Dalton v Mackley - [2021] NZHC 2697

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000760

[2021] NZHC 2697

UNDER the Companies Act 1993

IN THE MATTER

of the liquidation of Carbon Group Limited (in liquidation)

BETWEEN

SIMON DALTON and MATTHEW PETER KEMP

Applicants

AND

NEIL MACKLEY

Respondent

Hearing: 8 October 2021 (by VMR)

Appearances:

K Kommu for Applicants

B J Norling and C T Zhang for Respondent

Judgment:

8 October 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 8 October 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

DALTON v MACKLEY [2021] NZHC 2697 [8 October 2021]

[1] The applicants as liquidators of Carbon Group Ltd (in liq) (Carbon Group) applied for directions under s 284(1)(a) of the Companies Act 1993. In substance they asked the Court to rule that Carbon Group owned certain assets in the possession of the respondent (Mr Mackley) and to order him to deliver up those assets to them.

[2] In an interim judgment of 7 September 2021, I held that the orders sought by the applicants were not ones the Court could properly make under s 284(1)(a) in the circumstances of this case but that steps should be taken to regularise the proceeding rather than dismiss it.1 I directed that a conference was to be convened with counsel to consider three issues arising namely:

(a)the orders that should be made to regularise the proceeding;

(b)to timetable the proceeding to a hearing; and

(c)determine the issue of costs.

[3] Counsel have conferred on these matters but have filed memoranda indicating that they cannot reach agreement on any of them.

In this judgment I make orders for the future conduct of the proceeding.

The applicants’ submissions

[5] There has been a marked change in the applicants’ position since the hearing. Previously the applicants’ stance was that if they had incorrectly sought to utilise the s 284 procedure the case could proceed justly, speedily and most inexpensively as a summary judgment application. The applicants apparently no longer consider the case suitable for summary judgment. They now seek orders which can be summarised as:

(a)that the case proceed as an ordinary proceeding under pt 5 of the High Court Rules 2016;

(b)substituting Carbon Group as plaintiff in place of the applicants;

1 Dalton v Mackley [2021] NZHC 2329.

(c)directing the filing of pleadings;

(d)directing that the affidavits filed to date be treated as the briefs of evidence and the common bundle for trial;

(e)the case be set down for trial as soon as pleadings are filed; and

(f)that interim orders be made to prevent the disposal of the disputed assets pending resolution of the proceeding.

[6] As far as costs in respect of the interim judgment are concerned, the applicants submit they should be reserved pending final determination of the proceeding.

The respondent’s submissions

[7] The respondent argues the directions the applicants now seek are substantially different from what had…

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 Dalton v Mackley

Details

AGLC: Dalton v Mackley [2021] NZHC 2697
Case: [2021] NZHC 2697
Decision Date: 8 October 2021

CaseChat Overview and Summary

The applicants, Simon Dalton and Matthew Peter Kemp, as liquidators of Carbon Group Limited (in liquidation), applied for directions under s 284(1)(a) of the Companies Act 1993. They sought a ruling that Carbon Group owned certain assets in the possession of the respondent, Neil Mackley, and an order for him to deliver those assets to them. The case arose from the liquidation of Carbon Group Limited, with the applicants acting as liquidators. The dispute centred on the ownership of specific assets held by the respondent, and the applicants sought to recover those assets on behalf of the company. The matter was heard in the High Court of New Zealand, Auckland Registry, with Associate Judge Paulsen presiding.

The court had to determine the appropriate procedure to regularise the proceeding, timetable the case for a hearing, and address the issue of costs. The applicants initially sought to proceed under s 284 but later changed their stance, requesting the case be treated as an ordinary proceeding under part 5 of the High Court Rules 2016. They also sought various directions, including the substitution of Carbon Group as the plaintiff, filing of pleadings, and interim orders to prevent the disposal of the disputed assets. The respondent argued that the applicants' new directions were inappropriate and that the case should be dismissed and refiled in the District Court, given the modest sum in dispute and the lack of clarity on the issues until pleadings were exchanged.

The court found merit in the respondent's arguments but decided that regularising the proceeding was the appropriate course of action to avoid wastefulness and further delay. While some of the applicants' proposed directions were premature or inappropriate, the court recognised the need for close case management and potential cost savings by utilising the substantial evidence already filed. The court ordered that the proceeding would continue as an ordinary proceeding, with Carbon Group substituted as the plaintiff, and set specific deadlines for filing statements of claim and defence. Additionally, the court instructed the parties to confer and file memoranda addressing the payment of security for costs and the potential transfer of the case to the District Court. Costs in relation to the interim judgment were to be determined on the papers, with a strict page limit imposed on the memoranda.

In conclusion, the court issued directions to regularise the proceeding, set deadlines for filing pleadings, and instructed the parties to confer on specific issues. The case was vacated, and costs from the hearing were reserved for later determination. The court's decision aimed to streamline the proceeding, minimise costs, and avoid unnecessary delay.

Orders