Williams v BDO Auckland & Ors [2020] NZHC 2886

Williams v BDO Auckland & Ors [2020] NZHC 2886 [3 November 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-2097[2020] NZHC 2886IN THE MATTER OF FIVE STAR CONSUMER FINANCELIMITEDBETWEEN NEILL ALLAN WILLIAMSPlaintiffAND BDO AUCKLANDFirst DefendantRICHARD DALE AGNEW, ANTHONYDAVID KENNETH BOSWELL and COLINTHOMAS McCLOYSecond DefendantsCOVENANT TRUSTEE SERVICESLIMITEDThird DefendantOFFICIAL ASSIGNEEFourth DefendantHearing: 23 June 2020Appearances: The plaintiff in person, with his McKenzie Friend, Mr BalzatMC Smith and HE Savage for the First DefendantNFD Moffat and RA Morris for the Second DefendantsJ Adams for the Third DefendantJudgment: 3 November 2020JUDGMENT OF ASSOCIATE JUDGE SMITHThis judgment was delivered by me on 3 November 2020 at 5pm.Registrar/Deputy Registrar[1] The defendants all apply for summary judgment, or in the alternative, ordersstriking out Mr Williams' claims against them. If they are not successful with thoseapplications, they ask for an order fixing security for their costs of the proceeding.The parties, and Mr Williams' claims[2] Mr Williams' claims arise out of the collapse of a finance company called FiveStar Consumer Finance Limited (Five Star). Five Star collapsed and was put intoreceivership on 29 August 2007.[3] Five Star was an issuer of debt securities regulated under the Securities Act1978 and the Securities Regulations 1983. As such, it was required to appoint astatutory trustee to act on behalf of investors. The trustee was the third defendant,Covenant Trustee Services Limited (Covenant), appointed under a debenture trustdeed entered into by Five Star and Covenant on 27 April 2001 (the debenture trustdeed).[4] The first defendant, BDO Auckland (BDO), was Five Star's auditor at allmaterial times up to the date Five Star was put into receivership.[5] The second defendants (collectively, "the receivers") are partners or formerpartners in PriceWaterhouseCoopers, Auckland. At different times, they acted asreceivers of Five Star, appointed by Covenant.[6] The fourth defendant, the Official Assignee (the Assignee), was appointedliquidator of Five Star by order of this Court made on 6 December 2013.[7] Mr Williams is a gentleman in his eighties. He says in his statement of claimfiled on 30 September 2019 that he is the assignee of various debenture securities inFive Star, and that he is entitled to sue in that capacity. He also sues in his capacity astrustee of a trust known as the Antares Consumer Trust (the Trust), which he says holds4,096,226 shares in a company called Antares Finance Holdings Limited (Antares).Mr Williams pleads that Antares was the sole shareholder of Five Star from November2005, when it acquired the shareholding of Five Star Finance Limited.The claim against BDO[8] Mr Williams' first claim is against BDO, for alleged breaches of duty as auditorof Five Star's financial statements in the period before Five Star was put intoreceivership. Mr Williams says that BDO owed a duty of care to Antares as theshareholder of Five Star, and to debenture holders and future debenture holders of FiveStar, and that BDO acted in breach of that duty of care. BDO is said to have owed aduty to audit the books and records of Five Star in a professional, careful, and prudentmanner, and in accordance with generally accepted accounting practice. He says thatBDO also owed a duty to certify that the accounts of Five Star represented a true andfair picture of Five Star's financial position.[9] Between 2001 and September 2006, BDO provided unqualified audit reportsapproving the accounts and records of Five Star. Mr Williams contends that the auditreports were defective, in that they failed to take any or proper account of a number oftransactions, any one or more of which would have precluded BDO from providingunqualified audit reports. BDO's failure to take any or proper account of the pleadedtransactions is said to have constituted negligence on its part. Mr Williams says that itwas reasonably foreseeable that Antares would suffer loss as a result of thatnegligence, and that it has suffered loss (in the sum of $29,293,000, being the allegedvalue of Antares' shares in Five Star).[10] In addition to the alleged loss suffered by Antares, Mr Williams says that losseswere also suffered by debenture holders who relied on the audit reports prepared byBDO in deciding whether to invest or re-invest in Five Star. Mr Williams pleads thatthe debenture holders have suffered losses totalling $103,671,910 as a result of BDO'snegligence, and that, having taken assignments of the debentures, he is entitled torecover that sum.[11] Mr Williams asks for damages from BDO in the total sum of $132,964,910,made up of Antares' alleged loss as a shareholder ($29,293,000) and the loss he sayshe has suffered as assignee of the debenture securities ($103,671,910).The claim against the receivers[12] Mr Williams contends that, on their appointment, the receivers were under aduty to maximise the return to Antares and recover the losses suffered by the debentureholders. To discharge those duties, they should have commenced an appropriateproceeding against BDO for negligence in the preparation of the audit reports.[13] The receivers did not bring any proceeding against BDO, with the allegedresult that the shareholders in Antares lost the value their shares had when they werepurchased from Five Star Finance Limited, another member of the Five Star group.The receivers' failure to sue BDO is also said to have caused the debenture holders tosuffer the loss of the value of their debentures. Mr Williams sues the receivers innegligence for his losses, being the value of the shares in Antares plus the value of thedebentures (total $132,964,910).The claim against Covenant[14] Mr Williams alleges that Covenant acted in breach of its obligations under thedebenture trust deed, and in breach of duties of care owed to the shareholders inAntares and to the debenture holders. He lists a number of alleged breaches by FiveStar of its obligations under the debenture trust deed, including breach of cl 5.3(restrictions on related party lending), cl 5.1(a)(i) (restriction on allowing totalliabilities to exceed 91 per cent of total tangible assets), and cl 5.2(d) (restriction onallowing any debtor or group of debtors to owe more than 10 per cent of Five Star'stotal tangible assets).[15] Mr Williams contends that, in appointing the receivers, Covenant owed a dutyof care to the shareholders in Antares and the Five Star debenture holders to ensurethat the receivers carried out their obligations in a good, proper and competent manner.It was reasonably foreseeable that the shareholders in Antares and the debentureholders would suffer loss if the receivers failed to properly carry out their obligationsas receivers (by suing BDO), and they did suffer that loss.[16] Mr Williams repeats against Covenant his allegation that the receivers werenegligent in failing to bring a claim against BDO to recover damages for its negligencein carrying out the audit work. He then contends that Covenant breached its obligationsto the shareholders of Antares and to the debenture holders, when it failed to ensurethat the receivers sued BDO.[17] Mr Williams says that, as a result of Covenant's negligence, he has sufferedloss in the same amount he is claiming from BDO and the receivers.The claim against the Assignee[18] Mr Williams pleads that, as liquidator of Five Star, the Assignee was under aduty to the shareholders of Antares and the debenture holders to maximise the returnto Antares and to the debenture holders. Mr Williams pleads that the Assignee failedto discharge that duty of care in the following respects:(1) Failing to bring a claim against BDO for its negligence in the auditwork;(2) Failing to bring a claim against the receivers for failing to sue BDOduring the limitation period within which a claim against BDO couldhave been commenced;(3) Failing to bring a claim against Covenant for failing to bring a claimagainst the receivers.