Dold v Murphy
[2019] NZHC 1232
•31 May 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-003226
[2019] NZHC 1232
BETWEEN ROGER MURRAY LORIMER DOLD
First Plaintiff
ROGER MURRAY LORIMER DOLD, PENELOPE ANNE DOLD and
KEVIN DAVID PITFIELD as Trustees of THE DOLD TRUST
Second Plaintiffs
AND
PETER JAMES MURPHY
First Defendant
LUBERON NOMINEES LIMITED
Second Defendant
SIENA CONSULTANTS LIMITED
Third Defendant
Hearing: 4–8 March 2019 Counsel:
D J Heaney QC and K B Dillon for the Plaintiffs S O McAnally and N W Coyle for the Defendants
Judgment:
31 May 2019
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 31 May 2019 at 4.15 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
Counsel: D J Heaney QC, Auckland
K B Dillon, Auckland
Solicitors: Cameron Fleming and Associates Ltd, Auckland Keegan Alexander, Auckland
DOLD v MURPHY [2019] NZHC 1232 [31 May 2019]
[1] When does a demand for money become illegitimate? Mr Dold says it happened when Mr Murphy demanded payment from him before selling his shares in Cruise Whitsundays Pty Ltd (Cruise Whitsundays) to a third party. Mr Dold, and his shareholding entity, seek reimbursement of the AUD$2m he paid to Mr Murphy, and other orders in relation to shares that Mr Murphy’s interests received as consideration for the sale.
[2] Mr Murphy vigorously defends the claims brought against him. He considers the additional payment was fair compensation for the hours of work he put into Cruise Whitsundays, including preparing it for sale. He denies any suggestion that his share allocation was obtained by underhand means. Mr Murphy says he relied on Mr Dold’s promise to pay him when he agreed to sell his shares and he pleads estoppel by way of affirmative defence.
[3] The plaintiffs plead three causes of action: breach of contract, breach of fiduciary duty, and money had and received.1 The three issues to be determined are:
(a)Was there a breach of the shareholders’ agreement?
(b)Did Mr Murphy owe fiduciary duties and if so were they breached?
(c)Was there economic duress?
Events leading up to the dispute
[4] Although this claim is essentially between two men, Mr Dold and Mr Murphy, the background to it involves a third, Mr Christopher (Chris) Jacobs.
[5] Mr Dold and Mr Jacobs owned and operated various companies in New Zealand and overseas offering day cruises and ferry services. These included Fullers Bay of Islands Ltd which operated out of the Bay of Islands, and South Sea Cruises Ltd which operated out of Fiji.
1 A fourth cause of action in negligence was abandoned at the end of the trial. The defendants’ counterclaims were also discontinued.
[6] Mr Murphy was a commercial partner in a large law firm in Auckland and acted for Mr Dold and Mr Jacobs in the late 1980s. He continued to work for them after he left his firm and provided his services through a consultancy company that he owned with his wife.
[7] In 2001, Mr Murphy (through his shareholding entity) purchased a 6.23 per cent stake in Fullers Bay of Islands Ltd. Interests associated with Mr Dold and Mr Jacobs each held 46.9 per cent of the shareholding in that company. That shareholding structure was adopted in other companies in the wider group owned by interests associated with the three men.
[8] Mr Dold and Mr Jacobs were executive directors of the various companies and were each paid a salary for their work. Mr Murphy was a non-executive director but provided various services through the third defendant, Siena Consultants Ltd. He was paid a daily rate calculated according to the salaries received by Mr Dold and Mr Jacobs.
[9] The events at the core of this claim concern the sale of shares in Cruise Whitsundays in 2016. That company was incorporated in 2003 to run ferry and cruise services in the Whitsundays, Australia. Mr Dold and Mr Jacobs’ interests held
46.9 per cent of the shareholding respectively, and Mr Murphy held 6.23 per cent. The Dold Trust (second plaintiffs) was Mr Dold’s shareholding entity, and Luberon Nominees Ltd (second defendants) was Mr Murphy’s shareholding entity. For ease of reference, I shall refer to all shareholding entities as interests associated with either Mr Dold, Mr Jacobs or Mr Murphy.
[10] In 2014, Cruise Whitsundays started development on a maritime passenger terminal at Port Airlie. The intention was to complete construction of the building, then sell it and lease it back. The original plan was for Mr Jacobs to manage the development, but Mr Murphy ended up taking over the project. It was a significant task, and both Mr Dold and Mr Murphy were working very long hours both on this, and the other business ventures they had going on at the time. Mr Jacobs fell seriously ill in 2014 and this placed even greater strain on both men.
[11] The demanding workload took its toll and tensions reached boiling point one early morning in October 2014. Mr Dold described Mr Murphy as having a meltdown that day. He screamed that he was sick and tired of not being appreciated for what he was doing, that he was working for much less than he could get elsewhere, and he was sick of all the travelling and being away from his wife.
[12] In response, Mr Dold told Mr Murphy that he was appreciated for the work that he had done and that he understood the work pressures – given he was experiencing them too. He mentioned that it was his intention to suggest to Mr Jacobs that any profit on the sale of the Port of Airlie terminal should be split three ways to recognise Mr Murphy’s input into the development rather than on a pro-rata basis according to their relative shareholdings.
[13] However, Mr Murphy was not soothed by these promises and he flatly refused to do any further work. Mr Dold then set about preparing the Port Airlie terminal for sale alone. He prepared an information memorandum, appointed a real estate advisory agent, and commenced negotiations for the sale of the facility. Those negotiations heralded Mr Murphy’s return around April 2015 and he worked on the sale through to settlement date on 7 September 2015. However, the tensions which had caused him to leave in the first place continued to bubble close to the surface.
[14] The long-term vision for the Cruise Whitsundays business was to realise the shareholders’ investments through sale or float. The completion of the terminal at the Port Airlie project afforded an opportunity to pursue that objective. Discussions about a possible sale were held in November 2014 and again in 2015. An offer of approximately AUD$35m was received, but not accepted at that time.
[15] In January 2016, Mr Dold prepared projections for the sale of the shares based on a sale price of between $65m and $75m. These expectations formed the basis upon which Mr Dold and Mr Murphy resumed negotiations with the potential purchaser. However, by early May, it was clear that this negotiation was not going anywhere, and the parties agreed to appoint Deloitte to handle the sale.
