WORLDWIDE NZ LLC AND ANOR V QPAM LIMITED AND ORS HC AK CIV 2006-404-1827 [2009] NZHC 560 (15 May 2009)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                                       CIV 2006-404-1827



                BETWEEN                        WORLDWIDE NZ LLC
                                               First Plaintiff

                AND                            J J GOSNEY
                                               Second Plaintiff

    
           AND                            QPAM LIMITED
                                               First Defendant

         
      AND                            JACOBSEN VENUE MANAGEMENT
                                               NEW ZEALAND LIMITED
                                               Second Defendant

                AND                            JACOBSEN F.T. PTY
LIMITED (ACN
                                               108 254 440)
                                               Third Defendant

                AND                            JACOBSEN VENUE MANAGEMENT
                                               PTY
   
                                           Fourth Defendant


Hearing:        4 and 5 May 2009

Appearances: M J Fisher for Plaintiffs
             A C Sorrell & S L Robertson for First Defendant
             C P Browne & K J Sparrow for Second, Third and Fourth Defendants

Judgment:       15 May 2009


                               JUDGMENT OF KEANE J

              This judgment was delivered by Justice
Keane on 15 May 2009 at 5pm
                         pursuant to Rule 11.5 of the High Court Rules.

                           
        Registrar/ Deputy Registrar

                                              Date:

Solicitors:
Brookfields, Auckland
S Germann
Law Office, Auckland
Wilson Harle, Auckland for Second, Third and Fourth Defendants

WORLDWIDE NZ LLC AND ANOR V QPAM LIMITED AND
ORS HC AK CIV 2006-404-1827 15 May
2009
[1]    This case, which concerns principally the price that the Jacobsens, who hold
the
majority of shares in Quay Park Arena Management Limited, and related trust
units, are to pay Worldwide for its minority interest,
but also Worldwide's rights
until settlement and whether it is entitled to relief as an oppressed shareholder, was
set down for hearing
over three weeks commencing on 4 May 2009.


[2]    That fixture had to be vacated to resolve the three threshold issues that are
the
subject of this decision. Two are matters of scope, the first as to the issues for trial
and the second as to discovery. The
third concerns the need, if any, for the Court to
appoint its own valuer. The price payable is the value of Worldwide's interest
as at
26 April 2006.


Context


[3]    In January 2006 Worldwide NZ went into receivership. It was then a 25
percent shareholder
in QPAM, the corporate trustee of the trust that has developed
the Vector Arena at Quay Park, Auckland. The receivership constituted
a change of
control under the trust deed obliging Worldwide to sell its shares and units to the
Jacobsens, if they elected as they
did to exercise their pre-emptive right of purchase.
Two interrelated issues immediately emerged, at the outset in embryo.


[4]
   QPAM and the Jacobsens contended then or later that, immediately the
Jacobsens exercised their pre-emptive rights to the units
and shares, property was
deemed to pass. QPAM, as trustee for Worldwide, assumed any interest Worldwide
retained until payment. As
Worldwide's irrevocably appointed agent, moreover, it
was for QPAM to fix the price. Worldwide had neither the right to do so, nor
any
related right to information from QPAM going to value.


[5]    Worldwide in the first instance commenced this action to safeguard
its right
to be represented on the QPAM board by a director, Mr Gosney, and to prevent
QPAM taking any step, concerning its interest
in particular, until Mr Gosney had all
information he needed.
[6]     Worldwide soon enlarged its claim to assert that, until it
was paid a price to
be fixed by this Court if need be, it retained title to the shares and units, and rights as
holders of both. It sought declaratory and injunctive relief.
Alternatively it claimed
relief as an oppressed shareholder. It went further. In a third cause of action it
asserted it was entitled
to fix the price itself and did not need to do so until it had all
it needed from QPAM as to value.


[7]     In May 2006 Worldwide
sought and was denied interim injunctive relief. In
upholding that decision on 10 November 2006, the Court of Appeal held Worldwide
was unable to assert any arguable question of law. The trust deed deemed property in
Worldwide's units, and the stapled shares in
QPAM, to have passed immediately the
Jacobsens exercised their pre-emptive right. Worldwide was in default. It did not
possess, as
it claimed, the rights of an unpaid vendor.


[8]     Despite that decision Worldwide still asserts in its present pleadings, its
third
amended statement of claim, dated 14 September 2007, that the trust deed confers on
it implicitly, until it is paid, the rights
of a unit and shareholder. It still claims relief
as an oppressed shareholder. It no longer asserts that it is entitled to fix the
price for
the shares itself. It is unable to do so.


[9]     In December 2006 QPAM and the Jacobsens did not succeed in an attempt
to
strike out Worldwide's principal pleadings and obtain summary judgment.
Worldwide was considered arguably to retain the ability
to secure for itself a fair
price. QPAM's ability to stand in Worldwide's shoes as agent and trustee suffered
the difficulty that
QPAM could not be regarded as neutral. It was by then wholly
owned by the Jacobsens, whose liability to pay the price fixed was in
issue.


