Adams Plumbing and Drainage (2010) Limited v Hartland Construction Limited

[2012] NZHC 1095

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2012-412-000077 [2012] NZHC 1095

BETWEEN  ADAMS PLUMBING AND DRAINAGE (2010) LIMITED

Plaintiff

ANDHARTLAND CONSTRUCTION LIMITED

Defendant

Hearing:         21 May 2012 (Heard at Dunedin)

Appearances: C Gardner for Plaintiff

T D Gudmanz for Fletcher Construction & Infrastructure Limited, a creditor in support

M B Couling for Brazier Scaffolding Limited, a creditor in support
T D Gudmanz for Defendant

Judgment:      21 May 2012

JUDGMENT OF ASSOCIATE JUDGE OSBORNE GRANTING LEAVE TO THE APPOINTMENT OF A VOLUNTARY ADMINISTRATOR

[1]      In this proceeding the plaintiff applied for an order putting the defendant, Hartland Construction Limited, “Hartland”, into liquidation.   Adams Plumbing & Drainage claims some $58,000.

[2]      Hartland seeks leave to appoint a voluntary administrator under s 239I of the Companies Act 1993.  That section appears in Part 15A of the Act which deals with voluntary administration.     The plaintiff and  the other two  creditors,  who have appeared in support, support Hartland’s application for leave.

[3]      The  requirement  for  leave  arises  in  this  way.     Section  239I  permits appointment of an administrator of a company:

ADAMS PLUMBING AND DRAINAGE (2010) LIMITED V HARTLAND CONSTRUCTION LIMITED HC DUN CIV-2012-412-000077 [21 May 2012]

239I Appointment by company

(1)A company may appoint an administrator if the board of the company has resolved that,—

(a)in  the  opinion  of  the  directors  voting  for  the  resolution,  the company is insolvent or may become insolvent; and

(b)an administrator of the company should be appointed.

[4]      By  s  239I(4)  the  company  may  appoint  an  administrator  only  if  the administrator is appointed within 10 working days after service on the company of the liquidation application.  Service of the present application was effected on 16th February 2012.

[5]      Hartland   invokes   s   239ADO   of   the  Act.      In   particular   it   invokes s 239ADO(1):

239ADO Court's general power

(1)The Court may make any order that it thinks appropriate about how this

Part is to operate in relation to a particular company.

[6]      The submission for Hartland is that this provision gives the Court a broad power to alter the way Part 15A operates in relation to a particular company.

[7]      Ms Gudmanz refers for that proposition to the observations of the High Court of Australia in Australasian Memory Pty Ltd v Brien (2000) 172 ALR 28.

[8]      In   Australasian   Memory   the respondents had been appointed joint administrators of the first appellant (company). A required meeting of creditors did not take place in time. The Supreme Court of New South Wales made orders abridging time and declaring the resolution of creditors (at the late meeting) not invalid. The issue on appeal was whether an order could be made under s 447A(1) Corporations Act 2001 (the direct equivalent of New Zealand’s s 239ADO(1)) to alter the way in which the mandatory time limit for meetings applied to the company.

[9] The High Court dismissed the appeal, finding that the order made was permitted by s 447A(1).

[10]     The High Court at [17] said:

Nor is there anything on the face of s 447A(1) that suggests that it should be read down.

[11]     The Court said at [24]:

... Section 447A is an integral part of the legislative scheme provided for by Pt 5.3A. In its terms, it enables the making of orders which alter the way in which “this Part is to operate in relation to a particular company”. That is, it permits the making of orders which would alter how s 439A is to apply. It is not right to seek to characterise s 447A as some general source of power to which  resort  cannot  be  had  because  to  do  so  would  “circumvent”  the statutory  limitations  upon  the  exercise  of  the  power  that  is  given  by  s

439A(6) to extend the convening period. So to characterise s 447A is to give to all of the other provisions of Pt 5.3A a fixed and unchanging operation in relation to all companies. Yet the evident legislative intention of s 447A is to permit alterations to the way in which Pt 5.3A is to operate.

[12] The New Zealand legislation (which commenced in 2007) adopted the Corporations Act provisions and was clearly intended to have a parallel effect. I adopt the approach taken by the High Court of Australia in Australasian Memory in

2000 in relation to the Australian s 447A(1) for the purposes of applying s

239ADO(1). This is a broad and expansive power.

[13]     On the facts of this case, it is appropriate in my judgment to grant leave. Counsel have explained briefly but to the full extent necessary for this purpose that the defendant was affected by the termination  of  its franchise in  relation   to a national  franchise  arrangement.  It  has  subsequently been  in  a  difficult  financial position and has worked with its creditors to bring about a restructuring proposal which will work.   The three creditors appearing today all support the leave application.  I am satisfied in the circumstances that this is a case where voluntary administration appears to be in the best interests of the company and of its creditors.

[14]     In  these  circumstances  I  am  satisfied  that  it  is  appropriate  in  terms  of s 239ADO that Hartland has leave to proceed with its appointment.

[15]     I have in evidence the resolutions of the Board dated 17 May 2012 as to –

(a)      the insolvency of the company; and

(b)      the appointment of an administrator of the company.

Each resolution is signed by Hartland’s sole director.  The appointment resolution is intended to take effect from the date and time at which the Court grants leave if it does so.

Order

[16]     I grant leave to the appointment of a voluntary administrator of Hartland Construction Limited.  This order is timed at 10.29 am today so that the appointment resolution becomes effective as at this time.

[17]     The plaintiff’s application is adjourned to the List at Dunedin at 10.00 am,

16 July 2012 for mention.

Costs

[18]     Mr Couling has suggested that costs be fixed as indeed the High Court Rules anticipate they should be if an appropriate point had been reached in relation to any proceeding.    It  is  appropriate to  fix  costs  in  relation  to  all  creditors  who have appeared.  I fix the costs of all appearances of this proceeding up to and including today’s appearance on a 2B basis and order that they, together with disbursements to be fixed by the Registrar, be payable to the plaintiff and supporting creditors in any event.

Solicitors:

Downie Stewart - Email:  [email protected]

Chapman Tripp - Email: [email protected]

Gallaway Cook Allan - Email:  [email protected]

Maude & Miller - Email: [email protected]

Anderson Lloyd - Email: [email protected]