Nobilo v Nobilo - [2014] NZHC 654

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3925 [2014] NZHC 654

BETWEEN
JOHN SAMUEL NOBILO

Applicant

AND

DEBORAH KATHLEEN NOBILO Respondent

Hearing: On the papers

Appearances:

G L Harrison for applicant
G M Cameron for respondent

Judgment:

3 April 2014

JUDGMENT OF LANG J [Costs]

This judgment was delivered by me on 3 April 2014 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

NOBILO v NOBILO [2014] NZHC 654 [3 April 2014]

[1] On 7 March 2014, Associate Judge Abbott declined an application by Mr Nobilo for an order granting him leave under s 165 of the Companies Act 1993 (“the Act”) to issue a derivative proceeding on behalf of Nobilo & Co Limited (“NCL”).1
The Associate Judge expressed the preliminary view that costs should lie where they fall, but reserved leave to counsel to file memoranda addressing the issue in the
event that they could not reach agreement. That has now transpired to be the case.

[2] Because of other work commitments, Associate Judge Abbott is not available conveniently to determine the issue of costs. Rule 14.9 of the High Court Rules therefore applies. I propose to address the issue of costs in light of the judgment and
the memoranda filed by counsel.

Brief background

[3] Mr and Mrs Nobilo are the directors and equal shareholders in NCL. They are also both chartered accountants. They each operated their respective accounting practices through the auspices of NCL.

[4] After Mr and Mrs Nobilo separated, Mrs Nobilo set up a new accounting practice. At that point she wrote to those of NCL’s clients for whom she had been the principal point of contact. She informed those clients of the steps they needed to take in the event that they wished her to continue to undertake their accounting work. Many of those clients have now transferred their business to Mrs Nobilo’s new accounting practice.

[5] Mr Nobilo believes the letters that Mrs Nobilo sent to NCL’s clients have caused considerable loss to NCL. NCL could not issue proceedings itself, because Mrs Nobilo would obviously not agree to that being done. He therefore sought to issue a derivative proceeding on NCL’s behalf so that the company could recover
those losses.

1 Nobilo v Nobilo [2014] NZHC 401.

The judgment

[6] The Associate Judge declined Mr Nobilo’s application after weighing the mandatory factors in s 165(2) of the Act. He reserved leave to Mr Nobilo, however, to reinstate his application in the event that existing relationship property proceedings in the Family Court did not resolve all outstanding issues for the parties, or if a derivative action became the only means by which significant outstanding issues between the parties can be addressed.

[7] In dealing with costs, the Associate Judge said:

[43] Although Mrs Nobilo has succeeded in her opposition, I take the view that an overall resolution of the unfortunate differences between these parties will not be assisted by a costs order. However, as…

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 Nobilo v Nobilo

Details

AGLC: Nobilo v Nobilo [2014] NZHC 654
Case: [2014] NZHC 654
Decision Date: 3 April 2014

CaseChat Overview and Summary

Nobilo v Nobilo was a case before the High Court of New Zealand where the applicant, John Samuel Nobilo, sought an order for leave to issue a derivative proceeding on behalf of Nobilo & Co Limited. The dispute arose from a separation between John and his wife, Deborah Kathleen Nobilo, both directors and equal shareholders of Nobilo & Co Limited, who operated their respective accounting practices through the company. Following the separation, Deborah set up a new accounting practice and communicated with clients of Nobilo & Co Limited, many of whom transferred their business to her new practice. John believed these actions caused significant loss to the company and sought to issue a derivative proceeding to recover those losses.

The legal issue before the court was whether John should be granted leave to issue a derivative proceeding on behalf of Nobilo & Co Limited. The court had to weigh the mandatory factors outlined in section 165(2) of the Companies Act 1993 and decide whether John's application should be granted at that point. The court also needed to determine the costs associated with the application, considering that the Associate Judge had reserved leave to counsel to address the issue in the event that they could not reach an agreement.

The court concluded that Deborah was the successful party in the present case as her counsel persuaded the Associate Judge that John should not be granted leave at that point to issue a derivative proceeding on behalf of Nobilo & Co Limited. The court made an award of costs to Deborah on a Category 2B basis, together with disbursements as fixed by the Registrar. The court emphasised the importance of the principles that the unsuccessful party should contribute to the costs of the successful party and that the determination of costs should be predictable and expeditious. The court also noted that an award of costs would not assist in resolving the outstanding issues between the parties.

Orders