Estate of Kidd v Van Heeren [2021] NZHC 2661 (6 October 2021)

Last Updated: 18 October 2021

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-725 [2021] NZHC 2661

BETWEEN	THE ESTATE OF MICHAEL DAVID KIDD by its administrator BRYAN JOHN COOPER Plaintiff
AND	ALEXANDER PIETER VAN HEEREN Defendant

Hearing:	9 and 10 September 2021
Appearances:	B O’Callahan and EJH Morrison for the plaintiff M D O’Brien QC and S D Williams for the defendant R C Knight for Ms van Heeren-Hermans J G Miles QC and A E Murray for LCM Operations Pty Ltd A R Galbraith QC and M C Harris for S J Mills QC
Judgment:	6 October 2021

INTERIM JUDGMENT OF JAGOSE J

[Relief from partial disbursement of interim payment]

This judgment was delivered by me on 6 October 2021 at 4.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

.............................. Registrar/Deputy Registrar

Counsel/Solicitors:

S J Mills QC, Auckland

M D O’Brien QC, Auckland J G Miles QC, Auckland

A R Galbraith QC, Auckland

B O’Callahan Barrister, Auckland S D Williams Barrister, Auckland R C Knight Barrister, Auckland K3 Legal Limited, Auckland

Fee Langstone, Auckland Bell Gully, Auckland DLA Piper, Auckland Gilbert Walker, Auckland

THE ESTATE OF MICHAEL DAVID KIDD by its administrator BRYAN JOHN COOPER v VAN HEEREN [2021] NZHC 2661 [6 October 2021]

• [1] This judgment partially determines the defendant’s (“Mr van Heeren”) interlocutory application for relief from disbursement to the plaintiff (for convenience, “Mr Kidd”, although in fact his estate by its administrator, Bryan Cooper) of USD 17.612 million from the USD 25 million interim payment paid into Court on Mr van Heeren’s account.

Background

• [2] My interim judgment of 17 June 2021 found:1

... subject to adjustments for cash and interest, the partnership’s value as a whole at 18 January 1991 is USD 50.895 million, for allocation in equal shares of USD 25.448 million to each Mr Kidd and Mr van Heeren.

Noting Mr Kidd already to have the benefit of USD 7.836 million, “I would allow disbursement to him now on that account of USD 17.612 million from the USD 25 million interim payment”,2 the latter being a sum paid into Court on Mr van Heeren’s account,3 and I ordered accordingly “as an advance on a final accounting yet to be concluded”.4

• [3] Mr Kidd’s litigation funder, LCM Operations Pty Limited (“LCM”), claimed an entitlement to recover some USD 17.256 million in priority on any distribution from the interim payment, plus interest on the borrowing at the rate of 30 per cent per annum (compounding annually) from 14 May 2021.5

• [4] On 18 June 2021, Mr van Heeren sought stay of my order pending determination of his then-contemplated appeal, amended on 2 July 2021 pending determination of his then-intended appeal. Stay was sought in the alternative to disbursement being subject to a condition for LCM’s undertaking and security to repay in the event (and to the extent) of Mr van Heeren’s successful appeal.

• [5] Unknown to Mr van Heeren at the time of filing and service of his amended stay application, on 25 June 2021, Mr Kidd’s solicitors sought of this Court’s registry

¹ Kidd v van Heeren [2021] NZHC 1414 at [201].

² At [203].

³ At [15].

⁴ At [242].

⁵ At [15].

transfer of the USD 17.612 million in “non-reversible cleared funds to our trust account”. The request was made by email from a legal secretary in the solicitors’ firm to the registry’s case officer. My judgment was not then sealed. The registry made the transfer on 29 June 2021. On 30 June 2021, Mr Kidd’s solicitors paid out the transferred funds: in settlement of LCM’s claim; in partial settlement of outstanding legal fees in New Zealand and Liechtenstein; and the USD 60,000 balance to Mr Cooper for distribution in the estate.

• [6] Mr van Heeren appears to have become aware of the transfer from an exchange between the parties’ counsel on 2 July 2021. On 23 July 2021, he further amended his application to seek: Mr Kidd’s provision of information about the transfer; LCM’s undertaking and security to repay on Mr van Heeren’s successful appeal (alternatively, Mr Kidd to take all steps necessary to secure such undertaking and security); interim stay of payment out of the balance of the interim payment; and orders requiring all future communications between Mr Kidd’s solicitors or counsel and the Court to be copied or advised to other parties at the time or before their making.

