Legal Research
Cases
Houghton v Saunders

Houghton v Saunders

Case [2021] NZSC 38 6 May 2021

Civil Litigation & Procedure

Type to search within this case.

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 6/2021
[2021] NZSC 38

BETWEEN	ERIC MESERVE HOUGHTON Applicant
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

Court:	Glazebrook, O’Regan and Williams JJ
Counsel:	C R Carruthers QC for Applicant A R Galbraith QC, D J Cooper and M C Harris for First Respondents (other than Mr Magill and Ms Withers) 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 Respondents
Judgment:	6 May 2021

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.

BThe applicant must pay costs of $2,500 to the first respondents collectively and a total of $2,500 to the second and third respondents.

____________________________________________________________________

REASONS

The applicant, Mr Houghton, represents about 3,600 claimants in this proceeding. The claimants invested in shares in Feltex Carpets Ltd (Feltex) pursuant to a prospectus issued in May 2004. They claim that they suffered loss as a result of reliance on statements in the prospectus relating to the Feltex shares.
The proceeding was to be heard in two stages, the first stage being limited to a determination of whether any breach of the Securities Act 1978 or the Fair Trading Act 1986 had occurred. It was anticipated that if any breach was established, then the second stage trial would deal with issues of reliance and quantum of loss in respect of each claimant.
Both the High Court[1] and the Court of Appeal[2] determined that the claim failed at stage one. However, the applicant’s appeal to this Court was partially successful.[3] This Court found that the prospectus contained an untrue statement for the purposes of s 56 of the Securities Act and that this untrue statement amounted to misleading conduct in breach of s 9 of the Fair Trading Act. It referred the claim back to the High Court for a stage two trial to determine whether investors suffered loss by reason of the untrue statement and whether they were entitled to any remedy under the Fair Trading Act.
[1]Houghton v Saunders [2014] NZHC 2229, [2015] 2 NZLR 74.
[2]Houghton v Saunders [2016] NZCA 493, [2017] 2 NZLR 189.
[3]Houghton v Saunders [2018] NZSC 74, [2019] 1 NZLR 1.
The applicant was required to provide security for costs in relation to the stage two trial, which was set down for a five‑week hearing scheduled to commence in November 2019. The High Court ordered that security in the sum of $1.65 million was to be provided by 12 July 2019.[4]
[4]Houghton v Saunders [2019] NZHC 1362 at [90].
The required security was not provided by 12 July 2019…

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 [2021] NZSC 38
Case: [2021] NZSC 38
Decision Date: 6 May 2021

CaseChat Overview and Summary

The case of Houghton v Saunders involved an appeal by Eric Meserve Houghton, acting on behalf of approximately 3,600 claimants, against several respondents including Timothy Ernest Corbett Saunders, Samuel John Magill, and others. The claimants had invested in shares of Feltex Carpets Ltd based on statements in a 2004 prospectus, and alleged that they suffered losses due to reliance on these statements. The legal issues centered around whether the prospectus contained misleading information, and if so, whether the claimants were entitled to a remedy under the Securities Act 1978 and the Fair Trading Act 1986. The Supreme Court found that there was an untrue statement in the prospectus and that this amounted to misleading conduct, referring the matter back for a trial to determine the quantum of losses and remedies. However, Houghton's failure to provide the required security for costs led to the proceedings being struck out. The Court of Appeal upheld this decision, and Houghton appealed to the Supreme Court seeking leave to appeal on several grounds.

The Supreme Court considered three issues raised by Houghton for the appeal: the circumstances under which relief should be granted for non-compliance with an order for security for costs, the conditions under which a class action should be struck out for non-compliance with an unless order, and whether a substantial miscarriage of justice would occur if the appeal was not heard. The Court noted that there was no real dispute about the appropriate test for relief from sanctions, and that the Court of Appeal had already assessed Houghton's proposals for compliance with the security for costs order as unsatisfactory. The Court also found that the second and third issues depended on the outcome of the first, which was not likely to succeed. Therefore, the Court concluded that the application for leave to appeal should be dismissed, and ordered Houghton to pay costs to the respondents.

The final orders of the Court were that the application for leave to appeal was dismissed and that the applicant must pay costs of $2,500 to the first respondents collectively and a total of $2,500 to the second and third respondents. The Court's decision emphasised the importance of complying with court orders, particularly in relation to security for costs, and highlighted the limited scope of the substantial miscarriage of justice ground in civil cases. The case underscores the need for claimants to ensure that they are able to meet the financial requirements of litigation, particularly in complex and lengthy proceedings.

Orders