Viand Holdings Limited v Leonard - [2021] NZHC 1675

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-542

[2021] NZHC 1675

BETWEEN
VIAND HOLDINGS LIMITED

Plaintiff / Counterclaim Defendant

AND

DOUGLAS JOHN LEONARD and ROBERT RICHARD KORNMAN

Defendants / Counterclaim Plaintiffs

Hearing: 11 February 2021

Appearances:

NR Frith and Ms HO Meikle-Downing for the Applicant/Defendants

Ms AE Hansen for the Respondent/Plaintiff

Judgment:

6 July 2021

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 6 July 2021 at 4.30pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Heimsath Alexander, Auckland MinterEllisonRuddWatts, Auckland

VIAND HOLDINGS LIMITED v LEONARD & ANOR [2021] NZHC 1675 [6 July 2021]

Introduction

[1] The defendants, Mr Leonard and Mr Kornman, apply for summary judgment or, in the alternative, orders striking out Viand’s claim.

[2]Summary judgment is sought on the following basis:

(a)the first cause of action must fail because the defendants did not breach their contractual obligation to carry on the business of the companies in the usual and ordinary course and as a going concern and in substantially the same manner as it had done to date;

(b)the fourth cause of action must fail because even if there was a failure to maintain records as required, the plaintiff did not suffer any loss;

(c)if the above claims cannot proceed, the remaining second and third causes of action cannot meet the aggregate threshold of $100,000 required by the share sale agreement between the parties before a claim is brought.

[3] In the alternative, the defendants seek to strike out the first and fourth causes of action, again relying on the result that the remaining causes of action will not be able to meet the aggregate threshold of $100,000, and so will not be able to proceed.

[4] Summary judgment by defendants must be sought either at the time the statement of defence is served on the plaintiff, or, if later, only with the leave of the Court. The defendants failed to file their application at the same time as the statement of defence. Leave is therefore required.

[5] After setting out a brief summary of the proceeding, I will determine three issues:

(a)Should leave be granted?

(b)If so, have the defendants met the high bar that the parties accept is necessary for summary judgment by a defendant?

(c)If not, is the result the same for the defendants’ application to strike out?

Background

[6] The plaintiff, Viand Holdings Ltd (“Viand”) is suing the defendants, Mr Douglas Leonard and Mr Richard Kornman, for alleged breaches of a share sale agreement dated 1 March 2019 (“SSA”) relating to Leonard’s Superior Smallgoods Ltd, KLP Properties Ltd and Father’s Holdings Ltd (together, “Leonards”).

[7] Prior to completion of the share sale on 1 April 2019 (“Completion”), the defendants were the directors and shareholders of Leonards.

[8] The plaintiff settled the purchase of 100 per cent of the shares in Leonards under the SSA on 1 April 2019.

[9] On 27 March 2020, the…

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 Viand Holdings Limited v Leonard

Details

AGLC: Viand Holdings Limited v Leonard [2021] NZHC 1675
Case: [2021] NZHC 1675
Decision Date: 6 July 2021

CaseChat Overview and Summary

Viand Holdings Limited filed proceedings against Mr Leonard and Mr Kornman in relation to the sale of Leonard's Superior Smallgoods Ltd, KLP Properties Ltd and Father's Holdings Ltd under a Share Sale Agreement dated 1 March 2019. Viand's Statement of Claim included four causes of action. The defendants filed a Statement of Defence and a Counterclaim, and later applied for leave to apply for summary judgment and/or strike out the plaintiff's claim. The Court was required to determine whether leave should be granted, whether the defendants had met the high bar that the parties accept was necessary for summary judgment, and whether the result would be the same for the defendants' application to strike out. The Court held that leave should not be granted as the delay in filing was not satisfactorily explained, and there was a real risk of a miscarriage of justice in determining the proceedings summarily. The Court also held that the defendants had not met the high bar for summary judgment as there were disputed issues of material fact in the first, second and fourth causes of action. The Court found that the result would be the same for the defendants' application to strike out, as a strike out application is usually based on the pleadings alone and affidavit evidence was being used to resolve questions of fact. The applications for leave to apply for summary judgment, summary judgment and strike out of the plaintiff's claim were dismissed.

Orders