• [7] Without hearing from Mr Kidd, I made those orders on 28 July 2021, with leave reserved to the parties to apply on notice for their variation or discharge.6 By a second minute also on 28 July 2021, I sought the parties’ attendance at a conference before me to explain the circumstances in which the transfer was made.7 As a result of that conference on 2 August 2021, I gave timetable directions leading to hearing of any applications for my orders’ discharge or variation, as well as a foreshadowed third amended application from Mr van Heeren, and outstanding matters remaining for determination in finalisation of my interim judgment.8

• [8] I heard those applications on 9–10 September 2021. As matters transpired, both Mr Kidd and LCM provided information about the transfer, LCM doing so without prejudice to its position I lacked jurisdiction over it, as an Australian corporate providing litigation funding to Mr Kidd in terms of a contract subject to English courts’ exclusive jurisdiction. LCM additionally proposed its susceptibility to any orders

⁶ Kidd v van Heeren HC Auckland CIV-2014-404-725, 28 July 2021 (Minute No 1 of Jagose J).

⁷ Kidd v van Heeren HC Auckland CIV-2014-404-725, 28 July 2021 (Minute No 2 of Jagose J).

⁸ Kidd v van Heeren HC Auckland CIV-2014-404-725, 2 August 2021 (Minute of Jagose J) at [7], and see Kidd v van Heeren, above n 1, at [130] and [205].

I might make against it was better determined after Mr van Heeren established an entitlement to the general interlocutory relief he sought. That course was not opposed, with the result this judgment addresses only that entitlement.

Mr van Heeren’s third amended application

• [9] Mr van Heeren’s third amended application dated 18 August 2021 seeks orders:

• 1.1 [Mr Kidd and LCM] provide [Mr van Heeren] with information regarding the payment out of Court of USD 17.612 million to [Mr Kidd’s] solicitor’s trust account on 25 June 2021 including:

(a) copies of any written communications with the Court (including Registry staff) since the conclusion of the trial on 31 March 2021 to which [Mr van Heeren’s] advisors have not been party;

(b) details of any other communications with the Court (including Registry staff) since the conclusion of the trial on 31 March 2021 to which [Mr van Heeren’s] advisors have not been a party;

(c) details (and if written copies of) of any communications between [Mr Kidd] and LCM (including their legal teams) between the interim judgment of 17 June 2021 and the payment out on 25 June 2021, relevant to:

(i) K3 Legal’s application to the Court Registry requesting payment out from the interim payment sum, including but not limited to the email between LCM and Mr Cooper referred to at paragraph 14 of LCM’s counsel’s memorandum of 16 August 2021; and

(ii) any request by the respondent to LCM for an undertaking, security or other arrangements for repayment.

(d) details of what has been paid out of the USD 17.612 million received by [Mr Kidd] on 29 June 2021 and to whom;

(e) details of any undertaking or security provided by [LCM] or other arrangements with [LCM] to ensure repayment in the event and to the extent that [Mr van Heeren] successfully appeals from the interim judgment dated 17 May 2021; and

(f) copies of any record of any such undertaking, security or other arrangements and any related communications[;]

• 1.2 all future written communications between [Mr Kidd’s] solicitors or counsel and the Court (including Registry staff) be copied to all other parties to the proceeding at the time they are made, including interested parties;

• 1.3 all future oral communications between [Mr Kidd’s] solicitors or counsel and the Court (including Registry staff) be advised to all other parties to the proceeding before they are made, including interested parties, unless they concern purely administrative or similar matters;

• 1.4 the respondent’s litigation funder, LCM:

(a) provide an undertaking to the Court to repay the USD 17,292,246.58 it received from [Mr Kidd] in June 2021 if and to the extent [Mr van Heeren] successfully appeals from the judgment and security to support that repayment undertaking, in each case in a form satisfactory to the Court, or alternatively that [Mr Kidd] take all steps necessary to secure such an undertaking and security; or

(b) pay the USD 17,292,246.58 into escrow pending the determination of [Mr van Heeren’s] appeal; or

(c) repay into the Court, as and when required by further order, such part of the USD 17,292,246.58 as may be required to repay Worldwide Leisure Limited or [Mr van Heeren] in the event of a successful appeal of the interim judgment of 17 June 2021 or to meet any order that may be made on that appeal under rule 52A of the Court of Appeal (Civil)

Rules 2005; and/or

(d) such other or alternative order as the Court thinks fit; [and]

• 1.5 the payment out of Court of the balance of the interim payment sum be stayed pending further order of the Court.

