Jacobson v DDL Estates Limited
[2023] NZHC 1449
•12 June 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-000343
[2023] NZHC 1449
UNDER Section 174 Companies Act 1993 and
Sections 121 and 125 Trusts Act 2019
BETWEEN
MARCUS BRIAN JACOBSON
Plaintiff
AND
DDL ESTATES LIMITED
First Defendant
RUA WHARE LIMITED
Second DefendantHARJIT DHEIL
Third Defendant
Hearing: 22 May 2023 Appearances:
R J Bowden and N S Tabb for Plaintiff G N E Bradford for Third Defendant G S Caro for Registrar of Companies
Judgment:
12 June 2023
JUDGMENT OF EDWARDS J
This judgment was delivered by me on 12 June 2023 at 3.00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Counsel/Solicitors:
R J Bowden, Whangārei ([email protected]) N S Tabb, Auckland ([email protected])
G N E Bradford, Auckland ([email protected])
Ministry of Business Innovation and Employment, Auckland ([email protected])
JACOBSON v DDL ESTATES LTD [2023] NZHC 1449 [12 June 2023]
[1] The plaintiff, Mr Jacobson, was a director of the first defendant (DLL Estates), and a director and shareholder of the second defendant, (Rua Whare). He resigned his directorships in February 2023. Both of the defendant companies were placed into receivership and administration in April 2023.
[2] Mr Jacobson’s appointed roles with the defendant companies were made pursuant to the terms of a management services agreement executed in December 2019 (MSA). Under the terms of the MSA, Mr Jacobson held his interests in the companies as bare trustee for the third defendant, Mr Dheil. He also acted on Mr Dheil’s instructions.
[3] In the substantive proceeding, Mr Jacobson claims that the MSA is an illegal contract and that his appointments made under it are a nullity. That is because Mr Dheil was convicted of blackmail in 2019 and was prohibited from acting as a director. Mr Jacobson seeks orders confirming rescission of the MSA and rectifying the internal records of each company so as to remove Mr Jacobson as director and shareholder.
[4] This judgment concerns an interlocutory application by Mr Jacobson seeking interim orders:1
(a)requiring Mr Dheil to provide information requested by the Inland Revenue Department (IRD); and
(b)directing the Registrar of Companies to amend the Companies Register for both companies by replacing the name and address of the applicant with the letter “M” and “address withheld”.
1 The amended orders are set out in attachment A to the consolidating submission of counsel dated 17 May 2023. The order sought at 1(g) of that attachment (seeking a declaration that, by transferring the shareholding in Rua Whare to Mr Dheil, the trust relationship had come to an end) was not pursued at the hearing before me.
[5]The application is opposed by Mr Dheil and the Registrar of Companies.
Relevant facts
[6] Mr Dheil was convicted of blackmail on 25 March 2019. The effect of s 382(1)(b) of the Companies Act 1993 is that he was prohibited from being a director, promotor, or taking part in the management of a company without the leave of the Court for a period of five years.
[7] DDL Estates was incorporated by Mr Dheil on 9 September 2019. Mr Dheil was the director and sole shareholder at the time of incorporation. DDL Estates was incorporated to undertake residential developments in the Auckland area.
[8] Rua Whare was incorporated on 20 November 2019. The applicant was a director of Rua Whare at the time of incorporation and was also its sole shareholder.
[9] Towards the end of 2019, Mr Jacobson says he was approached by a development funder and asked to act as a trustee for Mr Dheil. Mr Jacobson says he was told that Mr Dheil’s court proceedings could obstruct the sales of units in developments being undertaken by DDL Estates at that time. Mr Jacobson says he was vaguely aware of Mr Dheil’s blackmail conviction but that he was not informed that Mr Dheil was banned from being a company director or managing a company at this time. That is disputed by Mr Dheil who says that Mr Jacobson was aware from late 2019 that Mr Dheil was prohibited from being a director.
