Napier v Torbay Holdings Ltd - [2016] NZCA 608

IN THE COURT OF APPEAL OF NEW ZEALAND

CA647/2015
[2016] NZCA 608

BETWEEN	DUNCAN JOHN NAPIER AND SARA ANN NAPIER Appellants
AND	TORBAY HOLDINGS LIMITED First Respondent
AND	TORBAY REST HOME LIMITED Second Respondent

Hearing:	17 October 2016
Court:	Asher, Dobson and Williams JJ
Counsel:	S O McAnally and B M Hojabri for Appellants DPH Jones QC for First and Second Respondents
Judgment:	15 December 2016 at 11.30 am

JUDGMENT OF THE COURT

A The appeal is dismissed.

BThe appellant must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Asher J)

Introduction

The appellants, Duncan and Sara Napier, were the Administration Manager and Nurse Manager of a Torbay Rest Home owned by the respondent companies (the Torbay companies). The Napiers effectively ran the rest home business. They were given untrammelled control on the basis of trust.
In 2012 representatives of the Torbay companies began to receive troublesome indications that all was not right financially with the rest home. Their investigations indicated that in excess of $1.9 million, including $281,087.01 of unauthorised remuneration, had been paid to the Napiers or their associated interests out of the bank accounts of the Torbay companies between 1 April 2005 and 30 April 2012.
Proceedings were filed by the Torbay companies. Torbay was successful after a three-week hearing before Woolford J.[1] Mr Napier was held to be liable for money had and received, and Woolford J entered judgment against Mr Napier in favour of the Torbay companies in the sum of $1,419,351.20. Mrs Napier was held to be personally liable on the same cause of action for $720,310.53 that she received, and the Napier Family Trust was held to be liable for $308,080.08 for money had and received, which after deductions was for $95,735.08. The total amounts of the collective judgments came to $2,235,396.81, but the net amount recoverable by the Torbay companies was $1,458,288.56. There were other consequential orders.[2]
[1]Torbay Holdings Ltd v Napier [2015] NZHC 2477, [2015] NZAR 1839.
[2]See [262]–[265].
The Napiers appeal that decision, submitting that the judgment is “unsafe and cannot stand”. The Napiers had not been represented by counsel in the High Court, and Mr Napier had run the defence. Before us, Mr McAnally and Ms Hojabri appeared for them.

Background facts[3]

[3]For a full summary of the facts see Torbay Holdings Ltd v Napier, above n 1, at [9]–[28].

The first respondent, Torbay Holdings Ltd, was incorporated on 8 June 2001. Its principal shareholder was Mr Michael Single’s family trust, which held approximately 40 per cent. Mr Single was also a director. There was another significant shareholder, the family trust of Mark Kayes, which held 20 per cent. The Napier Family Trust held 20 per cent. The shareholding of Torbay Rest Home Ltd was similar.
Mr and Mrs Napier had been directors of a toy retailer, Henderson Toys Ltd, that had got into financial difficulties in 2000. It ceased trading…

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: [2016] NZCA 608
Decision Date: 15 December 2016 at 11.30 am

CaseChat Overview and Summary

The Napiers appealed the High Court's decision in which they were found liable for money had and received, and other claims. The Torbay companies successfully sued the Napiers for misappropriation of funds from the rest home business, which the Napiers had effectively run. The appeal centred on three grounds: (1) the money had and received cause of action was not available because the relevant accounts from which the money was taken were in overdraft, and the accounts into which it was paid were also in overdraft; (2) the Judge reversed the onus of proof and placed it squarely on the Napiers; and (3) the negligence claim fell within the exclusive jurisdiction of the Employment Relations Authority. The Court of Appeal rejected all grounds of appeal. It held that the cause of action for money had and received was available because the funds were controlled by the plaintiff, and were received by the defendants. The Judge's factual findings were justified on the facts, and he did not err in his approach. Finally, the Court of Appeal held that the negligence claim did not relate to a breach of an employment agreement or an action arising from or related to the employment relationship. The appeal was dismissed, and the Napiers were ordered to pay costs of a standard appeal on a band A basis and usual disbursements.

Orders