McCarthy v McCarthy - [2012] NZHC 1555

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-0213 [2012] NZHC 1555

UNDER Part 12 of the High Court Rules

BETWEEN EUGENE GABRIEL MCCARTHY Applicant

ANDROSEMARIE MCCARTHY Respondent

Hearing: 16 May 2012

Appearances: Mr Tetzlaff for Applicant
Mr Downing for Respondent

Judgment: 3 July 2012

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on
03 July 2012 at 4 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:
Gaze Burt, P O Box 301251, Albany 0752 –Nathan.tetzlaff@gazeburt.co.nz

McFadden McMeeken Phillips, P O Box 656, Nelson – Graeme@mmp.co.nz

MCCARTHY V MCCARTHY HC AK CIV-2012-404-0213 [3 July 2012]

[1] This is an application for summary judgment. The plaintiff seeks to have the defendant complete the transfer of certain shares in a company purusant to an agreement between the parties.

Facts

[2] The plaintiff and the defendant were the proprietors, directors and shareholders of two companies: International Entertainment (NZ) Limited (“IENZ”), which is a New Zealand registered company, and International Entertainment (Aust) Pty Limited (“IEAUS”), which is an Australian-registered company. Both parties own 50 per cent each of both companies. The parties have had a falling out, and decided to separate their business affairs. The broad thrust of their arrangement to resolve matters was that the defendant would take over the New Zealand company, and the plaintiff the Australian company. They entered into an agreement dated 29
March 2011 (“the Agreement”). The broad objective of the agreement was to transfer the shares in each company to the party who was to have the ownership of that company.

[3] A number of steps were taken to implement the Agreement, but implementation has reached a stage where it has stalled. In effect, the defendant has declined to transfer her shares in IEAUS to the plaintiff.

The Pleadings

[4] The plaintiff has filed an application for summary judgment. The plaintiff seeks specific performance of the provisions of the Agreement that require the defendant to transfer her shares.

[5] A notice of opposition has been filed in turn. The grounds of opposition are as follows:

3.1 The plaintiff has not completed his obligations under the

Agreement, nor assisted in providing information necessary for the

completion of the defendant’s obligations under the Agreement. The equitable remedy of specific performance is not available in such circumstances.

3.2 The plaintiff is seeking specific performance of part of the defendant’s obligations under the Agreement, and ignoring other obligations and conditions of that Agreement.

3.3The obligation sought to be enforced is conditional, and the condition has not been satisfied.

3.4The Companies, IENZ and IEAUS, are both parties to the Agreement. However the plaintiff has not included them in the proceedings. The interests of IENZ in particular are prejudiced by the proceedings.

3.5The Agreement appoints William Grieve as an independent person to administer the fair and equitable restructuring of IEAUS and IENZ. However, the plaintiff has not called upon him or even suggested that the parties approach him concerning the subject of these…

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: [2012] NZHC 1555
Decision Date: 3 July 2012

CaseChat Overview and Summary

The case of McCarthy v McCarthy involved an application for summary judgment to enforce the terms of a contract between the parties for the transfer of shares in two companies, International Entertainment (NZ) Limited and International Entertainment (Aust) Pty Limited. The plaintiff sought specific performance of the defendant's obligation to transfer her shares in the Australian company to the plaintiff. The defendant opposed the application on several grounds, including that the plaintiff had not completed his obligations under the agreement, that the obligation to transfer shares was conditional and not yet satisfied, and that there were disputed facts that required resolution before the shares could be transferred.

The court considered the terms of the agreement, which provided for the reciprocal transfer of shares in the two companies, the division of the companies' liquid assets, and the indemnification of each party against certain liabilities. The court found that the preparation of financial accounts for the companies was not a prerequisite to the transfer of shares, and that the parties had intended to promptly separate their business affairs without waiting for the completion of such accounts. The court also found that the defendant's contention that she was entitled to withhold performance of the agreement until all possible liabilities of the company had been identified and the plaintiff had met his share of them was contrary to the indemnity provisions in the agreement and the parties' intention to promptly divide their assets.

The court granted the plaintiff's application for summary judgment and ordered the defendant to transfer her shares in the Australian company to the plaintiff. The court also awarded costs to the plaintiff on a category 2 basis, but declined to augment the costs against the defendant for procedural breaches that occurred during the preparation of the pleadings and affidavits.

Orders