Auckland vs Wellington in finance company spat

By Deborah Hill Cone

Friday 5th March 2004

A finance company owned by one of Auckland's richest families is banging heads with a Wellington rival owned by some of the capital's most well-known establishment names.

Auckland-based SH Lock, owned by the Goodfellow family, was at presstime poised to file proceedings in the High Court at Auckland against Prime Finance, a competitor whose shareholders include Todd Corporation director Malcolm Whyte, property developer Michael Robbers, Mowbray Collectibles' John Mowbray and Lowe Corporation's Graeme Lowe. Mr Lowe's brother, Rick, also a shareholder, is Prime's managing director.

SH Lock claims Prime has "stolen" four clients and is demanding $1.2 million damages for that.

The dispute, which relates to the departure of two key SH Lock managers, involves allegations of misuse of confidential information and claims of conspiracy and inducement. And if it goes to trial it will depend on cutting-edge computer forensic technology, never before used in a court case.

The scrap began when David Nicholson and Philip Heath left SH Lock in October last year to set up an Auckland operation for Prime Finance.

Both firms lend money but SH Lock specialises in trade finance and factoring. Prime has traditionally handled consumer and motor vehicle finance.

SH Lock claims the pair printed off and copied confidential SH Lock information, even allegedly emailing documents to their home computers months before they resigned.

A statement supplied to The National Business Review by SH Lock chairman Peter Goodfellow said following the pair's departure "it became clear to SH Lock that confidential company and client information had been removed."

Mr Goodfellow said the Employment Relations Authority had granted an unusual order that required Prime, Mr Nicholson and Mr Heath to turn over five computers for analysis.

Forensic accountancy firm McCallum Petterson carried out one of New Zealand's most detailed forensic computer record reconstructions on the machines, Mr Goodfellow said.

As a result of "footprints" found by McCallum Petterson, SH Lock was asking its former employees to delete more than 100 files.

Meanwhile, Prime Finance has distributed an information memorandum aiming to raise $5 million in a share offer, which would double Prime's share capital.

The memorandum sets out how the company plans to set up a new Auckland operation.

"The new division in Auckland will be lending in a market that is totally different than Prime's previous lending," the document says.

Mr Goodfellow claims the fundraising is specifically intended to support Prime's intention to develop a business similar to that of SH Lock.

Prime managing director Rick Lowe said the company had not been served with proceedings from SH Lock and was unable to comment until it had.

But he said Prime had not breached its duties or obligations and any proceedings would be "vigorously defended."

Mr Lowe said there had been "absolutely no wrong-doing by the company. We are astounded any proceedings could possibly be issued."

Mr Lowe declined to answer further questions.

SH Lock has a loan book of about $45 million while Prime secured loans of $39 million last year and made a $1.1 million after-tax profit.

But Prime's management has high hopes for the company, forecasting its loan book will grow to $59 million this year, $93 million next year and $125 million in 2006.

In an unrelated case, the Goodfellow family, estimated to be worth at least $375 million on the 2003 NBR Rich List, last year lost a High Court action taken by the son of a former employee.

Amalgamated Dairies, an investment company formed by the late Sir William Goodfellow in 1927, was ordered to pay $2.5 million plus interest to the son of the late Graham Glaister.

It emerged during the case that the private company was valued at $359 million in 2000 and paid a $70 million dividend the previous year.

SH Lock was established in 1889 and is one of the country's oldest finance companies.

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