Horton v Cowley - [2014] NZHC 20

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-5022 [2014] NZHC 20

UNDER the Companies Act 1993
IN THE MATTER OF SHAFTSPRY LIMITED (In Liquidation) BETWEEN CHRISTOPHER HORTON
Applicant

ANDBRIAN PATRICK COWLEY and GARTH WILLIAM COWLEY First Respondents

CALVIN BLAKLEY WEST Second Respondent
BRIAN PATRICK COWLEY Third Respondent
BRIAN COWLEY SURVEYING LIMITED
Fourth Respondent

Hearing: 3 December 2013

Appearances: K T Glover for Applicant
E J Werry for First, Third and Fourth Respondents
No appearance for Second Respondent

Judgment: 31 January 2014

JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 31 January 2014 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules.

Solicitors:

...................................

Registrar/Deputy Registrar

Dukesons Business Law (Steven Dukeson), Auckland, for Liquidator
Simpson Dowsett Mackie, Mt Roskill, Auckland, for First, Third and Fourth Respondents
Counsel:
E J Werry, Auckland, for First, Third and Fourth Respondents

HORTON v COWLEY and WEST [2014] NZHC 20 [31 January 2014]

[1] I gave an interim judgment on 23 November 2012.1 That judgment resolved certain matters in the liquidation, but did not decide them all. I set out some of my findings:
(a) Mr Horton, the liquidator, was entitled to recover under s 305(3)(b) of the Companies Act 1993 from the Cowleys and Mr West interest on their mortgages from the date of advance to 8 May 2008, but not interest from 8 May 2008 to the date of sale of the Paddy Road property.2 I did not fix the amount of the judgment, but I did award
interest.3

(b) Shaftspry Ltd was not able to pay its due debts as at 8 May 2008 and

22 July 2008.4

(c) The provision in the shareholders’ resolution of 8 May 2008 for the mortgagees to be secured for interest falling due under the mortgages after that date was not voidable under s 293 of the Companies Act.5
(d)The agreement to mortgage of 22 July 2008 was set aside as voidable under s 292 of the Companies Act.6

(e) The term loan contracts of 22 July 2008 could not be set aside under s

292 in this proceeding.7

(f) The Cowley interests needed to be separated out and could not be treated as a single creditor.8
(g)It was not possible to make a final decision under s 292 whether to set aside the agreement for prospective interest and the associated charge and if so, what relief to give under s 295.9

(h) It was not possible to decide under s 299 whether to set aside the

provision in the shareholders’ resolution of 8 May 2008 for the

1      Re Shaftspry Ltd, Horton v Cowley and West [2012] NZHC 3089.
2 Interim judgment at [89].
3 Interim judgment at [160].
4      Interim judgment at [104] and [105].
5 Interim judgment at [110].
6 Interim judgment at [111].
7 Interim judgment at [114].
8      Interim judgment at [51] and [121]
9 Interim judgment at [126].

mortgagees to be secured for interest falling due under the mortgages after…

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 Horton v Cowley

Details

AGLC: Horton v Cowley [2014] NZHC 20
Case: [2014] NZHC 20
Decision Date: 31 January 2014

CaseChat Overview and Summary

The High Court of New Zealand was called upon to decide various matters in the liquidation of Shaftspry Limited, with Christopher Horton as liquidator. The primary legal issues revolved around the determination of creditors, the approval of Mr Horton’s remuneration and expenses, and the calculation of Calvin West's entitlement as a creditor. The court had to balance the interests of the liquidator, who sought full compensation for his services, against those of the Cowleys, who argued for a more economical resolution of the liquidation. The decision involved a detailed examination of the liquidator's conduct and the necessity of various actions taken during the liquidation process.

In its judgment, the court found that Mr Horton's claim for remuneration and expenses was excessive. While some of his work was justified and necessary, other actions, such as the pursuit of unnecessary litigation, were deemed to be beyond what was required for the efficient administration of the liquidation. The court adjusted Mr Horton's claim accordingly, disallowing costs for actions that did not benefit the creditors. The court also found that the Cowleys should contribute to Mr Horton's remuneration to the extent that the assets available for distribution exceeded their entitlements as creditors. Furthermore, the court calculated Calvin West's entitlement as a creditor and ordered the Cowleys to pay a portion of Mr Horton's remuneration. The court awarded costs to the Cowleys against Mr Horton for the unnecessary litigation, while declining to award costs to or against Calvin West. The decision aimed to conclude the liquidation promptly, allowing Mr Horton to file his final report and have the company struck off.

Orders