Pure Elite Holdings Limited v Bodco Limited
[2018] NZHC 844
•30 April 2018
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2016-419-261
[2018] NZHC 844
BETWEEN PURE ELITE HOLDINGS LIMITED
First Plaintiff
AND
PEH NEW ZEALAND LIMITED
Second Plaintiff
AND
EVER HEALTH NEW ZEALAND LIMITED
Third Plaintiff
AND
BODCO LIMITED
First Defendant and First Counterclaim Plaintiff
AND
BRIAN NOEL WAGSTAFF
Second Defendant and Second Counterclaim Plaintiff
AND
RICHARD CHEW YOUNG
Third Defendant and Second Counterclaim Plaintiff
AND
RANDOLPH EDWARD CASIMIR VAN DER BURGH
Fourth Counterclaim Defendant
AND
GEOFFREY IAN POLLARD
Fifth Counterclaim Defendant
Hearing: 19 April 2018 Appearances:
A S Ross QC and C Jiang for the Plaintiffs and the Counterclaim Defendants
S W Hood and E R Anderson for the First Defendant S M Jass for the Second and Third Defendants
Judgment:
30 April 2018
PURE ELITE HOLDINGS LIMITED v PEH NEW ZEALAND LIMITED [2018] NZHC 844 [30 April 2018]
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] On 19 April 2018, I heard argument on two applications. The first was an application by the first defendant (BODCO) for further particulars of the plaintiffs’ second amended statement of claim dated 12 May 2017 (the Claim). The second was an application by the plaintiffs for particular discovery.
[2] The plaintiffs filed an amended discovery application on 17 April 2018, and Mr Hood was not in a position to argue the amended application on 19 April. With the consent of counsel, I heard argument from Mr Ross on the discovery application, and then adjourned the application to allow Mr Hood to make written submissions on it and Mr Ross to make written submissions in reply.
[3] I now give judgment on the application by BODCO for further particulars of the Claim.
Background
[4] The plaintiffs say that the first plaintiff (Pure Elite) was established in 2012 to pursue opportunities for the sale of New Zealand dairy products to China, including infant milk formula.
[5] Pure Elite was interested in acquiring production assets in New Zealand to support what would be a vertically integrated chain, from farm gate through processing, canning and blending plants, to the Chinese market. The products would be distributed through the third plaintiff (Ever Health), with joint venture partners in Hong Kong and China to market and distribute the products.
[6] The plaintiffs say that the second defendant, Mr Wagstaff, who was a director of BODCO, approached them in about May 2014 to discuss the creation of an independent supply chain of milk powder products from New Zealand to China. Mr Wagstaff was also a director of Danpac (NZ) Ltd (Danpac), and Danpac owned the
business and assets of a powdered milk canning and blending plant that was then under construction at Te Rapa, Hamilton.
[7] Discussions ensued. A central component of the discussions was the capitalization of Danpac, to allow the construction of the plant to be completed and the business to be developed. The Danpac business would provide a necessary component of the vertical integration plan. There were also discussions over raising USD200,000,000 in capital for the acquisition of Mataura Valley Milk (MVM). Through a trust, Mr Wagstaff was a shareholder in MVM.
[8] The discussions culminated in the signing of a short Heads of Agreement document on 24 September 2014 (the HOA). Although the HOA appears to have been completed without the assistance of lawyers, it contained a provision stating that it was intended to create binding legal obligations between the parties.
The HOA
[9] The following brief summary of the HOA is taken from Mr Hood’s written submissions, which were not challenged by Mr Ross at the hearing:
(a)The parties entered into a “home-made” Heads of Agreement dated 24 September 2014 (HOA) whereby [PEH New Zealand] would acquire 51 per cent of Danpac in exchange for the performance of various obligations under the HOA;
(b)The HOA required the provision of an “initial working capital” of
$3,000,000 within 30 days of signing the HOA. The HOA did not specify which of the parties would have to complete that obligation;
(c)Similarly, the HOA required “further working capital” of $5,000,000 but did not say the date by which such capital was required or how such future contributions were to be fixed between the parties;
(d)The HOA did however say that:
(i)“[PEH New Zealand] will provide the necessary capital to complete the construction of the plant in consideration for a controlling shareholding in Danpac”;
(ii)“[Pure Elite] or its nominee(s) will subscribe for ordinary shares in Danpac up to the amount set out in Schedule 1, Amount VII in consideration for [Pure Elite] contributing Amount VII in cash, paid up in accordance with the agreed milestones”; and
(iii)[PEH New Zealand] would provide a cash contribution of
$5,310,630. This is the same amount as Amount VII in the Schedule to the HOA.