[16] Deloitte attracted the interest of a private equity group, Quadrant Private Equity (Quadrant). At the initial meeting on 9 July 2016, Quadrant representatives explained that any purchase price would comprise cash and securities in a new buyer entity. The latter was known as “rollover shares”. Quadrant explained that the norm for their deals was for sellers to reinvest between 20 and 40 per cent of their equity into the new entity.
[17] Mr Jacobs indicated early on that he wanted a complete break and did not want to take any rollover shares. That is, the consideration for Mr Jacobs’ shares was to be 100 per cent cash. However, Mr Murphy was very keen on taking up the rollover offer and said clearly at the time that, given the opportunity, he would rollover 100 per cent of his equity. Mr Dold did not express any preference at that time.
[18] Following a presentation by Mr Murphy and Mr Dold, Quadrant came back with an indicative offer of AUD$110m. This was well beyond any of the parties’ expectations.
[19] Mr Dold, Mr Murphy and Mr Jacobs met with Deloitte to discuss the offer on the morning of 3 August 2016. Mr Murphy suggested pushing for more. Mr Dold, Mr Jacobs, and the Deloitte representative, Mr Garrett, expressed some reservations about that strategy, but, following some further discussion, it was agreed that Deloitte could go back to Quadrant to see whether they would raise their offer. The response was a further AUD$2m, making the total indicative offer AUD$112m. Quadrant required the parties to sign a memorandum of understanding that would give Quadrant exclusivity in the deal and trigger the due diligence process. A meeting on 8 August 2016 was set up to sign that memorandum.
[20] Mr Murphy’s demand for an additional sum came after the meeting with Deloitte had come to an end. Mr Murphy told Mr Dold, that he (Mr Dold) and Mr Jacobs would have to pay him AUD$5m over and above the price he would receive for the sale of his shares before he would sign the memorandum of understanding. Mr Murphy said that the additional payment was compensation for the huge amount of work he had put into Cruise Whitsundays.
[21] Later that day, when all three men were at the airport waiting for their flight back to New Zealand, Mr Dold told Mr Jacobs about Mr Murphy’s demand. In Mr Murphy’s presence, Mr Dold said that Mr Murphy was holding a pistol to their heads, holding them ransom, and blackmailing them. Mr Murphy responded that this was exactly what he was doing.
[22] The next day, 4 August 2016, after hearing about Mr Murphy’s demand, Mr Garrett from Deloitte wrote to the parties giving them “strong advice” not to involve or delay Quadrant in any way, and not to endanger the deal. On the same day, Mr Dold emailed Mr Murphy asking for a copy of the Cruise Whitsundays shareholders’ agreement to see what the terms of the arrangement were regarding the shareholders’ obligations on the sale of their shares. Mr Murphy undertook to dig that agreement out and forward it to Mr Dold.
[23] Over the next two days Mr Murphy repeated his demands. On Friday 5 August, he sent an email saying: “can I be clear that this deal will not proceed if my position is not resolved”. And, on the following day, 6 August, he sent an email to both Mr Dold and Mr Jacobs in the following terms:
Chris, in summary I have said to Roger I will drop my claim to A$4 million but Roger will not budge from $1.5 million contribution from him. That means to proceed you need to contribute $2.5 million. Roger can speak for himself but in respect of relative contribution I think that is fair and I believe Roger does. Roger would have accepted $110m as a price and I alone ran for the additional money and we got $2m more. I think I have contributed significantly more than by 6 per cent [sic] shareholding contribution, and I think you exiting completely for cash while Roger and I stay in also warrants recognition. Chris, that is my bottom line. Can you please confirm in or out, as that determines finding my own answer to the issue.
[24] Mr Jacobs did not agree to the different payments and stipulated that it had to be AUD$2m each. Then, on 7 August 2016, the day before the memorandum of understanding was to be signed, Mr Dold sent the following email to both Mr Jacobs and Mr Murphy:
Peter, I don’t condone your approach to this issue for one moment and I have to say that I am doing this under a lot of duress, but in the end you are correct
– as you said you are holding me to ransom and there is not much that I can do about it. So reluctantly, I will agree to your claim of $2 million from Chris and myself each.
[25] The memorandum of understanding was signed on 8 August 2016 in Sydney (Memorandum of Understanding). It set out the parties’ intention to enter into the sale and purchase of the shares subject to Quadrant being satisfied following its due diligence. The purchase price was recorded as follows:
2.Purchase price:
(a)The Purchase Price shall be One Hundred and Twelve Million Dollars ($112,000,000.00) less all taxes, shareholder and finance-related debt and term liabilities owed to third parties including Westpac Bank but not less the liability owed to Mulpha Pty Ltd representing prepayment of maintenance and repairs on vessels chartered from them by the Company, on a lock box basis.
(b)The Purchase Price may be constituted by:
(1)cash;
(2)security in the Buyer (Buyer Shares),
in such proportion to be agreed between the Selling Parties and the Buyer, but in the case of Carrajung Trust, 100% cash.
[26] As already noted, the “Buyer Shares” became known as the rollover shares. The Memorandum recorded that the Carrajung Trust (the entity associated with Mr Jacobs) would receive “100% cash”, but the allocations to Mr Dold and Mr Murphy’s interests had yet to be agreed.
[27] Other terms of the Memorandum provided that the transaction documents relating to the sale and purchase would be entered into within 45 days of the Memorandum, or the agreement recorded in the Memorandum would come to an end. Quadrant was given exclusive negotiation rights in terms of the purchase, and the right to conduct due diligence on Cruise Whitsundays.
[28] After the Memorandum of Understanding was signed, Mr Murphy worked together with Deloitte and the law firm, Hopgood Ganim, on the due diligence process. Meanwhile, Mr Dold sought a copy of the investment deed regarding the new buyer’s entity and tax advice, before considering the rollover allocation. That investment deed was emailed through on 6 September 2016, and on 7 September 2016 both Mr Dold and Mr Murphy received advice from Hopgood Ganim on its terms. By this time, both Mr Murphy and Mr Dold had also received advice from accountants on the transaction.
[29] The following day, 8 September 2016, Mr Dold sent an email to Quadrant requesting a rollover amount of AUD$21m. He said:
… If not, can you let me know what cap you have set for [Cruise Whitsundays] Co Investors. In this case I assume that the shares will be issued pro-rata to the shares Peter and I have in Cruise Whitsundays.