[19] Mr Williams claims the same loss from the Assignee as he claims from theother defendants.Mr Williams' criminal convictions relating to Five Star[20] Mr Williams was himself convicted of criminal offending associated with thecollapse of Five Star. On 5 October 2010 he pleaded guilty to certain charges laidunder s 58 of the Securities Act 1978 and s 66 of the Crimes Act 1961, in which hewas alleged to have been a party to mis-statements in a Five Star registered prospectusor advertisement, offering, distributing or allotting in contravention of the SecuritiesAct 1978, and false or misleading statements made in financial statements.[21] Mr Williams later sought (on two occasions) to withdraw his guilty pleas,contending that he had good defences. His attempts to withdraw the guilty pleas wereunsuccessful in the District Court, and an application for a judicial review of theDistrict Court decisions was dismissed by Venning J on 8 February 2013.1[22] Mr Williams was sentenced in the District Court to three years and sevenmonths imprisonment after certain determinations of fact were made by Judge DMWilson QC in a reserved decision given on 12 March 2013.[23] Judge Wilson rejected Mr Williams' proposition that he was a mere employeein the Five Star group, uninvolved in the critical decisions about the direction of thegroup. His Honour said:2The Crown evidence as a whole satisfies me that [Mr Williams] was theguiding hand of the group.[24] Later in the decision, Judge Wilson found that "Mr Williams was an integralpart of all major strategic decisions within the Five Star group".3[25] Mr Williams was prosecuted separately by the Serious Fraud Office, for theftby a person in a special relationship (s 220 of the Crimes Act 1961). He initiallypleaded not guilty to two charges but he changed his plea to guilty four days into thetrial.[26] In sentencing Mr Williams to five years' imprisonment on the charges under s220, Gilbert J noted that Mr Williams was "heavily involved" in the management andoperations of the Five Star group, including Five Star.4 His Honour noted that, between2003 and 2007, Five Star entered into a number of related party loans in breach of therestrictions in the debenture trust deed. His Honour found that Mr Williams was1 Williams v The District Court at Auckland [2013] NZHC 127.2 The Queen v Williams DC Auckland CRI-2009-004-024026, 12 March 2013 at [24].3 At [39].4 R v Williams [2013] NZHC 2139 at [2].involved in arranging and approving these unauthorised related party loans, knowingthat they breached the terms of the debenture trust deed.5[27] On one of the counts of theft, His Honour said:6 By disguising the related party lending in this way, you and the directorsof Five Star intended to mislead the trustee and the auditors so that Five Starcould continue to borrow further funds from members of the public.[28] Mr Williams' position in this proceeding is that he pleaded guilty at age 76 dueto major health problems he suffered after the receivership, as he was not physicallywell enough to stand the rigours of a major trial. He also said that he was incorrectlyadvised by counsel in the Securities Act proceeding that it would not be a difficultmatter to change his guilty plea if he later wished to do so.The statements of defence of BDO, the receivers, and the Assignee[29] Statements of defence have been filed by BDO, the receivers, and the Assignee.Covenant has deferred filing a statement of defence pending the determination of itsapplication for strike-out or summary judgment (or in the alternative, security for itscosts).BDO's statement of defence[30] BDO admits that Five Star was placed into receivership on 29 August 2007,and that Mr Agnew and Mr Boswell were appointed receivers of Five Star on that date.It admits that Five Star was put into liquidation on 6 December 2013, and it says thatFive Star was struck off the Register of Companies on 4 November 2015.[31] BDO admits that Antares was the sole shareholder of Five Star, and it says thatAntares was put into liquidation on 7 May 2008. It admits that it was the auditor forFive Star and Antares between 2001 and 2007.5 At [4].6 R v Williams, above n 4, at [5].[32] BDO denies that it owed the shareholders of Antares any duty of care, and itsays that any assignments of debentures to Mr Williams would have been contrary topublic policy and invalid. The invalidity is said to arise from Mr Williams' role andconduct in the affairs of Five Star before its receivership.[33] Finally, BDO says that Mr Williams' claims are out of time under theLimitation Act 1950. Any cause of action Mr Williams might have had would haveaccrued when shareholding or investment decisions were made in reliance on BDO'saudit reports, or at latest on the receivership of Five Star on 29 August 2007. On thatbasis, the six-year limitation period for Mr Williams to issue his proceeding7 expiredon or before 28 August 2013. As Mr Williams' claim was not filed in this Court until30 September 2019, the claim is out of time and cannot succeed.The receivers' statement of defence[34] The receivers deny that Mr Williams has standing to bring the claim. They saythat Companies Office records show that none of the 7,851,094 issued shares inAntares were allocated to Mr Williams. The first report of the liquidators of Antares,dated 12 June 2008, records that the shareholders in Antares were the subscribers to acumulative preference share issue, and there could not have been any transfer ofAntares shares to Mr Williams after Antares was put into liquidation: s 248(d) of theCompanies Act 1993 (the Act) prevents any transfer of shares in a company inliquidation without the prior approval of this Court, and no such approval has beengiven.[35] The receivers also deny that the secured debenture stock in Five Star was heldby Mr Williams. At the date of the receivership, the secured debenture stock was heldby approximately 2,130 investors, and Mr Williams was not one of them.[36] The receivers plead that Mr Williams acted as a de facto director of Five Starat material times. They refer to the decision on disputed facts given by Judge Wilsonin the District Court on 12 March 2013, and the sentencing remarks of Gilbert J whenMr Williams was sentenced in the High Court. They say that Mr Williams had full7 Limitation Act 1950, s 4.knowledge of, and responsibility for, any issues with Five Star's lending andaccounting practices, and with its non-compliance with the debenture trust deed.[37] The receivers deny that they owed any duty of care to shareholders of Antares.Under the debenture trust deed, their obligation was to recover amounts from theCharged Assets (as defined in the debenture trust deed), and to assist Covenant indistributing those amounts to investors.[38] The receivers say that in the course of the receivership they did considerwhether a claim should be made against BDO (for not detecting the criminal offendingby Five Star's actual and de facto directors, including Mr Williams). They made thedecision not to bring a proceeding against BDO in light of the risks and uncertaintiesas to whether such a proceeding would be successful, and the substantial costs ofbringing the proceeding. They advised Covenant of that decision in August 2012, andthey also informed the Financial Markets Authority of the information they had arisingfrom the criminal prosecution of Five Star's actual and de facto directors.[39] The receivers did bring proceedings against Five Star's actual and de factodirectors, including Mr Williams, for breaches of duties owed by them to Five Starunder the Act. The claim against Mr Williams was stayed when he was adjudicatedbankrupt on 17 February 2011.[40] The receivers also plead that Mr Williams' claims are out of time. In additionto s 4 of the Limitation Act 1950, they rely on s 11(1) of the Limitation Act 2010,which provides a defence to a money claim if the claim is not filed within six yearsafter the act or omission on which the claim is based.[41] The limitation position is different for Mr Boswell on the one hand, and MessrsAgnew and McCloy on the other. Any act or omission of Mr Boswell must have beenan act or omission before 27 January 2009, when he resigned as a receiver of FiveStar. The limitation position on the claim against Mr Boswell is therefore governed bythe Limitation Act 1950.88 Under s 59 of the Limitation Act 2010, the 1950 Act continues to apply to causes of action basedon any act or omission occurring before 1 January 2011.