100 Investments Limited v Walker - [2020] NZHC 1947

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-009

[2020] NZHC 1947

UNDER section 284 of the Companies Act 1993

IN THE MATTER

of the liquidation of Property Ventures Ltd (in liquidation)

BETWEEN

100 INVESTMENTS LIMITED

First Applicant

RFD FINANCE LIMITED
Second Applicant

AND

ROBERT BRUCE WALKER

Respondent

Hearing: 25 June 2020

Appearances:

J Moss for applicants

C Sawyer for respondent

Judgment:

7 August 2020

Reissued:

12 August 2020

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1] Property Ventures Ltd (in liquidation) (PVL) was incorporated on 3 November 1997. It was a property development concern. Over the years, it accumulated a large number of subsidiaries.1

1 In this judgment I propose to refer to PVL and its subsidiaries as the PVL group of companies. In doing so, I do not use the phrase in the technical sense as it is used in sub-pt 2 of pt 11 of the Companies Act 1993 dealing with financial reporting. It is merely a convenient way of describing the collection of entities involved.

100 INVESTMENTS LIMITED v WALKER [2020] NZHC 1947 [7 August 2020]

[2] On 27 July 2010 this Court made orders winding up PVL and several other companies in the group and appointing the respondent as liquidator.2

[3] A decade on, there is no sign that the liquidation of the PVL group of companies is nearing an end. There has been a remarkable level of acrimony between Mr Walker and PVL’s former Managing Director, Mr David Henderson, and the liquidation has given rise to a prodigious amount of litigation. This is just the most recent example.

[4] As seems to happen in litigation arising from this liquidation, what on its face is a straightforward application has become more complicated than it needs to be. In this judgment, I propose to deal only with the dispositive issues. I make no apology for ignoring extraneous matters.

[5] By originating application pursuant to pt 19 of the High Court Rules 2016, the applicants, 100 Investments Ltd (100 IL) and RFD Finance Ltd (RFD), seek two substantive orders:

(a)an order under s 256(1)(a)(ii) of the Companies Act 1993 entitling them to inspect accounts and records; and

(b)an order under s 284(1)(c) and (d) that these accounts and records be audited.

[6]As I see it the following issues arise:

(a)whether the applicants should be granted leave to pursue their application under pt 19 of the High Court Rules;

(b)if so whether they can establish that they are creditors of PVL, which is a threshold issue under both provisions;

2 Initially the respondent was the sole liquidator. For a period there was a second liquidator, Mr John Scutter. But since Mr Scutter’s retirement from the role on 22 March 2018, the respondent has again been the sole liquidator.

(c)if so whether they can make out an entitlement to the orders sought under the two provisions.

Leave to proceed by originating application

[7] Most proceedings must be commenced by notice…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 1947
Decision Date: 7 August 2020

CaseChat Overview and Summary

The applicants, 100 Investments Limited (100 IL) and RFD Finance Limited (RFD), sought leave to pursue their application for inspection and audit of accounts and records under the Companies Act 1993. The respondent, Robert Bruce Walker, was the liquidator of Property Ventures Ltd (PVL), a company in liquidation. The High Court of New Zealand was tasked with determining whether the applicants were granted leave to proceed with their application and whether they qualified as creditors of PVL. The court was also required to decide whether the applicants were entitled to the inspection and audit orders they sought.

The court found that the applications were suitable for commencement under the High Court Rules, part 19, as the issues were predetermined by statute. It was determined that 100 IL and RFD were creditors of PVL based on documentary evidence provided by the applicants. However, the court dismissed the applicants' requests for inspection and audit of the accounts and records. The court held that the applicants did not establish a good reason for the inspection order and that an audit at this stage of the incomplete liquidation would not be useful. The court noted that the liquidator would eventually be required to report on the distribution of funds, which would provide the necessary information to assess the liquidator's actions. The application was dismissed, and the court expected counsel to discuss and resolve the costs of the case.

Orders