Harrison v Wellington City Helicopters Limited [2016] NZHC 1555 (11 July 2016)

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Harrison v Wellington City Helicopters Limited [2016] NZHC 1555 (11 July 2016)

Last Updated: 18 August 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-001571 [2016] NZHC 1555

BETWEEN	AIDAN JOSEPH HARRISON First Appellant
AND	WELLINGTON CITY HELICOPTERS LIMITED Second Appellant
AND	JOHN PATRICK JOSEPH KEOGH Respondent

Hearing:	24 June 2016
Counsel:	T Conder for the Appellants Respondent in person
Judgment:	11 July 2016

_{JUDGMENT OF NATION J}

Introduction

[1] The first appellant (Mr Harrison) and the respondent (Mr Keogh) are cousins who were shareholders in the second appellant company (WCHL). There was a serious breakdown in their relationship. On 30 August 2011, in the context of settling proceedings in the Employment Court, they signed a record of settlement (ROS) settling all issues between them.

[2] Pursuant to the ROS, a helicopter belonging to WCHL was to be sold and final accounts were to be prepared for the company with a distribution to the shareholders, consistent with their agreed shareholding. The helicopter was sold. Accounts were prepared for the company. Later, at Mr Harrison’s direction, those

_{accounts were significantly revised.}

HARRISON & ANOR v KEOGH [2016] NZHC 1555 [11 July 2016]

[3] On the basis of the initial accounts, Mr Keogh obtained judgment against WCHL in the District Court for US$52,312.26.¹ Mr Harrison and WCHL appealed that judgment to the High Court. In a judgment of 11 November 2015, I dismissed WCHL’s appeal. In a further judgment of 18 December 2015, I entered judgment for Mr Keogh against Mr Harrison personally, jointly and severally with the judgment against WCHL.

[4] Mr Harrison and WCHL have applied for leave to appeal the judgments of the High Court to the Court of Appeal.

Procedural background

[5] Throughout these proceedings, Mr Harrison and WCHL have been represented by the same counsel. Mr Keogh has appeared for himself.

[6] The hearing in the District Court took place on 19 April 2015, Judge Andrée- Wiltens gave his judgment on 19 June 2015. He did not make any decision on Mr Keogh’s claim against Mr Harrison personally but both Mr Harrison and WCHL appealed to the High Court.

[7] That appeal was heard on 22 October 2015. I dismissed the appeal in a judgment of 11 November 2015.² In that judgment I noted Mr Keogh’s claim against Mr Harrison personally had not been determined by the District Court and I considered that, in all the circumstances, it needed to be. I suggested that, given the appeal was proceeding by way of rehearing, it would be appropriate for me to deal with the claim in the High Court. There was no objection to this. I received further

submissions as to Mr Harrison’s potential liability.

[8] On 8 December 2015, an application for leave to appeal to the Court of

Appeal was filed on behalf of both Mr Harrison and WCHL. At that point, there was no judgment against Mr Harrison personally.

¹ _{Keogh v Harrison [2015] NZDC 11226.}

² Harrison v Keogh [2015] NZHC 2791 [First HC Decision].

[9] I gave judgment for Mr Keogh against Mr Harrison personally in a judgment of 18 December 2015.³ At the same time, I issued a minute timetabling the filing of submissions anticipating the application for leave would be pursued in respect of both judgments. Unfortunately the minute, including those directions, was not sent out to the parties.

[10] A further application for leave was filed on behalf of Mr Harrison on 22

December 2015. Because of the miscommunication of my earlier minute, submissions on the application for leave were not filed when I had anticipated they would be. The applications were argued before me on 24 June 2016.

The test for granting leave

[11] The application is made pursuant to s 67(1) of the Judicature Act 1908.

