Bobnev-Jackson Trustees Limited v Robinson
[2024] NZHC 3256
•5 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-840
[2024] NZHC 3256
UNDER the Companies Act 1993 BETWEEN
BOBNEV-JACKSON TRUSTEES
LIMITED as trustee of the BOBNEV- JACKSON TRUST
First PlaintiffMARINA JACKSON
Second PlaintiffAND
MATTHEW ROBINSON
First Defendant
…./2
Hearing: 31 October 2024 Appearances:
B Norling and A Cherkashina for Plaintiffs
M Robinson, self-represented First Defendant and second-named Third Defendant
No appearance by A Robinson, self-represented Second Defendant and first-named Third Defendant
No representation or appearance of Fourth DefendantJudgment:
5 November 2024
JUDGMENT OF GORDON J
This judgment was delivered by me on 5 November 2024 at 3.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Norling Law Ltd, Auckland Copy to: First Defendant
Second Defendant
BOBNEV-JACKSON TRUSTEES LTD v ROBINSON [2024] NZHC 3256 [5 November 2024]
ANGELA MARIE ROBINSON
Second Defendant
ANGELA MARIE ROBINSON AND MATTHEW ROBINSON AS TRUSTEES OF THE ROBINSON FAMILY TRUST
Third Defendants
ROADWORX INFRASTRUCTURE LIMITED
Fourth Defendant
[1] This proceeding, arising out of a shareholder dispute, commenced in May 2019.
[2] The first and second plaintiffs, Bobnev-Jackson Trustees Ltd as trustee of the Bobnev-Jackson Trust and Marina Jackson respectively, together own 50 per cent of the shares in the fourth defendant company, Roadworx Infrastructure Ltd (Roadworx).
[3] The first, second and third defendants, Matthew Robinson, Angela Robinson and those two individuals as trustees of the Robinson Family Trust respectively (together the Robinson interests), own the other 50 per cent of the shares in Roadworx.
[4]Mrs Jackson and Mr Robinson are the two directors of Roadworx.
[5] In their statement of claim the plaintiffs sought orders under s 174 of the Companies Act 1993 directing the Robinson interests to transfer their shares in Roadworx to the plaintiffs at valuation. The Robinson interests counterclaimed seeking similar relief.
[6] The proceeding was set down for hearing before me commencing on 26 April 2022.
[7] On the first day of the hearing after taking time to discuss the issues, all parties agreed that the shares held by the Robinson interests should be sold to Mrs Jackson or her nominee. The issue then came down to the fair value of the shares and the procedure to be adopted for determining the fair value.
[8] Following further discussions and agreement between the parties and with the Court’s assistance, at the end of the first day allocated for the hearing, the Court made various consent orders which resolved the substantive claim and established a process for determining the fair value of the shares in Roadworx and for the sale process (consent orders).
[9] The plaintiffs have now brought this matter back to the Court under the leave reserved in the consent orders. In her affidavit Mrs Jackson says the parties are now at the final stages of the path set out under the consent orders but there is an issue that
could not be resolved between the parties and the Court’s assistance is required. That issue is a narrow one but one which is important for the parties. It is the date for the valuation of the shares.
[10] The plaintiffs say the date of valuation should be 2024. Mr Robinson acting for himself and appearing on his own behalf at the hearing abides the decision of the Court. He has not taken an active role on this issue (apart from responding orally on the issue of costs). He similarly did not seek to be heard when the matter was before the Court in April 2022 beyond agreeing with the consent orders.
[11] Ms Robinson, also acting for herself, disagrees with the plaintiffs. While she disagrees, Ms Robinson has not formally opposed the order sought by the plaintiffs. Further, despite the opportunity to file affidavit evidence in response to Mrs Jackson’s affidavit, she did not do so. Instead she has filed a large number of documents on an ongoing basis, almost all of which are irrelevant and some of which were not served on the plaintiffs. In her filings Ms Robinson mostly seeks to undermine and revisit the consent orders. She did not appear at the hearing.
