Grant v Peoples - [2016] NZHC 2611

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2016-419-207 [2016] NZHC 2611

BETWEEN
DAMIEN GRANT AND STEVEN KHOV

AS LIQUIDATORS OF SILVERSPUR DEVELOPMENTS LIMITED (IN LIQUIDATION)

Applicant

AND

PATRICK EDWARD PEOPLES First Respondent

ANTHONY CHARLES HARRIS Second Respondent

ANDREW SHAW Third Respondent

Hearing: 7 October 2016

Appearances:

Ms A Cherkashina for Applicants
Mr S Chatwin for Respondents

Judgment:

1 November 2016

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on
01.11.16 at 3.30 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

GRANT AND ANOR as LIQUIDATORS OF SILVERSPUR DEVELOPMENTS LIMITED (IN LIQUIDATION) v PEOPLES & ORS [2016] NZHC 2611 [1 November 2016]

[1] The applicants are the liquidators of Silverspur Developments Limited (“the company”) which was placed in liquidation on 4 April 2016. They have applied to the court seeking orders under s 266 of the Companies Act 1993 (“Act”). Specifically, the liquidators seek orders that the respondents comply with notices issued pursuant to s 261 of the Act, requiring the respondents to attend an examination under oath or affirmation. The respondents oppose the orders sought.

Background

[2] Between June 2014 and December 2015 the company owned a property (“the property”) at 24 Wayside Road, Te Kauwhata. From 24 June 2014, the property was subject to a first registered mortgage in favour of the Baker Trust (“trust”). The mortgage provided security for a loan of $2.1 million by the trust to the company.

[3] Unfortunately, the company fell into default under the mortgage and on 27

February 2015, the trust served a notice on the company pursuant to s 119 of the Property Law Act 2007. Thereafter, the company not having satisfied the default notice, the trust elected to initiate mortgagee sale proceedings. The property was placed in the hands of a real estate firm, Bayleys, to conduct the marketing campaign. On 11 December 2015 the property was sold for the price of $4.35 million.

[4] The liquidators’ interest in the three respondents arises from the respondents’ connections to the trust and to the mortgagee sale process. The first respondent, Mr Peoples, is a trustee of the trust. The second respondent, Mr Harris, is the director of a trustee company, ATL. The third respondent was the real estate agent who was involved, on the instruction of the trustees, in the sale of the property at mortgagee sale.

[5] Some additional details concerning the events leading up to the sale of the property are required to explain the discussion that follows later in this judgment.

The first tender

[6] The property was first listed with Bayleys on 2 April 2015. The firm had submitted a marketing proposal for the property which stated an expectation of achievable sale being in the vicinity of $1.6 million to $2.5 million.

[7] The program that was agreed was that the property would be marketed for approximately one month. The total amount of the budget for media exposure of the property was $6269.80. 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 Grant v Peoples

Details

AGLC: Grant v Peoples [2016] NZHC 2611
Case: [2016] NZHC 2611
Decision Date: 1 November 2016

CaseChat Overview and Summary

The liquidators of Silverspur Developments Limited have applied to the court for orders that the respondents comply with notices issued pursuant to s 261 of the Companies Act 1993, requiring the respondents to attend an examination under oath or affirmation. The respondents oppose the orders sought. The liquidators’ interest in the three respondents arises from the respondents’ connections to the trust and to the mortgagee sale process. The first respondent is a trustee of the trust. The second respondent is the director of a trustee company. The third respondent was the real estate agent who was involved in the sale of the property at mortgagee sale. The liquidators submitted that the respondents failed to take all reasonable steps to obtain the best possible price for the subject property at mortgagee sale and that there was evidence to suggest that the respondents may have attempted to acquire the property for themselves at undervalue. The court considered that the liquidators had sufficient information available to them to determine whether it was appropriate to issue proceedings such that an examination of the respondents would not be a genuinely investigative step. The proposed subject matter can arguably be characterised as being the affairs of the mortgagees, rather than the affairs of the company and therefore fall outside the jurisdiction of the liquidators’ examination process. The court concluded that the discretion ought not to be exercised in favour of directing an examination. The application for orders pursuant to s 266 was dismissed. The liquidators were ordered to pay the costs of the respondents.

Orders