McLean v Future Wealth Management Limited

[2014] NZHC 528

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2013-404-002919 [2014] NZHC 528

BETWEEN  JOHN GRAHAM MCLEAN Applicant

ANDFUTURE WEALTH MANAGEMENT LIMITED

First Respondent

PETER REGINALD DAYMOND Second Respondent

Hearing:                   10 February 2014

Appearances:           A Hooker for applicant

D P H Jones QC for respondents

Judgment:                20 March 2014

RESERVED JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 20 March 2014 at 3.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Andrew Hooker Lawyer, Auckland

Birdsey & Associates, Auckland

Counsel:

D P H Jones QC, Auckland

MCLEAN v FUTURE WEALTH MANAGEMENT LTD [2014] NZHC 528 [20 March 2014]

Contents

Background........................................................................................................................................ [5] The Draft Claim .............................................................................................................................. [10] Notice of opposition and evidence in opposition to the application ............................................ [20] The parties’ submissions ................................................................................................................. [29] The applicant .................................................................................................................................... [29] The respondents................................................................................................................................ [41] Supplementary evidence and submissions .................................................................................... [50] Discussion......................................................................................................................................... [56] Section 165(2)(a) – the likelihood of the proceedings succeeding ............................................... [57] Section 165(2)(b) – the likely costs of the proceedings ................................................................ [81]

Section 165(2)(b) and (3)(a) – any action already taken by the company to obtain relief, and whether the company intends to bring the proposed proceedings ................................................ [88]

Section 165(2)(d) – the interests of the company in the proposed proceedings ............................ [89]

Conclusion........................................................................................................................................ [97]

[1]      The applicant (Mr McLean) applies under s 165 of the Companies Act 1993 (the Act) for leave to bring proceedings in the name and on behalf of the first respondent   (Future   Wealth)   against   the   second   respondent   (Mr Daymond). Mr McLean also seeks an order under s 166 of the Act that Future Wealth bear the costs of the proposed proceedings.

[2]      Those sections provide as follows:

165     Derivative actions

(1)       Subject  to  subsection (3) of  this  section,  the  Court  may,  on  the application of a shareholder or director of a company, grant leave to that shareholder or director to—

(a)       bring proceedings in the name and on behalf of the company or any related company; or

(b)       intervene  in  proceedings  to  which  the  company  or  any related company is a party for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or related company, as the case may be.

(2)       Without  limiting  subsection  (1)  of  this  section,  in  determining whether to grant leave under that subsection, the Court shall have regard to—

(a)      the likelihood of the proceedings succeeding:

(b)       the costs of the proceedings in relation to the relief likely to be obtained:

(c)       any action already taken by the company or related company to obtain relief:

(d)      the interests of the company or related company in the proceedings being commenced, continued, defended, or discontinued, as the case may be.

(3)       Leave  to  bring  proceedings  or  intervene  in  proceedings  may  be granted under subsection (1) of this section, only if the Court is satisfied that either—

(a)       the company or related company does not intend to bring, diligently  continue  or  defend,  or  discontinue  the proceedings, as the case may be;…