[12] The Court’s position, as I stated at the hearing, is that the hearing was not an opportunity for Ms Robinson to revisit substantive matters underlying the consent orders. Nor would I be taking her unsworn documents into account. There are, however, three matters Ms Robinson raises in an early memorandum which I address after first considering the valuation issue.
Consent orders
[13]In summary, there were the following steps under the consent orders:
(a)Mrs Jackson would complete all reconciliation of Roadworx accounts within Xero, no later than 30 days from the date of the consent orders and would also ensure that all outstanding invoicing was drafted and sent, within five working days of the consent orders.1
1 The Court subsequently made an extension for compliance with this order given Mrs Jackson’s ill health at the time.
(b)An independent accountant would then be appointed (by an independent barrister who was nominated in the consent orders) to finalise Roadworx end of the year accounts for all years not completed. The accounts were to be completed “as soon as practically possible”.
(c)Once the end of the year accounts were completed an auditor would be appointed by the independent barrister. The completion of the audit would be completed “as soon as practically possible”. The scope of the audit was:
(i)annual financial statements for the years ended 31 March 2021 and 31 March 2022; and
(ii)shareholder current account transactions for all shareholders from the date of Roadworx’s incorporation to the date of the auditor’s report.
(d)Once the audit was finalised the fair market value of the shares in Roadworx would then be determined by an independent chartered accountant (valuer) who would similarly be appointed by the independent barrister.
[14]Once the shares had been valued, the consent orders set out the following steps:
(a)The Robinson interests would transfer their shares to Mrs Jackson or her nominee at the price determined by the valuer, less any amount owing by the Robinson interests to Roadworx.
(b)In the event that Mrs Jackson was unable to obtain funds to buy the shares, one or more of the Robinson interests or nominee had the discretion to buy the shares at the amount determined in the valuation.
(c)If the Robinson interests did not purchase the shares then 100 per cent of the shares were to be listed for public auction with the reserve set at the valuation price.
(d)There was also provision for the matter to be called back to the Court with the intention of the company being liquidated if the Robinson interests did not purchase the shares.
(e)Leave was reserved to seek further directions should it be necessary.
Delays implementing the consent orders
[15] In her affidavit Mrs Jackson says that at the time she agreed to the consent orders her expectation was that the parties would reach the stage when the valuation of Roadworx shares could be conducted within the same year that the consent orders were made. She says for this reason the consent orders were drafted in the way they were (requiring only the audit of the 2021/22 financial years and there was no direction for the valuer as to the year at which the shares should be valued).
[16] Unfortunately, for reasons that are referred to below and which I accept were out of the control of the plaintiffs, the preparation of Roadworx financial accounts by an independent accountant and the audit took considerably longer than expected. Mrs Jackson says that more than two years later they have just come to the point when the audit has been completed and the valuer has just been appointed. Mrs Jackson sets out the reasons for the delays in getting to this point.
Preparation of financial statements for 2020–2022 years
[17] While the independent accountant was appointed relatively promptly (Mrs Jackson says the first meeting with him was on 14 July 2022) there were significant delays in the accounts being completed. Mrs Jackson says she finally received the completed accounts for Roadworx in early February 2023 for review and comment. She says she submitted her comments in February 2023 but the sign-off of the final accounts did not occur until April 2023. Mrs Jackson says that based on her understanding and overseeing of the process of preparation of the accounts, it was delayed because:
(a)The accounting firm experienced staffing issues with a change of staff throughout the process.
(b)Ms Robinson interfered with the process by approaching the independent barrister who appointed the accountants and the accountants themselves by making allegations (which Mrs Jackson says were untruthful) against her and the accounts of Roadworx which required the accounting firm to conduct further investigations and work. She says this also unnecessarily increased the costs that Roadworx had to pay to the accounting firm.
