Colville Developments Ltd v Colville - [2021] NZHC 2272

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE

CIV-2021-418-000010

[2021] NZHC 2272

BETWEEN
COLVILLE DEVELOPMENTS LIMITED

Plaintiff/Applicant

AND

ADAM KEITH COLVILLE

Defendant/Respondent

Hearing: 24 August 2021

Appearances:

M S Henderson and R A Hearn for Plaintiff/Applicant D M Hughes and O J Towle for Defendant/Respondent

Judgment:

31 August 2021

JUDGMENT OF GENDALL J

This judgment was delivered by me on at pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Introduction

[1] This proceeding involves two brothers, the defendant Adam Keith Colville (Adam) and his brother Matthew Colville (Matthew) along with their company, the plaintiff Colville Developments Limited (CDL).

[2] The present application, according to Mr Hughes, counsel for Adam, forms part of a broader, ongoing and acrimonious dispute between the brothers. Matthew and Adam, he says, have fallen out over their business, professional and personal dealings and now have a complete lack of trust in each other. There seems little dispute over this.

COLVILLE DEVELOPMENTS LTD v COLVILLE [2021] NZHC 2272 [31 August 2021]

[3] Matthew and Adam were original directors of CDL. In general terms each brother held and continues to hold a 50 per cent interest as shareholders in the company which was set up in 2018 essentially to invest in commercial and residential properties.

[4] In establishing CDL, the brothers over time contributed funds to the company, essentially under the guise of shareholders’ advances in a series of payments which totalled $320,025 each. No documentation was drawn up for the purposes of depositing these funds.

[5] Some years ago, the relationship between the brothers, which also at the time involved ownership and operation of a West Coast G J Gardner building franchise through another company they owned, Housing West Coast Limited (HWC), was a reasonable one. In October 2020, however, they parted ways on the HWC business venture, Adam sold his shares in that company to Matthew and gave up his directorship. As part of this, Adam signed a restraint of trade agreement relating to HWC. Matthew believes Adam has breached this restraint of trade agreement by setting up a competing Stonewood Homes franchise. Adam denies this, however, telling Matthew that he has not set up the franchise.

[6] In a claim separate to the present proceeding, Matthew has sued Adam alleging breach of that restraint.

[7] Despite this clear sense of mistrust between the brothers which developed in 2020 they have remained shareholders and co-directors of CDL throughout the first half of 2021.

[8] According to Mr Hughes, Adam says he wanted to remain involved in CDL during that time but Matthew wanted him out.

[9] Matthew says Adam has had a string of personal issues in recent years which have coloured events. These have involved first, police charges against Adam and short times in custody in Greymouth and Christchurch over alleged domestic assaults against his partner. Secondly, Matthew says subsequent breaches of bail by Adam

eventuated. Thirdly, Matthew claims also that Adam…

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 Colville Developments Ltd v Colville

Details

AGLC: Colville Developments Ltd v Colville [2021] NZHC 2272
Case: [2021] NZHC 2272
Decision Date: 31 August 2021

CaseChat Overview and Summary

This case involves a dispute between two brothers, Matthew and Adam Colville, who are both shareholders and directors of Colville Developments Limited (CDL). The brothers have a history of disputes over their business and personal dealings, leading to a complete lack of trust between them. The central issue in this case is whether Adam is required to repay $300,000 he withdrew from CDL's bank account without Matthew's consent. CDL argues that the funding provided by the brothers was intended to be long-term and required mutual agreement for any withdrawals. Adam denies this agreement and claims that the funds were repayable upon request.

The court must determine if CDL has a good arguable case for the repayment of the $300,000, if there are assets to which the freezing order can apply, and if there is a real risk that Adam might dissipate his assets. The court found that CDL has a good arguable case for the repayment of the funds, as there is evidence supporting the agreement on long-term funding and mutual consent for withdrawals. The court also found that there is a real risk that Adam might dissipate his assets, given his recent financial and personal issues. The balance of convenience favours the continuation of the freezing order, as Adam has not shown any compelling reason for its removal and CDL has provided an undertaking as to damages if called upon to meet an adverse damages award.

The court granted the extension of the freezing order and the ancillary orders sought by CDL, which include disclosure of the frozen funds and details of any payments made by Adam after the withdrawal. CDL is entitled to an award of costs, and the parties are urged to resolve the issue of costs and quantum between them.

Orders