PCL Trustees (no 2) Limited v Pub Charity Limited
[2022] NZHC 888
•29 April 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-000358
[2022] NZHC 888
IN THE MATTER OF An application under Part 18 High Court Rules AND IN THE MATTER OF
An application for an injunction pursuant to
s. 164 of the Companies Act 1993
BETWEEN
PCL TRUSTEES (NO.2) LIMITED, an
incorporated company having its registered office at papakura and carrying on business there and elsewhere as a shareholder
Plaintiff
AND
PUB CHARITY LIMITED, an incorporated company having its registered office in
Wellington and carrying on business there and elsewhere as a gaming machine operator Defendant
CIV-2020-485-000292 IN THE MATTER OF
a claim by a prejudiced shareholder under section 174 of the Companies Act 1993
BETWEEN
MAURICE DESMOND HAYES of 56
O’Shannessey Street, Papakura, company director and shareholder
PlaintiffAND
PCL TRUSTEES LIMITED a duly
incorporated company having its registered office at Level 1, 190 Taranaki Street,
Wellington 6141 Defendant
Hearing: 28 February, 1,2 and 3 March 2022 Memoranda of submissions filed:
11 March 2022 from the Plaintiffs
PCL TRUSTEES (NO.2) LIMITED, an incorporated company having its registered office at papakura and carrying on business there and elsewhere as a shareholder v PUB CHARITY LIMITED, an incorporated company having its registered office in Wellington and carrying on business there and elsewhere as a gaming machine operator [2022] NZHC 888 [29 April 2022]
21 March 2022 from the Defendants
23 March 2022 from the Plaintiffs
Appearances:
D M O’Neill for the Plaintiffs
L Taylor QC and D G Dewar for the Defendants
Judgment:
29 April 2022
JUDGMENT OF GENDALL J
Introduction and Factual Background
[1] Matters leading up to these proceedings and the proceedings themselves have a reasonably long and complex history. They involve parties connected with Pub Charity Limited (Pub Charity) which, although an incorporated company, is a charitable organisation which distributes donations to community organisations in New Zealand through funds raised from gaming machines hosted in member hotels and taverns. Pub Charity (and its forerunner organisation Pub Charity Incorporated) as a charitable organisation has been receiving and distributing to community recipients these gaming machine monies since about 1987.
[2] Pub Charity has two equal shareholders each holding 1 share in the capital of the company.
(a)One shareholder is PCL Trustees (No. 2) Limited (PCLT 2) the plaintiff in proceeding CIV 2020-485-358 (Proceeding 358), a company owned and controlled by Maurice Desmond Hayes (Maurice Hayes). Maurice Hayes is the plaintiff in the proceeding noted at [2](b) below.
(b)The other shareholder is PCL Trustees Limited (PCLT) the defendant in CIV 2020-485-292 (Proceeding 292). The shareholding in PCLT is owned 50 per cent by Maurice Hayes and 50 per cent by Rodney Lingard (Mr Lingard). Mr. Lingard is also one of the current directors of Pub Charity.
[3] Maurice Hayes is effectively the instigator of both present proceedings before this Court. In an affidavit, he deposes that his involvement with Pub Charity began over 20 years ago. During that time, he had a close and friendly personal and business relationship with many of the current directors of Pub Charity. Sadly, that changed dramatically in recent years to one of considerable animosity with many disagreements arising. Maurice Hayes maintains that these disagreements have resulted essentially with all the current Directors of Pub Charity (excluding his son, Carter Hayes) because some years ago when he was chairman of Pub Charity he implemented discussions about revitalising its Board by introducing younger directors with a planned retirement and rotation of the Board’s older members and this has not
been followed through. Maurice Hayes, it seems, led this initiative. He contends it was agreed by all parties, that initially he and Mr McNay, another Director would resign, which happened, and then in two years’ time other Directors, Brian Counihan (Mr Counihan) and Bill McLean (Mr McLean) would also retire, which did not happen. He also proposed that his son Carter Hayes and Simon Norrie (Mr Norrie) would be immediately appointed as directors to replace him and Mr McNay. This also happened.
[4] Maurice Hayes maintains too that proposals were put forward with regard to replacement directors but shortly thereafter, Mr Counihan and Mr McLean resiled from what he says was their agreement to resign, and they remained on the Pub Charity Board. As a shareholder Maurice Hayes says he wanted to see the “agreement” for both Mr Counihan and Mr McLean to retire as directors upheld but the Board has refused to do so. As a result, these proceedings he says are his attempt to break the deadlock that has developed with Pub Charity and in the words of his counsel are needed to resolve “the need for some sort of restructure whatever that might entail”
[5] Additionally, once his son Carter Hayes was appointed as a director of Pub Charity in around 2019, considerable friction developed between him and the other Directors of Pub Charity. Maurice Hayes maintains the Board tried then to marginalise his son, Carter, despite him being properly appointed and acting as a Director.
[6] In proceeding 292 Maurice Hayes as plaintiff seeks relief under s. 174 of the Companies Act 1993 (the Companies Act) alleging he is a prejudiced shareholder of PCLT and thereby Pub Charity.
[7] In proceeding 358, PCLT 2 (effectively Maurice Hayes’ company) seeks injunctive relief against Pub Charity under s. 164 of the Companies Act.
[8] So far as the 50/50 shareholding in PCLT noted above at[2](b) is concerned, despite Maurice Hayes originally thinking otherwise, Mr Lingard, in his shareholder role, has been able to veto decisions Maurice Hayes has endeavoured to make for
Pub Charity. These decisions relate principally to the manner in which Pub Charity has operated and who are to be appointed and remain as Directors of that company.
[9] The current Directors of Pub Charity are its Chairman, Mr Lingard, Mr Counihan, Mr McLean, Mr Norrie, and Maurice Hayes’ son, Carter Hayes.
[10] Maurice Hayes previously was a director of Pub Charity, from the date of its incorporation up to 24 January 2018, when he retired. He was chairman of the Board of Directors of Pub Charity and its predecessor for at least 20 years. There seems to be no disagreement that Maurice Hayes believed (and informed all the other Directors and involved parties at the time) that, as he held all the shares in PCLT 2, a 50 per cent shareholder in Pub Charity, and one-half of the shares in PCLT, which itself owned the remaining 50 per cent shareholding in Pub Charity, he, Maurice Hayes, through his company interests, held a controlling 75 per cent interest in Pub Charity. Therefore, as the majority shareholder of Pub Charity, he could influence decisions made for that company, and in particular, the appointment and removal of Directors. This understanding, however, was wrong as legal advice sought by Pub Charity confirmed. This was the case, given that Mr Lingard, as the other 50 per cent shareholder in PCLT, was able effectively to veto decisions Maurice Hayes believed he could make for Pub Charity in what he thought was his majority shareholder role.
