A1 Containers NZ Limited v Boxman Alpha Limited
[2025] NZHC 852
•9 April 2025
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2025-442-8
[2025] NZHC 852
BETWEEN A1 CONTAINERS NZ LIMITED
Applicant
AND
BOXMAN ALPHA LIMITED
First Respondent
BOXMAN STORAGE LIMITED
Second Respondent
Hearing: 2 April 2025 Appearances:
J Wass, S Stewart for Applicant G Praat for Respondents
Judgment:
9 April 2025
JUDGMENT OF BOLDT J
[1] A1 Containers Limited (A1) and Boxman Storage Limited are both in the business of leasing and selling used shipping containers. They are now locked in dispute, first about a Managed Fleet Agreement (the agreement) they entered in May 2024 and, and more immediately, about an unpaid debt.
[2] The first respondent, Boxman Alpha Limited, is a holding company which owns other Boxman entities, including the second respondent, Boxman Storage Limited. The interests of the two respondents are fully aligned in this proceeding, and I refer to them collectively as Boxman.
[3] In December 2024, A1 issued a statutory demand in the sum of $1,010,991.66. The demand arose because A1 said Boxman had failed to pay an invoice A1 issued
A1 CONTAINERS NZ LIMITED v BOXMAN ALPHA LIMITED [2025] NZHC 852 [9 April 2025]
under the agreement. Boxman disputes the sum of A1’s invoice. It has applied to set the statutory demand aside, and that application is the subject of a separate proceeding in this Court.
[4] The current proceeding arises because, while the extent of Boxman’s debt to A1 is in dispute, it accepts it owes A1 the sum of $413,944.12. It has promised to pay that undisputed sum but has not done so. As a result, A1 has applied to have Boxman placed in liquidation. In addition, and as an interim measure, it has made an urgent application asking the Court to appoint an interim liquidator. The issue before me is whether that step is appropriate.
Background
[5] It is not necessary to traverse the background of the dispute between A1 and Boxman in detail. The circumstances which gave rise to the statutory demand, and the reason Boxman disputes the sum A1 claims, are not material to the present application, which arises from Boxman’s inability to meet a large debt it admits it owes.
[6] In short, the agreement provided that A1 would lease its stock of shipping containers to Boxman, and that Boxman would sell them on A1’s behalf. The parties agreed that at the end of a six-month period, Boxman would buy any unsold containers from A1 at an agreed price. A1 retained title to the containers until they were sold, either to a third party or to Boxman itself.
[7] On 30 November 2024, A1 invoiced Boxman $1,010,991.66 for its unsold containers. The invoice was due for payment on 6 December 2024, but on 5 December Boxman indicated it did not accept it was liable for the full amount. Boxman said A1 had unexpectedly added 115 containers to the stock Boxman was expected to sell, and that those containers were not covered by the agreement. A1 says the agreement captures all A1’s unsold containers, including the disputed additional stock.
[8] When Boxman indicated the full amount of the debt was in dispute, A1 issued its statutory demand. On 13 January 2025, Boxman applied to the Court to set the statutory demand aside.
[9] While the full extent of Boxman’s debt to A1 is in dispute, there is no dispute Boxman owes A1 at least $413,944.42.
[10] Boxman has repeatedly promised to pay the undisputed sum. For example, in his affidavit in support of the application to set aside the statutory demand, Boxman’s director, Mathew Charles, said he had “made arrangements to pay the undisputed amount by 20 January 2025”. In an affidavit dated 7 February 2025, in opposition to the present application, Mr Charles deposed that Boxman had signed heads of agreement with another company for the sale of the business. He said settlement was scheduled for 2 April 2025 “and payment of the undisputed portion of the Plaintiffs claimed invoice can be made on the same date if not paid earlier”.
[11] Mr Charles’ most recent affidavit was dated 28 March 2025. It said negotiation with Boxman’s prospective purchaser was “well advanced”, but that “a formal commitment and return of a signed Agreement is dependent upon the commitment of a critical offshore investor which is expected to provide a Letter of Intent within the next few days”. He said it was “expected that this milestone may be reached prior to the date of hearing this Application (2 April 2025).”
[12] Nothing has been paid. If Boxman’s sale to another business is still on track, it has plainly not been concluded. More importantly Mr Praat, on behalf of Boxman, acknowledged it does not currently have the means to pay the debt. He said Mr Charles had been open about Boxman’s inability to pay in the absence of infusion of capital from a new owner. In his submissions opposing the appointment of an interim liquidator, Mr Praat said a draft agreement for sale and purchase has been prepared “and is expected to be signed shortly pending support from an offshore investor”. He submitted:
[31]While there is evidence of short term cash insolvency in relation to the undisputed portion of Boxman’s debt to Al Containers, this in itself would not automatically result in the Court exercising its discretion to order the appointment of a liquidator.
