Home | Databases | WorldLII | Search | Feedback High Court of New Zealand Decisions

Wadsworth v Cognata Investments Limited [2023] NZHC 3063 (2 November 2023)

Last Updated: 14 November 2023

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 2 November 2023 at 11.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

WADSWORTH v COGNATA INVESTMENTS LIMITED [2023] NZHC 3063 [2 November 2023]

Introduction

• [1] This is an application for orders under s 174 of the Companies Act 1993 (the Act) to have the plaintiff, Mr Dale Wadsworth, declared to be the sole director and shareholder of Cognata Investments Ltd (Cognata).

• [2] The second defendant, Mr Troy Surch, objected to steps Mr Wadsworth took to remove Mr Surch as a director of Cognata and to appoint himself in Mr Surch’s place as shareholder. Although Mr Surch filed a statement of defence to these proceedings, it has now been struck out and the application was the subject of a formal proof hearing on 2 October 2023.

• [3] The sole issue for me to determine is whether, in the circumstances as outlined in evidence by Mr Wadsworth, it is appropriate to make orders under s 174 of the Act confirming Mr Wadsworth as the sole director and shareholder of Cognata.

• [4] Before I consider the availability of the relief sought, it is necessary to briefly outline the somewhat complex circumstances in which the dispute between Mr Wadsworth and Mr Surch arose.

Background

• [5] Mr Wadsworth was the sole shareholder and director of CTC Radiators Ltd (CTC) which was incorporated in 2004. CTC was a successful company, and by early 2013, Mr Wadsworth says the company was valued at approximately $3,500,000, including cash on hand of approximately $340,000.

• [6] Mr Surch, who is Mr Wadsworth’s cousin, provided accounting services to CTC on contract.

• [7] Mr Wadsworth and Mr Surch were close at the time, with Mr Surch acting as a trustee of a family trust settled by Mr Wadsworth and his late wife (the Dabbral Trust) and, from 2015, Mr Wadsworth acting as a trustee of a family trust (the Zurich Oak Trust) settled by Mr Surch and his then partner, Ms Corrina Hooper, the third defendant.
• [8] Mr Wadsworth was involved in a near fatal motor vehicle accident in late 2014 which resulted in him suffering a traumatic brain injury, 17 broken ribs, punctured lungs and other health complications.

• [9] Mr Wadsworth says that in early 2015, because of his health issues, Mr Surch’s advice was that Mr Wadsworth should establish a new company into which CTC’s cash on hand from time to time should be diverted. Mr Surch advised Mr Wadsworth that this would be “in the nature of a trust” to benefit Mr Wadsworth’s family should he not survive further surgeries.

• [10] Cognata was incorporated on 29 January 2015. The founding directors of Cognata were the trustees of the Zurich Oak Trust, being Mr Wadsworth, Mr Surch and Ms Hooper. The shares were jointly held by the three of them. As Mr Wadsworth notes, he was a trustee of the Zurich Oak Trust, but not a beneficiary of it, so it is unclear why the trustees of Mr Surch’s family trust, not of Mr Wadsworth’s family trust, the Dabbral Trust, took ownership of the shares.

• [11] None of the three shareholders paid any consideration for the issue of the shares in Cognata. However, the constitution for Cognata acknowledges that it was Mr Wadsworth who introduced the funds into Cognata, and that it is him and his family who would reap the benefits of successful investments. Specifically, cl 42 of the constitution provides:

In the event that:

(a) the third trustee of Dale Wadsworth becomes deceased or resigns as a trustee; or

(b) ...

the remaining trustees repay all monies plus net income and capital gains to the lender who was Dale Wadsworth who initially introduced the funds into the ANZ Cognata Investment accounts.

