Fistonich v Gibson - [2022] NZHC 1422

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1806

[2022] NZHC 1422

UNDER Parts 10 and 12 of the Companies Act 1993

BETWEEN

SIR GEORGE VJECESLAV FISTONICH

First Applicant

FFWL LTD (in receivership) Second Applicant

AND

BRENDON JAMES GIBSON and NEALE JACKSON

First Respondents

FFWL LTD (in receivership) Second Respondent

VILLA MARIA ESTATE LTD

Third Respondent

Hearing: 7 June 2022

Counsel:

J Farmer QC and J Carlyon for the Applicants

A Ross QC and D J Friar for the First and Second Respondents Appearance excused for counsel for Third Respondent

Judgment:

16 June 2022

JUDGMENT OF VAN BOHEMEN J

[on application for ruling on retention of funds by receivers]

This judgment was delivered by me on 16 June 2022 at 3.00 pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

FISTONICH v GIBSON & JACKSON [2022] NZHC 1422 [16 June 2022]

Introduction

[1] The applicants, Sir George Fistonich and FFWL Ltd (in receivership), seek an order that the first respondents, Brendon Gibson and Neale Jackson (the receivers), are not entitled to retain, from surplus funds following the sale of FFWL’s assets and payment of its debts, $5.16 million to cover the costs of defending actual and forecast claims by the applicants against the receivers.

[2] The application is directed principally at obtaining a ruling on whether, as a matter of law, the receivers have a right to retain funds to meet the costs of litigation where neglect, default or breach of duty are alleged against them. However, counsel for the applicants also sought to put in issue the reasonableness of the sum the receivers propose to retain.

Relevant background

[3] The application arises in the context of the sale of the business and land associated with the Villa Maria winery, which was established approximately 60 years ago by Sir George Fistonich and which has been owned and operated through Villa Maria Estate Ltd (Villa Maria).

[4] In 2019, ANZ Bank and Rabobank (the Banks), who had extended substantial loans to Villa Maria and were joint security holders over its assets, had concerns about the governance and management of Villa Maria and its debt levels. At the direction of the Banks, Villa Maria was restructured in accordance with recommendations of Advisory 525 Ltd, a company of which the receivers are directors.

[5] Under the restructure, FFWL was incorporated as the holding company for Villa Maria. Sir George ceased to be a director of or involved in the day-to-day business of Villa Maria, despite owning all of the shares in FFWL. He was also a director of FFWL but was not involved in the management oversight of Villa Maria.

[6] In 2020, Sir George agreed to a process by which the business and assets of Villa Maria would be offered for sale. Sir George had no direct involvement in the sale process, which led to offers for the purchase of the Villa Maria business for

$172.5 million by…

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 Fistonich v Gibson

Details

AGLC: Fistonich v Gibson [2022] NZHC 1422
Case: [2022] NZHC 1422
Decision Date: 16 June 2022

CaseChat Overview and Summary

The High Court of New Zealand considered an application by Sir George Fistonich and FFWL Ltd (in receivership) against the receivers, Brendon Gibson and Neale Jackson, and FFWL Ltd (in receivership), regarding the retention of funds by the receivers. The applicants sought a ruling that the receivers were not entitled to retain $5.16 million from the surplus funds following the sale of FFWL’s assets and payment of its debts to cover the costs of defending claims by the applicants against the receivers. The court was required to determine whether the receivers had a right to retain funds to meet the costs of litigation where neglect, default or breach of duty were alleged against them. The court found that receivers were ordinarily entitled to an indemnity and lien in respect of their costs incurred in carrying out their duties. This right subsists until a breach of duty is found. Until then, receivers are entitled to retain funds to defend proceedings brought against them. The court held that the receivers had a right to withhold a retention to defend allegations of neglect, default or breach of duty against them. The court dismissed the application for an order that the receivers were not entitled to retain $5.16 million to cover the costs of defending actual and anticipated claims by the applicants against the receivers. The court made no order as to costs.

Orders