Ballantyne Trustees Ltd v HFK Ltd - [2016] NZHC 917

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000173 [2016] NZHC 917

BETWEEN
BALLANTYNE TRUSTEES LIMITED

AND OTHERS Plaintiff

AND

HFK LIMITED First Defendant

AND

KEIRAN ANNE HORNE Second Defendant

Hearing: 11 April 2016

Appearances:

M J Tingey for Plaintiffs
M E Parker for Defendants

Judgment:

6 May 2016

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to interlocutory application

Introduction

[1] This judgment is upon:

(a) an application for leave to bring a claim under s 284 Companies Act

1993; and

(b) a cross-application for security for costs.

Background

[2] The plaintiffs were shareholders in Goose Bay Ranch Holdings Ltd (GBRH). GBRH is in liquidation. Initially, on 31 March 2009, it was put into interim
liquidation by order of this Court on the without notice application of GBR

BALLANTYNE TRUSTEES LIMITED AND OTHERS v HFK LIMITED [2016] NZHC 917 [6 May 2016]

Investment Ltd (GBR Investment) which held a minority (12.2 per cent) share in GBRH. Keiran Horne and David Crichton were appointed as interim liquidators of GBRH. At the same time, they were appointed interim liquidators of three wholly owned subsidiaries of GBRH, namely Moana Investment Property Ltd (Moana), Makura Settlement Ltd (Makura) and PK Construction Ltd (PK Construction) (collectively “the associated companies”).

[3] Subsequently, PK Construction was put into liquidation by order of this Court on the application of a third party creditor on 2 November 2009, Ms Horne and Mr Crichton being then appointed the permanent liquidators.

[4] On 27 November 2009, following a defended hearing, GBRH was placed into liquidation by order of this Court, with Ms Horne and Mr Crichton (of the firm HFK Limited (HFK)) appointed the permanent liquidators of GBRH.1 By the same judgment, the Court dismissed the application for orders liquidating Moana and Makura by reason of the fact GBR Investment did not have the status of shareholder (that is, in the associated companies) which it had relied on in bringing its
application. The Court therefore found that the orders of interim liquidation had been made without jurisdiction.2

[5] Shortly afterwards, on 9 December 2009, Moana and Makura were placed into liquidation by this Court on the application of third party creditors. Ms Horne and Mr Crichton were again appointed permanent liquidators.

[6] The associated companies were subsequently struck off the Companies

Register around the date of 9 August 2011 for Moana and Makura and 14 September

2011 for PE Construction.

[7] GBRH owned a 314 hectare rural property at Goose Bay. The property was mortgaged to Papprill Hadfield & Aldous Solicitors Nominee Company Ltd (the Nominee Company). The mortgage secured a loan of $1,450,000 which had been
obtained on the basis of a registered valuation of $4,450,000. In 2009, following the

1 GBR Investment Ltd v Goose Bay Ranch Holdings Ltd [2010] NZCCLR 11 (HC).
2 At [53].

appointment of interim liquidators, GBRH did not meet its interest payments to the Nominee Company or repay the principal. GBRH in October 2009 failed to comply with a notice under the property issued…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] NZHC 917
Decision Date: 6 May 2016

CaseChat Overview and Summary

In the High Court of New Zealand, Christchurch Registry, Ballantyne Trustees Limited and others sought leave to bring a claim under s 284 Companies Act 1993 and for security for costs against HFK Limited and Keiran Anne Horne. The plaintiffs were shareholders in Goose Bay Ranch Holdings Limited (GBRH) which was in liquidation. They alleged improper conduct by Ms Horne, who was the liquidator of GBRH and its associated companies. The plaintiffs sought to pursue a claim for relief under s 284 Companies Act 1993 in addition to their claims for breach of the liquidator's duty and negligence. The defendants opposed the leave application and sought security for costs.

The court declined the plaintiffs' application for leave. The plaintiffs had not satisfied the threshold test under Trinity Foundation Services, as there was no reasonable likelihood of the court granting the requested orders. The plaintiffs also sought to reverse the decision to put GBRH into liquidation, but the court found that the decision was made by the court itself, and not Ms Horne. The court further found that the plaintiffs' proposed use of s 284(1)(f) Companies Act 1993 was not within the evident purpose of the provision. The court also found that the delay in pursuing s 284 relief in relation to liquidations which were long complete would weigh heavily against granting relief. The defendants' application for security for costs was granted, and the plaintiffs were ordered to provide a first tranche security of $25,000 to cover the period to the making of trial directions.

Orders