Birchfield v Birchfield Holdings Ltd
[2021] NZCA 428
•2 September 2021 at 3.00 pm
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| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA404/2020 [2021] NZCA 428 |
| BETWEEN | ALLAN JOHN BIRCHFIELD, LEIGH ELLEN BIRCHFIELD, CHRISTOPHER PAUL BIRCHFIELD, PAULETTE MICHELLE BIRCHFIELD AND NGAIRE ELIZABETH BIRCHFIELD AS TRUSTEES OF THE PLC TRUST |
| AND | BIRCHFIELD HOLDINGS LIMITED |
| Hearing: | 8 June 2021 |
Court: | French, Gilbert and Goddard JJ |
Counsel: | K G Davenport QC and A M Cameron for Appellants |
Judgment: | 2 September 2021 at 3.00 pm |
JUDGMENT OF THE COURT
ALeave is granted to adduce in evidence the financial statements for BHL exhibited by Ms Butterworth, and the audited versions of those financial statements exhibited by Mr Noone. The application for leave to adduce further evidence on appeal is otherwise dismissed.
BThe respondents must, within 10 working days, file a memorandum of counsel that either:
(a)confirms that an adjusted offer has been made in accordance with [85] of this judgment, and attaches that offer; or
(b)advises that no such offer has been made.
C If a memorandum confirming the making of an adjusted offer is filed:
(a)the appeal is dismissed with effect from the date 20 working days after the date of that memorandum; and
(b)the appellants must pay costs to the respondents for a standard appeal on a band A basis, with usual disbursements.
DIf a memorandum confirming the making of an adjusted offer is not filed within 10 working days, we direct the Registrar to arrange a telephone conference with the parties.
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Table of contents
Para no
Differences within a family company
Buy-out offers
Summary judgment granted in the High Court
Background
The differences between the siblings
Proposals by PLC Trust to sell its shares in BHL
The buy-out offers
The proceedings
Application by defendant for summary judgment in s 174 proceedings
Application to adduce further evidence on appeal
Is the appellants’ claim incapable of succeeding in light of the offer(s) made?
The timing of the offers
Compensation for effect of conduct on value of company
Lack of strategic plan and other management/strategy issues
Remuneration and firewood business
Exclusion from participation in the company
Failure of offer to address other proceedings
Access to information/discovery before valuer appointed
Personal guarantees and securities
The costs of the proceedings
Summary
Next steps
Costs
Result
REASONS OF THE COURT
(Given by Goddard J)
Differences within a family company
The Birchfield family have extensive coal mining interests on the West Coast of the South Island. The family’s coal mining business is carried on through Birchfield Holdings Ltd (BHL) and its subsidiaries: Birchfield Coal Mines Ltd, Birchfield Energy and Resources Ltd, and North West Coal Company Ltd (the companies).[1] Allan Birchfield (the second appellant), his sister Karen and his brothers Gary and Evan each hold, either directly or through a family trust, 25 per cent of the shares in BHL. Allan Birchfield’s family trust, the PLC Trust (the first appellant), owns 25 per cent of the shares in BHL.
[1]BHL and its subsidiaries are named as the first to fourth respondents in this appeal. They took no active part in the appeal and abide by this Court’s decision. References to “the respondents” in this judgment are references to the fifth to ninth respondents in this appeal.
All four siblings were, until recently, directors of each of the companies. However following a breakdown in the relationship between Allan Birchfield and the other directors, he was removed as a director of the companies in April 2019.
In September 2019 Allan Birchfield and the PLC Trust (the appellants) issued proceedings in the High Court under s 174 of the Companies Act 1993, claiming that the affairs of the companies were being conducted in a manner that was oppressive, unfairly discriminatory or unfairly prejudicial to them. They sought wide-ranging orders reinstating Allan Birchfield as a director of the companies and regulating the future conduct of BHL’s business.
Buy-out offers
Before the proceedings were filed, the respondents made an offer to buy the PLC Trust’s shares in BHL at fair value, to be assessed in accordance with BHL’s constitution. After the filing of the proceedings further, more detailed, buy-out offers were made. None was accepted.
The respondents say that the buy-out offers they have made remove any unfair prejudice there might otherwise be as a result of the exclusion of Allan Birchfield from the management of the companies. They say the offers provide the appellants with all the relief they might possibly obtain in their proceedings, if successful. On that basis, they applied for summary judgment.
Summary judgment granted in the High Court
The respondents’ summary judgment application was successful. Associate Judge Lester considered that there was no realistic prospect of a court granting the extensive relief sought by the appellants.[2] At most, if the claims were made out, the court would require the respondents to buy out the PLC Trust.[3] In those circumstances, the respondents’ buy-out offers provided a complete answer to the claim.
[2]Birchfield v Birchfield Holdings Ltd [2020] NZHC 1516 [High Court judgment] at [55].
[3]At [36].
However certain aspects of the buy-out offer had been clarified, or had developed, in the course of the hearing. The Associate Judge directed the respondents to file and serve a memorandum containing the full details of their final offer, including the instructions to be given to the valuer in relation to certain matters. The offer should nominate a valuer, or set out the means by which the valuer can be determined. The offer should also address payment of the costs of the proceedings. It should be open for acceptance for 20 working days.[4]
[4]At [59] and [61].
Allan Birchfield was not obliged to accept the offer. But if he did not do so, then the proceedings would be at an end.[5]
[5]At [61].
An offer consistent with the requirements set out in the High Court judgment was made on 24 August 2020 (the August 2020 offer). It is set out in the appendix to this judgment. That offer was not accepted.
The appellants appeal to this Court against the entry of summary judgment.
Background
The differences between the siblings
It is unnecessary to set out in any detail the differences that have arisen between Allan Birchfield and his fellow siblings. It is common ground that the relationship between them has broken down irretrievably.
Allan Birchfield accepts that it may be unrealistic for him to be reinstated as a director of the companies. But he says that the PLC Trust could continue to own 25 per cent of the shares in BHL, and could continue to be represented in the management of BHL through the appointment of his daughter as a director.
Proposals by PLC Trust to sell its shares in BHL
The BHL constitution contains provisions governing the sale of shares in the company of a kind that are commonly found in closely held companies. A shareholder wishing to dispose of their shares must first offer them to the other shareholders. The constitution prescribes a mechanism for assessment of the fair value of the exiting shareholder’s shares by an expert valuer.
