Harrington v Te Mania Livestock Ltd
[2016] NZHC 785
•22 April 2016
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2015-409-000777 [2016] NZHC 785
UNDER the Companies Act 1993 IN THE MATTER
of an application for putting a company into liquidation by the Court
BETWEEN
JONATHAN OWEN HARRINGTON Plaintiff
AND
TE MANIA LIVESTOCK LIMITED Defendant
Hearing: 19 April 2016 Appearances:
I G Hunt for Plaintiff, as Respondent
P J Dale for Defendant, as Applicant
R J Hopkins for W H Holdings Limited, a creditor in supportJudgment:
22 April 2016
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
Introduction
[1] This is one of two proceedings in which issues arising from the governance of Te Mania Livestock Limited (TML) are raised in this court. In this case Mr Harrington, a shareholder and director of TML, applies for an order placing TML into liquidation under s 241(4) of the Companies Act 1993 on the ground that TML is unable to pay its debts. The second proceeding is CIV-2014-409-000899 Wilding and Te Mania Properties Limited v Te Mania Livestock Limited and Others. I refer to this as the 899 proceeding.
[2] Mr Harrington initiated this proceeding by a statement of claim in which he sued as a creditor of TML, and relied on a presumption that TML was unable to pay
its debt to him as it had not complied with a notice issued under s 289 of the
HARRINGTON v TE MANIA LIVESTOCK LTD [2016] NZHC 785 [22 April 2016]
Companies Act. He now claims as a shareholder of TML rather than a creditor, and in addition to relying on the presumption of insolvency also pleads that TML is unable to pay its debts on the basis of other facts presented in affidavits in support. This change came about because the sum in which TML was indebted to Mr Harrington was paid to him six days after the proceeding was filed and served. At that point he ceased to be a creditor of TML but nonetheless elected to continue with this proceeding.
[3] The directors of TML decided not to defend Mr Harrington’s application for liquidation. One director, and the holder of the largest parcel of shares in TML, Mr T Wilding, applies for leave to file a defence. He also seeks an order restraining publication of Mr Harrington’s application for liquidation and staying it until the
second proceeding to which I have referred is heard and determined by the Court.1
He seeks consolidation of the two proceedings. Mr Harrington opposes all these orders being made, and is supported by W H Holdings Limited which is another shareholder in TML and has filed a notice of intention to appear in support of Mr Harrington.
[4] As this is an application for a stay of this liquidation proceeding, r 31.11 requires the Court to treat it as though it were an application for an interim injunction. Accordingly, it is necessary for the Court to consider first whether there is a serious question to be tried and secondly, if there is, to determine whether an order staying the proceeding should be made, after considering the balance of convenience. These are the established principles on which applications for interim
injunctions are to be considered.2
[5] The central point of contention in this case is whether TML is able to pay its debts. Mr Harrington asserts that it is not, and if he is right a ground on which to liquidate TML will be made out. Mr Wilding asserts it is, and therefore there is no
basis for liquidation. The first issue to be decided on the present application is
1 This is proceeding is Wilding and Te Mania Property Ltd v Te Mania Livestock Ltd and Ors
CIV-2014-409-899. I refer to this as proceeding 899. It has a fixture for three weeks commencing on 20 June 2016.
2 See discussion of these principles in Andrew Beck and others (ed) McGechan on Procedure
(online looseleaf ed, Thomson Reuters) at [HR7.53].
whether Mr Wilding has sufficiently established a serious issue which should proceed to trial.
[6] The second issue arises if the first is decided in favour of Mr Wilding: does the balance of convenience favour restraining the otherwise mandatory advertising of this proceeding, then staying it with a view to it being consolidated with proceeding
899?
[7] I consider the issues thus:
(a) Should Mr Wilding be given leave to file and present a defence to
Mr Harrington’s proceeding?
(b)If so, has Mr Wilding established that there is a serious question to be tried in relation to whether or not TML is able to pay its debts?
(c) If so, does the balance of convenience favour the Court restraining advertising and ordering a stay of the proceeding?
(d) Should this proceeding be consolidated with proceeding CIV-2014-409-
899?
First issue: Should Mr Wilding be given leave to file and present a defence to
Mr Harrington’s proceeding?