[11] Resultingly, Maurice Hayes contends broadly that he is a prejudiced shareholder under s. 174 of the Companies Act in PCLT, and effectively too, through his shareholding company interest in Pub Charity.
[12] Before me, he argued initially that the shares held by Mr Lingard in PCLT ought to be transferred, either to himself or to an independent person. This was opposed by the defendants’ interests who include the majority of the Directors of Pub Charity Mr Lingard, Mr Counihan, Mr McLean, and Mr Norrie. The last director Carter Hayes, who was appointed as a Pub Charity director when his father resigned in January 2018, supports his father in all his claims before the Court. This led to what all parties agree now is in impasse with Pub Charity which needs resolution.
[13] In response to what are effectively Maurice Hayes’ claims, the defendant interests in this proceeding bring a counter claim again in terms of s. 174 of the Companies Act. In this counter-claim they seek orders that instead, his 50 per cent shareholding in PCLT and his 100 per cent shareholding in PCLT 2 should be transferred from Maurice Hayes and from his company PCLT 2 to the four Directors named above, Mr Lingard, Mr Counihan, Mr McLean, and Mr Norrie or their nominees, to enable the implementation of steps to adopt a new constitution and shareholding structure for Pub Charity which had been suggested by legal advice obtained.
[14] By way of general background, the present litigation involving these parties occupied 4 days of court hearing time before me which proved inadequate and the time was extended to be the subject of three sets of lengthy submissions from counsel for the parties filed on 11 March, 21 March and 23 March 2022.
[15] It is fair to say the claims and counter claims made relating to the parties involved with Pub Charity were heated and acrimonious.
[16] This is entirely regrettable and unfortunate. It is particularly the case because many of the parties involved with Pub Charity, and affected by the allegations advanced in these proceedings, were originally friends, business associates and colleagues. For a considerable time, there were good relationships between all parties. Thereafter, as I have noted, Maurice Hayes together with his son, Carter Hayes (who fully supports his father in this litigation and therefore recently by association), have fallen out with the other directors of Pub Charity and related parties in a major way.
Pub Charity
[17] Pub Charity as I note, is an entirely not-for-profit entity. Although an incorporated company, it conducts what is effectively a charitable business involving distribution of gambling proceeds pursuant to a Class 4 Operators License issued under the Gambling Act 2003 (Gambling Act). Its business purpose is to raise money for “authorised purposes” as defined in s. 3 of the Gambling Act and also within the company’s own constitution.
[18]In the Second Schedule to Pub Charity’s constitution, clause [3] states that:
Company not to make a profit
The company does not have the capacity or power to make a profit.
[19] In addition, clause [2] of the Second Schedule to Pub Charity’s constitution provides:
[2] The company carried on exclusives for Authorised Purposes
Subject to clause 3 of the schedule, the company has the capacity to carry on or undertake any business or activity, do any act or enter into any transaction, provided that the company shall exercise all such powers and privileges and apply all company property exclusively towards the furtherance of any Authorised Purposes including without limitation, all or any of the following purposes to the extent that they may from time to time be or constitute Authorised Purposes namely:
(a)Any purpose which for the time being constitutes a charitable purpose in New Zealand, including, without limitation:
(i)the advancement of education;
(ii)the promotion of scientific research and learnings
(iii)the promotion and support of the relief of poverty, including physical welfare:
(iv)the promotion and support of other purposes beneficial to the community, including literature and the arts.
[20] Also, in that Second Schedule, the words “Authorised Purposes” are to have the meaning given to that term under s. 4 of the Gambling Act 2003.
[21] Section 4 of the Gambling Act relevantly defines “Authorised Purposes” here to mean:
…(b) for class 4 gambling
…
(i)a charitable purpose;
(ii)a non-commercial purpose that is beneficial to the whole or a section of the community;
(iii)promoting, controlling, and conducting race meetings under the Racing Act 2003, including the payment of stakes…
[22] At the outset, it is important to bear in mind that, although Pub Charity is a company incorporated under the Companies Act, it is specifically required not to make a profit and exists to distribute to charitable and other organisations in New Zealand gambling profits essentially from the operation of poker machines. This must provide a distinct qualification to the usual shareholding rights and obligations attaching effectively to company ownership that relate to for-profit companies. What this might mean to the shareholding of Pub Charity in this case, in my view, is an important aspect of the various claims which are before this Court.
Evidence
[23] Initially, evidence before the Court was presented on behalf of Maurice Hayes and his interests only by:
(a)Maurice Hayes, himself and
(b)by his son, Carter Hayes.
[24] Substantial evidence was called on behalf of the defendants from the following:
(a)Mr Lingard, as I have noted, the current chairman of the Board of Directors of Pub Charity;
(b)Mr Counihan, a current director of Pub Charity;
(c)Mr McLean, another current director of Pub Charity;
(d)Mr Norrie, another current director of Pub Charity;
(e)Colin Terry Simkin (Mr Simkin), a Napier hotel and bar “owner” who operated hotel and bar premises involving a number of poker machines which provided funds for distribution by Pub Charity; and
(f)Martin Trevor Cheer (Mr Cheer), the current Chief Executive Officer of Pub Charity.
Evidence of Mr. Cheer
[25] At the outset, it is useful to look to further general background evidence provided by Mr Cheer. He has been the Chief Executive Officer of Pub Charity since about July 2007 and as such has some direct involvement with this proceeding. Mr Cheer was a thoughtful, decisive and compelling witness who was well-versed and experienced in all Pub Charity matters. His detailed evidence, in my judgment, was generally unchallenged on cross examination in any significant way, despite lengthy efforts from Mr O’Neill, counsel for Maurice Hayes in his endeavours to raise questions and doubt.
[26] In his affidavit dated 25 November 2020, sworn in reply to Maurice Hayes’ 11 May 2020 affidavit, amongst other things Mr Cheer helpfully deposes by way of background,
[10]….Pub Charity Ltd was not established for the purpose of “overseeing the financial and operation activities of Pub Charity” [as Maurice Hayes contended at [2] of his affidavit.] PCL was established for a number of reasons, but principally as an alternative legal structure, the necessity of which arose as a result of the limitations brought about by Pub Charity Incorporated’s charitable status and a view taken by the Regulator (the Department of Internal Affairs), that grants to some sporting bodies might not qualify as a “charitable” activity”
…..
