Fistonich v Halse - [2024] NZHC 2168

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2187

[2024] NZHC 2168

BETWEEN
IAN GEORGE FISTONICH

First Plaintiff

IAN GEORGE FISTONICH and ZLATO
TRUST HOLDINGS LIMITED, together as trustees of the ALATO TRUST
Second Plaintiffs

AND

GRAEME WILLIAM HALSE

First Defendant

PREMIER LEGAL FINANCE LIMITED PARTNERSHIP

Second Defendant

PREMIER LEGAL FINANCIAL GP LIMITED

Third Defendant

Hearing: 31 July 2024

Appearances:

S O McAnally for Plaintiffs/Respondents D W Grove for Defendants/Applicants

Judgment:

5 August 2024

JUDGMENT OF ASSOCIATE JUDGE SKELTON

Introduction

[1] The defendants/applicants apply for orders requiring the plaintiffs/respondents to provide further discovery, in respect of all documentation and correspondence between the first plaintiff (Mr Fistonich) and the Registrar of Companies that led to

FISTONICH v HALSE [2024] NZHC 2168 [5 August 2024]

the notice prohibiting Mr Fistonich from manging companies dated 10 January 2023, and the notice granting a partial exemption dated 16 January 2023.

[2] The defendants also apply for leave for the second defendant to commence a counterclaim against Mr Fistonich personally, pursuant to s 335 of the Insolvency Act 2006.

[3] The plaintiff opposes both applications. The discovery application is opposed on the grounds of lack of relevance to the issues in the proceeding. The leave is opposed on the basis that the time to bring a counterclaim expired over three years ago and there is no good reason to extend the timeframe; and leave is not appropriate in the context of this discrete proceeding in respect of three transactions/guarantees only –– the proposed counterclaim raises matters properly dealt with in relation to separate Insolvency Act proceedings.

Background

The parties

[4] Mr Fistonich, is a property developer. He is a shareholder and director of a group of companies (Accent On Group). The first defendant, Mr Halse, was the solicitor for Mr Fistonich, his trusts and various companies. The second defendant, Premier Legal Finance Limited Partnership (PLFLP) is a limited partnership that provides lending, of which the third defendant is its sole general partner. PLFLP and the third defendant are controlled by Mr Halse.

What happened?

[5] Between 2008 and 8 November 2018 Mr Fistonich and Mr Halse were the trustees of the Zlato Trust, which was settled on 27 July 2006. On or about 11 May 2007, the Zlato Trust acquired the residential property at 35 Holdens Road, Henderson (Holdens Road property) with funding from Mr Fistonich and a mortgage to ASB Bank Limited.

[6] During 2017, PLFLP made three advances to the Accent On Group which were secured, amongst other things, by second, third and fourth registered mortgages,

respectively, over the Holdens Road property and by personal guarantees of Mr Fistonich. These transactions occurred on 5 May 2017, 18 July 2017 and
5 September 2017. In each case:

(a)Funds were advanced to a group company, Paramount Group Holdings Limited;

(b)The borrowing was guaranteed by Messrs Fistonich and Halse as trustees of the Zlato Trust;

(c)That guarantee was secured by a mortgage over the property at…

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 Fistonich v Halse

Details

AGLC: Fistonich v Halse [2024] NZHC 2168
Case: [2024] NZHC 2168
Decision Date: 5 August 2024

CaseChat Overview and Summary

In Fistonich v Halse, the defendants sought orders requiring the plaintiffs to provide further discovery of documentation related to the Registrar of Companies' notices prohibiting and partially exempting Mr Fistonich from managing companies. The defendants also sought leave to commence a counterclaim against Mr Fistonich, seeking damages for breaches of various loan agreements. The plaintiffs opposed both applications, arguing the discovery was irrelevant and the counterclaim was beyond the scope of the current proceedings.

The court found the further discovery relevant as it pertained to the issue of mismanagement of the companies, which was still a matter on the pleadings. The court also found that the documents were likely to exist and the discovery was proportionate. Therefore, the court ordered the plaintiffs to provide the requested documents.

Regarding the leave to commence a counterclaim, the court considered whether the time for filing the counterclaim should be extended under the High Court Rules and whether permission should be granted under the Insolvency Act. The court held that while there had been a delay, no prejudice had been shown and that extending the time for filing the counterclaim was appropriate. However, the counterclaim was to be limited to the first to third causes of action relating to the transactions already in issue.

The court granted the discovery application and extended the time for filing the counterclaim, with conditions on its scope. The close of pleadings date was extended to 2 September 2024. The court indicated that the defendants were likely entitled to costs on a 2B basis and reasonable disbursements, with an opportunity for the parties to agree on costs or for the court to determine them on the papers if necessary.

Orders