Sareen v Oberoi - [2021] NZHC 2884

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002224

[2021] NZHC 2884

UNDER Companies Act 1993

IN THE MATTER OF

An application for leave to bring derivative action pursuant to s 165 of the Act

BETWEEN

DHEERAJ SAREEN

Applicant

AND

JAGPREET SINGH OBEROI

First Respondent

165 RUSSELL ROAD LIMITED

Second Respondent

Hearing: 12 October 2021

Appearances:

R J Connell for Applicant S Raju for Respondents

Judgment:

28 October 2021

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 28 October 2021 at 2.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date ………………………………

SAREEN v OBEROI & OR [2021] NZHC 2884 [28 October 2021]

Introduction

[1] 165 Russell Road Ltd1 was incorporated in September 2020 as a joint venture to purchase and develop the property at 165 Russell Road, Manurewa.2 Mr Sareen and Mr Oberoi are its shareholders and directors. They cannot agree on the future of the company. It is deadlocked.

[2] The registered proprietor of the property is Jasraj Investments Ltd.3 That company is owned by Mr Oberoi and his wife. In an agreement for sale and purchase4 of September 2020, JIL, as vendor, agreed to sell the property to RRL for $690,000.5 The ASP was subject to finance.

[3] In the present application, Mr Sareen seeks leave to bring a shareholder’s derivative action pursuant to s 165 of the Companies Act 1993. He contends that Mr Oberoi, in breach of his fiduciary duties as a director, improperly thwarted the sale of the property to RRL. Mr Sareen alleges that Mr Oberoi, who signed the ASP as both vendor and purchaser, had a change of heart when he realised the significant value of the property. Mr Sareen says that Mr Oberoi sought to exclude him from any share of a substantial capital gain.

[4] Mr Sareen seeks leave to bring an action by RRL against JIL for specific performance, requiring it to perform the ASP and therefore transfer the property to RRL. He also seeks, in the name of RRL, an award of damages against Mr Oberoi for breach of fiduciary duty.

[5] Opposing the application, Mr Oberoi contends that the proposed proceedings have no reasonable prospect of success and that it is not in the interests of the company, RRL, for leave to be granted. Those are the two critical issues I must address.

1      RRL.
2      The property.
3      JIL.
4      The ASP.
5      Standard ADLS 10th edition 2019(2).

Factual background

[6] The property was purchased by JIL in May 2020. It was previously owned by Eon Development Ltd.6

[7] In December 2019, Eon Development, as vendor, agreed to sell the property to Jasraj Properties Ltd, another company owned by Mr Oberoi, for $690,000. Mr Oberoi subsequently nominated JIL to be the purchaser.

[8] The adjoining property at 167 Russell Road is owned by a company controlled by a mutual business colleague, Mr…

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 Sareen v Oberoi

Details

AGLC: Sareen v Oberoi [2021] NZHC 2884
Case: [2021] NZHC 2884
Decision Date: 28 October 2021

CaseChat Overview and Summary

The High Court of New Zealand, Auckland Registry, presided over an application for leave to bring a derivative action by Dheeraj Sareen against Jagpreet Singh Oberoi and 165 Russell Road Limited. Sareen sought to bring an action by 165 Russell Road Limited against Jasraj Investments Limited and Oberoi, alleging Oberoi had breached his fiduciary duties by improperly thwarting the sale of a property to 165 Russell Road Limited. Sareen sought specific performance of an agreement for sale and purchase and damages for breach of fiduciary duty. Oberoi opposed the application, arguing the proposed proceedings had no reasonable prospect of success and were not in the interests of 165 Russell Road Limited. The court had to decide whether the proposed proceedings had a reasonable likelihood of success and whether it was in the interests of 165 Russell Road Limited to allow the derivative action to proceed. The court found that there was a reasonable likelihood of the proceedings succeeding and that it was arguably in the company's interests to allow the derivative action. The court granted Sareen's application to bring a derivative action in the name of 165 Russell Road Limited pursuant to s 165 of the Companies Act 1993. The court also ordered that 165 Russell Road Limited would meet the costs of the proceedings. The court reserved leave to the parties to apply for further directions and ordered that if the parties could not agree on costs, memoranda were to be filed and served within 14 days.

Orders