• [10] The orders are sought on grounds: irrecoverable disbursement of the interim payment renders Mr van Heeren’s appeal rights nugatory; Mr van Heeren sought my substantive order’s stay pending determination of his appeal; it is a “cardinal principle” a party’s unilateral communications with the Court are impermissible unless “purely routine, uncontentious or administrative”; and Mr van Heeren’s stay application rendered Mr Kidd’s unilateral communications with the Court contentious. Mr van Heeren relies on that ‘cardinal principle’ and procedural rules and principle relating to interim payments,9 sealing of judgments10 and stay pending appeal.11

• [11] Thus this judgment primarily concerns the sustainability of Mr van Heeren’s foundation for seeking the orders. For Mr van Heeren, Mark O’Brien QC allowed the relief sought at the application’s paras 1.2 and 1.3 adequately would be met by my articulation of solicitors’ or counsel’s obligations in communicating with the Court. As I have said,12 subsequent determination of the relief sought against LCM (alternatively, Mr Kidd) is contingent on that foundation being established. If payment out of the balance of the interim payment is to be stayed — as sought at the application’s para 1.5, not concerning LCM — is to be the subject of a separate judgment.

⁹ High Court Rules 2016, rr 7.68–7.76.

¹⁰ Rules 11.11–11.13.

¹¹ Rule 20.10.

¹² See [8] above.

Relevant law

—interim payments

• [12] Rules 7.68–7.76 of the High Court Rules 2016 relevantly provide:

• 7.68 Interpretation

In rules 7.69 to 7.76, interim payment means a payment on account of any damages, debt, or other sum (excluding costs) that the defendant in a proceeding may be held liable to pay to, or for the benefit of, the plaintiff in that proceeding.

• 7.69 Application for interim payment

(1) The plaintiff in a proceeding may, at any time after the time for the filing of a statement of defence by the defendant has expired, apply to the court for an order requiring the defendant to make an interim payment.

...

• 7.70 Order for interim payment in respect of damages

(1) A Judge may make an order under subclause (2) if, on hearing the application, the Judge is satisfied that—

...

(c) on a trial of the proceeding, the plaintiff would obtain judgment for substantial damages against the defendant or, if there are several defendants, against 1 or more of them.

(2) A Judge may, within the limits in subclause (3), order the defendant to make an interim payment of an amount that the Judge thinks just.

(3) The amount must not exceed a reasonable proportion of the damages the plaintiff is, in the opinion of the Judge, likely to recover after taking into account—

(a) any relevant contributory negligence; and

(b) any set-off, cross-claim, or counterclaim on which the defendant may be entitled to rely.

• 7.71 Order for interim payment in respect of sums other than damages

(1) A Judge may make an order under subclause (2) if, on hearing the application, the Judge is satisfied—

...

(c) that, on the trial of the proceeding, the plaintiff is likely to obtain judgment against the defendant for a substantial sum of money apart from any damages or costs.

(2) A Judge may order that the defendant pay an amount the Judge thinks just, after taking into account any set-off, cross-claim, or counterclaim on which the defendant may be entitled to rely.

(3) The order does not prejudice any contentions of the parties as to the nature or character of the sum to be paid by the defendant.

• 7.72 Method of payment

(1) The amount of any interim payment ordered to be made must be paid to the plaintiff unless the order provides for it to be paid into court.

(2) If the amount is paid into court, a Judge may, on the application of the plaintiff, order the whole or any part of it to be paid out to the plaintiff at a time or times the Judge thinks just.

...

(5) An application under subclause (2) for money in court to be paid out may be made without notice, but a Judge hearing the application may direct that notice of the application be served on the other party.

(6) An interim payment may be ordered to be made in 1 sum or by any instalments a Judge thinks just.

...

• 7.73 Directions on interim payment application

...

• 7.74 Non-disclosure of interim payment

...

• 7.75 Adjustment on final judgment or order or on discontinuance

(1) A Judge may, on the application of a party, make an order with respect to an interim payment made under an order or voluntarily that the Judge thinks just.

(2) A Judge may, in particular, make an order for—

(a) the repayment by the plaintiff of all or part of the interim payment; or

(b) the variation or discharge of the interim payment; or

(c) the payment by another defendant of part of the interim payment, if the defendant who made the interim payment is entitled to recover from the other defendant an amount—

(i) by way of contribution or indemnity; or

(ii) in respect of a remedy or relief relating to, or connected with, the plaintiff’s claim.

(3) A Judge may make an order under this rule—

(a) when giving or making a final judgment or order; or

(b) when granting the plaintiff leave to discontinue the proceeding or to withdraw the claim in respect of which the interim payment has been made; or

(c) at any other stage of the proceeding.

• 7.76 Counterclaims and other proceedings

...

