Startup v the Village Press Limited [2016] NZHC 2690 (9 November 2016)

Last Updated: 26 December 2018

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2016-441-134 [2016] NZHC 2690

UNDER	the Companies Act 1993
IN THE MATTER	of The Village Press Limited
BETWEEN	WAYNE KEITH STARTUP First Plaintiff
AND	MAUREEN FRANCIS STARTUP Second Plaintiff
AND	THE VILLAGE PRESS LIMITED First Defendant
AND	MARK RHYS WELDON Second Defendant
AND	ANTHONY JOSEPH CASEY Third Defendant
AND	STUART JOHN WEBSTER Fourth Defendant
AND	ROBERT THOMAS ARMSTRONG Fifth Defendant

On the papers:	9 November 2016
Counsel:	J R Billington QC
Judgment:	9 November 2016

JUDGMENT OF CLARK J

[1] An ex parte application for an interim injunction and related orders came before me on the afternoon of 9 November 2016.

STARTUP AND STARTUP v THE VILLAGE PRESS LIMITED AND ORS [2016] NZHC 2690 [9 November 2016]

[2] The plaintiffs, Wayne and Maureen Startup, seek urgent orders to restrain the first defendant, The Village Press Ltd, from taking actions that Mr and Mrs Startup say would prejudice their interests as shareholders in the first respondent.

[3] The substantive proceeding is an application under s 174 of the Companies Act 1993 seeking orders to prevent prejudice to the plaintiffs’ interests and the interests of other minority shareholders arising from proposed actions in breach of the Companies Act 1993 and the constitution of The Village Press Ltd.

[4] Mr and Mrs Startup seek also the appointment of a receiver pending resolution of the s 174 application or, in the alternative, orders variously assisting inspection of the affairs of The Village Press Ltd so far as is relevant to the s 174 application. These orders are not sought on an ex parte basis.

[5] Mr and Mrs Startup have given an undertaking as to damages.

[6] I have considered a memorandum in support of the application by Mr Billington QC and had regard to four affidavits including from the proposed receiver.

[7] Mr Billington submits that there is a serious case to be tried with respect to the s 174 application. Broadly, the plaintiffs allege that the board of The Village Press Ltd has taken or proposes to take a series of steps prejudicial to their interests: removing Mr Startup as a director and issuing shares with the effect of diluting the interests of Mr and Mrs Startup, both actions being in contravention of the constitution of The Village Press Ltd.

[8] Mr Startup deposed that the conduct challenged by the substantive application includes:

(a) That The Village Press Ltd and its directors have acted in a way which breaches its constitution by:

(i) Issuing new shares without proper resolutions and notice being given to shareholders.
(ii) Removing him as director without a proper vote.

(b) Failing to provide him or other minority shareholders with company records, despite requests.

(c) As a result of the issuing of new shares, diluting his share value, and therefore his voting rights in the company.

(d) Failing to enter into good faith discussions about value for the purposes of Mr Startup exiting the company.

[9] On the basis of these allegations I accept there is a serious case to be tried in respect of the s 174 application.

[10] I accept also that the balance of convenience and justice lies in favour of the applicants:

(a) Damages are not an adequate remedy because the potential loss to the plaintiffs may be irreparable;

(b) Orders will preserve the status quo and avoid the need to unwind any transactions if the underlying application prevails.

[11] I propose to make only those orders that are necessary to prevent the adverse consequences of a meeting scheduled for 10 November 2016 at which resolutions are proposed which ought to be, at the least, forestalled pending determination of Mr and Mrs Startup’s claim.

[12] Orders are granted in the following terms:

(a) The first respondent, The Village Press Ltd is restrained from:

(i) passing resolutions to have approved or give effect to:

(A) a proposed share issuance under a Rights Offer.
(B) a resolution to approve future issuing of shares.

(C) a resolution approving historic issuing of shares to the current registered directors of The Village Press and John Fernandes.

(ii) issuing further shares in The Village Press pending determination of the substantive proceeding.

(b) These orders remain in effect pending further order of the Court.










Karen Clark J

Solicitors:

Anthony Harper, Auckland for Plaintiffs