(c)The Robinson interests failed to provide information, documents and comments when asked by the accounting firm, including a delay in reviewing and commenting on the completed accounts.
Audit
[18] Mrs Jackson says there were then delays in the appointment of an auditor. She says the independent barrister appointed under the consent orders commenced his search for an independent auditor after receiving the final accounts from the accountants in April 2023. Mrs Jackson says an auditor was only located two months later. Her understanding is that the delay was caused by: auditors having no capacity as they had lost their staff who moved overseas in the period after COVID-19; and potential auditors being unwilling to take the job once they heard that Roadworx had a shareholder dispute and the audit was being conducted in accordance with a court order. Mrs Jackson says also that some potential auditors on receiving phone calls from Ms Robinson making allegations against Mrs Jackson and the accounts of Roadworx resulted in them not taking the job.
[19] Mrs Jackson says that in June 2023 the independent barrister located an auditor who was willing to take on the job. She says it was not, however, until August 2023 when the engagement documents were finally signed off with the auditor. While she and Mr Robinson agreed to the scope of the audit proposed by the auditor, Ms Robinson did not. It, therefore, took longer for the engagement documents to be signed. The audit was finalised only on 29 April 2024.
Valuer
[20] Mrs Jackson says the valuer has now been appointed but there is uncertainty as to whether the valuation of Roadworx shares should be based on the 2022 accounts or the current 2024 accounts. As already noted, the consent orders are silent on the date of valuation.
Change in value of Roadworx shares
[21] Mrs Jackson’s position is that the shares should be valued on the 2024 accounts as certain events have taken place since 2022 which have significantly reduced the value of the shares. The Court is told there was an attempt between the parties to reach agreement as to the year of valuation to avoid the need to return to the Court. But agreement could not be reached with Ms Robinson.
[22] Mrs Jackson says that it would be unfair for her, as the proposed purchaser of the shares, to purchase them at a value based on old data. Mrs Jackson acknowledges she is not a valuer and so is unable to determine the exact drop in value as a result of the factors she refers to. She says, however, being a qualified and experienced accountant, she is able to tell that the factors I set out below would have impacted on the value of the shares in a negative way.
Increased rent payments
[23] Mrs Jackson’s evidence is that from August 2015 until March 2022, Roadworx was able to rent its yard for a very low price, significantly below market value, because of the relationship between Roadworx’s operational manager and the landlord. However, after March 2022 the landlord closed the yard so Roadworx had to locate a new yard, with rental payments at five times the previous rate. Mrs Jackson annexes to her affidavit relevant documents showing the comparable rental for the two premises.
Drop in value of assets
[24] Mrs Jackson says that during the last two years the value of all vehicles and equipment has decreased due to depreciation. There has also been a drop in value of
assets of Roadworx in general. Schedules of assets for the relevant years are annexed to her affidavit.
Loss of employees
[25] Mrs Jackson says that as a result of the ongoing shareholder dispute which started in 2018, Roadworx has been losing employees every year. She says hiring new employees has been challenging due to the shareholder dispute and directors not being able to agree on the procedures. Mrs Jackson says in the best revenue year around the time when the shareholder dispute started, in the financial year ending March 2019, Roadworx had 23 employees. At the end of the financial year in 2022 there were only 12 employees, and currently there are only six employees.
Loss of major customers
[26] Mrs Jackson says that in March 2023 Mr Robinson failed to update Roadworx health and safety documentation for their major customers on time as had always been his job, which resulted in Roadworx losing contracts with two major customers. One accounted for 51 per cent of the total income and the other accounted for 29 per cent of the total income.
Loss in value
[27] Based on Mrs Jackson’s evidence, which is uncontradicted by any evidence from the Robinson interests, I accept that valuing the shares in Roadworx based on the 2022 accounts would not reflect the current (reduced) market value of Roadworx since 2022.
