Robcke v Metz - [2015] NZHC 1724

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV-2015-463-000031 [2015] NZHC 1724

UNDER the Companies Act 1993

BETWEEN

GEOFFREY IAN ROBCKE Applicant

AND

ROBERT METZ Respondent

Hearing: 8 July 2015

Appearances:

P F Dalkie for Applicant
T Grimwood for Respondent

Judgment:

27 July 2015

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

This judgment was delivered by me at 12.30 pm on 27 July 2015 pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
MacDonald Lewis Law, Auckland.
Lance Lawson, Rotorua.

GEOFFREY IAN ROBCKE v ROBERT METZ [2015] NZHC 1724 [27 July 2015]

Introduction

[1] This is an originating application by Mr Robcke for leave to bring proceedings in the name of a company, Qspear Limited (“Qspear”), against the respondent, Mr Metz, and another company, Roam Industries Limited (“Roam”).

[2] Mr Robcke and Mr Metz are the directors of Qspear. Each owns one share, and 999 shares are owned by each of their respective family trusts. The company was incorporated in April 2004, but it has not traded since 2011. It was a supplier of bike racks to retailers and wholesalers of bikes in New Zealand and Australia. Initially, Mr Metz designed a rack and he and Mr Robcke set up in business together in around 2001 to have the bike racks manufactured and to market them. The copyright in the racks is now owned by Qspear.

[3] In September 2010 Mr Metz and Mr Robcke parted company. In October

2010 Mr Metz incorporated Roam Industries Limited, and became a director of that company.

[4] The principal supplier of bike racks to Qspear was a manufacturing company called Yeong Ton Industrial Company Limited (“Yeong Ton”), based in Taiwan. In November 2010 Yeong-Ton declined to provide further product to Qspear. Mr Robcke maintains that Mr Metz contrived to have Yeong Ton refuse supply to Qspear. Mr Metz says that Yeong Ton declined to supply product to Qspear because of Qspear’s poor payment history, responsibility for which lies at the feet of Mr Robcke.

[5] Mr Robcke says that Mr Metz held all the contacts Qspear had for sales of its products and Qspear stopped trading when he used these to promote products sold by Roam. In particular, he says that a bike rack system is now marketed by Roam which is “extremely similar in size, configuration, shape and appearance to the Qspear racking system”.

[6] In the proceeding Mr Robcke wishes Qspear to bring against Mr Metz, Qspear would allege breach by Mr Metz of his duties to Qspear as a director, breach

by Mr Metz of fiduciary duties owed to Qspear, unauthorised use of confidential information, and a claim in relation to monies said to have been taken from Qspear by Mr Metz. As well, Qspear would bring a cause of action against Roam for knowingly making profits as a result of Mr Metz’s actions.

The principles of law to be applied

[7] The application is brought in reliance on s 165 of the Companies Act 1993, which provides:

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 Robcke v Metz

Details

AGLC: Robcke v Metz [2015] NZHC 1724
Case: [2015] NZHC 1724
Decision Date: 27 July 2015

CaseChat Overview and Summary

The case of Robcke v Metz involved an originating application by Geoffrey Ian Robcke for leave to bring proceedings in the name of a company, Qspear Limited, against Robert Metz, who was a director of the company, and Roam Industries Limited. Robcke and Metz were the directors of Qspear, each owning one share, with 999 shares owned by their respective family trusts. The company had not traded since 2011, and was a supplier of bike racks to retailers and wholesalers in New Zealand and Australia. The copyright in the racks was owned by Qspear.

Robcke and Metz parted ways in September 2010, and Metz incorporated Roam Industries Limited in October 2010. Robcke alleged that Metz conspired to have Yeong Ton Industrial Company Limited, Qspear's principal supplier, refuse to supply product to Qspear. Metz claimed that Yeong Ton declined to supply Qspear due to the company's poor payment history, which was the responsibility of Robcke. Robcke also claimed that Metz held all the contacts Qspear had for sales of its products and that Qspear stopped trading when Metz used these contacts to promote products sold by Roam.

In the proceedings, Qspear would allege breach by Metz of his duties to Qspear as a director, breach of fiduciary duties owed to Qspear, unauthorised use of confidential information, and a claim in relation to monies said to have been taken from Qspear by Metz. Qspear would also bring a cause of action against Roam for knowingly making profits as a result of Metz's actions.

The court had to determine whether to grant leave to Robcke to bring proceedings on behalf of Qspear, considering the likelihood of the proceedings succeeding, the costs of the proceedings in relation to the relief likely to be obtained, any action already taken by Qspear to obtain relief, and the interests of Qspear in the proceedings being commenced. The court also had to consider whether Qspear did not intend to bring, diligently continue or defend the proceedings, or whether it was in the interests of Qspear that the conduct of the proceedings should not be left to the directors.

The court found that a prudent businessperson would have real reservations about whether the proceeding would succeed, as there were evidentiary weaknesses in Qspear's case and evidence of breaches of duty by both Robcke and Metz. The court also found that the cost of proceeding would likely be in the order of $70,000 to $90,000, and the relief likely to be obtained would be relatively small. The court further found that Qspear had taken no steps to obtain the relief it now wished to pursue and had a dysfunctional board of directors. In conclusion, the court found that a prudent businessperson in charge of the affairs of Qspear would not bring the action proposed by Robcke, as the maximum prospective return to the company would involve expenditure of a significant sum in circumstances where the risks in relation to succeeding in obtaining judgment were readily identified and significant. The application was dismissed, and costs were to follow the event, with the applicant to pay costs on a 2B basis with disbursements fixed by the Registrar.

Orders