Shamariah Consultancy Limited; ; Robert Grant Darby; / ; And; New Zealand Egg Group Limited; ; Nicholas John Bennik and; Cullinane Steele Trustees (2020); Limited as trustees of the NJ Bennik Trust s /

[2024] NZHC 2771

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-002074

[2024] NZHC 2771

BETWEEN

SHAMARIAH CONSULTANCY LIMITED

First Plaintiff

ROBERT GRANT DARBY
Second Plaintiff / Respondent

AND

NEW ZEALAND EGG GROUP LIMITED

First Defendant

NICHOLAS JOHN BENNIK and
CULLINANE STEELE TRUSTEES (2020)

LIMITED as trustees of the NJ Bennik Trust Second Defendants / Applicant

Hearing:	16 September 2024
Appearances:	J Land / S Jeffs for the Second Defendants / Applicant E Taia for the Plaintiffs / Respondent
Judgment:	30 September 2024

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 30 September 2024 at 12.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Cullinane Steele Lawyers, Levin Franklin Law, Pukekohe

J Land, Auckland S Jeffs, Auckland

SHAMARIAH CONSULTANCY LTD v NEW ZEALAND EGG GROUP LTD [2024] NZHC 2771 [30

September 2024]

Introduction

[1]    The Free Range Egg & Poultry Co Ltd produced and distributed free range and organic eggs, operating both in Franklin and nationwide. The second plaintiff, Robert Darby, was a shareholder and director, and managed the business. In 2022, the business was sold to another egg producer and exporter — New Zealand Egg Group Ltd (NZ Egg). The Free Range Egg & Poultry Co Ltd changed its name to Shamariah Consultancy Ltd (SCL) two days before settlement of the agreement for sale and purchase. The second defendants, the trustees of the NJ Bennik Trust (trustees), are the majority shareholders of NZ Egg.

[2]    The plaintiffs claim that as part of the sale and purchase, SCL and/or Mr Darby were to receive a three per cent shareholding in NZ Egg in addition to a cash payment. Neither party has been provided with any shares in NZ Egg.

[3]    The plaintiffs plead five causes of action against NZ Egg. Mr Darby pleads one cause of action against the trustees of the NJ Bennik Trust: that the trustees hold 22,500 shares on trust for him pursuant to an institutional constructive trust.

[4]    The trustees apply for summary judgment against Mr Darby on the ground that the cause of action cannot succeed. Alternatively, they apply for an order striking out the cause of action. Mr Darby opposes the application.

Leave to apply for summary judgment

[5]    The trustees require leave to apply for summary judgment because they did not make their application when they served their statement of defence on Mr Darby.1

[6]    I consider that the trustees should be given leave, primarily because no steps have been taken in the proceeding since the defendants filed their statements of defence, other than the plaintiffs responding to a request for further particulars of their statement of claim. The plaintiffs provided the further particulars in November 2023, and the trustees applied for summary judgment in April 2024. I also note that prior

1      High Court Rules 2016, r 12.4(3).

to bringing the application, the defendants endeavoured to negotiate with the plaintiffs to settle the proceeding.

[7]    Overall, I do not consider there to be any significant prejudice to the plaintiffs from the application for summary judgment being heard and determined now.

The claim in more detail

[8]    SCL pleads three causes of action against NZ Egg.2 First, that NZ Egg misrepresented that it intended to transfer a three per cent shareholding in NZ Egg to SCL as part of the sale and purchase of the business. SCL seeks damages at the value of the three per cent shareholding, or an order  requiring the  board of directors of  NZ Egg to take all necessary steps to issue and register new shares to SCL, together with judgment for any dividends and/or other benefits that would have accrued to SCL from the date of settlement of the agreement for sale and purchase of the business to the date of judgment, commensurate with the three per cent shareholding.

[9]    Second, SCL pleads breach of an alleged express or implied term of the agreement for sale and purchase of the business that SCL would be entitled to a three per cent shareholding in NZ Egg. SCL seeks the same relief as for the misrepresentation cause of action.