In August/September 2018, the PLC Trust issued a formal transfer notice (the transfer notice) under BHL’s constitution. Correspondence followed between the siblings, and between the lawyers acting for the PLC Trust and for BHL. However it appears that Allan Birchfield changed his mind about following the process prescribed by BHL’s constitution. The transfer notice was withdrawn on 25 September 2018.
On 15 November 2018 Allan Birchfield requested that the other shareholders make an offer for the PLC Trust’s shares. He observed that there was little point in the parties continuing in business together.
The buy-out offers
An offer to purchase the PLC Trust’s shares for a specified sum was made on 23 November 2018. It was rejected (without reasons) on 25 November 2018.
Allan Birchfield was asked what the PLC Trust would consider to be an acceptable offer. His response was that the value of the PLC Trust’s shares would have to be determined by the valuation process as set out in the company constitution. Gary Birchfield advised his brother that BHL would start the valuation process under the constitution.
On 8 August 2019 the respondents made an offer to purchase the PLC Trust’s shares for fair value to be determined under the BHL constitution. That offer was also declined.
On 5 November 2019 (after the proceedings had been commenced) the respondents made a further offer to purchase the PLC Trust’s shares for fair value. The offer was made on the basis that there would be “no issue as to costs”. That is, each party would bear its own costs of the proceedings to that point in time.
The appellants declined that offer on 11 November 2019.
On 8 April 2020, after the respondents had filed their application for summary judgment/strike out, the respondents made a further offer to purchase the PLC Trust’s shares. The offer set out the history of the offers previously made and recorded that the further offer was made “[f]or the avoidance of doubt, and to consolidate the wording and intention of the [previous] offers and correspondence”. The respondents offered to purchase the PLC Trust’s shares for fair value to be determined by an independent expert, acting as an expert and not as an arbitrator. There would be no minority discount. The offer provided for information sharing between the parties and the valuer. It also provided that the valuer could “take account of both income and capital matters”, with any related adjustments at the valuer’s discretion. That offer was also declined.
By letter dated 17 April 2020, the appellants’ solicitors identified four reasons for the PLC Trust’s refusals of the various offers made:
(a)The PLC Trust no longer wished to sell its shares and Allan Birchfield felt he was being forced out of BHL.
(b)Fair value could not be assessed by a valuer, because “mismanagement” by the other directors had significantly diminished the value of the PLC Trust’s shareholding.
(c)The assessment of fair value was also prevented by the claim that BHL had made against the PLC Trust for recovery of costs of $57,500 associated with the Trust’s original transfer notice.
(d)The other directors were not providing Allan Birchfield with information needed to assess the value of the shares in BHL.
On 8 May 2020 the respondents offered to waive the claim for recovery of costs associated with the transfer notice.
As already mentioned, the High Court judgment required a further offer to be made by the respondents, to address additional matters identified during the hearing such as the costs of the proceedings. That further offer was made in August 2020, after the High Court judgment was delivered.
The proceedings
In their proceedings filed in September 2019 the appellants pleaded three causes of action: breach of directors’ duties, breach of fiduciary duties, and an unfair prejudice claim under s 174 of the Companies Act. In February 2020 the respondents filed their application to strike out the claim and/or for summary judgment. In relation to the unfair prejudice cause of action, the main ground on which the application was made was the offer to purchase the PLC Trust’s shares for fair value.
An amended statement of claim (ASC) was filed on 9 March 2020. It omitted the claims for breach of directors’ duties and breach of fiduciary duty. The sole remaining cause of action is the s 174 claim.
The events giving rise to the dispute are pleaded in some detail in the ASC. Lengthy particulars are given of the respects in which the affairs of the companies are alleged to have been conducted in breach of s 174. Those particulars can be grouped under the following headings:
(a)removal of Allan Birchfield as a director of the companies and excluding him from the management of the companies;
(b)BHL not paying dividends in recent years;
(c)alleged payments to some family members of salaries and/or management fees in excess of market rates;
(d)an allegation that Gary and Karen Birchfield are running a personal firewood business from property owned by the companies, diverting a commercial opportunity that would otherwise be available to the companies; and
(e)failing to exercise due care, diligence and skill in the management of the companies, including failing to exercise appropriate oversight and financial management of the companies.
The appellants sought the following relief:
(a) Declaring invalid the directors’ and shareholders’ resolutions [removing Allan Birchfield as a director of the companies];
(b) Reinstating [Allan Birchfield] as a director of the [companies] so as to give the [PLC Trust] proper representation on the [companies];
(c) Directing the Directors to obtain:
i. a business plan;
ii. a full review by a suitably qualified person/company of the [companies’] health and safety procedures;
iii. a review of the [companies’] business plan, practices and procedures and a remuneration review for all senior staff; and
(d) to implement such changes as identified in the report(s);
(e) requiring the Directors and Shareholders or any one of them to pay compensation to the [appellants] (including an account of profits in relation to any inappropriate remuneration/benefiting from their positions);
(f) regulating the future conduct of [BHL’s] affairs by appointing a majority of independent directors (and nominating one of them to be the chairman of the board of directors) for a period of five years;
(g) setting aside any action taken by the Directors or Shareholders in breach of this Act or the constitution of the [companies]; and
(h) as to costs of and incidental to these proceedings.
Application by defendant for summary judgment in s 174 proceedings
A defendant may obtain summary judgment if it satisfies the court that none of the causes of action against it can succeed.[6]
[6]High Court Rules 2016, r 12.2(2); and Westpac Banking Corp v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [61].
Section 174 of the Companies Act provides:
174 Prejudiced shareholders
(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him or her in that capacity or in any other capacity, may apply to the court for an order under this section.
(2)If, on an application under this section, the court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order—
(a)requiring the company or any other person to acquire the shareholder’s shares; or
(b)requiring the company or any other person to pay compensation to a person; or
(c)regulating the future conduct of the company’s affairs; or
(d)altering or adding to the company’s constitution; or
(e)appointing a receiver of the company; or
(f)directing the rectification of the records of the company; or
(g)putting the company into liquidation; or
(h)setting aside action taken by the company or the board in breach of this Act or the constitution of the company.
…
In order for the respondents to obtain summary judgment on the s 174 claim pleaded in the ASC, they needed to satisfy the Associate Judge that there was no realistic prospect of a court finding that the threshold for granting relief in s 174(1) was met. That is, the respondents needed to satisfy the Court that there was no realistic prospect that, following a trial, a court would find that:
(a)the respondents had engaged in the pleaded conduct; and/or
(b)the pleaded conduct was oppressive, unfairly discriminatory or unfairly prejudicial to the PLC Trust.
