Beverley v DC One H1 Limited - [2024] NZHC 1303

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-157

[2024] NZHC 1303

BETWEEN ANTHONY AND WENDY BEVERLEY & ORS
Plaintiffs

AND

DC ONE H1 LIMITED & ORS

Defendants

CIV-2023-485-47

BETWEEN

DRYLANDCARBON GP ONE LIMITED & ORS

Plaintiffs

AND

WILLIAM JAMES WATERHOUSE LECKIE & ORS

Defendants

CIV-2024-485-152

BETWEEN

PHEASANT TAIL HOLDINGS LIMITED

Plaintiff

AND

ANTHONY MONTGOMERY BEVERLEY & ORS

Defendants

Hearing: 15 May 2024

Counsel:

M G Colson KC and M R M Gale for Plaintiffs (CIV-2022-485- 157 and CIV-2023-485-47) and for Defendants (CIV-2024-485- 152)

A S Olney and O C Gascoigne for Defendants (CIV-2022-485-157 and CIV-2023-485-47) and for Plaintiff (CIV-2024-485-152)

Judgment:

23 May 2024

JUDGMENT OF RADICH J

BEVERLEY v DC ONE H1 LTD [2024] NZHC 1303 [23 May 2024]

[1] Mr and Mrs Beverley, in their own names (in CIV-2022-485-157) and through a derivative action (in CIV-2023-485-47) bring claims against Mr Leckie and Mr Morrison, and entities associated with them, relating to the alleged diversion of corporate opportunities.

[2] Now, Mr Leckie and Mr Morrison, through their company Pheasant Tail Holdings Ltd, bring proceedings against Mr and Mrs Beverley, and a company with which they are all associated (in CIV-2024-485-152). They apply for it to be heard at the same time as the other proceedings. The Beverleys say that it should not be heard at the same time because it should not be heard at all. It is, it is said, an abuse of process.

[3] This decision considers whether the new proceeding should proceed and, if so, whether it should be joined with the existing proceedings.

The factual background and the three proceedings it has given rise to

The underlying factual background

[4] The factual background to the three proceedings is described in my decision in Drylandcarbon GP One Ltd v Leckie, issued last week.1 For the purposes of this decision, it can be summarised again in the following way: Anthony Beverley, William Leckie and Christopher Morrison established a carbon afforestation fund to produce carbon credits for the fund’s investors (the Drylandcarbon venture).

[5] They established Drylandcarbon GP One Ltd (the General Partner), Drylandcarbon One Management Ltd (the Manager) and DC One H1 Ltd (H1) for that purpose (together, the Drylandcarbon companies).

[6] H1 is the holding company for the other Drylandcarbon companies and is owned as to 50 per cent by Mr and Mrs Beverley and as to 50 per cent by Pheasant Tail Holdings Ltd, a company in which Messrs Leckie and Morrison are directors and shareholders.

1 Drylandcarbon GP One Ltd v Leckie [2024] NZHC 1239.

[7] Messrs Leckie and Morrison established another fund, through Lewis Tucker Forest Partners Ltd, Lewis Tucker FP Investment Ltd, Forest Partners GP Ltd and Lewis Tucker FP Management Ltd (the Forest Partners venture) with a similar purpose. It is alleged by the Beverleys that, in doing so, a corporate opportunity belonging to the Drylandcarbon companies was diverted.

The Beverley proceeding

[8] The Beverley proceeding (CIV-2022-485-157) is a…

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: [2024] NZHC 1303
Decision Date: 23 May 2024

CaseChat Overview and Summary

In the High Court of New Zealand, Mr. and Mrs. Beverley, along with Drylandcarbon GP One Ltd, are engaged in litigation against Mr. Leckie, Mr. Morrison, and their associated entities, stemming from allegations of the diversion of corporate opportunities within a carbon afforestation fund. The disputes revolve around claims of oppression, breach of fiduciary duties, and misuse of company information under the Companies Act 1993. The court must determine whether Pheasant Tail Holdings Ltd’s proceeding against the Beverleys and their associated company should proceed and, if so, whether it should be consolidated with the existing proceedings.

The legal issues before the court include whether the new proceeding should be allowed to continue and if it should be heard alongside the existing proceedings. The court had to assess whether the allegations in the Pheasant Tail proceeding were sustainable, particularly considering the prior findings by the High Court and the Court of Appeal that the derivative action was a sound proceeding. Additionally, the court examined whether the Pheasant Tail proceeding represented an abuse of process or a collateral attack on the prior decisions.

The court held that the Pheasant Tail proceeding should not be struck out, as the allegations could potentially reveal flaws in the basis for the derivative proceeding not fully considered by the High Court and the Court of Appeal. The court found that the claims had some prospect of success and that the Pheasant Tail proceeding was not an abuse of process. It was determined that the most efficient way to address the overlapping issues was to consolidate the proceedings, allowing them to be heard together. The court exercised its discretion under the High Court Rules to order that the Pheasant Tail proceeding be tried concurrently with the Drylandcarbon and Beverley proceedings.

The court ordered that the Pheasant Tail proceeding be tried at the same time as the Drylandcarbon and Beverley proceedings, recognizing the commonality of facts and issues among them. The court did not determine costs on the applications at that stage, leaving open the possibility for memoranda to be filed by the parties if they disagreed on the issue.

Orders