James Farmer


Equiticorp 20 Years On

Tuesday, June 07, 2016
On 12 July 1996, Justice Robert Smellie delivered Judgment in the High Court at Auckland in the case of Equiticorp Industries Group Limited (In Statutory Management) v. The Crown (since reported in summary form only because of the length of the Judgment in [1996] 3 NZLR 586).   This followed a trial which started on 21 November 1994 and which finished on 21 December 1995 after 204 sitting days but which then continued with 8 “call back” days over the next 6 months in which the Judge sought further submissions on specific points.  This was – and still is – the longest trial in New Zealand’s legal history.

Justice Smellie entered Judgment by way of damages in favour of the Statutory Managers of Equiticorp against the Crown in the sum of $189 million, later increased by interest on that sum of $134 million and costs and disbursements of $4.7 million to a total of $328,393.641.00 (see [1996] 3 NZLR 685 (costs) and [1996] 3 NZLR 690 (interest).   This sum continued to increase during the period of a Crown appeal to $400 million, until settlement occurred shortly before the scheduled hearing date in the total sum of $270 million.  At the time, the Judgment was the largest entered in a civil claim in New Zealand.

Recently, the Equiticorp legal teams – being the main Equiticorp company and Equiticorp Australia which was separately represented – met for a reunion dinner.   Naturally, it was an evening of reminiscences but it was of interest to have an account of where the 12 who were present had ended up after 20 years.  Four had become Judges - Sian Elias (Chief Justice of the Supreme Court of New Zealand), Helen Winkelmann (Court of Appeal and former Chief High Court Judge), Peter Woodhouse (High Court) and Nick Manousaridis (Australian Federal Court).  Two are senior partners in Auckland law firms – Ian Denton (Wilson Harle) and Andrea Challis (McElroys).  Two are employed by commercial firms – Peter Goodall (who initiated and organised the dinner, now Head Claims broker at Marsh) and Aaron Delacey (head of Legal, BNZ Partners).  One, Lisa Gallate, is a member of an international law firm (Squire Patton Boggs) based in Sydney.  The remaining 3 are at the New Zealand Bar in Auckland – Stuart Grieve QC (notable also for his extracurricular rock band playing), Bill Manning (civil, employment and medico-legal) and me.

Sadly, one important member of the legal team who was not present was Anna Cook (Paton) who died prematurely some years ago.

The facts of the Equiticorp case are complex but arose from the sale on 19 October 1987 by the Crown of its shareholding in New Zealand Steel to Equiticorp Holdings Limited [EHL] in return for EHL shares and cash but with a contractual buy back of the shares to be settled in 6 months.   The share market crashed on the day following the sale and the value of EHL shares dropped dramatically.  In March 1988, although it knew that the buy back was being funded by companies in the Equiticorp Group (contrary to the prohibition of such funding at the time in the Companies Act and in breach of the fiduciary obligations of the directors of the purchasing Equiticorp company for committing that company to a grossly improvident transaction), the Crown proceeded with the buy back at pre-share market crash values.   The effect was that Equiticorp and not the Crown took the loss that resulted from the share market crash.  The Judge applied the legal principles relating to constructive trust (knowing receipt and knowing assistance), illegality and restitution (money had and received) to find in favour of the Statutory Managers.

A 13 month trial has its own challenges over and above the normal ones that apply to trials.   Essentially, it is like running a marathon instead of 5 kilometres but at the same pace.   This requires planning, organisation and good management, resources and, above all, stamina and stress control.  To assist with the latter, we required every lawyer at some point to take a 2 week break from the hearing (I spent mine in bed with bronchitis), which required personal acceptance that temporary absence of an individual would not lead to the immediate collapse of our case.  

We also took the unprecedented step of employing a psychologist/counsellor whose task was to monitor the emotional health of the team, individually and collectively, with a view to early identification and dealing with potential problem areas.   This was a process that required a degree of diplomacy but, in my view at least, it worked well and contributed greatly to our staying the course.

