BALLANTYNE TRUSTEES LTD & ORS AS TRUSTEES OF THE GBR TRUST and KEUNG v GBR INVESTMENT LIMITED & ORS [2017] NZHC 435

BALLANTYNE TRUSTEES LTD & ORS AS TRUSTEES OF THE GBR TRUST and KEUNG v GBR INVESTMENT LIMITED & ORS [2017] NZHC 435 [14 March 2017]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2015-409-000157[2017] NZHC 435UNDER the Contractual Remedies Act 1979BETWEEN BALLANTYNE TRUSTEES LIMITEDAVERILL NOELINE HEADCALMWATER ENTERPRISES PTYLIMITED AND SENG BOU KEUNG ASTRUSTEES OF THE GBR TRUSTFirst PlaintiffsSENG BOU KEUNGSecond PlaintiffAND GBR INVESTMENT LIMITEDFirst DefendantGRIGORI NIKOLAYEVICHKOULANOVSecond DefendantNIKOLAI KOULANOV and NATALIAKOULANOVThird DefendantsTHEODOROS INVESTMENTSLIMITEDFourth DefendantHearing: 20 February 2017Appearances: S V A East and R D H Massey for PlaintiffsA J Forbes QC and K-M M Paterson for DefendantsJudgment: 14 March 2017JUDGMENT OF ASSOCIATE JUDGE MATTHEWSIntroduction[1] This case stems from complex business arrangements made by the plaintiffs and the defendants commencing in 2007. Sometime after these arrangements were entered into the defendants, the Koulanov family, fell out with the third plaintiff, Mr Keung. Litigation ensued, and two of the outcomes were the liquidation of a company in which the plaintiffs and the Koulanov family had shareholdings, Goose Bay Ranch Holdings Limited (GBRH), and the bankruptcy of Mr Keung. In this proceeding the plaintiffs seek to recover from the Koulanov family losses that they say various actions by the Koulanov family have caused them, both before and during the proceeding to liquidate GBRH.[2] The proceeding was filed on 27 March 2015. An amended statement of claim (ASOC) was filed on 29 August 2016. The defendants apply to strike out all the causes of action.Principles applying to applications to strike out[3] Rule 15.1 of the High Court Rules provides:Dismissing or staying all or part of proceeding(1) The court may strike out all or part of a pleading if it –(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or(b) is likely to cause prejudice or delay; or(c) is frivolous or vexatious; or(d) is otherwise an abuse of the process of the court.(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.(4) This rule does not affect the court's inherent jurisdiction.[4] When an application is made on the grounds that there is no reasonably arguable cause of action the principles to be applied are those enunciated by theCourt of Appeal in Attorney-General v Prince and Gardner,1 and the Supreme Court in Couch v Attorney-General:2(a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.(b) The cause of action or defence must be clearly untenable. InCouch Elias CJ and Anderson J, at [33], said:It is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed.(c) The jurisdiction is to be exercised sparingly, and only in clearcases. This reflects the Court's reluctance to terminate a claim or defence short of trial.(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.(e) The Court should be particularly slow to strike out a claim in any developing area of the law, perhaps particularly where a duty of care is alleged in a new situation.[5] Where it is alleged that a proceeding, or specific causes of action within it, are statute-barred the Court is to approach the matter in accordance with the principles in Matai Industries Ltd v Jensen,3 and Murray v Morel & Co Ltd.4 InMurray v Morel & Co Ltd Tipping J said:[33] I consider the proper approach, based essentially on Matai, is that in order to succeed in striking out a cause of action as statute-barred, the defendant must satisfy the court that the plaintiff's cause of action is soclearly statute-barred that the plaintiff's claim can properly be regarded asfrivolous, vexatious or an abuse of process. If the defendant demonstratesthat the plaintiff's proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act, the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable case for an extension or postponement which would bring the claim back within time.[34] In the end the judge must assess whether, in such a case, the plaintiff has presented enough by way of pleadings and particulars (and evidence, if the plaintiff elects to produce the evidence), to persuade the court that what might have looked like a claim which was clearly subject to a statute bar is not, after all, to be viewed in that way, because of a fairly arguable claim for1 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA).2 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725.3 Matai Industries Ltd v Jensen[1989] 1 NZLR 525 (HC) at 532.4 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.extension or postponement. If the plaintiff demonstrates that to be so, the court cannot say that the plaintiff's claim is frivolous, vexatious or an abuseof process. The plaintiff must, however, produce something by way of pleadings, particulars, and, if so advised, evidence, in order to give an air of reality to the contention that the plaintiff is entitled to an extension or postponement which will bring the claim back within time. The plaintiff cannot, as in this case, simply make an unsupported assertion in submissions that s 28 [of the Limitation Act 1950] applies. A pleading of fraud should, of course, be made only if it is responsible to do so.The issues[6] There are nine issues to be decided:1. Should the proceeding be struck out in relation to all claims against Mrs Natalia Koulanov?2. Should the pleading be struck out as it was not served as soon as practicable after it was filed?3. Should all or any of the causes of action, apart from a claim in defamation, brought by Mr Keung in his personal capacity, as second plaintiff, be struck out as a consequence of his having been declared bankrupt on 20 September 2010?4. Are any or all of the causes of action in the statement of claim (SOC) and the amended statement of claim (ASOC) barred by the provisions of the Limitation Act 1950?55. Should the causes of action which allege breach of fiduciary duty be struck out as the alleged duties are not owed?6. Should all or any part of the cause of action in defamation be struck out for reasons other than those discussed in relation to the first, third and fourth issues?7. Does s 174 of the Companies Act apply to the acts relied on by the plaintiffs in the second cause of action?8. Should the SOC be struck out as an abuse of process?5 It is common ground that it is the Limitation Act 1950 which applies to this proceeding.9. Should the proceeding be dismissed?[7] The case for the applicants includes the argument that some causes of action should be struck out for more than one reason. The issues listed are derived from all the grounds argued but some require less attention as a consequence of decisions reached on others.[8] The ASOC follows an unusual form, describing each of the nine causes of action by reference to the defendants against whom all plaintiffs bring their case. For ease of reference during argument the nine causes of action were notionally numbered and referred to numerically. The same process is followed in this judgment.First issue: Should the proceeding be struck out in relation to all claims against Mrs Natalia Koulanov?[9] It is common ground that Mrs Koulanov has not been served with this proceeding. It was served on her husband but she was not present at the time this took place. A statement of defence was filed to the SOC which refers to thedocument being on behalf of all of "the defendants". It raises a limitation as an affirmative defence and also refers to r 5.72 of the High Court Rules, pleading that in breach of that rule the SOC and notice of proceeding have not been validly served, or served as soon as practicable after filing on 27 March 2015. It states that notwithstanding the failure of the plaintiffs to validly serve the SOC and notice of proceeding, the statement of defence has been filed to prevent any subsequent steps being taken by the plaintiffs without notice which might be contrary to the interests of the defendants. The defendants expressly reserved their position in relation to service and whether this proceeding can or should proceed.[10] The statement of defence to the First Amended Statement of Claim does not contain this pleading, and states that all defendants defend the proceeding. However, it was filed and served at the same time as this application to strike out, and states:This statement of defence is filed notwithstanding the affirmative defences set out above and the strike out application that accompanies this statementof defence, to preserve the defendants' position pending the determination ofthe strike out application.[11] Rule 5.70(1) provides:Service generally(1) Except as otherwise provided by any Act or these rules or an order made under these rules, a statement of claim and notice of proceeding must be served –(a) on every defendant named in it; and(b) on every other person directed to be served with it.[12] Rule 5.71(1) provides:Personal service required(1) Except when the court directs or these rules require or permit a different mode of service, the statement of claim and notice of proceeding must be served personally.[13] There is no suggestion that there is any Act or any rule which provides that this proceeding need not have been served on Mrs Koulanov personally.[14] Ms East for the plaintiffs argues that an order can be made curing what she describes as a defect, under r 1.9. This provides, to the extent relevant:Amendment of defects and errors(1) The court may, before, at, or after the trial of any proceeding, amend any defects and errors in the pleadings or procedure in the proceeding, whether or not there is anything in writing to amend, and whether or not the defect or error is that of the party (if any) applying to amend.(2) The court may, at any stage of a proceeding, make, either on its own initiative or on the application of a party to the proceedings, any amendments to any pleading or the procedure in the proceeding that are necessary for determining the real controversy between the parties.[15] Ms East argues that the fact that Mrs Koulanov has not been served is a defect or error in procedure and that an amendment is necessary for determining the real controversy between the parties.[16] Ms East was unable to cite any case where this rule has been applied to the service of a civil proceeding on a defendant. She cited Timbalok NZ Ltd v Sky-Hi Roofing Ltd,6and Kirton v Prospecdev Holdings Ltd,7as authority for the proposition6 Timbalok NZ Ltd v Sky-Hi Roofing Ltd (1996) 10 PRNZ 271 (HC).that the rule applies to service of statutory demands under the Companies Act. InKirton the Court described the issue taken in that case with service of the statutorydemand as a "somewhat technical and procedural objection" and the Court said thatthis defect would work substantial injustice to the plaintiffs unless cured by an order under the then equivalent of r 5.71.8[17] However, in my opinion, these cases can be distinguished. First, the purpose of serving a statutory demand under the Companies Act is to create a presumption of insolvency if it is not met. That in turn establishes a ground on which an order for liquidation may be made, unless the presumption is rebutted. A civil proceeding is altogether different. It commences a claim against a defendant which, if not served, has the potential for entry of judgment against that defendant without the defendant having notice that the proceeding exists.[18] Secondly, r 191 of the Companies (Winding-up) Rules 1956 gives the Court specific power to correct a defect in procedure under the Companies Act, which is broader than that in r 5.71. This rule provides:... no proceedings under the [Companies Act] or the Rules shall be invalidated by ... any irregularity ... unless the court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court.[19] The issues for determination by the Court when considering an application to cure a defect in service of a statutory demand are therefore materially different from the issues before the Court in relation to non-service on Mrs Koulanov. I find the cases cited by counsel for the plaintiffs to be distinguishable. I have also been unable to locate any case in which a lack of service of a civil proceeding has been avoided by an order under r 1.9.