Ruscoe v Houchens - [2023] NZHC 3224

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-411

[2023] NZHC 3224

IN THE MATTER OF CRYPTOPIA LIMITED (IN LIQUIDATION)

BETWEEN

AND

AND

DAVID IAN RUSCOE and MALCOLM RUSSELL MOORE

Applicants

RYAN HOUCHENS, GIA THANH PHAN, TRISTEN ROBINSON, JOSHUA DAVID STEVENSON, ANDREW ST JOHN ROSS

First to Fifth Interested Parties

GNY.IO LIMITED

Sixth Interested Party

Hearing: 13 November 2023

Appearances:

S A Barker and B E Marriner for the Applicants

No appearance for the First to Fifth Interested Parties L C Bercovitch for the Sixth Interested Party

P G Watts KC, counsel assisting the Court regarding the interests of account holders

J S Cooper KC and J A R Barrow, counsel assisting the Court regarding the interests of creditors

B P Henry and O K Thomas for Epic Trust Ltd

Judgment:

15 November 2023

JUDGMENT OF PALMER J

(Submissions)

Counsel/Solicitors
J S Cooper KC, Auckland P G Watts KC, Auckland
J A R Barrow, Barrister, Auckland
B P Henry and O K Thomas, Barristers, Auckland Buddle Findlay, Wellington
Chapman Tripp, Auckland Cavell Leitch, Christchurch

RUSCOE v HOUCHENS [2023] NZHC 3224 [15 November 2023]

The parties and interested parties

[1] On 31 July 2023, the liquidators of Cryptopia Ltd (in liq) (Cryptopia) applied for directions about distribution of the cryptocurrency assets of the company. On 9 August 2023, without objection, I made orders as to service of the application. They involved the liquidators emailing those account holders for whom they had an email address and making available downloadable copies of the proceedings on the Cryptopia website.

[2] On 1 September 2023, I determined that anyone who opposes the liquidators’ distribution application should be joined and named as respondents. Those who file only a notice of appearance would be named as interested parties. No one applied for joinder. No one filed a notice of opposition. Two notices of appearance were filed, by the first to fifth, and by the sixth, interested parties.

The hearing

[3] On 8 November 2023, Mr Henry and Ms Thomas, acting for Epic Trust Ltd (Epic Trust), filed a memorandum and a supporting affidavit by Mr Victor Cattermole, the owner and director of Epic Trust. The memorandum stated that Epic Trust, on behalf of 690 beneficiaries of the trusts in the cryptocurrencies held by Cryptopia, gave notice that it will appear to be heard to seek amendments to the notice to be sent out by the liquidators to account holders. The liquidators opposed Mr Henry and Ms Thomas being heard and filed an affidavit.

[4] On 13 November 2023, I heard the application by the liquidators. Mr Henry and Ms Thomas sought to appear for Epic Trust. I heard submissions from Mr Henry about why he should be able to make submissions, and from Mr Barker about why Mr Henry should not. I granted leave for the liquidators to file and serve a further updating affidavit and to Epic Trust to file and serve an affidavit in reply.…

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 Ruscoe v Houchens

Details

AGLC: Ruscoe v Houchens [2023] NZHC 3224
Case: [2023] NZHC 3224
Decision Date: 15 November 2023

CaseChat Overview and Summary

The High Court of New Zealand was tasked with deciding the admissibility of Epic Trust Ltd's submissions in proceedings concerning the distribution of cryptocurrency assets held by Cryptopia Ltd, a company in liquidation. The liquidators of Cryptopia applied for directions regarding the distribution of the company's cryptocurrency assets. Epic Trust Ltd, representing the interests of 690 beneficiaries, sought to appear and make submissions regarding the notice to be sent to account holders. The court needed to determine whether Epic Trust Ltd had standing to appear and make submissions, and if the liquidators' concerns about the integrity and legality of Epic Trust's offer to account holders were valid.

The court declined to hear Epic Trust Ltd's submissions on the liquidators' application due to the company's disruptive behaviour and failure to follow proper procedural steps. Epic Trust did not file a notice of appearance, a notice of opposition, or an application to be joined as required by the High Court Rules 2016. Instead, Epic Trust filed a memorandum and affidavit without clear disclosure of its objectives. This caused delays and confusion, prejudicing the court, liquidators, and other interested parties. Additionally, the liquidators presented evidence casting doubt on the validity of Epic Trust's claim to represent account holders, including unsigned sale and purchase agreements and discrepancies in the email addresses provided. The court found Epic Trust's actions and the lack of evidence supporting its claims to be inadequate grounds for allowing its participation in the proceedings.

The court made several directions regarding the next steps in the proceedings. The liquidators were instructed to file and serve any opposition to Epic Trust's application for joinder and any application to examine Mr Cattermole, with supporting affidavits. Epic Trust was directed to file and serve any affidavits in reply to the liquidators' opposition to its application for joinder, written submissions regarding the application for joinder, and any notice of opposition to the examination of Mr Cattermole, with supporting affidavits. The liquidators were to file and serve any affidavits in reply to any opposition to the examination of Mr Cattermole, written submissions regarding the application for joinder, and written submissions regarding the application to examine Mr Cattermole if opposed. The court reserved leave for any party or counsel assisting the court to apply for further directions as necessary.

The court set a hearing for the applications to examine Mr Cattermole and the application for joinder, scheduled for up to one day in the week of Monday, 11 December 2023. This decision aimed to ensure that all parties had an opportunity to present their arguments in a fair and orderly manner, allowing the court to make informed decisions regarding the distribution of Cryptopia's cryptocurrency assets.

Orders