LDC Finance Limited v Miller - [2015] NZHC 3165

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2012-442-000391 [2015] NZHC 3165

BETWEEN
LDC FINANCE LIMITED

First Plaintiff

JANET VERENA WILSON, KAYE DENISE WHALAN, ANGUS IAIN MCNEILL and GRETEL MCNEILL as trustees of the McNeill Family Trust Second Plaintiffs

JANET VERENA WILSON, KAYE DENISE WHALAN and ORS

Third Plaintiffs

ANGUS IAIN MCNEILL and GRETA MCNEIL as trustees of the McNeill

Family Trust, FAWDAN SUBDIVISIONS LIMITED and ROLAND LLOYD FAWCETT, JULIE BETHANY MORTON and PAULETTE FAWCETT as trustees of the Fawcett Family Trust

Fourth Plaintiffs

ANGUS IAIN MCNEILL and GRETEL MCNEILL as trustees of the McNeill Family Trust

Fifth Plaintiffs

IAIN BRUCE SHEPHARD and HEATH LESLIE GAIR as interim liquidators of LDC Finance Limited (In Receivership and Interim Liquidation)

Sixth Plaintiffs

AND

DAVID GORDON MILLER, KEVIN ELLIOTT, CHRISTOPHER JOHN HARDIMAN AND JOHN CHARLES JANETTO

First Defendants

CARRAN MILLER STRAWBRIDGE LIMITED

Second Defendant

LDC FINANCE LIMITED v DAVID GORDON MILLER, KEVIN ELLIOTT, CHRISTOPHER JOHN HARDIMAN AND JOHN CHARLES JANETTO [2015] NZHC 3165 [11 December 2015]

PERPETUAL TRUST LIMITED Third Defendant

SHERWIN CHAN WALSHEE Fourth Defendant

Hearing: 3 December 2015

Appearances:

H Rennie QC, D G Dewar and J Haig for Plaintiffs
R Ord for First Defendants
M C Smith and O L Ostrovsky for Second Defendant
O J Meech and E McCann for Fourth Defendant

Judgment:

11 December 2015

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS Regarding Mode of Trial

[1] This judgment determines the application by the third defendant, which is supported by the first and fourth defendants, in relation to the way this case should be tried. The application is dated 20 March 2015. It is opposed by the plaintiffs.

[2] The question of how this case should be tried has been the subject of a great deal of debate between counsel, and before the Court. It was comprehensively aired in a chambers hearing with counsel on 26 June 2015 and discussed in some detail in a Minute issued on 1 July 2015 as a result.1

[3] The third to fifth plaintiffs represent, with Court approval, three classes of investors in LDC Finance Limited (LDC) who placed monies with LDC for investment at various time periods, full details of which are set out in the judgment of the Court dated 12 November 2013.2 However, at present the Court has not approved the representative action intended by the second plaintiffs. The reason approval has been deferred in respect of this proposed class is again thoroughly

canvassed in the judgment of 12 November 2013, but stems principally from limitation issues.

[4] Although this class has not yet been approved, it is not thought that this should hold up the settling the way in which this case should be tried. In argument presented on this application, this issue did not feature with any prominence. It will therefore be revisited in a Minute which will be issued after this judgment.

[5] The current pleading is the fourth amended statement of claim. Since this document was filed and served early in July, the plaintiffs have served…

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: [2015] NZHC 3165
Decision Date: 11 December 2015

CaseChat Overview and Summary

LDC Finance Limited and others commenced proceedings against various defendants, including directors, the auditor, and a trustee, seeking damages for losses allegedly suffered due to the insolvent trading of LDC Finance Limited. The defendants challenged the mode of trial proposed by the plaintiffs, arguing that a representative action could not adequately address individual issues of reliance. The plaintiffs, on the other hand, asserted that their proposed method of trial, which included expert and witness evidence, would sufficiently establish the defendants' liability.

The Court considered the arguments of both parties, noting the precedent in Boyd Knight v Purdue which emphasized the necessity of individual reliance for claims against auditors. The Court found that the plaintiffs' proposed method of trial, while carrying a risk of not meeting the requisite standard of reliance as per Boyd Knight, was not manifestly disadvantageous to the defendants. The Court held that the plaintiffs were entitled to proceed with their proposed method unless a manifest disadvantage to the defendants could be demonstrated. The Court concluded that no such disadvantage existed and allowed the plaintiffs to proceed with their proposed method of trial, subject to certain conditions and reservations.

Orders