Bank of New Zealand v Goba Holdings Limited (in voluntary administration)

[2013] NZHC 2567

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-000406 [2013] NZHC 2567

BETWEEN	BANK OF NEW ZEALAND Plaintiff
AND	GOBA HOLDINGS LIMITED (in voluntary administration) Defendant

Hearing:	2 October 2013
Appearances:	P Drummond for Plaintiff No appearance for Defendant
Judgment:	2 October 2013

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

putting company into liquidation

Background

[1]      On 15 October 2012 the defendant company (Goba) was put into voluntary administration.  By resolution of its Board of Directors, Graeme Leslie Hercock was appointed voluntary administrator pursuant to s 239(1) Companies Act 1993.   Mr Hercock remains in office as voluntary administrator.

[2]      Goba  had  previously  executed  a  contract  to  guarantee  in  favour  of  the plaintiff (the Bank).   The affidavit of Trevor Stratford, a manager of the Bank, verifies that the guaranteed indebtedness in August 2013 was $355,208.55.

[3]      It appears from correspondence written by Mr Hercock that the crystallisation of the debt owed to the Bank threw into question Goba’s ability to trade.   Mr Hercock advised the Bank in April 2013 that the only practical outcome, if Goba was

to continue trading, was for the Bank to forego exercising the guarantee against

BANK OF NEW ZEALAND v GOBA HOLDINGS LIMITED (in voluntary administration) [2013] NZHC 2567 [2 October 2013]

Goba.  Mr Hercock suggested:

The Bank should resolve to take a loss.

[4]      In the event, the voluntary administrator did not recognise the Bank as a creditor to whom payments should be made in the administration.   Payments had been made to other creditors.  From records obtained by Mr Stratford, it appears that between October 2012 and April 2013 the administrator paid the following:

1.        Priority creditors a total sum of $8,100;

2.        Secured creditors a total of $113,632;

3.Unsecured creditors a total of $51,346, noted as being “20 cents in the dollar”.

[5]      While the Bank’s solicitors have pointed out to the administrator that, even without crystallisation of its debt, the recipient of a guarantee is a creditor of the guarantor within the definitions in the Companies Act,  that has not led  to  any payment to the Bank.

Winding up – the jurisdiction

[6]      Section  239ABU  of  the  Act  is  a  special  provision  providing  for  the appointment of a liquidator to a company in administration. It provides:

239ABU        When  liquidator  may  be  appointed  to  company  in administration

A liquidator may be appointed to a company in administration—

(a)       by the Court, on an application for the appointment of a liquidator under section 241(2)(c); or

(b)       by  resolution  of  the  creditors  at  the  watershed  meeting  or  at  a meeting convened under section 239ADF to consider the termination of the deed of company arrangement.

[7]      The power to appoint a liquidator under the section referred to in s 239 ABU, namely s 241(2)(c) includes where an application is made by a creditor (including any contingent or prospective creditor): s 241(2)(c)(iv).

[8]      The Court’s jurisdiction to appoint a liquidator, on such an application, arises if the Court is satisfied of any of the four limbs of s 241(4).  Those limbs include where the company is unable to pay its debts (s 241(4)(a)) and if it is just and equitable that the company be put into liquidation (s 241(4)(d)).

This application

[9]      The Bank in its statement of claim relied on  the jurisdiction under both s 241(4)(a) and s 241(4)(d).

[10]     A manager of the Bank provided the required verifying evidence, parts of which I have summarised.

Discussion

[11]     The plaintiff was entitled to apply as a creditor. [12]    Counsel has certified that the debt remains owing.

[13]     I  am  satisfied  on  the  evidence of  Mr  Stratford  both  that  the  defendant company is unable to pay its debts and that it is just and equitable that the company be put into liquidation.  The desire of the plaintiff, as deposed by Mr Stratford, to ensure that all unsecured creditors are treated equally is a proper objective – if it cannot be obtained other than through the liquidation of the company, then the “just and equitable” winding up jurisdiction is appropriate.

Orders

[14]     I order:

(a)       There is an order putting the defendant into liquidation; (b)     The liquidator appointed is the Official Assignee;

(c)       The   defendant   is   to   pay   the   plaintiff ’s   reasonable   costs   and

disbursements of and incidental to this proceeding on a solicitor/client

basis, with leave reserved to the plaintiff and the liquidator to file memoranda if any issue arises as to the amount of the costs;

(d)      This order is made at 10.19 am.

Solicitors:

J Toebes, Wellington

Associate Judge Osborne