Bank of New Zealand v Matsis
[2021] NZHC 1122
•19 May 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-569
[2021] NZHC 1122
BETWEEN BANK OF NEW ZEALAND
Applicant
AND
MICHAEL PETER MATSIS
Respondent
Hearing: 11 March 2021 Appearances:
J C Caird and L B Harrison for the applicant
C F J Reid and C M Kenworthy for the respondent
Judgment:
19 May 2021
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction and background
[1] The Bank of New Zealand sues Mr Michael Matsis pursuant to a guarantee given by him in support of lending arrangements between the Bank and a business effectively run by Mr Matsis. The Bank applies for summary judgment. Mr Matsis opposes this application.
[2] Mr Matsis incorporated Zany Zeus Ltd in January 2003. By the time of the events that form the background to this proceeding there were two other companies in the group: Soy Organic Ltd and Zany Zeus On Wheels Ltd. The group’s core business involved the manufacture of specialist cheeses and other such products.
[3] By late 2016 the Bank was the group’s principal financier. On 10 November 2016, the Zany Zeus companies and Mr Matsis entered into security arrangements to support pre-existing and new facilities. These included guarantees that were referred
BANK OF NEW ZEALAND v MATSIS [2021] NZHC 1122 [19 May 2021]
to as “interlocking”. That sounds more complicated than it is. Essentially, the three companies and Mr Matsis each guaranteed the others’ obligations to the Bank.
[4] By late 2019 the Zany Zeus group was facing financial difficulties and in December 2019, at the group’s instigation, the Bank appointed receivers, Mr John Fisk and Mr Richard Nacey of PriceWaterhouseCoopers in Wellington, over its business.
[5] Between their appointment and April 2020 the receivers continued to operate the business while they considered its future.
[6] Eventually they sold the business to a consortium headed by a Mr Gerald McDouall for $1,800,000. The sale and purchase transaction was settled on 3 April 2020. The assets were transferred to a company formed for the purpose by the consortium, Zany Zeus (2020) Ltd. As an aside, Mr Matsis is apparently employed by this company.
[7] The Bank’s losses were crystallised by the sale, and in October 2020 it commenced this proceeding in which it sues Mr Matsis pursuant to his guarantee claiming the difference between those losses and the maximum amount of the guarantee ($2,000,000), together with contractual interest and costs. Its application for summary judgment is supported by an affidavit sworn by one of its managers, Mr Michael Williams. This is a comparatively formal document. Mr Williams does little more than swear to the accuracy of the Bank’s statement of claim and produce the loan and security documentation. So far as it goes, Mr Williams’ primary affidavit is not controversial.
[8] However, Mr Matsis says he has defences to the Bank’s claim, and opposes its application for summary judgment.
Summary judgment applications
[9]The High Court Rules provide for summary judgment in pt 12.
[10]The pivotal rule is r 12.2, which provides as follows:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
(2)The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[11] There was no dispute as to the principles that apply to summary judgment applications.1
[12] Essentially, on this application the Court must be left with no serious doubt that the defendant/respondent has no defence to the claim. If there are disputes of fact that are incapable of being resolved, or cannot fairly be resolved, on affidavit evidence, then summary judgment will not be appropriate.2 However, even in a summary judgment application the Court is not obliged to accept evidence that is inherently incredible, and is entitled to take a robust approach to such issues.3
Mr Matsis’ defences
[13]What, then, are the defences that Mr Matsis raises?
