Ingenious Asset Management Limited v McConnon - [2024] NZHC 2982

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2103

[2024] NZHC 2982

UNDER Companies Act 1993

BETWEEN

INGENIOUS ASSET MANAGEMENT LIMITED

Plaintiff

AND

SIMON MCCONNON

First Defendant

JOHN BAIRD MCCONNON
Second Defendant

KEVIN BRUCE RAMSEY

Third Defendant

STEPHEN MARK LAWRENCE
Fourth Defendant

CHRISTOPHER CAREY MCCULLAGH

Fifth Defendant

Hearing: 11 September 2024

Appearances:

G Jindal for Plaintiff

R M Stewart, A J Wakeman and M Wallace

Judgment:

14 October 2024

JUDGMENT OF MUIR J

Application under s 26(2) of the Senior Courts Act 2016

This judgment was delivered by me on 14 October 2024 at 3 pm, Pursuant to Rule 11.5 of the High Court rules.

Solicitors:
DT Law
Freedom Chambers

Registrar/Deputy Registrar Date: ……………………………

INGENIOUS ASSET MANAGEMENT LIMITED v MCCONNON [2024] NZHC 2982 [14 October 2024]

Introduction

[1] Ingenious Asset Management Ltd (Ingenious) has been in litigation against the defendants since September 2023. It is represented by Mr G Jindal, solicitor. The proceedings have to this point been case managed by Associate Judge Brittain (the Associate Judge).1

[2] Ingenious is unhappy about various interlocutory orders and directions made by the Associate Judge. It wants the proceedings managed by a High Court Judge. Despite participating in hearings and mentions before the Associate Judge for six months it now says that he has no interlocutory jurisdiction in respect of the proceedings because they include claims for declarations.

Background

[3] Global Dairy Ltd (in liq) (GDL) was placed into liquidation in March 2020. The defendants are GDL’s three directors and two liquidators (collectively referred to as the Defendants). GDL’s three creditors assigned their unsatisfied claims from GDL’s liquidation to Ingenious.

[4] Ingenious’ statement of claim dated 6 September 2023 advances 11 causes of action premised on insolvent/reckless trading by the directors and unreasonable fees claims by the liquidators and/or failure on their part to investigate the directors.

[5] A feature of all bar the eighth and 11th causes of action are claims for declarations, often in addition to multiple other prayers for relief. The third cause of action is typical where the prayer includes not only claims for damages, but for “a declaration that the directors are responsible for allowing GDL to trade while being insolvent”.

1 There was an initial call before Associate Judge Lester on 16 February 2024.

[6] On 21 March 2024, the Associate Judge determined an application by the Defendants for security for costs.2 He has also determined an application for costs on the security application and has otherwise case managed the proceeding.

The application

[7] Ingenious applies for three orders. First, an order transferring the substantive proceeding to a High Court Judge under s 26(2) of the Senior Courts Act 2016 (the Act).3 Second, an urgent stay of all orders and directions made by the Associate Judge in the proceeding. Third, costs on the transfer application. The Defendants oppose the application.

[8]The orders are sought on the following grounds:

(a)Jurisdiction and powers of Associate Judges are not unfettered…

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.

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Details

Case: [2024] NZHC 2982
Decision Date: 14 October 2024

CaseChat Overview and Summary

The case Ingenious Asset Management Limited v McConnon, heard in the High Court of New Zealand, involved a dispute between Ingenious Asset Management Limited and several defendants, including Simon McConnon, who were former directors and liquidators of Global Dairy Ltd, a company that had been placed into liquidation. Ingenious sought to transfer the proceedings from Associate Judge Brittain to a High Court Judge, arguing that the Associate Judge lacked jurisdiction due to the claims for declarations in the statement of claim. Ingenious also sought a stay of all orders made by the Associate Judge and costs on the transfer application. The defendants opposed the application on various grounds, including that the complexity of the case did not warrant a transfer to a High Court Judge and that the application was an abuse of process.

The court examined the jurisdiction of Associate Judges under the Senior Courts Act 2016 and the High Court Rules, concluding that while the Act limited the exercise of jurisdiction to specific matters, the High Court Rules addressed the jurisdiction of Associate Judges in other matters. The court found that s 22(4)(i) of the Act, which excludes Associate Judges from dealing with proceedings for a writ or order in the nature of mandamus, prohibition, or certiorari, or for a declaration or injunction, referred to proceedings in the public law sphere rather than all declarations. Therefore, the Associate Judge had jurisdiction to case manage the proceeding. The court also found that the case was not of sufficient complexity to warrant a transfer to a High Court Judge. Consequently, Ingenious’ application to transfer the proceeding was declined, as was its application for a stay of the Associate Judge’s orders. Costs were awarded to the defendants on a 2B basis.

Orders