Fisk v Turvey

[2023] NZHC 2182

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-136

[2023] NZHC 2182

UNDER

the Companies Act 1993, the Receiverships Act 1993, the Property Law Act 2007, the Land Transfer Act 2017 and Part 19 of the High Court Rules 2016

IN THE MATTER OF

Vey Group Limited (in liquidation)

BETWEEN

JOHN HOWARD ROSS FISK and RICHARD JOHN NACEY

First Applicants

VEY GROUP LIMITED (IN LIQUIDATION)
Second Applicant

AND

DARYN ALLEN TURVEY

First Respondent

AOKAUTERE LAND HOLDINGS LIMITED

Second Respondent

Continued…

On the Papers

Counsel:

R L Pinny for the Applicants First Respondent in person

R L Roff for the First Interested Party

Judgment:

15 August 2023

JUDGMENT OF GWYN J

(Directions pursuant to s 284 of the Companies Act 1993 by consent)

FISK and NACEY v TURVEY [2023] NZHC 2182 [15 August 2023]

… Continued

AND

DAVID VANCE and IAN MILLARD AS TRUSTEES OF THE ORANA TRUST

First Interested Party

LESLIE WILLIAM FUGLE
Second Interested Party

GREGORY JOHN SHERRIFF
Third Interested Party

AND

THE COMMISSIONER OF INLAND REVENUE

First Interested Non-Party

Introduction

[1]    The liquidators of Vey Group Ltd (in liq) (Vey) (the Liquidators) have applied for directions relating to the distribution of Vey’s assets and related orders.

[2]    The Liquidators, the first respondent (Daryn Turvey) and the first interested party (the Trustees of the Orana Trust) (Orana) seek directions as to the distribution of Vey’s remaining assets by consent.

Background

[3]By application dated 18 March 2022, the applicants sought orders that:

(a)the Liquidators could sell the property owned by Vey located in Webb Street, Wellington (the Property);

(b)the proceeds of sale of the Property should be applied to meet certain undisputed priority debts and costs specified in the application; and

(c)following sale of the Property and application of the proceeds as specified, the Liquidators were to:

(i)seek further directions from the Court relating to the distribution of Vey’s remaining assets, including the validity and priority of any registered interests that were discharged on settlement; and

(ii)serve that request for further directions as to distribution on all creditors of Vey (the Further Directions Request).

[4]    The intention of the orders sought was to enable a two-stage approach to the distribution of Vey’s assets:

(a)First, to enable the prompt sale of the Property and payment of undisputed priority claims (Stage One).

(b)Second, to provide for a process to resolve all matters between the stakeholders relating to distribution of Vey’s remaining assets in an efficient and cost-effective way, through a single hearing at which all creditors of Vey could appear (Stage Two).

[5]The orders sought were granted in my judgment dated 27 September 2022.1

[6]    The Liquidators have now sold the Property and applied the sale proceeds in the manner specified in the Court’s orders. Stage One is complete.

Directions sought as to distribution

[7]Stage Two requires directions as to distribution and related orders.

[8]    The Liquidators are currently holding funds in the liquidation of Vey of just over $500,000 (the Fund).

[9]    There are four parties who have claims or possible claims to the Fund (excluding the Liquidators’ unpaid fees, costs and disbursements):

(a)Orana has a claim for a current account debt for $1,225,698.00.

(b)The Commissioner of Inland Revenue has a claim for $455,369.82 of which $3,824.94 is a preferential claim.

(c)Wellington City Council (WCC) has a claim for $223.50 relating to inspection fees.

(d)Mr Turvey has raised two types of claims against Vey (which appear to overlap):

(i)an interest in the Property pursuant to an institutional constructive trust; and

1      Fisk v Turvey [2022] NZHC 2462.

(ii)a creditor claim for $373,793.40.2

1. The Liquidators sought the following directions and related orders.

(a)a direction from the Court as to whether Mr Turvey had a valid ownership interest in the Property at the time of sale pursuant to an institutional constructive trust;

(b)that the Court confirm their decisions on creditor claims as follows:3

1. to admit Inland Revenue’s preferential claim in full;

   (ii)to admit Inland Revenue’s non-preferential claim only in part (with $131,100.91 of that claim rejected);

   (iii)to reject Mr Turvey’s unsecured claims against Vey, save for a related party loan of $797; and

   (iv)to admit WCC’s revised claim of $223.50 in full.