[30] Quadrant emailed back the same day stating that they had only set aside AUD$15.8m for Mr Dold’s interests. The total rollover amount was AUD$24.7m made up of AUD$6.9m, for Mr Murphy’s interests, AUD$2m for Cruise Whitsundays’ Chief Executive Officer and the balance of AUD$15.8m for the Dold Trust. In other words, Mr Murphy had received a 100 per cent allocation, and was purchasing more rollover shares in addition.
[31] The fact that Mr Murphy had rolled over 100 per cent of his equity was apparently news to Mr Dold, who had assumed that the rollover allocation would reflect their respective shareholdings in Cruise Whitsundays. Nevertheless, he said nothing about this at the time.
[32] A consequence of Mr Dold’s allocation was that he became liable for foreign investment fund tax. If, as was his expectation, a rollover amount in accordance with the respective shareholdings had been made, he would have been under the necessary threshold in respect of the foreign investment fund regime. This is the core of Mr Dold’s complaint in relation to the rollover shares.
[33] The share sale and purchase agreement was signed on 15 September 2016. Mr Murphy was recorded as the sellers’ representative in the agreement. That had been earlier approved by trustee resolutions passed by the Dold, Jacobs and Murphy interests.
[34] After the sale and purchase agreement was signed, Mr Dold turned his mind to the distribution of funds on settlement and the payment of the additional AUD$4m. He sought legal advice from Hopgood Ganim about the consequences of making the additional payment to Mr Murphy under Australian law.
[35] While waiting for that advice, Mr Dold sent an email to Mr Murphy telling him how he felt about Mr Murphy’s demands. The email sets out the essence of Mr Dold’s complaints and for that reason I set it out in full:
Peter,
As you are aware, I am in the process of obtaining advice from Justin which he is hoping to get to me by close of business tomorrow. It will be interesting to get his opinion and I am not sure where this will end up, but before I get the opinion, I need to get off my chest how upset and disappointed I am at the way this has turned out.
We have been friends and work colleagues for a very long time now and over that time you have made a considerable contribution to the business which I have always valued. I too have been totally committed to it and I am sure you appreciate its success is in no small part due to my commitment as well.
Right from the beginning I trusted you to attend to all our legal matters whilst I concentrated on the finances and operations. It was essentially my and Chris’ business but we were happy for you to come in as a shareholder as we knew you could and would make a positive contribution. Your investment of
$500,000 has now generated a cash return for you in excess of $7.8m - this is assuming that the CW sale goes through, but excludes the payment you are demanding from us. If that is included, your return will be about $12m. In addition to this return, you have been paid for all the work you have done at the daily rate that you nominated, that being the daily rates that Chris and I have been paid.
I have always had confidence in you and have trusted you to look after legal aspects for me and the business making sure that that my position and Chris’ are well organised and protected. I was extremely relieved when you put your hand up at the beginning of the Port of Airlie project as it was going nowhere under Chris’ curatorship. We did a magnificent job getting the SSC sale done, ditto the purchase of Fantasea, ditto the current sale of CW. I enjoyed being able to get your legal advice when I was helping Matthew with the business he was looking to invest in in the UK.
Against this backdrop and the long term friendship the two of us have enjoyed, your demand for a $5m payment came as an absolute body blow to me. And believe me, it was not the quantum that shattered me, it was the way you talked to me with such venom at the HIE Airport lounge. Your comments will haunt me forever…. “Yes, Roger, that is exactly what I am doing. I’m holding you to ransom and the deal won’t go through if you don’t pay” ……… “I would love to see your two faces if this deal doesn’t go through” etc.
If you have felt so strongly about the contribution you have made to the company and the amount you have been rewarded, you have had every opportunity to bring it up with us. In my opinion you should have brought this up at the beginning of the CW sale process. But no, you waited for the critical moment and hit us with it when you knew we would have our backs to the wall with nowhere to go. I cannot describe to you the sense of betrayal that I feel.
[36]Mr Murphy replied the following day, saying:
Roger, just what did you think the attached note sent to you in November 2014 amounted to – a declaration that I was happy with your treatment of me? I am absolutely no less disappointed in your response than you are in mine. You promised me a 1/3rd share of the profit from the power of attorney development and you failed to deliver. Despite the sentiments noted in the attachment I got re-involved in the business as it was the best opportunity I had to get my money out, and I have done so with considerable application, skill, and results.
I too am deeply saddened as I had considered you a friend and I thought if anyone appreciated what I bought to the table it was you. You know what Chris’ and Nick’s relative contributions are and you have seen a fair bit of what I have had to go through to get to this point. I am sick to my stomach with the way you have reacted and I [sic] want this over.
[37] Soon afterwards, having received legal advice on how the payment should be made, Mr Dold circulated a funds flow spreadsheet. This spreadsheet showed the payment of the AUD$4m flowing from Mr Dold and Mr Jacobs to Mr Murphy. Hopgood Ganim followed that up with a funds flow acknowledgement directing the parties’ solicitor as to the distribution of settlement funds. Mr Dold forwarded that to Mr Murphy with an email attached stating:
Peter,
Chris and I have executed the payment direction letter in order that Hopgood Ganim might attend to settlement of the share sale.
Chris [Jacobs] and I remain aggrieved at being required to pay you $2million each to ensure the sale is concluded. To that end, we both feel we are executing the direction under duress. Be that as it may, the transaction must go ahead or else the losses to us all will be much greater than your $4million.
You want to categorise the $4 million as gifts from Chris and me despite us understanding it to be in respect of the perceived additional work you have put into the company. The characterisation of the payment from our perspective could never be as an unsolicited gift. You should note though that Justin’s advice to us is that “the receipt in Peter’s hands will be “income”, irrespective of whether or not it is a gift” and Kevin has confirmed that the same will apply in New Zealand. This argument therefore appears to be academic.
While we agree that the payment can be made, we both want to make it clear that by signing the payment direction letter or making the payment to you, we are not in any way waiving any rights or claims we might have in respect of this matter. We have both executed the payment direction letter and authorised the payments on the basis that the directions and payments are accepted as being without prejudice to any rights we may have.
[38] That email was copied to Hopgood Ganim, who, noting the allegation of duress, required each of the shareholders to execute a release in favour of Hopgood Ganim in relation to any claims arising out of the payment. That release was signed by both the Dold and Jacob interests a few days later.
