Two caveats threatened a $817,400 Auckland sale in a bitter joint venture dispute
New Zealand's Court of Appeal has ruled that a company shareholder holds no personal caveatable interest in land owned by their company.
In 165 Russell Road Ltd v Jasraj Investments Ltd, decided on 18 March 2026, the court dismissed appeals by both 165 Russell Road Limited (RRL) and its director Dheeraj Sareen, upholding the removal of two caveats that had blocked the sale of a development site in Manurewa, Auckland.
Jasraj Investments Limited (JIL), controlled by Jagpreet Oberoi and his wife, both directors and 50 percent shareholders of JIL, purchased the property in May 2020 for $690,000 plus GST (if any). JIL agreed to on-sell it to RRL, a joint venture company that Oberoi and Sareen owned equally. The agreement was conditional on finance, but the purchase never settled.
In January 2023, the parties entered into a deed of settlement under which JIL declared it would hold the property on trust for RRL. The deed included two distinct mechanisms by which an open-market sale could be triggered: under cl 9.2.1, JIL was entitled to sell the property on the open market if RRL did not take title within the prescribed period; and under cl 9.2.2, either Mr Sareen or Mr Oberoi could give notice of his intention to sell his shares to the other, which, if the share sale did not proceed, required RRL to direct a sale of the property on the open market. The joint venture collapsed. In June 2023, Sareen acknowledged the venture had ended and agreed the property should be sold. JIL listed the property for auction in August 2024. The property was passed in at auction, and JIL subsequently sold it to Versatile Homes Limited, the highest bidder, for $817,400. Two caveats, one that Sareen had lodged and one that RRL had lodged, impeded settlement.
On the shareholder caveat point, the court confirmed that Sareen's status as a 50 percent shareholder and director of RRL gave him no personal proprietary interest, legal or equitable, in company-held assets. Citing Mahon v Station at Waitiri Ltd [2017] NZCA 387, the court reaffirmed that a shareholder in a company has no proprietary interest, whether legal or equitable, in the assets of the company in respect of which they hold their shares, as to hold otherwise would undermine basic concepts of incorporation and limited liability and run counter to the clear doctrine of separate legal personality enshrined in s 15 of the Companies Act. The equitable interest arising from the sale and purchase agreement belonged to RRL as purchaser, not to Sareen personally.
RRL argued that JIL breached the deed by failing to update the property valuation before the 2024 auction, as required by cl 9.2.1(c). JIL's counsel conceded the breach. However, the court held that the breach did not vitiate JIL's authority to proceed with the sale. Because Sareen and RRL had agreed in June 2023 to sell on the open market, JIL retained the right to proceed. Any loss from a potential undervalue sale sounded in damages only, and the Court found no sufficient evidence that the $817,400 sale price represented an undervalue.
Even accepting that RRL held a caveatable interest, the court agreed that it was appropriate to exercise the discretion to remove it. JIL's solicitors undertook to retain the net sale proceeds, estimated at approximately $300,000, pending authority to release the funds by the parties or by court order. The court determined that any losses RRL or Sareen sustained were financial in nature and that those proceeds could adequately address them.
The court dismissed both appeals and ordered the appellants to pay the respondents one set of costs for a standard appeal on a band A basis and usual disbursements.
