Vance v Vey Group Ltd - [2019] NZHC 1676

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV 2018-485-505

[2019] NZHC 1676

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

Hearing: 28 and 29 May 2019

Counsel:

R L Roff for Plaintiffs

J K Mahuta-Coyle for Defendants

Judgment:

18 July 2019

JUDGMENT OF MALLON J

Table of contents

Introduction [1]

The facts [4]

Vey and the trusts [4]

The Wellington property [8]

Changes to ownership of the Wellington property [11]

Relationship breakdown between Patricia and Daryn [13]

Sale of Vey shares [15]

Plaintiffs appointed trustees [17]

Initial dealings between Mr Fugle and the Trustees [18]

The proposed sale of the Wellington property [33]

The alleged debt owed by Vey to Orana [35]

The special general meeting [42]

Proceeding commenced [49]

VANCE v VEY GROUP LIMITED [2019] NZHC 1676 [18 July 2019]

Current value of the Wellington property [53]

First issue: the Trustees’ standing [56]

Second issue: oppressive, unfairly discriminatory or unfairly prejudicial conduct [58]

The law [58]

The defendants’ conduct [63]

My assessment [65]

Third issue: relief [73]

The law [73]

Submissions [77]

My assessment [79]

Result [87]

Introduction

[1] The plaintiffs, Mr Vance and Mr Millard QC, are the independent trustees (the Trustees) of the Orana Trust (Orana). Orana holds 49 per cent of the shares in Vey Group Limited (Vey) (the first defendant). Leslie Fugle (the second defendant) is the sole director of Vey. The Trustees believe the remaining shares are held by people associated with Mr Fugle. They consider Vey, through Mr Fugle, is being conducted in a manner that is oppressive or unfairly discriminatory or prejudicial to Orana. They seek relief under s 174 of the Companies Act 1993 in the form of an order placing Vey in liquidation.

[2] The oppressive, unfairly discriminatory or prejudicial actions concern alleged misleading conduct about registering the Orana shares in the names of the Trustees; approving a financing arrangement that was a major transaction without approval of 75 per cent of the shareholders; refusing to allow the Trustees to vote at a shareholders’ meeting deciding whether to approve the sale of Vey’s only asset; a lack of transparency and Company Act breaches concerning the accounts and other matters; and failing to respond to the Trustees’ claim that Vey is liable to Orana for a substantial debt. Overall, the Trustees say they can no longer have confidence in Mr Fugle’s conduct of Vey because of these matters and the only appropriate relief is liquidation.

[3] The defendants submit the Trustees do not have standing to bring the application; the conduct was not oppressive, unfairly discriminatory or unfairly prejudicial and was understandable in the circumstances; and if any relief is ordered it is not appropriate that it be an order for liquidation.

The facts

Vey and the trusts

[4] Francis Turvey (now deceased) had a range…

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 Vance v Vey Group Ltd

Details

AGLC: Vance v Vey Group Ltd [2019] NZHC 1676
Case: [2019] NZHC 1676
Decision Date: 18 July 2019

CaseChat Overview and Summary

The plaintiffs, Mr Vance and Mr Millard, are the independent trustees of the Orana Trust. They hold 49 per cent of the shares in Vey Group Limited (Vey). The defendants, Vey and Leslie Fugle, are the sole director of Vey. The plaintiffs brought proceedings under s 174 of the Companies Act 1993 against Vey and Mr Fugle for oppressive, unfairly discriminatory or unfairly prejudicial conduct. The plaintiffs alleged that Vey, through Mr Fugle, was being conducted in a manner that was oppressive, unfairly discriminatory or unfairly prejudicial to Orana. They sought relief in the form of an order placing Vey in liquidation. The defendants submitted that the plaintiffs did not have standing to bring the application; the conduct was not oppressive, unfairly discriminatory or unfairly prejudicial; and if any relief was ordered it was not appropriate that it be an order for liquidation. The Court found that the plaintiffs had standing to seek relief under s 174 of the Companies Act. It found that Mr Fugle had engaged in conduct that was oppressive, unfairly discriminatory and unfairly prejudicial to the Trustees. The Court found that a buy-out process was not appropriate and that the most appropriate relief would be an order placing Vey in liquidation. However, it considered that it was just and equitable to allow the parties to determine the quantum of the Orana debt and the value of the Orana shares, which would allow the majority shareholders to purchase the shares on a fair basis. The Court ordered that an independent accountant be appointed by the chairperson of the Auckland District Law Society to prepare financial statements from 2015 to the present and to give his or her opinion on a fair price for the Orana shares. The parties were given a reduced period of time to sell the shares, if they wished to do so, at that price. If the above process did not result in the sale of the Orana shares, or if Mr Fugle did not cooperate, the parties were granted leave to apply for further relief under s 174.

Orders