are nonetheless of assistance in deciding the questions in issue in this matter. [87] The facts in Bevin v Smith are far removed from the present but, for present purposes, its relevance results from the Court of Appeal's dealing with an argument that a paper road apparently forming part of the freehold and perpetually renewable leasehold farm was held in trust by the vendor for the purchaser when the contract for sale of the farm was unlawful by virtue of the then provisions of the Land Settlement Promotion and Land Acquisition act 1952. The vendor was held to have bought the paper road to frustrate the buyers. The purchasers applied for validation of the contract under the Illegal Contracts Act 1970 and succeeded. At first instance it was held the vendor did not hold the paper road on constructive trust for the buyers. In the passage on which Mr Fisher relied, the Court of Appeal held (at 659) :Though the reasons recorded by the Judge cannot be supported, it still is necessary to consider whether a legal basis exists for the order sought. The argument for the Smiths was that such basis is to be found either in the obligation of the vendor to hold the property and benefits or gains of a capital nature for the purchasers pending settlement - an institutional constructive trust" or in the imposition of a remedial constructive trust of the kind imposed in this Court in Elders Pastoral Ltd v Bank of New Zealand[1989] 2 NZLR 180. The yet ill-defined nature and scope of this latter doctrine is emphasised by the Privy Council in the recent decision in Re Goldcorp Exchange Ltd (In Receivership): Kensington v Liggett [1994] 3 NZLR 385 (PC) (pp 404-405). The "institutional" constructive trust in favour of a purchaser pending completion of a sale and purchase transaction is well established: Cope,Constructive Trusts (1992) pp 899 and 904, Official Assignee v Johnston[1974] 1 NZLR 79. As stated by Cope it rests on the equitable doctrine of conversion which looks upon that as done which ought to be done. Thus the purchaser under a specifically enforceable contract is treated in equity as the owner of the property and the vendor as constructive trustee. From the time the contract becomes specifically enforceable the purchaser is entitled to all benefits of a capital nature which accrue to the actual subject-matter of the contract whereas the vendor is entitled to retain such benefits which are unconnected with the subject-matter.[88] However, the Court of Appeal then went on to consider at some length a number of authorities here and overseas on the question whether a purchaser under a conditional contract has an equitable interest in the property even if specific performance may not be available. Describing as unsatisfactory the view that such apurchaser had no equitable interest pending fulfilment or waiver of a condition, for the reasons the Court discussed the Court of Appeal concluded (at 665) : as a matter of practicality, parties to a contract which is defeasible upon failure of a condition of the kind complained of here are in essentially the same position as parties to an unconditional contract pending completion. The condition in this contract was expressly identified as a condition subsequent. The equitable interest of a purchaser always is contingent upon payment of the purchase price in due time and performance of any other obligations arising as terms of the settlement. In principle it is difficult to distinguish the position of a purchaser having that conditional equitable interest from that of a purchaser in a contract where the vendor has the further specifically enforceable obligation to take all necessary steps to secure a consent which should be available as a matter of course. The identification by McGechan J of a contingent equitable interest of an unpaid vendor in Whiteleigh Holdings (New Zealand) Ltd v Whiteleigh Pacific Resources Ltd [1987] ANZ Conv R 480, 482 was consistent with this view. For these reasons we consider that an equitable interest in land should, and does, pass under a conditional contract of the kind involved here, even though specific performance of the contract in the strict sense is not available. We agree with the recent Australian authorities to the effect that the equitable estate passes when equity will, by injunction or otherwise, prevent the vendor from dealing with the property inconsistently with the contract of sale, ie inconsistently with the purchaser's contingent ownership rights. It will be sufficient if the Court will order specific performance of the contract subject to the contingency. We stress that whether the equitable interest has passed must always depend on the terms of the contract itself. There will be some conditional contracts, particularly those subject to true conditions precedent, where the parties cannot be regarded as intending that equitable title will pass to the purchaser until the condition is waived or fulfilled. In the end it must be remembered that by saying the equitable title has passed, equity is doing no more than recognising that the purchaser must have acquired rights which should be protected in an appropriate manner. The sui generis nature of the trust arising under a contract for the sale and purchase of land has long been recognised (see eg Wall v Bright (1820) 1 Jac & W 494, 499). In the end equity must act according to the nature of the contract and the practical situation of the parties.