YANDINA INVESTMENTS LTD V ANZ NATIONAL BANK LTD HC WN CIV-2010-485-002582

YANDINA INVESTMENTS LTD V ANZ NATIONAL BANK LTD HC WN CIV-2010-485-002582 10 October 2011IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2010-485-002582UNDER the Income Tax Act 1994 and the TaxAdministration Act 1994BETWEEN YANDINA INVESTMENTS LIMITEDPlaintiffAND ANZ NATIONAL BANK LIMITEDFirst DefendantAND WESTPAC BANKING CORPORATIONSecond DefendantAND BNZ INVESTMENTS LIMITEDThird DefendantCIV-2006-485-001228 to 001230AND UNDER the Income Tax Act 1994 and the TaxAdministration Act 1994BETWEEN YANDINA INVESTMENTS LIMITEDFirst PlaintiffAND DORSET ENTERPRISES LIMITEDSecond PlaintiffAND RAQUEL DEVELOPMENTS LIMITEDThird PlaintiffAND COMMISSIONER OF INLANDREVENUEDefendantHearing: 30 September 2011Counsel: CR Carruthers QC for PlaintiffsMR Dean QC, SE Fitzgerald for First DefendantRB Lange for Second DefendantA Barker for Third DefendantNo appearance for Inland RevenueJudgment: 10 October 2011JUDGMENT OF ASHER JThis judgment was delivered by me on Monday, 10 October 2011 at 11ampursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarIntroduction[1] This proceeding was commenced in the High Court of New Zealand in its Wellington registry. The plaintiff is Yandina Investments Ltd ("Yandina") and thedefendants are three significant New Zealand banks, ANZ National Bank Limited("ANZ"), Westpac Banking Corporation ("Westpac") and BNZ Investments Ltd("BNZ") (collectively "the banks"). The banks apply for an order that theproceeding be transferred to the Auckland registry and entered on the commerciallist. For reasons that will be set out this application has been treated not so much asan application to enter the proceeding on the commercial list in Auckland, but ratheras an application for a change of venue.Background[2] Yandina is an incorporated company with its registered office in Wellington.The principal of Yandina, Graham Doke, resides in London. In 1982 the banks andDevelopment Finance Corporation New Zealand Ltd formed the Maroro partnership("the partnership"). The partnership, through a special purpose company MaroroLeasing Ltd purchased an aircraft on deferred payment terms and leased it to AirNew Zealand.[3] I do not go into the details of the leasing arrangement. They are set out in fullin two previous judgments of this Court.1 However, it is necessary to note that in1994 an arrangement was entered into under which the partnership's interest in thelease was transferred to an entity involving Yandina. It was envisaged that Yandinawould have the ability to offset the income against tax losses available to Yandina.The transactions included certain deeds of assignment.[4] In 1996 the Commissioner of Inland Revenue formed the view that thearrangements involved tax avoidance on the part of Yandina. The Commissionerreassessed the income as returned for the 1996 and 1997 years which had the effectof disallowing the losses claimed. He also assessed the 1998 year, assessing taxableincome and allowing no losses against it. Yandina challenged those assessments in aproceeding commenced in 2003. That proceeding was transferred to the High Courtin 2005 and is due for trial in November 2011.[5] In November 2010 Yandina sought to join the banks to the tax proceeding.MacKenzie J rejected that application.2 Following that decision Yandina issued thisproceeding against the banks. Yandina claims that by an equitable assignment a trustwas created in favour of Yandina in relation to income arising under a deed ofassignment. Yandina asserts that the banks are trustees for that income. Yandinaalso asserts that there is an indemnity from the banks in relation to the taxproceeding. The amounts at issue exceed $72 million. In May 2011 Yandina appliedto have this proceeding and the tax proceeding consolidated. It failed on thatapplication.3[6] The banks now seek an order for the transfer of this proceeding to thisregistry.[7] This commenced as an application under r 29.14(2) of the High Court Rulesfor an order that the proceeding be transferred to the Auckland registry and entered1 Yandina Investments Ltd v Commissioner of Inland Revenue (2011) 25 NZTC 20-019 (HC) andYandina Investments Ltd v Commissioner of Inland Revenue HC Wellington CIV-2006-485- 1228, 16 September 2011.2 Yandina Investments Ltd v Commissioner of Inland Revenue (2011) 25 NZTC 20-019 (HC).3 Yandina Investments Ltd v Commissioner of Inland Revenue HC Wellington CIV-2006-485- 1228, 16 September 2011.on the commercial list. Yandina opposed that application on the grounds that theproceeding was ineligible for entry on the commercial list and that an overallconsideration of questions of relative convenience and fairness favoured decliningthe application. However, since the application and notice of opposition were filed,three commercial list Judges have been appointed in the Wellington registry. Acommercial list will be established at the Wellington registry.[8] In that circumstance Yandina no longer submits that the proceeding isineligible for entry on the commercial list. Rather the issue is the consideration ofquestions of relative convenience and fairness.