Yandina Investments Ltd v ANZ National Bank Ltd HC Auckland CIV-2010-485-002582 [2011] NZHC 1510; (2011) 25 NZTC 20-089 (10 October 2011)

High Court of New Zealand

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Yandina Investments Limited v ANZ National Bank Limited HC Wellington CIV-2010-485-002582 [2011] NZHC 1510 (10 October 2011)

Last Updated: 16 November 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CIV-2010-485-002582}

UNDER the Income Tax Act 1994 and the Tax

Administration Act 1994

BETWEEN YANDINA INVESTMENTS LIMITED Plaintiff

AND ANZ NATIONAL BANK LIMITED First Defendant

AND WESTPAC BANKING CORPORATION Second Defendant

AND BNZ INVESTMENTS LIMITED Third Defendant

CIV-2006-485-001228 to 001230

AND UNDER the Income Tax Act 1994 and the Tax

Administration Act 1994

BETWEEN YANDINA INVESTMENTS LIMITED First Plaintiff

AND DORSET ENTERPRISES LIMITED Second Plaintiff

AND RAQUEL DEVELOPMENTS LIMITED Third Plaintiff

AND COMMISSIONER OF INLAND REVENUE

Defendant

Hearing: 30 September 2011

Counsel: CR Carruthers QC for Plaintiffs

MR Dean QC, SE Fitzgerald for First Defendant

RB Lange for Second Defendant

_{A Barker for Third Defendant}

YANDINA INVESTMENTS LTD V ANZ NATIONAL BANK LTD HC WN CIV-2010-485-002582 10 October

2011

No appearance for Inland Revenue

Judgment: 10 October 2011

_{JUDGMENT OF ASHER J}

This judgment was delivered by me on Monday, 10 October 2011 at 11am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Introduction

[1] This proceeding was commenced in the High Court of New Zealand in its Wellington registry. The plaintiff is Yandina Investments Ltd (“Yandina”) and the defendants are three significant New Zealand banks, ANZ National Bank Limited (“ANZ”), Westpac Banking Corporation (“Westpac”) and BNZ Investments Ltd (“BNZ”) (collectively “the banks”). The banks apply for an order that the proceeding be transferred to the Auckland registry and entered on the commercial list. For reasons that will be set out this application has been treated not so much as an application to enter the proceeding on the commercial list in Auckland, but rather as an application for a change of venue.

Background

[2] Yandina is an incorporated company with its registered office in Wellington. The principal of Yandina, Graham Doke, resides in London. In 1982 the banks and Development Finance Corporation New Zealand Ltd formed the Maroro partnership (“the partnership”). The partnership, through a special purpose company Maroro Leasing Ltd purchased an aircraft on deferred payment terms and leased it to Air New Zealand.

[3] I do not go into the details of the leasing arrangement. They are set out in full in two previous judgments of this Court.[1] However, it is necessary to note that in

1994 an arrangement was entered into under which the partnership’s interest in the lease was transferred to an entity involving Yandina. It was envisaged that Yandina would have the ability to offset the income against tax losses available to Yandina. The transactions included certain deeds of assignment.

[4] In 1996 the Commissioner of Inland Revenue formed the view that the arrangements involved tax avoidance on the part of Yandina. The Commissioner reassessed the income as returned for the 1996 and 1997 years which had the effect of disallowing the losses claimed. He also assessed the 1998 year, assessing taxable income and allowing no losses against it. Yandina challenged those assessments in a proceeding commenced in 2003. That proceeding was transferred to the High Court in 2005 and is due for trial in November 2011.

[5] In November 2010 Yandina sought to join the banks to the tax proceeding. MacKenzie J rejected that application.[2] Following that decision Yandina issued this proceeding against the banks. Yandina claims that by an equitable assignment a trust was created in favour of Yandina in relation to income arising under a deed of assignment. Yandina asserts that the banks are trustees for that income. Yandina also asserts that there is an indemnity from the banks in relation to the tax proceeding. The amounts at issue exceed $72 million. In May 2011 Yandina applied to have this proceeding and the tax proceeding consolidated. It failed on that application.[3]

[6] The banks now seek an order for the transfer of this proceeding to this registry.

[7] This commenced as an application under r 29.14(2) of the High Court Rules for an order that the proceeding be transferred to the Auckland registry and entered

on the commercial list. Yandina opposed that application on the grounds that the proceeding was ineligible for entry on the commercial list and that an overall consideration of questions of relative convenience and fairness favoured declining the application. However, since the application and notice of opposition were filed, three commercial list Judges have been appointed in the Wellington registry. A commercial list will be established at the Wellington registry.

[8] In that circumstance Yandina no longer submits that the proceeding is ineligible for entry on the commercial list. Rather the issue is the consideration of questions of relative convenience and fairness.