[89] Bevin v Smith is mainly concerned with defining the vendor's position when the contract is conditional or unenforceable. Though still relating to realty, a perhaps more pertinent authority – though not one mentioned in Bevin v Smith or by counsel – is Firth Concrete Industries Ltd v Duncan [1973] 1 NZLR 188. That was an application to cancel a charging order registered on the title between execution of a contract for sale of land and settlement. Cancelling the order, McMullin J considered what interest the vendor, the judgment debtor under the charging order, had at the date of its registration. He held (at 191) :As on that date, the judgment debtor, while remaining the registered proprietor of the land, had no equitable interest in it. His interest had been changed from one in land to one in personalty. For his equitable interest in the land, there had been substituted a lien on the unpaid purchase money. The position is put by Williams on Title 3rd ed 665 as follows: "An agreement for the sale of land, if it is such an agreement as the Court will enforce by a decree of specific performance, is in equity an alienation of the beneficial interest in the property, and as from the date of the binding contract, the vendor's beneficial interest is transferred from the land to the purchase-money, and, if his interest was of the nature of real estate, it is, as from that date, converted into personalty. As regards the land, he becomes, as between himself and the purchaser, constructively a trustee for the purchaser with the right to be indemnified by the purchaser against the liabilities of the trust property; and the purchaser becomes the beneficial owner, with the right to dispose of the property by sale, mortgage or otherwise, and to devise it by will. On his death intestate it devolves on his legal personal representatives, who hold it, subject to the requirements of administration, on trust for sale and for distribution of the net proceeds among the persons entitled on intestacy. In one sense the vendor becomes a mortgagee since he has a vendor's lien on the property for the payment of the balance of the purchase- money or the whole of it if no deposit has been paid." To the same effect is Stonham on Vendor and Purchaser at p 581 where the learned author says: "Equity looks upon things agreed to be done as actually done. Consequently, upon the signing of a valid and specifically enforceable contract for the immediate sale of land, the vendor's interest in the land is converted into an interest in the purchase money, and is personal estate. He becomes, in equity, a trustee of the land for the purchaser; and the purchaser becomes, in equity, the real beneficial owner of the land, subject to his fulfilling the contract, and subject to the qualifications hereafter mentioned." The qualifications mentioned are set out on p 582. It is true that the equity obtained by the purchaser on the execution of the agreement for sale and purchase is only an equity conditional upon the performance of the contract. But the equity no less exists and, when the contract is performed, it relates back to the formation of the contract (Stonham p 582 para 1140, Williams on Title p 666).(The passage from Williams on Title is repeated verbatim in the latest edition (4 th edn 1975 p 712-713). See also McMorland Sale of Land 2 nd ed 2000 paras 10.02,10,06 p 299-300, 303-305; Hinde McMorland & Sim Land Law in New Zealand looseleaf Vol.1 chap 4.019 p 11,204-206).[90] In Whiteleigh Holdings (supra at 483) McGechan J summarised an unpaid vendor's position in the following terms :The unpaid vendor retains the legal estate. In New Zealand he retains that legal estate by virtue of registered proprietorship until registration of the memorandum of transfer consequent upon the sale: Montgomery v Continental Bags Ltd (1972) NZLR 884 at p 893. The vendor is a constructive trustee for the purchaser until the purchase money is paid, but his trusteeship until that point is a limited trusteeship only. However, his position in equity differs markedly. Provided the agreement for sale and purchase is open to specific performance, equity regards as done that which ought to be done. It treats the vendor as no longer owner of the land, but as entitled to the purchase money subject to the condition that the legal estate is conveyed. It treats the purchaser as owner of the land, subject to a condition that the purchase money is paid. The vendor no longer, in equity, is owner of the land Finally, equity recognises that if the contract goes off, or specific performance becomes no longer available, the vendor and purchaser are restored to their former positions retrospectively, the former vendor again being the holder of the equitable estate as well as legal estate. The equitable estate passing to the purchaser passes only upon a conditional basis. It passes and is received upon condition that the purchaser subsequently complete the agreement by paying the full purchase price. Pending completion therefore the vendor holds a contingent interest in the equitable estate which is passed to the purchaser. In the contingency that the contract is not completed, or becomes inequitable of specific