Houghton v Saunders - [2018] NZSC 112

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 135/2016
[2018] NZSC 112

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 NZ CAPITAL Fourth Respondent
FORSYTH BARR LIMITED Fifth Respondent

Court:	Elias CJ, Glazebrook, O’Regan, Arnold and Kós 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 V A East for First Respondents (other than Mr Horrocks) J A Carnie and G R Burgess for Mr Horrocks J B M Smith QC, A S Olney and C J Curran for Second and Third Respondents
Judgment:	22 November 2018

JUDGMENT OF THE COURT

AThe first to third respondents must pay the appellant costs of $30,000 plus usual disbursements.
BCosts in the High Court should be reconsidered by that Court in light of this Court’s judgment in Houghton v Saunders [2018] NZSC 74 and this judgment.
CCosts in the Court of Appeal should be determined in light of this Court’s judgment in Houghton v Saunders [2018] NZSC 74 and this judgment if the agreement between the parties as to costs in that Court expressly or impliedly allows for such a determination to occur.

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REASONS

Appeal allowed in part

In a judgment delivered on 15 August 2018, we allowed in part an appeal by the appellant, Mr Houghton.[1] At issue were claims brought against the respondents for breaches of the Securities Act 1978 and the Fair Trading Act 1986 in relation to the initial public offering of shares in Feltex Carpets Ltd. In addition to the appellant’s individual claims, the case comprised stage 1 of two stages of a representative action by a large number of investors in shares issued by Feltex.

Summary of conclusions

[1]Houghton v Saunders [2018] NZSC 74, (2018) 15 TCLR 1 [Houghton (SC)]. We will use the same defined terms and abbreviations in this judgment as were used in that judgment.

This Court summarised its conclusions in relation to the first to third respondents as follows:
[379]    The appeal in relation to the first, second and third respondents is allowed to the limited extent described below.
[380]    The Court of Appeal’s finding that the forecast of revenue for the financial year ended 30 June 2004 (the untrue statement) was, at the time of allotment of the shares offered for subscription in the Feltex prospectus, an untrue statement for the purposes of s 56 of the Securities Act 1978, is upheld.
[381]    The Court of Appeal’s findings that the untrue statement did not give rise to liability under s 56 of the Securities Act 1978 and was not in breach of s 9 of the Fair Trading Act 1986 are set aside.
[382]    We find 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 [2018] NZSC 112
Case: [2018] NZSC 112
Decision Date: 22 November 2018

CaseChat Overview and Summary

The appeal in Houghton v Saunders [2018] NZSC 112 concerned claims brought by the appellant, Mr Houghton, against the first to third respondents for breaches of the Securities Act 1978 and the Fair Trading Act 1986 in relation to the initial public offering of shares in Feltex Carpets Ltd. The case was a representative action by numerous investors in Feltex. The central issue before the Court was whether the FY04 revenue forecast, an untrue statement in the Feltex prospectus, breached the Securities Act or the Fair Trading Act, and if so, whether the respondents were liable. The Court of Appeal had previously found the FY04 revenue forecast was an untrue statement, but had held that it did not give rise to liability under the Securities Act or the Fair Trading Act.

The Supreme Court allowed the appeal in part. It upheld the Court of Appeal's finding that the FY04 revenue forecast was an untrue statement. However, it set aside the Court of Appeal's findings that the untrue statement did not give rise to liability under the Securities Act or the Fair Trading Act. Instead, the Court found that the untrue statement was in breach of the Fair Trading Act. The Court left questions about the investors' reliance on the prospectus, the quantum of any loss suffered, and the remedy available under the Fair Trading Act for resolution at the stage 2 hearing.

Regarding costs, the Court awarded the appellant costs of $30,000, plus usual disbursements. It directed that the High Court should reconsider costs in light of the Supreme Court's judgment, and that the Court of Appeal should do the same if the agreement between the parties allowed it. The Court did not quash the costs awards in the High Court or the Court of Appeal but indicated that those Courts should consider the issue afresh.

Orders