Gillovic v Nayacakalou - [2023] NZHC 2348

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-216

[2023] NZHC 2348

UNDER ss 284 and 286 of the Companies Act 1993

IN THE MATTER OF

the removal of liquidator, setting aside transaction and fix liquidator’s feels

BETWEEN

BRENT STEPHEN GILLOVIC

Plaintiff

AND

KELERA NAYACAKALOU

First Defendant

Hearing: 12 July 2023

Counsel:

D Delic and Z Evita for the Plaintiff K Bond for the Defendant

Judgment:

28 August 2023

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 28 August 2023 2023 at 11am.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors/Counsel:

S D Legal, Hamilton
Braun Bond and Lomas, Hamilton

GILLOVIC v NAYACAKALOU [2023] NZHC 2348 [28 August 2023]

Introduction

[1] The plaintiff, Brent Gillovic, holds 100 per cent of the shares in Tesio Thoroughbred Services Limited (in liq) (Tesio Thoroughbred) and 99 per cent of the shares in Tesio Bloodstock Services Limited (in liq) (Tesio Bloodstock). Mr Gillovic is a director of both companies. The defendant, Kelera Nayacakalou, is the liquidator of both companies (the liquidator).

[2] Tesio Bloodstock is registered as the owner of 600,000 shares in CHG Investments Limited (CHG) (the CHG shares). Mr Gillovic is a director of CHG. He says that the shares have a value of at least $400,000.

[3] In August 2021, the liquidator purported to sell the CHG shares to a third party, Naldapat Limited (Naldapat), for a price of $2,000. CHG has refused to register a share transfer. Mr Gillovic now wishes to challenge the share sale as well as the remuneration claimed by the liquidator. He also seeks an order removing the liquidator from office.

[4] Mr Gillovic has filed an application under ss 284 and 286 of the Companies Act 1993 (the Act), by statement of claim. Mr Gillovic, in his capacity as a shareholder of Tesio Thoroughbred and Tesio Bloodstock, requires leave to bring an application under s 284 of the Act.

[5] The liquidator opposes a grant of leave. The liquidator makes two other procedural challenges to Mr Gillovic’s proceeding. First, the liquidator opposes an order removing her from office under s 286 of the Act on the ground that Mr Gillovic failed to serve the notice required under s 286(2) of the Act. The liquidator submits that the claim under s 286 is a nullity, however, there is no formal application to strike out that part of the claim.

[6] Secondly, the liquidator applies to strike out Mr Gillovic’s second cause of action in his amended statement of claim dated 23 December 2022, which seeks to reverse the share sale, on the grounds that the relief sought is not available on an application under s 284 of the Act and where Naldapat is not joined as a party.

Background

[7] Tesio Bloodstock and Tesio Thoroughbred fell into arrears in meeting their tax obligations. Mr Gillovic decided to place Tesio Bloodstock and Tesio Thoroughbred into voluntary liquidation, by resolution…

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.

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Details

Case: [2023] NZHC 2348
Decision Date: 28 August 2023

CaseChat Overview and Summary

In the case of Gillovic v Nayacakalou, the High Court of New Zealand, Hamilton Registry, was tasked with determining whether the plaintiff, Brent Gillovic, could challenge the sale of shares in CHG Investments Limited by the liquidator, Kelera Nayacakalou, and review the liquidator's remuneration. Gillovic, who holds a significant stake in Tesio Thoroughbred Services Limited and Tesio Bloodstock Services Limited, sought to set aside the sale of CHG shares to Naldapat Limited for $2,000, arguing it was undervalued, and to remove the liquidator on grounds of misconduct. The court had to decide if Gillovic could challenge the sale and the liquidator's fees under the Companies Act 1993 and whether the liquidator's actions warranted her removal.

The court found that Gillovic's application to remove the liquidator under section 286 of the Companies Act 1993 could proceed despite the liquidator's argument that the required notice was not served. The court reasoned that the issue of notice could be resolved at trial and that the court may have inherent jurisdiction to order the removal of the liquidator if jurisdiction under section 286 was lacking. However, the court held that Gillovic could not challenge the sale of the CHG shares or seek monetary remedies against the liquidator or Naldapat under section 284 of the Act because these claims involved third-party contractual and property rights not joined to the proceeding. The court struck out the second cause of action that sought to set aside the share sale, but allowed the third cause of action regarding the liquidator's remuneration to proceed. The court found that Gillovic had established a credible basis to challenge the reasonableness of the liquidator's fees, which required further scrutiny given the liquidator's conduct and the terms of the fee agreements.

The court granted Gillovic leave to pursue his application under section 284 of the Act to review the liquidator's remuneration and ordered the parties to file amended statements of claim and defence by specific dates. The court adjourned the proceeding for a case management conference to be held after the amended statements were filed and served. The court also set a deadline for submissions on costs, to be determined based on the parties' written submissions.

Orders