PARSONS v O’CONNOR [2020] NZHC 226

PARSONS v O’CONNOR [2020] NZHC 226

There was a seriously arguable case that respondents could not validly trigger the buyout because cl 14.1 was subject to cl 17 (negotiation and mediation) which had not been exhausted; damages were inadequate and the balance of convenience and overall justice favoured preserving the applicants' shareholder position pending resolution, therefore interim without‑notice orders (draft orders 3,5,6 and 7) were justified.

Citation
[2020] NZHC 226
Parties
First Applicant: Michael Kenneth Parsons; Second Applicant: Green Shoots Holdings Limited as trustees of the Green Shoots Lifestyle and Education Trust; First Respondent: Paul Michael O'Connor and BHW Trustee 2017 Limited as trustees of the O'Connor Family Trust; Second Respondent: Paul Michael O'Connor; Third Respondent: Sally Jane Carey and Andy Fox as trustees of the Fox Cub Trust; Fourth Respondent: Sally Jane Carey; Fifth Respondent: Datamine Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
20 February 2020
Procedural Posture
Interim Injunction Arising From Shareholders' Dispute / Without‑notice Interim Application (duty Judge List)
Outcome
Interim injunction granted on a without‑notice basis in terms of draft orders 3, 5, 6 and 7; draft order 4 declined; matter listed for mention
Legal Topics
Shareholders' Deed, Buy‑out/default Provision, Dispute Resolution Clause (mediation), Interim Injunction, Without Notice Application, Adequacy of Damages
Company Law Contract Law Civil Procedure Equity Shareholders' Deed Buy‑out/default Provision Dispute Resolution Clause (mediation) Interim Injunction +2 more

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Parties

Michael Kenneth Parsons

First Applicant

Green Shoots Holdings Limited as trustees of the Green Shoots Lifestyle and Education Trust

Second Applicant

Paul Michael O'Connor and BHW Trustee 2017 Limited as trustees of the O'Connor Family Trust

First Respondent

Paul Michael O'Connor

Second Respondent

Sally Jane Carey and Andy Fox as trustees of the Fox Cub Trust

Third Respondent

Sally Jane Carey

Fourth Respondent

Datamine Limited

Fifth Respondent

Procedural Posture

Interim Injunction Arising From Shareholders' Dispute / Without‑notice Interim Application (duty Judge List)

Legal Issues

  1. 1 Whether respondents were contractually entitled to give notices and purchase applicants' shares under the Shareholders' Deed (cl 14.1 / cl 4.1)
  2. 2 Whether cl 17 dispute resolution (good faith negotiation and mediation) barred the respondents from triggering the buyout
  3. 3 Whether there is a serious issue to be tried and whether the balance of convenience favors injunctive relief

Ratio Decidendi

There was a seriously arguable case that respondents could not validly trigger the buyout because cl 14.1 was subject to cl 17 (negotiation and mediation) which had not been exhausted; damages were inadequate and the balance of convenience and overall justice favoured preserving the applicants' shareholder position pending resolution, therefore interim without‑notice orders (draft orders 3,5,6 and 7) were justified.

Court Disposition

Interim injunction granted on a without‑notice basis in terms of draft orders 3, 5, 6 and 7; draft order 4 declined; matter listed for mention

Orders

  • Interim orders granted in terms of draft orders 3, 5, 6 and 7 annexed to the interlocutory application dated 19 February 2020
  • No order in terms of draft order 4 (declined)