WALTER PEAK CORPORATE TRUSTEE LIMITED V ANDERSON LLOYD HC DUN CIV-2009-412-000389

9 December 2011

IN THE HIGH COURT OF NEW ZEALAND

DUNEDIN REGISTRY

CIV-2009-412-000389

BETWEEN WALTER PEAK CORPORATE TRUSTEE

LIMITED

Plaintiff

AND ANDERSON LLOYD

First Defendant

AND ROSS & WHITNEY

Second Defendant

AND JOHN ALEXANDER WILLIAMSON

AND REX THOMAS

First Third Party

AND CHECKETTS MCKAY

Second Third Party

AND QUEENSTOWN REAL ESTATE 1998

LTD

Third Third Party

AND MACALISTER TODD PHILLIPS &

MACALISTER TODD PHILLIPS LTD

Fourth Third Parties

Hearing: 30 August 2011

(Heard at Dunedin)

Appearances: G T Carter for Plaintiff/Respondent

A Challis for First named Third Party and Second Third Party

B W Morley for First Defendant/Applicant

D L Greig for Second Defendant (excused)

A Challis for First-named Third Party and Second Third Party

(excused)

M E Parker for Second-named First Third Party (excused)

S Lucas for Third Third Party (excused)

K M Burkhart for Fourth Third Party (excused)

Judgment: 9 December 2011

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to application to join further third parties

[1] This judgment concerns an application by the first defendant to join three

additional third parties –

Ian Gregory Koblick as Fifth Third Party

Hanan Miron as Sixth Third Party

Jamie Robert Eisner as Seventh Third Party

[2] The application, filed in December 2010, covered also Queenstown Real

Estate 1998 Limited and Macalister Todd Phillips & Macalister Todd Phillips Ltd,

which have in the meantime been joined, unopposed as third and fourth third parties.

[3] The plaintiff opposes the application for joinder. The other parties notified

the following positions –

Second defendant (Ross & Whitney) – not opposed

First-named First Third Party and Second Third Party – position not

advised

Second-named First Third Party – abiding the order of the Court

Third Third Party – abiding the order of the Court

Fourth Third Party – abiding the order of the Court

Index to party/name abbreviations

Anderson Lloyd – First Defendant – law firm practising at Queenstown and

elsewhere

Aurum – Aurum Holdings MKI Limited

Aviation Properties – Aviation Properties NZ Limited, a company related to WPD

Mr Chapman – Second-named First Third Party – Rex Thomas Chapman a solicitor

and company director, a director of WPCT

Checketts McKay – Second Third Party – a law firm at Queenstown and elsewhere

Convelle – Convelle Enterprises Limited, at times a neighbour of WPCT at Walter

Peak

DMC – DMC (RE) Limited

Mr Eisner – proposed Seventh Third Party – Jamie Robert Eisner, a lawyer of

Connecticut, United States of America

Golden Arc – Golden Arc Capital Incorporated

Harcourts – Third Third Party – Queenstown Real Estate 1998 Limited (a Harcourts

franchisee)

Mr Koblick – proposed Fifth Third Party – Ian Gregory Koblick, a company director

of Florida, United States of America

MacTodd – Fourth Third Parties – comprising a firm Macalister Todd Phillips & a

company, Macalister Todd Phillips Ltd, lawyers practising at Queenstown and

elsewhere

Mr Miron – proposed Sixth Third Party – Hanan Miron, a company director of

Ramot Hashavim, Israel

Ross & Whitney – second defendant – a law firm at Auckland

WPCT – the plaintiff – Walter Peak Corporate Trustee Limited, trustee of the WPS

Trust

WPD – Walter Peak Development Limited (previously known as Queenstown WF

Property Limited)

The WPS Trust - Walter Peak Station Trust

WPSF – Walter Peak Station Freehold Limited, a beneficiary in the WPS Trust

WPSL – Walter Peak Station Limited, a beneficiary in the WPS Trust

Mr Williamson – First-named First Third Party – John Alexander Williamson a

company director, and director of WPCT

The big picture of this litigation

[4] This litigation arises out of the sale by the plaintiff WPCT of land (―the

property‖) which formed part of Walter Peak Station. WPCT had previously entered

into a Deed of Restrictive Covenant and into a Deed of Covenant in relation to the

property in favour of a neighbour, Convelle. WPCT sold the property to WPD

before the covenants were registered against the title without notice of the covenants

to WPD as purchaser. WPD settled the purchase and demanded damages. WPCT

settled WPD‘s claim by making available an interest-free loan to a company related

to WPD. WPCT suffered loss through the subsequent financial failure of the

borrower and its guarantors. The claims in this litigation arise thus –

First defendant – WPCT sues its lawyers, Anderson Lloyd, for negligence

in the registration of and advice upon the covenants.

Second defendant – WPCT sues WPD‘s lawyers for misrepresentations

about WPD‘s on-sale agreements.

First Third Parties – Anderson Lloyd joins Messrs Williamson and

Chapman as directors of WPCT for a lack of care in not disclosing the

covenants to WPD.

