Monday 29th July 2019
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The amount awarded against former Mainzeal directors including Jenny Shipley and Richard Yan will remain at $36 million, the High Court has ruled.
Justice Francis Cooke allowed both sides to dispute how much should be paid after he ruled earlier this year that Shipley, Yan, Peter Gomm and Clive Tilby had breached directors’ duties ahead of the construction firm’s 2013 collapse.
In a judgment that reveals multiple settlement offers from the liquidators at BDO, Justice Cooke has ruled his initial liability figure was right.
While the judge found merit in both sides’ arguments, he essentially found that they cancelled each other out.
In any event, whether the directors were liable in the first place will be revisited in the Court of Appeal. A hearing is expected next year.
According to the judgment dated July 12, both the liquidator and representatives for the four directors held liable wanted to change the $36 million awarded. The court had heard during the trial that the directors were insured for about $23 million.
The liquidators wanted an increase, claiming that interest was not appropriately recognised, while the four defendants argued that they shouldn’t have to pay as much because losses to creditors had been exaggerated.
The director defendants were successful in saying that the correct starting point for Justice Cooke to work out liability from should have been $89 million, not $110 million as originally held.
This would have meant their liability was $29 million.
However, the judge found that adjusting the starting point upwards by $23 million would be equivalent to compensating the creditors at the rate of 4.4 percent for six years.
“In other words, if both adjustments were made, the starting point would have been the same overall, meaning $36 million would still have been the appropriate compensation to award.”
“In light of the above factors, I have concluded that both applications are appropriately considered on their merits, that both applications are valid, but that they cancel one another out.”
The judgment also notes several settlement offers had been made during the course of the litigation, which has been funded by LPF Group.
The decision said that in June 2016 BDO liquidator Andrew Bethell offered to settle for $32 million, while during trial in October 2018 a settlement of $25.5 million was mooted.
One of the original defendants, Siew May Kwan, had settled with the liquidator mid-trial.
On Nov. 15, after the trial had concluded, BDO offered to settle for $37.5 million.
The judge also awarded Paul Collins, the fifth former Mainzeal director who was sued but not found liable, costs in the trial. Collins was represented by the Chapman Tripp lawyers which represented Shipley, Gomm and Tilby.
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