CARTER v CANTERBURY DESIGN AND DEVELOPMENT LIMITED [2023] NZHC 529

CARTER v CANTERBURY DESIGN AND DEVELOPMENT LIMITED [2023] NZHC 529

The Court set aside the appearance insofar as the statement of claim concerned the asserted entitlement to shares and appointment of a director because the shareholders agreement already recorded Swann as a shareholder and his nominee as a director as at its date; the defendants had no arguable legal defence to refuse transfer based on the working capital issue, so the arbitration clause did not bar the Court from determining the share/director claim and the 'clean hands' defence did not apply where defendants had no legal justification for refusing to transfer.

Citation
[2023] NZHC 529
Parties
First Plaintiff: Simon Laidlaw Carter; Second Plaintiff: Christopher John Swann; First Defendant: Canterbury Design and Development Limited; Second Defendant: Aaron John Hooper; Second Defendant: Carl James Fordyce
Court
High Court
Jurisdiction
New Zealand
Judgment Date
16 March 2023
Procedural Posture
Specific Performance of Agreements to Issue Shares / Interlocutory Application to Set Aside Appearance (jurisdictional Objection Under R 5.49)
Outcome
Appearance under protest set aside in respect of the claim for shares and appointment of nominee director; arbitration clause does not prevent Court determination of that issue
Legal Topics
Specific Performance, Share Issuance, Shareholders Agreement, Arbitration Clause, Appearance Protesting Jurisdiction, Clean Hands Doctrine, Working Capital Contribution, Summary Judgment Timetable
Company Law Contract Law Equity Arbitration Law Civil Procedure Specific Performance Share Issuance Shareholders Agreement +5 more

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Parties

Simon Laidlaw Carter

First Plaintiff

Christopher John Swann

Second Plaintiff

Canterbury Design and Development Limited

First Defendant

Aaron John Hooper

Second Defendant

Carl James Fordyce

Second Defendant

Procedural Posture

Specific Performance of Agreements to Issue Shares / Interlocutory Application to Set Aside Appearance (jurisdictional Objection Under R 5.49)

Legal Issues

  1. 1 Whether the plaintiff's claim to shares and director appointment is a dispute concerning the shareholders agreement and therefore subject to its arbitration clause
  2. 2 Whether there is in fact a dispute for the purposes of Article 8 Schedule 1 of the Arbitration Act 1996 and Zurich v Cognition guidance
  3. 3 Whether the defendants have an arguable defence (including any right akin to s 84(5) Companies Act 1993) to refuse transfer of shares

Ratio Decidendi

The Court set aside the appearance insofar as the statement of claim concerned the asserted entitlement to shares and appointment of a director because the shareholders agreement already recorded Swann as a shareholder and his nominee as a director as at its date; the defendants had no arguable legal defence to refuse transfer based on the working capital issue, so the arbitration clause did not bar the Court from determining the share/director claim and the 'clean hands' defence did not apply where defendants had no legal justification for refusing to transfer.

Court Disposition

Appearance under protest set aside in respect of the claim for shares and appointment of nominee director; arbitration clause does not prevent Court determination of that issue

Orders

  • Set aside the appearance under protest insofar as it relates to the statement of claim concerning entitlement to shares and appointment of a director
  • Counsel to confer and file an agreed timetable for filing a notice of opposition and any further affidavits within 10 working days of judgment