Second Third Party – Anderson Lloyd joins Checketts McKay (which

acted for WPCT on the sale to WPD) for failure to disclose the covenants.

Third Third Party – Anderson Lloyd joins Harcourts, WPCT‘s real estate

agent on the sale to WPD, for failure to disclose the covenants.

Fourth Third Party – Anderson Lloyd joins MacTodd, the law firm which

acted for the purchasers under the on-sale agreements and buy-back

agreements, for representing that the covenants had, during sale

negotiations, not been brought to the attention of on-sale purchasers.

[5] If the present joinder application is granted then the following would apply –

Fifth Third Party – Anderson Lloyd join Mr Koblick, a director of WPSF

who had represented WPCT and/or the beneficiaries of the WPS Trust,

for, first, the failure to disclose or have WPCT disclose to WPD the

existence of the covenants and, secondly, the failure to disclose to WPCT

information relevant to the on-sales agreements and to settlement of

WPD‘s damages claim.

Sixth Third Party – Anderson Lloyd joins Mr Miron, a chief executive

officer of Aurum, who represented WPCT and/or the beneficiaries of the

WPS Trust and/or Mr Morris Kahn, for failure to disclose to WPCT

information relevant to the on-sale agreements and to settlement of

WPD‘s damages claim.

Seventh Third Party – Anderson Lloyd joins Mr Eisner, an attorney for

Golden Arc (which is related to Mr Shmuel Meitar and DMC); Mr Eisner

having acted as representative of WPCT and/or the beneficiaries of the

WPS Trust and/or Mr Meitar for, first, failure to disclose or to have

WPCT disclose to WPD the existence of the covenants and, secondly, the

failure to disclose WPCT information relevant to the on-sales agreement

and to settlement of WPD‘s damages claim and, thirdly, for breach of

fiduciary duty by not advising WPCT of those matters.

Joinder of a third party: the general principles

[6] Rule 4.4 High Court Rules provides for the joinder of third parties in the

following terms –

4.4 Third parties

(1) A defendant may issue a third party notice if the defendant claims

any or all of the following:

(a) that the defendant is entitled to a contribution or an

indemnity from a person who is not a party to the proceeding

(a third party):

(b) that the defendant is entitled to relief or a remedy relating to,

or connected with, the subject matter of the proceeding from

a third party and the relief or remedy is substantially the

same as that claimed by the plaintiff against the defendant:

(c) that a question or issue in the proceeding ought to be

determined not only between the plaintiff and the defendant

but also between—

(i) the plaintiff, the defendant, and the third party; or

(ii) the defendant and the third party; or

(iii) the plaintiff and the third party:

(d) that there is a question or an issue between the defendant and

the third party relating to, or connected with, the subject

matter of the proceeding that is substantially the same as a

question or an issue arising between the plaintiff and the

defendant.

(2) A third party notice must be issued within—

(a) 10 working days after the expiry of the time for filing the

defendant's statement of defence; or

(b) a longer time given by leave of the court.

(3) A third party notice may be issued only with the leave of the court

if—

(a) an application for judgment is pending under rule 12.2 or

12.3; or

(b) a proceeding is entered on a commercial list established

under section 24A of the Act at a registry of the court.

[7] The discretion in r 4.4 is further defined by r 4.8 which provides –

4.8 Court's power and discretion

(1) On an application seeking leave to issue a third, fourth, or

subsequent party notice, the court must have regard to all relevant

circumstances, including delay to the plaintiff.

(2) On the making of an application of that kind, the court may grant or

refuse leave or grant leave on just terms.

[8] The general principles which I adopt are as follows:

(a) The defendant‘s claim against the third party must be covered by one

of the four grounds set out in r.4.4(1). A defendant may join the third

party as of right within the time limit set down in r 4.4(2)(a). An

application outside this time limit requires leave of the Court (r

4.4(2)(b)).

(b) Where leave is sought, the Court must consider firstly whether one of

the grounds in r 4.4(1) exists and secondly whether to exercise its

discretion to join the third party: ANZ Banking Group (NZ) Ltd v

Dairy Containers Ltd CA156/92, 17 December 1992.

(c) In exercising its discretion, the Court must have regard to all relevant

circumstances, including delay to the plaintiff (r 4.8).

(d) The interest of justice between all parties, however, is paramount.

While any delay to the plaintiff is regrettable, the attainment of justice

by the most efficient means is an overriding consideration: KPMG

Peat Marwick v Cory-Wright & Salmon Ltd (in rec and liq) CA77/94,

20 May 1994.

(e) Where the defendant has not been guilty of unreasonable delay, a

factor in favour of exercising the discretion will be whether the

defendant could have joined the third party as of right if it had applied

within the time limit: ANZ Banking Group (NZ) Ltd v Dairy

Containers Ltd CA156/92, 17 December 1992.

(f) Equally, unexplained or unacceptable delay by the defendant may

result in leave being refused: Meroiti v National Australia Finance

Ltd CA128/90, 6 December 1990.

(g) In cases of serious delay that risk prejudicing the plaintiff, the court

may be prepared to make an order for joinder on conditions designed

to preserve the hearing date for the plaintiff‘s claim against the

defendant: Total Air Supply Company Ltd v Total Air Supply Company

(2007) Ltd HC Auckland CIV-2008-404-7627, 10 January 2011.