[10]   Third, SCL claims that NZ Egg holds a three per cent shareholding on trust for SCL pursuant to a “common intention remedial constructive trust”. The alleged trust is based on the claim that SCL and NZ Egg had a common intention, expressed in discussions, communications and documents preceding the settlement of the agreement for sale and purchase, that the shares would pass to SCL upon SCL entering into the agreement for sale and purchase, or upon settlement. Further, the alleged trust is based on the claim that SCL has contributed to NZ Egg’s business by entering into the agreement for sale and purchase and providing facilities and goodwill. SCL seeks an order declaring a “common intention remedial constructive trust”, such that a three per cent shareholding in NZ Egg is to be held for the benefit of SCL. Alternatively, as with its first and second causes of action, SCL seeks an order requiring NZ Egg’s board

2      Statement of claim, dated 7 September 2023.

of directors to undertake all necessary steps to issue and register new shares to SCL, and judgment in respect of dividends and/or other benefits that would have accrued.

[11]   Alternatively, under the fourth cause of action, Mr Darby claims that NZ Egg is obliged to transfer to him a three per cent shareholding pursuant to an agreement. He seeks an order that NZ Egg’s board of directors undertakes all necessary steps to issue and register new shares in NZ Egg to him, and judgment in respect of dividends and/or other benefits that would have accrued to him from the date of settlement of the agreement for sale and purchase to the date of judgment, commensurate with the 3 per cent shareholding.

[12]   Under the fifth cause of action, Mr Darby seeks a declaration that NZ Egg holds a three per cent shareholding on trust for him under a “common intention remedial constructive trust”, or an order requiring NZ Egg’s board of directors to take all necessary steps to issue and register new shares in NZ Egg to him. The plaintiffs claim that Mr Darby contributed to NZ Egg’s business by undertaking services and providing expertise to NZ Egg in the expectation of receiving a shareholding, and that it would be unconscionable for NZ Egg to not provide the shareholding.

[13]   Finally, in the sixth cause of action, Mr Darby claims that if NZ Egg is not liable to him for the shares, then he is entitled to a declaration that the trustees hold 22,500 shares out of their current shareholding in NZ Egg on constructive trust for him.  The claim relies on a draft declaration of trust deed provided to Mr Darby on   8 September 2022, which recorded that in consideration for Mr Darby contributing his expertise to NZ Egg, the trustees were to hold 22,500 shares on trust for him.

[14]   This application concerns the sixth cause of action by Mr Darby against the trustees only. However, findings on this application could have implications for the causes of action against NZ Egg which involve the same legal or factual issues.

Legal principles

Defendant summary judgment

[15]Rule 12.2(2) of the High Court Rules 2016 provides:

The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.

[16]   This contrasts with an application for summary judgment by a plaintiff, where the Court may grant summary judgment in respect of a single cause of action in the plaintiff’s statement of claim (or even part of a cause of action).3

[17]   In Stephens v Barron the Court of Appeal summarised the long-standing authority on defendant summary judgment, Westpac Banking Corp v M M Kembla New Zealand Ltd,4 and confirmed that a defendant seeking summary judgment has a considerable burden to discharge:5

(a)The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually this will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim.

(b)An application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment able to be properly arrived at only after a full hearing of the evidence.

(c)The Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment is not to be arrived at on a fine balance of the available evidence as would be appropriate at a trial.

(d)The residual discretion of the Court to refuse summary judgment would be properly invoked to avoid the oppression which would otherwise result if an application by a defendant for summary judgment would pre-empt a plaintiff exercising the right to amend the pleadings.

(e)Summary judgment should not be applied for unless the substantive merits of the case are clear and capable of summary disposal.

[18]   The Supreme Court has emphasised that this is a heavy onus on the defendant, observing that a defendant should apply for summary judgment only “where there is

3      High Court Rules, r 12.2(1).

4      Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).

5      Stephens v Barron [2014] NZCA 82, (2014) 21 PRNZ 734 at [9] (footnotes omitted).

a complete and incontrovertible answer on the facts (in which case summary judgment may be entered for the defendant)”.6

Strike-out

[19]   The court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading.7 The Court of Appeal summarised the principles applicable to the exercise of this discretion in Attorney-General v Prince:8

A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed; the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material; but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction.

