Dunphy & Shepherd v Ngati Mutunga o Wharekauri Trust

[2012] NZHC 807

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2010-485-2185 [2012] NZHC 807

IN THE MATTER OF     section 27 of the Charitable Trusts Act

1957 and s 27 of the Incorporated Societies

Act 1908

AND

IN THE MATTER            of the liquidation of Ngati Mutunga o Wharekauri Trust (in liquidation) and Ngati Mutunga o Wharekauri Society Incorporated (in liquidation)

AND

IN THE MATTER            of an application by James Pohio under s 250 of the Companies Act 1993 to terminate the liquidations

Hearing:         26 April 2012

Counsel:         H L Thompson for the Liquidators

S C Potter for Ngati Mutunga o Wharekauri Iwi Trust

Judgment:      27 April 2012

JUDGMENT OF MALLON J

Contents

Introduction ....................................................................................................................................... [1] No appearance on behalf of Mr Pohio ............................................................................................. [2] Background........................................................................................................................................ [5] Section 250 application ................................................................................................................... [15]

Result and orders ............................................................................................................................ [18]

Dunphy & Shepherd v Ngati Mutunga o Wharekauri Trust HC WN CIV 2010-485-2185 [27 April 2012]

Introduction

[1]      Before me for hearing is an application by James Pohio, under s 250 of the Companies Act 1993,   to terminate the liquidations of a trust (Ngati Mutunga o Wharekauri Trust) (the Original Trust) and an incorporated society (Ngati Mutunga o Wharekauri Society Incorporated) (the Society). The application is opposed.

No appearance on behalf of Mr Pohio

[2]      Mr  Pohio  was  not  present  when  the  application  was  called  at  10am  on

26 April 2012.   Nor was any other person representing Mr Pohio  present.   The application was stood down until 11.45am to enable the Court to make enquiries as to the whereabouts of Mr Pohio, or the whereabouts of Mr McNab (being the person the Court had been advised would be representing Mr Pohio).  Neither Mr Pohio nor Mr McNab were able to be located through the contact details provided to the Court by them.  A telephone message was left on Mr Pohio’s mobile phone but no return call was made by him.

[3]      The   registry   advised   that   Mr   McNab   had   earlier   indicated   that   an adjournment of the hearing was sought.  The registry informed Mr McNab at that time that an application for an adjournment would have to be made.   Mr McNab indicated to the registry on 24 April that he would provide an email setting out his position. As at 11.58am on 26 April 2012 no email had been received.

[4]      In these circumstances, the liquidators and the Ngati Mutunga o Wharekauri Iwi Trust (the New Trust) sought that I proceed to determine Mr Pohio’s application under s 250 of the Companies Act in his absence.  I considered it appropriate to do so.  The above circumstances indicate that Mr Pohio was aware of the hearing, and had not sought an adjournment in the appropriate manner as he had been requested to do.   Further, as explained below, Mr Pohio has been given other opportunities throughout the course of this proceeding to pursue his claims.

Background

[5]      The Society was incorporated with the intention of being the entity which would have a mandate from Ngati Mutunga (the iwi of the Chatham Islands) to negotiate a treaty settlement with the Crown and the allocation of pre-settlement fisheries assets.  Following an issue about its mandate, the Original Trust was then established.  The mandate of the Original Trust was also disputed.  In 2004 the New Trust  was  established,  with  the  intent  that  it  would  receive  the  fishery  assets allocated to Ngati Mutunga.

[6]      In 2006 liquidators of the Original Trust and the Society were appointed.  It was intended that their surplus assets (which arose from their annual catch entitlements as distributed by Te Ohu Kai Moana) would be distributed to the New Trust.  Because various other parties claimed to be interested in the surplus assets, in November  2010  the  liquidators  sought  directions  from  the  Court  as  to  the distribution of the surplus assets.

[7]      In the course of those proceedings, an issue arose about the validity of the resolution to wind up the Original Trust. This led to an order from the High Court on

18 April 2011 to wind up the Original Trust on the ground that this was just and equitable.  The High Court’s ruling on that order recorded that all interested parties agreed that it was appropriate to make that order.  The interested parties were said to be  Mr  Pohio  and  Golden  Sea  Limited,  who  were  both  said  to  be  claiming  as creditors, and who at that time were represented by counsel (Ms Ertel).   The Te Runanga o Wharekauri Rekohu Incorporated Society (the Runanga) were also said to be potentially interested.  The High Court set timetable orders to lead to a two day fixture to settle the distribution of the surplus assets.

[8]      After this, there were further calls of the proceeding.   One of those was a telephone conference on 23 November 2011.  At this time Mr Pohio and Golden Sea Ltd were represented by new counsel (Mr Sharrock).   The minute of the Judge’s teleconference records as follows:

Mr  Sharrock  has  foreshadowed  an  application  for  “a  review  of  the liquidators’ position with regard to outstanding debts”. This follows on from

a  draft  liquidators’ report  submitted  to  the  Court  by  Mr  Thompson  on

22 November 2011.  The report suggests the liquidators are not minded to accept the Pohio and Golden Seas Ltd claims.   However Mr Thompson

confirms today that no final decision has been made.   The liquidators are

willing to meet with Mr Sharrock’s clients.  Mr Sharrock wishes to take up that invitation.  These matters will not be dealt with by (or on) 5 December

2011.

I will be prepared to deal with any application for orders restraining distribution  of  surplus  assets  at  the  fixture  on  5  December,  if  needed. Mr Thompson indicates that his clients would not oppose provision being made for remaining potential creditor claims.

[9]      After  that,  the  Court  received  memoranda  from  the  interested  parties, including Mr Sharrock on behalf of Mr Pohio and Golden Sea Ltd, advising that there was opposition to the directions sought by the liquidators.

