Clark v Libra Developments Limited - [2013] NZCA 618

IN THE COURT OF APPEAL OF NEW ZEALAND

CA482/2013
[2013] NZCA 618

BETWEEN

LINDSAY ALLAN CLARK
Appellant

AND

LIBRA DEVELOPMENTS LIMITED
First Respondent

RUSSELL ERNEST HYSLOP AS TRUSTEE OF THE HYSLOP FAMILY TRUST
Second Respondent

Hearing:	14 November 2013
Court:	Stevens, Miller and Dobson JJ
Counsel:	L A Andersen for Appellant P B Churchman QC for Respondents
Judgment:	11 December 2013 at 3.00 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant must pay the respondents one set of costs on a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Dobson J)

In a judgment delivered in February 2005, the High Court declared that a partnership had existed between the present appellant (Mr Clark) and the first respondent (Libra) in relation to a range of development projects that the parties had pursued in the period from 1997 to 2002.[1]
[1]Libra Developments Ltd v Clark (2005) 2 NZCCLR 305 (HC).
In subsequent judgments, a number of which have been appealed to this Court, Mr Clark has been ordered to account to Libra for its share of that partnership.[2] For the purposes of that accounting, Chisholm J deemed the partnership to have been wound up on 30 June 2010.[3]
[2]Libra Developments Ltd v Clark HC Dunedin CIV-2002-412-39, 10 June 2008; appeal by Clark struck out in Clark v Libra Developments Ltd [2008] NZCA 416; Libra Developments Ltd v Clark HC Dunedin CIV-2002-412-39, 21 March 2011; appeal allowed in Clark v Libra Developments Ltd [2011] NZCA 493, (2011) 9 NZBLC 103,378.
[3]Libra v Clark HC Dunedin CIV-2002-412-39, 21 March 2011 at [214]–[215].
The partnership had a 50 per cent interest in a company that owns a hotel in Dunedin, Cargill Hotel 2002 Limited (CH2002). There have been further disputes as to the basis on which the account-taker should calculate Mr Clark’s liability to account to Libra for Libra’s share of the partnership’s interest in CH2002. In his last judgment in the proceedings, delivered on 27 June 2013, Chisholm J determined a sequence of questions as to how the account-taker was to proceed with that task.[4] The present appeal determines Mr Clark’s challenge in respect of two of those questions.
[4]Libra Developments Ltd v Clark [2013] NZHC 1578.
The remaining 50 per cent of CH2002 is owned by a company in the Scenic Circle group of companies. A heads of agreement (HoA) regulating the relationship between the shareholding interests provided for shareholder funding by each of Mr Clark’s interests, and the Scenic Circle interests.[5] Interest was to be payable on the advances from Mr Clark’s interests at six per cent per annum. However, there was also an obligation that net profit from the hotel’s operation would be applied to repay those advances. The clear intention was that these were to be repaid as soon as possible.

Reserve for furniture, fittings and equipment

[5]The HoA foreshadowed the completion of a shareholder agreement, but that has not occurred…

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 Clark v Libra Developments Limited

Details

AGLC: Clark v Libra Developments Limited [2013] NZCA 618
Case: [2013] NZCA 618
Decision Date: 11 December 2013 at 3.00 pm

CaseChat Overview and Summary

Lindsay Allan Clark appealed against the decision of the High Court to determine the accounting of his liability to Libra Developments Limited for its share of the partnership's interest in Cargill Hotel 2002 Limited (CH2002). The Court of Appeal was required to decide whether the High Court was correct in its direction that the account-taker should disregard the Furniture, Fittings and Equipment (FF&E) reserve and the prospect of a future liability for a claw-back of depreciation. The Court found that the High Court was correct in its direction to disregard the FF&E reserve as it was speculative and not necessary for the account-taker to treat it as a current liability when valuing the shares in the company. The Court also found that it was an irrelevant distraction for the account-taker to consider the prospect of a future liability for a claw-back of depreciation. The appeal was dismissed, and the appellant must pay the respondents one set of costs on a standard appeal on a band A basis and usual disbursements.

The Court of Appeal found that the High Court's direction to disregard the FF&E reserve was correct as it was speculative and not necessary for the account-taker to treat it as a current liability when valuing the shares in the company. The Court also found that it was an irrelevant distraction for the account-taker to consider the prospect of a future liability for a claw-back of depreciation. The appeal was dismissed, and the appellant must pay the respondents one set of costs on a standard appeal on a band A basis and usual disbursements.

Orders