He
was one of law firm Buddle Finlay’s most valuable clients generating fee income
in excess of ten million dollars over a fourteen year period. The knowledge gained about George Kerr was so
detailed that the High Court barred the firm from acting for financiers
chasing him for $A33.6 million.
Around 2009,
businessman George Kerr established the Torchlight Group. It specialises in purchasing distressed
assets. In 2012, Torchlight borrowed
$A37 million short term through Australian financier Mr John Grill to acquire
debt from Bank of Scotland International.
The High Court was
told this $A37 million loan was for 60 days only. Repayment of principal was late, being paid
progressively through 2012 and 2013. The
Australian financier is now demanding further payments for interest, fees and
penalties accruing at the rate of $500,000 a week – a demand now in excess of
$A30 million. Torchlight has gone on the
attack, saying late payment fees claimed are an unenforceable penalty.
Learning that Buddle
Finlay was to act for the financier against Torchlight, Mr Kerr applied to have
the law firm removed from the case. He
said Buddle Finlay knows all about his personal circumstances and business
methods having worked for him for over a decade. This is confidential information which the
law firm should not be allowed to use against him. Should Torchlight be held liable, it is
likely the financier will chase him personally for money due, he said.
The law firm said any
possible misuse of confidential information was “fanciful or theoretical”. Justice Gilbert removed Buddle Finlay from
the case. Disqualification was the only
effective way of avoiding any risk of the firm acting against Mr Kerr and his
business interests, he said. The
financier argues Torchlight had the benefit of independent legal advice before
taking up the short term loan. This is
legal advice provided earlier by Buddle Finlay itself.
Torchlight
Fund v. NZ Credit – High Court (17.10.14)
14.049