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Clark v Libra Developments Ltd

Clark v Libra Developments Ltd

Case [2008] NZCA 416 13 October 2008

Breach of Fiduciary Duty

Taking of Accounts

Partnership Property

Civil Litigation & Procedure

Partnership Law

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA390/2008
[2008] NZCA 416
BETWEENLINDSAY ALLAN CLARK

Appellant

ANDLIBRA DEVELOPMENTS LIMITED

First Respondent
ANDRUSSELL ERNEST HYSLOP

Second Respondent

Hearing:7 October 2008

Court:O'Regan, Arnold and Baragwanath JJ
Counsel:L A Andersen for Appellant

P B Churchman for Respondents

Judgment:13 October 2008 at 10.00am

JUDGMENT OF THE COURT

A The appeal is struck out.
BTHE APPELLANT MUST PAY THE ACTUAL AND REASONABLE COSTS OF THE RESPONDENTS PLUS USUAL DISBURSEMENTS.

____________________________________________________________________
REASONS OF THE COURT
(Given by Baragwanath J)
[1] The respondents Mr Hyslop and his company Libra Developments Ltd have applied to strike out an appeal by Mr Clark against a judgment of Chisholm J delivered on 10 June 2008 (the second judgment). There the High Court:
(a)Determined the scope of an earlier decision of Chisholm J, delivered in the same proceedings on 4 February 2005 (the first judgment), in so far as it related to “the Cargill House project”;
(b)Ordered particular discovery against Mr Clark;
(c)Ordered a taking of accounts;
(d)Reserved leave to apply for a tracing order; and
(e)Ordered Mr Clark to pay the actual and reasonable costs of the application.

The first judgment was endorsed by a judgment of this Court of 31 October 2006: [2007] 2 NZLR 709. Leave to appeal to the Supreme Court was declined by that Court on 15 March 2007.
[2]       The building formerly known as Cargill House is on the north-east corner of Princes and Dowling Street, south along Princes Street from the Octagon in the centre of Dunedin City. The building was bought in June 2000 for $1,065,000 by Danube Holdings Ltd the shares in which were acquired by Mr Clark who was its sole director. It provided basement car parking, ground floor retail and storage, and upper levels of office accommodation.
[3]       In the first judgment, Chisholm J found that the purchase was one of several transactions in which Mr Hylop’s development skills were matched with Mr Clark’s funding capability. He held that the acquisition in the name of Danube Holdings was in fact on behalf of a partnership between Mr Clark and Libra.
[4]       In mid 2001 Mr Hyslop suggested to Mr Clark that they consider the possibility of developing Cargill House into an hotel and for that purpose approached Scenic Circle Hotels Management Services Ltd. It was agreed that Cargill House should be converted into a Scenic Circle Hotel. On 12 July 2002 Danube Holdings entered a written agreement for the sale of the premises to Cargill Hotel 2002 Ltd of which half the shares were to be owned by Scenic Circle and the other half by Mr Clark’s interests. The hotel would be operated under a Hotel Management agreement with Scenic Circle.
[5]       Chisholm J held that Libra was entitled to a declaration that Cargill House, together with four other properties, and/or profits or proceeds from such properties were assets of the partnership. He rejected Mr Hyslop’s claim that he was promised a shareholding in Cargill Hotel 2002 Ltd.
[6]…

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 Ltd

Details

AGLC: Clark v Libra Developments Ltd [2008] NZCA 416
Case: [2008] NZCA 416
Decision Date: 13 October 2008

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, the case of Clark v Libra Developments Ltd involved Lindsay Allan Clark, the appellant, and Libra Developments Limited and Russell Ernest Hyslop, the respondents. The dispute pertained to a judgment delivered by Chisholm J on 10 June 2008, concerning the Cargill House project and related financial obligations. The High Court had ordered particular discovery, a taking of accounts, and reserved leave for a tracing order, while also mandating that Clark pay the costs of the application. The appeal by Clark against this judgment was struck out by the Court of Appeal, which held that the issues raised had already been determined in the respondents' favour. Clark was ordered to pay the respondents' costs, including reasonable expenses and usual disbursements.

The primary legal issues before the Court of Appeal revolved around the interpretation and scope of the earlier judgment made by Chisholm J. The respondents argued that the appeal was an abuse of process as it sought to reargue issues already settled. They contended that Clark's partnership with Hyslop and his company Libra was entitled to a share in the profits from the Cargill House project, including the 50% interest held by Clark in Cargill Hotel 2002 Ltd. Clark, on the other hand, argued that the partnership had been dissolved by the agreement of 12 July 2002 and that he was only liable for the value of the partnership property at that time. The Court considered the principle established in Featherstonehaugh v Fenwick, which held that continuing to operate a business post-dissolution with partnership assets makes the remaining partner liable for profits generated from those assets.

The Court of Appeal ruled in favour of the respondents, affirming that the partnership's interest in the Cargill House venture continued post-dissolution and that Clark was required to account for all profits arising from the project. The Court held that Clark's right to challenge the respondents' claims had already been exercised in multiple courts, and thus, the appeal was an attempt to relitigate settled issues. Consequently, the appeal was struck out, and Clark was ordered to pay the respondents' costs.

The final orders mandated that the appeal be struck out and that Clark pay the respondents' actual and reasonable costs plus usual disbursements. If the parties could not agree on the costs, they were instructed to file memoranda, and the Court would then fix the costs.

Orders