Legal Research
Cases
Vey Group Ltd v Vance

Vey Group Ltd v Vance

Case [2020] NZCA 232 12 June 2020

Breach of Contract

Unconscionable Conduct

Remedies

Receivership

Statutory Interpretation

Corporate Law & Governance

Commercial Law

Type to search within this case.

FOR A COURT READY (FEE REQUIRED) VERSION PLEASE FOLLOW THIS LINK

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA368/2019
[2020] NZCA 232

BETWEEN	VEY GROUP LIMITED First Appellant LESLIE WILLIAM FUGLE Second Appellant
AND	DAVID VANCE AND IAN MILLARD AS TRUSTEES OF THE ORANA TRUST Respondents

Hearing:	11 May 2020 (further submissions 12 and 14 May 2020)
Court:	Kós P, Venning and S France JJ
Counsel:	J K Mahuta-Coyle for Appellants R L Roff for Respondents
Judgment:	12 June 2020 at 10 am

JUDGMENT OF THE COURT

A The appeal is dismissed.

BOrders appointing receivers to the first appellant are made at [71].
CThe second appellant is to pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

The Orana Trust owned an apartment building in Webb Street, Wellington. It did so via a company called Vey Group Ltd, the first appellant. The trustees, Patricia and Daryn Turvey, mother and son, fell into dispute. The son brought proceedings against Orana and obtained a consent judgment in June 2016. In September 2016 the second appellant, Leslie Fugle, was appointed a director of Vey. He was appointed by the then-sole director, Mrs Turvey, under a power in the company constitution. Mr Fugle and Mrs Turvey are cousins. He says, “I took on Vey in order to help Pat”.
Two weeks later an unusual expedient was taken to meet the judgment. A sheriff’s auction sold 51 per cent of Vey’s shares to Mr Fugle’s son. These 51 shares were then distributed to other persons evidently associated with Mr Fugle. He himself holds, legally at least, just one per cent, said to be on trust for Mrs Turvey. In August 2017 Mrs Turvey resigned as a director, leaving Mr Fugle sole director of Vey.
Differences between the Turveys continuing, in October 2017 Cull J appointed the respondents, David Vance, chartered accountant and Ian Millard QC trustees of Orana in their place.[1] The beneficiaries of the trust remain the Turveys and their various descendants.
[1]Turvey v Turvey HC Wellington CIV-2017-485-150, 27 October 2017.
Dealings between the respondent trustees and Mr Fugle have been deeply unsatisfactory. Exactly what Mr Fugle did will be discussed below when we address Issue Two. It will suffice for present purposes to record that Mallon J found Mr Fugle had conducted himself in a misleading and disingenuous manner concerning registration of the respondents as shareholders; had thereby excluded Orana from participating in a decision to approve a proposed sale of the Webb Street property at a special general meeting; had otherwise excluded the respondents from decisions in which they reasonably could expect to have been involved; failed to be transparent with them and failed to provide information they were reasonably entitled to receive; and had failed to address Vey’s indebtedness to Orana — meaning the respondents could not assess the value of Orana’s shareholding and whether offers made…

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 Vey Group Ltd v Vance

Details

AGLC: Vey Group Ltd v Vance [2020] NZCA 232
Case: [2020] NZCA 232
Decision Date: 12 June 2020 at 10 am

CaseChat Overview and Summary

Vey Group Ltd and Leslie William Fugle appeal against a decision of Mallon J in the High Court that the affairs of Vey had been conducted in a manner that was oppressive, unfairly discriminatory or unfairly prejudicial to David Vance and Ian Millard, the trustees of the Orana Trust. Mallon J ordered an independent accountant to prepare financial statements, ascertain the indebtedness of Vey to Orana, and determine a fair sale price for Orana’s shares. She also ordered that the shares be sold to the majority at that price. The appeal was dismissed by the Court of Appeal. The Court found that the respondents had standing to bring the application under s 174 of the Companies Act. They had acquired a chose in action pending legal title, an inchoate right to registration. The shares would not be said to have passed to the respondents by operation of law until vesting orders were made, but the circumstances were not normal. The company’s unequivocal recognition of shareholder status meant the shares passed to the respondents by operation of law. The Court found that the affairs of Vey had been conducted by Mr Fugle in a manner that was oppressive, unfairly discriminatory or unfairly prejudicial to the respondents. The Court of Appeal considered eight points of Mr Fugle’s conduct. The first three were in a category of their own. Firstly, Mr Fugle had executed a director’s resolution to enter into a major transaction when shareholder approval by 75 per cent majority had not been received. Secondly, Mr Fugle had inconsistently dealt with the respondents as to their shareholding status. Thirdly, Mr Fugle had attempted to engineer the sale of the major asset of the company. The Court found that the High Court had erred in exercising the discretion conferred under s 174 of the Companies Act to provide relief to the respondents in the form of a buy-out process that differed from that provided for in Vey’s constitution. The Court of Appeal found that more intrusive orders were required than those made by the Judge. The Court of Appeal appointed John Howard Ross Fisk and Richard John Nacey as joint and several Court-appointed receivers of Vey Group Ltd. The Court ordered the receivers to take control of and ascertain the assets of the company, effect insurance of the major asset of the company, ascertain the true liabilities of the company, and report to the High Court on the best means of realising the assets of the company and distributing the net assets among the shareholders either pro rata or by enabling the purchase of the shares of the minority by the majority in accordance with the constitution of the company. The appeal was dismissed and the second appellant was ordered to pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

Orders