Assured (Ch) Limited v Pierce

[2012] NZHC 2158

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-000201 [2012] NZHC 2158

BETWEEN  ASSURED (CH) LIMITED Plaintiff

ANDBEVAN PIERCE Defendant

Hearing:         23 August 2012

(Heard at Christchurch)

Appearances: D M Lester for Applicant Henry Hudson

No appearance for Defendant

Judgment:      24 August 2012

JUDGMENT OF J WILLIAMS J

[1]      The applicant applies for orders granting leave under s 165 of the Companies Act for the applicant to continue the plaintiff’s proceeding on its behalf together with a further order for further and better discovery.

[2]      It is in order for me to address these matters now in light of the defendant’s

failure to take any steps.

[3]      Section 165 allows a company director or shareholder to sue in the name of the company, by leave of this Court, if the company does not intend to diligently continue proceedings on foot.

[4]      In this case the plaintiff sues the defendant in respect of monies wrongly or wrongfully paid by the company to the defendant when the defendant was Acting General Manager and Chief Financial Officer.   The plaintiff says such payments were in breach of s 161(1)(a) of the Companies Act.  The defendant is a 75 per cent

shareholder in the company and, according to the applicant, appointed himself as a

ASSURED (CH) LIMITED V BEVAN PIERCE HC CHCH CIV-2010-409-000201 [24 August 2012]

director and removed the applicant.   This was to prevent the case proceeding.   A memorandum from the defendant’s counsel dated 31 January 2012 made it clear that the plaintiff, now under the control of the defendant, no longer wishes to pursue this proceeding.

[5]      The proceeding has been on foot since the beginning of 2010, but is now moribund.

[6]      Section 165 requires me to take into account, in considering whether to grant leave,  the  likelihood  of  success  in  the proceeding,  the  costs  of proceeding,  the company’s intentions in relation to the relief sought and the interests of the company.

[7]      I am satisfied that it is in order to grant leave under s 165 in this case.  It is a little early to form any view of the company’s prospects in this case, but the proceeding is certainly far from fanciful.  Mr Hudson indicates that he will meet the costs of any proceeding and it is clearly in the interests of the company to pursue them.  This is bona fide litigation and the evidence is that the defendant is using his position in the company to prevent its prosecution.

[8]      There will be an order accordingly as sought.

[9]      A further order is sought for further and better discovery.   The applicant suspects that the defendant’s statement of assets and liabilities dated 27 January 2011 is incomplete.  Mr Hudson says it does not disclose any assets the defendant received as a result of a matrimonial property division nor in relation to his family trusts.  The defendant is directed to provide such disclosure or confirm in a sworn statement that he has no such assets or interests.

[10]     Costs are reserved.

Williams J

Solicitors:

D M Lester, PO Box 9344, Christchurch 8149