performance, he will again be the holder of the equitable estate. The existence of such a contingent interest in the equitable estate follows as an inevitable consequence of the established rules as to that which occurs in the event of the contingency. This consequence, perhaps surprisingly, has received little express acknowledgment in the authorities to date. the basic proposition in equity is that land passes to the purchaser and the vendor becomes entitled not to land but to the purchase-money. However the proposition so put is too simple. As the passages quoted above presage, the vendor does retain a certain position in relation to the land so sold. That position derives on the one hand from retention of the legal as distinct from the equitable estate, and on the other from the rule that the equitable estate passes to the purchaser only in conditional fashion.[91] More generally, McGhee QC et al Snell's Equity (31 st ed 2004 para 6-41, p 128) say, of the Doctrine of Performance :Under the doctrine, if the covenantor has not fully performed his covenant but has done some other act which may fairly be supposed to have been a step towards performance, that step will be treated as having been taken in performance of the covenant, and the property concerned will be treated as being bound by the obligations of the covenant. And, of personal property (para 23-15 p 578-579) : On a voluntary transfer of personal property the transferee is presumed to hold on a resulting trust for the transferor unless the presumption of advancement applies or the transferor is proved to have had an actual intention to make the transferee the beneficial owner of the property.relying in that last citation partly on New Zealand authority (In Re Muller: Cassin v Mutual Cash Order Co Ltd [1953] NZLR 879). [92] Although the evidence is silent as to whether "B" unit certificates had been issued, Worldwide NZ's rights in relation to them would appear to be choses in action and accordingly assignable in equity if the intention to assign irrevocably is clear on the face of the document, as must be the case with the QPAM Trust Deed. This applies even if the parties did not intend the document to operate as an assignment (Dr Roger Fenton Laws NZ: Choses in Action para 30 p 36 and cases there collected). [93] The Deed provides the necessary consideration as does the obligation Jacobsen Venue Management accepts to pay for the units. [94] Although the present discussion focuses on the "B" units as opposed to the "B" shares, it is also of assistance to note the following passage from the same author's Garrow & Fenton's Law of Personal Property in New Zealand (6th ed 1998 para 12.065 p 785-786). The learned author first cites the "famous dictum" of Turner LJ in Milroy v Lord (1862) 4 De G F & J 264, 274 (1862) 45 ER 1185, 1189- 1190 : in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him.[95] The author then continues :The words of Turner LJ may be interpreted in at least two ways. Does "everything necessary to be done" require full compliance with the prescribed procedure for any particular property, or does it suffice for the donor to do everything which will then enable the donee to take steps and complete title? In the context of the assignment of a chose in action assignable under the statute, need notice be given before the assignment is enforceable in equity, or need the assignor simply place the assignee in aposition where the assignee can give notice? In the case of company shares, need they be registered in the company's share register before the gift is complete? The English and New Zealand cases have taken a relatively consistent path favouring the less stringent approach, and the Australian High Court, despite some variance in earlier judgments, has by a majority now adopted the same position.The transfer in Milroy had not been handed to the donee so the gift failed but the text observes (ibid.) :This leads to the question as to what steps are necessary to achieve registration in the particular circumstances of the transaction itself. The general principle in both England and New Zealand is clear: the gift is perfected if the donor has done all things necessary to pass to the donee the means of completing the transfer of the legal title.[96] What conclusions are to be drawn from that discussion? They must be that the placing of Worldwide NZ in receivership on 18 January 2006 effected a Change in Control of that company and that in its turn effected disposal of its "B" units in QPAM Unit Trust to Jacobsen Venue Management, the holder of the "A" units. Pursuant to the pre-emptive rights in cl 10 modified mutatis mutandis for what occurred, that gave Jacobsen Venue Management the right to acquire Worldwide NZ's "B" units on giving notice even though it had received no Transfer Notice from Worldwide NZ in accordance with the Trust Deed. It gave such notice on 26 April thus forestalling (in association with Baragwanath J's order) the transfer of the units to any other purchaser. Though the result of the deemed disposal is described inconsistently in the authorities, the deemed disposal and Jacobsen Venue Management's acceptance transferred at least the equitable and, possibly, both the legal and equitable, title in Worldwide NZ's "B" units in the QPAM Trust to Jacobsen Venue