The majority owners of private oil and gas company Greymouth Petroleum, which has exploration interests in Taranaki, are seeking a High Court order to force their fellow minority owner to sell his stake with accusations he breached his fiduciary duty and led the company towards a potential crisis.
Directors Mark Dunphy and Peter Masfen, who jointly own 86 per cent of the company, have accused 14 per cent shareholder and Greymouth's former chief operating officer John Sturgess in the Auckland High Court today of overseeing well drilling contracts in a negligent and incompetent way.
Dunphy and Masfen's lawyer Mark O'Brien told the court that from 2009 Sturgess' conduct was "erratic and his skills deteriorated" from working long hours. It got to the point where his relationship with people meant key staff left the company, O'Brien said, and he claimed it led to Sturgess overseeing well drilling contracts incompetently.
Sturgess failed to consult on operational matters with Dunphy in particular and so Dunphy was "excluded from being able to make informed decisions about the company" and led to the company moving towards a "potential crisis," said O'Brien.
Dunphy suspended Sturgess in February 2011 for three months and directed him to take a holiday. Sturgess claims the suspension is unlawful.
O'Brien said the full extent and detail of Sturgess' alleged operational mistakes didn't become known until relatively recently, exacerbated by his failure to comply with a court order issued on December 19 last year to release company records on computers in his possession.
He said that Sturgess should be required to exit the company and sell his stake which is held by Jet Trustee. "The company has become dysfunctional and can't operate any longer with the constitutional documents that founded it."
O'Brien said the relationship of the three principal directors was regulated by constitutional documents from 2002, where Dunphy and Sturgess entered into management contracts with Greymouth Petroleum.
Sturgess is seeking an order that the whole company be liquidated.
Greymouth says it is the country's second-ranked private petroleum production company by daily oil production and in the top four amongst New Zealand and foreign-owned production companies with New Zealand oil and gas production.
The case continues.
- © Fairfax NZ News
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