Ott v Holt

[2024] NZHC 3468

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2024-404-002358

[2024] NZHC 3468

IN THE MATTER OF

Section 174 of the Companies Act 1993

IN THE MATTER OF

GOLD CRESCENT (NZ) LIMITED

BETWEEN

GEORGINA MARLENE OTT

Plaintiff

AND

STEPHEN HOLT

Defendant

Hearing:	14 November 2024
Appearances:	D Grove for the Plaintiff C Jiang for the Defendant
Judgment:	19 November 2024

JUDGMENT OF TAHANA J

[Result]

This judgment was delivered by me on 19 November 2024 at 4.30pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Foy & Halse, Auckland O’Connell Chambers, Auckland Tompkins Wake, Auckland

OTT v HOLT [Result] [2024] NZHC 3468 [19 November 2024]

Introduction

[1]                 Ms Ott and Mr Holt are both directors and shareholders of Gold Crescent (NZ) Ltd (the company). They were married for 13 years and have now separated. Their separation is acrimonious. The company owns six properties and is in default on loan repayments owed to the Bank of New Zealand (BNZ).

[2]                 The BNZ has requested repayment of $103,782.43 by 21 November 2024 and notified the company that it will proceed to issue notices under the Property Law Act 2007 if repayment is not made by that date.

[3]                 Ms Ott applies for urgent relief under s 174 of the Companies Act 1993 (the Act) seeking orders appointing an independent director to enter into agency agreements for the sale of two company properties at Mangakino and Taupō, which Mr Holt had previously agreed to sell. In effect, Ms Ott applies for a mandatory injunction. She has provided an undertaking as to damages.

[4]                 Mr Holt agrees to the appointment of an independent director but opposes orders requiring the independent director to sell the two properties. Mr Holt argues that the independent director should sell another company property in Grey Lynn (where Ms Ott is residing) or alternatively, the independent director should determine which property to sell.

[5]                 Given the urgency, counsel for Ms Ott indicated a results judgment may be appropriate with reasons to follow. I therefore issue my decision with reasons to be provided separately.

Summary

[6]                 I accept that there is a serious issue to be tried as to whether Mr Holt has acted in a manner that is oppressive, unfairly prejudicial, or unfairly discriminatory by changing his mind as to the sale of the two properties in circumstances where the company is in default to the BNZ. Mr Holt has previously agreed to sell the two properties but says that he now considers that it would be better to sell the Grey Lynn property because of the market conditions in that location. Mr Holt’s concerns are with

the returns from the sale and not with the fact of sale. Ms Ott has provided an undertaking as to damages which is relevant when considering  any  prejudice  to  Mr Holt in granting the mandatory injunction.

[7]                 I also accept that the balance of convenience weighs in favour of granting the relief. If orders are not made to progress the sale of the two properties, the BNZ is likely to exercise its rights as mortgagee. It is therefore just and equitable to grant the relief.

[8]                 I accept that I have jurisdiction to make orders under s 174 of the Act to appoint an independent director for the purpose of progressing the sale of the two properties. I do not consider that it is appropriate to direct Mr Francis as to the manner in which he should progress the sales. That is a matter for him noting the obligations of directors under the Act.

Orders

[9]I therefore order that:

(a)Mr Benjamin Francis is appointed as an independent director of the company;

(b)Upon Mr Francis’ appointment, Ms Ott and Mr Holt are to be removed as directors of the company;

(c)Mr Francis is appointed to sell the company properties at Mangakino and Taupō, the proceeds of which are to be applied:

(i)to repayment of company borrowings from the BNZ;

(ii)to payment of Mr Francis’ reasonable costs; and

(iii)to the ongoing operation of the company.

(d)Leave is granted to the parties to seek such further orders as may be necessary for the sale of the properties and the ongoing management of the company until determination of the substantive proceedings.

Costs

[10]              Ms Ott seeks indemnity costs. Mr Holt has not yet had an opportunity to respond. If the parties are unable to agree costs, leave is granted to file costs memoranda with:

(a)Ms Ott filing a costs memorandum within 15 working days of this judgment; and

(b)Mr Holt filing a costs memorandum within a further 10 working days.

[11]I will then determine costs on the papers.

Tahana J