Empire Technology Limited v Vital Limited - [2025] NZHC 2272

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2025-485-207

[2025] NZHC 2272

UNDER section 290 of the Companies Act 1993

IN THE MATTER OF

an originating application to set aside a statutory demand

BETWEEN

EMPIRE TECHNOLOGY LIMITED

Applicant

AND

VITAL LIMITED

Respondent

Hearing: 25 July 2025

Counsel:

S Holden and D Keogh for Applicant

P Shackleton and E McDowell for Respondent

Judgment:

12 August 2025

JUDGMENT OF GENDALL J

Introduction

[1] The applicant, Empire Technology Limited (Empire), is a privately held investment company. In August 2024, it issued takeover notices to Vital Limited (Vital), a NZX-listed telecommunications infrastructure company. However, Empire says that, after discovering further information indicating reduced revenue and net profit after tax, it withdrew its bid on 15 September 2024. On 13 March 2025, the Takeovers Panel (the Panel) determined that Empire was liable for Vital’s costs in responding to the takeover notices under s 49 of the Takeovers Act 1993, in the sum of $247,036.58. On 20 March 2025, Vital served a statutory demand on Empire for that sum.

EMPIRE TECHNOLOGY LIMITED v VITAL LIMITED [2025] NZHC 2272 [12 August 2025]

[2] Empire now applies for orders that the statutory demand be set aside, or alternatively that time for compliance with the statutory demand be extended until further order of the Court. It also seeks an award of costs for the application.

[3] The basis of Empire’s application is that Vital was aware of, but had not disclosed to the market, the following allegedly material information, in breach of the NZX Listing Rules, the Financial Markets Conduct Act 2013 (FMCA), and/or the Fair Trading Act 1986 (FTA):

(a)A significant reduction in Vital’s adjusted Net Profit After Tax (NPAT) from a forecast of $400,000–$700,000 as at 27 February 2024 to an actual NPAT of $253,000 by August 2024, which was not disclosed until 27 August 2024, after Empire’s takeover notices.

(b)The anticipated loss of significant revenue from key customer Hato Hone St John (St John), who intended to transition to the Public Safety Network. While some risk of losing St John had been disclosed, the expected financial consequences were not. St John accounted for
$3.7 million (approximately 13 per cent) of Vital’s 2024 revenue. (the Information).

[4] Empire maintains the Information was material to the valuation of Vital’s shares and, had it been aware of it, Empire would not have issued the takeover notices. Empire submits too that it was those breaches which induced it to issue the takeover notices, resulting in losses to it of at least $355,461.28. These comprise the
$247,036.58 takeover costs awarded to Vital, and $108,424.70 of costs incurred by Empire in issuing the takeover notices. Empire says that, in light of this genuine counterclaim, which is greater than the prescribed amount in the statutory demand, the issue of the statutory demand by Vital was an abuse of process and improper. It also seeks an award of increased costs on the present application…

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.

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Details

Case: [2025] NZHC 2272
Decision Date: 12 August 2025

CaseChat Overview and Summary

Empire Technology Limited, an investment company, applied to set aside a statutory demand issued by Vital Limited, a telecommunications infrastructure company. The application arose from a takeover bid Empire made to acquire Vital, which it subsequently withdrew. Following the bid, the Takeovers Panel found Empire liable for Vital’s costs in responding to the takeover notices, amounting to $247,036.58. Empire argues that it withdrew its bid based on undisclosed material information that Vital had failed to disclose, including a significant reduction in Vital’s Net Profit After Tax (NPAT) and the anticipated loss of significant revenue from a key customer, Hato Hone St John (St John). Empire claims that Vital’s failure to disclose this information constituted a breach of the NZX Listing Rules, the Financial Markets Conduct Act 2013, and the Fair Trading Act 1986. Empire submits that, had it known this information, it would not have issued the takeover notices and would not be liable for the costs.

The court had to determine whether Empire had a substantial counterclaim against Vital that was reasonably arguable and whether the statutory demand should be set aside under section 290(4)(b) of the Companies Act 1993. The court found that there was a reasonably arguable basis for Empire’s claim that Vital had failed to disclose material information about its financial performance and the potential loss of revenue from St John. The court also noted that the counterclaim was not contingent on any external events and was capable of quantification. Furthermore, the court held that Empire had sufficient means to pay the statutory demand and that there were no significant concerns regarding Empire’s ability to pay. The court concluded that it was appropriate to set aside the statutory demand and ordered that the statutory demand issued by Vital against Empire be set aside. The court also awarded costs to Empire on a Category 2B basis, together with disbursements as fixed by the Registrar.

Orders