[10] Mr Jacobson agreed to take on the trustee role. The terms of his appointment were recorded in the MSA between Mr Jacobson, both of the defendant companies, Mr Dheil and another party who was to be appointed as a second director of Rua Whare. The MSA was executed around December 2019.
[11] The recitals to the MSA record the purpose of the agreement as enabling DDL Estates to borrow funds for the development of residential properties in Flat Bush and Ellerslie, Auckland; to purchase the Flat Bush and Ellerslie properties; and to complete the development of those properties. The recitals explained that Mr Dheil’s objectives under the MSA were to appoint Mr Jacobson to undertake
management services for the development; to appoint Rua Whare to hold 100 per cent of the shares in DDL Estates on bare trust for Mr Dheil; to appoint Mr Jacobson to act as the director of both of the defendant companies; and to appoint another director to Rua Whare.
[12] Under the MSA, Mr Jacobson was defined as the “Manager”; Mr Dheil was defined as the “Owner”; DDL Estates was defined as the “Nominee”; and the “Trust Property” was defined to include all beneficial and ownership interest in both companies, and the development being undertaken at the time.
[13]Clauses 5.1 and 5.2 of the MSA set out the relationship of the parties:
5.1Trust: The Manager and Rua Whare Limited (the Trustees) agree and acknowledge that the Trust Property shall be held by them on bare trust for the Owner and to undertake the Development in accordance with the Project Budget.
5.2Terms of Trust: The Trustees must each:
a.Act on instructions: act on the Owner’s instructions relating to the exercise of all rights and privileges and the performance of all duties by them as holders of the Trust Property, provided however that the Trustees shall not be obliged to undertake any work which is not in the commercial interests of the Nominee or the Development.
b.Trustee may act: in the absence of instructions from the Owner but subject to clause 8, the Trustees may act as they see fit in respect of the Development, provided that any act or omission by the Trustees must be in the best interest of the Owner and the Development.
c.Transfer of Trust Property: transfer the Trust Property back to the Owner or the Owner’s nominee, at the request of the Owner and if that is not possible then to the extent that it is possible.
d.Notification: notify the Owner of all notices, statements and other documents received by the Trustees as holders of the Trust Property.
[14] Under clause 7.3, Mr Jacobson was obliged to undertake management services, which were defined to include managing compliance with the terms of a loan facility and advising and reporting to Mr Dheil on issues relating to the development.
Mr Jacobson says he was paid a management fee of $10,000 plus GST per month for these services.
[15] Clause 8 of the MSA listed 12 separate matters which were not to be carried out without the prior written consent of Mr Dheil. These matters included key steps in managing the developments.
[16] The MSA also provided for the return of the Trust Property to Mr Dheil on completion of the development and in other circumstances. Template letters of resignation, share transfers, guarantees and releases were annexed to the MSA.
[17] Following execution of the MSA, the residential developments were progressed. Mr Jacobson says he acted on instructions from Mr Dheil in managing those developments. He liaised with the Quantity Surveyor on the monthly drawdowns which were signed off as true and complete. He also says he brought issues with the projects to the attention of Mr Dheil and the funder and helped to explore solutions and strategies.
[18] In November 2022, Mr Jacobson says he became aware that the Inland Revenue Department (IRD) was seeking information from Mr Dheil. He says he urged Mr Dheil to contact the IRD to resolve the issues.
[19] At the end of 2022, the applicant sought to return or transfer the directorships to Mr Dheil, but Mr Dheil refused to allow that to occur. Mr Jacobson says that the development funder was also opposed to Mr Dheil taking back control.
[20] Further demands for overdue tax were received from the IRD in early 2023. In the course of receiving advice on these letters, Mr Jacobson says he discovered that Mr Dheil was prohibited from being a company director because of his blackmail conviction and was legally advised that the MSA was likely to be unlawful as it breached this prohibition.
[21] Mr Dheil disputes this evidence, stating that the applicant knew Mr Dheil was a banned director at the time the MSA was executed. Indeed, Mr Dheil says this was the very purpose of the MSA.