[39] Mr Murphy refused to accept the funds flow acknowledgment with the email attached, and he demanded that it be removed. It was subsequently removed, but instead, Mr Dold inserted a clause into the funds flow acknowledgement which stated that the Dold and Jacobs interests “continue to reserve their rights as set out in earlier correspondence”. That was circulated to Hopgood Ganim and Mr Murphy. The latter raised an issue with the classification of the additional payment as income but otherwise raised no comment about the clause that reserved rights. It was subsequently signed by all parties.
[40] Settlement was completed on 31 October 2016. The payment of AUD$4m was made and recorded in journal entries showing the Dold and Jacobs interests paying Mr Dold and Mr Jacobs the sum of AUD$2m respectively, those payments being made to Mr Murphy, and then being paid to Mr Murphy’s interest, the Luberon Nominees Ltd.
[41] These proceedings were commenced on 21 December 2016.2 The breach of contract and breach of fiduciary duty causes of action seek relief in relation to Mr Murphy’s demand, and the rollover share allocation. The third cause of action in money had and received only relates to the demand. In all three causes the plaintiffs seek the sum of AUD$2m plus interest (a claim for general damages was abandoned at trial). The relief sought in relation to the rollover share allocation is a declaration that upon the sale of the buyer entity (or any substitute for that buyer entity) the defendants shall account to Mr Dold for any profit derived on that portion of the shares to which Mr Dold “should have been entitled, being the profit upon sale of shares representing $4.2m as allocated as part of the purchase price of the shares in Cruise Whitsundays”.
2 For completeness I record that there was no issue raised about either forum or applicable law. The case is accordingly decided on the basis that this Court has jurisdiction and New Zealand law applies.
Was there a breach of contract?
[42] The plaintiffs’ first cause of action is for a breach of contract. The plaintiffs say that Mr Murphy’s actions were in breach of the shareholders’ agreement. That shareholders’ agreement was for Marine Tourism Holdings Ltd, which at that time was the holding company for South Sea Cruises Ltd and Cruise Whitsundays. However, there is no dispute that this agreement governs the relationship between the parties as shareholders in Cruise Whitsundays, and binds the defendants, including Luberon Nominees Ltd. I shall refer to it as the “Shareholders’ Agreement”, or “Agreement” throughout this judgment.
[43] The relevant parts of cl 3 of the Shareholders’ Agreement, which sets out the main operating objectives of the company, are as follows:
The main operating objectives of the Company and its subsidiaries are:
3.1.1 foremost, to maximize shareholders’ returns on funds invested;
…
3.1.4to ensure the operations of the Group Companies are managed so as to facilitate the sale of any or all of the Group Companies and/or its business at any time and specifically within five to ten years of the date of this agreement.
[44] Clause 3.3 sets out the conduct of the “Participants” (defined to include the shareholders and their affiliates) as follows:
3.3.1None of the Participants shall conduct its affairs or carry on its business in a manner which is inconsistent with any of the main operating objectives of the Company.
3.3.2Each Participant, Shareholder Affiliate and Director shall ensure that all business opportunities identified by them which fall within the activities contemplated either now or in the future by the Group Companies as outlined in clause 3.1 are referred to the Group Companies in the first instance.
[45] Finally, cl 5.4 of the Shareholders’ Agreement governs matters requiring unanimity, and cl 5.4.7 provides:
Notwithstanding the provisions of any Constitution, decisions on the following matters shall require the unanimous agreement of the Participants:
…
5.4.7the sale or other disposition of all or a substantial part of the undertaking of any Group Company;
…
[46] The plaintiffs allege that Mr Murphy failed to act in accordance with the objective of maximising shareholders’ returns in breach of cl 3.3.1 and cl 3.1.1 of the Agreement. In particular, the plaintiffs say that “Mr Murphy’s demand for AUD$4m was at the expense of the shareholding return of [Mr Jacobs] and [Mr Dold]. It reduced the returns [Mr Jacobs] and [Mr Dold] were entitled to”. The plaintiffs place particular reliance on an admission by Mr Murphy during cross-examination that his demand for AUD$4m reduced the other shareholders’ returns on their investments.
[47] There are several difficulties with this claim. First, the existence of a contractual obligation of the kind contended for by the plaintiffs does not sit easily with the plain and ordinary meaning of cl 3.1.1. The clause itself is expressed in broad and somewhat aspirational terms. It sets out a collective common purpose; a goal for all shareholders to work towards. The clause does not govern the relationship between individual shareholders at the point of sale of their shares. Nor does it say anything about how the collective return is to be divvied up between the shareholders once the shares have been sold.
[48] Second, construing cl 3.1.1 as constraining an individual shareholder’s rights in relation to their shares at the point of sale is at odds with the unanimity requirement in cl 5.4.7. The effect of cl 5.4.7 is that each individual shareholder has the right to stipulate the terms upon which they are willing to sell their shares. Construing cl 3.3.1 to require a shareholder to subordinate its personal interests in maximising the returns on the sale of its shares, to the interests of other shareholders, would be inconsistent with cl 5.4.7 in my view.
[49] Third, there is no dispute that the sale price for Cruise Whitsundays was an extremely good price. It was significantly more than the previous offer of AUD$35m, and Mr Dold acknowledged in his evidence in chief that the sale price for the shares was more than any of them had hoped. That price maximised the returns for each of
the shareholders. Mr Dold made around AUD$40m on the sale. The fact that Mr Dold considers he got less than what he regarded as fair because he had to pay an additional sum to Mr Murphy is not the same as failing to maximise shareholders’ returns in accordance with the contractual obligations imposed under the Agreement.
[50] It follows that Mr Murphy’s acceptance that his demand for an additional AUD$4m reduced the overall returns to the other shareholders was not an admission of breach. Clause 3.1.1 did not prevent Mr Murphy from stating the terms upon which he was prepared to sell his shares, and the alleged breach of this clause cannot be proved.
[51] Next, the plaintiffs say that Mr Murphy breached the Agreement by refusing to sell unless he was paid an additional payment over and above his shareholding, putting the entire sale in jeopardy. They also say that Mr Murphy took advantage of the condensed timeframe in making his demand. This, the plaintiffs say, was inconsistent with the objective of selling the company within 5 to 10 years as set out in cl 3.1.4.
