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Walker v Forbes

Walker v Forbes

Case [2017] NZHC 1212 6 June 2017

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Commercial Law

Insolvency Law

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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-2486 [2017] NZHC 1212

UNDER the Companies Act 1993

IN THE MATTER

of the liquidation of Property Ventures Limited (in receivership and in liquidation)

BETWEEN

ROBERT BRUCE WALKER AND JOHN MARSHALL SCUTTER

First Plaintiffs

PROPERTY VENTURES LIMITED (in liquidation)

Second Plaintiff

FIVE MILE HOLDINGS LIMITED (in receivership and in liquidation) Third Plaintiff

CASHEL VENTURES LIMITED Fourth Plaintiff

TAY VENTURES LIMITED

(in receivership and in liquidation) Fifth Plaintiff

LIVINGSPACE PROPERTIES LIMITED (in receivership and in liquidation)

Sixth Plaintiff

BEECHNEST VENTURES LIMITED (in liquidation)

Seventh Plaintiff

TUAM VENTURES LIMITED

(in receivership and in liquidation) Eighth Plaintiff

CASTLE STREET VENTURES LIMITED

(in receivership and in liquidation) Ninth Plaintiff

WALKER v FORBES [2017] NZHC 1212 [6 June 2017]

LICHFIELD VENTURES LIMITED

(in receivership and in liquidation) Tenth Plaintiff

92 LICHFIELD LIMITED

(in receivership and in liquidation) Eleventh Plaintiff

ST ASAPH VENTURES LIMITED (in liquidation)

Twelfth Plaintiff

MONTECRISTO CONSTRUCTION COMPANY LIMITED

(in liquidation) Thirteenth Plaintiff

AND

AUSTIN JOHN FORBES First Defendant

ALISTER SPEDDING JOHNSTON Second Defendant

GORDON LEWIS HANSEN Third Defendant

DAVID IAN HENDERSON (a bankrupt) Fourth Defendant

ADOLF de ROOS Fifth Defendant

DANIEL JAMES GODDEN Sixth Defendant

PwC (sued as a firm) Seventh Defendant

VERO LIABILITY INSURANCE Third Party

Hearing 8 and 9 May 2017

Appearances:

JBM Smith QC and N R Williams for Plaintiffs
A C Hughes-Johnson QC and W Palmer for First Defendant
J Moss for Second and Sixth Defendants
R W Raymond QC and A L Sherriff for Third Defendant
D Lester and C Child for Fourth Defendant
M J Wallace for Fifth Defendant
B D Gray QC, P M Fee and R M Stewart for Seventh Defendant

Judgment:

6 June 2017

JUDGMENT OF LANG J

[on application by defendants for order

requiring plaintiffs to provide security for costs]

This judgment was delivered by me on 6 June 2017 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

INDEX

The amounts for which security is sought..........................................................[4] Jurisdiction .........................................................................................................[12] Is there reason to believe the plaintiffs will be unable to pay the defendants’ costs if the claim is unsuccessful? .....................................................................[14] How should the discretion be exercised?..........................................................[17] The involvement of a litigation funder ...............................................................[18]
Background [18] The litigation funding arrangement in this case [21] Litigation funders: relevant principles [24] The arguments [27] Decision [30] The merits of the plaintiffs’ claims [35] Approach [35] Summary of the claims [40] The claims against PWC [41] The claims against the directors [56]
Trading whilst insolvent [57] Permitting Mr Henderson to use PVL to serve his own interests [59] The positions of individual defendants [62] Conclusion [68] Conclusion ...........................................................................................................[71] The offers made by the plaintiffs ......................................................................[73] What level of security should the plaintiffs be required to provide? ............[81] The defendants other than Mr Henderson [81] Mr Henderson [97] When should the plaintiffs be required to provide security? .......................[102] Should the proceeding be stayed pending provision of security? ................[103]

Orders................................................................................................................[105]

Costs ..................................................................................................................[106]

[1] This proceeding arises out of the collapse…

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 Walker v Forbes

Details

AGLC: Walker v Forbes [2017] NZHC 1212
Case: [2017] NZHC 1212
Decision Date: 6 June 2017

CaseChat Overview and Summary

This case concerns the liquidators of a group of companies that went into liquidation following the 2008 global financial crisis. The liquidators, as plaintiffs, sued the former directors of the companies for $302 million. They also sued PricewaterhouseCoopers, the auditor of the companies, for the same sum. The defendants applied for the plaintiffs to provide security for their costs in the event that the plaintiffs were unsuccessful at trial. The Court was required to determine whether there was reason to believe the plaintiffs would be unable to pay the defendants’ costs if the claim was unsuccessful. The Court was also required to consider the merits of the plaintiffs’ claims and whether the involvement of a litigation funder should have any bearing on the decision. The Court held that, in light of the involvement of a litigation funder, it was appropriate to make a substantial order for security for costs. The merits of the claims were largely a neutral factor. The Court ordered that the plaintiffs provide security in the sum of $2.63 million for the costs of the defendants other than Mr Henderson, and $150,000 for Mr Henderson’s costs. Security in the sum of $1.5 million was to be provided by 31 July 2017 and the balance by 15 October 2017. The proceeding was not to be stayed pending provision of security.

Orders