[20]   Where a defect in a pleading challenged as disclosing no reasonably arguable cause of action or defence can be cured by amendment which the party is willing to make, the Court will almost always permit amendment rather than striking the pleading out.9

[21]   Although r 15.1(1) expressly contemplates the striking out of part of a proceeding, the Court is cautious about partial strike-out applications. A careful assessment must be made to determine whether the time and expense of such an application will, overall, be an efficient use of the resources of all involved.10

6      Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 at [4], cited in Webster Farm Management Ltd v Dargaville Farms Ltd (in liq) [2020] NZHC 1477 at [32].

7      High Court Rules, r 15.1(1)(a).

8      Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267 (citations omitted); endorsed by the Supreme Court in Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].

9      Marshall Futures Ltd v Marshall [1992] 1 NZLR 316 (HC) at 324; and Westpac Banking Corp v M M Kembla New Zealand Ltd, above n 4, at [66], as cited recently by the Court of Appeal in Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552, [2022] 2 NZLR 284 at [38].

10 Whitman v Airways Corp of New Zealand Ltd (1994) 8 PRNZ 155 (HC) at 158; and Auckland City Council v Effuzi (International) Ltd [2011] LGHNZ 30 (HC) at [103]; and see Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR15.1.08(3)].

The constructive trust claim against the trustees

The trustees’ submissions

[22]   The trustees submit that the pleading suggests that Mr Darby relies on an institutional constructive trust arising out of contributions he has made to the property.11 They claim that Mr Darby’s cause of action cannot succeed because has not contributed to the property in question (the NZ Egg shares) and he could not reasonably have expected that the trustees would hold shares on trust for him.

[23]   On 17 November 2023, the defendants required particulars from the plaintiffs, including particulars of Mr Darby’s pleaded contributions to NZ Egg’s business at [47] and [55] of the statement of claim.

[24]   Mr Darby replied, through his solicitors, that he had undertaken significant services for which he had invoiced NZ Egg, including maintaining relationships with supermarkets following the sale, providing advice and services to NZ Egg regarding export and organic farming, introducing Mr Bennik to farmers, assisting with egg deliveries, providing reports to NZ Egg’s regional director of sales and marketing, assisting with insurance matters, arranging clearance of a feed mill and making arrangements for the use of older egg for liquid supply.

[25]   Mr Darby said he made these contributions between October 2022 and February 2023.

[26]   The trustees point out that these were services which SCL and Mr Darby were obliged to provide NZ Egg under a consultancy agreement entered into shortly after the sale. They say that Mr Darby has not contributed to the shares in NZ Egg; all he has done is provide consultancy services to NZ Egg, for which he was entitled to remuneration.

[27]   Relatedly, the trustees submit that Mr Darby cannot have had a reasonable expectation of acquiring a shareholding interest through the provision of these

11     Lankow v Rose [1995] 1 NZLR 277, (CA).

services, because they were services provided under the consultancy agreement for which he invoiced NZ Egg.

[28]   The trustees reject that the draft declaration of trust gave rise to any expectation of a shareholding interest. They say that Mr Darby cannot  have  relied upon the  draft declaration of trust, because by mid-October 2022, he (and SCL) expected (or at least hoped) to obtain the shares from NZ Egg itself, not the trustees.

[29]   On 30 September 2022, Andrew Skinner of Martelli McKegg  (acting  for  NZ Egg) emailed Ross Townshend, Executive Chairman of NZ Egg, saying “We have understood that new shares from NZ Egg were still under consideration as… holding the shares on trust for [Mr Darby] may have some tax implications…”, and that the draft declaration of trust needed “an effective date from when the shares are to be held on trust (presumably the settlement date of the [SCL] transaction)”.

[30]    On 13 October 2022, Mr Townshend told Mr Darby that his understanding was that the shares in NZ Egg were going to be transferred directly to Mr Darby.

[31]   On 14 October 2022, two directors of NZ Egg (Tony Cameron and Hendrikus Bennik) signed a letter addressed to Mr Darby’s solicitors, Franklin Law, confirming that following settlement of the sale and purchase of the business they would provide Mr Darby with a three per cent shareholding in NZ Egg, subject to certain conditions.