Management leaving Worldwide NZ with an equitable interest or one in personalty in the value of the units or one in which Worldwide NZ has a lien on the unpaid purchase money or one in which Jacobsen Venue Management's interest in the units is affected by a remedial or constructive trust to pay the price of the units to Worldwide NZ. If the legal title still remains with Worldwide NZ, it must be regarded as holding that title as a constructive trustee for Jacobsen Venue Management on payment of the purchase price. Looked at another way, had Jacobsen Venue Management issued specific performance proceedings against Worldwide NZ on or at any time since 26 April 2006, it is difficult to see what defence Worldwide NZ may have raised against such a claim. In terms of Bevin vSmith, Jacobsen Venue Management must therefore be regarded as at least the equitable owner of Worldwide NZ's "B" units after 26 April, with Worldwide NZ as a constructive trustee in relation to the same or having a resultant trust in its favour as far as the unpaid price is concerned. Even if that proposition may be thought slightly too widely stated as a matter of law, it would appear to be the appropriate conclusion to draw from the terms of the Unit Trust Deed (Bevin v Smith at 665) although, in that regard, it is to be noted that the Trust speaks of the unit holder being the persons "whose name for the time being is entered into the register" as a unit holder. That may preserve the legal title to the "B" units in Worldwide's name but it is clear the equitable interest has transferred by operation of the Deed and the most Worldwide NZ has is as beneficiary of a resultant trust in its favour for the transfer price. Worldwide NZ would be bound to act in accordance with the interests and direction of Jacobsen Venue Management, its beneficiary, in the discharge of its duties under that Trust. [97] Whilst, therefore, there may perhaps have been a basis for the injunction sought by the plaintiffs in relation to Worldwide NZ's QPAM "B" units at the time this proceeding was commenced, since Jacobsen Venue Management's acceptance on 26 April 2006 of the disposal of those units to it, any such possible basis which existed prior to that time evaporated. [98] Mr Fisher, however, submitted, in effect, that such a conclusion was not open as the Trust Deed contained no mechanism for fixing the price of the units. Does that submission disturb the conclusions just arrived at? [99] True it is that the Trust Deed contains no express provision as to a mechanism for fixing the price of "B" units being transferred in the way such occurred here: the holder's proposed consideration would normally be included in its Transfer Notice and would be subject to the limitations in cl 10.4. However, under cl 10.5.1 the unit holders appointed QPAM as their agent "to the extent required to give effect to the provisions" of the pre-emptive rights and under cl 14.3 QPAM was given an "absolute discretion as to the manner, mode and time of the exercise of powers and authorities conferred on it" under the Deed. It would therefore appear to be the case that it is open to QPAM as Worldwide NZ's agent togive effect to the pre-emptive rights and it has an absolute discretion as to the manner of so doing. It is therefore open to QPAM to take action in accordance with those provisions to set up a mechanism designed to assess the value of the "B" units and the manner of payment for them. It is to be noted that cl 14.4 expressly gives QPAM power to engage valuers and others to assist the trustee in discharge of its duties. Operation of those mechanisms will result in Worldwide NZ being ultimately paid the proper price for its former assets. [100] The price to be paid would presumably be a reasonable or fair one or one set by independent valuation (though to the extent the "B" units are choses in action, the Sale of Goods Act 1908 s 10 and the Consumer Guarantees Act 1993 s 11 are inapplicable). [101] Thus far, this judgment has focused on the "B" units. Is there a different régime that applies to Worldwide NZ's "B" shares in QPAM? [102] Notably, Wilson Harle's letter of 26 April 2006 refers only once to QPAM's constitution and their operative comments ignore Worldwide NZ's "B" shares in the company. And, even though it be no more than an accident of timing, the company search of QPAM as at 8 May 2006 still listed Worldwide NZ as holding 25 shares in QPAM with the registered documents list suggesting no change in shareholding had ever been notified. [103] That notwithstanding, no argument was presented suggesting Worldwide NZ's "B" shares in QPAM should be treated differently from its "B" units in the QPAM Trust. No doubt that was because both cll 3.1 and 13.1 of the constitution tie the units and shares so closely to each other. Indeed, cl 13.1 says the "B" units could "only be transferred upon a transfer of corresponding units" by the holder. [104] That notwithstanding, as yet no form of share transfer as provided for in cl 13.2 and signed by Worldwide NZ has been presented to QPAM and accordingly, notwithstanding Mr Germann's advice to QPAM to transfer the shareholding, the company's obligation under cl 13.4 to enter Jacobsen Venue Management on itsshare register does not appear to have occurred – or it at least had not occurred by 8 