[9] The parties are now content to proceed as if this was an application forchange of venue under r 10.1 of the High Court Rules. Under r 10.1(4)(b) the Courtmay order that a proceeding be tried at a place where the proceeding "can be moreconveniently or more fairly tried".[10] The predecessor to this rule was considered by the Court of Appeal inConsumer Council v Pest Free Service Ltd as follows:4In the present case Mr Barton submitted that, in terms of the new rules, it is misleading to speak of a plaintiff having a right to choose the forum. He accepts the position that in a case where the plaintiff has exercised his initial right to nominate a venue under R 9 of the Code then the onus will lie on any party to the action who applies for a change of venue under R 249 to satisfy the Court affirmatively that "the action can be more conveniently or more fairly tried" at some other town. He also accepts that that question must be determined by a process of balancing the factors that are relevant to the consideration of convenience and in the same way evaluating the matters relevant to fairness and then arriving at an overall just decision thereon.However Mr Barton strongly submitted that the initial right of nomination given by the Code to a plaintiff under R 9 ought not to be regarded as relevant to the process of evaluating the respective considerations of convenience and fairness. Put in another way, the plaintiff's nomination is not in itself probative of convenience or fairness. In his submission questions of relative convenience and fairness should be considered simply on such relevant material as may be placed before the Court. A change of venue should be ordered if on an overall consideration of such material the Court is affirmatively satisfied that the action can be more conveniently and fairly tried elsewhere. Mr Barton further submitted that the onus on an applicant to satisfy the Court ought not to be regarded as in some way especially difficult to discharge. He argued that there is no justification for adopting any such approach, notwithstanding earlier expressions of judicial opinion that the4 Consumer Council v Pest Free Service Ltd [1978] 2 NZLR 15 (CA) at 18.plaintiff's so called right to choose his forum "is not lightly to be overridden". With all of this we agree, and indeed Mr Newhook found himself unable to argue to the contrary. In our view Meates v News Media Ownership Ltd should not be regarded as an authority to the contrary as regards the onus to be discharged by an applicant for a change of venue.(Emphasis added.)[11] This approach was recently affirmed by the Court of Appeal in Erwood vMaxted5 and was adopted in relation to an application to transfer a proceeding andenter it on the commercial list by Rodney Hansen J in Commerce Commission vCards NZ Ltd.6Where can the action be more conveniently or more fairly tried?[12] Yandina's effective nomination of the Wellington registry in naming ANZ,which has its principal place of business in Wellington, as the first-named defendant,is no more than a factor. What is necessary is a balancing of all the relevant factorsto determine the most convenient or most fair venue. The Court must beaffirmatively satisfied that the action can be more conveniently or more fairly tried ata place other than the registry in which the proceeding was commenced.[13] In carrying out the assessment the objective of the rules to secure the just,speedy, and inexpensive determination of any proceeding, will be an importantconsideration.7[14] The transaction underlying the cause of action took place in Wellington. The transaction documents concerning the equitable assignments in issue identify two ofthe banks as banks "at Wellington" and specified Wellington addresses for notices totwo of them. However, there is nothing in the document trail, which goes back manyyears, to indicate that there is any particular Wellington factor either in relation togeography or custom that might arise.5 Erwood v Maxted [2007] NZCA 572 at [30].6 Commerce Commission v Cards NZ Ltd HC Wellington CIV-2006-485-2535, 5 April 2007 at[16].7 High Court Rules, r 1.2.[15] It is convenient to adopt the categorisation of factors going to convenience and fairness set out in McGechan on Procedure:8parties;witnesses;counsel; andany relevant practical factors relating to a particular court, such as delays.The parties[16] The registered office of ANZ was and remains in Wellington. However, theother two banks, Westpac and BNZ, now have their registered offices in Auckland.Westpac was the largest percentage partner in the partnership having a 45.5 per centshare, BNZ the next largest at 26.5 per cent and ANZ the smallest at 21 per cent.BNZ was the manager of the partnership.[17] All three of the banks conduct the relevant business relating to the Yandinaclaim from Auckland. ANZ, although it has its registered office in Wellington, has aspecialised lending and loan product unit which has overall oversight andresponsibility for the matter which is based in Auckland.[18] Yandina has its registered office in Wellington. Its principal, Mr Doke,resides in the United Kingdom.