(h) Avoiding duplicity of proceedings and preventing the same question

being tried with different results militate in favour of allowing the

application. The overriding purpose of the third party rules is to

enable all the issues to be dealt with in one action: Turpin v Direct

Transport Ltd [1975] 2 NZLR 172.

(i) There is, however, a need to strike a balance between all the parties‘

interests. The extent to which the plaintiff is necessarily involved in

the issues between the defendant and the third party is a

consideration. Equally, it can be oppressive and unjust to involve a

third party in a proceeding where much of the proceeding will not

involve that third party.

(j) The Court may have regard to the relevant strengths and weaknesses

of the parties‘ cases, including the case against the proposed third

party and the likelihood of recovery: Dairy Containers Ltd v NZI

Bank Ltd [1993] 1 NZLR 160 at 167.

Contribution from a third party under the Law Reform Act 1936 – the

principles

[9] Anderson Lloyd asserts that if it is liable to WPCT then it is entitled to

contribution and/or indemnity from the proposed third parties upon the basis that

they are joint tortfeasors.

[10] Section 17(1)(c) Law Reform Act 1936 states:

17 Proceedings against, and contribution between, joint and several

tortfeasors

(1) Where damage is suffered by any person as a result of a tort

(whether a crime or not)—

...

(c) Any tortfeasor liable in respect of that damage may recover

contribution from any other tortfeasor who is, or would if

sued in time have been, liable in respect of the same damage,

whether as a joint tortfeasor or otherwise, so, however, that

no person shall be entitled to recover contribution under this

section from any person entitled to be indemnified by him in

respect of the liability in respect of which the contribution is

sought.

[11] Specific principles or approaches which I adopt in relation to the right of

contribution are:

(a) The essence of the right to a contribution lies in the liability to a

common demand (Halsbury’s Laws of England (4th

ed reissue, 1998)

vol 9(1) at [1116]).

(b) The elements necessary for a defendant to succeed in joining a third

party pursuant to s 17(1)(c) of the Law Reform Act 1936 are:

(i) The plaintiff has suffered damage as a result of a tort;

(ii) The defendant is a tortfeasor liable in respect of that damage;

(iii) The third party is also a tortfeasor liable in respect of that

same damage.

(Computer Training Services Ltd v Universal Data Systems Ltd HC

Auckland CL 44/99 1 August 2000 at [5])

(c) Damage does not mean ‗damages‘; it means the harm suffered by

another person: Burse Construction Ltd v Hastie Ltd (Wilson & ors

third parties) [1996] 2 All ER 1 at 8, cited in Computer Training

Services at [11].

(d) The damage must be the same. In other words, the harm caused by

the proposed third party must be the same as that caused to the

plaintiff by the defendant (Computer Training Services at [11]).

(e) The phrase ‗joint tortfeasors or otherwise‘ in s 17(1)(c) includes

concurrent tortfeasors as well as joint tortfeasors (Computer Training

Services at [12]). While the damage must be the same, the causes of

action (the specific torts) may be different.

The more detailed factual background

[12] The application to join Messrs Koblick, Miron and Eisner as additional third

parties arises from their alleged involvement in the dealings whereby WPCT sold the

property to WPD and subsequently settled WPD‘s claim in relation to the covenants.

[13] The background which I now set out represents the arguable background as

elicited by Mr Morley from the evidence and particularly the documentary evidence.

The proposed third parties have not given discovery of documents – information

relating to them has come from contemporary documents and from answers provided

in correspondence by Anderson Lloyd‘s solicitors.

[14] WPCT is the corporate trustee of the WPS Trust. Messrs Williamson and

Chapman are the directors of WPCT.

[15] Anderson Lloyd, a law firm, allegedly acted for WPCT in relation to the

covenants relating to the property. The covenants were in favour of a neighbour,

Convelle.

[16] Mr Koblick is a director of WPSF which is in turn a beneficiary under the

WPS Trust. Mr Koblick acted as the representative of both WPCT and WPSF.

Anderson Lloyd acknowledges that it acted for WPSF in or around 1999.

[17] Mr Eisner is the General Counsel for Golden Arc, which is owned by Shmuel

Meitar. Golden Arc is an investment advisor and consultant and is the management

company for most of Mr Meitar‘s holdings. Mr Meitar holds an interest in DMC,

which is in turn a beneficiary of the WPS Trust.

[18] Mr Miron is the Chief Executive Officer of Aurum, an investment firm based

in Israel. Aurum represents the interests of Maurice Khan and is in turn a

beneficiary of the WPS Trust.

[19] Anderson Lloyd‘s current understanding of the involvement of Messrs

Koblick, Miron and Eisner derives in part from claims of legal professional privilege

which WPCT has made over contemporary correspondence in which the proposed

third parties were involved. The proposed third parties are described by WPCT‘s

solicitors as having been involved ―as WPCT‘s representatives‖. They are also

described as ―agents‖ of WPCT. In earlier correspondence they are described as

having acted ―on behalf of Walter Peak‖. Reference is also made to the fact that they

were acting for their respective companies but the documents do not disclose the

basis, rights, terms, scope or duties of the ―representative‖ functions performed for

WPCT.