[20] The reference in r 5.70 to "an order made under these Rules" applies to thosecircumstances identified in the Rules where personal service may be dispensed with by order of the Court. Rule 6.8 provides for substituted service:7 Kirton v Prospecdev Holdings Ltd (1990) 2 PRNZ 412.8 At 415.6.8 Substituted serviceIf reasonable efforts have been made to serve a document by a method permitted or required under these rules, and either the document has come to the knowledge of the person to be served or it cannot be promptly served, the court may –(a) direct –(i) that instead of service, specified steps be taken that are likely to bring the document to the notice of the person to be served; and(ii) that the document be treated as served on the happening of a specified event, or on the expiry of a specified time;(b) when steps have been taken for the purpose of bringing, or which have a tendency to bring, the document to the notice of the person on whom it is required to be served, direct that the document be treated as served on that person on a specified date;(c) subject to any conditions that the court thinks just to impose, dispense with service of a document on a person and give to the party by whom the document is required to be served leave to proceed as if the document had been served.[21] In this case, if reasonable efforts had been made to serve Mrs Koulanov without success an order could have been made, on application, if it could have been shown either that the statement of claim and notice of proceeding had come to her attention or that they could not be promptly served. It is too late now for an application to be made without leave as r 5.72(2) imposes a time limit of 12 months for service, after the date of filing.[22] I conclude that personal service on Mrs Koulanov was required, and that as it did not take place, the proceeding is to be treated as having been discontinued against her, under r 5.72(2). Accordingly, the third cause of action against Natalia Koulanov in the SOC, and the causes of action against her in the ASOC, are struck out. These are the third (a cause of action in defamation), the fifth (a cause of action in negligent misstatement), the sixth (a cause of action in promissory estoppel) and the seventh (a cause of action for breach of fiduciary duty).Second issue: Should the pleading be struck out as it was not served as soon as practicable after it was filed?[23] Rule 5.72(1) of the High Court Rules provides that a statement of claim and notice of proceeding must be served as soon as practicable after they are filed. Asnoted, the SOC and the notice of proceeding which commenced this case were filed on 27 March 2015. They were served on the first and fourth defendants on 4 December 2015 and on the first-named third defendant, Nikolai Koulanov on either 10 or 11 December 2015. They were served on the second defendant, Grigori Koulanov on 14 December 2015. Thus the documents were not served until over eight months after they were filed.[24] Rule 5.72 does not prescribe a specific sanction for failure to comply with this mandatory direction.[25] In Minister of Education v Warren & Mahoney Architects Ltd, the Court saidthat "as soon as practicable" envisages that there may be difficulties in service suchas defendants being overseas or difficult to locate.9 The Court said that the word"practicable" indicates that feasibility is to be considered, and found that a delay of over four months in serving the proceeding, when earlier service was feasible, was not service which complied with r 5.72(1).[26] In Body Corporate 348047 v Auckland Council, the statement of claim was filed on 24 October 2013, and an amended statement of claim was filed on 20 August 2014, before service of the initial claim.10 The SOC was served at the same time as the ASOC. On an application to strike out, the Court found that the original statement of claim amounted to an abuse of process. In addition to defects in the pleading it was not promptly served, though it was practicable to have done so. The Court considered the effect of non-compliance with r 5.72. In the absence of any sanction in that rule, the Court found that the position must be considered interms of either r 1.5 or r 15.1, or the Court's inherent jurisdiction.[27] Rule 15.1 is the rule under which the present application for strike out is brought. Rule 1.5 contains a further sanction for non-compliance with the Rules. To the extent relevant to the present case, it provides:Non-compliance with rules(1) A failure to comply with the requirements of these rules –9 Minister of Education v Warren & Mahoney Architects Ltd [2015] NZHC 2724 at [19].10 Body Corporate 348047 v Auckland Council [2014] NZHC 2971.(a) must be treated as an irregularity; and(b) does not nullify –(i) the proceeding; or(ii) any step taken in the proceeding; or(iii) any document, judgment, or order in the proceeding.(2) Subject to subclauses (3) and (4), the court may, on the ground that there has been a failure to which subclause (1) applies, and on any terms as to costs or otherwise that it thinks just, -(a) set aside, either wholly or in part, -(i) the proceeding in which the failure occurred; or(ii) any step taken in the proceeding in which the failure occurred; or(iii) any document, judgment, or order in the proceeding in which the failure occurred; or(b) Exercise its powers under these rules to allow any amendments to be made and to make any order dealing with the proceeding generally as it thinks just.(3) (4) The court must not set aside any proceeding or any step taken in a proceeding or any document, judgment, or order in any proceeding on the ground of a failure to which subclause (1) applies on the application of a party unless the application is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.[28] In Body Corporate 348047 the Court found that the original statement of claim was to be treated as a nullity. Mr Forbes for the defendants says the same should occur in this case because the statement of claim was filed on the six year anniversary of the filing of the application for appointment of liquidators and interim liquidators, so arguably on the last possible day for limitation purposes,11 it was not served as soon as practicable after it was filed, and it was defective. Therefore it was an abuse of process and issued for an improper motive, namely to save the claim from the consequences of a limitation defence. He notes that in Body Corporate 348047, Faire J said:12The proceeding was clearly brought to save a claim from the consequences of a limitation defence. When I look at what was in that document and what it notified, I reach a conclusion that it was clearly an abuse of the rules of the court which was highly prejudicial and was issued for an improper motive,11 Limitation issues are fully discussed as the fifth issue.12 At [50].namely to bring a case inside a limitation period when the case is known to the party pleading to have no notified, particularised foundation for the allegations made.[29] Mr Forbes says that the proceeding should be set aside under r 1.5(2) or alternatively struck out under r 15.1 as an abuse of process.[30] The considerable delays in service are not explained on any convincing basis. Service could have been effected on the first and fourth defendants within a matter of days as they are registered companies with registered offices in Christchurch. All three members of the Koulanov family have addresses in Christchurch. Whilst Mr Grigori Koulanov did go overseas after the document was filed, this was not until 28 May 2015 so there was a period of two months in which he could have been served before he left. Mrs Natalia Koulanov has not been served at all.[31] Mr Keung seeks to cast responsibility for the delay in service on the unavailability of documents required for initial disclosure. There is no merit in that suggestion. This is evident from r 8.4(1) and (2):Initial disclosure(1) After filing a pleading, a party must, unless subclause (2) applies, serve on the other parties, at the same time as the service of that pleading, a bundle consisting of –(a) all the documents referred to in that pleading; and(b) any additional principal documents in the filing party's controlthat that party has used when preparing the pleading and on which that party intends to rely at the trial or hearing.(2) A party need not comply with subclause (1) if –(a) the circumstances make it impossible or impracticable to comply with subclause (1); and(b) a certificate to that effect, setting out the reasons why compliance is impossible or impracticable, and signed by counsel for that party, is filed and served at the same time as the pleading.[32] From this it will be noted that the documents of which initial disclosure are required are documents referred to in the pleading and additional principaldocuments which are in the filing party's control that have been used when preparingthe pleading and on which there will be reliance at trial. It is obvious from this thatdocuments which were not in the plaintiffs' control at the time of filing need not have been disclosed. Further, to the extent that any documents that are referred to in the pleading were not then available, sub-paragraph (2) sets out a procedure which could and should have been followed. Thus, reference to documents which are unavailable due to the Christchurch earthquakes, as claimed by Mr Keung, could have been the subject of a certificate. This option was not invoked.[33] Mr Keung claims that the defendants were informed of the proceeding havingbeen filed, before service. Mr Grigori Koulanov denies this. Even if Mr Keung'sassertion is accepted for present purposes, that is no substitute for service, and it begs the question of why there could be communication with the defendants at an earlier date, but not service promptly after filing.[34] I find that the plaintiffs are in breach of the mandatory requirement to serve the SOC and notice of proceeding as soon as practicable under r 5.72(1). There ismerit, too, in Mr Forbes' wider submission referred to at [28] and [29]. I refer to thisin more detail in discussion of the eighth and ninth isues, and confine the decision on the present issue to the consequence of service in breach of r 5.72(1).[35] Rule 1.5(4) prevents the Court from taking the step sought by Mr Forbes, setting aside the proceeding, by reason of delay in service. The rule provides that an application to set the proceeding aside must be made within a reasonable time and before the applicant has taken any fresh step after becoming aware of the irregularity. Rather than applying to set the proceeding aside, the applicants served a notice requiring the provision of further particulars, and a statement of defence, albeit with a reservation of rights. Mr Forbes argues that the reservation of rights protects thedefendants' position. A similar submission was made in Minister of Education v Warren & Mahoney Architects Ltd. The Court said:13That ignores the text of r 1.5(4). Filing and serving documents on a "withoutprejudice" basis or while reserving rights does not amount to filing a settingaside application under r 1.5(2). It is equivocal. "Without prejudice" and "reserving rights" do no more than announce that a party may at a later stageadopt a certain position, and steps being taken now are not a waiver of that13 Minister of Education v Warren & Mahoney Architects Ltd, above n 9 at [41].position. They may accordingly postpone the time when a party decides whether to pursue the reserved step or position. Rule 1.5(4) does not, however, allow such deferral. Unless the other parties consented, [the defendant] had to apply to set aside the proceeding before taking any other steps. It could not leave to a later date its decision whether to apply to set aside. It cannot escape that by purporting to reserve its position or by filingdocuments on a "without prejudice" basis. Because it took other steps in the proceeding after it was aware of the irregularity, [the defendant] is barred under r 1.5(4) from applying to set aside Warren and Mahoney's proceeding.[36] I respectfully agree with this decision. The Court is therefore prevented from making the order under r 1.5 which the defendants seek, for breach of r 5.72(1).Third issue: Should all or any of the causes of action, apart from a claim in defamation, brought by Mr Keung in his personal capacity, as second plaintiff, be struck out as a consequence of his having been declared bankrupt on 20 September 2010?