[32]   The trustees say that given these communications, it is apparent that earlier discussions involving the holding of shares by the trustees were overtaken by the proposed provision by NZ Egg itself of shares directly to Mr Darby. Consequently, there could have been no reasonable expectation by Mr Darby that the trustees would hold shares on his behalf.

[33]   They say that for the same reasons it is not unconscionable for the trustees to deny that they are holding shares for Mr Darby.

Mr Darby’s submissions

[34]   At the hearing Mr Taia accepted that the services provided by Mr Darby under the consultancy agreement after settlement of the agreement for sale and purchase of the business cannot provide a foundation for an institutional constructive trust claim. However, he submits that Mr Darby undertook substantial work prior to signing the agreement for sale and purchase or the consultancy agreement.

[35]   He further submits that “contribution” should be given a broad meaning to encompass Mr Darby’s general expertise and experience. He points out that the draft declaration of trust said that the trustees would hold the shares on trust for Mr Darby “in consideration for the Beneficiary [Mr Darby] contributing his expertise to the Company [NZ Egg]”. Mr Taia submits therefore that Mr Darby’s contribution to the shares involved not only the specific work he undertook for NZ Egg’s benefit prior to the consultancy agreement, but also his long-standing experience and expertise.

[36]   In terms of the reasonableness of his expectation, Mr Darby’s evidence is that he was promised the shares, and whether the trustees would hold the shares on trust for him or NZ Egg would transfer the shares to him directly was undecided right up until and after the transaction. Mr Taia emphasises that on 11 October 2022, just three days prior to settlement, Mr Townshend confirmed to Mr Darby that the parties would be proceeding with the trust arrangement.

Analysis

[37]   An institutional constructive trust arises when it would be unconscionable for the defendant to deny the plaintiff an equitable interest in the relevant property because of a previous understanding, whether subjectively agreed upon between the parties or, more commonly, deemed by law to have been appropriate in the circumstances.12 The trust is not created by the Court; it arises on the happening of the events that bring it into play, and the Court merely declares its existence.13

12     Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [13.2.1].

13     Fortex Group Ltd (in rec & liq) v MacIntosh [1998] 3 NZLR 171 (CA) at 172–173.

[38]    There are different types of institutional constructive trusts. One type is a trust that arises when a claimant has made direct or indirect contributions to the relevant property, they had an expectation of an interest in that property, that expectation was reasonable, and the defendant should reasonably expect to yield the claimant an interest in the property.14 This type of institutional constructive trust was developed in the context of de facto relationships, but has been recognised in other types of relationships.

[39]   A close relation is an institutional constructive trust based on the parties having had a subjective common intention that the claimant would share in the property, which was “clearly and unequivocally established by words or conduct”.15 While it appears the position is not entirely settled, the authorities have cast doubt on the suggestion that evidence of contribution to the property by the party claiming an interest is unnecessary to establish a common intention constructive trust.16

[40]   The present situation does not fall squarely into the framework of an institutional constructive trust. Mr Darby’s evidence is that the NZ Egg shares were agreed as part of the overall package, whether they were to be dealt with under the agreement for sale and purchase or separately. His evidence is that it was important to him that he remain involved in the business. He deposes that as far as he was concerned, whether he was to receive the shares from the trust or in another way was still uncertain when the transaction settled, but what was not uncertain was that he would receive a three per cent shareholding. He deposes that he would not have entered into the agreement to sell the business to NZ Egg if shares in NZ Egg were not included.

[41]   In truth then, Mr Darby’s claim to the shares is based on the notion of an agreement, promise or representation that he would receive the shares as part of the deal, which NZ Egg or the trustees have breached or denied, rather than it being unconscionable for the trustees to deny him the shares because of contributions he has made to the value of the shares.

14     Lankow v Rose, above n 11, at 294; and Li v 110 Formosa (NZ) Ltd [2020] NZCA 492 at [134].

15     Ridge v Parore [2014] NZHC 318 at [19].

16     Mills v Laboyrie [2021] NZCA 450, [2022] NZLR 258 at [55]; and Harvey v Beveridge [2014] NZCA 72, (2014) 15 NZCPR 205 at [46].

[42]   The evidence before the Court is more consistent with the notion of an agreement or promise that Mr Darby would receive shares as part of the sale and purchase of the business.

