Grant v Lotus Gardens Limited - [2014] NZCA 498

IN THE COURT OF APPEAL OF NEW ZEALAND

CA230/2014
[2014] NZCA 498

BETWEEN	DAMIEN GRANT AND STEVEN KHOV Appellants
AND	LOTUS GARDENS LIMITED First Respondent
AND	ALAN CANAVAN Second Respondent

Hearing:	6 October 2014
Court:	Harrison, Wild and Goddard JJ
Counsel:	B J Norling and J K Boparoy for Appellants No appearance for First Respondent S I Perese for Second Respondent
Judgment:	9 October 2014 at 11.30 am

JUDGMENT OF THE COURT

AThe application for an extension of time to cross-appeal is dismissed.
BThe second respondent is to pay the appellants’ costs for a standard application on a band A basis with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Wild J)

By application filed on 14 July 2014 Mr Canavan seeks an extension of time to cross-appeal against a judgment of Associate Judge Bell delivered in the High Court at Whangarei on 16 April 2014.[1] The application, which is about eight weeks out of time, is opposed by the appellants.
[1]Grant v Lotus Gardens Ltd [2014] NZHC 829.
Pertinent points in the complicated and lengthy procedural background to this application can be summarised as follows:
(a)Mr Canavan was a shareholder and director of Lotus Gardens Ltd (Lotus) and Quantum Grow Ltd (Quantum). Quantum was put into liquidation on 20 March 2012. The appellants, Messrs Grant and Khov, are liquidators of Quantum.
(b)Prior to its liquidation, Quantum transferred $113,280.63 to Lotus, $25,576.88 of that amount within the two year voidable preference period specified by s 292 of the Companies Act 1993.
(c)The appellants took steps to recover the $25,576.88, ultimately applying to put Lotus into liquidation. In a judgment he delivered on 17 May 2013, Associate Judge Bell dismissed the appellants’ application, taking the view that:[2]
·     the liquidators had adopted the wrong procedure; and
·     Lotus anyway had a tenable defence to the liquidators’ claim, that Lotus was a conduit (between Quantum and the two companies’ bank) rather than the beneficial recipient of the $25,576.88.
(d)The appellants appealed successfully to this Court. In a judgment it delivered on 4 April 2014, this Court held:[3]
·     the liquidators had used a procedure which was open to them; and
·     Lotus had no arguable defence to the liquidators’ claim and therefore the statutory demand should not be set aside.
This Court made an order putting Lotus into liquidation.
(e)After the parties had filed memorandums, and after issuing a first minute, on 15 April this Court issued a second minute recalling and reissuing its judgment. The Court revoked the order it had made liquidating Lotus and remitted the matter back to the High Court “to make such orders as to the appointment of a liquidator and any other orders as are considered appropriate”.
(f)In a further judgment – the one against which Mr Canavan seeks to cross-appeal – delivered on 16 April, Associate Judge Bell observed “[i]t is clear from the decision of the Court of Appeal that a liquidation order should be made”.[4] He made an order putting…

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: [2014] NZCA 498
Decision Date: 9 October 2014 at 11.30 am

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, Damien Grant and Steven Khov, liquidators of Quantum Grow Ltd, appealed against a decision of the High Court that dismissed their application to put Lotus Gardens Limited into liquidation. Alan Canavan, a shareholder and director of both Lotus Gardens Limited and Quantum Grow Ltd, sought an extension of time to cross-appeal against the High Court's decision. The primary legal issue was whether Mr Canavan could cross-appeal against the High Court's decision, despite lacking standing to appeal the Court of Appeal's prior decision. The Court of Appeal held that Mr Canavan could not cross-appeal due to issue estoppel and the fact that the Supreme Court had previously dismissed his application for leave to appeal the Court of Appeal's decision.

The Court of Appeal held that the Supreme Court's dismissal of Mr Canavan's application for leave to appeal the Court of Appeal's decision created an issue estoppel, preventing him from challenging the same issues through a cross-appeal. Additionally, the Court of Appeal determined that Mr Canavan's failure to oppose the liquidators' demand and his last-minute application for Lotus Gardens Limited to file a statement of defence demonstrated a lack of diligence, which further supported the dismissal of his application for an extension of time to cross-appeal.

The Court of Appeal dismissed Mr Canavan's application for an extension of time to cross-appeal and ordered him to pay the appellants' costs for a standard application on a band A basis with usual disbursements.

Orders