[42] Mr Agnew and Mr McCloy were the receivers in office following Mr Boswell'sresignation, but any omission by Mr Agnew and Mr McCloy to commence aproceeding against BDO would have to have been at a time when it was still possibleto sue BDO. That could not have been any later than six years after the commencementof the receivership of Five Star (29 August 2013), as by then at least some loss musthave been caused by any negligence there may have been in BDO's audit work. Anyclaim by Mr Williams against Mr Agnew and Mr McCloy therefore had to be filed nolater than 29 August 2019, being six years after the last date a proceeding could havebeen issued by the receivers against BDO. As Mr Williams did not commence hisproceeding until 30 September 2019, he was approximately one month out of time.His claim is accordingly barred under s 11(1) of the Limitation Act 2010.The Assignee's statement of defence[43] The Assignee admits he was appointed liquidator of Five Star on 6 December2013. He says that he retired on 7 August 2015.[44] The Assignee denies owing any duty to maximise the returns to Antares andthe debenture holders. He says that he was not obliged to carry out any duty or exerciseany power in the liquidation that would have resulted in him incurring expense, andnor was he required to carry out any duty in respect of any property of Five Star whichwas subject to a charge.[45] Pursuing a proceeding against BDO would have incurred substantial expense,and there were in any event no available assets in the liquidation of Five Star to meetthat expense. Further, any such claim was and remained secured property throughoutthe course of the liquidation.[46] The Assignee also pleads that any claim against BDO was statute-barred fromat least 29 August 2013.Mr Williams' reply[47] Mr Williams has filed a reply, briefly denying all of the affirmative defencespleaded in the statements of defence.Defendants' applications for summary judgment, strike-out, or security for costs[48] Each of the defendants has filed an application for summary judgment or anorder striking out Mr Williams' claim. In the alternative, each asks for an order forsecurity for its costs.[49] Mr Williams has filed brief notices of opposition to each of the defendants'applications, generally opposing the making of the orders sought. In each case, MrWilliams denies any relevant limitation period has expired, and he says that each ofthe defendants owed him a duty of care as alleged. He avers that he is the assignee ofvarious debenture securities, and says that he has acted properly in bringing his claim.[50] In response to the summary judgment/strike-out application by the receivers,Mr Williams says that he was not aware of or complicit in breaches of Five Star'sobligations under the debenture trust deed.[51] On each of the security for costs applications, Mr Williams admits that he isimpecunious, but pleads that it is just and equitable that his claim should be allowedto proceed.Defendants' strike-out and summary judgment applications – legal principlesStrike-out applications[52] Rule 15.1 of the High Court Rules 2016 provides as follows:15.1 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, orcase 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 undersubclause (1), it may by the same or a subsequent order dismiss theproceeding 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 asare considered just.(4) This rule does not affect the court's inherent jurisdiction.[53] The following principles have been established by the Supreme Court:9(1) the jurisdiction to strike out a cause of action is one which is exercisedrarely and only where the cause of action is clearly untenable (i.e. hasno prospect of success);(2) a strike-out application proceeds on the basis that the facts pleadedagainst the applicant are true;(3) the Court should be particularly slow to strike out a claim in anydeveloping area of the law, particularly where a duty of care is allegedin a new situation;(4) developments in negligence need to be based on proved rather thanhypothetical facts; and(5) if a pleading may be saved by amendment, that amendment should beallowed.10Defendants' summary judgment applications[54] Rule 12.2(2) of the High Court Rules provides:(2) The court may give judgment against a plaintiff if the defendantsatisfies the court that none of the causes of action in the plaintiff'sstatement of claim can succeed.9 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725.10 Kupenga v Hayes HC Auckland A1523/84, 4 February 1986.[55] The principles applicable to an application for summary judgment by adefendant were discussed by Elias CJ in Westpac Banking Corp v MM Kembla NZLimited:11[61] The defendant has the onus of proving on the balance of probabilitiesthat the plaintiff cannot succeed. Usually summary judgment for a defendantwill arise where the defendant can offer evidence which is a complete defenceto the plaintiff's claim ...[62] Application for summary judgment will be inappropriate where thereare disputed issues of material fact or where material facts need to beascertained by the Court and cannot confidently be concluded from affidavits.It may also be inappropriate where ultimate determination turns on a judgmentonly able to be properly arrived at after a full hearing of the evidence.Summary judgment is suitable for cases where abbreviated procedure andaffidavit evidence will sufficiently expose the facts and the legal issues.Although a legal point may be as well decided on summary judgmentapplication as at trial if sufficiently clear (Pemberton v Chappell [1987]1 NZLR 1), novel or developing points of law may require the contextprovided by trial to provide the Court with sufficient perspective.[63] Except in clear cases, such as a claim upon a simple debt where it isreasonable to expect proof to be immediately available, it will not beappropriate to decide by summary procedure the sufficiency of the proof ofthe plaintiff's claim. That would permit a defendant, perhaps more inpossession of the facts than the plaintiff (as is not uncommon where a plaintiffis the victim of deceit), to force on the plaintiff's case prematurely beforecompletion of discovery or other interlocutory steps and before the plaintiff'sevidence can reasonably be assembled.The applications by BDO[56] I will deal first with BDO's application for summary judgment and/or strike-out.Submissions for BDO[57] BDO made two principal submissions:(i) The claims against it are statute-barred;(ii) It did not owe Mr Williams the pleaded duties of care.11 Westpac Banking Corp v M M Kembla NZ Limited [2001] 2 NZLR 298 (CA) at [61] - [63].[58] For BDO, Mr Smith submitted that the Limitation Act 1950 applies, and that s4 of that Act provides that an action founded on tort (as Mr Williams' claim is) shallnot be brought after the expiration of six years from the date on which the cause ofaction accrued.[59] Under the 1950 Act, a cause of action in negligence accrues when the plaintifffirst suffers loss attributable to the breach.12 That is generally the position whether ornot the plaintiff is aware they have suffered loss. There is no general doctrine ofreasonable discoverability under the 1950 Act.13[60] When a plaintiff sues a professional adviser for financial damage, the cause ofaction accrues (and time begins running for limitation purposes) as soon as the plaintiffwho relied on the advice is "financially worse off", even if quantification is difficultand measurement of the loss may ultimately depend on further contingencies.14 Theloss must be material, but it need not be complete or readily measured.15[61] Where an investor has purchased an investment that does not have therepresented characteristics, the investor suffers loss immediately on the purchase. Thereason for that is that the investment is less valuable to the investor for that reason; itremains uncertain whether the investment will in fact underperform in comparisonwith an investment that had the promised characteristics.16[62] Mr Smith submitted that the effect of those authorities is that any shareholderor investor in Five Star must have suffered loss when he or she purchased shares orinvestments in Five Star. On the date of purchase, the investor acquired an investmentthat was not what had been represented in the prospectuses, including BDO's auditletters. Mr Smith submits that must be the case here, particularly having regard to MrWilliams' pleading in his statement of claim that Five Star was insolvent from as earlyas 31 March 2004.12 Thom v Davys Burton [2008] NZSC 65, [2009] 1 NZLR 437 at [15].13 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721 at [37].14 Thom v Davys Burton, above n 12, at [16].15 Westland District Council v York [2014] NZCA 59 at [13].16 Shore v Sedgwick Financial Services [2008] EWCA Civ 863, [2009] Bus LR 42, at [37] – [39],referred to in Smith v Singleton [2015] NZHC 1643 at [43].