[16] PCL is one of the largest Class 4 corporate societies in New Zealand and currently operates approximately 1600 gaming machines in 120 venues across New Zealand…
[17] In the financial year ending 30 September 2019 PCL generated $98.2 million in gaming revenue and distributed over 3500 grants worth $34.9 million.
[18] PCL has, by industry standards an unusual shareholding structure with equal shares held by PCL Trustees Limited… and PCL Trustees (No.2)
Limited…
[19] The original application for a Class 4 Operators Licence for PCL was based on a single shareholder being (PCLT) but this was rejected by the DIA who requested a second shareholder as per the email dated 6 December 2012…
[20] It was decided to acquiesce to the DIA’s request and PCLT 2 was incorporated in July 2013 and added to the ownership structure of PCL. Subsequently, a Class 4 Operator’s Licence for PCL was issued by the DIA in August 2013. While (Maurice Hayes) places emphasis on the fact that he sees himself effectively controlling 75 % of the shareholding in PCL, that balance was never originally intended and is only a consequence of the perceived need to create another shareholder. In any event, as I have described, this is not a company whose sole purpose is to serve and further the personal interests of shareholders, rather it is expressly a “not-for-profit” entity. It does not return dividends to its shareholders and nor have its shareholders invested any capital in the entity.
The Governance of PCL
[23] PCL was incorporated in 2012 with five Directors:
·Mr Maurice Hayes
·Mr William (Bill) McLean
·Mr David McNay
·Mr Brian Counihan
·Mr Rod Lingard
[24] All of the initial Directors of PCL were at the time the incumbent Directors of Pub Charity Incorporated1
[29] Mr Lingard was a founding shareholder of PCLT and appointed along with the four other directors of PCL from its September 2012 incorporation and served alongside [Maurice Hayes] on the Boards of both [Pub Charity Incorporated] until it was wound up in 2015, and [Pub Charity] until January 2018.
[30] In the PCL [Pub Charity] Board meeting of 24 January 2018 [Maurice Hayes], notified the PCL Board that he would be resigning as Chairman and Director of PCL effective from the end of that meeting.
[31] In the same meeting Mr Hayes proposed:
1 Pub Charity Incorporated was a charitable trust incorporated in 1987 to run originally the operation at issue here, later as I have noted, subsumed by Pub Charity.
·PCL Director Mr Brian Counihan succeed him as the new Chairman of PCL.
·The removal of PCL Director Mr David McNay in his absence.
·Nominating his son, Carter Hayes and Mr Simon Norrie as replacement Directors for Mr McNay and himself.
·Separating the role of Complaints Officer from the Net Proceeds Committee and appointing himself to that role.
·Setting the incoming Chairman’s honorarium to $35,000 per annum and the Complaints Officer payment at $6,000 per annum.
There was no discussion and [Maurice Hayes’] proposals were adopted unopposed….
The Shareholder dispute – Mr Hayes attempts to replace Board Member
[32] A dispute has arisen between Mr [Maurice] Hayes and Mr Lingard directly, but also between Mr Hayes and the Board of PCL. As I understand his [Mr Hayes] claim, it is to force Mr Lingard to relinquish his shareholding to enable Mr Hayes to exercise sole and unfettered control of PCL.
[33] I know Mr Hayes quite well through my long association with this business. He has had an outstanding business career, has provided support to me as an employee of the enterprise and has exhibited considerable skill and devotion in furthering the interests of both PCL and Pub Charity Incorporated before it. Mr Hayes did, however, relinquish his directorship and chairmanship in favour of Mr Counihan for good reasons in 2018. He appears now to regret that and is seeking to regain control.
[34] I do not like the position I find myself in, giving evidence that Mr Hayes will perceive is against his interests. However, I believe it my duty to provide the Court with relevant information, including correcting the very significant errors in Mr Hayes’ sworn testimony. They are many and they are significant,
… His criticism of the Board members generally, and Mr Lingard in particular, is unreasonable and is based on significant errors of fact and perception.
[36] Prior to and after his resignation Mr M Hayes had voiced the view to me that succession was needed on the PCL Board and that in short order he expected long serving Directors Mr Brian Counihan and Mr Bill McLean to also resign and make way for the new generation, suggesting his son Carter would be suitable as Chair.
[37] After his resignation, despite no longer being engaged in the oversight of the day to day running to PCL, Mr Hayes became increasingly critical of the performance of the senior members of the Board, particularly Mr Counihan, Mr McLean and Mr Lingard. There were never specific examples, but more an expression of an opinion that things were going badly for PCL and that he had lost faith in them, that they were incompetent, and they did not know what they were doing.
[38] Although no longer a board member, Mr Hayes regarded himself as being entitled to communicate directly with me and make requests of me independently of the Board.
[39] Mr Hayes would later express disappointment in new Director Mr Simon Norrie and commented to me that the only competent person on the PCL Board was his son, Mr Carter Hayes.
[40] Mr Hayes was of the view that both Mr Counihan and Mr McLean should resign in January 2020, the 2-year anniversary of his own resignation. Mr Hayes believed that both had committed to do so. Mr Hayes advised me that if they did not resign as Directors, Mr Counihan and Mr McLean would be removed by him.
……..
[56] Rather than a period of inactivity and underperformance, Mr Lingard and the current Board has overseen an organisation of virtually the same size as Mr Hayes but generating substantially more revenue and with improved profit margin……
[25] Before me, Mr Cheer was subjected to considerable cross examination. Throughout, I found him to be a thoughtful and measured witness completely on top of his role as Chief Executive Officer of Pub Charity, a role he had performed for some time, including under Maurice Hayes chairmanship of the company. Clearly he had significant regard for Maurice Hayes’ abilities and his long history with Pub Charity up to his retirement as a director in 2018. I regard Mr Cheer’s evidence as informed, measured and reliable.
Evidence of Maurice Hayes
[26] It is useful also to turn to some of the evidence and cross-examination of Maurice Hayes in support of the various claims he advances. Of particular relevance are the following matters:
(a)In his cross-examination at page 21 of the Notes of Evidence, Maurice Hayes explains at line 15:
I brought these proceedings because we couldn’t get anywhere and because the members who (should have) resigned, because of their and their agreement to do so, (were) in cahoots… Lingard decided to withdraw the resignation….