[43]   The Free Range Egg & Poultry Co Ltd and NZ Egg (with Mr Darby as covenantor) entered into a non-binding Heads of Agreement (HOA) for the sale and purchase of the business on or around 28 July 2022. Clause 3.1 of the HOA provided that the purchase price was to be a three per cent equity stake in NZ Egg and a

$1.5 million cash payment. Clause 3.5 repeated that The Free Range Egg & Poultry Co Ltd would be issued with three per cent equity by NZ Egg at completion date. Further, cl 3.6 provided that The Free Range Egg & Poultry Co Ltd would be able to sell one per cent of the equity as part of an intended equity raise.

[44]    Mr Darby’s evidence is that at a meeting in August 2022 with Nicholas Bennik (henceforth referred to as “Mr Bennik”), Mr Townshend, and Mr Fagan, the agent appointed to act on behalf of NZ Egg in relation to the purchase of SCL’s business, Mr Bennik assured him that the three per cent shareholding was secured. Mr Bennik denies  this.    However,  an  email  exchange  on  24  August  2022  shows  that    Mr Townshend agreed to Mr Darby receiving a three per cent shareholding in NZ Egg, one per cent of which could be sold before the end of the year and two per cent of which would be retained so Mr Darby had “skin in the game”. This shareholding was said to be in addition to the $1.5 million price and Mr Darby remaining in NZ Egg as a contractor or employee.

[45]   It seems that by the time the agreement for sale and purchase was prepared, a decision had been made to deal with the three per cent shareholding separately. On 31 August 2022, NZ Egg’s solicitors, Martelli McKegg, emailed The Free Range Egg & Poultry Co Ltd’s solicitors attaching an emailed a version of the agreement, and informing them that “We understand the 3% shareholding will be dealt with separately”.

[46]   For reasons which are unclear, it was decided that rather than the shares being transferred outright, the trust would hold  some  of  its  shareholding  on  trust  for Mr Darby. The trustees’ solicitors, CS Law, prepared the draft deed of declaration of

trust between the trustees and Mr Darby. This deed provided that the trustees would hold 22,500 shares on trust for Mr Darby in consideration for him “contributing his expertise” to NZ Egg. It is unclear why the provision of shares was now described as being consideration for Mr Darby’s expertise rather than part of the consideration for the business. Mr Darby deposes that he was provided with a copy of the deed on or around 8 September 2022.

[47]   Under the deed, the trust would also hold all net dividends received on trust for Mr Darby. Mr Darby would have the right to require the sale of up to 7,500 shares and receive the net proceeds. He would not have the right to vote as a shareholder. A similar deed was prepared providing for the trustees to hold 37,500 shares on trust for Mr Fagan.

[48]   It seems that the parties expected that the trustees would hold shares on trust for Mr Darby until shortly before settlement when the plan changed. There is the abovementioned email from Martelli McKegg to Mr Townshend dated 30 September 2022 about the terms of the deed. The agreement for sale and purchase of the business, which made no mention of the shares, was signed on 20 September 2022.

[49]   On 11 October 2022, three days before settlement, Mr Townshend sent an email to all the parties involved, including Mr Darby, confirming that the deed of declaration of trust arrangement would be put in place. He asked the lawyers to have it ready for Mr Darby to review the following day, emphasising that it represented roughly half of the settlement value, therefore it was “not unimportant”.

[50]   However, Mr Bennik deposes that on 13 October 2022, the trustees communicated a decision to NZ Egg that the trust would not transfer any shares to Mr Darby. Mr Bennik also states that the trust did not agree to sign the deed of declaration of trust. Mr Bennik does not explain why the plan changed.

[51]On 13 October 2022, Mr Darby followed up with Mr Townshend, and at

3.30 pm the same day Mr Townshend  responded that his understanding was that   NZ Egg was going to transfer the shares, and that “we are going to transfer the shares directly to you - not to be held in trust”, with the same sell-down rules to apply.

