Financial Markets Authority v CBL Corporation Limited (in liquidation)

[2024] NZHC 2026

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2745

[2024] NZHC 2026

BETWEEN

FINANCIAL MARKETS AUTHORITY

Plaintiff

AND

CBL CORPORATION LIMITED (IN LIQUIDATION)

First Defendant – DISCONTINUED

SIR JOHN WELLS
Second Defendant – DISCONTINUED

PETER ALAN HARRIS
Third Defendant – TO BE DISCONTINUED

Continued …

Hearing:	18 July 2024
Appearances:	JCL Dixon KC, N M Blomfield and JEM Greer for FMA DPH Jones KC and S E Cameron for C J Mulholland
Judgment:	24 July 2024

JUDGMENT OF GAULT J

(Strike out application – results only judgment)

This judgment was delivered by me on 24 July 2024 at 11:00 am pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

FINANCIAL MARKETS AUTHORITY v CBL CORPORATION LTD (IN LIQUIDATION) [2024] NZHC 2026 [24 July 2024]

Continued …

AND

ANTHONY CHARLES RUSSELL HANNON
Fourth Defendant – DISCONTINUED

GEOFFREY JOHN TURNER as executor of the ESTATE OF ALISTAIR LEIGHTON HUTCHISON

Fifth Defendant – DISCONTINUED

NORMAN GERALD PAUL DONALDSON

Sixth Defendant – DISCONTINUED

IAN KELVIN MARSH
Seventh Defendant – DISCONTINUED

CARDEN JAMES MULHOLLAND

Eighth Defendant

[1]    Mr Mulholland applied on 19 June 2024, six days before commencement of an eight-week trial in this proceeding brought by the Financial Markets Authority (FMA), to strike out causes of action in the second amended statement of claim.

[2]    The same day, the FMA applied for leave to file a third amended statement of claim.

[3]    Counsel did not consider that the strike-out application affected the scope of the FMA’s evidence and were content for the trial to commence.

[4]    The strike-out application was heard on 18 July 2024. By that date, I had granted leave for the FMA to file a third amended statement of claim (in a further revised form) without prejudice to the strike-out application.

[5]    The scope of the strike-out application narrowed considerably. In essence,  Mr Mulholland sought to strike out two causes of action:

(a)the 12th cause of action – breach of s 270 of the Financial Markets Conduct Act 2013 (FMCA) – Castlerock transaction – October 2017; and

(b)the 24th (alternative) cause of action – breach of s 270 of the FMCA – failure to disclose material information after 23 June 2017.

[6]    The primary ground relied on was abuse of process since the FMA is no longer pursuing the relevant causes of action against other defendants. In addition, pleading flaws were raised in relation to the 24th cause of action.

[7]    Mr Mulholland needed leave to file a strike-out application so close to trial. The FMA opposed leave on the grounds of delay, prejudice and lack of merit. I heard the leave issue first but indicated that I would proceed to hear the strike-out application without formally determining the leave issue.

[8]    During the hearing, Mr Jones KC acknowledged that the issues with the 24th cause of action may be capable of amendment. Counsel agreed to confer and file a memorandum addressing the proposed amendment by Monday, 22 July 2024.

[9]    The memorandum of counsel for the FMA dated 22 July 2024 provided clarification  (or  amendment)  of  the  pleading  in   the   24th   cause   of   action  (and consequently the related 23rd cause of action). On 23 July 2024, Mr Jones accepted that the contents of this memorandum could be treated as incorporated into the third amended statement of claim by consent, which I ordered, and that strike-out of the 24th cause of action was only pursued on the abuse of process ground.

[10]Counsel indicated that a results only judgment would suffice given the timing.

Result

[11]   Despite the delay in filing the strike-out application, I grant Mr Mulholland leave so that the abuse of process ground can be addressed on its merits.

[12]   The application to strike out the 12th and 24th causes of action for abuse of process is dismissed.

[13]Reasons to follow.

Gault J

Solicitors / Counsel:

Mr JCL Dixon KC and Mr W Potter (for the plaintiff Financial Markets Authority), Barristers, Auckland

Ms JEM Greer, Financial Markets Authority, Auckland

Mr J Caird, Ms N Blomfield and Ms C G Paterson (plaintiff’s instructing solicitors), Simpson Grierson, Auckland

Mr DPH Jones KC (for the 8th defendant Carden James Mulholland), Barrister, Auckland Mr DCS Morris and Ms S Cameron (8th defendant’s instructing solicitor), CM & Associates, Auckland