Fruit Shippers Limited v Petrie - [2019] NZHC 2694

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2819

[2019] NZHC 2694

BETWEEN
FRUIT SHIPPERS LIMITED

Plaintiff

AND

ALISTAIR DOUGLAS PETRIE

First Defendant

AND

LUISA NOBOA

Second Defendant

Hearing: 3 October 2019

Appearances:

D J Friar and B A Keown for Plaintiff

M D Arthur and J Marcetic for Defendants

Judgment:

21 October 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 21 October 2019 at 3.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 21 October 2019

FRUIT SHIPPERS LIMITED v PETRIE [2019] NZHC 2694 [21 October 2019]

Application

[1] The plaintiff applies for an order restraining Chapman Tripp from acting as solicitor for the defendants and for the company of which they were directors if it is joined to this proceeding.

Background

[2] The plaintiff, Fruit Shippers Ltd (“Fruit Shippers”), alleges that the second defendant, Mr Noboa, received from Bartel Holdings Ltd (“Bartel”) between 2008 and 2017 a total of approximately $15 million to which he was not entitled. Mr Noboa was a director of Bartel from 16 January 2012 to 8 November 2017. The shareholders of Bartel are the trustees of the Dossor Trust (“the Trust”) and Fruit Shippers characterises itself as the sole discretionary beneficiary of the Trust.

[3] The standing of Fruit Shippers as a beneficiary of the shareholder of Bartel to bring the present proceeding is the subject of a further application to be heard in December 2019. Counsel agreed that this application would proceed without regard to issues of standing. There is also an application by Fruit Shippers to join Bartel as a third defendant, hence the prohibition on the firm acting is sought to extend to that company if joined.

[4] The first defendant, Mr Petrie, is a director of Bartel and has been since 18 January 2016. Mr Petrie was the sole shareholder of Bartel from 18 January 2016 until 14 December 2017, as trustee of the Trust. (A Mr Carpenter was appointed second trustee of the Trust on 6 November 2017, an additional shareholder of Bartel on 14 December 2017, and a director of Bartel on 8 November 2017 alongside Mr Petrie). The causes of action against Mr Petrie are based on breach of fiduciary duty owed to Bartel in permitting the payments received by Mr Noboa to be made during Mr Petrie’s directorship. The claim against Mr Petrie is quantified at $7.149 million being the payments alleged to be improperly made while Mr Petrie was a director.

[5] From about April 2016, Chapman Tripp began acting for Bartel and Mr Noboa as director of Bartel. It is understood the firm also acted for Mr Petrie as director of Bartel.

[6] The basic proposition behind the present application is that Fruit Shippers says that Chapman Tripp was so involved in events relating to the impugned payments to Mr Noboa and to an entity said to be associated with him, that Chapman Tripp should…

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.

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Details

Case: [2019] NZHC 2694
Decision Date: 21 October 2019

CaseChat Overview and Summary

Fruit Shippers Limited brought an application against Alistair Douglas Petrie and Luisa Noboa seeking an order restraining Chapman Tripp from acting as solicitors for the defendants and for a company that may be joined to the proceeding. Fruit Shippers sought the order on the basis that Chapman Tripp had been involved in the reclassification of payments to Mr Noboa and the treatment of the accounts of Bartel, a company that the parties to the proceeding are directors of. Fruit Shippers argued that Chapman Tripp had been involved in events that could result in it having to defend the advice it gave, which would put it in a conflict of interest. The court accepted that Chapman Tripp had been involved in the reclassification of the payments to Mr Noboa and the treatment of the accounts of Bartel. The court concluded that there was a more than negligible risk that Chapman Tripp’s advice would be put into issue and therefore there should be an order preventing Chapman Tripp from acting for the defendants. There was an order that Chapman Tripp be restrained from acting as solicitors for the defendants and for the proposed new defendant, Bartel.

Orders