Wood v Dawson

[2016] NZHC 1089

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000939 [2016] NZHC 1089

UNDER

Part 19 of the High Court Rules and the Companies Act 1993

IN THE MATTER OF

DAWOO HOLDINGS LIMITED

BETWEEN

JASON WOOD AND VICTORIA DOHOTARU

Applicants

AND

MICHAEL JOHN DAWSON

Respondent

Hearing:	23 May 2016
Appearances:	T J P Bowler for Applicants No appearance for Respondent
Judgment:	24 May 2016

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 24 May 2016 at 3.30 pm

pursuant to R 11.5 of the High Court Rules Registrar / Deputy Registrar Date………………………..

WOOD & OR v DAWSON [2016] NZHC 1089 [24 May 2016]

Introduction

[1]    The applicants each own 25 per cent of the shares in Dawoo Holdings Limited (DHL). The respondent, Mr Dawson, owns the remaining 50 per cent of the shares and is also the sole director of DHL. For more than a decade Mr Dawson has failed to properly discharge his duties as a director. The applicants wish to remove him and have Mr Wood appointed the sole director.  They have applied for:

(a)leave to bring this application as an originating application;

(b)an order removing Mr Dawson as a director of DHL; and

(c)an order appointing Mr Wood the sole director of DHL; or alternatively

(d)an order requiring Mr Dawson to sign an agreement for sale and purchase of a property owned by DHL at 2594A Paparoa Oakleigh Road, Paparoa.

[2]    Mr Dawson did not appear. Mr Bowler tendered an affidavit of service and I permitted him to proceed with the application. After hearing from Mr Bowler I granted leave to bring the proceeding as an originating application under Part 19 of the High Court Rules.  I then made orders removing Mr Dawson as a director of  DHL and appointing Mr Wood in his place.  My reasons were to follow.

Application

[3]    The application to remove Mr Dawson and appoint Mr Wood was stated as being made in reliance on ss 154 and 156 of the Companies Act 1993. In the course of [re[aromg the reasons for the orders I realised that the appropriate section under which to seek these orders was s 174. Since the purpose and factual basis for the application that was served on Mr Dawson was clear, I treat the application as having been correctly made under s 174.

[4]    Mr Wood swore an affidavit in support of the application. He explained that when DHL was incorporated in 2003 the directors were his and Ms Dohotaru’s father and Mr Dawson. Mr Wood senior and Mr Dawson were also equal shareholders. Following their father’s death in 2004 Mr Wood and Ms Dohotaru each acquired a  25 per cent shareholding. However, since at least since July 2004 Mr Dawson has taken virtually no steps in relation to the company’s affairs. Over the last two years  in particular he has not responded to requests to undertake essential tasks. He has,  for example, failed to pay rates on the property at Paparoa owned by DHL, which resulted in the Kaipara District Council issuing proceedings to recover the rates. He failed to file annual returns, resulting in advice from the Companies Office in December 2015 advising of its intention to remove the company from the  Companies Register.

[5]    Matters have come to a head because DHL has now received an offer to purchase the property at Paparoa for $145,000. There has been little interest in the property and Mr Wood considers it imperative that the offer be accepted. The offer was first received in February 2016 but it is said that the prospective purchasers are losing interest as a result of the delay.

[6]    I am satisfied that it is in the interests of the company and its shareholders that the sale and purchase agreement be executed on behalf of the company and that Mr Dawson’s failure to engage with the other shareholders and to discharge his duties as a director is causing prejudice to them. For those reasons I made the orders described earlier.

[7]In the circumstances there are to be costs against Mr Dawson on a 2B basis.

P Courtney J