(e)The Timeline to the HOA required:
(i)The initial capitalization of Danpac within 30 days of signing the HOA; and
(ii)Completion of capitalization of Danpac within 90 days.
Implementation of the HOA
[10] Mr Hood summarised the steps taken by the parties after the signing of the HOA, as follows:
(a)On 20 October 2014 the Companies Office records for Danpac were amended to show [PEH New Zealand] as shareholder of 51 shares;
(b)The plaintiffs did not raise any capital.
(c)[Mr Wagstaff] voiced his concerns at the funding delays and sought changes to the shareholding of Danpac;
(d)The plaintiffs did not accede to these suggestions or make any capital contributions;
(e)30 days after the signing of the HOA, the exclusivity period expired and the defendants sought alternative funding and/or partnership arrangements;
(f)On 23 February 2015 the Companies Office register was amended to remove [PEH New Zealand] as a 51 per cent shareholder in Danpac;
(g)The plaintiffs allege that on 12 May 2017, they cancelled the HOA for repudiation;
(h)Despite never having contributed any capital to Danpac, the plaintiffs have sued the defendants for NZ $55,000,000 and NZD$227,000,000.
[11] The plaintiffs say in the Claim that a number of steps were taken by the parties pursuant to the HOA. Some of them are mentioned in the brief summary provided by Mr Hood. They say that by 20 October 2014, Ever Health had become registered as the owner of 51 shares in Danpac, for which it paid $51. That gave Ever Health a 51 percent majority shareholding in Danpac. The balance of the Danpac shares (49 shares) was held by BODCO. The third defendant (Mr Young) resigned as a director of Danpac, and that resignation was registered in the Companies Office on 21 October 2014. Mr Wagstaff remained a director of Danpac.
[12] Mr van der Burgh and Mr Pollard, respectively the fourth and fifth counterclaim defendants, were appointed as directors of Danpac representing the plaintiffs. The plaintiffs say those appointments were registered with the Companies Office on 28 October 2014. Following those appointments, Danpac’s board consisted of Mr Wagstaff, Mr van der Burgh, and Mr Pollard.
[13] PEH New Zealand was incorporated on 22 November 2014, and on 24 November 2014 it acquired Ever Health’s 51 shares in Danpac. The transfer of those shares was authorised by Danpac’s board by resolution dated 5 December 2014.
[14] The plaintiffs say that Pure Elite carried out due diligence in relation to Danpac, incorporated PEH New Zealand, and arranged the transfer of the 51 Danpac shares from Ever Health to PEH New Zealand. They allege that it also provided a part-time financial controller for Danpac, and that Mr van der Burgh became a joint signatory of Danpac’s bank account. They say Pure Elite was represented at numerous operational and budget meetings of Danpac, and established financial systems, record- keeping systems, and reporting templates for Danpac.
[15] The plaintiffs say that BODCO also carried out a number of steps pursuant to the HOA, including the provision of an asset register to PEH New Zealand, providing budget and financial records to PEH New Zealand, and providing existing business plans to PEH New Zealand.
Difficulties in raising capital
[16] By the end of 2014 neither side had put its agreed capital contribution into Danpac. The plaintiffs say in the Claim that the defendants were unable to contribute their cash of $3,502,370 under the HOA, and that they themselves encountered delays in meeting their capital commitments. They plead that, as a result of the parties’ mutual delays in raising their capital commitments, BODCO and Pure Elite and PEH New Zealand did not finalise a revised business plan, a shareholders’ agreement, a sales and marketing plan, or the appointment of a managing director and chief financial officer for Danpac.
