Thomson v Surch - [2022] NZHC 820

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-000455

[2022] NZHC 820

BETWEEN
CHRISTOPHER BRUCE THOMSON AND DALE ANTHONY WADSWORTH

Plaintiffs

AND

TROY ADAM SURCH

Defendant

Hearing:
22 March 2022

(Further evidence and submissions filed 31 March 2022)

Appearances:

G J Ryan and N J McKessar for Plaintiffs No Appearance for Defendant

Judgment:

26 April 2022

Reissued:

9 May 2022

JUDGMENT OF EATON J ON FORMAL PROOF

This judgment was delivered by me on at pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

THOMSON v SURCH [2022] NZHC 820 [26 April 2022]

Introduction

[1] On 6 October 2021, the plaintiffs, Messrs Wadsworth and Thomson, applied for an order rectifying the share register of NZ Radiators Trustee Ltd (the Company) pursuant to s 91 of the Companies Act 1993. The register currently records the shares to be held jointly by Mr Wadsworth, and the defendant, Mr Surch. The plaintiffs seek rectification to record the shares as held jointly by Mr Wadsworth and Mr Thomson.

Response of Mr Surch

[2] On 29 November 2021, Associate Judge Lester made an order for substituted service, directing that service of the claim and notice of proceeding be effected on Mr Surch other than by way of personal service. Between 6 and 8 December 2021, service was effected in accordance with the orders made by Associate Judge Lester.

[3] Mr Surch has not filed a statement of defence. He has taken no steps. The application was set down for a formal proof hearing. Mr Surch did not appear at the formal proof hearing on 22 March 2022.

[4] The application was supported by an affidavit of Mr Wadsworth dated 11 March 2022. Following discussion with Mr Ryan, on behalf of the plaintiffs, the application was adjourned for Mr Ryan to file further evidence. An affidavit was filed by Mr Thomson on 31 March 2022. I have considered both affidavits.

The evidence

[5] The plaintiffs are business partners. They were previously in business with Mr Surch in the Company and a radiator business, NZ Radiator Ltd (the Business).

[6] The Company holds the shares in the Business. The Company’s shareholding is currently held jointly, as to 100 per cent of its shares, by Mr Wadsworth and Mr Surch.

[7] In March 2016 the parties reached an agreement to beneficially own the Business through personal trusts and private companies. The agreement was

documented in a shareholders’ agreement (the Agreement) dated 23 March 2016. The parties to that agreement were:

(i)Mr Surch and Mr Wadsworth as trustees of the Zurich Oak Trust (Zurich).
(ii)Cognata Investments Ltd (Cognata).
(iii)Mr Thomson, Ms Tanja Frets and WF Trustees 2007 Ltd as trustees of Belgica Trust (Belgica).

[8] Mr Thomson deposes that, as set out in the agreement, the Company held the shares of the Business for Zurich, Cognata and Belgica. Zurich was a trust for the benefit of Mr Surch. Cognata was a limited liability company holding investments on…

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 Thomson v Surch

Details

AGLC: Thomson v Surch [2022] NZHC 820
Case: [2022] NZHC 820
Decision Date: 26 April 2022

CaseChat Overview and Summary

The plaintiffs, Messrs Thomson and Wadsworth, sought to have the share register of NZ Radiators Trustee Ltd rectified under s 91 of the Companies Act 1993. They argued that the register, which recorded the shares as held jointly by Mr Wadsworth and Mr Surch, should be amended to reflect that they held the shares jointly. Mr Surch did not defend the application. The central legal issue was whether the Court should rectify the share register of the Company to reflect the plaintiffs’ equitable interests. The plaintiffs submitted that they were the beneficial owners of the shares, and that Mr Surch no longer had any beneficial interest in the shares of either the Company or the Business. They argued that unless the share register was rectified, Mr Surch would remain as a shareholder with no beneficial or equitable interest in the shares of the Company, while Mr Thomson, who did have a beneficial interest in those shares, remained omitted from the register. The Court accepted the submission advanced on behalf of the plaintiffs. It found that the plaintiffs had undertaken a process prescribed by the shareholders’ agreement, and that Mr Surch no longer had a legal or equitable interest in the shares of the Company. The Court held that it was appropriate to rectify the register under s 91 of the Companies Act, as the legal and beneficial ownership of the shares should align. The Court made an order rectifying the share register of the Company by removing Mr Surch as a shareholder and recording the shareholders as Messrs Thomson and Wadsworth, jointly. The Court also granted leave to the plaintiffs to apply for any further consequential orders or directions in order to give effect to the order rectifying the share register. Finally, the Court ordered the defendant to pay costs to the plaintiffs on a 2B basis.

Orders