   (c)related to (a) and (b) above, further directions that the Liquidators are to distribute the Fund as follows:

(i)first, to pay the Liquidators’ unpaid reasonable fees, costs and disbursements in the liquidation;

(ii)second, to pay Inland Revenue’s preferential claim of

$3,842.94;

(iii)third, to pay on a pari passu basis the following unsecured creditor claims:

2      Reflecting his creditor claim of $449,347.51 less amounts already paid relating to the assigned bank loan or previously held by the Court to not be recoverable against Vey in Aokautere Land Holdings Ltd v Turvey [2022] NZHC 2338.

3      The Liquidators do not seek orders in this proceeding confirming their decision to admit in full Orana’s creditor claim, as the High Court has already confirmed their decision to admit that claim in Vance v Vey Group Ltd (in liq and in rec) [2022] NZHC 75.

a.Orana Trust’s claim of $1,225,698.00;

b.Inland Revenue’s claim of $320,443.97;

c.Mr Turvey’s claim of $797; and

d.WCC’s claim of $223.50.

[11]   The Liquidators’ application was served on all of Vey’s creditors. Inland Revenue and WCC did not file any response to the application. However Inland Revenue had previously confirmed to the Liquidators that it did not intend to oppose the Liquidators’ decision to admit only part of Inland Revenue’s unsecured creditor claim.

[12]   The Trustees of Orana filed an appearance and Mr Turvey filed an opposition to the Liquidators’ application.

[13]   The application was set down for a hearing before me on 30 August 2023 with an expectation of the  parties  that  the  hearing  would  focus  on  the  validity  of  Mr Turvey’s claims.

Settlement of Mr Turvey’s claim

[14]   The Liquidators, Vey and Mr Turvey have now settled all of Mr Turvey’s claims against Vey, for payment by Vey of $15,000.

[15]   The Liquidators’ power to settle such claims is contained in sch 6(f) of the Companies Act 1993. The settlement is conditional on the Court granting directions as to distribution of the Fund, which enable the Liquidators to pay Mr Turvey the settlement sum from the Fund.

[16]On that basis, the Liquidators, Mr Turvey and Orana have reached agreement:

(a)To seek directions as to the distribution of the Fund by consent; and

(b)In the case of Mr Turvey and Vey, if those directions are granted as sought, to discontinue the related proceeding brought by Mr Turvey against Vey in CIV-2018-454-121.

[17]   Neither of the other two creditors of Vey, Inland Revenue and WCC, is a party to the joint memorandum, reflecting that neither filed an appearance in response to the Liquidators’ application. However, counsel for the Liquidators confirms that Inland Revenue has advised the Liquidators that:

(a)The Commissioner was only joined to this proceeding as an interested non-party for the limited purpose of addressing the deduction notice issued to Vey by Inland Revenue pursuant to s 157 of the Tax Administration Act 1994; and

(b)As  one  of  Vey’s  creditors,  it  considered  the  decision  to  settle   Mr Turvey’s claims against Vey was a decision for the Liquidators and the Commissioner would not take any steps to oppose that decision. A copy of that correspondence has been provided to the Court.

[18]   WCC was not approached by the Liquidators to be a party to the consent memorandum as its creditor claim in the liquidation is only $223.50.

[19]The parties are agreed that the application can be considered on the papers.

Directions by consent

[20]   On the basis of the memorandum filed by the Liquidators, Mr Turvey and Orana, I make the following directions as to distribution, pursuant to s 284 of the Companies Act 1993.

[21]The Liquidators are to distribute the Fund in accordance with the following:

(a)First, to pay Mr Turvey the sum of $15,000.

(b)Second, to pay the Liquidators’ unpaid reasonable fees, costs and disbursements in the liquidation.

(c)Third, to pay Inland Revenue’s preferential claim of $3,842.94.

(d)Fourth, to pay on a pari passu basis the following unsecured creditor claims:

(i)Orana Trust’s claim of $1,225,698;

(ii)Inland Revenue’s claim of $320,443.97; and

(iii)WCC’s claim of $223.50.

Gwyn J

Solicitors:

Crown Law, Wellington Bell Gully, Wellington Dewhirst Law, Wellington