Aggreko (NZ) Limited v Clements and Page Limited (in liquidation) HC Wellington Civ-2007-485-206

[2007] NZHC 2002

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2007-485-206

IN THE MATTER OF     the Companies Act 1993

BETWEEN  AGGREKO (NZ) LIMITED Plaintiff

ANDCLEMENTS AND PAGE LIMITED IN LIQUIDATION

Defendant

Hearing:         17 August 2007

Appearances: C. Matsis for the defendant applicant

J Haig for the plaintiff respondent

Judgment:      17 August 2007

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

[1]      This  is  an  application  by  the  defendant  for  an  order  terminating  the liquidation of the defendant company.   It is brought pursuant to s 250 Companies Act 1993 upon grounds stated in the application to be:

a)       The defendant is solvent and able to pay its debts;

b)        It is in the public interest that the liquidation be terminated; and c)     It is just and equitable to do so.

[2]      Section 250 Companies Act 1993 provides:

“(1)     The Court may, at any time after the appointment of a liquidator of a company, it if is satisfied that it is just and equitable to do so, make an order terminating the liquidation of the company.

(2)      An application under this section may be made by the liquidator, or a director or shareholder of the company, or any other entitled person, or a creditor of the company, or the Registrar.”

AGGREKO (NZ) LIMITED V CLEMENTS AND PAGE LIMITED IN LIQUIDATION HC WN CIV-2007-

485-206  17 August 2007

[3]      At para CA250.02 of Brooker’s Companies and Securities Law the learned authors state:

“CA250.02 Who may apply

Any  person who is in a position to initiate a Court ordered liquidation under s 241(2)(c)   (other than the company itself) as well as the liquidator may apply to the Court under s 250 for a termination order.   The reference to

‘creditor’  includes  a  reference  to  a  ‘secured  creditor’:  s  240.     If  the termination of the liquidation is ordered by the Court, it is the applicant’s responsibility to file a copy of the order with the Registrar within 10 working days.   Failure to do so can result in the payment of a fine not exceeding

$10,000: s 373(2).”

[4]      Here the application for an order terminating the liquidation is made by the defendant company, Clements and Page Ltd in liquidation.  On the face of it, and noting the comments in Brooker’s Companies and Securities Law at paragraph [3] above, it would appear that the defendant company itself is not a party who is in a position to bring an application to terminate the liquidation under s 250.

[5]      Given that, it may well be that the application before the Court must fail on the grounds of a lack of jurisdiction.

[6]      If I may be wrong as to that aspect, or if I can treat the present application as one made effectively by a director or shareholder of the company, I turn now in the alternative to consider the substantive grounds advanced by the defendant in support of the application.

[7]      In doing so, Brooker’s Companies and Securities Law sets out the applicable principles to be considered by the Court when exercising its discretion under s 250. At para CA250.03 of Brooker’s Companies and Securities Law the learned authors

state:

“CA250.03  Applicable principles

In the ordinary run of cases, the Court will only exercise its discretion to order a termination of a liquidation if:

(a)  All the creditors have been paid in full or satisfactory provision has been made for them to be paid or they have consented; and

(b) The liquidator’s costs have been paid or secured; and

(c)       The shareholders have given their consent or would be in no worse position than if the liquidation had proceeded to its conclusion.”

[8]      In the present case, Mr Matsis appeared on behalf of the defendant company and also, as I understand it, on behalf of Mr A M Dellabarca, who is a principal shareholder and director of the defendant company.   As I understand the position, there is no question that the shareholders support the present application for an order terminating the liquidation.

[9]      As to the requirement noted in paragraph [7] above under (a), first that all the creditors have either been paid or had satisfactory payment arrangements made, or, secondly, that hey have consented, there appears to be little doubt here that the creditors of the defendant company have neither been paid in full nor consented to the application.   Indeed, Mr Haig appeared on behalf of Aggreko (NZ) Ltd, the plaintiff in this proceeding, and confirmed that the sum of $39,332.16 plus interest was still outstanding to that creditor.  In addition, Mr Haig confirmed that a further creditor, Redeal Ltd, was owed some $11,073.42, which remains outstanding.