[28] Mrs Jackson says that she would not want to purchase the shares of Roadworx if she had to pay for them at an unfair price. She goes on to say that even if she wanted to, she would not be able to, as no bank would advance her the amount required, knowing the true value of the business (as the bank would be advancing her the purchase price in exchange for a General Security Agreement over the business).
[29] Mrs Jackson says she does not think the Robinson interests would be interested or willing to buy the shares of Roadworx at an unfair price either. As noted, the
consent orders provide for the Robinson interests to buy the shares if Mrs Jackson or her nominee do not.
Date for valuation of shares
[30] There is no settled rule as to the date for the valuation of shares. The Court has a discretion to decide the valuation date in the light of all the circumstances.2
[31] I accept that it would be unfair to require Mrs Jackson to purchase the shares at a value based on outdated financial data and in circumstances where the delays in completing the procedure under the consent orders were for reasons outside of the control of the plaintiffs. I also accept that at least some of the delay has been contributed to by Ms Robinson. Where the evidence points to a reduction in the value of Roadworx, that must be taken into account to ensure fairness.
[32] Despite Ms Robinson’s opposition to the plaintiffs’ proposed date of valuation, it seems inherently unlikely that any of the Robinson interests would wish to buy the shares at a value in excess of the current value (noting that the process under the consent orders enables the Robinson interests to purchase the shares if Mrs Jackson or her nominee do not). There is no evidence suggesting they are interested in purchasing the shares.
[33] That would then lead to a public auction with the reserve set at the valuation price. It seems highly unlikely that there would be a buyer willing to pay a price in excess of the current value (which would be the case if 2022 was the valuation date).
[34] The likely outcome would then be liquidation of Roadworx which I accept would be detrimental to all parties involved. It would also be, as Mr Norling, counsel for the plaintiffs submits, a waste of significant costs and time since 2019.
2 Re Cumana Ltd [1986] BCLC 430 (CA) at 445.
Result
[35] For the reasons discussed above, I direct that the valuer appointed under the process in the consent orders is to determine the fair market value of Roadworx shares based on financial information up to and including 31 March 2024 data.
Ms Robinson’s issues
[36] Of the multiplicity of issues raised by Ms Robinson, there are three in her memorandum of 2 July 2024 that arguably arise from the consent orders. Mrs Jackson responded to them in her affidavit and Mr Norling made oral submissions on them. I accordingly address them for completeness despite Ms Robinson not having sought leave to raise them.
Access to accounts
[37]One of the orders I made on 26 April 2022 was as follows:
[6(b)] Ms Robinson seeks an order providing her with read-only access to Zero Crystal Payroll, Roadworx’s ANZ account and the Roadworx’s BNZ account. The plaintiffs agree that such an order might be made. They in fact say that they have already provided such access. With the plaintiffs agreeing to the order as sought by Ms Robinson I order accordingly.
[38]In her 2 July 2024 memorandum Ms Robinson seeks an order as follows:
3.1 Access to Accounts and Records
I request a court order for continued access to the company’s financial records and online accounts. If access is not provided by Marina Jackson, I seek an order for Xero, ANZ an [sic] BNZ to issue my login credentials to a judicial officer. ANZ and BNZ confirmed Monday, 01 July 2024 I do not have access.
[39] Mrs Jackson in her affidavit says that Roadworx granted Ms Robinson fresh access to ANZ, BNZ, Xero and Crystal Payroll accounts of Roadworx in April/May 2022 and these accesses have never been terminated.
[40] Mrs Jackson goes on to say that over the years there have been multiple instances of Roadworx granting Ms Robinson with access to accounts and Ms Robinson then being unable to access those accounts due to her forgetting
passwords and changing emails without letting Roadworx know. Mrs Jackson says she is aware of at least 17 email addresses which Ms Robinson has been using over those years. She lists them.
[41] Mrs Jackson suggests that if Ms Robinson is not able to access any of Roadworx’s accounts, this might be for the reasons Mrs Jackson gives as referred to above.