In this case, the respondents did not attempt to argue that the appellants would be unable to establish at trial the conduct pleaded in the ASC.[7] The sole basis on which summary judgment was sought was that it was not arguable that the pleaded conduct amounted to a breach of s 174, as the appellants’ complaints about exclusion from the management of the companies, and about any other arguable unfairness, had been remedied by making a reasonable offer to purchase their shares.
[7]It appears that such an argument was initially advanced at the hearing in the High Court, but was abandoned in the course of the hearing, as the respondents accepted that this was not the basis on which summary judgment had been sought: High Court judgment, above n 2, at [12]–[14].
Mr Hollyman QC, counsel for the respondents, described this argument as founded on the “O’Neill principle”: a reference to the decision of the House of Lords in O’Neill v Phillips.[8] In that case the House of Lords held that the corresponding provision of the English companies legislation was not triggered, as the conduct complained of was not unfairly prejudicial to the respondent. But Lord Hoffman went on to address (in obiter) the appellant’s alternative argument that the application should have been dismissed because the appellant had made an offer to buy the respondent’s shares at a fair price. Lord Hoffman considered that “parties ought to be encouraged, where at all possible, to avoid the expense of money and spirit inevitably involved in such litigation by making an offer to purchase at an early stage”.[9] Where a majority shareholder wants to put an end to the association with the minority shareholder, “it will almost always be unfair for the minority shareholder to be excluded without an offer to buy his shares or make some other fair arrangement”.[10] It will often be the case that removal of a shareholder as a director is unfairly prejudicial conduct:[11]
But the unfairness does not lie in the exclusion alone but in exclusion without a reasonable offer. If the respondent to a petition has plainly made a reasonable offer, then the exclusion as such will not be unfairly prejudicial and he will be entitled to have the petition struck out. It is therefore very important that participants in such companies should be able to know what counts as a reasonable offer.
[8]O’Neill v Phillips [1999] 1 WLR 1092 (HL).
[9]At 1106.
[10]At 1107.
[11]At 1107.
Lord Hoffman then went on to identify the characteristics of a reasonable offer to purchase shares, which would provide an answer to a complaint that exclusion from management was unfairly prejudicial conduct:[12]
In the first place, the offer must be to purchase the shares at a fair value. This will ordinarily be a value representing an equivalent proportion of the total issued share capital, that is, without a discount for its being a minority holding. The Law Commission … has recommended a statutory presumption that in cases to which the presumption of unfairly prejudicial conduct applies, the fair value of the shares should be determined on a pro rata basis. This too reflects the existing practice. This is not to say that there may not be cases in which it will be fair to take a discounted value. But such cases will be based upon special circumstances and it will seldom be possible for the court to say that an offer to buy on a discounted basis is plainly reasonable, so that the petition should be struck out.
Secondly, the value, if not agreed, should be determined by a competent expert. The offer in this case to appoint an accountant agreed by the parties or in default nominated by the President of the Institute of Chartered Accountants satisfied this requirement. One would ordinarily expect the costs of the expert to be shared but he should have the power to decide that they should be borne in some different way.
Thirdly, the offer should be to have the value determined by the expert as an expert. I do not think that the offer should provide for the full machinery of arbitration or the half-way house of an expert who gives reasons. The objective should be economy and expedition, even if this carries the possibility of a rough edge for one side or the other (and both parties in this respect take the same risk) compared with a more elaborate procedure. …
Fourthly, the offer should, as in this case, provide for equality of arms between the parties. Both should have the same right of access to information about the company which bears upon the value of the shares and both should have the right to make submissions to the expert, though the form (written or oral) which these submissions may take should be left to the discretion of the expert himself.
Fifthly, there is the question of costs. In the present case, when the offer was made after nearly three years of litigation, it could not serve as an independent ground for dismissing the petition, on the assumption that it was otherwise well founded, without an offer of costs. But this does not mean that payment of costs need always be offered. If there is a breakdown in relations between the parties, the majority shareholder should be given a reasonable opportunity to make an offer (which may include time to explore the question of how to raise finance) before he becomes obliged to pay costs. As I have said, the unfairness does not usually consist merely in the fact of the breakdown but in failure to make a suitable offer. And the majority shareholder should have a reasonable time to make the offer before his conduct is treated as unfair. The mere fact that the petitioner has presented his petition before the offer does not mean that the respondent must offer to pay the costs if he was not given a reasonable time.
[12]At 1107–1108.
This approach has been referred to with approval in subsequent New Zealand decisions, though it appears it has never previously been relied on as the basis for granting summary judgment for the defendant in a s 174 claim.[13] Indeed in M Yovich & Sons Ltd v Yovich, this Court went further, saying that a reasonable offer can cure all forms of conduct that are unfairly prejudicial, not just those relating to the exclusion of the minority from the company.[14]
[13]See M Yovich & Sons Ltd v Yovich (2001) 9 NZCLC 262,490 (CA) at [47]–[49]; and Fong v Wong [2010] NZSC 152, (2010) 20 PRNZ 250 at n 6.
[14]M Yovich & Sons Ltd v Yovich, above n 13, at [48].
However we consider that whether an offer to buy out a shareholder cures any unfairness to that shareholder is, ultimately, a question of fact. And questions of fact that are capable of argument at trial will not be determined in the context of a summary judgment application. So for example, where the conduct that is alleged to be unfairly prejudicial has arguably had a material effect on the value of the company, an offer to buy the shareholder out for fair value is unlikely to cure the alleged prejudice. Nor will a buy-out offer cure unfairness where it is arguable that the company has not kept proper accounting records, and that this would have a material effect on the ability of an expert to assess fair value.[15] Similarly, a buy-out offer will not resolve any relevant unfairness if it is made on terms which prevent the prejudiced shareholder from obtaining access to information needed to satisfy themselves that the basis on which the offer is made is fair. And where a company can fairly be described as a quasi‑partnership, and in particular where the shareholders work full time in the company’s business, the unfairness that would result from exclusion from that business may not be cured by a buy-out offer.[16]
[15]See Vey Group Ltd v Vance [2020] NZCA 232, [2020] NZCCLR 24 at [48] and [53].
