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Van der Fluitt v O'Neill

Van der Fluitt v O'Neill

Case [2021] NZHC 1651 5 July 2021

Corporate Law & Governance

Civil Litigation & Procedure

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-670

[2021] NZHC 1651

IN THE MATTER OF

AND
Liquid Studios Limited

IN THE MATTER OF

Section 174 of the Companies Act 1993

BETWEEN

PETER WILLIAM VAN DER FLUIT and TAMARA JOAN O’NEILL

Plaintiffs

AND

MICHAEL ARTHUR JAMES O’NEILL

Defendant

Hearing: 28 June 2021

Appearances:

D W Grove for the Plaintiffs

R M Keane and E F Armstrong for the Defendant

Judgment:

5 July 2021

JUDGMENT OF GAULT J

This judgment was delivered by me on 5 July 2021 at 5:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:
Mr D W Grove, Barrister, Auckland
Mr I Vodanovich (plaintiffs’ instructing solicitor), Vodanovich Law Ltd, Auckland Ms R M Keane and Ms E F Armstrong, LeeSalmonLong, Auckland

VAN DER FLUIT v O’NEILL [2021] NZHC 1651 [5 July 2021]

[1] Mr van der Fluit and Ms O’Neill (the plaintiffs) seek an interim order removing Mr O’Neill as a director of Liquid Studios Ltd (Liquid). The parties are Liquid’s three directors and shareholders.

[2] The substantive proceeding alleges prejudicial conduct by Mr O’Neill and seeks orders removing him as a director of Liquid and that the plaintiffs purchase his shares at a value to be determined by the Court.

Background

[3] Mr van der Fluit and Mr O’Neill were members of the music band Screaming Meemees in the 1980s.

[4]Mr and Ms O’Neill were married in 1998.

[5] Liquid was formed in 1999 by Mr O’Neill and three others. It carries on business producing music. By 2002 Mr O’Neill and Mr van der Fluit were each 50 per cent shareholders, and in 2002 Mr van der Fluit transferred 5,000 of his shares to Ms O’Neill. In 2015 Mr van der Fluit transferred 1,000 of his shares to Mr O’Neill. So now Mr O’Neill holds 26,000 shares (52 per cent), Mr van der Fluit holds 19,000 shares (38 per cent) and Ms O’Neill holds 5,000 shares (10 per cent).

[6]In May 2014 Mr O’Neill suffered a potentially fatal stroke.

[7] In January 2020 Mr and Ms O’Neill separated. They are involved in relationship property proceedings in the Family Court. Both accept that their shares in Liquid are relationship property.

Dispute in this proceeding

[8] The plaintiffs say that since Mr O’Neill’s stroke in 2014 he has been incapacitated and unable to undertake his functions and duties as a director of Liquid. The plaintiffs say there is no ill will towards Mr O’Neill but that he is being manipulated and controlled by his father and/or sister. The plaintiffs say that Mr O’Neill’s father and sister have actively disrupted and adversely affected the

operations of Liquid, and the plaintiffs have been prevented from running the company as directors.

[9] By way of defence and counterclaim, Mr O’Neill says the plaintiffs have acted improperly and prejudicially in terms of s 174 of the Companies Act 1993 (the Act), and his…

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 Van der Fluitt v O'Neill

Details

AGLC: Van der Fluitt v O'Neill [2021] NZHC 1651
Case: [2021] NZHC 1651
Decision Date: 5 July 2021

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Van der Fluitt v O'Neill involved a dispute between the plaintiffs, Peter William Van der Fluitt and Tamara Joan O’Neill, and the defendant, Michael Arthur James O’Neill. The plaintiffs sought an interim order to remove Mr O’Neill as a director of Liquid Studios Limited, alleging that he was incapacitated and unable to perform his duties due to a stroke in 2014. They further contended that Mr O’Neill was being manipulated by his father and sister, disrupting the company's operations. Mr O’Neill defended himself by claiming that the plaintiffs had acted improperly and prejudicially under Section 174 of the Companies Act 1993, and sought an order for the plaintiffs to purchase his shareholding in Liquid Studios Limited.

The court needed to determine whether there was a serious question to be tried regarding Mr O’Neill's capacity and conduct, the balance of convenience in either granting or denying the interim order, and where the overall justice lay in the matter. The court held that there was a serious question to be tried based on several specific complaints, such as the unilateral directive from Mr O’Neill’s father in an email purporting to be from Mr O’Neill himself, and the padlocking of the company's storage facility. However, the court declined to grant leave to cross-examine Mr O’Neill as it did not believe there were special circumstances warranting such an examination.

In terms of the balance of convenience, the court found that it favoured maintaining the status quo. While the plaintiffs proposed several undertakings and indemnities to protect Mr O’Neill's interests, the court considered that the interim order sought was a form of mandatory injunction, typically granted only in special circumstances. The court also noted that the order sought was effectively final relief, and weighed against granting the interim relief. Consequently, the overall justice also favoured maintaining the status quo.

The application for the interim order was dismissed, and the court encouraged the parties to agree on costs. If they could not, the court would determine the costs on the papers.

Orders