Nobilo v Nobilo - [2014] NZHC 401

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2013-404-003925 [2014] NZHC 401

BETWEEN JOHN SAMUEL NOBILO Applicant

ANDDEBORAH KATHLEEN NOBILO Respondent

Hearing: 20 November 2013

Appearances: G L Harrison for applicant
G M Cameron for respondent

Judgment: 7 March 2014

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me 7 March 2014 at 4pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Langdon & Co, Takapuna, Auckland
Donnell & Associates, Auckland

Counsel:
G L Harrison, Auckland
G M Cameron, Auckland

NOBILO v NOBILO [2014] NZHC 401 [7 March 2014]

[1] The parties are directors of a family company, Nobilo & Co Ltd (NCL). They are also husband and wife (now estranged).

[2] The parties ran an accountancy practice through NCL.

[3] At the end of their marital relationship, the respondent (Mrs Nobilo) set up a separate accountancy practice. She wrote to those clients of NCL for whom she had been the principal point of contact, and informed them of the steps they needed to take if they wished her to continue to undertake their work. Most, if not all, of those clients have since transferred their work to Mrs Nobilo’s new practice.

[4] The applicant (Mr Nobilo) says the letters caused some 70 percent of NCL’s clients to transfer their work to Mrs Nobilo’s new practice. He says that the letters breached Mrs Nobilo’s duties to NCL. As NCL is deadlocked (the shareholding is held or controlled equally by the parties) he has applied for leave1 to bring an action in NCL’s name to recover losses that he contends NCL has suffered.

[5] The respondent, Mrs Nobilo, opposes the granting of leave. She denies any breach of duty to NCL, contending that it was common ground that NCL could not continue to function with both of them working in it, and that she and Mr Nobilo had come to an understanding that each would take the clients for whom they had been working or had been the primary point of contact. She also says that Mr Nobilo’s concerns can be addressed as a relationship property issue in proceedings already before the Family Court.

[6] For the reasons I will now give, I have come to the view that leave should not be granted (at least at this time).

Background

[7] Mr and Mrs Nobilo were married for approximately 24 years. They separated on 18 September 2012.

1 Under s 165, Companies Act 1993.

[8] The parties are chartered accountants by profession. Both originally worked for chartered accountancy practices. Mrs Nobilo left and started her own practice. After she had built a successful practice, Mr Nobilo joined her in partnership, and later they incorporated NCL to operate the practice. It seems that Mrs Nobilo managed the work of the majority of NCL’s clients.

[9] The parties have both been a director of NCL at all times. They hold one share each. The remaining 98 shares are held by them (and their solicitor) 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 401
Case: [2014] NZHC 401
Decision Date: 7 March 2014

CaseChat Overview and Summary

The applicant, Mr Nobilo, applied for leave to bring an action in the name of Nobilo & Co Ltd (NCL), of which he is a director and equal shareholder, against the respondent, Mrs Nobilo, also a director and equal shareholder, for breach of fiduciary and statutory duties, and for damages for those breaches. NCL is deadlocked, and thus unable to bring the action itself. The central issue was whether the Court should exercise its discretion under s 165 of the Companies Act 1993 to allow Mr Nobilo to bring the proposed action. The Court considered whether there was a reasonable prospect of the claim succeeding, whether Mr Nobilo’s contentions were capable of being addressed in the Family Court, and, if so, whether it was better for the relationship property proceedings to run their course. The Court decided that leave should not be granted (at least at this time). Mr Nobilo’s case for leave was rejected on the basis that there was no realistic prospect of establishing a loss to justify NCL incurring the costs in pursuing the proposed proceeding. The Court considered the dispute over the alleged effect of any breach of duty, the likelihood of any loss, and the comparison between cost and likely recovery. The Court concluded that the parties’ interests were aligned on the point that steps needed to be taken to preserve value in the company. The Court also noted that it would be preferable for the parties to endeavour to resolve their issues within the existing relationship property proceeding, in the knowledge that if there were matters that could not be resolved there, there were other avenues that could be pursued. The application for leave was dismissed.

Orders