Stacey v Watson - [2017] NZCA 542

IN THE COURT OF APPEAL OF NEW ZEALAND

CA464/2016
[2017] NZCA 542

BETWEEN

NORMAN WILLIAM STACEY
First Appellant

NORMAN WILLIAM STACEY, ANNE LOUISE SERRA AND KERRY DALE MCINTOSH AS TRUSTEES OF THE STACEY FAMILY TRUST
Second Appellants

AND

DOROTHY VICKI WATSON
First Respondent

DOROTHY VICKI WATSON AND DVW TRUSTEE LIMITED AS TRUSTEES OF THE DVW FAMILY TRUST
Second Respondents

Hearing:	9 October 2017
Court:	Gilbert, Venning and Wylie JJ
Counsel:	P J Dale for Appellants J Q Wilson and C M Cattin for Respondents
Judgment:	24 November 2017 at 4 pm

JUDGMENT OF THE COURT

A The appeal is dismissed.

BThe first appellant must pay the respondents costs for a standard appeal on a band A basis together with disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Venning J)

Introduction

Mr Stacey and Ms Watson were financial advisers and directors of Diversified Investments Strategies Limited (DISL) and Diversified Wealth Management Limited (DWML).
The shares in DISL and DWML (together, Diversified) were held equally by the trustees of the Stacey Family Trust and the trustees of the DVW Family Trust.
During 2014 the parties agreed to sell the business of DWML and DISL to Fisher Funds Management Ltd (Fisher Funds) for $318,012.09. Fisher Funds paid $145,216.25 for DWML and $172,795.84 for DISL.
Mr Stacey and the trustees of the Stacey Family Trust allege that in the course of the sale process Ms Watson acted in breach of a fiduciary duty owed to them and that Ms Watson and the trustees of the DVW Family Trust acted in a manner towards Mr Stacey and the Stacey Family Trust which was unfair, prejudicial or oppressive in terms of s 174 of the Companies Act 1993. In the High Court Faire J dismissed both claims.[1]

Background

[1]Stacey v Watson [2016] NZHC 1891, [2017] NZCCLR 5.

DISL provided investment strategies and advice to private clients for individually managed portfolios. Mr Stacey and Ms Watson managed the portfolios online using an electronic investment administration service, AEGIS.
DWML’s business was funds management. It provided investment strategies described as the Law Retirement KiwiSaver Scheme (LRKS) and the Law Retirement Plan (LRP). DWML also offered managed funds to retail investors. A good number of DISL’s private clients were also investors in the DWML funds or in the LRKS.
Mr Stacey and Ms Watson were the directors of DISL and DWML. Each was actively involved in Diversified’s business. Mr Stacey was primarily responsible for research, preparation of monthly economic commentary, and preparation of fund fact sheets. Ms Watson had administration and information technology skills and experience in managing private clients. They worked together in an open plan office and regularly had lunch meetings at which they discussed the affairs of the companies. There was one other staff member, a Ms Johnstone, who was employed as a marketing and communications manager. From 2009 until 2014 Ms Watson and Mr Stacey each drew salaries of $100,000 per annum plus expenses.
The businesses faced challenges during 2013. DWML experienced reductions in…

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 Stacey v Watson

Details

AGLC: Stacey v Watson [2017] NZCA 542
Case: [2017] NZCA 542
Decision Date: 24 November 2017 at 4 pm

CaseChat Overview and Summary

This case arose from a dispute between Norman Stacey and Vicki Watson, who were directors and shareholders of Diversified Investments Strategies Limited (DISL) and Diversified Wealth Management Limited (DWML). The shares in the companies were held equally by the trustees of the Stacey Family Trust and the trustees of the DVW Family Trust. The appellants brought claims against the respondents, alleging that Ms Watson acted in breach of a fiduciary duty owed to them and that Ms Watson and the trustees of the DVW Family Trust acted in a manner that was unfair, prejudicial or oppressive in terms of s 174 of the Companies Act 1993. In the High Court, Faire J dismissed both claims. The appeal was dismissed by the Court of Appeal. The Court of Appeal found that there was no basis to impose a fiduciary duty in this case and that there was nothing in Ms Watson’s conduct during the sale process to support the allegation that she or the DVW Trust acted in an oppressive, unfair or prejudicial manner towards Mr Stacey or the Stacey Interests. The appeal is dismissed. The first appellant must pay the respondents costs for a standard appeal on a band A basis together with disbursements.

Orders