Houghton v Saunders - [2019] NZSC 148

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 117/2019
[2019] NZSC 148

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 and P A B Mills 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:	13 December 2019

JUDGMENT OF THE COURT

AThe application for leave to appeal is dismissed.
BThe applicant must pay costs of $2,500 to the first respondents collectively and $2,500 to the second and third respondents collectively.

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REASONS

Background

The applicant, Mr Houghton, commenced proceedings against the respondents and others on a representative basis claiming for losses said to have been sustained as a result of untrue statements in an offer document relating to the initial public offering of shares in Feltex Carpets Ltd (Feltex). Mr Houghton and those in the class he represents were investors in Feltex shares. The proceeding was split, so that the question of liability was to be determined at a stage 1 trial, with a stage 2 trial taking place if necessary to determine issues of reliance and loss.
Having failed to establish liability in the stage 1 trial in the High Court[1] and on appeal to the Court of Appeal,[2] Mr Houghton succeeded in part in this Court.[3] This Court found that the revenue forecast for the financial year ending 30 June 2004 (the FY04 revenue forecast) that appeared in the offer document was untrue at the time of the allotment of the shares offered for subscription.[4] However, the Court found that it had not been proved that the revenue projection for the financial year ending 30 June 2005 (the FY05 revenue projection) was an untrue statement.[5]
[1]Houghton v Saunders [2014] NZHC 2229, [2015] 2 NZLR 74 (Dobson J).
[2]Houghton v Saunders [2016] NZCA 493, [2017] 2 NZLR 189.
[3]Houghton v Saunders [2018] NZSC 74, [2019] 1 NZLR 1.
[4]At [231].
[5]At [266].
The result of this Court’s 2018 decision was that the stage 2 trial was necessary to determine whether the investors represented by Mr Houghton had suffered loss by reason of the untrue statement concerning the FY04 revenue forecast, and, if so, the quantum of such loss. Mr Houghton’s claims were made under both the Securities Act 1978 and the Fair Trading Act 1986.

Proposed appeals

The decisions against which Mr Houghton wishes to appeal are two interlocutory decisions relating to the stage 2 trial.
The…

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] NZSC 148
Case: [2019] NZSC 148
Decision Date: 13 December 2019

CaseChat Overview and Summary

In Houghton v Saunders, the applicant, Mr Houghton, sought leave to appeal two interlocutory decisions relating to a stage 2 trial in his class action proceedings against the respondents, which arose from an initial public offering of shares in Feltex Carpets Ltd. The first interlocutory decision concerned the admissibility of certain expert evidence relating to the quantum of loss suffered by investors, while the second related to the admissibility of a defence under section 63 of the Securities Act 1978. The Supreme Court of New Zealand, consisting of Glazebrook, O’Regan and Williams JJ, dismissed the application for leave to appeal on both points.

The Court considered that the issue of admissibility of the expert evidence was specific to the case and did not raise any general or public importance. Additionally, the Court was not satisfied that a third consideration of the fact-specific issue was justified, at least not as an interlocutory appeal. As for the section 63 point, the Court found it unnecessary to be dealt with before the stage two trial and dismissed the application for leave in relation to that point.

The Court also ordered that the applicant must pay costs of $2,500 to the first respondents collectively and $2,500 to the second and third respondents collectively.

Orders