Justice Ailsa Duffy finds former banking boss liable for more than $1 million to consultancy business he set up
A former banking boss traded without the knowledge of his co-directors at a consultancy business and rather than putting the firm's account on invoices he put bank accounts of companies he personally controlled, the High Court was told.
Ex-ANZ senior executive Peter Jesse Holland profited at the expense of the consultancy business he set up, Holland Corporate, and received A$440,798 ($471,995) that should have gone to the company, a High Court judge found yesterday.
The firm sued Holland for breach of duties in the High Court at Auckland and Justice Ailsa Duffy said yesterday that the former banker was liable to the company for more than $1 million.
Holland Corporate was incorporated with four directors in 2010 as the vehicle for an advisory business Holland had previously run himself.
According to the ex-banker's LinkedIn profile, Holland Corporate provided specialised "corporate finance, debtor, advocacy, creditor disputes and solutions".
Holland stepped down from the firm's board in 2012 and according to the Companies Office it is now only directed by ex-Chapman Tripp lawyer Michael Kyriak and former treasurer at Heinz Wattie's Michael Ryan.
Ryan provided evidence in Holland Corporate's case against the company's former director.
"From our investigations it's clear to me that Mr Holland through companies that he controlled continued to trade in the name of the plaintiff [Holland Corporate Ltd] ... such trading included the use of client engagement letters in the name of the plaintiff without the knowledge of the other directors of the plaintiff and the issuance of a number of invoices in the name of the plaintiff but on terms where the fee income was directed not to the account of the plaintiff but rather to the account of companies controlled by Mr Holland," Ryan said in evidence to the High Court.
According to Ryan, he began investigating the matter after his wife helped the ex-banker update his profile on social networking site LinkedIn.
"During that process she told me that she had become aware that Mr Holland was featured as a director on the websites of two companies that appeared to be direct competitors with the plaintiff," Ryan's evidence said.
In a brief decision released yesterday morning Justice Duffy said she was satisfied that Holland owed the consultancy business duties of loyalty, to act in good faith and not place himself in a position that conflicted with the firm's interests.
She ruled Holland breached those duties.
As a consequence of these breaches, the former senior banker profited at Holland Corporate's expense by receiving A$440,798 that should have gone to the company, the judge said. He is liable to account to the company for this amount.
Holland also performed services for third parties either in his own right, or on behalf of entities other than Holland Corporate and deprived the company receiving value for those services, the judge said.
For these breaches, Holland is liable to pay equitable compensation to the company of A$166,407 and $450,000, she said.
Holland Corporate's proceedings were complicated by Holland - who was not represented in court - appointing a controlling trustee under Australian bankruptcy laws.
The trustee attempted to put Holland Corporate's action against its former director on hold but Justice Duffy allowed the case to proceed.
Holland Corporate was represented by Queen's Counsel Noel Ingram.