C R MONTEITH AND M E MONTEITH v P M FOGARTY, E A SQUIRE AND J MORRELL AND RUATUKI LIMITED [2015] NZHC 2301

C R MONTEITH AND M E MONTEITH v P M FOGARTY, E A SQUIRE AND J MORRELL AND RUATUKI LIMITED [2015] NZHC 2301

Leave to intervene and to bring a derivative counterclaim was refused because the plaintiffs' claims are directed at the first defendants personally and there is no substantive need for the company to take an active partisan role; permitting intervention would create duplication and risk double recovery, there is no realistic purpose for the company to defend separate from the already-filed counterclaim, and any representative/company investigation is more appropriately left to a liquidator; accordingly it is not in the company's interests and not just and equitable to grant leave under s165.

Citation
[2015] NZHC 2301
Parties
Plaintiff/respondent: Carwyn Ross Monteith; Plaintiff/respondent: Michelle Eileen Monteith; First Defendant/applicant: Patrick Maurice Fogarty; First Defendant/applicant: Erinavis Squire; First Defendant/applicant: Jo Ann Morrell; Second Defendant: Ruatuki Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
22 September 2015
Procedural Posture
Shareholder/company Dispute With Application Under Companies Act / Application for Leave to Intervene Under S165 (derivative/representative Action) Refused
Outcome
Application for leave to intervene and to bring counterclaim on behalf of the company refused
Legal Topics
Derivative Proceedings, Oppressive/unfair Conduct, Shareholder Agreement Disputes, Directors' Duties, Counterclaim
Company Law Civil Procedure Equity Contract Law Derivative Proceedings Oppressive/unfair Conduct Shareholder Agreement Disputes Directors' Duties +1 more

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Parties

Carwyn Ross Monteith

Plaintiff/respondent

Michelle Eileen Monteith

Plaintiff/respondent

Patrick Maurice Fogarty

First Defendant/applicant

Erinavis Squire

First Defendant/applicant

Jo Ann Morrell

First Defendant/applicant

Ruatuki Limited

Second Defendant

Procedural Posture

Shareholder/company Dispute With Application Under Companies Act / Application for Leave to Intervene Under S165 (derivative/representative Action) Refused

Legal Issues

  1. 1 Whether leave under s165(1)(b) Companies Act 1993 should be granted to permit equal-shareholder directors to intervene and prosecute/defend proceedings on behalf of the company
  2. 2 Whether the company intends or is willing/capable to defend proceedings and whether it is in the company's interests to permit a derivative/counterclaim
  3. 3 Whether granting leave would cause duplication or risk of double recovery

Ratio Decidendi

Leave to intervene and to bring a derivative counterclaim was refused because the plaintiffs' claims are directed at the first defendants personally and there is no substantive need for the company to take an active partisan role; permitting intervention would create duplication and risk double recovery, there is no realistic purpose for the company to defend separate from the already-filed counterclaim, and any representative/company investigation is more appropriately left to a liquidator; accordingly it is not in the company's interests and not just and equitable to grant leave under s165.

Court Disposition

Application for leave to intervene and to bring counterclaim on behalf of the company refused

Orders

  • Application dismissed
  • Mr Fogarty to pay plaintiffs costs on a 2B basis and disbursements as approved by the Registrar