[37] Section 101 of the Insolvency Act 2006 provides:Status of bankrupt's property on adjudication(1) On adjudication, –(a) all property (whether in or outside New Zealand) belonging to the bankrupt or vested in the bankrupt vests in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and(b) the powers that the bankrupt could have exercised in, over, or in respect of any property (whether in or outside New Zealand) forthe bankrupt's own benefit vest in the Assignee.(2) This section is subject to section 104.[38] Section 104 provides that property held by the bankrupt in trust for another person does not vest in the Assignee.[39] Mr Keung, who sues as the fourth-named first plaintiff in his capacity as a trustee, and the second plaintiff in his personal capacity, was adjudicated bankrupt on 20 September 2010. It is common ground that all the causes of action he brings in this case arose before that date. To the extent that they are within the terms of s 101, the causes of action therefore vested in the Official Assignee. This is because they are within the definition of property in s 3 of the Insolvency Act:Property of every kind, whether tangible or intangible, real or personal, corporeal or incorporeal, and includes rights, interests and claims of every kind in relation to property however they arise.[40] Rights of action that are personal to a bankrupt do not vest in the Official Assignee. In Heath v Tang, Hoffman LJ noted:14These include cases in which the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind or character and without immediate reference to his rights of property ... Actions for defamation and assault are obvious examples. The bankruptcy does not affect his ability to litigate such claims ...[41] The SOC does not include a cause of action in defamation. This cause of action was first pleaded in the ASOC. It is the third, described as a cause of action against GBRI and the second and third defendants. This cause of action is brought, as all the causes of action are, by all the plaintiffs. Mr Forbes accepts that Mr Keung may bring the third cause of action in his personal capacity under the principle inHeath v Tang, and all the causes of action in his capacity as a trustee, under s 104.[42] However, Mr Keung personally is a plaintiff in all the other eight causes of action, all of which arose before Mr Keung was adjudicated bankrupt and therefore all of these causes of action, so far as they are brought in his personal capacity as second plaintiff, vested in the Official Assignee and cannot now be brought by him.[43] All the causes of action by Mr Keung as second plaintiff, save only for the third, are struck out.Fourth issue: Are any or all of the causes of action in the statement of claim (SOC) and the amended statement of claim (ASOC) barred by the provisions of the Limitation Act?[44] In the ASOC the plaintiffs plead that on 27 March 2009 the first defendant, GBRI, applied to the High Court at Christchurch without notice for an order that interim liquidators be appointed to GBRH on the basis that there had been a breakdown in personal relationships between the shareholders.14 Heath v Tang [1993] 4 All ER 694 (CA) at 697.[45] On 31 March 2009 the High Court made an order appointing interim liquidators. On 27 November 2009, after a defended application, the High Court placed GBRH into liquidation. In April 2010 costs were awarded against Mr Keung and in May the High Court declined a stay of the costs order, as did the Court of Appeal in August 2010. In September 2010 Mr Keung was adjudicated bankrupt and in October 2010 and January 2011 appeals lodged against the liquidation order and the costs order were abandoned. Mr Keung was discharged from bankruptcy on 9 November 2013.[46] The SOC was filed on 27 March 2015 exactly six years after GBRI applied for appointment of interim liquidators. It follows that if any of the causes of action in the SOC arose before the application was filed, those causes of action are out of time. Likewise, if any of the causes of action in the ASOC which are not pleaded in the SOC arose prior to 29 August 2009, the date six years prior to the ASOC being filed, these causes of action are out of time. The exception is the third cause of action in the ASOC, defamation, in respect of which a limitation of a period of two years applies.15[47] The SOC was filed by former solicitors for the plaintiffs. The ASOC was prepared and filed by their present solicitors. Much of the argument on the present application was directed to whether causes of action in the ASOC, which have an appearance of being filed outside relevant limitation periods, are causes of action which were pleaded initially in the SOC and are therefore in time. These issues will be dealt with by reference to each cause of action in the ASOC, in turn. First it is necessary to discuss the SOC.The SOC[48] The four causes of action in the SOC are brought by all the plaintiffs and are brought in turn against the first, second, third and fourth defendants. They are set out in full below as an introduction to the arguments on the relationship between the causes of action in the SOC and the ASOC. Mr Forbes concedes that the first,15 Limitation Act 1950 s 4(6A). The time may be extended to six years if a Court considers that delay in bringing the action was occasioned by a mistake of fact or law or any other reasonable cause. Counsel for the plaintiffs did not suggest that the period should be extended to six years.second and third causes of action in the SOC are in time. For now I set out only the fourth cause of action in the SOC:For a cause of action against the Fourth Defendant [Theodoros] the Plaintiffs repeat paragraphs 1 to 26 and say further:29. The Fourth Defendant promised to the Plaintiffs throughout the dealings between the Defendants and the Plaintiffs that the Fourth Defendant would:a. peform all aspects of the Shareholders Agreement; andb. fund the purchase of the property at 20 Moana Road, Kaikoura; andc. support the Company.30. The Plaintiffs acted in reliance on the promises pleaded at paragraph 27.31. The Fourth Defendant failed to honour the promises pleaded at paragraph 27.32. The Fourth Defendant caused the Plaintiffs losses by failing to honour the promises pleaded at paragraph 27.[49] Plainly, reference to paragraph 27 of the SOC should not be to paragraph 27, as that paragraph does not plead any promises. Presumably the reference should be to paragraph 29 and I will proceed on that assumption.[50] The fourth defendant, Theodoros Investments Limited (Theodoros), according to a pleading in paragraph 8, is a trustee of Theodoros Trust and the sole shareholder in GBRI. Its sole director is the second defendant Grigori Koulanov.[51] The legal basis for the fourth cause of action is obscure. It is also a manifestly inadequate pleading in terms of the requirements of r 5.26 of the High Court Rules. The allegation of a promise to "support the company" is meaningless.There is no indication of how the plaintiffs are said to have acted in reliance on the promises pleaded, let alone how the failure by Theodoros to honour the promisescaused the plaintiffs' losses.[52] Further manifest shortcomings with this cause of action are evident from reference to a shareholders' agreement. In paragraph 9 of the SOC reference is madeto a written shareholders' agreement dated 15 August 2007 and in paragraph 10 reference is made to an amended shareholders' agreement dated 10 June 2008.These are said to be shareholders' agreements amongst the shareholders of GBRH. Theodoros was not at any point a shareholder in GBRH, nor, therefore, a party to any shareholders' agreement, so it was not obliged to perform any aspect of theshareholders' agreement pursuant to any contractual obligation. The fourth cause of action seems to plead some obligation on Theodoros to perform those obligations, and an obligation to fund the purchase of a property at 20 Moana Road, Kaikoura, without setting out any particulars of the basis upon which such obligations might arise.[53] Mr Forbes draws an inference that this is a cause of action founded in contract. Noting that at no point in the pleading of this cause of action is any date mentioned when either the promises are said to have been made, the reliance is said to have occurred or the failure to honour the promises occurred causing losses, Mr Forbes relies on paragraph 14 of the SOC in which it is pleaded that during late 2008 and early 2009 a deadlock occurred between the shareholders of the company. He says the pleaded promises and reliance arose before, and in the case of the pleaded failure as part of, this deadlock. These dates are prior to the application to the High Court for liquidation of GBRH and more than six years before the SOC was filed.[54] This lack of pleaded dates placed Ms East in a similarly difficult position. She says this is a cause of action in negligent misstatement although, as she puts it, admittedly not pleaded in the clearest terms. Further, she accepts that the reference in this cause of action to the fourth defendant is plainly in error. She says that Mr Keung maintains that the promise to fund the 20 Moana Road purchase was made to him by the third defendants, Nikolai and Natalia Koulanov. Consistent with this, causes of action against the third defendants appear as the fifth and sixth causes of action in the ASOC and are based on negligent misstatement and promissory estoppel respectively.[55] Despite that position, Ms East submits that as the cause of action is framed in the tort of negligent misstatement, it accrued when the damage occurred, and thiswas not until the Moana Road property was sold in a mortgagee sale on 31 May 2011. She says that prior to that point the shareholders and GBRH had preservedtheir rights to retain that property and allow GBRH's business plan to continue.Thus, she says, the limitation period for this cause of action expires on 31 May 2017, and accordingly this cause of action was filed within time.[56] I am unable to accept Ms East's submission that the fourth cause of action inthe SOC is framed in the tort of negligent misstatement. It is not pleaded that Theodoros was negligent in making the promises asserted in paragraph 29. Equally, I cannot see how the pleading can be regarded as a pleading in contract given that there is no pleading that Theodoros was in a contractual relationship with any of the plaintiffs, and was not a shareholder in GBRH. If anything, the pleading appears to be framed in promissory estoppel as it pleads promises, acting in reliance on those promises, breach of the promises, and loss.[57] During the course of presenting her argument on this cause of action, and responding to questions from the Bench, Ms East responsibly agreed that the fourth cause of action should be struck out as it cannot be sustained, for two reasons. First, Theodoros was not a shareholder in GBRH and secondly, this cause of action should not have been brought against Theodoros in the first place because Mr Keung maintains that the oral promises referred to were made in fact by the third defendants, Mr and Mrs Koulanov. To those reasons for striking out this cause of action, with which I agree, I would add that it cannot realistically be said that this is a cause of action framed in the tort of negligent misstatement.[58] The fourth cause of action in the SOC is struck out.The ASOC[59] After the SOC was served the plaintiffs changed solicitors. Their present solicitors filed a memorandum recording a change of representation on 19 April 2016.[60] In broad terms, in order to avoid limitation consequences, the plaintiffs'position is that none of the causes of action in the ASOC are fresh causes of action,but are in essence the same causes of action as in the SOC, though with further particulars as requested by the defendants. As Ms East puts it:It is accepted that the original statement of claim was pleaded significantly more succinctly than the amended statement of claim, but the changes to the pleadings merely break down and diffract the allegations into smaller parts. They rely on the same underlying facts as the originally pleaded allegations which are not fundamentally different in type.