May. [105] Though not remarked upon by counsel, the mechanism for registering share transfers is provided for by the Companies Act 1993. Sections 84 and 89(1) make clear that entry of a shareholder in the company's share register is "prima facie evidence that legal title to the shares vests in that person". Section 92 debars entry of any form of trust on a share register. [106] On the present state of the evidence, therefore, it must be the case that Worldwide NZ continues to hold legal title to the QPAM shares registered in its name. [107] What, then, of the equitable or beneficial ownership of the shares? [108] In that regard, it is clear that if consideration is given for a transfer, execution of the document of transfer passes equitable title to the purchaser, though such principle is subject to the parties' intention as displayed in the documents and other evidence. That principle is of general application to both real and personal property and, in particular, to shares (New Zealand Hotel Investments Ltd v Middleditch(1991) 5 PRNZ 586, 588). But such an interest is contingent on performance and until performance the legal owner retains an interest in the equitable estate (Whiteleigh Holdings supra). [109] Making the point that the same principle applies even when shares are affected by pre-emptive rights and whether the shares are in listed companies or not, the learned authors of Gower & Davies: Principles of Modern Company Law (7 th ed 2003 p 693, 699) say (at 692) : only if and when the transfer is registered will the transferor cease to be a member and shareholder and the transferee will become a member and shareholder. However, notwithstanding that registration has not occurred, the beneficial interest in the shares may have passed from the transferor to the transferee. In the case of a sale the transaction will normally go through three stages: - (1) an agreement (which, particularly if a block of shares conferring de facto or de jure control is being sold, may be a complicated one) (2) delivery of the signed transfer and the certificate by the seller and payment of the price by the buyer and (3) lodgement of the transfer forregistration by the company. Notwithstanding that the transfer is not lodged for registration or registration is refused, the beneficial interest in the shares will, it seems, pass from the seller to the buyer at the latest at stage (2) and, indeed will do so at stage (1) if the agreement is one which the courts would order to be specifically enforced.[110] In this case, QPAM's constitution so closely tying its respective classes of shares to the same classes of units, and it having been held that Worldwide NZ's "B" units are now owned by Jacobsen Venue Management on the terms earlier set out, Worldwide NZ's "B" shares in QPAM can only be transferred "upon the transfer" of the units. That having occurred, it would appear to be the case, in reliance on the authorities discussed, that the equitable or beneficial ownership in Worldwide NZ's "B" shares passed to Jacobsen Venue Management on its exercise of its right to accept disposal of Worldwide NZ's "B" units at the latest on 26 April 2006 and accordingly Worldwide NZ's prima facie legal title to the shares as shown in QPAM's register is affected by the equitable interest in the same being now held by Jacobsen Venue Management. In terms of the Gower citation, because it is difficult to see that Worldwide NZ would have any defence to a claim brought by Jacobsen Venue Management for specific performance of a transfer of Worldwide NZ's "B" shares in QPAM, this must be a case where the beneficial interest in the shares has passed at stage (1) as defined in that work. [111] The appropriate conclusion must accordingly be that Worldwide NZ continues to have prima facie legal title to its "B" shares in QPAM but the equitable interest in those shares passed on 26 April 2006 at the latest to Jacobsen Venue Management subject to it holding that interest on a resultant trust. Any residual equitable interest, whether by way of resultant trust or otherwise Worldwide NZ has in the shares is conditional on Jacobsen Venue Management paying the full purchase price for them. [112] It must therefore follow, on this aspect of the case as well, that, at least since 26 April 2006, there has been no basis for the making of an interim injunction such as that which the plaintiffs seek. [113] What effect do those findings have on Mr Gosney's position?[114] This point can be decided with relative brevity. Clause 22.1 of QPAM's constitution provides for a minimum of three directors with the "B" shareholder having the right to appoint one and the "A" shareholder having a right to appoint three. [115] On 3 April 2006 Worldwide NZ acted pursuant to its rights as it believed them to be in appointing Mr Gosney as a director of QPAM by virtue of holding the "B" shares. There may, in the circumstances discussed in this judgment, be doubt as to whether that appointment was valid. That depends on whether the deemed disposal of Worldwide NZ's units on 18 January 2006 was effective as at that date or required the acceptance by Jacobsen Venue Management on 26 April. However, it is unnecessary to decide that question because it is clear that, at least since 26 April 2006, Worldwide NZ held no more than prima facie legal title to the "B" shares in QPAM with the equitable interest residing in Jacobsen Venue Management. In such situations, the learned authors in Gower say, in a passage which immediately follows that cited, that once beneficial interest in the shares has passed (at 692) :The seller then becomes a trustee for the buyer and must account to him for any dividends he receives and vote in accordance with his instructions (or appoint him as his proxy). Hardoon v Belilios [1901] AC 118, PC.