[22] Mr Jacobson subsequently wrote to Mr Dheil advising him that he no longer wanted to act as a director of DDL Estates. He asked Mr Dheil to provide a signed director’s consent for a replacement director. He says Mr Dheil did not respond.
[23] On 27 February 2023, Mr Jacobson gave written notice resigning as a director of both companies. Proceedings were commenced the same day.
[24] A without notice application by Mr Jacobson for interim name suppression was granted by this Court on 10 March 2023. Mr Jacobson’s name was suppressed on an interim basis pending further order of the Court.
[25] Receivers and administrators were appointed to both companies on 17 April 2023. Lawyers for the receiver and administrator were served with the proceedings but indicated that they did not intend to take any steps in the proceeding.
Substantive proceeding
[26] Mr Jacobson’s claim is set out in the amended statement of claim dated 23 March 2023. It comprises three causes of action.
[27] The first cause of action is pleaded under s 174 of the Companies Act. It is alleged that the affairs of DDL Estates have been conducted in a manner that is either oppressive or unfairly discriminatory or unfairly prejudicial to Mr Jacobson. Various orders are sought including orders:
(a)confirming rescission of the MSA;
(b)re-appointing Mr Dheil as director from 16 December 2019;
(c)directing rectification of the companies’ internal records by removing Mr Jacobson’s name as a director and shareholder from those records;
(d)transferring shares held by Rua Whare in DDL Estates to Mr Dheil with an effective date of 23 December 2019; and
(e)permanently suppressing Mr Jacobson’s name as a director of the companies, shareholder in Rua Whare, and as a party to the proceeding.
[28] The second cause of action is pleaded under the Trusts Act 2019. Mr Jacobson says the MSA created a trust relationship between himself and Mr Dheil. He pleads that he seeks the assistance of the Court under ss 121 and 125 of the Trusts Act to waive the requirement for Mr Dheil to consent to termination of the trust.
[29] The third cause of action is brought under the Court’s equitable or inherent jurisdiction. It is claimed that by resigning as director, and surrendering his shareholding, Mr Jacobson has handed control and ownership of the Trust Property back to Mr Dheil, thereby bringing the trust relationship to an end. Declarations along those lines are sought.
[30] The concerns at the core of Mr Jacobson’s claim are succinctly captured in the following paragraph taken from his reply affidavit sworn on 13 April 2023:
24.I am asking the Court for help to resolve the present situation. In good faith, I was asked by [the development funder] to assist with these property developments and in good faith I agreed to do so. I confirm that I did not know that the MSA could create a potentially unlawful situation where [Mr Dheil] was avoiding his director’s prohibition by managing the first and second defendant Companies. I have resigned as director and seek the court’s assistance to both terminate the trust relationship created by the MSA and avoid unnecessary damage to my reputation. Further, I wish to see the affairs of the two defendant Companies wound up in an orderly manner including attending to all outstanding matters with the Inland Revenue.
Approach to the application
[31] Mr Jacobson’s application is made under r 7.53 of the High Court Rules 2016 which governs applications, for interlocutory applications. The objective of an interlocutory injunction is summarised in McGechan on Procedure as follows:2
The grant of an interlocutory injunction is a temporary and discretionary remedy. Its purpose is to protect plaintiffs against injury by violation of their rights for which they could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in their favour at the trial. A plaintiff’s need for such protection must be weighed against a defendant’s need to be protected against injury resulting from being prevented from exercising legal rights for which the defendant could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The Court must weigh one need against another and determine where “the balance of convenience lies”: per Lord Diplock, American Cyanamid Co v Ethicon Ltd [1975] AC 396, [1975] 1 All ER 504(HL) at 405-406, 508-509.
