Hampson v Donald - [2018] NZHC 2239

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2012-442-000291

[2018] NZHC 2239

UNDER the Companies Act 1993

BETWEEN

STEPHEN KING HAMPSON

First Plaintiff

AND

THE DUNES CAFÉ AND BAR LIMITED

Second Plaintiff

AND

ROBERT ARCHIBALD HAYWARD DONALD

Defendant

Hearing: 25 July 2018

Appearances:

S K Hampson (First Plaintiff) in person with D L Hampson assisting for both Plaintiffs (by leave)

A J B Holmes for Defendant

Judgment:

28 August 2018

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

on interlocutory applications

Introduction

[1] The plaintiffs commenced this proceeding in 2012. In 2013, some of the claims were struck out and the remainder were stayed. The plaintiffs now apply for an order lifting the stay to allow them to proceed. The defendant says that the stay should not be lifted – instead through his counsel’s submissions he asks that the proceeding be struck out or permanently stayed.

STEPHEN KING HAMPSON v DONALD [2018] NZHC 2239 [28 August 2018]

The losses incurred by Dunes and the Hampsons

[2] In 2004, the second plaintiff, The Dunes Café and Bar Limited (“Dunes”) was successfully running (as it had been for a number of years) a café, bar and casino in leased premises at 643 Rocks Road, Tahunanui, Nelson. With rights of renewal, its lease potentially ran until 2010.

[3] The first plaintiff, Stephen Hampson, was Dunes’ sole director and shareholder. His wife, Danielle Hampson, was also involved actively in the management and running of the business.

[4] About May 2004, an experienced Auckland property developer, Dr Robert Donald, entered the Hampsons’ lives with disastrous financial consequences for Dunes and the Hampsons. Dr Donald was the sole director and shareholder of 623 Rocks Road Limited (“Rocks”). As part of a plan to redevelop 623 and 643 Rocks Road, Dr Donald entered into a contract with Dunes whereby Dunes would surrender its existing lease. Rocks would lease Dunes a café and bar in the new premises. The contract included requirements for Rocks to compensate Dunes for its “stand down” costs and to provide aspects of Dunes’ fit-out.

[5]Differences arose between the parties during the fit-out period.

[6] Rocks purported to cancel the contract. It refused to execute the lease. It let the premises to a different lessee. Dunes accepted Rocks’ repudiation of the contract and itself cancelled the contract in December 2006.

[7]Dunes sued for damages for breach of contract. Rocks counterclaimed.

[8] Following a seven-day trial in 2008, this Court gave judgment for Dunes on liability. It dismissed Rocks’ counterclaims.1 The Court’s judgment on liability was delivered in February 2009. A trial was directed on quantum. On 25 March 2009

1 The Dunes Café and Bar Ltd v 623 Rocks Road Ltd HC Nelson CIV-2006-442-481, 25 February 2009 (the “liability judgment”).

Rocks was put into liquidation by a shareholders’ resolution. It transpired that Rocks was massively insolvent.2

[9] Towards the end of the liability trial Dunes had run out of financial resources to retain legal representation. Mrs Hampson (although…

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 Hampson v Donald

Details

AGLC: Hampson v Donald [2018] NZHC 2239
Case: [2018] NZHC 2239
Decision Date: 28 August 2018

CaseChat Overview and Summary

The case of Hampson v Donald was heard in the High Court of New Zealand. The plaintiffs, Stephen King Hampson and The Dunes Café and Bar Limited, brought the proceeding against Robert Archibald Hayward Donald in 2012, alleging reckless trading and breaches of statutory duties. In 2013, some of the claims were struck out and the remainder were stayed. The plaintiffs now apply for an order lifting the stay to allow them to proceed. The defendant argues that the stay should not be lifted and requests that the proceeding be struck out or permanently stayed.

The court examined the legal issues surrounding the lifting of the stay and the striking out of the proceeding. The plaintiffs sought to proceed under section 301 of the Companies Act 1993, which provides for remedies in the course of a liquidation. The court considered the status of the plaintiffs as creditors of Rocks and whether they had standing to bring the claims under section 301. The court also considered the factors that should be taken into account in deciding whether to lift a stay, such as inordinate delay, inexcusable prejudice to the defendant, and the interests of justice.

The court found that the plaintiffs' claims were misconceived and that the relief sought was not available to them under the Act. The court held that Mr Hampson was not a creditor of Rocks and, therefore, did not have the required status to make an application under section 301 of the Act. The court also found that the plaintiffs' delays and choices to pursue other remedies had prejudiced the defendant and that justice would not be served by allowing Dunes to proceed with its claim. The court permanently stayed the plaintiffs' claims in the proceeding, dismissed Mrs Hampson's application to represent the plaintiffs, and dismissed Dr Donald's application for security for costs. The costs of each application were reserved.

Orders