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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV 2002-404-1931
BETWEEN CHRISTOPHER RUSSELL HOOK
Plaintiff
AND GULF HARBOUR TOWN CENTRE
LIMITED (IN LIQUIDATION)
First Defendant
AND GULF HARBOUR DEVELOPMENT
LIMITED (IN LIQUIDATION)
Second Defendant
AND
GULF HARBOUR MANAGEMENT
LIMITED (IN LIQUIDATION)
Third Defendant
AND GULF HARBOUR HOLDINGS LIMITED
(IN LIQUIDATION)
Fourth Defendant
AND GRAEME BRUCE
JOHNSTONE
Fifth Defendant
AND TAN KOK SENG
Sixth Defendant
AND GOH CHENG LIANG
Seventh Defendant
AND AUCKLAND REGIONAL HOLDINGS
Eighth Defendant
AND AMERICA'S CUP VILLAGE LIMITED
Ninth Defendant
AND JOHN EDWARD CHRISTOPHER
SELLICK
Third Party
Hearing: 10-13 and 16 October 2006
HOOK V GULF HARBOUR TOWN CENTRE LIMITED
(IN LIQUIDATION) AND ORS HC AK CIV 2002-
404-1931 2 March 2007
Appearances: S R G Judd for plaintiff
J Long and M
Heard for 1st-4th defendants
J Billington QC and H M Lim for 6th and 7th defendants
R B Stewart QC and
L A O'Gorman for 8th and 9th defendants
Judgment: 2 March 2007
JUDGMENT OF ALLAN J
Solicitors/Counsel
S R G Judd PO Box 3320 Auckland
Phillips. PO Box 28649, Auckland
Lee Salmon Long, PO Box 2026, Auckland
J Billington QC, jb@shortlandchambers.co.nz
Gulf Harbour Management Ltd, Manukau
R B Stewart QC, rbstewart@xtra.co.nz
Buddle Findlay, PO Box 1433 Shortland St, Auckland
2
[1] Gulf Harbour is situated on the southern side
of the Whangaparaoa Peninsula.
For a period of some years, commencing in the early 1990s, the region was the
subject of significant
development. An existing marina was enlarged and improved;
a town centre and golf course were constructed, and there was very substantial
residential expansion.
[2] In May 1995 the Royal New Zealand Yacht Squadron won the America's
Cup. An America's Cup Regatta
was planned for the year 2000; races would be
held in the Hauraki Gulf. The regatta would attract a number of racing syndicates
and
much international interest. Gulf Harbour offered obvious commercial
opportunities by reason of its proximity to the proposed
course, and its facilities,
both existing and planned.
[3] The plaintiff, Mr Hook, became interested in participating in exploiting
those
opportunities. He engaged in negotiations with those who controlled the Gulf
Harbour development. Ultimately he
entered into a number of commercial
arrangements, for which he incorporated several companies. They were:
a) An agreement
to lease premises in the town centre for the purpose of
establishing a licensed restaurant for which Nautilus (Gulf
Harbour)
Ltd (Nautilus) was incorporated;
b) An agreement to lease premises in the town centre in
order to
establish a tavern business and a wine shop. For that purpose Judder
Bar (Gulf Harbour) Ltd (Judder Bar) was incorporated;
c) An agreement to lease premises to be fitted out and operated as a
hotel. For that purpose Gulf Harbour
Lodge Ltd (Lodge) was
incorporated;
d) The purchase of the only commercially zoned land at Gulf
Harbour
other than the town centre itself, for the purpose of establishing a
petrol station;
Gulf Harbour Service Centre Ltd (Services) was
incorporated in that regard;
e) An agreement to purchase
a residential section upon which a house
was built as a residence for the plaintiff and his wife. For that purpose
Lochmara Ventures Ltd (Lochmara) was incorporated.
[4] In addition, the plaintiff incorporated Gulf Harbour
Charters Ltd (Charters)
with a view to purchasing a vessel to operate charters during the Cup Regatta, in
conjunction with the operations
of Lodge.
[5] Unfortunately, the plaintiff's businesses did not prosper. He says that those
controlling Gulf Harbour made a
number of false representations to him. In
particular, he complains that he was given to understand that a number of
racing
syndicates would be based at Gulf Harbour. In the end, all syndicates went to the
Viaduct Basin. Mr Hook sold his shareholding
in Charters in late 1998, and in
Services in January 1999. Lodge, Nautilus and Judder Bar were placed in
liquidation on 20
April 1999. Mr Hook says that he has suffered significant financial
loss.
[6] As a result the plaintiff first issued proceedings
on 12 November 2001. That
statement of claim was amended on 22 April 2002, and the proceeding was joined by
a second claim, CP442/02,
filed on 10 October 2002. Those claims were
consolidated with effect from 20 March 2003. The proceedings have followed
a
somewhat complicated course. There have been no fewer than seven separate
statements of claim alleging various causes of
action against a range of defendants.
It is however, unnecessary to trace the history of the litigation for the purposes of the
interlocutory
applications with which this judgment is concerned, because counsel
are agreed that the Court's attention can properly be confined
to Mr Hook's third
amended consolidated statement of claim dated 14 December 2005, to be considered
in the light of the immediately
preceding claim, the second amended consolidated
statement of claim dated 11 March 2004. References to Mr Hook's statement of
claim
hereafter are to the third amended consolidated statement of claim unless
otherwise stipulated.
[7] The statement of claim greatly
expands the scope of the proceeding, both in
respect of the number of defendants named, and the number and character of the
causes
of action pleaded. The first four defendants are Gulf Harbour Town Centre
Ltd (first defendant), Gulf Harbour Development Ltd (second
defendant) Gulf
Harbour Management Ltd (third defendant) and Gulf Harbour Holdings Ltd (fourth
defendant). All are in liquidation.
The first, second and fourth defendants were the
only defendants named in the second amended consolidated statement of claim.
[8]
In broad terms, the first defendant was involved in the development of the
town centre, the second defendant was responsible for
the development of the land
surrounding the town centre and the marina, the third defendant was a management
company and the fourth
defendant was the sole shareholder in the first three
defendants.
[9] The fifth defendant, Mr Johnstone, is claimed to have
been general manager
of one or more entities within the Gulf Harbour group. The sixth defendant, Mr Tan,
is said to have been managing
director of Gulf Harbour Developments and Gulf
Harbour Management. The seventh defendant Mr Goh was a director of Gulf
Harbour Holdings
and is alleged to have "controlled, directly or indirectly, the [Gulf
Harbour] group". The eighth defendant, Auckland Regional Holdings, is a local
authority
associated with the Auckland Regional Council. It was formerly known as
Infrastructure Auckland, and prior to that, as the Auckland
Regional Services Trust
(ARST). The ninth defendant is America's Cup Village Ltd (ACV), incorporated by
the ARST for the purpose
of participating in the provision of America's Cup bases
and services at the Viaduct Basin. It owned land in the vicinity of the
Basin.
The causes of action
[10] As a first cause of action Mr Hook claims that all of the defendants are
parties to, or relevantly
involved in, anti-competitive conduct, arising from the terms
and implementation of two written agreements entered into on 11 September
1997
(the September 1997 agreement) and 24 November 1998 (the November 1998
agreement) respectively.
[11] It is pleaded that
these agreements, and their implementation, had the purpose
and/or likely effect of substantially lessening competition in a market
in breach of s
27 of the Commerce Act 1986.
[12] All the defendants are said to have been involved in anti-competitive
conduct,
either as contracting parties, or by aiding, abetting, procuring or being
directly or indirectly knowingly concerned in that conduct.
