Lifestyles Investment Group v Coral Investments Securities Limited [2016] NZHC 1116 (27 May 2016)

High Court of New Zealand

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Lifestyles Investment Group v Coral Investments Securities Limited [2016] NZHC 1116 (27 May 2016)

Last Updated: 22 June 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-002352 [2016] NZHC 1116

BETWEEN	LIFESTYLES INVESTMENT GROUP Plaintiff
AND	CORAL INVESTMENTS SECURITIES LIMITED First Defendant
AND	TONY NOEL LUSBY Second Defendant
AND	MACQUARIE BANK LIMITED AND MACQUARIE INVESTMENT MANAGEMENT LIMITED Third Defendants

Hearing:	24 May 2016
Appearances:	M C Black for the Plaintiffs A M Callinan and G K Holm-Hansen for the Third Defendants
Judgment:	27 May 2016

_{JUDGMENT OF ASSOCIATE JUDGE SARGISSON}

This judgment was delivered by me on 27 May 2016 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date.......................................}

Solicitors:

Simpson Grierson, Auckland

Devonport Law, Auckland

M Black, Auckland

_{Copy to: P McNicol, National Business Review}

LIFESTYLES INVESTMENT GROUP v CORAL INVESTMENTS SECURITIES LIMITED & Ors

[2016] NZHC 1116 [27 May 2016]

[1] Mr Hamish McNicol of the National Business Review has applied for a general right of access to inspect formal Court documents on the Court file in this proceeding.

[2] Mr McNicol says that the NBR has already reported on the existence of the lawsuit, and that as there is a jurisdiction hearing, information about the lawsuit is already publicly available; but that Macquarie Bank Limited (the second named third defendant) has told NBR it is unable to publicly comment on the case while it is before the courts.

[3] Mr McNicol adds that NBR would like to access the Court file in order to assess the statements of claim and defence in order to cover the proceedings in a timely and accurate manner, noting that the basis of the case was extensively reported upon in 2011 when allegations surfaced against Mr Lusby (now named as the second defendant):

We say that with about 50 investors involved in this case, and more elsewhere, there is significant public interest in the case, particularly as Mr Lusby has not yet faced any of the allegations first made five years ago. This case also involves allegations against Macquarie Bank, which we say are of equally significant public interest.

[4] Reliance is placed on High Court Rules 3.9 and 3.13, and particularly the following matters which are found in r 3.16:

(c) the principle of open justice, namely, encouraging fair and accurate reporting of, and comment on, court hearings and decisions:

(d) the freedom to seek, receive, and impart information:

[5] Rule 3.9 has no application to the present application as it governs access during the substantive hearing stage of a proceeding. It is r 3.13 that applies to an application made for permission at other stages of a proceeding, and it imports the considerations set out in r 3.16.

[6] Rule 3.16 lists a number of factors that the Court must consider and balance when determining an application under 3.13. These are not limited to those matters that Mr McNicol has referred to. Relevantly they also include the orderly and fair administration of justice.

[7] The NBR’s application is opposed by the third defendants. The plaintiffs have on the other hand indicated their non-opposition, and more recently their support for the application.

[8] At my direction argument on the application was heard in Court yesterday. There was no appearance for the NBR, but counsel for the plaintiffs presented submissions in support.

[9] In this proceeding the plaintiffs are suing all of the defendants for losses they allege they incurred as a result of an investment scheme they were invited to join by the first and second defendants. Essentially their case against the first and second defendants alleges misrepresentation and breach of investment contracts entitling them to remedies under the Contractual Remedies Act 1979, and breach of fiduciary duty / fraud; their case against the third defendants relies on several causes of action, including for breach of fiduciary duty. The first and second defendants have filed statements of defendant; the third defendants have not.

[10] Counsel for the third defendants acknowledges that there is a public interest in this proceeding, and that at some point it will be appropriate to allow the NBR and other media access to documents on the Court file. However, they point out that the third defendants have not as yet been required to file a statement of defence because they have filed a protest challenging the jurisdiction of the New Zealand Courts to deal with the proceeding, and they have applied for an application to stay the New Zealand proceeding. They say that this case is one that is more appropriately dealt with by the courts in Australia. Until that stay application is determined (and it is presently adjourned part-heard), it is common ground that the third defendants are not required to file a formal response by way of a statement of defence to the allegations in the statement of claim against them. Indeed, were they to do so, that

would be taken as a submission to jurisdiction, which would defeat the stay application.

[11] The third defendants argue that it would be inappropriate to allow the NBR general access to the Court file at this stage precisely because a statement of defence has not been filed, and the NBR will not be able to assess the statement of claim together with the statement of defence. They submit that the lack of a statement of defence will not enable balanced reporting.

[12] Counsel for the plaintiffs submits in support of the application that there is sufficient documentary material on file, to enable a balanced approach to reporting because of the material filed with the stay application. The submission is not one I accept. The stay application does not generate the need for the third defendants to state what their substantive grounds of defence are, with the result that any discussion based on the documents presently on the Court file would be made without the benefit of access to those grounds.

[13] Counsel for the plaintiffs also relies on the fact that statements of defence have been filed by the first and second defendants (Coral Investments Securities Ltd and Tony Lusby). However, as counsel for the third defendants points out, it cannot be assumed that the third defendants’ grounds of defence are identical or at all similar to those of the first and second defendants.

Assessment

[14] Mr McNicol’s request for access to the court file appears to be made for good reasons, but it is premature. The proceeding is in an early stage. The pleadings are not yet complete, and a report of the pleadings at present would necessarily be limited to the pleadings of the plaintiffs and the first and second defendants, and be notable for its omission to cover those of the third defendants, which are not yet required to be filed. A report of the pleadings at present would not give a balanced view of the parties’ positions. In these circumstances I am satisfied that the fair and orderly administration of justice must prevail over the legitimate interest of the media in having access to the court file.

[15] I do not wish to say anything that is determinative of any future application that may be made for access. It is too soon to do so, and will depend at least in part on whether the proceeding is stayed or continues in New Zealand; and if the latter, whether it is appropriate to allow access during the interlocutory process or whether access should await the substantive hearing stage.

[16] The application is accordingly denied, but without prejudice to the NBR’s

_{right to make a future application when and if it chooses to do so.}

Associate Judge Sargisson