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DHC Assets Ltd v Arnerich

DHC Assets Ltd v Arnerich

Case [2018] NZHC 1865 26 July 2018

Breach of Contract

Misappropriation of Corporate Assets

Corporate Law & Governance

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-307

[2018] NZHC 1865

BETWEEN
DHC ASSETS LTD

Plaintiff

AND

ANTONY IVO ARNERICH

Defendant

Hearing: 28 June 2018

Appearances:

F J Thorp and L J Turner for the Plaintiff J McBride and A J Steel for the Defendant

Judgment:

26 July 2018

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 26 July 2018 at 11:00am
pursuant to Rule 11.5 of the High Court Rules.

…………………………………
Deputy Registrar

Solicitors:
Duthie Whyte, Auckland, for the Plaintiff Doug Cowan, Auckland, for the Defendant

Copy for:
F J Thorp and L J Turner, Auckland, for the Plaintiff
J D McBride and A J Steel, Auckland, for the Defendant

DHC ASSETS LTD v ARNERICH [2018] NZHC 1865 [26 July 2018]

TABLE OF CONTENTS

Background [3]

Application for further discovery and non-party discovery [22] 2011-2012 documents [24]
2013 documents [35]

Miscellaneous documents [42]

Challenge to privilege [44]

Outcome [49]

Costs [50]

[1] In a minute dated 29 June 2018 I gave rulings on DHC Assets Ltd’s application for further discovery under r 8.19 of the High Court Rules, its challenge to privilege under r 8.25 and its application under r 8.20 for discovery by non-parties, ANZ Bank and Martelli McKegg. I now give my reasons.

[2] Finding that it was in Mr Arnerich’s interest to disclose documents explaining payments made from the bank accounts of Vaco Investments (Lincoln Road) Ltd between 1 March 2013 and when it went into liquidation, I gave him the opportunity to file a further affidavit of documents. I reserved leave to apply for directions if Mr Arnerich had difficulty obtaining documents from the liquidator. That aside, I dismissed the application for further discovery and non-party discovery. I upheld the claim for privilege, also noting that only two of the challenged documents were relevant. I awarded costs to Mr Arnerich.

Background

[3] In 2012 Mr Arnerich, a property developer, had a commercial building erected at 288-290 Lincoln Road, Henderson, Auckland. The entity through which he undertook the development was Vaco Investments (Lincoln Road) Ltd.1 He is its director. It is the corporate trustee of the Vaco Investments Lincoln Road Trust, established under a trust deed of 4 November 2011. It settled the purchase of the site on 18 November 2011. The ANZ Bank provided finance for the development.2 Clearwater Construction Ltd had a design-and-build contract with Vaco Investments (Lincoln Road) Ltd but part way through construction, DHC Assets Ltd, a related company, was substituted for Clearwater. Under the contract, the engineer (in truth, a quantity surveyor) certified that payments were due. Mr Arnerich says that Vaco Investments (Lincoln Road) Ltd made all the payments certified due. DHC Assets Ltd says that it is entitled to further payments, which the engineer ought to have certified, for extensions of time and compensatable variations. Its total claims are about
$680,000. Mr Arnerich, on the other hand, contends that Vaco Investments (Lincoln

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 DHC Assets Ltd v Arnerich

Details

AGLC: DHC Assets Ltd v Arnerich [2018] NZHC 1865
Case: [2018] NZHC 1865
Decision Date: 26 July 2018

CaseChat Overview and Summary

The case involves DHC Assets Ltd suing Mr Arnerich under s 301 of the Companies Act 1993 for breaches of duty as director of Vaco Investments (Lincoln Road) Ltd. The main issues are how much, if any, is payable to DHC Assets Ltd under the design-and-build contract, and whether Mr Arnerich breached his director's duty when he arranged for distributions to beneficiaries of the Vaco Investments (Lincoln Road) Trust without paying DHC Assets Ltd. DHC Assets Ltd applied for further discovery, non-party discovery, and to challenge privilege. The court dismissed the application for further and non-party discovery, upholding the claim for privilege, and awarded costs to Mr Arnerich. The court found that DHC Assets Ltd's application for further discovery was misdirected as it pursued something that would get it nowhere. The transactions in 2011-2012 were irrelevant to the alleged loss to the company, which occurred in 2013 when Mr Arnerich dealt with the profits of the development. The court also found that it was in Mr Arnerich's interest to disclose documents explaining payments made from Vaco Investments (Lincoln Road) Ltd's bank accounts between 1 March 2013 and when it went into liquidation. The court upheld the claim for privilege, noting that only two of the challenged documents were relevant.

Orders