[42] Having regard to Mrs Jackson’s sworn evidence it appears there is no breach by the plaintiffs of the order I made on 26 April 2022. There is no need for a further order.
Lump sum payment
[43]Ms Robinson seeks a court order:
3.3 Lump Sum Payment
I seek a court order for a lump sum payment reflecting the difference in my fuel allowance as per the court order. Additionally, I request a new Cardsmart card to prevent unauthorized cancellation.
[44] First, as Mr Norling notes, there is no particularisation by Ms Robinson as to the difference in payment amounts. In other words, Ms Robinson is seeking an unknown lump sum.
[45] The Court order regarding a fuel allowance referred to by Ms Robinson was not an order I made on 26 April 2022. Rather it was a consent order made by another Judge on 19 September 2019 reflecting the settlement reached by the parties in relation to the plaintiffs’ application for an interim injunction.
[46] I make two observations about the order. First, it did not provide an allowance. Rather, it provided Ms Robinson with the ability to use a fuel card provided that such use did not exceed a specified amount. Second, and here I accept Mr Norling’s submission, that the order having been made to settle an interim injunction, has now been overtaken by the orders I made in the substantive proceeding. There was no
consent order in relation to fuel allowances. Further, Mrs Jackson in her affidavit says there is no fuel allowance in Roadworx.
[47]For all these reasons I decline to make this order as sought by Ms Robinson.
RWI Concrete Ltd
[48] As already noted, the consent orders the Court made on 26 April 2022 resolved the substantive proceeding. Over the following two days the Court made further consent orders on issues relating to the operation of Roadworx pending the completion of the process contemplated by the consent orders for valuation of the shares. One of those orders was as follows:
[3(e)] The Board of Roadworx has one month from the date of this order to come to a binding agreement with RWI Concrete Limited regarding payment of moneys owed by RWI Concrete Limited to Roadworx. In the event that agreement is reached or if an agreement is reached but RWI Concrete Limited breaches the agreement then the debt is to be referred to Baycorp. The agreement referred to in this paragraph must record:
(i)The amount of the original debt owing by RWI Concrete Limited;
(ii)The amount paid by RWI Concrete Limited to Roadworx up to the date of the agreement; and
(iii)The total outstanding amount.
[3(f)] Ms Robinson is to be given a copy of any proposed agreement between RWI Concrete Limited and Roadworx before it is signed and a further copy once any agreement has been signed.
[49]Ms Robinson seeks an order as follows:
3.4 RWI Concrete Ltd
I seek a court order for the Board of Directors to comply with the court order of Justice Gordon to provide the binding payment agreement to me.
[50] Mrs Jackson responds in her affidavit stating that RWI Concrete Ltd was liquidated in 2022 before any agreement could be reached.
[51]For that reason I do not make an order as sought by Ms Robinson.
Costs
[52] The plaintiffs seek costs on a 2B basis from the second and third defendants having regard to Ms Robinson’s refusal to agree to a resolution of what is a narrow issue. Costs are not sought against Mr Robinson in his personal capacity. The plaintiffs’ position is that the parties ought to have been able to agree on a way forward in relation to the valuation date and the Court’s assistance ought to have been unnecessary.
[53] Mr Robinson submits it would be unfair for him to bear costs in his capacity as a trustee as he has co-operated throughout the proceeding and it has been Ms Robinson who had been “problematic”.
[54] While I have some sympathy for Mr Robinson, any costs order would not be against him personally. There has not been a united position presented by the trustees and in the absence of the co-operation and consent of both in relation to this application, I consider an order should be made against the trustees as well as against Ms Robinson in her personal capacity.
[55] I accordingly order that the second and third defendants are jointly and severally liable to pay the costs of this application on a 2B basis to the plaintiffs.
[56]Mr Norling should file a memorandum setting out the items claimed.
Gordon J
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