….
and at line 24
My (intention) was to get younger people in and that is what it is all about, nothing about revenues really.
(b)At page 36 of the Notes of Evidence, in Maurice Hayes cross- examination, the following questions and answers occur:
Question:…you regarded Mr Lingard as being somehow an imposter Chair because he was appointed chair in the time that Mr Counihan and Mr McLean were directors, but you thought they should have resigned as directors. Is that correct?
Answer: Yes that is correct and also Mr Lingard should have resigned…
Question: Given that they hadn’t done what you wanted them to do, you thought you would take it into your own hands by drafting these (31 January 2020) minutes and appointing your son as Chair, is that right?
Answer: That is not correct
Question: Well Mr Hayes its precisely what you did isn’t it? When you wrote to Mr Cheer on the 29th of January 2020 saying that, putting in minutes for the 31st of January that both Mr Counihan and Mr McLean have retired and that your son was to (be) appointed as chair, correct? That’s what you did?
Answer: Yes, that is correct, yes.
Question: And before proposing this resolution that your son be appointed; did you discuss that with any of the existing Directors?
Answer: no, because at that stage nobody was talking to us
[27] As to that 29 January 2020 letter mentioned above, a letter from Maurice Hayes to Mr Cheer, this explained Maurice Hayes clear intentions here, it referred to Pub Charity shareholders’ Minutes for a meeting that had not taken place and were not agreed to, and it and relevantly stated:
Dear Martin,
With regard to the termination of the employment of Brian Counihan and Bill McLean, as directors and shareholders of Pub Charity Limited, I have completed the necessary minutes of the meeting and copies of these documents are enclosed.
The papers are fairly straightforward and if there any questions I will be pleased to answer them…
The next resolution of the directors will be to appoint the new Directors who are as follows:
John O’Connell, Chief Executive of Wellington Kevin McIntosh, Trustee of Wellington
Yours Faithfully,
M D Hayes
[28] And by way of explanation, the 31 January 2020 “Minutes” accompanying that letter, signed only by Maurice Hayes (and not by Mr Lingard), purported to provide:
Minutes of Meeting of Shareholders
Pub Charity Limited
31 January 2020
Maurice Hayes representing PCL Trustees (No. 2) Limited
Rod Lingard and Maurice Hayes representing PCL Trustees Limited Whereas it was unanimously resolved:
(1)The resignation of Brian Counihan… as a Director of Pub Charity Limited and his position as Chairman of the company be approved
(2)The resignation of William McLean… as a Director of Pub Charity Limited be approved
(3)To clarify the situation Pub Charity Directors will be Rodney Lingard… Carter Desmond Hayes… and Simon Norrie… be hereby approved.
(4)The appointment of Carter Desmond Hayes… as Chairman of Pub Charity Limited, be hereby approved
Evidence of Carter Hayes
[29] I turn now at this point to the evidence of Maurice Hayes’ son, Carter Hayes’. It is illustrative to note in this area the following:
(a)At page [64] line 18 of the Notes of Evidence Carter Hayes states:…
I do confirm I did call Rod Lingard a weasel, I did not swear and I do confirm I called Brian Counihan and Bill McLean liars about their retirement and at
the time they were treating my Dad pretty horrible and I said “don’t treat my Dad like that I don’t appreciate it”
And in response to a question “And you weren’t going to let that happen to have your father be treated in that way, correct?”
Carter Hayes answered:
“Well why should I, I love my father, he’s my father.”
(b)Later on, page [64] line 5 of the Notes of Evidence Carter Hayes in response to cross-examination states:
Well… I believe that Rod Lingard… weaselled his way into being the Chairman by promising to pay Mr Counihan a gratitude payment of $30,000. He weasels his way in there and them Brian Counihan nominated him to be Chairman. I think they all colluded and got together to protect their positions, to look after themselves and Mr McLean and Mr Counihan were – they did lie about their retirement….
(c)And later at page [66] line 7 of the Notes of Evidence, Carter Hayes was asked a question:
You see Mr Hayes what I’m really putting to you is, in making these allegations and describing what you believe to be the way your father had been treated, you were solely looking after your father’s interests. It had nothing to do with the interest of the company at all did it?
To which Carter Hayes answered:
That’s incorrect sir, I wasn’t looking after my father’s interests in Pub Charity, I was looking after my father personally. He’s my father. I’m sure everyone of us in this room would do the same thing for our parents, look after your parents.
(d)And later at page [69] line 20 of the Notes of Evidence, Carter Hayes was asked the question:
Did you support your father in wanting to have you appointed as the Chair of the company?
To which Carter Hayes answered: well Dad asked me, and I said, “yes I’ll be prepared to do that job”.
Evidence of Mr Lingard, Mr Counihan, Mr Mclean, Mr Norrie and Mr Simkin
[30] For completeness, I now turn to make a few brief remarks on the evidence provided for the defendants’ interests by the other four current directors Mr Lingard, Mr Counihan, Mr McLean, Mr Norrie, and by the venue operator, Mr Simkin.
[31] As to those other directors, they all impressed me as generally experienced operators in the Pub Charity governance area. Without question they were open, measured and thoughtful in providing their evidence and I found that evidence on important issues reliable. These proceedings advanced by Maurice Hayes had troubled them all, not least because of possible damage to their individual business reputations, reputations which had been established in some cases over many years of involvement in the charities sector. Quite fairly in my view, they uniformly acknowledged Maurice Hayes’ committed and well-regarded role on the Board and as Chairman of Pub Charity up to his retirement in 2018, but since that time all agreed that wrongly, he had continuously attempted himself (and perhaps at times through his son Carter Hayes) to exercise control over affairs and governance of Pub Charity.
[32] And as to Mr Simkin, he too impressed me as a direct and straightforward witness, affronted by the suggestion advanced in this proceeding that he had attempted to influence grant allocations by Pub Charity. Unequivocally, he denied these suggestions.
Section 174 prejudiced shareholder Proceeding 292
[33] I turn now to Maurice Hayes’ prejudiced shareholder claim. In his Amended Statement of Claim in this Proceeding 292 Maurice Hayes seeks specific orders, he outlines:
(a)To regulate the future conduct of PCLT’s affairs;
(b)That Mr Lingard’s shares in PCLT be acquired by Mr Hayes or an independent person;
(c)That Mr Hayes, or his nominee, be appointed as a director of PCLT;
(d)That an independent director be appointed to the board of PCLT and Pub Charity;
(e)Altering the constitution presumably of PCLT (but possibly also of Pub Charity) to allow the relief sought to be granted and costs.
