Autumn Tree Limited v Bishop Warden Property Holdings Limited

[2019] NZHC 1386

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2744

[2019] NZHC 1386

IN THE MATTER OF

an application for an ordering placing a company into liquidation

UNDER

the Companies Act 1993

BETWEEN

AUTUMN TREE LIMITED

Plaintiff

AND

BISHOP WARDEN PROPERTY HOLDINGS LIMITED

Defendant

Hearing:	18 June 2019
Appearances:	B Rooney for the Plaintiff N Tabb for the Defendant
Judgment:	18 June 2019

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]    This is an application by Autumn Tree Ltd (“Autumn”) to have liquidators appointed to Bishop Warden Property Holdings Ltd (“BWPH”). This follows the issuing of a statutory demand under s 289 of the Companies Act 1993 (“the Act”) seeking recovery of $30,442.95.

[2]    The statutory demand was served on 16 November 2018. No application was made to set the statutory demand aside. Accordingly, on the expiration of the date by which the statutory demand had to be met, a presumption of insolvency of BWPH arose. That is the basis of Autumn’s application for appointment of liquidators.

AUTUMN TREE LTD v BISHOP WARDEN PROPERTY HOLDINGS LTD [2019] NZHC 1386 [18 June 2019].

[3]    Late in the piece, just before the first call of this case, BWPH applied for leave to file a defence out of time, and leave was granted. A defence was filed, and the case was set down for hearing before me today.

[4]    In a memorandum filed before the fixture, counsel for the defendant Ms Tabb, seeks an indulgence from the Court by way of adjournment of this case for two weeks to enable the debt to be paid in full. She refers to health issues suffered by the sole director of BWPH, Mr Blomfield, who is not able for that reason to deal with this case. Counsel tells me she has seen Mr Blomfield’s medical certificate and I accept that that is the position.

[5]    Counsel then outlines attempts to settle the case, and the commencement of this morning’s hearing was delayed while counsel continued discussions. Unfortunately, agreement was not able to be reached.

[6]    Counsel for BWPH notes two points in particular. First, I am told that BWPH is not insolvent.   Its assets include a property in Te Atatu valued at  $525,000 with   a mortgage of $400,000 on it, over which Autumn Tree Ltd (“Autumn”) has a charging order for the debt now claimed. Counsel informs me that BWPH does not have any other creditors and is not incurring additional debt.

[7]    Secondly, the shareholder of BWPH, a company called Bishop Waldron Ltd, is prepared to inject funds to cover the debt owing to the plaintiff. It is due to receive

$577,642 by way of a distribution from the Official Assignee, and counsel helpfully put forward a letter from the Official Assignee confirming this fact. This letter does not advise a date when payment is to be made, but counsel tells me that the money is to come from the sale of a property owned by Bishop Warden Ltd, and there is an unconditional contract for sale to a purchaser who wishes to bring the settlement date forward. I accept that there is a reasonable prospect that Bishop Warden Ltd will be in funds within a period of two weeks.

[8]    However, as Mr Rooney points out, the settlement of this debt still relies on Bishop Warden Ltd making a shareholders’ advance. Mr Rooney points out that BWPH’s debt is comprised of three awards of costs, and a review of the file shows

that these were made by this Court and the Court of Appeal between May and November 2018. Part of the debt is therefore up to a year or so old.

[9]    I enquired from Ms Tabb whether BWPH is trading or has staff. To the best of her knowledge it is not. This is not a case therefore where there appears to be any third party interests that the Court should take into account in allowing further time for the debt to be paid.

[10]   Overall, I have reached the view that the justice of the case requires that it proceed  today.    I  have  some  sympathy  for  the  defendant’s  position  given     Mr Blomfield’s current ill health, but to say that its compliance with orders of this Court is being made late in the piece is putting it mildly.

[11]   Action is required by those against whom costs are awarded on a prompt basis. Costs awards are intended to compensate a successful party in litigation which has incurred costs at the time in running the case in respect of which the award was made. The consequence is that Autumn has been out of pocket for all of its own costs without contributions from BWPH for periods between May 2018 to now, and November 2018 to now, and however one looks at it that is extremely tardy compliance with directions of this Court and the Court of Appeal.

[12]   Further, resolution of this case is in the end dependent on the proposed shareholders’ advance.   There is no sign of the defendant company’s property in    Te Atatu providing the cash that is needed to clear this debt. Whilst the Court may have a degree of confidence that funds will be made available by Bishop Warden Ltd, equally, circumstances can change in a matter of a couple of weeks or so, the period sought for an adjournment, and I have to take into account in assessing that, that these parties have been in opposing camps for an extended period, and at great cost.

[13]It follows that the request to adjourn today’s hearing is declined.

[14]   Mr Rooney wishes to proceed. He has produced to the Court and I have read a certificate that the debt remains unpaid. He asks that private liquidators be appointed.

[15]I therefore make the following orders:

(a)The defendant company Bishop Warden Property Holdings Ltd is placed into liquidation.

(b)Christopher Carey McCullagh and Stephen Mark Lawrence are appointed as the Liquidators.

(c)I approve the rates of remuneration which are set out in their consent of 12 March 2019, subject to their applying in due course for approval  of their remuneration overall under s 284 of the Companies Act 1993.

(d)The Liquidators may exercise their powers individually.

(e)The plaintiff company will have costs against the defendant company on a 2B basis, that being the appropriate scale given the fact that this case proceeded until today on the basis that it would be defended. Disbursements will also be paid, fixed if necessary by the Registrar.

[16]   Counsel are agreed that it is appropriate that this order lie in Court and have effect at a later time today. This follows their strenuous attempts over recent days, and indeed today, to settle this case. I think that this course is appropriate, if a little unorthodox. I direct that the order will lie in the Court and not take effect before 5 pm today. In the event the case is settled, the orders will be of no effect. If it is not settled the orders will take effect at 5 pm Tuesday 18 June 2019.

Associate Judge Matthews

Solicitors:

Fortune Maning, Auckland, for the Plaintiff

Email: [email protected] Natalie Tabb, North Harbour, Auckland for the Defendant

Email: [email protected]

Copy to:

Brian Rooney, Barrister, Auckland, for the Plaintiff Email: [email protected]