[8] Rule 31.16 of the High Court Rules provides for either a defendant company or a creditor or shareholder of the company to file a statement of defence to a proceeding seeking winding-up. No time limit for taking this step is specified in relation to a statement of defence filed by a creditor or shareholder.3 Accordingly, leave is not required by Mr Wilding to file a statement of defence. If leave were required, it would be necessary for Mr Wilding to show an arguable defence.4
[9] This is the same issue as the Court must consider next, though phrased a different way. Mr Hunt submits that leave should not be granted if Mr Wilding does
not discharge what he sees as the onus of showing that TML is solvent. I do not
3 There is a 10 working day time limit imposed on the company by r 31.17.
4 Freshcut Flower Wholesalers Ltd v Living and Giving Gift Co Ltd [2001] 16 PRNZ 173 (HC).
consider the onus is as high as that. It is sufficient in my view if Mr Wilding establishes that there is an arguable case that TML is solvent, to the degree that a serious question to be tried is demonstrated.
[10] The winding-up of a company brings the life of that company to an end and is not a step to be taken unless one of the grounds specified in the Companies Act is sufficiently made out. In this case the evidence shows that the majority of the directors, including the plaintiff, Mr Harrington, decided not to oppose liquidation of the company by the Court, a decision which must reflect a view that it is appropriate that the company be placed into liquidation on the ground pleaded, namely that the company is unable to pay its debts. For the reasons which follow when considering the next issue, though, I have formed the view that it is arguable, indeed strongly arguable, on the information presently before the Court, that this view is wrong and the company is able to pay its debts and that the ground relied on for winding-up the company is not presently able to be made out.
[11] For this reason I have no hesitation in finding that Mr Wilding, as the largest shareholder, should be permitted to put this position before the Court in order to protect his position including the value of his shareholding. It is plain on the evidence that there are significant disagreements between the directors on key issues relating to how the business of the company should be conducted. It is not the function of the Court on this application to determine who is correct and who is incorrect in relation to the decisions that have been taken, some or all of which are called into question, and will be resolved by the Court, on proceeding 899. I am satisfied that if the company itself, under the governance of the majority of its directors, does not seek to assert its solvency and thus defend the liquidation application brought on that ground then the shareholder with the most to lose should have the opportunity to do so.
[12] I am fortified in this view by the asserted fact that Mr Harrington is now employed by a company which operates in opposition to TML. It is also relevant to my conclusion that the 2015 accounts for TML, which were accepted by resolution of the directors on Friday, 15 April, show net assets of $1,221,287, and that Ms S M Adams, an alternate director for Mr Hoong and Mr Win in TML, states in her
affidavit5 that it is presently forecast that although the company will make a trading loss in the current financial year of $258,746, it will make an overall profit of
$26,384, despite making a one-off payment to Mr Wilding in accordance with the ruling of the Employment Relations Authority, in the sum of $191,452.53.
[13] I grant leave to Mr Wilding to defend this proceeding.
Second issue: Has Mr Wilding established that there is a serious question to be tried in relation to whether or not TML is able to pay its debts?
[14] Mr Harrington was formerly employed by TML. TML breeds registered Angus cattle for sale and sells Angus genetics nationwide. It does not own any land but currently operates on four properties. From February 1999 Mr Harrington was its farm manager, and he bought shares in TML in 2004. He resigned in October
2014 and claimed from TML statutory entitlements under the Holidays Act 2003 for which he maintained he was unpaid. This claim was brought in the Employment Relations Authority (ERA) but was settled before it was due to be heard, with a consent order being made by the ERA for payment to Mr Harrington of $186,795.15 plus interest from June 2015 until the date of payment. On 18 September 2015 the Board of TML unanimously resolved to pay Mr Harrington the sum owing to him in accordance with the ERA determination. It also resolved, with Mr Wilding dissenting, that Mr Wilding should repay to TML his current account which was in a sum sufficient to enable TML to meet its liability in accordance with the ERA order.
[15] On 24 September 2015 Mr Harrington demanded payment of the sum owing to him under the ERA determination. On 5 October TML’s banker, Heartland Bank, advised TML it could not meet the demand as it had insufficient funds to do so. By that point Mr Wilding had not repaid his current account debt.
