Confidential documents behind the purchase of a Marlborough wine business will not be released in case it dissuades future investors from working with the region’s electricity supplier.
Blenheim businessman David Taylor brought legal action in the High Court in 2020 against the Marlborough Electric Power Trust. Its elected directors govern the region’s electricity supplier Marlborough Lines on behalf of its 25,000 electricity users.
He wanted the court to order the publication of documents about Marlborough Lines’ decision to buy Yealands Group. Marlborough Lines bought 80% of Yealands Group for $89 million in 2015 and the remaining shares for $22.8 million in 2018.
Yealands Wine Group founder Peter Yealands and Marlborough Lines managing director Ken Forrest announce that the region’s electricity supplier has purchased 80% of the wine company. Video first published in 2015.
Taylor, a Marlborough resident and beneficiary of the trust, being a consumer of electricity, was also a director and chairman of the board of Astrolabe Wines, according to the court ruling issued this month.
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Taylor had been publicly outspoken with her criticisms of the purchase in the past. He told the court that it was a risky business, that the directors were not sufficiently involved in the purchase and did not ensure that the correct directors were appointed to Marlborough Lines, and to As a result of these mistakes, Marlborough Lines and Yealands Group were in serious financial trouble. .
His court case targeted documents including expert reports valuing the pre-purchase of Yealands Group, the sale agreement and settlement documents from 2015 and 2018, and particular parts of the directors’ meetings in December 2019 and May. 2020.
Taylor had earlier requested these minutes, which the trust had given him, but with confidential portions redacted or blacked out. However, Taylor had found a way to see behind the editorial staff and shared this information with other interested parties, including a reporter.
An injunction issued in September 2020 prevented him from further sharing the redacted information.
In response to Taylor’s current case, Marlborough Lines and the Trust have filed a counterclaim against Taylor for disclosing confidential information.
Taylor told the court at a hearing in the High Court in September that after his pursuit to obtain the documents, he planned to take the directors and directors of Marlborough Lines to court for breach of duty and breach of Fair Trading Act for alleged misrepresentation.
Taylor said the Trusts Act 2019 requires trusts to share enough information with beneficiaries, in this case power clients, so that they can hold trustees to account.
However, the law also stipulated that the reasoning behind decisions made by directors did not count as information for this purpose.
Administrators told the court they did not have to provide the requested information to Taylor, who only needed it for its scheduled breach of duty and fair trade proceedings.
They also said they do not have the agreements or any settlement documents for the purchase of Yealands Group in 2015 or 2018.
Former Marlborough Lines board chairman David Dew told the court that expert reports were provided to directors on a strictly confidential basis.
If disclosed, their contents could be used to harm Yealands Group and discourage potential future investors lest working with Marlborough Lines lead to the disclosure of their own confidential information, Dew said.
Judge Helen Cull ruled the documents should not be released, saying there was no need to hold the trust to account, and that releasing the documents could affect the freedom of communication between the trust and Marlborough Lines in the future.
In this episode of RNZ’s The Detail, we hear all the twists and turns after utility company Marlborough Lines made the seemingly ‘quite bizarre’ decision to buy Yealands Wine.
She believed the documents were indeed reasoning by the trustee, so releasing them was not appropriate.
However, it was possible that the documents could be used for proceedings planned by Taylor for breach of duty and fair trade, she said.
Judge Cull also noted that Taylor’s position as chairman of a competing winery disadvantaged Marlborough Lines, at the heart of New Zealand’s small competitive wine industry.
Taylor’s attorney, Michael Wigley, said the injunction could prevent the redacted record from being used in proceedings planned by Taylor. They wanted to use particular comments made by the trustee Domenic Romano about an annual general meeting and the content of an annual report, which they said contradicted what had been reported to the beneficiaries and proved that the trustees had acted inappropriately.
Judge Cull said a director’s candid opinion was not sufficient proof of this and she did not believe it was in the public interest to publish it.
She said Taylor’s decision to share the redacted information was a breach of trust and her decision to provide it to a reporter was “harmful”.
She granted an injunction preventing Taylor and his associates from sharing the redacted information and asked Taylor to provide a list of who received it.
The injunction could be amended if necessary for future proceedings, Judge Cull said.
She would be accepting cost submissions over the next 11 weeks.