BURTON V THOMPSON HC AK CIV 2012-404-1465

BURTON V THOMPSON HC AK CIV 2012-404-1465

Leave to bring derivative proceedings was dismissed because a receiver had been validly appointed and may bring proceedings on behalf of the company; no interim injunction was granted on the corporate opportunity claim because of anti‑competitive effect, enforceability concerns and the balance of convenience; a limited preservation order was justified in respect of goods valued at US$15,657 acknowledged to be in respondent's possession, for 20 working days (extendable 20 working days if receiver files proceedings), conditioned on return or payment to the receiver; all other interim relief was dismissed.

Citation
openlaw-e7ed1941_3084_4847_8b26_030099612738.pdf
Parties
Applicants: Rebecca Jessie Burton, James Richard Burton and Annemarjorie Burton as Trustees of the Rebecca Burton Family Trust; First Respondent: Brendal Maree Thompson; Second Respondent: Graeme Robert Little; Third Respondent: Bebe Corporation Limited; Fourth Respondent: Dolly Boutique Limited; Fifth Respondent (company in Which Parties Hold 50%): First Choice Collections (NZ) Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
13 June 2012
Procedural Posture
Application for Leave to Commence Derivative Proceedings Under the Companies Act 1993; Related Interim Preservation/injunction Applications in Receivership Context / Interim Hearing on Preservation Order and Interim Relief; Receiver Appointed to First Choice
Outcome
Application for leave to bring derivative action dismissed; Woodhouse J preservation order discharged and substituted by limited preservation order; other interim relief dismissed; r7.49(5) order granted; costs reserved; leave to apply over form of sealed order reserved
Legal Topics
Derivative Action, Corporate Opportunity Doctrine, Preservation Order (r7.55), Interim Injunctions, Conversion of Goods, Directors' Duties
Company Law Equitable Remedies Injunctions Property (conversion) Receivership Derivative Action Corporate Opportunity Doctrine Preservation Order (r7.55) +3 more

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Parties

Rebecca Jessie Burton, James Richard Burton and Annemarjorie Burton as Trustees of the Rebecca Burton Family Trust

Applicants

Brendal Maree Thompson

First Respondent

Graeme Robert Little

Second Respondent

Bebe Corporation Limited

Third Respondent

Dolly Boutique Limited

Fourth Respondent

First Choice Collections (NZ) Limited

Fifth Respondent (company in Which Parties Hold 50%)

Procedural Posture

Application for Leave to Commence Derivative Proceedings Under the Companies Act 1993; Related Interim Preservation/injunction Applications in Receivership Context / Interim Hearing on Preservation Order and Interim Relief; Receiver Appointed to First Choice

Legal Issues

  1. 1 Whether leave should be granted under s165 Companies Act 1993 to bring derivative proceedings in the name of First Choice
  2. 2 Whether interim injunctions and/or a preservation order should be granted to protect alleged diverted stock
  3. 3 Whether a director (Thompson) usurped a corporate opportunity (VZI distribution agreement) for Bebe

Ratio Decidendi

Leave to bring derivative proceedings was dismissed because a receiver had been validly appointed and may bring proceedings on behalf of the company; no interim injunction was granted on the corporate opportunity claim because of anti‑competitive effect, enforceability concerns and the balance of convenience; a limited preservation order was justified in respect of goods valued at US$15,657 acknowledged to be in respondent's possession, for 20 working days (extendable 20 working days if receiver files proceedings), conditioned on return or payment to the receiver; all other interim relief was dismissed.

Court Disposition

Application for leave to bring derivative action dismissed; Woodhouse J preservation order discharged and substituted by limited preservation order; other interim relief dismissed; r7.49(5) order granted; costs reserved; leave to apply over form of sealed order reserved

Orders

  • Application for leave under s165 Companies Act 1993 dismissed
  • Preservation order made limited to goods paid for by respondent's mother (US$15,657) and/or goods acknowledged in respondents' possession; order to run for 20 working days and extendable a further 20 working days if receiver files proceedings before expiry; order discharged if respondents pay US$15,657 to receiver...