[20] In November 2001 WPSF obtained subdivision and land consents in relation

to the property. From November 2001 to December 2004 proceedings took place in

the Environment Court and negotiations occurred between WPSF and Convelle.

[21] In December 2004 WPCT through its directors, Messrs Williamson and

Chapman, executed a Deed of Restrictive Covenant and a Deed of Covenant with

Convelle in relation to the property and in relation to other land. Anderson Lloyd

did not immediately register the covenants against the title to the property but

eventually did so on 21 April 2006.

[22] Documents show that Mr Koblick knew of the Environment Court

proceedings and of the negotiations by 2004 and authorised the WPCT directors to

execute the covenants on its behalf.

[23] On 28 October 2005 (six months before the covenants were registered)

WPCT entered an agreement to sell the property to WPD (the ―Walter Peak

agreement‖). The Walter Peak agreement contained WPCT‘s warranty that it had not

given any consent or waiver in relation to any application under the Resource

Management Act 1991 directly or indirectly affecting the property which had not

been disclosed to WPD. The covenants were in fact such a consent or waiver. They

did not appear on the title until registered on 21 April 2006.

[24] Neither WPCT nor anyone on its behalf disclosed the existence of the

covenants to WPD.

[25] The Walter Peak agreement settled on 4 May 2006 (two weeks after the

covenants were registered). WPCT alleges the covenants were not discovered by

WPD until after settlement.

[26] WPD entered into a number of agreements to on-sell part of the property

(―the on-sale agreements‖). On 26 April 2006 (five days after the covenants were

registered) WPT entered into on-sale agreements with four individuals and on 28

March 2007 entered into an on-sale agreement with an additional individual.

[27] WPCT alleges that WPD informed it that titles for the on-sale agreements

were going to issue in January 2008 but that –

1. there was a serious risk that the on-sale purchasers would cancel the

on-sale agreements as a consequence of the covenants registered

against the title to the property, and

2. if the on-sale purchasers did cancel, WPD‘s financier would call in its

loan and WPD would be left with a short-fall of $7,500,000.00 on

settlement which WPD would seek from the plaintiff in damages.

[28] WPCT alleges that in reasonable mitigation and settlement of WPD‘s claims

against it, it provided to Aviation Properties (a company related to WPD) and to one

of its directors, Rod Nielson, a six month interest free loan of $3,890,000. The loan

was secured by mortgages and by a deed of guarantee and indemnity and release

from WPD and its directors.

[29] As representatives of WPCT (and also representatives of certain beneficiaries

of the WPS Trust) Messrs Koblick, Miron and Eisner negotiated the Aviation

Properties loan with Mr Nielson on behalf of WPD. The WPCT representatives

entertained doubts as to whether the covenants were the true reason behind the on-

sale purchasers‘ purported threats to cancel their agreements. Mr Miron also

communicated to Messrs Koblick and Eisner the concerns as to Mr Nielson‘s

financial stability and as to Mr Nielson‘s ability to service and repay a loan. When

WPD‘s initial settlement proposal to WPCT (for the loan of $7,000,000) had been

put forward, Mr Koblick had also raised concerns about Mr Nielson‘s financial

position, the progress of the development and the value of the lots as security.

[30] Following the negotiations with Aviation Properties, WPCT entered into the

$3,890,000 loan agreement with Aviation Properties. Aviation Properties defaulted.

Its guarantors (including WPD and its directors) were either placed into liquidation

or adjudicated bankrupt.

[31] It has transpired that Messrs Nielson and Russell of WPD had entered into

contemporaneous back-to-back agreements with a number of the on-sale purchasers

to repurchase their respective Lots (―the buy-back agreements‖). This has raised

questions as to the true nature of the on-sale agreements and as to whether the

existence of the covenants was causative of WPD‘s potential failure to settle the

Walter Peak agreement.

[32] Ross & Whitney (the second defendant) was the firm which acted for WPD

in connection with the Walter Peak agreement and the on-sale and buy-back

agreements. WPCT alleges that Ross & Whitney‘s conduct and representations in

the Aviation Properties‘ negotiation amounted to misleading and/or deceptive

conduct, a false representation and a breach of duty of care owed to WPCT.

[33] Anderson Lloyd has itself added as third parties in the litigation –

Messrs Williamson and Chapman, the WPCT directors who

negotiated the covenants and did not disclose the covenants to

WPD;

Checketts McKay, the law firm which represented WPCT

when it executed the Walter Peak agreement, upon the basis

that it failed to give adequate advice to WPCT as to disclosing

the covenants to WPD and as to the non-registration of the

covenants on the title;

MacTodd, as the firm which represented some of the on-sale

purchasers (having previously acted for Convelle in

connection with negotiation of the covenants) upon the basis

that MacTodd engaged in misleading and/or deceptive

representations to WPD which in turn were conveyed to

WPCT (and upon which WPCT relied when deciding to make

the Aviation Properties‘ loan); and

Harcourts, the real estate agent which acted for WPCT and/or

WPSF in relation to the original subdivision and land consents,

the finalising of documents for the covenant, and the agent on

the Walter Peak agreement, upon the basis that Harcourts

negligently failed to disclose or failed to advise WPCT to

disclose the existence of the covenants to WPD.

