Gibson v Wikeley
[2025] NZHC 1509
•11 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-31
[2025] NZHC 1509
UNDER the Companies Act 1993 and the Trusts Act 2019 IN THE MATTER
of Wikeley Family Trustee Limited (in interim liquidation)
BETWEEN
BRENDON JAMES GIBSON and NEALE JACKSON
First Applicants
Continued …
AND
KENNETH DAVID WIKELEY
First Respondent
Continued …
Hearing: On the papers Parties / Counsel:
M D Arthur and J Marcetic for the Applicants First Respondent as self-represented litigant
No appearance for the Second or Third Respondents
JBM Smith KC, MC Harris, JLW Wass and M C Smith for Kea Investments Ltd
F C Monteiro and F A Best for MK Solicitors LP
Judgment:
11 June 2025
JUDGMENT OF GAULT J
This judgment was delivered by me on 11 June 2025 at 11:00 am pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
GIBSON and JACKSON v WIKELEY [2025] NZHC 1509 [11 June 2025]
Continued …
BETWEEN WIKELEY FAMILY TRUSTEE LIMITED
(in interim liquidation) Second Applicant
AND
WILLIAM WIKELEY
Second Respondent
OLIVER WIKELEY
Third Respondent
Introduction
[1] In this originating application for directions by the interim liquidators of Wikeley Family Trustee Ltd (in interim liquidation) (WFTL), the first respondent (Mr Wikeley) seeks, by interlocutory application dated 7 March 2025, disclosure of the interim liquidators’ financial arrangements and decision-making processes.
[2] As indicated in previous minutes, this interlocutory application is for determination on the papers, on the basis of the following documents received:1
(a)interlocutory application by first respondent for disclosure of interim liquidators’ financial arrangements and decision-making processes;
(b)the applicants’ notice of opposition and affidavit in support filed on 24 March 2025;
(c)Mr Wikeley’s affidavit in reply and memorandum of submissions filed on 27 March 2025 (only received on 5 May 2025);
(d)the applicants’ submissions dated 4 April 2025; and
(e)the supplementary memorandum of submissions of Mr Wikeley dated 7 April 2025.
Background
[3] It is unnecessary to set out the background in any detail. The interim liquidators were appointed by the Court on 6 April 2023, in the context of related proceedings brought by Kea Investments Ltd (Kea). The related proceedings concerned the enforcement of a default judgment obtained in January 2022 in the Commonwealth of Kentucky Circuit Court (the Kentucky Default Judgment) by entities associated with Mr Wikeley against Kea. As the Court of Appeal said in its judgment of 21 November 2024 in the related proceedings:2
1 See particularly my minutes of 20 March, 1 April and 5 May 2025.
2 Wikeley v Kea Investments Ltd [2024] NZCA 609 at [43] (footnote omitted). See also [196].
… having failed on his jurisdictional challenge, Mr Wikeley embarked upon a scheme to insulate WFTL from any New Zealand judgment by assigning the benefit of the Kentucky Default Judgment to a new United States entity, Wikeley Inc, and replacing the trustee of WFT with USA Asset Holdings Inc, all in breach of Gault J’s interim orders. This in turn resulted in an application by Kea to appoint interim liquidators to WFTL which was successful.
[4] The Court of Appeal upheld this Court’s declarations that the Kentucky Default Judgment was obtained by fraud and that Mr Wikeley’s attempts in March and April 2023 to assign the benefit of that judgment and of the Coal Agreement3 (and related steps) were void (among other orders), on the basis of a fraudulent conspiracy between the defendants, but discharged this Court’s permanent injunctions on comity grounds.4 The Court of Appeal reserved to the interim liquidators the right to apply to this Court for any further order considered appropriate in the context of the interim liquidation.5
[5] Following the Court of Appeal’s judgment, both Mr Wikeley and Kea have applied for leave to appeal to the Supreme Court. Mr Wikeley says his appeal extends to challenging the appointment of the interim liquidators.
[6] The applicants also filed this originating application seeking directions including – in the first instance pending determination by the Supreme Court of whether the Kentucky Default Judgment was obtained by fraud – requiring them to refrain from seeking to enforce the Kentucky Default Judgment or have it set aside.