[12] There was no disagreement as to the grounds that have to be established. The test for granting leave is summarised in McGechan on Procedure:⁴

J67.02 The test

The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal. Not every alleged error of law is of such importance, either generally or to the parties, as to justify further pursuit of litigation already twice considered and ruled upon by a Court, so the test is a restricted one. The scarce time and resources of the Court of Appeal are not to be wasted, nor additional expense for parties incurred, “without realistic hope of benefit”: Snee v Snee [1999] NZCA 252; [2000] NZFLR 120, (1999) 3 PRNZ 609 (CA) at 125-126, 612-613; Waller v Hider [1997] NZCA 221; [1998] 1 NZLR 412 (CA) at 413. Further, the Court of Appeal has noted the trend, both in New Zealand and in the United Kingdom, “to reverse the steady increase in the number of (second appeals) reaching the Court of Appeal, and so to free up valuable and expensive judicial resources to give more and more effective attention to hearing first appeals”: Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355, [2008] 2 NZLR 591 (CA) at [36]. In Chief Executive of Land Information New Zealand v Luke [2008] NZCA 43 at [18], the Court of Appeal explained that that trend reflected the Court’s fundamental role and the need for proportionality in civil litigation.

³ _{Harrison v Keogh [2015] NZHC 3323 [Second HC Decision].}

⁴ AC Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at

[J67.02].

[13] While all those factors have to be considered, ultimately the issue for me is whether or not, in all the circumstances of this particular case with these particular parties, it is in the interests of justice for leave to be granted. As Mr Conder for Mr Harrison and WCHL acknowledged, this involves a balancing of those factors that might justify a further appeal against the burden of the cost and delays involved in a further appeal. In the circumstances of this case, the demands that would have to be made on valuable judicial resources with a further appeal are a significant factor.

[14] The factual background to the current applications is apparent from the judgment of the District Court and the two judgments from the High Court.

Does the proposed appeal raise questions of law or fact capable of bona fide and serious argument?

[15] In submissions, Mr Conder said the first question for which leave was sought was:

To what degree do the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings⁵ continue to apply to implied terms? In particular, can the Court imply a term in a contract which is neither necessary for business efficacy nor so obvious as to go without saying?

[16] There is nothing in the District Court decision to suggest there was any issue there as to the legal principles which should apply in deciding if a term should be implied into a contract. That was not an issue for me in the High Court.

[17] The approaches taken in BP Refinery (Westernport) Pty Ltd and Attorney- General of Belize v Belize Telecom Ltd have already been considered and commented on by the Court of Appeal in Hickman v Turn and Wave Ltd.⁶ Randerson J, referring to Belize, said the list of elements referred to in the BP Refinery case did

_{not necessarily all have to be satisfied before a term was implied but remained a}

⁵ _{BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266}

⁶ BP Refinery (Westernport) Pty Ltd v Hastings Shire Council, above n 5; Attorney-General of Belize v Belize Telecom Ltd [2009] UKPC 11, [2009] 1 WLR 1988; Hickman v Turn and Wave Ltd [2011] NZCA 100, [2011] 3 NZLR 318. The Court of Appeal’s judgment was overturned by the Supreme Court but the Court’s judgment did not discuss implied terms: [2012] NZSC 72, [2013] 1 NZLR 741.

useful indicator relevant to the deciding what a reasonable person would have understood a contract to mean.⁷

[18] With the way the application for leave was framed, it is apparent WCHL wishes to argue before the Court of Appeal that a term ‘that the parties should be paid out the amounts shown as being due on updated accounts from the company’ should not have been implied into the original ROS on the facts rather than any mistake as to the legal approach which was to be taken.

[19] I do not consider there would be any significant public interest in having the Court of Appeal consider whether or not, on the particular facts of this case, application of the approach adopted in BP Refinery should have been followed and would have led to a different result.

[20] Neither WCHL nor Mr Harrison has anything to gain personally from having the Court of Appeal consider this proposed question. I did agree with the decision of the District Court Judge, that there was an implied term in the ROS that both Mr Keogh and Mr Harrison’s shareholding company would be paid out monies due to them from WCHL at the same time but this was not material to my judgment. I found the issue was not whether they should have been paid out at the same time but whether or not Mr Keogh was entitled to the amount shown as due to him in the

2012 and 2013 accounts prepared for WCHL which he had accepted as a shareholder.⁸

[21] Mr Conder (who had not appeared as counsel at the earlier hearings) said he had made his submissions with the understanding that I had concluded there was an implied term in the ROS that any final adjustment to the shareholders’ current accounts would be based on future debits and credit rather than an adjustment to accounts which had already been signed off by the directors. That is how I interpreted the ROS but it was not through finding there was an implied term to that effect. It was how I interpreted the agreement having regard to the context in which

_{it was entered into.}

⁷ _{Hickman v Turn and Wave Ltd, above n 6, at [248].}

⁸ First HC Decision, above n 2, at [88].

