John Dixon QC is representing the regulator. Photo / NZME
A lawyer representing CBL Corporation has revealed proceedings were filed earlier this year by the failed company against its directors.
The new directors' liability suit is against all of the former insurer's directors and adds to the mass of civil proceedings that arose out of the insurers' downfall.
CBL Corporation lawyer, Jason Goodall, revealed the action at a case management hearing in the high court at Auckland this morning.
Goodall said it was "another proceeding alongside the CBLI case which stands to be determined … it currently sits in the queue".
The CBL Insurance case is one brought by the liquidators against the CBL Corporation subsidiary.
Goodall said the CBL Corporation case that was related to the purchase of an overseas managing agent in 2016-17 is a case for breach of directors' duties, the case is that the entities should not have been purchased.
CBL Corporation also has cross-claims against the directors, as it also defends proceedings by the Financial Markets Authority (FMA) and two lots of shareholders.
The main topic of discussion today was whether to hear the FMA's claims with the class actions. Even if a consolidated hearing proceeds, a two-stage hearing is likely, Justice Ian Gault heard today.
The various civil claims against CBL Corporation and its former directors include breaches of the Financial Markets Conduct Act for CBL's initial public offering (IPO) documents and continuous disclosure breaches.
A trial is not expected to take place until 2024.
The FMA's position is that its case should run first, and the other cases follow.
The court has heard if this happens there would be two six-month-long trials rather than one 13 and a half month hearing Early in the hearing at the high court at Auckland, the lawyer for the liquidators, David Chisholm QC, said his client's position was neutral, so long as the "dash for cash" issue that is quantum is decided later.
"The purpose of today is to decide which is whether the proceeding should be heard together … it's complicated in that different people and parties are seeking different things," Justice Gault said.
The lawyer for one of the shareholder groups, Philip Skelton QC, said his clients, known as the Livingstone claimants, shouldn't have to "effectively give control to the FMA, whose interests may diverge [from those of the shareholders]".
"Shareholders are entitled to be heard and shouldn't have to wait for the FMA and any possible appeals and then relitigate any issues," Skelton said.
He urged the judge to be guided by the principles of justice and a speedy determination of the proceedings. Representing the other group of shareholders, including Harbour Asset Management, was Mike Colson who said it was also advocating for a joint hearing.
While it believed its insider trading claim wouldn't take much time – it was easy to prove – his client would sever that claim if necessary to allow the consolidated trial to proceed. Colson even suggested that the shareholders could have even gone ahead of the regulator.
The lawyer for the independent and non-executive directors, Tim Lindsay, said his view was that there was little cross-over in the continuous disclosure and IPO claims, but he would abide by the court's decision.
Former CBL chief executive Peter Harris's lawyer, Davey Salmon, was supportive of the shareholders' position. He said the suggestion that FMA witnesses might not agree to also being questioned by the shareholders' lawyer, "was just a theoretical concern".
He warned there were "many hands reaching for a pot assumed to be finite" but the longer the case against his client proceeded, the less money there would be for shareholders at the end.
The FMA's lawyer, John Dixon QC, said the regulator was "not unsympathetic to the position of the shareholders". "But the fact is that the shareholders have brought a raft of broader and different claims and it is considerably different from the FMA proceedings."
Dixon said the FMA's proceeding is what meets the public interest of sanctioning and providing guidance to the marketplace.
He says: "This is the most significant case the FMA has brought," and added it wanted to punish the behaviour and provide guidance to the marketplace and, in particular, in relation to continuous disclosure.
He said the case would have great ramifications for corporate governance on when material issues should be disclosed.
"In my view, the extra time required for the shareholders' case is at least three to four months," he said.