Kirby v Tekplas Limited - [2024] NZHC 2320

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-284

[2024] NZHC 2320

UNDER

AND
the Companies Act 1993 and part 18 of the High Court Rules 2016

IN THE MATTER

of an application under section 174

BETWEEN

CORRENA FAY KIRBY

Plaintiff

AND

TEKPLAS LIMITED

First Defendant

IAN MCDOUGAL

Second Defendant

TONY SCHRAMM

Third Defendant

Hearing: 18 April 2024

Appearances:

DJ Cooper KC and HL Quinlan for the Plaintiff WC Pyke for the Defendants

Judgment:

19 August 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 19 August 2024 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Anthony Harper, Auckland

KIRBY v TEKPLAS LIMITED [2024] NZHC 2320 [19 August 2024]

Introduction

[1] The plaintiff, Correna Kirby, has filed a claim against Tekplas Ltd and its two directors, Ian McDougal and Tony Schramm, pursuant to s 174 of the Companies Act 1993.

[2] Ms Kirby is a former director and shareholder of Tekplas and claims that Tekplas and Messrs McDougal and Schramm treated her oppressively and unfairly. Ms Kirby says this included failing to comply with standards of good governance, denying her access to information to which she was entitled, and causing Tekplas to enter into a lease with a related‑party (because Mr Schramm has an interest in the lessor) on terms which provided for above-market rent and so transferred value from Tekplas to the lessor. Ms Kirby alleges that was a major transaction for Tekplas and was entered into without the required shareholder approval and without obtaining independent advice.

[3] Ms Kirby alleges that this oppressive, unfairly discriminatory or prejudicial conduct by the defendants caused her loss and damage to the value of her Tekplas shareholding.

[4] The defendants have brought an application for defendant summary judgment on the basis that Ms Kirby’s claim cannot succeed because:

(a)Tekplas is a trustee company that holds its assets and business on trust for the Tekplas Trust. The shares in Tekplas therefore have no value. As a consequence, Ms Kirby cannot be said to have suffered loss even if there was prejudicial behaviour.

(b)Ms Kirby sold the entirety of her beneficial interest in Tekplas’ business for $4,000,000 by deed executed on 3 February 2022 (Deed of Revocation) under which Ms Kirby disclaimed and renounced any future beneficial interest in the Trust.

[5] In the defendants’ submission Ms Kirby has not purported to cancel the Deed of Revocation, nor does she sue on it claiming breach, mistake or misrepresentation

or that she was misled into accepting an offer at an unfair value. The defendant’s position is that Ms Kirby’s claim not only has no substance, it has no legal scaffolding.

[6] Ms Kirby responds that her s 174 claim can succeed as the Deed of Revocation does not provide for full and final settlement of her claims as a shareholder of Tekplas because s 174 provides both proprietary and personal remedies. These remedies include the…

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.

Keep reading for free

Create a free CaseChat account to read Kirby v Tekplas Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2024] NZHC 2320
Decision Date: 19 August 2024

CaseChat Overview and Summary

The case of Kirby v Tekplas Limited involves a claim by Correna Kirby against Tekplas Ltd and its two directors, Ian McDougal and Tony Schramm, for oppressive and unfair conduct under section 174 of the Companies Act 1993. Kirby alleges that Tekplas and the directors conducted the company's affairs in a manner that was oppressive and unfairly prejudicial to her, including entering into a lease with a related party at above-market rent and without shareholder approval. The defendants applied for summary judgment, arguing that Kirby's claim could not succeed because Tekplas is an assetless trustee company, and she renounced her beneficial interests in the Tekplas Trust by executing a Deed of Revocation. The Court considered whether the lack of value in Tekplas shares precluded a section 174 claim, whether the Deed of Revocation prevented the claim, and whether Kirby was estopped from bringing the claim.

The Court found that a section 174 claim does not depend on the value of the shares and can provide both proprietary and personal remedies. The Court also found that the Deed of Revocation did not clearly settle all claims between the parties, and there was no clear evidence that it intended to cover a section 174 claim. Additionally, the Court found that the estoppel argument based on the Deed of Revocation was not suitable for summary determination due to disputed facts. The Court concluded that the defendants had not established that Kirby's claim could not succeed, and the application for summary judgment was declined. Costs were reserved for later determination, and the parties were directed to propose next steps for the substantive hearing.

Orders