Bo Si Limited (In Liquidation) v Crusaders Building Development Limited

[2022] NZHC 592

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-467

[2022] NZHC 592

UNDER

the Companies Act 1993

BETWEEN

BO SI LIMITED (IN LIQUIDATION)

Plaintiff

AND

CRUSADERS BUILDING

DEVELOPMENT LIMITED & ORS
First Defendant

CANTERBURY RYWM HOLDINGS LIMITED

Second Defendant

Hearing:

28 March 2022

(Telephone conference and on the papers)

Counsel:

A V Foote and S Caradus for Plaintiff

B M Russell and J A Frampton for Second Defendant G A Cooper and S C Cowan for Supporting Creditor

Judgment:

29 March 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(application for adjournment)

BO SI LIMITED (IN LIQUIDATION) v CRUSADERS BUILDING DEVELOPMENT LIMITED & ORS [2022] NZHC 592 [29 March 2022]

[1]    The second defendant, Canterbury Rywm Holdings Limited, is a shareholder of the first defendant, Crusaders Building Development Limited (Crusaders). The second defendant opposes the application of the plaintiff, Bo Si Limited (in liquidation), to put Crusaders into liquidation. The opposed winding up is for hearing before me on 8 April 2022.

[2]    Mr Russell, counsel for the second defendants, has applied by memorandum for the 8 April 2022 hearing to be adjourned. He has done so on the basis that there is a separate proceeding in which the first and second defendants are both parties, where the shareholding in Crusaders is in issue. That proceeding is set down for hearing from  23  to  27  May  2022.    A  Mr Li  claims  to  be  entitled  to  be  registered  as a shareholder of 38.21 per cent of the shares in Crusaders. If Mr Li is successful, he and the second defendant will control more than fifty per cent of the shares in Crusaders.

[3]    The application to liquidate Crusaders is based on a statutory demand issued by the plaintiff. While the statutory demand was not subject to challenge, Mr Russell will argue on 8 April 2022 that the plaintiff is not a creditor of Crusaders.

[4]    Crusaders owns a large block of land in Christchurch. The company otherwise does not trade. There are outgoings in terms of rates and insurance but interim arrangements are in place for those obligations to be funded. Mr Russell said if there are issues as to funding those outgoings, his client could take on those payments.

[5]    Mr Russell’s clients do not oppose a sale of the land but, assuming his clients are successful in the related proceedings to be heard at the end of May 2022, prefer that the sale is undertaken under their control and not that of a liquidator.

[6]    In my view, the application for an adjournment should be declined. Many of the points raised by Mr Russell in his memorandum were focused on the merits of the liquidation application. If Mr Russell is correct in those matters then such may lead to the liquidation application being declined. The converse is also true.

[7]    Mr Russell refers to the fact that there is an interim injunction preventing the sale of Crusaders’ assets. While the future of that injunction, assuming an order of liquidation is made, would need to be the subject of an application by the court appointed liquidator once the company was under the liquidator’s control, the reasons for the injunction would seem to fall away. There would be no risk of the dissipation of assets if the sale process was controlled by the liquidator who would not distribute any surplus to shareholders until their respective claims have been resolved, either through proceedings directly between the shareholders or through the liquidator seeking directions.

[8]    In short, Mr Russell’s application came down to his clients preference being, to control the sale process themselves if they are successful in their proceeding. That, in my view, does not justify the adjournment sought. Liquidation proceedings are brought on for hearing promptly. The plaintiff here wishes to proceed, notwithstanding the defences that have been raised.

[9]    The proceeding at the end of May 2022 will not resolve whether the plaintiff is a creditor. At some point, the plaintiff’s application will have to be dealt with – if not on 8 April 2022 then when? Even if Mr Russell’s clients are successful in the shareholder proceedings, the issue of whether the plaintiff in this matter is entitled to liquidation will simply be left hanging.   The plaintiff has brought an application     to court and is entitled to have it dealt with.

[10]Accordingly, the application for an adjournment is declined.

[11]Costs on the adjournment application are reserved.

Associate Judge Lester

Solicitors:

Duncan Cotterill, Christchurch (for Plaintiff)

Lane Neave, Christchurch (for Second Defendant) Cavell Leitch, Christchurch (for Supporting Creditor)