Butcher v Dragon Flyte Farm Limited - [2013] NZHC 1735

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2012-488-570 [2013] NZHC 1735

BETWEEN CARL DAVID GEORGE BUTCHER Plaintiff

ANDDRAGON FLYTE FARM LIMITED, PERI FINNIGAN AND ROY HORROCKS AS LIQUIDATORS OF DRAGON FLYTE FARM LIMITED Defendants

Hearing: 8 July 2013

Counsel CDG Butcher, plaintiff in person
K Rowe for defendants
No appearance for interested parties, AJ and RV Burgess

Judgment: 8 July 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:
McElroys, Auckland

BUTCHER v DRAGON FLYTE FARM LIMITED & ORS [2013] NZHC 1735 [8 July 2013]

[1] On 28 August 2012, Mr Carl Butcher filed an application seeking relief under s 174 of the Companies Act 1993 (the Act), as a 30 per cent shareholder in Dragon Flyte Farm Limited (in liquidation). The liquidators were named as defendants. Although the other shareholders (holders of 70 per cent of the shares) were not named as parties, they have previously appeared as interested parties.

[2] The proceeding is before the Court with an application by Mr Butcher, filed on 14 May 2013, for leave to commence the proceeding against the company. I will come back to an issue over the nature of the application.

Background

[3] This proceeding has its genesis in a dispute between shareholders, which seemingly began when the company was first established in late 2003. In essence, as I understand from what Mr Butcher has told me today, he considers that his own property was put into the company without his authority, and although an arrangement was reached to return that property to him, that arrangement has not been recognised by the liquidators.

[4] Mr Butcher’s grievances have had previous airing in the Court in applications brought in the liquidation of the company both by Mr Butcher and by the liquidators (under s 284 of the Act). Those matters were the subject of judgments by Associate Judge Bell on 27 April 2012 and 21 September 2012.[1]
[1] Finnigan v Butcher [2012] NZHC 810; Finnigan v Butcher [2012] NZHC 2463.

[5] When this present proceeding first came before the Court in a telephone conference (on 3 December 2012), Associate Judge Bell commented that he considered it misconceived[2] but also noted that as it had been issued against the company, it required leave under s 248(1)(c) of the Act. At that point Mr Butcher had not asked the liquidators whether they would consent.
[2] A comment he also made at [28] of his judgment of 21 September 2012: Finnigan v Butcher
[2010] NZHC 2463.

\[6] The liquidators filed a memorandum shortly after the conference advising that they did not consent to Mr Butcher issuing his claim against the company in

liquidation, and that they would oppose any application for leave. They indicated several grounds for opposition and, in the course of doing so, signalled that they were close to completing distribution of the company’s assets (in accordance with directions given by the Court on 27 April 2012 and 14 November 2012) and that they were intending to complete…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NZHC 1735
Decision Date: 8 July 2013

CaseChat Overview and Summary

Carl David George Butcher, a 30% shareholder in Dragon Flyte Farm Limited, sought relief under the Companies Act 1993, as the company was in liquidation. The liquidators opposed the application and were granted leave to file a memorandum opposing the application for leave. The Court was required to decide whether Mr. Butcher had the right to bring a proceeding against the company, despite the company being in liquidation. The Court found that the application was misconceived and that there was no purpose to granting leave, as the company had been struck off the register, its assets had been distributed, and there were no assets available for Mr. Butcher to claim. The Court also found that the application was without merit, and ordered Mr. Butcher to pay costs to the liquidators on a scale 2B basis, together with disbursements as fixed by the Registrar. The Court considered awarding increased costs but saw little practical advantage in doing so.

Orders