[9] The parties are now content to proceed as if this was an application for change of venue under r 10.1 of the High Court Rules. Under r 10.1(4)(b) the Court may order that a proceeding be tried at a place where the proceeding “can be more conveniently or more fairly tried”.

[10] The predecessor to this rule was considered by the Court of Appeal in

Consumer Council v Pest Free Service Ltd as follows:[4]

In the present case Mr Barton submitted that, in terms of the new rules, it is misleading to speak of a plaintiff having a right to choose the forum. He accepts the position that in a case where the plaintiff has exercised his initial right to nominate a venue under R 9 of the Code then the onus will lie on any party to the action who applies for a change of venue under R 249 to satisfy the Court affirmatively that "the action can be more conveniently or more fairly tried" at some other town. He also accepts that that question must be determined by a process of balancing the factors that are relevant to the consideration of convenience and in the same way evaluating the matters relevant to fairness and then arriving at an overall just decision thereon. However Mr Barton strongly submitted that the initial right of nomination given by the Code to a plaintiff under R 9 ought not to be regarded as relevant to the process of evaluating the respective considerations of convenience and fairness. Put in another way, the plaintiff's nomination is not in itself probative of convenience or fairness. In his submission questions of relative convenience and fairness should be considered simply on such relevant material as may be placed before the Court. A change of venue should be ordered if on an overall consideration of such material the Court is affirmatively satisfied that the action can be more conveniently and fairly tried elsewhere. Mr Barton further submitted that the onus on an applicant to satisfy the Court ought not to be regarded as in some way especially difficult to discharge. He argued that there is no justification for adopting any such approach, notwithstanding earlier expressions of judicial opinion that the

plaintiff's so called right to choose his forum "is not lightly to be overridden". With all of this we agree, and indeed Mr Newhook found himself unable to argue to the contrary. In our view Meates v News Media Ownership Ltd should not be regarded as an authority to the contrary as regards the onus to be discharged by an applicant for a change of venue.

(Emphasis added.)

[11] This approach was recently affirmed by the Court of Appeal in Erwood v Maxted[5] and was adopted in relation to an application to transfer a proceeding and enter it on the commercial list by Rodney Hansen J in Commerce Commission v Cards NZ Ltd.[6]

Where can the action be more conveniently or more fairly tried?

[12] Yandina’s effective nomination of the Wellington registry in naming ANZ, which has its principal place of business in Wellington, as the first-named defendant, is no more than a factor. What is necessary is a balancing of all the relevant factors to determine the most convenient or most fair venue. The Court must be affirmatively satisfied that the action can be more conveniently or more fairly tried at a place other than the registry in which the proceeding was commenced.

[13] In carrying out the assessment the objective of the rules to secure the just, speedy, and inexpensive determination of any proceeding, will be an important consideration.[7]

[14] The transaction underlying the cause of action took place in Wellington. The transaction documents concerning the equitable assignments in issue identify two of the banks as banks “at Wellington” and specified Wellington addresses for notices to two of them. However, there is nothing in the document trail, which goes back many years, to indicate that there is any particular Wellington factor either in relation to

_{geography or custom that might arise.}

[15] It is convenient to adopt the categorisation of factors going to convenience and fairness set out in McGechan on Procedure:[8]

parties;

witnesses;

counsel; and

any relevant practical factors relating to a particular court, such as delays.

The parties

[16] The registered office of ANZ was and remains in Wellington. However, the other two banks, Westpac and BNZ, now have their registered offices in Auckland. Westpac was the largest percentage partner in the partnership having a 45.5 per cent share, BNZ the next largest at 26.5 per cent and ANZ the smallest at 21 per cent. BNZ was the manager of the partnership.

[17] All three of the banks conduct the relevant business relating to the Yandina claim from Auckland. ANZ, although it has its registered office in Wellington, has a specialised lending and loan product unit which has overall oversight and responsibility for the matter which is based in Auckland.

[18] Yandina has its registered office in Wellington. Its principal, Mr Doke, resides in the United Kingdom.

[19] On balance, in relation to this factor, there is a definite weighting in favour of the banks in that only Yandina conducts its relevant business in Wellington (with its principal being overseas) while all the banks conduct their relevant business in

_Auckland.

[20] There is an understandable vagueness as to whom exactly will be called as witnesses at this early point in the proceeding. There is a suggestion from Yandina that there could be up to three witnesses from the relevant accounting firm. However, the principal witness Mr Doke resides in the United Kingdom. There will be at least four bank witnesses who were involved in the original transaction. Of those four witnesses, three reside in Auckland. The fourth resides in Wellington but spends approximately two weeks of every month in Auckland. It is my assessment on an overview that there are likely to be more relevant witnesses based in Auckland than in Wellington.