[63] Mr Smith submitted that the precise date on which any cause of action wouldhave accrued is academic in this case, because the shareholders and debenture holdersmust have suffered loss when Five Star was put into receivership on 29 August 2007.He submitted that the shareholders and investors could certainly have commenced aclaim against the registered directors, Mr Williams, and any other allegedly liableparties at that point. Under s 4 of the Limitation Act 1950, any claim had to be broughtwithin six years of that date. In this case, Mr Williams' claim was not filed until 30September 2019, more than 12 years after any cause of action against BDO must haveaccrued.Submissions by Mr Williams[64] Mr Williams first submitted that time did not begin to run under the LimitationAct until the completion of the receivership.[65] Secondly, Mr Williams argued that the claim against BDO is one of mistake.He appears to rely on s 28 of the Limitation Act 1950, which provides as follows:28 Postponement of limitation period in case of fraud or mistakeWhere, in the case of any action for which a period of limitation is prescribedby this Act, either—(a) the action is based upon the fraud of the defendant or his agent or ofany person through whom he claims or his agent; or(b) the right of action is concealed by the fraud of any such person asaforesaid; or(c) the action is for relief from the consequences of a mistake,—the period of limitation shall not begin to run until the plaintiff hasdiscovered the fraud or the mistake, as the case may be, or could withreasonable diligence have discovered it:Provided that nothing in this section shall enable any action to bebrought to recover, or enforce any charge against, or set aside anytransaction affecting, any property which—(d) in the case of fraud, has been purchased for valuable consideration bya person who was not a party to the fraud and did not at the time ofthe purchase know or have reason to believe that any fraud had beencommitted; or(e) in the case of mistake, has been purchased for valuable consideration,subsequently to the transaction in which the mistake was made, by aperson who did not know or have reason to believe that the mistakehad been made.[66] Mr Williams also referred to the 15-year longstop limitation period providedat s 23B of the Limitation Act 1950. He submitted that the longstop limitation period: is to allow for [an extension of the limitation period to 15 years] in the caseof Audit Mistake of which BDO as auditor are guilty of not reporting that90.35 per cent irrecoverable losses had not been written off. Last unqualifiedaudit longstop period of limitation BDO 20/9/2006 plus 15 years is 20/9/21.Discussion and conclusions on the limitation issue[67] I accept Mr Smith's submissions on this issue. Mr Williams' claim againstBDO is clearly statute-barred under s 4 of the Limitation Act 1950.[68] On Mr Williams' own pleadings and evidence, Five Star was actually insolventfrom as early as 31 March 2004, and the last of the audit reports issued by BDO wasissued in September 2006. According to Mr Agnew's affidavit for the receivers, it wasthe directors of Five Star who concluded in August 2007 that the company was nolonger able to operate due to lack of liquidity and reduced investment rate in themarketplace. The directors then requested that Covenant appoint the receivers underits powers contained in the debenture trust deed, and the appointment was made on 29August 2007.[69] Five Star's insolvency appears to have been made public immediately after thereceivers were appointed. In a document prepared by Mr Williams and sent by him tothe receivers' solicitors on 17 November 2019, Mr Williams said:Appendix 2: PWC receivers first report 9 days after appointmentPWC appointed 29/08/2007 reported within 9 days that two of the Five StarDirectors revealed and signed that irrecoverable NZ loans not written off were$30 million which mean that Five Star was insolvent.[70] A major part of Mr Williams' complaint against BDO is that it failed to pickup breaches of the debenture trust deed, and/or the fact that commercial loans enteredinto by Five Star were outside normal commercial lending practices and were madewithout any or proper security, such that approximately 78 per cent of the loans wereirrecoverable. Mr Williams himself acknowledges in his statement of claim that no orinsufficient allowance was made for bad debts, and that the restrictions on related partylending contained in the debenture trust deed were breached by Five Star.[71] Mr Agnew described in his evidence the issues the receivers found with FiveStar's loan book. He said that of the total loan book of $65,520,000 at the date of thereceivership, $40,965,000 comprised large consumer loans to 72 private individuals.It transpired that the majority of this lending had been conducted on non-commercialterms with either no security or inadequate security. The loans were made tocompanies related to the directors of Five Star, or to individuals for the purpose ofbuying redeemable preference shares in Antares. The receivers issued proceedingsagainst the directors and Mr Williams for breaches of their directors' duties owed toFive Star, in July 2008. Mr Williams was bankrupted in February 2011, preventing theproceeding against him being pursued any further.[72] On any view of it, any loss caused to shareholders, debenture holders, or otherinvestors in Five Star as a result of reliance on BDO's audit reports, must haveoccurred by the date of the receivership at latest. Anyone acquiring shares or otherinvestments in Five Star in reliance on the allegedly defective audit reports issued byBDO could not have been in any doubt at that point that their investments were worthsubstantially less than they would have been if there had been no defects in the auditreports. Applying cases such as Shore v Sedgwick, and Smith v Singleton, the investorsor shareholders relying on the audit reports to obtain their investments probablysuffered loss immediately when the investments were acquired. However, I do notneed to make any finding to that effect, because it is clear from Mr Williams' ownstatement of claim and the evidence of Mr Agnew that, by the date of receivership atlatest, Five Star was insolvent. Shareholders or investors who may have relied onBDO's audit reports must have suffered loss by that point.[73] For those reasons, there is no merit in Mr Williams' submissions that anyrelevant loss did not occur until the conclusion of the receivership. It had occurred, atlatest, by the date of receivership in August 2007. By then, the investors were clearlyfinancially worse off, as their investments were less valuable than they would havebeen if Five Star's financial position, on a true and fair view, had been as it was saidto be in the financial statements which were the subject of BDO's unqualified auditreports.