A T Financing Limited v The Anchor Operations Limited Partnership

[2020] NZHC 2490

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2522

[2020] NZHC 2490

UNDER

the Limited Partnerships Act 2008

IN THE MATTER

of sections 89 and 90

BETWEEN

A T FINANCING LIMITED

Plaintiff

AND

THE ANCHOR OPERATIONS LIMITED PARTNERSHIP

Defendant

Hearing:

21 September 2020

Appearances:

J K Goodall for the plaintiff

E A Boshier for J K Scragg for the defendant

Judgment:

23 September 2020

JUDGMENT OF PALMER J

This judgment was delivered by me on Wednesday 23 September 2020 at 2.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

D J Chisholm QC, Auckland

J K Goodall, Barrister, Auckland Duncan Cotterill, Wellington

Leigh Judd Law, Auckland

A T FINANCING LIMITED v THE ANCHOR OPERATIONS LIMITED PARTNERSHIP [2020] NZHC 2490

[23 September 2020]

Appointment of liquidators

[1]    A T Financing Ltd (ATF) applies for the appointment of liquidators to the Anchor Operations Limited Partnership (AOLP). My judgment is based on:

(a)the statement of claim of 12 November 2019 and statement of defence of 11 December 2019;

(b)supporting affidavits of Michael Reynolds  of  12  November  2019, 23 June 2020, and 26 August 2020;

(c)the affidavits of Giandeo Pittea and Antony Brokenshire of 13 March 2020;

(d)the advertisements published in the New Zealand Herald  and  the New Zealand Gazette on 4 February 2020;

(e)the consent to act by Gareth Hoole and Clive Bish of 15 September 2020;

(f)the certificate as to the non-payment of the debt by Leigh Judd of     20 September 2020; and

(g)written and oral submissions by counsel.

[2]AOLP owes ATF $4,504,995 under a loan agreement, comprising principal of

$3,762,000, a facility fee of $37,620 and interest from  20 July 2018 of  $705,375. On 18 October 2019, ATF served AOLP with a statutory demand. AOLP has failed to comply with the statutory demand and has taken no steps to set it aside. After initially opposing the application, AOLP now abides the Court’s decision.

[3]    Section 92 of the Limited Partnerships Act 2008 (LPA) provides that the liquidation provisions in pt 16 of the Companies Act 1993 apply to limited partnerships, with certain exceptions. Under s 91(a) of the LPA, if a demand for payment has been served by a creditor and not paid within three weeks, the limited

partnership is deemed unable to pay its debts. That has happened here. There is no evidence AOLP can pay its debts and AOLP has filed a memorandum of 16 September 2020 advising it is insolvent. Under ss 89 and 90(1)(h) of the LPA, the Court has a discretion to appoint a liquidator to a limited partnership when it is unable to pay its debts. Mr Gareth Hoole and Mr Clive Bish have consented to act as liquidators.

[4]    I am satisfied liquidators should be appointed. I appoint Mr Gareth Hoole and Mr Clive Bish to act as liquidators at the rates set out in their consent  to act of       15 September 2020. I reserve leave to them to apply for the approval of other rates, not more frequently than six-monthly and with supporting affidavits by them and by an independent expert deposing as to the reasonableness of rates. Costs of $3,936 will be paid to the plaintiff out of the assets of AOLP under cl 10.1 of the loan agreement.

Jurisdiction

[5]    One other aspect of this application arises. It was listed in the Duty Judge list because of a concern about whether the matter lies within the jurisdiction of Associate Judges of the High Court. I consider that an application to liquidate a limited partnership does lie within the jurisdiction of Associate Judges because:

(a)Under s 20(2)(b) of the Senior Courts Act 2016, an Associate Judge has the jurisdiction and powers of the court or a High Court Judge under pt 16 of the Companies Act. That was originally provided for by the Insolvency Act 2006 amending s 26I(2)(e) of the Judicature Act 1908. It was then carried over into the 2016 Act. Part of Parliament’s purpose in passing the 2006 provision was said by the Minister of Commerce, the Hon Lianne Dalziel, to be “the extension of the jurisdiction of associate judges to all personal and corporate insolvency matters”.1 The explanatory note to the initial bill recorded the reason was “to remove the uncertainties and the inconsistencies that currently exist in the voidable transaction regime”.2

1      (26 October 2006) 634 NZPD 6153.

2      Insolvency Law Reform Bill 2005 (14-1) (explanatory note) at 19.

(b)In pt 16 of the Companies Act 1993, s 241(2)(c) empowers the court appoint a liquidator of a company. Section 240(1A)(d) defines “company” to include, for this purpose, “any other body corporate to which this Part applies under any other enactment”.

(c)A limited partnership is a separate legal person under s 11 of the LPA. Section 92 of the LPA provides that “[p]art 16 of the Companies Act 1993 (except sections 241(1) to (4), 268, 287, and 313(4)) applies, with such modifications as may be necessary, in relation to the liquidation of a limited partnership…”. Those excepted provisions relate to the procedure for commencement of liquidation, the power of a liquidator to enforce liability of shareholders, the meaning of inability to pay debts and the distribution of surplus assets. These matters are governed by alternative provisions specified in the LPA.3 But otherwise, and in general, part 16 of the Companies Act applies to limited partnerships.

(d)Accordingly, I consider limited partnerships fall within the definition of “company” under s 240(1A)(d) of the Companies Act and the Court can appoint a liquidator to a limited partnership under pt 16. This means, under s 20(2)(b) of the Senior Courts Act, Associate Judges have jurisdiction to appoint liquidators to limited partnerships. This interpretation is based on the terms of the legislation but is reinforced by a purposive approach to interpretation based on the legislative history in 2006. This interpretation of the jurisdiction of Associate Judges is also likely to enhance the efficiency of the appointment of liquidators to limited partnerships.

Palmer J

3      Sections 89, 93, respectively.