[10]    This was not disturbed by the Court of Appeal in its second decision dated 16
April 2008. It held that to be beyond
its immediate remit. Instead it struck out
Worldwide's third cause of action in which Worldwide claimed the right to fix the
price
and to withhold doing so until it had all it needed from QPAM. By consent it
declared that this Court was to fix the price, a fair
market value as at 26 April 2006.
[11]   On the pleadings as they are, therefore, the primary issue is what that fair
market value
is. But also remaining in issue is what interim rights Worldwide has, if
impliedly; and it asserts the rights to remain on the registers
of unit and share
holders, to attend meetings of the trust and QPAM, to be supplied information
concerning both, to appoint an active
director of QPAM, to a fair process for the
fixing of the value of the units and shares. Also still, relief as an oppressed
shareholder.


[12]   Those are the issues that were to be resolved at the three week fixture given
that has since had to be vacated because of
the three threshold issues that have
emerged, the first of which is as to the scope of the issues for trial.


[13]   The Jacobsens
and QPAM wish the fixture confined to a single severable
question, the value of the shares and units as at 26 April 2006, including
the value if
any of an option the Jacobsens gave Worldwide that it did not exercise. Once value
is fixed, the Jacobsens contend,
they will complete purchase. Any issue as to
Worldwide's interim rights will fall away.


[14]   Worldwide is willing to reserve
its claim for relief as an oppressed
shareholder and that part of its first cause of action going to the conduct of QPAM
and its
officers. It seeks still to have its interim rights vindicated. It doubts that the
Jacobsens have the ability to settle. It wants
immediately to be able to dispose of its
interest elsewhere.


[15]   The second issue of scope arises from Worldwide's wish to obtain
from
QPAM every document that could bear on value; the task that QPAM resists as
unnecessary and oppressive. The Jacobsens have agreed
with Worldwide what they
are to disclose and when they are to do so. That is not something I need to resolve.


[16]   In December
2007, after receiving QPAM's affidavit of documents the month
before, Worldwide sought particular discovery in six categories going to value. By
solicitor's letter dated 4
June 2008 QPAM gave a corresponding though qualified
undertaking. On 21 July 2008, before Associate Judge Doogue, the sole issue
proved to be whether QPAM had to discover documents after the valuation date, 26
April 2006. QPAM did not take issue as to documents
completed after that date
concerning events before. It took issue as to those, necessarily completed after the
date of valuation,
concerning events that had then still to occur.


[17]   Taking one category of documents as illustrative, the Judge held that QPAM
needed only to disclose documents up to the valuation date. He held that later
documents recording events after that date were not
relevant. He did not record that
documents after that date, as to events before, were accepted by QPAM to be
potentially discoverable,
or that QPAM was to make discovery in all six of
Worldwide's categories up to the valuation date. On 8 October 2008 QPAM
complied
by supplementary affidavit, as Worldwide contends incompletely. It did
not set out the documents discovered within the six categories.


[18]   Worldwide invited the Judge to revisit his decision under the slip rule. In a
minute, dated 27 November 2008, resolving
costs on his judgment as it was, the
Judge saw it as irrelevant that he had not resolved all issues then between the parties;
that
they themselves had resolved some but not others and that some might still be at
large. He considered he had done everything that
had been asked of him.


[19]   On 3 December 2008 Worldwide sought both to review the Judge's decision
and to obtain more particular
discovery, once again seeking documents after as well
as before the date of valuation, and once again in categories, relying on two
valuations disclosed by QPAM after the Judge's decision, but not formally
discovered.


[20]    Both were made after the date of
valuation. The first took a later valuation
date and the latter an earlier date. They differed also in focus. The first, dated 17
April 2007, went to the fair market value of QPAM's interests in the Vector Arena as
at 30 June 2006. The second, dated 18 January
2008, went to the fair value of the
equity in the QPAM unit trust, in particular the value of Worldwide's minority
interest, as at
18 January 2006.


[21]   QPAM contends that this second application for particular discovery is
incompatible with that for review
of the Associate Judge's decision, concerning the
first, and renders it moot. More, QPAM contends, the extent to which Worldwide
seeks further discovery is oppressive and extends well beyond the value of
Worldwide's interests as at 26 April 2006.


[22]   The
final issue is raised by the Jacobsens. On 29 October 2008 they invited
the Court to appoint an expert to value the shares, their
stated intent being to secure a
datum valuation limiting the evidence to be called by each side. That is opposed by
Worldwide. It
contends that it comes too late. Worldwide has its own valuer, and has
engaged an economist as to the market value of the 40 year
monopoly right over the
stadium that QPAM enjoys from the Auckland City.


Scope of issues


[23]   HCR 10.15 enables an order to
be made before trial directing that a question
arising be tried separately from any other, in order to limit the scope of the trial:
Innes v Ewing  (1986) 4 PRNZ 10, at 18, Eichelbaum CJ. Ultimately the question is,
under HCR 1.2, whether the determination of a separate question will secure the
just,
speedy and inexpensive determination of the case.


[24]   That a separate question will have that effect is not to be assumed.
There are
cases warning that the more likely effect will be the opposite. In Windsor
Refrigerator Co Ltd v Branch Nominees Ltd  [1961] 1 Ch 375, for instance, Lord
Evershed MR said at 396, `the shortest cut so attempted inevitably turns out to be the
longest way round'. Whether
such an order should be made, McGechan on
Procedure says, is to be tested against such concerns as how much time the separate
question
will occupy in contrast to the time all issues will require, the impact on
those other issues, and any likelihood of delay in resolving
the case completely.