[116] Since Wilson Harle's 26 April letter makes clear that Jacobsen Venue Management would direct Worldwide NZ to rescind Mr Gosney's appointment as director of QPAM, even were it valid, it is again clear that, at least since that date, Mr Gosney's appointment as director of QPAM came effectively to an end. [117] In the result, therefore, though for reasons not deeply explored by counsel, the overall conclusion must be that, at least since 26 April 2006, there has been no basis for making the orders sought by the plaintiffs, absent the question of estoppel.(2) Estoppel[118] All of that said, have the plaintiffs made out their claim for estoppel by representation such that the defendants should not be permitted to assert the positions they have adopted in this case?[119] Estoppel by representation of fact is pleaded. It is defined in Faltham Hochberg & Leech Spencer Bower: The Law Relating to Estoppel by Representation(4th ed 2004 para I.2.2 p 4) in the following terms :I.2.2 Under the doctrine of estoppel by representation of fact: where one person ('the representor') has made a representation of fact to another person ('the representee') in words or by acts or conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive) and with the result of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto.[120] Here, it is noteworthy that the plaintiffs plead that QPAM made the representations and engaged in the conduct pleaded on its own behalf or on behalf of the Jacobsen entities. [121] It must at once be said, as the defendants argued, there is no evidential basis that any of the pleaded statements or actions were made by or on behalf of any of the Jacobsen entities. The finding must be that all were made by or on behalf of QPAM. The nearest the evidence gets to proof that any of the representations may have been made on behalf of the Jacobsen entities is the attendance of the Sydney lawyers at the 13 March 2006 meeting who acted both for the Jacobsens and for QPAM and, even in that instance, clearly they must have been representing QPAM not the Jacobsen interests. That such must have been the case is borne out by the facts, first, that they had no Jacobsen clients present from whom they could get instructions, particularly as to waiver of legal professional privilege which would otherwise have attached to any comments they made on the Jacobsens' behalf and, secondly, that the meeting was called to familiarize Messrs Goldberg and Berlin with QPAM, not the Jacobsen family interests, and the Sydney lawyers were there as authors of the prime QPAM documents. The courtesy invitation to participate in the 5 April board meeting was a courtesy extended by Mr Jacobsen but in his capacity as chairman of QPAM. [122] For completeness, it should be noted that, although raised in the affidavits, there is no pleading that, by taking no action in relation to the "B" units and "B"shares until 26 April 2006, the Jacobsen interests were representing in some way that they would not exercise Jacobsen Venue Management's rights in that regard. Even if such had been raised, it is clear from Mr Jacobsen's affidavit that, although he was aware of the Worldwide NZ interest in QPAM and its purported appointment of Mr Gosney through his chairmanship of the first defendant, the Jacobsen entities were unable to obtain legal advice concerning their particular position until Anzac Day, 25 April 2006, and, having taken that advice, immediately took the steps mentioned in the 26 April letter. All the claims of estoppel by representation by or on behalf of the Jacobsen entities accordingly have no evidential basis and the application for an injunction must be dismissed against them. [123] As far as QPAM's pleaded representations are concerned, in terms of the cited definition, its pleaded acts or conduct must be shown to have been intended to induce Worldwide NZ to alter its position to its detriment. [124] Such, however, does not appear to be the case. Attending the 13 March meeting, advice of the board meeting on 5 April and inviting Mr Goldberg to participate in it by telephone, removing Mr Utsick as director and appointing Mr Gosney in his stead and acknowledging what was then believed to be Worldwide NZ's status as shareholder and unit holder, are equally explicable by what QPAM and Worldwide NZ then thought were their respective positions rather than the former leading the latter to change its position detrimentally. [125] The plaintiffs additionally plead that Mr Gosney's s 191 notice and QPAM's response were all material to the question of the representations. Since there is little evidence of representations being made to Mr Gosney other than the conversations recorded earlier, that seems difficult to accept but, even if the allegations be regarded as provable, they, too, are explicable by Mr Gosney's attempts to familiarize himself with QPAM's business and his resort to what he believed were his directors' rights when he encountered what he saw as resistance. [126] The plaintiffs then plead they acted to their detriment through Mr Goldberg's trip to New Zealand, reviewing the documents and appointing Mr Gosney, and applying to the Court, issuing s 191 and 216 notices and the inspection on 24 April.