Bankside Barristers Sam Lowery and Josh Suyker (instructed by Lindsay, Francis & Mangan) recently obtained a strike-out judgment based on an unusual abuse of process in CNP Holdings Ltd v Central Park Property, involving the failed Nido megastore in Henderson, Auckland.
The 27,000-square-metre furniture outlet was originally promoted as the country's largest retail store and opened in May 2020. It entered receivership six months later, closing in March 2021.
The plaintiff, CNP Holdings Ltd, sued under the Financial Markets Conduct Act 2013 for allegedly defective disclosure in a product disclosure statement (PDS) for a capital raise for the development. The plaintiff alleged that the PDS failed to disclose material risks to the investment.
An unusual feature of the case was that the plaintiff had not invested and suffered no loss. The plaintiff claimed to be pursuing the litigation for public interest reasons under the Act’s broad standing provisions. The defendants were two companies, their directors and employees, whom CNP alleged were responsible for the allegedly defective PDS.
The defendants argued that the plaintiff’s real purpose was to pressure the defendants to sell their business to him at a bargain basement price. The High Court agreed and found that the plaintiff’s predominant purpose was to further his commercial purpose of acquiring the defendants’ business.
The Court held that was an abuse of process and struck out the proceeding. The judgment raises interesting issues of standing, the use of litigation to achieve collateral purposes, and the court’s discretion to reject untenable affidavit evidence.
“This is one of those rare and exceptional cases”, stated Associate Judge Brittain, “where the extrinsic evidence is sufficient to make an objective determination that CNP would not have commenced this proceeding without CNP having the collateral purpose. The collateral purpose is the predominant purpose, it is improper and not a by-product of legitimate relief sought in this proceeding. This proceeding is an abuse of process and should be struck out.”
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