[74] Section 28(c) of the Limitation Act 1950 cannot assist Mr Williams on thelimitation issue. Section 28(c) had the effect of extending the six year limitation periodin an action for relief from the consequences of a mistake, so that time would not beginto run against the plaintiff for limitation purposes until the plaintiff had discovered themistake (or could, with reasonable diligence, have discovered it). Mr Williams' presentaction is not an action for relief from the consequences of any mistake. It is a claimfor substantial damages for alleged negligence in the conduct of audit work.17[75] Nor can the longstop limitation period of 15 years prescribed by s 23B of theLimitation Act 1950 assist Mr Williams. The 15-year longstop provision is notdesigned to extend the period within which plaintiffs can bring proceedings. Rather, itis designed to provide prospective defendants with certainty that they will no longerbe exposed to possible claims when 15 years have expired from the dates of their actsor omissions which might have been the subject of a claim. That purpose is madeclear in s 23B(2), which provides that the longstop period is to apply in addition toevery other period of limitation that applies to the action. In this case, Mr Williams'claim is caught by the six-year limitation period prescribed by s 4 of the 1950 Act.[76] For all of those reasons, the claim against BDO is clearly out of time. Thatsituation is incapable of being remedied by any amendment to the pleadings, and theappropriate relief is to enter summary judgment for BDO on the claims against it.There will be judgment accordingly.[77] In those circumstances there is no need to consider BDO's argument based onthe absence of any duty of care owed to Mr Williams. Nor is there any need to considerBDO's applications for strike-out and security for costs orders.17 Section 28(c) was considered by Allan J in James v McMahon [2013] NZHC 3018, [2014] NZAR295 at [59] – [61]. His Honour held (at [61]) that a plaintiff who wishes to rely on the provisionsof s 28(c) must plead and prove a cause of action that involves mistake as a necessary ingredient.His Honour noted (at [59]) that mistake was not an essential element of the causes of actionpleaded – rather, the plaintiff's claim was that the defendant solicitors were negligent in thedischarge of their obligations to the plaintiffs. So in this case, Mr Williams case is one ofnegligence – there is no attempt to invoke the statutory provisions relating to mistake in Part 2,subpart 2 of the Contract and Commercial Law Act 2017, or to rely on any other form of mistakemade by Mr Williams. Nor could there be on the facts of this case.The applications by the receivers[78] Again, I will deal first with the receivers' application for summary judgmentand/or strike-out.Submissions for the receivers[79] Mr Moffat made the following submissions for the receivers:(1) The proceeding against the receivers is statute-barred. Any lossesarising out of any deficiencies in BDO's last audit letter dated 20September 2006 would have been suffered no later than the date FiveStar was put into receivership, and the receivers could not have broughtany claim against BDO after six years had elapsed from the date of thereceivership. The relevant omission relied upon by Mr Williams(failure to issue a proceeding against BDO while there was still time todo so) must have occurred at latest by 29 August 2013, being the sixthanniversary of the commencement of the receivership. Any claimagainst the receivers had to be filed within six years of that date, andMr Williams missed that filing deadline by a little over one month.(2) Mr Williams has no standing to bring the proceeding, as he is neither ashareholder of Antares nor a holder of Five Star debenture stock.Further, the receivers owed no duty of care to a shareholder of Antares.(3) The claim against the receivers is frivolous, vexatious, and an abuse ofprocess, given that Mr Williams effectively seeks damages for BDO'salleged failure to uncover his own wrongdoing.[80] Mr Moffat substantially adopted the submissions made for Covenant in respectof Mr Williams' lack of standing, and the submissions of the Assignee in respect ofthe claim being an abuse of process.[81] On the limitation argument, Mr Moffat referred to the different limitationprovisions applicable in respect of Mr Boswell on the one hand, and Messrs Agnewand McCloy on the other. Any economic loss allegedly suffered due to Mr Boswellfailing to issue a proceeding against BDO would have occurred no later than the datehe retired as a receiver on 27 January 2009 (once he retired as a receiver, he had noability to bring a claim on behalf of Five Star against BDO). The six-year time limitfor bringing a claim against Mr Boswell therefore started running from 27 January2009, and expired on 27 January 2015, more than four years before Mr Williams filedthis proceeding.[82] In respect of the claims against Messrs Agnew and McCloy, the allegedomission to sue BDO continued after 1 January 2011, and the Limitation Act 2010applies in respect of that period. As Messrs Agnew and McCloy could not havebrought a claim against BDO after 29 August 2013, time began running for any claimagainst them from 29 August 2013 at latest, and the limitation period for claims againstthem expired on 29 August 2019.[83] In support of the submission that Mr Williams has no standing to bring theclaim, Mr Moffat submitted that the clear documentary evidence is that, despite hisclaims, Mr Williams is neither a shareholder of Five Star's parent company Antares,nor a holder of debenture stock in Five Star. And even if Mr Williams had been ashareholder of Antares, he would have had no claim in that capacity against thereceivers.[84] A receiver's principal duty is to the person in whose interests he or she wasappointed. In this case, that person was Covenant. While s 18(3) of the ReceivershipsAct 1993 recognises a secondary duty for a receiver to have reasonable regard to theinterests of certain other persons, those other persons do not include the shareholdersof the grantor (let alone a shareholder of the shareholder of the grantor).18 Thereceivers acknowledge that it is arguable that they could have owed a duty to MrWilliams in his claimed capacity as a debenture holder but, on the facts, he does notgenuinely hold debenture stock in Five Star.18 Rogers v Bullen (1992) 6 NZCLC 67,636 (HC); Irdoss Computer Systems Ltd v Arthur Andersen& Co [1993] MCLR 397.[85] On the issue of abuse of process, Mr Moffat submitted that Mr Williamseffectively seeks damages of approximately $130 million for BDO's alleged failure topick up Mr Williams' own wrongdoing, even though this Court sentenced Mr Williamsto five years' imprisonment, in part for wrongfully trying to disguise that wrongdoingfrom BDO.Submissions by Mr Williams[86] Mr Williams essentially relied on the same limitation argument he relied uponin opposing BDO's summary judgment application. Specifically in respect of thereceivers, he argued that the receivership was not completed until 23 May 2014, sothat the six year time limit for commencing a claim would not have expired until 23May 2020.[87] Mr Williams contended that he was entitled to sue as the holder of shares inAntares and as the holder of the debenture stock. Relevant to the abuse of processissue, he said that he was suing in the interests of others (many small investors in FiveStar), and not for his own personal gain.Discussion and conclusions on the limitation issue[88] I have held that any cause of action against BDO must have accrued, at latest,when Five Star was put into receivership. Mr Williams' case is that, from that point,Five Star held a contingent asset in the form of a claim against BDO, and each of thereceivers was negligent in failing to issue a proceeding against BDO in order to realisethat asset.[89] Assuming (for the sake of the limitation argument only) that the receivers werenegligent in failing to commence a proceeding against BDO, that negligence musthave caused relevant loss (at the latest) when any claim against BDO became statute-barred – at that point, the value of any claim against BDO would have becomeworthless.[90] Applying the Limitation Act 1950 to the claim against Mr Boswell, it followsthat the cause of action against him must have accrued by 29 August 2013 at latest.After that point, any prospect of successfully suing BDO was gone.19[91] The same result must follow in respect of any negligent omission by Mr Agnewor Mr McCloy to commence a proceeding against BDO in the period from the datesof their appointment as receivers up to 31 December 2010. The Limitation Act 1950applied to causes of action against them in respect of any negligent acts or omissionsup to that date, and any cause of action based on such acts or omissions must haveaccrued by 29 August 2013 at latest (when any claim against BDO became valueless).Under s 4 of the 1950 Act, Mr Williams had six years running from that date tocommence an action against the receivers. He did not do so, missing the limitationdeadline by a little over one month.