[34] Anderson Lloyd has pleaded an affirmative defence against WPCT alleging

contributory negligence in WPCT‘s failure to disclose the existence of the covenants

to WPD.

[35] Anderson Lloyd also intends to plead that WPCT was negligent in entering

into the Aviation Properties loan as the loan was neither reasonable nor prudent.

[36] It is against this background that the causes of action against Messrs Koblick,

Miron and Eisner (as summarised above [5]) are pleaded.

[37] There is alleged to have been negligence by Mr Koblick in not disclosing the

existence of the covenants to WPD or having WPCT disclose those covenants – Mr

Miron having stated in notes that Mr Koblick had ―dropped the ball‖ by making an

assumption that the covenants were registered.

[38] It is alleged that Messrs Koblick, Miron and Eisner were all negligent in

advising WPCT to enter the Aviation Properties loan agreement given the risks

associated with Aviation Properties – a cause of action reinforced in Mr Morley‘s

submission by some evidence of a personal relationship between Mr Koblick on the

WPCT side and Mr Nielson on the WPD/Aviation Properties side. Anderson Lloyd

asserts that if adequate weight had been given to the identified concerns as to Mr

Nielson‘s financial position, the Aviation Properties loan would not have been made

and the present loss not incurred.

Analysis of the basis of joinder – the existence of duties

[39] This proceeding already involves a number of parties who are alleged

through their roles in representation of, advice given to or representations made to

WPCT, to have breached duties of care or duties under the Fair Trading Act. Some

have been joined directly as defendants. Others have been joined as third parties

upon the basis of an alleged right to contribution.

[40] Anderson Lloyd, in seeking to join the proposed third parties, refers most

particularly to their characterisation by WPCT itself as WPCT‘s ―representatives‖.

They have also been characterised by WPCT as its ―agents‖. The documentary

evidence suggests that all three had a significant role in the consideration and

negotiation of the WPD settlement and ultimately Aviation Properties‘ loan.

First ground of opposition – conduct not in personal capacity

[41] The plaintiff‘s first ground of opposition focuses on the involvement of the

proposed third parties in the settlement negotiations with WPD. WPCT asserts that

the involvement of Messrs Koblick, Eisner & Miron was not in their personal

capacities but was as the representatives of their respective companies (Koblick

Marine Centre Inc.; Golden Arc Capital Inc.; and Aurum Holdings MKI Limited).

None of the three has given evidence to that effect. Anderson Lloyd‘s assertion in its

proposed pleading that the individuals were involved as representatives of WPCT

has not been demonstrated to be untenable. It is common ground that they were each

involved in the consideration of WPCT‘s position and in the negotiations with WPD.

While there are references in the correspondence to their involvement as

representatives of their respective companies or interests, WPCT‘s own solicitors

have expressly referred to them acting in their capacities ―as WPCT‘s

representatives‖. A duty of care (or indeed a fiduciary duty) owed to WPCT might

reasonably arise in such circumstances. The need for a full examination of the

precise nature of relationships – to take place at trial rather than at the threshold

point of leave to join a party – is reflected in the observations of Cooke P in ANZ

Banking Group (New Zealand) Ltd v Dairy Containers Ltd1. His Honour, at 9, said –

What is important at this stage, when no final determinations are being

made, is to ensure that at the trial the true relative culpabilities can be

examined.

and his Honour continued, in relation to the interlocutory nature of joinder, at 10 –

no final determination of the existence of any duty is being made and what is

important is to ensure at the trial adequate examination of the true issues

arising in this pattern of relationships.

(emphasis added)

[42] The Court is not in a position in this interlocutory hearing to reach any

definitive view as to the capacity in which the proposed third parties were acting and

whether they owed duties in some capacity other than their personal capacity.

[43] In any event it would not follow that the proposed third parties escape

liability in tort through a finding that they were representatives of their respective

companies when they made representations. The victim of a tort may choose to sue

the individual as well as the individual‘s organisation.

[44] WPCT‘s first ground of opposition in this regard fails.

Second ground of opposition – imputation of conduct

[45] WPCT‘s second ground of opposition is that the conduct of the proposed

third parties (Mr Koblick in relation to the covenants and all three in relation to the

WPD negotiation) is imputed to WPCT, so that no issue of contribution or indemnity

arises.

[46] Mr Carter, before WPCT, put the ―imputation‖ ground on two bases. First, he

submitted that imputation or attribution arises as a matter of law. He referred to

1 ANZ Banking Group (New Zealand) Ltd v Dairy Containers Ltd CA 156-92; CA 160-92; CA

164-92; CA 169-92, 17 December 1992.

