Hewson v Azure Property Investments Limited

[2024] NZHC 314

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2983

[2024] NZHC 314

UNDER

the High Court Rules and Companies Act 1993

IN THE MATTER

of an application under s 178 of the Companies Act 1993

BETWEEN

BLAIR DOUGLAS TREVOR HEWSON

Applicant

AND

AZURE PROPERTY INVESTMENTS LIMITED

Respondent

Hearing:

26 February 2024

Appearances:

S Logarh for Applicant

T M Archer, Director of the Respondent

Judgment:

26 February 2024

JUDGMENT OF WOOLFORD J

Solicitors:           Norling Law Limited, Auckland Copy to:  Ms Archer, Auckland

HEWSON v AZURE PROPERTY INVESTMENTS LIMITED [2024] NZHC 314 [26 February 2024]

[1]    On 8 December 2023, Blair Douglas Trevor Hewson filed an originating application seeking orders under r 19.5 and s 178 of the Companies Act 1993 (the Act).

[2]    This is the first call of the application. There is no appearance on behalf of the respondent company. The applicant’s counsel have, however, been dealing with the company’s director, Ms Tanya Archer, but she cannot, of course, appear for the company. It appears that the company has not instructed counsel to represent it.

[3]    Mr Hewson is a 33 per cent shareholder in the company and has filed an extensive affidavit detailing his attempts to obtain records of the company so that he can better understand whether the company is being properly managed, whether it is insolvent or not, and what, if any, steps can be taken to try and fix the problems of the company’s management and profitability.

[4]    The originating application as originally filed sought orders the company supply a wide range of material. On 31 January 2024, Ms Raewyn Archer, another shareholder of the company, and purportedly on behalf of the company, attended on counsel’s offices and provided 12 bags of documents, claiming they contained the information requested by Mr Hewson. These have now been analysed by counsel as a result of which Mr Hewson seeks to amend the list of material sought in his application.

Legal principles

[5]I adopt Associate Judge Bell’s statement as to the purpose of s 178 of the Act:1

The purpose of s 178 is to ensure that those in control of the company, the directors and management, are accountable to shareholders. Accountability is enhanced by allowing shareholders access to company information. Under s 178, there is a wide range of reasons for refusing disclosure of information to shareholders. Some of them are noted in sub-section (4) but they are not the only ones. If the company does not cooperate or it refuses to provide information, the shareholder can come to Court to seek orders under s 178(7). On such an application, the Court considers whether there are outweighing reasons to justify a refusal of information to a shareholder.

1      Ayyildiz v Casablanca Silva Park Limited [2018] NZHC 2782, case applied in Sayegh v Fermit NZ Ltd [2019] NZHC 703.

[6]    A request for information under s 178 of the Act must be made in good faith and for a proper purpose.2

[7]    Section 178 of the Act requires a shareholder to have made written request for information held by  the  company.  That  took  place  here.  The  company  within 10 working days must either provide the information, agree to provide the information within a specified time, agree to provide the information and require that the shareholder pay the reasonable cost of providing the information or refuse to provide the information and specifying the reasons for the refusal. The company has only provided some of the information sought by Mr Hewson, although Ms Archer today suggests that more information is available. It has not specifically refused to provide the remainder of the information sought, nor has any explanation been given as to why it is not able to be supplied.

Decision

[8]    Given the circumstances described by Mr Hewson in his affidavit, there is a need for him to be provided with a wide range of information to understand what is happening with the company. I consider this case falls directly within the purpose of s 178 of the Act as set out above.

[9]Accordingly, there will be the following orders:

(a)Mr Hewson is granted leave to proceed with this application by way of originating application;

(b)Azure Property Investments Limited (APIL) is to provide the following information to Mr Hewson for use only by Mr Hewson and his appointed solicitors:

(i)minutes of any directors’ and/or shareholders’ meetings held between January 2013 and October 2023;

2      Wells v Mega-Merger Housing Limited (2005) 9 NZCLC 263,727(HC) at [21].

(ii)copies of financial accounts prepared for APIL for the financial years ending in 2022 and 2023;

(iii)login information, including a username and password, necessary for the applicant to obtain read only access to any accounting software of APIL;

(iv)copies of all documents, including bank statements, invoices and receipts, evidencing the payment of rent to APIL for the property at 2/12 Mahara Avenue, Birkenhead, Auckland 0626, from 1 January 2010 to 30 March 2014 and 1 March 2023 to date (Birkenhead property);3

(v)copies of all documents, including bank statements, invoices and receipts, evidencing the payment of rent to APIL for the property at 50B Bay Road, Ostend, Waiheke Island 1081, from 1 January 2011 to 30 March 2014 and 1 March 2023 to date (Waiheke property);4

(vi)copies of all documents, including bank statements, invoices and receipts, evidencing the payment of rent to APIL for the property at 30A Oranga Avenue, Onehunga, Auckland 1061, from 1 March 2023 to date (Onehunga property);5

(vii)copies of all rental tenancy agreements in favour of APIL, for the  Birkenhead,  Waiheke  and  Onehunga  properties,  from   1 January 2010;

3      The respondent has partially complied with this request, providing bank statements for a BNZ bank account from 21 March 2014 to 22 December 2023, for an ASB orbit bank account from 19 March 2013 to 6 December 2023 and an ASB Omni bank account from 31 March 2014 to     3 January 2024.

4      As above.

5      As above.

(viii)copies of all agreements for the sale and purchase of land, in relation to any land that APIL holds, or held, any legal or equitable interest in, from 1 January 2010;

(ix)copies of any market valuation reports for all property owned by APIL (including the Birkenhead property, the Waiheke property and the Onehunga property);

(x)copies of all documents evidencing the lodging of rental bond amounts by APIL, since 1 January 2010;

(xi)APIL’s company records for the past two years.

(c)In the event that APIL contends that it does not possess or have access to any of the information which it has been directed to produce to the applicant, the director of the APIL must, within 10 working days of this order, file and serve an affidavit, detailing the information which APIL does not have, and where that information can be obtained, if known to the APIL;

(d)APIL is to pay the costs of and incidental to the application, on a 2B basis, provided that the costs paid by APIL should not in any way affect any profit or dividend payable by APIL to Mr Hewson, or negatively affect Mr Hewson’s position in the financial accounts of APIL.

Woolford J