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Houghton v Saunders

Houghton v Saunders

Case [2019] NZCA 506 11 October 2019

Discovery & Disclosure

Res Judicata

Issue Estoppel

Admissibility of Evidence

Civil Litigation & Procedure

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA437/2019
[2019] NZCA 506

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

Hearing:	9 and 10 October 2019
Court:	Brown, Simon France and Hinton JJ
Counsel:	C R Carruthers QC and P A B Mills for Appellant A R Galbraith QC, D J Cooper and M C Harris for First and Third to Sixth named First Respondents T C Weston QC for Second named First Respondent B D Gray QC and A E Ferguson for Seventh named First Respondent J B M Smith QC, A S Olney and C J Curran for Second and Third Respondents
Judgment:	11 October 2019 at 4.00 pm
Reasons:	18 October 2019

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant is to pay one set of costs to the first respondents and one set of costs to the second and third respondents, in both instances for a standard appeal on a band A basis with usual disbursements. We certify for two counsel in both instances.

____________________________________________________________________

REASONS OF THE COURT

(Given by Brown J)

Introduction

This is another interlocutory appeal in the “Feltex” litigation. It is against a judgment of Dobson J delivered on 15 August 2019 making orders for discovery and security for costs and ruling inadmissible parts of the evidence which the appellant proposes to lead from an economist, Mr Greg Houston.[1] On 11 October 2019 we delivered a results judgment dismissing the appeal.[2] Our reasons for doing so now follow.

Background

[1]Houghton v Saunders [2019] NZHC 2007 [High Court decision].

[2]Houghton v Saunders [2019] NZCA 491.

A combined investment statement and prospectus for an initial public offering (IPO) of shares in Feltex Carpets Ltd (Feltex), issued on 5 May 2004, contained a revenue forecast for the financial year ending 30 June 2004 (the FY04 revenue forecast) and a projection for the financial year ending 30 June 2005 (the FY05 projection) as follows:

For the year ending	Forecast June 2004 $000	Projection June 2005 $000
Total operating revenue	335,498	348,147
Earnings before interest, tax, depreciation, amortisation and write-offs – EBITDA	41,641	51,683
Net surplus attributable to Shareholders	10,113	23,889

Mr Houghton[3] brought proceedings under the Securities Act 1978 and the Fair Trading Act 1986 which included allegations that the FY04 revenue forecast and the FY05 projection were untrue statements and misleading and deceptive conduct. In August 2012 it was ordered that issues raised by the proceeding should be dealt with in two stages.[4] The first stage was to determine Mr Houghton’s own claim, together with the issues that were common to the claims of all the other shareholders whom he represented. The remaining issues arising for the other shareholders who had opted in were to be…

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 506
Case: [2019] NZCA 506
Decision Date: 11 October 2019 at 4.00 pm

CaseChat Overview and Summary

The appeal in Houghton v Saunders was heard in the Court of Appeal of New Zealand. The appellant, Eric Meserve Houghton, sought to challenge a judgment delivered by Dobson J on 15 August 2019. The appeal was dismissed by the Court of Appeal on 11 October 2019. The issues on appeal included the admissibility of expert reports by Mr Greg Houston concerning the financial impact of untrue statements in a prospectus issued by Feltex Carpets Ltd, the adequacy of discovery provided by claimants whose cases were to be determined at the second stage of the trial, and the appropriateness of orders for security for costs. The Court of Appeal held that the expert reports were inadmissible, the discovery orders were not erroneous, and the security for costs orders were appropriate. The appeal was dismissed and the appellant was ordered to pay costs to the respondents.

Orders