[25]   As it happens, Worldwide is not averse to the issues being limited. It has in
draft a fourth amended
statement of claim excluding its allegations of misconduct in
its first cause of action, and its alternative claim to relief as an
oppressed minority
shareholder altogether. It will proceed on that basis as long as QPAM and the
Jacobsens accept that this cannot
give rise to any issue estoppel or res judicata; that it
can still pursue its claim on the bases set aside in this or a fresh action.
[26]   Worldwide wants to retain that part of its first cause of action in which it
seeks to have vindicated its rights to remain
a unit and shareholder until paid and this
is where the Jacobsens join issue. They with QPAM's support seek an order under
HCR 10.15
limiting the trial to a single issue: the fair market value for the shares as
at 26 April 2006, extending to the related issue whether
an option the Jacobsens had
given Worldwide, but which it had not exercised, has any bearing on that value.


[27]   Once those issues
are resolved, the Jacobsens and QPAM contend, settlement
can happen as the trust deed prescribes. It is only if settlement does not
happen that
Worldwide needs to rely on any rights it retains. Whether, moreover, the rights
Worldwide presently contends for will
equip it, as it assumes, in the event of default,
is debatable. A partial and notional finding now may not assist Worldwide. At the
very least the interim rights issue will prove a waste of time and money.


Jacobsen's ability to pay


[28]   Worldwide's principal
concern in pressing for the interim rights issue to be
resolved is that Jacobsen NZ might not be able to pay a fair market value
for the
shares, and if it cannot Worldwide will be left in limbo unless it is recognised in law
to have the immediate ability to
sell elsewhere.


[29]   Worldwide is concerned that, in Australia, the Jacobsen group has suffered
what it understands to have been
serious financial difficulty, a Jacobsen company is
now in receivership; and that the Jacobsens have not explained how they propose
to
fund the purchase without departing from their recent undertaking to the Court of
Appeal not to charge or dispose of Worldwide's
units and shares. Worldwide is also
concerned that it knows nothing about QPAM's current state.


[30]   These causes for concern
may or may not be real. On the information filed,
which is general in nature, I cannot say. I cannot see that the undertaking to
the
Court of Appeal, as I understand it to be, will prove inhibiting. That undertaking
only bites, as I understand, until the value
of Worldwide's interest is fixed and
settlement occurs. If on settlement the Jacobsens pay what is due they are not
precluded then
from charging or disposing of the Worldwide units and shares.
[31]    Nor do I consider anything can be taken from an admission
as to lack of
means Worldwide seeks to sheet home to the Jacobsen directors of QPAM deriving
from their statement of defence in a
2005 proceeding, not now to be pursued, in
which Worldwide sought, derivatively, to make them accountable to QPAM for
committing
it to a more onerous ticketing right contract with Ticketmaster7 Pty
Limited than it needed to enter, in exchange for a benefit for
a Jacobsen entity.


[32]    The sum lent to Jacobsen Australia, $5M, the Jacobsen directors said by way
of defence, went to QPAM,
to enable it satisfy the Auckland City's debt funding
requirement; a basis for the agreement in which the City conferred on QPAM
its
monopoly right relating to the stadium. By that means the Jacobsens, and
Worldwide, the QPAM shareholders, both avoided having to shoulder the liability.
There was no conflict
of interest.


[33]   Whether that is right or not, it cannot be any basis now for inferring that the
Jacobsens lack the ability
to pay for Worldwide's units and shares. That has
presently to be speculative.


[34]   The Jacobsens, moreover, deny any inability
to pay. Their counsel says that
they anticipate completing settlement, as the trust deed requires, once the price is
fixed. How likely
is it, they ask, that holding as they do a 75 percent stake in
QPAM, now a fully functioning entity in possession of the stadium,
they will be
unable to pay Worldwide for its 25 percent interest, valued at 26 April 2006, before
the stadium was complete and QPAM
had still to function ?


[35]    Presently I see no reason to question that logic. The larger issue is whether
Worldwide's interim
rights, an issue on the pleadings as they are, should remain
undefined, if that can be resolved within the fixture given for whatever
effect it
might have. Though Worldwide might then still retain its complaints founded on
misconduct, presently it does not seek any
distinct remedy. A decision resolving the
principal issues as to value and interim rights might conceivably resolve the case.


[36]
  That assumes, however, that Worldwide's pleadings as they are suffice to
enable it to claim the relief it appears truly intent
on; a declaration that should the
Jacobsens default it has the ability to sell the shares elsewhere for whatever price it
can obtain.


Unpleaded rights issue


[37]   The Court of Appeal in its second decision resolved the principal issue as to
which the trust deed
is silent; as to how the value of Worldwide's interest was to be
fixed, the Jacobsens having exercised their pre-emptive right. Except
to the extent
that it had to, it did not enter on the issue Worldwide now wishes to pursue, its
interim rights until a fair market
value is fixed and paid.