Orders sought by Mr Wikeley
[7]The orders sought in Mr Wikeley’s interlocutory application are as follows:
1. Disclosure of Funding/Indemnity Arrangements: An order that the Interim Liquidators (Messrs. Brendon Gibson and Neale Jackson) disclose to the parties and the Court the full details of any indemnities, funding agreements, or other financial arrangements that have been made in relation to their role as Interim Liquidators of WFTL. This includes, but is not limited to, any agreement by Kea Investments Ltd (or any other third party) to underwrite or guarantee the fees, expenses, or potential liabilities of the Interim Liquidators in this liquidation/trust administration.
3 The Coal Agreement was the purported basis for the Kentucky Default Judgment.
4 Wikeley v Kea Investments Ltd [2024] NZCA 609 at [211].
5 At [211](e) and [219].
2. Disclosure of External Inputs into Decision-Making: An order that the Interim Liquidators disclose any instructions, directions, or material guidance they have received from any creditor, beneficiary, or other interested party in relation to decisions made in the interim liquidation of WFTL or the conduct of the associated litigation. Specifically, the Interim Liquidators should state whether they have had any communications or meetings regarding strategy or decision-making with representatives of Kea Investments Ltd (beyond ordinary court processes and correspondence between counsel), or with any beneficiaries of the Wikeley Family Trust, and provide a summary of such communications if they occurred.
3. Further or Ancillary Orders: Such further or other orders as the Court deems just and necessary to give effect to the above, including (if considered appropriate) orders as to confidentiality or use of the disclosed information, and/or directions for how any issues arising from the disclosed information will be addressed.
…
1) Specific Relief disclosure Orders sought
1)An order requiring Full financial and strategic disclosure from the IL’s
2) A Temporary restriction on the IL ability to take substantive steps in these proceedings until full disclosure is provided
3) Any financial arrangements, indemnities or agreements with [Kea] or related parties
4) Any instructions or input they have received from Kea or its lawyers regarding the KY [judgment] or WFTL assessment. This covers all communication.
5) A full account of their legal decision-making process to date including meetings with [Kea] and Chapman Tripp.
6) Without such full disclosure the IL’s continued [role] in these proceedings is untenable.
[8] Mr Wikeley’s reply affidavit clarifies that he is seeking only any indemnities, funding or insurance arrangements involving Kea or other parties; communications or instructions received that may compromise neutrality; and strategic decisions concerning the Kentucky Default Judgment, including any decisions not to appeal or defend it, and the overall litigation strategy adopted by the liquidators. He is not seeking privileged communications or internal strategy. Rather, he is seeking to understand whether the liquidators have acted independently or under the influence and direction of Kea.
Mr Stadler’s affidavit
[9] A preliminary issue arises in relation to the affidavit of Mr Stadler dated 5 March 2025, filed in support of Mr Wikeley’s notice of opposition to the originating application. Mr Wikeley relies on this affidavit in support of his disclosure application. The applicants object to its admissibility.
[10] I have reviewed Mr Stadler’s affidavit. He is a legal practitioner at MK Solicitors in the British Virgin Islands. MK Solicitors is a creditor of WFTL. Mr Stadler’s affidavit gives opinion evidence based on his review of documents regarding the proceedings in Kentucky and New Zealand. He expresses concerns about the liquidators’ handling of WFTL’s liquidation given their obligations to act for the benefit of all creditors, rather than just Kea. But the focus of this affidavit opposing the substantive directions application is supporting the Kentucky Court’s dismissal of Kea’s motion to set aside the Kentucky Default Judgment, and criticising Kea’s Kentucky litigation strategy, saying that the outcome of its motion may well have been different if it had relied on “excusable neglect”. Mr Stadler also takes issue with the expert evidence of Mr Kelly filed in Kea’s related proceeding, and opines that WFTL did not procure the Kentucky Default Judgment by fraud as a matter of Kentucky law.