[61] Elaborating on this, Ms East says that the whole of the evidence in support of the case has not changed and that the defendants had fair warning of the case against them in the SOC. In this respect she emphasised certain particulars, as she describes them, given in paragraph 15 of the SOC, which are then relied on in turn in the causes of action of the SOC.[62] Accordingly, I set out paragraph 15 of the SOC, and the pleadings which comprise the first three causes of action (the fourth is quoted above at [51]):15. The Defendants became hostile to the Plaintiffs:a. Personal threats were made by the second defendant and third defendants toward the plaintiffs.b. The defendants refused all reasonable offers made by the plaintiffs to preserve the Company.c. The defendants attempted to de-stabilize the Company by introducing funds from non-shareholders who were overseas citizens and thereby creating potential illegality in ownership of New Zealand land.d. The defendants demanded $500,000 compensation alleging an agreement to provide dwelling to the defendants.e. The defendants instructed its professional advisors to sabotage the business and reputation of the Company and the plaintiffs.f. The defendants improperly obtained the appointment of interim liquidators of subsidiary companies of the Company, thereby destroying those subsidiaries and causing loss to the Company and the plaintiffs.g. The defendants caused to be published damaging notices and articles disparaging the Company and the plaintiffs.h. The defendants reneged on an agreement to fund the purchase of the property at 20 Moana Road, Kaikoura.l. The defendants impeded the Company and the plaintiffs from obtaining legal and other professional representation.The pleadings:For a cause of action against the First Defendant [GBRI] the Plaintiffs repeat paragraphs 1 to 14 and say further:18. The application by the First Defendant for an order for appointment of an interim liquidator of the Company terminated the Amended Shareholders Agreement.19. The termination of the Amended Shareholders Agreement caused the Plaintiffs losses in amounts to be determined.For a cause of action against the Second Defendant [Grigori Koulanov] the Plaintiffs repeat paragraphs 1 to 19 and say further:20. The Second Defendant caused the First Defendant to cancel the Shareholders Agreement.21. The Second Defendant as director of the First Defendant owed to the Plaintiffs a duty of care to act in the best interests of the Company.22. The Second Defendant intentionally caused the First Defendant to act in the way pleaded at paragraphs 12 to 14 above knowing, or being reckless as to whether, that cancellation would cause damage to the Company and the Plaintiffs.23. The Second Defendant caused the plaintiffs losses.For a cause of action against the Third Defendants [Nikolai and Natalia Koulanov] the Plaintiffs repeat paragraphs 1 to 20 and say further:24. The Third Defendants controlled the actions of the First Defendant.25. The First Defendant acted in accordance with the directions or instructions of the Third Defendants.26. The Second Defendant was accustomed to act as director of the First Defendant in accordance with the directions or instructions of the Third Defendants.27. The Third Defendants caused the First Defendant and the Second Defendant to act in the manner pleaded above with the intention of, or wilfully reckless to the likelihood of, causing loss to the Company and the Plaintiffs.28. The Third Defendant caused the Plaintiffs losses.[63] The test for determining whether a cause of action is fresh is set out inTranspower New Zealand Ltd v Todd Energy Ltd:1616 Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302.(a) A cause of action is a factual situation the existence of which entitles one person to obtain a legal remedy against another (Letang v Cooper[1965] 1 QB 232 at 242 – 243 (CA) per Diplock LJ);(b) Only material facts are taken into account and the selection of thosefacts "is made at the highest level of abstraction" (Paragon Finance plc v D B Thakerar & Co (a firm) [1999] 1 All ER 400 at 405 (CA) per Millett LJ);(c) The test of whether an amended pleading is "fresh" is whether it is something "essentially different" (Chilcott v Goss) [1995] 1 NZLR 263 at 273 (CA) citing Smith v Wilkins & Davies Construction Co Ltd[1958] NZLR 958 at 961 (SC) per McCarthy J). Whether there is such a change is a question of degree. The change in character could be brought about by alterations in matters of law, or of fact, or both; and(d) A plaintiff will not be permitted, after the period of limitations hasrun, to set up a new case "varying so substantially" from the previouspleadings that it would involve investigation of factual or legalmatters, or both, "different from what have already been raised and of which no fair warning has been given" (Chilcott at 273 noting that this test from Harris v Raggatt [1965] VR 779 at 785 (SC) per Sholl J was adopted in Gabites v Australasian T & G Mutual Life Assurance Society Ltd [1968] NZLR 1145 at 1151 (CA))."[64] In Commerce Commission v Visy Board Pty Ltd, the Court of Appeal elaborated on these principles:17A similar approach has been taken in two later cases where it was argued that an amendment to a statement of claim inserting new facts amounted to the introduction of a new cause of action. The theme running through all three cases is that in order for an amendment to amount to a new cause of action there must be a change to the legal basis for the claim. That can, in theory, occur through the addition of new facts, but only if the facts added are so fundamental that they change the essence of the case against the defendant.If the basic legal claims made are the same and they are simply backed up by the addition or substitution of a new fact, that is unlikely to amount to a new cause of action.(emphasis added)[65] Ms East relies on the summary of actions set out in paragraph 15 of the SOC as particulars of the causes of action in the ASOC. Whilst there are factual pleadings in that paragraph, when assessing limitation issues the Court must determine in relation to each cause of action not whether somewhere in the SOC some or even all of the facts relied on were set out, but whether the legal claims in the ASOC were17 Commerce Commission v Visy Board Pty Ltd [2012] NZCA 383 at [146].made in the SOC, thereby extending the date for the expiration of the limitation period to the date the ASOC was filed.First cause of action against first defendant (GBRI): breaches of the AmendedShareholders' Agreement[66] The first cause of action in the ASOC cites four alleged breaches of the amended shareholders' agreement:(a) The first is breach of the deadlock provisions in that agreement by filing the application for appointment of an interim liquidator. This occurred on 27 March 2009 which was more than six years prior to the filing of the ASOC, though exactly six years prior to the filing of the SOC.(b) The second alleged breach is interference with the purchase of the Moana Road property and negotiations with a potential shareholder. All the events relied on as particulars pre-date the filing of the application to appoint interim liquidators, so are more than six years prior to the filing of the SOC and the ASOC.(c) The third alleged breach is the making of threats on 2 February 2009 by the then solicitor for GBRI. This was more than six years prior to the filing of the SOC and the ASOC.(d) The fourth alleged breach of the amended shareholders' agreement is the making of misleading statements in the liquidation application. That occurred more than six years prior to the ASOC but exactly six years prior to the SOC.[67] The only cause of action against GBRI in the SOC is the first. After repeating the pleadings in paragraphs 1-14 (but notably not 15), it is pleaded only that the application for appointment of liquidators terminated the amendedshareholders' agreement. Although counsel for the plaintiffs seeks to rely on the particulars in paragraph 15 of the SOC to support the submission that the first causeof action in that document is carried through into the first cause of action in the ASOC, I do not accept that submission. Paragraph 15 is not mentioned as a source of particulars relied on for the first cause of action in the SOC. Nothing in paragraphs 1-14 of the SOC add anything to the pleading of the first cause of action in the SOC from which it could be inferred that the first cause of action in the ASOC is merely a re-pleading of the same cause of action.[68] The first alleged breach of the amended shareholders' agreement in theASOC is by the application to the Court for appointment of interim liquidators, with the consequent court order terminating it. In the SOC it is pleaded that the application itself terminated the agreement. Applying the principle in Commerce Commission v Visy Board Pty Ltd, I find that the first pleaded breach in the first cause of action in the ASOC is not a new cause of action. It is, in substance, the same allegation of breach of contract: termination of the agreement by applying for appointment of liquidators.[69] I find that the second, third and fourth pleaded breaches are allegations which amount to new causes of action for breach of contract, as they have a different legal basis from the allegations brought against GBRI in the SOC. They do not amount to the pleading of more facts by way of amplification of the sole allegation of breach of contract brought against GBRI in the SOC. I refer to each in turn. The pleading of the second alleged breach (interference with the purchase of Moana Road and negotiations with a potential shareholder) specifically says that the conduct in paragraphs 96-107 was a breach of the agreement, but nothing in those paragraphs refers to the appointment of interim liquidators, the breach pleaded in the SOC. This is an entirely new allegation of a breach of contract which arose more than six years prior to the filing of the ASOC.[70] Secondly, the third alleged breach (threats made by representatives of GBRI) is also an entirely different alleged breach of the agreement. Thirdly, the fourth alleged breach is derived from alleged misleading statements in the application for appointment of interim liquidators, which is alleged to be a breach of clause 2.2 of the agreement, which requires all reasonable endeavours to promote the interests of the GBRI group to be used in connection with the business. This is also a differentallegation of breach of a contract, but arose more than six years prior to the filing of the ASOC.[71] As a consequence, the second, third and fourth allegations of breaches of theamended shareholders' agreement in the first cause of action (paragraphs 145-155 inclusive of the ASOC) are struck out.Second cause of action against first defendant (GBRI): prejudicial conduct under s 174 Companies Act 1993[72] The second cause of action in the ASOC is also brought against the first defendant GBRI. Prejudicial conduct under s 174 of the Companies Act 1993 is alleged.18 This is not alleged in the SOC so can only survive the defendants'submission that it is out of time if the conduct complained about is said to have occurred on or after 29 August 2010.[73] Prejudicial conduct under s 174 is alleged in three ways: breach of the deadlock provisions in the amended shareholders' agreement by applying to liquidateGBRH and related companies, interference with the purchase of the Moana Road property and negotiations with a potential shareholder, and making misleading statements in support of the liquidation application.[74] All the alleged actions which are said to give rise to this cause of action occurred at the time of, or prior to, the filing of the liquidation application, so well before 29 August 2010.[75] This is a cause of action on an entirely new legal basis which accrued more than six years before the filing of the ASOC in which it first appeared, and it is therefore struck out.18 The defendants raise further issues in relation to this cause of action: see discussion of the seventh issue.Third cause of action: Cause of action against GBRI and the second and third defendants: defamation[76] In this cause of action all the plaintiffs sue the first, second and third defendants in the tort of defamation. The defamation is said to have occurred in three separate publications:(a) A letter dated 27 November 2008;(b) A statement said to have been made at the end of 2008 or early 2009;(c) An article said to be published and republished daily online on the website of the Christchurch Press and on the website www.stuff.co.nz. All of the statements are alleged to be defamatory of Mr Keung, but not any of the other plaintiffs.