[34] The relief noted above is sought by Maurice Hayes under s. 174 of the Companies Act, on the basis, as he pleads at [10] of his Amended Statement of Claim dated 3 September 2021 that:
The acts of [PCLT] have been, or being, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to [Maurice Hayes] in [his] capacity as a shareholder of [PCLT].
[35] The pleading also goes on to contend that “the affairs of PCLT are deadlocked” and this has meant that the shareholders in Pub Charity are also deadlocked.
[36] This prejudiced shareholder proceeding is brought under and seeks relief relating to s. 174 of the Companies Act, which provides:
Prejudiced shareholders
174 (1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him or her in that capacity or in any other capacity, may apply to the Court for an order under this section.
(2) If, on an application under this section, the court considers that it is just and equitable to do so it may make such order as it thinks fit including, without limiting the generality of this subsection, an order -:
(a) requiring the company or any other person to acquire the shareholder’s shares; or
(b) requiring the company or any other person to pay compensation to a person; or
(c) regulating the future conduct of the company’s affairs; or
(d) altering or adding to the company’s constitution; or
(e) appointing a receiver of the company; or
(f) directing the rectification of the records of the company; or
(g) putting the company into liquidation; or
(h) setting aside action taken by the company or the board in breach of this Act or the constitution of the company.
(3) No order may be made against the company or any other person under subsection(2) of this section unless the company or that person is a party to the proceedings in which the application is made.
[37] In his final submissions before me, Mr O’Neill for Maurice Hayes noted that the relief claimed in the 3 September 2021 Amended Statement of Claim had been overridden by subsequent events. Maurice Hayes was now suggesting that the PCLT shareholding should be spread amongst a number of institutions who can independently vote directors onto the Board of Pub Charity to ensure that its “reputation and existence remains where it is today”. Mr O’Neill continued in his final submissions to make clear that Maurice Hayes was adamant he did not wish to take over Pub Charity but simply wanted to see an independent group of directors. He was clear that Maurice Hayes said he did not want to have power for himself.
[38] Under s. 174 of the Companies Act when considering the “interests” of any shareholder contending s/he has been prejudiced, a court normally would expect to look to the economic effects on that shareholder of the prejudicial conduct complained of. That is not the case here however. As Mr Cheer describes, PCLT and indeed Pub Charity Limited (along with PCLT 2) were incorporated to create vehicles to carry on the existing business of Pub Charity Incorporated. This was because not all the community activity (particularly sporting activity as supported by the existing business) was regarded as “charitable”. Pub Charity as successor to that earlier charity is governed by the provisions of the Gambling Act 2003, and also its own constitution, which effectively prohibit any personal benefit to shareholders whether by way of dividends or distribution in the event of liquidation of the company.
[39] Maurice Hayes in this proceeding seeks to advance a number of allegations and complaints against PCLT, Mr Lingard and others. He also has sought to reinforce these complaints and his position in the second Proceeding 385 which I address below. In that proceeding, he claims that the affairs of Pub Charity have been conducted improperly by its current Board to the extent that they ought to be removed and an injunction imposed. I will address these allegations shortly.
[40] Suffice to say at this point that I am satisfied there is little in Maurice Hayes unfair prejudice claims in terms of s. 174 of the Companies Act in relation to this Proceeding 292.
[41] Instead, as the defendants’ interests note in their counterclaim brought in this Proceeding 292, all parties unequivocally agree first, that a deadlock has developed with respect to PCLT, and secondly, that this affects Pub Charity and thirdly, it is essential this deadlock is resolved, which can be achieved effectively by appropriate orders being made in terms of s. 174 of the Companies Act.
[42] Given this acknowledged deadlock, it is clear in my view that s. 174 of the Companies Act is activated here, and it is just and equitable for relief to be granted. The next step is to consider what may be an appropriate remedy.
[43] As I note above, Maurice Hayes’ proposed solution to this impasse, as put forward generally for the first time just prior to the hearing before me, is that the current board of Pub Charity (excluding his son) be removed and a number of “independent” Institutional Shareholders be appointed by the Court to decide who the replacement directors are to be. Effectively it seems therefore, Maurice Hayes appears to be asking this Court to make directions as to the future make up of Pub Charity and its shareholders.
[44] Agreed common ground here is that the shareholders of PCLT (and also resultingly of, Pub Charity) are deadlocked. A conventional solution in such situations relating to for-profit companies is for the Court to direct the transfer of shares from one party to the other or if this is not possible to order a liquidation (which I accept is out of the question for PCLT and Pub Charity here).
[45] In the present case, the defendants’ interests contend that the party who is most obviously at fault here is Maurice Hayes. They say he has no legitimate interest in, and is simply attempting to exercise control over, the affairs and governance of Pub Charity, given that he resigned as a director of that company some years ago. Those parties contend the appropriate remedy in this case is that he should be removed as a shareholder.
[46] Generally, as I see the position, it is not necessary here for me to make any definitive ruling on this specific aspect.
[47] Instead I am satisfied the extensive steps which have been taken by the Board of Pub Charity in retaining Mr Allastair Sherriff (Mr Sherriff) of Buddle Findlay, a highly experienced and acknowledged expert in this area, to produce a revised fit for purpose Constitution and restructured shareholding for Pub Charity, along with a new Code of Practice and Board Charter and a new Code of Ethics, were appropriate in all the circumstances when the Board was faced with this litigation. Mr Sherriff, as I understand it is accepted by all here, including it seems Maurice Hayes, as a longstanding and well-regarded expert in this area.2
[48] In my view these arrangements also provide the basis for an acceptable proposal to resolve the shareholders deadlock here relating to PCLT, PCLT 2 and Pub Charity.
[49]Later I will turn to the appropriate orders to be made.
[50] Next it is appropriate to consider the injunctive relief Maurice Hayes and his company PCLT 2 seek in Proceeding 358 which I now do.
PCLT 2’s injunctive relief Proceedings 358
[51] In this Proceeding 358, effectively Maurice Hayes through his company PCLT 2 seeks injunctive relief to:
(a)restrain Pub Charity from approving grants to community groups that are influenced by third parties outside of the net proceeds committee of the Company;
(b)restrain Pub Charity from paying honoraria or increase honoraria which are unwarranted;
2 Notes of Evidence page 24 lines 10-11, Maurice Hayes acknowledge that he did not have any problem with the suggestions and documents Mr Sherriff had prepared.
