Encorefx (NZ) Limited - [2020] NZHC 870

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-000612

[2020] NZHC 870

UNDER Part 19 of the High Court Rules 2016 and section 239ADO of the Companies Act 1993

IN THE MATTER OF

ENCOREFX (NZ) LIMITED

AND

of an application by

REES GRAHAM LOGAN, ADAM PAULS NIKITINS and

STEWART ALEXANDER McCALLUM

Applicants

Hearing: On the papers

Counsel:

D T Broadmore and L C Sizer for the Applicants

Judgment:

30 April 2020

JUDGMENT OF HINTON J

This judgment was delivered by me on 30 April 2020 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors:
Buddle Findlay, Auckland

ENCOREFX (NZ) LIMITED [2020] NZHC 870 [30 April 2020]

[1] Late yesterday afternoon, the Court registry referred to me the applicants’ urgent originating application without notice for further orders under the Companies Act 1993 (the Act) dated 29 April 2020 in respect of the administration of EncoreFX (NZ) Ltd (the company).

[2] The applicants seek, on a without notice basis, a 5 working day extension for convening a watershed meeting of creditors, and an extension of orders relating to the method of holding and voting at the meeting.

Without Notice Application

[3] This proceeding is brought by way of originating application as an application under pt 15A of the Act pursuant to r 19.2(c) of the High Court Rules 2016.

[4] The applicants seek, pursuant to r 7.46, that the application be determined on a without notice basis because, they submit, requiring the application to proceed on notice would cause undue delay or prejudice.

[5] I note that this Court has previously regularly held that it is appropriate to determine applications such as this on a without notice basis.1 This is primarily because doing so is unlikely to cause prejudice to any creditor and requiring such applications to proceed on notice may well cause undue delay or prejudice to the administrators in efficiently conducting the administration.2

[6] In addition, requiring service of the application on the company’s creditors (as the persons most obviously affected by the administration of the company) would be unreasonable under current circumstances, given the Health Act (Covid-19 Alert Level 3) Order 2020 made by the Director-General of Health on 27 April 2020 in respect of all districts of New Zealand. The Covid Order requires all persons within all districts of New Zealand to be isolated or quarantined, except for essential personal

1 See In Re Pumpkin Patch Ltd (In Rec and Admin Appt) [2016] NZHC 2771; and also, for further examples, Re Fiber Fresh Feeds Ltd (In Rec and Admin Appt) [2019] NZHC 1565; Re RCR Building Products (New Zealand) [2019] NZHC 23; and Re CBL Corp Ltd [2018] NZHC 1998.
2 See Re CBL Corp Ltd at [2].

movement as defined.3 Suffice to say, service on creditors pursuant to the requirements of the Act would not qualify as essential personal movement.

[7] The applicants submit, and I…

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 Encorefx (NZ) Limited

Details

AGLC: Encorefx (NZ) Limited [2020] NZHC 870
Case: [2020] NZHC 870
Decision Date: 30 April 2020

CaseChat Overview and Summary

The applicants, Rees Graham Logan, Adam Pauls Nikitins, and Stewart Alexander McCallum, applied to the High Court of New Zealand for an urgent extension of time to convene a watershed meeting of creditors of EncoreFX (NZ) Limited. They also sought an extension of orders relating to the method of holding and voting at the meeting. The Court accepted the application on a without notice basis due to the current COVID-19 restrictions in New Zealand, which made it impracticable and potentially unlawful to serve notice on all creditors. The applicants argued that the extension was necessary to facilitate a combined sale of the New Zealand and Australian entities as going concerns, which would likely result in a better return for the creditors.

The Court found that the application could be appropriately dealt with without notice as it would not prejudice the creditors and would save time and cost. The Court also found that granting the extension would benefit the company's creditors by increasing the amount they expected to recover. The Court granted the extension sought and the orders relating to the method of holding and voting at the meeting. The Court found that providing for an alternative means of holding and voting at the meeting was necessary given the impracticality or unlawfulness of convening an in-person meeting during the currency of the COVID-19 restrictions. The Court found that holding meetings in this manner would allow for effective participation of all interested creditors. The Court found that there would be no material or any prejudice to creditors in allowing the meeting to proceed, or for voting to be conducted, in the manner proposed by the applicants.

The Court granted the orders sought and made orders in terms of the “(Draft) Court Orders Under the Companies Act 1993” filed by the applicants. The Court found it appropriate to determine the applicants’ application without notice or hearing, grant leave accordingly, grant the applicants’ application, and make orders in terms of the “(Draft) Court Orders Under the Companies Act 1993” filed by the applicants and dated 29 April 2020, which were annexed to this judgment.

Orders