—sealing of judgments

• [13] Rules 11.11–11.13 provide:

• 11.11 Judgments to be sealed, dated, and served

(1) A Registrar must seal judgments with the seal of the court.

(2) A judgment must be sealed—

(a) in accordance with any direction given by the Judge relating to the sealing of the judgment; or

(b) if no direction is given, at any time after the judgment is given.

(3) Except with the leave of the court, a judgment must not be sealed until any application under rule 11.9 for the recall of the judgment is determined.

(4) A sealed judgment must state—

(a) the date on which the judgment is given; and

(b) [Revoked]

(5) A party who has a judgment sealed must immediately serve a sealed copy of it on—

(a) every other party who has given an address for service; and

(b) any other person who, although not a party, is affected by the judgment.

• 11.12 When judgment takes effect

(1) A judgment takes effect when it is given.

(2) Rule 11.13 overrides subclause (1).

• 11.13 Steps before judgment sealed

(1) A step may be taken on a judgment before it is sealed only with the leave of a Judge.

(2) A party may appeal under rule 31 of the Court of Appeal (Civil) Rules 2005 against a judgment before it is sealed but must take steps to ensure the judgment is sealed without delay after the appeal is brought.

—stay pending appeal

• [14] Rule 20.10 provides:

20.10 Stay of proceedings

(1) An appeal does not operate as a stay—

(a) of the proceedings appealed against; or

(b) of enforcement of any judgment or order appealed against.

(2) Despite subclause (1), the decision-maker or the court may, on application, do any 1 or more of the following pending determination of an appeal:

(a) order a stay of proceedings in relation to the decision appealed against:

(b) order a stay of enforcement of any judgment or order appealed against:

(c) grant any interim relief.

(3) An order made or relief granted under subclause (2) may—

(a) relate to enforcement of the whole of a judgment or order or to a particular form of enforcement:

(b) be subject to any conditions for the giving of security the decision- maker or the court thinks just.

• [15] As seeking “some relief ancillary to that claimed in a pleading”,13 Mr van Heeren’s application for such “interim relief” pending appeal necessarily was made as an interlocutory application under r 7.19, in respect of which r 7.24 provides:

7.24 Notice of opposition to application

(1) A respondent who intends to oppose an application must file and serve on every other party a notice of opposition to the application—

(a) before the end of the tenth working day after being served with the application; and

(b) no less than 3 working days before the hearing date.

(2) The notice of opposition must—

(a) state the respondent’s intention to oppose the application and the grounds of opposition; and

(b) refer to any particular enactments or principles of law or judicial decisions on which the respondent relies.

(3) The notice of opposition must be in form G 33.

¹³ Rule 1.3 definition of “interlocutory order”.

—communications with the court

• [16] Nothing in the High Court Rules expressly addresses communications with the Court. Chapter 13 of the Schedule to the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, with which “[e]very lawyer must comply”,14 stipulates:

The overriding duty of a lawyer acting in litigation is to the court concerned. Subject to this, the lawyer has a duty to act in the best interests of his or her client without regard for the personal interests of the lawyer.

and relevantly elaborates:

Protection of court processes

• 13.2 A lawyer must not act in a way that undermines the processes of the court or the dignity of the judiciary.
  • 13.2.1 A lawyer must treat others involved in court processes with respect.
  • 13.2.2 A lawyer must not discuss any case or matter before the court with any judicial officer involved in the proceeding either formally or informally outside of the rules of procedure that permit matters to be raised in the absence of the other party (such as in cases of urgency or where an ex parte application is justified). In cases of doubt, the lawyers for other parties (or if a party is not represented, then the party concerned) should be informed of any matters being brought before the court.

Discussion

—interim payments

• [17] My 17 June 2021 judgment was in partial determination of Mr Kidd’s substantive claim against Mr van Heeren. As such, it was not in itself to determine any application by either party in relation to the interim payment. At the time of my judgment, there was no such outstanding application. Under r 7.75(3) of the High Court Rules, when giving final judgment, I was entitled to make an order with respect to the interim payment, albeit “on the application of a party” made under r 7.75(1). Mr van Heeren relies on the absence of such application.

¹⁴ Rule 3.

• [18] It is unclear if Mr van Heeren relies on such absence as either invalidating my order, or requiring Mr Kidd to make application for its operation. The point was not pressed in argument. I am unsure if Mr van Heeren intends to argue on appeal I lacked jurisdiction to make the order. Regardless, the interim payment also was paid into Court in terms of the Court of Appeal’s order, expressly for holding “pending further order of the Court”.15 My order was such ‘further order’, in derivative reliance on Mr Kidd’s application as determined by the Court of Appeal.