[16] On 20 October 2015 Mr Harrington served on TML a notice under s 289 of the Companies Act. On 2 November TML wrote to Mr Wilding requiring him to repay his current account debt which, at that point, was $310,300. On 16 November
Mr Wilding paid that sum to TML as required. TML did not, however, pay
5 Sworn on 18 April 2016 and filed and served with leave the day before the hearing of this application.
Mr Harrington immediately. A meeting of the Board of Directors was called for
20 November 2015, but then adjourned to 25 November 2015 with a view to authorising payment to Mr Harrington. At the meeting, however, Mr Wilding proposed that TML should negotiate with Mr Harrington for a staged payment of the sum owing to him. The following day another director, Mr Hoong, made a similar proposal. On 27 November 2015, the demand under s 289 not having been met, and
11 days after Mr Wilding put TML in funds to pay the debt, Mr Harrington issued this proceeding. Three days later on 30 November 2015, after the acting chair of TML had discussed with Mr Harrington the prospect of payment of the debt by instalments, a proposal which Mr Harrington rejected, the Board voted unanimously to pay the sum owing to Mr Harrington immediately. Payment was made on
2 December 2015, which was six days after the proceeding had been filed.
[17] Because TML did not comply with the terms of the demand under s 289 within the time stated in the demand, TML was presumed to be unable to pay its debts at the expiration of that time.6 As noted earlier, when Mr Harrington first issued this proceeding he claimed as a creditor to whom the sum in the demand was owing, with the intention of relying on the presumption that the company was unable to pay its debts as a ground to liquidate the company. Mr Hunt, on behalf of Mr Harrington, maintains that this presumption still stands, even though the debt was paid in full shortly after the proceeding was issued. He points out, quite correctly,
that payment of a debt demanded in a notice under s 289 after the notice has expired does not, of itself, necessarily rebut the presumption of inability to pay debts.7
[18] Payment of the amount claimed in the notice is, however, evidence to be taken into account in determining whether the presumption has been rebutted. Whilst the presumption arises on the day on which time for compliance with a notice expires, payment within a matter of days of the full sum claimed may demonstrate, in the circumstances of a particular case, that the company is in fact able to pay its debts. In the present case I am satisfied that in this case it is strongly arguable that
the payment did rebut the presumption, for the following reason.
6 Companies Act 1993, s 287.
7 Commissioner of Inland Revenue v The Fish & Chip Shop Co Ltd (2009) 19 PRNZ 757 (HC); Magic Carpet Rides Ltd v ACS2006 Ltd HC Auckland CIV-2009-404-2130, 5 August 2009 (HC), per Associate Judge Doogue.
[19] It is established law that a temporary lack of liquidity may not equate to insolvency if the debtor is able to realise assets or borrow funds within a relatively short timeframe in order to meet its liabilities as they fall due. After stating this principle, the Court of Appeal in Yan v Mainzeal Property & Construction Ltd (In Receivership & Liquidation) cited the following passage from Barwick CJ in the
High Court of Australia in Sandell v Porter:8
… the debtor’s own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realisation by sale or by mortgage or pledge of his assets within a relatively short time – relative to the nature and amount of the debts and to the circumstances, including the nature of the business of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor’s inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency.
[20] At the time the demand was made TML had an asset of over $300,000 in the form of an on-demand debt owing by Mr Wilding. Its temporary lack of liquidity, indicated by the response of Heartland in relation to the demand for payment by Mr Harrington, was able to be addressed by using this resource. TML took the simple course of calling in the debt owing by Mr Wilding, with a view to then paying its debt to Mr Harrington. These steps took place at about the same time or shortly after the presumption of inability to pay its debts arose. At the time that presumption arose, however, TML was well able to pay its debt to Mr Harrington by the simple expedient of calling in the greater sum it was owed by Mr Wilding. That is exactly what it did, thereby following precisely the course referred to by Barwick CJ and
endorsed by the Court of Appeal in Yan.9 I find without hesitation that this rebutted
the presumption of insolvency which had arisen on the expiration of the notice, because the debt owing by Mr Wilding was able to be called on at that time. In short, TML was well able to pay its debt when the notice expired. I find, therefore, that it is strongly arguable that the presumption of inability to pay its debts has been
rebutted.
8 Yan v Mainzeal Property & Construction Ltd (in receivership & in liquidation) [2014] NZCA
190 at [59], citing Sandell v Porter (1966) 115 CLR666 at 670.
9 At [59]..
[21] Notwithstanding the fact that this conclusion would have been open to Mr Harrington on sufficient analysis at the time that payment was made to him, he elected to press on with this proceeding. Faced with the fact that once paid he was no longer a creditor he filed an amended statement of claim as a shareholder in order to continue to assert that TML is unable to pay its debts. I turn first to the evidence which he put forward initially in response to Mr Wilding’s application to restrain advertising and stay this proceeding.
