Capital + Merchant settlement dispute back in court

The thousands of investors eyeing up what might be the last avenue of recovery in the collapse of Capital + Merchant face further delay after a settlement dispute went back to court today.

In March, NBR ONLINE revealed a High Court judge will decide whether Capital + Merchant conditionally settled its dispute with Perpetual Trust in September last year.

A four-day hearing on the issue of settlement is set to be heard in September this year.

According to an earlier court decision Perpetual and Stace Hammond say their lawyer, Campbell Walker, settled the matter with Capital + Merchant lawyer Bruce Stewart, QC, in September.

But Mr Stewart says he did not agree to settle.

Capital + Merchant’s receivers have said the case against former trustee Perpetual and law firm Stace Hammond is probably the only remaining potential avenue of recovery for investors.

At the date of receivership 7500 investors were owed approximately $167 million.

This morning, an application for particular discovery was heard before Justice Sarah Katz in the High Court at Auckland.

Suppression orders from an earlier judgment in February mean NBR ONLINE cannot report on the pleadings or the disputed settlement amount.

The hearing continues.

A legal source recently said even if a court finds there was a settlement at the September hearing, this will have to be vetted by an independent QC as there is a clause in the alleged agreement for a third party check. 

NBR understands the clause was inserted because the claim involves litigation funders, which traditionally the courts have preferred not to hold power over the actions they fund.

Mr Stewart has applied to the High Court before Justice Susan Thomas to be considered a separate party, so he could have his own lawyer.

He says he needs a lawyer because, if at the trial the court finds he did enter his client, Capital + Merchant, into an agreement, it could open him up to liability from Capital + Merchant.

His lawyer, Michael Ring, QC, noted that Capital + Merchant has contractual arrangements which dictate how the action is pursued and funded and said Mr Stewart’s concern is that the financial constraints may not allow for the ”fullest ventilation of issues,” harming his case.

The judge ruled Mr Stewart should not be a separate party because, while there will be an impact on his reputation, his interest in the case is not sufficient.

hmcnicol@nbr.co.nz