—sealing of judgments

• [19] As I have noted,16 judgments require to be sealed and leave is required to take a step on a judgment before it is sealed.

• [20] To that extent, ‘judgments’ are distinguished from “interlocutory orders”, of which sealing generally is for a party’s election.17 The distinction is in substantive determination of contended rights.18 My judgment substantively determined the parties’ rights at the point of dissolution of their partnership. That the final account remained to be determined is immaterial; it was enough I substantively determined the parties’ rights “in ... part”.19 My judgment required to be sealed.

• [21] Sealing of judgment is not empty procedural formality. Rather, it is the process of ‘perfecting’ the judgment,20 to complete its merger of claim and defence so far as their respective contentions are determined. Significantly, while the order for sealing

¹⁵ Kidd v van Heeren [2019] NZCA 275, (2019) 24 PRNZ 596 at [85].

¹⁶ See [13] above.

¹⁷ High Court Rules 7.47.

¹⁸ Andrew Beck Principles of Civil Procedure (3rd ed, Thomson Reuters, Wellington, 2012) at [8.2.1] and [11.9.1]; and Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters) at [11.1.01] and [11.1.02].

¹⁹ Waterhouse v Contractors Bonding Ltd [2013] NZCA 151, [2013] 3 NZLR 361 at [16], [32] (approving Fisher J’s dissent in Matthews Corporation Ltd v Edward Lumley & Sons (NZ) Ltd (1994) 7 PRNZ 591 (CA)), and [33]. See also Roerig v Valiant Trawlers Ltd [2002] EWCA Civ 21, [2002] 1 WLR 2304 at [44] (citing Tanfern Ltd v Cameron-MacDonald [2000] EWCA Civ 3023; [2000] 1 WLR 1311 (CA) at [17]) and [45] (citing Holmes v Bangladesh Biman Corp [1988] 2 Lloyd’s Rep 120 (CA) at 124).

²⁰ Browne v Afele [2003] 3 NZLR 433 (CA) at [16]. See also Andrew Beck “To seal or not to seal?” [2003] NZLJ 31 (observing, despite sealing’s “mandatory” nature, it “is frequently ignored in practice, because the parties comply with the judgment of the Court without further compulsion”, and asserting the sealed document “must be presented if any further action is to be taken in respect of the decision”; and Tiny Intelligence Ltd v Resport Ltd HC Christchurch CIV-2003-409-352, 2 March 2007 at [14].

may be sought without notice if “routine”,21 the sealed order must “immediately” be served,22 meaning the prospect of steps subsequently to be taken is known. While a judgment takes effect when given,23 that expressly is ‘overridden’ by the requirement “[a] step may be taken on a judgment before it is sealed only with the leave of a Judge”.24

• [22] For Mr Kidd, it is argued my order was “self-executing”, not necessitating any further step to be taken. If that was so, then nothing required to be done by Mr Kidd’s solicitors at all. They could simply have waited. Instead, the question is if Mr Kidd’s solicitors’ 25 June 2021 request of the registry for the ordered disbursement nonetheless was “a step ... taken on a judgment”.

• [23] The High Court Rules do not define ‘step’. The word is used in a variety of contexts: typically, as to steps “in a proceeding” — “some genuine and authorised procedural act within the limits of the rules and recognised practice of the Court ... usually ... within the registry or courtroom”.25 Excluded are “[a]ctions outside that area, albeit connected with the litigation”. Filing of memoranda — while having “little if any direct recognition within the express language of the Rules ... are an accepted means for the formal conveyance by counsel of requests and information” — therefore constitutes ‘a step in a proceeding’.26 A “liberal” approach is to be taken.27

• [24] ‘Steps taken on a judgment’ demands no more restrictive construction. While the phrase encompasses resort to specific enforcement processes,28 so too did it encompass an appeal.29 Thus, on a ‘liberal’ approach, the phrase includes steps taken

²¹ High Court Rules, r 7.23(2)(iii).

²² Rule 11.11(5).

²³ Rule 11.12.

²⁴ Rule 11.13.

²⁵ Mountain Rock Productions Ltd v Wellington Newspapers Ltd [1997] 3 NZLR 31 (HC) at 36–37, approved in London v Smallbone [2018] NZCA 131 at [15]–[16].

²⁶ Mountain Rock Productions Ltd v Wellington Newspapers Ltd, above n 25, at 37.