[22] In his affidavit Mr Harrington asserts that TML is insolvent. Part of his evidence is directed at what he sees as the overall financial position of TML by reference, amongst other matters, to its reduced assets in the form of stock, and its debt level. I need not consider these figures as they do not assist with the resolution of the issue under discussion.
[23] Mr Harrington goes on to assert difficulties he sees TML will face in achieving income this financial year in accordance with its budget. He regards the budgeted receipt from bull sales to be optimistic when compared with actual results achieved in the previous two years. He questions the budgeted receipts from sale of paddock bulls, he notes that at least three income-producing initiatives out of four which made their way into this year’s budget have fallen away. He says that as a result losses are predicted to be some $20,000 this year, but if his view of the projected receipts from bull sales is correct, a net loss of $135,000 may be incurred. An increase in expenditure on fertiliser over the budgeted sum may raise the loss to around $150,000 for the full year.
[24] Mr Harrington’s affidavit was sworn on 10 March. At that point TML’s overdraft was $568,182.48 and Mr Harrington says there were accounts to be paid amounting to $59,462.86 which, if paid, would lead to an overdrawn current account of $627,645.34. TML has an overdraft limit of $600,000. On this basis it is surmised that within a short time TML would be unable to pay its debts.
[25] On 22 March Mr Wilding swore an affidavit in reply in which he noted that at that date the overdraft was $501,000 and there were invoices payable in March of
$70,000, payment of which could be made within the overdraft limit of $600,000.
He also noted that there was further budgeted income in excess of $100,000 expected in the following month for cull cattle sales and that the company had the prospect of a receipt of $200,000 if the directors agreed to sign a contract known as GO Beef, in respect of which there would be an upfront payment. In the 12 days between these affidavits the overdraft had fallen, not risen, and no explanation is given for this.
[26] The creditor in support filed an affidavit from Ms Adams (an alternate director of TML for Mr Hoong) dated 18 April. It has more up-to-date financial information than either the affidavit of Mr Harrington or the affidavit in reply of Mr Wilding. When she swore her affidavit the overdraft stood at $507,780. Payments of $94,378.57 were approved on 15 April and other expenses amounting to
$30,257.41 are due to be paid shortly. An additional $31,636.31 is due to be paid before the end of April. If all of these were paid immediately, an overdraft of
$664,053.25 would be required by the end of April. This exceeds the current limit of
$600,000 so unless the overdraft limit is extended, or funds are received from another source, these payments cannot all be made.
[27] There is no mention by Ms Adams of the receipt of $100,000 from cull cattle sales. I do not know, therefore, whether it was received by TML between the time Mr Wilding swore his affidavit, and the date Ms Adams swore hers. For present purposes I think it preferable to assume that no further payment will be received by the company in relation to cull cattle during the period in which the invoices described by Ms Adams are due to be paid. I accept, therefore, that within a reasonably short period there is a prospect that all current invoices will not be able to be paid from the banking facility presently in place.
[28] However, in my opinion that does not establish that TML is unable to pay its debts, when one applies the principle enunciated in Yan and Sandell v Porter. Heartland has approved an extension of TML’s overdraft from $600,000 to
$800,000. If TML resolves to increase its overdraft as approved it will have ample to meet its current debts as they fall due. As with the current account indebtedness of Mr Wilding which was utilised to pay Mr Harrington, so also this facility is
available for the company to pay its debts and must, therefore, be taken into account in considering whether TML is unable to pay its debts.
[29] The Board has not presently resolved to extend the overdraft. Mr Harrington, Mr Hoong and Ms Adams, as alternate director for Mr Wong, have refused to do so. Both Mr Harrington and Ms Adams give reasons which come down to an unwillingness to have TML increase its borrowing due to its overall financial position and, in particular, its present financial performance. Mr Wilding, on the other hand, supports an increase in the overdraft, maintaining that budgeted receipts from the June bull sales will be received and are indeed on the low side. This will clear the overdraft as in former years.
[30] The question of whether or not the overdraft should be extended displays the divergences of views between the directors on how TML should be operated, which have not only led to this proceeding but also proceeding 899 and which will be considered by this Court when proceeding 899 is tried in two months’ time. On the application now before me I need not decide which group of directors is right on this issue. It may be that the correct answer is that the overdraft should not be extended, which would result in the creditors who are due for payment now or in the next few weeks having to wait until June to be paid from proceeds of the bull sales. Equally, it may be a more prudent course to increase the overdraft and pay them now. The point that is not explained in evidence is the flaw in the proposition that increasing the overdraft will increase TML’s debt. Increasing the overdraft does not increase the company’s debt. It simply replaces the debts to the trade creditors with a debt to Heartland, which Heartland has already approved.
