Jindal v Liquidation Management Ltd

[2022] NZHC 2292

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2342

[2022] NZHC 2292

BETWEEN

GAUTAM JINDAL

Plaintiff

AND

LIQUIDATION MANAGEMENT LIMITED

First Defendant

IMRAN MOHAMMED KAMAL

Second Defendant

Hearing:	24 August 2022 (by VMR)
Counsel:	G Jindal self-represented Plaintiff A Ho for Defendants
Judgment:	9 September 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Application for security for costs)

JINDAL v LIQUIDATION MANAGEMENT LIMITED [2022] NZHC 2292 [9 September 2022]

[1]                 The defendants apply for security for costs and, in the event security is ordered, a stay until such time security is provided along with costs.

[2]                 The application is opposed, not on the ground the threshold for ordering security has not been satisfied, but on the basis the claim has merit and is brought in “the public interest”. While the plaintiff has no personal pecuniary interest in the outcome of the proceeding, he says he brings it as a “watchdog”.

Context and background

[3]                 This proceeding is the second iteration of the plaintiff’s claim.  Originally  Mr Jindal sought leave to pursue what was in substance the present claim by way of an originating application.  At that time the respondent was named as the Registrar  of Companies, notwithstanding that the relief sought concerned the present defendants, Liquidation Management Ltd and Mr Kamal.

[4]                 In a decision of 1 December 2021, Associate Judge Taylor declined Mr Jindal’s leave application.1

[5]                 In this proceeding, Mr Jindal alleges Mr Kamal (as liquidator) charged excessive fees in 133 liquidations in the  months  leading up  to  31 August 2021.  Mr Kamal brought those liquidations to an end within that relatively short period as he was no longer going to be able to practice as a liquidator. Other liquidations were referred to other liquidators.

[6]                 Mr Jindal alleges the Inland Revenue Department (IRD) was a creditor in almost all of the liquidations with receipts in the 133 liquidations totalling $3,521,000. Mr Jindal alleges Mr Kamal charged liquidator’s fees and overheads of approximately

$2,582,000.

[7]                 Mr Jindal alleges Mr Kamal’s fees and expenses were unreasonable. Mr Jindal seeks an order that the fees and expenses charged by Mr Kamal be fixed at a reasonable level and any excess amount refunded. Further, an order is sought that any fee or

1      Jindal v Registrar of Companies [2021] NZHC 3268.

amount Mr Kamal has paid to a company he controls for the provision of services by that company also be reviewed and fixed at a reasonable level.

[8]                 Three causes of action are alleged. The first, while not specifically referring to s 284 of the Companies Act 1993 (the Act), is advanced pursuant to that section and I will explain the reason why that is clear below.

[9]                 The second cause of action is headed “Breach of fiduciary duty” and alleges Mr Kamal owed a fiduciary duty to each of the 133 companies, their shareholders, directors and their creditors. The allegation is that by charging fees and…