Singh v Dua

[2019] NZHC 971

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-626

[2019] NZHC 971

UNDER

the Companies Act 1993

IN THE MATTER OF

an application for urgent interim relief and for leave to bring a derivative action on behalf of AUCKLAND TAXI SERVICE

LIMITED a duly incorporated company having its registered office at Unit 9, 203 Kirkbride Road, Mangere, Auckland 2022 and carrying on business as a provider of taxi services

BETWEEN

JOGINDER SINGH

First Applicant

SUKHDEV SINGH HUNDAL
Second Applicant

AND

MANMOHAN SINGH DUA

Respondent

Hearing:

2 May 2019

Appearances:

L T Meys for Applicants

I M Hutcheson for Respondent

Judgment:

6 May 2019

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 6 May 2019 at 12.45 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

SINGH v DUA [2019] NZHC 971 [6 May 2019]

Parties

[1]    The applicants, who are the first two plaintiffs, seek interim relief. They are members of Auckland Gold Line Co-operative Taxi Society Limited (“Society”), a Society registered under the Industrial and Provident Societies Act 1908. The Society owns all the shares in Auckland Taxi Service Limited (“ATS”).

[2]    Mr Singh, the first named applicant, is a director of ATS, as is the respondent, Mr Dua, and several others. Mr Dua is the Managing Director of ATS.

[3]    Mr Hundal, the second named applicant, was or is also a director of ATS. The Companies Office records for ATS show that Mr Hundal has ceased to be a director. However, Mr Hundal’s evidence is that no meeting was called to remove him as a director and Mr Hundal believes that Mr Dua removed him as a director of Mr Dua’s own initiative, merely by making an online entry in the Companies Office records.

[4]    The third named applicant, ATS, is not a plaintiff as yet. The applicants have sought an order giving them leave to commence a derivative action on behalf of ATS, but I am not required to determine that application at present.

Issues

[5]The interim relief sought is as follows:

1.1An order for urgent interim relief requiring that a notice sent to Auckland Airport on about 1 April 2019 purportedly on behalf of Auckland Taxi Service Limited (ATS), advising that the first applicant Joginder Singh is banned from working at Auckland Airport, must be withdrawn and is of no legal effect; and

1.2An order for urgent interim relief prohibiting Manmohan Singh Dua from being involved in sending any notices, on behalf of ATS to Auckland Airport, seeking to block from working at the Airport any of the persons who signed a requisition dated 31 March 2019 or Notice of Special General Meeting calling for elections in ATS’ parent entity Auckland Gold Line Co-Operative Taxi Society Limited (the Society); and

1.3An order prohibiting Mr Dua and associated entities controlled by him from taking any further payments from A TS over and above his authorized salary of $1,600 salary per week; and

1.4That leave be granted to the applicants to bring proceedings on behalf of ATS against Mr Dua for breach of director’s duties and misappropriation of company funds; and

1.5Any other such orders this Honourable Court deems fair and just.

Background

[6]    There is internal dispute within the Society and ATS as to who is to control the business. However, the issues requiring immediate resolution concern actions that Mr Dua is said to have taken.

[7]    The first of these, addressed in [1.1] quoted above, was to exclude Mr Singh from access to the taxi ranks at the Auckland Airport terminals. ATS is one of several companies permitted to operate from the ranks, the airport work being by far the most lucrative for drivers.

[8]    The second is to prohibit Mr Dua from sending notices of the type alleged and as regards the persons referred to in [1.2] quoted above.

[9]    The third order sought quoted in [1.3] above is to restrain Mr Dua, “and associated entities” he controls, from receiving any payment from ATS beyond his authorised salary of $1,600 per week. Mr Meys advised me this issue can be deferred, given time constraints.

Mr Singh

[10]   By letter dated 1 April 2019, ATS advised Mr Singh that it was “suspending” his access to the ranks. The reason given for the suspension was that Mr Singh was believed to have been disclosing confidential financial information to third parties or to other ATS personnel or both. The suspension was to continue whilst ATS investigated the same. Mr Singh’s access card(s) to enter the ranks have been de-activated and, apparently, ATS has advised Auckland Airport that Mr Singh is not permitted to pick up from the ranks.

[11]   The letter advised Mr Singh that the suspension was pursuant to cl 8.5 of the Operator’s Agreement (“agreement”) between ATS and Mr Singh. This agreement

comprises the terms on which drivers under the ATS banner operate. The letter also advised Mr Singh that the monthly levy he would otherwise be obliged to pay to ATS (or to the Society) would be reduced from $585 to $100. In my view, this substantial reduction in the levy serves to confirm the importance of access to the ranks.

[12]   Mr Meys, counsel for Mr Singh, contends that there is an arguable case the suspension was unlawful. Mr Singh denies any wrongdoing, and the “investigation” referred to in the letter has not occurred. As to the balance of convenience, Mr Meys submits that Mr Singh’s exclusion from the airport ranks is financially ruinous for him.

