Jacobson v DDL Estates Limited - [2023] NZHC 1449

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 Defendant

HARJIT 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 (roger@bowdenlegal.co.nz) N S Tabb, Auckland (ntabb@xtra.co.nz)
G N E Bradford, Auckland (greg@bradford.nz)
Ministry of Business Innovation and Employment, Auckland (guy.caro@mbie.govt.nz)

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…

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.

Continue reading Jacobson v DDL Estates Limited

Details

AGLC: Jacobson v DDL Estates Limited [2023] NZHC 1449
Case: [2023] NZHC 1449
Decision Date: 12 June 2023

CaseChat Overview and Summary

The interlocutory application in Jacobson v DDL Estates Limited was heard and determined by Edwards J in the High Court of New Zealand. The plaintiff, Mr Jacobson, sought interim orders requiring the third defendant, Mr Dheil, to provide information requested by the Inland Revenue Department (IRD) to the administrator of the defendant companies, and directing the Registrar of Companies to amend the Companies Register to suppress the plaintiff’s name and address. Mr Jacobson claimed that the management services agreement (MSA) under which he acted as a director of the defendant companies was illegal and a nullity because Mr Dheil, who was the owner under the MSA, was prohibited from being a director due to a previous conviction for blackmail. The application was opposed by Mr Dheil and the Registrar of Companies. The court found that while there was a serious question to be tried, the balance of convenience and overall justice did not favour making the orders sought. In particular, the court was cautious about ordering Mr Dheil to provide information in his possession to the IRD, given that the scope and status of the IRD investigation was unclear, and that it was not at all clear that determination of responsibility for meeting tax obligations would be an issue at trial. The court also found that it was not satisfied there was a seriously arguable case for the Registrar of Companies to amend the register, particularly given that Mr Jacobson had not explored available channels to seek relief for the separate claim that the register did not accurately reflect his resignation. The application was dismissed and the respondents were awarded costs. The interim suppression order relating to the plaintiff’s name was to lapse, and the judgment was to be published in the ordinary course.

Orders