Bawden Holdings Limited v Real Estate Assets Limited HC Auckland CIV 2008-404-002142

[2008] NZHC 2559

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2008-404-002142

UNDER

an application under section 174 of the

Companies Act 1993

BETWEEN

BAWDEN HOLDINGS LIMITED Plaintiff

AND

REAL ESTATE ASSETS LIMITED First Defendant

AND

BRIDGECORP HOLDINGS LIMITED (IN RECEIVERSHIP)

Second Defendant

AND

D M COOMBE Third Defendant

AND

S N KENDON Fourth Defendant

AND

P P CARTER Fifth Defendant

AND

S G LONGLEY Sixth Defendant

Hearing:

1 September 2008

Appearances: D Chisholm for the Plaintiff

M Gilbert for the Second to Sixth Defendants
M Heard for Tattle Holdings Limited

Judgment:      5 September 2008 at 5.15pm

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 5 September 2008 at 5.15pm pursuant to r 540(4) of the High Court Rules

Registrar/Deputy Registrar

Date:

Counsel:

D J Chisholm, P O Box 2629, Shortland Street, Auckland 1140

Gilbert Walker, P O Box 1595, Shortland Street, Auckland

LeeSalmonLong, P O Box 2026, Auckland

BAWDEN HOLDINGS LTD V REAL ESTATE ASSETS LTD AND ORS HC AK CIV 2008-404-002142  5

September 2008

[1]      These proceedings were commenced on 16 April 2008, when the plaintiff filed a statement of claim seeking an order pursuant to s 174 of the Companies Act

1993 requiring the second defendant to sell its shares in the first defendant to it, or its nominee, at a price representing fair value to be set by an independent valuer acting as an expert.   It also sought an order that the second to sixth defendants pay compensation to the first defendant and/or the plaintiff for losses said to be have been caused by their oppressive and unfairly prejudicial conduct.

[2]      The second defendant responded with an application that the first defendant should be put into liquidation pursuant to s 241 of the Companies Act 1993.

[3]      The hearing of the matter commenced on 26 May 2008.

[4]      As  recorded  in  my  Minute  of  4  June  2008,  in  the  event  a  settlement agreement was entered into between the parties.   In terms of that agreement, the parties undertook various obligations.  The agreement recorded that if the plaintiff or the first defendant were unable to perform any of the obligations imposed on them, and such failure was not caused by any default by the second defendant, or by any director appointed by the second defendant, then the first defendant should be placed into liquidation, and Messrs McCloy and Waller should be appointed as liquidators.

[5]      The plaintiff was unable to perform the various obligations imposed on it under the settlement agreement and the matter was called before me on Monday

1 September 2008.

[6]      An appearance was entered by Mr Heard on behalf of a company known as Tattle Holdings Limited.  That company’s claimed interest in the matter is outlined in my Minute of 25 June 2008.  Strictly, Mr Heard had no right to appear.  However his appearance was consented to by both Mr Chisholm for the plaintiff, and by Mr Gilbert for the second to sixth defendants inclusive.  In the circumstances, I heard from him.

[7]      The plaintiff accepted that the first defendant – Real Estate Assets Limited – should be placed in liquidation.  It disputed however whether or not Messrs McCloy and Waller should be appointed as liquidators.

[8]      Mr Chisholm argued that Messrs McCloy and Waller were precluded from being appointed as liquidators by virtue of s 280(1)(b) and (c) of the Companies Act

1993, and that there would be a clear conflict of interest if they were appointed as liquidators.  He was supported by Mr Heard.

[9]      Mr Gilbert submitted that there were real advantages in terms of cost in having Messrs McCloy and Waller appointed as liquidators.  He noted that they are familiar with the matters in dispute, and it would not be necessary for them to instruct a further set of professionals in relation to Bridgecorp’s involvement with the first defendant.

[10]     Having considered the arguments presented, I was satisfied that it would be inappropriate for Messrs McCloy and Waller to be appointed.   They are the liquidators of Bridgecorp Limited – the parent company in the Bridgecorp group. They are also partners in the firm PricewaterhouseCoopers.  So are the fifth and sixth defendants, Messrs Carter and Longley.  Messrs Carter and Longley are liquidators of the second defendant and various other Australian-based companies which are part of the Bridgecorp group.   It has been alleged by the plaintiff that Mr Carter acted as a shadow director of the first defendant and that the third and fourth defendants as directors of the first defendant, would not act except at the direction of Mr Carter.  Various allegations have been made in particular against Mr Carter and damages have been sought against him.   Any liquidator appointed of the first defendant will have to investigate the allegations made against Mr Carter, and determine whether or not proceedings should be issued against him for the benefit of the first defendant’s creditors.   It seemed to me to be patently clear that it was inappropriate for Messrs McCloy and Waller to be appointed liquidators of the first defendant in the circumstances, and notwithstanding any possible cost savings.

[11]     I noted, and it was properly accepted by Mr Gilbert, that the settlement agreement entered into between the parties cannot bind the Court.

[12]     At the conclusion of the hearing on Monday 1 September last, I indicated to the parties that in my view independent liquidators should be appointed.  I invited the parties to liaise as to the appropriate appointment.   As a result, I have today received a consent memorandum, seeking the appointment of Brian Mayo-Smith and Shaun Neil Adams as joint liquidators of the first defendant, Real Estate Assets Limited.  They have consented to their appointment, and seek that they should be entitled to charge the normal rates charged by BDO Spicers in Auckland from time to time for liquidation work.

[13]    Accordingly, and by consent, I order that Brian Mayo-Smith, Chartered Accountant, and Shaun Neil Adams, Insolvency Practitioner, be appointed as joint liquidators of the first defendant, Real Estate Assets Limited.  They are authorised to charge for their work in conducting the liquidation in accordance with the rates set out in the schedule to this order – such rates being exclusive of GST and disbursements.

[14]     This authorisation is subject to the standard direction that the joint liquidators are to apply (by memorandum) for an order fixing their overall remuneration at the conclusion of the liquidation.

Wylie J

Schedule

Partner  $395 per hour Principal  $375 per hour Managers  $250 per hour Qualified Accounting Staff  $175 per hour

Support and Unqualified Staff                $100 to $150 per hour