Houghton v Saunders - [2019] NZHC 142

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2008-409-348

[2019] NZHC 142

BETWEEN
ERIC MESERVE HOUGHTON

Plaintiff

AND

TIMOTHY ERNEST CORBETT SAUNDERS, SAMUEL JOHN MAGILL, JOHN MICHAEL FEENEY, CRAIG

EDGEWORTH HORROCKS, PETER DAVID HUNTER, PETER THOMAS and JOAN WITHERS
First Defendants

CREDIT SUISSE PRIVATE EQUITY INCORPORATED

Second Defendant

CREDIT SUISSE FIRST BOSTON ASIAN MERCHANT PARTNERS LP

Third Defendant

Hearing: 7 February 2019

Counsel:

C R Carruthers QC and P A B Mills for plaintiff

A R Galbraith QC, D J Cooper and S T Coupe for first defendants (except for separate representation noted below)

T C Weston QC for Mr Magill
B D Gray QC and A E Ferguson for Ms Withers
J B M Smith QC, A S Olney and C J Curran for second and third defendants

Judgment:

13 February 2019

RESERVED JUDGMENT OF DOBSON J

[Directions on issues for determination at stage two hearing]

HOUGHTON v SAUNDERS [2019] NZHC 142 [13 February 2019]

[1] Pursuant to steps agreed during a telephone conference on 10 December 2018, the plaintiff’s solicitors have filed an application for directions to define the nature of the issues and mode of evidence for the stage two hearing.

Mr Houghton’s status

[2] All aspects of Mr Houghton’s individual claim under the Securities Act 1978 were determined at the first trial, being dismissed in my first substantive judgment.1 The Supreme Court recognised the prospect of Mr Houghton applying for leave to re- open his individual claim under the Securities Act, given that Court’s finding of an untrue statement in the prospectus, and that there may be some unfairness if all remaining claimants can have their claims considered in light of the Supreme Court finding as to an untrue statement, when his was determined without that.2 The present application sought leave for Mr Houghton to resume his individual claim under the Securities Act, notwithstanding the grounds on which I held it must fail which have not been overturned. There is no issue that he is entitled to pursue his claim under the Fair Trading Act 1986. The defendants abide the Court’s decision on this aspect of the application.

[3] The Supreme Court’s concern for potential unfairness is understandable, depending on how quantification of losses is determined for other claimants. Mr Carruthers QC accepted that Mr Houghton’s evidence at the stage one hearing would be evidence for the second stage of his claim, but that should not preclude further evidence in light of the Supreme Court judgment. Mr Carruthers also accepted that Mr Houghton could be cross-examined at the stage two hearing by reference to the evidence he had given at the first stage. Counsel for the defendants did not wish to be heard on these prospects for evidence and cross-examination.

[4] In reliance on the status of evidence discussed with Mr Carruthers, I granted the leave sought for Mr Houghton to resume his claim under the Securities Act. The consequence, as agreed with counsel, is that…

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] NZHC 142
Case: [2019] NZHC 142
Decision Date: 13 February 2019

CaseChat Overview and Summary

In the case of Houghton v Saunders, the plaintiff, Eric Meserve Houghton, sought directions for the second stage of a proceeding against several defendants, including Timothy Ernest Corbett Saunders, Samuel John Magill, and others, as well as Credit Suisse Private Equity Incorporated and Credit Suisse First Boston Asian Merchant Partners LP. The dispute primarily revolved around claims under the Securities Act 1978 and the Fair Trading Act 1986, following an untrue statement in a prospectus related to the Feltex initial public offering (IPO). The legal issues before the court included whether Mr Houghton could resume his individual claim under the Securities Act, despite the grounds for its dismissal at the first trial, and whether the proceeding could proceed as a representative action with sub-groups of claimants providing evidence of their investment circumstances.

The court, Justice Dobson, ruled that Mr Houghton could resume his individual claim under the Securities Act, allowing him to continue as the representative plaintiff in the proceeding. The court granted the plaintiff's application for the proceeding to proceed as a representative action with four sub-groups of claimants: professional investors, those who subscribed through Forbar Custodians, retail investors who did not sell their Feltex shares, and retail investors who did sell their Feltex shares. However, the court emphasised that individual circumstances, such as the subjective factors influencing each claimant's investment decision, could not be treated in advance as applying to any claimant other than the individual giving evidence. The court left open the possibility of revisiting the use of sampling evidence but expressed significant doubts about its utility in this context.

The court directed that the second stage of the hearing should focus on quantifying loss for individual claimants, the availability of a defence under s 63 of the Securities Act, and claims under the Fair Trading Act for misleading conduct in reliance on the untrue statement. The court also anticipated cooperation between counsel in preparing a hyperlinked electronic bundle of documents relevant to the second stage and suggested further case management through telephone conferences upon receipt of the contemplated memoranda.

Orders