THE ESTATE OF MICHAEL DAVID KIDD by its administrator BRYAN JOHN COOPER v VAN HEEREN [2021] NZHC 2663

THE ESTATE OF MICHAEL DAVID KIDD by its administrator BRYAN JOHN COOPER v VAN HEEREN[2021] NZHC 2663 [6 October 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2014-404-725[2021] NZHC 2663BETWEEN THE ESTATE OF MICHAEL DAVID KIDDby its administrator BRYAN JOHNCOOPERPlaintiffAND ALEXANDER PIETER VAN HEERENDefendantHearing: 9, 10 and 16 September 2021Appearances: S J Mills QC (on 16 September 2021), B O'Callahan andEJH Morrison for the plaintiffM D O'Brien QC and S D Williams for the defendantR C Knight for Ms van Heeren-HermansJudgment: 6 October 2021JUDGMENT OF JAGOSE J[Ancillary interim payment and other issues]This judgment was delivered by me on 6 October 2021 at 4.00pm.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel/Solicitors:S J Mills QC, AucklandM D O'Brien QC, AucklandB O'Callahan Barrister, AucklandS D Williams Barrister, AucklandR C Knight Barrister, AucklandK3 Legal Limited (EJH Morrison), AucklandFee Langstone (C Langstone), AucklandBell Gully (T B Fitzgerald and B J Ward), Auckland[1] This judgment is issued contemporaneously with my interim judgmentpartially determining the defendant's ("Mr van Heeren") interlocutory application forrelief from disbursement to the plaintiff (for convenience, "Mr Kidd", although in facthis estate by its administrator, Bryan Cooper) of USD 17.612 million from theUSD 25 million interim payment paid into Court on Mr van Heeren's account.1[2] This judgment addresses outstanding issues relating to the balance of theinterim payment — additional sums for disbursement under my interim substantivejudgment; further sums for payment or disbursement; and if further disbursement toMr Kidd should be stayed on grounds of my interim disbursement judgment — andformulation of separate questions for determination.Background[3] My interim substantive judgment found:2 subject to adjustments for cash and interest, the partnership's value as awhole at 18 January 1991 is USD 50.895 million, for allocation in equalshares of USD 25.448 million to each Mr Kidd and Mr van Heeren.Noting Mr Kidd already to have the benefit of USD 7.836 million, "I would allowdisbursement to him now on that account of USD 17.612 million from theUSD 25 million interim payment",3 the latter being a sum paid into Court onMr van Heeren's account,4 and I ordered accordingly "as an advance on a finalaccounting yet to be concluded".5 As my interim disbursement judgment recounts,6that disbursement was made. My judgment is subject to appeal and cross-appeal.Additional sums for disbursement[4] My interim substantive judgment invited Mr Kidd to seek additionaldisbursement of up to the balance of the interim payment,7 by reference to an interest1 Kidd v van Heeren [2021] NZHC 2661 [Interim disbursement judgment].2 Kidd v van Heeren [2021] NZHC 1414 at [201] [Interim substantive judgment].3 At [203].4 At [15].5 At [242].6 Interim disbursement judgment, above n 1, at [5].7 Interim substantive judgment, above n 2, at [243].calculation on non-cash values to 18 January 1991.8 I also reserved leave for furtheradjustment to the partnership cash balance calculation at that date.9[5] The parties are agreed interest on those non-cash values reflected in line items5.1.13–5.1.15 of Schedule 2 to my interim substantive judgment is to be accounted foras at 18 January 1991 in the amount of USD 102,006. An additional line item 5.1.11,inadvertently omitted by Mr Kidd's counsel in closing, of USD 305,000 also is agreed,along with interest to 18 January 1991 in the amount of USD 29,544. Together, that isto increase the partnership asset value at 18 January 1991 by USD 436,550.[6] Mr Kidd claims for adjustment line items 5.1.3 and 5.1.4 as not addressed inmy judgment's treatment of line item 5.07.10 But my judgment expressly was to"disregard" the difference.11 Similarly Mr Kidd claims line item 5.1.10 as a necessarycorollary of my judgment's treatment of line item 7.01.12 But my judgment thereinferred equalisation between the parties, save for two "discrepancies".13 AndMr van Heeren claims, for adjustment in the partnership asset value at18 January 1991, line item 9.03 I allowed for subsequent deduction.14 If I erred in anyof those respects, that is a matter for appeal, not adjustment. I will not allow adjustmenton those grounds.