[17] Nevertheless, the plaintiffs say that, in reliance on the HOA and the agreed scheme to develop the business, they committed significant resources during January, February and March 2015 to secure the first drawdown from their new cornerstone funding partner, in accordance with the original terms and conditions agreed in the HOA. At the same time they continued to arrange alternative back-up funding for both Danpac and MVM.
[18] Notwithstanding both sides’ delays in performing their obligations under the HOA relating to the capitalization of Danpac, the plaintiffs say that the HOA remained on foot. They contend that neither party made time of the essence, and both parties continued to perform their obligations under the HOA and considered themselves bound by it. They say that the parties also continued with their contemporaneous endeavours to raise the USD200,000,000 in respect of the MVM part of the business scheme.
Alleged wrongful repudiation by the defendants
[19] The plaintiffs contend that, from about 23 February 2015, the defendants took a number of steps which constituted wrongful repudiation of the HOA. These steps were said to be (i) procuring the purported removal of Mr van der Burgh and Mr Pollard as directors of Danpac (without any notice to them), (ii) procuring amendments to the Companies Office register to reflect those steps, (iii) wrongly procuring the removal of PEH New Zealand as the registered holder of 51 shares in Danpac (leaving BODCO as the only registered shareholder) of Danpac, and (iv) procuring an amendment to the Companies Register to show the re-appointment of Mr Young as a director of Danpac.
[20] The plaintiffs say that these unauthorised actions made it possible for the defendants to cause Danpac, by deed dated 27 February 2015, to issue convertible notes equal to 10 percent of the shares in Danpac, to a financier called Zhuhai Hengqin Aorta Investment Co Limited (Zhuhai), for $500,000.
[21] Notwithstanding the plaintiffs’ pleaded view that these steps taken by the defendants amounted to wrongful repudiation of the HOA, the plaintiffs say they did not cancel the HOA. Indeed, they plead that Mr Pollard, acting on behalf of all of the
plaintiffs, affirmed the HOA by writing to Mr Wagstaff on 26 March 2015 demanding that the allegedly unauthorised actions be rectified.
Further alleged breaches of the HOA
[22] The plaintiffs plead further breaches of the HOA by the defendants from and after 29 October 2015, including the appointment of Braithwaite and Pearks Limited (Braithwaite) as Danpac’s authorised company agent, without the knowledge of authority of Mr van der Burgh and Mr Pollard. They say that Braithwaite then procured further amendments to the Companies Office records for Danpac, again without the knowledge or approval of Mr van der Burgh or Mr Pollard.
[23] The plaintiffs say that at all material times they have remained ready, willing and able to perform the HOA, subject to the extent to which the defendants’ repudiatory conduct impaired their ability to perform.
[24] The plaintiffs say that eventually, on 12 May 2017, they accepted the defendants’ repudiation of the HOA and cancelled the HOA.
The Claim
[25] The plaintiffs plead causes of action in breach of contract, breach of fiduciary obligation, breaches of the Companies Act 1993, and breaches of s 9 of the Fair Trading Act 1986.
[26] Relevant to the first defendant’s request for particulars, the plaintiffs seek the following relief:
A.Damages in favour of the Plaintiffs or any of them by the Defendants’ repudiations of the HOA, such as to put the Plaintiffs in the position they would have been in had the Defendants performed the HOA:
(a)Loss of the value of 51% of the shares in Danpac, to be quantified following discovery and expert evidence, but currently estimated to be no less than NZ$55,000,000; and
(b)Loss of value in [Pure Elite], to be quantified following discovery and expert evidence, but currently estimated to be no less than NZD$227,000,000.
B.Such other relief as the court thinks fit pursuant to section 9 of the Contractual Remedies Act 1979;
C.Interest; and
D.Costs.
