Introduction............................................................................................................................ [1] The schemes........................................................................................................................... [8] The outcome of the 2004 criminal trial................................................................................ [56] The present proceedings ...................................................................................................... [60] Issues on the present costs applications ............................................................................... [75] Issue 1: Defendants entitled to indemnity or increased costs?............................................ [76] Issue 2: Defendants entitled to scale costs instead? ........................................................... [121] Issue 3 & 4: Plaintiffs entitled to costs on discontinuance of counterclaims? ................... [137] Conclusion ......................................................................................................................... [166]

Introduction

[1] A trial abandoned on its 19th day. Claims all discontinued by the plaintiffs; counterclaims all discontinued by the defendants. Only the allocation of costs cannot be agreed. The defendants ask for indemnity costs. They say the plaintiffs’ claims always lacked any conceivable merit, and the plaintiffs knew it. The
plaintiffs deny that. They say costs should just lie where they fall.

N-TECH LIMITED AND ORS v ABOOTH LIMITED AND ORS HC AK CIV-2006-404-003362 [29 May 2012]

[2] Back in September 2004, four men associated with the Digitech investment scheme faced trial for fraud in the High Court at Auckland.

[3] One of them, Mr John Reid, was the promoter of the scheme. The other three assisted him and carried it into effect. Mr Reid gave evidence before me. I will say more about him later. But I say now, as I said at the trial,1 that I held serious reservations about the truthfulness of some of the evidence he gave before me.

[4] A second of the criminal defendants, Mr Peter Connolly, gave evidence before me also. He cut a sorry figure. Euphemistically, Mr Reid described him as “unnecessary”. His role was to give apparent substance to the transactions if they were ever enquired into. Certainly by the Revenue; perhaps by investors. Presenting as a merchant banker of substance - albeit one operating from a garden flat in Peckham rather than offices in the City of London - he was in fact the mere amanuensis of Mr Reid, his solicitor Mr Darvell, and Mr Currie (of whom, more shortly). Of an evening he would receive phone calls from Auckland or Hong Kong, note down what the other three dictated, get his wife to type it all up, and then send it straight back to them over his signature.

[5] The third man, Mr Peter Russel, was still due to give evidence before me when the trial collapsed. He had been an Inland Revenue Department tax inspector, and later became a partner in the Auckland accounting firm Gosling Chapman. He took a substantial payment, $680,000, from the Reid interests to assist in promoting the scheme. It seems he did not disclose that payment to…

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 N-Tech Ltd v Abooth Ltd

Details

AGLC: N-Tech Ltd v Abooth Ltd [2012] NZHC 1167
Case: [2012] NZHC 1167
Decision Date: 29 May 2012

CaseChat Overview and Summary

N-Tech Limited and St Lucia Investments Limited commenced proceedings against 121 defendants alleging breach of share purchase agreements. The defendants denied the claims and brought counterclaims. Settlements were reached between the parties. The defendants sought indemnity or increased costs against the plaintiffs. The plaintiffs argued that the costs should lie where they fell. The defendants argued that the plaintiffs' claims were hopeless, and that the plaintiffs' claims were brought for an improper purpose. The court held that the defendants' claims and counterclaims were substantially common. The defendants' counterclaims were wholly defensive and responsive to the plaintiffs' claims. The court held that the rule in Medway Oil applied. Costs on discontinuance should lie where they fell. The defendants' application for costs in the sum of $774,157 was granted.

Orders