Dr Sarah Glassey was blind-sided when she found fellow medical professionals Drs Luc Wee and Anitha Nair had gone behind her back setting up a side deal cutting her out of managing their supposedly jointly-run south Auckland medical practice. Dr Glassey forced the business into liquidation, over their objections.
The three set up practice as Takanini Surgery Ltd in 2019. Each was a director of the company and each owned a one-third share. They each put in some $100,000 working capital as loans to the company. The High Court was told Dr Glassey was the primary doctor in attendance; the other two also had medical practices in Karaka and Pokeno.
Shortly after setting up business, Dr Glassey learnt her fellow professionals had jointly signed a shareholders’ agreement setting out, amongst other things, how they would vote their shares. Between the two, they held a controlling 66 per cent interest. Dr Glassey left the practice shortly after, saying she was cut out of management control. She sued to have Takanini Surgery Ltd put into liquidation, a strategy to recover her $100,000 working capital lent to the company.
Evidence was given that Drs Wee and Nair then transferred Takanini Surgery’s patient list to another company they owned. Dr Glassey’s $100,000 debt was not ‘owing,’ they said. There was an agreement repayment of shareholder advances was deferred until Takanini Surgery was profitable, they said.
Associate judge Andrew ruled Dr Glassey’s $100,000 loan was repayable on demand. Dr Glassey had not seen and had not signed the shareholder agreement specifying a ‘non-withdrawal period.’ Since Takanini Surgery had no prospect of earning further income it was clearly insolvent; Dr Glassey as an unpaid creditor was entitled to force liquidation.
Glassey & Associates Ltd v. Takanini Surgery Ltd – High Court (15.03.21)
21.051