The defendants’ statement of defence
[27] The defendants deny liability on all of the plaintiffs’ causes of action, and they plead affirmatively that the transfer of shares in Danpac to Ever Health (or other entities associated with the plaintiffs) was conditional on the HOA being complied with, and in particular on PEH New Zealand complying with all of its obligations under the HOA (including the introduction of $5,310,630 in capital) before the relevant time periods as set out in the HOA, and in any event prior to the HOA expiring on 24 December 2014.
[28] The defendants say that Pure Elite and PEH New Zealand failed to complete their obligations under the HOA in relation to raising the necessary capital within the prescribed timeframe. They admit the various steps taken on or around 23 February 2015, including the appointment of a new authorised agent for Danpac, but say the action was taken because, on 24 December 2014, and despite the HOA coming to an end on that date, the relevant plaintiffs refused to unwind the various changes that had been made to Danpac’s shareholding and directorships.
[29] The defendants say that by the time Mr Young was re-appointed to the board of Danpac on 9 March 2015 no authorisation was required from Mr van der Burgh and Mr Pollard, because “it was an implied term, or an oral term of the HOA, that if the HOA came to an end without being fully implemented, then any changes to the shareholding or directorship of Danpac would be unwound.”
[30] The defendants say that by the time Mr Pollard wrote to Mr Wagstaff on 26 March 2015 complaining about the steps taken to alter the Danpac shareholding and directorship details, they had no obligation to rectify those steps.
[31] The defendants acknowledge that on 30 November 2015 the Companies Office register for Danpac was updated to show the amalgamation of Danpac with BODCO.
Danpac was then struck off the Companies Register. They further acknowledge that on or around 26 July 2016 the amalgamated company issued shares to China Animal Husbandry Group (CAHG), and that four new directors were appointed to the amalgamated company.
The first defendant’s particulars requests and the plaintiffs’ responses
[32] The application for further particulars was initially pursued by Mr Hood in respect of paragraphs 26(a), 29(a), 29(b), and 45 of the Claim, together with certain parts of the plaintiffs’ claim for relief.
[33] In the course of the hearing, and as a result of discussions between counsel, the particulars requested in respect of paragraphs 29(b) and 45 have now been resolved. That leaves for determination the first defendant’s request for particulars in respect of paragraphs 26(a) and 29(a), and the plaintiffs’ claim for relief. I will address each of the particulars requests in turn.
Applications for further particulars – legal principles
[34]Rules 5.21 and 5.26 of the High Court Rules materially provide:
5.21 Notice requiring further particulars or more explicit pleading
(1)A party may, by notice, require any other party—
(a)to give any further particulars that may be necessary to give fair notice of—
(i)the cause of action or ground of defence; or
(ii)the particulars required by these rules; or
(b)to file and serve a more explicit statement of claim or of defence or counterclaim.
(2)A notice must indicate as clearly as possible the points on which the pleading is considered defective.
…
(4)Even if no notice has been given under this rule, the court may on its own initiative order a more explicit pleading to be filed and served.
…
5.26 Statement of claim to show nature of claim
The statement of claim—
(a)must show the general nature of the plaintiff’s claim to the relief
sought; and
(b)must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff’s cause of action; and
…
[35]Rule 5.33 deals with claims for special damages. It provides:
5.33 Special damages
A plaintiff seeking to recover special damages must state their nature, particulars, and amount in the statement of claim.
[36] The leading authority on a party’s obligation to plead adequate particulars of its case remains the Court of Appeal decision in Pricewaterhouse v Fortex Group Ltd.1 In that case, the Court of Appeal noted that pleadings which are properly drawn and particularised constitute “an essential road map” for the Court and the parties, particularly in cases of any complexity. The pleadings are the documents against which the briefs of evidence are or should be prepared, and it is the pleadings that establish the parameters of the case, not the briefs of evidence. Both the Court and opposite parties are entitled to be advised of the essential basis of the claim or defence, and all necessary ingredients of it, so that subsequent processes and the trial itself can be conducted against recognisable boundaries.2
[37] The Court of Appeal in Pricewaterhouse noted that the object of the statement of claim is to “state” the “claim”, so that the Court will know what it is to rule upon and the defendant will know the case it has to meet. As a matter of practicalities, the “initial statement” is not the level of a full disclosure of all evidence and documentation – it is an “abbreviated summary statement” of the basic facts said to give rise to the claim, and of the relief which is sought. While in complex cases a more detailed factual narrative may be appropriate, that does not mean that the full