[92] The Limitation Act 2010 would have applied to negligent acts or omissions ofMessrs Agnew and McCloy after 1 January 2011, and the six-year limitation period ins 11(1) of that Act runs from the date of the negligent act or omission relied upon bythe plaintiff. Any negligent omission to sue BDO before 29 August 2013 cannot nowbe relied upon by Mr Williams, because more than six years had passed before hecommenced his proceeding against the receivers. And Messrs Agnew and McCloycannot be liable for electing not to sue BDO after 29 August 2013, as BDO wouldhave had a complete (limitation) defence to any such claim. No one can be liable innegligence for failing to sue someone who has a complete defence.[93] For the reasons set out at [73] above, the fact that two of the receivers remainedin office until May 2014 is irrelevant to my conclusion that any claim the receiversmight have brought against BDO became statute-barred on 29 August 2013 at latest.The six-year time limit is designed to provide defendants with some certainty that theywill no longer be exposed to claims after the statutory limitation period has passed,and that protection is not lost (or the limitation period extended) if a prospective19 It is not necessary for me to make any finding on whether the cause of action against Mr Boswellaccrued on his retirement as receiver, as Mr Moffat submitted. It may be that any negligence onMr Boswell's part in failing to commence a proceeding against BDO did not affect the value ofthe contingent asset (the possible claim against BDO) until that claim later became statute-barred.If that is so, there would arguably have been no economic loss caused by Mr Boswell's failure tosue BDO until as late as 29 August 2013.plaintiff happens to go into receivership or liquidation before any proceeding is filed.And for the reasons set out at [74] and [75] above, Mr Williams' claims against thereceivers cannot be saved by s 28(c) or s 23B of the 1950 Act. The claims are quiteclearly out of time, and that is a situation that cannot be cured by any amendment toMr Williams' pleadings. As with the claim against BDO, the appropriate relief is toenter summary judgment for the receivers. There will be judgment accordingly.[94] It is not strictly necessary to consider the receivers' other arguments, or theirapplications for strike-out orders and/or security for costs, except to say that (i) Iwould also have entered summary judgment for the receivers based on their lack ofstanding argument, for the reasons that are set out below at [114] – [122] in mydiscussion of Covenant's summary judgment/strike-out application; but (ii) I wouldnot have been prepared to enter judgment for the receivers, or strike out Mr Williams'claim against them, on the basis that Mr Williams was effectively seeking damages forthe failure of others to detect his own wrongdoing (or to sue others who should havedetected it). That is not an issue suitable for determination on a summary judgmentapplication, as it may be arguable for Mr Williams that, in circumstances where hewas not suing in his personal capacity but as trustee for others (to whom nowrongdoing could be attributed), the "profiting from one's own wrongdoing"/abuse ofprocess principles referred to by counsel cannot be applied.The applications by Covenant[95] Again, I address first the applications for summary judgment and/or strike-out.Submissions for Covenant[96] Ms Adams' principal submissions were that Covenant did not owe Mr Williamsthe pleaded duties, and that he has no standing to bring the claim against it. She alsosubmitted, generally adopting the submissions of counsel for BDO and the receivers,that the claim against Covenant is out of time and an abuse of process.[97] On the limitation issue, Ms Adams supplemented the submissions of Mr Smithand Mr Moffat, and adapted them to apply to Covenant, as follows.[98] Mr Williams' allegation is that Covenant as trustee owed a duty to Antaresshareholders and Five Star debenture holders, to ensure that the obligations of thereceivers of Five Star were carried out in a good, proper and competent manner.Covenant is alleged to have breached that duty by failing to ensure that the receiversbrought a claim against BDO for negligent auditing.[99] The time limit for Mr Williams to bring a claim against Covenant (for failureto ensure that the receivers sued BDO) ran from 29 August 2013 (at latest). That is sobecause any duty Covenant might have had to ensure that the receivers brought aproceeding against BDO must have ceased when it was no longer possible for thereceivers to bring any timely claim against BDO. That point was reached by 29 August2013 at latest, and Mr Williams had six years from that date to sue Covenant for failureto perform the duty he alleges it owed. On that basis, the time for Mr Williams to sueCovenant expired on 29 August 2019, a little over one month before his claim wasfiled.[100] On the standing issue, Ms Adams submitted that Mr Williams is not ashareholder in Antares, and is not an assignee of any debentures issued by Five Star.She noted that the list of shareholders of Antares at the time of its receivership, andthrough to its removal from the Companies Register on 7 October 2011, did notinclude Mr Williams, nor any Antares entity. While Mr Williams has produced sharetransfer forms recording transfers of Antares shares from various individuals to theTrust, the share transfer forms are all dated in 2017. Antares was put into liquidationon 7 May 2008, and it was removed from the Companies Register on 7 October 2011.Once a company is in liquidation, a share in the company cannot be transferred unlessthe Court otherwise orders.20 Furthermore, the share transfers on which Mr Williamsrelies were signed approximately six years after Antares was removed from theCompanies Register. You cannot validly transfer shares in a company that no longerexists.20 Companies Act 1993, s 248(1)(d).[101] Nor does the evidence show that Mr Williams, as trustee of the Trust, is theassignee of debentures in Five Star. A copy of the register of debenture holdersmaintained by Five Star makes no reference to Mr Williams or to any Antares entities.After the defendants each raised this issue in correspondence with him, Mr Williamsprovided an affidavit attaching a copy of an assignment of debentures to him as trusteeof the Trust, from Boma Trustees Limited (Boma). But this document does not relateto Five Star. It purports to be an assignment of debentures in a different entity, FiveStar Debenture Nominee Limited (Debenture Nominee). Debenture Nominee was partof the wider group of Five Star companies, and it did share some common directorswith Five Star, but it was a separate entity, with separate receivers and liquidators toFive Star. Covenant was not the trustee for Debenture Nominee, and did not have anyrelationship with it.[102] For those reasons, Mr Williams' allegations that he is a shareholder in Antaresand/or an assignee of Five Star debentures, do not meet the threshold of credibility. Heis neither a shareholder of Antares nor the holder of relevant debentures, and he hasno standing to bring the claim. An order striking out his claims against Covenant isjustified on that basis.[103] Next, Ms Adams submitted that Covenant did not in any event owe the dutiesof care alleged by Mr Williams. She acknowledged that a trustee of debt securitiesowes duties to the investors on whose behalf it acts as trustee, but no such duty wasowed to the shareholders of Five Star,21 and Covenant's duties to the holders of thedebentures did not include a duty to supervise the receivers' performance of theirobligations.Submissions by Mr Williams[104] Mr Williams generally relied on the same limitation submissions he relied uponin opposition to the application by the receivers. He submitted that the limitationperiod for a claim against Covenant expired in May 2020, six years after the21 Referring to National Finance 2000 Ltd (in rec and in liq) v William Buck New Zealand Ltd, CIV-2010-404-007157 HC Auckland, 7 December 2011; Takaro Properties Ltd v Rowling [1986] 1NZLR 22 (CA) and Christensen v Scott [1996] 1 NZLR 273 (CA).conclusion of the receivership. He submitted that Covenant had been negligent intaking "no action prior to or after receivers final report 23.05.14".