(c)restrain Pub Charity from using its funds for legal disputes between shareholders;
(d)remove the current board of Pub Charity;
(e)replace the board of Pub Charity with independent directors;
(f)costs.
[52]This application is brought under s. 164 of the Companies Act which provides:
Injunctions
164(1) The Court may on an application under this section, make an order restraining a company that or a director of a company who, proposes to engage in conduct that would contravene the constitution of the company or this Act from engaging in that conduct.
(2)An application may be made by-
(a) the company; or
(b) a director or shareholder of the company; or
(c) an entitled person.
(3) If the Court makes an order under subsection(1) of this section, then it may also grant such consequential relief as it thinks fit.
(4) An order may not be made under this section in relation to conduct or a course of conduct that has been completed.
(5) The court may, at any time before the final determination of an application under subsection (1) of this section make, as an interim order, any order that it is empowered to make under that subsection.
[53] Mr Taylor QC, counsel for the defendants’ interests before me asserted that, with this injunctive relief proceeding in particular, it was difficult to reach any other conclusion, but that Maurice Hayes was endeavouring to use any attempt he could to have the current board of Pub Charity (with the exception of his son) removed and replaced by his approved people. In doing so, in this Proceeding 358, Maurice Hayes through his company PCLT 2, makes a number of allegations. All these Maurice Hayes suggests do justify the removal of the existing Pub Charity Board. They are complaints involving:
(a)Taking instructions from venue operators as to the approval and payment of grants to community groups.
(b)The inappropriate setting of honoraria for Board members.
(c)Payment of legal expenses from Pub Charity funds for disputes between shareholders.
(d)Suggestions that Pub Charity was being poorly run and that its performance had declined since he resigned as a director of the Company. (Although this allegation was never pleaded, it does seem Maurice Hayes in raising it for the first time in his reply affidavit, did endeavour to pursue it at the hearing before me.)
[54]I address each of these allegations in turn.
Taking instructions from venue operators as to the approval and payment of grants to community groups
[55] This allegation, effectively one of misconduct by the Pub Charity Board as well as the venue operator, was regarded before me as an extremely serious one.
[56] As to this Maurice Hayes, effectively supported by his son, Carter Hayes, alleges that one of the Pub Charity directors Mr McLean acted in serious breach of his duties as a director and member of a subcommittee of Pub Charity, the NPC, by unlawfully taking instructions from Mr Simkin, a venue operator as to the allocation of grants to community organisations.
[57] A similar allegation to this (that a written list from Mr Simkin as a venue operator had been provided to Mr McLean at the August 2019 NPC meeting) was investigated by Mr Cheer as Chief Executive of Pub Charity soon after that allegation had been made by Carter Hayes directly to Mr Cheer.
[58] Mr Cheer in his detailed evidence explained the thorough investigation he had immediately undertaken regarding that particular allegation and his conclusion and
finding that the allegation was entirely without foundation. Mr Cheer confirmed that he communicated the result of that investigation to a number of parties including Maurice Hayes and Carter Hayes. Nothing further he said was heard of it until this Proceeding 358 was issued.
[59] Before me, Mr Taylor QC for the defendants complained strongly that these serious allegations of improper conduct by Mr McLean, impacting as they do on reputation issues, should never have been advanced before this Court. I accept there is some substance in this contention. The only evidence of any kind before me in support of the allegations were oral statements which Carter Hayes in his trial evidence alleges were made by Mr McLean at the NPC3 meeting in question, as opposed to the written note or list which, as I understand it, was the subject of his original concern expressed to Mr Cheer and the other directors in August 2019.
[60] In cross examination before me, however, Carter Hayes asserted it seems for the first time that he had never alleged there was a written list of potential grantees. That assertion was made notwithstanding the fact that the affidavits in reply to the allegation made it clear that Mr Counihan, Mr McLean and Mr Norrie, all members of NPC at that time, understood the allegation to relate to the handwritten note given by Mr Counihan to Mr McLean at the August 2019 meeting. In his reply to those affidavits Carter Hayes, it seems, said nothing to disabuse them of that belief. He did not suggest in his reply affidavit that he was not relying on any handwritten instruction received from Mr Simkin.
[61] The assertion from Carter Hayes that he had never alleged the existence of a handwritten list of grantees, I am satisfied is also undermined by the measured evidence of Mr Cheer, Mr Norrie and also Mr Counihan regarding the enquiries Carter Hayes had made about the note or handwritten list soon after the August 2019 NPC meeting.4
3 Pub Charity operated with a sub-committee which met about monthly, considered and recommended approval of community grants known as the Net Proceeds Committee (the NPC).
4 Notes of Evidence Mr Cheer page 209-10, Notes of Evidence Mr Norrie page 171 lines 3-7. The evidence of these two witnesses is clearly that Carter Hayes reference was to a note.
[62] Equally as important, I accept from the evidence of Mr Simkin and Mr McLean, (both of whom I find were reliable witnesses) that Mr Simkin had never provided a list of required grantees to Mr McLean or anybody else at Pub Charity. From all the evidence before me, I am satisfied that any reference made by Mr McLean at the meeting to a list was only a reference to notes handed to him at that meeting by Mr Counihan as chair of the NPC expressing his personal views on the various grant applications.
[63] On these matters I note that when allegations of this kind relate to serious misconduct, on the part of the member of a body such as the NPC, the Court will require proof to a standard that reflects the gravity of the allegations.5
[64] In my view the evidence of Carter Hayes on this aspect (although adamantly repeated by him on a number of occasions) is simply not enough when considered in the context of all the other evidence before me (including evidence as to what his initial allegation was and what I see as the implausible and unlikely scenario that Mr McLean was given instruction by Mr Simkin which he then later acknowledged he had acted upon in the meeting).
[65] Maurice Hayes allegation in this Proceeding 358 relies entirely upon what he had been told by his son Carter Hayes that Mr McLean had acted in this “improper” way. In my judgment, this is simply without any proper foundation. Mr McLean denied firmly that he had told Carter Hayes that he was acting on a list provided by Mr Simkin and said bluntly that “simply didn’t happen”6
[66] A far more likely explanation to all of this, in my view, is that Carter Hayes , who by that time was clearly having significant difficulties with his fellow Pub Charity directors and his involvement as a member of the NPC, may have simply jumped to his own conclusions as to the contents of the note provided by Mr Counihan to Mr McLean at the meeting. On all the evidence before me including that of Mr Cheer who investigated the issue, it is likely the note simply contained Mr Counihan’s views
5 T v M (1984) 2NZFLR 462 (CA), Back v National Insurance Company of New Zealand CP 23/95, 15 March 1996, Hammond J.
6 Notes of Evidence Mr McLean page 197 lines 25-30, In addition nobody else at the NPC meeting recalls any such statement being made by Mr McLean
as to allocation of grants in circumstances where there were insufficient funds to fulfil all of the applications being considered in the particular Napier area in question.
