Gair v Liddle - [2023] NZHC 1246

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2022-441-79

[2023] NZHC 1246

UNDER Section 266 of the Companies Act 1993 and Part 19 of the High Court Rules

IN THE MATTER OF

Liddle Builders & Construction Ltd

BETWEEN

HEATH LESLIE GAIR

Applicant

AND

ROBERT JAMES LIDDLE

First Respondent

AMANDA ELIZABETH LIDDLE

Second Respondent

Hearing: On the Papers

Counsel:

J D Haig and P H Surridge for Applicant

J B Orpin-Dowell, T J G Allan and K M Wakelin for Respondents

Judgment:

25 May 2023

JUDGMENT McQUEEN J [COSTS]

[1] This proceeding has now been discontinued. The remaining issue is costs. Mr Gair, the liquidator of Liddle Builders & Construction Limited (LBCL) and the applicant in this proceeding, seeks costs against Mr Robert Liddle and Ms Amanda Liddle, who are the respondents. Mr Liddle is the director and majority shareholder of LBCL, and Ms Liddle is the minority shareholder.

[2] Mr Gair sought an order by way of originating application that the respondents be directed to attend an examination on oath by him, pursuant to ss 261 and 266 of the

GAIR v LIDDLE [2023] NZHC 1246 [25 May 2023]

Companies Act 1993. Subsequent to the filing of his originating application, and prior to its determination, the respondents attended an examination before him.

[3] The issue is whether Mr Gair is entitled to costs on the basis that he achieved substantive success in his application, or whether the respondents are entitled to costs on the basis that Mr Gair’s application has been discontinued and was in any event unnecessary.

[4]For the reasons below I consider costs should lie where they fall.

Background

[5] On 28 September 2021, Jason and Victoria Roebuck applied for without notice orders ancillary to a prospective freezing order over LBCL. Those orders were granted by Churchman J on 1 October 2021, on the basis that it was seriously arguable that LBCL had engaged in a process of transferring assets to other entities to judgment proof itself against prospective claims by creditors.1

[6] On 26 October 2021, Mr Gair was appointed by consent as interim liquidator to LBCL. He was subsequently appointed liquidator by an order of the High Court on 9 December 2021.

[7] Upon appointment, Mr Gair found that the shareholders had applied the sale proceeds of the company’s assets to repay their own shareholder advances to the company. A voidable preference notice was issued in December 2021. The respondents repaid the sum to the company in January 2022. In June 2022, Mr Gair wrote to the respondents raising his concern that the transaction to sell the company’s business and assets may have been at undervalue and therefore in breach of their duties as directors. Counsel for the respondents rejected this concern, raising various matters in response.

[8] As part of his investigation into this matter, Mr Gair served notices on the respondents pursuant to s 261 of the Companies Act on 31 August 2022, requesting

1

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 Gair v Liddle

Details

AGLC: Gair v Liddle [2023] NZHC 1246
Case: [2023] NZHC 1246
Decision Date: 25 May 2023

CaseChat Overview and Summary

The case of Gair v Liddle involved Heath Leslie Gair, the liquidator of Liddle Builders & Construction Ltd (LBCL), who sought an order for the respondents, Robert James Liddle and Amanda Elizabeth Liddle, to be examined on oath. The respondents, who are the director and minority shareholder of LBCL respectively, had previously failed to comply with Mr Gair's requests for an examination under the Companies Act 1993. The primary legal issue before the court was whether Mr Gair was entitled to costs on the basis of his success in achieving the examination, or whether the respondents were entitled to costs as the proceeding was discontinued and the application was unnecessary.

The court found that the presumption under High Court Rules that a discontinuing party pays costs to the defendant could be displaced if it is just and equitable to do so. The court acknowledged that Mr Gair achieved his objective of having the respondents examined, but it also noted that the respondents had been cooperative and had agreed to attend the examination from the outset. The court held that neither party acted unreasonably, and that both shared responsibility for the delays in scheduling the examinations. As such, the court decided not to award costs to either party, allowing costs to lie where they fell.

The final orders of the court were that both applications for costs were declined, and that costs in the matter were to lie where they fell.

Orders