Singh v Buttar - [2023] NZHC 243

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV 2021-470-26

[2023] NZHC 243

UNDER section 165 of the Companies Act 1993

BETWEEN

JASWINDER SINGH

Applicant

AND

DALJEET SINGH BUTTAR

First Respondent

KIWI JOINT LIMITED

Second Respondent

Hearing: 9 February 2022

Appearances:

D P Weaver and A G Needham for Applicant B Murray for First Respondent

Judgment:

21 February 2023

JUDGMENT OF DUFFY J

This judgment was delivered by me on 21 February 2022 at 2.00 pm pursuant to
Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:
Holland Beckett, Tauranga
Vallant Hooker & Partners, Tauranga

SINGH v BUTTAR & KIWI JOINT LTD [2023] NZHC 243 [21 February 2023]

[1] The applicant, Mr Singh, seeks leave to bring a proceeding by way of derivative action in the name of Kiwi Joint Ltd (Kiwi Joint) against the first respondent, Mr Buttar. Kiwi Joint is itself the second respondent.

[2] The application is made pursuant to s 165 of the Companies Act 1993 (the Act). If leave is granted, Mr Singh also seeks an order under s 166 of the Act that Kiwi Joint pay the reasonable costs of the proceeding.

Background

[3] Kiwi Joint is a kiwifruit contracting business in the Bay of Plenty. The first respondent, Mr Buttar, is a 50 per cent shareholder of Kiwi Joint and one of its two directors. The applicant, Mr Singh, is its other director. He holds 30 percent of Kiwi Joint’s shares. The third and final shareholder is Mr Singh’s wife, who holds 20 per cent of Kiwi Joint’s shares.

[4] On 24 March 2021, Mr Singh made the originating application under s 165 of the Act for leave to bring a derivative action in the name of Kiwi Joint against Mr Buttar (the application). Mr Singh claimed various breaches of directors’ duties, breach of fiduciary duty and equitable fraud by Mr Buttar.

[5] Simultaneously, Mr Singh (in the name of Kiwi Joint) made an interlocutory application for leave to issue charging orders before judgment, as well as freezing and ancillary orders. The hearing for that interlocutory application was set down for 22 June 2021. On 18 June 2021, the respondent undertook not to dispose of assets and to provide relevant information. The 22 June hearing was vacated as a result.

[6] After deliberations between the parties, counsel by joint memorandum dated 4 November 2021 confirmed that the applicant intended to withdraw the interlocutory application. They cited the respondent’s undertaking as the reason for withdrawal. Importantly, however, Gardiner AJ had also questioned Mr Singh’s standing to bring that interlocutory application in Kiwi Joint’s name without orders regarding his derivative action application.1 Her Honour had directed counsel for the appellant to

1 Singh v Buttar HC Tauranga CIV-2021-470-26, 20 September 2021 at [6].

file memoranda addressing this issue of standing.2 Counsel did not do so before withdrawing the interlocutory application.

The proposed claims

[7]The draft statement of claim alleges five causes of action.

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 Singh v Buttar

Details

AGLC: Singh v Buttar [2023] NZHC 243
Case: [2023] NZHC 243
Decision Date: 21 February 2023

CaseChat Overview and Summary

In the High Court of New Zealand, Singh v Buttar & Kiwi Joint Ltd involved an application by Jaswinder Singh for leave to bring a derivative action against Daljeet Singh Buttar and Kiwi Joint Ltd. Singh sought to recover substantial sums of money allegedly misappropriated by Buttar. The court had to determine whether to grant Singh leave to bring the derivative action under s 165 of the Companies Act 1993. The court considered the likelihood of the proceedings succeeding, the costs relative to the relief likely to be obtained, any action already taken by the company to obtain relief, and the interests of the company in the proceedings being commenced, continued, defended, or discontinued. The court was satisfied that Singh had met the requisite legal threshold and found that the evidence before it warranted granting the application to bring a derivative action. The court granted Singh’s application and the parties were permitted to file memoranda on costs.

Orders