[32]Whether Boxman can satisfy that debt either through a process of selling its assets or otherwise is yet to be seen.
[13] In oral argument, Mr Praat accepted Boxman is insolvent. He could hardly have argued otherwise, though it is still making its monthly rental payments for the containers it is leasing from A1. It also appears Boxman is meeting its day-to-day operational costs, though it is unclear how they are being funded, and whether it is using proceeds from the sale of A1’s containers to support its ongoing operations. Mr Wass, for A1, advised that since December 2024 Boxman has sold 66 of A1’s containers. A1 has received neither the proceeds of the sales nor its share of the profits.
[14] On 30 January 2025 A1 commenced proceedings seeking to have Boxman placed in liquidation.
Discussion
[15] The power to appoint an interim liquidator is created by s 246 of the Companies Act 1993. It relevantly provides:
246 Interim liquidator
(1)If an application has been made to the court for an order that a company be put into liquidation, the court may, if it is satisfied that it is necessary or expedient for the purpose of maintaining the value of assets owned or managed by the company, appoint a named person, or an Official Assignee for a named district, as interim liquidator.
(2)Subject to subsection (3), an interim liquidator has the rights and powers of a liquidator to the extent necessary or desirable to maintain the value of assets owned or managed by the company.
(3)The court may limit the rights and powers of an interim liquidator in such manner as it thinks fit.
[16]Rule 31.23 of the High Court Rules 2016 provides:
31.23 Power to appoint interim liquidator
(1)When a proceeding for putting a company into liquidation has been commenced under rule 31.3, the plaintiff and any person entitled to apply to the court for the appointment of a liquidator under section 241(2)(c) of the Companies Act 1993 may apply to the court for the appointment of an interim liquidator.
(2)If the court is satisfied, upon proof by affidavit, that there is sufficient ground for the appointment of an interim liquidator, it may make the appointment, and may limit the rights and powers of the interim liquidator in any manner it thinks just.
[17] In Robert Bryce & Co Limited v Chicken and Food Distributors Limited, Eichelbaum CJ, in a decision which pre-dated the enactment of s 246, drew on Australian authority and observed there were three requirements for the appointment of a provisional liquidator, namely:1
(i)the existence of a valid winding up petition;
(ii)a likelihood the petitioner would succeed; and
(iii)a need for interim control of the company pending a winding up order
[18] The Chief Justice noted that factors relevant to the need for interim control included:
(i)whether the company’s assets were in jeopardy;
(ii)whether the status quo should be maintained; and
(iii)whether the interests of creditors were safeguarded.
[19] With some refinement, the Robert Bryce criteria have been regularly applied since 1990; the enactment of s 246 in 1993 has not altered the Court’s approach.2 Notably, in Truck and Trailer Holdings Ltd v Skelly Holdings Ltd Osborne AJ observed:3
[7] Beyond the statutory criteria it has been recognised that there are three main pre-conditions:
(i)There must be a valid winding up application underway.
(ii)The application will in all probability succeed.
(iii)The circumstances must be not merely urgent, but also justify the appointment of an interim liquidator.
1 Robert Bryce & Co Ltd v Chicken and Food Distributors (1990) 5 NZCLC 66, 648, [1991] MCR 133.
2 Carter Holt Harvey Ltd v Timbalock New Zealand Ltd (1997) 11 PRNZ 435 (HC).
3 Truck & Trailer Holdings Ltd v Skelly Holdings Ltd HC Christchurch CIV 2012-409-451, 11 May 2012.
[20] Although s 246 refers to the need to maintain the value of the company’s assets, the Court has held that the reference to appointment being “expedient” conveys a relatively low threshold.4 The Court must be satisfied appointment is “fitting, suitable, desirable or convenient”.5
[21]In Best Invest New Zealand Company v Japan Business Consulting Limited
Bell AJ observed:6
[11] The appointment of interim liquidators is a drastic remedy. Once interim liquidators are appointed, it is almost inevitable that a liquidation order will be made. Applications to appoint interim liquidators must therefore be considered with care and should not be made lightly. In most applications, the plaintiff normally has a straightforward case on the substantive merits. In the typical case the plaintiff is indisputably a creditor and there are clear signs of insolvency. In such cases the court’s main inquiry is whether the appointment of interim liquidators is necessary or expedient for the purpose of maintaining the value of assets owned or managed by the company. A sound basis on the substantive merits is a prerequisite for any application to appoint interim liquidators. That is required to avoid any miscarriage of justice in appointing interim liquidators. If the substantive proceeding should ultimately fail, damage to the business caused by the appointment of interim liquidators may be irreparable.
[22] Mr Wass observed the Court has often found it expedient to appoint an interim liquidator in circumstances similar to those facing Boxman. In particular, an interim liquidator may well be appropriate where the company is trading while insolvent, and making payments that may constitute voidable preferences.7 In those circumstances it is essential the company’s funds and assets are preserved and dealt with properly.