[14] In his written synopsis of submissions Mr Reid summarised these in the following terms:
Essentially, the respondent contends that:
a. He has a defence to the cause of action and the statement of claim;
b. The Plaintiff’s receivers, Messrs Fisk & Macey of PwC (the Receivers), with the consent of the Plaintiff, settled the sale of the business of Zany Zeus Ltd (the Company) and its related companies on 3 April 2020 (the sale), and failed to obtain the best price reasonably obtainable thereby causing loss and damage to the Respondent, as the guarantor of the debts owing by the Company to the Plaintiff;
1 See Kruikziener v Hanover Finance [2008] NZCA 187 at [26]–[27].
2 See Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [62].
3 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 at 14 citing Eng Mee Yong v Letchumanan [1980] AC 331 at 341.
c. The Receivers, prior to the sale, made false and misleading misrepresentations to the Respondent regarding the Plaintiff’s enforcement of his obligations as a guarantor of the Companies’ debts;
d. By the conduct of the Receivers (and its own conduct) prior to the sale
— to be established through the discovery process before trial — the Plaintiff is estopped from enforcing the Respondent’s obligations as a guarantor.
[15] By the time of the hearing Mr Matsis’ defences had resolved themselves into two essential points, which I would summarise as follows:
(a)First, that the Bank is estopped from enforcing the guarantee of the companies’ debts given by Mr Matsis;
(b)Second, that the Bank has breached a duty owed to Mr Matsis to secure the best price reasonably obtainable on the sale of the business and as a result it is prevented from pursuing Mr Matsis pursuant to the guarantees granted in respect of the company’s debts at least for any amount between the amount recovered (together with interests and costs) and a reasonable amount (together with interest and costs).
[16]I deal with the defences in that order.
Estoppel
[17]In his notice of opposition Mr Matsis pleads that:
The Receivers, prior to the sale … made false and misleading misrepresentations to the Respondent regarding the Plaintiff’s enforcement of his obligations as a guarantor of the Company’s [sic] debts …
By the conduct of the Receivers (and its own conduct) prior to the sale … the Plaintiff is estopped from enforcing the Respondent’s obligations as a guarantor …
[18] In support of that pleading, Mr Matsis swore a brief affidavit. He outlined the background to the formation of the business. He talked about how difficult the receivership was for him. He said that it was his hope and expectation that the business would ultimately emerge from the process. He described how hard he worked throughout the receivership. His evidence concluded:
7.When I was working with the receivers they always lead me to believe that if I cooperated and worked hard, the Bank would be happy and wouldn’t sue me under my personal guarantee.
[19] That is all that Mr Matsis himself says in support of his estoppel defence.
[20] His notice of opposition was also supported by an affidavit sworn by Mr Gerald McDouall who, it will be recalled, headed up the consortium that ultimately purchased the business. However, Mr McDouall’s evidence does not address the estoppel issue at all.
[21] The Bank’s Mr Williams responded to Mr Matsis’ evidence. So did one of the receivers, Mr Nacey.
[22]In his affidavit in response Mr Williams says:
21.At no point prior to, or during, the receivership did BNZ represent to Mr Matsis that BNZ would refrain from enforcing his obligations under his personal guarantee if Mr Matsis cooperated with the Receivers. Nor did BNZ ever direct the Receivers to make such representation to Mr Matsis.
[23] Mr Nacey says:
46.I categorically reject making any such representations to Mr Matsis. As an experienced insolvency practitioner, I am aware that I have no control over a bank’s decision to pursue a guarantor under a personal guarantee and/or pursue bankruptcy proceedings, nor am I involved in any such decisions. Those are matters solely for the bank. Accordingly, I would never make such a representation to Mr Matsis (or any person involved in a receivership).
47.Mr Matsis had advised me that he had granted a personal guarantee to BNZ in respect of the Companies’ indebtedness to BNZ. In my experience, it is common for a director to provide a personal guarantee to a bank in circumstances where the company/business is a closely-held family business. Mr Matsis also advised me that he had provided personal guarantees to other creditors as well.
48.I did have conversations with Mr Matsis when I spoke about the fact that our interests were aligned — in the sense that the greater the realisations generated through the receivership process the less residual debt he would owe to BNZ under his personal guarantee, and I encouraged Mr Matsis to assist the receivers through the receivership process in order to achieve the highest realisations possible. However, I emphasised to Mr Matsis on a number of occasions that the Receivers would not be involved in decisions made
by BNZ, or any other creditors to which Mr Matsis had provided personal guarantees, and that he needed to seek independent legal advice regarding his personal affairs.