[32] The approach to these applications is well settled. The Court considers: (a) whether there is a serious question to be tried; (b) the balance of convenience; and (c) the overall justice of the case.3
[33] Ordinarily, the parties’ submissions would be marshalled under these three heads. However, the issues raised by this application do not easily lend themselves to this structure. Nevertheless, these three considerations inform the reasoning in relation to the orders sought, as I explain in more detail below.
Should orders directing Mr Dheil to provide information required by IRD be made?
[34] Mr Jacobson seeks orders directing Mr Dheil to provide information requested by the IRD by delivering that information to the administrator of the defendant companies. The specific orders sought are as follows:
(a)Directing the third defendant to respond to a request made by the Commissioner of Inland Revenue for additional information as set out in a letter from the Commissioner to Rua Whare Limited (the second defendant) dated 3 February 2023 (relating to GST for the period
2 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR7.53.02].
3 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.
1 May 2022 to 30 July 2022) by providing the information requested to the administrator Tony Maginness;
(b)Directing the third defendant to respond to a request made by the Commissioner of Inland Revenue by email on 14 February 2023 for additional information regarding credit notes issued by Rua Whare Limited (the second defendant) by providing the information requested by the administrator Tony Maginness;
(c)Directing the third defendant to provide to the administrator Tony Maginness information requested by the Commissioner of Inland Revenue in relation to the audit of DDL Estates Limited (the first defendant) for GST for the period 1 June 2022 to 31 July 2022.
(d)Directing the third defendant to provide to the administrator Tony Maginness sufficient information to complete and file all outstanding tax returns for the first and second defendants.
[35] Mr Jacobson says that such orders are necessary because the IRD has made requests for certain information and there are outstanding tax returns. He says that he does not have, and has never had, the requested information and that only Mr Dheil can provide it. If the information is not provided, and the tax returns are not filed, then the companies and the applicant may face increased penalties for the filing of late (or no) returns, and the applicant may also be liable in his capacity as director.
[36] Mr Dheil says that he was not involved with the preparation of, or filing of, GST returns for the first or second defendants. He says he has no records for those companies, and he has no information to give to the IRD. In addition, Mr Dheil says that until June 2022, Rua Whare retained DDL Homes Central Ltd (in liq) to file all necessary tax returns. DDL Homes Central Ltd (in liq) is another company owned by Mr Dheil which was placed in liquidation in June 2022. Downs J granted Mr Dheil permission to act as that company’s director in a judgment delivered on 22 March 2021.4
[37] At one level, there appears to be little downside in ordering Mr Dheil to provide documents and information in his possession to the administrator to forward on to the IRD. This would appear to be in the best interests of all parties, including those of Mr Dheil. If, as Mr Dheil asserts, he does not have possession of the documents, then compliance should be relatively straightforward.
4 Re Dheil [2021] NZHC 572.
[38] However, despite the superficial attraction of that position, I consider the Court should be cautious about making the orders sought in this case. I say that for three reasons.
[39] First, the orders sought by the applicant are in the nature of a mandatory interim injunction. They require Mr Dheil to take positive steps to comply with IRD obligations and requests by providing information to the administrator. Rather than restraining Mr Dheil from acting, the applicant asks this Court to exercise coercive powers requiring Mr Dheil to act.
[40] Ms Tabbs, who addressed this part of the application, accepts that the injunction sought is mandatory in nature but submits that its overall effect is to preserve the status quo. That is, the injunction would ensure that Mr Dheil continues to meet the defendant companies’ tax obligations as he has done in the past.
[41] The difficulty with that submission is that what constitutes the status quo in this case is disputed. While there is evidence before the Court to substantiate Mr Jacobson’s position that Mr Dheil was responsible for the companies’ tax obligations, Mr Dheil denies that he had those obligations and that he has the relevant documents sought. This is not a dispute I am able to resolve on the affidavit evidence, and on the basis of the current information before the Court.
[42] The mandatory nature of the relief sought on an interim basis would require Mr Dheil to take positive steps in relation to obligations he may or may not owe. I consider the Court should be cautious about stepping in too quickly and using its power to require Mr Dheil to act in those circumstances.
