N M TOBIN ORTHODONTICS LIMITED V SADIE TOBIN HC PMN CIV 2012-454-000440

N M TOBIN ORTHODONTICS LIMITED V SADIE TOBIN HC PMN CIV 2012-454-000440

Leave was granted because a prudent business person would pursue the companies' claims: the transfers were prima facie recoverable as company property and breaches of directors' duties, the likely recovery justified modest costs, the companies could not practically bring the action due to conflicted directors/shareholders, and the companies' interests are to be treated separately from relationship property entitlements which can be addressed independently.

Citation
openlaw-31ffb981_9a14_4379_8815_26370af912b8.pdf
Parties
First Plaintiff: N M Tobin Orthodontics Limited; Second Plaintiff: The Orthodontic Centre Limited; First Defendant: Sadie Tobin; Second Defendant: John Cawood; Second Defendant: Lynn Cawood
Court
High Court
Jurisdiction
New Zealand
Judgment Date
28 February 2013
Procedural Posture
Interlocutory Application for Leave to Bring a Derivative Action Under the Companies Act 1993 / Leave Granted (interlocutory)
Outcome
Leave granted to the applicant to commence derivative proceedings on behalf of N M Tobin Orthodontics Ltd and The Orthodontic Centre Ltd
Legal Topics
Derivative Action, Directors' Duties, Shareholder Rights, Relationship Property, Leave Under S165 Companies Act 1993, Misappropriation of Company Funds
Company Law Family Law Trusts Equity Derivative Action Directors' Duties Shareholder Rights Relationship Property +2 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 4 Authorities cited 8 Party arguments 2 Amounts and remedies 3
Sign in to unlock

Parties

N M Tobin Orthodontics Limited

First Plaintiff

The Orthodontic Centre Limited

Second Plaintiff

Sadie Tobin

First Defendant

John Cawood

Second Defendant

Lynn Cawood

Second Defendant

Procedural Posture

Interlocutory Application for Leave to Bring a Derivative Action Under the Companies Act 1993 / Leave Granted (interlocutory)

Legal Issues

  1. 1 Whether leave should be granted under s165 Companies Act 1993 to bring a derivative action
  2. 2 Whether the transfers constituted breaches of directors' duties and are recoverable by the companies
  3. 3 Whether the family/relationship property context precludes or weighs against granting derivative leave

Ratio Decidendi

Leave was granted because a prudent business person would pursue the companies' claims: the transfers were prima facie recoverable as company property and breaches of directors' duties, the likely recovery justified modest costs, the companies could not practically bring the action due to conflicted directors/shareholders, and the companies' interests are to be treated separately from relationship property entitlements which can be addressed independently.

Court Disposition

Leave granted to the applicant to commence derivative proceedings on behalf of N M Tobin Orthodontics Ltd and The Orthodontic Centre Ltd

Orders

  • Grant leave to Mr N M Tobin to commence proceedings in the name of and on behalf of N M Tobin Orthodontics Limited and The Orthodontic Centre Limited
  • Leave is subject to Mr Tobin meeting the companies' costs pending any claim for reimbursement; entitlement to reimbursement to be determined at the conclusion of the proceedings