Torbay Holdings Ltd v Napier

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-007660 [2015] NZHC 2477

BETWEEN

TORBAY HOLDINGS LIMITED

First Plaintiff

TORBAY REST HOME LIMITED Second Plaintiff

AND

DUNCAN JOHN NAPIER AND SARA ANN NAPIER

First Defendants

DUNCAN JOHN NAPIER, SARA ANN NAPIER AND CHRISTOPHER JOHN DAVIS AS TRUSTEES OF THE NAPIER FAMILY TRUST

Second Defendants

.../proceedings contd over

Hearing:	15 June - 4 July 2015
Appearances:	DPH Jones QC and AC Krzanich for Plaintiffs in CIV-2012- 404-007660 and Defendant in CIV-2013-404-001406 DJ Napier for Defendants in CIV-2012-404-007660 and Plaintiffs in CIV-2013-404-001406
Judgment:	9 October 2015

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Friday, 9 October 2015 at 2:30 pm pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

TORBAY HOLDINGS LIMITED & ANOR v NAPIER & ORS [2015] NZHC 2477 [9 October 2015]

CRI-2013-404-001406

BETWEEN  DUNCAN JOHN NAPIER, SARA ANN NAPIER AND CHRISTOPHER JOHN DAVIS AS TRUSTEES OF THE NAPIER FAMILY TRUST

Plaintiffs

ANDSANDSPIT BAY HOLDINGS LIMITED Defendant

Solicitors:           Sellar Bone & Partners, Auckland

Counsel:            DPH Jones QC, Auckland

Copy to:            Duncan Napier

INDEX

Paragraph Introduction ..........................................................................................................[1] Factual background .............................................................................................[9]

Credibility ...........................................................................................................[29]

Mr Napier’s employment contract ...................................................................[38] Mrs Napier’s employment contract ..................................................................[45] Declared income .................................................................................................[46] Reimbursement or payment of company expenses .........................................[53] Fruit and vegetable supplier ............................................................................[71] Whangaripo Valley Road property...................................................................[85] Indebtedness of Mr and Mrs Napier and Napier Family Trust ..................[107] Misappropriation of company funds ............................................................. [115] Quantum of losses ........................................................................................... [117] Tracing of the funds ........................................................................................[135] Salary overpayments ..................................................................................[135] Unauthorised payments ..............................................................................[137] Causes of action ................................................................................................[151] Breach of fiduciary duties ..........................................................................[152] Money had and received.............................................................................[163] Deceit .........................................................................................................[180] Knowing receipt..........................................................................................[183] Remedies – constructive trust.....................................................................[198]

(a)     Is there a pre-existing equitable right to property?.................[205] (b)    Can that right be traced into the claimed property? ...............[207] Negligence ..................................................................................................[233]

Counterclaim ....................................................................................................[239] Claim by Napier Family Trust against Sandspit Bay Holdings ...................[248] Result .................................................................................................................[262]

Introduction

[1]      Torbay  Holdings  Limited  and  Torbay  Rest  Home  Limited,  the  first  and second plaintiffs in the first proceeding (CIV-2012-404-007660), were incorporated in 2001 to own and operate a rest home business.  Torbay Holdings purchased the land and buildings, while Torbay Rest Home ran the business and paid rent to Torbay Holdings.   The first defendants, Duncan Napier and his wife Sara Napier, were appointed  as  administration  manager  and  nurse  manager  of  the  rest  home respectively.  Mrs Napier was a director of the companies from incorporation until 3

September 2012.  Mr Napier was also a director of the companies between 27 June

2008 and 11 June 2012.   The second defendants are Mr and Mrs Napier and an independent solicitor as trustees of the Napier Family Trust, which is a minority shareholder in both companies.

[2]      Mr Napier and his wife effectively ran the rest home business.   They had cheque signing authority over the companies’ bank accounts and day-to-day control of their finances.   The other shareholders had very limited involvement in the business.   They trusted Mr and Mrs Napier.   There were no effective checks and balances.

[3]…