[38]   Those rights, as Worldwide presently claims them to be, and as set out in its
statement of claim,
are these:

       (a)     Worldwide NZ holds the legal title to both the `B'; units and `B'
               class shares;

     
 (b)     Worldwide NZ is entitled to be entered on the Register of unit
               holders of the Unit Trust as holder of the
`B' units and on the Share
               Register of QPAM as the holder of the `B' class shares;

       (c)     Worldwide has an
equitable interest in the `B' units and/or in the `B'
               class shares in the form of a vendor's lien;

       (d)   
 Worldwide is entitled to exercise the rights attaching to the `B' units
               and the `B' class shares and to act (and
vote) in accordance with,
               and to protect, its own interests, providing that in so doing it does
               not
act or threaten to act in breach of its duties as constructive
               trustee for Jacobsen NZ;

       (e)     Mr Gosney,
as the duly appointed `B' director of the Board of
               QPAM on 4 April 2006, is entitled to hold that office until he
either
               resigns or is removed by Worldwide NZ;

       (f)     Worldwide has a legitimate interest in ensuring a process
which
               entitles it to a fair market value for the `B' units/and or for the
               Option.

[39]     In contending
for legal title, Worldwide faces this difficulty. In its first
decision, dated 10 November 2006, the Court of Appeal confirmed that
Worldwide
was not entitled to injunctive relief because on the change of control within
Worldwide, and on the Jacobsens electing
to exercise their pre-emptive right,
property in the units and shares passed. Worldwide did not possess the rights of an
unpaid vendor.
It was actually in default.
[40]    That proved not to be the end of the story, of course. When QPAM and the
Jacobsens sought to
strike out Worldwide's pleading and obtain summary judgment
they were unsuccessful. In her decision, dated 1 December 2006, Winkelmann J held
that, even accepting a deemed transfer
had taken place, Worldwide might retain
vestigial rights entitling it to secure a fair price. She questioned at paras [81] ­ [85]
QPAM's claim to stand in Worldwide's shoes as trustee and agent. As para [84] she
said this:

        There is ... a serious question
as to what machinery provisions are to be
        implied. In particular there is a serious question as to whether a more
      
 reasonable and equitable limitation on the ownership interests of WWNZ is
        appropriate than one that would leave (as conceded
by Jacobsen NZ)
        WWNZ as an unsecured creditor in respect of a purchase price and that
        purchase price to be fixed
by QPAM, an entity controlled by a company
        associated with the putative purchaser.

[41]    In its second decision the Court
of Appeal, though it confined itself to how
the price for the shares was to be fixed, and declared that to be within the ability
of
this Court, took a not unlike position in reaching this conclusion at para [41]:

        We ... interpret the relevant clauses
simply as requiring the transaction to
        occur at fair market value. As this can be assessed if necessary by the court,
  
     there is no need for QPAM to act as the agent of the unit holders (and thus
        nothing for the first sentence of cl 10.5.1
to bite on) as there is no respect in
        which QPAM is `required' to act as agent of WWNZ to ensure that cl 10 is
        complied
with.

[42]    Each of these decisions assumes that the Jacobsens have title and the only
issue is as to how to ensure that the price
they pay is a fair market value. Neither
answers directly the problem that Worldwide will face, if the Jacobsens do default;
the
Court of Appeal's first decision that it ceased to have title to the units and shares
immediately the Jacobsens exercised their pre-emptive
right. How then can
Worldwide sell the units and shares to a third party? Worldwide's pleadings, as they
are, do not expose that
issue explicitly, or seek any obviously correlative relief.


Conclusions


[43]    This very uncertainty as to Worldwide's vestigial
rights, if any, does need to
be resolved, I consider, at the forthcoming trial. Worldwide cannot be left in limbo.
If the Jacobsens
were to prove unable to settle Worldwide, QPAM, and the
Jacobsens for that matter, would need to know instantly what Worldwide could
or
could not do. That cannot be left for some future fixture.


[44]   This issue, so far as I can see, moreover, will turn almost
entirely on a
construction of the deed. There may be some contextual evidence called for. But
even if there is, this discrete issue
ought still to be able to be accommodated easily,
alongside the principal issue of value, within the three week fixture proposed.


[45]   Whether the trial is to proceed on a further amended statement of claim, or on
the basis of defined questions, does not
seem to me to matter especially. That is an
issue on which counsel ought to attempt to agree. If they can agree the issues I can
make a corresponding order. If they cannot Worldwide can amend unilaterally. As
long as it does so as soon as practicable, and well
before any further fixture given, it
should have leave to do so to expose what is truly in issue.


Scope of discovery


[46]   On
13 December 2007 Worldwide applied for particular discovery in six
categories, the first of which, category one, concerned financial
forecasts:

       Documents existing as at 26 April 2006 relating to the anticipated financial
       performance of QPAM Limited
and the Quay Park Arena Management Trust
       (the trust) including forecasting in respect of:

       (a)     profit and loss
accounts;

       (b)     capital expenditure requirements;

       (c)     working capital requirements;

       (d)     balance
sheets;

       (e)     cashflow statements;

       (f)     for cashflows beyond the projection period, an appropriate long-term
               growth rate;

       (g)   
 information supporting a rate at which the future cashflows are
               discounted.