1 Pricewaterhouse v Fortex Group Ltd CA 179/98, 30 November 1998.
2 At 17-18.
detail which will come later in the party’s briefs of evidence is required. What is required is an assessment based on the principle that a pleading must, in the individual circumstances of a case, state the issue and inform the opposite party of the case to be met. In the end, that will involve a common sense and balanced judgment based on experience as to how cases are prepared and trials work. It is not an area for mechanical approaches or pedantry.3
[38] In Platt v Porirua City Council,4 Kós J noted that while the extent of particularisation of pleadings may have changed over the past 25 years, the fundamental function of proper pleadings remained unaltered. Particulars of pleading are important to:5
(a)inform defendants as to the case they have to meet;
(b)limit the scope of matters the plaintiff may put in issue at trial (or in pre-trial settlement discussion);
(c)enable the defendants to know what witnesses they will need to retain and enable them to start preparing evidence ahead of the formal exchange of evidence; and
(d)provide an opportunity for a defendant to seek summary determination on the basis that the claim as pleaded is untenable.
Analysis and conclusions
Paragraph 26(a) of the Claim
[39]Paragraph 26(a) states:
BODCO and the Plaintiffs were delayed in the raising of their respective capital commitments under the HOA:
3 At 19.
4 Platt v Porirua City Council [2012] NZHC 2445.
5 At [19].
(a)The Plaintiffs’ principal funding party, Enertech LLC Limited, delayed providing funding as the result of unrelated internal issues at Enertech during the period October 2014 to January 2015; and
…
[40]The first defendant’s request for particulars was:
[What were] the “unrelated internal issues at Enertech” which the plaintiffs allege delayed the provision of funding to meet their capital commitments under the HOA[?]
[41]The plaintiffs’ response to the request for particulars was:
Response:
Heart attacks and subsequent death of the chairman of the investment board of the Wang family/Enertech during the period from November 2014 to January 2015. There were nine members of the investment board, made up of five family board members and four professional board members. There was no or inadequate succession plan. When the chairman had his first heart attack, all transactions being considered by the investment board were put on hold.
[42] Following discussions between counsel immediately after the hearing, I have been advised that the plaintiffs will now supply particulars of the date on which the plaintiffs became aware that the chairman of Enertech/Wang family had had a heart attack. The plaintiffs’ willingness to supply those further particulars is expressed to be without prejudice to the entitlement of the first defendant to have those particulars.
[43] Mr Hood submitted that the first defendant wishes to ascertain when the pleaded “internal issues” are alleged to have occurred, who was involved, and how such events are alleged to have delayed the provision of funding. He submitted that the plaintiffs’ response, describing “heart attacks and subsequent death of the chairman of the investment board of the Wang family board/Enertech during the period from November 2014 to January 2015”, is inadequate, in that it does not provide details of when the heart attacks occurred, how many occurred, when the chairman died, or whether there were any other internal issues that are alleged to have delayed the funding.
[44] I am not satisfied that there is any basis to order further particulars of this paragraph. The plaintiffs freely acknowledge that they could not raise the funding
during the period with which this paragraph is concerned, and in those circumstances I am unable to see that the exact reasons for the plaintiffs failing to raise their part of the overall capital commitment by January 2015 matters. The plaintiffs are not contending that the HOA was frustrated by their inability to raise the plaintiffs’ capital contribution at this time, and they do not assert (and say they have never asserted) that they had funding on hand or available up to 23 February 2015.
[45] Furthermore, the plaintiffs are not saying that they purported to cancel the HOA at or about this time. If they had been saying that, I could understand that the question of their own readiness, willingness, and ability to perform the HOA at that time might have been an issue. On the contrary, the plaintiffs expressly plead that they affirmed the HOA on 26 March 2015 when Mr Pollard wrote his letter to Mr Wagstaff.
