After
gaining total management control in 2006 of the 12,000 seat Vector Arena in
Auckland, the Australian-based Jacobsen family has cheerfully neglected to pay in
full the $2.69 million compensation due to its former joint venture partner,
Florida-based Worldwide Entertainment Group.
The Supreme Court imposed court-ordered interest to run from 2006 to
such time as final payment is made.
Worldwide, together
with the Jacobsen family, were parties to a joint venture for the construction
and operation of the Vector Arena.
Worldwide held a 25% stake. This
joint venture came to an end in January 2006 when a US Federal Court in Florida
put Worldwide Entertainment into receivership.
Appointment of receiver amounted to a “change of control” which
triggered pre-emption rights in the joint venture agreement. Jacobsen interests immediately assumed full
management control of Vector Arena’s operations. Convoluted litigation followed over what
compensation was payable to Worldwide for its former 25% stake. It was not until a court ruling in November
2011 that Jacobsen interests were ordered to pay Worldwide $2.69 million within
28 days, with interest running on any delayed payment. Rather than making payment, Jacobsen argued court-ordered
interest can be awarded only on the “recovery of debt or damages” and this was
neither. It was a declaration as to the value of an interest in a business.
The Supreme Court
ruled that the phrase “debt or damages” is not to be read too narrowly. It
covers all cases where a claim is made for money. In this case the appointment of a receiver
triggered an immediate transfer of Worldwide’s stake in the joint venture to
Jacobsen. The joint venture agreement
was silent on when payment was to be made, so the assumption is that payment
and transfer were simultaneous, the Supreme Court said. Worldwide was entitled to payment from early
2006, even though the amount to be paid was not finalised until late 2011. Interest was payable from when notice of
pre-emption was given in 2006.
The rates for
court-ordered interest are set by government regulation. They vary depending on inflation. In this case, Jacobsen interests were ordered
to pay 7.5% on the amount outstanding for the period 2006 to mid-2011, and 5.0%
from mid-2011 to full payment.
Worldwide
NZ LLC v. NZ Venue & Event Management – High Court (24.11.11) & Supreme
Court (11.08.14)
14.035