[31] The issue comes down to whether TML’s trade creditors or TML’s banker carries the estimated additional debt of some $60,000 until the bull proceeds are received. Thus, TML is in fact able to pay all its creditors now if it elects to accept the overdraft or within two months if it elects not to. For a company which receives the majority of its annual income from bull sales held once a year in June, a comparatively brief delay in paying trade creditors in the latter part of the year running up to those sales is not as dire a reflection on its liquidity as it might appear. This is particularly so in a financial year when TML has had to endure prolonged
drought conditions, and to meet an unbudgeted debt of $191,452.53 to Mr Harrington, who now asserts the company’s insolvency. Although he was not under any obligation to do so, Mr Harrington was in a position late last year to assist with the liquidity of the company by agreeing to accept payments of his entitlement by instalments at agreed future dates. If he had agreed to defer about one-third of his entitlement into a period beyond the June 2016 bull sales, it appears this would have assisted TML’s liquidity in the period running up to receipt of a major part of its annual income.
[32] Mr Hunt referred to Mr Wilding’s suggestion that Mr Harrington agree to staged payments as support for his contention that Mr Wilding was aware, from late last year, that the company was, or would be, unable to pay its debts. I do not see this as a reason to criticise Mr Wilding. It is the duty of every director, including both Mr Wilding and Mr Harrington, to foresee the cashflow needs of a company, particularly when the business receipts of that company are not received regularly throughout a trading year. In the end, though, it is not necessary to reach a conclusion on which of these directors was correct in his view. The question of TML’s current ability to pay its debts is squarely met by the availability of an overdraft increase more than sufficient to meet those debts.
[33] In addition to the evidence to which I have referred, there is before the Court an affidavit from Mr J C Hagen, a chartered accountant who gives expert evidence on behalf of Mr Wilding. Mr Hagen says that the cashflow forecast for the company shows a need for the overdraft to be increased from $600,000 to $800,000 for the period April to July 2016, as it will peak at $761,023 at the end of June 2016. Mr Hagen concludes:
I am aware that there are allegations that the company is insolvent but it appears to me that that is not the case and particularly as an extension of the overdraft limit to $800,000 that Heartland Bank is prepared to provide, would overcome the problems alleged by Mr Harrington with regard to cashflow. As noted above an overdraft of $761,000 was envisaged in the cashflow budget that the directors have approved. I note also that Mr Harrington’s affidavit of 10 March 2016 notes that the overdraft was
$568,182 as of that date and this can be compared with the budgeted level of
$587,942 at the end of March.
[34] Earlier in this judgment I have found it arguable that in the circumstances of this case the payment of the debt demanded by Mr Harrington had rebutted the presumption of insolvency which had arisen when TML failed to meet his demand under s 289. Even if that conclusion is wrong, that payment is a factor to be taken into account with all the other relevant evidence presented to the Court in relation to solvency. I am satisfied that TML has the ability to pay its debts now and for the balance of the period through to receipt of income from the June bull sales. It paid a very significant expense to Mr Harrington by the simple expedient of calling up for payment an asset to which it was entitled. There is no evidence that it has failed to pay any creditor in the subsequent period (or for that matter, at any time). The evidence establishes that TML will be able to pay all its creditors if it accepts an extended overdraft which is available from Heartland. If the directors choose not to avail themselves of that facility, it is that decision which may put it in a position of having to defer payments to creditors for a comparatively brief period, as I have discussed. Even then, the majority of current creditors will be able to be paid in the period between now and receipt of bull sale proceeds.
[35] For these reasons I find it is strongly arguable that TML can pay its debts. Thus there is a serious question to be tried in relation to the insolvency of TML alleged in Mr Harrington’s statement of claim.
Third issue: Does the balance of convenience favour the Court restraining advertising and ordering a stay of the proceeding?
