CP Asset Management Limited v Damien Grant and Steven Khov as liquidators of NZ Property Holdings Ltd

IN THE SUPREME COURT OF NEW ZEALAND

SC 121/2013
[2014] NZSC 11

BETWEEN

C P ASSET MANAGEMENT LIMITED
First Applicant

ASIA PACIFIC HOTEL INVESTMENTS LIMITED
Second Applicant

C P RETAIL HOLDINGS LIMITED
Third Applicant

RAISONS PACIFIC INVESTMENTS LIMITED
Fourth Applicant

SOUTH ISLAND HOTEL INVESTMENTS LIMITED
Fifth Applicant

YEIL C & M LIMITED
Sixth Applicant

AND

DAMIEN GRANT & STEVEN KHOV AS LIQUIDATORS OF NZ PROPERTIES HOLDINGS LIMITED (IN LIQUIDATION)
First Respondents

BRIAN AND BRIDGIT LAWRENCE
Second Respondents

Court:	Elias CJ, McGrath and Glazebrook JJ
Counsel:	D L LangSiu for First, Second, Third, Fourth, Fifth and Sixth Applicants K P Sullivan for the First Respondents G A Keene for the Second Respondents
Judgment:	25 February 2014

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.

B The applicants must pay to the First Respondents costs of $2,500 plus all reasonable disbursements to be fixed if necessary by the Registrar.
C The applicants must pay to the Second Respondents costs of $2,500 plus all reasonable disbursements to be fixed if necessary by the Registrar.

____________________________________________________________________

REASONS

Background

NZ Properties Holdings Ltd (NZ Properties) was put into liquidation by the High Court and Messrs Grant and Khov were appointed as liquidators. On 15 August 2012 a creditors’ resolution was passed that they be replaced as liquidators by Messrs Heath and Lamacraft. The creditors who voted in favour of the resolution were associated with the Pandey family who controlled NZ Properties.
Messrs Grant and Khov applied to set aside the resolution. This application was made under s 245A of the Companies Act 1993, which applies where the outcome of voting at a meeting of creditors is determined by a related entity.
Venning J in the High Court declined the application.[1] As the original liquidators were court appointed, any new liquidators had to be court appointed. Venning J thus appointed Messrs Heath and Lamacraft as liquidators.

Court of Appeal decision

[1]Grant and Khov v CP Asset Management Ltd [2012] NZHC 3488.

The Court of Appeal reversed that decision and reinstated Messrs Grant and Khov as liquidators.[2] This was on the basis that the resolution was contrary to the interests of the unsecured creditors and that it was causing prejudice to Mr and Mrs Lawrence, who had obtained judgment against the company for a large sum.
[2]Grant and Khov v CP Asset Management Ltd [2013] NZCA 452.
The Court of Appeal’s concern was that the creditors may not get an adequate investigation into the affairs of the company if the replacement liquidators remained in office and in particular, that the possibility of recovery from the Pandey family would not be adequately investigated.
Various transfers of assets over the period 2006 to 2011 out of NZ Properties (then called CP Holdings Ltd) were outlined by the Court of Appeal. These had left the company without assets.[3] The Court of Appeal noted, that Venning J’s attention does not seem to have been drawn to these dispositions.[4]

The application

[3]At [9].

[4]At [53].

The applicants seek leave to appeal against the Court of Appeal decision.
The difference between the High Court and the Court of Appeal decisions depends largely on a differing view of the facts. There is thus no point of general, public or commercial significance. Nor is there the possibility of a miscarriage of justice.

Result

The application for leave to appeal is dismissed.
The applicants must pay to the First Respondents costs of $2,500 plus all reasonable disbursements to be fixed if necessary by the Registrar.
The applicants must pay to the Second Respondents costs of $2,500 plus all reasonable disbursements to be fixed if necessary by the Registrar.

Solicitors:
Hucker & Associates, Auckland for Applicants
Waterstone Insolvency, Auckland for First Respondents
Pidgeon Law, Auckland for Second Respondents

CaseChat Overview and Summary

CP Asset Management Limited, Asia Pacific Hotel Investments Limited, CPR Holdings Limited, Raisons Pacific Investments Limited, South Island Hotel Investments Limited, and Yeil C & M Limited (collectively referred to as the applicants) sought leave to appeal against the Court of Appeal's decision to reinstate Damien Grant and Steven Khov as liquidators of NZ Property Holdings Ltd, instead of appointing Heath and Lamacraft. The applicants argued that the Court of Appeal's decision to reinstate Grant and Khov as liquidators was contrary to the interests of unsecured creditors, and that the decision was causing prejudice to Brian and Bridgit Lawrence who had obtained a judgment against the company for a large sum. The applicants argued that the Court of Appeal's decision to reinstate Grant and Khov as liquidators was not in the best interest of the unsecured creditors and that the Court of Appeal had overlooked certain asset transfers that had left the company without assets. The Court was required to decide whether the application for leave to appeal should be granted, and if so, whether the decision was in the best interest of the unsecured creditors.

The Court dismissed the application for leave to appeal. The Court held that the difference between the High Court and the Court of Appeal decisions depended largely on a differing view of the facts. The Court held that there was no point of general, public or commercial significance, nor was there the possibility of a miscarriage of justice. The Court held that the applicants were not entitled to leave to appeal. The applicants were ordered to pay costs of $2,500 plus all reasonable disbursements to be fixed if necessary by the Registrar to the First Respondents and the Second Respondents. The Court held that the Court of Appeal's decision to reinstate Grant and Khov as liquidators was in the best interest of the unsecured creditors.

The Supreme Court dismissed the applicants' application for leave to appeal against the Court of Appeal's decision to reinstate Grant and Khov as liquidators of NZ Property Holdings Ltd. The Court held that the Court of Appeal's decision was in the best interest of the unsecured creditors, and that the applicants were not entitled to leave to appeal. The applicants were ordered to pay costs of $2,500 plus all reasonable disbursements to be fixed if necessary by the Registrar to the First Respondents and the Second Respondents.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established