• [12] Mr Wadsworth then explains that in the years following the incorporation of Cognata, Mr Surch managed the company’s affairs in a way that was detrimental to Cognata. Mr Surch arranged a number of loans to be made from Cognata’s funds, including to Mr Surch himself, and to related and unrelated business entities in which

Mr Surch and his associates were involved. Mr Wadsworth has identified the following loans which were made from Cognata:

(a) a loan to Stewart Island Smoked Salmon Ltd in the principal sum of

$50,500 made on or about 13 May 2016;

(b) a loan to the Zurich Oak Trust in the principal sum of $300,000 made on or about 1 April 2017 (this sum having now reduced to $120,505);

(c) two loans to Carl and Kirsty Wall totalling $315,000 to finance the purchase of a business known as “Habipax” (in respect of which Mr Wadsworth says Mr Surch was a silent and hidden partner);

(d) a further loan to Carl Wall in the principal sum of $42,000 for the purchase of two racing cars;

(e) a loan to Mr Surch’s sister, Heather, for $15,000 which was misappropriated by Mr Surch and transferred to himself;

(f) a loan to Mr Surch for $27,000 for the purchase of a BMW motor vehicle (this sum having now reduced to approximately $15,000); and

(g) a loan to Mr Surch as trustee for $10,000 for “maintenance” on a property at 359 Clyde Road which is owned by Zurich Oak Trust.

• [13] Mr Wadsworth notes that all of these loans remain outstanding and the loan to Stewart Island Smoked Salmon will not be recovered. While he issued proceedings to recover the loan, the director of that company, who was also the guarantor, has disappeared overseas, so there is no real prospect of recovery.

• [14] Mr Wadsworth says there was also a loan for $30,500 that Mr Surch advanced to Denis and Michelle Sefton. Cognata issued proceedings to recover these funds, but the defendants were adjudicated bankrupt and there is no indication of whether Cognata will recover any money.
• [15] While it seems that some of these loans may have been imprudent, on the limited evidence I have, Mr Wadsworth was aware of at least some of this lending and did not oppose it. For example, he was a witness to the loan agreement with South Island Smoked Salmon and he signed the loan agreement with the Zurich Oak Trust on behalf of Cognata.

• [16] Mr Wadsworth says throughout this period, when he spoke to Mr Surch, Mr Surch assured him that the various loans and investments were all for Mr Wadsworth’s benefit or, if he did not survive, then they would benefit Mr Wadsworth’s family. By way of example, he refers to a document signed by the parties on 21 October 2016 which sets out what was happening with Cognata’s funds at the time. It acknowledges that all the funds held by Cognata “are lent to Cognata by D Wadsworth”.

• [17] Mr Wadsworth says that during 2016 Mr Surch filed updates to the companies register as follows:

(a) a filing on 21 March 2016 recording the cessation of Ms Hooper as a director of the company;¹

(b) a filing on 27 September 2016 recording the cessation of Mr Wadsworth as a director of the company; and

(c) a filing on 27 September 2016 recording the allocation of all the shares in the company to Mr Surch alone.

• [18] Mr Wadsworth says he did not sign any instrument transferring his interest in the shareholding in Cognata to Mr Surch, nor did he agree to sign any such instrument. While he does not recall retiring as a director around September 2016, he says it is possible he may have signed a form retiring as a director given the concerns about whether he would survive the ongoing surgeries.

¹ This is explained to be an agreed consequence of her separation from Mr Surch at this time.

• [19] From 27 September 2016, Mr Wadsworth says that Mr Surch was illegitimately purporting to be the sole director and sole shareholder of Cognata. I note given Mr Wadsworth’s acknowledgment that he may have agreed to retire as a director because of his health issues, it is really the transfer of the shareholding which is in dispute.

• [20] From around 2018, Mr Wadsworth says the relationship between him and Mr Surch began to break down. Mr Wadsworth’s health began to improve, and he was becoming uneasy about how Mr Surch was managing and controlling Cognata. The statement of claim says:

The company now held much of [Mr Wadsworth’s] wealth, yet was ostensibly owned and controlled by [Mr Surch], with no trust or other governing documentation between them in relation to it. [Mr Surch] appeared to be operating Cognata as a money-lending business, with borrowers including himself and parties known to him.

• [21] In June 2019, Mr Wadsworth says he took steps to begin to regain control of Cognata. He asked Mr Surch to cease as a director and to arrange for himself to be re-appointed.

• [22] In an email dated 21 June 2019, Mr Surch offered to resign as a director and to have Mr Wadsworth appointed as the director and to arrange the paperwork for those changes. However, that was not done. Instead, on 7 November 2019, Mr Wadsworth filed an update to the companies register, which had been prepared by Mr Surch, recording Mr Wadsworth’s reappointment as a director. It did not record any cessation of Mr Surch’s directorship.