[7] Rounding, the partnership assets value at 18 January 1991 thus is increased byUSD 0.437 million to USD 51.332 million.15 I also would allow disbursement toMr Kidd from the interim payment, on account of his 50 per cent share in thepartnership's 18 January 1991 value, of an additional USD 218,275.16Further sums for payment or disbursement[8] Each Mr Kidd and Mr van Heeren seek further sums for disbursement of orfrom the interim payment:8 At [205].9 At [130].10 At [169]–[172].11 At [171].12 At [197]–[201].13 At [200].14 At [216].15 See [201].16 See [203].(a) to Mr Kidd, the balance as 'uncontroversially' to be exceeded byMr Kidd's entitlement on a final accounting, Mr Cooper contending:[I]t is about time [Mr Kidd's family] saw some meaningfulreturn from Mr Kidd's entitlement and for them to have thefinancial freedom to finish recovery without the involvementof further ruinous litigation funding.and(b) to Mr van Heeren, for payment of due and payable litigation expensesfor the period from 31 March 2021 to 30 September 2021 in the amountof NZD 526,610.47, NZD 333,401.53 having been expended to31 July 2021 largely to conclusion of my interim substantive judgment(although including initial steps in addressing Mr Kidd's disbursementfrom the interim payment).[9] Mr van Heeren seeks disbursement of the larger sum from the interim paymentto the extent, in the assessment of Worldwide Leisure Ltd's ("WWL") directors, WWLis not able to pay the full amount as previously directed.17 With that discretion, WWLdoes not oppose being directed so to pay Mr van Heeren, but prefers the amount bepaid by disbursement from the interim payment to avoid "difficult predictions aboutWWL's future expenses and the use of its limited remaining funds", which amount tosome NZD $1.340 million. On the basis all WWL's funds are partnership assets, andtheir further depletion by Mr van Heeren no longer can be justified on any balancingof considerations in the wake of my interim substantive judgment,18 Mr Kidd opposesany payment or disbursement to Mr van Heeren.[10] Mr van Heeren notes Mr Kidd has had some USD 2.510 million of hislitigation expenses paid by WWL. Mr Kidd also is seeking to use some of the balanceof the interim payment to maintain litigation in Liechtenstein, claimed necessary tosecure any final judgment materially in excess of the interim payment. While the17 At [15]–[16].18 Relying on United Mizrahi Bank Ltd v Doherty [1998] 1 WLR 435 (Ch) at 439 (relying on SundtWrigley & Co Ltd v Wrigley CA Transcript 685, 23 June 1993), relied on in An Ying InternationalFinancial Ltd v Li HC Auckland CIV-2004-404-6952, 6 April 2005 at [86], noting: the difficulties of balancing on the one hand the basic entitlement of a litigant to instructsolicitors and counsel, and on the other the desirability of preserving, so far as is possible, afund to which a plaintiff makes a proprietary claim parties are in dispute over the quantum of prospective litigation expenses in thatjurisdiction, Mr Kidd evidences unpaid and prospective legal expenses approachingCHF 1.287 million (or presently USD 1.384 million).[11] I am advised by the registry the interim payment sum it retains presently standsat approximately USD 7.091 million, or USD 6.872 million allowing for the furtherdisbursement to 18 January 1991.19 My interim substantive judgment remains to befinalised, possibly requiring reconvening of the experts,20 for payment of whom someretention should be maintained. Noting expert fees drawn on the interim paymentapproached USD 0.300 million to date, generously perhaps USD 0.150 million shouldbe retained on such account. Pending such finality, the balance remains in favour ofaccommodating the parties' litigation expenses from the attainable subject ofMr Kidd's proprietary claim, on certification by the respective party's solicitors suchproperly are incurred in this proceeding, due and payable.21[12] Given the result of my interim substantive judgment, I will extend suchaccommodation to Mr Kidd's offshore legal expenses (as I had not previously beenprepared to do)22 in prospective enforcement of final judgment in this proceeding, oncomparable certification by Mr Kidd's New Zealand solicitors.