[24] Mr Reid submits that the Bank cannot discharge the burden of demonstrating that Mr Matsis has no arguable basis for his estoppel defence.
[25] Mr Reid acknowledges that Mr Matsis’ evidence that he was told by the receivers that if he cooperated the bank would not sue him under the Guarantee is denied both by the Bank through Mr Williams and the receivers through Mr Nacey.
[26] He submits that it is significant that Mr Nacey confirms that he did have conversations with Mr Matsis in which it was said that the interests of all parties were aligned, and in which Mr Nacey encouraged Mr Matsis to assist the receivers to obtain the best price for the business.
[27] Mr Reid says that it is also significant that Mr Nacey does not produce any contemporaneous records of these conversations.
[28]He concludes that:
It follows that these disputed matters are clearly arguable requiring oral evidence at trial.
[29] I do not accept that submission.
[30] Certainly, there is a direct clash between Mr Matsis’ very general assertion and the denials that this has elicited from Mr Williams and Mr Nacey.
[31] I cannot see how Mr Matsis’ position is bolstered in any way by Mr Nacey’s acceptance of having had conversations of the sort he describes with Mr Matsis, which I imagine are common as between receivers and the directors and other officers of companies in receivership, encouraging them to assist the receivers and doing so by making the self-evident point that the parties all have the same interest in securing the best price for the business.
[32] Neither party has produced any contemporaneous records of these discussions, and nor would I necessarily expect them to have made records of general discussions of the sort under consideration.
[33] Standing back from the matter, it appears to me that the proposition that a large trading bank and very experienced receivers would make representations to Mr Matsis of the sort he claims is an incredible one, even putting aside the categorical denials of both Mr Williams and Mr Nacey.
[34] In any event, there is no evidence that Mr Matsis relied on the alleged representation to his detriment.4
[35] Even if there was evidence to support Mr Matsis’ assertion that the receivers made representations to him, there is no evidence to support the proposition that the receivers had actual or any other form of authority to make any such representations on the bank’s behalf. That would leave Mr Matsis with a claim against the receivers, but it would not provide a foundation for a defence or estoppel against the Bank.
[36] In the end, I am left without any real doubt that Mr Matsis’ estoppel defence cannot succeed.
Realisation
[37] The circumstances in which the Zany Zeus group’s business was sold to the company formed by Mr McDouall, Zany Zeus 2020, are not touched on by Mr Matsis in his affidavit evidence. However, Mr McDouall describes the process, and I quote his evidence as it is the most complete description.
[38] Having introduced himself, and described how he became aware of the receivership and interested in attempting to acquire the business, Mr McDouall continues:
4 This would be required for an estoppel argument to succeed. See Wilson Parking v Fanshawe 136 Ltd [2014] 3 NZLR 567 at [44].
7.The ZZ2020 Consortium and the subsequent Zany Zeus 2020 Limited followed the process outlined by PWC in its expression of interest, and other documentation, to the best of our ability.
8.On 7 February 2020 we sent a formal indicative non binding offer to acquire the business and assets of Zany Zeus Limited (in receivership) to PWC. Our indicative price range was $2.5 - $5 million (Exclusive of GST). We were subsequently provided additional information relating to the company and asked to provide a final binding bid.
9.On 6 March 2020, as the sole Director of Zany Zeus 2020 Limited, a newly formed entity, I signed a binding (but still conditional) offer for the acquisition of the business and assets of Zany Zeus Limited (in receivership) for $3.5 million. We made a commercial call to make our bid subject to a few conditions as possible.
10.We subsequently were advised by PWC that the bid had been accepted, and we were given exclusivity for a period ending initially on 24 March 2020 and later extended to 31 March 2020.
11.On Monday March 23 2020, the Government announced a national lockdown in response to Covid 19. Within a couple of hours of this announcement, I received a call from Richard Nacey of PWC, advising that following discussions they were going to look at closing the business down and mothballing the assets.