[77] The first and second publications are alleged to have taken place on dates more than six years prior to the filing of the ASOC. No causes of action in defamation are contained in the SOC. Even if they had been the dates on which the first and second statements are said to have been made are more than six years prior to the filing of that document. Accordingly, the cause of action in defamation in relation to the first and second alleged publications is struck out.[78] Mr Forbes accepts that the articles on the website are ongoing publications so are not out of time. This publication is discussed again in relation to the sixth issue.Fourth cause of action: First cause of action against second defendant (Grigori Koulanov): Breach of fiduciary duty[79] This cause of action is brought against the second defendant, Grigori Koulanov, and alleges breach of fiduciary duty on his part by making false or misleading statements in the affidavit he swore in support of the application for appointment of interim liquidators. That occurred more than six years prior to the filing of the ASOC so is out of time unless it was pleaded in the SOC.[80] In the SOC Grigori Koulanov faced the second cause of action. It is said that as director of the first defendant, GBRI, he owed the plaintiffs a duty of care to act inthe best interests of GBRH, and that he intentionally caused GBRI to cancel theshareholders' agreement. It is said that he took this step being reckless as to whether that cancellation would cause damage to GBRH and the plaintiffs, and thus caused the plaintiffs losses.[81] In paragraph 22 of the SOC the conduct on the part of the second defendantwhich is impugned is that he intentionally caused the first defendant "to act in theway pleaded at paragraphs 12-14 above". In those paragraphs there is no allegation of any action on the part of the first defendant, so this pleading is erroneous. Ms East says that in paragraph 15 of the SOC there are allegations of conduct by the first defendant, and she says that this is what is meant by the cross reference to paragraphs 12-14, though with an error in the number of the paragraphs. Thus, she says, the substance of the allegation can be discerned from the SOC, and the fourth cause of action in the ASOC is derived from the second cause of action in the SOC.[82] I do not accept that submission. First, as I have already discussed, paragraph 15 is not pleaded in the SOC as a source of particulars of any of the causes of action in the SOC. Secondly, read as a whole, the pleading of the second cause of action in the SOC in paragraphs 20-23 inclusive is directed at the second defendant causing the first defendant to wrongly cancel the shareholders' agreement, causing losses to the plaintiffs. Nowhere in the SOC is there any reference to Grigori Koulanov making misleading statements in the liquidation application as alleged in the fourth cause of action in the ASOC. A vague reference in paragraph 15(f) to "the defendants" improperly obtaining the appointment of liquidators falls far short ofdoing so. The liquidation application is not called into issue in any way in the second cause of action in the SOC which is based entirely on cancellation of theshareholders' agreement. So even if the reference to paragraphs 12-14 should include 15, this does not assist the plaintiffs.[83] I find therefore that the fourth cause of action in the ASOC was a fresh cause of action introduced in that document. It relies on facts which are said to have occurred more than six years prior to its issue. The fourth cause of action is struck out.Fifth cause of action: First cause of action against third defendants (Nikolai and Natalia Koulanov): negligent misstatement.[84] In the fifth cause of action, the plaintiffs allege that Mr Nikolai Koulanov agreed that he or the first defendant, GBRI, would pay up to around $1,800,000 into GBRH to fund the purchase of 20 Moana Road, which would allow other investors to see that the investment proposal had been implemented and have the confidence to invest. It is said that he and Mrs Natalia Koulanov promised Mr Keung that the purchase price would be funded in cash which they had set aside for the purpose. It is said that Mr Koulanov owed a duty of care to Mr Keung and the first plaintiffs as he knew the promise would be relied on, and that he knew that his promise needed to be fulfilled in order for GBRH to be able to offer shares to new investors in accordance with the investment proposal. It is said that Mr Keung and the first plaintiffs relied on Mr Koulanov's promise in circumstances where it was reasonableto rely on it, and Mr Keung paid a deposit of $188,125 and GBRH paid $100,000 to extend the settlement date of the purchase to December 2008. It is said that Mr Head, Ballantyne Trustees Limited, and Calmwater Enterprises Pty Limited, three of the first plaintiffs, bought shares in GBRH for a total of $600,000. None ofthis would have happened, it is said, but for Mr Koulanov's promises.[85] It is not pleaded that but for the single alleged promise by Mrs Koulanov, none of these events would have occurred. It is not clear why she is included in this cause of action, but as the proceeding against her is struck out, nothing turns on the point.[86] All the payments were made between March 2008 and late 2008.19[87] It follows that all these payments were made prior to a period of six years before the SOC was filed on 27 March 2015. As the payments were said to have been made in reliance on the promises, the promises must have been made before then.19 A contract to purchase the property was entered on 3 March 2008. The date of payment of the deposit was after that, but can be assumed to be at approximately the same time, as settlement was scheduled for 1 September 2008 and, according to paragraph 184 of the SOC, GBRH paid$100,000 to extend the settlement date "on or around mid-late 2008".[88] The claim is expressly brought in the tort of negligent misstatement, so the limitation period runs from the date that the loss was incurred. Each of the payments said to have been made by the first and second plaintiffs and GBRH are the losses which are claimed.[89] It follows that this cause of action accrued at the latest in late 2008 so must be struck out. Even if it had been pleaded in the SOC, it would have been out of time, but I am not satisfied that it was pleaded in the SOC, in any event. The sole claim of the plaintiffs against Mr and Mrs Koulanov in that document was that although not directors of the first defendant, they controlled its actions and those of its director, the second defendant, and thereby caused the first defendant to act in certain ways. These are not clearly pleaded, but Ms East submits it could be inferredfrom the pleading in paragraph 15(h) that "the defendants reneged on an agreementto fund the purchase of the property at 20 Moana Road, Kaikoura". I need notdecide whether this adequately pleaded the cause of action now contained in the ASOC, because all of the elements of the cause of action arose as I have said prior to six years before either document was filed, but this argument is another instance ofthe plaintiffs' attempted reliance on the contents of paragraph 15 of the SOC as constituting pleading of particulars of causes of action, which is not the case.20[90] The fifth cause of action is struck out.Sixth cause of action: Second cause of action against the third defendants (Nikolai and Natalia Koulanov): promissory estoppel[91] In the sixth cause of action the plaintiffs again seek to rely on a promise by Mr Nikolai Koulanov that either he or GBRI would fund the purchase of 20 Moana Road by GBRH. This time, reliance on that position is pleaded by the same payments being made by the first plaintiffs and GBRH as are pleaded in relation to the fifth cause of action. This cause of action therefore is similar to the cause of action for negligent misstatement, though brought as a claim for promissory estoppel against Mr and Mrs Koulanov (though, for the sake of completeness, I note that there is no mention at all of any promise by Mrs Koulanov in this cause of action).20 See [68].[92] Again, all the alleged promises, and steps taken in reliance on them, took place on dates prior to six years before the filing of the SOC. As pleaded in paragraph 108 Mr Koulanov is said to have made it clear that funding would not beprovided for the purchase "around December 2008 or early 2009". It is alleged thatthis caused a deadlock between the shareholders, and after that deadlock occurred GBRI applied to place GBRH into interim liquidation.[93] All the elements of this cause of action, therefore, occurred more than six years prior to the issue of the ASOC.[94] This is a cause of action in equity, in which damages are sought. I find that a six year limitation period applies by analogy to a claim for damages for breach of contract.21[95] It is not necessary, therefore, to consider whether this cause of action against the third defendants appeared in the SOC as it also occurred more than six years before that was filed, but for completeness I note that it did not. There is a cause of action (the fourth) in the SOC in which it is said that Theodoros, the fourth defendant, is the party which promised to fund the purchase of the property, a position which has altered by the pleading in the ASOC. This is discussed above.22No such claim was brought against the third defendants.[96] The sixth cause of action is accordingly struck out.Seventh cause of action: Third cause of action against third defendants (Nikolai and Natalia Koulanov): breach of fiduciary duty[97] The plaintiffs say that Nikolai and Natalia Koulanov "controlled the actions of Mr Grigori Koulanov (as the sole director of GBRI) and ultimately GBRH". It is said that Mr Grigori Koulanov was accustomed to acting as director in accordance with the directions or instructions of his parents, Nikolai and Natalia Koulanov. Accordingly, it is said that Nikolai Koulanov owed a duty of care to Mr Keung personally and the first plaintiffs to ensure that Mr Grigori Koulanov acted with due21 Limitation Act 1950, s 4.22 At [50] – [58].skill and care. The plaintiffs said that Nikolai and Natalia Koulanov caused Grigori Koulanov and GBRI to seek the interim and full liquidation of GBRH and related companies and caused Grigori Koulanov to make misleading or false statements in the affidavit he swore and filed in support of the liquidation application.[98] As noted earlier, the sole cause of action against Nikolai and Natalia Koulanov in the SOC is the third. There it is alleged that they controlled the actions of GBRI, which acted in accordance with their directions or instructions, and that their son, Grigori, was accustomed to act as director of GBRI in accordance with the directions and instructions of his parents. It is then said that Nikolai and NataliaKoulanov caused GBRI and Grigori Koulanov to act that way "with the intention of,or wilfully reckless to the likelihood of, causing loss to the company and theplaintiffs" and by that means it is said that they caused the plaintiffs' losses.[99] The legal basis of this cause of action in the SOC is entirely unclear. The impugned conduct amounts to directing another person (Grigori) to direct a third entity (GBRI) to act, and doing so with the intention of, or with reckless disregard to the likelihood of, causing loss to the plaintiffs who are the shareholders of a fourth entity (GBRH) and a fifth party (Mr Keung). Ms East says that the way in whichthis is said to occur is in paragraph 15(h) of the SOC where it is said that "thedefendants reneged on an agreement to fund the purchase of the property at 20Moana Road, Kaikoura". She says this is what was referred to in the phrase "act in the manner pleaded above" in paragraph 27.[100] The first difficulty with this proposition is that it has nothing to do with steps taken to seek liquidation which in the ASOC is the first action the third defendants are said to have caused. The second is that it contradicts the fourth cause of action in the SOC in which it is expressly pleaded that Theodoros agreed to fund the purchase of the property at 20 Moana Road, Kaikoura. Ms East accepts this pleading was erroneous and says it should have been against Nikolai and Natalia Koulanov.