[23] Mr Praat submitted the appointment of an interim liquidator is unnecessary and may harm the interests of Boxman and its creditors in the long term. He noted that Boxman remains in discussion with a prospective purchaser, which is reliant on an overseas investor, and submitted that sale of the company is the most likely mechanism by which its creditors will be paid in full. Mr Praat argued the appointment of an interim liquidator may signal that Boxman is a distressed seller, and may deter either the prospective purchaser or the investor on which it depends. He submitted the
4 At [6].
5 Carter Holt Harvey Ltd v Timbalok NZ Ltd, above n 2, at 438.
6 Best Invest New Zealand Company v Japan Business Consulting Ltd [2019] NZHC 1037 at [11].
7 Probis Financial Services Pty Ltd v Mars Cap Ltd [2023] NZHC 2215 at [20].
presence of a liquidator might, at very least, reduce the price the purchaser is prepared to pay.
[24] That submission was undercut by Mr Praat’s acknowledgement that the company seeking to buy Boxman is fully aware of its financial situation. In particular, the prospective purchaser is aware Boxman currently carries debts it is unable to meet. He also acknowledged that if a sale is the only realistic mechanism by which Boxman’s creditors will be paid promptly, that position will be equally apparent to the liquidator, who will enthusiastically support that course.
[25] Mr Praat was unable to say what Boxman believes a large creditor in A1’s position should do if an interim liquidator is not appointed, other than wait and hope the sale is concluded soon. Nonetheless, he submitted the company’s assets are not at risk, and that Boxman is operating successfully on a day-to-day basis. He submitted it is meeting its outgoings, including its lease payments on A1’s remaining containers.
[26] I do not accept that submission. The fact Boxman is trading while unable to meet its debts makes its assets inherently vulnerable. Boxman is, by definition, engaging in voidable transactions.8 If it considers it will be possible to trade its way out of trouble, there are mechanisms under the Companies Act, including the appointment of voluntary administrators, which would have allowed that to occur.
[27] Mr Praat accepted Boxman is currently favouring some creditors at the expense of others. That acknowledgement, by itself, goes a long way towards establishing the urgent need for the appointment of an interim liquidator. A1 does not know how Boxman’s current income is being applied, and whether assets and income that could be used to meet A1’s debt are being diverted elsewhere.
[28] The inevitability that Boxman is engaging in voidable transactions only highlights the urgent need for intervention. The longer the company continues to trade while insolvent, the greater the risk those eventually charged with bringing order to the company’s affairs will find themselves presented with a tangle of transactions which will be difficult, and expensive, to unwind.
8 Companies Act 1993, s 292.
[29] It is not appropriate to expect A1 to wait indefinitely while Boxman tries to finalise a sale to another entity. The longer the current situation persists, the worse its position will be. If Boxman remains a good investment despite its current indebtedness, the appointment of a liquidator will not change that.
[30] I agree with Mr Wass that if the current application is declined there is no assurance, or even cause for optimism, that A1’s debts will be paid in the foreseeable future. Mr Charles has set and missed two deadlines for payment this year already. I agree the current level of uncertainty for A1, and any other creditors, is intolerable.
[31] It follows the case for appointment of an interim liquidator is very strong. There is clear evidence of insolvency, and nothing but vague and (so far) unreliable assurances from Mr Charles about the speed with which matters will be resolved. At the same time, the company is continuing to trade, satisfying some of its creditors to the detriment of others.
[32] I am satisfied the substantive application to place Boxman Alpha and Boxman Storage into liquidation is very likely to succeed, and I am satisfied the companies’ position is sufficiently urgent to warrant the immediate appointment of an interim liquidator. I am also satisfied Boxman has nothing to fear from that step. Its prospective purchaser is well aware it cannot pay its debts at present, and if a mutually-beneficial sale is imminent, the liquidator’s task will consist of little more than ushering it to completion. Nevertheless, A1 is entitled to have its debt addressed without further delay and uncertainty.
Conclusion
[33] A1 has identified an appropriately qualified liquidator and obtained his consent to act as interim liquidator if appointed.
[34] I make an order appointing Ryan Eathorne as interim liquidator of Boxman Alpha Limited and Boxman Storage Limited. Under s 246(3) I also make the ancillary orders set out in the draft order A1 has submitted for sealing.
[35] I reserve leave to Mr Eathorne to make application to seek any further orders and directions he considers appropriate.
Costs
[36] A1 has been successful and is entitled to costs. The parties agreed the unsuccessful party should pay the costs of the successful party on a 2B basis, and I award costs on a 2B basis to A1 accordingly.
Boldt J
Solicitors:
Izard Weston Law, Wellington for Applicant
Client Legal Solutions, Nelson for Respondents
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