Forestlands (no.2) Limited (in liquidation)

[2019] NZHC 393

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-386

[2019] NZHC 393

UNDER

Part 19 of the High Court Rules and section 284 of the Companies Act

IN THE MATTER

of an application concerning

FORESTLANDS (NO.2) LIMITED (IN LIQUIDATION)

…/cont

IN THE MATTER

of an application by NEALE JACKSON and GRANT ROBERT GRAHAM

Applicants

Hearing:	On the papers
Appearances:	D T Broadmore/HCMS Snell for Applicants
Judgment:	8 March 2019

JUDGMENT OF LANG J

[on application for orders under s 284 of the Companies Act 1993

This judgment was delivered by me on 8 March 2019 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:

Buddle Findlay, Auckland

RE FORESTLANDS [2019] NZHC 393 [8 March 2019]

FORESTLANDS (NO. 3) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 4) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 5) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 6) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 7) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 8) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 9) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 10) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 11) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 12) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 13) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 14) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 15) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 16) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 17) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 18) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 19) LIMITED (IN LIQUIDATION)

FORESTLANDS (NO. 20) LIMITED (IN LIQUIDATION)

[1]                  The applicants in this proceeding are the liquidators of the Forestlands group of companies. They currently hold approximately $23 million representing the sale of forests and lands belonging to the companies. They now seek directions from the Court under s 284 of the Companies Act 1993 approving the payment of an interim dividend to the shareholders in all companies.

[2]                  I accept it is appropriate to determine the application on a without notice basis because service of the application on all 4600 shareholders would be a costly and time consuming exercise. Furthermore, the liquidators’ proposal treats all shareholders equally and the interests of all affected parties can be protected under the orders that they seek. In addition, the liquidators have, to the extent they are able, advised all shareholders of what they propose to do.

[3]                  A difficulty has arisen because the companies’ share registers have not been updated for some time. For that reason the liquidators understandably hold concerns about the accuracy of the registers. Not surprisingly, they do not want to make payments unless they are satisfied the recipients currently hold shares in one or more of the companies. To date, however, the liquidators have only been able to ascertain with certainty the identity and bank details of approximately 60 per cent of the companies’ shareholders. The remaining shareholders have not yet proved the validity of their shareholdings to the satisfaction of the liquidators and/or have failed to provide details of bank accounts into which any dividend could be paid. Approximately 15 per cent of this group have never responded to any communications sent out by the liquidators.

[4]                  The liquidators therefore propose to pay an interim dividend to those shareholders who have proved the validity of their shareholdings and have provided bank accounts into which dividends can be paid. They will then hold an amount equivalent to the dividend that would otherwise have been paid to the remaining shareholders in a separate bank account. The liquidators anticipate that, as shareholders prove the validity of their shareholdings and provide bank account details, payments of interim dividends will be made on an ongoing basis from that account. Interest earned on funds held in the account will be added to the general pool

of funds used for payment of ongoing costs and ultimate distribution to all of the shareholders.

[5]                  I agree with the liquidators’ opinion that it is appropriate at this stage to pay an interim distribution to shareholders. Those shareholders who have proved their shareholdings to the satisfaction of the liquidators and provided bank account details should receive a payment as soon as possible. It would be unfair to require them to wait until the liquidators have ascertained the identity and bank account details of the remaining shareholders before receiving any payment.

[6]                  I am satisfied that the interests of the remaining shareholders will be adequately protected by preserving the funds that would have been paid to them in a separate account. The liquidators say the cost of calculating interest earned on this account for apportionment among the shareholders who receive payments from it would be greater than the value of the interest earned. I accept that this is likely to be so. I therefore agree that interest earned on these funds should be added to the general pool for use in paying ongoing costs and ultimately a final dividend to shareholders.

[7]                  I therefore make orders as sought in the originating application dated 6 March 2019.

Lang J