[52] This claim is also strained in my view. Like cl 3.1.1, this clause also states a common aim of the shareholders in conducting their business through a corporate vehicle. Properly construed, cl 3.1.4 sets out the objective in manging the company – with the ultimate goal to facilitate the sale of the company within a certain timeframe. There is no dispute that Cruise Whitsundays was managed so as to facilitate its sale. Indeed, none of the shareholders appeared to deviate from that common purpose. The offer to buy, and the attractive purchase price, was due in large part to the huge efforts of both Mr Dold and Mr Murphy.
[53] What the clause does not do is dictate the relationship between shareholders at the point of sale. Importantly, it does not oblige a shareholder to sell their shares at any particular point in time. There is nothing in this clause requiring Mr Murphy to sell his shares if the other shareholders resolved to do so. As already discussed, that interpretation of cl 3.1.4 would be contrary to the express requirement in cl 5.4.7 that the decision to sell be unanimous. The claim that Mr Murphy’s demands breached cl 3.1.4 must be similarly dismissed.
[54] Finally, the plaintiffs say that Mr Murphy breached the agreement by obtaining an increased rollover allocation at the expense of Mr Dold, when that rollover allocation should have been made on a pro-rata basis according to the percentage of shares owned. The particular clauses relied on by the plaintiffs in advancing this claim are not clear. To the extent that the allegation of breach rests on cl 3.1.1 and 3.1.4, then the claim must fail for the reasons already canvassed above. To the extent that the claim turns on cl 3.3.2, then it must similarly fail. There is no evidence that Mr Murphy took advantage of a business opportunity in order to secure his 100 per cent rollover allocation. In any respect, cl 3.3.2 provides for the business opportunity to be referred to the company – which is of no assistance to either of the plaintiffs in this case.
[55] In sum, Mr Dold cannot show any contractual obligations that were breached by Mr Murphy either making the demand for an additional payment or securing a 100 per cent rollover allocation. The breach of contract cause of action is dismissed.
Did Mr Murphy owe fiduciary duties and if so were they breached?
[56] In addition to breaches of the Shareholders’ Agreement, the plaintiffs also claim breach of fiduciary duty. The plaintiffs put forward two alternative grounds for construing the relationship between the plaintiffs and the defendants as fiduciary in nature:
(a)First, they say there was an inherently fiduciary relationship based on Mr Murphy’s role as solicitor and/or inhouse counsel.
(b)Second, they say that the relationship was fiduciary in nature due to the “special relationship” that Mr Murphy had with both Mr Dold and Mr Jacobs. They rely on the second category of fiduciary relationships recognised by Tipping J in Chirnside v Fay.3
[57] The plaintiffs refer to a range of features of the relationship between the three men which they say indicate it was fiduciary in nature. These include Mr Murphy’s
3 Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433.
various roles over the years as solicitor, trustee of Mr Jacob’s family trust, director and shareholder of all the companies in the group, and his appointment as sellers’ representative under the share sale agreement. Mr Murphy’s involvement with critical and strategic decision making, his possession of confidential information relating to the sale, and the length of time the three men had worked together towards a common goal of building the companies up for sale, are also relied on by the plaintiffs.
[58] The focus of the plaintiffs’ case under this head is on the general nature of the relationship between the parties. However, proof of a fiduciary relationship is not, in and of itself, enough to prove that a fiduciary duty was owed. As Elias CJ put it in Chirnside v Fay, not every breach of a duty by a fiduciary is a breach of a fiduciary duty.4 A relationship which is contractual in nature may involve fiduciary elements, and a fiduciary relationship may involve non-fiduciary obligations too.5 To succeed on their claim, therefore, the plaintiffs must show that Mr Murphy owed fiduciary duties at the time of the alleged breaches, and that his actions constituted a breach of those duties. The focus is on the time that Mr Murphy made his demand, and the period that the rollover share allocation was made.
Did Mr Murphy owe a fiduciary duty not to demand additional funds?
[59] There is no doubt that Mr Murphy wore a number of different hats during the negotiation of the sale to Quadrant. He was a director of Cruise Whitsundays, and provided services to that company through Siena Consulting Ltd. He was also the point of contact for Hopgood Ganim. It is entirely possible that he undertook legal work in one or more of those capacities (although exactly what he did is not clear from the evidence). In that respect at least, Mr Murphy may have owed fiduciary duties in relation to that work. Mr Murphy was also appointed the sellers’ representative – a role formally recognised in the sale and purchase agreement. In that role, too, Mr Murphy owed fiduciary duties as agent for his fellow shareholders.
[60] However, it is not clear how those fiduciary obligations, assuming they are proved, are said to have been breached by the making of the demand. There is no
4 At [15].
5 At [72].
complaint about the legal work (if indeed there was legal work) carried out by Mr Murphy. Nor is it contended that carrying out that legal work placed Mr Murphy in a conflicted position when it came to the sale of his shares. It is not at all clear how a fiduciary relationship arising out of limited legal work (if proved) undertaken in relation to the sale gives rise to an obligation not to make a demand for payment from fellow shareholders before agreeing to sell the shares owned by his interests.
[61] Similarly, there is no correlation between the fiduciary duties that Mr Murphy owed as sellers’ representative with a prohibition on making demand for an additional sum to sell his shares. The plaintiffs do not allege that Mr Murphy took advantage of information that he obtained acting in this capacity in making the demand (although this allegation is made in relation to the rollover share allocation as examined below). The only information Mr Murphy had was equally available to Mr Dold and Mr Jacobs. There is a gap between the scope of the fiduciary obligations owed as sellers’ representative and the alleged breach by making a demand.
[62] Furthermore, Mr Murphy was not acting as lawyer or sellers’ representative at the time he made the demand. Arguably, he was acting in his capacity as a contractor (through Siena Consulting Ltd) to Cruise Whitsundays. He was seeking additional remuneration, akin to a bonus, for the work he had put into preparing the company for sale. However, there is nothing in that relationship that could be construed as imposing a fiduciary obligation on Mr Murphy not to make the demand.
[63] In any respect, properly analysed, I consider Mr Murphy was acting as shareholder of Cruise Whitsundays (or at least the representative of his shareholder entity), and he was dealing with Mr Dold and Mr Jacobs in that same capacity. Mr Murphy was stipulating the terms upon which his shareholder entity, Luberon Nominees Ltd, was prepared to sell its shares. Those terms involved a payment from his fellow shareholders over and above that which he was to receive from Quadrant.
[64] The relationship between shareholders is contractual, rather than fiduciary, in nature. However, and as already noted, the fact that a relationship may be contractual
in nature does not preclude the imposition of fiduciary obligations in some circumstances.