[101] An equally significant problem with the third cause of action in the SOC is that although Ms East sought to explain the meaning of "in the manner pleaded above" as a reference to paragraph 15(h), there is nothing in the SOC to suggest thatis the case, apart from a statement in the opening sentence of the third cause of action that paragraphs 1-20 of the SOC are repeated. The action listed in the nine sub-paragraphs of paragraph 15 are headed as ways in which "the defendants became hostile to the plaintiffs", not as particulars of how the third defendants are said to have caused the second defendant to cause the first defendant to act, or even as to how the first defendant, in particular, is said to have acted. Apart from the first of these alleged actions (making personal threats) which are confined to the second and third defendants, all are directed at the defendants as a group. A fair and objective reading of the third cause of action in the SOC does not make it at all clear that the third defendants are alleged to have caused the first and second defendants to have reneged on an agreement to fund the purchase of the property at 20 Moana Road, Kaikoura (15(h)) or to have improperly obtained the appointment of interim liquidators (15(f)).[102] Even if an inference can be fairly drawn that this is the essence of the pleading of the third cause of action in the SOC, contrary to my view, it appears to possibly be framed as an allegation in tort of intentional interference with contract by the first, second and third defendants, as joint tortfeasors, but even that is no more than supposition. I am unable to draw from the pleading of the third cause of action in the SOC any indication that it was alleged that Mr Koulanov owed a duty of care to Mr Keung and the first plaintiffs to ensure that Mr Grigori Koulanov acted with due skill and care as pleaded in paragraph 196 of the ASOC. I find that the seventh cause of action in the ASOC is a new cause of action which did not appear in the SOC.[103] Further support for this is drawn from the fact that in the ASOC the actions which the third defendants are alleged to have caused the first and second defendants to have undertaken are to seek the liquidation of GBRH and related companies, and causing Grigori Koulanov to make misleading or false statements in the affidavit filed in support of that application. There is no reference to these actions in the SOC apart from a general statement in paragraph 15(f) that the defendants (not just Mr and Mrs Koulanov senior) improperly obtained the appointment of interim liquidators. It is quite another matter to allege that Mr and Mrs Koulanov seniorcaused their son and GBRI to bring about the liquidation of GBRH, and their son to make misleading and false statements.[104] The question of whether the cause of action is out of time must therefore be judged against the date of filing the ASOC.[105] The facts relied on occurred in the course of the interim and full liquidation proceedings, which ended with the judgment of this Court on 27 November 2009. Up until that point the full liquidation of GBRH was still being sought, a process which started with the preparation of documents for the interim application, and the filing of those documents on 27 March 2009. Therefore the date when the last pleaded act took place, 27 November 2009, was outside a period of six years prior to the filing of the ASOC.[106] Mr Forbes says that six years should be the limitation period by analogy. In my opinion that analogy is sound. In the first cause of action it is said that GBRIbreached the shareholders' agreement by applying for appointment of interimliquidators, which is a claim based on breach of contract. In the seventh cause of action it is said that the parents of the sole director of GBRI caused that to occur. The losses claimed, though in vague terms, are damages in each case. In my opinion it is sound to apply a limitation period of six years, the same period as applies to the underlying claim that causing the liquidation to occur was a breach of contract.[107] For these reasons I find the seventh cause of action is out of time and it is struck out.Eighth cause of action: First cause of action against the fourth defendant (Theodoros Investments Limited): Breach of fiduciary duties[108] All the plaintiffs plead that Theodoros owed them a fiduciary duty to procure GBRI to take certain pleaded steps.[109] The only cause of action against Theodoros in the SOC is the fourth, that itwould perform all aspects of the shareholders' agreement, fund the purchase of theproperty at 20 Moana Road, and support the company. These are the same actions asare now pleaded in paragraph 200 of the ASOC, but now it is said that Theodoros would procure GBRI to undertake these steps.[110] The cause of action in the SOC against Theodoros is for breach of contract and makes no mention of fiduciary duty, or of any basis for a fiduciary duty to be owed to GBRI. I find that this is a new pleading in the ASOC.[111] As with the seventh cause of action, I am satisfied that by analogy the appropriate limitation period for this cause of action is six years. The analogy is with a claim for damages for breach of contract, the amended shareholders'agreement. As the pleadings all relate to events prior to the application to appoint interim liquidators, this cause of action is out of time and is struck out.Ninth cause of action: Second cause of action against the fourth defendant (Theodoros Investments Limited): inducing breach of contract[112] In this cause of action the plaintiffs say that Theodoros as sole shareholder inGBRI induced GBRI to breach the amended shareholders' agreement, relying onalleged breaches by GBRI which are pleaded against GBRI in the first cause of action. These are breaches of the deadlock provisions of the amended shareholders'agreement, interference with the purchase of the Moana Road property and negotiations with potential shareholders, threats made by representatives of GBRI, and making misleading statements in the liquidation application.[113] This is a claim in tort and accordingly the cause of action accrued when the alleged losses were suffered. The losses pleaded (which are the same as the eighth cause of action) are the loss of opportunity to develop the properties held by GBRH and other business opportunities for that company, the reduction in the value of the shares held by the first plaintiffs in GBRH, the wrongful placing of companies related to GBRH into liquidation, the sale of assets of GBRH during its liquidation at prices below fair value, and damage to the goodwill of the company. All of these losses were incurred when GBRH was placed into liquidation except the alleged sale of assets of related companies at below fair value. If this was a loss, it was not caused by the related companies being placed into liquidation, but by the actions of the liquidators which are not called into question in this case. All the claimablelosses were therefore incurred outside a period of six years prior to the issue of the ASOC.[114] The losses claimed also include losses said to have been incurred by Mr Keung as second plaintiff. He claims for monies advanced to GBRH and related companies which he says he has not been able to recover. These losses were also incurred when GBRH and related companies were placed into liquidation. Mr Keung also claims losses incurred "relating to the bankruptcy". These losseswere incurred when Mr Keung was adjudicated bankrupt on 20 September 2010. This is inside a period of six years prior to the issue of the ASOC.[115] In the SOC there is no pleading against Theodoros for inducing breach of contract. Accordingly the ninth cause of action is out of time in relation to the claims of all the first plaintiffs, as their pleaded losses were incurred prior to a period of six years before the issue of the ASOC. It is also out of time in relation to MrKeung's claim in respect of advances. It is not out of time in relation to the losses claimed by Mr Keung in relation to his bankruptcy, but as already noted, his personal causes of action all vested in the Official Assignee when he was adjudicated bankrupt apart from his cause of action in defamation. For these reasons the ninth cause of action is struck out.Fifth issue: Should the causes of action which allege breach of fiduciary duty be struck out as the alleged duties are not owed?[116] Breaches of fiduciary duty by Grigori, Nikolai and Natalia Koulanov, and Theodoros are alleged in the fourth, seventh and eighth causes of action in the ASOC, which have been discussed fully above, and for reasons given, have been struck out.[117] As an alternative argument Mr Forbes says that outside relationships within which they are recognised as existing, fiduciary duties are not readily imported into arms length commercial contracts between parties which are neither vulnerable nor dependent.23 He says a fiduciary relationship may exist where one person stands in a position of trust and confidence with another and is bound to place the other person's23 AUAG Resources Ltd v Waihi Mines Ltd [1994] 3 NZLR 571 (HC).interests before his or her own.24 Notably the expectation by one commercial party that the other will act honestly and conscientiously to do what it had promised to do by contract is not sufficient. Based on these principles Mr Forbes says that relationships between the parties in this case do not give rise to fiduciary duties. They had arms length commercial relationships some of which were recorded in ashareholders' agreement. Mr Forbes says Grigori Koulanov owed fiduciary dutiesonly to GBRI, as its director, and there is no basis on which either Nikolai or Natalia Koulanov, or Theodoros, could be found to owe any fiduciary duty to any of the plaintiffs.[118] Ms East says that the categories of fiduciary duties are not closed, and may be found to be owed despite the fact that a relationship does not fall within one or other of settled categories of fiduciary relationships, provided the circumstances justify the imposition of such duties. She says that the facts of this case justify the imposition of fiduciary duties. She says the arrangements between the parties were in substance a joint venture between Mr Keung and his family, other shareholders, and the Koulanovs. She relies on Maruha Corporation v Amaltal Corporation Ltd:25It is well-settled that, even in a commercial relationship of a generally non- fiduciary kind, there may be aspects which engage fiduciary obligations of loyalty. That is because in the nature of that particular aspect of the relationship one party is entitled to rely upon the other, not just for adherence to contractual arrangements between them, but also for loyal performance of some function which the latter has either agreed to perform for the other or for both or has, perhaps less formally, even by conduct, assumed.[119] As all the causes of action based on breach of fiduciary duty have been struck out, any finding made on the argument presented by Mr Forbes for strike out on the basis that fiduciary duties are not owed would be obiter. Therefore, and only in deference to the careful arguments of counsel, I express my view that it is unlikely that an application to strike out these causes of action on the basis that a fiduciary duty is not owed would succeed. The question of whether a fiduciary duty is or is not owed requires an examination of facts well beyond the scope of the limited evidence presented on an application to strike out, so had it been necessary to24 Aberdeen Railway Company v Blaikie Brothers (1854) 1 Macq 461 at 471; Cook v Evatt (No 2)[1992] 1 NZLR 676 (HC). See generally the discussion in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 17.52 – 17.54.25 Maruha Corporation v Amaltal Corporation Ltd [2007] NZSC 40, [2007] 3 NZLR 192 at [21].consider this issue as determinative of the application, the defendants would in my opinion have faced a head wind.26Sixth issue: Should all or any part of the third cause of action (in defamation) be struck out for reasons other than those discussed in relation to the first, third and fourth issues?