[52]   Mr Bennik has put in evidence a letter dated 14 October 2022 from NZ Egg to Mr Darby’s solicitors “Re: Share issue to Robert Darby”. The trustees submit that  Mr Darby cannot have had any expectation that he would have an interest in the shares held by the trustees in NZ Egg because this letter confirmed that any shares provided to Mr Darby would be provided by NZ Egg directly, not the trustees. The letter states:

We confirm that following settlement of the sale and purchase of the Frenz business we will provide you with a 3% shareholding in New Zealand Egg Group, subject to you entering into a deed of accession of the shareholders agreement and providing any appropriate certificates under the FMCA (or the provision of shares being otherwise permitted under the FMCA). The provision of shares will be subject to tax advice.

[53]   The letter was signed on behalf of NZ Egg by Mr Cameron and Hendrikus Bennik.

[54]   Based on this chain of events, I am unable to conclude that Mr Darby does not have a claim against the trustees. However, it is not a claim to an institutional constructive trust arising out contributions he made to the value of the trust’s shares made with a reasonable expectation or common intention of sharing in the shares.  Mr Darby’s claim must be based on an agreement or promise or representation that he would receive the shares as part of the sale and purchase of the business, either directly or via an express trust.

[55]   I do not accept that the 14 October 2022 letter means that a claim against the trustees has no chance of success. The letter is dated 14 October 2022, the day of settlement. The letter is not addressed to Mr Darby, but rather to his solicitors. It is unclear whether Mr Darby saw the letter or if he did, whether he saw it before the sale settled that day. Mr Darby does not refer to the letter in his evidence. His evidence is that he would not have gone through with the sale unless he was to receive a shareholding as part of the package.

[56]   It follows that I accept that the cause of action as currently framed cannot succeed. It is undisputed that Mr Darby took steps to ensure a smooth transition of the Free Range Egg & Poultry Co Ltd’s  business to NZ Egg, such as introducing  NZ Egg to supermarkets, pack houses, farmers, and other suppliers. Mr Darby describes “significant groundwork” he undertook for NZ Egg before entering into the

agreement for sale and purchase or the consultancy agreement. Undoubtedly the business continued to benefit from his experience and expertise throughout the period between the HOA in July 2022 and the sale in October 2022.

[57]   However, this kind of work is a typical part of the transition when any business is sold, and there is nothing to suggest it was done with the expectation of receiving shares in NZ Egg as a result. Relevantly, the HOA required The Free Range Egg & Poultry Co Ltd to ensure that the business carried on as a going concern in the normal course.17 The agreement for sale and purchase also required Free Range Egg & Poultry Co Ltd to carry on business in a normal and efficient manner and maintain the goodwill in the business between the date of the agreement and settlement.18 Furthermore, Free Range Egg & Poultry Co Ltd warranted that it would carry on the business as a going concern and maintain the goodwill in accordance with good business practice.19

[58]   Nor can services provided by Mr Darby to NZ Egg after settlement of the agreement for sale and purchase reasonably be said to be contributions to the value of the NZ Egg shares made in the expectation of acquiring an interest in the shares. Clause 6.1.5 of the agreement for sale and purchase obliged Mr Darby as covenantor to provide contracting services to NZ Egg after settlement. On 17 October 2022, SCL and NZ Egg entered into the consultancy agreement providing for SCL to be paid $500 per half day exclusive of GST, with the agreement having an initial term of 18 months. Mr Darby himself does not depose that he carried out the services from October 2022 with the expectation of acquiring an interest in the shares. These services were provided under the consultancy agreement, and Mr Darby has invoiced NZ Egg for the work.

[59]   The cause of action as presently drafted cannot succeed. But rather than enter summary judgment or strike out the cause of action, I consider that Mr Darby should be given the opportunity to replead it in light of this discussion so that it aligns with his evidence and the contemporaneous documents.

17     Heads of Agreement for Proposed Acquisition Of the Business fo FRENZ EGGS Ltd and associated Assets, cl 6.1.1.

18     Agreement for Sale and Purchase of Business and Assets, dated 20 September 2022, cl 9.1.1.

19     Agreement for Sale and Purchase of Business and Assets, above n 18, sch 1, cl 2.1.

Result

[60]   The application for summary judgment of the sixth cause of action against Mr Darby or for strike-out is dismissed.

[61]   The trustees will pay Mr Darby’s costs on a 2B basis and reasonable disbursements to be fixed by the Registrar.

Associate Judge Gardiner