[13] The plaintiff claims the consequence of the conduct was that, by agreement
between the defendants, no yachting syndicates
and no super-yachts were based at
Gulf Harbour, with consequent adverse financial implications for the plaintiff and his
companies.
[14] In the second cause of action, also pleaded against all defendants, the plaintiff
alleges an unlawful means conspiracy involving
all defendants and arising from the
alleged breach of s 27 of the Commerce Act 1986, certain misleading representations
as to the
true nature of the relationship between ACV and the Gulf Harbour
companies in breach of s 9 of the Fair Trading Act 1986, and the
commission of the
torts of deceit and negligent mis-statement.
[15] The third to sixth causes of action are pleaded against the
first to seventh
defendants inclusive only. The third cause of action pleads deceit, said to arise from
certain false representations
about Gulf Harbour's prospects made to the plaintiff at a
time when the defendants were aware of the anti-competitive conduct arising
from
the September 1997 and November 1998 agreements, and were thereby known by
the defendants to be false. The fourth cause of action
is similarly based, but alleges
negligent mis-statement. The fifth cause of action pleads the provisions of s 9 of the
Fair Trading
Act 1986, again founded upon representations said to have been made
in the context of the alleged anti-competitive conduct. The sixth
cause of action,
similarly grounded, alleges promissory estoppel.
[16] The seventh and eighth causes of action are pleaded against
Gulf Harbour
Town Centre Ltd and Gulf Harbour Development Ltd only. They allege breaches of
contract and are largely replications
of pleadings found in the second amended
consolidated statement of claim. The seventh and eighth causes of action were not
the
subject of challenge before me.
Plaintiff's losses
[17] Mr Hook is the sole plaintiff. He claims in his own right to have
lost a total
of $811,607 made up of unrecovered advances made by him to Nautilus, Judder Bar,
and Lodge, together with payments of
$112,312 in respect of his personal guarantee
of the obligations of Nautilus and Judder Bar, and some $277,362 for legal fees and
Court costs. He says also that his companies have suffered a total loss of profits of
$4,100,000 and that the businesses of Judder
Bar, Nautilus, and Lodge respectively,
having totally failed, have suffered capital losses of $1,500,000 in total.
[18] Mr Hook's
personal entitlement to damages for losses suffered by his
companies is an issue which is not directly addressed in the pleadings.
It is not
immediately obvious how he can maintain a claim for losses suffered by his
companies, as distinct from those which he can establish as personal to
him. I return
to this point later.
[19] Finally, Mr Hook alleges that he is entitled to distress damages of $300,000
and exemplary
damages totalling $3.25m.
[20] The detail of these alleged losses appears in the section of the statement of
claim which precedes
the separate causes of action. The first-sixth causes of action
in each case incorporate an identical prayer for relief, in which
Mr Hook claims:
a) Damages for pecuniary loss to be assessed at trial, or an inquiry into
damages;
b) General damages for non-pecuniary damage of $300,000;
c) Exemplary damages of $3.25m;
d) Interest;
e) Costs.
The applications
[21] Several interlocutory applications were the subject of very
detailed argument
during the course of the five day hearing, in which, as Ms O'Gorman neatly put it, I
was:
... swamped with
a mass of paper and submissions relating to a wide range
of matters including:
various proceedings involving
seven statements of claim against a
progressively increasing number of different defendants since
November
2001;
various judgments delivered in those proceedings;
amendments to the limitation periods under
the Commerce Act and
the Fair Trading Act;
pleas of negligent mis-statement, deceptive/misleading conduct,
anti-competitive conduct, conspiracy, deceit, concealment,
compromise, estoppel, limitation bars and
standing issues;
six volumes of case law some of which conflicts;
construction and interpretation
issues in relation to the limitation
legislation.
[22] The applications before the Court comprised:
a)
An application by Mr Hook to join Lochmara as a plaintiff and Lodge,
Nautilus and Judder Bar as defendants;
b) An application by the first-fourth defendants for orders striking out
portions of the plaintiff's statement
of claim;
c) An application by the seventh defendant to dismiss the proceeding as
against him. This application
is made in reliance on r 131 following
the filing of a notice of protest to jurisdiction;
d) An application
by the eighth and ninth defendants for an order striking
out the claim as against them, or alternatively for defendants'
summary judgment.
[23] There is a significant degree of overlap between the defendants' applications.
In particular,
all defendants argue that most of the plaintiff's causes of action are
statute barred. It is convenient to deal with that issue first,
because my conclusions
on this point will affect the outcome of certain other applications.
Strike out/defendant's summary judgment
[24] This Court has jurisdiction to strike out pleadings under r 186 of the High
Court Rules, and under its inherent jurisdiction.
Rule 186 provides:
186 Striking out pleading
Without prejudice to the inherent jurisdiction of the Court in that
regard,
where a pleading--
(a) Discloses no reasonable cause of action or defence or other case
appropriate
to the nature of the pleading; or
(b) Is likely to cause prejudice, embarrassment, or delay in the proceeding;
or
(c) Is otherwise an abuse of the process of the Court,--
the Court may at any stage of the proceeding, on such
terms as it thinks fit,
order that the whole or any part of the pleading be struck out.
[25] The principles pertaining
to strike out applications are well-settled. In van
Soest v Residual Health Management Unit [2000] 1 NZLR 179 (CA) at [7],
Blanchard J for the Court said:
It is common ground that a claim is not to be struck out unless it [is] so clearly
untenable that it could not possibly succeed even after amendment in a
manner proposed by the plaintiff, and on the
assumption that all facts alleged
in the statement of claim can be proved to be true (R Lucas & Son (Nelson
Mail) Ltd
v O'Brien [1978] 2 NZLR 289 at 294 295; Takaro Properties Ltd
(in receivership) v Rowling [1978] 2 NZLR 314 at 316 317; Attorney-
General v Prince and Gardner [1998] 1 NZLR 262 at p267). The statement of
claim must be beyond repair. It must be plain that even if it is reformulated the
claim
cannot succeed.
[26] It has been noted that the jurisdiction is one to be exercised sparingly, and
only in a clear case where
the Court is satisfied it has the requisite material.
However, the fact that applications to strike out raise difficult questions
of law, and
require extensive argument, does not exclude the jurisdiction: Attorney-General v
Prince and Gardner.
[27] Alternatively,
the Court may give judgment against a plaintiff where it is held
that no pleaded cause of action can succeed. Rule 136(2) provides:
136 Judgment where there is no defence or where no cause of action
can succeed
The Court may give judgment
against a plaintiff if the defendant satisfies the
Court that none of the causes of action in the plaintiff's statement of
claim
can succeed.
[28] Rule 136(2) permits a defendant who has a clear answer to the plaintiff to put
up the evidence
which constitutes the answer so that the proceedings can be
summarily dismissed: Westpac Banking Corporation v M M Kembla NZ Ltd
[2001]
2 NZLR 298; Jones v Attorney-General [2003] UKPC 48; [2004] 1 NZLR 433. A defendant's
application for summary judgment is similar to an application to strike out;
however, an application
for summary judgment must be supported by affidavit
evidence. It is thereby possible to obtain judgment on the basis of material
other
than that contained in the pleadings. Summary judgment is suitable for cases where
an abbreviated procedure and affidavit evidence
will sufficiently expose the facts
and the legal issues: Westpac Banking Corporation v M M Kembla NZ Ltd. Rarely,
if ever, will the
procedure be appropriate where the outcome of the action may
depend on disputed issues of fact: Jones v Attorney-General.