[16]Harborne Road Nominees Ltd v Karvaski [2011] EWHC 2214 (Ch), [2011] All ER (D) 46 at [27].
In Re Sprintroom Ltd the Court of Appeal of England and Wales observed that in later cases where parties had cited the guidance in O’Neill, judges had counselled against treating the reasonableness of an offer as a trump card in the hands of a respondent majority shareholder.[17] The Court referred with approval to the High Court judgment in Harborne Road Nominees Ltd v Karvaski.[18] The respondent in that case applied to have an unfair prejudice claim struck out on the grounds that he had made a series of offers to purchase the shares of the complainant, but those offers had been unreasonably refused. The Judge noted that the parties had approached the matter as if what had to be considered was the extent to which the offer made complied with the guidance of Lord Hoffman in O’Neill, and that if a sufficient degree of compliance was achieved the respondent was inevitably protected from any petition that the complainant might issue. That approach, the Judge said, would be a cardinal error. The guidance given by Lord Hoffman was widely accepted as providing a basis on which many shareholders’ disputes could be resolved without the notoriously high cost of litigation by way of unfair prejudice petition. However that guidance, though detailed, did not have the status of legislation:[19]
The question for the court is always whether in all the circumstances of the case the Applicant has satisfied the conditions required to have the petition struck out, or summary judgment in his favour given on it. These [counsel] accurately summarised as being that it must be shown that the continued prosecution of the petition after the making of the offer amounts to an abuse of process, or was bound to fail. The issue is highly sensitive to the facts and circumstances of each case, and consideration of the nature and terms of any offer made can only ever be an intermediate step in the process.
[17]Re Sprintroom Ltd [2019] EWCA Civ 932, [2019] All ER (D) 41 at [129].
[18]Harborne Road Nominees Ltd v Karvaski, above n 16.
[19]At [26], referred to in Re Sprintroom Ltd, above n 17, at [129].
The Judge in Harborne Road also emphasised that O’Neill was concerned with an offer by a majority shareholder to buy out a minority shareholder, not equal shareholders who are quasi-partners:[20]
Ultimately, in a breakdown of relations between a majority and a minority shareholder the solution is likely to be that the minority shareholder must exit the company, or be offered the opportunity to do so on fair terms. In the case of equal shareholders however, particularly if they are quasi partners, there is a clear potential for injustice if one of them is able to seize de facto control of the company and effectively force the other either to accept his offer to buy or be forever excluded from the participation that he bargained for and cut out from any remedy in respect of what would be a continuing breach of the quasi partnership arrangement originally made. Lord Hoffmann’s remarks were not intended to have the effect of establishing a mechanism for seizure and exclusion.
[20]At [27].
In Sprintroom the Court of Appeal went on to identify a number of factors that will in many cases be relevant to the court’s assessment of the reasonableness of an offer, and the reasonableness of claimant’s rejection of that offer:[21]
[21]Re Sprintroom Ltd, above n 17.
(a)The value offered, or the means proposed for arriving at that value:[22]
[22]At [131].
An offer inviting the [claimant] to join in the appointment of a mutually acceptable independent expert who will be given full access to relevant company documents and whose decision on the value will be binding on the parties is more likely to be a fair offer than a fixed figure presented on a ‘take it or leave it’ basis.
(b)The ability of the claimant to satisfy themselves that the figure offered is reasonable before they have to decide whether to accept or reject the offer:[23]
Any offer is likely to be made at a time when the relationship of trust and confidence between the quasi-partners has already come under strain. Suspicion and mutual recrimination may already characterise their relationship. … A fixed price offer will rarely be fair if the minority shareholder or his advisers are not provided with access to company documents necessary to see how the price has been arrived at and to determine whether it is a reasonable valuation. Similarly, an offer to instruct an independent expert will not be reasonable if the majority is not prepared to open the company’s books to that expert.
(c)The substance of the unfair prejudice allegations, and the implications of those allegations for the assessment of fair value. So, for example, where the minority shareholder alleges that the majority have diverted business from the company or misapplied company assets, it may not be just to expect the minority shareholder to accept an expert valuation for their shares without an authoritative determination of the claim.[24]
(d)The likelihood of the majority shareholder being able to implement the offer made.[25]
(e)The proximity of the offer to the unfairly prejudicial conduct complained of.[26]
[23]At [132].
[24]At [133].
[25]At [134].
[26]At [136].
We agree that assessment of whether a buy-out offer establishes that a s 174 claim is bound to fail will be highly sensitive to the facts and circumstances of the case, including the nature and terms of any offer made. And we agree that the factors listed at [39] above will generally be relevant to that assessment. We approach the appeal on that basis. We also bear in mind the need for caution before entering summary judgment for a defendant, denying the appellants the opportunity to obtain discovery and pursue their claims at trial.
Application to adduce further evidence on appeal
The appellants sought leave to file, as further evidence on appeal, two affidavits:
(a)An affidavit sworn by the executive assistant to Ms Davenport QC, senior counsel for the appellants, attaching correspondence about preparation of financial statements for the companies and requests for provision of information in relation to the companies; special purpose financial statements for the companies as at 31 March 2020; and information about the salaries of employees of the companies obtained by Mr Allan Birchfield from the Inland Revenue Department.
(b)An affidavit sworn by Mr McGlinn, a forensic account, expressing an opinion on the information he would need to investigate the affairs of the companies, including matters such as related party transactions.
The respondents oppose that application. They say the evidence is neither fresh nor cogent, and is in certain respects inaccurate. They filed affidavits in support of their opposition to the application, including two affidavits sworn by Mr Noone, an accountant, responding to the affidavit of Mr McGlinn. Mr Noone’s second affidavit attached the audited special purpose financial statements for the companies for the year ended 31 March 2020.
Evidence will generally be admitted on appeal only if it is fresh, cogent and credible.[27] The evidence in relation to the financial statements for the companies is fresh: the financial statements were prepared in August 2020, and the auditor’s report is dated 31 May 2021. Neither party made any submissions based on the content of these financial statements, though reference was made to their (recent) availability. In those circumstances, we doubt they are cogent. But we are prepared to receive the financial statements as updating evidence, as the fact they have now been prepared, audited, and provided to the appellants is relevant to the issues raised on appeal.
[27]Paper Reclaim Ltd v Aotearoa International Ltd [2006] NZSC 59, [2007] 2 NZLR 1 at [6]–[8], citing Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 92. .
