Boaden v Mahoney - [2023] NZHC 1318

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-413

[2023] NZHC 1318

BETWEEN
DREW BOADEN

Plaintiff

AND

TIMOTHY MAHONEY

Defendant

Hearing: 12 May 2023

Appearances:

N G Lawrence for Plaintiff

T J P Bowler and G J Ryan for Defendant

Judgment:

30 May 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

Further and better discovery and application for stay

This Judgment was delivered by me on 30 May 2023 at 12:30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BOADEN v MAHONEY [2023] NZHC 1318 [30 May 2023]

[1] Mr Mahoney is the director of Civil Underground Limited (in liq) (Civil). Civil leased land from Mr Boaden. The parties have known each other for many years. It is not necessary to detail the previous arrangements between the parties in respect of Civil’s use of Mr Boaden’s land, as in June 2019 a written lease was entered into between Mr Boaden and Civil.

[2] Mr Boaden alleges that at the time Civil entered the lease, Civil was experiencing financial difficulties which Mr Mahoney omitted to disclose. Mr Boaden claims Mr Mahoney implicitly represented that Civil had the means to comply with the terms of the new lease, including the agreed rental and the obligation to return the leased land to its original state if the lease was terminated.

[3] The reference to returning the land to its original state is to the fact Civil stockpiled soil on the land it had excavated for its clients. The soil was stored until Civil could on-sell it to its clients. The lease gave each party the right to terminate the lease upon six months’ notice.

[4] As Mr Boaden needed to sell the land in January 2020 he gave Civil six months’ notice terminating the lease. Mr Boaden had sold the land to a third party in January 2020, that sale settling in July 2020 upon the termination of the lease.

[5] As part of Civil’s obligations to restore the land, it had to remove the stockpiled soil. Mr Boaden alleges Civil continued to add to the stockpile until June 2020; in doing so Civil would have generated income from its clients. On termination of the lease, the stockpiled soil remained on site. Mr Boaden had to pay for its removal ($55,000 plus GST). Mr Boaden says the removal of the soil took one and a half days, cutting across Mr Mahoney’s claim, bad weather and rain meant it was not possible to remove the soil by July 2020. Mr Mahoney would have known that the six month notice period expired in the middle of winter. Mr Mahoney claims his offers to remove the soil post termination were rejected.

[6] As to rental, Mr Boaden at Mr Mahoney’s request, agreed in April 2020 to defer the payment of rental to June 2020. No further rental was ever paid by Civil.

[7] In this proceeding, Mr Boaden, relying on s 301…

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.

Continue reading Boaden v Mahoney

Details

AGLC: Boaden v Mahoney [2023] NZHC 1318
Case: [2023] NZHC 1318
Decision Date: 30 May 2023

CaseChat Overview and Summary

In the case of Boaden v Mahoney, the High Court of New Zealand was tasked with resolving a dispute arising from a lease agreement between Drew Boaden and Timothy Mahoney, who was the director of Civil Underground Limited (in liquidation). Mr. Boaden alleged that Mr. Mahoney failed to disclose the financial difficulties of Civil Underground at the time of the lease, implicitly representing that the company could meet its lease obligations, including the rental payments and the requirement to restore the leased land. Mr. Boaden further alleged that Mr. Mahoney's conduct constituted a breach of director's duties under the Companies Act 1993 and that Mr. Mahoney misled him regarding Civil Underground's intentions to meet its obligations, which was in violation of the Fair Trading Act 1986.

The court considered Mr. Boaden's application for further and better discovery, as well as his application for a stay of the proceedings. The court held that the application for further discovery was not to be dismissed outright but should be adjourned pending Mr. Boaden's inspection of the liquidator's documents. The court ordered Mr. Mahoney to provide further information on certain categories of documents and to conduct a proper review of his emails to ascertain whether significant discoverable documents were present.

Regarding the application for a stay, the court found that the threshold for a stay under Rule 15.1 of the High Court Rules was not met. The court held that Mr. Boaden's cause of action under section 301 of the Companies Act 1993 was not clearly untenable, given the competing lines of authority on whether creditors can recover directly from directors for breach of director's duties. The court declined the stay application, noting that there was no basis in the discovery issues for a stay and that the proceeding did not qualify for a strike out.

In conclusion, the court denied Mr. Mahoney's application for a stay of the proceedings and ordered him to provide further discovery and conduct a proper review of his electronic devices. Costs on the applications were reserved.

Orders