Castlereagh Properties Limited v Walker - [2015] NZCA 368

IN THE COURT OF APPEAL OF NEW ZEALAND

CA440/2014
[2015] NZCA 368

BETWEEN	CASTLEREAGH PROPERTIES LIMITED Appellant
AND	ROBERT WALKER AS LIQUIDATOR OF GIBBSTON WATER HOLDINGS LIMITED (IN LIQUIDATION) Respondent

Court:

Harrison, Wild and Winkelmann JJ

Counsel:

J Moss for Appellant
K P Sullivan for Respondent

Judgment:

(On the papers)

12 August 2015 at 2.15 pm

JUDGMENT OF THE COURT

AThe application for leave to adduce new evidence is dismissed.
BThe appellant must pay the respondent’s costs on a standard application for leave on a band B basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

This appeal is set down for hearing on 20 August 2015.
Castlereagh Properties Ltd appeals against a judgment delivered in the High Court at Christchurch.[1] Mander J made orders on an application by the respondent, Robert Walker, under s 284 of the Companies Act 1993 confirming these decisions which Mr Walker had made as liquidator of Gibbston Holdings Ltd:
[138] …
(a)The decision of the liquidator to void the sale and purchase agreement between Gibbston Water Holdings Ltd (in liquidation) and Castlereagh Properties Ltd dated 24 August 2011 is confirmed.
(b)That Gibbston Water Holdings Ltd is the 100% shareholder of Gibbston Water Services Ltd, and the share register of Gibbston Water Services Ltd is to be updated to record this.
(c)The appointment of Denis William Anson Marshall as sole director of Gibbston Water Services Ltd by the liquidator on 23 December 2011 is confirmed.
Costs
[139] The applicant is entitled to costs on a 2B basis. If the parties cannot agree on the incidence and amount of costs, they are to file memorandum (no more than 5 pages each) which have been previously exchanged in draft.
[1]Walker v Gibbston Water Services Ltd [2014] NZHC 1638.
The principal issue for determination in the High Court was whether Castlereagh was able to establish that a transfer of shares between related companies for $60,000, which the liquidator had voided, was at a fair value. Castlereagh asserts that the Judge erred in:
[89] … conclud[ing] that notwithstanding liabilities that the company may have been carrying, it was not apparent at the time of the transfer from Holdings to Castlereagh that the shares were worthless. On the evidence adduced, the respondents who seek to uphold the transaction have not discharged the onus of establishing fair value. I therefore find that the liquidator’s decision to avoid the sale and purchase agreement of Services’ shares between Holdings and Castlereagh pursuant to s 141 of the Act was valid.
On 3 August 2015 Castlereagh filed an application to adduce new evidence in this Court on the grounds that the evidence is documentary, relatively brief, cogent and reliable; is fresh and updates the Court on events occurring since the High Court hearing; and goes to the heart of the appeal on the issue of the value of the assets of Gibbston Water Services Limited. Mr Walker opposes the application.
The evidence which Castlereagh seeks to adduce on…

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: [2015] NZCA 368
Decision Date: 12 August 2015 at 2.15 pm

CaseChat Overview and Summary

Castlereagh Properties Limited sought to appeal a judgment of the High Court that confirmed the liquidator's decision to void a sale and purchase agreement for shares between Gibbston Water Holdings Ltd and Castlereagh Properties Ltd. The appeal was dismissed by the Court of Appeal of New Zealand. The central issue before the Court of Appeal was whether the trial judge had erred in confirming the liquidator's decision to void the transaction and whether new evidence could be introduced to support Castlereagh's claim that the shares were transferred at fair value. The Court of Appeal held that the trial judge did not err in confirming the liquidator's decision, as Castlereagh had not discharged the onus of proving the transaction was at fair value. Additionally, the Court dismissed Castlereagh's application to adduce new evidence on appeal, as the events occurring after the trial were irrelevant to the issue of whether Castlereagh had established that the transaction was at true value at the time of the trial. As a result, the appeal was dismissed and the costs of the appeal were awarded to the liquidator.

The Court of Appeal examined the liquidator's decision to void the sale and purchase agreement, confirming that the liquidator had acted within his authority under section 284 of the Companies Act 1993. The Court held that the liquidator's decision to avoid the sale and purchase agreement was valid, as Castlereagh had not established that the shares were transferred at a fair value. The Court of Appeal further held that the liquidator's decision to update the share register of Gibbston Water Services Ltd and to appoint a sole director was also valid. The Court of Appeal rejected Castlereagh's application to adduce new evidence, as the evidence related to events occurring after the trial and was therefore irrelevant to the issue of whether Castlereagh had established that the transaction was at true value at the time of the trial. As a result, the liquidator was entitled to costs on a standard application for leave on a band B basis together with usual disbursements.

Orders