12.I advised him that Zany Zeus 2020 limited had an exclusivity period for another week, and he needed to honour that exclusivity period. He asked where we’re at, in meeting the conditions and I advised we had met or were willing to waive all but two conditions in the offer dated 6 March 2020, and were still working on the remaining two but were confident of meeting them or being in a position to waive them shortly.
13.He advised “I am not going to lose my house over this”. He asked what it would take to get us to waiver the conditions immediately to reduce this risk. Sensing an opportunity I advised price was always an option. He asked me to come back with a reduced price to immediately waive the conditions.
14.I rang other key members of the consortium and advised them of the phone call and went back to Richard Nacey with a price of $1.5 million + stock, some $2 million below the conditional offer. He said he needed to talk to others and the Bank (BNZ).
15.He subsequently came back and offered $1.8 million all up (inclusive of stock as they didn’t want to do a stock take). This was subsequently accepted. The assets and business were acquired on Friday 3 April 2020 for a price of $1.8 million.
[39] Neither Mr Williams nor Mr Nacey in their responses contradict that description of events in any material way.
[40] Mr Williams’ affidavit in response refers to the Bank’s appointment of receivers and he touches on how the Bank sees its ongoing role post appointment. In particular he says:
I have personally been involved in the appointment of receivers on many occasions previously and understand that receivers have various statutory duties and are required to act independently of the appointing creditor.
[41] He continues by making a specific reference to the appointment documentation which, as he says, expressly provided that the receivers are not agents of the bank and are required to act independently.
[42] He then goes on to describe the level of communication between the Bank and the receivers in this case, referring to the irregular reports received, of which there appear to have been four between 10 December and 9 March. He acknowledges that, having regard to the fact that the Bank held security over the Zany Zeus group’s assets, the receivers would require the Bank’s approval to any sale because the securities would need to be released, but says that, other than that, the judgments about the sale were largely left to the receivers. Finally, Mr Williams acknowledges that the receivers kept the Bank informed of the negotiations in early March 2020 and that the Bank agreed to the receivers’ recommendation for the sale that was ultimately reached.
[43] Mr Nacey replies in more detail to the implied and express criticisms of the sale. He begins by setting out the receivers’ credentials. All I need say is that both Mr Fisk and he have many years of experience in the insolvency area.
[44] Mr Nacey then goes on to describe the process that was undertaken to determine whether to sell the Zany Zeus group business.
[45] He commences that description by saying that having taken a series of formal steps following their appointment the receivers turned their minds to the business’ future. Mr Nacey picks up the description of events as follows:
9.Next, Mr Fisk and I undertook an analysis of the current financial position, and ongoing trading viability, of the Companies. We decided to continue to trade the Zany Zeus business while determining the best way to maximise the realisation of the Companies’ assets.
10.We engaged JLL to carry out a valuation of the Companies’ assets, to inform our decision as to whether to sell the business as a going concern, or to realise the assets. JLL valued the assets on a [sic] both a market value ex situ basis and a market value in situ basis. A copy of that valuation is annexed marked “B”. The in situ valuation assumed a going concern business that had both a new lease for, and completed new cheese plant at, the Seaview factory (neither of which was in place).
11.The value of the assets on a market value ex situ basis according to the JLL valuation was approximately $960,000 plus GST. The assets included in the valuation comprised some assets subject to prior ranking specific security. When these assets were removed from the valuation, the value of assets subject to the BNZ security was approximately $775,000 plus GST. This is the approximate value that Mr Fisk and I considered might be achievable if the business were to cease trading and the assets sold at auction.
[46] Mr Nacey then goes on to talk about various particular characteristics — good and bad — of the Zany Zeus group’s business, the mechanics of the process and how the receivers ultimately received a small number of final bids, the most attractive of which by some margin was from the McDouall consortium.
