Wellington-based investment bankers Will Leckie and Chris Morrison failed in attempts to block legal action alleging they diverted for their own benefit management of carbon trading investments, bypassing a deal initially negotiated with Anthony and Wendy Beverley.
Leckie and Morrison provide investment services to the agribusiness and forestry sectors through their business Lewis Tucker & Co.
The Court of Appeal was told they joined forces with the Beverleys in 2017 to exploit investment opportunities arising from New Zealand’s emissions trading scheme. A limited liability partnership called Drylandcarbon One Limited Partnership was set up to hold investors’ money. It was intended investors would receive a return on carbon credits generated from afforestation. Harvesting and sale of trees was a secondary priority.
The money pot for Lewis Tucker and the Beverleys was intended to be base fees calculated on capital employed plus performance fees from ongoing operations, all channelled through a management structure they both controlled: DC One H1 Ltd.
Evidence was given that Mr Beverley’s relationship with Messrs Leckie and Morrison broke down irretrievably within months of the first investment partnership being established. Shortly after, Lewis Tucker & Co set up its own carbon trading fund.
The court was told of Lewis Tucker & Co using publicity material for its new fund similar to that used by DC One’s operations and also transferring staff managing the earlier fund across to Lewis Tucker’s new operations.
The Beverleys sued. The High Court approved legal action being taken against Messrs Leckie and Morrison in DC One’s name on grounds there was an arguable case that they had misused DC One’s information to set up in opposition, seizing business opportunities otherwise available to DC One, part owned by the Beverleys as joint managers.
Company information from DC One allegedly used to set up Lewis Tucker’s competing alternative fund included the content of investment flyers, the pool of potential investors and details of investment structures likely to attract new investors.
Leckie and Morrison claim this information is generic. It is general business information known to any knowledgeable business investor, not corporate information particular to DC One, they said. If the Beverleys have a complaint, they should sue personally, rather than sue through a derivative action in the name of DC One, they said. It was indicated litigation costs will likely exceed one million dollars. DC One, part-owned by Lewis Tucker, should not have to bear the cost of legal action against Lewis Tucker, they said.
The Court of Appeal confirmed a High Court ruling that the dispute go to trial, with DC One bearing the Beverleys’ costs.
Leckie v. Beverley – Court of Appeal (17.11.23)
24.017