Patel v Dunbar - [2021] NZHC 1687

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 1687

BETWEEN
JIGNESH PATEL and SOHINI PATEL

First Plaintiffs/first counterclaim defendants

INDIAGO LIMITED
Second Plaintiff/second counterclaim defendant

AND

SALLY-ANNE DUNBAR

First Defendant/first counterclaim plaintiff

IMMIGRATION CENTRE LIMITED

Second Defendant/second counterclaim plaintiff

Hearing: 27 May 2021

Appearances:

D Livingston for plaintiffs/counterclaim defendants J D Haig for defendants/counterclaim plaintiffs

Judgment:

7 July 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction and background

[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

PATEL v DUNBAR [2021] NZHC 1687 [7 July 2021]

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 transition period as National Sales Manager, either as employee or contractor.

[4] On execution and settlement of the agreement the deposit and second tranche of the sale and purchase price were paid.

[5]Following settlement things did not go well.

[6] In their affidavit evidence Mr Patel and Ms Dunbar describe how they say matters unfolded.

[7] It is unnecessary to attempt a comprehensive summary of all of this, but here are some key points:

(a)The relationship between Mr Patel and Ms Dunbar was not an especially productive one. Mr Patel…

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 1687
Case: [2021] NZHC 1687
Decision Date: 7 July 2021

CaseChat Overview and Summary

The High Court of New Zealand, Wellington Registry, presided over Associate Judge Johnston in the case of Patel v Dunbar. The case involved a dispute arising from a sale and purchase agreement between Indiago Limited, formerly known as Immigration Centre Limited, and Jignesh and Sohini Patel, on one side, and Sally-Anne Dunbar, on the other side, in two capacities as both purchaser and guarantor. The central issue in the case was whether the Patels had properly handed over the business goodwill to Dunbar and whether the business turnover had met the guaranteed levels. The Patels sought payment of the third tranche of the sale and purchase price, while the Dunbars counterclaimed for damages for breach of contract.

The court had to decide on interlocutory applications made by both parties. The Patels sought further discovery of documents related to the business's client interactions, communication methods, call logs, email inquiries, and wage records. The Dunbars sought discovery of the Patels' personal and business email accounts, mobile phone numbers, and bank statements of their minor children. The court ruled that the Dunbars must provide further discovery as specified in the schedule attached to the judgment. However, the application for the bank statements of the Patels' children was dismissed. The Patels were ordered to disclose all email accounts and mobile phone numbers used in the business and allow a forensic examination of these by a specialist nominated by the Dunbars. All information obtained from this examination was to be treated as confidential and only used for the purpose of the proceeding.

In summary, the court ordered the Dunbars to provide further discovery within 20 working days and allowed the Patels to apply further if necessary. The application for the bank statements of the Patels' children was dismissed. The court also ordered the Patels to disclose all email accounts and mobile phone numbers used in the business and permit a forensic examination by a specialist nominated by the Dunbars. All information obtained from this examination was to be treated as confidential and only used for the purpose of the proceeding. Costs were reserved.

Orders