We have considered the appeal on the basis that the appellants have not been given access to company information that they have requested: as we explain below, the provision of such information in advance of the share valuation process is not necessary to enable the reasonableness of the August 2020 offer to be assessed. The correspondence about provision of information attached to Ms Butterworth’s affidavit is not relevant, or cogent, in these circumstances.
The BHL employee salary information is not fresh: if relevant, it could have been put in evidence in the High Court. But in any event, it is not relevant: such information, without more, sheds no light at all on the allegation that salaries have been paid above market rates.
The evidence of Mr McGlinn is not fresh: evidence about the information needed to conduct a detailed forensic investigation of the companies’ affairs could have been filed in the High Court. Nor is it cogent: it sheds no light on the issues pleaded in the ASC, or on the reasonableness of the offers made by the respondents. Mr McGlinn’s evidence does not take matters any further.
We grant leave to adduce in evidence the financial statements for BHL exhibited by Ms Butterworth, and we also grant leave to adduce the audited versions of those financial statements exhibited by Mr Noone. The application to adduce further evidence is otherwise declined.
Is the appellants’ claim incapable of succeeding in light of the offer(s) made?
Ms Davenport submitted that the offers made by the respondents did not provide a complete answer to the unfair prejudice claim brought by the appellants for eight reasons:
(a)The offers made before seeking summary judgment were inadequate. The offers made after the summary judgment application had been filed were too late and should not be taken into account.
(b)The offers made did not, and could not, address the need for compensation in respect of certain aspects of the unfairly prejudicial conduct that affected the value of BHL.
(c)The offers would exclude the appellants from participation in the company, against their will. This in itself would be unfair.
(d)The offers made did not address two other proceedings brought by the companies against Mr Allan Birchfield. The offer would not provide a “clean break”.
(e)The offers did not provide for discovery before a valuer was appointed.
(f)The offers did not address release of personal guarantees and securities provided by Mr Allan Birchfield.
(g)The offers did not make adequate provision for payment of the costs of the proceedings. Costs had been offered only up to April 2020. But the final offer was not made until the hearing in June 2020.
We address each of these issues, before returning to the overarching question of whether the Judge was right to find that the s 174 claim was not capable of succeeding.
The timing of the offers
Ms Davenport submitted that the offers made before February 2020 were not sufficient to cure any unfairness. They did not confirm that there would be no minority discount. They did not provide for payment of the costs of the proceedings. The Associate Judge erred by considering the offers made after the application for summary judgment in February 2020. He should have asked whether, at the time summary judgment was sought, the claim was incapable of succeeding. An offer made subsequent to the application could not affect the answer to that question. In particular, the Associate Judge erred in permitting the respondents to revise their offer following the hearing. If the offers already made were not sufficient to cure any arguable unfairness, the application should have been dismissed.
We agree with Ms Davenport that a summary judgment application can only be made by a defendant to a s 174 claim in reliance on a buy-out offer where such an offer has been made before summary judgment is sought. Summary judgment will be granted only if the court is satisfied that any arguable unfairness has been cured by the making of the offer. It follows that the offer must have been made before the defendants’ application and supporting evidence are filed. We add that the offer must have been open for acceptance for a reasonable period of time.
An application for summary judgment on the basis of a buy-out offer is also likely to fail where material defects in the offer are identified in the course of the summary judgment process. There would be obvious unfairness to a plaintiff in having to respond to an application made on the basis of an offer that evolved in material respects as that application progressed. In particular, if an offer changes in ways that might require further fact or expert evidence to be filed in opposition to the application, the application will almost invariably be dismissed.
However we consider that where concerns of less substance are raised by a claimant in relation to a buy-out offer, modifications to the offer to address those concerns may satisfy the court that any arguable unfairness has been cured, and that the claim is not capable of succeeding. So for example, if — as in this case — an offer is made on the basis that the offeror will pay the costs of proceedings up to a particular date, and the claimant objects that costs should be paid to a later date, it would be unsatisfactory if a defendant could not adjust their offer to meet that concern. It would make no sense to require the claim to go to a full trial, merely because the buy-out offer is open to criticism in some minor respect that can fairly be addressed in the course of the summary judgment process, and that the defendant is willing to address. That would result in an unjustifiable waste of the resources of the parties and of the courts. The courts should adopt an approach that encourages a defendant that has made a buy-out offer to agree to sensible minor adjustments to that offer and to respond to concerns raised about the finer details of that offer. Similarly, the courts should adopt an approach that encourages the claimant to articulate any concerns about an offer at an early stage, to enable the defendant to decide whether to respond to those concerns. An approach that rewarded claimants for rejecting offers without giving reasons, then identifying minor concerns about the offer in the course of the summary judgment process, would be unsatisfactory and unjust.
It follows that the evolution of the buy-out offer after the respondents applied for summary judgment is not an absolute barrier to the entry of summary judgment. But when we come to consider the offer made in this case, and the modifications that were made to it in the course of the summary judgment process, we will need to consider whether the modifications were confined to matters of detail that could fairly be addressed by the appellants in the context of the summary judgment process.
Compensation for effect of conduct on value of company
As already mentioned, if a claimant has an arguable case that the value of the company has been impaired by the alleged unfairly prejudicial conduct, an offer to buy the complainant out at a fair value for their shares to be assessed by a valuer will not provide a complete response to the unfair prejudice claim. The issues raised must arguably have a material effect on the value of the company: minor matters that will not materially affect the valuation of the company will not call into question the reasonableness of an offer to buy out shares for fair value to be assessed by an expert.[28]
[28]Re Sprintroom Ltd, above n 17, at [133].
Ms Davenport says that is the position here. This is not simply a case about exclusion of the appellants from the management of the companies, or the failure to pay dividends. Rather, the appellants claim that the value of the companies has been materially affected by the conduct identified in the ASC. In particular, they claim that the value of the company has been reduced by:
(a)imprudent capital expenditure on new and second-hand plant;
(b)failure by the directors to appropriately oversee the management of the companies, including in relation to health and safety concerns raised by the appellants;
(c)failure by the directors to produce a strategic plan or business strategy for the companies;
(d)the payment of excessive salaries and/or management fees to other family members; and
(e)permitting other family members to operate a personal firewood business from the companies’ premises.
Ms Davenport added that there may well be other respects in which the companies have been mismanaged. But the appellants cannot identify those issues without access to company records through the discovery process.
