Nandro Investment Limited v Wiri Holdings Limited [2018] NZHC 2653 (12 October 2018)

Last Updated: 26 October 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-001193 [2018] NZHC 2653

BETWEEN	NANDRO INVESTMENT LIMITED First Plaintiff DEO SHARAN SINGH and KUSHMANGARAN NAIR as trustees of the NANDRO TRUST Second Plaintiffs DEO SHARAN SINGH Third Plaintiff
AND	WIRI HOLDINGS LIMITED First Defendant NINE INVESTMENTS LIMITED Second Defendant MADHU RESHMI SAHAY Third Defendant

Hearing:	17 September 2018 and memoranda of counsel
Appearances:	D Grove on behalf of E St John for the Plaintiffs at the hearing E St John for the Plaintiffs at the telephone conferences on 26 September 2018 and 1 October 2018 I M Hutcheson for the Defendants at the hearing and conferences
Judgment:	12 October 2018

JUDGMENT OF HINTON J

NANDRO INVESTMENT LIMITED v WIRI HOLDINGS LIMITED [2018] NZHC 2653 [12 October 2018]

This judgment was delivered by me on 12 October 2018 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

.............................................................................. Registrar/Deputy Registrar

Counsel:

Daniel Grove, Barrister, Auckland Eugene St John, Barrister, Auckland Iain Hutcheson, Barrister, Auckland

[1] This matter came before me by way of an interim injunction hearing on 17 September 2018.

[2] The parties (who previously had a close working relationship), are at odds over who is the true owner of certain development properties (or company shareholdings), and what is the true arrangement between them. The relevant properties are 27 and 27A Puhinui Road, Papatoetoe and 15 Reagan Road, Manukau. The facts are quite unusual, such that the answers to the substantive issues are far from obvious. Further, as Courtney J said in a Minute dated 22 June 2018, the allegations being made by each party against the other are serious.

[3] The plaintiffs originally sought extensive injunctive relief against the defendants on an ex parte basis. In her Minute of 22 June 2018, Courtney J directed that the defendants be served and the matter heard on a Pickwick basis before the Duty Judge.

[4] Downs J, as Duty Judge, then made interim orders on 27 June 2018, preventing any dealings with the company shares and properties at issue pending further order of the Court. The balance of the injunction application (for mandatory orders by way of share transfers, vacant possession of the properties, and settlement of sale and purchase agreements), was adjourned to the hearing before me on 17 September 2018. Downs J also directed that a five-day substantive fixture be allocated. The parties had both been expecting advice from the Registry of the five-day fixture. However, it was not clear whether the fixture was to be allocated immediately, or following the 17 September 2018 hearing.

[5] As recorded in my Minute of 21 September 2018, at the hearing before me Mr Grove for the plaintiffs submitted that the status quo should be maintained. He recognised that the other interim orders the plaintiffs had sought were unlikely to be provided by way of interim relief. Rather, he sought a priority fixture for the substantive hearing.

[6] The defendants sought that the existing orders be vacated, which as I recorded in my 21 September 2018 Minute was unlikely. Those orders appeared to be
appropriate on an interim basis, for the same reasons that Downs J made them in the first place. The further evidence that had been filed in the interim had only made it clear that there were extremely complicated factual disputes between the parties, which turned heavily on assessments of credibility.

[7] However, as also recorded in my Minute, both parties had failed to grapple with the fact that the mortgages over the properties were in arrears. At least one bank was taking enforcement action, and had a mortgagee tender closing on 2 October 2018. The principal debt outstanding to the bank was approximately $1.38 million. The bank was apparently not prepared to extend time. All of this became apparent on the day of the hearing. The evidence referred only to “financial difficulty and threat of mortgagee sales”.

[8] I left it with counsel to attempt to reach arrangements that would remedy the mortgage defaults. Neither side wished the mortgagee sale to proceed so they had a common interest at least in that respect.

[9] After two telephone conferences and a number of memoranda, I was finally in a position to make further urgent orders, which were issued to the parties on 2 October 2018. I ordered, in addition to the orders made by Justice Downs on 27 June 2018, that:

1. The third defendant immediately on behalf of the first defendant execute the sale and purchase agreement, as attached, for the properties identified as:

27A Puhinui Road, Papatoetoe identifier 750430; and

27 Puhinui Road, Papatoetoe identifier 750429.

2. The first defendant assigns to the purchaser at settlement all its right, title and interest in all plans, warranties and consents.

3. The first and third defendants are ordered to specifically perform the sale and purchase agreement and the terms above by 4.00 pm on 5 October 2018.

4. The sale and purchase agreement is amended to provide that the third defendant may occupy 27A Puhinui Road until further order of the Court.

5. Upon settlement, the first defendant is to apply the purchase price solely to:

First, repayment of the mortgage(s) in full. Secondly, the costs of sale.

6. The full balance is to be held undisbursed in the trust account of Murdoch Price Limited, pending agreement of the parties to the proceeding or order of the Court.

7. The third defendant will pay rates and insurance on 27A Puhinui Road during the period of occupation.

8. The full balance to be held undisbursed is expected to be close to

$600,000 and if not, the defendants have leave to refer the matter back to the Court.

9. The costs of sale are to be strictly limited to standard and reasonable conveyancing costs.

10. These orders are made to avoid a mortgagee sale of the properties and are without prejudice to all claims and rights of all parties in the proceedings, pending further order of the Court.

11. Costs are reserved.

[10] I made these orders because the sale of 27 and 27A Puhinui Road to the plaintiffs was the only apparent way in which the mortgage default in respect of those properties could be remedied on an urgent basis. Both parties seemed to accept that the bank would not accommodate any further delay and that this was the best interim solution that could be reached that was at least palatable to them.

[11] The orders were not made by consent, but it would be fair to say that there was ultimately no active opposition to them.

[12] Also, the defendants’ position is still protected, in that the orders, including the price at which the plaintiffs have purchased, are made on a without prejudice basis. The purchase price is set on the basis of registered valuations, but the defendants are free to argue that the development value is higher for purposes of their damages claim. In addition, the third defendant is able to remain in occupation of the house located on the property at 27A Puhinui Road, pending further order of the Court. I was concerned to achieve this having been advised by counsel that the third defendant’s mental health is precarious as a result of the disputes that have developed between the parties. (Again, the evidence referred only to the third defendant having “health challenges”.)

[13] I encourage the parties to now try to come to some accommodation that enables the completion of the Reagan Road development by the defendants, pending the substantive hearing. I should record in this regard that the defendants have voluntarily
taken responsibility for both remedying the default on the Reagan Road mortgage and making continued payments under that mortgage, pending further order of the Court. Obviously, that is a matter that will be taken into account in any final orders. The parties should also take that into account in hopefully reaching further terms that provide the defendants with funds, and facilitate their completing the development of Reagan Road.

[14] Both parties were wishing to obtain a priority fixture for the substantive hearing. I advised them that a formal application would have to be made to the Executive Judge. If they could reach accommodation regarding the Reagan Road development so that constructive steps can be taken by each party in the interim, then a priority fixture may well be unnecessary, and for that matter, they may achieve a settlement.

[15] I record my impression that at present, the interim arrangements somewhat favour the plaintiffs.

[16] I repeat comments I have already made a number of times to counsel that both parties need to take a realistic and sensible approach to reaching a final resolution, especially given the serious allegations on both sides, which may have ramifications outside this litigation.

[17] I thank counsel, and particularly Mr St John, for their focused assistance in reaching the orders made.









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Hinton J