Calvert v Reynolds - [2016] NZCA 151

IN THE COURT OF APPEAL OF NEW ZEALAND

CA173/2015
[2016] NZCA 151

BETWEEN	HILARY JANE CALVERT AND HGW TRUSTEES LIMITED AS TRUSTEES OF THE FRONGOPOULOS TRUST AND ANOR First Appellants
AND	CHRIS JAMES Second Appellant
AND	GRANT BRUCE REYNOLDS AS LIQUIDATOR OF JAMES DEVELOPMENTS LIMITED (IN LIQUIDATION) Respondent

Hearing:	16 March 2016
Court:	Harrison, Stevens and Miller JJ
Counsel:	M R Sherwood King and MAF Gilkison for Appellants M J McCartney QC and A C Sorrell for Respondent
Judgment:	22 April 2016 at 11.30 am

JUDGMENT OF THE COURT

A The appeal is dismissed.

B The cross-appeal is allowed to the extent that:

(1)judgment is entered for the respondent against the second named appellant for the sum of $740,000 plus interest at the rate prescribed by the Judicature Act 1908 from 6 July 2009; and
(2)interest is payable by the first named appellants on the sum of $740,000 also from 6 July 2009.

C The order for stay of judgment in the High Court is discharged.

DThe respondent is entitled to costs for a standard appeal on a band A basis together with usual disbursements. We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Introduction

The liquidator of James Developments Ltd (JDL), Grant Reynolds, sued the trustees of the Frongopoulus Trust (the trust) to recover a debt of $740,000 together with interest. The trustees did not deny their indebtedness but defended the liquidator’s claim on the ground that it was time barred.
Dunningham J rejected the trustees’ defence following a trial in the High Court at Christchurch.[1] She found that the trustees had fraudulently concealed the claim from the liquidator. The commencement of the limitation period was deferred accordingly. She entered judgment against the trustees for $740,000 plus statutory interest from the date of the liquidator’s demand for repayment.
[1]Reynolds v Calvert [2015] NZHC 400 [HC decision].
The trustees appeal against the Judge’s decision to enter judgment against them. JDL’s sole director, the second named appellant Chris James, appeals against findings that he breached his duty to the company to act in good faith, even though judgment was not entered against him. The liquidator cross-appeals against (1) the Judge’s dismissal of other causes of action against the trustees and Mr James and (2) her decision on the date from which interest is payable.

Facts

The relevant facts are not in contest. Mr James is a property owner in Dunedin and Central Otago with interests in a variety of commercial entities. In early 2006 Mr James settled the trust for the benefit of himself and his family.
The original trustees of the trust were HGW Trustees Ltd, the second named first appellant (HGWT), and Brocal Trustees Ltd (Brocal). HGWT is a trust company in Dunedin. It is owned and controlled by Harvie Green Wyatt Ltd, a firm of chartered accountants in Dunedin. Among HGWT’s directors are Douglas Harvie and Todd Miller. Mr Miller is the partner primarily responsible for accounting work for Mr James and…

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 Calvert v Reynolds

Details

AGLC: Calvert v Reynolds [2016] NZCA 151
Case: [2016] NZCA 151
Decision Date: 22 April 2016 at 11.30 am

CaseChat Overview and Summary

In this case, the liquidator of James Developments Ltd (JDL), Grant Reynolds, sued the trustees of the Frongopoulus Trust (the trust) to recover a debt of $740,000 plus interest. The trustees did not deny their indebtedness but defended the liquidator’s claim on the ground that it was time barred. Dunningham J rejected the trustees’ defence and found that the trustees had fraudulently concealed the claim from the liquidator. The commencement of the limitation period was deferred accordingly. The trustees appealed the Judge’s decision to enter judgment against them and JDL’s sole director, Chris James, appealed against findings that he breached his duty to the company to act in good faith. The liquidator cross-appealed against the Judge’s dismissal of other causes of action against the trustees and Mr James and her decision on the date from which interest is payable.

The Court held that the trustees’ appeal should be dismissed. The Court found that the Judge’s findings that the trustees fraudulently concealed the liquidator’s right of action against them were open to her and were the only findings open to her. The Court held that the concealment practised by Messrs James and Miller did not end with the fabricated resolution and falsified accounts. It was a continuum through until 30 May 2012. The Court also held that the liquidator could not with reasonable diligence have discovered the fraudulent concealment until 6 January 2011.

The Court held that the cross-appeal should be allowed to the extent that judgment is entered for the respondent against the second named appellant for the sum of $740,000 plus interest at the rate prescribed by the Judicature Act 1908 from 6 July 2009 and that interest is payable by the first named appellants on the sum of $740,000 also from 6 July 2009. The Court held that the Judge erred in not awarding interest from the date on which the liquidator would have made demand on the trustees but for the fraudulent concealment. The Court also held that the order for stay of judgment in the High Court is discharged.

Orders