Further, summary
judgment is not available to a defendant who cannot show that the plaintiff must fail
on each and every cause
of action.
[29] The onus lies on the party bringing either application to prove that the
plaintiff cannot succeed. It has been
observed that this is an exacting test, as it is a
serious thing to stop a plaintiff bringing his claim to trial: Jones v Attorney-General
at [10]; Adams v Joseph Banks Trusts Ltd HC WN CP224/91 4 March 1992, Master
Williams QC at 2.
Limitation issues the law
[30]
Counsel for the defendants join in arguing that Mr Hook's statement of claim
must be struck out at least to the extent to which
it relies upon alleged breaches of
the Commerce Act 1986, because any such claim is statute barred.
[31] As it now stands, s
82 of the Commerce Act provides:
82 Actions for damages for contravention of Part 2
(1) Every person is liable
in damages for any loss or damage caused by
that person engaging in conduct that constitutes any of the following--
(a) A contravention of any of the provisions of Part 2 of this
Act:
(b) Aiding,
abetting, counselling, or procuring the contravention
of such a provision:
(c) Inducing
by threats, promises, or otherwise the
contravention of such a provision:
(d)
Being in any way directly or indirectly, knowingly
concerned in, or party to, the contravention of such
a
provision:
(e) Conspiring with any other person in the contravention of
such a provision.
(2) An action under subsection (1) may be commenced within 3 years
after the matter
giving rise to the contravention was discovered or
ought reasonably to have been discovered. However, no action under
subsection (1) may be commenced 10 years or more after the matter
giving rise to the contravention.
[32] The section took effect in that form from 26 May 2001, by virtue of s 19 of
the Commerce Amendment Act 2001. Prior to that
date, s 82(2) relevantly provided:
An action under subs (1) of this section may be commenced at any time
within 3
years from the time when the cause of action arose.
[33] Section 26 of the Commerce Amendment Act provides:
26 Provisions
as to proceedings already barred and pending
proceedings
Nothing in this Act--
(a) enables any proceedings
to be brought that were barred before the
commencement of this Act; or
(b) affects any proceedings commenced before
the commencement of this
Act.
[34] It is self-evident that s 19 was intended to effect a substantive change in
Commerce
Act limitation provisions. Section 26 would otherwise have been
superfluous. The effect of s 26 is that causes of action based
upon alleged breaches
of the Commerce Act will be time barred if:
a) They were already barred under the former s 82(2)
prior to 26 May
2001; or
b) They were not brought within the time specified in s 82(2) as it now
stands.
[35] Section 82(2) pre-amendment contained no explicit discoverability provision
of the type more recently enacted. Nevertheless in Bomac Laboratories
Ltd v
F Hoffman-La Roche Ltd (2002) 7 NZBLC 103,627, Harrison J held that the
reasonable discoverability doctrine should be read into s 82(2) as it stood pre-
amendment at [172].
Fisher J took a different view in Commerce Commission v
Roche Products New Zealand Ltd [2003] 2 NZLR 519 which dealt with the
construction of very similar language in s 80(5) of the Commerce Act.
[36] Importantly, the Court of Appeal
has recently pointed out that the reasonable
discoverability doctrine is not a general test to be applied in a wide variety of
circumstances.
As the law stands, it will be relevant only in cases of latent defects in
buildings, personal injury claims and sexual assault cases:
Murray v Morel & Co
Ltd [2006] 2 NZLR 366 at [43]-[53], affirmed in Securities Commission v Midavia
Rail Investments BVBA CA252/05 29 November 2006. I am satisfied that, under
the
subsection as it stood pre-amendment, time commenced to run from the date upon
which the cause of action arose. Questions of
reasonable discoverability are not
relevant.
[37] I accept the submission of counsel for the eighth and ninth defendants that
the
Courts have used the expressions "arose" and "accrued" interchangeably in this
context: see for example Invercargill City v Hamlin
[1996] 1 NZLR 513 at 523. In
general a cause of action will arise, or accrue, when all the material facts and
elements of the cause
of action first come into existence: Saunders & Co v Bank of
New Zealand [2002] 2 NZLR 270 at [28]. Counsel for the defendants accept that
pre-amendment, time did not start running against the plaintiff until some loss or
damage had occurred.
[38] Post-amendment, the limitation landscape has changed. Section 82(2) as it
now stands is similar (leaving
aside the reasonable discoverability factor) to the
provisions of s 43(5) of the Fair Trading Act 1986, prior to its amendment in
2001.
At that time s 43(5) provided:
An application under subsection (1) of this section may be made at any time
within
3 years from the time when the matter giving rise to the application
occurred.
[39] In Murray v Eliza Jane Holdings Ltd
(1993) 6 PRNZ 251, the Court of
Appeal held that time began running under s 43(5) whether or not loss or damage
had occurred. The words of the section
were aimed at conduct simpliciter. The
reasons given by the Court of Appeal are equally applicable to the present case:
a) The Act was intended to catch both claims for loss already suffered
and proceedings based on the likelihood
of future loss or damage;
b) The word "matter" was singular and not apt to cover both conduct and
ensuing
loss;
c) "Matter" could not logically include loss or damage when a person
could seek an injunction on
the premise that he or she was likely to
suffer loss in the future.
[40] I accept the submission of counsel for
the eight and ninth defendants that the
expression "matter giving rise to the contravention" in s 82(2) post-amendment, is a
reference
to any conduct in contravention of the Commerce Act, whether or not loss
or damage has been suffered by a plaintiff at the time.
In consequence, time will
begin to run whether or not any such loss or damage has been suffered.
[41] Section 82(2) as it now
stands incorporates the reasonable discoverability test
couched, as is usual, in partly objective terms. If the matter giving rise
to the
contravention has been discovered in fact, then time will begin to run at that point.
But time will commence running at an
earlier stage if the matter giving rise to the
contravention "ought reasonably to have been discovered" at that earlier time. The
test to be applied in determining whether a matter giving rise to a contravention
ought reasonably to have been discovered, was discussed
by the Court of Appeal in
Amaltal Corporation Ltd v Maruha Corporation (2006) 3 NZCCLR 1. Following a
discussion of the authorities,
the Court concluded that what is required is reasonable
diligence, not exceptional diligence: see [151]-[161].
[42] Further,
the test is to be applied by considering how a person carrying on a
business of the relevant kind would act if he had adequate but
not unlimited staff
resources, and was motivated by a reasonable, but not excessive, sense of urgency:
Paragon Finance PLC v DB Thakerar
& Co (a firm) [1998] EWCA Civ 1249; [1999] 1 All ER 400 (CA),
approved by the Court of Appeal at [155] of Amaltal.
[43] It is the discovery or reasonable discoverability of facts which
triggers the
running of time for limitation purposes, not the legal consequences of those facts:
Stratford v Phillips Shayle-George
(2001) 15 PRNZ 573 at 579 (CA).
[44] As earlier noted the plaintiff's fifth cause of action invokes s 9 of the Fair
Trading Act. Limitation issues
under that Act fall to be considered under s 43(5). In
its earlier form, that subsection is set out and discussed above. It was however
amended with effect from 3 May 2001, and now provides:
(5) An application under subsection (1) may be made at any time within
3
years after the date on which the loss or damage, or the likelihood of loss or
damage, was discovered or ought reasonably
to have been discovered.
[45] The relevant savings provision is to be found in s 4 of the Fair Trading
Amendment Act 2001, which
provides that the amended section does not affect any
proceedings that were barred before the commencement of the Amendment Act
or
any proceedings commenced prior to 3 May 2001.