[43] This leads to the second reason to be cautious in this case. As the statement of claim is currently pleaded it is not at all clear that determination of responsibility for meeting tax obligations will be an issue at trial. That creates some doubt about whether the injunction is required to preserve the applicant’s position pending determination of the substantive proceeding. Rather than being an interim measure, the purpose of the application appears to be an attempt to shield or deflect any potential liability that Mr Jacobson may have as director of the companies. However, it is far too early to
say whether Mr Jacobson will face such liability, and much will depend on the outcome of the IRD investigation. The use of a mandatory interim injunction to pre- empt liability goes beyond the purpose of interim relief.
[44] The ongoing IRD investigation provides the third reason to be cautious in this case. The scope and status of that investigation is far from clear from the materials before the Court and the IRD was not invited to appear at the hearing. Nevertheless, the very fact of that investigation suggests that there is a forum by which Mr Jacobson’s concerns and claims may be addressed without the need for a court order. At the very least, it would appear premature to order Mr Dheil to provide the information before the IRD (and administrator, if necessary) has exhausted all avenues.
[45] For these reasons, I consider the overall interests of justice weigh against ordering Mr Dheil to disclose the information requested by the IRD.
Should the Registrar of Companies be directed to amend the Companies Register?
[46] The applicant applies for orders directing the Registrar of Companies as follows:
Directing the Registrar of Companies to amend the companies register for the first and second defendants and in the place of the plaintiff’s name as director of the first and second defendants record “M”.
Directing the Registrar of Companies to amend the companies register and in place of the plaintiff’s address as director of the first and second defendants record “address withheld”.
[47] As I understand the case for the applicant, there are two grounds offered in support of these orders. First, the applicant says his registration as a director was made pursuant to an illegal agreement (the MSA) which is a nullity. Second, he says the register does not properly reflect the true position which is that he resigned as a director of both companies on 27 February 2023. Both positions are considered below.
[48] The Registrar of Companies identifies several difficulties with the application. These include the fact that the Registrar is not a party to the proceeding, and there is
no relief sought against the Registrar in the amended statement of claim. In addition, the application seeks interim relief in the nature of a mandatory interim injunction, when that relief is not available against the Crown.5
[49] The key ground of opposition, however, is that the Court does not have jurisdiction to make the orders sought. Mr Bowden, who addressed this part of the application for Mr Jacobson, accepts that there is no rule which permits the Registrar to anonymise records. However, he submits that the Court’s power to make the orders derives from the Court’s inherent jurisdiction. He cited several cases in support of that proposition.
[50] In Re Calmex Ltd, the wrong company had been wound up by mistake and the winding up order was recorded on the company register in the United Kingdom. Hoffman J (as he then was) observed that the companies register was to record information which may be useful to persons dealing with the company. He said there was no purpose in recording an order which had no legal consequence and had been declared a nullity.6 The Court found that the winding up order was a nullity and directed the winding up order to be removed from the register.7
[51] As Mr Caro for the Registrar submits, this present case has a number of distinguishing features. Most notably, unlike the position in Re Calmex, there has been no determination that the MSA is a nullity in this case. Even if the MSA was declared to be a nullity, it does not automatically follow that Mr Jacobson’s directorships would also be declared a nullity. Indeed, Mr Jacobson’s appointment as a director of Rua Whare pre-dates the MSA. Furthermore, both appointments were duly registered with the appropriate consents and certificates. It is far from clear that invalidity of the MSA (assuming that to be proved) would lead to invalidity in Mr Jacobson’s appointment as director.
5 Crown Proceedings Act 1950, s17(1)(a). See also Company Net Limited v Registrar of Companies
(2011) 10 NZCLC 264,823 at [2].
