Accident Compensation Corporation v Trends Publishing International Ltd [2016] NZHC 742 (20 April 2016)

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BETWEEN	ACCIDENT COMPENSATION CORPORATION First Plaintiff ADVICEWISE PEOPLE LIMITED Second Plaintiff CALLAGHAN INNOVATION Third Plaintiff/Counterclaim Defendant MEDIAWORKS RADIO LIMITED Fourth Plaintiff WEBSTAR, a divison of BLUE STAR GROUP (NEW ZEALAND) LIMITED Fifth Plaintiff
AND	TRENDS PUBLISHING INTERNATIONAL LTD Defendant/Counterclaim Plaintiff

Hearing:	20 April 2016 (by telephone)
Counsel:	D C McLellan QC and S Bisley for Callaghan Innovation K J Crossland for Trends Publishing International Ltd
_Judgment:	_{20 April 2016}

ACCIDENT COMPENSATION CORPORATION v TRENDS PUBLISHING INTERNATIONAL LTD [2016] NZHC 742 [20 April 2016]

[1] Callaghan Innovation (Callaghan) applies to adjourn a counterclaim brought against it by Trends Publishing International Ltd (Trends). The counterclaim has been set down for hearing over 10 days, commencing on 21 November 2016. The application arises out of the non-availability of senior counsel of choice.

(a) The first is an application by Callaghan Innovation to set aside a compromise proposed by Trends Publishing International Ltd under Part 14 of the Companies Act 1993 (the compromise application). The defence proceeds on the basis that Callaghan is not a creditor. Although the compromise documents recognised that Trends was indebted to Callaghan, an amount alleged to be owed by Callaghan to Trends is said to extinguish that claim.

(b) The second is a counterclaim brought by Trends against Callaghan alleging breach of contract and defamation, in connection with an agreement for research and development funding entered into on 2

[3] Callaghan is a public body that was established by the Government. Its mandate was to stimulate research, development and innovation, for later commercial benefit. Trends had operated as a magazine publisher. Later, it digitised its products and endeavoured to expand further into that medium. Trends sought funding from Callaghan to research (what it says) were novel ideas about the way in which information could be conveyed to consumers.

[4] In a judgment given on 18 December 2015, Associate Judge Doogue made an order that the compromise application and the counterclaim be heard separately.¹

Following a case management conference before Lang J on 4 March 2016, directions were made in respect of both the compromise application and the counterclaim. The former was set down for a hearing over two days commencing on 11 July 2016. The latter was given a trial date over 10 days, commencing on 21 November 2016. The proceeding was adjourned for a further case management conference, so that remaining timetabling issues could be debated.

[5] That is the context in which Callaghan applies to adjourn the trial date fixed for the counterclaim until the first quarter of 2017. The prejudice it asserts is that its senior counsel of choice, Mr McLellan QC, is unavailable at that time. For Trends, Mr Crossland opposes the application. He contends that the circumstances surrounding the litigation make it necessary for the counterclaim to be heard as soon as practicable after the compromise application.

[6] Mr McLellan and Mr Bisley, for Callaghan, accept that, apart from the availability issue, no prejudice would be suffered by Callaghan if the application to adjourn were to fail, making it necessary for Callaghan to instruct alternative senior counsel.

[7] In dealing with the split trial application, Associate Judge Doogue concluded his judgment by saying:

[47] There is no justification for delaying the [compromise application]. [48] If the compromise is set aside and Callaghan proceeds with a

liquidation application, it will be open to the defendant to seek a stay of that proceeding or, if the counterclaim is ready, to seek directions that the counterclaim be heard at the same time as the liquidation proceeding. The merits of Trends’ position would then be ascertainable and the Court could, possibly, conclude that Trends has an equitable set-off which extinguishes the debt owed to Callaghan. That would then have the result of defeating any liquidation proceeding that Callaghan brought.

[49] Even if the Court were ultimately to permit a liquidation to proceed and an order were to be made, it would still be open to the liquidator to pursue the claims which are the subject of the counterclaim if it was perceived that there was merit in that course being adopted.

[50] In the case of the other plaintiffs, apart from Callaghan, there is still less reason why an order should be made deferring the hearing of the application which they have brought.

[54] The parties should confer on the case management steps that are required to ready the two separate cases for hearing. They should file memoranda within 15 working days of the date of this judgment advising the Court on what matters have been resolved and, what if any, have not. I will then give consideration to further directions being made and the possible scheduling of a case management conference.

