Ballantyne Trustees Ltd v HFK Ltd - [2021] NZHC 388

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2015-409-000173

[2021] NZHC 388

BETWEEN
BALLANTYNE TRUSTEES LIMITED and

S B KEUNG as trustees of the GBR Trust First Plaintiffs

AND

SENG BOU KEUNG

Second Plaintiff

AND

HFK LIMITED

First Defendant

AND

KEIRAN ANNE HORNE

Second Defendant

Hearing:
3 February 2021

(Submissions received 26 February 2021)

Appearances:

M J Tingey for Plaintiffs

M E Parker and J Eckford for First and Second Defendants

Judgment:

5 March 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 5 March 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BALLANTYNE TRUSTEES LTD v HFK LTD [2021] NZHC 388 [5 March 2021]

The background

[1]This judgment concerns applications by the plaintiffs that the defendants:

(a)provide further and better discovery; and

(b)make a further answer to interrogatories.

[2] I deal with each application separately below, but first it is necessary to provide some context.

[3] This litigation relates to events that occurred in 2009 but it was not commenced until March 2015. It has not been progressed promptly or efficiently and for a lengthy period it was stayed. There have been many interlocutory skirmishes and non- compliance with timetabling orders. The parties should be working to a pre-trial timetable. The close of pleadings date has passed and the plaintiffs’ briefs of evidence are to be exchanged by 5 March 2021 with the defendants’ briefs required by 23 April 2021. The trial is scheduled to commence on 21 June 2021.

[4] The plaintiffs are shareholders in Goose Bay Ranch Holdings Ltd (in liq) (GBRH) and wholly owned subsidiaries (the companies). The second defendant (Ms Horne) was a chartered accountant employed by the first defendant (HFK). During 2009, Ms Horne and David Crichton were appointed interim liquidators and then liquidators of the companies. They had high profiles as insolvency practitioners. Mr Crichton has since retired and Ms Horne no longer practises as a liquidator. She has sworn an affidavit stating she now has no connection with HFK. HFK no longer carries on business. It merged its practice with another accounting firm in 2016 to form Nexia Christchurch Ltd. It owes its continued existence to the plaintiffs’ pursuit of this litigation against it.

[5] The plaintiffs’ latest pleading is an amended statement of claim of 25 November 2015. It contains two extant causes of action.1 The plaintiffs allege Ms Horne and HFK breached various duties owed to the companies and were

1 The plaintiffs were refused leave to pursue a third cause of action under s 284 Companies Act 1993 in Ballantyne Trustees Ltd v HFK Ltd [2016] NZHC 917.

negligent in the manner in which the interim liquidations and liquidations were conducted. The alleged breaches of duty are inadequately particularised in the amended statement of claim. Mr Tingey acknowledges a further amended statement of claim will be required. The quantum of damages is not pleaded but Mr Tingey…

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: [2021] NZHC 388
Decision Date: 5 March 2021

CaseChat Overview and Summary

In Ballantyne Trustees Ltd v HFK Ltd, the plaintiffs sought further and better discovery and a further answer to interrogatories. The plaintiffs were shareholders in Goose Bay Ranch Holdings Ltd and wholly owned subsidiaries. The defendants, HFK and Ms Horne, were the liquidators of the companies. The plaintiffs alleged that Ms Horne and HFK breached various duties owed to the companies and were negligent in the manner in which the liquidations were conducted. The court found that the plaintiffs had established a prima facie case that the defendants had not made a reasonable search for documents required to be discovered. The court held that the defendants should be required to comply with their obligations under the High Court Rules and make a reasonable search for documents in the 11 categories. The court also found that some of the interrogatories were oppressive and unnecessary and need not be answered. The court ordered the defendants to answer certain interrogatories and granted costs reserved pending completion of discovery.

Orders