HOUGHTON AND ANOR V SAUNDERS AND ORS HC CHCH CIV-2008-409-000348

HOUGHTON AND ANOR V SAUNDERS AND ORS HC CHCH CIV-2008-409-000348

The Court held the representative order should be limited to the first plaintiff's IPO claims (buying on the IPO date) and the opt-out direction should be rescinded and replaced with an opt-in procedure; claims in negligence and for breach of fiduciary duty brought by the second plaintiff (post-IPO purchasers) are struck out as disclosing no reasonable cause of action; the JAFL funding agreement is champertous but does not presently amount to an abuse of process warranting a stay; applications for further particulars are adjourned and security for costs deferred until class composition is fixed.

Citation
openlaw-9e0964d0_a90e_468a_9af5_f955804db069.pdf
Parties
First Plaintiff: Eric Meserve Houghton; Second Plaintiff: Darryl Alexander Jones; First Defendant: Timothy Ernest Corbett Saunders; First Defendant: Samuel John Magill; First Defendant: John Michael Feeney; First Defendant: Craig Edgeworth Horrocks; First Defendant: Peter David Hunter; First Defendant: Peter Thomas; First Defendant: Joan Withers; Second Defendant: Credit Suisse Private Equity Inc (formerly Credit Suisse First Boston Private Equity Inc); Third Defendant: Credit Suisse First Boston Asian Merchant Partners LP; Fourth Defendant: First New Zealand Capital; Fifth Defendant: Forsyth Barr Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
7 October 2008
Procedural Posture
Representative Shareholder Proceeding (prospectus/security/fair Trading) / Interlocutory Applications (direction Review, Strike Out, Stay for Champerty, Particulars, Security for Costs)
Outcome
Interlocutory applications partially allowed and partially dismissed: representative order amended and limited to IPO group with opt-in; second plaintiff's negligence and fiduciary claims struck out; stay on grounds of champerty dismissed; further particulars adjourned; security for costs deferred; costs to lie...
Legal Topics
Representative Proceedings/class Actions, Prospectus Liability, Negligent Misstatement, Opt in Vs Opt Out Procedure, Security for Costs, Strike Out Jurisdiction R186, Champerty/maintenance, S37 A/s56 Securities Act, S5 a Fair Trading Act Amendment
Securities Law Fair Trading Act Company Law Tort (negligence) Equity (fiduciary Duty) Civil Procedure Maintenance and Champerty/litigation Funding Representative Proceedings/class Actions +8 more

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Parties

Eric Meserve Houghton

First Plaintiff

Darryl Alexander Jones

Second Plaintiff

Timothy Ernest Corbett Saunders

First Defendant

Samuel John Magill

First Defendant

John Michael Feeney

First Defendant

Craig Edgeworth Horrocks

First Defendant

Peter David Hunter

First Defendant

Peter Thomas

First Defendant

Joan Withers

First Defendant

Credit Suisse Private Equity Inc (formerly Credit Suisse First Boston Private Equity Inc)

Second Defendant

Credit Suisse First Boston Asian Merchant Partners LP

Third Defendant

First New Zealand Capital

Fourth Defendant

Forsyth Barr Limited

Fifth Defendant

Procedural Posture

Representative Shareholder Proceeding (prospectus/security/fair Trading) / Interlocutory Applications (direction Review, Strike Out, Stay for Champerty, Particulars, Security for Costs)

Legal Issues

  1. 1 Validity of representative order under High Court Rules r78
  2. 2 Appropriateness of opt-out procedure versus opt-in
  3. 3 Whether reliance must be proved individually for Securities Act, Fair Trading Act and negligence claims

Ratio Decidendi

The Court held the representative order should be limited to the first plaintiff's IPO claims (buying on the IPO date) and the opt-out direction should be rescinded and replaced with an opt-in procedure; claims in negligence and for breach of fiduciary duty brought by the second plaintiff (post-IPO purchasers) are struck out as disclosing no reasonable cause of action; the JAFL funding agreement is champertous but does not presently amount to an abuse of process warranting a stay; applications for further particulars are adjourned and security for costs deferred until class composition is fixed.

Court Disposition

Interlocutory applications partially allowed and partially dismissed: representative order amended and limited to IPO group with opt-in; second plaintiff's negligence and fiduciary claims struck out; stay on grounds of champerty dismissed; further particulars adjourned; security for costs deferred; costs to lie...

Orders

  • Representative order amended to permit only first plaintiff Eric Meserve Houghton to sue in representative capacity for shareholders who purchased shares in the IPO on 4 June 2004 and suffered loss
  • Parts of Associate Judge's order providing for an opt-out procedure rescinded and replaced with an opt-in procedure; qualifying shareholders to advise Court they consent to be part of proceeding by 19 December 2008 (consent form to be prepared and include funding options)