Unka v Dodd - [2018] NZHC 1665

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-170

[2018] NZHC 1665

IN THE MATTER OF Ownership of the shares of Copperfield Village Limited

BETWEEN

LESLEY CHRISTINE UNKA as trustee of the PRATIMA BHABNISHA PATEL

TRUST
Applicant

OPERATIONAL SERVICES LIMITED
Applicant

LESLEY CHRISTINE UNKA
Applicant

EVAN DESMOND BOURKE
Applicant

AND

ARTHUR WATSON DODD

Respondent

COPPERFIELD VILLAGE LIMITED

Respondent

Hearing: 13 March 2018

Counsel:

Q S Haines for Applicants

J A Langford for Respondents

Judgment:

14 March 2018

Reasons:

6 July 2018

JUDGMENT OF CLARK J

UNKA v DODD [2018] NZHC 1665 [6 July 2018]

Introduction

[1] On 13 March 2018 I heard the applicants’ application for an interim injunction. I declined to make the orders sought. In this judgment I provide my reasons for declining the application.

Background

[2] The background facts, which are not disputed, involve Mr Dodd being approached in early 2016 by Ron Schlatter, a mortgage broker and friend of several years. Mr Schlatter had a proposition for Mr Dodd. If Mr Dodd were to allow a person to use his name he would be paid $50,000. Mr Dodd deposed to “this sound[ing] too good to be true, which it has proven to be”.

[3] As Mr Dodd’s several properties were owned by his trust he did not feel exposed and agreed to be involved. The point of Mr Dodd’s involvement was to lend credibility to a loan application to be made by one Keran Unka, a bankrupt. The loan was apparently to fund the purchase of a commercial property at Kapiti, known as Copperfields. Mr Dodd understood from a lawyer and an accountant acting for Mr Unka at a meeting on 2 May 2016 that although he was driving the matter, Mr Unka was to be kept at a distance from the transaction because he was a bankrupt. There was no mention of Mr Unka’s wife and she was not present at the meeting.

[4] Mr Dodd had been told that after approximately six months from May 2016 Mr Unka would refinance the complex and Mr Dodd’s role would end.

[5] Mr Bourke, a friend and business associate of Mr Unka’s, signed the sale and purchase agreement for Copperfields in his name. Mr Bourke nominated the newly formed Copperfield Village Limited (Copperfield Village) to be the nominated purchaser of the property. Nomination of Copperfield Village was conditional upon shares in the company being held by Mr Dodd as trustee. Mr Bourke’s company, Operational Services Limited, was to have the management contract for the property. A “deed of trust for shares” was signed by Mr Dodd and emailed to Mr Unka’s lawyer, Mr Soper, on 5 May 2016.

[6] Over the following months, Mr Dodd was required to make various cash injections to keep the company solvent. In December 2016, Mr Unka offered Mr Dodd a loan agreement recording Mr Dodd’s total payments at $135,000 plus interest at 15 per cent, amounting to approximately $150,000. Mr Dodd…

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: [2018] NZHC 1665
Decision Date: 14 March 2018

CaseChat Overview and Summary

Unka v Dodd involved an application by several parties for an interim injunction to be made in relation to the ownership of shares of Copperfield Village Limited. The application was heard in the High Court of New Zealand by Clark J, who dismissed the application on 14 March 2018. The applicants sought a number of orders including that shares in Copperfield Village Limited vest with Lesley Christine Unka as Trustee of the Pratima Bhabnisha Patel Trust and that Arthur Watson Dodd be removed as a director of Copperfield Village Limited. The application was made under the Companies Act 1993, the Trustee Act 1956 and on the basis of the evidence of four deponents. The applicants argued that the purpose of the injunction was to allow settlement of funds and further injection of capital into Copperfield Village. The respondents opposed the application on the grounds the applicants sought to uphold a sham arrangement designed by Keran Unka to conceal his involvement as the architect and effective director of the arrangement, and to defeat the insolvency laws. The court found that the applicants had not met the threshold of a serious question to be tried and that the overall justice and the balance of convenience favoured declining the application for a mandatory injunction. In addition, the applicants failed to provide an undertaking as to damages as required by r 7.54 of the High Court Rules 2016.

The legal issues the court had to decide were whether the applicants had met the threshold of a serious question to be tried and whether the overall justice and the balance of convenience favoured making the orders sought. The court found that the applicants had not met the threshold of a serious question to be tried as there were serious questions as to the real intention of the parties and certainty of beneficiary. The issues were not, and were not expected to be, fully investigated in the context of an urgent hearing for an interim injunction. The court also found that the overall justice and the balance of convenience favoured declining the application for a mandatory injunction as the applicants failed to establish that there is a serious question to be tried. The applicants also failed to provide an undertaking as to damages as required by r 7.54 of the High Court Rules 2016. For these reasons the application was declined.

The court's reasoning and outcome were based on the evidence and arguments presented by both parties. The court found that the applicants had not met the threshold of a serious question to be tried and that the overall justice and the balance of convenience favoured declining the application for a mandatory injunction. The court also found that the applicants failed to provide an undertaking as to damages as required by r 7.54 of the High Court Rules 2016. The court's decision was based on a careful consideration of the evidence and arguments presented by both parties and the application of the relevant legal principles. The court's decision was also consistent with the approach to be taken to applications for interim injunctions, which requires the plaintiff to show that there is a serious issue to be tried, the balance of convenience weighs in favour of making the orders sought, and the overall justice favours the making of the orders sought.

Orders