Lookman v Design Electronics Limited - [2018] NZHC 3396

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2018-442-000041

[2018] NZHC 3396

BETWEEN
MICHAEL ANDREW LOOKMAN and 187 BRIDGE TRUSTEES 53 LIMITED as

Trustees of the LOOKMAN FAMILY TRUST

Plaintiff

AND

DESIGN ELECTRONICS LIMITED

First Defendant

AND

RICHARD WARWICK JONES

Second Defendant

Hearing: 27 November 2018

Appearances:

G M Downing for Plaintiff

S J Jamieson for First and Second Defendants

Judgment:

18 December 2018

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

Introduction

[1] Issues between the parties to this case are the subject of two earlier judgments of this Court.1

[2] As background, the following passages are reproduced from the latter of these judgments:

1 Lookman v Design Electronics Ltd HC Nelson CIV-2018-442-000006, 6 March 2018; Lookman v Design Electronics Ltd [2018] NZHC 904

LOOKMAN v DESIGN ELECTRONICS LTD [2018] NZHC 3396 [18 December 2018]

[12] On 14 December 2016 the parties entered an agreement titled “Investment and Shareholding Agreement 14 December 2016”. The agreement was for a term of five years “unless terminated earlier in accordance with its conditions”. It recorded that the Lookman trustees would advance $2,100,000 “on a reimbursement model” to Design Electronics from the date of an earlier promissory note issued on 8 May 2016. The funds were to be interest free for a period of one year from the date of the first advance, after which interest would be charged at 10 per cent per annum payable monthly. The document is expressed to be the entire agreement between the parties in relation to its subject-matter, replacing and extinguishing all prior agreements, draft agreements, arrangements, undertakings or collateral contracts of any nature made by the parties, whether oral or written, in relation to such subject-matter.
…

[14] The Lookman trustees have advanced $1,820,000 pursuant to this agreement. The security to be given to the Lookman trustees was “security over SenSys IP” the name SenSys being the defined name of Design Electronics in this agreement. A personal guarantee was also to be given to the Lookman trustees from the director of Design Electronics, Mr Warwick Jones.

[3] The Lookman Family Trust (the Trust) now sues Design Electronics Ltd, together with the second defendant, Mr Jones, its director and a shareholder (along with his wife, Ms Matthews) for specific performance of obligations said to lie on those parties under the agreement. The orders sought are set out in three schedules, and each schedule relates to clauses in the agreement. It is convenient, therefore, to set out each clause which Mr Lookman says has not been complied with, together with the clause of the agreement from which it is derived.

[4]Clause 6:

Requirements A Personal Guarantee to the Lender from the Company Director on behalf of the existing shareholders. Personal Guarantee is to be released at the time shareholding is taken up. The shareholders will not act to remove from access any value supporting the personal guarantee.

Security over SenSys’ IP will be provided against the loan to the Lender. Once…

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 Lookman v Design Electronics Limited

Details

AGLC: Lookman v Design Electronics Limited [2018] NZHC 3396
Case: [2018] NZHC 3396
Decision Date: 18 December 2018

CaseChat Overview and Summary

The plaintiff, Michael Andrew Lookman, and the Lookman Family Trust, brought proceedings against Design Electronics Limited and Richard Warwick Jones, a director of the company and a shareholder, seeking specific performance of obligations under an agreement between the parties. The court was required to decide whether summary judgment could be granted in favour of the plaintiffs on certain claims. The plaintiffs had entered into an Investment and Shareholding Agreement with the defendants in December 2016, pursuant to which the plaintiffs had advanced $1.82 million to Design Electronics Limited. The agreement provided for ongoing obligations, including monthly meetings and the provision of documentation. The plaintiffs alleged that the defendants had failed to comply with these obligations, and sought specific performance of the agreement. The court found that the defendants had not challenged the plaintiffs' assertions that they had not complied with certain obligations under the agreement. The court also found that the breakdown in the relationship between the parties was not a justification for the defendants' failure to perform their contractual obligations. The court concluded that the plaintiffs were entitled to specific performance of certain parts of the agreement, including access to Design Electronics Limited's electronic accounting system and records, and compliance with the obligations imposed by clause 10 of the agreement. The court dismissed the plaintiffs' claims for specific performance of other parts of the agreement, including the provision of a personal guarantee by the defendants. Costs were reserved, and the proceeding was adjourned to a case management conference.

Orders