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Sharrock v Wedd

Sharrock v Wedd

Case [2017] NZHC 1739 26 July 2017

Company Law

Shareholders' Rights

Director Appointment

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Declaratory Relief

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IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2016-441-107 [2017] NZHC 1739

BETWEEN
GERALD ERRINGTON SHARROCK

Plaintiff

AND

STEPHEN CHARLES WEDD First defendant

JOHN BRIAN KIPPING Second defendant

BRENTON JOHN HUNT Third defendant

AFFORDABLE RESIDENTIAL LIMITED

Fourth defendant

REGISTRAR OF COMPANIES Fifth defendant

Hearing: 10 March 2017

Appearances:

Mr Hucker and Ms Selby for the plaintiff
Mr Wedd in person
Mr Kipping in person
No appearances for the third, fourth or fifth defendants

Judgment:

26 July 2017

JUDGMENT OF ASSOCIATE JUDGE SMITH

Introduction

[1] In this proceeding the plaintiff (Mr Sharrock) seeks declarations that he is a shareholder in the fourth defendant (Affordable). He also seeks a declaration that the second defendant (Mr Kipping), who is recorded on the Companies Register as a
director of Affordable, has not been validly appointed as such, there having been no

SHARROCK v WEDD [2017] NZHC 1739 [26 July 2017]

shareholders’ meeting called or resolution of shareholders appointing Mr Kipping a director.

[2] Further relief is sought under the Companies Act 1993 (the Act) in respect of the purported appointment by the first defendant (Mr Wedd), without the knowledge or approval of Affordable, of the third defendant (Mr Hunt) as liquidator of Affordable. Mr Sharrock asks for an order rectifying the Companies Register in addition to the various declarations, together with an order for costs on an indemnity basis.

[3] Mr Sharrock has taken the view that the defendants have no defences to his claims, and he has applied for summary judgment on them.

[4] Mr Hunt has elected not to contest the application for an order under the Act declaring that he was not validly appointed liquidator. He has filed a consent to an order being made under s 284(1)(g) of the Act declaring that his appointment was not valid.

[5] The fifth defendant, the Registrar of Companies, abides the decision of the court, and did not participate in the hearing on 10 March 2017.

[6] I now give judgment on Mr Sharrock’s application for summary judgment.

Background

The Deed

[7] On 22 February 2013 Mr Sharrock, Affordable, Mr Wedd and a company called Just Steel Framing Ltd (Just Steel) entered into a deed (the Deed), under which Mr Sharrock was to acquire 50 per cent of the shares in Just Steel and Affordable. The sole shareholder at that time was Mr Wedd.

[8] The background to the execution of the deed is set out in some detail in a judgment I gave in a proceeding commenced by Mr Sharrock and Just Steel against

Mr Wedd (the Just Steel proceeding).1 In that judgment, I made a declaration that Mr Sharrock is, and has since 22 February 2013 been, a director of Just Steel. I also made a declaration that Mr Sharrock was entitled to be entered as a shareholder in the share register of Just Steel, or (in the event that such a share register already existed — as Mr Wedd had contended) to an order rectifying that register under s 91…

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 Sharrock v Wedd

Details

AGLC: Sharrock v Wedd [2017] NZHC 1739
Case: [2017] NZHC 1739
Decision Date: 26 July 2017

CaseChat Overview and Summary

In this case, the plaintiff, Gerald Errington Sharrock, sought a declaration that he was a shareholder in Affordable Residential Limited and that the appointment of Brenton John Hunt as liquidator of Affordable was not valid. The defendants, Stephen Charles Wedd, John Brian Kipping, and Affordable Residential Limited, disputed Sharrock's claims. The court granted summary judgment in favour of Sharrock on all counts.

The court found that Sharrock had validly become a shareholder in Affordable upon meeting his payment obligations under the Deed. Despite the defendants' claims that Sharrock had not paid for his shares, the court found that Sharrock had paid the required amount of $257,787.74 to Just Steel and various creditors. The court also found that John Brian Kipping had not been validly appointed as a director of Affordable, as there was no evidence of a shareholders' meeting or resolution appointing him as such.

The court ordered that the Companies Register be rectified to reflect the correct shareholding and directorship information. It also declared that Brenton John Hunt's appointment as liquidator of Affordable was not valid, as the defendants had no authority to appoint him without Sharrock's concurrence.

Regarding costs, the court decided to allow time for written submissions on costs if the parties could not agree. If submissions were filed, Sharrock had 20 working days from the date of the judgment to file his memorandum, and the defendants had 15 working days from the service of Sharrock's memorandum to file their opposing memorandum.

Orders