[47]   Category two concerned events
and Worldwide first sought documents as to
those anticipated:
       Documents existing as at 26 April 2006 relating to anticipated
events at the
       Arena and including details in relation to:

       (a)     number of events separated into type of event e.g.
sporting, concert,
               or exhibition;

       (b)     timing of events;

       (c)     expected patronage of type of
event over time;

       (d)     information around the likelihood of securing events, such as
               documented discussions
with promoters;

       (e)     information on likely attendance at events such as research on
               forecasts and trends
for New Zealand and the immediate population
               size and affluence;

       (f)     information on ticket prices such
as documented discussions with
               promoters around ticket prices and research into industry trends
               around
ticket prices;

       (g)     data from comparable venues in Australia;

       (h)     activity levels at competitive venues, if
applicable.

[48]   Worldwide also sought in the second category documents concerning the
income stream anticipated from such events:

       In respect of each event, documents containing details of the anticipated
       income to QPAM Limited/The Trust including:

       (i)     details of anticipated ticket prices and revenue sharing arrangements
               with the promoter;

       (ii)
   details of anticipated income from catering revenue;

       (iii)   details of anticipated income from other sources anticipated
to
               accrue to the venue operator.

[49]   As to the third category, maintenance and operating costs, and the fourth,
capital expenditure and working capital, Worldwide sought simply this:

       Documents relating to anticipated maintenance and
operating costs (both
       variable and fixed) such as insurance, security and rates.

       Documents relating to anticipated
capital expenditure and anticipated
       Working Capital Requirements.
[50]   The fifth category, concerning existing agreements,
was amended by the
Judge at the hearing to expose the issue as to scope. He did not amend the document
description, which was this:

       Documents evidencing existing agreements in relation to the operation of the
       arena including:

       (i)     agreements
with Ticketmaster7 Pty Ltd;

       (ii)    naming rights and catering, beverage and/or sponsorship agreement.

He amended rather
the related request for `documents evidencing funds received
under such agreements' by adding to it `whether before or after 26 April
2006'.


[51]   The sixth category concerned existing financial records and said this:

       Documents containing details of historical
profit and loss accounts as at 26
       April 2006;

       Documents containing details of any contingent assets or liabilities,
or
       details of actual, pending or threatened litigation for or against the company,
       in particular documents relevant
to the Derivative Proceeding brought by
       Worldwide NZLLC against the Jacobsens in CIV 2005-404-5903;

       Documents in the
nature of business plans;

       Documents containing details of any related party or non-arm's length
       transaction.

[52]
  This was the application for particular discovery resolved by the Associate
Judge in the decision Worldwide seeks to review, and
as QPAM says, Worldwide's
application for further particular discovery, dated 3 December 2008, could be
thought to subsume that first
application, rendering the review moot.


[53]   I do not accept that to be so. The second application also raises the very issue
that the Judge decided as to the scope of QPAM's duty to discovery: whether that
extends to documents describing events or matters after the valuation date. To decide
that
issue on the second application I cannot avoid reviewing the Associate Judge's
decision on the identical issue on the first application.


[54]   I am conscious that though a review under HCR 2.3(4) is by way of rehearing
it is for Worldwide to show that the decision
was wrong in the sense that it was
unsupportable on the evidence, or turned on a wrong understanding of the law, or
omitted to take
into account something relevant or turned on something irrelevant:
Alex Harvey Industries Ltd v CIR  (2001) 15 PRNZ 361, CA, Midland Metals
Overseas Pte Ltd v Christchurch Press Co Ltd  (2002) 16 PRNZ 107.


[55]    I will assume those limiting principles still to hold though this Court's
responsibility on appeal by way of rehearing
has recently been set on a wider footing
by the Supreme Court, at least on general appeals: Austin, Nichols & Co Inc v
Stichting
Lodestar [2008] 2 NZLR 141. That has not proved material to the review I
now make.


Decision under review


[56]    As the Judge
recorded at the outset of his decision, dated 28 August 2008,
Worldwide had framed its application for discovery as widely as it
had on the
premise that the value of Worldwide's shares and units as at 26 April or 28 June
2006 depended on QPAM's ability to generate
cashflow in the future. QPAM had
then still to trade. It was setting up to do so.


[57]    As the Judge also recorded, Worldwide
contended for discovery of
documents concerning events beyond the valuation date on the basis set out in its
valuer's affidavit;
and the Judge set out in his decision a passage from the valuer's
evidence within which the valuer said this:

        The way in
which I would go about valuing the units and shares would be
        first, to make an initial assessment based on information existing
as at the
        valuation date, and then, secondly to look at specific relevant information
        coming into existence after
the valuation date to confirm the reasonableness
        of expectations at the valuation date.

[58]    Worldwide's application,
the Judge said, was not framed in such a way as to
expose this particular issue. He asked Worldwide's counsel, Mr Fisher, to amend
the
schedule, which I have set out in paras [46] - [51], to identify the subject areas in
contention. The first, it seems, proved
to be category five, `existing agreements in
relation to the operation of the arena'; that including agreements with Ticketmaster7.
[59]   The Judge rested his decision as to scope on that category, by way of
example, on the basis on which Worldwide had amended
it, `documents received
whether before or after the valuation date under such agreements'. To decide
whether that was proper the
Judge reviewed five or more decisions concerning the
admissibility of evidence about post-valuation date matters, the first of which,
Wood
v Wood  (1985) 1 FRNZ 576, Hardie Boys J, is illustrative.