[22] Mr Conder submitted the second question for which leave was sought was:

What nexus is required in estoppel between a party’s reliance and the detriment which they suffer? Is the loss of the representation alone sufficient to establish detriment?

[23] Mr Conder suggested that, with estoppel being a developing area of law becoming increasingly important in a commercial context, there would be a public interest in determining the extent of the detriment that has to be suffered for an estoppel to arise. That submission was made on the premise that, in this case, the only loss which Mr Keogh had suffered was that he had not been paid out the funds which he was entitled to on the accounts as initially prepared.

[24] I found Mr Keogh had relied on the representations made to him in acting in the way set out in para [93] of my judgment of 11 November 2015.

[25] The Court of Appeal has already considered what a party has to establish to be able to rely on estoppel for a particular relief. Those points were set out by Tipping J in National Westminster Finance NZ Ltd v National Bank of NZ Ltd.⁹

They were referred to in my second judgment.¹⁰

[26] The Court of Appeal has said the person relying on an estoppel (the proponent) must establish that he would suffer detriment if the other party were allowed to resile or depart from the assumption that had been made on the basis of representations made to him.¹¹ In the circumstances of this case, that required Mr Keogh to establish that he would suffer detriment if he was not paid the amount due to him as shown by the accounts which he had approved and signed off as a shareholder. The representation or promise in this case was that Mr Keogh would be paid US$52,312.26. That is what he lost by reason of Mr Harrison and WCHL

resiling from the assumption which had been made by all parties in the way they

_{proceeded when the initial accounts were signed off by Mr Keogh.}

⁹ National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548 (CA) at

549-550. The Supreme Court has referred to Tipping J’s judgment as setting out both the essence and distinguishing characteristics of estoppel: Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [68] per McGrath J.

¹⁰ _{Second HC Decision, above n 3, at [28].}

¹¹ National Westminster Finance NZ Ltd v National Bank of NZ Ltd, above n 9 at 550.

[27] In the way Tipping J articulated the principles of estoppel, there was nothing to suggest that the detriment had to be of any particular degree, but connected with the requirement for detriment was that “in all the circumstances, it would be unconscionable to allow the other party to resile or depart from the assumption”.¹²

[28] As was acknowledged in the submissions for WCHL and Mr Harrison, the purpose of estoppel is to repair unconscionable detriment and what the Court should do will be fact-specific.¹³ It is because what a Court does is so fact-specific that what I did in the High Court and what the Court of Appeal might do on any appeal will be of limited precedent value in a general commercial context.¹⁴

[29] Mr Conder submitted that, before the Court of Appeal, WCHL and Mr Harrison would contend that any detriment which Mr Keogh suffered was not necessarily of significant value because Mr Harrison could have arranged for monies to be paid out from WCHL to his shareholding company without obtaining Mr Keogh’s agreement. They would also want to argue that the signing of an indemnity for the liquidator’s costs and approval of the accounts may have been of limited monetary value because the company has not yet been liquidated.

[30] The appellants wish to argue that the detriment which the Court would have to consider should be limited to the detriment Mr Keogh suffered in complying with his responsibilities as a shareholder and completing company documents without objection.

[31] If either Mr Harrison or WCHL were to be given leave to appeal on this issue, they would merely be asking the Court of Appeal to come to a different judgment on the particular facts of the case before them. Neither appellant would be asking the Court of Appeal to establish a new legal principle of importance to the law as to estoppel.

_{[32] It was submitted the third question for which leave should be granted is:}

¹² _{At 550.}

¹³ _{Referring to Commonwealth v Verwayen [1990] HCA 39, (1990) 170 CLR 394.}

¹⁴ It is for this very reason that the Supreme Court declined leave to appeal in Wilson Parking New

Zealand Ltd v Fanshawe 136 Ltd [2014] NZSC 173, (2014) 15 NZCPR 867 at [10].

Whether expectation losses are an appropriate remedy for estoppel where this is out of all proportion with any detriment suffered by the claimant?

