Dheil

[2021] NZHC 572

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-001972

[2021] NZHC 572

UNDER

The Companies Act 1993

IN THE MATTER

of an application by Harjit Singh Dheil of Auckland, company director, for an order pursuant to s 382 of the Companies Act 1993 for leave to not be prohibited from managing companies

BETWEEN

HARJIT SINGH DHEIL

Applicant

Hearing:	11 February 2021
Counsel:	DP Hoskin and SMT Chambers for Applicant
Judgment:	22 March 2021

JUDGMENT OF DOWNS J

This judgment was delivered by me on Monday, 22 March 2021 at 4 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Steindle Williams Legal, Auckland.

Re DHEIL [2021] NZHC 572 [22 March 2021]

Permission to direct (construction) companies?

[1]                 Harjit Dheil seeks permission to direct, manage and promote two companies, DDL Homes Central Ltd and DDL Homes South Ltd.1 The companies build homes in and around Auckland. Permission is required because Mr Dheil was convicted of blackmail in 2019, and the Companies Act 1993 precludes a person with a conviction “of any crime involving dishonesty” from being a director, promoter or manager of a company for five years.2

[2]                 The application is unopposed. The Registrar of Companies3 has been notified, did not wish to be heard, and did not appear at the hearing.

Background

[3]                 In 2014, Mr Dheil directed and owned more than 10 companies in property development and hospitality, including Dheils Ltd.4 A former employee, A, complained about Dheils to the Employment Relations Authority.

[4]                 On 28 August 2014, Mr Dheil threatened A, through another defendant, that unless he withdrew his employment complaint, Mr Dheil would orchestrate a complaint of sexual assault against him. Two weeks earlier, A had interacted with an intoxicated female patron. Mr Dheil told A he would pay $10,000 to the patron (captured on CCTV footage) to complain of sexual assault. Mr Dheil drafted a letter of abandonment; and sent it to A to sign. A did so; and sent it to the Employment Relations Authority.

[5]                 Mr Dheil and the co-defendant were charged with blackmail. Following a jury trial in March 2019 in the District Court, Mr Dheil was found guilty. The co-defendant was found not guilty. Mr Dheil sought to be discharged without conviction. Unsurprisingly, the application failed.5 Mr Dheil was sentenced to 10 months’ home detention.6

1      The companies.

2      Companies Act 1993, s 382(1)(b).

3      The Registrar.

4      Dheils.

5      R v Dheil [2019] NZDC 8233 at [13].

6 At [21].

[6]                 Mr Dheil challenged conviction and sentence in the Court of Appeal. The Court dismissed the appeal.7 Mr Dheil then sought permission to appeal to the Supreme Court. That Court declined permission.8

[7]                 Mr Dheil says he proposes to apply to the Criminal Cases Review Commission in the hope of overturning his conviction.

[8]                 In early 2020, the Registrar informed Mr Dheil he was disqualified from being a  director.   Mr  Dheil  was  overseas,  but  he  learned  of  the  correspondence.    On 28 April 2020, Mr Dheil’s lawyers notified the Registrar of Mr Dheil’s intention to apply to the High Court for permission to be a director of the companies and other companies. On 22 September 2020, the Registrar told Mr Dheil the process of removing a company from the Register of Companies had begun, because Mr Dheil had not resigned his directorship(s). Mr Dheil then resigned all directorships.

[9]                 On 20 October 2020, Mr Dheil filed this application. The application is confined to the companies. Baljit Dheil, Mr Dheil’s wife, has assumed directorships of the companies.

[10]DDL Homes Central Ltd has almost 60 staff.9

The application

[11]Mr Dheil has filed evidence in support of his application.

[12]              Mr Dheil has more than 18 years’ experience in the construction industry. Before conviction, he was closely involved in the companies’ day-to-day management, including account management, project management liaison, and site visits. Mr Dheil considers himself integral to the companies’ success.

[13]Mr Dheil believes his involvement would not be detrimental to the public.

