Houghton v Saha - [2015] NZCA 553

IN THE COURT OF APPEAL OF NEW ZEALAND

CA238/2015
[2015] NZCA 553

BETWEEN

LUKE BRAMWELL HOUGHTON
First Appellant

TIMOTHY GERARD ARBUCKLE
Second Appellant

AND

GOVIND PRASAD SAHA
First Respondent

TIMOTHY PETER REARDON
Second Respondent

NEIL ANTHONY LOWNE FROST
Third Respondent

JONATHAN ROBERT MACDONALD MYERS
Fourth Respondent

RICHARD HUGH MORISON
Fifth Respondent

MICHAEL ANTHONY PEAD
Sixth Respondent

VISWA PHANI KUMAR PADISETTI
Seventh Respondent

Hearing:	12 August 2015
Court:	Miller, Courtney and Clifford JJ
Counsel:	S A Barker and P J Niven for Appellants G Harley and P W Ahern for Respondents
Judgment:	18 November 2015 at 2.15 pm

JUDGMENT OF THE COURT

AThe appeal is allowed in part.
BThe appellants’ summary judgment is granted on those aspects of their counterclaim detailed at [50].
CWe declare that cl 7.1 of the Deed empowers the first respondent to allocate losses as between the partners in his (guided) discretion on a performance basis, in the accounts for the stub period 31 October 2012, guided by the principles set out in sch 1 of the Deed.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

Table of Contents

Introduction [1]

Background [4]

The challenged High Court decision [30]

This appeal – as filed and as argued [33]

GAAP non-compliance [46]

The interpretation dispute [52]

Result [61]

Costs [63]

Introduction

This is an appeal by Luke Houghton and Timothy Arbuckle against parts of a decision of Collins J.[1] In that decision Collins J declined two applications by Messrs Houghton and Arbuckle in proceedings brought against them and the second to seventh respondents by the first respondent, Govind Saha, in relation to the affairs of the Saha International Partnership in liquidation (the Partnership). The first was an application for summary judgment made as counterclaim plaintiffs. The second was an application for strike-out made as defendants.
[1]Saha v Reardon [2015] NZHC 638.
Messrs Houghton and Arbuckle, Dr Saha and the second to seventh (other than the fourth) respondents are the current members of the Partnership. The fourth respondent is a former member.
The second to seventh respondents are abiding the decision of the Court.

Background

The Partnership was established in 2001. Dr Saha was its foundation partner. Messrs Houghton and Arbuckle became members of the Partnership on 1 April 2007 and 1 August 2002 respectively.
The Partnership carried on business providing management and financial consultancy services in New Zealand, Australia, Namibia and South Africa. From at least financial year (FY) 2009 onwards,[2] the Partnership’s financial performance deteriorated. That matter was discussed at a meeting of the Partnership’s advisory committee on 24 May 2010. At or following that meeting:
(a)interest on capital was suspended;
(b)partner drawings were suspended;
(c)an independent accountant was engaged to review the financial position of the Partnership; and
(d)the partners engaged in a process of exploring options to save the Partnership as a going concern.
[2]I.e., the financial year ending 31 March 2009.
That outcome was not achieved. Instead it was decided that the major assets of the Partnership were to be sold…

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 Houghton v Saha

Details

AGLC: Houghton v Saha [2015] NZCA 553
Case: [2015] NZCA 553
Decision Date: 18 November 2015 at 2.15 pm

CaseChat Overview and Summary

This appeal concerns the affairs of the Saha International Partnership in liquidation. The partnership was established in 2001, and the foundation partner, Govind Saha, was joined by Luke Houghton and Timothy Arbuckle in 2007 and 2002 respectively. The partnership's financial performance deteriorated from 2009, and it was wound up in 2010. Disputes arose between the partners over the winding up of the partnership, including the treatment of partners' current account deficits. Houghton and Arbuckle sought summary judgment and strike-out in relation to certain claims against the respondents. The High Court declined to grant summary judgment or strike-out. Houghton and Arbuckle appealed the decision. The appeal concerned the relevance of GAAP non-compliance in the winding up and the extent of the foundation partner's discretion to allocate losses. The Court of Appeal allowed the appeal in part, granting summary judgment on certain aspects of the counterclaim and declaring that the foundation partner could allocate losses in the stub period accounts on a performance basis, guided by the principles set out in the Deed. The Court of Appeal also noted that costs should lie where they fall.

Orders