100 Investments Ltd v Walker - [2020] NZHC 165

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

COMMERCIAL PANEL

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-001160

[2020] NZHC 165

BETWEEN
100 INVESTMENTS LIMITED

First Plaintiff

FTG SECURITIES LIMITED
Second Plaintiff

RFD FINANCE LIMITED
Third Plaintiff

TOMANOVICH HOLDINGS LIMITED
Fourth Plaintiff

…/2 cont’d

Hearing: 4 February 2020

Appearances:

A Barker QC for Plaintiffs

A Cherkashina for First Defendant

A L Holloway and J M Fitzgerald for Second Defendant D Bigio QC and N R Frith for Fourth Defendant

Judgment:

14 February 2020

JUDGMENT OF VENNING J (RECUSAL OF SOLICITORS)

This judgment was delivered by me on 14 February 2020 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………
Solicitors: Canterbury Legal, Christchurch
Norling Law, Auckland Wotton Kearney, Wellington
Minter Ellison Rudd Watts, Auckland

Copyto: A Barker QC, Auckland D Bigio QC, Auckland

100 INVESTMENTS LIMITED v WALKER [2020] NZHC 165 [14 February 2020]

AND
ROBERT BRUCE WALKER

First Defendant

JOHN MARSHALL SCUTTER
Second Defendant

SPF NO 10 LIMITED (REMOVED)
Third Defendant

LPF GROUP LIMITED

Fourth Defendant

Applications

[1] The first, second and fourth defendants have applied for orders to restrain Canterbury Legal from continuing to act as solicitor for the plaintiffs in this proceeding.1

Background

[2] Property Ventures Ltd (PVL) was the parent company for a number of subsidiaries involved in individual property developments and investments. The relevant subsidiaries in relation to the plaintiffs’ claims are:

(a)Lichfield Ventures Ltd;

(b)Cashel Ventures Ltd;

(c)Tuam Ventures Ltd;

(d)Tay Ventures Ltd;

(e)Castle Street Ventures Ltd;

(f)Livingspace Properties Ltd; and

(g)St Asaph Ventures Ltd.

[3] PVL was placed in liquidation on 25 July 2010. Mr Walker was appointed liquidator.2 Mr Scutter was appointed joint liquidator of PVL with Mr Walker from 4 June 2013. He remained in that role until 22 March 2018.

[4] At various dates between 13 December 2010 and 9 February 2012 the above subsidiaries were also placed in liquidation. Mr Walker was appointed sole liquidator of the subsidiaries.3

1      The third defendant has been removed from the Register. There is an application to be heard at a later date for its restoration.
2      The liquidation was stayed until 10 February 2012.
3      Four other subsidiaries were also placed in liquidation. They are not relevant for present purposes.

[5] In 2012, Mr Walker brought proceedings against PVL’s former directors (including Austin Forbes QC, who was formerly counsel for the plaintiffs in this proceeding), PriceWaterhouseCoopers (PwC), Fright Aubrey Ltd and Richard Gibbons (jointly the PVL defendants) in relation to alleged breaches of duty said to have contributed to the PVL Group’s collapse in 2010 (PVL proceedings). On 27 May 2014, a further and separate set of proceedings brought against the PVL defendants was consolidated with the PVL proceedings.

[6] To fund the claim, the liquidators entered a litigation funding agreement with SPF No. 10 Ltd (SPF). SPF was a special purpose vehicle incorporated for the purpose of the PVL proceedings. It was a wholly owned subsidiary of LPF Group Ltd (LPF).…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 165
Decision Date: 14 February 2020

CaseChat Overview and Summary

The defendants in the case 100 Investments Ltd v Walker have successfully applied to restrain Canterbury Legal from continuing to act as solicitor for the plaintiffs in this proceeding. The plaintiffs, 100 Investments Ltd, FTG Securities Ltd, RFD Finance Ltd, and Tomanovich Holdings Ltd, are seeking to recover settlement proceeds from the defendants, who include Robert Bruce Walker, John Marshall Scutter, and others. The plaintiffs claim they are secured creditors of the PVL subsidiaries and have a right to share in the proceeds of the settlement of the PVL proceedings. They rely on assignments of security interests granted by the PVL subsidiaries to other creditors to create those rights. Canterbury Legal were responsible for the chain of transactions involving the securities including the assignment to the plaintiffs.

The defendants argued that Canterbury Legal's involvement in the assignments and advice given to the plaintiffs would be in issue in the proceeding. They cited Rule 13.5.3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, which provides that a lawyer must not act in a proceeding if the conduct or advice of the lawyer or another member of the lawyer's practice is in issue in the matter before the court. The Court found that Canterbury Legal would be in effect defending their own advice to the plaintiffs in the course of these proceedings. To allow them to continue to act would affect the integrity of the Court process.

The Court also found that there was a reasonable likelihood of one or both of Canterbury Legal's directors, Clive Cousins and Grant Smith, being required to give evidence in the proceeding. Even if that were not the case, the finding that their advice would be in issue was sufficient to determine the application. The Court granted the application to restrain Canterbury Legal from continuing to act as solicitor for the plaintiffs. Costs to each of the defendants on a 2B basis would be generally appropriate, save for the following adjustment: the fourth defendant had the main running of the argument, and the first defendant effectively adopted the submissions of the second defendant with some minor additions. The time allowed in relation to the first defendant for the preparation of submissions will be on a time band A basis. Otherwise, the defendants are each to have costs on a 2B basis. The Court did not certify for second counsel.

Orders