Justo v Briggs - [2016] NZHC 1464

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV 2016-442-023 [2016] NZHC 1464

UNDER section 174 of the Companies Act 1993

IN THE MATTER

of RAPID ROOFING LIMITED a duly incorporated company having its registered office at Campbell Thompson

Accountants, 14 Oxford Street, Richmond, Nelson

BETWEEN

RICHARD JAMES JUSTO Plaintiff

AND

GAVIN DWAIN BRIGGS Defendant

Hearing: 27 May 2016

Counsel:

L Stevens for Plaintiff
G Briggs for Defendant

Judgment:

30 June 2016

JUDGMENT OF SIMON FRANCE J

Introduction

[1] Rapid Roofing Ltd is jointly owned by the parties.1 Each performs complementary roles within the company. Mr Justo is the person with the technical roofing skills who is hands on with the various jobs. Mr Briggs negotiates the contracts, including pricing the jobs, sources materials and maintains business relations with various suppliers and clients. Mr Justo has long been in the industry
and also has relationships with many suppliers and clients.

1 There are 300 shares. Mr Justo owns 150, Mr Briggs 100, and a Briggs’ family trust the other
50.

[2] The relationship between the two men has broken down irrevocably. This seems to have been a quite rapid decline through the second half of 2015 and the first part of this year. However, as is not uncommon, what could be termed festering grievances are now also being aired.2

[3] The situation has come to a head because in September 2015 Mr Justo was diagnosed with rheumatoid arthritis, which has prevented him doing the actual roofing work. There have been other health scares over this period, some as yet unresolved. It has obviously been a difficult time, and Mr Justo’s reaction to medication has, it seems, not led him to be the most even-tempered of people during this period. There are complaints over his interactions with staff. His health has also understandably dominated his thoughts, and so he has not responded throughout the period to requests for the future of the company to be sorted out.

[4] This ruling addresses competing applications under s 174 of the Companies Act 1993. Mr Justo requests the Court to order that Mr Briggs buy his shares in the company. Mr Briggs requests that the Court direct that the company be placed into liquidation.

[5] The matter came on for an expedited hearing, with affidavit evidence being taken as read, and with no cross-examination occurring. My ability to assess the true merits of the many disputes is therefore significantly hindered, but this is the basis on which the matter has proceeded. That said, many of the matters of conflict are little more than bickering and will not be the subject of consideration.

Relevant law

[6] Section 174 of the Companies Act 1993 provides:

174 Prejudiced shareholders

(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have…

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 Justo v Briggs

Details

AGLC: Justo v Briggs [2016] NZHC 1464
Case: [2016] NZHC 1464
Decision Date: 30 June 2016

CaseChat Overview and Summary

The High Court of New Zealand heard a case between Richard James Justo and Gavin Dwain Briggs concerning their jointly owned company, Rapid Roofing Ltd. The dispute centred on competing applications under section 174 of the Companies Act 1993. Mr Justo sought an order for Mr Briggs to buy his shares in the company, while Mr Briggs sought an order for the company to be placed into liquidation. The relationship between the two men had deteriorated significantly, and Mr Justo's health issues had prevented him from performing his technical roofing duties, impacting the company's performance. The court had to determine whether the conduct of the company's affairs was oppressive, unfairly discriminatory, or unfairly prejudicial to either party.

The court considered the allegations made by Mr Justo against Mr Briggs, including running the business down, improperly taking money from the company, unlawfully using Mr Justo's Licensed Building Practitioner certificate, threatening to close the business, and establishing a new company in opposition to Rapid. The court also examined the financial performance of the company and the impact of Mr Justo's health issues on the business. The court found that the allegations made by Mr Justo were not substantiated, and that the downturn in the company's performance was primarily due to Mr Justo's unavailability.

The court concluded that neither party had met the threshold for oppressive, unfairly discriminatory, or unfairly prejudicial conduct under section 174 of the Companies Act 1993. The court declined both applications, noting that the relationship between the parties and the company's performance would benefit from a resolution by consent. The court also awarded costs to Mr Briggs on a 2B basis, with reasonable disbursements to be fixed by the Registrar if necessary.

Final orders: The applications under s 174 are declined. If the parties want some other order by consent, an application can be filed. Mr Briggs is to be entitled to costs on a 2B basis, with reasonable disbursements to be fixed by the Registrar if necessary.

Orders