It was not economic duress for lawyer Peter Murphy to play hardball, refusing to sign off on a $A112 million business sale unless fellow investors gave him a larger share of the pie.
The end of nearly three decades of co-operation between Peter Murphy, Roger Dold and Chris Jacobs running charter cruises in the Bay of Islands, Fiji and Queensland played out in the High Court at Auckland.
The court was told of growing tensions in 2014 between the three over construction of a passenger terminal at Port Airlie, Queensland. Mr Jacobs was expected to oversee the project. He fell seriously ill. Mr Murphy took over management, becoming increasingly annoyed at the time and management pressures which followed. The job was completed in early 2015, leaving simmering discontent still bubbling away. Their entire business, Cruise Whitsundays Pty Ltd, was put up for sale. An indicative offer of $A35 million was not accepted. Accounting firm Deloitte was appointed to handle potential sales. It attracted an offer from Quadrant Private Equity: $A110 million; far beyond what the three investors ever expected to get. Negotiations pushed the price up to $A112 million. Mr Dold and Mr Jacobs expected net proceeds of sale would be divided according to the ratio of their respective shareholdings: Dold (46.9 per cent); Jacobs (46.9 per cent) and Murphy (6.2 per cent). At this point, Mr Murphy refused to sign off on the deal unless he was paid a greater proportion; reward for the extra work he had done getting the business ready for sale, he said. A furious Mr Dold said a pistol was being held to their heads, holding them to ransom. Without Mr Murphy’s signature, the entire $A112 million deal might fall over. The two grudgingly agreed to pay Mr Murphy an extra four million dollars, with each reserving their rights. Mr Dold later sued, seeking reimbursement of the two million he contributed.
Justice Edwards dismissed his claim of economic duress. Duress requires proof of illegitimate pressure being applied, causing the victim to enter into a contract. There was no illegitimate pressure, she said. Mr Dold had ample time to consider his position, and did so, getting legal advice before paying the extra two million dollars. Mr Murphy’s initial demand for an extra five million dollars was bargained down to four million dollars. Negotiating the level of payment is the antithesis of duress, Her Honour said. By his own admission, Mr Dold was selling at a price beyond his wildest dreams at $A112 million. Agreeing to Mr Murphy’s demand was not economic duress; it was a calculated and considered commercial decision after weighing all the options.
Dold v. Murphy – High Court (31.05.19)
19.107