An Auckland accountant who tried to sue his estranged wife and former business partner after she allegedly left with 70 per cent of their company's clients has been knocked back by the Court of Appeal.
John Nobilo has lost an appeal over whether he can take action in the company's name against Deborah Nobilo, whom he was married to for about 24 years.
The Nobilos, both chartered accountants, separated in about September 2012.
While they initially worked in different accountancy practices, Mrs Nobilo started her own and her husband later joined after it became a successful business.
They established a company called Nobilo & Co to operate the practice. The vast bulk of the company's shares - 98 per cent - are held in a family trust, with the estranged couple both beneficiaries.
After the pair separated, Mrs Nobilo set up a new company and began writing to clients she worked for telling them of the change. The majority of Nobilo & Co's clients transferred their work to her new business, Nesti & Associates.
Three of Nobilo & Co's employees also shifted to Mrs Nobilo's new company.
In 2013, Mr Nobilo went to the High Court at Auckland seeking leave to take action in Nobilo & Co's name to recover losses of between $250,000 and $400,000 he argued the company had suffered.
Mr Nobilo argued the letters his now estranged wife wrote to clients breached her duties to Nobilo & Co.
He also claimed the Family Court did not have jurisdiction to make orders in respect of the 98 per cent Nobilo & Co's shares that are held in a trust.
The High Court refused to grant the leave sought, and Mr Nobilio then took matter to the Court of Appeal earlier this year.
Mr Nobilio's lawyer argued there was at least an arguable case Mrs Nobilo had breached her duties as a director, which the Court of Appeal accepted.
One of the things the court must take into account is the cost of the action versus what could be gained from it.
Justices Tony Randerson, Helen Winkelmann and Geoffrey Venning, in a decision today, were not satisfied that Mr Nobilio's evidence supported a "loss of anything approaching the $400,000 claimed".
It was estimated the cost of bringing the action could be more than $50,000
Even if the company could claim for a year's worth of damages, the court said this would net between $70,000 and $130,000 at the most.
"Given the uncertainties associated with litigation of this nature (including the possibility of further costs on appeal) we do not consider a reasonable businessperson would bring proceedings with an associated cost in excess of $50,000 against such possible returns," the judges said.
They did not believe it was in Nobilo & Co's interest for the leave to be granted, dismissed Mr Nobilo's appeal and awarded costs to his wife.