[33] This appears to be another way of looking at the proposed second question. It was submitted there would be a public interest in having the Court of Appeal provide guidance as to how the election between two measures of compensation – expectation or reliance-based – should be selected. The Court of Appeal has considered this issue in detail with extensive reference to judgments from New Zealand, Australia and England in Randerson J’s judgment for the Court in Wilson

Parking New Zealand Ltd v Fanshawe 136 Ltd.¹⁵ The Court began its discussion

with the statement that the broad choice in remedies was between a reliance-based remedy on the one hand and expectation-based relief on the other.

[34] Mr Conder acknowledged that Wilson Parking provides “some assistance” as to his third proposed question warranting appeal: the proper remedy for equitable estoppel. This is an understatement. Wilson Parking authoritatively states the principles of equitable estoppel and clearly captures the appropriate flexibility of remedies. Given the fact-dependant nature of the cases coming before the courts, the Court of Appeal explicitly observed that a more concrete statement of these principles is neither a viable nor helpful goal and that, ultimately, the question of remedy is one of fashioning a just outcome guided by these principles, “flexibly

applied to the particular circumstances of the case”.¹⁶

[35] Declining leave to appeal, the Supreme Court noted that an estoppel of the kind established could result in expectation-based relief.¹⁷ While recognising residual scope for debate about aspects of the underlying principles, particularly as to whether the starting point should be the avoidance of detriment, the Supreme Court concluded that the case primarily turned on the application of broad principles to some very particular facts. For this reason, the Supreme Court was not persuaded that a point of general or public importance or of general commercial significance

_{was involved.}

¹⁵ _{Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2013] 3 NZLR 567.}

¹⁶ _{At [113] and [124].}

¹⁷ Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 15, at [10].

[36] It is for the same reason the Court of Appeal’s reconsideration of the issues in this case would be of limited assistance to anyone other than the parties involved in this case.

[37] In assessing the prospects of success for either Mr Harrison or WCHL in this regard, it is also relevant that, in its conclusions in Wilson Parking, the Court of Appeal stated that the clearer and more explicit the assurance is, the more likely it is that a Court would be willing to grant expectation-based relief.¹⁸ This was because a clear assurance was more likely to engender an expectation by the promisee that it would be fulfilled. This is a case where there was a clear and precise assurance, namely the representation through the accounts that Mr Keogh would be paid US$52,312.26.

[38] It was submitted that the fourth question which the Court of Appeal should have the opportunity to consider would be:

Whether a director of a company should be personally liable for the company’s decisions to revise its accounts and to alter the entitlements of its shareholders?

[39] It was submitted that this issue is important because the Court of Appeal has not yet ruled on whether or not a director of a company could become personally liable in equity through representations he has made as a director.

[40] While the Court of Appeal may not have had to consider a case where a director has been found personally liable in equity, there is no controversy or conflict in judgments of the Court of Appeal and the High Court as to whether such liability could arise.

[41] The Court of Appeal recognised in Trevor Ivory Ltd v Anderson that, in the particular circumstances of a case, a director of a company might come under a

_{personal liability to a third party, breach of which might entail personal liability.}¹⁹

¹⁸ _{Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 15, at [115].}

¹⁹ Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517 (CA).

Hardie Boys J stated that, in the policy area, there is “no difficulty in the imposition of personal liability on a director in appropriate circumstances”.²⁰

[42] The Court of Appeal’s statements in that regard were made with reference to the personal liability which might arise in tort if there was a duty of care and negligence, but there was no indication that the Court’s rulings would be limited to such circumstances. Consistent with that, in Attorney-General v Equiticorp Industries Group Ltd (in stat man), the Court of Appeal said:²¹

The phrase “to lift the corporate veil” is a description of the process by which in certain situations the Courts can look behind the corporate façade and identify the real nature of a transaction and the reality of the relationship created. It is not a principle. It describes the process, but provides no guidance as to when it can be used.

