Selling her late husband’s interest in FM105.3 Ltd, Roshni Kumar represented that his estate was owed $294,000 by the company. Refusing to later pay the full sale price agreed, Many Ltd controlled by Robert Khan claimed accounting records held by Ms Kumar showed it was the other way round; her late husband in fact owed money to FM105.3.
The confused state of FM105’s accounting records led the High Court to refuse a fast-track summary judgment order that Mr Khan’s Many Ltd pay $337,000 still due for purchase of its FM105 shareholding. A full court hearing is needed.
The High Court was told at time of the sale there was a pre-existing link between Mr Khan and FM105; Mr Khan controls a further company called Radio Tarana (NZ) Ltd which uses FM105’s frequency to broadcast a radio station.
Ms Kumar inherited her late husband’s interest in FM105 after his 2018 death. The now disputed 2021 sale contract saw Ms Kumar selling her inherited interest to Mr Khan’s Many Ltd with agreement to pay $380,000 for her FM105 shareholding plus an extra $294,000 for funds supposedly advanced by Mr Kumar to FM105. Sold as a debt due, she inherited the right to recover this supposed advance as an asset from her late husband’s estate.
The High Court was told Ms Kumar came to control her late husband’s accounting business, Professional Accounting Services Ltd, on his death. FM105 was a client. Evidence was given that new accounting staff taken on after Mr Kumar’s death could not make ‘head nor tail’ of FM105’s financial position.
In particular, multiple transactions could not be clearly explained, including: deposits into a Diners Club account over several years totalling $2.1 million; $54,400 withdrawn from ATMs around New Zealand and overseas; nearly $70,000 spent at public bars; cheques written with no supporting documentation; and money transferred electronically to non-FM105 accounts without identifying references.
Prime accounting records could not be reconciled to any of FM105’s financial statements. It was alleged Ms Kumar was aware that tax returns for FM105 were in arrears and that those filed were inaccurate.
In the background, other private investors in FM105 were disputing who owed who how much and for what. At one point, FM105 alleged Mr Kumar owed the company close to $860,000.
The High Court was asked to rule on the narrow question of whether Many Ltd should be ordered to pay immediately the $337,000 remaining unpaid on its 2021 contract with Ms Kumar.
Factual disputes over FM105’s financial position required a full court hearing to determine whether Ms Kumar had breached warranties in the sale agreement, Associate judge Sussock ruled.
The fact her FM105 shareholding had already been transferred to Many Ltd did not mean Many Ltd had surrendered its right to dispute payment of the balance.
Kumar v. Many Ltd – High Court (16.05.24)
24.125