Legal Research
Cases
Rahman v Shephard

Rahman v Shephard

Case [2025] NZHC 1452 5 June 2025

Voluntary Administration

Creditors' Rights

Shareholders' Rights

Deed of Company Arrangement

Termination of Administration

Corporate Law & Governance

Commercial Law

No judgment structure available for this case.

Type to search within this case.

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2025-485-146

CIV-2024-485-629 [2025] NZHC 1452

UNDER Part 15A of the Companies Act 1993

IN THE MATTER

of the voluntary administrations of Wellington Combined Taxis Ltd (administrators appointed), Combined

Finance Ltd (administrators appointed) and Wellington Combined Properties Ltd (administrators appointed)

BETWEEN

AZAD RAHMAN

First Applicant

KRISHNA SAMY GOUNDAR
Second Applicant

RAJESHWAR SINGH
Third Applicant

CHELVAKHANTHAN KRPILLAI
Fourth Applicant

AND

IAIN SHEPHARD and JESSICA KELLOW

Respondents

Hearing: 23 May 2025

Appearances:

D P MacKenzie for Applicants

D Kalderimis KC, C T Jolliffe for Respondents J Marcetic for Interested Parties

Judgment:

5 June 2025

JUDGMENT OF BOLDT J

RAHMAN v SHEPHARD [2025] NZHC 1452 [5 June 2025]

TABLE OF CONTENTS

Introduction [1]

The applications [10]

The parties [11]

The companies [15]

Scope of argument [19]

Should the administration be terminated? [22]

WCT’s assets and solvency [26]

Companies Act 1993 Part 15A [34]

Termination of the administration [44]

How should the watershed meeting be conducted? [61]

Should shareholders have a say at the watershed meeting? [79]

Drivers as trade creditors [85]

Proxies [92]

Conclusion [98]

Costs [104]

Introduction

[1] Wellington Combined Taxis Limited (WCT) is an iconic Wellington taxi firm. It has provided a consistently high-quality taxi service in the region since its incorporation in 1993.

[2] WCT is a co-operative; it does not own taxis or employ drivers. Rather, the company, at least as originally envisaged, was made up of shareholders who also worked in the business. Drivers are independent operators who either drive their own WCT-branded taxi, or who lease the right to drive from a WCT shareholder. Drivers

pay monthly levies to WCT, which fund the company’s dispatch and communications systems, along with things like marketing, branding and administration.

[3] Today, WCT’s board and shareholders are embroiled in a bitter and apparently-intractable dispute. WCT, like many traditional taxi companies, has seen a significant downturn in custom in recent years. There are several reasons for that, including the COVID-19 pandemic, from which the company never completely bounced back, the growth of ride-share operators like Uber and a general downturn in the Wellington economy. The number of individual rides in WCT taxis has fallen by over 50 per cent in the last five years, from more than 1.2 million in 2019 to fewer than 600,000 last year.

[4] WCT’s accumulated losses for the five years ending 31 March 2024 were almost $3 million. In the 2023–24 financial year alone, its operating loss, before revaluation of assets, was $861,601. In September 2024 there were just under 500 ordinary shares in the company, but due to the steady decline in demand more than 150 of those shares now lie dormant. The holders of dormant or non-operational shares neither drive a WCT taxi, nor do they lease the right to “drive the share” to another driver.

[5] Many driver-shareholders are deeply unhappy with the performance of WCT’s board. Those shareholders blame the board for the company’s financial state.…

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 Rahman v Shephard

Details

AGLC: Rahman v Shephard [2025] NZHC 1452
Case: [2025] NZHC 1452
Decision Date: 5 June 2025

CaseChat Overview and Summary

The case of Rahman v Shephard [2025] NZHC 1452 involved a dispute concerning the voluntary administration of Wellington Combined Taxis Limited (WCT) and its related entities, Wellington Combined Properties Limited (WCP) and Combined Finance Limited (CFL). The primary issue was whether the administration of WCT should be terminated, and if not, how the forthcoming watershed meeting should be conducted. The applicants, led by Mr Azad Rahman, argued that WCT should not have been placed in administration and sought its immediate termination. They contended that the company was solvent and that the administration was improper. The administrators, Mr Iain Shephard and Ms Jessica Kellow, opposed the termination and sought directions for the watershed meeting that would favour a sale of WCT's assets to Auckland Cooperative Taxi Society Limited (ACT). The central legal issues revolved around the interpretation of insolvency under Part 15A of the Companies Act 1993, the appropriate role of shareholders in the watershed meeting, and the validity of existing proxies for the shareholders' vote.

The High Court, in dismissing Mr Rahman's application for termination, found that while WCT had a strong balance sheet, its liquidity issues and ongoing cashflow problems made it unlikely to remain solvent in the medium term. The Court rejected the argument that WCT was solvent within the meaning of the Act, noting that the company's ability to pay its debts as they fell due was precarious. The Court also ruled that shareholders should have a say at the watershed meeting, as the interests of shareholders, not creditors, should prevail given that creditors were not at immediate risk. The Court held that shareholder-drivers should not be recognised as creditors for the purposes of the watershed meeting, and existing proxies should be considered valid for the shareholders' vote. The Court ordered that the watershed meeting be conducted with equal consideration given to both shareholder and creditor interests, ensuring a neutral and even-handed process.

The final orders included dismissing Mr Rahman's application for termination, extending the convening period, and directing that the watershed meeting be structured to allow shareholders to vote on the proposed deeds of company arrangement (DOCA) before creditors, provided a majority of shareholders approved the DOCA. The Court also ruled that existing proxies would be valid for the shareholders' vote, subject to shareholders being informed and given the opportunity to revoke their proxies if they wished. Costs were reserved for further submissions.

Orders