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

Applying the factors in s165(2) and the prudent business person test, the Court exercised its discretion to grant leave because, on the facts presented, a prudent business person would bring the claim in the name of the companies; the applicant will fund the proceedings initially.

Citation
openlaw-65670860_e9fc_4d1a_ab11_ba25e7cb3dad.pdf
Parties
First Plaintiff: N M Tobin Orthodontics Limited; Second Plaintiff: The Orthodontic Centre Limited; First Defendant: Sadie Tobin; Second Defendants: John Cawood and Lynn Cawood
Court
High Court
Jurisdiction
New Zealand
Judgment Date
28 February 2013
Procedural Posture
Application for Leave to Bring a Derivative Action Under the Companies Act 1993 / Interlocutory Application (leave Hearing)
Outcome
Leave granted to bring derivative proceedings in the name of N M Tobin Orthodontics Limited and The Orthodontic Centre Limited
Legal Topics
Derivative Action, S165 Companies Act 1993, Prudent Business Person Test, Relationship Property Impact on Corporate Claims
Company Law Civil Procedure Family Law Equity Derivative Action S165 Companies Act 1993 Prudent Business Person Test Relationship Property Impact on Corporate Claims

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Parties

N M Tobin Orthodontics Limited

First Plaintiff

The Orthodontic Centre Limited

Second Plaintiff

Sadie Tobin

First Defendant

John Cawood and Lynn Cawood

Second Defendants

Procedural Posture

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

Legal Issues

  1. 1 Whether leave should be granted under s165 of the Companies Act 1993 to bring derivative proceedings
  2. 2 Whether transfers by a director/shareholder to third parties amounted to misuse of company funds requiring corporate redress
  3. 3 Whether family and relationship property considerations or the applicant's continued use of company assets preclude grant of leave

Ratio Decidendi

Applying the factors in s165(2) and the prudent business person test, the Court exercised its discretion to grant leave because, on the facts presented, a prudent business person would bring the claim in the name of the companies; the applicant will fund the proceedings initially.

Court Disposition

Leave granted to bring derivative proceedings in the name of N M Tobin Orthodontics Limited and The Orthodontic Centre Limited

Orders

  • Leave granted under s165 of the Companies Act 1993 for the applicants to commence derivative proceedings in the name of N M Tobin Orthodontics Ltd and The Orthodontic Centre Ltd against Sadie Tobin, John Cawood and Lynn Cawood
  • Applicant to meet the costs of bringing the proceedings initially subject to seeking reimbursement from the companies when they are able to meet those costs