Gower - [2020] NZHC 1948

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV 2020-409-000106

[2020] NZHC 1948

UNDER section 32 of the Receivership Act 1993 and Part 19 of the High Court Rules

IN THE MATTER OF

the receiverships of CONE ENTERPRISES (NEW ZEALAND) LIMITED (in

receivership and in liquidation) and SHAKE SHED & CO HOLDING LIMITED (in
receivership)

AND

IN THE MATTER OF

an application pursuant to s 32 of the Receiverships Act 1993

AND

COLIN ANTHONY LATHAM GOWER and ANDREW JAMES GRACE

Applicants

Hearing: 3 August 2020

Appearances:

C R Vinnell for the Applicants

Judgment:

5 August 2020

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 5 August 2020 at 2.00/pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:
Anthony Harper, Christchurch

GOWER and GRACE (Receivership) [2020] NZHC 1948 [5 August 2020]

Introduction

[1] On 12 February 2020, the applicants, Colin Gower and Andrew Grace, were appointed receivers and managers of Cone Enterprises (New Zealand) Ltd (in receivership and liquidation), Shake Shed & Co NZ Ltd (in receivership) and Shake Shed & Co Holding Ltd (in receivership).

[2] Since 3 March 2020, a succession of orders has been made excusing the receivers from liability for rent and other payments becoming due under various leases held by the companies at numerous sites throughout New Zealand. The last extension was made by Doogue J on 6 July 2020 and applied until 31 July 2020.1

[3] By application dated 30 July 2020, the receivers applied to vary the orders previously made to extend the period of relief from personal liability from rent and other payments in respect of 15 named properties for the period 31 July 2020 to 11 September 2020.

[4] At the duty list call on 3 August 2020, I made the orders requested in the application and said I would issue my reasons subsequently.

Relevant background

[5] The background to this matter is set out at [1]-[4] and [7]-[14] of Mander J’s decision of 5 June 2020.2 For present purposes it is enough to recall that the three companies in receivership are lessees of various retail premises. Through informal intercompany arrangements or licences to occupy, franchisees of Shake Shed fast food outlets have rights to occupy these premises.

[6] The Covid-19 emergency had a major effect on the franchise stores, the leased premises and the receivers’ ability to deal with issues arising from the receiverships. The ability of the various lessees and licensees of these premises to meet their rental obligations and the willingness and ability of their landlords to forego or abate rent have been uncertain, and the receivers have faced difficulties in obtaining information

1 Gower v Grace [2020] NZHC 1605.
2 Gower v Grace [2020] NZHC 1239.

about the business operations of the companies in receivership. As a consequence, the receivers have faced the possibility of being held personally liable for rent in accordance with s 32(5) of the…

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 Gower

Details

AGLC: Gower [2020] NZHC 1948
Case: [2020] NZHC 1948
Decision Date: 5 August 2020

CaseChat Overview and Summary

Colin Gower and Andrew Grace, as receivers and managers of Cone Enterprises (New Zealand) Ltd, Shake Shed & Co NZ Ltd, and Shake Shed & Co Holding Ltd, sought an extension of their relief from personal liability for rent and other payments due under various leases. The companies in receivership were lessees of retail premises, which were occupied by franchisees of the Shake Shed fast food outlets. Due to the impact of the Covid-19 emergency, the receivers faced difficulties in obtaining information about the businesses and potential liability for rent. The receivers had been negotiating with an overseas party to purchase the Shake Shed franchise business, and they had entered into a Heads of Agreement subject to due diligence and completion. The receivers sought an extension of their relief from personal liability until 11 September 2020 to enable the completion of the purchase.

The court considered whether the receivers had made responsible and efficient progress towards resolving the issues around the companies in receivership and whether it was appropriate to excuse them from personal liability for rent and other payments. The receivers had communicated with the landlords, and while not all landlords had responded, the court was satisfied that the receivers had made efforts to engage with them. The court concluded that it was appropriate to excuse the receivers from personal liability for the period of due diligence and completion of the purchase.

The court granted the application and made orders excusing the receivers from liability for rent and other payments for the specified properties from 31 July 2020 to 11 September 2020 or such further period as the Court directed. The court also ordered that a copy of the decision be served on all potentially affected parties within 14 days of the order and reserved leave to the applicants and any other party affected by the orders to apply to vary the orders as made.

Orders