[60]   In that case Hardie Boys J contrasted a hindsight valuation, `treating assets at
their
true worth, as established by subsequent events', against the other extreme,
`unrealistic book values'; and then he stated two principles:

       ... First, the theoretical willing but not anxious vendor would not sell at a
       price that reflected inadequate asset
values, and the like-minded theoretical
       purchaser would not expect to buy at such a price. And, secondly, the law is
    
  clear that a valuer is required to take into account events that have occurred
       since the date at which the value is to be
assessed; in order to determine the
       proper weight to attach to the circumstances pertaining at the material date.

[61]  
After having completed his review of the cases, the last of which was Riddle
v Riddle (HC CHC, CIV 2005-409-000335, 17 August 2005)
Fogarty J, also
concerning the valuation of shares, which he found particularly helpful, the Judge
expressed himself in much the
same way:

       In general, the subsequent performance of a company cannot be relevant
       because that is not a matter that
would be known to prospective purchasers
       as at the date of the valuation. However, if an inference can be drawn from
    
  an occurrence, particularly one soon after the date of valuation, which
       throws light on the understanding or expectations
of the theoretical
       purchasers before the valuation date, then it may be admissible.

[62]   The Judge did not understand Worldwide
to seek to rely on this rationale to
obtain documents relating to events after valuation date. He concluded that the
evidence Worldwide
sought to obtain would be neither directly nor indirectly
relevant to an issue between the parties. He ruled that documents in category
five, in
existence but not discovered, were not discoverable under HCR 300, the rule then
applying. In that way he decided the issue
as it arose in every other category.


[63]   What Worldwide's final position was in oral submission I cannot recapture
definitively
now. But in ruling out discovery after the valuation date the Judge does
not appear to have taken into account how Worldwide's valuer
intended to use the
documents obtained. That intent seems very close to the basis on which the Judge
himself considered such documents
might be admissible (compare paras [57 ] and
[61] of this decision).


[64]   Whether or not that is so, Worldwide is correct to
say that what may be
relevant for the purpose of discovery is wider than what may prove to be admissible.
In this it has the support
of the very recent decision of the Court of Appeal in ANZ
National Bank Ltd & Ors v Commissioner of Inland Revenue  [2009] NZCA 150,
paras [4] ­ [6]. Relevance for discovery purposes, the Court said, is not to be equated
with relevance for the purposes of s 7 of
the Evidence Act 2006.


[65]   The Court also affirmed as still applying the duty to make discovery on the
expansive basis expressed
by Brett LJ in The Compagnie Financiere et Commerciale
Du Pacifique v The Peruvian Guano Company  (1882) 11 QBD 55, CA. That basis
bears repeating. The duty is, Brett LJ said at 63, to discover any document that:

       relates to the matters
in question ..., which not only would be evidence upon
       any issue, but also which, it is reasonable to suppose, contains information
       which may ­ not which must ­ either directly or indirectly enable the party
       requiring the affidavit either to advance
his own case or to damage the case
       of his adversary.

And:

       I have put in the words `either directly or indirectly',
because, as it seems to
       me, a document can properly be said to contain information which may
       enable the party requiring
the affidavit either to advance his own case or to
       damage the case of his adversary, if it is a document which may fairly
lead
       him to a train of inquiry, which may have either of these two consequences.

[66]   The cases on which the Judge relied
all concern admissibility at trial, after
discovery, and cannot limit the scope of what is discoverable. They do not warrant
the
conclusion in this case that the valuation date ought to be the cut-off point.
QPAM's duty to make discovery must extend a sufficient
time beyond that date to
capture any events that might assist to define the horizon as it was at the date of
valuation.


[67]  
In the nature of things there cannot be an absolute cut-off date for discovery
after the valuation date. A line might be drawn, for
instance, six months after that
date but that could not be absolute. QPAM's own valuer in the second of the two
valuations, that
going to the value of Worldwide's interest, referred to events
occurring as much as a year later. Two instances will suffice.


[68]
    The value ascribed by QPAM's valuer to Worldwide's interest in that second
valuation as at January 2006 reflected how uncertain
it then was that the venture
would survive. QPAM was locked in dispute with Mainzeal about the construction
of the stadium. That,
and the change in control within Worldwide, leading to
receivership, could have led the Auckland City to end the venture. Both risks
only
ceased, as the second valuation says, when QPAM and Mainzeal settled on 13 April
2007, and QPAM and the City three days later.
How relevant if at all are those later
events to value as at 26 April 2006?


[69]     Again, that second valuation depended on QPAM's
forecast net revenue and
free cashflows until 2046, particularly those until 31 December 2011. As at January
2006 they assumed a
practical completion date for the stadium of 31 August 2006.
But that later became 30 April 2007 and the first event in the still
incomplete
stadium only occurred within the month before. Again, how relevant might these
realities be to value as at 26 April 2006?


[70]     Though the QPAM valuer warned himself about the dangers of hindsight, he
did include them in his second report and they
could well be reflected in the value he
ascribed to the Worldwide interest. If that was open in principle to him, and that
cannot
be ruled out, then it must be equally open to Worldwide's valuers. Ultimately
the cogency of their survey, as expressed in the valuation
they reach, will be for the
Court.


