Miedema v Petrou - [2024] NZHC 3169

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1205

[2024] NZHC 3169

BETWEEN
MARK NIEKLAAS MIEDEMA, JULIE MIEDEMA and ALH TRUSTEE CO LTD as

trustees of the MIEDEMA FAMILY TRUST Plaintiff

AND

LOUKAS SOTERI PETROU

First Defendant

CANAM CONSTRUCTION (BOP) LIMITED

Second Defendant

STEPHEN WARD JONES

Third Defendant

Hearing: 6-9, 20-24, 27, 28, 30 November and 1 December 2023

Appearances:

M A Corlett KC, A G Needham and D S Howell for Plaintiff D L Bennington for First Defendant

J L Land and S Nicolson for Second Defendant
D A Campbell and N M Thompson for Third Defendant

Judgment:

31 October 2024

JUDGMENT OF ANDERSON J

This judgment was delivered by me on 31 October 2024 at 3.00 pm pursuant to r 11.5 of the High Court Rules 2016.

………………………………
Registrar/Deputy Registrar

Solicitors: Holland Beckett Law, Tauranga
Duncan Cotterill, Auckland Lowndes Jordan, Auckland
Dentons Kensington Swan, Auckland

MIEDEMA v PETROU [2024] NZHC 3169 [31 October 2024]

Table of Contents

Page No

Facts[5]

Canam BOP is established [5]

Initial perspectives[13]

Canam Group support[15]

Charges for Canam Group support[20]

Canam BOP performance 2013–2015[22]

Changes in ownership/directorship[26]

Increasing shareholder account balances[28]

Alexandra Park arbitration[32]

Dividends[35]

August 2019 and October 2019 meetings [42]

Mr Miedema brings matters to a head[46]

Proceedings are issued[55]

Canam BOP performance in 2020[59]

Mr Petrou raises the “Reimbursement Charge” in his affidavit of
23 October 2020[60]
Mr Miedema resigns[70]
Canam BOP after Mr Miedema left[72]
The Reimbursement Charge and 2021 Head Office Costs are journaled[76]

This proceeding[79]

Causes of action[80]

The issues[83]

Evidence[84]

Legal framework under s 174 [87]

First cause of action: Deemed prejudicial conduct under s 174[90] Annual overhead charges to Canam Group companies for group support [96] Annual retrospective charge[99]

Recognition of an existing liability under an agreement [104]

Evidence consists only of Mr Petrou’s assertion[108]
Evidence vague on the details[109]
Not corroborated by other evidence[111]
No contemporaneous record[118]
Contrary to commercial common sense[121]
Contingent liability[124]
Agreement not supported by invoices[126]
Conclusion on agreement[127]

Recognition of an existing liability – quantum meruit? [128] The Reimbursement Charge was entered into by Canam BOP [135] The transaction was a “major transaction” [138]

Conclusion on first cause of action[139]

Second cause of action: “Cash stripping”[140]

Reimbursement Charge[145]

2021 Head Office Costs[151]

Legal fees[155]

The procedural background[158]

What fees were incurred to 31 March 2021?[162]

Costs on derivative action[164]

Fees on s 174 proceeding[170]

Mr Petrou’s personal legal fees[174]

Warranty provision[175]

Use of Canam BOP funds for Alexandra Park litigation [178]

Withholding of payment of dividends to the Trust to assist with the
Alexandra Park arbitration[181]
Unjustified salaries recorded for Mr Petrou and Mr Jones[185]
Conclusion on second cause of action[186]

Third cause of action: Advances in the Treasury Account[187]

Access to information/financial control[192]

Shareholder advances[198]

Relief under s 174[206]

Approach to granting relief [209]

Whether lack of attempts to resolve stands in the way of relief[215] Fairness as a basis for potentially disentitling relief[221] Alleged disentitling conduct by…

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 Miedema v Petrou

Details

AGLC: Miedema v Petrou [2024] NZHC 3169
Case: [2024] NZHC 3169
Decision Date: 31 October 2024

CaseChat Overview and Summary

The case of Miedema v Petrou involves a dispute between shareholders of Canam Construction (BOP) Ltd (Canam BOP), a construction company in the Bay of Plenty region. Mark and Julie Miedema, trustees of the Miedema Family Trust (the Trust), own 33% of Canam BOP, while Loukas Soteri Petrou and Stephen Ward Jones own the remaining 67% through their interests in Canam Group Ltd (CGL). The Trust brings claims under s 174 of the Companies Act 1993 alleging oppressive, unfairly discriminatory, or unfairly prejudicial conduct by Petrou and Jones in the management of Canam BOP. Additionally, the Trust claims that Canam BOP breached duties owed to it as a shareholder.

The court found that the Reimbursement Charge, a retrospective charge made by Canam BOP to account for alleged undercharging of group support by CGL, was an unauthorised major transaction under s 129 of the Act and therefore deemed oppressive conduct under s 174. The court also found that the acceptance of the Reimbursement Charge and subsequent head office costs charge constituted actual oppressive conduct. The court rejected the defendants' argument that the Reimbursement Charge represented an existing liability under an agreement, noting the lack of evidence to support such an agreement. The court concluded that the conduct of Mr Miedema and the Trust did not disentitle them from relief, as the breakdown of the relationship was due to the oppressive conduct of Petrou and Jones.

As relief, the court ordered Petrou and Jones to compensate the Trust for the oppressive conduct, totaling $513,444. The court also ordered the Trust to transfer its shares in Canam BOP to Petrou and Jones for a nominal value of $1, reflecting the company's negative equity and lack of future as a going concern. The court rejected the Trust's claim that Canam BOP breached duties to declare dividends and allow the Trust to exercise voting rights, finding no such duties existed.

Orders