6 Re Calmex Ltd [1989] BCLC 299 (Ch) at 302.
7 At 303.
[52] This was an important distinction in Bank of Beirut v HRH Prince Adel El- Hashemite, another case relied on by Mr Bowden.8 In that case the first defendant had used forged powers of attorney to enter into false partnerships with the claimant banks which were then registered on the United Kingdom register of limited partnerships. The rectification powers under the Companies Act 2006 (UK) were not available because that Act did not apply to limited partnerships. A key issue was whether the Court had the power to rectify the register itself. The Court canvassed cases which had both applied and distinguished Re Calmex, concluding that a line was drawn between documents which were themselves a nullity, and “… those cases where the document registered was perfectly valid and duly registered, and the applicant merely wished to substitute a different version”.9 The Court declined to interfere in the latter case. It would appear that Mr Jacobson’s application falls into that latter category although I accept that the case is at an early stage.
[53] Closer to home, Mr Bowden relies on Bridon New Zealand Ltd v Tent World Ltd.10 In that case, Thomas J employed the inherent jurisdiction of the Court to rescind a winding up order where it was necessary to do so in the interests of justice. This was despite the fact that there was a longstanding rule that the Court had no such power where the winding up order was properly made in the first place.11 In those cases, the proper route to bring a winding up to a halt was to make an order for a permanent stay.12 Relying on Bridon, Mr Bowden submits that the Court may use its inherent jurisdiction to make the orders sought because it is necessary to do so in the interests of justice.
[54] It is unnecessary to consider whether Bridon should be limited to its factual and statutory context (as Mr Caro submits). That is because even if there is jurisdiction to make the orders sought, on the materials currently before the Court, I am not satisfied there is a seriously arguable case for those orders to be made. More importantly, even if that hurdle could be crossed at the substantive trial, I am not satisfied that suppression orders should be made in the interim.
8 Bank of Beirut SAL v HRH Prince Adel El-Hashemite [2015] EWHC 1451 (Ch).
9 At [90].
10 Bridon New Zealand Ltd v Tent World Ltd [1992] 3 NZLR 725 (HC).
11 At 728–730.
12 At 729, referring principally to Re Kim Maxwell Ltd [1992] 1 NZLR 69 (HC) at 72.
[55] As I have already observed, it is far from clear that any declaration that the MSA is a nullity (assuming such a finding is made out) tainted Mr Jacobson’s appointments to such an extent that the register should be rectified. On the information currently before the Court, Mr Jacobson’s appointments were valid, and Mr Jacobson performed the director role and other management services in return for a monthly fee. I am not persuaded that an order removing Mr Jacobson’s name from the register and expunging his connection with the companies would be made in those circumstances. In short, even if there is jurisdiction to make the orders sought by Mr Jacobson, it is by no means certain that the jurisdiction would be exercised in this case.
[56] The doubt over the Court’s jurisdiction to grant the substantive relief sought, and whether it would be exercised in Mr Jacobson’s favour, applies equally to the Court’s jurisdiction to grant the interim orders sought in this case. Even if the jurisdiction to direct suppression of Mr Jacobson’s name on the Companies’ Register exists (and there is significant doubt about that), I am not satisfied it should be exercised in this case. This is not a case of Mr Jacobson being wrongly associated with companies with which he had no involvement whatsoever and there is no basis to conceal that involvement by suppressing his name and address details.
[57] The claim that the register should be rectified because it does not accurately reflect the fact that Mr Jacobson has resigned raises separate issues.
[58] In an affidavit sworn in opposition to the application, the Deputy Registrar of Companies explains that the register is kept by a device that records or stores information electronically. Where there is only one director recorded, the system will not allow notice of that director ceasing to hold office in the absence of information required by s 159(2) of the Companies Act. That section requires the particulars of new directors (and especially their full names and residential addresses) to be provided. The Deputy Registrar explains that, in the absence of a nominated substitute, any application to register the resignation of a sole director will be refused.
[59] The Deputy Registrar goes on to explain that given Mr Jacobson’s resignation, and the lack of a substitute director, the Registrar will begin the process of removing the companies from the register. Due to the outstanding tax liabilities, the
Deputy Registrar anticipates that IRD will object to the removal of both companies pending the completion of their investigations. However, there is no indication in any of the affidavit evidence before the Court that this has occurred.
