Drylandcarbon GP One Ltd v Leckie - [2024] NZHC 3531

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-47

[2024] NZHC 3531

BETWEEN
DRYLANDCARBON GP ONE LIMITED

First Plaintiff

DRYLANDCARBON ONE MANAGEMENT LIMITED

Second Plaintiff

DC ONE H1 LIMITED
Third Plaintiff

AND

WILLIAM JAMES WATERHOUSE LECKIE

First Defendant

CHRISTOPHER GORDON LEWIS MORRISON
Second Defendant

LEWIS TUCKER AND COMPANY LIMITED
Third Defendant

PHEASANT TAIL HOLDINGS LIMITED

Fourth Defendant

continued …

Hearing: 4 October 2024

Counsel:

M G Colson KC, K J Dobbs and M R M Gale for Plaintiffs

J B M Smith KC, A S Olney and O C Gascoigne for Defendants

Judgment:

25 November 2024

RESULTS JUDGMENT OF RADICH J

(Approval of litigation funding agreement)

DRYLANDCARBON GP ONE LTD & ORS v LECKIE & ORS [2024] NZHC 3531 [25 November 2024]

… continued

LEWIS TUCKER FOREST PARTNERS LIMITED
Fifth Defendant
LEWIS TUCKER FP INVESTMENTS LIMITED
Sixth Defendant
FOREST PARTNERS GP LIMITED
Seventh Defendant
LEWIS TUCKER FP MANAGEMENT LIMITED
Eighth Defendant

[1] This judgment – on the application by Mr and Mrs Beverley on behalf of the plaintiff companies for approval of a litigation funding agreement – is given on a results basis only at this stage for reasons I come on to describe.

[2]It follows:

(a)this Court’s December 2022 decision in which derivative action orders were made under s 165 of the Companies Act 1993 and in which orders were made, under s 166, that the reasonable costs of the proceeding are to be met by the plaintiffs;1
(b)the November 2023 decision of the Court of Appeal in which the High Court’s decision was upheld;2

(c)this Court’s order in December 2023 approving by consent an interim variation of the costs orders under which (by way of summary) the Beverleys are to meet the plaintiff companies’ costs in the proceeding

1 Beverley v Drylandcarbon GP One Ltd [2022] NZHC 3606 [2022 High Court decision].
2 Leckie v Beverley [2023] NZCA 570 [Court of Appeal decision].

on the basis that they are entitled to recover those costs from the plaintiffs as and when the plaintiffs have the means to pay them;3

(d)my decision of 17 May 2024 which, following resistance to the continuation of the interim varied orders by the defendants, extended the orders to 30 August 2024,4 and my decision of 5 September 2024 which extended the orders to 4 October 2024, when this application was heard.5

[3] At the conclusion of the hearing on 4 October, the parties asked that a decision on the application not be made available within two weeks of the hearing. On 18 October, a direction was made at the request of the parties that preparation of a judgment would be deferred until either, or both, of the parties requested by memorandum that it be prepared.

[4] In a 12 November memorandum, counsel for the defendants asked that I commence preparation of the judgment and in their 13 November memorandum, supporting the request that a judgment be prepared, the plaintiffs suggested (in light of an…

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.

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Details

Case: [2024] NZHC 3531
Decision Date: 25 November 2024

CaseChat Overview and Summary

The case of Drylandcarbon GP One Ltd v Leckie and others involves the plaintiff companies, Drylandcarbon GP One Limited, Drylandcarbon One Management Limited, and DC ONE H1 Limited, against William James Waterhouse Leckie, Christopher Gordon Lewis Morrison, Lewis Tucker and Company Limited, Pheasant Tail Holdings Limited, Lewis Tucker Forest Partners Limited, Lewis Tucker FP Investments Limited, Forest Partners GP Limited, and Lewis Tucker FP Management Limited. The dispute revolves around the approval of a litigation funding agreement in a derivative action. The High Court of New Zealand, Wellington Registry, presided over the matter. The primary legal issues the court addressed were whether it had the jurisdiction to approve a litigation funding agreement in a derivative action and whether it should grant such approval in this case.

The court concluded that it had jurisdiction to make the orders sought under section 167 of the Companies Act and its inherent jurisdiction. The court noted that derivative actions must be managed flexibly to serve justice and that the discretion afforded by section 167 was largely unfettered, consistent with the court's supervisory role in derivative proceedings. The court further found that the proposed litigation funding agreement was reasonable, ensuring that the litigation could proceed without downside risk and allowing for a return to the plaintiffs if the claim succeeded. The court also dismissed the defendants' concerns about potential termination of inter-company agreements due to the funder's rights under the proposed agreement.

In approving the litigation funding agreement, the court issued orders to authorize Mr. and Mrs. Beverley to enter into the funding agreement on behalf of the plaintiff companies, extended the varied costs order, and protected the confidential and commercially sensitive information contained in the affidavits. The court reserved the right to address costs at a later stage, pending further developments and the issuance of a judgment with full reasons.

Orders