[8] It is apparent from that judgment, delivered on 18 December 2016, that the purpose of the next case management conference was to ready both the compromise application and the counterclaim for hearing.²

[9] On 2 February 2016, Mr Bisley filed a memorandum addressing timetabling issues involving both claims. Areas of agreement were identified, as were points on which judicial intervention was required. In dealing separately with the counterclaim, Mr Bisley set out “basic steps” that the parties agreed should be timetabled. He continued:

(a) The plaintiffs’ submission is that the Counterclaim should not be progressed until the Companies Act claim has been resolved.

(b) Trends argues that the Counterclaim ought to be progressed in parallel with the Companies Act Claim, with orders to be made now timetabling the Counterclaim through to a hearing in October 2016.

[10] In a comprehensive response, dated 3 February 2016, Mr Crossland made submissions on timetabling in respect of both aspects of the proceeding. In particular, he contended that timetabling arrangements should be made to progress the counterclaim to hearing, which should not await determination of the compromise application. In a schedule annexed to his memorandum, Mr Crossland

_{proposed a timetable for the hearing of the counterclaim, culminating in
a close of}

pleadings date of 30 September 2016 and the allocation of a hearing over 10 days, to begin on “the first convenient date after 30 September 2016”.

2016. After canvassing various interlocutory issues, he maintained Callaghan’s position that the counterclaim should not be allowed to proceed to a hearing in parallel with the compromise application.

[12] It is fair to say that the nature of the orders sought by Trends and its proposed timetable were squarely before the Judge for consideration at the forthcoming case management conference.

[13] Following the telephone conference on 4 March 2016, Lang J made it clear that the compromise application required priority, because of the solvency issues involved. That application was set down for hearing on 11 July 2016. In dealing with the counterclaim, the Judge made consent orders in relation to discovery and inspection and recorded counsel’s agreement that, subject to later review, 10 days would be required for the trial.

[14] Although a possible hearing date during 2016 was not mentioned during the course of the conference, Lang J concluded by saying:

[10] The Registrar has allocated the proceeding a ten day trial commencing on 21 November 2016 at 10am. Pre-trial directions in relation to that fixture will need to be given either at the telephone conference on the date allocated by the Registry or, if interlocutory applications need to be dealt with, once those applications have been determined.

[15] The Judge was not told (during the 4 March 2016 telephone conference) that Mr McLellan had been instructed as senior counsel for Callaghan. In a memorandum filed in response to a query that I raised in advance of the present hearing, Mr Bisley confirmed that Mr McLellan had been instructed on the counterclaim in April 2015. Although the topic of a hearing date was a live issue for debate at the conference before Lang J, no indication was given to the Judge either of the fact that senior counsel had been instructed or the need to check his availability for proposed hearing dates.

[16] In the absence of some indication from counsel attending at a conference of this type that a need to check availability of counsel instructed (whether senior counsel or not) is necessary, the Registrar is entitled to proceed to fix a hearing date and advise the parties of it. Once a date is fixed (particularly for a long cause), other litigants stand to be prejudiced if their cases are given dates of hearing that are later than was necessary.

[17] In this case, not only was Lang J not advised of the need for Mr McLellan’s availability to be ascertained, but the Court had not received any prior indication that he was involved in the proceeding.

[18] Mr Bisley advised that Mr McLellan was provided with Lang J’s Minute on 6

March 2016. At that stage, Mr McLellan indicated unavailability due to involvement in a trial in the Cook Islands, which is due to start on 29 November 2016.

[19] The presumptive right of a party to go to trial with counsel of choice must be balanced against any countervailing considerations. In this case, while no other prejudice would be caused to Callaghan if alternative senior counsel had to be briefed, it is clear that Trends’ position is different.

[20] Mr Crossland’s submission is that the value of Trends’ business has been affected adversely and materially by statements made on behalf of Callaghan that its conduct was worthy of investigation by the Serious Fraud Office. While that contention is disputed, the possibility of additional financial harm caused by delay is a relevant consideration on an application of this type.

[21] Further, Trends is having to contest the compromise application on an earlier date. The counterclaim, which goes to the potential validity of any debt, also needs to be resolved promptly. In his judgment of 18 December 2015, Judge Doogue identified limited avenues of recourse for Trends if the compromise were set aside

[22] As the trial is not due to commence until 21 November 2016, there is ample time for alternative counsel to be instructed. I am not persuaded that, in the circumstances of this case, Callaghan’s presumptive right to counsel choice should override the desirability of a prompt decision on the counterclaim.

[23] Mr McLellan’s involvement should have been disclosed at an earlier time, so that any discussions between counsel about a potential hearing date could have taken his availability into account. I reiterate that the memoranda exchanged in anticipation of that conference put the possible allocation of a trial date for the counterclaim in issue and were filed almost one month before the conference was held.

High Court of New Zealand Decisions

Accident Compensation Corporation v Trends Publishing International Ltd [2016] NZHC 742 (20 April 2016)