[60] This explanation makes clear that the claim that the register does not accurately reflect Mr Jacobson’s resignation is a separate and distinct claim to that raised in the current proceeding. The alleged prejudice to Mr Jacobson caused by the register not recording Mr Jacobson’s resignation does not arise out of the MSA or Mr Dheil’s blackmail conviction. Rather, it arises out of the processes which apply when a sole director resigns from a company and there is no director to replace him. That is not a challenge currently before the Court.
[61] Furthermore, the Deputy Registrar confirms that Mr Jacobson has not applied under s 360A (1)(a) of the Companies Act to rectify the register. That power may be exercised where the Registrar is satisfied that any information has been wrongly entered or omitted from the register.
[62] While there may be some merit in Mr Jacobson’s submission that any application for rectification is likely to be declined, the fact that Mr Jacobson has not explored (let alone exhausted) available channels in which to seek relief for a separate and un-pleaded claim is another reason to decline interim relief at this stage.
[63] As for balance of convenience considerations, Mr Jacobson’s concern is to protect his business interests from any adverse publicity arising out of his association with Mr Dheil and the two companies. While that concern is understandable in the circumstances, the evidence falls short of showing a real risk to Mr Jacobson’s businesses if his name is not suppressed. There has already been some publicity linking Mr Jacobson to the liquidation of Mr Dheil’s other companies, and the entities involved with Mr Jacobson’s development company and projects are aware of that connection. Although there is evidence of enquiries and concerns being raised as a result of that publicity, there is no evidence that this has led to contracts being terminated or business opportunities being lost.
[64] Moreover, Mr Jacobson has been a director of an (unrelated) liquidated company in the past. Mr Jacobson explains that his role in that liquidation did not involve wrongdoing on his part, but the wider point is that the mere fact of association does not appear to have hurt Mr Jacobson’s business prospects.
[65] I also note that there does not appear to be any adverse effects arising from the lack of suppression of Mr Jacobson’s name on the register to date. That is despite Mr Jacobson resigning in February 2023. There is no urgency or imminent prejudice that would justify making the orders Mr Jacobson seeks pending resolution of the substantive proceeding.
[66] Finally, it seems to me that there is a public interest in knowing the name of those who are appointed directors of companies. The register fulfils that public interest objective. Neither party made submissions directed at this impact, but I consider it to be another factor weighing against the grant of interim relief in this case.
[67] To summarise , I am not satisfied that Mr Jacobson has established the pre- requisites for relief in this case. Even if there was jurisdiction to grant the orders sought (a matter of which I have some doubt), the balance of convenience and overall justice of the case do not weigh in favour of the relief sought in this case.
Result
[68]The application is dismissed.
[69] There has been no challenge to the interim suppression order which only relates to the name of the plaintiff in this case, and does not extend further. Publication of this judgment is likely to undermine the integrity of that order, however, as there is no suppression of the roles Mr Jacobson holds with the two defendant companies. This raises issues about the efficacy of continuing the interim suppression order and whether there are grounds to extend it in any case. I propose to convene a telephone conference to address this issue following the delivery of this judgment. To maintain the integrity of the interim suppression orders in the meantime, I direct that this judgment be disclosed to the parties only in the first instance and pending further order of the Court.
[70] The respondents are entitled to an award of costs. If quantum cannot be agreed then memoranda in support of costs shall be filed 10 working days after this hearing, with memoranda in opposition five working days thereafter. Memoranda shall be no longer than three pages in length.
Edwards J
Postscript:
[71] Following delivery of this judgment, the plaintiff applied, but then withdrew, an application to continue the interim suppression order. Accordingly, on 3 July 2023, I made orders that the interim suppression order would lapse at 4.00 pm that day; the plaintiff was to be named in this judgment; and the judgment was to be published in the ordinary course.
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