Green v Glenhaven Farm Limited - [2021] NZHC 1307

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-978

[2021] NZHC 1307

UNDER the Companies Act 1993, s 241(2)(c)(ii)

IN THE MATTER OF

an application for putting a company into liquidation

BETWEEN

ALISON CHRISTINA GREEN

First Plaintiff

CATHERINE MAREE KRYBOLDER
Second Plaintiff

AND

GLENHAVEN FARM LIMITED

Defendant

On the papers: 3 June 2021

Appearances:

Alexandra Low for the Plaintiffs

Judgment:

4 June 2021

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 4 June 2021 at 12 noon
pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:
Miller Poulgrain (Graeme Beagley), Thames, for the Plaintiffs

Copy for:
Alexandra Low, Barrister, Lynfield, Auckland, for the Plaintiffs

GREEN v GLENHAVEN FARM LIMITED [2021] NZHC 1307 [4 June 2021]

[1] The plaintiffs apply for Glenhaven Farm Ltd to be put into liquidation on the just and equitable ground. They have applied without notice for an interim liquidator to be appointed under s 246 of the Companies Act 1993.

[2] Glenhaven Farm Ltd owns and has owned and operated farms at Maramarua. The company was established by Edgar Smith and his wife, Kathleen. The plaintiffs are their daughters. They also have a son, Alan. Edgar Smith died in 2015. Kathleen is still alive but the plaintiffs say that she does not have capacity as she has Alzheimers.

[3] There are 100 A voting shares, 4,900 B shares without voting rights. Kathleen holds the A shares. Half the B shares are owned by the trustees of the EJ Smith Family Trust (Edgar’s trust), and the other half are owned by the trustees of the KF Smith Family Trust (Kathleen’s trust). The three children are the trustees of Kathleen’s trust and the trustees of Edgar’s trust.

[4] The directors of Glenhaven Farm Ltd are Alison Green (the first plaintiff), her brother Alan, and Mr David Hurle. Alison Green lives at Mangatangi. Her sister, Catherine Krybolder, lives in Australia but is a farmer.

[5] The sisters say that over time their brother Alan has assumed effective control of the company. It has entered into transactions with him, his trusts and companies associated with him, which are to his advantage and to the disadvantage of the company. The sisters have been starved of information, even after Alison was appointed a director in 2019. While their mother was a director of the company, she lacked capacity. The sisters allege asset-stripping by Alan.

[6] In December 2009, the company gave Alan’s trust an option to buy the home farm, the property at 610 Monument Road, Maramarua. The present proceeding has been triggered by steps Alan to exercise that option. The sisters seek the appointment of an interim liquidator to stop the sale of the home farm going ahead.

Procedural matters

Parties

[7] As a director of the company, Alison Green has standing to apply for a liquidation order.1 It is not so clear that Catherine also has standing. She is…

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: [2021] NZHC 1307
Decision Date: 4 June 2021

CaseChat Overview and Summary

In Green v Glenhaven Farm Limited, Alison Christina Green and Catherine Maree Krybolder, the daughters of the deceased Edgar Smith and his wife Kathleen, sought an interim liquidation of Glenhaven Farm Ltd, alleging oppression and asset-stripping by their brother, Alan. The plaintiffs claimed that Alan had assumed control of the company and engaged in transactions that disadvantaged the company while benefiting him personally. They sought to halt the sale of the home farm, which was triggered by Alan exercising an option to purchase the property.

The legal issues before the court included whether the plaintiffs had standing to bring the application, whether the proceeding was filed in the correct registry, and whether the appointment of an interim liquidator was necessary and appropriate given the circumstances. The court noted that while Alison Green, as a director, had standing, it was less clear that Catherine Krybolder did. Additionally, the application was filed in the wrong registry, necessitating a transfer to the Hamilton registry. The court was also concerned that the appointment of an interim liquidator might be a blunt instrument and could result in irreparable damage if the application ultimately failed.

The court decided not to grant the application without notice, as it was wary of acting without considering potential arguments from the other side. The court believed that alternative remedies, such as an interim injunction, might be sufficient to preserve the status quo while the case was decided. The application was directed to be brought on notice, and the file was transferred to the Hamilton registry for further proceedings. The court also emphasized the importance of ensuring that Alan and his professional advisers did not proceed with the sale while the matter was pending.

Orders