Baker v Libeau - [2022] NZHC 3137

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2021-425-000017

[2022] NZHC 3137

BETWEEN
ROBERT DARCY BAKER

Plaintiff

AND

JEAN-MICHEL LIBEAU

First Defendant

AND

LINCSPUN LIMITED

Second Defendant

AND

LIBEAU LIMITED

Third Defendant

Hearing: 16 November 2022

Appearances:

B B Gresson for the Plaintiff B P Molloy for the Defendants

Judgment:

28 November 2022

JUDGMENT OF NATION J

Introduction

[1] The first defendant (Mr Libeau) is a director and shareholder of a number of companies that have an interest in a yarn and fabric manufacturing technology (the Lincspun technology) which they licence to spinning mills and other manufacturers of yarn and fabric-based products. In 2015, the plaintiff (Mr Baker) and Mr Libeau discussed the potential value of Mr Libeau’s companies being USD 10 million. Mr Libeau planned on setting up a holding company which would own all the Lincspun technology intellectual property. Mr Baker agreed to invest USD 150,000 and receive a 20 per cent shareholding in the company. Mr Libeau owned the other 80 per cent of shares, which he transferred to the third defendant (Libeau Ltd). In 2016, the shares

BAKER v LIBEAU [2022] NZHC 3137 [28 November 2022]

were reallocated so that Mr Baker owned 26 per cent of them. He paid an additional USD 10,000 in consideration. The relationship between Mr Baker and Mr Libeau ultimately broke down.

[2] In 2021, Mr Baker filed proceedings against Mr Libeau and the defendant companies associated with him, seeking damages and relief for breach of contract and misrepresentation under the Contract and Commercial Law Act 2017, and for oppressive and unfairly discriminatory conduct under the Companies Act 1993.

[3] On 13 July 2022, Mr Baker filed an interlocutory without notice application for freezing orders as to certain assets in which Mr Libeau and the defendant companies had an interest, and an application for ancillary orders requiring Mr Libeau to file an affidavit identifying property he owned.

[4] On 15 July 2022, Mander J made an interim freezing order to continue until a telephone conference with the parties, the telephone conference to serve as first call of the application on an on notice basis.

[5] On 21 July 2022, Dunningham J confirmed the freezing order would continue until a further order of the Court. The application for ancillary orders remained before the Court.

[6] On 9 September 2022, Mr Libeau and the other defendants filed an application for the discharge of the freezing order. There was a hearing as to all applications on 16 November 2022.

Initial requirements for the making of a freezing order

[7]Rule 32.5 of the High Court Rules 2016 relevantly provides:

32.5 Order against judgment debtor or prospective judgment debtor or third party

(1) This rule applies if—

…

(b)an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—

(i)the court; or

...

(4) The court may make a freezing order or an ancillary order or both against a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Baker v Libeau

Details

AGLC: Baker v Libeau [2022] NZHC 3137
Case: [2022] NZHC 3137
Decision Date: 28 November 2022

CaseChat Overview and Summary

The case of Baker v Libeau involves a dispute between Mr Baker, the plaintiff, and Mr Libeau, the first defendant, along with two other defendant companies associated with Mr Libeau. Mr Baker filed proceedings against Mr Libeau and the defendant companies seeking damages and relief for breach of contract, misrepresentation, and oppressive and unfairly discriminatory conduct. The case revolves around a contract between Mr Baker and Mr Libeau regarding the investment of USD 150,000 into a Singaporean company called Lincspun Tech, which was to be an intellectual property holding company. The court was required to decide whether a freezing order should be discharged and whether ancillary orders should be made to obtain information about the defendants' assets.

The court found that Mr Baker had established a good arguable case on his substantive claims, as the allegations in his proposed claim were capable of tenable argument and were supported by sufficient evidence. The court also found that there were assets to which the freezing order could apply and that there was a risk the defendants would dissipate or dispose of their assets. The court concluded that the freezing order should continue, subject to certain conditions, as the balance of convenience favoured maintaining the order.

Regarding the ancillary orders, the court found that it was appropriate to make such orders to properly police the freezing order. The court made ancillary orders as set out in Appendix 1 to the plaintiff's application of 12 July 2022. The court reserved costs as to the on notice application for freezing orders, ancillary orders, and the discharge of the interim freezing order, noting that Mr Baker had been successful in such applications.

Orders