Coffee108 Limited (in liquidation) - [2025] NZHC 2255

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2025-470-101

[2025] NZHC 2255

UNDER Section 284 of the Companies Act 1993 and the inherent jurisdiction of the High Court

IN THE MATTER OF

An application for directions relating to the liquidation of Coffee108 Limited

(in liquidation)

RE

BENJAMIN FRANCIS and GARRY CECIL

WHIMP as liquidators of Coffee 108 Limited (in liquidation)

Applicants

Hearing: On the papers

Counsel:

C J H Fraser for the Applicants

Judgment:

11 August 2025

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 11 August 2025 at 3 pm.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors:
Morrison Partners, Auckland

FRANCIS and WHIMP [2025] NZHC 2255 [11 August 2025]

Introduction

[1] Benjamin Francis and Garry Whimp (the liquidators) were purportedly appointed as the liquidators of Coffee108 Ltd (the company) on 10 March 2025, by special resolution of the shareholders of the company.

[2] The liquidators have discovered an issue with the validity of their appointment. They seek directions from the Court regarding their appointment and the steps that they have taken in the liquidation since their appointment.

Background

[3] The company has two shareholders who are both directors, Colleen Heath and Michael Leonard-Smith. In November 2024, Ms Heath commenced a proceeding in this Court alleging shareholder oppression under s 174 of the Companies Act 1993 (the Act), including an application for an order putting the company into liquidation under s 241 of the Act (the liquidation proceeding).

[4] In the liquidation proceeding, Ms Heath nominated the liquidators as appropriate liquidators should the court make the orders sought. On 5 February 2025, the liquidators consented to their appointment by the Court.

[5] Ms Heath and Mr Leonard-Smith subsequently agreed to settle the liquidation proceeding. They agreed to the liquidation of the company. They signed a special resolution of shareholders of the company, dated 10 March 2025, appointing the liquidators. The liquidation proceeding was discontinued by consent on 21 March 2025.

[6] The liquidators were not notified of their appointment until 25 March 2025. Since then, the liquidators have substantially progressed the liquidation, including:

(a)closing the company’s business and realising the company’s assets;

(b)identifying potential creditors and processing creditors’ claims; and

(c)filing statutory reports.

[7] The Commissioner of Inland Revenue (the Commissioner) has a preferential creditor’s claim of $272,049.37, which exceeds the amount available for distribution to creditors. No other creditors will receive a distribution.

The issues

[8] Section 241 of the Act provides that a liquidator may be appointed by special resolution of shareholders. Section 241AA provides:

241AA Restriction on appointment of liquidator by shareholders or board after application for court appointment served on company

(1)This section applies if an application for the appointment of a liquidator under section 241(2)(c) has been filed and served on the company.

(2)A liquidator may be appointed under section 241(2)(a) or (b) only if—

(a)the liquidator is appointed within 10 working days after the…

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 Coffee108 Limited (in liquidation)

Details

AGLC: Coffee108 Limited (in liquidation) [2025] NZHC 2255
Case: [2025] NZHC 2255
Decision Date: 11 August 2025

CaseChat Overview and Summary

The High Court of New Zealand was asked to provide directions regarding the liquidation of Coffee108 Limited (in liquidation), where Benjamin Francis and Garry Cecil Whimp were appointed liquidators by special resolution of the shareholders on 10 March 2025. The liquidators sought validation of their appointment and clarification on the steps they had taken since their appointment. The company, having two shareholders and directors, Colleen Heath and Michael Leonard-Smith, faced a shareholder oppression proceeding filed by Ms Heath in November 2024. The liquidators were nominated by Ms Heath for the liquidation proceeding, which was discontinued by consent on 21 March 2025.

The primary legal issues before the court were whether the liquidators' appointment could be validated and what relief might be available to rectify the invalid appointment. The court considered Section 241AA of the Companies Act 1993, which stipulates that a liquidator may be appointed by shareholders only within 10 working days after an application for court appointment is served on the company. Given that the shareholders' resolution was passed more than 10 working days after the application was served, the initial appointment was invalid. However, the court noted that the liquidation itself might still be valid from its inception, and the acts of the liquidators in good faith were not invalidated by their defective appointment.

Associate Judge Brittain found that while the initial appointment of the liquidators was indeed invalid, the court had the discretion to validate the appointment under Section 283(7) of the Act. The court also considered that terminating the liquidation at this stage would not be beneficial, as it had nearly concluded, with only the Commissioner of Inland Revenue as a creditor who would receive a distribution. The Commissioner did not oppose the orders sought by the liquidators. Therefore, the court appointed Mr Francis and Mr Whimp as liquidators effective from the date of the judgment and declared that any acts performed by them in good faith from 25 March 2025 onwards would remain valid. The liquidators were also entitled to remuneration for their work from that date. The court reserved leave for the liquidators to apply for further directions if any specific issues arose in the future.

Orders