• [23] On 28 January 2020, Mr Wadsworth took it on himself to file an update to the companies register recording that Mr Surch had ceased to be a director of the company and recording a transfer of all the shares in the company from Mr Surch to himself. Mr Wadsworth explains he filed these documents believing that:

(a) Mr Surch’s email of 21 June 2019 offering to resign as a director of Cognata was a sufficient basis to record his cessation as a director;

(b) as the beneficiary of the supposed trust on which Cognata was incorporated, he had sufficient basis to purport to end that trust and transfer the shares to himself as beneficial owner; and

(c) Mr Surch may liquidate Cognata if left as a shareholder.

• [24] On 16 November 2020, the Integrity and Enforcement team at the New Zealand Companies Office wrote to Mr Wadsworth advising it had received a complaint that his filings of 28 January 2020 may have been improper changes to the companies register. Subsequent investigation revealed that it was Mr Surch who complained about the filings.

• [25] Mr Wadsworth, through his solicitors, provided a detailed explanation to the Companies Office of the circumstances behind the filings and it appears nothing further has come of the Companies Office’s enquiries. Mr Wadsworth remains recorded as the sole director and shareholder of Cognata.

• [26] In December 2019, Mr Wadsworth was advised by Cognata’s bank, ANZ, that on or about 8 March 2019, Mr Surch had removed Mr Wadsworth from the bank mandate. Mr Wadsworth then attempted to have the banking mandate updated to include himself so that he could have visibility and control of the company’s funds. However, the ANZ sought Mr Surch’s confirmation that the banking mandate change was in order. This was not provided by Mr Surch.

• [27] On or about 23 December 2019, Cognata’s bank accounts were frozen by Mr Wadsworth because of his concern that Mr Surch would dissipate the funds, and ANZ now requires a satisfactory legal resolution to the question of Cognata’s control before it will unfreeze the accounts. The present balance of Cognata’s ANZ accounts totals approximately $850,000. Mr Surch has not responded to Mr Wadsworth’s request that Mr Surch acknowledge he has no interest in Cognata so that ANZ can unfreeze the bank accounts. Similarly, Mr Surch has not confirmed with the Companies Office that he is no longer challenging the changes to the control and ownership of Cognata to Mr Wadsworth.
• [28] Mr Wadsworth’s solicitor wrote to Mr Surch seeking his ratification of his resignation as a director and his completion of a share transfer form of all the shares in Cognata to be transferred to Mr Wadsworth. Mr Surch, however, has not responded meaningfully to those requests.

Relief sought

• [29] Mr Wadsworth seeks relief in the form of the following orders:

(a) removing the second, third, fourth and/or fifth defendants as directors of Cognata and/or confirming their prior removal;

(b) ordering the transfer of any shares held by the second, third, fourth and/or fifth defendants in Cognata to the plaintiff and consequential rectification of the share register; and

(c) declaring that the second, third, fourth and fifth defendants have no remaining or ongoing right or interest in relation to Cognata.

• [30] He seeks these orders under s 174 of the Act on the grounds that the affairs of Cognata have been and are being conducted in a manner that is oppressive, unfairly prejudicial or unfairly discriminatory to him as a shareholder or former shareholder, including by Mr Surch:

(a) purporting to become the sole director and shareholder of the company by his filings on 27 September 2016 to the companies register;

(b) complaining to the Companies Office about the companies register filings that Mr Wadsworth made on 28 January 2020;

(c) failing to acknowledge Mr Wadsworth as the proper person to hold the ANZ banking mandate for the company’s accounts when requested to do so by the ANZ;

(d) failing to respond to Mr Wadsworth’s request for confirmation that Mr Surch has no beneficial interest in the company and that Mr Wadsworth is the legitimate beneficial owner of Cognata;

(e) advancing monies to himself and related entities (and neglecting to repay such monies) without Mr Wadsworth’s knowledge or consent; and

(f) failing to take steps to recover and/or assist with recovery of loans owning to Cognata which were put in place by him and which were overdue.

Jurisdiction to grant relief

• [31] The relief sought by Mr Wadsworth is pursuant to s 174 of the Act. That provides:

174 Prejudiced shareholders

(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him or her in that capacity or in any other capacity, may apply to the court for an order under this section.

(2) If, on an application under this section, the court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order—

(a) requiring the company or any other person to acquire the shareholder’s shares; or

(b) requiring the company or any other person to pay compensation to a person; or

(c) regulating the future conduct of the company’s affairs; or

(d) altering or adding to the company’s constitution; or

(e) appointing a receiver of the company; or

(f) directing the rectification of the records of the company; or

(g) putting the company into liquidation; or

(h) setting aside action taken by the company or the board in breach of this Act or the constitution of the company.

