Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Belgrave Finance auditor loses bid to quash negligence claim

Belgrave Finance auditor loses bid to throw out accusations of negligence

By Paul McBeth

Nov. 13 (BusinessDesk) - Accounting firm Hayes Knight has lost a bid to throw out accusations it breached its duty of care in signing off on Belgrave Finance accounts, and is one of several parties being sued by the receivers of the failed lender.

Associate Judge John Matthews dismissed an application to strike out Belgrave's case against Hayes Knight, provided the claim was amended to more clearly demonstrate the auditor's alleged culpability, he said in a Nov. 7 judgment. Belgrave has filed six causes of action against former directors Shane Buckley and Steven Smith, their associate Raymond Schofield, solicitors Davidson, Armstrong & Campbell and Hayes Knight.

The judge agreed with Belgrave's lawyer, Bruce Stewart QC, who argued the losses were caused "by the very fact of continued trading" and that it was an issue for a trial to determine, rather than a strike out application.

Belgrave claims that had Hayes Knight done a "careful, diligent and professionally appropriate" audit, the lender wouldn't have issued the 2007 prospectus and would probably have been placed into receivership earlier than it ultimately was in 2008.

From the time of the offer document, the lender advanced some $3.8 million, including to Schofield and related entities, and received $4.9 million from debenture stockholders which it was unable to repay.

Stewart "acknowledges that the plaintiff will have to prove these contentions at trial, but says that if proved the losses claimed are the recoverable consequence of Hayes Knight's negligence," the judgment said.

Judge Matthews ordered Belgrave to "clearly plead relevant facts to show that the losses claimed were the result of the decision to continue to trade."

Costs were reserved, though the judge said his immediate view was to let them lie where they fell.

In August, former Belgrave director Buckley was sentenced to three years in jail after pleading guilty to 19 charges of theft by a person in a special relationship, and four charges of false statement by promoter under the Crimes Act. He also pleaded guilty to one Securities Act charge of making an untrue statement and one Companies Act charge of making a false statement to a trustee.

The Serious Fraud Office has levelled similar charges against Smith and Schofield, who are due to stand trial in April next year.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news