[71]     The only practical cut-off date limiting QPAM's duty of discovery seems to
me to be
one encompassing these hindsight events to which QPAM's own valuer
referred; and that suggests the end of April 2007, one year after
the valuation date.
The question remains what order of discovery QPAM is obliged to make. Relevance
must be set against oppression.
Both come into play very pointedly on Worldwide's
second application.
Relevance and oppression


[72]    In its second application,
dated 3 December 2008, the categories of document
that Worldwide seeks to have QPAM discover, 24 categories in all, derive from the
conclusions critical to QPAM's two valuations. As Worldwide's valuer explained in
his initial affidavit in support:

        ...
are relevant for a variety of reasons. In my view, in order to undertake a
        fair market value of the units and shares it is necessary to:

        (a)     have a complete
picture of all documentation and matters arising in
                relation to dealings between all material interested parties
in relation
                to the development agreement and construction contract in order to
                understand as at valuation
date inter alia:

                (i)     likely cost to complete the project;

                (ii)    who was likely to be liable
for the cost to complete the
                        project;

                (iii)   realistic expectations for timing of completion;

                (iv)    the parties' abilities to meet their obligations under their
                        various contractual
arrangements;

                (v)     whether the Council         was   likely   to   terminate   the
                        Development
Contract.

                As this is a matter in part of determining attitudes of QPAM
                Limited, Mainzeal Construction
Limited (Mainzeal) and Auckland
                City Council, documentation prepared after the valuation date may
              
 well provide insight into the parties' attitudes as at valuation date.
                All information touching and concerning the
disputes with Mainzeal
                and Auckland City Council and the legal advice to QPAM in relation
                to those
disputes would be material. (Category 1).

        (b)     understand QPAM's financial position at valuation date so as to
     
          establish the precise starting point for the valuation. (Category 2).

        (c)     understand any sources of committed
funding or income (from
                shareholders or any other sources) at valuation date. This will ensure
                that
the value implications of such items are properly dealt with.
                (Category 3).

        (d)     understand management's
expectations of likely trading cashflows
                (including maintenance costs) and the rationale for these
             
  expectations at various times, from initial consideration of project
                through to valuation date, with explanations
of any significant
                changes and views over time. An electronic version would assist in
                ensuring the
parties to this dispute work from the same model as far
               as practicable in order to minimise differences which may
arise from
               different modelling approaches (Category 4).

He then went on to say that, `forecasts prepared after valuation
date may also be of
assistance in establishing management's expectations at valuation date.'


[73]   QPAM's valuer, at the Jacobsens'
request, responded as to how reasonable
that request was. He described it as unusual and contrasted it with the approach he
himself
had taken. He said this:

       I commenced my assessment by requesting a relatively standard preliminary
       list of documents
which I considered to be relevant, such as the contractual
       agreements and historic and forecast financial information. By
considering
       these documents, and after liaising with management, I identified other
       particular documents which I considered
would have an effect on value and
       sought and obtained copies of these documents. I consider that I was
       provided with
all the documents I required to assess the interests that I was
       asked to value.

[74]   In a detailed affidavit in reply Worldwide's
valuer held his ground.
Essentially, he wishes access to documents preceding and underpinning critical
events and decisions, and
succeeding documents also, in order to assess objectively
the value of Worldwide's interest as at 26 April 2006, not dictated by
how QPAM's
management and board, and their advisers, then saw things.


[75]   QPAM, before this present hearing, in a solicitor's
letter dated 3 March 2009
made a proposal to both Worldwide and the Jacobsens. The range of documents
Worldwide sought, the solicitor said, was huge
and in QPAM's view much of
marginal relevance. It did not regard discovery of most to be necessary.


[76]   QPAM offered to make
available all documents concerning the design and
construction of the arena up to and including 26 April 2006, both physical and
electronic documents, in a secure room to which each party would be allowed
access. QPAM offered, if asked, to copy any document
inspected without admitting
its relevance at trial, and reserving the right to deny a copy on the ground of
privilege.


[77]   This,
QPAM's solicitors said, would give Worldwide access to the
documents it wanted without subjecting QPAM to an oppressive burden of
formal
discovery. QPAM reserved the right to claim costs in excess of scale. This proved
unacceptable to Worldwide. It looks still
to QPAM for complete formal discovery of
all documents within the 24 categories. It is on that basis that I must decide
Worldwide's
second application.


Governing principles


[78]   QPAM's duty to discover documents relevant, both before and after the
valuation
date, is as I have said wide. It is not absolute. A balance must be struck
between discovery, which elicits documents of likely probative
value, and the burden
that imposes. If there is a high likelihood that documents within a category will be of
high probative value
the duty to discover them is correspondingly high. But the
converse is also true: AMP Society v Architectural Windows  [1986] 2 NZLR 190,
197, Chilwell J; Mao-Che v Armstrong Murray  (1992) 6 PRNZ 371, Wallace J.


[79]   In Molnlycke AB v Proctor and Gamble Ltd (No 3)  [1990] RPC 498, at 503,
Mummery J described the balance to be struck in this way:

       An order may be refused on the ground that it is unduly
oppressive to the
       party giving discovery. The Court takes account of such considerations as
       the value of the discovery
to the person seeking it and the burden imposed
       on the party giving it, with a view to restricting the volume of documents
       and the labour and expense involved to that which is necessary for fairly
       disposing of the issues in the case.

