How to calculate damages in relation to director conduct will be central to the Mainzeal case
How to calculate damages in relation to director conduct will be central to the Mainzeal case
LPF Group's funded Mainzeal suit and actions taken following the collapse of CBL Corporation are key cases to watch in 2020, according to lawyers canvassed by BusinessDesk.
Developments in the rules governing class actions will also be keenly observed in 2020 as the courts will have to set precedents in this burgeoning area.
"The biggest case is Mainzeal's appeal in April, and that's a fascinating case from a number of different angles," said Matt Kersey, a partner at Russell McVeagh.
"It's an unusual decision, on the first level, in relation to the way you calculate damages in relation to director conduct. In the corporate space, people are wanting to know how they should behave in that twilight zone, to see whether liability holds up in the Court of Appeal."
NZ-based LPF Group is also funding one of the proposed class actions following the collapse of CBL Corporation, where it is expected that a judge will have to pick between their suit and one funded by ASX-listed IMF Bentham.
Kersey said it will be interesting to see where the two private claims intersect with a civil case brought by the Financial Markets Authority announced last month.
"In theory, they will be running a similar factual pattern and looking at the role of the directors, so I suppose where the three cases intersect will emerge in the new year."
CBL shareholder Alistair Hutchison, former chairman Sir John Wells and managing director Peter Harris.
Buddle Findlay's Scott Barker said the Supreme Court appeal of the Southern Response case is another that will be closely watched. The top court granted leave for the government-owned company to appeal a ruling that the first stage can proceed on an "opt-out" basis, which means all potential plaintiffs are covered unless they actively chose to be excluded.
That landmark decision was a turning point because the courts had previously required class actions to be run on an "opt-in" basis, meaning decisions covered only those potential plaintiffs who signed up.
The Southern Response decision meant about 3000 other Southern Response customers were automatically covered by the suit fronted by Brendan and Colleen Ross, unless they opt-out. Due to its significance, the court has asked the NZ Law Society and the NZ Bar Association if they want to intervene.
"The opt-in, opt-out decision is going to be significant for litigation funders, obviously, because it makes your starting pool obviously a lot more attractive," if the opt-out approach is taken, Barker said.
IMF Bentham has also started preparing an opt-out case relating to aluminium composite panels on buildings, the kind of material used on the Grenfell Tower in London and which contributed to the catastrophic June 2017 fire that killed 72 people and injured more than 70 others.
Barker added that construction disputes and insolvency-related cases appear to be increasing.
"The International Convention Centre alone, there has to be a lot of litigation coming out of that, and Commercial Bay is behind. That's going to keep a lot of lawyers busy," he said.
Kersey said while there would be construction disputes in the new year, it tended to be done privately in arbitration.
Former Mainzeal chair Dame Jenny Shipley
Outside the courtroom, class actions will present a big piece of work for the Law Commission, which recently confirmed it will consult on the issue with the aim of making recommendations to government in 2021.
The High Court Rules Committee is asking for feedback on some key developments to how cases are run in the interests of access to justice.
It is looking at introducing a short trial process in the High Court, an inquisitorial process for certain claims, introducing a quicker initial starting process for civil claims and streamlining trial processes.
ANZ wants to get rid of the $75 million claim at pre-trial by saying it is not even reasonably arguable. Ross Asset Management investors, which has formed a class action funded by LPF Group, says that, as David Ross's banker, ANZ had breached its duties to investors.
Mainzeal's Liquidators v Former Directors
Court of Appeal, April
At the trial into what happened ahead of the construction company's 2013 collapse, Justice Francis Cooke commented that the case was likely to be appealed and so here we are. While Justice Cooke awarded $36 million against the group of director defendants, they say they shouldn't be liable and the liquidator says they should pay more.
The mammoth case has been to the Supreme Court and back but, finally, the Ministry of Education will get its day in court against Carter Holt Harvey. The ministry has been suing Carter Holt for the defective cladding of 800 school buildings. The court has set aside six months to go through all the evidence.
Eric Houghton v Feltex directors
High Court at Wellington, May
Following a late adjournment in November, aggrieved Feltex investors are scheduled to start stage two of their trial against former directors of the collapsed carpet maker. The case on behalf of more than 3000 Feltex Carpet shareholders is now at the quantum stage after the Supreme Court ruled last year its 2004 prospectus had an untrue statement and that could led to liability.
