Castlereagh Properties Limited v Walker - [2015] NZCA 481

IN THE COURT OF APPEAL OF NEW ZEALAND

CA440/2014
[2015] NZCA 481

BETWEEN	CASTLEREAGH PROPERTIES LIMITED Appellant
AND	ROBERT BRUCE WALKER AS LIQUIDATOR OF GIBBSTON WATER HOLDINGS LIMITED Respondent

Hearing:	20 August 2015
Court:	Harrison, Wild and Winkelmann JJ
Counsel:	J Moss for Appellant K P Sullivan for Respondent
Judgment:	9 October 2015 at 2 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe respondent is entitled to costs calculated in accordance with band A for a standard appeal, together with usual disbursements.

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REASONS OF THE COURT

(Given by Winkelmann J)

The respondent Robert Walker is the liquidator of Gibbston Water Holdings Ltd (Holdings). Mr Walker applied to the High Court for orders confirming decisions he made as liquidator to avoid a sale and purchase agreement between Holdings and the appellant Castlereagh Properties Ltd (Castlereagh), by which Holdings sold all of its shares in Gibbston Water Services Ltd (Water Services) to Castlereagh.
Castlereagh appeals the decision of Mander J confirming the liquidator’s decisions and making related orders.[1] Castlereagh argues that the Judge erred in finding that:
(a)the liquidator had the power to avoid the transaction under s 141 of the Companies Act 1993;
(b)all entitled persons had not consented to the transaction for the purposes of s 107(3) of the Companies Act;
(c)Castlereagh had failed to discharge the onus on it to prove the transaction was at fair value; and
(d)there were grounds to set the agreement aside under s 348 of the Property Law Act 2007.
[1]Walker v Gibbston Water Services Ltd [2014] NZHC 1638 [High Court decision]. Having confirmed the liquidator’s decision, the Judge ordered the updating of the share registers, and confirmed the appointment of a director to Water Services by the liquidator. It is common ground that if the appeal is successful then those ancillary orders should be quashed.
Prior to the hearing Castlereagh sought leave to adduce an affidavit which outlined developments since the decision of Mander J, purportedly to support its case that the shares were transferred for fair value. We dismissed the application as events occurring some three years after the transaction are irrelevant to the issue of whether at trial Castlereagh discharged its evidential onus of establishing the transaction was for fair value.[2]

Relevant background

[2]Castlereagh Properties Ltd v Robert Walker as liquidator of Gibbston Water Holdings Ltd (in liquidation) [2015] NZCA 368.

Water Services owns and runs a water scheme in the Gibbston Valley near Queenstown, supplying potable (drinkable) water to a number of owners of small lots and vineyards in that area who hold deeds with the company.
The constitution of Water Services provides that its only objective is the perpetual provision and proper administration and control of suitable potable reticulation to the land situated at Gibbston Valley. It is not permitted to make a profit. The deed holders are to pay the costs of running the company and carrying out the services.
In March 2007 Holdings purchased all of the shares in Water Services…

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.

Continue reading Castlereagh Properties Limited v Walker

Details

AGLC: Castlereagh Properties Limited v Walker [2015] NZCA 481
Case: [2015] NZCA 481
Decision Date: 9 October 2015 at 2 pm

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, Castlereagh Properties Limited, the appellant, appealed against the decision of the High Court which upheld the decision of the liquidator of Gibbston Water Holdings Limited, the respondent, to set aside the sale and purchase agreement between Holdings and Castlereagh. The appeal was dismissed and the Court ordered that the respondent was entitled to costs. The Court held that the liquidator had the power to avoid the transaction under s 141 of the Companies Act 1993, all entitled persons had not consented to the transaction for the purposes of s 107(3) of the Companies Act, Castlereagh had failed to discharge the onus on it to prove the transaction was at fair value, and there were grounds to set the agreement aside under s 348 of the Property Law Act 2007. The liquidator, Mr Walker, had the power to avoid the transaction under s 141 of the Act, as he was acting in discharge of his statutory duties. The requirement of s 107(3) of the Act that all entitled persons must agree in writing to the transaction was not met. Castlereagh failed to discharge the onus on it to establish that it paid fair value for the shares, based on the information known to the company and to the interested director at the time of the transaction. The Judge was satisfied that the liquidator had established that the shares had been sold at an undervaluation and that the transaction prejudiced Holdings.

The appeal was dismissed with the respondent entitled to costs. The Court rejected the argument that the respondent should be entitled to costs against a non-party, Ms Buxton, on the grounds she had caused this appeal to be brought as the director standing behind the appellant. No notice of this was given to Ms Buxton and without her having the opportunity to be heard on the application, the Court did not consider it further.

Orders