[43] In Chen v Butterfield, in the High Court, Tipping J set out the applicable legal principles and circumstances where it could be appropriate to lift the corporate veil.²²

His Honour noted the Court of Appeal’s endorsement of the House of Lords’ approach in Woolfson v Strathclyde Regional Council, whereby “it is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere façade concealing the true facts”.²³ New Zealand courts have repeatedly cautioned against “too ready a departure from ordinary principles of company law”.²⁴ In New Zealand the courts have traditionally been reluctant to lift the corporate veil; recourse will only be had to this remedy in “special”,²⁵ “limited”,²⁶ or “extraordinary circumstances”.²⁷

[44] Tipping J also noted in Chen v Butterfield that “the corporate veil can sometimes be lifted in cases of fraud, sharp practice and unconscionable conduct”.²⁸

²⁰ _{At 527.}

²¹ Attorney-General v Equiticorp Industries Group Ltd (in stat man) [1996] 1 NZLR 528 (CA) at

_541.

²² _{Chen v Butterfield (1996) 7 NZCLC 261,086 (HC).}

23. Woolfson v Strathclyde Regional Council 1978 SC 90 (HL) at 96 per Lord Keith, cited with approval in Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 (CA) at 312.

²⁴ Re Securitibank Ltd (No 2) [1978] 2 NZLR 136 (CA); Bentley Poultry Farm Ltd v Canterbury

_{Poultry Farmers Co-operative Ltd (No 2) (1989) 4 NZCLC 64,780 (HC) at 64,790.}

²⁵ _{Police v Alexandra Park Functions Ltd [2005] NZAR 568 (HC) at [17].}

²⁶ Tiag Ltd v Haier Appliances New Zealand Ltd HC Auckland CIV-2007-404-558, 13 February

_{2008 at [42].}

²⁷ _{Bomac Laboratories Ltd v F Hoffman-La Roche Ltd (2002) 7 NZBLC 103,627 (HC) at [72].}

²⁸ Chen v Butterfield, above n 22, at 7.

[45] In Police v Alexandra Park Functions Ltd, Harrison J held that, in order to justify lifting the corporate veil, “[evidence] is required that an individual has abused the rights and privileges granted by limited liability to defeat, subvert or circumvent a legal obligation or prohibition”.²⁹

[46] Permitting an appeal to the Court of Appeal will thus not resolve any controversy as to whether a director can become personally liable in equity through estoppel. There is no such controversy at present.

[47] I do not consider there is any issue in relation to the personal liability of directors, estoppel or whether a term should have been implied into the ROS which is of sufficient public importance to justify the granting of leave to bring a further appeal.

[48] I acknowledge that, pursuant to s 67, an appeal does not have to be on a question of law. Leave could be given for the Court to consider a potential error as to a judgment that has been reached on the facts. However, this was a case where there was no real dispute as to the facts. The relevant facts were apparent from the documentary record. The legal entitlements and obligations arising from those facts in the case of WCHL have now been considered by both the District Court and the High Court. The amount at issue is relatively modest, certainly so as far as Mr Harrison and WCHL are concerned. I make that assessment having regard to the fact the amount Mr Harrison paid to his shareholding company from WCHL’s bank account was more than $600,000, as well as his obvious ability to pay for the difficult accounting task of revisiting earlier accounts for WCHL and to pursue, with the assistance of counsel, sophisticated and refined legal arguments through all stages of these proceedings to date, to avoid WCHL having to pay a liability that was

originally for US$52,312.26.³⁰

[49] Mr Conder suggested that the seriousness of the existing judgments should not be considered in just monetary terms because there were reputational issues for

_{both Mr Harrison and Mr Stevens, the chartered accountant who had prepared the}

²⁹ _{Police v Alexandra Park Functions Ltd, above n 25.}

³⁰ I acknowledge that, with the revision of earlier accounts, this credit to Mr Keogh from WCHL

changed to a liability from him to WCHL of $63,037.

accounts for WCHL. He referred to the reputational damage that he said had been done through Judge Andrée-Wiltens referring to the way in which the accountant had allowed himself to be manipulated by Mr Harrison, effectively acting as “something like a pawn to Mr Harrison’s king”.³¹

[50] An appeal to the Court of Appeal, no matter what the outcome, is not going to change the way in which either the accountant or Mr Harrison acted in relation to relevant events. Judge Andrée-Wiltens did make an observation as to how the accountant came to act as he did. That observation was not essential to the judgment he reached and it was not essential to mine. I did not refer to it. On an appeal, the Court of Appeal would be considering the legal consequences of how Mr Harrison and the company’s accountant acted, not whether their actions were other than was apparent from the record. I accept that, given the conclusions which I came to as to estoppel against both WCHL and Mr Harrison, there has been a finding that Mr Harrison was engaged in “sharp practice” and acted in a way which was unconscionable.

