BANNOCK v MONACO MANAGEMENT LIMITED [2017] NZHC 1575

BANNOCK v MONACO MANAGEMENT LIMITED [2017] NZHC 1575

Relief under s 37AH was refused because the issuer completely failed to comply with the Act's disclosure regime (no prospectus or equivalent exemption compliance), the breach was substantive and causally connected to material prejudice suffered by subscribers who lacked the information to assess promoter projections...

Source-derived case information.

Citation
[2017] NZHC 1575
Parties
Plaintiffs: Michael William Bannock; Anne Margaret Bannock; Oxford Street Trustees (2010) Limited & Ors; First Defendant: Monaco Management Limited; Second Defendant (issuer): Monaco Village Limited (in liquidation and receivership); Third Defendant (director/applicant): Scott Patrick Sanders; Non‑party: Financial Markets Authority
Court
High Court
Jurisdiction
New Zealand
Judgment Date
7 July 2017
Procedural Posture
Civil Securities Litigation (securities Act 1978) / Post‑trial Application for Relief Under S 37 AH and Consequential Order (judgment Delivered)
Outcome
Application for relief under s 37AH dismissed; order under s 37AC granted to specified plaintiffs; costs reserved.
Legal Topics
Relief Under S 37 AH, Prospectus and Disclosure Obligations, Participatory Securities, Director Liability S 37(6), Territorial Scope S 7, Material Prejudice Assessment
Securities Law Company Law Insolvency Law Equity/remedial Discretion Relief Under S 37 AH Prospectus and Disclosure Obligations Participatory Securities Director Liability S 37(6) +2 more

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Parties

Michael William Bannock; Anne Margaret Bannock; Oxford Street Trustees (2010) Limited & Ors

Plaintiffs

Monaco Management Limited

First Defendant

Monaco Village Limited (in liquidation and receivership)

Second Defendant (issuer)

Scott Patrick Sanders

Third Defendant (director/applicant)

Financial Markets Authority

Non‑party

Procedural Posture

Civil Securities Litigation (securities Act 1978) / Post‑trial Application for Relief Under S 37 AH and Consequential Order (judgment Delivered)

Legal Issues

  1. 1 Whether the third defendant (director) has standing to apply for relief under s 37AH
  2. 2 Whether it is just and equitable to grant relief under s 37AH given substantive breach of s 37
  3. 3 Whether the contravention materially prejudiced subscribers

Ratio Decidendi

Relief under s 37AH was refused because the issuer completely failed to comply with the Act's disclosure regime (no prospectus or equivalent exemption compliance), the breach was substantive and causally connected to material prejudice suffered by subscribers who lacked the information to assess promoter projections and risks, and mitigating factors (lawyer involvement, contemporaneous Securities Commission practice) did not eliminate that prejudice or justify validation; therefore it was not just and equitable to relieve the director.

Court Disposition

Application for relief under s 37AH dismissed; order under s 37AC granted to specified plaintiffs; costs reserved.

Orders

  • Relief under s 37AH refused and application dismissed
  • Relief granted under s 37AC to the plaintiffs listed in Schedule 1 to the Statement of Claim except plaintiffs 2, 14, 20, 21, 28, 31, 32, 34, 37, 39 and 43 so that s 37(4) to (6) does not apply to those allotments