[11] In relation to concern about the liquidators’ handling of WFTL’s liquidation, Mr Stadler opines that the liquidators should have noted Kea’s Kentucky litigation strategy before this Court in the directions application, in the interests of all creditors. He also opines that the liquidators failed to apprise the (New Zealand) Court that the Kentucky Default Judgment was not procured by fraud as a matter of Kentucky law. He says the liquidators also have an obligation to raise such points before the Kentucky Court of Appeals. He says that rather than remaining neutral in relation to (enforceability of) the Coal Agreement, their job is to preserve vigorously WFTL’s largest asset – namely the Kentucky Default Judgment – and not “sit idly by while Kea and Mr Wikeley (WFT’s ultimate beneficial owner) litigate matters in New Zealand”. Finally, he refers to an attempt to arrange a call with the liquidators which they cancelled and expresses concern they may have attempted to remain “wilfully blind so that they can continue to act as Keas’s, rather than WFT’s, agents”.
[12] This originating application is not concerned with Kea’s Kentucky litigation strategy, relitigating its motion to set aside the Kentucky Default Judgment or whether the Kentucky Default Judgment was obtained by fraud. The directions sought by the interim liquidators are whether they ought to take any steps to enforce, or to discharge, the Kentucky Default Judgment, pending (and later following) final determination by the Supreme Court of whether the Kentucky Default Judgment was obtained by fraud. If Mr Stadler’s affidavit is relevant to the directions application and Mr Wikeley’s disclosure application at all, its potential relevance is limited to the concern about the liquidators’ handling of WFTL’s liquidation. Even if concerns about the liquidators’ conduct may be relevant to assessment of the directions sought, this originating application for directions is not a vehicle to relitigate the appointment of the interim liquidators or to seek relief in relation to the validity of their prior actions. Thus, Mr Stadler’s affidavit has limited relevance to the directions application or Mr Wikeley’s disclosure application.
[13] Further, Mr Stadler’s opinion evidence is not in admissible form. He does not qualify himself as an expert in accordance with the code of conduct for expert witnesses in New Zealand. Reference to his review of documents does not provide an evidential basis for the underlying facts. This is particularly so in relation to his concerns about the liquidators’ handling of WFTL’s liquidation.
[14] Nevertheless, for the purpose of this interlocutory application, I admit Mr Stadler’s affidavit and reflect these issues in the weight given to it.
Disclosure
[15] The starting point in relation to Mr Wikeley’s disclosure application, as counsel for the applicants submitted, is that discovery of documents is not automatic in originating applications. The Court has discretion to order discovery in originating applications but generally adopts a conservative approach.6
6 Manchester Securities Ltd v Body Corporate 172108 [2015] NZCA 29 at [15].
[16] In support of his disclosure application, Mr Wikeley’s reply affidavit alleges that despite being appointed on 6 April 2023, the interim liquidators did nothing to defend the trust’s interests in 2023 – they failed to file any evidence in response to Kea’s application for formal proof or ask for a stay before 14 April 2023, to support WFTL’s rights in the Kentucky appellate process or engage with beneficiaries including Mr Wikeley at the key procedural moments. He says that the liquidators’ recent steps in relation to beneficiaries are an exercise in retroactive legitimisation, not a reflection of genuine fiduciary concern. He says they have continued the same obstructive path by not supporting WFTL’s US appellate rights; taking no steps to protect the trust’s asset; and resisting transparency regarding their own instructions and funding.
[17] As the Court of Appeal has confirmed,7 a liquidator is an agent for the company. It is not a normal agency position because the liquidator controls the principal (the company) and has statutory duties under the Companies Act 1993 which are focused on protecting the interests of creditors. It is an agency subject to external rules and ethical obligations. The liquidator has power to bind the company without personal liability but has certain fiduciary duties, and duties of skill and care. As counsel for the interim liquidators accept, liquidators have an obligation to be independent.
