Pursuing case may cost baker $75,000
Taranaki baker Paul Yarrow's legal bid to reclaim control of his family business hangs by a thread after the High Court ruled he must come up with $25,000 to continue his case.
Yarrow is the majority shareholder of Yarrows the Baker, which went into receivership last year with debts of $150 million.
The messy collapse of Yarrows the Baker sparked a storm of activity, with legal action on both sides of the Tasman, and Winston Peters describing the receivership in Parliament as a "corporate assassination".
Yarrow filed a claim in the High Court at New Plymouth against Yarrows the Baker's accountant Michael Finnigan, seeking $11m in damages for breaches of good faith, loyalty and fidelity.
In a decision made publicly available yesterday, Associate Judge Tony Christiansen ruled on an application by Finnigan for security of costs and said Yarrow's allegations were far from proven.
"Yarrow's pleadings include claims of dishonesty and fraud. Those are serious charges and for which the court will require an appropriate high level of proof in due course," Justice Christiansen said.
Yarrow's claims were "largely unsupported other than by inference" and the demand for $11m in damages "lacks particulars and there is no suggestion that calculations have been made with the assistance of professional advice", the judge said.
He ruled security for costs should be made against Yarrow, with $25,000 to be paid to the court by December 4 and likely another $50,000 ahead of an expected three-week trial.
Lawyers acting for Yarrow had argued against a requirement for costs to be paid into trust in advance, as he was unable to raise such a sum and it would prevent him from continuing his case against Finnigan.
Justice Christiansen said the matter was significant for both parties.
"In this case the stakes are high. According to Yarrow the financial consequences are huge. For Finnigan they must be very significant.
"He is 75 years of age and carries no indemnity insurance."
The New Plymouth action is one of three being mounted by Yarrow, with additional claims being progressed though the High Court in Auckland and the New South Wales Supreme Court.
In September, Paul Yarrow's brother John bought the New Zealand assets of Yarrows the Baker, including the Mania bakery, from receivers BDO.
Reuters reported last month a Japanese and Singaporean joint venture between Sumitomo Corp and Prima were mounting a bid for the Australian arm of Yarrows the Baker.