Gillies Bakery Limited v Gillespie - [2013] NZHC 1608

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-000386 [2013] NZHC 1608

BETWEEN
GILLES BAKERY LIMITED First Plaintiff

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AND

KEVIN JAMES GILLESPIE First Defendant

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Hearing: 30 October 2012

Appearances:

G J Judd QC and K J Patterson for Plaintiffs

G W Hall and D T Broadmore for First, Second and Sixth

Defendants
B P Henry and P J Knapp for Fourth and Seventh Defendants
M V Robinson and F M Kirkcaldie for Eight Defendant

Judgment:

28 June 2013

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 28 June 2013 at 4.45pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
McKechnie Quirke & Lewis, Rotorua
G Hall/D T Broadmore, Buddle Findlay, Auckland
M Robinson/F M Kirkcaldie, Simpson Grierson, Auckland
D J Gates, Whangaparaoa
Simpson Grierson, Auckland

Counsel:
G J Judd QC, Auckland
K J Patterson, Tauranga
B Henry/P J Knapp, Auckland

GILLES BAKERY LIMITED v GILLESPIE [2013] NZHC 1608 [28 June 2013]

ANDTREVOR KEITH BOSS AND BRIAN ERSKINE-SHAW AS TRUSTEES OF THE TREVOR BOSS FAMILY TRUST Second Plaintiff

ANDESTHER TCHOUA JACQUET AND TREVOR KEITH BOSS AS TRUSTEES OF THE ESTHER JACQUET FAMILY TRUST AND JEAN PHILLIPE THADDEE JACQUET AND TREVOR KEITH BOSS AS TRUSTEES OF THE JEAN PHILLIPPE THADDEE JACQUET FAMILY TRUST AND JEAN PHILLIPPE THADDEE JACQUET AND ESTHER TCHOUA JACQUET PERSONALLY Third Plaintiffs

ANDWARREN ALEXANDER DUNCAN Second Defendant

ANDJOHN LELIEVRE Third Defendant

ANDMICHAEL CHANNEL FINNEGAN Fourth Defendant

ANDPAUL STEVEN YARROW Fifth Defendant

ANDTREVOR NEIL PERRY Sixth Defendant

ANDCOLIN PETTIGREW Seventh Defendant

ANDWESTPAC NEW ZEALAND LIMITED Eighth Defendant

ANDDENNIS KING LAW Ninth Defendant

Introduction – the parties and this application

[1] This proceeding arises out of the circumstances in which the first plaintiff, Gilles Bakery Limited (GBL), gave a guarantee of loan obligations of Yarrows (The Bakers) Limited (Yarrows) to the eighth defendant, Westpac New Zealand Limited (Westpac).

[2] At the material time, Yarrows was the holder of all of the ordinary shares in GBL, and the second and third plaintiffs were the holders of non-voting, redeemable preference shares. Both companies were in the bakery business. Yarrows had purchased the ordinary shares from the second and third plaintiffs (who are trustees of family trusts associated with Trevor Boss and Jean Jacquet, the directors of GBL). I will refer to the second and third plaintiffs as the preference shareholders. They received the redeemable preference shares as part of the consideration for the sale of the ordinary shares. Mr Boss and Mr Jacquet remained directors after the sale (as appointees of the preference shareholders) and continued to run the business on a day-to-day basis.

[3] A few months after acquiring 100% of the ordinary shares in GBL, Yarrows sought an extension of an existing loan facility with Westpac. Westpac agreed to extend the facility on several conditions, one of which was that GBL accede to a guarantee arrangement under which companies in the Yarrows group gave cross guarantees of Yarrows’ obligations and a general security agreement in support…

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 Gillies Bakery Limited v Gillespie

Details

AGLC: Gillies Bakery Limited v Gillespie [2013] NZHC 1608
Case: [2013] NZHC 1608
Decision Date: 28 June 2013

CaseChat Overview and Summary

Gilles Bakery Limited (GBL) sought to hold Yarrows, its 100% shareholder, liable for breaches of statutory and fiduciary duties by its directors, including the Chief Executive Officer and Finance Director. GBL alleged that Yarrows, and the other defendants, had required it to execute a guarantee of Yarrows’ loan from Westpac, and had failed to ensure that GBL’s directors and the preference shareholders were fully informed as to the jeopardy in which they were being placed by executing the documents. The defendants applied to strike out the claims or for summary judgment. The Court found that Yarrows could not be a deemed director under s 126 of the Companies Act 1993. The Court also found that Yarrows was entitled to act in its own best interests, and could not be held liable for acting in accordance with that entitlement. The Court found that Yarrows, and the other defendants, could not be liable for knowingly assisting Yarrows’ breaches of duty, or for breach of fiduciary duties. The Court therefore found that the claims against the defendants could not succeed, and dismissed the claims.

Orders