[65] The starting point for deciding whether this is one of those cases is the Shareholders’ Agreement itself. In Paper Reclaim Ltd, Blanchard J, writing for the Court said that when parties have formed a contract, the correct approach is to first decide exactly what they have agreed upon. 6 It is only then that the Court should consider whether any particular aspect of their agreement can be characterised as fiduciary, imposing obligations which supplement the express or implied contractual terms.
[66] In this case, the terms of the Shareholders’ Agreement provided for a common objective of maximising shareholders’ returns and ensuring that the companies were managed in order to facilitate their future sale. Those common objectives may be the hallmark of a joint enterprise, but it is self-evident that the parties decided to pursue that joint enterprise through the vehicle of an incorporated company. The observations of the Supreme Court in Maruha Corporation v Amaltal Corporation Ltd are apt in these circumstances:7
In our view, when commercial parties elect to use an incorporated vehicle for a venture that can only loosely called a joint venture, it is unlikely that their relationship as a whole will be fiduciary in nature.
[67] A further indication that the parties did not intend to enter into a fiduciary relationship may be found in cl 22.3 of the Shareholders’ Agreement which provides:
22.3 No Partnership
Nothing in this agreement or in the relationship between the Participants or Shareholder Affiliates or in the relationship between, on the one hand, the Participants and, on the other hand, any Group Company shall be construed as in any sense creating a partnership between any two or more of the parties to this agreement or as giving to any party any of the rights, or subjecting any party to any of the liabilities, of a partner.
6 Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 1, [2007] 2 NZLR 124 at [3].
7 Amaltal Corporation Ltd v Maruha Corporation [2007] NZSC 40, [2007] 3 NZLR 192, at [20].
[68] Mr Heaney submits that this clause is limited to the liability of one partner for the acts of another and does not exclude fiduciary relationships more generally. However, the clause is expressed more broadly than that. It relates to the nature of the relationship between the shareholders, their affiliates, and any of the companies within the group. It prohibits construction of the relationship as a partnership “in any sense” and relates to “any rights” and “any liabilities” of a partner.
[69] In addition, cl 2 of the Shareholders’ Agreement provides that “from the date of this agreement, the terms of the agreement shall solely govern the duties, rights, and obligations relating to all Group Companies”. The combination of cl 2 and cl 22.3 provides very strong evidence that the parties did not intend to assume the fiduciary obligations of partnership in pursuing their common commercial objectives.
[70] However, and as Amaltal itself exemplifies, even in a commercial relationship of a generally non-fiduciary kind, there may be aspects which engage fiduciary obligations of loyalty.8 The plaintiffs rely on Counties Manukau Pacific Trust v Manukau City Council in this regard.9 In that case, a clause of the contract imposed an obligation on the parties to confer and agree on a method of marketing the land in order to achieve the best sale price. Cooper J found that fiduciary obligations existed in the pursuit of these common objectives, and that these fiduciary obligations supplemented the agreement.
[71] Applying those principles to the present case, I accept that maximising the shareholders’ return, and facilitating the sale of the companies, could arguably give rise to fiduciary obligations in the way those objectives were pursued. The length of time the parties had worked together, the nature of that work, and their pursuit of a common goal may all be relevant to whether such duties existed. But even if those duties did exist, they do not advance the plaintiffs’ claim in this case. The plaintiffs’ claim is not that Mr Murphy failed to manage the companies to facilitate their sale, nor that he breached some duty in securing Quadrant’s offer in the first place. To the contrary, Mr Dold was full of praise for Mr Murphy’s skill and hard work in preparing Cruise Whitsundays for sale and progressing that sale to completion.
8 At [21].
9 Counties Manukau Pacific Trust v Manukau City Council [2009] 2 NZLR 260 (HC).
[72] Mr Dold’s essential complaint is that he reposed trust and confidence in Mr Murphy not to make a demand for money before selling his shares. That particular obligation, whatever its source, cannot co-exist with the terms of the Shareholders’ Agreement and in particular cl 5.4.7. Such a clause preserves the unconditional right of each individual shareholder, irrespective of the size of their shareholding, to refuse to sell their shares. It is a right to look after one’s own interests, even if that is at the expense of the interests of fellow shareholders. That is the very antithesis of a fiduciary relationship where the obligations are of trust and confidence, and of mutual loyalty. In this case, at least insofar as the sale of shares was concerned, it was each shareholder for themselves. I consider the express terms of the Shareholders’ Agreement preclude a finding that Mr Murphy owed a fiduciary duty to his fellow shareholders not to make the demand that he did.
Did Mr Murphy breach a fiduciary duty in obtaining a 100 per cent rollover allocation?
[73] The issues in relation to the rollover share allocation require a different form of analysis. The question is not whether Mr Murphy owed fiduciary duties at the time the rollover share allocation was made, but whether those duties were breached.
[74] Mr Murphy owed fiduciary duties to his fellow shareholders in his capacity as sellers’ representative. That appointment had been made after the demand, and after the Memorandum of Understanding was signed. Both the Dold and Jacobs’ interests passed resolutions confirming Mr Murphy’s appointment to act on their behalf and his appointment was recorded in the sale and purchase agreement.
[75] The plaintiffs allege that Mr Murphy took advantage of his position in securing a 100 per cent allocation of rollover shares. The difficulty with this aspect of the plaintiffs’ claim is that there is no evidence to substantiate those allegations. The evidence regarding the rollover share allocation may be summarised as follows:
(a)Mr Murphy expressed a desire at the outset to secure a 100 per cent allocation. That was a statement made by Mr Murphy in Mr Dold’s presence – which Mr Dold accepted at trial.
(b)Mr Dold did not object to Mr Murphy’s stated preference at the time, despite it being at odds with an assumption that any allocation would be made on a pro-rata basis linked to the relative shareholdings in Cruise Whitsundays. Nor did he express a preferred percentage of rollover shares for himself.
(c)Even when he found out that the allocation had already been made, Mr Dold did not object. Indeed, the first time Mr Dold made any protest about the allocation was in the current proceeding. That suggests that Mr Dold did not regard Mr Murphy’s allocation as a breach of fiduciary duty at the time.
(d)In fact, Mr Dold’s interests passed a resolution appointing Mr Murphy as sellers’ representative a few days after Mr Dold found out about the rollover share allocation, confirming he still retained trust and confidence in Mr Murphy to protect his interests, despite what he now regards as a breach.