(3) No order may be made against the company or any other person under subsection (2) unless the company or that person is a party to the proceedings in which the application is made.

• [32] Mr Wadsworth has standing to bring the application both as a former shareholder and because he claims he is entitled to be the current sole shareholder. Indeed, the companies register reflects this, albeit Mr Surch originally contested this.

• [33] Mr Wadsworth claims that the affairs of the company have been and continue to be conducted in a manner which is oppressive and unfairly prejudicial to him as a shareholder, thus engaging the right to relief under s 174.

• [34] The leading authority on what constitutes conduct which meets this statutory test is Thomas v H W Thomas Ltd, which considered the substantially identical provision in the Companies Act 1955.² There, Richardson J explained the scope of the section as follows:

The foundation of the jurisdiction under the recast provision is a complaint by a member of oppression, unfair discrimination or unfair prejudice to him in the conduct of the affairs of the company or in the acts of the company.

...

In employing the words “oppressive, unfairly discriminatory or unfairly prejudicial” Parliament has afforded petitioners a wider base on which to found a complaint. Taking the ordinary dictionary definition of the words from the Shorter Oxford English Dictionary: oppressive is “unjustly burdensome”; unfair is “not fair or equitable; unjust”; discriminate is “to make or constitute a difference in or between; to differentiate”; and prejudicial, “causing prejudice, detrimental, damaging (to rights, interests, etc)”. I do not read the subsection as referring to three distinct alternatives which are to be considered separately in watertight compartments. The three expressions overlap, each in a sense helps to explain the other, and read together they reflect the underlying concern of the subsection that conduct of the company which is unjustly detrimental to any member of the company whatever form it takes and whether it adversely affects all members alike or discriminates against some only is a legitimate foundation for a complaint under [the predecessor to s 174]. The statutory concern is directed to instances or causes of conduct amounting to an unjust detriment to the interests of a member or members of the company. It follows that it is not necessary for a complainant

² Thomas v H W Thomas Ltd [1984] 1 NZLR 686 (CA) at 693.

to point to any actual irregularity or to an invasion of his legal rights or to a lack of probity or want of good faith towards him on the part of those in control of the company.

Should relief be granted in this case?

• [35] In the present case, however, I consider there has not just been conduct amounting to an unjust detriment to the interests of Mr Wadsworth as a shareholder. There has been an actual irregularity by the unauthorised removal of Mr Wadsworth as a shareholder in 2016.

• [36] The other key concerns raised by Mr Wadsworth are:

(a) the mismanagement of the company by imprudent lending to the detriment of the shareholders; and

(b) the refusal of the company (through its then director Mr Surch) to rectify the situation so that Mr Wadsworth’s beneficial ownership of the company is recognised.

• [37] I accept that these, too, are complaints about the conduct of the affairs of the company. However, I do not rely on these claims to grant relief given:

(a) the evidence Mr Wadsworth was aware of, or authorised, at least some of the lending which he now claims was imprudent; and

(b) given the issue of Mr Wadsworth’s rights as a shareholder are complicated because there is an unanswered question in the factual narrative provided by Mr Wadsworth as to why the founding shareholders of Cognata were the trustees of the Zurich Oak Trust, which Mr Wadsworth was not a beneficiary of. This sits uneasily with Mr Wadsworth’s claim that he believed the company was to be “in the nature of a trust to benefit [Mr Wadsworth’s] family should he not survive further major surgeries”.

• [38] However, it is uncontested that the assets of the company solely comprised advances from Mr Wadsworth or which he authorised to be diverted from CTC to Cognata, and there is no logical explanation given for the company to be held for the benefit of Mr Surch’s family. The only way I can reconcile this is to accept that while the three shareholders were the trustees of the Zurich Oak Trust, they were bound by the company constitution which ensured that Mr Wadsworth, or his family, would benefit from the repayment of the funds advanced to Cognata, plus the “net income and capital gains”.