[46] Accordingly, in the present case, the cause of action brought in reliance
on
the Fair Trading Act will be barred if it can be shown that either it was barred under
the pre-amendment provision, prior to 3
May 2001, or that the plaintiff had
discovered, or ought reasonably to have discovered, loss or damage or the likelihood
of loss
or damage, prior to 14 December 2002 (the statement of claim having been
filed on 14 December 2005). Pre-amendment, s 43(5) incorporated
no reasonable
discoverability test: Murray v Eliza Jane Holdings Ltd.
[47] Section 41(a) of the Limitation Act 1950 provides
for a limitation period of
six years from the date of accrual of a cause of action, in a proceeding founded on
simple contract or
tort, but s 33(1) provides that the Limitation Act has no
application where a limitation period is prescribed by another enactment.
Limitation issues the factual matrix
[48] In March 1996, as earlier recounted, the Gulf Harbour Group (of which the
first-fourth
defendants formed part), and its management, had become interested in
developing Gulf Harbour to accommodate America's Cup challenge
syndicates and
super yachts and other spectators for the 2000 America's Cup challenge. During
1996 and 1997, that group corresponded
with a number of challenge syndicates. On
the evidence it appears that negotiations with various syndicates extended over a
period
from about late 1996 through to about September 1997. There is evidence of
distinct interest, for example, from Newport Challenge
and the New York Yacht
Club. Initially, Bayswater appeared to be a viable option as a base for challengers
and super yachts, but
fairly soon it emerged that the true competitors were the
Viaduct area and Gulf Harbour.
[49] In 1996 the plaintiff set up and
funded Lochmara, Nautilus and Judder Bar.
Lochmara purchased the land on which the plaintiff's residence was built in May
1996. Nautilus
and Judder Bar signed their leases on 21 October 1996. Mr Hook
invested in Lodge in February 1997, in Services on 27 May 1997,
and incorporated
Charter on 12 November 1997.
[50] The Gulf Harbour Group applied for appropriate resource consents in July
1997,
and for that purpose obtained a report from Beca Carter dated 26 July 1997,
which strongly supported the Gulf Harbour facility as
a viable and highly suitable
alternative to the Viaduct Basin.
[51] In mid-1997 the ARST and ACV were becoming concerned about
competition from Gulf Harbour for America's Cup syndicates. There is evidence
that on 24 June 1997, a representative of the ARST
told a lawyer acting for the Gulf
Harbour Group that the Trust was concerned about competition and proposed to
oppose Gulf Harbour's
resource consent application.
[52] On 11 September 1997 ACV and Gulf Harbour Development Ltd entered
into the September 1997
agreement. In summary, this agreement:
· stipulated that the relationship between the parties was not that of partners,
although
they agreed to hold themselves out to the public at large as such;
· conferred upon ACV the right to take over negotiations with
interested
syndicates and other parties, in respect of the possible provision of facilities at
Gulf Harbour;
· provided generally that ACV would support
the development at Gulf Harbour;
· recorded in general terms an expectation that at least one high profile racing
syndicate
would be based at Gulf Harbour. The agreement listed a number of
possible challengers which might be so based, but notably excluded
both
Newport Challenge and New York Yacht Club. However there was a caveat
upon the possibility of any challenger being located
at Gulf Harbour; if eight or
fewer teams committed to base occupancy arrangements at the Viaduct, then
ACV was entitled to
allocate all teams to the Viaduct Basin base. Only if nine or
more teams were committed, would ACV's obligation to use its
best endeavours
to ensure that at least one such team went to Gulf Harbour, arise;
· provided a guarantee by ACV to Gulf
Harbour that the latter would receive
payment of sums totalling at least $4m from the Gulf Harbour base facilities,
including
$2m plus GST to be paid immediately on signing the agreement;
· contained an indemnity " ... given the potentially contentious
nature of ACV's
role under this agreement ..." by ACV in respect of any liability which Gulf
Harbour might incur by reason
of the existence of the agreement.
[53] The overall effect of the agreement was that Gulf Harbour relinquished to
ACV the right
to contract with interested parties for the provision of facilities at Gulf
Harbour.
[54] The parties to the agreement joined
in a press release which conveyed the
overall impression that the likelihood of racing syndicates being based at Gulf
Harbour was
increased by reason of the conclusion of the agreement.
[55] At about this time other publications produced by or on behalf of
the Gulf
Harbour Group likewise conveyed the impression that there was a high likelihood
that racing syndicates would be based at
Gulf Harbour. Indeed, it seems that by the
time of the November 1997 agreement, Gulf Harbour's own negotiations with the
New York
Yacht Club were at an advanced stage.
[56] The general effect of the September 1997 agreement appears to have become
common knowledge
after a time, at least in the Auckland commercial community.
On 7 November 1997, the Independent Business Weekly published an article
headed
"Renewed Support and Another Boat Race for America's Cup Base". The article
included the following passage:
Another
reason for the turnaround in challenger sentiment is that the Gulf
Harbour Marina at Whangaparaoa is no longer an immediate
option. ACVL
has a marketing agreement with the Gulf Harbour developers whereby the
Viaduct Basin village will be filled
first, and any over-flow will then go to
Gulf Harbour. Sutherland won't confirm the amount paid to Gulf Harbour
as
part of the deal.
[57] In the issue of the National Business Review of 6 March 1998, the following
appeared:
Under
the deal done last year between ACVL and Gulf Harbour developers
the Viaduct Basin was to be filled first and the overflow
was to go to
Whangaparaoa.
General Manager at Gulf Harbour Development, Graeme Johnstone, said it
was
now unlikely that any of the syndicates would be based there.
[58] By that time Mr Hook had met Mr Goh. The first occasion was
in November
1997, and on the plaintiff's evidence there were two further meetings in 1998.
Mr Hook says that on these occasions Mr
Goh made various representations to him,
to the general effect that Gulf Harbour's America's Cup prospects were good, and
Mr Hook
should therefore continue with his involvement in the Gulf Harbour area,
and that there were prospects of joint ventures between
them. For his part, Mr Goh
accepts that he may have met Mr Hook once or twice but says that those meetings
were purely social. He
vehemently denies the account given by Mr Hook, and
indeed denies that one or two of the meetings of which Mr Hook speaks ever took
place.
[59] There is evidence to suggest,
to put matters at their lowest, that Mr Goh was
rightly regarded in the Gulf Harbour area as the effective owner of the Gulf Harbour
Group, and the person who made the important decisions.
[60] Although on Mr Hook's evidence there were several positive and
constructive meetings between him and Mr Goh between late 1997 and about mid-
1998, disputes had plainly arisen between Mr Hook and
the Gulf Harbour Group at a
relatively early stage, and certainly by late 1997.
[61] On 27 May 1998 Mr Hook's then solicitor,
Mr Seebold of Kensington Swan,
wrote to Gulf Harbour Management Ltd. This was a long letter dealing with a
number of issues which
had arisen with respect to various defaults under leases and
mortgages and in respect of fit out payment discrepancies. The letter
included the
following passage:
Other matters
5.1 Mr Hook has asked us to convey to you his concern and regret at the
apparent deterioration in the working relationship between GHL and
GHD.
