LDC FINANCE LIMITED (In Receivership and In Liquidation) v DAVID GORDON MILLER, KEVIN ELLIOTT and ORS [2013] NZHC 2993

LDC FINANCE LIMITED (In Receivership and In Liquidation) v DAVID GORDON MILLER, KEVIN ELLIOTT and ORS [2013] NZHC 2993

The Court granted representative status for classes 1.2, 1.3 and 1.4 and held that IRG members as at 29 October 2013 had validly opted in to be represented, but adjourned determination of class 1.1 because its temporal composition raised live limitation and cause‑of‑action issues that could deprive defendants of defences; the Court imposed staged disclosure, an opt‑in deadline for non‑IRG investors and review limits to balance judicial economy with protection of defendants' rights.

Citation
[2013] NZHC 2993
Parties
First Plaintiff: LDC Finance Limited (In Receivership and In Liquidation); Second Plaintiffs (representatives of Secured Depositors): Janet Verena Wilson & Roland Lloyd Fawcett; Third Plaintiffs (representatives of Unsecured Depositors): Kaye Denise Whalan; Janet Verena Wilson; CW Fishing and Motorsport Consulting Limited; Fourth Plaintiffs (representatives of Clients of Carran Miller): Fawdan Subdivisions Limited; Angus & Greta McNeil; Fifth Plaintiffs: Iain Bruce Shephard & Heath Leslie Gair (liquidators of LDC); First Defendants (directors of Ldc): David Gordon Miller; Kevin Elliott; Christopher John Hardiman; John Charles Janetto; Second Defendant (accountancy Practice): Carran Miller Strawbridge Limited; Third Defendant (trustee Under Securities Act 1978): Perpetual Trust Limited; Fourth Defendant (auditors): Sherwin Chan & Walsh
Court
High Court
Jurisdiction
New Zealand
Judgment Date
12 November 2013
Procedural Posture
Representative Proceedings Application Under R 4.24 High Court Rules / Directions Hearing for Leave to Bring Representative Proceedings and Related Procedural Orders
Outcome
Representative proceedings permitted for classes 1.2, 1.3 and 1.4; class 1.1 adjourned for further consideration after filing of third amended statement of claim; IRG members as at 29 October 2013 declared to have opted in but given right to elect out; procedural directions and deadlines ordered.
Legal Topics
Representative Proceedings, Class Definition and Opt In/opt Out, Limitation Periods, Auditor Liability, Trustee Duties, Directors' Duties
Company Law Trusts Securities Law Civil Procedure Professional Negligence Representative Proceedings Class Definition and Opt In/opt Out Limitation Periods +3 more

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Parties

LDC Finance Limited (In Receivership and In Liquidation)

First Plaintiff

Janet Verena Wilson & Roland Lloyd Fawcett

Second Plaintiffs (representatives of Secured Depositors)

Kaye Denise Whalan; Janet Verena Wilson; CW Fishing and Motorsport Consulting Limited

Third Plaintiffs (representatives of Unsecured Depositors)

Fawdan Subdivisions Limited; Angus & Greta McNeil

Fourth Plaintiffs (representatives of Clients of Carran Miller)

Iain Bruce Shephard & Heath Leslie Gair (liquidators of LDC)

Fifth Plaintiffs

David Gordon Miller; Kevin Elliott; Christopher John Hardiman; John Charles Janetto

First Defendants (directors of Ldc)

Carran Miller Strawbridge Limited

Second Defendant (accountancy Practice)

Perpetual Trust Limited

Third Defendant (trustee Under Securities Act 1978)

Sherwin Chan & Walsh

Fourth Defendant (auditors)

Procedural Posture

Representative Proceedings Application Under R 4.24 High Court Rules / Directions Hearing for Leave to Bring Representative Proceedings and Related Procedural Orders

Legal Issues

  1. 1 Whether classes of LDC investors satisfy r 4.24 to permit representative proceedings
  2. 2 Whether members of the Investor Recovery Group (IRG) had validly opted in to be represented
  3. 3 Whether class definitions must be time‑segmented to avoid depriving defendants of limitation defences

Ratio Decidendi

The Court granted representative status for classes 1.2, 1.3 and 1.4 and held that IRG members as at 29 October 2013 had validly opted in to be represented, but adjourned determination of class 1.1 because its temporal composition raised live limitation and cause‑of‑action issues that could deprive defendants of defences; the Court imposed staged disclosure, an opt‑in deadline for non‑IRG investors and review limits to balance judicial economy with protection of defendants' rights.

Court Disposition

Representative proceedings permitted for classes 1.2, 1.3 and 1.4; class 1.1 adjourned for further consideration after filing of third amended statement of claim; IRG members as at 29 October 2013 declared to have opted in but given right to elect out; procedural directions and deadlines ordered.

Orders

  • Representative proceedings may be brought in respect of classes 1.2, 1.3 and 1.4
  • Within 10 working days plaintiffs to advise defendants of identity and investment details of intended representative plaintiffs for each approved class