[67] In cross-examination Mr McLean also acknowledged quite frankly that he may have discussed or referred to the list Mr Counihan had given him at the NPC meeting in a discussion with Carter Hayes. Given the passage of time and in light of the innocent explanation of the note I outline above, it is difficult to escape the conclusion that Carter Hayes may well have convinced himself (quite wrongly) that when referring to the “grantee not being on the list” Mr McLean was in fact accepting that he had taken oral instructions from Mr Simkin as to how grants should be allocated, which I find was clearly not the case here.
[68] I conclude too, from the evidence of Mr Cheer and his investigation report, and on all the contrary evidence provided by Mr Counihan and Mr Norrie, that no such admission by Mr McLean was made at the time.
[69] Further, neither Maurice Hayes nor his son, Carter Hayes, have attempted to provide any relevant corroborating material to support this serious allegation of misconduct advanced here. Both have simply put forward, what I accept represents a changing story, that Carter Hayes has presented and which Maurice Hayes has chosen to support and pursue.
[70] I conclude that this allegation of misconduct is without any proper foundation. It is dismissed.
Inappropriate setting of honoraria for Board members
[71]On this, clause [13] of PCLT2’s statement of claim in Proceeding 358 pleads:
The board of PCL [Pub Charity] has approved increases in honorariums and payment of honorariums that were unwarranted and sustainable and not within the authorised purposes of PCL [Pub Charity].
[72] Effectively Maurice Hayes suggests here that decisions made by Pub Charity Board when setting honoraria are unlawful or in breach of its constitution. Little is provided by way of independent evidence on these issues. The principal assertion
Maurice Hayes advances is his own view that the Pub Charity directors are “feathering their own nests” and running the company for their own benefit rather than for the benefit of the community.
[73] In his affidavits filed in this Proceeding 358, it does not seem that Maurice Hayes has sought to produce any objective or independent evidence to support his allegations. These allegations in part include the suggestion that Mr Lingard as Chairman of the Board was receiving $95,000 per annum. This particular claim it appears is incorrect. Mr Lingard and others confirm this. In his evidence, Mr Lingard states his honorarium was $50,000 per annum, which was at the same level as Maurice Hayes had received when he chaired the Board some years earlier.
[74] And, as to Maurice Hayes’ suggestion that Pub Charity was being run now for the benefit of the directors and not for the community, nothing whatever has been provided by way of substantiation for this claim.
[75] In conclusion there is no evidence of any kind before the Court to support the allegation from Maurice Hayes and PCLT 2 of excessive honoraria being paid to any current Pub Charity director. I dismiss this claim.
Use of Pub Charity funds for payment of personal legal expenses
[76] Clause [11] of PCLT 2’s Amended Statement of Claim in Proceeding 358 pleads in part:
[11] the defendant [Pub Charity] is breaching its constitution and the Gambling Act by approving the expenditure of funds that are not for authorised purposes, in the following ways:
(a) PCL resolved in March 2020 to utilise PCL funds to take action against the sole shareholder and director of the plaintiff (Mr Hayes) in relation to a shareholders’ dispute … between the chairman of the PCL Board, Rod Lingard, and Mr Hayes and the company PCL Trustees Limited of which they are equal shareholders
.
(b) the resolution to pay legal fees in respect of the shareholders’ dispute is contrary to the constitution and the authorised purposes as defined by the constitution.
….
[77] Turning to the March 2020 resolution referred to in this pleading, it is clear the Board of Pub Charity did not resolve to issue court proceedings against Maurice Hayes or his company PCLT 2. No proceedings were issued against Maurice Hayes and in fact, it was he and his company who issued proceedings generally against Pub Charity and PCLT.
[78] The resolution itself which was passed by the directors of Pub Charity (but opposed by Carter Hayes as one of those five directors) stated:
That Rob Lingard, acting in his capacity as chairman and shareholder, be authorised by the Board to take whatever action is considered proper and necessary to have Maurice Hayes transfer to Pub charity Limited as soon as practicable, all the shares currently held by him in PCL Trustees Limited and PCL Trustees (No. 2) Limited.
[79] In addition, the Minutes of that particular Board Meeting went on to state that this resolution “is not about the shareholders but the sustainability of Pub Charity Limited”.
[80]Maurice Hayes in his supporting affidavit of 16 June 2020 deposes:
I am also concerned that it appears that the Board has approved PCL paying legal expenses for Rob Lingard to have a legal argument with me about his shareholding in a shareholding company.
[81] As an aside at this point, I note that s. 164 of the Companies Act, which Maurice Hayes contends provides the authority for this Proceeding 258, can only be invoked to obtain injunctive relief to restrain proposed conduct which is unlawful or in breach of a company’s constitution. Here it seems clear that legal costs have been incurred by Pub Charity relating particularly to a number of matters. These include the taking of advice as to the legality of attempts to appoint and remove directors, the proposed restructuring of the Company, and necessarily on decisions to defend the present proceedings. Those legal costs as I understand it have been incurred and paid. There is an argument therefore that no injunctive relief under s. 164(1) or s. 164(4) is appropriate here for those matters as they relate to completed conduct and do not represent the restraining of future proposed conduct.
[82] Leaving that aspect on one side, in any event it is my view that the legal fees claim here by Maurice Hayes and PCLT 2 must fail. The reasons for this are clear.
[83] At the relevant times there can be no dispute that governance problems for Pub Charity had arisen. This occurred first, because of repeated attempts by Maurice Hayes to insist he had sole power over appointments to the Board, and later an impasse between he and Mr Lingard regarding company governance and operation of that Board. Secondly, it occurred because of the accepted common ground that Maurice Hayes son, Carter Hayes, who he had promoted and appointed as a Board director and then sought to have appointed as Chairman of the Board, had fallen out in a major way with other board members and thirdly, because it was legitimate for the Board to take legal advice and to respond to the litigation initiated by Maurice Hayes, the subject of the present proceedings which he was promoting.