Anderson Lloyd‘s draft pleading as to the proposed third parties being ―WPCT‘s

agents‖. By reference to the decision of the Court of Appeal in Jessett Properties v

UDC Finance Ltd2, he submitted that the proposed third parties‘ actions and

knowledge are all imputed to WPCT in any event.

[47] Secondly, Mr Carter referred to correspondence between WPCT‘s and

Anderson Lloyd‘s solicitors when the issue of joinder arose. Anderson Lloyd‘s

solicitors recorded that Anderson Lloyd might reconsider its joinder application if

WPCT –

Admits that all knowledge held by Messrs Koblick, Miron and Eisner and

any opinion or concern held or expressed by them as to the financial

standing of Rod Nielson and WPD, as to whether Aviation Properties would

be able to repay the loan, and the prudence generally of settling on the terms

agreed with WPD is imputed to WPCT and the beneficiaries of the Walter

Station Trust.

[48] WPCT‘s solicitors responded –

As set out in WPCT‘s opposition to the application for joinder, WPCT

acknowledges that the actions and knowledge of Messrs Koblick, Miron and

Eisner (acting through their respective companies) are imputed to WPCT, so

that no issue of contribution and/or indemnity arises.

[49] Mr Carter‘s submission is that as a consequence of WPCT‘s

acknowledgement of imputation, the two branches of allegation against the proposed

third parties will be fully dealt with as allegations that –

1. WPCT was contributorily negligent (through Mr Koblick‘s alleged

non-disclosure of the existence of the covenants to WPD); and

2. That the settlement with WPD was not objectively reasonable

(through the knowledge and conduct of Messrs Koblick, Miron &

Eisner in the WPD negotiation).

Mr Carter submits that a finding of negligence or breach of duty on the part of any of

the proposed third parties would be taken into account by reducing or extinguishing

2 Jessett Properties v UDC Finance Ltd [1992] 1 NZLR 138 at 143.

WPCT‘s damages to the extent of the contribution which that third party would

otherwise have been required to make.

[50] To the extent that WPCT (in its notice of opposition) relies on an imputation

of conduct which arises as a matter of law, the apparent concession does not take

matters to the point where Anderson Lloyd could safely leave the third parties out of

the litigation. The concession contained in the notice of opposition refers to the

conduct of the proposed third parties ―acting through their respective companies‖.

The concession involves factual assumptions as to the capacity or precise

relationship in which each individual was acting. As indicated in the passage

referred to (above [41]) in the judgment of the President in Dairy Containers, at trial

a Court may find the relationships or capacities to be of a different nature. If the

underlying foundation of the concession as to imputation disappears, it is at least

arguable that Anderson Lloyd would no longer have the benefit of the apparent

concession as to imputation. In any event, a Court in relation to an ambiguous

situation may be reluctant to hold WPCT to an imputed responsibility. In his

submissions, Mr Morley gave as an example a situation where at trial one of Messrs

Koblick, Miron & Eisner was shown to have been negligent (or worse) in relation to

something of which WPCT had not the slightest inkling. As Mr Morley put it, the

acknowledgment of imputation may in that situation create something of a legal

fiction. This raises for Anderson Lloyd a legitimate concern as to whether a trial

Court would hold WPCT to a position of responsibility in such event.

[51] A similar concern arises in relation to the acknowledgement of imputation

offered by WPCT through the exchange of solicitors‘ letters. The concession was

again predicated upon the basis that they were ―acting through their respective

companies‖. The very fact that WPCT‘s solicitors did not provide an

acknowledgment in the terms sought by Anderson Lloyd‘s solicitors, but instead

substituted wording of their own, indicates an understandable concern that the

precise wording of an acknowledgement may create a wider or different extent of

acknowledgement than WPCT wants to give.

[52] I accept Mr Morley‘s submissions that some particular observations of the

Court of Appeal in Dairy Containers Ltd are relevant in this context. At one point

the Court of Appeal was dealing with a defendant‘s application to join the plaintiff‘s

parent company, upon the basis of concurrent liability arising from the vicarious

liability of the parent company for the conduct of its employees in the course of their

employment (they having acted as directors of the plaintiff subsidiary). Cooke P, at

7, observed that –

...breaches of duties by the directors might be precisely coincidental with the

contributory negligence [alleged by the defendant against the plaintiff],

but his Honour stated that in the interlocutory context –

...I do not think that this could safely be taken for granted.

The third party was joined.

[53] Thomas J also found in favour of joinder notwithstanding the proposition that

the liability of the parent company could be attributed to the plaintiff. His Honour, at

at 48, observed –

In the end, the questions of contribution and apportionment of blame will

come down to the trial Judge's assessment of issues of causation and the

various parties' respective responsibility for the losses suffered by [the

plaintiff]. Those issues and that responsibility could differ in kind and extent

[as between the plaintiff and its parent company] and can probably be best

assessed separately.

[54] Through having all relevant parties before the Court there will be the

opportunity, as Thomas J noted, for the individual responsibilities and contributions

to be assessed and for those to be taken into account directly in relation to matters

such as contributory negligence. I accept, as Mr Morley submitted, that before trial

one cannot confidently predict that the negligence or breach of duty by a third party

will necessarily translate into an equivalent and co-extensive contributory negligence

by the plaintiff. That is something that calls for full examination at trial when the

nature of all relationships is established.

