Patel v Dunbar - [2021] NZHC 2634

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-20

[2021] NZHC 2634

BETWEEN
JIGNESH PATEL and SOHINI PATEL

First plaintiff/first counterclaim defendants

INDIAGO LIMITED
Second plaintiff/second counterclaim defendants

AND

SALLY-ANNE DUNBAR

First defendant/first counterclaim plaintiff

IMMIGRATION CENTRE LIMITED

Second defendant/second counterclaim plaintiff

Hearing: 7 September 2021

Appearances:

E Watt and D Livingston for plaintiffs/counterclaim defendants J D Haig for defendants/counterclaim plaintiffs

Judgment:

5 October 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1] The background to this litigation was described in my judgment of 7 July 2021.1 There, I was dealing with interlocutory applications by both parties — the Patel interests (the first and second plaintiffs and first and second counterclaim defendants) and the Dunbar interests (the first and second defendants and first and second counterclaim plaintiffs) — for discovery and related orders. For the purposes of this judgment, the most efficient way of recording the background is to quote from my earlier judgment:

1 Patel v Dunbar [2021] NZHC 1687.

PATEL v DUNBAR [2021] NZHC 2634 [5 October 2021]

[1] On 28 April 2019 Indiago Ltd, then called Immigration Centre Ltd, and Jignesh and Sohini Patel, on the one hand, and Sally-Anne Dunbar (in two capacities — as both purchaser and guarantor), on the other hand, entered into an agreement whereby Indiago Ltd and Mr and Mrs Patel agreed to sell, and Ms Dunbar agreed that she or her nominee would purchase the company’s immigration consultancy business, and that she would guarantee the obligations of any nominated purchaser. The original Immigration Centre Ltd subsequently changed its name to Indiago Ltd, and Ms Dunbar incorporated a new company known as Immigration Centre Ltd and nominated that company as the purchaser of the business.

[2] The agreement for sale and purchase followed a marketing campaign by the Patel interests and a due diligence exercise by the Dunbar interests during the second half of 2018 and the first half of 2019, both parties being assisted by professional advisers throughout. After the execution of the original agreement, aspects of the same were renegotiated.

[3]Some important terms of the final agreement were as follows:

(a)The sale and purchase price was $1.5 m. The business had very little in the way of fixed assets so that the $1.5 m price was virtually entirely made up of good will, based on a warranted turnover for the FYE 31 March 2018 of
$1,332,758. The price was payable in three tranches;
$150,000 by way of a deposit on execution of the agreement;
$850,000 on settlement; and $500,000 on 16 December 2019;

(b)To support the value placed on the goodwill of the business, the Patels agree to restraints of trade to operate worldwide for a period of three years;

(c)Mr and Mrs Patel both agreed to continue working in the business during a “period of assistance” of 20 working days to ensure a smooth transition, and Mr Patel also agreed to accept employment or engagement from the conclusion of the…

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 Patel v Dunbar

Details

AGLC: Patel v Dunbar [2021] NZHC 2634
Case: [2021] NZHC 2634
Decision Date: 5 October 2021

CaseChat Overview and Summary

Patel v Dunbar was an action for payment of the third tranche of the sale and purchase price of an immigration consultancy business. The defendants counterclaimed for damages for breach of contract. Both parties had made interlocutory applications for discovery and related orders, which the Associate Judge determined in Patel v Dunbar [2021] NZHC 1687. The parties then made further applications for recall of that judgment and leave to cross-appeal. The Associate Judge recalled the previous judgment to allow the parties to agree on the terms of the orders. The parties agreed that no orders were required in relation to the discovery of bank account records of the Patels' minor children or the disclosure of all email accounts and mobile telephone numbers used by the business. The parties also agreed that the Dunbar interests were entitled to know what devices were used by Mr Patel and others associated with the former company and that the Patel interests did not object to providing this information. The parties disagreed as to the terms of the order for discovery of electronic exchanges between the Patel interests and past, present or prospective customers of the business before or after settlement. The Associate Judge held that the Dunbar interests were entitled to such discovery and that the Patel interests were not entitled to object on grounds of privacy. The Associate Judge directed the parties to confer to formulate replacement orders for those in paragraphs [24] (b)–(e) of the previous judgment. The Associate Judge expected a joint memorandum as to this within 10 working days.

Orders