The respondents say that the offer addresses the appellants’ complaints about exclusion from the company, and failure to pay dividends. Differences about the management and strategy of the company cannot amount to unfairly prejudicial conduct: the majority is entitled to administer the company in the manner that they think appropriate. A review of the remuneration paid to family members has confirmed that it is at, or below, market rates. The firewood business is operated by one of the companies and is not material: annual sales of some $45,000 in the context of a total turnover of approximately $30 million. In any event, the August 2020 offer expressly provides for the concerns raised about remuneration and the firewood business to be considered by the valuer when carrying out the valuation exercise.
Lack of strategic plan and other management/strategy issues
We agree that broad complaints about the absence of a strategic plan, and about decisions on capital expenditure, are not conduct of a kind that comes within s 174. Relief is not available under s 174 in respect of:
(a)differences about the appropriateness of business strategies arrived at in good faith by a company, or alleged errors of judgment by management, inefficiencies, or poor business management;[29] and
(b)disagreements over company strategy or management, or situations “where minority shareholders differ from the majority on the policy and direction of a company which they see as being to their disadvantage”.[30]
[29]Latimer Holdings Ltd v SEA Holdings NZ Ltd [2005] 2 NZLR 328 (CA) at [71].
[30]M Yovich & Sons Ltd v Yovich, above n 13, at [31].
The pleaded conduct in relation to the general management and strategy of the companies is not capable of amounting to unfairly prejudicial conduct for the purposes of s 174. The same applies to the complaints about capital expenditure and the allegations in relation to health and safety issues. Because these are not capable of amounting to unfair prejudice to the appellants, the offer need not “cure” them. We add that we doubt very much that any of these matters would be material to the valuation of BHL, given the scale of the business it carries on.
Nor do we give any weight to the submission that discovery might turn up some other issue that has a material effect on the value of the company. That is mere speculation.
Remuneration and firewood business
That leaves the issues raised in relation to remuneration and the firewood business.
The appellants have not provided any evidence to support the assertion by Mr Allan Birchfield that the firewood business is not carried on by the companies. There is clear evidence from the respondents that it is in fact a business carried on by one of the companies. There is also real force in the respondents’ submission that the firewood business will not be material to the valuation of BHL, having regard to its scale. Any residual concern there might be about the (unsupported) allegation in relation to the firewood business is addressed by the express provision in the August 2020 offer for the valuation to “specifically incorporate the value of the firewood business being operated from premises at Darfield owned by BHL/its subsidiaries”.
Similarly, there is no evidence to support the allegation that some family members are receiving remuneration in excess of market rates. But in any event, this aspect of the claim is directly addressed by the August 2020 offer, which requires the valuer to “specifically take into account a review of the remuneration of [relevant family members] employed by BHL/its subsidiaries since the financial year beginning 1 April 2018, and make such adjustments as the valuer considers appropriate”. The appellants criticised the lack of detail in the August 2020 offer in relation to how any excess remuneration is to be taken into account. However we consider that the provision for appropriate adjustments to be made, in the context of an assessment of fair value, provides sufficient guidance to the valuer in relation to these issues. The August 2020 offer expressly provides for the parties to have the opportunity to make submissions to the valuer: the appellants can express their view about how any adjustments for these factors ought to be made in the course of the valuation process, and can expect the valuer to give proper consideration to any views they express.
In summary, we consider that to the extent that the appellants’ claim raises matters that are capable of amounting to unfairly prejudicial conduct, and that are arguably capable of having a material effect on the value of BHL, those matters are addressed in the August 2020 offer in a manner that ensures that any arguable unfair prejudice arising out of those matters is cured by the offer.
Exclusion from participation in the company
Allan Birchfield complains that he is being forced out of BHL. Although it may not be possible for him to continue as a director, he considers that his daughter could serve as a director, maintaining his family’s connection with the family business. Ms Davenport emphasised the observations in Kavarski to the effect that a buy-out offer may not cure unfair prejudice in the context of a quasi-partnership, where each partner has a reasonable expectation of participation in the business carried on by the company.[31]
[31]Harborne Road Nominees Ltd v Karvarski, above n 16, at [27].
We do not consider that BHL is a quasi-partnership of the kind where a buy‑out offer is incapable of resolving complaints about the exclusion of a shareholder from the business of the company or its management. Allan Birchfield was not an employee of BHL or the other companies. He was not engaged full time in the conduct of their business. He has other significant business interests of his own. The PLC Trust is a minority shareholder in BHL with 25 per cent of the shares, not an equal 50 per cent shareholder as in Kavarski. There is no evidence of any background understandings or arrangements that call into question the appropriateness of a buy-out as a method of resolving the differences between the parties. And Allan Birchfield has himself recognised that buy-out may be an appropriate solution, by issuing a transfer notice in 2018, and proposing that the other shareholders purchase his shares on more than one occasion.
We agree with the Associate Judge that if the claim proceeds to trial, and if the appellants succeed in establishing that s 174 applies, it is difficult to envisage any remedy other than a buy-out of the PLC Trust’s shares. It is inconceivable that the court would make orders in relation to the future management of BHL of the kind sought by the appellants in the ASC. Such orders would remove the ability of the majority to manage the company in good faith and in the manner that they consider most appropriate, for an extended period. That would run directly against the grain of the 1993 companies legislation, which was intended to reinforce the ability of a 75 per cent supermajority of shareholders to determine the future shape and direction of the company’s business, subject to the minority having a right to exit at a fair price.[32] Nor is there any real prospect of an order requiring reinstatement of Allan Birchfield as a director, or the appointment of his daughter (or some other person nominated by the PLC Trust) as a director, contrary to the wishes of the holders of 75 per cent of BHL’s shares. Liquidation of BHL would make no sense, in circumstances where the majority is willing to buy out the minority. The likelihood — indeed, inevitability — of a buy-out order as the appropriate remedy under s 174(2) following a trial confirms that this is not a case where the concerns identified in Kavarski arise.
Failure of offer to address other proceedings
[32]See Andrew Beck and others Morison’s Company Law (NZ) (online ed, LexisNexis) at [16.15].
There are other proceedings on foot against Allan Birchfield brought by the companies in relation to:
(a)possession of a digger, which the companies say they own and Allan Birchfield has in his possession; and
(b)allegations that Allan Birchfield has held himself out as managing director of the companies and as a representative of the companies, when he was not entitled to do so.