7      Dheil v R [2019] NZCA 416.

8      Dheil v R [2019] NZSC 153.

9      DDL Homes South Ltd has none.

[14]              Mr Dheil offers to adhere to any conditions “the Court sees fit”. At the hearing, I invited Mr Dheil to elaborate. I adjourned to allow Mr Dheil to file additional material. Mr Dheil has done so, through his lawyer, Mr Hoskin. I thank Mr Hoskin for his assistance.

The law

[15]              Section 382 of the Companies Act prohibits persons from managing companies, “whether directly or indirectly”, if they are convicted of specified offences, including “any crime involving dishonesty as defined in s 2(1) of the Crimes Act 1961”.10 The definition captures the crime of blackmail, an offence punishable by up to 14 years’ imprisonment.11

[16]              The prohibition recognises those dealing with a company “are entitled to find that they are dealing with persons of integrity”.12 The purpose is prophylactic: to protect the company’s creditors, consumers, shareholders, investors and employees, and wider public.

[17]              The prohibition is for five years from conviction, unless the High Court grants permission. The statute does not prescribe criteria. Many interests are generally considered, with an overarching eye to the prophylactic dimension.13 Importantly, the Court may impose conditions.14

Analysis

[18]              Mr Dheil’s offending was calculated and serious. The Court of Appeal noted the sexual allegation was “deliberately fabricated … with the intention of subverting the [Employment Relations Authority] process”.15 A starting point of two years’ imprisonment was considered “well within range”.16 And, Mr Dheil continues to deny guilt.

10     Companies Act, s 382(1)(b).

11     Crimes Act 1961, s 238.

12     Re Minimix Industries Ltd (1982) 1 NZCLC 95,043 (HC) at 98,382.

13     Ramsay v Sumich [1989] 3 NZLR 628 (HC) at 633.

14     Companies Act, s 382(1).

15     Dheil v R, above n 7, at [54].

16 At [55].

[19]              However, Mr Dheil is otherwise of good character; he has no other convictions. Mr Dheil’s “good standing in the community” was recognised by both the sentencing Judge and Court of Appeal.17 The offending occurred more than six years ago. It represents a departure—not a pattern.

[20]              Mr Dheil’s participation in the management of the companies would advance their interests, and those dependent on the companies for income. Mrs Dheil has managed to “hold the fort” (my phrase, not hers), but no longer wishes to do so. She believes the companies “may suffer” if Mr Dheil does not return to their management. I acknowledge the concern may reflect modesty, influence, or both.

[21]              Permission is not without risk. The most obvious concern lies with employees given the nature of the offending and imbalance of power (between the manager of a reasonably large employer and an employee). However, this could be ameliorated with conditions.

[22]              The next concern lies with creditors. The evidence implies the companies are solvent, and profitable. The current construction boom supports this view. Associated risk could also be ameliorated with conditions.

[23]              Permission is unlikely to endanger others, the public included. I do not overlook Mr Dheil’s apparent tardiness in resigning his directorships.

[24]The mix favours permission, at least with conditions.

Result

[25]              Mr Dheil may manage and be a director of the companies (notwithstanding his conviction) provided the following conditions are observed for the balance of the five-year period, or earlier order of the Court:

(a)Mr Dheil may not be involved, directly or indirectly, with any matter or issue arising out of an employment relationship problem (as defined

17     R v Dheil, above n 5, at [20]; and Dheil v R, above n 7, at [56].

in the Employment Relations Act 2000) in relation to the companies, unless required by law.

(b)Mr Dheil may not be involved, directly or indirectly, with any process or action by the companies in the censure, dismissal, termination or redundancy of any employee, unless required by law.

(c)An auditor’s report of the accounts of the companies must be provided to the Inland Revenue Department and Companies Office annually.

(d)The companies’ external accountant is to attend to all tax reporting obligations to Inland Revenue Department.

(e)All formal company documents shall be signed by both company directors, or by one director if witnessed by the company’s external accountant.

[26]A copy of the judgment is to be sent to the Registrar.

……………………………..

Downs J