5.2 In respect of the lodge, we record the fact
that Mr Hook only agreed
to lease the premises after much discussion and persuasion by
Colliers Jardine and Gulf Harbour
management, namely Mr Tan and
Mr Johnstone. We understand that GHD was unable to secure a
lessee for the Lodge and
as is evidenced by the terms of the lease
agreement itself, the lease agreement reflected the `friendly'
arrangement
entered into by the parties. Prior to entering the lease,
Mr Hook made it very clear that because of the market uncertainties
and the possibility of having to provide financial support to Nautilus
and Judder Bar for the first two years of operation,
the Lodge would
not be able to sustain a negative cash flow during its start up phase.
As mentioned earlier, it was
understood that GHD would provide
assistance to GHL in the event of difficult times.
5.3 To date, the Lodge has produced
a negative cash flow which has
been covered by GHL through the summer months and by using the
positive cash flow of
Nautilus and Judder Bar. However, the overall
cash flow is now negative as previously outlined to GHD.
5.4 In addition,
further representations were made by GHD to Mr Hook
in respect of the development plans for Gulf Harbour. In particular,
Mr Hook was led to believe that stage 2 of the village would be built
soon after stage 1 and that a number of the America's
Cup
Challenge Syndicates would be based at Gulf Harbour from August
1998 until the conclusion of the Challenger Series
in March 2000.
These representations were relied upon by Mr Hook in reaching a
decision to lease the Lodge premises,
Nautilus, the Judder Bar and
the wine shop. GHD has breached its representations to GHL and
Mr Hook in the following
ways:
(a) Entering into an agreement with parties concerned with the
Viaduct Basin development to prohibit any
America's Cup
Syndicates being based at Gulf Harbour;
(b) Stage 2 of the Marine Village Commercial Centre has
not
commenced and GHD has not secured during Stage 1 the quality
and variety of tenancies as represented;
(c) Phase 4 apartments have failed to attract buyers as
contemplated; and has deferred the development of further
canal housing;
(d) The Admiralty Hills Residential Development has fallen over
and the property has
been returned to GHD with the result that
there will be a delay for one to two years; and
(e) Cape Villas development
has been stalled for six months and
has probably been set back at least one year.
[62] Particularly noteworthy for
present purposes is paragraph 5.4(a) which
evidences an awareness on Mr Hook's part of the existence and general effect of the
November 1997 agreement. It seems from Mr Hook's
evidence that he first learned
of the existence and effect of the agreement early in 1998, from Mr Johnstone.
[63] On 4 June
1998 Gulf Harbour responded to the Kensington Swan letter in
writing. The response confirmed the existence of an agreement, but declined
to
disclose its contents on confidentiality grounds.
[64] On 21 August 1998, the first defendant, Lodge, Nautilus, Judder Bar
and
Messrs Hook and Sellick, entered into a deed of settlement, under which various
obligations between the parties were cancelled
and various payments agreed upon.
That deed included the following provision:
Full and final settlement
5.1 The
parties agree that this deed represents the full and final
settlement of all claims (including, without limitation,
the claims
referred to in the Kensington Swan letter to Gulf Harbour
Management Limited of 27 May 1998
and correspondence between
the parties from May to August 1998) which any party may have
against the
others (either now and in the future) and that none of the
parties shall have any further claim against any other
party in respect
of any matter relating to this deed.
[65] In the meantime, solicitors acting for the Gulf Harbour
Group and for the
eighth and ninth defendants became progressively concerned as to the possible anti-
trust implications of the September
1997 agreement. Ultimately, ACV and Gulf
Harbour Developments entered into a further agreement on 24 November 1998.
This agreement:
· terminated the September 1997 agreement;
· provided that the Gulf Harbour Group would proceed with the construction of
five fully serviced berths at Gulf Harbour;
· provided that ACV would be the exclusive marketing agent for those berths;
· required Gulf Harbour to obtain any necessary further resource consents;
· conferred upon ACV the sole responsibility for
management of bookings for the
new berths;
· provided for a payment by ACV to Gulf Harbour Developments of $4m
(inclusive
of the sum of $2m paid under the September 1997 agreement), the
second tranche of $2m + GST being payable on 1 February 1999;
· provided for the sharing between the parties of ultimate profits, if any;
· conferred upon Gulf Harbour Developments the
right to terminate the November
1998 agreement on or before 1 December 1998 (that is, within one week of the
date of the
agreement itself) in which case the total consideration payable under
the agreement was reduced from $4m to $3m;
· contained
confidentiality and indemnity provisions broadly similar to those
appearing in the September 1997 agreement.
[66] On 26 November
1998, just two days later, Gulf Harbour Developments did
terminate the November 1998 agreement. In January 1999, it received a termination
payment of $1.125m from ACV, being the sum to which it was entitled consequent
on its termination of the agreement.
[67] On 28
April 1999, Lodge, Nautilus and Judder Bar were placed in
liquidation.
Limitation Issues findings
[68] Central to those causes
of action with which this judgment is concerned, is
the allegation that the September 1997 agreement and the November 1998 agreement
breached s 27 of the Commerce Act 1986. Irrespective of the position pre-
amendment, causes of action founded upon that
allegation would be statute barred
under s 82(2) as it now stands, unless Mr Hook had not discovered, and ought not
reasonably to
have discovered, the matter giving rise to the contravention prior to 14
December 2002. As discussed above, loss or damage is not
part of the relevant
inquiry. The focus is upon the alleged contravening conduct. I accept that it is for
the defendants to show
that the claim is statute barred.
[69] The article in the Independent on 7 November 1997 constituted the first
evidence of knowledge in the market place of the
September 1997 agreement, and of
the fact that that agreement effectively conferred priority on the Viaduct Basin
Village over Gulf
Harbour. But the Independent newspaper has a limited circulation
and it would not be right to draw the inference that Mr Hook must
have seen it.
[70] Then there is the article in the National Business Review of 6 March 1998,
which provided further disclosures
relating to the agreement, indicated that the New
York Yacht Club had changed its mind about Gulf Harbour in the light of the
agreement
and recorded Mr Johnstone as saying it was unlikely any of the syndicates
would now be based at Gulf Harbour. Again, it cannot be
taken for granted that
Mr Hook would have seen that article. But there is evidence that Mr Johnstone did
advise Mr Hook orally, at
about that time, of the existence and effect of the
November 1997 agreement, and indeed it is common ground that he did so.
[71]
The Kensington Swan letter of 27 May 1998, is in my view, pivotal. Acting
on Mr Hook's instructions, Kensington Swan complained
to Gulf Harbour of the
agreement "... to prohibit any America's Cup Syndicate being based at Gulf Harbour
...". It is incontrovertible
that Mr Hook knew at least by the date of that letter, that a
deal, now alleged by him to be anti-competitive, had been done between
Gulf
Harbour and those involved in the Viaduct Basin development. Indeed, that much is
confirmed in Mr Hook's affidavit of 31 March
2006, at paragraph 20.
[72] Mr Judd submits that although Mr Hook may have been aware, in a broad
sense, of what had transpired,
he did not have the agreements themselves, and could
not have been expected to appreciate the legal significance of the arrangements
entered into between Gulf Harbour on the one hand, and the eighth and ninth
defendants on the other. In support of that argument,
he refers to the fact that
although Mr Hook was represented by several solicitors over a period of several
years, none appears to
have appreciated the possibility that a breach of the
Commerce Act had occurred. The simple answer to that submission is that the
present inquiry must be as to the knowledge by a plaintiff of the relevant facts, or the
reasonable discoverability of those facts;
the legal consequences are irrelevant
Stratford v Phillips Shayle-George at 579.
