Baker v Libeau - [2022] NZHC 2826

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2021-425-17

[2022] NZHC 2826

BETWEEN
ROBERT DARCY BAKER

Plaintiff

AND

JEAN-MICHEL LIBEAU

First Defendant

LINCSPUN LIMITED
Second Defendant

LIBEAU LIMITED

Third Defendant

Hearing: 19 October 2022

Appearances:

B B Gresson for Plaintiff (via VMR)

N C T Batts and H F K Whitney for Defendants (via VMR)

Judgment:

31 October 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

BAKER v LIBEAU [2022] NZHC 2826 [31 October 2022]

[1] Mr Libeau is the director of Lincspun Limited which is in the business of manufacturing and selling yarns and fabrics under the Lincspun trademark. He is the sole director and shareholder of Libeau Limited.

[2] The plaintiff, Mr Baker, wished to invest in the intellectual property behind Lincspun Ltd’s business.

[3] On 4 May 2015, Mr Baker and Mr Libeau entered into an agreement which is recorded in an email (the contract). The subject line of the email is: “Investment in new LincSpun Tech company”. A new company was to be formed which:

… will acquire all intellectual property and royalty income of Mr Libeau’s existing Lincspun company. Except royalty income to cover all expenses of running the existing New Zealand and European companies.

[4] Mr Baker committed to invest USD $150,000 in exchange for 20 per cent of the new Lincspun company (Lincspun Tech Limited). The email recorded the investment will mainly go to pay for patent and company costs to “take the new company through to its next level”.

[5] The following year, Mr Baker invested a further USD $10,000, increasing his shareholding in Lincspun Tech Limited to 26 per cent. The balance of the shares are held by Libeau Ltd. Libeau Ltd and Mr Libeau between them own 93 per cent of the shares in Lincspun Ltd.

[6] Mr Baker and Mr Libeau have fallen out. On 8 March 2021, Mr Baker gave notice cancelling the contract. In this proceeding, Mr Baker alleges the defendants breached the contract by failing to transfer to Lincspun Tech Ltd all intellectual property and royalty income from Mr Libeau’s other Lincspun companies. Mr Baker also alleges Mr Libeau took for his own benefit the USD $150,000 paid by Mr Baker when the contract refers to those funds being used as set out in [3] and [4] above.

[7] Mr Baker seeks relief under s 43 of the Contract and Commercial Law Act 2017 (CCL Act) in such sum as the Court thinks fit, and orders under s 174

of the Companies Act 1993 (the Act) that Mr Libeau acquire his shares. In short, Mr Baker wants to exit his investment and sever his ties with the defendants.

History of these proceedings

[8] The proceeding was commenced in March 2021. The defendants filed a counterclaim in December 2021. The close of pleadings date was 30 May 2022.

[9] On 5 July 2022, counsel then instructed for the defendants sought and subsequently obtained leave…

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 2826
Case: [2022] NZHC 2826
Decision Date: 31 October 2022

CaseChat Overview and Summary

In the High Court of New Zealand, Mr. Robert Darcy Baker sued Mr. Jean-Michel Libeau, Lincspun Limited, and Libeau Limited. Mr. Baker invested in Lincspun Limited, a company that manufactures and sells yarns and fabrics under the Lincspun trademark. Mr. Baker alleged that the defendants breached their contract by not transferring all intellectual property and royalty income to the new company, Lincspun Tech Limited. Mr. Baker also alleged that Mr. Libeau used the USD $150,000 paid by Mr. Baker for his own benefit.

The legal issues before the court were whether Mr. Baker's application for security for costs was appropriate and whether the counterclaims were in substance a defence to Mr. Baker's claim. The court held that Mr. Baker's application for security for costs was appropriate as there was reason to believe the defendants would be unable to pay costs if their counterclaims were unsuccessful. The court also held that the counterclaims were not in substance a defence to Mr. Baker's claim.

The court ordered that Mr. Baker pay security for costs in the sum of $30,000, to be paid in two instalments. The court also ordered that the defendants provide certain financial documents and correspondence to Mr. Baker. The court reserved costs in respect of Mr. Baker's discovery application. The court directed the parties to finalise the quantum of their respective claims and plead other claimed damages with appropriate detail before the exchange of evidence could be finalised.

Orders