Coleman v Lambie Assets Limited - [2013] NZHC 244

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-297 [2013] NZHC 244

BETWEEN LYNETTE MARY COLEMAN AND BRUCE IAN SANGSTER
First Plaintiffs

ANDGARRY KENNETH ROBINSON AND ALISON MARGARET ROBINSON Second Plaintiffs

ANDALAN GRAHAM YULE AND CHERIE JOY YULE
Third Plaintiffs

ANDBRYAN MAURICE HODGES AND JENNIFER MARGARET HODGES AND BPA TRUSTEES 2009 LTD
Fourth Plaintiffs

ANDRICHARD ALLAN PIERCE, DEBORAH ANN PIERCE, DARYL RODERICK PIERCE AND PATRICK ADRIAN HOULIHAN
Fifth Plaintiffs

ANDKENNETH CHARLES DICKIE AND JESSIE LYNETTE DICKIE
Sixth Plaintiffs

ANDRODNEY KEITH HARRIS AND HEATHER JOY HARRIS
Seventh Plaintiffs

ANDLAMBIE ASSETS LIMITED First Defendant

ANDMURRAY REX ALCOCK AND ALLISTER RONALD KNIGHT Second Defendants

ANDSPI CAPITAL LTD Third Defendant

ANDSPI SECURITIES LTD Fourth Defendant

COLEMAN AND SANGSTER V LAMBIE ASSETS LIMITED HC AK CIV-2013-404-297 [19 February 2013]

ANDCRESSIDA CAPITAL ONE LTD Fifth Defendant

Hearing: 11 February 2013

Counsel: TJG Allan and A L Credin for Plaintiffs
D E Smyth for Defendants

Judgment: 19 February 2013

In accordance with r 11.5 I direct that the delivery time of this judgment is 9.30am on the 19th day of February 2013.

RESERVED JUDGMENT OF MACKENZIE J

[1] In this proceeding, the plaintiffs, who are shareholders in the first defendant, Lambie Assets Limited, (“LAL”) seek relief related to the way in which the affairs of LAL are being conducted. The application presently before the Court is an interlocutory application for appointment of receivers to LAL.

[2] The shares in LAL are of two classes:

(a) Investment shares which carry the right to receive distributions but carry only very limited voting rights.

(b)Management shares which carry no right to receive distributions but carry all voting rights other than the very limited rights attaching to the investment shares.

[3] There are 3,500,000 investment shares. Each of the seven plaintiffs holds

500,000 shares. There are five management shares, all held by the third defendant

(SPI Capital).

[4] LAL was incorporated in December 2008 as the vehicle for an investment scheme proposed by SPI Capital. The terms were set out in an investment

memorandum dated December 2008 which was described as an offer to private persons and not an offer to the public under the Securities Act 2004. Briefly stated, the proposal was to purchase by mortgagee sale a partly developed area of industrial land in Manukau, South Auckland, to complete the construction of some partly built industrial units on the land, and either to build further units on, or to sell, the remaining land. SPI Capital was to be the manager of the project.

[5] The individuals who were the driving force behind the investment proposal are the second defendants, Messrs Alcock and Knight. They are the directors of LAL, and the directors and (indirectly) the shareholders of SPI Capital.

[6] Matters have reached the point where the investors have lost confidence in Messrs Alcock and Knight. They have issued these proceedings alleging, inter alia, that the affairs of LAL have been conducted in a manner that is unjustly detrimental to the plaintiffs, and seeking relief under s 174…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Coleman v Lambie Assets Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2013] NZHC 244
Decision Date: 19 February 2013

CaseChat Overview and Summary

In the case of Coleman v Lambie Assets Limited, the plaintiffs, who are shareholders in Lambie Assets Limited (LAL), sought relief from the court regarding the way the affairs of LAL were being conducted. The plaintiffs alleged that the conduct of LAL's affairs was unfairly prejudicial to them, and sought relief under section 174 of the Companies Act 1993, including the appointment of receivers. The court was required to decide whether the plaintiffs had established a serious question to be tried and whether the balance of convenience favoured the grant of interim relief. The court held that while the plaintiffs had alleged oppressive, unfairly discriminatory, or unfairly prejudicial conduct, there was not a strong case for the grant of relief under section 174 on the present application. Furthermore, the court held that the balance of convenience did not favour the interim appointment of receivers, as the remedy sought was invasive and would have serious consequences for LAL. The application for interim relief was dismissed.

The court's reasoning was based on the traditional two-stage test for interlocutory relief, which requires consideration of both the strength of the plaintiffs' claim and the balance of convenience. The court considered the plaintiffs' allegations of unfair prejudice, but found that most of the matters fell within the category of business judgment and management. The court held that the plaintiffs had not established a strong case for the grant of relief under section 174, and that the balance of convenience did not favour the interim appointment of receivers. The court held that the appointment of receivers would have serious consequences for LAL, and that the plaintiffs had not demonstrated that the balance of convenience favoured the grant of interim relief. The court also held that the plaintiffs had available to them a self-help remedy in respect of the management of LAL by SPI Capital, and that section 174 was not a usual mechanism for dealing with a breach of duty by directors. The court dismissed the application for interim relief, and reserved costs on the application.

Orders