[46] I am here concerned with the sufficiency or otherwise of the pleading of the plaintiffs’ case, and that case is that the HOA was not cancelled until May 2017. It might or might not be the case that the first defendant somehow considers that these particulars would bolster its argument that the HOA had come to an end by February 2015 at the latest, but that is not the plaintiffs’ case.
[47]The application in respect of paragraph 26(a) is dismissed.
Paragraph 29(a) of the Claim
[48]Paragraph 29(a) of the Claim states
In reliance on the HOA and the Business Scheme:
(a)The Plaintiffs committed significant resources during January, February and March 2015 to secure the first drawdown from their new cornerstone funding partner in accordance with the original terms and conditions agreed in the HOA; and
[49]The first defendant’s request for particulars of this paragraph was:
[What were] the respects in which the plaintiffs are alleged to have committed “significant resources” to secure the first drawdown from their new cornerstone funding partner, including names, dates, amounts and the nature and date of instruments the plaintiffs are alleged to have secured or attempted to secure from their new cornerstone funding partner[?]
[50]The plaintiffs’ response to that request was:
The principal contacts for the plaintiffs were David McCann and Terence Kwong. The principal contact persons from the Wang family/Enertech were Mrs Fu Ling Wang and Anna Wang. Contact had been initiated in August 2014. The parties reached a bridging funding agreement for US$1million dated 31 October 2014. At the same time, the parties were in the process of negotiating a USD$6 million loan.
Significant efforts continued to be made to secure the first drawdown from Enertech to provide the necessary funding for the Danpac joint venture, including a number of face to face meetings and telephone calls with Enertech’s representatives.
Mr McCann continued to have contact with Fu Ling and Anna Wang during 2015 until alternative funding with Gleaneagle Securities (Aust) Pty Ltd (Gleneagles) was secured in late 2015.
[51] Mr Hood submitted that the plaintiffs’ response fails to sufficiently identify the “significant resources” which were allegedly committed by the plaintiffs in the specific period January to March 2015.
[52] Again, it is not at all clear to me how or why the provision of these further particulars is necessary for BODCO to sufficiently understand the case it has to meet. As I understand it, the plaintiffs’ case is that neither party had been able to secure funding for their respective capital commitments by March 2015, and the reason for that state of affairs seems to me to be irrelevant to the case the plaintiffs are running. They are simply saying that, regardless of the reasons, neither party was able to meet its capital contributions by March 2015, but the HOA nevertheless remained on foot. Had there been a pleading that the plaintiffs cancelled the HOA at this time the question might have been relevant to whether the plaintiffs were ready, willing and able to perform their own obligations under the HOA at the time, but that is not the plaintiffs’ case. Nor am I here concerned with any potential alternative argument BODCO might wish to run, along the lines that alleged failure by the plaintiffs to commit significant resources during this period allegedly justified the defendants in treating the HOA as having been cancelled by them. In any event, that is not the case the defendants are presently pleading.
[53] For those reasons, the application will be dismissed insofar as the particulars of paragraph 29(a) are concerned.
Paragraph 29(b) of the Claim
[54] I record counsel’s advice that this part of the particulars application has been resolved, on the basis that the new cornerstone funding partner referred to in the paragraph is Enertech.
Paragraph 45 of the Claim
[55] I record counsel’s advice that this part of the application has also been resolved, on the basis that the plaintiffs do not assert, and say they have never asserted, that they had funding on hand or available up to 23 February 2015.
The plaintiffs’ claim for relief
[56]The relevant parts of the claim for relief are the plaintiffs’ claim for:
A.Damages in favour of the Plaintiffs or any of them by the Defendants’ repudiations of the HOA, such as to put the Plaintiffs in the position they would have been in had the Defendants performed the HOA:
(a)Loss of the value of 51% of the shares in Danpac, to be quantified following discovery and expert evidence, but currently estimated to be no less than NZ$55,000,000; and
(b)Loss of value in the First Plaintiff, to be quantified following discovery and expert evidence, but currently estimated to be no less than NZD$227,000,000.