[13] As entitlements to progressive payments for litigation expenses pending thefinal accounting, I will not disburse the balance of the interim payment as Mr Kiddseeks. The balance of the interim payment remains an important fund to ensure thisproceeding's conclusion. WWL's funds need not now to be engaged.Stay of disbursement to Mr Kidd[14] Partly in reliance on his earlier stay applications, but also as relief on his thirdamended application dated 18 August 2021 as I have held,23 Mr van Heeren seeks anyfurther disbursement to Mr Kidd (including that at [12] above) be stayed. Mr Kiddresponds Mr van Heeren's "best case" on appeal, after discounting any entitlement to19 See [7] above.20 Interim substantive judgment, above n 2, at [244(b)].21 Kidd v van Heeren HC Auckland CIV-2014-404-0725, 12 February 2021 at [6]–[7].22 Kidd v van Heeren [2020] NZHC 3198 at [13].23 Interim disbursement judgment, above n 1, at [38].go behind the Genan issue estoppel,24 is his substantive liability ofUSD 19.644 million (being his debt to Mr Kidd of USD 9.822 million as at18 January 1991, plus interest calculated in accordance with the South African 'induplum' rule).25[15] With reference to well-comprehended principle on stay pending appeal,26Mr Kidd argues there is no justification to stay disbursement of at least that sum, orbeyond to at least the whole of the interim payment as exceeded by Mr Kidd'scontended "present day entitlement". Mr van Heeren replies the present disbursementsto Mr Kidd (of USD 17.612 million, and USD 2.510 million)27 already exceed that'best case'; success on the Genan argument would reduce Mr van Heeren's liabilityon appeal to USD 12.900 million (or less, if also successful on the 'illegality' issue).28A requirement for security should accompany any disbursement.29[16] Standing back, I would not initially have stayed my ordered disbursement toMr Kidd. Uncertainty of appeal's outcome was countered by relative certainty of upliftin updating the account from 18 January 1991 to the present day. Security wasunnecessary. Mr van Heeren's delay in complying with this Court's interim paymentorder reinforced the need to relieve Mr Kidd of his consequent litigation fundingliability. Overall, the balance of convenience — by analogy with interim injunctionconsiderations,30 if refusing stay pending appeal would be harder on a prospectivelysuccessful appellant than granting it would be on the successful respondent —favoured Mr Kidd as inevitable recipient of the net award on final accounting.[17] Mr van Heeren's entitlement to relief under my interim disbursement judgmentdoes not materially shift that balance. But the entitlement still should not go ignored.Irrespective of what remedy may be obtained from LCM (alternatively, Mr Kidd)24 Interim substantive judgment, above n 2, at [52].25 At [36].26 Keung v GBR Investments Ltd [2010] NZCA 396 at [11].27 See [3] and [10] above.28 Interim substantive judgment, above n 2, at [57]–[58].29 Relying on Harmon CFEM Façades (UK) Ltd v Corporate Officer of the House of Commons QB1996 ORB 1151, 29 June 2000 and Campbell v Mylchreest [1999] PIQR Q17 (CA).30 Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV 2007-485-1756,30 July 2008 at [4] citing Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at237.under para 1.4 of the third amended application,31 condign relief under para 1.5 maybe ordered in respect of the additional substantive disbursement.32 All the same, aspart of that interim substance, stay goes too far. More appropriate is the proposedundertaking sought of LCM (or such alternative security as may be acceptable to theparties or the Court), that the disbursed sum be repaid to the extent necessary toaddress Mr van Heeren's success on appeal. I will order accordingly.Formulation of separate questions for determination[18] Under r 10.15 of the High Court Rules 2016, Mr Kidd proposes the followingquestion be formulated for separate determination:(a) Whether following the Court's determination that South African law is theproper law of the partnership between the parties, the election of remedyin [s] 79 of the Partnership Law Act 2019 [] is available to the plaintiff,either because it is part of the lex fori or because it is a statutory provisionto which the New Zealand courts are required to give effect.(b) If the election under s 79 is available to the plaintiff, is the plaintiff entitledto elect to have a final judgment entered on the basis of the amountdetermined in the interim judgment to be due to Mr Kidd at dissolution(including any further amount held to be due in accordance with [130] and[205] of the interim judgment) plus interest on that sum at 5% per annumto the date of final judgment on the account, or such other date as isdetermined by the Court.