A1 Cars 2014 Ltd was supposedly operating a car sales business for a period of five years from Great South Road, Papatoetoe in south Auckland. When Hera Soma and Sunil Nath took to the High Court, Justice Brewer ruled both had ignored their company’s existence and had supressed company income. He ordered a copy of his judgment be forwarded to Inland Revenue.
The two started their car sales business in 2013, selling cars on commission. Mr Nath worked the sales yard; Mr Soma brought in customers. Legal writs flew when the two fell out. This after Mr Soma had frozen the company’s bank account and seized from the car yard business records together with Mr Nath’s diary. Mr Nath trespassed Mr Soma.
Mr Soma alleged Mr Nath had failed to keep proper records and had unilaterally taken control of company assets. Mr Nath alleged Mr Soma was not an investor; his accountant had made a mistake by including Mr Soma as a director and shareholder, he said.
Justice Brewer said A1 Cars 2014 Ltd had no life of its own. Any returns made on its behalf to Inland Revenue were fictional. Mr Nath ran the business as a cash business, putting through the company’s books only those sums he had to, such as payments from finance companies. Mr Nath took as much cash from the business as he could, Justice Brewer said. Cash transactions were not reported to Inland Revenue by their company.
Both Mr Nath and Mr Soma told the court their accountants would be called to give evidence; their accountants could not be persuaded to attend court.
Justice Brewer said evidence indicated the two had a profit sharing agreement. Neither made any attempt to comply with their duties as directors of A1 Cars 2014 Ltd. Neither were entitled to Companies Act remedies.
Mr Nath was ordered to repay Mr Soma $85,000; money lent for cars to be imported from Japan. A1 Cars 2014 Ltd was ordered to pay Mr Soma $11,000; his half share on the sale of a HiAce van.
Mr Soma failed in his further claims: first for $106,500 allegedly loaned to both Mr Nath and A1 Cars 2014 Ltd ; secondly for $800,000 claimed from Mr Nath alone as damages for alleged failures to comply with the Companies Act.
Soma v. Nath – High Court (17.05.19)
19.089