[51] Mr Conder said it was important to Mr Harrison that he be able to pursue an appeal so Mr Harrison could establish that the actions he had taken were “lawful”. There has been no suggestion that Mr Harrison’s conduct involved criminal offending. In terms of wanting to establish that Mr Harrison’s actions should not have rendered WCHL or Mr Harrison liable at law for the debt claimed by Mr Keogh, I consider the prospects of success for WCHL and Mr Harrison on a further appeal would be limited.

[52] Even if the Court of Appeal were to come to a different view as to the legal consequences of Mr Harrison’s actions, that would not change the nature of what either he or Mr Stevens did. An appeal to the Court of Appeal is thus unlikely to repair any reputational damage Mr Harrison, WCHL or its accountant may have suffered, if indeed that has occurred.

[53] It was suggested in WCHL’s application for leave that there are particular

issues in this case relating to the tax consequences arising out of the revised WCHL

accounts, those being in conflict with what would have been the position on the initial accounts. The revised accounts had not been filed with the IRD at the time of the hearing of the appeal in the High Court. I was told they have still not been filed. It would appear Mr Harrison and WCHL are reserving their position so that they can file the accounts as originally prepared, if they are consistent with the judgments that prevail through these proceedings.

[54] Mr Conder submitted that I should be more ready to grant leave because the issues that would have to be considered on further appeal were reasonably confined. I do not accept that submission. For Mr Keogh, there would be the stress associated with continuing uncertainty and delay in resolving proceedings and, more likely than not, significant expense in obtaining legal advice to assist him with submissions in the Court of Appeal. Significantly too, it is argued for the appellants that there are issues of law where it would be in the public interest to have a judgment from the Court of Appeal on particular nuances of principles that have already been discussed extensively by the Court.

[55] If leave were to be granted on that basis, further consideration of those issues would require a substantial application of the judicial resources of the Court of Appeal. Three judges in that Court would have to familiarise themselves, as judges in both the District Court and the High Court have already done, with the detailed evidence given in the District Court. They would also be required to revisit carefully earlier judgments in New Zealand and potentially other jurisdictions. If a further appeal were to be allowed, it could be expected three judges of the Court of Appeal would address the issues raised as to estoppel with the same time and care as is apparent in their consideration of estoppel issues in Wilson Parking New Zealand

Limited.³²

[56] In relation to Mr Harrison’s application, there is a further matter which I have considered carefully. While findings were made in the District Court as to his actions, they were not the subject of any judgment. When his personal liability was made an issue in the High Court, his counsel chose not to make submissions with regard to any potential liability based on estoppel despite the way that had been

discussed in my judgment against WCHL and the way it had been a potential issue in the District Court proceedings. The judgment against him in the High Court was thus essentially the first judgment. It has resulted in him having a personal liability. Mr Keogh could pursue him for that debt. Mr Harrison has said, in an affidavit in support of his application, that, although he lives in Ireland, he is a regular visitor to New Zealand.

[57] I accept that, in those circumstances, it may be easier to establish that it would be in the interests of justice for there to be an appeal to the Court of Appeal.³³

Balanced against that is the fact that the judgment against him is a judgment as to his civil liability in a particular context.

[58] Furthermore, on the particular facts of this case, there is no issue as to whether a director of a company could become liable in equity for statements he has made or the way he has acted solely as a director of a company. Judgment was entered against Mr Harrison personally because of the way he had personally accepted responsibility for the settlement recorded in the ROS, the implementation of that settlement in accordance with the accounts prepared by Mr Stevens and the assurances he had given as to the way funds from the company would be distributed having regard not just to the company’s position but the personal benefit he would derive through the distribution to his shareholding company. Mr Keogh pointed out in his submissions to me, consistent with Mr Harrison’s personal stake in all that was happening, when it was apparent from the accounts that Mr Keogh would have to be paid US$52,312.26 and Mr Keogh had signed the documents required for that to happen, Mr Harrison sought to set off against the amount due to Mr Keogh a claim which Mr Harrison said he had personally against Mr Keogh for $591,850. Mr Keogh asserted immediately that such a claim could not be pursued because of the earlier settlement of all issues between the parties and companies with which they were involved. No such claim has ever been pursued.