There were light moments during the case.  There was issued to me what came to be called “Jim’s challenge”, which was to include the word “asparagus” in a legal submission.   Not the easiest task when the subject matter in the case was the sale of shares in a steel manufacturing company and the legal principles were largely equitable.   However, a submission drawing a contrast between a market for the sale of company shares and a market for asparagus met the challenge, though Justice Smellie’s puzzlement -  “Asparagus?”, he queried - provided its own challenge to remain poker-faced to all those who were in the know.   These included Don Mathieson QC, senior counsel for the Crown, who responded magnificently by replying with his own submission pointing to the inappropriateness of any analogy based on a market for asparagus.  

Don was assisted on the Crown’s side by Karen Clark (now a High Court Judge), Arthur Tompkins (now a District Court Judge) and Rachel Sussock and Craig Deuchrass from Crown Law.

One unprecedented event occurred half-way through the trial.   One of the plaintiff’s senior counsel (Sian Elias QC) was appointed a Judge of the High Court by (ironically) the defendant (the Attorney General), with immediate operation.    Rather different from the more recent example of Jonathan Sumption (now Lord Sumption) who was permitted to start and finish a lengthy civil trial for his billionaire Russian client before embarking on his new judicial duties after his appointment had been announced.

Sian’s premature departure did provide an opportunity for Helen Winkelmann, then even younger than she is now, to step up and take an active role in the presentation of legal submissions in the latter part of the case.  This she did superbly and, if I may say so, that represented the first big step towards where she is now.  

The case was complex and required the application of new logistical techniques, including what must have been the first use in New Zealand of real time evidence transcribing (with Australian operators).  However, it was anticipated to be, and could have been, much more difficult.  Initially there were 16 defendants who in turn joined a number of third parties and issued cross-notices against one another.  This led to the creation of one large courtroom from 2 adjacent courtrooms – what is now Courtroom 12 – but before the hearing started settlements (totalling $64 million) were reached with all defendants other than the Crown.   And so, reduced to Equiticorp New Zealand, Equiticorp Australia and the Crown, we did rather rattle around in that large courtroom.

Courtroom 12 has however not always been under-utilised since.  It has been the venue for a number of methamphetamine multi-accused trials and in recent times I have returned there twice on multi-party competition law cases, in one of which the jury box was almost filled with 10 economists in a “hot tub” together. 

