Hollis v Maugers Rentals (2009) Limited

[2020] NZHC 1137

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-203

[2020] NZHC 1137

UNDER

the Companies Act 1993

IN THE MATTER

of an application by Malcolm Grant Hollis and Wendy Ann Somerville for an order that they not be disqualified from appointment as liquidators of Maugers Rentals

(2009) Limited

BETWEEN

MALCOLM GRANT HOLLIS and WENDY ANN SOMERVILLE

Applicants

AND

MAUGERS RENTALS (2009) LIMITED

Respondent

Hearing:	22 May 2020
Counsel:	M K Crimp for Applicants
Judgment:	27 May 2020

REASONS FOR ORDERS OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 27 May 2020 at 2.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 27 May 2020

HOLLIS & SOMERVILLE v MAUGERS RENTALS (2009) LIMITED [2020] NZHC 1137 [27 May 2020]

[1]                 On 22 May 2020, I made orders as sought by the applicant liquidators. Two of the orders were procedural. First, that the applicants be able to use the originating application procedure for their application that they not be disqualified from acting as liquidators of the respondent and, secondly, dispensing with service.

[2]                 The substantive orders made were that the applicants were not disqualified from being liquidators of the respondent, directing that the application, supporting affidavits and sealed order be served on all known creditors of the respondent, and directing that any creditor of the respondent who wished to apply to set aside the appointment as liquidators, to do so within 10 working days.

[3]                 The application was made to the Court on 21 May 2020 with a request that the Court deal with it urgently given  that  it  was  intended  that  the  shareholders  of the respondent were planning to  place  the  respondent  into  liquidation  on  Monday 25 May 2020.

[4]Having made the orders, I now release the reasons for those orders.

[5]                 A similar application came before Justice Cooke, involving the same applicants.1

[6]                 His Honour recorded that applications of this type have in the past been brought by way of originating application and I accept that is also appropriate in this case.

[7]                 Similarly, in previous cases, the application proceeded without service on creditors. As Cooke J recorded, the position of creditors is appropriately dealt with by notice that this application was made and giving creditors leave to apply to set aside the applicants’ appointments.

[8]                 As to the substantive application, the applicants in this case belong to PricewaterhouseCoopers which has a continuing business relationship with a secured

1      Re Somerville [2019] NZHC 1189.

creditor of the respondent being the Bank of New Zealand Limited. That triggers the need for leave under s 280 of the Companies Act 1993.

[9]                 Essentially, whether there should be an order that the applicants are not disqualified from being appointed as liquidators turns on whether they are conflicted.2

[10]              The applicants’ counsel points out the requirement for liquidators to apply for leave will no longer apply in respect of business relationships with secured creditors after June 2020. Counsel notes that the change reflects Parliament’s apparent reassurance that appropriate independence will be provided by the new licensing regime and accreditation to apply to liquidators.

[11]              While that licensing regime is yet to come into force,3 both applicants are professional insolvency practitioners. They are members of a large international accounting firm with its own strict procedures and policies in respect of conflicts. Both liquidators are known to the Court and I am satisfied that there is no risk of a lack of independence or concern about the applicants’ ability to carry out their tasks professionally and effectively.

[12]              The director and shareholders of the company are aware of the association and their consent to the application is confirmed by affidavit.

[13]It was for these reasons that the orders already referred to were made.

Associate Judge Lester

Solicitors:

Harmans Lawyers, Christchurch

2      Fisk v Fargher Construction Ltd [2018] NZHC 441 applied in Re Somerville, above n1, at [11].

3      See the Insolvency Practitioners Regulation Act 2019.