[105] Mr Williams contended that he was entitled to sue as the holder of shares inAntares and as the holder of the debenture stock.[106] Mr Williams referred to cl 9.7 of the debenture trust deed, which provides:9.7 Relevant StockholdersThe Trustee may either of its own volition or pursuant to anydirections or in accordance with any policy given by any meeting ofstockholders represent the stockholders in any matter or proceedingsaffecting the interests of the stockholders concerning them generally.[107] He then submitted that no extraordinary meeting of Five Star's stockholderswas called, and no extraordinary resolution was passed by the stockholders releasingCovenant from its responsibilities to act properly in the interests of the debenturestockholders. Consequently, Covenant remained liable to the stockholders.Discussions and conclusions[108] In his statement of claim, Mr Williams says that Covenant owed a duty (to himas an Antares shareholder and/or debenture stockholder) to ensure that the obligationsof the receivers were carried out in a good, proper and competent manner. He allegesthat Covenant breached that duty by "failing to ensure that [the receivers carried outtheir obligations as receivers and managers in a good, proper and competent manner".The particular default alleged against the receivers in this context, is their failure tosue BDO for negligently carrying out the Five Star audit work. Mr Williams says thatthe losses he or the Trust have suffered, were suffered "as a result of the negligence of[Covenant]".[109] I have found that any claim against BDO had to be brought by 29 August 2013,at latest, when the limitation period for claims against it expired. Any breach byCovenant of a duty of care to take appropriate steps to ensure BDO was sued, and anyloss suffered as a result, must also have occurred and been suffered by 29 August 2013.After that date, Covenant could not have been negligent in failing to take any stepsthat might theoretically have been available to it, to ensure that a hopeless, statute-barred claim was pursued against BDO. The claim against Covenant as pleaded, then,was filed outside the six-year time limits under both the 1950 Act and the 2010 Act.[110] Ms Adams acknowledges that Covenant did owe duties to Five Star debenturestockholders (although not a duty to "oversee" the decisions of the receivers onceappointed). I think the duties Covenant owed to the debenture stock holders wouldhave been owed primarily in the law of trust, or equity. In such cases, the time limitfor bringing any claim is normally fixed by analogy with the time limits for bringingsimilar claims for which limitation periods are prescribed by statute.22[111] But regardless of what might have been the time limit for commencing a breachof trust claim, Mr Williams does not appear to be alleging that Covenant owed him aduty as the beneficiary of any relevant trust. The duty that he pleads is said to havebeen owed by Covenant to (inter alia) the shareholders of Antares, and he says that hehas suffered loss as a result of the "negligence" of Covenant. As I understand it, thereis no suggestion that Covenant was acting as a trustee for the shareholders of Antares.[112] At very least, then, the statement of claim against Covenant in negligence mustbe struck out because it is statute-barred. The question is whether it might be re-constituted as a breach of trust claim by Mr Williams acting solely as the assignee ofthe Five Star debenture stock, in such a way as to give him an arguable route aroundCovenant's limitation defence. I do not think there is any realistic prospect of that.[113] First, I think the time limit for commencing a claim against Covenant fornegligent breach of trust was the six-year time limit anyway, by analogy with thelimitation periods in the Limitation Acts for claims to recover money for loss resultingfrom a defendant's negligence.[114] Secondly, and more fundamentally, the evidence on the question of MrWilliams' standing to sue is in my view fatal to his case. He is not even arguably withinthe ambit of those to whom Covenant might have owed any duty.22 Proprietors of Wakatu v Attorney-General [2017] NZSC 17, [2017] 1 NZLR 423 at [943],referring to Gwembe Valley Development Co Ltd v Koshy (No 3) [2003] EWCA Civ 1048 at [111]and [112].[115] Mr Williams was adjudicated bankrupt on 17 February 2011, so any Antaresshares or Five Star debentures he might have owned prior to that date would havevested in the Official Assignee under s 101 of the Insolvency Act 2006. They wouldhave remained so vested following his discharge from bankruptcy on 17 February2014.23[116] Next, and quite apart from the issue of whether Covenant could have owed anyduty of care in negligence to shareholders of Antares (which I doubt), the purportedtransfers of Antares shares to Mr Williams in 2017 were clearly invalid. No leave ofthe Court had been obtained to transfer the shares while the company was inliquidation24, and there was in any event no entity in which shares could exist afterAntares was removed from the companies register on 7 October 2011.[117] Nor could Mr Williams' acquisition of debenture stock in Debenture Nomineeprovide him with standing to sue Covenant. In his affidavit in opposition sworn on 10February 2020, Mr Williams said that the Trust is the assignee of "various debenturesecurities in Five Star". Exhibit "C" to his affidavit was said to comprise "copies ofthe transfer of debenture securities". However Exhibit "C" consisted only of anassignment to the Trust (some time after September 2019 when the Trust was created)of debentures held by Boma Trustees Ltd in Debenture Nominee.[118] Mr Spong's reply affidavit for Covenant made it clear that Debenture Nomineeis a separate entity from Five Star, and that Covenant was not the trustee for it. Nordid Covenant have any other relationship with Debenture Nominee. DebentureNominee operated as debenture holder in respect of deposits made for the benefit of adifferent company within the group, Five Star Finance Ltd.[119] Mr Spong also confirmed in his reply affidavit that Mr Williams' name did notappear on the list of Five Star debenture holders at the time Five Star was put intoreceivership.23 The Trust did not exist at that stage.24 Companies Act 1993, s 248(1)(d).[120] An affidavit provided by Ms Langley, a principal officer with the Aucklandoffice of the Insolvency and Trustee Service, shows that Mr Williams was asked inNovember 2019 to provide documentation establishing the purported assignment ofFive Star debentures to him. Although Mr Williams responded on 19 November 2019,he did not provide the requested evidence. He had earlier failed to include in his initialdisclosure under r 8.4 the claimed assignments of Five Star debenture stock. On anyview of it, those documents (if they existed) were critical documents relied upon byMr Williams in his claim.[121] The standing issue must have been obvious to Mr Williams by the time thevarious applications came on for hearing in June 2020, but he made no application toproduce any further evidence to suggest that he or the Trust holds some Five Stardebenture stock.[122] In the foregoing circumstances, I consider that the defendants have sufficientlyproved that Mr Williams holds no Five Star debenture stock, and that he has nostanding to sue on that basis. His claim against Covenant as trustee for the Five Stardebenture holders is accordingly misconceived. Nor does it appear that the claimmight be capable of repair if Mr Williams were permitted to amend his statement ofclaim. The right answer in such a case is to enter summary judgment for the defendant,and there will be summary judgment for Covenant accordingly.