[10]     Further, Mr Haig confirmed today that the liquidator’s costs, amounting to

$2,035 plus GST, remain outstanding, as do the plaintiff’s legal costs with respect to this matter, which he indicated totalled $24,838.

[11]     As  I  understand  the  position  from  Mr  Matsis  for  the  applicant,  this proceeding has been served upon the liquidator of the defendant company and upon the plaintiff creditor.   The liquidator, I am told, has indicated that if the Aggreko (NZ) Limited debt, the debts owing to other creditors and the liquidator’s costs are not paid then he supports the plaintiff’s opposition to the present application.

[12]     What is clear to me, however, is that the requirement under s 250 that all creditors of the defendant company are paid in full or satisfactory provision has been made  for  them,  or,  alternatively,  that  they  consent  to  the  termination  of  the company’s liquidation, has not been satisfied here.  In fact, the two major creditors, Aggreko (NZ) Ltd and Redeal Limited, remain unpaid and oppose the present application.

[13]     In considering this need for the company creditors to be settled, I should note that when this matter was called before me yesterday, 16 August, Mr Matsis on his client’s instructions sought an adjournment to enable a payment to be made into his solicitors’ trust account to settle all or most of the outstanding creditors.  At that time a figure of about $45,000-$50,000 was discussed.

[14]     On that basis, I adjourned this matter yesterday until 1.00 pm today.

[15]     At 1.00 pm today, Mr Matsis appeared and indicated that Mr Dellabarca had advised him by telephone that he was on his way to the bank to arrange a bank cheque, which it was anticipated would be in the region of $60,000, to pay towards the outstanding debts.

[16]     At that point Mr Haig for the plaintiff indicated that the total amount required to settle the Aggreko debt plus interest, the Redeal Limited debt, the Aggreko solicitors’  costs  and  the  liquidator’s  costs  would be in the vicinity of $82,000. Mr Matsis indicated that he would communicate this to Mr Dellabarca with a view to endeavouring to obtain a bank cheque for this sum, in order that the Court could be satisfied that all creditors could be paid.

[17]     I adjourned the matter again at 1.30 p.m. today to a further call at 2.00 p.m. today.

[18]     It is now 2.30 p.m.   Mr Matsis has confirmed that, despite a number of communications  to  Mr Dellabarca,  and  despite  his  best  efforts  in  this matter, Mr Dellabarca has been unable to provide a bank cheque to settle all outstanding creditors.   He said funds were not available to obtain a cheque  at the level of

$82,000.

[19]     That  said,  Mr  Matsis  before  me  indicated  that  his  instructions  were  to continue to argue the present application, notwithstanding that the requirement for clearance of all creditors had not been satisfied.

[20]     In my view, that fundamentally ends this matter.

[21]     The  defendant  company has  been  unable  to  make  payment  to  settle  the outstanding creditors, despite the provision of a number of opportunities to do so. The $82,000 total required to settle creditors and costs, together with the liquidator’s costs, remains outstanding.

[22]     The justice of this matter clearly requires that the defendant’s application to terminate the liquidation  should be dismissed.  An order is now made dismissing the application.     A  further  order  is  made  revoking  the  interim  orders  made  by MacKenzie J in this matter on 16 April 2007 at (b) and (c) of his Minute that day.

[23]     As  to  costs,  Mr  Haig  for  the  plaintiff  seeks  costs  against  the  defendant company on an indemnity basis.

[24]     In my view, indemnity costs are warranted.   This is an application which should not have been brought, given the difficulty which has obviously been experienced in finding funds to settle the outstanding creditor.  The suggestion in the application  that  “the  defendant  is  solvent  and  able  to  pay its  debts”  cannot  be supported.

[25]     Costs are therefore awarded   in favour of the plaintiff in this matter on an indemnity basis.

[26]   Within 10 working days of today counsel for the plaintiff is to file a memorandum in this Court as to the quantum of such indemnity costs.

[27]     Within a further 10 working days of that date counsel for the defendant shall have an opportunity to file a memorandum as to costs in response.

[28]     An order as to the quantum of such indemnity costs will then be made upon the basis of the material filed.

Associate Judge D.I. Gendall

Solicitors:

Gibson Sheat, Wellington, for the plaintiff

Gault Mitchell Lawyers, Wellington, for the defendant