Gower v FTG Securities Limited - [2019] NZHC 1610

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000229

[2019] NZHC 1610

BETWEEN C A L GOWER and S J TUBBS as receivers of TUAM VENTURES LIMITED
Applicants

AND

FTG SECURITIES LIMITED

First Respondent

R B WALKER as Liquidator of TUAM VENTURES LIMITED

Second Respondent

Hearing: 13 March 2019

Appearances:

A J Forbes QC for FTG Securities Limited

K C Francis for R B Walker as Liquidator of Tuam Ventures Limited

Judgment:

10 July 2018

JUDGMENT OF GENDALL J

[1] This is an application by FTG Securities Ltd (FTG) to strike out the Notice of Appearance for Ancillary Purposes dated 30 April 2018 of Mr Robert Walker (Mr Walker) the liquidator of Tuam Ventures Limited (TVL) filed in the present proceeding. In the alternative, FTG seeks security for costs on the liquidator’s Notice of Appearance.

Background

[2] The present and related proceedings are somewhat complex and protracted. It is not necessary here to set out all the issues in detail. But essentially, the

C A L GOWER and Anor v FTG SECURITIES LIMITED [2019] NZHC 1610 [10 July 2018]

substantive claim is about who is entitled to the surplus in the current receivership or liquidation of TVL.

[3] Originally, TVL was managed by David Ian Henderson (Mr Henderson). It owned property in Christchurch’s central city hospitality sector. TVL financed this property itself with mortgage loans from Canterbury Finance Ltd (CFL) and Bank of New Zealand (BNZ). In 2008, A Deed of Subordination and Priority (the Priority Deed) was entered into between CFL and BNZ. That Priority deed gave BNZ priority over CFL in respect of securities held over TVL, up to a value of $7.5 million.

[4] In 2009, TVL was placed into receivership. At the time it was in default in its payments to BNZ, which sought to exercise its power of sale over TVL’s property as Mortgagee. The Christchurch Earthquake Sequence however interrupted that mortgagee sale. This gave rise to a protracted dispute between a range of parties including the insurers and receivers as to the entitlement to TVL’s assets and in particular its property, the buildings on which had suffered significant earthquake damage.

[5] In the meantime, in 2011 CFL was acquired by Crown Asset Management (CAML). CAML took over the debt and security interests CFL held in TVL. FTG claims that on 15 June 2015 (while the dispute with TVL’s insurer was ongoing), it acquired from CAML, all its debt and security interests held in TVL, for a price of $100,000.

[6]Eventually there was an insurance pay-out the total amount of which was over

$12 million. Under the Deed of Priority, BNZ as first mortgagee has received $7.5 million of this plus interest. FTG relies on its gained security interests as second charge holder over TVL’s assets to justify a claim it makes to what it says are the remaining assets of TVL. These assets it seems are cash to a value of something between $3.5 million…

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: [2019] NZHC 1610
Decision Date: 10 July 2018

CaseChat Overview and Summary

Gower and Tubbs as receivers of Tuam Ventures Limited (TVL) filed an application seeking directions as to the priorities for distribution of the surplus arising from the receivership of TVL, following the repayment of sums due to Bank of New Zealand. The liquidator of TVL, Mr Robert Walker, filed a Notice of Appearance for Ancillary Purposes, seeking declarations as to the entitlement to the surplus arising from the receivership of TVL. FTG Securities Limited (FTG) applied to strike out the liquidator's Notice of Appearance for Ancillary Purposes and, in the alternative, for security for costs against the liquidator of TVL.

The court held that the claims made by the liquidator in his Notice of Appearance were not ancillary to the receiver's application and that the liquidator's Notice of Appearance was not for ancillary purposes. The claims made by the liquidator in his Notice of Appearance were not incidental to the receiver's application and required proper pleadings. The liquidator's use of the Notice of Appearance was an improper use of the court's processes and an abuse of the court's processes. The court struck out the claims made by the liquidator in his Notice of Appearance, with the exception of the claim that the surplus arising from the receivership of TVL, following the repayment of sums due to BNZ, should be held by the receivers for the benefit of TVL. The court found that the liquidator had a valid interest in appearing in the proceeding to reserve his rights and to be heard on this particular matter. The court dismissed FTG's application for security for costs against the liquidator of TVL.

The court stayed the present proceeding for 10 working days to give the liquidator time to issue new proceedings to outline in detail his claim that the surplus realised by TVL's Receivers is TVL's money and to seek consolidation of the proceedings. The court held that costs should lie where they fall and made no order for costs on the hearing of these matters.

Orders