Bunting v Buchanan - [2013] NZHC 1921

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-001150 [2013] NZHC 1921

UNDER The Companies Act 1993

IN THE MATTER OF an application to terminate the liqudiation of Silverdale Developments (2007) Ltd (In Liquidation)

BETWEEN ANTHONY BUNTING AND GARY RAYMOND COOPER
Applicants

ANDJOHN BUCHANAN First Respondent

CALLUM MACDONALD Second Respondent

Hearing: 26 July 2013

Appearances: L J Turner for applicants
M Lenihan for first respondent
D P H Jones QC for second respondent

Judgment: 31 July 2013

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 31 July 2013 at 5pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Whaley & Garnett, Greenlane
Parker Rhodes, Auckland
J Thompson, Auckland

Counsel:
L Turner, Auckland
G P Blanchard, Auckland
D P H Jones QC, Auckland

BUNTING v BUCHANAN [2013] NZHC 1921 [31 July 2013]

[1] This case concerns a dispute between the directors and shareholders of Silverdale Developments (2007) Ltd (SD2007) over fees and disbursements charged in the liquidation of SD2007, now terminated, by the respondent liquidators. That dispute is to be heard on 26 and 27 August 2013.

[2] The proceeding is before the Court now because the applicant directors and shareholders have challenged a claim to privilege made by the first respondent in respect of legal advice he obtained in the course of litigation brought against SD2007 whilst in liquidation, and have applied for an order that the second respondent (who preceded the first respondent as liquidator) provide particular discovery of electronic data held on the second respondent’s computer system in relation to his time records for work undertaken in the liquidation.

The context

[3] The applicants are the directors and shareholders of SD2007. It was incorporated to carry out a commercial property development. Following completion of the development the applicants placed SD2007 into liquidation. They considered SD2007 to be solvent. The second respondent was appointed liquidator.

[4] After settlement of the sales of the five units in the development, the purchasers of four of the units observed cracking in the concrete floors. They made claims against SD2007 and various other parties involved in the construction, contending faulty design and construction and claiming substantial remedial costs, potentially exceeding SD2007’s assets. SD2007 was in liquidation by the time the claims were made formally. Up to that point the liquidation had appeared to be relatively straight-forward. SD2007 defended the claims. In the course of its defence it issued cross claims against other parties, including the applicant.

[5] The unit purchasers’ claim was eventually settled without SD2007 having to contribute anything more than sums that it recovered from other defendants or third parties (essentially, the other parties contributed the settlement money). Following settlement of that litigation (which left SD2007 as a solvent company subject to meeting the costs of the liquidation) the applicants sought to terminate the liquidation. The first respondent initially resisted because a substantial part of his

fees and expenses, and part of the fees of the second respondent, remained unpaid.…

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 Bunting v Buchanan

Details

AGLC: Bunting v Buchanan [2013] NZHC 1921
Case: [2013] NZHC 1921
Decision Date: 31 July 2013

CaseChat Overview and Summary

This case concerns a dispute between the directors and shareholders of Silverdale Developments (2007) Ltd (SD2007) over fees and disbursements charged in the liquidation of SD2007, now terminated, by the respondent liquidators. The dispute over fees and disbursements is to be heard on 26 and 27 August 2013. The proceeding is before the Court now because the applicant directors and shareholders have challenged a claim to privilege made by the first respondent in respect of legal advice he obtained in the course of litigation brought against SD2007 while in liquidation, and have applied for an order that the second respondent provide particular discovery of electronic data held on the second respondent’s computer system in relation to his time records for work undertaken in the liquidation.

The Court found that the applicants had not made out a sufficient case for an order for particular discovery in respect of electronic data relating to the entry of time records into the second respondent’s computer systems, nor for challenging the first respondent’s claim to privilege in respect of his communications with his solicitors and counsel. The application was dismissed accordingly. Counsel did not address the Court on costs, or ask that costs be reserved. As the successful parties, the respondents are entitled to costs on a scale 2B basis, together with disbursements as fixed by the Registrar.

The applicants were the directors and shareholders of SD2007. It was incorporated to carry out a commercial property development. Following completion of the development, the applicants placed SD2007 into liquidation. They considered SD2007 to be solvent. The second respondent was appointed liquidator. After settlement of the sales of the five units in the development, the purchasers of four of the units observed cracking in the concrete floors. They made claims against SD2007 and various other parties involved in the construction, contending faulty design and construction and claiming substantial remedial costs, potentially exceeding SD2007’s assets. SD2007 was in liquidation by the time the claims were made formally. Up to that point the liquidation had appeared to be relatively straight-forward. SD2007 defended the claims. In the course of its defence, it issued cross claims against other parties, including the applicant.

The unit purchasers’ claim was eventually settled without SD2007 having to contribute anything more than sums that it recovered from other defendants or third parties (essentially, the other parties contributed the settlement money). Following settlement of that litigation (which left SD2007 as a solvent company subject to meeting the costs of the liquidation) the applicants sought to terminate the liquidation. The first respondent initially resisted because a substantial part of his fees and expenses, and part of the fees of the second respondent, remained unpaid. Subsequently an agreement was reached under which the liquidation was terminated by consent, with the dispute over fees and disbursements charged by the liquidators reserved for separate determination (in this proceeding). Over the course of the liquidation there were a series of other disputes, some of which involved contested litigation.

The Court found that the applicants had not made out a sufficient case for an order for particular discovery in respect of electronic data relating to the entry of time records into the second respondent’s computer systems. The Court also found that privilege in the first respondent’s communications with his solicitors and counsel belonged to the first respondent and not to the company. The application was dismissed accordingly. As the successful parties, the respondents are entitled to costs on a scale 2B basis, together with disbursements as fixed by the Registrar.

Orders