(e)Emails concerning the shareholders’ allocation were copied in to Mr Dold and Mr Jacobs. There is no evidence from which a secret side deal may be inferred.
(f)Mr Murphy was cross-examined about how the rollover share allocation was made and explained the process as follows:
Q.And what’s confusing me, and perhaps you can help us with this, Mr Murphy, is how come you managed to get in first and get yours locked down when Roger was back to Quadrant within about 24 hours of getting the investment deed?
A.There was no lockdown. There was no agreement from any of our points of view until we signed the agreement for sale and purchase on the 15th of September. I had said all the way through to Quadrant that I wanted to roll over 100%. They had accepted all the way through that I wanted 100% and that’s in fact what they did allocate. Roger didn’t say what he wanted and that’s I think what caused the problem. It was just too late in the piece. It really is a very, very complex exercise trying to financially engineer a private equity transaction like this. The lead deal was Great Southern Rail and there, there
was another private equity firm and they got 30% rollovers but they were actually the lead negotiators, probably of the transactions overall. So the investment deed in fact came to us late because Quadrant were resolving it with Great Southern Rail and it was in fact those parties that became “the parties” to the investment deed and everybody else was subsequently added, effectively by deeds of accession at – right at the end.
[76] Mr Dold may harbour suspicions about how Mr Murphy secured his rollover share allocation. But suspicions do not amount to proof. The evidence called at trial is not sufficient to show that Mr Murphy obtained a 100 per cent rollover share allocation in breach of his fiduciary duties.
[77] In sum, the plaintiffs cannot show that Mr Murphy owed a fiduciary obligation that prohibited him from making the demand for payment in return for selling his shares. In addition, although Mr Murphy likely owed fiduciary duties at the time the rollover share allocation was made, the plaintiffs cannot show that Mr Murphy breached these fiduciary duties in obtaining a 100 per cent share allocation. This cause of action is dismissed
Was there economic duress?
[78] The plaintiffs’ third cause of action is for money had and received. It is pleaded as a remedial response to what the plaintiffs say is the defendants’ unjust enrichment. In response to the defendants’ claim that the cause of action cannot succeed where there is consideration for the contract, the plaintiffs say that any consideration was vitiated by economic duress. The core issue in relation to this claim therefore is whether there was economic duress. I approach it on that basis.
[79] In McIntyre v Nemesis DBK Ltd, the Court of Appeal said that contractual duress involves the imposition of illegitimate pressure that coerces a party to enter into a contract.10 Contracts that have been procured by duress are voidable, unless the party that has been coerced has subsequently affirmed the contract. To establish a claim of economic duress, the plaintiff must prove two elements.11 First, there must
10 McIntyre v Nemesis DBK Ltd [2009] NZCA 329, [2010] 1 NZLR 463.
11 Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366 at 400 (HL); Pharmacy Care Systems Ltd v Attorney-General (2004) 17 PRNZ 308 (SC).
be the exertion of illegitimate pressure on a victim. Second, the imposition of that pressure must have compelled the victim to enter the contract. The second element requires consideration of all relevant circumstances, including the characteristics of the victim and whether the victim protested, was independently advised or took steps to avoid the contract after entering into it. Finally, if there was duress, affirmation of the contract by the victim may negate his or her right to avoid it.12
Was there illegitimate pressure?
[80] As identified in previous cases, the fact that one party to a contract has exerted pressure on the other does not, on its own, amount to duress. Commercial pressure is commonly brought to bear in commercial transactions. To succeed on a claim of duress, the pressure brought to bear must be illegitimate. The legitimacy of the pressure is considered from two perspectives. First, the nature of the pressure, and second, the nature of the demand which the pressure is applied to support.13
[81] In terms of the nature of the pressure in this case, the question of time is considered first. Mr Dold considers that Mr Murphy deliberately left his demand to the last minute so that there was effectively no other option but to accede to it. But that perception of pressure requires closer scrutiny. Mr Dold did not have to decide on the spot whether to accept Mr Murphy’s demands. In fact, he had ample time to reflect on his rights and consider his options, as the following evidence reveals:
(a)Mr Murphy made his demand on 3 August 2016.
(b)The Memorandum of Understanding had to be signed on 8 August 2016, five days after the demand was made.
(c)The sale and purchase agreement was signed on 15 September 2016, approximately six weeks after the demand was made.
(d)The payment was not actually made until 31 October 2016, two and a half months after the demand was made.
12 McIntyre v Nemesis DBK Ltd [2009] NZCA 329, [2010] 1 NZLR 463.
13 Attorney-General for England and Wales v R [2004] 2 NZLR 577 (PC) at [16].
[82] Not only did Mr Dold have the time to consider his rights, he used the time to do just that. Immediately after the demand was made, he sought a copy of the Shareholders’ Agreement from Mr Murphy to consider whether there were any contractual obligations in relation to the sale. It is also apparent that there was some form of negotiation between the two men, as Mr Murphy agreed to accept AUD$4m rather than the original AUD$5m demanded. Negotiation over the terms of the agreement is apposite to the concept of duress.
[83] After the Memorandum was signed, Mr Dold sought and received legal and tax advice on the investment deed and the tax implications of the rollover share allocation. Further legal advice was sought and received on the distribution of the settlement funds, and the tax implications of making the additional payment under Australian law. It appears that Mr Dold may also have sought legal advice from his current counsel prior to the payment being made. All of that suggests that Mr Dold’s decision to pay Mr Murphy was a considered one with the benefit of legal advice.
[84] The nature of the pressure arose from the potential consequence of losing the deal. In this respect, Mr Dold places reliance on the advice of Mr Garrett from Deloitte who, on learning of the demand, sent an email to the parties stating:
Gents,
my [sic] strong advice is not to involve or to delay Q in any way. Whilst it alone isn’t a deal breaker, the culmination of a few distracting/ shareholder strategies will go to the heart of value down the track.
This is a very good deal an [sic] I wouldn’t endanger the deal but involving the buyer on sensitive shareholder issues.
