Wagner v B Property Group Limited - [2024] NZHC 1305

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-425-022

[2024] NZHC 1305

UNDER the Companies Act 1993

BETWEEN

KURT BRADLEY WAGNER

Applicant

AND

B PROPERTY GROUP LIMITED

Respondent

AND

ANDREW STEWART GRAEME McINTOSH

Non-party

Hearing: 22 April 2024

Appearances:

S P Pope and V V Kumar for Applicant P W G Ahern for Respondent

S N McKenzie and S K Gibb for Non-party

Judgment:

23 May 2024

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 23 May 2024 at 3.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

WAGNER v B PROPERTY GROUP LIMITED [2024] NZHC 1305 [23 May 2024]

[1] The applicant (Mr Wagner) and the non-party (Mr McIntosh) are each 50 per cent shareholders in the respondent, B Property Group Ltd (BPGL). Mr McIntosh is, and has at all material times been, the sole director and in effective control of BPGL. Mr Wagner acquired his shares in the company when he invested
$10 million which was to be used to develop a hotel in Wānaka. The development has not proceeded.

[2] Mr Wagner brought this proceeding under s 178 of the Companies Act 1993 (the Act) to obtain information about what happened to his investment in BPGL. This has resulted in substantive judgments of Dunningham J of 20 July 2023,1 and Associate Judge Lester of 15 November 2023,2 and a further judgment of Associate Judge Lester dismissing an application by Mr McIntosh for leave to appeal.3 In the first two judgments orders were made in Mr Wagner’s favour requiring disclosure of the information he sought.

[3] Mr Wagner seeks an order that Mr McIntosh personally pay indemnity costs or, in the alternative, increased or scale costs on his applications under s 178. Mr McIntosh considers he should not have to pay costs and certainly not indemnity costs.

[4]The issues are:

(a)Should Mr McIntosh be ordered to personally pay costs on the applications?

(b)If so, is an award of indemnity or increased costs justified?

(c)Were the legal costs and expenses of Mr Wagner reasonably and necessarily incurred?

(d)What sum should be awarded?

1      Wagner v B Property Group Ltd [2023] NZHC 1898.
2      Wagner v B Property Group Ltd [2023] NZHC 3230.
3      Wagner v B Property Group Ltd [2024] NZHC 911.

The background

[5] The relevant background leading to the judgment of Dunningham J (following a hearing on 17 July 2023) is set out in her judgment, which I adopt as follows:4

[6] In February 2022, Mr Andrew McIntosh, the sole director of BPGL at the time, provided Mr Wagner with an Information Memorandum describing an opportunity to invest in the development of the Kitea Hotel in Wanaka. Mr Wagner entered into a Subscription Agreement with BPGL under which he invested $10,000,000 in BPGL and became a 50 per cent shareholder of that company. The Subscription Agreement explained that BPGL had been established to own and operate…

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: [2024] NZHC 1305
Decision Date: 23 May 2024

CaseChat Overview and Summary

In Wagner v B Property Group Limited, the High Court was required to decide whether the sole director of a company, who was also a 50% shareholder, should be ordered to pay personal costs incurred by the other shareholder in obtaining information from the company. The court was also required to decide if an award of indemnity or increased costs was justified and, if so, the appropriate amount. Kurt Wagner and Andrew McIntosh are each 50% shareholders in B Property Group Limited (BPGL), a company established to own and operate a hotel in Wānaka. Wagner invested $10 million in BPGL for the hotel development, but became concerned about the lack of progress and sought information from BPGL under s 178 of the Companies Act 1993. McIntosh, as the sole director, did not provide the information, and Wagner brought applications to the High Court to compel disclosure. McIntosh opposed the applications, and the court found his opposition to be without merit. The court held that McIntosh should be ordered to pay costs because he was not acting in the interests of the company but in his own interests. McIntosh's conduct was found to be vexatious, frivolous, improper, and unnecessary, justifying an award of indemnity costs. The court determined that the reasonable costs incurred by Wagner were $67,500, plus disbursements of $7,164.71 and scale costs of $10,038. McIntosh was ordered to pay indemnity costs of $67,500, disbursements of $7,164.71, and scale costs of $10,038.

Orders