[13]   Mr Hutcheson, for Mr Dua, contends that Mr Dua was entitled to do as he did, as the power to suspend is a matter of management, and vested in Mr Dua in his capacity as Managing Director. Mr Hutcheson also referred me to several other provisions of the agreement which he contended were relevant and would enable suspension if cl 8.5 did not. Mr Hutcheson also submitted that a substantial concession had been made to Mr Singh by the reduction of the levy and that Mr Singh remained eligible to undertake other work.

[14]   I am satisfied there is a serious issue to be tried. That is because Mr Singh denies any breach of his obligations. Moreover, cl 8.5 of the agreement provides:

Serious misconduct- The Company may immediately terminate the agreement and deactivate his airport or dispatch device access if any of following is reported. In such cases [the] company after deactivation, at its discretion may later conduct a hearing, until such investigation and hearing the access will remain suspended. After hearing the decision whether to reactivate the operator on any platforms will be [at the] sole discretion of [the] company. Serious misconduct [is] as follows but not limited to;

·     Violent abusive, disorderly, or inappropriate behaviour with passengers, company management, office staff, airport staff in [the] company’s view.

·     Charged by police for any serious offence.

·     Found drunk or on drugs while driving [a] taxi.

·     Fare refusal, inappropriate tariffs, work hour breaches.

[15]   The power under cl 8.5 is vested in the company. I am not satisfied that it would lie within Mr Dua’s remit as Managing Director to act on this provision of his own initiative.

[16]   Mr Hutcheson referred me to other provisions he submitted entitled Mr Dua to act as he had. These were:

(a)4.4 – this comprises the operator’s agreement to be bound by ATS disciplinary procedures and to do or abstain from doing any act pursuant to any direction of the management. Mr Hutcheson submits that Mr Dua is “management” and that this provision enables him to suspend access.

(b)8.1 – this gives ATS a right to terminate the agreement if the operator undertakes any proscribed acts, such as repudiation of the agreement, insolvency, breach of the agreement, unsatisfactory conduct, bringing ATS into disrepute and similar. There has been no termination, so this clause does not apply.

(c)8.4 – this gives ATS a right to suspend the operator’s right on a breach of the agreement.

(d)8.5 – as above.

[17]   It may be that there is room for argument in due course as to the lawfulness of Mr Dua’s actions. However, he referred to cl 8.5 in his letter, and I am satisfied that a serious issue arises on that provision.

[18]   I am also satisfied the balance of convenience lies with Mr Singh, for the reason given in [12] above.

Restraining Mr Dua from sending notices

[19]   As I understand it, the background to the second order sought is as follows. Mr Dua has instructed others aligned with Mr Singh to work a recently implemented “night shift”, which requires those drivers to service the airport ranks between 1.00 am and 4.00 am. Few flights are scheduled to depart or arrive during these hours.

[20]   That said, Mr Dua’s evidence is that the airport requires the ranks to be serviced at this time, that to date ATS has fallen short of its responsibilities in this regard and it needs to comply with its obligations, particularly as the airport company will soon commence a new tender process for access to the taxi ranks.

[21]I am not persuaded to grant this relief, for these reasons.

[22]   First, the order sought is too broad. There may be very good reason for Mr Dua to send notices falling within the description encompassed by the order sought in [1.2].

[23]   Secondly, on the face of it, the reasons given for requiring the ranks to be serviced at those times are sensible.

[24]   Thirdly, there is no evidence that Mr Dua intends to impose this regime on some drivers only. Plainly that would be open to dispute. If he has not done so already, I expect that Mr Dua will be implementing a scheme or roster so that all drivers share equally in the burden of ensuring ATS’s compliance with the airport contract, unless there is good reason to exclude a particular driver. Given the parties’ history, if there is no roster or one is not put in place promptly, I imagine Mr Dua may face a further application for relief.

Result

[25]   Pending further order of the Court, I make an order requiring Mr Dua to take such steps as are required to reinstate Mr Singh’s access to the airport ranks.

[26]   For the reasons given, I decline to make the order sought in [1.2] of the application for interim relief.

[27]   Counsel are to liaise as to whether the plaintiffs are to have leave, by consent, to bring a derivative action. In the absence of consent, Mr Meys is to communicate with the case officer so that hearing time can be arranged. Counsel should provide an agreed estimate of time.

Costs and disbursements

[28]   The applicants have succeeded in part only. They are entitled to an order for costs and disbursements commensurate with their success, which I would put at 50 per cent. Costs and disbursements are to be fixed by the Registrar in the event of disagreement.

Peters J

Solicitors:           Neilsons Lawyers Limited, Auckland Counsel:  I M Hutcheson, Auckland