Gaskin v Stark - [2021] NZHC 204

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2020-412-26

[2021] NZHC 204

UNDER the Companies Act 1993

BETWEEN

GRAHAM KENNETH GASKIN and

ELIZABETH JOAN DUSTIN, as trustees of the DUSTIN FAMILY TRUST

Plaintiffs

AND

ALASTAIR DAVID STARK

First Defendant

AND

ALAN BEVIN MCKAY
Second Defendant

AND

RICHARD DRUMMOND FRASER

Third Defendant

AND

MEAD STARK LIMITED

Fourth Defendant

Hearing: 3 February 2021

Appearances:

P J Dale QC for the Plaintiffs

D G Hurd for the First and Second Defendants
A Gaborieau for the Third and Fourth Defendants

Judgment:

18 February 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 18 February 2021 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 18 February 2021

GASKIN v STARK [2021] NZHC 204 [18 February 2021]

[1] This judgment concerns applications by the plaintiffs and the defendants for discovery.

Background

[2] Ian Luke Dustin (Mr Dustin) was bankrupted by this Court on 7 March 2016. As a result, shares he held in two companies, Pisa Moorings Ltd (PML) and Pisa Moorings Vineyard Ltd (PMVL) vested in the Official Assignee. Mr Dustin held 26 per cent of the shares in each company.

[3] Mr Dustin was also owed a current account debt of $128,291 by PMVL which was called up by the Official Assignee on 8 April 2016.

[4] Shortly after Mr Dustin’s bankruptcy but prior to calling up the current account, discussions commenced between the Official Assignee and the first defendant, Alastair David Stark (Mr Stark) in respect of the sale of Mr Dustin’s shares.

[5] The plaintiffs allege that on 13 April 2016, in a telephone conversation between Mr Stark and a representative of the Official Assignee, Mr Stark made representations relevant to the value of the shares in the companies. It is also alleged that on 19 April 2016, in a subsequent conversation between the same parties, further representations were made in respect of value. A significant representation alleged is that Mr Stark said in respect of the major asset owned by PMVL – a large block of land – that he did “not have a problem” with that land being valued at around the rateable value of $1.02m.

[6] The plaintiffs allege that Mr Stark indicated a preparedness to do a package deal to acquire Mr Dustin’s shares for $200,000, inclusive of Mr Dustin’s current account entitlement.

[7] It is that the Official Assignee, based on the information provided by Mr Stark and allowing for a discount for Mr Dustin’s shares being a minority interest, concluded the offer of $200,000 was reasonable.

[8] The Official Assignee, in a document called a Deed of Settlement dated 19 May 2016 (the Deed), sold Mr Dustin’s shares to the remaining shareholders of PML and PMVL. The parties to the Deed are the Official Assignee in the bankruptcy of Mr Dustin, PMVL and PML. While the remaining shareholders of those companies are not named as parties, the…

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 Gaskin v Stark

Details

AGLC: Gaskin v Stark [2021] NZHC 204
Case: [2021] NZHC 204
Decision Date: 18 February 2021

CaseChat Overview and Summary

The High Court of New Zealand considered applications for discovery by both the plaintiffs and the defendants in the case of Gaskin v Stark. The plaintiffs, Graham Kenneth Gaskin and Elizabeth Joan Dustin, as trustees of the Dustin Family Trust, initiated proceedings against the defendants, Alastair David Stark, Alan Bevin McKay, Richard Drummond Fraser, and Mead Stark Limited. The plaintiffs alleged various causes of action, including misrepresentation, breach of fiduciary duties, negligent misstatement, and violations under the Fair Trading Act 1986 and the Companies Act 1993. The plaintiffs sought wide-ranging discovery concerning the financial positions of Pisa Moorings Ltd (PML) and Pisa Moorings Vineyard Ltd (PMVL) from 2012 to 2020, as well as information about PMVL's land subdivision. The defendants argued that documents postdating the sale of shares were irrelevant and that the plaintiffs had not yet elected between seeking damages or an account of profits.

The court assessed the relevance and proportionality of the discovery requests. It determined that the plaintiffs were entitled to discover documents relevant to the value of PML and PMVL and the advancement of PMVL’s land subdivision. The court ordered specific categories of documents to be disclosed, including finalized financial statements, correspondence relating to the subdivision, and sale and purchase agreements. The defendants' application for non-party discovery against the Official Assignee was adjourned for further review. Costs were reserved, with an indication that the plaintiffs might reflect on the benefit of the doubt given regarding the pleading issue. The court set a deadline for the defendants to provide a further list of documents within 20 working days of the judgment date. A telephone conference was scheduled to address the future of the defendants' application and case management generally.

Orders