[59] The particular factual basis on which I found Mr Harrison personally liable on the basis of an estoppel was set out in paras [26] to [31] of my second judgment. That judgment recognised Mr Harrison could not become personally liable for acts

which were solely as a director or clearly identifiable as being on behalf of the company. In that sense, my judgment did not require me to pierce the corporate veil.

[60] Mr Harrison’s liability is joint and several with that of WCHL. Given the way in which Mr Harrison was able to arrange payment to his shareholding company of $643,343.58 in 2012, I would have been confident that he and WCHL had the ability to arrange for WCHL to discharge the liability which it had to Mr Keogh. Indeed, pending the hearing of WCHL’s appeal in the High Court, WCHL had obtained a stay of the District Court judgment on the basis that funds had been secured and would be available to meet the company’s liability to Mr Keogh.

[61] At the hearing of this application, Mr Keogh and Mr Conder confirmed to me that there had been a further stay granted in the District Court on the basis $120,000 was being held in the trust account of the solicitors for Mr Harrison and WCHL with undertakings that those funds would be available to meet the judgments of the High Court. Undertakings were given accordingly. I was not told the precise terms of those undertakings but what I was told indicates that funds are available which WCHL could apply immediately to meet the liability which it has jointly and severally with Mr Keogh as a result of the judgments which have already been given. If that happens, Mr Harrison would not have to pay any debt arising out of the judgment which has been given against him. Accordingly, the refusal of leave will not necessarily result in Mr Harrison having to make any payments to Mr Keogh. Weighing that in the balance and in the particular circumstances of this case, I do not consider it would be in the interests of justice for Mr Harrison to be granted leave to appeal against the judgment which was given against him personally.

[62] The facts of this case are similar to those in Norris v Johnson Price Holdings Ltd, where the Court of Appeal declined Mr Norris’ application for special leave to appeal.³⁴ Mr Norris was a liquidator who contested his personal liability for rental arrears accrued while he attempted to sell the company’s business as a going concern. The Court of Appeal accepted that in those proceedings there may have

_{been errors of judicial reasoning, yet still declined leave because:}³⁵

³⁴ _{Norris v Johnson Price Holdings Ltd [2012] NZCA 541.}

³⁵ At [30] (citations omitted).

(a) the amount at stake was relatively small;

(b) the primary function of a second appeal is not to correct error;

(c) it was far from certain that Johnson Price would have had an alternative remedy (as claimed by counsel for Mr Norris) were it to be deprived of its judgment; and

(d) Mr Norris’ position was “not a particularly deserving one”. He had given an assurance which he had failed to honour and without which Johnson Price would never have agreed for the lease to continue. He had sufficient funds to pay the rent when it was due but failed to do so. Moreover, although he failed to pay this debt, he did pay his own management company and other lesser priority debts.

[63] I thus consider that the proposed questions do not raise any question of law or fact capable of serious argument and involving some interest of public or private importance to justify a further appeal.

[64] The judgments already obtained give effect to a settlement which was reached on 30 August 2011. There have already been numerous delays as well as a considerable use of judicial resources and significant expense, stress and no doubt inconvenience to Mr Keogh. The merits of WCHL’s position have been considered in both the District Court and the High Court. The result in both Courts has been the same, albeit for different reasons. The interests of justice do not, in the circumstances, justify leave being given to each appellant to further appeal this matter to the Court of Appeal.

[65] The applications for leave to appeal by both appellants are dismissed. Mr Keogh is entitled to costs. The submissions he filed, as respondent to these applications, were of assistance. He told me they had been prepared with the benefit of legal advice. If there is no agreement over costs, Mr Keogh may file a memorandum setting out what he seeks. He must do this by 29 July 2016. A memorandum should be filed for the appellants in response by 12 August 2016. Mr

Keogh is to file any reply by 19 August 2016. The memoranda are to be no longer than five pages. I will make a decision as to costs on the basis of those memoranda.

Solicitors:

Holland Beckett, Tauranga

Copy to:

J P J Keogh, Wellington.