Grant v CP Asset Management Ltd - [2013] NZCA 452

IN THE COURT OF APPEAL OF NEW ZEALAND

CA67/2013
[2013] NZCA 452

BETWEEN

DAMIEN GRANT AND STEVEN KHOV AS FORMER LIQUIDATORS OF NZ PROPERTIES HOLDING LIMITED (IN LIQUIDATION)
Appellants

AND

CP ASSET MANAGEMENT LIMITED
First Respondent

ASIA PACIFIC HOTEL INVESTMENTS LIMITED
Second Respondent

CP RETAIL HOLDINGS LIMITED
Third Respondent

RAISONS PACIFIC INVESTMENTS LIMITED
Fourth Respondent

SOUTH ISLAND HOTEL INVESTMENTS LIMITED
Fifth Respondents

YEIL C & M LIMITED
Sixth Respondents

BRIAN AND BRIDGIT LAWRENCE
Seventh Respondents

Hearing:	22 August 2013
Court:	Ellen France, Wild and Miller JJ
Counsel:	K P Sullivan and B J Norling for Appellants B P Keene QC and J F Anderson for First to Sixth Respondents G A Keene for Seventh Respondents
Judgment:	30 September 2013 at 11 am

JUDGMENT OF THE COURT

AThe fresh evidence filed is admitted, and the appeal is allowed. The creditors’ resolution of 15 August 2012 is set aside. Messrs Heath and Lamacraft are removed, and the appellants are reinstated, as liquidators of NZ Properties Holding Ltd.
BThe first to sixth respondents must pay each of the appellants and the seventh respondents costs on a standard appeal on a band A basis and usual disbursements. The award for the appellants includes provision for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Miller J)

Introduction

Brian and Bridgit Lawrence, the seventh respondents, won a large judgment against NZ Properties Holding Ltd (“NZ Properties”) and Capital Hospitality Holdings Ltd (“Capital HH”) in proceedings that were ultimately undefended. When the judgment debt was not paid, the High Court put the companies into liquidation on the Lawrences’ application and appointed the appellants, Damien Grant and Steven Khov, as liquidators.
Interests associated with the Pandey family, who controlled NZ Properties, lodged proofs of debt in the liquidation of that company and passed, over the Lawrences’ opposition, a creditors’ resolution which would replace Messrs Grant and Khov with new liquidators, Aaron Heath and Michael Lamacraft.
The High Court declined to set the resolution aside under s 245A of the Companies Act 1993 and exercised its jurisdiction under s 243(7) to replace Messrs Grant and Knov as liquidators of NZ Properties.[1]
[1]Grant & Khov v CP Asset Management Ltd & Ors [2012] NZHC 3488 [High Court judgment].
The Lawrences, the seventh respondents, actively support the appeal. Opposing it are the related creditors which supported the resolution, the first to sixth respondents.

The narrative

NZ Properties was formerly named CP Holdings Limited after its director, Charles Pandey. It was one of a group of companies controlled and managed by Mr Pandey, his wife Jaswanti, and his son Prakash.[2]
[2]Charles and Jaswanti Pandey each held 50 per cent of the shares. There is evidence that Prakash Pandey was closely involved. For our purposes it is not generally necessary to distinguish among the Pandeys.
In 2003 the company leased a Rotorua motel to the Lawrences. Evidence suggests that the Pandeys knew the plumbing was seriously defective but did not tell the Lawrences, who suffered a series of pipe failures and…

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: [2013] NZCA 452
Decision Date: 30 September 2013 at 11 am

CaseChat Overview and Summary

In Grant v CP Asset Management Ltd, the Court of Appeal allowed the appeal of the liquidators of NZ Properties Holding Ltd (NZ Properties) against a decision of the High Court to set aside their appointment and replace them with new liquidators. The Court found that the creditors' resolution to replace the liquidators was contrary to the interests of unsecured creditors, and that the prejudice caused to the Lawrences, the largest unsecured creditor, was unreasonable, given the close relationship of the related creditors who voted for the resolution to the company in liquidation. The Court also found that the High Court had placed too much weight on the views of a majority of unsecured creditors who were related to the company. The appeal was allowed, the resolution was set aside, and the original liquidators were reinstated. The first to sixth respondents, who supported the resolution, were ordered to pay costs of the appeal on a band A basis.

Orders