²⁷ At 37, citing McKee-Fehl Constructors Ltd v Green & McCahill (Contractors) Ltd [1988] NZHC 478; (1988) 4 PRNZ 277 (HC), Saxpack Foods Ltd v J Wattie Foods Ltd (1993) 6 PRNZ 120 (HC), Winders v Bank of New Zealand Ltd (1994) 7 PRNZ 512 (HC), Rea v Jordan Sandtan Were Ltd (1995) 8 PRNZ 264 (HC) and Walls v McBey (1996) 9 PRNZ 610 (HC).

²⁸ Limitation of ‘steps on a judgment’ to such enforcement, as held in Carter v M HC Wellington CIV-2003-485-1666, 7 November 2005 at [3], is inconsistent with the appellate approaches articulated in Browne v Afele, above n 20, and London v Smallbone, above n 25.

²⁹ Browne v Afele, above n 20, at [17]. But that now is supplanted by r 11.13(2) of the High Court Rules.

“in trying to execute a judgment, in whatever guise”.30 So far as disbursement from interim payment held by the court is concerned, the ‘recognised practice’ is responsive rather than proactive. That is reinforced by the requirement for an application for orders with respect to an interim payment even on final judgment.31

• [25] Given my order for disbursement from the interim payment held by the court, such execution here necessarily was to be taken within the registry. There can be no doubt counsel’s formal memorandum requesting the registry’s performance of my order would constitute a ‘step’.32 The informality of Mr Kidd’s conveyance of his request to the registry for transfer of my ordered disbursement is not effective to exclude the request from being a step on my judgment. Leave was required for the request made before sealing. Self-evidently, leave was not sought or obtained. Without leave before sealing, Mr Kidd was not entitled to make the request for transfer.

—stay pending appeal

• [26] No one argues Mr van Heeren’s undetermined application for stay pending appeal of itself constrained Mr Kidd’s actions. But its filing imposed an obligation on Mr Kidd, if intending to oppose the application, to file and serve opposition within ten working days of service.33 While its absence does not enable making of orders without holding a hearing, which required a memorandum of consent or in any event not opposing,34 and time remained for opposition’s filing, no opposition was filed within the requisite period. Filing of opposition would have crystallised the stay application as controversial between the parties, which can be thought the default position on the application’s making, unless formally consented to or not opposed.

—communications with the court

• [27] The materiality of such controversy may be in subsequent communications with the court. The permissible scope of such communications is not the subject of any material authority in New Zealand.

³⁰ Tiny Intelligence Ltd v Resport Ltd, above n 20, at [20].

³¹ High Court Rules, r 7.75.

³² See [23] above.

³³ High Court Rules, r 7.24(1).

³⁴ Rule 7.37.

• [28] So far as lawyers’ communications with the court are concerned, the rules of professional conduct expressly limit their regulation to “discuss[ion of] any case or matter before the court with any judicial officer involved in the proceeding”.35 That is in the context of the rules’ prohibition on lawyers “act[ing] in a way that undermines the processes of the court”,36 and under the rubric of lawyers’ “overriding duty ... to the court”.37 As has been seen,38 those processes extend to steps taken “within the registry or courtroom”, not limited to those with ‘judicial officers’. And the scope of permissible communications is not limited only for or to lawyers, but extend to parties to proceedings, although the rules of professional conduct may be informative of the court’s processes.39

• [29] Perhaps recognising that broader audience, but in any event expressly promulgating for the employment institutions, the only identified New Zealand judicial statement on the scope of permissible communications with the court asserts:40

It is appropriate to make the point, not just in the context of this case, but because in my experience such failures to notify the opposite party in Court proceedings are far too prevalent in this jurisdiction at least. It should be second nature for representatives of parties (whether counsel or advocates who appear in this Court) to so notify their opponents when there is any communication with the Court whether by the filing of correspondence or a document with the Registrar or a memorandum for the attention of a Judge. Not only is this necessary as a matter of professional courtesy between persons who ought to be able to rely upon their counterparts to do so as a matter of course, but the progress of litigation is slowed if the Registry cannot confidently expect, without making enquiry on each occasion, that a copy of a document filed with it or communication addressed to it, has been served on other parties. The task of effecting service should not fall upon the Registry except in those few cases where either the Act or Regulations so provide or contemplate. No party is entitled to make a communication to the Court without the knowledge of the other party on any matter on which that other party may wish to be heard. This includes communications to officers of Court on matters other than enquiries of a routine nature about the practice or requirements of the Court, filing fees payable, availability of fixtures and the like. There is no place for trial by surprise. Not only do the rules governing

³⁵ Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.2.2.

³⁶ Rule 13.2.

³⁷ Chapter 13.

³⁸ See [23] above, citing Mountain Rock Productions Ltd v Wellington Newspapers Ltd [1997] 3 NZLR 31 (HC) at 37.

