Swindle v Withers - [2015] NZHC 888

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-1237 [2015] NZHC 888

BETWEEN
BURVLE EDWARD SWINDLE and

CAROLIE ANN TERPENING SWINDLE as trustees of the Swindle Family Trust First Plaintiffs

AORANGI FORESTS LIMITED Second Plaintiff

ORAKEI SECURITIES LIMITED (in liquidation)

Third Plaintiff

AND

MARK DONALD WITHERS Defendant

AND

ZURICH AUSTRALIAN INSURANCE LIMITED

Third Party

Hearing: 26 - 29 May, 30 October and 17 November 2014

Appearances:

D J Heaney QC, P A Robertson and A S Ayton for Plaintiffs

J Long, S J Davys-Brown, S G T Ma Ching and D A C Bullock for Defendant

A C Challis and H K Harkess for Third Party

Judgment:

30 April 2015

JUDGMENT OF M PETERS J

This judgment was delivered by Justice Peters on 30 April 2015 at 5.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date: ...................................

Solicitors: Heaney & Partners, Auckland Lee Salmon Long, Auckland McElroys, Auckland

SWINDLE v WITHERS [2015] NZHC 888 [30 April 2015]

Introduction

[1] This case arises from advances that the Plaintiffs made to four companies

(“Vintage companies”) in 2008 and 2009. The principal advanced totalled

$3,000,000 and some $2,620,000 of it, leaving aside interest, has not been repaid.

[2] The First Plaintiffs are the trustees of the Swindle Family Trust (“trustees”). The Second Plaintiff (“Aorangi”) is a company wholly owned or controlled by the trustees. The Third Plaintiff (“Orakei”) is a subsidiary or at least a related company of GTF Capital Limited (“GTF”).

[3] The Defendant (“Mr Withers”) is an accountant in private practice. The

Third Party (“Zurich”) is Mr Withers’ insurer.

[4] The Plaintiffs’ claim is for losses they contend they suffered as a result of Mr Withers’ failure to honour undertakings he gave prior to the funds being advanced. Those undertakings were:1

I confirm that I have been irrevocably appointed until at least the time of repayment of each loan by [borrowers], as a mandatory joint signatory to the costs account.
Further, I confirm that the costs account will be utilised solely to meet the production costs specified in the costs schedule.

[5] There was some dispute at trial about the meaning of the statements made. If they mean, as I consider they do, that pending repayment Mr Withers would be required to sign every cheque drawn on the costs accounts, and that the funds in that account would be applied only to meet the production costs specified, they were false.

[6] Mr Withers was not a signatory, let alone a mandatory signatory, to the costs account. Moreover, instead of retaining the funds advanced by the Plaintiffs and applying them to the costs of production as they arose, each Vintage company immediately transferred them to related companies, Matakana Estate Limited and
Goldridge Estate Limited (“Matakana” and “Goldridge”), these transfers apparently

1 Letter Withers Tsang & Co Ltd to Orakei Securities Ltd dated 27 March 2008, Vol 1 at 332.

being recorded in each companies’ ledger as a loan by the Vintage company to the

recipient.

[7]…

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 Swindle v Withers

Details

AGLC: Swindle v Withers [2015] NZHC 888
Case: [2015] NZHC 888
Decision Date: 30 April 2015

CaseChat Overview and Summary

This case involves claims by the trustees of the Swindle Family Trust and Aorangi Forests Limited against Mark Withers for losses they claim to have suffered as a result of his failure to honour certain undertakings he provided before funds were advanced to the Vintage companies. The claims are brought pursuant to the Fair Trading Act 1986 (FTA) and in negligence, for negligent misstatement. The third plaintiff, Orakei Securities Limited, joined the proceedings and brings its claims only to the extent that the claims by the trustees and Aorangi do not succeed. The defendants, Mark Withers and Zurich Australian Insurance Limited, Withers' insurer, opposed the claims. The High Court found in favour of the trustees and Aorangi in respect of their claims under the FTA, although the court found that the plaintiffs contributed to their loss. The court found that Mr Withers breached his undertakings and that his conduct was an effective cause of the loss suffered by the plaintiffs. The court also found that the plaintiffs failed to take reasonable care to look after their own interests, and that their failure contributed to their loss. The court held that Mr Withers is entitled to indemnity under the policy in respect of his liability to the trustees and Aorangi under the FTA. The court ordered the defendant to pay the trustees and Aorangi a sum equivalent to 50 per cent of their loss. The court reserved leave to apply if any issues arise as to the calculation of the sum due.

Orders