Hayes v Taniwha Buses Limited - [2014] NZHC 1965

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4215 [2014] NZHC 1965

IN THE MATTER
of an Application to put TANIWHA

BUSES LIMITED into liquidation pursuant to Section 241(2) of the Companies Act 1993

BETWEEN

MAURICE DESMOND HAYES Plaintiff

AND

TANIWHA BUSES LIMITED First Defendant

RODNEY PHILLIP GUNSON Second Defendant

Hearing: 28-29 July 2014

Counsel:

S A Connolly for the Plaintiff
No appearance on behalf of the First Defendant
D P Weaver for the Second Defendant

Judgment:

20 August 2014

JUDGMENT OF BROWN J

This judgment was delivered by me on 20 August 2014 at 4 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors: David Rice & Associates, Papakura
Lyon O’Neale Arnold, Tauranga

Counsel: S A Connolly, Auckland
D P Weaver, Tauranga

HAYES v TANIWHA BUSES LTD [2014] NZHC 1965 [20 August 2014]

[1] Taniwha Buses Ltd’s shares are held equally by Maurice Hayes and Rodney Gunson. Since 1999 Mr Hayes has been the sole director but he is now of an age that the company’s constitution requires that he retire.

[2] Mr Hayes claims that Taniwha Buses is indebted to him and that it should be wound up both because it is insolvent and because it is just and equitable to do so. Mr Gunson resists that request and counters that Mr Hayes has conducted the company’s affairs in a manner which has been oppressive, unfairly discriminatory and unfairly prejudicial to him. It is apparent that their 40 year relationship has irretrievably broken down.

[3] The issues to be determined are:

(a) Is Taniwha Buses insolvent?

(b)Has Taniwha Buses been operated in a manner which is oppressive, unfairly discriminatory and unfairly prejudicial to Mr Gunson?

(c) Is it just and equitable that Taniwha Buses be wound up?

How the current impasse arose

[4] Mr Hayes and Mr Gunson have known each other for some 40 years and have experienced a positive working relationship. Indeed in his statement of affairs relating to his bankruptcy dated 31 May 2010 (which Mr Hayes assisted him to complete) Mr Gunson provided Mr Hayes as his emergency contact describing Mr Hayes’ relationship to him as “friend”.

[5] Over a decade ago Mr Hayes advanced significant levels of funding to Gunson Trucking Ltd, an unrelated company run by Mr Gunson. In March 2006 he attempted to establish an arrangement for the repayment of those advances. The various debts were itemised in a letter from Mr Hayes to Mr Gunson dated 24 March
2006 in which Mr Hayes recorded that he considered that Mr Gunson was personally responsible for the debts.

[6] By a handwritten notation on that letter dated 12 June 2006 Mr Gunson agreed that the debts detailed in the letter were correct and that he would personally use his best endeavours to make full repayment. On the same day on behalf of Taniwha Buses he executed an automatic payment authority to the ASB Bank providing for a monthly payment to Mr Hayes of $1,500.

[7] In the…

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: [2014] NZHC 1965
Decision Date: 20 August 2014

CaseChat Overview and Summary

Hayes v Taniwha Buses Limited [2014] NZHC 1965 involved a dispute between equal shareholders of Taniwha Buses Limited, Maurice Desmond Hayes and Rodney Phillip Gunson. Hayes sought the liquidation of the company, claiming it was insolvent and that it was just and equitable to wind it up. Gunson opposed the application and counterclaimed that the company's affairs had been conducted in a manner that was oppressive, unfairly discriminatory, and unfairly prejudicial to him. The court was required to determine whether the company was insolvent, whether its affairs had been conducted in a manner that was oppressive to Gunson, and whether it was just and equitable to wind up the company.

The court found that there was a genuine dispute regarding the amount owed by Taniwha Buses to Hayes, and thus the company could not be deemed insolvent based on that debt alone. However, the court concluded that it was just and equitable to wind up the company due to the irretrievable breakdown in trust and confidence between the shareholders, compounded by the fact that Hayes was disqualified from holding office as a director. The court appointed the Official Assignee as the liquidator of Taniwha Buses and awarded Hayes costs on a 2B basis.

Orders