[73] Neither does it assist Mr Hook to assert
that he was not in a position to
launch proceedings until he had seen a copy of the relevant agreements. For a
considerable period
prior to 14 December 2002, Mr Hook had sufficient information
to enable him to issue proceedings, if necessary with the assistance
of documents
obtained following pre-commencement discovery. Moreover, in anti-trust cases, the
Court is alive to the fact that the
bulk of the evidence required by a plaintiff in order
to prove his or her case, will often be obtained on discovery; the Court will
hesitate
to strike out a statement of claim even when the allegations are initially scanty: see
the useful discussion in Commerce
Commission v Qantas Airways Ltd (No.2) (1992)
4 TCLR 444 at pp 447-448.
[74] In my view, Mr Hook ought reasonably have discovered
the matters giving
rise to the alleged contravention of the Commerce Act, well before 14 December
2002. Indeed, it may fairly be
said that he had in fact discovered them, even though
the agreements themselves were not seen by him until late 2004, in the course
of
discovery in this proceeding.
[75] I conclude therefore that the plaintiff's first cause of action is statute barred
unless
certain other matters raised by Mr Judd give rise to a different outcome.
Those matters are discussed below.
[76] I turn to the
cause of action which alleges a breach of s 9 of the Fair Trading
Act 1986. Pre-amendment, s 43(5) of that Act provided for a limitation
period of
three years from the date of the contravening conduct, whether or not any loss or
damage had been suffered. The amendment to the subsection took effect on 3 May
2001, so the plaintiff would be time barred under the Fair Trading Act in respect of
alleged anti-competitive conduct that occurred
prior to 3 May 1998. That would bar
any proceeding in respect of the September 1997 contract, and any reliance on any
representations
made to Mr Hook prior to 3 May 1998.
[77] Under the amended s 43(5), Mr Hook's claim will be time barred if he had
discovered,
or ought reasonably to have discovered loss or damage, or the likelihood
of loss or damage, resulting from the impugned conduct prior
to 14 December 2002.
I have held that the conduct concerned ought reasonably to have been discovered
well prior to 14 December 2002.
Because Mr Hook's interests already owned or
leased property at Gulf Harbour and operated several businesses there at the time of
the challenged conduct, and would plainly be affected by it, he ought reasonably to
have discovered relevant loss or damage well
before 14 December 2002.
[78] In my view the defendants have established the plaintiff's failure to bring
himself within the
limitation period prescribed by the Fair Trading Act.
[79] The third cause of action (deceit) and the sixth (promissory estoppel)
appeared in the second amended consolidated statement of claim, but they are now
heavily based on factual allegations not previously
pleaded, namely the anti-
competitive conduct in which the defendants were allegedly involved. An amended
pleading raises a new cause
of action when new matters of fact or law are pleaded to
the extent that there is an essentially different pleading: Chilcott v Goss
[1995] 1
NZLR 263 at 273. In my opinion, the second, third, fourth and sixth causes of action
must be regarded as newly brought in the statement of
claim of 14 December 2005.
[80] The second, third and fourth causes of action are tortious in character. The
sixth cause of action
alleges the existence of promissory estoppel. There is no
specific time limit for the bringing of an equitable cause of action, but
where it is
pleaded together with actions founded on tort or contract, the same time limits will
apply to the equitable cause of
action by analogy: Saunders & Co v BNZ. Each of
these causes of action is accordingly subject to the limitation provisions contained
in
the Limitation Act.
[81] Mr Hook incurred financial obligations as a principal party in respect of
certain of the leases and
mortgages into which he entered as part of his Gulf Harbour
activities. His companies were placed in liquidation on 28 April 1999.
To the extent
to which the existence of loss or damage is an essential ingredient of a cause of
action I am satisfied that such loss
or damage must have occurred, at the latest, by 28
April 1999. All of the remaining ingredients of these causes of action were
likewise
in existence by that date. If that is so, then Mr Hook's claims became statute barred
at the latest on 28 April 2005, some
months prior to the date of the statement of
claim.
[82] Mr Judd argues however that the six year limitation period must be
postponed pursuant to s 28 of the Limitation Act, because the defendants have
deliberately concealed their conduct.
[83] Section
28 provides:
28 Postponement of limitation period in case of fraud or mistake
Where, in the case of any action
for which a period of limitation is
prescribed by this Act, either--
(a) The action is based upon the
fraud of the defendant or his
agent or of any person through whom he claims or his agent; or
(b)
The right of action is concealed by the fraud of any such
person as aforesaid; or
(c) The
action is for relief from the consequences of a mistake,--
the period of limitation shall not begin to
run until the
plaintiff has discovered the fraud or the mistake, as the case
may
be, or could with reasonable diligence have discovered
it:
Provided that nothing
in this section shall enable any action
to be brought to recover, or enforce any charge against, or
set aside any transaction affecting, any property which--
(d) In the case of fraud,
has been purchased for valuable
consideration by a person who was not a party to the fraud and did
not at the time of the purchase know or have reason to believe that
any fraud had been committed; or
(e) In the case of mistake, has been purchased for valuable
consideration, subsequently to the transaction
in which the mistake
was made, by a person who did not know or have reason to believe
that the
mistake had been made.
[84] In Inca v Autoscript (New Zealand) Ltd [1979] 2 NZLR 700 at 711, Mahon J
explained that s 28(2):
... uses the word `fraud' in para (a) as meaning either fraud at common law
or equitable fraud ... Paragraph (b) covers causes of action other than fraud,
and the limitation defence will be
barred for the appropriate period either
where there is dishonest concealment of the cause of action, equivalent to
common law fraud, or where there is non-disclosure occurring in such
circumstances as to amount to equitable fraud.
[85]
The latter will arise only where there is a fiduciary relationship, or where:
... by virtue of a contract or other legal
relationship subsisting between the
parties, a duty to disclose the facts giving rise to a cause of action was
expressly
or impliedly created.
[86] Mr Judd submits that the commencement of the limitation period must be
postponed to late 2004, being
the time at which the plaintiff ultimately obtained
copies of the September 1997 and the November 1998 agreements.
[87] I am
unable to accept that submission. There is nothing before the Court to
support a claim that a relevant fiduciary relationship involving
a duty of disclosure
existed between the parties. Neither is there any evidence of concealment of the sort
described by Mahon J.
[88] Mr Hook accepts that he was told by Mr Johnstone in the early part of 1998,
of the existence of the September 1997 agreement,
and of its general effect.
Mr Johnstone was a senior officer within the Gulf Harbour Group. Such disclosure
is the very antithesis
of the concealment which Mr Judd asserts took place. Mr Hook
knew by the time of the Kensington Swan letter of 27 May 1998 that the
September
1997 agreement might well operate in a manner adverse to his interests. From the
time of the liquidation of his companies
in April 1999, he must have been aware of
the potential for loss. There is no room in this case for the application of s 28.
[89]
The second, third and fourth causes of action are statute barred. So is the
sixth to the extent that it is brought against parties
other than the first, second and
fourth defendants, and to the extent that it relies upon the alleged anti-competitive
conduct of
the defendants.
Commerce Act: s 89
[90] Mr Judd argues that the limitation provisions contained in s 82(2) of the
Commerce
Act do not apply to claims for damages brought in reliance on s 89 of the
Act.
[91] Section 89(1) provides:
89 Other
orders
(1) Where, in any proceedings under this Part of this Act, the Court
finds that a person who
is a party to the proceedings has suffered, or
is likely to suffer, loss or damage by conduct of another person that
was engaged in contravention of any of the provisions of Part 2 of
this Act, the Court may, whether
or not it grants an injunction or
makes any other order under this Part of this Act, make such order
or orders as it thinks appropriate against the person who engaged in
the conduct, or any other person who in
relation to the contravention
did any act referred to in section 81(b) to (f) of this Act.
