Houghton v Saunders - [2019] NZCA 285

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA578/2014
[2019] NZCA 285

BETWEEN	ERIC MESERVE HOUGHTON Appellant
AND	TIMOTHY ERNEST CORBETT SAUNDERS, SAMUEL JOHN MAGILL, JOHN MICHAEL FEENEY, CRAIG EDGEWORTH HORROCKS, PETER DAVID HUNTER, PETER THOMAS AND JOAN WITHERS First Respondents CREDIT SUISSE PRIVATE EQUITY INCORPORATED Second Respondent CREDIT SUISSE FIRST BOSTON ASIAN MERCHANT PARTNERS LP Third Respondent FIRST NEW ZEALAND CAPITAL Fourth Respondent FORSYTH BARR LIMITED Fifth Respondent

Court:	French, Miller and Collins JJ
Counsel:	C R Carruthers QC and P A B Mills for Appellant A R Galbraith QC, T C Weston QC, D J Cooper and S T Coupe for First Respondents other than Mr Horrocks and Ms Withers J A Carnie for First Respondent Mr Horrocks B D Gray QC and A E Ferguson for First Respondent Ms Withers J B M Smith QC, A S Olney and C J Curran for Second and Third Respondents
Judgment: (On the papers)	5 July 2019 at 10 am

JUDGMENT OF THE COURT

AThe first to third respondents must refund the appellant costs he paid to them in the amount of $156,250.85.
BThe appellant’s claim to recover the costs of an ATE insurance premium is not allowed.
CThe respondents must pay the appellant two thirds of scale costs calculated as for a complex appeal on a band B basis together with usual disbursements, to be fixed by the Registrar in the event of any dispute. We certify for three counsel.
DThere will be no award of costs in relation to this application.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

The Supreme Court has directed this Court to determine costs in light of the Supreme Court’s decision allowing Mr Houghton’s appeal in part.[1]
[1]Houghton v Saunders [2018] NZSC 74, [2019] 1 NZLR 1 [Supreme Court Substantive Decision]; and Houghton v Saunders [2018] NZSC 112 [Supreme Court Costs Decision].
It is necessary first to briefly summarise the background. The proceeding is a representative proceeding brought by Mr Houghton on behalf of himself and approximately 3,000 shareholders against the former Feltex directors and others associated with a public float of shares in 2014. The claim centres primarily on the prospectus which the shareholders allege contained untrue and misleading statements. The relevant causes of actions are breach of s 56 of the Securities Act 1978 and breach of s 9 of the Fair Trading Act 1986.
The proceeding is funded by a litigation funder by way of an investment agreement with a London based entity. The London based entity has taken out an adverse costs insurance policy in relation to the proceeding.
The parties agreed to split the trial into two stages.[2] In the first stage, Mr Houghton’s own claim would be heard in its entirety, any ruling on specified common issues (that is, common to Mr Houghton and the other represented claimants) to be binding as between all other members of the represented class and the defendants. The second stage would…

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 Saunders

Details

AGLC: Houghton v Saunders [2019] NZCA 285
Case: [2019] NZCA 285
Decision Date: 5 July 2019 at 10 am

CaseChat Overview and Summary

In Houghton v Saunders, the Court of Appeal of New Zealand addressed an application for costs in the context of a representative proceeding brought by Eric Meserve Houghton on behalf of himself and approximately 3,000 shareholders against the former Feltex directors and others associated with a public float of shares in 2014. The claim focused primarily on the prospectus, which the shareholders alleged contained untrue and misleading statements. The proceeding was funded by a litigation funder through an investment agreement with a London-based entity, which had taken out an adverse costs insurance policy.

The legal issues before the Court of Appeal were whether the respondents should refund the costs Mr Houghton had paid to them under an agreement between the parties, and whether Mr Houghton was entitled to recover the costs of an After the Event (ATE) insurance premium. The Court also had to determine what costs Mr Houghton should receive for his successful appeal.

The Court of Appeal held that the respondents must refund Mr Houghton the costs he paid to them in the amount of $156,250.85. The Court rejected Mr Houghton's claim to recover the costs of an ATE insurance premium, finding that such recovery would not be in the interests of justice. The Court also ordered the respondents to pay Mr Houghton two thirds of scale costs calculated as for a complex appeal on a band B basis together with usual disbursements, to be fixed by the Registrar in the event of any dispute. The Court certified for three counsel and declined to award costs in relation to this application.

Orders