Lewis v Mason - [2009] NZCA 306

IN THE COURT OF APPEAL OF NEW ZEALAND
CA676/2008
[2009] NZCA 306
BETWEENCONWAY LEWIS

First Appellant
ANDJOHANNA LEWIS

Second Appellant

ANDKAREN BETTY MASON AND JEFFREY PHILIP MELTZER AS LIQUIDATORS OF GLOBAL PRINT STRATEGIES LIMITED (IN LIQUIDATION)

Respondents

Hearing:6 May 2009

Court:Chambers, O'Regan and Ellen France JJ
Counsel:P J Davey for Appellants

B P Keene QC and C A Murphy for Respondents

Judgment:20 July 2009 at 11.30 am

JUDGMENT OF THE COURT

A The appeal is allowed.
B The orders made in the High Court are quashed.
CWe make an order that the first and second appellants must contribute the sum of $560,000 to the assets of Global Print Strategies Limited (in liquidation) by way of compensation for their breach of the duty they owed to Global Print Strategies Limited under s 135 of the Companies Act 1993. The liability of the first and second appellants is joint and several.
DCosts are reserved.

REASONS OF THE COURT
(Given by O’Regan J)
Table of Contents
Para No

Introduction  [1]
Issues  [2]
Factual background  [7]
Statutory context  [39]
The judgment under appeal  [41]
Did this Court set a cap of $560,000?  [43]
Did the Judge miscalculate the creditor pool?  [60]
Did the Judge err in his assessment of causation?  [75]
Did the Judge err in his assessment of culpability?  [84]
SHOULD THE COMPENSATION BE REDUCED BECAUSE OF CONTRIBUTORY
conduct by Commercial Factors?  [99]
Result  [111]
Costs  [116]
Introduction
[1]       This is the second time this litigation has reached this Court. The present appeal is against a judgment of Stevens J in which he made orders under ss 300(1) and 301 of the Companies Act 1993 that the appellants, Mr and Mrs Lewis, pay substantial amounts for breaches of their duties as directors of Global Print Strategies Limited (in liquidation) (Global Print): Mason v Lewis HC AK CIV 2003-404-0936 1 October 2008. The respondents, Ms Mason and Mr Meltzer, are the liquidators of Global Print. That decision was on a referral back from this Court (Mason v Lewis [2006] 3 NZLR 225), which had allowed an appeal from an earlier High Court judgment in which the liquidators’ claim against the Lewises had failed. This Court remitted the matter to the High Court for the determination of the amount to be paid by Mr and Mrs Lewis.
Issues
[2]       The principal issue on appeal is whether the earlier appeal decision determined that the maximum liability of Mr and Mrs Lewis was $560,000 or left it open to the High Court to determine the appropriate quantum of liability, even if greater than $560,000.
[3]       We heard argument on that issue first, and determined that $560,000 was a cap on liability. We informed counsel of that decision at the hearing and provided an opportunity for settlement discussions, but these were unsuccessful and we then heard the remaining argument. Counsel for the Lewises, Mr Davey, argued that even $560,000 was too great an amount, and that a lower figure should have been set by the High…

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 Lewis v Mason

Details

AGLC: Lewis v Mason [2009] NZCA 306
Case: [2009] NZCA 306
Decision Date: 20 July 2009

CaseChat Overview and Summary

In the case of Lewis v Mason, Conway and Johanna Lewis appealed against a decision of the High Court to hold them liable for breaches of their duties as directors of Global Print Strategies Limited (Global Print), a company in liquidation. The respondents, the liquidators of Global Print, sought compensation for the losses suffered by the company’s creditors. The Court of Appeal previously held that the Lewises were liable for their breaches of duty, but the quantum of liability was to be determined by the High Court. The primary issue on appeal was whether the earlier appeal decision had set a cap on the Lewises' liability of $560,000, or if the High Court was free to determine a higher amount. The Court of Appeal concluded that $560,000 was indeed a cap on liability, based on the terms of the remittal from the earlier appeal. The Court of Appeal rejected the Lewises' arguments that the High Court had erred in its assessment of the creditor pool, causation, culpability, and whether the compensation should be reduced due to contributory conduct by Commercial Factors. The Court of Appeal upheld the High Court’s assessment of the Lewises' culpability and the appropriate level of compensation. The Court of Appeal allowed the appeal, quashed the High Court’s orders, and made an order that the Lewises must contribute $560,000 to the assets of Global Print by way of compensation. Costs were reserved.

Orders