³⁹ Black v Taylor [1993] 3 NZLR 403 (CA) at 418–419. Otherwise, compliance with rules of professional conduct is “a matter between the lawyers, their client and, of course, their professional body”: Carter Holt Harvey Forests Ltd v Sunnex Logging Ltd [2001] 3 NZLR 343 (CA) at [21].

⁴⁰ New Zealand Building Trades Union v Hawke’s Bay Area Health Board (1992) 2 ERNZ 897 (EmpC) at 905.

the Court s procedure require documents to be served in a number of cases but my remarks extend to other pertinent communications for which there is no such statutory expectation.

• [30] Those comments of the Employment Court’s then-Chief Judge are to endorse the common law position:41

It is an elementary rule of the administration of justice that none of the parties to civil litigation may communicate with the court without simultaneously alerting the other parties to that fact.

As an ‘elementary rule’, the constraint is part of ‘the processes of the court’, extending to steps taken ‘within the registry or courtroom’.

• [31] In the United Kingdom, the civil procedure rules were amended with effect from April 2019 to include:42

39.8.

(1) Any communication between a party to proceedings and the court must be disclosed to, and if in writing (whether in paper or electronic format), copied to, the other party or parties or their representatives.

(2) Paragraph (1) applies to any communication in which any representation is made to the court on a matter of substance or procedure but does not apply to communications that are purely routine, uncontentious and administrative.

(3) A party is not required under paragraph (1) to disclose or copy a communication if there is a compelling reason for not doing so, and provided that any reason is clearly stated in the communication.

(4) A written communication required under paragraph (1) to be copied to the other party or parties or their representatives, must state on its face that it is being copied to that person or those persons, stating their identity and capacity.

(5) Unless the court directs otherwise, a written communication which does not comply with paragraph (4) will be returned to the sender without being considered by the court, with a brief explanation of why it is being returned.

(6) In addition to returning a communication under paragraph (5), where a party fails to comply with paragraph (1) the court may, subject to hearing the parties, impose sanctions or exercise its other case management powers under Part 3.

⁴¹ R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2010] EWCA Civ 158, [2011] QB 218 at [6], later cited in Topping v Ralph Tristees Ltd [2017] EWHC 1954, [2017] 4 WLR 147 at [12], after noting at [11] the alternative “is a denial of open justice too often overlooked by courts and tribunals as well as parties. It ignores elementary fairness as well as professional courtesy”.

⁴² Civil Procedure Rules 1998, r 39.8, inserted by Civil Procedure (Amendment) Rules 2019.

(7) Paragraph (1) does not apply to communications authorised by a rule or practice direction to be sent to the court without at the same time being provided to the other party or parties or their representatives.

• [32] Subsequent commentary on the new rule observed:43

There has been an increase in parties communicating with the court (often by email) without copying the other party, and without good reason not to do so. This was a serious denial of justice of a particular kind; it is self-evidently objectionable, other than in exceptional cases, for a party to engage in a private dialogue with the court without the other party. To exclude the other party from the communication requires compelling justification.

The new rule is described as applying “a cardinal principle of the conduct of proceedings before the Court”,44 on which depiction Mr van Heeren relies. Prospectively subject communications have been recognised as including those with the United Kingdom ‘listing office’ equivalent of our registry.45

• [33] I hesitate to legislate for application of that ‘cardinal principle’ or ‘elementary rule’ in this Court. The hazards are illustrated by limitations in the professional rules to communications “with any judicial officer”, or the United Kingdom’s civil procedure rules to “any representation ... on a matter of substance or procedure” in a communication other than one which is “purely routine, uncontentious and administrative” (and noting the combined, rather than separate, application of those adjectives). Note also the United Kingdom rule’s regulatory consequences.46

• [34] Plainly the court’s processes are wider than as may engage a judicial officer alone. Even if the presence of Mr van Heeren’s stay application is to render Mr Kidd’s communication contentious, Mr Kidd argues it made no representation. But inherent in the communication — whether or not correct, given my holding leave was required to make it before the judgment was sealed — is a representation Mr Kidd unqualifiedly was entitled to the disbursement. Even a more anodyne enquiry made after sealing —

⁴³ Peter Coulson, Barbara Fontaine and John Sorabji (eds) Civil Procedure (Sweet & Maxwell, United Kingdom, 2021) vol 1 [White Book] at [39.2.10].

⁴⁴ Bell v Brabners LLP [2021] EWHC 560 at [4].