7 June 2016

Recent Posts

  1. America's Cup Venue - Fact or Fiction Chris Goode 04-Apr-2022
  2. Covid and the New Zealand Rules Committee Proposed Reforms Chris Goode 24-Jan-2022
  3. A Chat On The Virtual Couch About My Legal Career Chris Goode 26-Nov-2021
  4. America’s Cup Home Defence – Requisition For Special General Meeting Of Members Of Royal New Zealand Yacht Squadron To Discuss Venue For Next Defence Chris Goode 24-Nov-2021
  5. Pandemics 12-Nov-2021
  6. America's Cup - Just Do It and Positivity 20-Sep-2021
  7. September 11 - 20 Years On 09-Sep-2021
  8. Whither America's Cup? Chris Goode 22-Jun-2021
  9. Conducting Civil Appeals Chris Goode 07-Mar-2021
  10. David Barnes (27 April 1958 - 23 October 2020) - A Personal Note Chris Goode 02-Nov-2020
  11. Cannabis Bill Not the Right Reform Chris Goode 07-Oct-2020
  12. Whatever the result, is this the last time the America's Cup event is held in New Zealand? Chris Goode 14-Sep-2020
  13. Cannabis Legal Reform - Arguments For and Against Chris Goode 13-Aug-2020
  14. Will the Proposed Cannabis Legislation Achieve its "Overarching Objective" of Reducing the Harms Associated with Cannabis Use? Chris Goode 18-May-2020
  15. The Debate Continues - Virtual Hearings or Real Hearings Chris Goode 02-May-2020
  16. These Issues were all Predicted Pre-Covid-19 and 6 Years Ago Chris Goode 02-May-2020
  17. And here is a Report from Stuff of a Virtual Hearing this Week Chris Goode 30-Apr-2020
  18. More Correspondence on Covid-19 and the Courts Chris Goode 30-Apr-2020
  19. In Defence of Remote Technology - from Steve Keall Chris Goode 29-Apr-2020
  20. Court Hearings and Covid-19 - Part Two Chris Goode 29-Apr-2020
  21. Court Hearings and Covid-19 Chris Goode 28-Apr-2020
  22. Covid-19 and Executory Contracts: Will the Doctrine of Frustration Apply? Chris Goode 06-Apr-2020
  23. Race, Poverty and Education - Lessons from the UK learned while spending Christmas in London December 2019 Chris Goode 13-Jan-2020
  24. Witnesses in Civil Cases - the Consequences of Not Calling and of Not Cross-Examining - A Paper Presented to the Pacific Islands Lawyers Association, Auckland, 22 November 2019 Chris Goode 21-Nov-2019
  25. The Forthcoming Referendum on the Growing and Supply of Cannabis for Personal Recreational Use Chris Goode 19-Nov-2018
  26. Armistice Day and Its Sequel Chris Goode 13-Nov-2018
  27. An Easy Read of the Rule of Law in the World of Fiction Chris Goode 08-Aug-2018
  28. Bullying, Harassment and Gender Bias Chris Goode 22-May-2018
  29. Criticising Judges Chris Goode 07-May-2018
  30. America's Cup Part 3A Chris Goode 11-Dec-2017
  31. America's Cup Part 3 Chris Goode 04-Dec-2017
  32. Pro Bono Publico as an Aid to Living a Balanced Lifestyle Chris Goode 08-Nov-2017
  33. Terence Arnold Retires From the Supreme Court Bench Chris Goode 10-Apr-2017
  34. From Violence to Redemption Chris Goode 14-Mar-2017
  35. Drugs, Sports and Society Chris Goode 18-Oct-2016
  36. Are Our Law Schools Churning Out Too Many Lawyers? Chris Goode 25-Aug-2016
  37. Equiticorp 20 Years On Chris Goode 07-Jun-2016
  38. The Year in Retrospect Chris Goode 19-Jan-2016
  39. A Good Year for the Farmer Legal Family Chris Goode 30-Oct-2015
  40. Having a Balanced Life Style - Part 4 Chris Goode 21-Sep-2015
  41. A Balanced Life Style (Part 3), Prisoners' Voting Rights, Top Gun, 7000kms in a Corvette, John Maynard Keynes and Atticus Finch Chris Goode 05-Aug-2015
  42. Biographies Chris Goode 13-Apr-2015
  43. The Cost of Justice Chris Goode 13-Mar-2015
  44. The Increase in Unrepresented Litigants and Their Effect on the Judicial Process Chris Goode 11-Feb-2015
  45. Evidence - Notes of Presentation to Continuing Legal Education Seminar November 2014 Chris Goode 01-Dec-2014
  46. Corporate Governance and Directors' Liability Chris Goode 19-Aug-2014
  47. Paper Presented on 2 August 2014 at the Competition Law & Policy Institute of New Zealand 25th Annual Conference Chris Goode 05-Aug-2014
  48. Life in the Fast Lane Chris Goode 06-Jun-2014
  49. 2014 - Roaring Past Chris Goode 04-Jun-2014
  50. Commentary on Paper Delivered by Professor Andrew I Gavil at Commerce Commission Conference Chris Goode 18-Nov-2013
  51. America's Cup Wrap Up Chris Goode 04-Oct-2013
  52. Happiness, Living a Balanced Life and Legal Practice - Part II Chris Goode 15-Aug-2013
  53. America's Cup 2013 Chris Goode 01-Jul-2013
  54. Why the Rules of Evidence Matter in Civil Cases Chris Goode 11-Mar-2013
  55. The High Court in Review Chris Goode 07-Oct-2012
  56. "Criticism of Supreme Court needs to be put in context" as published in the New Zealand Herald 11 May 2012 Chris Goode 23-May-2012
  57. Recent Reform Reports Chris Goode 03-Apr-2012
  58. Happiness, Living a Balanced Life and Legal Practice Chris Goode 09-Jan-2012
  59. In Defence of the Supreme Court Chris Goode 12-Dec-2011
  60. Instructions - dont publish! Chris Goode 16-Nov-2011
  62. Cross Examination Notes Chris Goode 11-Nov-2011
  63. Are the independence of the Judiciary and the Rule of Law under threat? Chris Goode 16-Oct-2011
  64. Commentary on my commentary on Morse Chris Goode 14-Sep-2011
  65. The passing of three leaders of the Bar Chris Goode 14-Sep-2011
  66. How good is our Supreme Court? Chris Goode 08-Aug-2011

Georgia Racing

Website Managed by Generate Design