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Cain v Mettrick

Cain v Mettrick

Case [2019] NZHC 802 12 April 2019

Standing

Discovery & Disclosure

Res Judicata

Unconscionable Conduct

Limitation Periods

Breach of Contract

Civil Litigation & Procedure

Corporate Law & Governance

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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-548

[2019] NZHC 802

BETWEEN
RHYS JAMES CAIN AND REES

GRAHAM LOGAN AS LIQUIDATORS OF STONEWOOD HOMES LIMITED

(IN RECEIVERSHIP AND LIQUIDATION)
First Plaintiffs

RHYS JAMES CAIN AND REES GRAHAM LOGAN AS LIQUIDATORS OF STONEWOOD HOMES NEW ZEALAND LIMITED

(IN RECEIVERSHIP AND LIQUIDATION)
Second Plaintiffs

RHYS JAMES CAIN AND
REES GRAHAM LOGAN AS

LIQUIDATORS OF HOLMFIRTH GROUP LIMITED

(IN RECEIVERSHIP AND LIQUIDATION)

Third Plaintiffs

AND

BRENT ALFRED METTRICK

First Defendant

JAMES BOULT

Second Defendant

Hearing: 19 March 2019

Appearances:

M G Colson and JWA Johnson for Plaintiffs O D Peers for First Defendant

T C Weston QC and G J Ryan for Second Defendant

Judgment:

12 April 2019

JUDGMENT OF MANDER J

CAIN & LOGAN v METTRICK [2019] NZHC 802 [12 April 2019]

[1] The liquidators of Stonewood Homes Ltd, Stonewood Homes New Zealand Ltd, and Holmfirth Group Ltd (the companies) have commenced proceedings against two former directors. The liquidators’ action is supported by a litigation funder. One of the directors, James Boult, seeks disclosure of details regarding the identity of the litigation funder. He claims that while the liquidators have disclosed the “nominal funder”, the “real funder” remains unknown.

Background

[2] The companies were placed into receivership and then liquidation. Unsecured creditors are owed some $27 million. The plaintiffs, Messrs Cain and Logan, who are partners of Ernst and Young, were appointed as liquidators of the companies.1 They seek damages of $25.47 million, alleging various breaches of directors’ duties. The claims are defended by both defendants.

[3] The liquidators have disclosed that they are funded by a litigation funder. There are no funds in the liquidation from which any unsecured creditors can be paid and the litigation is dependent on third party funding. The litigation funder has been disclosed as a company called PLF Services Ltd (PLF). It is uncontested that the sole shareholder of PLF is Arkansas Trustees Ltd, the sole shareholder of which is another company, Touchstone Trustees Ltd (Touchstone). The directors of the companies are two solicitors who provide professional trust services using Touchstone. All the companies share the same company address and registered office.

[4] It is Mr Boult’s case that the liquidators have failed to discharge their responsibility to disclose the identity of the entity funding the litigation, as opposed to that person’s nominee, and that active steps appear to have been taken to disguise that person’s true identity. The liquidators’ response is that they have complied with their obligations by disclosing the name of the litigation funder and, as required, the location of that entity and its amenability to the jurisdiction of the New Zealand courts.

1 By order of this Court on 21 April 2016.

[5] In support of their respective positions, both parties rely upon the Supreme Court’s decision in Waterhouse v Contractors Bonding Ltd.2

Waterhouse

[6] The issue before the Supreme Court in Waterhouse was whether the funded party should be required…

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 Cain v Mettrick

Details

AGLC: Cain v Mettrick [2019] NZHC 802
Case: [2019] NZHC 802
Decision Date: 12 April 2019

CaseChat Overview and Summary

In the High Court of New Zealand Christchurch Registry, the liquidators of three companies in receivership and liquidation, Stonewood Homes Ltd, Stonewood Homes New Zealand Ltd, and Holmfirth Group Ltd, have brought proceedings against two former directors, Brent Alfred Mettrick and James Boult. The liquidators seek damages of $25.47 million, alleging various breaches of directors’ duties. Mr Boult has sought disclosure of details regarding the identity of the litigation funder, claiming that while the liquidators have disclosed the "nominal funder", the "real funder" remains unknown.

The court held that the liquidators were not required to disclose the identity of the litigation funder beyond the name of the nominee company, PLF. However, in the circumstances of the present case, the defendant and the Court were entitled to greater information regarding the identity of the litigation funder beyond the name of the nominee company, PLF. The liquidators were ordered to disclose the person(s) beneficially entitled to the shares in PLF Services Ltd and Arkansas Trustees Ltd, the person(s) beneficially entitled to the Services Fee which PLF is entitled to receive from the Resolution Sum as those terms are defined in the Litigation Funding Agreement of 14 December 2016 between PLF and the companies, and the location of the person(s) identified in (a) and (b) and those person(s) amenability to the jurisdiction of the New Zealand courts. The orders were made subject to any notice by the liquidators of being unable to comply with the orders because of a lack of knowledge or an inability to obtain such knowledge, within three working days from the release of this judgment. If the liquidators gave notice of being unable to comply with the orders, Mr Boult and Mr Mettrick would be entitled to proceed as they saw fit on the basis of that concession.

Mr Boult, as the successful party on the interlocutory application, was entitled to costs in the ordinary way on a category 2B basis.

Orders