VANCE v VEY GROUP LIMITED [2019] NZHC 1676

VANCE v VEY GROUP LIMITED [2019] NZHC 1676

The Court found the Trustees had standing once vested as registered shareholders; the sole director's conduct in misleading the Trustees about share registration, excluding them from voting on a proposed sale, failing to provide timely financial records and material disclosure, and purporting to authorise a major financing without proper shareholder approval cumulatively amounted to conduct that was oppressive, unfairly discriminatory and unfairly prejudicial. The Court granted just and equitable relief short of immediate liquidation: appointment of an independent accountant to prepare accounts, determine the disputed inter-company debt and opine a fair price for the 49% shares,...

Citation
[2019] NZHC 1676
Parties
Plaintiff (trustee of Orana Trust): David Vance; Plaintiff (trustee of Orana Trust): Ian Millard QC; First Defendant (company): Vey Group Limited; Second Defendant (sole Director): Leslie William Fugle
Court
High Court
Jurisdiction
New Zealand
Judgment Date
18 July 2019
Procedural Posture
Application Under S 174 Companies Act 1993 (oppressive/unfair Prejudice) / High Court Judgment (hearing 28–29 May 2019; Judgment 18 July 2019)
Outcome
Application under s 174 granted in part; remedial orders made requiring independent accounting and a modified share buy-out process; liquidation/receivership reserved if non-cooperation or process fails
Legal Topics
Oppression/unfairly Prejudicial Conduct, Shareholder Remedies, Liquidation Vs Buy Out, Share Registration and Voting Rights, Disclosure and Financial Records, Major Transaction Approval
Company Law Trusts Equity Civil Procedure Oppression/unfairly Prejudicial Conduct Shareholder Remedies Liquidation Vs Buy Out Share Registration and Voting Rights +2 more

Case Brief

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Parties

David Vance

Plaintiff (trustee of Orana Trust)

Ian Millard QC

Plaintiff (trustee of Orana Trust)

Vey Group Limited

First Defendant (company)

Leslie William Fugle

Second Defendant (sole Director)

Procedural Posture

Application Under S 174 Companies Act 1993 (oppressive/unfair Prejudice) / High Court Judgment (hearing 28–29 May 2019; Judgment 18 July 2019)

Legal Issues

  1. 1 Standing of court-appointed trustees to bring s 174 application
  2. 2 Whether director's conduct was oppressive, unfairly discriminatory or unfairly prejudicial
  3. 3 Appropriate remedy if oppression established (buy-out, liquidation or other)

Ratio Decidendi

The Court found the Trustees had standing once vested as registered shareholders; the sole director's conduct in misleading the Trustees about share registration, excluding them from voting on a proposed sale, failing to provide timely financial records and material disclosure, and purporting to authorise a major financing without proper shareholder approval cumulatively amounted to conduct that was oppressive, unfairly discriminatory and unfairly prejudicial. The Court granted just and equitable relief short of immediate liquidation: appointment of an independent accountant to prepare accounts, determine the disputed inter-company debt and opine a fair price for the 49% shares,...

Court Disposition

Application under s 174 granted in part; remedial orders made requiring independent accounting and a modified share buy-out process; liquidation/receivership reserved if non-cooperation or process fails

Orders

  • An independent accountant, to be appointed by the chairperson of the Auckland District Law Society, is to prepare Vey Group Limited's financial statements from 2015 to date and form a view on the alleged debt owed by Vey to Orana and provide an opinion on a fair price for Orana's 49% shareholding; the accountant...
  • Upon completion of the accountant's report and valuation, the Trustees must give irrevocable notice of desire to sell the 49% shareholding within 14 days; other shareholders will have 14 days to state in writing whether they wish to purchase the shares at the accountant's price and, if they elect to purchase, 14...