[47] Mr Nacey then recounts that on 23 March 2020 the nationwide lockdown on account of COVID-19 was announced, and that that altered the landscape materially so that the receivers were not confident that a sale would ultimately be achieved for reasons which he sets out in detail.
[48]Mr Nacey continues:
… Mr Fisk and I were unwilling to continue trading the Zany Zeus business for an extended period in lockdown conditions for the following reasons:
(a)while we were able to trade the Zany Zeus business profitably during the receivership period, the profit margin was modest, and the business in fact operated at a loss after receivership costs were included. We considered it to be highly unlikely that the business would trade profitably in circumstances where approximately 65% of revenue was generated from customers in the hospitality sector, who themselves would not be able to trade during the lockdown;
(b)Mr Fisk and I could potentially face personal liability for trading losses incurred during the receivership period;
(c)the factory had very narrow corridors, was crowded, and it would have been difficult to ensure social distancing between employees; and
(d)we were cognisant of the large remediation costs that would be shortly required to keep the Moera Zany Zeus factory compliant with food safety regulations.
[49] Accordingly, the receivers contacted Mr McDouall on 23 March 2020. Here is Mr Nacey’s description on how matter preceded from that point:
26.On 23 March 2020, I spoke to Mr McDouall by telephone about the concerns outlined above. I advised him that if a sale could not be concluded quickly (i.e. by ZZ2020 waiving the Insol Condition and the Seaview Lease Condition), then Mr Fisk and I were considering closing the business until trading conditions stabilised.
27.Mr McDouall expressed concern about the loss of value should the Companies stop trading, even temporarily. Mr McDouall explained that he expected there to be a significant deterioration in value if the business was closed. Mr McDouall also stated that ZZ2020 was unwilling to enter an unconditional sale agreement at the price agreed, as it considered the Insol Condition and Seaview Lease Condition were critical to the value of the business. It was at this point that we appeared to be in a “stalemate”. I invited ZZ2020 to “put a value” on those conditions and put forward an unconditional offer, so that a sale could be achieved.
28.ZZ2020 then submitted a revised indicative offer of $1.5 million, dated 23 March 2002, for the purchase of the Companies’ assets, which was not conditional on the Insol Condition or the Seaview Lease Condition. I annex marked “H” a copy of the letter of offer dated 23 March 2020.
29.Mr Fisk and I considered this revised offer. While it was lower than the initial offer received, we considered that, in the circumstances, it may have been the best price we would be able to achieve at that time. While the offer was at a level that we would have accepted, we made a decision to attempt to solicit a higher offer to test whether ZZ2020 would be willing and able to pay an increased amount. I then verbally advised Mr McDouall that if ZZ2020 increased its offer to $2 million, the Receivers would accept that offer. ZZ2020 made a counter-off of
$1.8 million, which Mr Fish and I accepted. Given the circumstances at the time, we considered a sale price of $1.8 million to be a good one. This agreement was then recorded in a revised letter of offer, also dated 23 March 2020, which is annex marked “I”.
30.Mr Fisk and I were comfortable with the revised offer being inclusive of stock because:
(a)I had a good understanding of the stock held by the business (as no goods or services were ordered during the receivership without me or a PwC staff member signing a purchase order, and we were constantly monitoring the trading performance); and
(b)there were cost and health and safety concerns about completing a full stocktake during the COVID-19 lockdown.
31.The sale of the assets of the Companies settled on 3 April 2020 and all assets were transferred to ZZ2002 in accordance with the final SPA, dated 1 April 2020. I annex marked “J” a copy of the final SPA.
32.I have read the affidavit of Mr McDouall, dated 3 December 2020, and filed in this proceeding. At paragraphs 11 to 13 of his affidavit he refers to the telephone discussion of 23 March 2020 that I have referred to above. At paragraph 13 of his affidavit, Mr McDouall stated that I:
… advised “I am not going to lose my house over this”. He asked what it would take to get us to waiver the conditions immediately to reduce the risk.