[92] Mr Judd argues
that s 89(1) is a stand alone provision, not subject to the
provisions of s 82(2), but covered by the provisions of the Limitation
Act 1950. I
disagree. Section 89 does not confer a separate right of action. It is conditioned
upon the existence of "any proceedings
under this Part of this Act" so that the
powers conferred on the Court by s 89(1) are exercisable only in the context of an
extant
proceeding brought under Part 2 of the Act. A proceeding cannot be brought
under s 89 alone. Accordingly, a plaintiff who invokes
s 89 is caught by the
limitation provisions of s 82(2).
[93] Even if I am wrong in that however, my earlier finding that the
plaintiff's
claim is barred under the Limitation Act is, in any event, fatal to this argument.
Commerce and Fair Trading Act: Separate Codes?
[94] In his second cause of action the plaintiff
alleges an unlawful means
conspiracy involving breaches of the Commerce and Fair Trading Acts, and a variety
of other torts:
deceit, negligent mis-statement, actionable misrepresentation,
interference with economic relations and abuse of public office
by the eighth and
ninth defendants.
[95] The cause of action is underpinned by, and indeed founded upon, the alleged
anti-competitive
conduct of Gulf Harbour and the eighth and ninth defendants. In
effect, it is a cause of action which relies on alleged contraventions
of the Commerce
Act and/or the Fair Trading Act, dressed up as a claim in tort.
[96] Counsel for the defendants argue that
such a pleading is an abuse of process
intended, at least in part, to avoid the effect of the more stringent limitation
provisions
which apply to claims under those Acts. Counsel submit that the second
cause of action ought to be struck out on that ground. I agree.
[97] In Dickson Livestock Associates Ltd v Wrightson Ltd (1999) 6 NZBLC 102,
806 a Full Court of the High Court held that the Commerce Act and the Fair Trading
Act were each codes which prohibited certain
conduct, in the interests of promoting
competition in markets (the Commerce Act) or in trade (the Fair Trading Act),
providing significant
remedies for breach and prescribing statutory limitation
periods. Where a claim is founded on an alleged statutory breach, it must
be brought
under the statute, and not by way of a parallel claim in tort. The exclusive character
of the remedies created by the
Commerce Act and the Fair Trading Act has been
underscored in such cases as Vector Ltd v Transpower NZ Ltd [1999] 3 NZLR 646
(CA) and Bomac Laboratories Ltd at [111].
[98] The particulars which appear in support of this cause of action at paragraph
92 of the statement of claim confirm the plaintiff's reliance on claimed statutory
breaches. Accordingly this cause of action must
be struck out on this ground also.
Issue estoppel
[99] Mr Judd submits that by reason of the judgment of Associate Judge
Doogue
delivered on 23 November 2005, an issue estoppel arose which prevented the parties
from arguing limitation issues and irrevocably
determined them in the plaintiff's
favour.
[100] The hearing before the Associate Judge was convened for the purpose of
determining
the plaintiff's application, pursuant to s 248 of the Companies Act 1993,
for orders granting him leave to continue his proceeding
against those corporate
defendants (part of the Gulf Harbour Group), which had recently gone into
liquidation. So the issue before
the Associate Judge was a relatively confined one.
He had before him what he called a "draft amended statement of claim", a document
which I have located on the Court file.
[101] Mr Judd refers to [62]-[69] of Associate Judge Doogue's judgment. They
read:
Are the claims clearly unsustainable
[62] I have heard submissions from Mr Long, which call into question the
validity of the claims brought by the plaintiffs against the defendants.
[63] He submitted that the statutory
grounds on which the plaintiff intends
to bring some or all of his claims are not available because the legislation was
not in force or effect at the time when the plaintiff asserts his cause of action
arose. He also submitted that there
is a limitation defence available to
defendants one to eight in respect of cause of action four which concerns
allegations
of breach of the Fair Trading Act.
[64] Then, in relation to the first cause of action, that all defendants
breached
provisions of the Commerce Act, there is again an argument open as
to whether the claims are time-barred.
[65]
I am not prepared to conclude that the plaintiff's claims are
unsustainable on these grounds alone. The question as to
when any particular
cause of action may have arisen could well be influenced by documents that
emerge in the course
of discovery. After all, the substance of the plaintiff's
claim is that the defendants separately entered into arrangements
that were
inconsistent with and gave the lie to assurances that they allegedly made to the
plaintiff that efforts
were underway to attract America's Cup teams to Gulf
Harbour. Similarly, the dealings between the Gulf Harbour defendants
and
the eighth and ninth defendants were allegedly carried on in an atmosphere of
close confidentiality or even secrecy.
That at least is the plaintiff's allegation.
Because of that, there may well be some fluidity concerning the dates when
the causes of action were alleged to have come into existence. It might
eventually transpire that the plaintiff will
find his way blocked by the problem
about the statutory cause of action not being available to him because the law
had not been enacted at the time when the events occurred or by limitation
type defences. At that point, the defendants
will have the right to bring a
strike-out application and that will be the appropriate time for such matters to
be
ventilated. I would not be prepared to conclude that at this early stage in
the litigation that the defendants have demonstrated
the additional claims as
being "clearly unsustainable".
[66] In any case, Mr Long accepted that the position about limitation
is not
quite so clear-cut in the light of the authority of Bomac Laboratories Ltd &
Ors v F. Hoffman La Roche Ltd & Ors (2002) 7 NZBLC 103,627. In that
case Harrison J made the following comments concerning limitation which are
relevant here:
[172] In my opinion
the reasonable discoverability doctrine is an
incremental creature. The principle is well recognised; its application
must be determined on a case by case basis. It all comes back to the
facts. I am satisfied that the reasonable discoverability
doctrine
should be read into s 82(2) on the facts as pleaded in Bomac's revised
proposed second amended statement
of claim. Accordingly I find
against the international defendants on this alternative basis.
[173] I should add
that I regard the recent amendment to s 82(2)
expressly incorporating the test of reasonable discoverability into the
statute, as supporting my conclusion.
[67] His Honour's reference to the recent amendment was to the insertion
of a provision
into the main Act by an amendment Act in 2001 of the
following provision:
2. An action under sub-section (1) may be
commenced within
three years after the matter giving rise to the contravention
was discovered or
ought reasonably ought to have been
discovered.
[68] Mr Long's submission was that the plaintiff is unable to
take
advantage of that statutory amendment because his causes of action pre-date
the amendment. However, the plaintiff may be able
to argue that even
without the statute he can rely upon a test of "reasonable discoverability".
The plaintiff alleged that the asserted
anti-competitive arrangements were
cloaked in secrecy and that in those circumstances it is not surprising that the
plaintiff was
not able to discover the true nature of the agreement between the
Gulf companies and the eighth and ninth defendants. This is not
a matter that
should appropriately be determined in the setting of an application under s 248
of the Companies Act for leave. But
what I have said indicates that the
limitation point so far as it relates to the first cause of action, takes the
proceedings out
of the category where they might be described as clearly
unsustainable.
[69] Mr Long, I believe, would accept that he was on even
less strong
ground in submitting that second and third causes of action (Deceit and
Negligent Misstatement respectively) are "clearly
unsustainable".