[55] The second ground of opposition – based on conceded imputation – also fails.

A right of contribution?

[56] Anderson Lloyd‘s application for leave to join Messrs Koblick, Miron &

Eisner (in addition to Harcourts and MacTodd) asserted an entitlement to

contribution and/or indemnity from those parties. Anderson Lloyd invokes

s 17(1)(c) Law Reform Act (above [10]).

[57] The Anderson Lloyd pleading against the proposed third parties meets each

of the requirements of s 17(1)(c), in that the pleadings identify:

(i) Damage suffered by the plaintiff as a result of negligence (that

is, as a result of a tort);

(ii) Anderson Lloyd is a tortfeasor liable in respect of that

damage.

(iii) The proposed third parties are tortfeasors liable in respect of

the same damage.

[58] The damage I refer to is under two heads. In relation to all three proposed

third parties there is the damage involved in the plaintiff‘s entry into the settlement

agreement. In the case of Mr Koblick there is also the damage involved in WPCT‘s

entry into the agreement for sale and purchase for WPD without disclosure of the

covenants. In relation to some or all of the causes of action the relevant parties may

be more correctly described as concurrent tortfeasors rather than joint tortfeasors. As

the Computer Training Services case (above [12]) indicates, that does not alter the

right of contribution under s 17(1)(c).

A right of indemnity?

[59] In its application, Anderson Lloyd asserted that it was entitled under the Law

Reform Act not only to a contribution from the proposed third parties but also to

indemnity.

[60] Mr Morley did not develop any detailed submissions in relation to an alleged

right of indemnity. Mr Carter for WPCT submitted, correctly, that s 17(1) of the

Law Reform Act does not create a right of indemnity.

[61] Given my finding in relation to a right of contribution, Anderson Lloyd does

not need to establish in this case a right of indemnity. While I doubt, at least on the

pleadings as they stand, that such exists in this case, I do not decide the point as it is

unnecessary to do so.

The reasonableness or unreasonableness of settlement

[62] WPCT‘s notice of opposition did not refer specifically to the concept of the

reasonableness of settlement. Mr Carter nevertheless developed for WPCT a

submission to the effect that the third parties could not be viewed as concurrent

tortfeasors with Anderson Lloyd in relation to losses under the settlement because of

the nature of the Court‘s investigation into the reasonableness of settlement. Mr

Carter noted that where a plaintiff cannot prove that a settlement was objectively

reasonable, its claim for losses associated with the settlement will not succeed due to

a lack of causation or because the settlement involved a voluntary assumption of

liability.

[63] Such an analysis in my judgment would distract the Court from its focus

upon damage sustained by WPCT. Anderson Lloyd has pleaded that WPCT has been

contributorily negligent. It may be that one outcome of this litigation is that a

settlement is demonstrated to have been so unreasonable that WPCT cannot claim

the costs of settlement as reasonable costs in mitigation or otherwise. On the other

hand, a Court may find that WPCT has in some respect contributed to its losses

without having lost its right to some costs of mitigation. On WPCT‘s case, it may

look to Anderson Lloyd (and others) for its damages. On Anderson Lloyd‘s case

WPCT should also be looking to those who advised WPCT (in the case of Mr

Koblick as to the covenants and the agreement for sale and purchase) and in the case

of all three proposed third parties in relation to the settlement of issues.

[64] The characterisation of the matter as being simply an issue of reasonable at

settlement states the matter too narrowly – Anderson Lloyd on its pleadings can

reasonably point to a right of contribution in terms of the Law Reform Act.

The necessity of joinder

[65] WPCT opposed the joinder of the proposed third parties upon the additional

ground that joinder of those parties is unnecessary to resolve the issues in the

proceeding. In the notice of opposition it was stated that this was so:

… because there are no questions which ought to be determined not only

between the Plaintiff and the Defendants but between the Defendants and the

proposed third parties…

[66] As Mr Morley observed in his written synopsis, this ground of opposition

appears to flow from the provisions of High Court Rule 4.4(1)(c)(iii). That rule is

not applicable in relation to the present application. Anderson Lloyd‘s application is

based on the defendants‘ entitlement to contribution in terms of the Law Reform Act,

as already discussed.

[67] In his submissions, Mr Carter briefly developed this ground (that joinder was

unnecessary) upon the basis of the imputation of the proposed third parties‘ actions

and/or knowledge to WPCT. For the reasons already discussed, I do not regard the

legal arguments as to imputation or the form of acknowledgement of imputation

offered by WPCT to cut across the appropriateness of having the proposed third

parties as parties to this litigation.

Would the delay and additional cost of joinder cut across the interests of

justice?

[68] WPCT stated in its final ground of opposition that the joinder of the proposed

third parties would result in delay and further cost, and was therefore not in the

interests of justice.

[69] Mr Carter developed this ground of opposition in brief submissions, the main

points of which were:

Anderson Lloyd received WPCT‘s discovery in March 2010.

WPCT‘s discovery included substantial documentation obtained from the

proposed third parties, which was disclosed on the basis that they were

WPCT‘s agents and/or representatives.