(c) In the event that the election under s 79 is not available to the plaintiff, orthe plaintiff is for some other reason not now entitled to exercise theelection [], is the plaintiff is entitled to treat Mr Kidd's entitlement atdissolution as a money claim and elect to have a final judgment enteredon the basis of the amount due to Mr Kidd at dissolution plus interest onthat sum to the date of judgment, or such other date as is determined bythe Court.(d) If the answer is yes to question (c), what is the interest rate that applies.(e) Whether, under South African law, the defendant has "wrongfullyretained" partnership assets or is otherwise required to account for thegains made on the partnership assets retained by the defendant, or on thereinvestment of those assets.The application is brought in "the apprehension that the South African law findingdoes not determine remedy, as remedy is generally governed by the lex fori".31 Interim disbursement judgment, above n 1, at [9].32 See [7] above.[19] My interim substantive judgment observed the impact of 'wrongful retention'under South African law remained to be determined on a final accounting, bringingthe 18 January 1991 valuation up to date.33 I invited counsel to consider "if furtherexpert evidence is necessary on 'wrongful' retention under South African law".34 Forthat reason, Mr van Heeren does not oppose the formulation at (e) above, accepting itis "a question preliminary to the task of bringing the account up to date", and wouldconveniently be determined in advance of appeal. I agree.[20] So far as formulations (a)–(d) above are concerned, however, each attempts toadvance Mr Kidd's position beyond the pleadings and my determinations on them.I observed Mr Kidd's election "may be affected by my finding as to the applicablelaw".35 I determined "the proper law of the partnership law here plainly is SouthAfrican law", and Mr Kidd's claim is "not yet a debt claim".36 The proposed questions(a)–(d) seek to make an end-run around those determinations. Specifically, they wouldavoid my direction for conclusion of the accounting "in accordance with [my interimsubstantive] judgment".37 Separate determination of questions (a)–(d) by me now isnot efficient or expeditious. I recognise they nonetheless may be questions fordetermination on or after successful appeal (or cross-appeal).[21] For Mr van Heeren, Mark O'Brien QC also argues it is an "open question" ifremedy stands jurisdictionally to be separated from the right to be enforced,38 notingMs Snyman van Deventer's advice such segregation was impermissible. But I alreadyhave held a jurisdictional alternative is available.39Result[22] I therefore order:33 Interim substantive judgment, above n 2, at [208]–[209] and [222].34 At [244].35 At [4]. For what it is worth, in drafting that phrase, I prevaricated between "may be" and "willbe", ultimately opting for the former as not indicating predetermination of election's availability.36 At [43] and [64].37 At [245].38 Relying on Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105 at 124.39 Interim substantive judgment, above n 2, at [231]–[234].(a) conditionally on receipt of Mr Cooper's personal undertaking to repayif and to the extent Mr van Heeren succeeds on appeal (or suchalternative security as may be acceptable to the parties or the Court),disbursement to Mr Kidd in the amount of USD 218,275 from thebalance of the interim payment retained by the Court, as a furtheradvance on a final accounting yet to be concluded;(b) subject to retention by the Court of at least USD 0.150 million of theinterim payment, payment to each party's solicitors of any sum certifiedby either as due and payable litigation expenses incurred by their clientin this proceeding or in prospective enforcement (whether or not inNew Zealand) of its final judgment; and(c) separate decision if, under South African law, Mr van Heeren has"wrongfully retained" partnership assets or is otherwise required toaccount for the gains made on the partnership assets retained by him,or on the reinvestment of those assets.Next steps[23] I direct:(a) the registry to set down a one-day hearing before me, on a dateconvenient to counsel, for separate decision of the question identifiedat [22](c) above; and(b) the parties to propose a timetable for steps leading up to the hearing.Costs[24] I reserve costs until after determination of Mr van Heeren's third amendedapplication dated 18 August 2021.—Jagose J