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Williams v Tellen Systems NZ (2013) Ltd

Williams v Tellen Systems NZ (2013) Ltd

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Case Copied 27 May 2021 74 min read

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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-727

[2021] NZHC 1199

BETWEEN
SIMON ANDREW WILLIAMS

Plaintiff

AND

TELLEN SYSTEMS NZ (2013) LIMITED

Defendant

CIV-2018-409-803

BETWEEN

TELLEN SYSTEMS NZ (2013) LIMITED
Plaintiff

AND

SIMON ANDREW WILLIAMS

First Defendant

SIMON ANDREW WILLIAMS, MELANIE JANE WILLIAMS and ROSTOCK TRUSTEES LIMITED

Second Defendant

Hearing: 23, 24, 25, 26, 27, 30 November, 1 and 2 December 2020

Appearances:

G Cooper and M Rhodes for the Plaintiff in CIV-2018-409-272 and the First Defendant in CIV-2018-409-803

B Gustafson and G Grant for the Defendant in CIV-2018-409-727 and the Plaintiff in CIV-2018-409-803

S M Grieve and T Brown for the Second Defendants in CIV-2018-409-803

Judgment:

27 May 2021

JUDGMENT OF GAULT J

This judgment was delivered by me on 27 May 2021 at 5:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………

WILLIAMS v TELLEN SYSTEMS NZ (2013) LTD [2021] NZHC 1199 [27 May 2021]

TABLE OF CONTENTS

Factual background  [2]
The two proceedings  [12]
Issues  [15]
Approach to contractual interpretation  [16] SPA claims

Non-disclosure? [17]

Bonus salary and dividend to clear retained earnings [19]

Sedco’s balance sheet solvency as at 31 March 2017 [54]

Sedco’s ability to pay creditors in January-April 2017 [63]
Factoring of invoices not due [75]

Material matters [88]

Cancellation [95]

Right to cancel [97]

Affirmation [102]

Notice to cancel [103]

Causation and loss [104]

Mr Williams’ SPA claim [108]

Tellen’s FTA claim [110]

Exclusion of FTA liability [112]

Misleading and deceptive? [121]

Loss [122]

Tellen’s SHA claim [125]

Causation and loss [132]

Tellen’s claims against the trustees for knowing receipt / dishonest

assistance [134]

Timing of alleged breach, receipt and use of funds [142]

Fiduciary duty? [148]

Knowledge [154]

Mr Williams’ SHA indemnity claim [156]

Result [160]

Costs [161]

[1] These two proceedings concern a dispute following an agreement for sale and purchase of 67 per cent of the shares in Sedco New Zealand Ltd (Sedco) for $850,000.

Factual background

[2] Mr Williams incorporated Sedco in 2012. He was the sole director and shareholder. Sedco manufactured and designed nurse call systems for rest homes and hospitals, and also installed wifi networks, CCTV systems and distributed TV systems.

[3] Tellen Systems NZ (2013) Ltd (Tellen) is an electrical engineering and communications supplier. It is a specialist in wireless technology and communications systems, including in the healthcare industry.

[4] Around mid-2016 Mr Williams and Mr Briggs of Tellen began discussing the sale and purchase of part of Mr Williams’ shareholding in Sedco. They signed a non-disclosure agreement on 9 August 2016 and Mr Williams sent Mr Briggs some Sedco financial and sales pipeline information. Over the following months Mr Williams provided further Sedco financial and other information to Tellen.

[5] On 22 November 2016 Mr Briggs sent Mr Williams a term sheet for the proposed sale and purchase and a draft shareholders’ agreement. Various further drafts were exchanged over the following months.

[6] On 28 April 2017 Mr…

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: [2021] NZHC 1199
Decision Date: 27 May 2021

CaseChat Overview and Summary

Williams v Tellen Systems NZ (2013) Ltd [2021] NZHC 1199 involved two proceedings between the parties concerning a sale and purchase agreement for shares in Sedco New Zealand Ltd (Sedco). Williams claimed that Tellen breached the sale and purchase agreement (SPA) by failing to pay the second instalment of the purchase price. Tellen counterclaimed, alleging breach of the SPA and shareholder agreement (SHA), and liability under the Fair Trading Act 1986 (FTA). Tellen also sought damages against Williams and the trustees of Williams' family trust for knowing receipt and dishonest assistance. The court addressed several issues, including whether Williams breached warranties under the SPA, whether Tellen was entitled to cancel the SPA, and whether Williams breached the SHA. The court concluded that Williams did not breach the SPA, Tellen was not entitled to cancel the SPA, and Williams breached the SHA by failing to disclose the status of an invoice. The court awarded damages for the breach of the SHA and ordered Williams to pay Tellen for the breach. Tellen was ordered to pay Williams for the second instalment of the purchase price and indemnify Williams for payments made to Sedco's creditors. The court dismissed Tellen's claims against the trustees and ordered the parties to agree on costs.

Orders