[120] The third cause of action is brought by all plaintiffs against the first, second and third defendants. For reasons already given, this cause of action is struck out as statute barred in relation to all alleged publications save the third. Discussion in the following paragraphs is obiter so far as the first two publications are concerned. Mr Forbes raises three issues:(a) Can the first plaintiffs, apart from Mr Keung, claim?(b) Was the third pleaded publication a publication by the first, second or third defendants?(c) Is the third publication protected by qualified privilege?[121] First, it is alleged that each of the three publications relied on is defamatory of Mr Keung. It is not alleged that any of the publications is defamatory of any of the other plaintiffs. Mr Forbes says that for this reason the causes of action by all plaintiffs other than Mr Keung should be struck out.[122] Ms East did not produce any authority for the proposition that a person not defamed may sue in defamation. She argues that the statements made cause ongoing damage and loss to all the plaintiffs and most likely will continue to do so throughout all their working lives. That is not, however, sufficient to support a cause of action by them for defamation. Quite simply, none of the plaintiffs was the subject of the statements, so even if they were defamatory, these plaintiffs were not defamed and cannot sue. The third cause of action must be struck out so far as it is brought by any plaintiffs other than Mr Keung.26 The need for caution to be exercised on an application to strike out, on the basis of a duty of care not being owed, is clear from Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].[123] Secondly, Mr Forbes accepts that for the purposes of this application to strike out the statements said to have been made by Mr Russell, in paragraphs 168 and 170 of the ASOC, which constitute the first and second publications relied on for the cause of action, may be attributed to the defendants on the basis that Mr Russell was their agent and the statements were made in the course of the agency and within thescope of the agent's authority.27 He says, however, that the third publication, an article in the Christchurch Press, was not a publication by the defendants. He says it is plain on the face of the article itself that it was based on the court judgment and that no comment was given by any of the Koulanovs about the content of the judgment. He notes that Grigori Koulanov says in his affidavit that he was asked bythe author of the article only to confirm his family's nationality and theirmembership of the Russian Orthodox Church. Mr Nikolai Koulanov and Mr Russell, to whom the first two publications are attributed, did not speak to the author of the article at all.[124] The pleadings in question are these:172. As a result of the applications for interim liquidation and full liquidation and orders for interim and full liquidation of the Company and Related Companies, the Christchurch Press published an article dated 5 December 2009 on their website and in the newspaper restating the misleading and/or false statements made by the Koulanovs in the proceedings.173. The article published and republished daily online on the Press website and on stuff.co.nz is defamatory of Mr Keung. The statements in the article bear the following meaning:(a) That Mr Keung acted dishonestly in relation to the investment of $2.9 million by the Koulanov family in a group of property companies that Mr Keung managed;(b) That Mr Keung dishonestly used $2.9 million invested by the Koulanov family in a group of Kaikoura property companies by:(i) Buying other companies; and(ii) Spending the money on person lifestyle expenses;(c) That Mr Keung had defrauded the Koulanov family;(d) That Mr Keung was knowingly involved in extremist religions and sects;27 Citizens Life Assurance Co Ltd v Brown [1904] AC 423 at 427 and 428.(e) That Mr Keung has a bad record as a company director;(f) That Mr Keung was guilty of profiting improperly in relation to a property owned by the Company; and(g) That Mr Keung acted dishonestly in relation to the use of money belonging to the Company.[125] This is a pleading of publication by the Christchurch Press of statements made in court papers. It is not:(a) an allegation of publication of a defamatory statement by any defendant to the Press;(b) an allegation that the Press published defamatory material which had been provided to the Press by any defendant;(c) an allegation that any defendant was responsible for the Press putting the report on its website.[126] It is alleged that the article contains misleading and/or false statements made by "the Koulanovs" in the proceedings which led to the liquidation. Statements of witnesses in that proceeding are subject to absolute privilege.28 There is no pleading that the Koulanovs made any statement to the newspaper.[127] For these reasons the third cause of action is struck out.[128] There is evidence, and counsel presented argument, in relation to what the Koulanovs said to the Press reporter. The evidence conflicts. In his affidavit Mr Keung says:Grigori Koulanov and/or Nikolai Koulanov and/or Mark Russell (on behalf of the defendants) spoke to Martin van Beynan (the author of article (sic) in the Press) and therefore it is my belief that the statements made in the Press were made on behalf of the defendants.[129] Grigori Koulanov says he did speak briefly to Mr van Beynan before the article was published. He was asked if his family were Russian and members of the28 Royal Aquarium and Summer and Winter Gardens Society v Parkinson [1892] 1 QB 431; Defamation Act 1992, s 14.Russian Orthodox Church which he confirmed. He was not asked any questions about the court judgment and did not give any comment on it or on any other matter. Neither Mr Russell nor Mr Nikolai Koulanov spoke to Mr van Beynan to his knowledge.[130] This evidence does not assist on this issue. The application to strike out is directed at the pleadings. It is not alleged in the pleadings that any of the defendants spoke to the Press journalist.[131] Mr Forbes also submits that the publication by the Press, for which the plaintiffs seek to hold the defendants responsible, was published on an occasion of qualified privilege. He says this can be determined on an application to strike out. Ms East says that the application of a defence of qualified privilege can only be determined at trial because it is necessary for evidence to be given on whether the publication by the newspaper in question is a fair and accurate report.29[132] In many circumstances it will not be possible for the Court to determine whether a defence of qualified privilege is available, on an application to strike out, for the reason identified by Ms East. There will be occasions when it is possible, an example of which is Rafiq v Meredith Connell.30[133] The Court is not required to consider whether the defence of qualified privilege applies to the claim as pleaded. Only publication by the Christchurch Press is alleged, so it is not necessary, on an application to strike out a claim against other parties, to decide whether a defence of qualified privilege is available. That is an issue between Mr Keung, who claims to have been defamed, and the Christchurch Press.Seventh issue: Does s 174 of the Companies Act apply to the acts relied on by the plaintiffs in the second cause of action?[134] Mr Forbes says the second cause of action, which is against GBRI under s 174 of the Companies Act, cannot succeed. He says that all the alleged conduct on29 Defamation Act 1992, s 16 and Schedule 1.30 Rafiq v Meredith Connell [2014] NZHC 1597.which the cause of action is said to be based is conduct by GBRI, breach of deadlockprovisions in the shareholders' agreement, interference with the purchase of theMoana Road property, and misleading statements in the liquidation proceeding. Mr Forbes says that this conduct is that of GBRI attempting to protect its own interests as shareholder of GBRH.[135] Ms East does not accept this analysis. She says a broad view of the conduct called into question and the affairs of the company must be taken, as the affairs of the company extend to anything done, generally concerning the company.31[136] As this cause of action has been struck out for reasons given earlier, a decision in relation to this would be obiter. In this circumstance I refrain from considering it.Eighth issue: Should the first, second and third causes of action in the SOC be struck out as an abuse of process?[137] In discussion of the second issue, and elsewhere in this judgment, I have recorded a significant level of criticism of the SOC. I have declined to declare the SOC a nullity on the basis of late service in breach of r 5.71. Mr Forbes says it should be struck out under r 15.2(1) as an abuse of process because it was filed on the sixth anniversary of the filing of the application for appointment of liquidators, and therefore on the last day on which the first, second and third causes of action could be filed in terms of limitation, that it was not served as soon as practicable after it was filed, and that it was defective.[138] Mr Forbes notes the inadequate explanation for the lack of particularisation, namely the lack of records, saying that if a plaintiff is not in a position to properly plead its claim, it ought not to proceed. He notes the lack of any indication of damages claimed or, for that matter, the basis upon which damages might be assessed, in addition to the other defects in the pleading to which reference has been made elsewhere in this judgment.31 McCulloch v Quinn [2012] NZHC 16.[139] When considering the second issue I have found the considerable delay in effecting service is not explained on any convincing basis and that the plaintiffs breached the mandatory service requirements in r 5.72(1).[140] In numerous other passages of this judgment I have necessarily recorded criticisms of the SOC. Examples are in paragraphs [49], [51], [52], [56], [57] and [99].[141] The shortcomings that are readily identifiable in the SOC include these:(a) In the first cause of action against GBRI, after a pleading that the application for appointment of an interim liquidator of GBRH terminated the amended shareholders' agreement, it is said that thetermination caused the plaintiffs losses in amounts to be determined. What it does not state, and should have stated, is how it is said that thetermination caused the plaintiffs' losses, how Mr Keung, as second plaintiff in his personal capacity, who was not a shareholder, could have suffered any loss from the termination, how the losses might have been assessed, or how much the losses are. The relief sought is under s 11 of the Contractual Remedies Act but that section relates to assignees. It seems the reference should have been to s 9, but even if that is the case no indication is given of which of the numerous forms of potential relief the plaintiffs seek.(b) The second cause of action is brought by all the plaintiffs against Grigori Koulanov. It is said that he caused GBRI to cancel theshareholders' agreement: not, this time, the amended shareholders'agreement which is a different document. It is said that as a director of GBRI he owed the plaintiffs, as shareholders in GBRH, a duty of care to act in the best interests of the company. That cannot be so in the case of Mr Keung as second plaintiff, as he was not, personally, a shareholder. The cause of action is pleaded in the terminology of the tort of negligence, but it is then pleaded that Mr Koulanov intentionally caused GBRI to act in the way pleaded at paragraphs 12-14 "knowingor being reckless as to whether that cancellation would cause damage tothe company and the plaintiffs". Self-evidently intentional conduct is not negligence.The way in which GBRI is alleged to have acted at the behest of Grigori Koulanov is said to be set out in paragraphs 12-14, but those paragraphs do not contain any reference to conduct by GBRI. If the reference should have been (though was not) to paragraph 15, a further criticism can be levelled. That paragraph contains a statement of nine items of conduct all bar one of which are said to be by all the defendants. It is impossible to discern how it is said that the first defendant acted, as caused by the second defendant, as pleaded in paragraph 22. And, again, there is no indication as to how losses have been incurred by the first plaintiffs as shareholders and/or by the second plaintiff personally, let alone what those losses are.