[127] On his own evidence, Mr Goldberg's trip to New Zealand was voluntary, as was his review of the QPAM records and his appointment of Mr Gosney. He wished to familiarize himself with Worldwide NZ's business as part of his overall receivership, This litigation was commenced not, it would seem, in reliance on any representations by QPAM, but because of what Worldwide NZ, Mr Goldberg and Mr Gosney saw as obstructive tactics on the company's part. Undertakings are a necessary part of injunction litigation, as are the instruction of solicitors and counsel. [128] There is a further evidentiary difficulty in concluding that, as pleaded, it would be unconscionable for QPAM to assert that Mr Goldberg's appointment as receiver did not constitute a deemed Change of Control of Worldwide NZ under the Trust Deed or triggered the pre-emptive rights given the concession and the fact that those matters arose through the terms of the Trust Deed itself. Further, there is no evidence that the plaintiffs (or QPAM) were aware the rights had been triggered until Jacobsen Venue Management's solicitors wrote their 26 April letter. The pleaded representations do not, therefore, mesh with the pleaded unconscionability. [129] In terms of the balance of convenience between the parties therefore, the estoppel pleadings do not form a justifiable basis for the granting of the injunction sought. [130] Finally, standing back and considering the overall justice of the case, the evidence demonstrates that this is a matter where, though not realised by any party until 26 April, Mr Goldberg's appointment as receiver to Worldwide NZ automatically disposed of all but, at most, that company's prima facie legal title to its "B" QPAM units and, through them, its "B" shares in QPAM to Jacobsen Venue Management. Even though Worldwide NZ may continue to hold legal title to the units and shares, the equitable title rests with Jacobsen Venue Management and the former is bound to act in accordance with the latter's directions. The passing of title was subject to an obligation on Jacobsen Venue Management to meet the value of the units and shares, the fixing of which must be undertaken by QPAM as agent of both parties.[131] Worldwide NZ was always a minority participant in QPAM and the Trust Deed. Its receivership has terminated that participation but it remains entitled to receive a fair or reasonable price for the units and shares its receivership has transferred once valued. That being the case, on the overall justice of the situation, and having regard to QPAM's difficult current situation, there is no basis for ordering that Worldwide NZ and Mr Gosney are to participate in the running of QPAM. It should be permitted to continue with its business without the participation of Worldwide NZ and Mr Gosney with the former being paid a proper price for its former assets in due course.Result[132] In the result, no case has been made out by the plaintiffs for any of the injunctive orders that they seek and their applications in that regard are accordingly dismissed. [133] If counsel cannot agree on costs, memoranda may be filed with that from the defendant being filed and served within 28 days of delivery of this judgment and that from the plaintiffs within 35 days and with the parties certifying, if they consider it appropriate so to do, that all questions of costs can be determined without the necessity for a further hearing. [134] With the parties' agreement, a consent order was made at an earlier stage of this case, restricting the availability of inspection of this file to the parties. At the hearings on 15 and 18 May 2006, counsel requested that a similar order apply to the judgments arising from those hearings on the basis of commercial sensitivity. However, the Court's view is that, apart perhaps from the figure appearing in para [2] of this judgment, there is little about its contents which should be regarded as commercially sensitive. The same applies to the other judgments arising from those hearings. In addition, it must at least be possible that the parties may wish to give copies of those judgments to the Auckland City Council. In view of that, the order limiting availability of those judgments to the parties will apply only for 14 days following delivery of this judgment and will then expire unless extended by Court order made on application by one or more of the parties...WILLIAMS JSolicitors:Brookfields (S J Corlett), P O Box 240 Auckland, for plaintiffsStewart Germann Law Office, P O Box 1542 Auckland, for First Defendant Wilson Harle (Chris F Browne/Julia Carlyon), P O Box 4539 Shortland Street, Auckland, for Second DefendantCopy for: Michael J Fisher, P O Box 3236 Shortland Street Auckland, for Plaintiffs Peter Woodhouse QC, P O Box 2558 Auckland, for First Defendant Adina J Thorn, P O Box 4420 Auckland, for First Defendant Susan Stanney, Case Officer, Civil Registry, Auckland High Court