[102] In Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37, 40-41, the Court of
Appeal discussed the concept of issue estoppel in the following terms:
The expression "res judicata"
means the matter has been adjudicated. The
concept of res judicata is often applied to both cause of action estoppel and
issue estoppel. Traditionally its use was confined to the former. Cause of
action estoppel is different from issue estoppel
which can arise where a plea
of res judicata in the strict sense is not open because the causes of action are
not the
same: see 16 Halsbury's Laws of England (4th ed, reissue) (Estoppel)
at para 977. Issue estoppel is concerned with the prior
resolution of issues
rather than causes of action. In the same paragraph of Halsbury as that
referred to above, it
is said that issue estoppel precludes a party from
contending the contrary of any precise point which, having once been
distinctly put in issue, has been solemnly and with certainty determined
against him. Cross on Evidence (4th NZ ed, 1989)
by Mathieson discusses
issue estoppel at para 12.8 on p 315. The learned author cites the judgment
of Lord Denning
MR in Fidelitas Shipping Co Ltd v V/O Exportchleb [1965]
2 All ER 4, 9:
`. . . within one cause of action, there may be several issues raised
which are necessary for
the determination of the whole case. The
rule then is that, once an issue has been raised and distinctly
determined between the parties, then, as a general rule, neither party
can be allowed to fight that issue all
over again.'
There is an authoritative recent discussion of cause of action and issue
estoppel in the House of Lords:
see Arnold v National Westminster Bank plc
[1991] 3 All ER 41 especially at pp 46 and 47 per Lord Keith of Kinkel.
It is to be noted that both Halsbury and Lord Denning MR refer to the
need
for the point said to be the subject of the issue estoppel to have been raised
in the previous litigation. Halsbury
uses the phrase "distinctly put in issue"
and Lord Denning spoke of "issues raised which are necessary for the
determination".
[103] The purpose of the issue estoppel principle is to ensure that litigants should
not be twice vexed by the same claim or point.
It is in the public interest that there
be an end to litigation: Joseph Lynch at 42.
[104] In my view no estoppel arises in the
present case. In the first place it is plain
that the Associate Judge deliberately refrained from making any findings in respect
of limitation issues. The passage set out above is replete with qualifications, and
towards the end of [65] he expressly notes that
the defendants retain the right to
bring a strike out application on limitation grounds. His approach is unsurprising
given the confined
nature of the issue before him.
[105] In the second place, not all of the parties represented before me participated
in the hearing
before Associate Judge Doogue; only Mr Judd and Mr Long
appeared. Those parties not represented cannot, in any circumstances,
be bound by
what occurred.
Application to join Lochmara as a plaintiff
[106] Mr Hook seeks to join Lochmara Ventures Ltd as a
plaintiff. Joinder is
opposed by the defendants. Mr Judd submits that it is appropriate for all entities
suffering loss or damage
as a result of the defendants' alleged conduct to be joined
as plaintiffs, and that the Court should join all parties whose presence
before the
Court may be necessary effectually and completely to adjudicate and settle all
questions involved in the proceedings:
r 97; Duff v Communicado Ltd [1995] 3
NZLR 739.
[107] Mr Stewart argues that the presence of Lochmara is not required to enable
Mr Hook to recover anything to which he is entitled
in his personal capacity, and
Mr Long argues that the plaintiff does not allege that the defendants owed duties to
Lochmara, either
jointly with him, or at all.
[108] A difficulty I have with this application is that there is nothing before me to
indicate the
cause or causes of action which Lochmara wishes to pursue. It is not
named in the statement of claim and the only draft pleading
produced simply names
Lochmara as a plaintiff without identifying discrete causes of action upon which
Lochmara wishes to rely. But
more fundamentally and fatally, since Lochmara is a
company of which Mr Hook is the director and shareholder, any claim it may wish
to
make in its own right must be statute barred because Mr Hook's knowledge is
imputed to it. The application to join Lochmara is
therefore dismissed.
[109] Accordingly, it is unnecessary to consider the question of whether the joinder
of Lochmara would involve
a prima facie breach of Mr Hook's implied undertaking
not to use documents discovered, for a collateral purpose: see Wilson v White
(Undertaking) (2005) 17 PRNZ 537.
Joinder of Hook Company defendants
[110] Initially Mr Hook proposed to apply for joinder of Lodge, Nautilus and
Judder Bar as
additional plaintiffs. Each company is now in liquidation. Plaintiffs
may be joined only with their consent. Consents are not currently
available from the
liquidators of the three companies concerned. Apparently there is some dispute over
remuneration. Mr Hook
believes there is some realistic prospect that new
liquidators, amenable to joinder as plaintiffs of the companies concerned, may
soon
be appointed. In the meantime however, he sought an order joining the three
companies as defendants.
[111] That application
was opposed by the existing defendants. Mr Judd sought to
adjourn the application for joinder, but the adjournment application was
also
opposed. Ultimately he elected to withdraw the application, which I treat as
abandoned.
Summary
[112] The plaintiff's
first cause of action under the Commerce Act, and his fifth
cause of action under the Fair Trading Act, are statute barred. Mr Hook
ought
reasonably to have discovered the matters giving rise to the alleged contraventions of
those Acts well before 14 December 2002.
Accordingly his claim is barred by s
82(2) of the Commerce Act and s 43(5) of the Fair Trading Act. Section 89 of the
Commerce Act
is also covered by that Act's limitation period and no cause of action
can be independently brought under that provision. The Commerce
and Fair Trading
Acts operate as codes. In consequence, the second cause of action based on unlawful
means conspiracy involving breaches
of those Acts is struck out as being a
duplication of the first and fifth causes of action.
[113] The second cause of action based
on unlawful means conspiracy, the third
cause of action based on deceit, and the fourth cause of action based on negligent
misstatement
are tortious in character and are statue barred under the Limitation Act.
Loss or damage flowing from those causes of action must
have occurred at the latest
by 28 April 1999, more than six years prior to the date of the statement of claim.
Section 28 of the
Limitation Act does not assist the plaintiff. No duty of disclosure
existed between the parties, nor did the defendants deliberately
conceal their
conduct. The sixth cause of action based on promissory estoppel is likewise barred
as it relies on essentially the
same grounds as the tortious causes of action, and is
therefore subject to the same time limits. The plaintiff is unable to rely
on issue
estoppel principles as a means of avoiding the application of the ordinary limitation
rules.
[114] The application to
join Lochmara as a plaintiff is dismissed, and I treat the
application to join the additional Hook Companies as defendants as abandoned.
[115] Nothing in this judgment affects the plaintiff's right to pursue claims made in
the second amended statement of claim.
[116] Several issues not hitherto touched upon were the subject of detailed
argument. They included, in particular, the question
of whether Mr Hook had
standing to bring claims which appeared to involve losses incurred by the corporate
entities through which
he operated. Issues of the type discussed in Christianson v
Scott [1996] 1 NZLR 273 arose. Neither have I discussed Mr Goh's application
under r 131. That is because my findings in respect of limitation matters render
decisions on these other matters unnecessary.
[117] Leave is however reserved to all parties to apply in respect of matters not
resolved in this judgment.
[118] It is necessary to give directions in respect of consequential matters. Counsel
for the defendants
are, on or before 16 March 2007, to file and serve memoranda
which are to deal inter alia with the following matters:
a) The precise orders which ought to be made following this judgment;
b) Whether any issues not resolved in this
judgment ought nevertheless
to be resolved in the light of the findings already made, and if so,
which;
c) Costs.
[119] Mr Judd is to file and serve any memorandum in reply on or before 30 March
2007.
[120] Counsel
are to indicate whether, in their view, it is necessary for them to be
heard on any outstanding matter. If so, a hearing will be
convened at a suitable time.
If not I will deal with outstanding matters on the papers.
C J Allan J
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