Go to Collection Limited - [2022] NZHC 3140

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2022-409-548

[2022] NZHC 3140

UNDER Part 19 of the High Court Rules 2016 and Part 15A of the Companies Act 1993

IN THE MATTER

of GO TO COLLECTION LIMITED

AND

An application by MALCOLM

GRANT HOLLIS and JOHN HOWARD ROSS FISK

Applicants

Hearing: (On the papers)

Counsel:

K Paterson and M Powell for Applicants

Judgment:

28 November 2022

REASONS JUDGMENT OF ASSOCIATE JUDGE LESTER

RE GO TO COLLECTION LTD [2022] NZHC 3140 [28 November 2022]

[1] The applicants sought orders that notwithstanding ss 239F, 239ACD and 280 of the Companies Act 1993 (the Act) they may be appointed as administrators and/or liquidators and/or deed administrators of Go To Collection Limited (the company). On 22 November 2022 I made the orders sought with a Reasons Judgment to follow.

[2] The orders were necessary because Messrs Hollis and Fisk are members of PricewaterhouseCooper (PWC). Other members of that firm have provided services to one of the directors of the company in her capacity as a trustee of four trusts. Neither the applicants or PWC have provided professional services to the company’s directors, as directors, or to the company’s shareholders.

[3] In addition, the applicants sought a number of orders designed to make their appointment more efficient in terms of providing for service of their appointment by email, the mechanics of how creditors are to be served if there is no known email address, and the use of video link for meetings if necessary.

[4] Further, leave was sought for this application to be brought by way of originating application on a without notice basis.

Reasons for orders

[5] As to the last application, applications of this type have in the past been brought by way of originating application and I agree that it was appropriate to use the originating application procedure in this case.

[6] Again, it is common for these applications to be made without service to the creditors. As Cooke J noted in Re Sommerville, the position of creditors is appropriately dealt with by giving creditors leave to apply to set aside the applicant’s appointments and the orders sought here give creditors that opportunity.1

[7] At the end of the day, the delay and extra expense involved in this application being dealt with on notice were not warranted. The creditors retain the right to challenge the appointment of the applicants if they wish. The creditors may vote to

1 Re Sommerville [2019] NZHC 1189 at [4].

have the applicants removed at a creditors’ meeting or they may vote for an alternative administrator at the watershed meeting or, if the applicants are appointed liquidators, the creditors may propose alternative liquidators.

[8] Essentially, whether there should be an order that the applicants are not disqualified from being appointed turns on whether they are conflicted.2

[9] The connection between PWC and the company is, if not tenuous, then hardly…

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

AGLC: Go to Collection Limited [2022] NZHC 3140
Case: [2022] NZHC 3140
Decision Date: 28 November 2022

CaseChat Overview and Summary

In the High Court of New Zealand, Christchurch Registry, the applicants, Malcolm Grant Hollis and John Howard Ross Fisk, sought orders that they may be appointed as administrators and/or liquidators and/or deed administrators of Go To Collection Limited (the company). This application was made in accordance with Part 19 of the High Court Rules 2016 and Part 15A of the Companies Act 1993. The applicants were members of PricewaterhouseCoopers (PWC), an international accounting firm, which had provided services to one of the company's directors in her capacity as a trustee of four trusts. The applicants sought various orders, including permission to serve notices on creditors via email, the use of video link for meetings, and the restriction of file searches until they were appointed as administrators.

The court was required to decide whether the applicants were disqualified from being appointed due to a potential conflict of interest arising from their association with PWC. The applicants argued that their firm had strict procedures and policies in place to manage conflicts, and that they had no personal connection with the company's directors or shareholders. The court also considered whether the proposed methods of serving notices on creditors and conducting meetings were appropriate, and whether it was necessary to restrict file searches until the applicants were appointed.

The court found that the applicants were not disqualified from being appointed due to their association with PWC, as the connection was indirect and there was no personal connection between the applicants and the company or its directors or shareholders. The court was satisfied that the applicants' experience and adherence to their firm's conflict management policies meant that they could carry out their tasks professionally and effectively. The court also found that the proposed methods of serving notices on creditors and conducting meetings were appropriate, as they would promote efficiency and cost savings without causing prejudice to the creditors. The court granted the applicants' requests for these orders. Finally, the court made an interim order that the file not be searched until the applicants were appointed, which was lifted once the applicants were appointed as voluntary administrators.

In conclusion, the court found that the applicants were not disqualified from being appointed due to their association with PWC, and that the proposed methods of serving notices on creditors and conducting meetings were appropriate. The court granted the applicants' requests for these orders and made the necessary orders to allow for their appointment as administrators and/or liquidators and/or deed administrators of the company. No order as to costs was sought or made.

Orders