(c) In the third cause of action Nikolai and Natalia Koulanov are said to have controlled the actions of GBRI, and Grigori Koulanov is said to have acted in accordance with the directions or instructions of his parents. No particulars of this are given. It is then said that Nikolai and Natalia Koulanov caused GBRI and Grigori Koulanov "to act in the manner pleaded above".The first difficulty with this cause of action is that it is completely unclear what legal basis it is brought on.Secondly, it is unclear what is meant by "act in the manner pleadedabove". I understood Ms East to suggest that this was the conduct inparagraph 15(h) in which it is alleged (though as a particular of apleading that "the defendants became hostile to the plaintiffs") that thedefendants reneged on an agreement to fund the purchase of the property at 20 Moana Road. Even if that is the case (and the pleading does not say so) it is not apparent how this is said to have caused loss toGBRH and the plaintiffs. Even if the phrase "in the manner pleaded above" is supposed to refer to everything said in paragraph 15, that too would be insufficiently precise to give the third defendants propernotice of how they are said to have required the second defendant to make the first defendant act.(d) The fourth cause of action is pleaded against the wrong party.(e) All the causes of action are brought by all the plaintiffs. No attempt is made to recognise the entirely different interests the first plaintiffs and the second plaintiff had.[142] It will be apparent from the discussion of each of the causes of action in the ASOC when considering the fourth issue, that counsel for the plaintiffs was placed in a position of having to present argument justifying the drafting of the SOC in order to support arguments that causes of action in the ASOC were filed inside relevant limitation periods because they were a revised pleading of a cause of action in the SOC. This required argument that the Court should regard cross-references to some paragraphs as cross-references to others, and regard statements of conduct pleaded in paragraph 15 as instances of how the defendants became hostile to the plaintiffs as particulars of later and distinctly different pleaded allegations.[143] Whilst no criticism is made of counsel for this exercise, it strained the concept of interpreting the document to give it the meaning she says it was intended to have beyond any reasonable limit.[144] Rule 5.26 provides that a statement of claim must show the general nature ofthe plaintiffs' claim to the relief sought. All the causes of action in the SOC fail to comply with this rule, for the reasons given. Further, the rule requires that the SOC:must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiffs' cause of action.[145] It is, in my opinion, difficult to discern with any degree of precision the general nature of any of the four claims brought by the plaintiffs. It does not informthe Court or the parties of the plaintiffs' causes of action. The pleading is manifestlydeficient in provision of particulars. In paragraph 15 there is a list of nine ways inwhich it is said that "the defendants became hostile to the plaintiffs", and as notedearlier Ms East sought to argue that these were particulars of other allegations contained within the pleadings of the four causes of action. The difficulties with that argument are self-evident. First, they are not pleaded as particulars. Secondly, the nine allegations are diverse. It is an exercise in guesswork to attribute them to the allegations within the four causes of action. Further, cross references, to the extent that there are any within the document, are frequently to paragraphs which were self- evidently not intended to be the source of the cross reference. There is no indication of relief sought other than a general claim to damages in an amount to be determined at trial, and costs. All the causes of action are brought by all the plaintiffs even though they had entirely different roles in the events which led to this litigation. This, coupled with the delay in service, demonstrates an unacceptable level of attention to the responsible task of commencement of civil proceedings in this court.[146] I find, as Faire J did in Body Corporate 348047, that the SOC was filed to save the claims from the consequence of limitation defences. The proceeding as filed was frivolous, as it was a proceeding which lacked the seriousness required of matters for the Court's determination. It was vexatious, as it involved proceduralimpropriety across a range of Rules, as discussed. It was also an abuse of process as it was brought to save the claim from limitation defences without it being evident that a requisite degree of analysis of the law or the facts had been undertaken.[147] For these reasons grounds exist for the SOC to be struck out in its entirety.Ninth issue: Should the proceeding be dismissed?[148] Rule 15.1 says that in this circumstance the Court may, by the same or a subsequent order, dismiss the proceeding.[149] The effect of the decisions made in this judgment on the causes of action in the ASOC is that the only claim that remains is that of the first plaintiffs (not the second plaintiff) in the first cause of action, for breach of the deadlock provisions ofthe amended shareholders' agreement (clauses 140-144 inclusive). If the proceeding is struck out the first plaintiffs will not be able to pursue this claim.[150] The deadlock provision in the amended shareholders' agreement provides fora company called GBR Trustees Limited to purchase the shares of other shareholders on the giving of a notice, and on certain terms. It will be noticed that GBR Trustees Limited is not a party to the present proceeding. During argument there was debate over whether Mr Keung is in fact trustee of the GBR Trust, as he claims, or whether the correct trustee is GBR Trustees Limited. Mr Forbes accepted that for the purposes of the present application the Court may proceed on the basis that Mr Keung is the trustee of that Trust. If this case is to proceed further, his entitlement to remain as a plaintiff in that capacity would need to be considered, but for present purposes I will assume that any right GBR Trustees Limited has underthe amended shareholders' agreement was at material times held by Mr Keung.[151] The deadlock agreement relied on by all the plaintiffs in the first cause of action in the ASOC appears only to provide rights to GBR Trustees Limited, and not to any other shareholder in GBRH. If that is the case it does not appear that Ballantyne Trustees Limited, Mr and Mrs Head, or Calmwater Enterprises Pty Limited has a cause of action based on an alleged breach of the deadlock provisionsof the amended shareholders' agreement. On the material presently before the Court only a provisional view can be reached on that point.[152] Of more immediate substance is the second difficulty now faced by the first plaintiffs. After the appointment of interim liquidators, without notice, Mr Keung swore an affidavit in support of an interlocutory application for an order removing the interim liquidators, and that application was considered and decided by the High Court at the same time as the substantive application to liquidate GBRH. Nowhere in the affidavit that Mr Keung filed in support, nor in the judgment of Gendall J in relation to these two applications, is there any mention of the deadlock clause.32 It would have been open to GBR Trustees Limited to rely on this clause as a basis to argue that a liquidation should not proceed, there being a right to resolve the differences that had arisen by this contractual mechanism. In fact, however, the first time this appears to have been raised was when the SOC was filed in March 2015 five and a half years later.32 GBR Investment Ltd v Goose Bay Ranch Holdings Ltd [2010] NZCCLR 11 (HC).[153] Further, in his affidavit on that application, Mr Keung promoted what he described as a constructive alternative to liquidation, the placing of GBRH in voluntary administration. This may readily be contrasted with the position now taken. There is nothing in the affidavit from Mr Keung to suggest that the deadlock clause should have been followed, or for that matter to show that the Trust had the means to proceed in accordance with the deadlock clause. There was ample opportunity to present that argument at a time when it might have had the effect of staying the liquidation whilst the clause, if valid and binding, was applied.[154] The nature of the deadlock provision raises another issue. There is no indication in the pleading that the Trust could or would have taken the steps that may have been open to it under the deadlock clause, or what the effect of taking those steps might have been. Therefore, even though the ASOC pleading is, as I have found, a re-pleading of the pleading in the first cause of action in the SOC, it is still deficient as a pleading.[155] This is further demonstrated by examination of the claimed losses. The first is the loss of the opportunity to benefit from the development of the properties held by GBRH and other business opportunities, which are noted. This is a loss which would have been incurred, if at all, by GBRH. GBRH is in liquidation. There is no indication how this pleaded loss on the part of the shareholders of GBRH might have been suffered, though presumably by way of adverse effect on the value of shares. The pleaded loss, however, is of opportunity to benefit from future possibilities, with scant details pleaded of how or when those opportunities might have translated into an increase in share value. It is at least arguable that this claimed loss is too remote.[156] The second claimed loss is on the sale of assets during the liquidation at prices below fair value. As I have already said, if that occurred, it is the responsibility of the liquidators.[157] The third allegation is that related companies were wrongfully placed into liquidation resulting in sale of assets below fair value, and loss of income from those companies. The first aspect is covered by the same statement as I have just made in relation to the liquidation of GBRH and the second is too general to comment on.[158] The fourth and fifth claimed losses are reduction in the value of shares held by the first plaintiffs and damage to the goodwill of the company. The second appears to be an element of the first. All that can be said on this is that the Court ordered appointment of liquidators to GBRH after a contested hearing at which the plaintiffs had the opportunity to challenge the evidence of the Koulanovs. For all these reasons there are very real difficulties in the way of this cause of action by the first plaintiffs succeeding.[159] The remaining claims for losses are losses by Mr Keung personally, and his claims need not be considered as they vested in the Official Assignee on his bankruptcy.[160] It is readily apparent, therefore, that the pleading of this alleged breach has been brought years after a point at which it could have been raised at a time when it might have had the effect of preventing the liquidation of which such trenching complaint is made. It is raised in terms which do not comply with the pleading requirements of the High Court Rules, notwithstanding that it has been pleaded twice, the second time after a change of solicitors with an evident comprehensive review of claims that might be brought. Damages are claimed which appear very difficult to establish.[161] For these reasons I have formed the view that this pleading, too, is frivolous and vexatious, and for that reason should be struck out.[162] As this was the only claim subsisting in the ASOC, the appropriate course is to dismiss the proceeding in its entirety.Outcome[163] This proceeding is dismissed.[164] Costs are reserved. The defendants may file a memorandum within 10 working days and the plaintiffs may respond within a further five working days. In all probability costs will then be decided on the papers._______________________J G MatthewsAssociate JudgeSolicitors:Bell Gully, AucklandBuddle Findlay, Christchurch