Following discovery, Anderson Lloyd, in late April 2010, applied to join

WPCT‘s directors and solicitors in relation to the non-disclosure of the

covenants, but did not apply to join the proposed third parties until late

December 2010.

There was therefore significant delay in relation to the application for the

joinder of the proposed third parties (WPCT nevertheless acknowledging

the subsequent delay caused by the Christchurch earthquakes, including

the vacating of the initial hearing in March 2011).

Joinder of the proposed third parties will inevitably result in further delay

of the proceedings, which were otherwise close to progress towards ADR

or trial.

This is particularly so where the proposed third parties are all foreign

nationals and independent counsel may need to be instructed.

[70] I do not consider there is merit in the suggestion that some delay resulting

from joinder in this case will cause an injustice. The identification of the proposed

third parties as ―representatives‖ of WPCT came most clearly through the

correspondence from WPCT‘s solicitors in the latter half of 2010. The application

for joinder was made with reasonable promptness thereafter. The subsequent delay

must be seen as almost entirely relating to the Christchurch earthquakes.

[71] Mr Morley correctly noted that had the first defendant been fully alert to the

role of the proposed third parties at the time it filed its initial pleadings, it could have

joined those third parties as of right. It is a factor to be weighed in the interests of

justice that Anderson Lloyd, having since discovery acted promptly, should have

those parties before the Court.

[72] While the third parties may be based overseas, and the Court notes Mr

Morley‘s observation that ―independent counsel may need to be instructed‖, the

emphasis of WPCT‘s response to the present application has essentially been that

WPCT has fully treated the proposed third parties in the course of this litigation as

its representatives and agents, and has itself contended that all their knowledge and

conduct is imputed to WPCT in any event. Their full co-operation has apparently

been given to WPCT for the purposes of discovery. This therefore cannot be seen as

a case where the third parties come cold to the proceeding – rather, they have clearly

had a significant role in co-operation with WPCT to this point. Whether they see fit

to engage independent counsel, given WPCT‘s acknowledgement of responsibility, is

a matter for them. Should they choose to take independent advice and/or

representation I do not consider, against the background of the time taken to reach

this point in the litigation, that the passage of some additional months while

representation is secured and pleadings filed is inconsistent with the interests of

justice.

[73] Discovery and inspection involving the third parties, which might in a normal

case be expected to cause some significant delay, can scarcely be expected to do so

in this case where part of WPCT‘s submission has been that the proposed third

parties have already been co-operating with WPCT in that process.

[74] Finally, there are the rights to obtain discovery and to administer

interrogatories. As persons who took part in relevant correspondence, the proposed

third parties will likely be called upon to provide verification of their list of

documents which may prove to be more comprehensive than provided through the

plaintiff. They may also be called upon to answer interrogatories, thereby providing

to Anderson Lloyd verified information from participants in the sale and negotiation

processes. The value of such information to the trial process – and to Anderson

Lloyd in particular – should not too readily be defeated by argument that joinder will

involve delay.

The corporate entities behind the proposed third parties

[75] Although it did not form part of the notice of opposition, Mr Carter

developed a submission that if there was to be joinder, it should be the corporate

entities behind the individuals which are joined and not the proposed third parties.

[76] I can deal with this submission briefly. I have found that Anderson Lloyd‘s

application to join the three individuals has been properly made. It has been made

against the background where WPCT has identified the individuals as representatives

and/or agents of WPCT. There may be other references where corporations or

companies with which they have been involved are also identified as representatives

or agents of WPCT. It is not for this Court to dictate to Anderson Lloyd which

person or persons it should select. It was entitled to select the individuals. It has

made no application to join the corporations or companies. I therefore reject Mr

Carter‘s invitation to the Court to consider doing so in the absence of any

application.

Conclusion

[77] It is appropriate that the Court gives leave to Anderson Lloyd, pursuant to r

4.4(2)(b) High Court Rules to issue third party notices against Messrs Koblick,

Eisner and Miron.

Orders

[78] I grant leave to the first defendant to issue third party notices to Ian Koblick,

Jamie Eisner and Hanan Miron.

[79] All documents associated with the issuing of a third party notice are to be

filed within 15 working days.

[80] The first defendant is promptly after the issuing of the third party notices to

effect the service upon Messrs Koblick, Eisner and Miron.

Costs

[81] Counsel accepted that the costs of this application should appropriately be on

a 2B basis and that costs would follow the event.

[82] In the circumstances I order that the plaintiff pay the first defendant‘s costs of

this application, dated 23 December 2010, so far as it related to Messrs Koblick,

Eisner and Miron on a 2B basis together with disbursements to be fixed by the

Registrar.

Adjournment of the proceeding

[83] Having regard to the pending vacation, I adjourn the proceeding to a case

management conference at 2 p.m., 14 February 2012 by telephone (Associate Judge

Osborne) for the purpose of review and appropriate timetabling. Counsel are to file

by 8 February 2012 preferably a joint memorandum providing an update as to

progress and proposed timetabling directions.

____________________

Associate Judge Osborne