• [39] In the end, though, I do not have to resolve why the trustees of the Zurich Oak Trust were the shareholders. No matter what capacity Mr Wadsworth held his shareholding in, I am satisfied that there was prejudice to him as a shareholder by unilaterally removing his shareholding from him. On Mr Wadsworth’s unopposed evidence, that action was not authorised, and by doing so, it removed Mr Wadsworth’s ability to exercise various rights as a shareholder. For example, as a shareholder he had the right to apply to put the company into liquidation if it was just and equitable to do so,³ and the right to seek an injunction restraining the company from breaching the Act or the company’s constitution.⁴ Here, for example, the requirement under the constitution to repay Mr Wadsworth his investment on his cessation as a “trustee” may be a relevant circumstance in which he would want to invoke this statutory remedy. As a shareholder, Mr Wadsworth could also have brought a derivative action to enforce the rights of the company, for example, a breach of a director’s duty.⁵ The actions of Mr Surch in advancing money from Cognata to himself and associates may have constituted such a breach. This right was also removed from Mr Wadsworth by the unauthorised removal of his shareholding. On any assessment, this was an action which was prejudicial to Mr Wadsworth as a shareholder.

• [40] The only live issue is whether he should have the shares confirmed as being held by him in his personal capacity or as a trustee for Zurich Oak Trust. While no explanation has been given as to why Mr Wadsworth held them in his capacity as trustee, I am satisfied that this was intentional as the company constitution confirms

³ Companies Act 1993, s 241.

⁴ Section 164.

⁵ Section 165.

he holds the shares in that capacity, and I am not prepared to confirm he holds the shares in any other capacity. The shares were removed from him when he held them in this capacity so it is proper they are reinstated in that capacity. While Mr Wadsworth says he has contributed all the assets to the company, his remedy is to utilise cl 42 of the company’s constitution which provides if he resigns as a trustee, he is entitled to repayment of all monies he has advanced plus net income and capital gains.

• [41] Accordingly, I confirm, pursuant to s 174(2)(f), that the companies register correctly records him as holding 100 shares in that company, albeit he holds those shares as trustee of Zurich Oak Trust.

• [42] The next issue to consider is who should be recorded on the companies register as director of the company. There is no dispute that Ms Hooper relinquished her directorship in 2016. While the fourth and fifth defendants may have initially held the shares as trustees, there is no evidence that they were ever directors in that capacity. The only contest then is whether the second defendant is still a director, noting that Mr Surch prepared the paperwork for and authorised Mr Wadsworth to be reinstated as a director in 2019, so Mr Wadsworth’s entitlement to be a director is not in question.

• [43] That issue is answered simply because it transpires that Mr Surch, earlier this year, was made bankrupt on his own application.⁶ As an undischarged bankrupt,

Mr Surch is disqualified from holding office as a director.⁷

• [44] Accordingly, the register does not require rectification pursuant to s 174(2)(f) of the Act. It correctly records the plaintiff, Mr Wadsworth, as the sole director of Cognata.

Costs

• [45] As Mr Wadsworth has been successful in obtaining some of the relief he sought, he seeks an award of costs from Mr Surch in his capacity as trustee of the Zurich Oak Trust. This is because, given Mr Surch’s bankruptcy, it is questionable whether a costs award against him personally would be satisfied. Costs are also not

⁶ Thomson v Surch [2023] NZHC 850 at [9].

⁷ Companies Act, s 151(2)(b).

sought from the first or third defendant. Mr Wadsworth accepts that if costs are awarded against Mr Surch as trustee they should also be awarded against him as the fifth defendant.

• [46] Mr Mckessar submits that notwithstanding the fact the fourth and fifth defendants were only joined in August 2023, it would be “artificial to say they have not been a party to the proceeding from its inception given they are the same individuals albeit in different capacities” and so both should be liable for costs from the outset of the proceedings.

• [47] Alternatively, he seeks that the fourth defendant be liable to pay costs as a non-party for the steps taken prior to him being formally joined. Mr Mckessar acknowledges the principles relating to non-party costs, as articulated in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), include the principle that orders of costs against non-parties are “exceptional”.⁸ Mr Mckessar says that had Mr Surch followed through with his offer to resign as director and accepted the request of Mr Wadsworth’s lawyers to transfer his shares, then this proceeding would not have been necessary. Furthermore, it was expressly put to Mr Surch in a letter sent on 18 November 2021 that any interest he had “as a trustee of the Zurich Oak Trust or personally, has only ever been as trustee or nominee for [Mr Wadsworth] and/or CTC”. The letter goes on to give notice that the failure to comply with the request would result in an application to the High Court and that “an order for costs against you will be sought”. For these reasons, Mr Mckessar submits that this case is “exceptional” in the sense that it is a case outside the ordinary run of cases, and that 2B costs totalling

$28,321.50 should be awarded against both Mr Surch and himself as trustees of the Zurich Oak Trust.

