Tyrion Holdings Ltd v Claydon - [2015] NZHC 428

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4037 [2015] NZHC 428

UNDER the Companies Act

BETWEEN

TYRION HOLDINGS LTD Plaintiff

AND

PAUL FREDRIC CLAYDON First Defendant

INFRASTRUCTURE & CIVILWORKS LTD

Second Defendant

Hearing: 3 and 4 February 2015

Counsel:

D G Collecutt for Plaintiff
M R Taylor for Defendants

Judgment:

11 March 2015

JUDGMENT OF BREWER J

This judgment was delivered by me on 11 March 2015 at 3:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors: Doug Burgess (Auckland) for Plaintiff
Blackwells (Auckland) for Defendants

TYRION HOLDINGS LTD v CLAYDON [2015] NZHC 428 [11 March 2015]

Introduction

[1] The plaintiff (“Tyrion”) has brought proceedings claiming that the first defendant (“Mr Claydon”), in his capacity as director of Infrastructure NZ Ltd (“INZL”), misappropriated INZL’s assets by transferring them to the second defendant (“ICL”).1 Tyrion has standing to bring the claim if it is a shareholder of INZL. It pleads that it holds 50 percent of INZL’s shares. Mr Claydon denies that Tyrion holds any shares at all. The parties want to resolve the issue of standing before the substantive claim goes any further.2

Issues

[2] The principal issue I have to determine is set out in Tyrion’s application for

decision of questions filed on 17 October 2014:

Is Tyrion the holder of 50,000 shares (“the shares”) in INZL?

If I find it is not, other issues going to estoppel and rectification will have to be decided.

Is Tyrion the holder of the shares?

[3] INZL was incorporated in 2005. The initial shareholdings were:

· Mr Claydon: 49,000

·

Projects NZ Ltd

31,000

·

Blomfield Investments Ltd

20,000

[4] There is no direct evidence that INZL ever had a share register. Returns filed with the Companies Office are to the following effect:

(a) In 2006, Projects NZ Ltd transferred its 31,000 shares to Soloman

Enterprises Ltd (“SEL”).

1 A wholly owned subsidiary of INZL, Contract NZ Ltd, is included in the plaints, but for simplicity I will refer to INZL unless a distinction is necessary.
2 Rule 10.15 gives the Court jurisdiction to decide a question separately from any other question, and at any time – including before trial.

(b) In 2007, SEL transferred 30,000 shares to Black Trading Ltd and

1,000 shares to Mr Claydon.

(c) In 2008, Blomfield Investments Ltd transferred its shareholding to Tyrion, as did Black Trading Ltd.3 According to the Companies Office records, this resulted in Tyrion holding 50,000 shares. Mr Claydon held the other 50,000 shares.

[5] On 20 March 2009, Mr Claydon filed the online annual return for INZL. He recorded that he and Tyrion each owned 50,000 shares.

[6] On 4 February 2010, Mr Claydon filed the next online annual return for INZL

and showed the same shareholding.

[7] There was no annual return filed in 2011. On 2 May 2012, Mr Claydon filed an annual return asserting that he was the sole director of INZL and that he and Tyrion each owned 50,000 shares. In this return…

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.

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Details

Case: [2015] NZHC 428
Decision Date: 11 March 2015

CaseChat Overview and Summary

The High Court of New Zealand, Auckland Registry, was presented with a case where Tyrion Holdings Ltd (Tyrion) claimed that Paul Fredric Claydon (Mr Claydon) misappropriated assets of Infrastructure NZ Ltd (INZL) by transferring them to Infrastructure & Civilworks Ltd (ICL). Tyrion sought to determine if it held 50,000 shares in INZLand, therefore had standing to bring the claim. Mr Claydon denied Tyrion held any shares at all.

The principal issue was whether Tyrion was the holder of 50,000 shares in INZLand therefore had standing to proceed with the claim. The court examined the historical share transfers and annual returns filed with the Companies Office. Mr Claydon argued that Tyrion could not be a shareholder unless listed in INZLand's share register, which did not exist. The court found, on the balance of probabilities, that INZLand originally had a share register that went missing. The court also considered Mr Claydon's arguments regarding pre-emption rights and rectification of the register, but found Tyrion had acquired a legal or beneficial interest in the 50,000 shares.

The court held that Tyrion was the holder of 50,000 shares in INZLand. It followed that Tyrion had standing to bring the proceedings against the defendants. The court directed that the proceedings be put back into the case management system for allocation of a fixture date and for timetabling of intermediate steps. The costs of the application were reserved to be dealt with by the trial judge in the overall context of the eventual outcome.

Orders