Solicitors and counsel

[21] It has been suggested that the whereabouts of counsel has been accorded somewhat less prominence than that of the parties and their witnesses in recent years.[9] However, there seems to be no good reason to discount the relevance of this factor. It costs a client less if the lawyers are located where the case will be heard. There might be some basis for discounting this factor if counsel had been chosen from a location not connected to the location of the party for tactical reasons.

However, here the relevant businesses of the banks are now all based in Auckland, and they have understandably chosen Auckland solicitors and counsel.

[22] The position is therefore that of the four groups of solicitors and counsel involved, one is in Wellington and three are in Auckland. While the interests of the banks are aligned, they have all briefed their own solicitors and senior counsel. Given the significant amount involved in the proceeding there can be no doubt that each bank will be fully represented. Therefore, in terms of cost and convenience this

_{factor strongly favours an Auckland venue.}

[23] Now that there is to be a commercial list established in Wellington, it is difficult to discern any real difference between the practices and time frames available in the two courts. While historically hearings may have been more quickly obtained in Wellington, that is not necessarily the case now. The proceeding can in any case hardly be described as urgent given the time that has gone by since the original transactions.

Overview on convenience

[24] All the relevant practical factors when balanced favour an Auckland venue. This is clearly so numerically in relation to the location of the witnesses, places of business of the parties, and the location of solicitors and counsel. This is not a situation where the weighting is equal or only slightly in favour of one side. The proceeding can be more conveniently heard in Auckland in the sense that the overall costs of all parties in the round are likely to be less if the hearing occurs in Auckland rather than in Wellington. There will be lower travel and accommodation costs. The balance clearly tilts to Auckland. I conclude therefore that such onus as there is on the banks has been discharged.

Fairness

[25] Fairness will tend to follow convenience, although there may be cases such as the straitened financial circumstances of one party that could make it unfair to order change. There is no particular unfairness to Yandina arising from a change of venue to Auckland. It cannot make a great deal of difference to Mr Doke, the principal of Yandina, whether he travels from the United Kingdom to Auckland or Wellington. There is nothing to indicate that costs are a constraining factor for Yandina. It has briefed a considerable legal team. Although it will be less convenient for them to have to come to Auckland for the trial, that circumstance does not create any material unfairness, and Yandina’s convenience bows to the majority.

[26] There will be little gained if this decision is deferred. While the position in relation to witnesses may become clearer over time, the general facts are clear enough at this point. Much of the cost advantage in transferring it to Auckland now will be lost if there is a lengthy delay.

Result

[27] Under r 10.1 of the High Court Rules I direct that this proceeding be tried at

Auckland and all formal subsequent steps in the proceeding be taken at Auckland.

Costs

[28] It is my preliminary view that costs should follow the event and be ordered in favour of the banks. However, if the parties are unable to agree then memoranda should be filed within 21 days of the date of this judgment.

...................................

Asher J

Solicitors/Counsel:

CR Carruthers QC, PO Box 305, Wellington 6140. Email: [e-mail]

J Farmer QC, PO Box 1800, Shortland Street, Auckland 1140. Email: [e-mail]

S Bartlett, BNZ Legal Services, Private Bag 38906, Wellington.

RJ Cullen, PO Box 22051, Khandallah, Wellington 6441. Email: [e-mail]

Simpson Grierson, DX CX10092, Auckland. Email: [e-mail]

A Barker, PO Box 4338, Shortland Street, Auckland 1140. Email: [e-mail]

Crown Law Office, DX SP20208, Wellington 6140. Email: [e-mail]

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[1] Yandina Investments Ltd v Commissioner of Inland Revenue [2010] NZHC 2316; (2011) 25 NZTC 20-019 (HC) and Yandina Investments Ltd v Commissioner of Inland Revenue HC Wellington CIV-2006-485-_{1228, 16 September 2011.}
[2] _{Yandina Investments Ltd v Commissioner of Inland Revenue [2010] NZHC 2316; (2011) 25 NZTC 20-019 (HC).}
[3] Yandina Investments Ltd v Commissioner of Inland Revenue HC Wellington CIV-2006-485-1228, 16 September 2011.

[4] Consumer Council v Pest Free Service Ltd [1978] 2 NZLR 15 (CA) at 18.
[5] _{Erwood v Maxted [2007] NZCA 572 at [30].}
[6] Commerce Commission v Cards NZ Ltd HC Wellington CIV-2006-485-2535, 5 April 2007 at _[16].

[7] High Court Rules, r 1.2.

[8] McGechan on Procedure (online looseleaf ed, Brookers) at [HR10.1.03](2)(b).

[9] Mosaed v Mosaed (1990) 2 PRNZ 327 (HC) at 331 and Prudential Assurance Co New Zealand

Ltd v Slater (1990) 4 PRNZ 639 (HC) at 642.