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Dold v Murphy

Dold v Murphy

Case [2020] NZCA 313 31 July 2020

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Breach of Contract

Unconscionable Conduct

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA301/2019
[2020] NZCA 313

BETWEEN	ROGER MURRAY LORIMER DOLD First Appellant ROGER MURRAY LORIMER DOLD, PENELOPE ANNE DOLD AND KEVIN DAVID PITFIELD AS TRUSTEES OF THE DOLD TRUST Second Appellants
AND	PETER JAMES MURPHY First Respondent LUBERON NOMINEES LIMITED Second Respondent SIENA CONSULTANTS LIMITED Third Respondent

Hearing:	24 April 2020
Court:	Kós P, Clifford and Collins JJ
Counsel:	N R Campbell QC and K B Dillon for Appellants S O McAnally and N W Coyle for Respondents
Judgment:	31 July 2020 at 9.30 am

JUDGMENT OF THE COURT

ALeave to amend the appellants’ claim is denied.
BThe appeal is dismissed.
CThe respondents are entitled to costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

Roger Dold, Chris Jacobs and Peter Murphy owned a Queensland-based tourism company called Cruise Whitsundays Pty Ltd. Their ownership was beneficial rather than direct, but that detail need not detain us here. In effect, Mr Dold and Mr Jacobs each held 46.9 per cent; Mr Murphy, who had been their solicitor, held 6.2 per cent.
The three were interested in selling Cruise Whitsundays. A third party, Quadrant Private Equity, made an exceptionally lucrative offer of AUD 110 million for the whole shareholding in Cruise Whitsundays. This was far more than expected, and they were keen to sell. With encouragement from Mr Murphy, they managed to get Quadrant’s offer increased to AUD 112 million.
But Mr Murphy then insisted he receive more for his shares. Unless he got another AUD 5 million from Mr Dold and Mr Jacobs, he would not sell his shares to Quadrant. Eventually he settled for AUD 4 million, and the sale proceeded. In effect, he insisted on being treated as if his shareholding was 9.8 per cent, rather than 6.2 per cent.
Now Mr Dold seeks to recover the AUD 2 million he paid Mr Murphy to get him to sell. He says Mr Murphy’s demand was unlawful, either being in breach of the shareholders’ agreement, in breach of fiduciary duty, or economic duress.
Edwards J did not agree.[1] She said Mr Murphy could keep the extra money. Mr Dold appeals.

Background

[1]Dold v Murphy [2019] NZHC 1232 [High Court judgment].

To begin with, Mr Dold, Mr Jacobs and a Mr Simm each owned one-third of a ferry company, Fullers Bay of Islands Ltd. Mr Murphy was a commercial lawyer who acted for them. Amongst other things he drafted a shareholders’ agreement for them, concerning Fullers. He continued to act for them when he left Chapman Tripp and went out on his own.
In 1998 Fullers acquired 50 per cent of South Sea Cruises Ltd, a Fiji-based day cruise operator. Fullers acquired the remaining 50 per cent in 1999. In 2001 Mr Simm left the group. The shareholdings were reorganised, and Mr Murphy…

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 Dold v Murphy

Details

AGLC: Dold v Murphy [2020] NZCA 313
Case: [2020] NZCA 313
Decision Date: 31 July 2020 at 9.30 am

CaseChat Overview and Summary

In Dold v Murphy, the Court of Appeal was asked to determine whether Roger Dold could recover AUD 2 million from Peter Murphy. Mr Dold had paid Mr Murphy to secure his signature on a memorandum of understanding, which was a necessary precursor to the sale of Cruise Whitsundays Pty Ltd. Mr Dold argued that Mr Murphy's demand for a higher payment breached the shareholders' agreement, breached a fiduciary duty, or amounted to economic duress. The High Court dismissed the claim, and Mr Dold appealed.

The Court of Appeal held that the demand did not breach the shareholders' agreement. The agreement did not require Mr Murphy to subordinate his interests to those of the other shareholders. It was also not a breach of fiduciary duty. The Court held that fiduciary duties arise where there is an inherently fiduciary relationship, or where the relationship involves the conferral of powers, an assumption of a representative responsibility, and an implied subordination of self-interest. None of these indicia were present in this case. The Court also held that the demand did not amount to economic duress. A threat to withdraw from the sale unless the proceeds were redistributed was not illegitimate, as Mr Murphy was entitled to act in his own self-interest.

The Court of Appeal dismissed the appeal and held that Mr Dold could not recover the AUD 2 million paid to Mr Murphy. The respondents were entitled to costs for a standard appeal on a band A basis and usual disbursements.

Orders