Happy to help if we can Tony
[85] As this email highlights, there was a risk of losing the deal, but it was far from a forgone conclusion. In fact, on one reading of this email, Mr Garrett did not see the shareholder spat as a deal breaker. Further, the risk that the deal would fall through had to be seen in context. This is not a case where Mr Dold was going to lose money if he did not agree to make the payment sought. Rather, Mr Dold faced a possibility that the deal would not go through and he would lose an opportunity to sell his shares
for a price that, by his own admission, was beyond his wildest dreams. The choices facing Mr Dold at the time are illustrated in the following exchange during cross- examination:
Q. But you could have refused?
A. I could have and I would have destroyed the whole sale, I mean, I just wasn’t prepared to go there.
Q. Well you didn’t know that a refusal would destroy the sale did you?
A.I was going on what Deloitte’s, Tony Garrett had advised us Your Honour, that any shareholder disagreements like this would go to the heart of the value of the deal. He did say that it might not knock the whole deal over but it would certainly go to the heart of the value of what they were going to be prepared to pay us.
Q. You could have called Mr Murphy’s bluff couldn’t you?
A. I wasn’t prepared to play Russian Roulette Your Honour.
Q. Well didn’t you say in your evidence-in-chief that he was falling over himself to do this deal?
A. Yep, and he was.
Q.So he was falling over himself to do the deal but he was bluffing, which one do you think it was?
A. I wasn’t prepared to go there Your Honour.
Q. But let’s assume for argument’s sake that it may have jeopardised the sale, that choice was open to you wasn’t it?
A. That choice was open to me and I chose not to take it Your Honour.
Q. And you chose not to take it because it was a good deal?
A. Correct.
Q. In fact it was a very good deal wasn’t it?
A. Correct.
Q.And even after having to pay Luberon or Mr Murphy too many dollars it was still a very good deal wasn’t it?
A. It was a good deal Your Honour, yes.
Q. So proceeding with the sale along with Mr Murphy’s requirements in terms of the Luberon shares was still a commercially sensible thing to do wasn’t it?
A.It certainly was a correct commercial decision to take and I felt it was the only one to take at the time.
Q. Because it was the best deal on the table at that time wasn’t it?
A.It was the best deal on the time, that’s quite correct, and I didn’t want to jeopardise it.
[86] This passage demonstrates that the pressure in this case was not so overwhelming that Mr Dold’s will was effectively overborne. Rather, it appears that the decision to make the payment was a calculated and considered commercial decision after weighing all the options. That is inconsistent with economic duress.
[87] Next, I consider the nature of the demand. Mr Heaney referred to the unlawfulness of a threat to breach a contract in his closing submissions. There is some debate about whether a threatened breach of contract will necessarily render any pressure illegitimate. But I need not consider that debate in any detail in this case because, as I have already found, there was no contractual obligation to sell or to sell at a certain price. Mr Murphy’s demand was not a threat to breach the Shareholders’ Agreement. Nor was it a breach of any contract of services between Siena Consulting Ltd and Cruise Whitsundays. The parties had not yet signed the Memorandum of Understanding and so were not yet bound by its terms. In any respect, the Memorandum of Understanding did not impose obligations in relation to sale. There was no other prohibition on Mr Murphy making the demand that he did, and it cannot be said to be unlawful in those circumstances.
[88] This distinguishes the present case from D&C Builders Ltd v Rees and North Ocean Shipping Co Limited v Hyundai Construction Co Limited relied on by the plaintiff.14 In both those cases there was a threat to break a contract without any legal justification, and that amounted to undue pressure for the purposes of duress. In this case there was no threat to break a contract, and the pressure cannot be said to be undue.
[89] There is some evidence to support Mr Murphy’s claim that the demand for additional payment was justified. Mr Dold was noble enough to accept that
14 D&C Builders Limited v Rees [1966] 2 QB 617; North Ocean Shipping Co Limited v Hyundai Construction Co Limited [1979] QB 705, [1978] 3 All ER 1170.
Mr Murphy had worked extremely hard on the Port Airlie project, and on preparing Cruise Whitsundays for sale. Mr Dold’s offer to speak to Mr Jacobs about splitting the proceeds of sale of the Port Airlie terminal three ways was a tacit acknowledgement that Mr Murphy’s contribution was greater than the contractual payments he had received for his work. And, at trial, Mr Dold acknowledged that expressly.15
[90] What Mr Dold really objected to was not the quantum of demand but the way in which Mr Murphy went about making it. Mr Dold said that expressly in the email sent to Mr Murphy just prior to the payment being made, noting that it was not the quantum of the demand that “shattered” him but “the way you talked to me with such venom in the HIE Airport lounge”. Rather than seeking to re-negotiate Siena Consulting Ltd’s daily rate or reminding Mr Dold of his suggestion of splitting the Port Airlie profits three ways, Mr Murphy waited to spring it on Mr Dold when the deal was almost over the line.
[91] Many may share Mr Dold’s outrage at Mr Murphy’s behaviour. Some may consider it sharp and at odds with a sense of fair play. But commercial dealings are full of examples of pressure brought to bear on opposing parties, and the exploitation of opportunities to benefit one party at the expense of others. Although Mr Murphy’s behaviour might be regarded as distasteful, ultimately, I do not consider it to be illegitimate.
[92] That is fatal to the economic duress cause of action and it is unnecessary to consider whether the illegitimate pressure coerced payment to be made. Failure to establish economic duress means that the money had and received cause of action must also fail, and this cause of action is dismissed.
Other claims and defences
[93] In the course of the trial an issue arose regarding “tag along” or “drag along” rights. Mr Dold described these rights as a provision in a shareholders’ agreement requiring a minority shareholder to act in accordance with a decision of the majority
15 Notes of Evidence, page 43, lines 30–35.
shareholder to sell the shares. An obligation such as this would have compelled Mr Murphy to sell his shares to Quadrant and would have effectively prevented him from making the demand that he did.
[94] The plaintiffs say that Mr Murphy failed to include such rights in the Shareholders’ Agreement, and consequently they suffered loss. But this claim was not pleaded and I would not have granted an application to amend the statement of claim. It is an entirely different claim arising out of events in 2005. It would have required evidence directed towards the nature of any duties (fiduciary or otherwise) owed by Mr Murphy at the time that he prepared the Shareholders’ Agreement. I decline to consider this claim.
[95] Finally, my findings on each cause of action make it unnecessary to consider the defendants’ affirmative defence based on estoppel.
Result
[96]The plaintiffs’ claim is dismissed.
[97] The defendants are entitled to an award of costs. If costs cannot be agreed then the defendants may submit a memorandum in support within 10 working days of this judgment. The plaintiffs may file a memorandum in response five working days thereafter. Costs shall be determined on the papers.
Edwards J
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