Ms Davenport submits that the offer does not address those outstanding proceedings. That means that accepting the offer will not provide a clean break: one of the suggested advantages of a buy-out offer in the unfair prejudice context. She also identified uncertainty about how the claims would be taken into account in the valuation of BHL.
We do not consider that these proceedings are material to the value of BHL. On many orthodox valuation approaches, for example where a multiple of earnings is used, these proceedings would be irrelevant.
Nor do we see the absence of a clean break as a relevant factor, in circumstances where the outstanding matters relate to allegations of wrongdoing made against the claimant. A claimant in s 174 proceedings cannot argue that an otherwise fair buy-out offer does not adequately address any unfair prejudice to them, because it does not resolve allegations that they have committed actionable wrongs against the company. There is no necessary connection between the existence of a dispute of this kind, and an inability to fairly value the claimant’s shares. And as a matter of principle, it would be odd if a claimant who has arguably committed such wrongs were in a better position to resist summary judgment than one who has not.
We accept that there may be cases where the s 174 claim is so closely intertwined with cross-claims against the claimant that the s 174 claim cannot be resolved separately by a buy-out offer. And there may be cases where the value of the company is materially affected by the outcome of the cross-claim to an extent that prevents a buy-out offer proceeding until the cross-claim is resolved. But that is plainly not the position here.
Access to information/discovery before valuer appointed
Ms Davenport submitted that it would be unfair to the PLC Trust to expect it to make a decision on an offer without first having access to information that the appellants had requested, but which the company had refused to provide. With access to information in advance of the valuation process, the appellants would be able to interrogate the balance sheet and financial statements more effectively, and engage more effectively in the valuation process.
We do not accept this submission. The offer is not a fixed-price offer, but an offer of fair value to be assessed by a valuer. The valuer will have unrestricted access to company information. The PLC Trust has recent audited financial statements for BHL, and will have access to relevant information in the context of the valuation process, subject to appropriate confidentiality restrictions. The reasonableness of an offer of this kind can be assessed without further detailed information about the companies.[33]
Personal guarantees and securities
[33]See Re Sprintroom Ltd, above n 17, at [132].
The question of personal guarantees and securities provided by Allan Birchfield does not appear to have been raised in the High Court. There is no reference to any guarantees in Allan Birchfield’s affidavit in opposition to the application for summary judgment. Nor was this issue raised in the appellants’ written submissions. It only emerged as an issue in the course of oral argument before us. As a result, we did not have any evidence about those matters.
In response to the submissions made about this issue by counsel for the appellants, we were advised by Mr Hollyman QC, counsel for the respondents, that his instructions were that in the course of a recent refinancing of the companies all personal guarantees given by Allan Birchfield “had gone”.
A buy-out offer would be unlikely to resolve concerns about unfairly prejudicial conduct if it was made on terms that left the claimant exposed to contingent liabilities in respect of the business of the company. It is a natural corollary of a buy‑out offer designed to address claims of unfair prejudice that the claimant should not be exposed to continuing liabilities associated with a business in which they no longer have any interest or influence.
However the concerns belatedly raised about such guarantees in the course of oral argument before us are not sufficient to persuade us that this is a material issue in the present case. There is no reason to think that there are any relevant guarantees in place. If there were, and if they were material to the reasonableness of the offers made, we would have expected to see the issue raised in the correspondence between the parties about those offers, and in the evidence filed by the appellants.
The costs of the proceedings
The final concern raised in relation to the August 2020 offer was that it only provided for the costs of the proceedings to be paid up to 8 April 2020, the date on which the respondents made an offer to purchase the PLC Trust’s shares in BHL without a minority discount. Mr Cameron, junior counsel for the appellants, submitted that this was unsatisfactory. It was only at the hearing of the summary judgment application in June 2020 that the respondents first offered to pay the costs of the proceedings, as contemplated by Lord Hoffman in O’Neill. The August 2020 offer is deficient, he submitted, because it does not extend to costs up to and including June 2020.
We have some sympathy for Mr Hollyman’s submission that the offers made by the respondents to purchase the PLC Trust’s shares before the proceedings commenced were sufficient to address any arguable claims of unfair prejudice. On that basis, the further refinements of the offer were not strictly speaking necessary to justify the entry of summary judgment, and no offer of costs was required. Mr Hollyman also drew our attention to the respondents’ offer to waive recovery of the costs incurred by BHL in responding to the PLC Trust’s transfer notice in August/September 2018 (some $57,500). He submitted that this element of the offer, which is not required by the approach in O’Neill, provides a buffer for any minor omission there may have been in relation to the offer to pay costs.
We also consider that the suggested deficiency in the offer to pay costs is arguably immaterial in the context of an offer to purchase 25 per cent of the shares in BHL. The offer made in November 2018 assumed a value for BHL in the region of $20 million. The costs of preparing for and appearing at a one-day summary judgment hearing pale into insignificance in that context.
In any event, we consider that a modification of the respondents’ offer to address concerns about the period for which costs will be paid falls squarely within the minor adjustment category identified at [53] above. Mr Hollyman confirmed that the respondents are willing to extend the offer to pay the appellants’ costs up to June 2020. Any conceivable criticism of the way in which the August 2020 offer provides for the costs of these proceedings can be addressed by extending the offer to pay costs through to June 2020.
Summary
The concerns raised by the appellants have not persuaded us that this is a case where a buy-out offer is incapable of curing any arguable unfairness arising out of the matters pleaded in their s 174 claim. Nor have they persuaded us that there is any material deficiency in the terms of the August 2020 offer (if adjusted to provide for payment of the costs of the proceedings through to June 2020). We are satisfied that the adjusted offer would cure any arguable unfairness, with the result that there is no arguable claim under s 174.
Next steps
We consider that the August 2020 offer, with the costs adjustment, is capable of fully addressing any arguable claims of unfair prejudice. Such an offer would need to be open for acceptance for a reasonable period — we consider 20 working days would be sufficient. However although the respondents have indicated that they are willing to make an adjusted offer, that offer has not yet been made.
We asked Ms Davenport whether the appellants’ position was that no buy-out offer would be accepted. If so, there would be no point in providing the appellants with an opportunity to consider the adjusted offer. Ms Davenport advised us that she did not have instructions on this point. She submitted that if the Court were minded to dismiss the appeal on the basis of the adjusted offer, the appellants should have a reasonable opportunity to consider that offer.
