Kiwi Joint Limited v Buttar - [2024] NZHC 3637

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2023-470-58

[2024] NZHC 3637

BETWEEN
KIWI JOINT LIMITED

Plaintiff

AND

DALJEET SINGH BUTTAR

Defendant

Hearing: 15 July 2024 (Heard in Rotorua)

Appearances:

J Mahuta-Coyle and S Howell for Plaintiff No appearance for Defendant

Judgment:

2 December 2024

JUDGMENT OF MOORE J

This judgment was delivered by me on 2 December 2024 at 3.00 pm Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………..

Solicitors: Holland Beckett, Tauranga

KIWI JOINT LTD v BUTTAR [2024] NZHC 3637 [2 December 2024]

Introduction

[1] This is a case about a very successful Bay of Plenty horticultural service company and how, through the deceptive actions of one of its directors over a period of about two years, it ended up in financial strife. It is a case about how what seemed to be a sensible division of responsibilities between directors permitted one to pursue his own agenda of avarice and self-advancement to the detriment of his fellow director and ultimately the company.

[2] The company seeks just under a million dollars in damages (notwithstanding interest) based on alleged breaches of directors’ duties under the Companies Act 1993; breaches of fiduciary duties; and losses suffered from equitable fraud.

[3] This judgment deals with the fallout of that director’s conduct; why the Court has determined that the company is owed compensatory damages and what those damages are. I will first set out the relevant factual background, before turning to examine a forensic accountant’s analysis of the company’s accounts. I will then consider the causes of action that comprise the company’s claim.

Factual background

[4] The company at the centre of these proceedings is Kiwi Joint Ltd (“Kiwi Joint”). Kiwi Joint was incorporated on 19 May 2015 and was set up by Jaswinder Singh1 At the time of incorporation, Jaswinder was the sole director, jointly holding shares in Kiwi Joint with his parents.

[5] Until December 2020, Kiwi Joint was highly successful. It contracted kiwifruit orchard pickers throughout the Bay of Plenty, employing and providing staff and plant to undertake pre- and post-harvest work for orchard owners and growers.

[6] Jaswinder capably managed the operational side of Kiwi Joint but readily accepted that he needed assistance with the financial and administrative aspects of the

1 Jaswinder Singh shares a common name with the defendant — Daljeet Singh Buttar. During the hearing each man was referred to by his first name. For clarity I adopt the same approach in this judgment. No disrespect is intended by this approach.

business. Jaswinder recruited the defendant, Daljeet Singh Buttar, to assist with these aspects shortly after the business started. Jaswinder knew that Daljeet had experience in business administration as he had recently assisted a family friend.

[7] Daljeet was trusted to manage the financial and administrative aspects of the business in the best interests of Kiwi Joint. He was given a free rein.

[8] Daljeet became a shareholder on 24…

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.

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Details

Case: [2024] NZHC 3637
Decision Date: 2 December 2024

CaseChat Overview and Summary

In Kiwi Joint Limited v Buttar, the plaintiff, Kiwi Joint Limited, sought compensation from the defendant, Daljeet Singh Buttar, for breaches of directors' duties, fiduciary duties, and equitable fraud. The case centred on allegations that Daljeet, while serving as a director of Kiwi Joint, misappropriated funds from the company for personal and business-related gains, leading to significant financial losses. The High Court of New Zealand, Tauranga Registry, found in favour of Kiwi Joint, ordering Daljeet to compensate the company $990,817.74, and granted Kiwi Joint leave to calculate interest on the judgment sum and to file a memorandum regarding the costs. The court's decision was based on a comprehensive forensic accounting analysis, which revealed substantial unauthorised transactions and misallocations in the company's financial records orchestrated by Daljeet. The court concluded that Daljeet's actions were in clear breach of his fiduciary and statutory duties as a director, and that he had acted disloyally and in conflict with his obligations to the company.

Orders