33.I do not recall using the phrase “I am not going to lose my house over this”, but I did express concerns regarding the risk of continued trading (as set out above). To the extent that Mr McDouall may be implying that I expressed concern about my liability due to the SPA conditions, that is incorrect. However, I did express concern about potential liability that could arise from the continued trading of the business during the lockdown (as stated above).
Best price reasonably obtainable at the time of sale
34.As a Licenced Insolvency Practitioner, a Chartered Accountant, and a Partner at PwC, I am very aware of my legal and ethical duties when acting as a receiver of a company. Mr Fisk is similarly aware of his legal and ethical duties. Those duties include a specific statutory duty under s 19 of the Receiverships Act 1993 to obtain the best price reasonably obtainable as at the time of sale when selling property in receivership.
35.The steps that Mr Fisk and I have taken to date in the receiverships of the Companies have been entirely appropriate, and are consistent with the many receiverships that I and Mr Fisk have previously undertaken during our professional careers. The sale process that we undertook in respect of the Zany Zeus business was appropriate for the nature of the business, was robust and yielded a good level of interest.
36.Ultimately, any sale of the Zany Zeus business faced difficulties relating to:
(a)securing a lease for essential premises; and
(b)securing an agreement for the supply and installation of essential cheese-making equipment from Greece.
37.In addition, we were seeking to sell a trading business that supplied the retail/hospitality sector during an unprecedented national lockdown of uncertain duration, resulting from a global pandemic. There was no certainty how the Zany Zeus business would be affected by the pandemic, both in the short term and the long term.
38.I believe that Mr Fisk and I obtained the best price reasonably obtainable for the Zany Zeus business in the circumstances.
39.Despite an extensive sale process prior to lockdown, no other offers were received that would have produced a greater return for the Companies’ assets than Mr Fisk and I achieved, and the final sale price significantly exceeded the ex situ valuation of the Companies’ assets obtained from JLL.
[50] Mr Nacey also gives evidence that the BNZ had no direct involvement in the negotiation or sale:
40.Although Mr Fisk and I were appointed as receivers by BNZ, we act as agents of the Companies, not of BNZ. This is clear as a matter of general practice, and was expressly stated in our appointment documents. Mr Fisk and I act independently of BNZ and we are mindful in all of our receivership appointments not to act in a manner that would cause us to act as agents for our appointing secured creditor. At no stage during the receiverships of the Companies have we acted as agents for BNZ, nor have we held ourselves out as being the agents of BNZ.
41.As is normal process in a receivership, Mr Fisk and I did keep BNZ updated as to the progress of the sale process. This included both written and verbal updates regarding the nature of the sale process; the number of interested parties and the extent of their interest; information regarding the non-binding indicative offers received; and information regarding the final offers received. We also provided BNZ with updates regarding the discussions with ZZ2020 during the negotiations around the SPA, and the negotiations regarding the sale price on 23 and 24 March 2002. One of the primary reasons to keep BNZ updated during the sale process is to ensure they are provided with adequate information to make a decision as to whether they agree to release their security over the assets being disposed of. In my experience most appointers will consider, among other things, the robustness of the sale process used to achieve a sale, together with the agreed sale price when making a decision regarding the release of security.
42.Following the sale of the Zany Zeus business and the other assets of the Companies, we have made distributions to BNZ totalling approximately $1,370,000. We have also paid the preferential creditors (identified above) and made distributions totalling approximately $12,000 to creditors with valid security interests, where the assets subject to those security interests (such as raw materials) were realised by the Receivers. I annex marked “K” a copy of our receivership reports for the Companies filed to date.
[51] Mr Reid relied on Black v The Ottoman Bank5 and Standard Chartered Bank Ltd v Walker6 for the following propositions:
(a) Although receivers are appointed by a security holder over the business of the giver of the security are prima facie not the agents of the security holder but the agents of the giver of the security, both at common law and in New Zealand under the Receivership Act, nevertheless in the exercise of their duties they owe responsibilities to the giver of grantor of the security and any guarantors of the grantor’s obligations to achieve the best price possible; and
(b)The security holder and appointor of the receivers may itself incur liability to the giver of the charge or any guarantor — seemingly based on negligence principles if it were shown that the security holder interfered with the receivers’ conduct of the receivership.