• [48] However, I am not satisfied that it is appropriate to make an award against Mr Surch in his capacity as a trustee of the Zurich Oak Trust. First, I query whether it was appropriate to add the fourth and fifth defendants in their capacities as trustees of the Zurich Oak Trust. The pleadings make no allegations against them. Mr Wadsworth’s complaint was solely over steps Mr Surch took in his capacity as a

8. Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145 at [25(1)].

director. They appear to have been joined, for the avoidance of doubt, as a consequence of Mr Surch asserting in his statement of defence that the shareholding of the company was held by the Zurich Oak Trust, which in fact is borne out by the documents provided in evidence by Mr Wadsworth.

• [49] Furthermore, I do not accept that I can effectively treat Mr Surch, in his capacity as trustee, as having been joined from the outset. The fact the joinder application had to be made is recognition that Mr Surch was being joined in a different capacity. I accept that Mr Surch was on notice that he was liable for costs in that capacity from the point he was joined as the fourth defendant. However, he took no steps in that capacity and has not contributed to the costs of the proceeding. In my view, this is not a case where there are grounds for awarding costs against the fourth or fifth defendants, let alone in their capacity as non-parties, prior to joinder.

• [50] The issue of whether there should be a costs order against Mr Surch personally is, of course, complicated by his bankruptcy. While at the hearing Mr Mckessar sought costs against Mr Surch in both his personal capacity and as the fourth defendant, he acknowledged there was no real prospect of recovering costs from Mr Surch personally, which is why he focussed his submissions on seeking costs from Mr Surch in his capacity as trustee of Zurich Oak Trust.

• [51] A complicating factor in making a costs award against Mr Surch personally is that ss 76 and 232 of the Insolvency Act 2006 provide:

76 Effect of adjudication on court proceedings

(1) On adjudication, all proceedings to recover any debt provable in the bankruptcy are halted.

(2) However, on the application by any creditor or other person interested in the bankruptcy, the court may allow proceedings that had already begun before the date of adjudication to continue on the terms and conditions that the court thinks appropriate.

...

232 What debts are provable debts

(1) A provable debt is a debt or liability that the bankrupt owes—

(a) at the time of adjudication; or

(b) after adjudication but before discharge, by reason of an obligation incurred by the bankrupt before adjudication.

...

• [52] In order to award costs, leave needs to be granted under s 76(2) of the Insolvency Act to permit the continuation of the application for costs in these proceedings.⁹ Thus, the decision to award costs is inextricably connected to whether I should grant leave to permit the continuation of the application for costs. In Saimei v McKay, the Court set out a number of principles that may be applicable to deciding the question of leave, the primary one being that the Court has a discretion to do what is right and fair according to the circumstances of the case.¹⁰ This is not a case where I consider it is appropriate to grant leave having regard to that principle.

• [53] First, on Mr Wadsworth’s own evidence, he has taken steps which contributed to the unsatisfactory situation which the Court faced, both by agreeing to the arrangements for the management of the company which created some of the problems, such as the shareholding initially being held by the trustees of the Zurich Oak Trust, and also, by unilaterally altering the companies register without seeking the Court’s prior approval of those steps. In any event, I have no information about what impact making a costs award would have on other creditors or on the likelihood of recovery of any part of the costs award.

• [54] In my view, this is a case where costs should lie where they fall and I so order.

Result

• [55] I declare:

(a) the companies register correctly records the plaintiff as the sole director of Cognata Investments Ltd; and

9. Bradbury v Commissioner of Inland Revenue [2015] NZSC 80, [2015] 1 NZLR 739 at [13] and [16].

¹⁰ Saimei v McKay (1998) 6 NZBLC 102,611 (HC) at 102,614.

(b) the companies register correctly records the plaintiff as the sole shareholder of Cognata Investments Ltd, although he holds those shares in his capacity as a trustee of the Zurich Oak Trust.

• [56] Costs are to lie where they fall.

Solicitors:

White Fox & Jones, Christchurch