Treating their joint venture property company Manukau Family Doctors Ltd as if it were his own resulted in a High Court order that Siva Vasanthan pay nearly $750,000 to minority investor Sothilingin Vijayakumar, buying out his fellow investor’s forty per cent share.
In 2005, the two jointly purchased commercial premises on Great South Road, at Manukau in Auckland, which was then fitted out for use as a medical clinic. The 60/40 shareholding recognised their respective contributions to the purchase price. Dr Vasanthan is sole director.
The following year, Dr Vijayakumar moved to Australia, leaving his fellow investor to manage their property investment. Fifteen years later, he was in court with a long list of complaints about Dr Vasanthan. In particular, Dr Vijayakumar complained of failures to pay bank loan interest on time (resulting in threats of a mortgagee sale); a further bank loan being raised without his consent and apparently used to meet personal expenses of Dr Vasanthan; lease of the premises at below market rental to interests associated with Dr Vasanthan; charging to their company operating costs more properly paid by a tenant; using company cash to pay personal legal expenses; and excessive management fees charged by Dr Vasanthan. Evidence was given that Manukau Family as landlord received no rental income at all for one four year period and that in other years income received was consumed by management fees charged by Dr Vasanthan.
Dr Vasanthan did not appear in court to answer these allegations.
Justice Fitzgerald ruled Dr Vasanthan was in breach of the Companies Act; managing the company in a manner oppressive to his fellow investor as minority shareholder. He was ordered to buy out Dr Vijayakumar’s minority interest paying some $750,000: $445,000 as the value of his minority shareholding; $222,300 he loaned to the company and $79,200 as a proportion of direct losses suffered by leasing the building at below market rental.
Vijayakumar v. Vasanthan – High Court (1.06.22)
22.096