BACKHAUS v BAKER [2017] NZHC 1507

BACKHAUS v BAKER [2017] NZHC 1507

Court found Baker owed fiduciary duties to the investors in relation to the Trident investment because investors reposed trust and he had undertaken to 'look after' investors and control funds; Baker breached those duties by making false/misleading representations, failing to control or account for funds and failing to disclose material matters and is liable for $400,000. GTNZ did not owe fiduciary duties to Backhaus in respect of the Moneylink loan prior to a formal retainer for those matters, but McCormick's representations were misleading under s9 FTA: GTNZ is liable for the plaintiffs' $100,000 second Trident instalment (misrepresentation that Trident was fully subscribed) and liable...

Citation
[2017] NZHC 1507
Parties
Plaintiff: Mark Daniel Backhaus; Plaintiff: Linda Backhaus; Plaintiff: Max Daniel Backhaus; Plaintiff: Erica Anne Backhaus; First Defendant: Christopher Baker; Second Defendant: Andrew David Simkin; Third Defendant: Grant Thornton New Zealand Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
30 June 2017
Procedural Posture
Civil Litigation – Professional Negligence / Fiduciary Breach / Misleading Conduct (fta) / Securities Allegation / Judgment After Full Trial (high Court)
Outcome
Judgment for plaintiffs in part. Christopher Baker held liable for Trident losses; Grant Thornton New Zealand held liable in part (FTA and negligent/ misleading conduct) with apportionment against Backhaus.
Legal Topics
Misrepresentation, Negligent Misstatement, Conflict of Interest, Duty of Loyalty, Causation and Loss, Contributory Negligence, Limitation (fta S43 A), Professional Retainer/scope of Engagement
Tort Equity and Fiduciary Law Contract Statutory Consumer Protection (fair Trading Act) Securities Law Insolvency/liquidation Misrepresentation Negligent Misstatement +6 more

Case Brief

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Parties

Mark Daniel Backhaus

Plaintiff

Linda Backhaus

Plaintiff

Max Daniel Backhaus

Plaintiff

Erica Anne Backhaus

Plaintiff

Christopher Baker

First Defendant

Andrew David Simkin

Second Defendant

Grant Thornton New Zealand Limited

Third Defendant

Procedural Posture

Civil Litigation – Professional Negligence / Fiduciary Breach / Misleading Conduct (fta) / Securities Allegation / Judgment After Full Trial (high Court)

Legal Issues

  1. 1 Whether Christopher Baker owed fiduciary duties to plaintiffs and breached them in relation to Trident investment
  2. 2 Whether Grant Thornton owed fiduciary or tortious duties to Mark Backhaus in relation to the Moneylink loan and Trident, and the scope of any retainer
  3. 3 Whether representations by GTNZ (McCormick) that Munro was "reliable" and that Trident was fully subscribed amounted to misleading or deceptive conduct under s9 Fair Trading Act and caused loss

Ratio Decidendi

Court found Baker owed fiduciary duties to the investors in relation to the Trident investment because investors reposed trust and he had undertaken to 'look after' investors and control funds; Baker breached those duties by making false/misleading representations, failing to control or account for funds and failing to disclose material matters and is liable for $400,000. GTNZ did not owe fiduciary duties to Backhaus in respect of the Moneylink loan prior to a formal retainer for those matters, but McCormick's representations were misleading under s9 FTA: GTNZ is liable for the plaintiffs' $100,000 second Trident instalment (misrepresentation that Trident was fully subscribed) and liable...

Court Disposition

Judgment for plaintiffs in part. Christopher Baker held liable for Trident losses; Grant Thornton New Zealand held liable in part (FTA and negligent/ misleading conduct) with apportionment against Backhaus.

Orders

  • Judgment entered for plaintiffs against Christopher Baker in the sum of NZD 400000
  • Grant Thornton New Zealand Limited directed to pay the plaintiffs NZD 100000 (Trident misrepresentation)