Vance v Vey Group Limited - [2020] NZHC 245

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV 2018-485-505

[2020] NZHC 245

UNDER The Companies Act section 174

IN THE MATTER OF

Vey Group Limited

BETWEEN

DAVID VANCE and IAN MILLARD

Plaintiffs

AND

VEY GROUP LIMITED

First Defendant

LESLIE WILLIAM FUGLE

Second Defendant

On the papers

Judgment:

21 February 2020

JUDGMENT OF MALLON J

(Costs)

[1] In this proceeding the plaintiffs claimed that Vey Group Limited (Vey) (the first defendant) (through the conduct of Leslie Fugle (the second defendant)) was being operated in a manner that was oppressive, unfairly discriminatory or prejudicial to them (as trustees of a minority shareholder). They sought relief under s 174 of the Companies Act 1993 in the form of an order placing Vey in liquidation.

[2] Mr Fugle was the sole director of the company. He was the registered shareholder of just one share in the company (held on trust for another shareholder) but the plaintiffs’ enquiries indicated that the remaining shareholders were associated with Mr Fugle. In any case, the evidence established that Mr Fugle was able to control

VANCE v VEY GROUP LIMITED [2020] NZHC 245 [21 February 2020]

Vey and that he did so in a manner that was oppressive, unfairly discriminatory and unfairly prejudicial to the plaintiffs.1

[3] The plaintiffs succeeded in establishing that relief ought to be granted. Although the statement of claim specified a range of relief the Court might order, in their submissions the plaintiffs concentrated on an order placing Vey in liquidation. That relief was not granted. I ordered a process intended to provide a mechanism by which the majority shareholders would have the opportunity to buy the plaintiffs’ shares at a fair price or for the plaintiffs to sell to any other person.2 If this process did not result in a sale of the plaintiffs’ shares, the parties had leave to apply for further relief and this might be for Vey to be placed in receivership or liquidation.3 These orders were stayed by consent following an appeal against my judgment brought by Vey and Mr Fugle as appellants.4

[4] The plaintiffs seek an order for costs. They seek costs on a 2B basis and reasonable disbursements. They have provided a schedule that calculates costs at
$39,694 and disbursements at $13,929.34. They seek an order that the costs be ordered against Mr Fugle personally, or alternatively against Vey. The order is sought against Mr Fugle because the plaintiffs will bear a portion of the costs as a 49 per cent shareholder of Vey if costs are ordered against Vey. They say this would be unfair to them because it was Mr Fugle’s actions that required their application for relief.

[5] The defendants oppose the Court making an order for costs at this stage. This is because of two offers Mr Fugle made to purchase the plaintiffs’ shares. One of those was for $100,000 and was made six months prior to the commencement of proceedings.…

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.

Keep reading for free

Create a free CaseChat account to read Vance v Vey Group Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2020] NZHC 245
Decision Date: 21 February 2020

CaseChat Overview and Summary

The case of Vance v Vey Group Limited involved the plaintiffs, David Vance and Ian Millard, bringing an action against Vey Group Limited and its director, Leslie Fugle, seeking relief under section 174 of the Companies Act 1993. They claimed that Vey Group Limited, through Leslie Fugle, was being operated in a manner that was oppressive, unfairly discriminatory, and prejudicial to them as minority shareholders. The plaintiffs sought an order for liquidation of Vey Group Limited. Leslie Fugle was the sole director and the registered shareholder of just one share in the company, although the remaining shareholders were associated with him. The evidence indicated that Leslie Fugle controlled Vey Group Limited and acted in a manner that was oppressive, unfairly discriminatory, and unfairly prejudicial to the plaintiffs.

The legal issues before the court included whether Vey Group Limited, through Leslie Fugle, was being operated in a manner that was oppressive, unfairly discriminatory, or unfairly prejudicial to the plaintiffs. The court also had to determine the appropriate relief to grant if the plaintiffs' claims were successful. The court was asked to consider the defendants' argument that costs should be reserved until an independently appointed accountant valued the plaintiffs' shares, as the outcome of the proceedings was uncertain.

The court found that Vey Group Limited, through Leslie Fugle, was being operated in a manner that was oppressive, unfairly discriminatory, and unfairly prejudicial to the plaintiffs. The court ordered a process intended to provide a mechanism by which the majority shareholders would have the opportunity to buy the plaintiffs' shares at a fair price or for the plaintiffs to sell to any other person. If this process did not result in a sale of the plaintiffs' shares, the parties had leave to apply for further relief, which might include placing Vey Group Limited in receivership or liquidation. The court declined to reserve costs at this stage, finding that Leslie Fugle's earlier offers to purchase the plaintiffs' shares were well below their value. The court held that the plaintiffs should be awarded costs on a 2B basis against both defendants, with joint and several liability.

The court ordered costs of $39,694 and disbursements of $13,929.34 against the defendants, Vey Group Limited and Leslie Fugle. The plaintiffs were successful in establishing that relief should be granted due to the oppressive, unfairly discriminatory, and unfairly prejudicial conduct of Vey Group Limited, through Leslie Fugle. While the plaintiffs did not obtain their preferred relief, they did secure orders from the court. The court found that the defendants opposed the plaintiffs' claims, and the plaintiffs' success was not entirely tempered by the court's rejection of their preferred relief. The court did not find it appropriate to order that Leslie Fugle solely bear the costs of the litigation, as it had not been established that he acted solely for his personal benefit. Instead, the court ordered costs against both defendants, with joint and several liability.

Orders