[19] On balance, in relation to this factor, there is a definite weighting in favour ofthe banks in that only Yandina conducts its relevant business in Wellington (with itsprincipal being overseas) while all the banks conduct their relevant business inAuckland.8 McGechan on Procedure (online looseleaf ed, Brookers) at [HR10.1.03](2)(b).Witnesses[20] There is an understandable vagueness as to whom exactly will be called aswitnesses at this early point in the proceeding. There is a suggestion from Yandinathat there could be up to three witnesses from the relevant accounting firm.However, the principal witness Mr Doke resides in the United Kingdom. There willbe at least four bank witnesses who were involved in the original transaction. Ofthose four witnesses, three reside in Auckland. The fourth resides in Wellington butspends approximately two weeks of every month in Auckland. It is my assessmenton an overview that there are likely to be more relevant witnesses based in Aucklandthan in Wellington.Solicitors and counsel[21] It has been suggested that the whereabouts of counsel has been accordedsomewhat less prominence than that of the parties and their witnesses in recentyears.9 However, there seems to be no good reason to discount the relevance of thisfactor. It costs a client less if the lawyers are located where the case will be heard.There might be some basis for discounting this factor if counsel had been chosenfrom a location not connected to the location of the party for tactical reasons.However, here the relevant businesses of the banks are now all based in Auckland,and they have understandably chosen Auckland solicitors and counsel.[22] The position is therefore that of the four groups of solicitors and counselinvolved, one is in Wellington and three are in Auckland. While the interests of thebanks are aligned, they have all briefed their own solicitors and senior counsel.Given the significant amount involved in the proceeding there can be no doubt thateach bank will be fully represented. Therefore, in terms of cost and convenience thisfactor strongly favours an Auckland venue.9 Mosaed v Mosaed (1990) 2 PRNZ 327 (HC) at 331 and Prudential Assurance Co New ZealandLtd v Slater (1990) 4 PRNZ 639 (HC) at 642.Factors particular to a court[23] Now that there is to be a commercial list established in Wellington, it isdifficult to discern any real difference between the practices and time framesavailable in the two courts. While historically hearings may have been more quicklyobtained in Wellington, that is not necessarily the case now. The proceeding can inany case hardly be described as urgent given the time that has gone by since theoriginal transactions.Overview on convenience[24] All the relevant practical factors when balanced favour an Auckland venue.This is clearly so numerically in relation to the location of the witnesses, places ofbusiness of the parties, and the location of solicitors and counsel. This is not asituation where the weighting is equal or only slightly in favour of one side. Theproceeding can be more conveniently heard in Auckland in the sense that the overallcosts of all parties in the round are likely to be less if the hearing occurs in Aucklandrather than in Wellington. There will be lower travel and accommodation costs. Thebalance clearly tilts to Auckland. I conclude therefore that such onus as there is onthe banks has been discharged.Fairness[25] Fairness will tend to follow convenience, although there may be cases such asthe straitened financial circumstances of one party that could make it unfair to orderchange. There is no particular unfairness to Yandina arising from a change of venueto Auckland. It cannot make a great deal of difference to Mr Doke, the principal ofYandina, whether he travels from the United Kingdom to Auckland or Wellington.There is nothing to indicate that costs are a constraining factor for Yandina. It hasbriefed a considerable legal team. Although it will be less convenient for them tohave to come to Auckland for the trial, that circumstance does not create anymaterial unfairness, and Yandina's convenience bows to the majority.[26] There will be little gained if this decision is deferred. While the position inrelation to witnesses may become clearer over time, the general facts are clearenough at this point. Much of the cost advantage in transferring it to Auckland nowwill be lost if there is a lengthy delay.Result[27] Under r 10.1 of the High Court Rules I direct that this proceeding be tried atAuckland and all formal subsequent steps in the proceeding be taken at Auckland.Costs[28] It is my preliminary view that costs should follow the event and be ordered infavour of the banks. However, if the parties are unable to agree then memorandashould be filed within 21 days of the date of this judgment...Asher JSolicitors/Counsel:CR Carruthers QC, PO Box 305, Wellington 6140. Email: crc@crcarruthers.co.nzJ Farmer QC, PO Box 1800, Shortland Street, Auckland 1140. Email: jamesfarmer@queenscounsel.co.nzS Bartlett, BNZ Legal Services, Private Bag 38906, Wellington.RJ Cullen, PO Box 22051, Khandallah, Wellington 6441. Email: Robbie.cullen@xtra.co.nzSimpson Grierson, DX CX10092, Auckland. Email: Richard.lange@simipsongrierson.comA Barker, PO Box 4338, Shortland Street, Auckland 1140. Email: ab@shortlandchambers.co.nzCrown Law Office, DX SP20208, Wellington 6140. Email: maria.deligiannis@crownlaw.govt.nz