BANNOCK v MONACO MANAGEMENT LIMITED [2016] NZHC 2842

BANNOCK v MONACO MANAGEMENT LIMITED [2016] NZHC 2842

Sales of Monaco Resort units subject to Cottage Leases were, in substance, offers of participatory securities; the s 5(1)(b) exemption did not apply because the units formed part of a contributory scheme; s 37 applied to allotments offered to the public and invalidates the allotment (the sale contract) not the registered lease itself; declaratory relief invalidating leases was refused as impractical and beyond the proper scope of s 37(4) given passage of time and registration/indefeasibility concerns; MVL (issuer) and Mr Sanders (director) are jointly and severally liable to repay subscription monies (plus statutory interest) to specified non‑statute‑barred plaintiffs; Monaco Management...

Citation
[2016] NZHC 2842
Parties
Plaintiffs: Michael William Bannock and Anne Margaret Bannock and Oxford Street Trustees (2010) Limited and other plaintiffs listed in Schedule 1 to the Statement of Claim; First Defendant (lessee/manager): Monaco Management Limited; Second Defendant (developer/issuer): Monaco Village Limited (in liquidation and receivership); Third Defendant (director/related Party): Scott Patrick Sanders
Court
High Court
Jurisdiction
New Zealand
Judgment Date
28 November 2016
Procedural Posture
Civil – Securities Act 1978 / Property / Company Law Dispute / Judgment Following Full Trial (high Court, Christchurch)
Outcome
Judgment for plaintiffs in part; liability for repayment ordered against Monaco Village Limited and Scott Sanders for identified non‑statute‑barred plaintiffs; declaratory relief invalidating leases declined
Legal Topics
Participatory Securities, Securities Act 1978 S37 Invalidation, S5(1)(b) Exemption and Contributory Scheme, Relief Order Regime Ss37 Aa–37 AL, Leasehold Indefeasibility, Directors' Statutory Liability, Statute Bar/limitation Issues, Subsequent Purchasers and S6(1)
Securities Law Property Law Company Law Contract Law Insolvency Law Participatory Securities Securities Act 1978 S37 Invalidation S5(1)(b) Exemption and Contributory Scheme +5 more

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Parties

Michael William Bannock and Anne Margaret Bannock and Oxford Street Trustees (2010) Limited and other plaintiffs listed in Schedule 1 to the Statement of Claim

Plaintiffs

Monaco Management Limited

First Defendant (lessee/manager)

Monaco Village Limited (in liquidation and receivership)

Second Defendant (developer/issuer)

Scott Patrick Sanders

Third Defendant (director/related Party)

Procedural Posture

Civil – Securities Act 1978 / Property / Company Law Dispute / Judgment Following Full Trial (high Court, Christchurch)

Legal Issues

  1. 1 Whether sales of units subject to Cottage Leases were offers of participatory securities
  2. 2 Whether s 5(1)(b) exemption for interests in land applied or was excluded by the contributory scheme exception
  3. 3 Whether s 37(4) was invoked and, if so, what the legal effect of s 37(4) is

Ratio Decidendi

Sales of Monaco Resort units subject to Cottage Leases were, in substance, offers of participatory securities; the s 5(1)(b) exemption did not apply because the units formed part of a contributory scheme; s 37 applied to allotments offered to the public and invalidates the allotment (the sale contract) not the registered lease itself; declaratory relief invalidating leases was refused as impractical and beyond the proper scope of s 37(4) given passage of time and registration/indefeasibility concerns; MVL (issuer) and Mr Sanders (director) are jointly and severally liable to repay subscription monies (plus statutory interest) to specified non‑statute‑barred plaintiffs; Monaco Management...

Court Disposition

Judgment for plaintiffs in part; liability for repayment ordered against Monaco Village Limited and Scott Sanders for identified non‑statute‑barred plaintiffs; declaratory relief invalidating leases declined

Orders

  • Second and third defendants (Monaco Village Limited and Scott Patrick Sanders) are jointly and severally liable to repay the subscription monies, plus interest in accordance with s 37(6), to the following plaintiffs: P M A and Associates Ltd (plaintiff 2); Paul Andrew Cheeseman and Sarah Frances Cheeseman (plaintiff...
  • Repayment by second defendant is conditional on each plaintiff transferring the relevant unit to the second defendant or its nominee immediately upon deposit by the second defendant of the plaintiff's subscription money in cleared funds into the trust account of the plaintiff's solicitor.