[84] I conclude that nothing has been placed before me to suggest that the legal costs incurred by the Pub Charity Board, even insofar as they may have been tangentially related to the dispute between Maurice Hayes and Mr Lingard together with their respective shareholder companies, were in any way an improper or unauthorised expenditure of the Company’s funds.
[85]For all these reasons I reject this claim.
Pub Charity’s allegedly poor running and financial performance
[86] As I noted above, the allegation from Maurice Hayes and his company PCLT 2 that Pub Charity was not only being poorly run but its performance had declined since he left the company, was not included in their pleadings. It was raised for the first time in the reply affidavit filed in this Proceeding 358 by Maurice Hayes.
[87] In that 2 August 2021 Affidavit, Maurice Hayes asserted that Pub Charity has been poorly managed and unsuccessful recently and “…. it has had declining revenue from its activities over the last three years and this is still occurring. “
[88] He endeavoured to support this in his affidavit with a table purporting to show declining “figures for Pub Charity”. This table however did not refer to revenue but simply referenced the relevant number of machines in the relevant sites
[89] Mr Cheer in his evidence, however, addressed these claims. In doing so, he noted that Maurice Hayes had been selective in taking some Pub Charity monthly figures to create an impression of declining numbers, but importantly he had left out those figures which disproved the trend. Further, current numbers and figures were not disclosed.
[90] As I understand the position, the actual revenue figures for Pub Charity before the Court in fact showed the company to be about $800,000 ahead of budgeted revenue (and $3.1 million up in a year on year comparison) to the period ending July 2019. Mr Cheer in his evidence also noted that Pub Charity is currently the largest Class 4 Corporate Society venue operator in the industry.
[91] With profitability up to the COVID-19 crisis of over $3.1 million year on year, Mr Cheer’s evidence in particular confirms there is simply no basis for allegations that Pub Charity has suffered poor financial performance in any recent times.
[92] Nor, as I see the position has any evidence been placed before the Court to suggest that the conduct of the affairs of Pub Charity by its current directors could be seen in any way as prejudicial to the Company’s interests.
[93] I reject this poor financial performance claim advanced by PCLT 2 and Maurice Hayes.
[94] Overall then, it will be apparent here that neither PCLT 2 nor Maurice Hayes have been able to establish any prejudicial conduct which might justify removal of the current board of Pub Charity and/or the introduction of the new shareholders Maurice Hayes seeks. Their claims in Proceeding 358 must fail.
Result
[95] For all the reasons I have outlined above, it will be apparent that, subject to what I note below at [96], Maurice Hayes’ prejudiced shareholder claim pursuant to s. 174 of the Companies Act outlined in Proceeding 292, and his company PLCT 2, injunction proceeding pursuant to s. 164 of the Companies Act in Proceeding 358, are both dismissed.
[96]Notwithstanding this, the counter claim by the defendant interests pursuant to
s. 174 of the Companies Act claiming relief resulting from the clear deadlock between the shareholders and all parties to these proceedings has succeeded.
[97] Indeed, all parties to these proceedings have accepted that, given this shareholder deadlock, and its impact on governance matters for Pub Charity, some resolution of matters by way of court orders is desirable. S. 174(2) of the Companies Act gives the Court full discretion to grant relief, if it is considered just and equitable to do so. In my view a grant of relief is appropriate here. The Court may then make such orders as it thinks fit.
[98] The principles to be taken into account when granting relief in cases like the present were listed by the High Court in Jordan v Chemical Specialties Limited7 as follows:
· Remedial relief is remedial rather than punitive;
· Any order should be clearly directed to provide a remedy of an appropriate character;
· The court should be weary of intervening in the management of the company to any extent greater than is strictly necessary to provide the appropriate remedy; and
7 (1999) 8 NZCLC 261,839 at 17 and 18.
· The Court has a broad discretion to select the appropriate remedy for the situation and should not hesitate to be creative and flexible in fashioning a remedy to fit the case.
Orders
[99]With these principles in mind the following orders noted below are now made:
(a)Maurice Hayes as the holder of the shares in PCL Trustees (No. 2) Limited is to transfer those shares to Mr Sherriff (or his nominee) and he is to resign as a director of that Company.
(b)Maurice Hayes and Mr Lingard as the shareholders in PCL Trustees Limited are each to transfer their shares in that Company to Mr Sherriff and are to resign as directors of PCL Trustees Limited.
(c)Mr Sherriff, himself (or his nominee) as the holder then of 100 per cent of the shareholding in PCL Trustees (No.2) Limited and PCL Trustees Limited, (which together hold all the shares in Pub Charity) is to make the necessary arrangements for Pub Charity to adopt as its new Constitution, its new Code of Ethics and its new Code of Practice and Board Charter for directors (in place of the previous Constitution and documents of this kind held by the Company), to ensure the future direction and governance of Pub Charity, that new Constitution and other documents to take the form prepared by Mr Sherriff and outlined as Exhibit P, Exhibit N, and Exhibit O respectively in the Reply Affidavit of Mr Lingard dated 27 November 2020 filed in these proceedings.
(d)Mr. Sherriff is then to transfer all shares in PCL Trustees (No.2) Limited and PCL Trustees Limited (effectively resulting in shareholding ownership of Pub Charity) in equal shares to each of the current directors of Pub Charity, Mr Lingard, Mr Counihan, Mr McLean, Mr Norrie, and Carter Hayes, those parties then to be in a position to
determine by a majority vote who are to be the ongoing directors of Pub Charity.
(e)The reasonable costs and the disbursements of Mr Sherriff and his legal firm in implementing the terms of these orders are to be met by Pub Charity.
(f)Leave is reserved for Mr Sherriff or any other party the subject of these orders, to approach the court on 48 hours’ notice for any further implementation directions as may be reasonably required here.
Costs
[100] As I received no detailed submissions at the hearing from counsel on costs for these proceedings they are reserved. My preliminary view however is that, as the largely unsuccessful parties here, the plaintiffs Maurice Hayes and his company PCLT 2 should pay the reasonable costs and disbursements of the defendant parties.
[101] All parties and their counsel are urged, however, to liaise with a view to settling between them any issues of costs which arise here. In the absence of agreement being reached on costs, counsel for the parties may file memoranda (sequentially) on the question of costs (five pages maximum for each costs memorandum) which are to be referred to me, and in the absence of any party indicating they wish to be heard on the costs issue, I will decide that question of costs based upon the memoranda filed and all other material then before the Court.
Gendall J
Solicitors:
Nielsen LawLeslie Taylor Queens Counsel & Thomas Dewar Sziranyi Letts
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