Eagle v Petterson HC Auckland CIV 2011-404-7387

[2011] NZHC 2023

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-7387

BETWEEN  RYAN REGINALD EAGLE AND PETER JAMES GOTHARD

Applicants

ANDDAVID ROSS PETTERSON Respondent

CIV 2011-404-7069

AND BETWEEN            DAVID ROSS PETTERSON Applicant

ANDPETER JAMES GOTHARD AND RYAN REGINALD EAGLE

First Respondents

ANDCOMMISSIONER OF INLAND REVENUE

Second Respondent

Hearing:         21 December 2011

Counsel:         B Gustafson and C Priest for Mr Petterson (liquidator)

M Kersey and S Vickers for Mr Gothard and Mr Eagle (receivers) No appearance for Commissioner of Inland Revenue (abiding decision)

Judgment:      21 December 2011

(ORAL) JUDMGENT (NO. 2) OF HEATH J

Solicitors:

Lowndes Jordan, PO Box 5966, Auckland Russell McVeagh, PO Box 8, Auckland Counsel:

B Gustafson, PO Box 1297, Shortland Street, Auckland

EAGLE AND GOTHARD V PETTERSON HC AK CIV 2011-404-7387 21 December 2011

[1]      Today’s hearing was convened following delivery of my judgment of 16

December 2011.  In that decision I provided guidance to the receivers and liquidators on the way in which remuneration and expenses incurred in relation to the realisation of accounts receivable and inventory were to be apportioned.1

[2]      Counsel have conferred and have agreed on specific orders that can be made today in relation to the costs to be charged against those funds by the receivers and the amounts to be distributed to the liquidator.  This will enable a partial distribution to be made to employees before Christmas.

[3]      The terms of the orders that are agreed are as follows:

(a)      That the Receivers, as receivers of each of Hurlstone Earthmoving Limited  (in  receivership  and  liquidation)  ("HEL"),  River  Island Shingle Company Limited (in receivership and liquidation) ("RISC"), Hayes Earthmoving Services Limited (in receivership and liquidation) ("Hayes") and New Zealand Pollution Engineering Limited ("NZPE") (together the "Companies"), may apply the proceeds of accounts receivable and inventory as follows:

(i)in relation to HEL, deduct a total of $195,589.22 from the proceeds of accounts receivable and inventory in respect of their expenses and remuneration;

(ii)in  relation  to  RISC,  deduct  a  total  of  $4,159.20  from  the proceeds of accounts receivable and inventory in respect of their expenses and remuneration; and

(iii)in  relation  to  Hayes,  deduct  a  total  of  $3,177.49  from  the proceeds of accounts receivable and inventory in respect of

their expenses and remuneration.

1 For the purposes of s 30(2B) of the Receiverships Act 1993.

(b)That the Receivers distribute the following amounts to the Liquidator from the proceeds of accounts receivable and inventory:

(i)       in relation to HEL: $607,772.98; (ii)     in relation to RISC: $5,281.40; and (iii)        in relation to Hayes: $36,566.17.

(c)      That the Receivers' will comply with and discharge their obligations under section 30(2)(c) of the Receiverships Act 1993 in relation to the proceeds of accounts receivable and inventory of the Companies, identified in order (b), and in respect of any future accounts receivable and inventory (after deducting any relevant expenses and remuneration),   by   paying   the   amounts   to   the   Liquidator   for distribution to the preferential creditors of the Companies.

[4]      Two other issues arose during the course of the hearing.  The first concerned the extant application for discovery made by the liquidator.  The second involved the extent to which, if at all, there should be an entitlement for either party to apply to revisit the orders, if some material error were found in the calculation of the amounts involved; having regard to the principles set out in my earlier judgment.

[5]      As to the second point, I agree that such a mechanism is appropriate.  It will work both ways.  If discrepancies of a material nature are found which are in favour of the receivers, that may require some refund by the liquidator.   If some discrepancies were found in favour of the liquidator, the receivers may be required to account for further funds to him.

[6]      I make an additional order in these terms.

Leave is reserved for either party to seek further orders to adjust the amounts set out in orders (a) and (b) above, if, as a result of additional information or inquiries, any material error is found that requires an adjustment to be made.

[7]      The final point relates to the application for discovery.  I have made it clear that  I  am  uneasy  about  making  a  formal  order,  in  these  circumstances.    A compromise position is to be preferred.   The liquidator will write to the receivers asking for whatever further information may be required to satisfy the liquidator that there is no material error of the type in respect of which leave has been reserved. Whether the liquidator makes that request formally under s 261 of the Companies Act 1993 or informally is a matter for him.  The receivers shall respond to any such letter on or before 3 February 2011.

[8]      The Registrar shall allocate a telephone conference before me at 9am on the first available date after 20 February 2012, to  determine whether there are any further issues I need to address.

[9]      Depending upon the outcome of the inquiries the liquidator intends to make, it may be that the application for discovery can be dismissed by consent.  Otherwise, Mr Gustafson, for the liquidator, may wish to pursue the application.  If so, time will need to be allocated for a short hearing on that.

[10]     Similarly, if any issues arise in relation to “material error", an application may be filed and served on or before 17 February 2012; so that the nature of the issue is readily apparent to me at the telephone conference.   Memoranda shall be filed and served contemporaneously, no less than two working days prior to the conference.

[11]     In accordance with the orders made in my judgment of 16 December 2011, costs shall be borne out of the funds available to each party.

P R Heath J