[18] Here, it is not disputed that the interim liquidators’ duties extend to preserving the value of WFTL’s assets, including the Kentucky Default Judgment, for the benefit of all creditors, not just Kea. The interim liquidators submit that they are doing so, that they have not taken any instructions from Kea, and nor have they taken instructions from any creditors or beneficiaries of WFTL or other interested party. They also submit they are entitled to remain neutral in relation to whether the Kentucky Default Judgment was obtained by fraud, at least pending final determination by the Supreme Court. The position thereafter will, of course, need to be assessed in light of such final determination.8 Insofar as the past and present conduct of the interim liquidators is relevant in this proceeding, I accept it is
7 Dunphy v Sleepyhead Manufacturing Company Ltd [2007] 3 NZLR 602 at [22].
8 It is unnecessary, and would be inappropriate, to engage further at this stage with the parties’ submissions addressing the consequences of the potential outcomes in the Supreme Court.
appropriate to consider the need for targeted discovery. It would not be appropriate to determine these factual issues on this interlocutory application as a basis for declining discovery.
[19] However, as indicated, this originating application is not a vehicle to relitigate the appointment of the interim liquidators or to seek relief in relation to the validity of their prior actions. I largely accept counsel for the applicants’ submission that the directions application is forward-looking – objectively assessing what the interim liquidators should or should not do in respect of the Kentucky Default Judgment – whereas the stated purpose of Mr Wikeley’s disclosure application is to ensure transparency and accountability, and that the interim liquidators are acting for WFTL and not for Kea. His allegations against the interim liquidators largely relate to the initial period of appointment in April to May 2023, and suggest an attempt to relitigate aspects of Kea’s related proceeding (which is the subject of the applications for leave to appeal to the Supreme Court). However, I accept in a limited sense that concern about the liquidators’ conduct may be relevant to assessment of the directions sought and that the documents sought may be capable of supporting Mr Wikeley’s opposition to the directions application or adversely affecting the applicants’ case.
[20] Even so, turning to the first category of documents sought – the interim liquidators’ funding and indemnity arrangements – such documents are unlikely to be important to objectively assessing this originating application for directions as to what steps the interim liquidators should or should not take in respect of the Kentucky Default Judgment.
[21] In any event, the interim liquidators have already disclosed their funding arrangements and the funding they have received in their statutory six-monthly liquidators’ reports. They have filed at least four of these reports with the Companies Office to date. In their first report, they acknowledged that Kea had agreed to provide funding for the costs of the liquidation and had provided up-front payments. Subsequent reports set out further funding payments in the relevant periods. The interim liquidators also acknowledge that Kea has provided an indemnity against all costs, liabilities and claims the interim liquidators may face arising in the course of their appointment. In the absence of grounds for belief that further documents exist,
and weighing the marginal relevance of any further documents, I consider that discovery of funding and indemnity arrangements is unnecessary and should not be ordered in this originating application for limited directions.
[22] I turn to the second category of documents sought – non-privileged communications or instructions received by the interim liquidators relevant to their decision-making concerning the Kentucky Default Judgment or their overall litigation strategy that may compromise neutrality. Since Mr Wikeley’s allegations largely relate to the initial period of appointment in April to May 2023, such documents are also unlikely to be important to objectively assessing what steps the interim liquidators should or should not take in respect of the Kentucky Default Judgment. Insofar as it is relevant to the directions sought, the appropriateness of the past conduct of the interim liquidators is more likely determined by an objective assessment of that conduct rather than by reference to correspondence it has received.
[23] Further, in the absence of grounds for belief contradicting the interim liquidators’ position stated on affidavit that they have not taken any instructions from Kea, I consider that discovery of communications or instructions received by the interim liquidators relevant to their decision-making is also unnecessary and should not be ordered in this originating application for limited directions.
Result
[24]The interlocutory application for disclosure is dismissed.
Gault J
Counsel / Solicitors / Parties:
Mr M D Arthur and Mr J Marcetic, Chapman Tripp, Auckland Mr K D Wikeley
Mr JBM Smith KC, Barrister, Wellington; Mr MC Harris, Barrister, Auckland; and Mr JLW Wass, Barrister, Wellington (for Kea Investments Ltd)
Mr M C Smith (instructing solicitor for Kea Investments Ltd), Gilbert Walker, Auckland Mr C Browne and Ms F Monteiro, Wilson Harle, Auckland
Copy to:
Mr A F Regard, Regard Law Group PLLC
0
1
1