We have concluded that if an adjusted offer on the basis set out at [85] above is made, the appeal should be dismissed. If an adjusted offer on those terms is not made, we would need to go on to determine whether the August 2020 offer, without any adjustment, cured any arguable unfair prejudice.
We will therefore make orders providing a window of 10 working days within which an adjusted offer may be made. If such an offer is made, then the appeal will be dismissed with effect from the date 20 working days after the offer is made. If such an offer is not made, a telephone conference will be convened to make directions in relation to the filing of further submissions about whether the August 2020 offer, without any adjustment, cured any arguable unfair prejudice.
Costs
If the adjusted offer is made, the appeal will be dismissed and the respondents will have been successful, subject to one minor adjustment to the terms of their
buy-out offer. In those circumstances, they will be entitled to costs in respect of the appeal.If the adjusted offer is not made, we will deal with costs following the final determination of the appeal.
Result
We grant leave to adduce in evidence the financial statements for BHL exhibited by Ms Butterworth. We also grant leave to adduce the audited versions of those financial statements exhibited by Mr Noone. The application for leave to adduce further evidence on appeal is otherwise dismissed.
The respondents must, within 10 working days, file a memorandum of counsel that either:
(a)confirms that an adjusted offer has been made in accordance with [85] above, and attaches that offer; or
(b)advises that no such offer has been made.
If a memorandum confirming the making of an adjusted offer is filed:
(a)the appeal is dismissed with effect from the date 20 working days after the date of that memorandum; and
(b)the appellants must pay costs to the respondents for a standard appeal on a band A basis, with usual disbursements.
If a memorandum confirming the making of a revised offer is not filed within 10 working days, we direct the Registrar to arrange a telephone conference with the parties.
Solicitors:
Connors Legal, Greymouth for Appellants
Harmans Lawyers, Christchurch for Fifth to Ninth Respondents
Appendix
Offer to purchase the PLC Trust’s shares in BHL
In accordance with the Court’s judgment dated 30 June 2020, the defendants here record their offer to purchase the PLC Trust’s shareholding in Birchfield Holdings Limited (BHL).
The Purchase Price will be the fair value of the PLC Trust’s shareholding in BHL. That is, a value representing 25 per cent of the value of the total issued share capital, without any minority discount.
Fair value will be determined and certified by an independent valuer engaged by BHL at BHL’s cost.
Fair value is to be calculated with regard to the following points:
(a) It is to take account of both income and capital matters, including any related adjustments, at the independent valuer’s discretion.
(b) It is to specifically take into account a review of the remuneration of Gary Birchfield, Donna Birchfield and Karen Birchfield, and their respective children Eilish Birchfield, Max Birchfield, Cameron Birchfield and Steffan Jamieson employed by BHL/its subsidiaries since the financial year beginning 1 April 2018, and make such adjustments as the valuer considers appropriate.
(c) It is to specifically incorporate the value of the firewood business being operated from premises at Darfield owned by BHL/its subsidiaries.
The bases for such adjustments, including market indicators and/or assumptions, shall be clearly set out in the independent valuer’s report.
The Purchase Price is to be adjusted to include the value of any relevant shareholder current account of the PLC Trust.
Process
The following process is to be followed:
(a) The independent valuation will be conducted at arms-length and the procedure shall be determined by the valuer.
(b) The valuer must have experience in valuing coal mining enterprises within New Zealand.
(c) Subject to the confidentiality constraints recorded below, both the seventh to ninth defendants, and the plaintiffs, are to be equally entitled to:
(i) reasonably request information from the valuer;
(ii) request that the valuer seek information from the parties, or BHL/its subsidiaries; and
(iii) make submissions to the valuer on all matters related to its valuation.
(d) The independent valuer will have full access to all BHL company records (including subsidiaries’ records) and will be entitled to undertake site visits, as and when necessary, to complete its valuation.
(e) The independent valuer will conduct an expert determination and not act as an arbitrator. The determination shall be final and binding without right of appeal.
Confidentiality
6. Any documents provided by either party may be marked as “confidential”. Any documents marked as “confidential” must be kept confidential by the recipient, and subject to an undertaking not to disclose those documents, or the information contained within them, to anyone else (including other parties to the proceeding).
7. Upon final determination and certification of fair value by the independent valuer:
(a) the seventh to ninth defendants, or their nominee, will pay, or will cause BHL to pay, the total sum of that determined fair value to an account nominated by the PLC Trust within 90 working days (Purchase Price).Any late payment will attract interest at a rate equal to the Bank of New Zealand business overdraft base rate, from the due date for payment until such payment is received in full; and
(b) contemporaneous with the payment of the Purchase Price, the PLC Trust will provide the seventh to ninth defendants with all documents necessary to register the transfer (unencumbered) of the PLC Trust’s shares in BHL to the seventh to ninth defendants (or their nominees), together with an assignment of the PLC Trust’s shareholder current account.
Immediately following the transfer as set out in paragraph 7, the parties, their advisers, and the valuer shall return or destroy the documents or copies they have of any confidential information belonging to the other parties to the proceeding. That includes, without limitation, the documents that are marked as “confidential” or which contain information taken from the documents marked as “confidential”.
Costs
The defendants will pay the plaintiffs’ costs of this proceeding up to the date at which the fifth to ninth defendants made an offer to purchase the PLC Trust’s shares in BHL without minority discount (being 8 April 2020), calculated on a 2B scale basis, as set out in Schedule 1 to this offer, unless otherwise ordered by the Court.
The defendants will waive and will not seek payment deduction or set off for the costs incurred by BHL in responding to the PLC Trust’s sale notice dated 21 August 2018 (totalling $57,500).
Independent valuer
The independent valuation will be undertaken by Deloitte New Zealand (Deloitte) or, failing agreement by the parties to its appointment, such other valuer as may be appointed by the following process:
11.1 A valuer, who fits the criteria in paragraph 5 (b) above, appointed by the President of the New Zealand Law Society (or their nominee), following submissions (if desired) by the parties as to their respective recommendations as to the selection of valuer. For the avoidance of doubt the President (or nominee) may if they think fit, appoint Deloitte (or any other valuer) despite objection from any party.
Duration of Offer
This Offer shall remain open for acceptance for 20 working days after receipt by the Plaintiffs and if not accepted by 5,00pm on the final day in that period, shall be automatically revoked.
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