[36] The advertising of an application to the Court to wind up a company has the consequence of notifying the commercial community at large that the company has a financial difficulty which has led to a winding-up proceeding being issued. In my opinion this has the potential to severely adversely affect the financial position of TML, not only in relation to its trading, but also in relation to the value of its assets. TML is entering a critical period in relation to both, as the bull sales from which it receives a large part of its income are just a matter of weeks away. Creating uncertainty or doubt in the commercial community about the financial viability of TML at this time, in particular, is highly undesirable in the interests of the company. Indeed, it is surprising that the majority of the directors who have decided not to oppose this proceeding, and who thus seem content to have this application
advertised, do not see this as being contrary to the interests of the company. In the case of Mr Harrington his employment by a competitor may be a factor which drives him not only in bringing this proceeding, when it is manifestly arguable that the company is solvent and able to pay its debts, but also in wishing to advertise his view of the solvency of the company debts to the community with which it trades.
[37] The only factor to balance against these points is the delay to Mr Harrington of just under two months in having this claim decided. As TML is, in my view, solvent, trading, and reaching the crucial selling period in its annual cycle of business, the factors favouring the granting of a stay well outweigh any disadvantage to Mr Harrington.
[38] I find the balance of convenience favours ordering a stay. For the reasons canvassed, I also find that the overall justice of the case leads to the same result.
[39] The result of the decisions I have made on this application is that the proceeding will be adjourned to be heard at the fixture for the 899 proceeding in June. All relevant issues on which the directors presently disagree will be aired then. In that proceeding Mr Wilding and his company, Te Mania Properties Limited, make substantial claims against TML and against W H Holdings. If findings of fact on any of those issues are relevant to the present proceeding they will be taken into account by the trial Judge when considering this proceeding.
[40] For my part, however, I see the issues raised on this proceeding as more narrow, by far, than those raised in the 899 proceeding. Either TML is able to pay its debts, in which case this proceeding should be dismissed, or it is not, in which case liquidation may be the appropriate result. Apart from an examination of whether TML is able to pay its debts at the time of the June hearing, the only broader issue of relevance may be whether the majority of the directors are correct in their decision not to avail themselves of the Heartland overdraft but for the reason I have given, even this may not be relevant. Other issues raised in the affidavits on this application, and canvassed by counsel, relating to other steps which TML should or should not have taken, do not appear to me to bear on the single issue of ability to pay debts, which will govern the outcome of this proceeding.
Fourth issue: Should this proceeding be consolidated with proceeding CIV-
2014-409-899?
[41] In the course of argument counsel accepted that the initial request for consolidation with proceeding 899 was inappropriate, and suggested that the correct order, were a stay to be granted, would be to direct that this proceeding be heard at the same time as proceeding 899, with the evidence on each read on the other.
[42] I agree with that course, given the indication by Mr Dale that this is how Mr Wilding would like to proceed. I add, however, that had the evidence presented to me on this application for a stay been presented at a hearing of a defended application to wind up, I would have dismissed the proceeding on the basis that the company is not shown to be insolvent. However, I was not asked to take that step.
The shareholders’ agreement
[43] On 28 January 2005 the shareholders of TML entered a shareholders’
agreement. Clause 9.1 provides, to the extent raised in this proceeding:
9.1 Notwithstanding the constitution, decisions on the following matters shall require shareholders holding at least 75 per cent of the voting shares on issue in the company to approve the action:
(a) ... (b) ... (c) ...
(d) The liquidation of the company. (e) ...
(f) ... (g) ...
[44] Counsel devoted argument to whether this term of the agreement prevents
Mr Harrington from bringing this proceeding to wind up TML.
[45] In view of my decision to stay the proceeding for the reasons given it is not necessary to reach a conclusion on this point, and given that this case is to be
adjourned for a fixture, and therefore further argument, along with the 899 proceeding, it is preferable that I do not reach a conclusion or express a view on this point.
Outcome
(1) Leave is granted to Mr Wilding to defend this proceeding.
(2)Mr Harrington is restrained from advertising this proceeding until further order of the Court.
(3) The proceeding is stayed until further order of the Court.
(4)The proceeding is adjourned to the commencement of the fixture before this Court on proceeding 899 currently scheduled to be
20 June 2016.
[46] Costs are reserved. If counsel are unable to agree, memoranda may be filed within five working days, and reply memoranda may be filed within a further five
working days. All memoranda are limited to no more than three pages in length.
J G Matthews
Associate Judge
Solicitors:
Lane Neave, Christchurch
Young Hunter, Christchurch
Ewart & Ewart, Auckland
cc: Counsel PJ Dale, Chancery Street Chambers, Auckland
3