[52] Those propositions are elementary and, as Mr Reid submitted, are reflected in various leading commentaries. Mr Caird did not contend otherwise.
[53] The dispositive issues in relation to this second defence are first, whether there is any arguable foundation for the contention that the receivers did not discharge the obligation they owed to the Bank, the Zany Zeus companies and Mr Matsis in his capacity as guarantor to realise the best price reasonably obtainable for the business, and second, even if there is an arguable case to that effect, whether there is an argument that the Bank may be liable for the actions of the receivers because it intermeddled (my term rather than any term that emerges from the authorities) with the receivers’ actions.
[54] Mr Reid contended that there is a real possibility that the receivers may have panicked when the initial lockdown was announced and were “tunnel-visioned” in settling the sale at any price, even if that was not the best price reasonably obtainable.
5 Black v The Ottoman Bank (1862) 15 Moo P.C.C. 472; 15 E.R. 573.
6 Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410.
He submitted a reduction of close to 50% is highly material, and that there is no independent evidence that the price obtained was the best price reasonably obtainable.
[55] There is no evidence upon which the Court would be entitled to conclude that the receivers panicked. For a start, the assertion that the price obtained was 50 per cent less than originally proposed by the McDouall consortium offered is misleading. The consortium’s offer was heavily tagged. It is true that the price ultimately achieved was 50 per cent lower than the figure mentioned, but that is not to say that it was 50 per cent lower than the figure that the parties would ultimately have landed on in any event. Moreover, no evidence has been offered by Mr Matsis establishing that a higher price was available. Even more fundamentally, Mr Nacey’s evidence as to why there was a reduction in the price is quite unanswered.
[56] Mr Nacey explains that the draft sale and purchase agreement under negotiation was conditional on Zany Zeus 2020 agreeing two important contracts with third parties — a new lease for the factory in Seaview, and arrangements in respect of the installation and commissioning of equipment— that, according to Mr McDouall, were critical to the value of the business. But there were serious impediments to Zany Zeus 2020 getting these contracts over the line. Mr Nacey therefore invited Zany Zeus 2020 to “put a value” on those conditions. After more back and forth negotiation, the final offer price was reached, which, among other things such as the uncertainty created by COVID-19, reflected the fact those two important contracts were no longer part of the picture.
[57] The argument that the Bank may be liable for the actions of the receivers because it improperly interfered with the receivers’ actions can be dealt with briefly. The short point is that there is no evidence to establish this. The correspondence that did take place between the receivers and the Bank appears to be directed at keeping the Bank informed about the sale process, just as one would expect.
[58] In my view, the evidence falls well short of establishing the Bank was improperly directing the receivers. Generally, a secured party’s intervention will need to be serious before any liability can attach to it for the receiver’s actions; giving
advice to or holding discussions with the receiver, or making known its preferences, will not render the secured party liable.7
Conclusion
[59] In the end, for those reasons, I am satisfied that the Bank is able to make out its claim, and that Mr Matsis has no reasonably arguable defence to the same.
[60]Accordingly:
(a)I enter summary judgment in the Bank’s favour against Mr Matsis in the terms sought in sub-paragraphs (a) and (b) of the prayer for relief in the plaintiff’s statement of claim;
(b)Costs are reserved. If counsel are unable to agree as to costs, they may file and serve memoranda in the usual way.
Associate Judge Johnston
Solicitors:
Simpson Grierson, Auckland for plaintiff Franks Ogilvie, Wellington for defendant
7 Peter Blanchard and Michael Gedye The Law of Private Receivers of Companies in New Zealand
(3rd ed, LexisNexis, Wellington, 2008) at 39.
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