[80]
  Recent instances of exercises of discretion against wide discovery,
particularly discovery in the hope that something will turn
up, are Slick v Westpac
Banking Corporation (No 2)  [2006] FCA 1712 at 43; Austal Ships Pty Ltd v Incat
Australia Pty Ltd  [2009] FCA 368.


Conclusions


[81]   The burden Worldwide seeks to impose on QPAM seems to me to go well
beyond what is needed to establish as
at 26 April 2006, what a fair value for its
interest then was. Equally, informal discovery on QPAM's part, as it has proposed,
seems
to me to be insufficient. There is, I consider, a point of balance and it is this.
[82]   QPAM must complete an affidavit of documents
that answers Worldwide's
application for discovery in each of the 24 categories, listing the files of documents
that it holds in
each category. It need not list the documents within those files.


[83]   There are two categories of document, which may overlap
with the 24
categories as to which QPAM must list the documents it holds; and I add these
categories in the interests of clarity.
QPAM must list specifically the documents that
it disclosed to its own valuer. These appear to be listed in the valuations but there
may be others held by the valuer that ought also to be discovered. Secondly, QPAM
must list those discovered in the 2005 derivative
proceeding that are discoverable
now. Worldwide has no right to them on the basis they have already been
discovered. The contrary
is the case: Wilson v White  [2005] 3 NZLR 619, 623, para
[20]. But if they are discoverable in this proceeding, that cannot be a bar.


[84]   In discovering the files that it
holds, without disclosing their contents, and in
discovering the documents in the two specific categories, QPAM is entitled to
reserve
its position as to whether any of those documents lie beyond the scope of
discovery, on the grounds of relevance or privilege or,
as in the case of the derivative
action, whether documents then discovered are discoverable now. Such issues as
these can be resolved
by an Associate Judge as and when they arise.


[85]   The files and documents should then, as QPAM has proposed, be placed in a
secure room and, to the extent that it is feasible, ordered in Worldwide's 24
categories and the two further categories that I have
identified. Access should be on
the basis proposed in the recent QPAM solicitor's letter.
Independent expert appointed by Court


[86]   Finally, HCR 9.36 gives the Court a wide ability to appoint an expert from a
panel agreed by the parties if they themselves
cannot agree as to whom it should be.
The issue is rather whether the expert's opinion is likely to resolve an important
issue in
the case, or at least narrow its scope: Theatre Light Electronic Control &
Audio Systems Ltd v Angliss  (1997) 10 PRNZ 427.


[87]   There is no issue that the fair market value of Worldwide's interests as at 26
April 2006 is susceptible of an expert opinion
and that it is the fundamental issue in
the case. I do not think it at all likely, however, that a Court appointed expert is
likely
to resolve that issue to everybody's satisfaction or narrow its scope. The
opposite, I consider, is more likely.


[88]   If an expert
were appointed Worldwide and the Jacobsens could call one
witness in rebuttal without leave and another with leave if the circumstances
were
exceptional. And Worldwide is firmly intent on relying on the opinion of its own two
valuers. It does not accept that there
is any other safe basis on which to secure a fair
price. I imagine that the Jacobsens would wish to respond.


[89]   The result
is that, in all likelihood, there will be two expert witnesses on
either side and a Court appointed expert would simply add to the
body of evidence
the Court has to consider. The advantages that can flow from the Court appointed
expert procedure, moreover, a closer
focus on the issue on the basis of a defined
body of documents, can now be achieved by other means.


[90]   The Court has the ability
to require experts to meet before trial and to identify
those issues on which they agree and those on which they disagree and to
have them
give evidence in the presence of each other. That seems to me the preferable path to
take. This will need to be the subject
of directions prior to trial.


Conclusion


[91]   For these reasons I hold firstly that the issues for trial are to be that of
value
and that, as I have identified it, relating to Worldwide's rights, not just until payment
is made by the Jacobsens, but any
that arise if they do not make payment. The parties
are to confer as to whether that is best achieved by separate question or amended
pleadings or both.


[92]   Secondly, I hold that QPAM is to make discovery of files that it holds
containing documents that may
be discoverable, in the wide expansive traditional
sense, up to April 2007; and is to discover documents disclosed to its own valuer
and
those discovered in the 2005 derivative proceeding to the extent that they are
discoverable. QPAM is to retain its right to contend
that any document is not
discoverable, or is not admissible, on the ground of relevance or privilege or on any
other basis open in
law.


[93]   Finally, I decline to appoint an expert to make a valuation. The application
comes too late to assist in resolving
the principal issue in this case or narrowing its
scope and such an appointment could actually prove complicating. I envisage that
experts instructed on either side will meet to identify issues agreed and not agreed
and give their evidence in the presence of each
other. In that way the same result
hopefully will flow.


[94]   There remains the issue of costs. Worldwide has succeeded in part
but not
completely. It is to file a memorandum within ten working days of the date of this
decision and QPAM and the Jacobsens are
to file their memoranda in reply within
the succeeding ten working days.


                                                     
        _____________
                                                              P.J. Keane J