Some of the events occurred before June 2018 but the FMA has said it had no knowledge of them any earlier than July 16, 2021.
Booster is also contending that only the decisions to invest KiwiSaver and funds from other investment schemes in the Booster Tahi Limited Partnership (Tahi) should be considered, not the decisions that Tahi made to invest in various wine businesses.
Booster has argued that its obligation to issue related-party certificates stopped at its decision to make capital commitments to Tahi.
“The defendents say that each ‘downstream’ investment made by Tahi is not a ‘transaction’ giving rise to a further obligation to issue a related-party certificate,” says Justice Rebecca Edwards of the High Court in a judgment on each party’s discovery obligations.
The judgment, published on the FMA website, gives each side some wins and some losses.
Justice Edwards said the FMA alleges that Booster and its directors and senior officers ignored or disregarded “clear conflicts of interest” when the Tahi wine businesses began to struggle and they advanced funds to Tahi “on short notice, with almost no due diligence and in the face of clear red flags.”
She noted that the defendents say that the 75 causes of action “make the claim appear more complex than it really is” and that the Tahi decisions didn’t attract obligations for Booster.
The FMA had sought documents about other unrelated investments by Booster and its parent, Booster Financial Services and Tahi, including meeting agenda, minutes and records of decisions, arguing that these would shed light on Booster’s decision-making process, a key issue in the FMA’s claim.
But Justice Edwards turned the FMA down on this and said “it is not BIML’s decision-making in general which is at issue.”
Even if an argument could be make that Booster’s general decision-making was relevant, which Booster disputes, “I am not persuaded such a comparison would be probative of the issues to be determined in this proceeding.”
As well, the likely volume of documents involved, such discovery “would be disproportionate in the circumstances.”
Booster got another win in not having to produce documents relating to the financial performance of other Tahi investments.
It also won on getting documents showing when the FMA became aware of the Tahi investments at issue.
However, Booster had sought what is known as standard discovery but Justice Edwards decided it would get only tailored discovery.
She also denied Booster’s request for information on complaints the FMA had received against it.
Justice Edwards also gave the FMA more time to obtain expert evidence which might dispute an expert Booster had engaged, a Mr Hardy, described as an independent specialist trustee, who said that documents Booster sought relating to the actions of other companies and industry practice would assist an independent expert in giving informed opinions on whether the conduct of Booster, its directors and senior managers met the threshold of “a prudent professional manager” or whether they had acted “improperly.”
The FMA had argued that allowing such discovery was likely to cover more than 100,000 documents and that such documents would belong to third parties and that issues of commercial sensitivity might arise.
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