[123] Mr Williams' submissions relating to the alleged need for an extraordinaryresolution of debenture stockholders relieving Covenant of its responsibilities, cannotassist him to overcome the limitation and standing issues, which are fatal to his case.[124] Having regard to those findings, there is no need to address the other argumentsmade for Covenant, or to address its application for security for costs.The applications by the AssigneeSubmissions for the Assignee[125] Mr Neil noted that the Assignee is alleged to have breached a duty of care owedto the shareholders of Antares, and to Five Star debenture holders, by failing to bringclaims against BDO, against the receivers (for failing to bring a claim against BDO),and against Covenant (for failing to bring a claim against the receivers). He submittedthat the claim against the Assignee cannot succeed for the following reasons:(i) Mr Williams does not have standing to bring the claim;(ii) The Assignee had no duty to bring any of the specified claims;and(iii) The claim that Mr William alleges the Assignee ought to havemade against BDO had become statute-barred well before theAssignee's appointment as liquidator.[126] On the lack of standing issue, Mr Neil adopted the argument of other counselthat Mr Williams is neither a shareholder of Five Star nor of its shareholder, Antares.Nor is he the assignee of debenture securities in Five Star, or an unsecured creditor ofFive Star. No relevant duty of care was owed by the Assignee as liquidator, whetherin tort or under any statute.[127] On the duty of care issue, Mr Neil first referred to s 254 of the Act. That sectionprovides:254 Liquidator not required to act in certain casesNotwithstanding any other provisions of this Part,—(a) except where the charge is surrendered or taken to be surrendered orredeemed under section 305, a liquidator may, but is not required to,carry out any duty or exercise any power in relation to property thatis subject to a charge:(b) where—(i) a company is put into liquidation under section 241(2)(c); and(ii) the Official Assignee is the liquidator of the company; and(iii) the company has no assets available for distribution to creditorsof the company,—the Official Assignee shall not be required, without the consent of the Ministerof the Crown who, under the authority of any warrant or with the authority ofthe Prime Minister, is for the time being responsible for the administration ofthis Act, to carry out any duty or exercise any power in connection with theliquidation if, to do so, would or would be likely to involve incurring anyexpense.[128] In this case, the Assignee was not required to carry out any duty or exerciseany power in relation to the claims Mr Williams alleges existed against other parties,because any such claims were properly subject to the charge over Five Star's assetsand undertaking created by the debenture trust deed, and that charge had not beensurrendered or redeemed. The claim is barred by s 254(a).[129] Even if that were not so, s 254(b) would have relieved the Assignee of anyresponsibility to bring any of the specified claims. That is because:(1) Five Star was placed into liquidation by order of the Court made unders 241(2)(c) of the Act;(2) Five Star had no assets available for distribution to creditors;(3) To advance any of the specified claims would have, or would be likelyto have, involved the Assignee incurring significant expense; and(4) The Assignee did not have ministerial consent to carry out any duty orexercise any power in connection with the liquidation that would orwould be likely to involve incurring expense.25Submissions by Mr Williams[130] Mr Williams submitted that the Assignee owed the duties he has pleaded, andthat it was negligent in not bringing claims against the other defendants. He referredto a successful claim the Assignee had made against the same firm of auditors, in hiscapacity as liquidator of Capital + Merchant Finance Ltd (in liquidation).[131] On the limitation issue, Mr Williams submitted that he had six years to sue theAssignee, running either from 6 December 2013 (the date of the Assignee'sappointment as liquidator) or from 7 August 2015 (when the liquidation wascompleted. Either way, the claim against the Assignee was in time.25 Referring to Aladdin's Motor Inn Ltd (in liquidation) v Bowcorp Holdings Ltd [2015] NZHC 843.Discussion and conclusions[132] The Assignee also succeeds, and is entitled to summary judgment.[133] For the reasons outlined in my decision on the application by Covenant, MrWilliams is neither a shareholder in Antares nor a holder of debenture stock in FiveStar, and he has not identified any other basis on which duties might have been owedto him by the Assignee. He is not even a creditor of Five Star.[134] I also accept Mr Neil's submissions based on limitation (in respect of thecontention that the Assignee should have sued BDO), and on s 254 of the Act. On thelimitation issue, the time within which BDO might have been sued expired on 29August 2013 at latest, and the Assignee was not appointed until December of that year.The Assignee could not have been negligent in failing to pursue a claim that wasalready statute-barred.[135] Turning to s 254 of the Act, any assets of Five Star were and remained subjectto the charge created by the debenture trust deed, even after the retirement of thereceivers in May 2014. Ms Langley's evidence confirms that that charge was notsurrendered or taken to be surrendered, or redeemed under s 305 of the Act, and anythird party claims that might have been made against BDO, the receivers or Covenantwould have been "property" of Five Star that was subject to s 254(a). The words "butis not required to" in s 254(a) are in my view incompatible with the existence of anyduty on the liquidator to exercise any powers in relation to the charged property,including the pursuit of potential claims against third parties.[136] Had it been necessary, I would also have accepted Mr Neil's submissions basedon s 254(b) of the Act. The various requirements of that subsection are established byMs Langley in her affidavit, and it is clear that the Assignee would have incurredsignificant expense in suing the receivers or Covenant. No ministerial consent wasgiven for any such action, and in my view the Assignee was not under any duty,enforceable by Mr Williams, to seek such consent.[137] Mr Williams has endeavoured to make much of the fact that the Assignee suedthe same auditors and recovered a sum in excess of $18 million, in the liquidation ofCapital + Merchant Finance Ltd (in liquidation). There is nothing in that submission.Even if the facts in that case were similar (and I have insufficient evidence that theywere), I think it is safe to infer that the claim against BDO in that case must have beenbrought within the relevant limitation period. That is not the position in this case.[138] For all of those reasons it is clear that Mr Williams' claims against the Assigneecannot succeed, and that the Assignee is entitled to summary judgment. There will bejudgment accordingly.[139] In those circumstances it is not necessary to address the Assignee's strike-outapplication, or the application for security for costs.Result(1) Summary judgment is entered for all of the defendants on Mr Williams'claims against them.(2) Each defendant is entitled to costs against Mr Williams. Those costswill be on a 2B basis (with only one set of costs allowed for preparingthe casebook for the hearing of the defendants' applications, and withthe scale amount for written submissions for each defendant reducedby 20 per cent to reflect the areas that were common to the defendants'submissions (Mr Williams should not have to pay costs for four sets ofwritten submissions addressing the same topics)), unless memorandaare filed seeking increased or indemnity costs by not later than 5pm onMonday, 9 November 2020. Any such memoranda are not to exceedthree pages in length. In the event of any such memoranda being filed,Mr Williams may file a memorandum in reply by not later than 5pmon Friday, 13 November 2020. Costs will then be decided on thepapers.Associate Judge SmithSolicitors:Gilbert Walker, AucklandBell Gully, AucklandChapman Tripp, AucklandMeredith Connell, AucklandCopy to:Neill Williams