Mirza v Singh - [2021] NZHC 2081

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1236

[2021] NZHC 2081

UNDER Part 18 of the High Court Rules 2016

AND UNDER

Section 174 of the Companies Act 1993

IN THE MATTERS

of 1974 Limited and Victoria Station Limited

BETWEEN

AREEB BAIG MIRZA

Plaintiff

AND

HARMANPREET SINGH and ANGELA GEETA SURESH GAIKWAD

Defendants

Hearing: 28 July 2021

Appearances:

B P Rooney for the Plaintiff

B J Norling and A Cherkashina for the Defendants

Judgment:

11 August 2021

JUDGMENT OF HARLAND J

This judgment was delivered by me on 11 August 2021 at 4:00 pm Pursuant to Rule 11.5 High Court Rules

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

Counsel/Solicitors:
B P Rooney, Barrister, Auckland  brian@rooney.co.nz
T Hibbitt, Lovegroves, Auckland  terry@lovegroves.co.nz
B Norling, Norling Law, Auckland  brent@norlinglaw.co.nz A Cherkashina, Norling Law, Auckland  anna@norlinglaw.co.nz

MIRZA v SINGH and GAIKWAD [2021] NZHC 2081 [11 August 2021]

Introduction

[1] The parties are the three directors and shareholders of 1947 Limited (the company); however, they have fallen out as a result of the plaintiff raising issues to do with discrepancies between the cash takings generated by the business between November 2016 and April 2021 and that which has been banked. In the substantive proceeding, the plaintiff alleges that the defendants have engaged in an oppressive or unfairly discriminatory/prejudicial conduct as it is outlined in s 174 of the Companies Act 1993 (the Act).

[2] The defendants, who are husband and wife, have given notice to convene a shareholders meeting, the purpose of which is to resolve to remove the plaintiff as a director. The plaintiff seeks an interim order restraining them from doing so, which the defendants oppose. 1

[3] I have decided to grant the plaintiffs application. This judgment sets out my reasons for that decision.

Background

[4]The parties have, since recently, been good friends and business partners.

[5] In 2016 they decided to open an Indian restaurant together. The company was incorporated, and they purchased an existing restaurant business with the plan to undertake renovations later. The restaurant opened for business in 2017.

[6] Initially the shareholding in the company was allocated 50 percent to the plaintiff and 50 percent to Mr Singh, with both appointed as directors. The Companies Office extract annexed to Mr Singh’s affidavit however shows that on 8 March 2017, 9 and 27 April 2017, Ms Gaikwad presented to that office amended share allocations, the last of which showed the plaintiff holding 37 percent of the shares, Mr Singh holding 32 percent and which Ms Gaikwad holding 31 percent. Although in each party’s affidavit, they accepted the shareholding as it is revealed in the Companies

1 Fitzgerald J, as Duty Judge, made an order on 12 July 2021 that pending further order of the Court, the plaintiff is not to be removed as a director of the Company.

Office extract, the plaintiff now contends that he did not sign a share transfer and that the originally 50 percent shareholding allocated to him…

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 Mirza v Singh

Details

AGLC: Mirza v Singh [2021] NZHC 2081
Case: [2021] NZHC 2081
Decision Date: 11 August 2021

CaseChat Overview and Summary

The case of Mirza v Singh and Gaikwad involves a dispute between three directors and shareholders of 1947 Limited, an Indian restaurant company. The plaintiff, Areeb Baig Mirza, alleges that the defendants, Harmanpreet Singh and Angela Geeta Suresh Gaikwad, have engaged in oppressive conduct under section 174 of the Companies Act 1993, resulting in significant discrepancies between cash takings and banked funds. Mirza claims that Singh and Gaikwad have failed to account for cash takings from November 2016 to April 2021, amounting to $466,962.47, and have attempted to remove him as a director. The defendants, who are husband and wife, deny the allegations and have given notice to convene a shareholders' meeting to remove Mirza as a director. Mirza seeks an interim order to prevent this removal. The legal issues before the court were whether there was a serious question to be tried and whether the balance of convenience favoured granting the interim relief sought. The court found that there was a serious question to be tried regarding the allegations of oppressive conduct, supported by affidavits from the plaintiff and expert witnesses. The court also determined that the balance of convenience favoured maintaining the status quo pending a thorough investigation into the company's financial affairs. The court granted Mirza's application, continuing the interim orders made by Fitzgerald J, and ordered the substantive proceeding to be closely timetabled for a hearing. The plaintiff is entitled to costs.

The court's reasoning and outcome were grounded in the established principles of interim relief and the specific provisions of section 174 of the Companies Act 1993. The court considered the affidavit evidence, which revealed significant factual disputes but also supported the plaintiff's claims of discrepancies in cash takings and banking. The court acknowledged the defendants' concerns about the plaintiff's actions but found that the overall justice of the case required maintaining the status quo. The court emphasised the need for an independent investigation to resolve the discrepancies and ensure the company's financial health. The substantive proceeding was to be closely timetabled to address the parties' claims and counterclaims effectively. The plaintiff was awarded costs.

Orders