[57]The relevant part of the original request by BODCO for particulars was:
What is the basis on which the plaintiffs have calculated their losses on NZ$55,000,000 and NZ$227,000,000?
[58] In the course of the hearing Mr Hood advised that he is now concerned only with subparagraph (a) of the claim for relief, relating to the $55 million loss said to have arisen from the loss of 51 percent of the Danpac shares. Specifically, particulars are sought of the plaintiffs’ valuation of Danpac at $108 million, and the comparable market transactions relied upon by the plaintiffs in reaching that figure.
[59]The part of the plaintiffs’ response to that request which is now material was:
Response: Danpac would have had a value of approximately NZD$108,000,000 on 23 February 2015. This is based on the plaintiffs’ own valuation of Danpac (subject to providing further discovery) and comparable market transactions. A 51% shareholding in Danpac would have been approximately NZ$55,000,000.
[60] Mr Hood submitted that the plaintiffs’ response does not say what particulars the plaintiffs relied on in reaching their own valuations, or what market comparisons have been used. An affidavit from Mr van der Burgh suggests that the claim is based on more than these factors, and includes for example, an assessment of forward orders. No particulars of the forward orders have been given.
[61] Mr Hood submitted that what is missing is particulars of any other market transactions the plaintiffs have used to calculate damages, particulars of the alleged orders, what factors (if any) the plaintiffs have based the damages claim on, and particulars of the alleged beneficial relationship between PEH New Zealand and Ever Health.
[62] For the plaintiffs, Mr Jiang submitted that the particulars sought have been sufficiently answered in the plaintiffs’ response.
[63] In my view, the pleading, supplemented by the plaintiffs’ response to the request for further particulars, provides a sufficient answer to the first defendant’s request. Mr Hood was unable to refer me to any previous decided case where a party relying on a particular valuation figure has been required to provide, as particulars of its claim, details of the evidence of comparative sales relied upon by its expert witness or witnesses. That is fundamentally a matter of evidence, going beyond the obligation on the pleading party to state the nature, particulars, and amount of the claim under r 5.33.
[64] The learned authors of McGechan on Procedure note that, where claims can be upon the basis of estimates only, which estimates will be proven, that estimate and
the basis for its calculation must be supplied. The particulars should contain sufficient detail for the defendant to be able to check and confirm prior to trial.6
[65] In this case, the defendants must have all the documents they will need for their experts to form their own views on the valuation of Danpac at the relevant date, and of course they will have available the plaintiffs’ briefs of expert evidence well in advance of the trial. The amount of the claim has been stated, and this is not the kind of case where the particulars are necessary for the first defendant to know what witnesses it will need to retain to answer the relevant allegations.
[66] I do not consider that the first defendant is entitled, by way of particulars, to details of the plaintiffs’ actual computation of the figure of approximately
$108,000,000. Valuers valuing unlisted company shares may use a variety of methods for reaching their valuation figures, including for example discounted cashflow models and EBIT multipliers. The preferred methodology will then typically be the subject of some cross-checking against other possible methodologies, and there may be some rounding, or averaging, to reach a final valuation figure depending on the nature of the company and the particular valuation exercise. All of that is in my view in the realms of evidence, not particulars.
[67] For those reasons, the application is also dismissed insofar as particulars are sought of that part of the plaintiffs’ claim for relief that is concerned with the valuation of Danpac as at 23 February 2015.
Result
[68] In accordance with the foregoing findings, the application for further particulars is dismissed. The plaintiffs are entitled to costs, which I fix on a 2B basis, with disbursements to be fixed by the registrar.
Associate Judge Smith
Solicitors:
Glaister Ennor, Auckland for the Plaintiffs and Counterclaim Defendants Norris Ward McKinnon, Hamilton for the First Defendant
Tompkins Wake, Auckland for the Second and Third Defendants
6 McGechan on Procedure, HR 5.33.03.
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