⁴⁵ France v Kapila [2019] EWHC 3935 at [47]. A listing office has responsibility for “organising hearings for trials and for other applications”. Officers “liaise with parties or their legal representatives and with the Commercial Judges to fix hearing dates and times and to allocate Judges for hearings”: Commercial Court of England & Wales “Commercial Court Contact Details” <www.commercialcourt.london>.

⁴⁶ Civil Procedure Rules, r 39.8(3)–(6).

for example, when would the registry act on my order — is still communication of a representation as to the registry’s procedure; that it was entitled to act without more. It is hard to conceive of a representation-less communication, perhaps except the exclusively salutatory (although there may then be a question of courtesy as to why they should not extend to other parties).

• [35] The brightline of the common law’s prohibition, subject only to the Court’s express procedural rules, has its attractions. Those rules identify when and how applications may be made without notice,47 and when and how such unilaterality may be maintained or corrected,48 which must extend to their communication to the registry and court. None of the ‘without notice’ provisions had (or was argued to have) application here: in particular, the presence of Mr van Heeren’s stay application meant the request for disbursement could not be thought to affect only Mr Kidd or characterised “routine”.

• [36] On the other hand, “adamantine rigidity of this kind would fail to allow for cases of high exceptionality”.49 The exception, taken at the communicator’s risk, may be of communications on which another party could have no contribution to make. But, so phrased, such an exception’s utility is limited, should give rise to no responsive communication, and may be outweighed by the benefit of common communication.

• [37] In the circumstances of the present case — in which none of the court’s procedural rules’ ‘without notice’ provisions is engaged, and Mr van Heeren had material contribution to make on Mr Kidd’s request for disbursement in noting his undetermined application for stay — I prefer simply to endorse the common law’s ‘elementary rule’. It was not open to Mr Kidd to communicate with the registry as he did without simultaneously alerting Mr van Heeren to that fact.

⁴⁷ High Court Rules, r 7.23.

⁴⁸ Rule 7.46.

⁴⁹ R (Mohamed) v Secretary of State for Foreign & Commonwealth Affairs (No 2), above n 41, at [13].

Consequences

• [38] On those two grounds — that, without leave before sealing my judgment, Mr Kidd was not entitled to request the registry make disbursement from the interim payment;50 and, whether or not with leave or after sealing my judgment, Mr Kidd was not entitled to make that request of the registry without simultaneously advising Mr van Heeren of that fact51 — I hold Mr van Heeren is entitled to relief on his third amended application dated 18 August 2021.

• [39] With one exception, I understand it is accepted Mr Kidd and LCM each have provided all the information Mr van Heeren seeks under para 1.1 of his third amended application. The exception is a partly-redacted document LCM additionally would disclose, to which disclosure Mr Kidd objects in whole as subject to their joint interest negotiation privilege. I sought the unredacted and redacted documents be provided for my review.52

• [40] I am satisfied from that review, in terms of performance of the funding agreement between them, Mr Kidd and LCM jointly were party to “a dispute of a kind for which relief may be given in a civil proceeding”, and the document was intended to be communicated confidentially between them in connection with an attempt to negotiate the dispute.53 The document’s contents neither advance nor provide a foundation on which to contradict LCM’s evidence. The document thus not being outweighed in the interests of justice by any need for it to be disclosed in this proceeding, it accordingly is privileged from disclosure.54

• [41] Given both the sought order’s otherwise accepted performance, and LCM’s objection to my jurisdiction to make orders against it, I see no point in making the order sought at Mr van Heeren’s application’s para 1.1. As I previously explained:55 the declaratory relief sought at paras 1.2 and 1.3 is met by my grounds for holding

⁵⁰ See [25] above.

⁵¹ See [37] above.

⁵² Kidd v van Heeren HC Auckland CIV-2014-404-725, 9 September 2021 (Minute of Jagose J) at [2].

⁵³ Evidence Act 2006, ss 57(1) and 66(1).

⁵⁴ Section 57(3)(d).

⁵⁵ See [11] above.

Mr van Heeren is entitled to relief;56 the relief sought of LCM and Mr Kidd at para
1.4 requires separately to be determined, and I will give directions accordingly; and I will issue a separate judgment addressing the relief sought exclusively of Mr Kidd at para 1.5.

Result

• [42] Mr van Heeren is entitled to relief on his third amended application dated 18 August 2021.

Next steps

• [43] I direct:

(a) the registry to set down a one-day hearing before me, on a date convenient to counsel, of the order sought at para 1.4 of Mr van Heeren’s third amended application dated 18 August 2021; and

(b) the parties to file any additional written submissions in support, opposition or reply respectively five, two and one working days before the hearing.

Costs

• [44] I reserve costs until after determination of the balance of this application.

—Jagose J

⁵⁶ See [38] above.