[10]     The  hearing  of  the  liquidators’  application  for  directions  proceeded  on

5 December 2011.  Mr Pohio and Golden Sea Ltd were represented by Mr Sharrock. In  an  oral  judgment  that  day,  the  High  Court  made  an  order  approving  the distribution of the surplus assets of the Society and the Original Trust to the New Trust.   As is recorded in that judgment, it was not necessary for Mr Pohio and Golden Sea Ltd or the Runanga to apply to restrain the distribution of assets.  That was because the liquidators considered that it would not be prudent or responsible to distribute the assets before resolving the creditors’ claims.

[11]     In that judgment the Court made directions that proofs of claim were to be submitted  by  23  December  2011,  discussions  between  the  liquidators  and  the claiming creditors were to be concluded by 10 February 2012, and the liquidators were to submit a final report to the Court by 24 February 2012.  The Court reserved leave to the parties to apply for directions.  The Court intended that the directions would enable the surplus assets, over and above the creditor claims, to be distributed by the end of the year and any contest over the remaining assets to be resolved as soon as possible after 24 February 2012.

[12]     Pending resolution of the creditors’ claims, the liquidators did not make any distribution to the New Trust.   This was because it understood the amounts being claimed exceeded the surplus assets.  Mr Pohio and Golden Sea Ltd did not submit finalised proofs of claim as they had been directed to do.   Also, efforts by the

liquidators to arrange a meeting with Mr Pohio, or persons representing his interests, were unsuccessful.  In the absence of further details about Mr Pohio and Golden Sea Ltd’s claims, the liquidators rejected the claims.   The Runanga’s claim was also rejected.  The liquidators advised the Court that it was intending to distribute all of the surplus assets to the New Trust, but that it would not do so for a period of two weeks from 27 February 2012.  The two-week period was to provide the Runanga and Mr Pohio with the opportunity to make an application to the Court and to obtain any interim relief they considered appropriate.

[13]     After that, the High Court received from Mr Pohio “an application to stay proceedings and certain related matters concerning the conduct of [Ms Ertel and Mr Sharrock].”    In  that  application  Mr  Pohio  appears  to  take  issue  with  his representation on the basis that he did not have access to all relevant court papers. This application was not accepted for filing because no filing fee had been paid.

[14]     Mr Pohio also made the application under s 250 that is before me.  Directions were made by the Court in respect of that application on 26 March 2012.

Section 250 application

[15]     Section  250  of  the  Companies Act  permits  the  Court  to  make  an  order terminating a liquidation if “it is just and equitable to do so.” The order can be made on the application of persons listed in s 250(2).  They include a “creditor” or “any other entitled person”.  Mr Pohio has not pursued the opportunities he has been given to establish that he is a creditor.  Mr Pohio is Ngati Mutunga, but it is not clear that this would be sufficient to give him standing as an “entitled person”.

[16]     But  even  if  I  proceed  on  the  basis  that  he  has  standing  to  make  the application, I am not satisfied that it is just and equitable to terminate the liquidations of the Old Trust and the Society.  The decision to liquidate them was made in 2006. The intention was that the new body with the mandate for Ngati Mutunga (that is the New Trust) would receive the assets.   It is not clear from Mr Pohio’s application what the point of terminating the liquidations would be, other than to prevent the

distribution of the surplus assets to the New Trust.   Mr Pohio has had ample opportunity to take steps to object to that occurring.

[17]     Mr Pohio’s application makes allegations of professional misconduct on the part of his previous counsel.  He contends that the High Court Judge who heard the liquidators’ application on 5 December 2011 needs to advise whether he will recuse himself from hearing anything further in this proceeding.  He makes allegations of obstruction by court registry staff.  He contends that the liquidators have failed in the execution of their duties.  He continues to assert that he has been denied all relevant information.   None of these contentions are supported by affidavit evidence.   The allegations of malpractice and failure of duties are not particularised.  There is no sufficient basis provided on which this Court should at this juncture terminate the liquidations.

Result and orders

[18]     The  application  under  s  250  of  the  Companies Act  is  dismissed.    It  is therefore unnecessary to determine the New Trust’s application to strike out the s 250 application.

[19]     The liquidators sought further orders as follows:

(a)       Find that the liquidators have acted throughout with probity and integrity;

(b)       Withdraw leave for any party to bring any further application for directions in this proceeding;

(c)       Make a final order confirming the Court’s previous direction that the surplus  assets  of  the  Old Trust  and  the  Incorporated  Society  be distributed to the Iwi Trust without further delay.

[20]     It is not appropriate for me to make the first order on the present application. It is unnecessary to make the second order but I agree that Mr Pohio has had ample opportunity since 5 December 2011 to take appropriate steps to protect his interest. As confirmed in a minute dated 28 February 2012 the liquidators are now at liberty to  act  in  accordance  with  the  orders  made  at  para  [17]  of  the  judgment  of

5 December 2011.

[21]     The liquidators and the New Trust are entitled to costs in respect of the s 250 application.  Counsel indicated that costs may be sought on an indemnity basis.  If that is to be pursued then memoranda will need to be filed and Mr Pohio will need to have an opportunity to respond.  It is a matter for the liquidators and the New Trust whether they consider this to be worth pursuing despite the further cost and delay in the final disposition of this matter that this will entail.  If costs are to be pursued then the liquidators are to file memoranda within two weeks of the date of this judgment and Mr Pohio is to have a further two weeks to respond.

Mallon J

Solicitors:

Howard Thompson, McMahon Butterworth Thompson, Auckland, email  [email protected]

Stephen Potter , Enterprise Law, Auckland, email  [email protected]