Just Beverages Limited v Horton - [2018] NZHC 2135

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001924

[2018] NZHC 2135

UNDER the Companies Act 1993

BETWEEN

JUST BEVERAGES LIMITED

First Applicant

DANIEL JOSEPH BEARSLEY, MARILYN CELIA BEARSLEY and NAPIER INDEPENDENT TRUSTEES LIMITED

Second Applicants

AND

CHRISTOPHER ROBERT ROSS HORTON

Respondent

Hearing: 30 April 2018

Appearances:

D D Vincent for the Applicants J Lethbridge for the Respondent

Judgment:

29 August 2018

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 29 August 2018 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Lowndes, Auckland
Thomas Dewar Sziranyi Letts, Lower Hutt

JUST BEVERAGES LTD v HORTON [2018] NZHC 2135 [29 August 2018]

Introduction

[1] The respondent in this proceeding, Mr Christopher Horton, is the liquidator of FUB Limited (FUB), having been appointed by shareholder resolution in May 2017. The applicants are Just Beverages Limited (Just Beverages) and the Trustees of the Bearsley Ranui Trust (the Bearsley Trust).

[2] The applicants commenced the proceeding on 11 August 2017 when they filed an originating application claiming orders, pursuant to s 284 of the Companies Act 1993 (the Act), for leave to commence the proceeding by originating application, and to reverse the liquidator’s decision to reject three claims filed in the liquidation of FUB. The application was settled shortly before the hearing was due to commence, with two of the three claims being admitted.

(a)The first and second claims were for amounts purportedly owed by FUB to a Mr Bruce Keatley (a former marketing director and shareholder of FUB) which had been assigned to Just Beverages. The first, now partially admitted, was for holiday pay owed to Mr Keatley. The second (which remains rejected) was for advances Mr Keatley made to FUB (at the time trading under the name Waipak Limited).

(b)The third has been allowed in its entirety. It was made by the Bearsley Trust, and was for unpaid rent, operating expenses, interest and associated legal costs owed by FUB.

[3] On 24 November 2017, prior to the settlement, the respondent filed an interlocutory application regarding the validity of his appointment as liquidator of FUB. Counsel for the parties agree the issues raised in the interlocutory application remain “live” and that the Court should determine the application notwithstanding that settlement has been reached over the disputed rejection of claims. It is that application which is dealt with in this judgment.

[4]The application is opposed by Just Beverages and the Bearsley Trust.

The interlocutory application

[5]The orders Mr Horton seeks are:

(a)A declaration under s 284(1)(b) of the Act, confirming that his appointment as liquidator was valid from the outset under s 280(1) of the Act; and

(b)Alternatively, if the Court is unwilling to make such a declaration, an order under s 286(4)(b) of the Act that he may continue to act as liquidator, despite not complying with the requirements of s 280(1)(cb) of the Act.

[6] The application has been made in…

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: [2018] NZHC 2135
Decision Date: 29 August 2018

CaseChat Overview and Summary

The proceeding in this matter was brought by Just Beverages Limited and the Bearsley Ranui Trust against Mr Christopher Horton, the liquidator of FUB Limited (FUB). The applicants sought orders under section 284 of the Companies Act 1993 (the Act) for leave to commence the proceeding by originating application, and to reverse the liquidator’s decision to reject three claims filed in the liquidation of FUB. The application was settled before the hearing was due to commence, with two of the three claims being admitted. The third, made by the Bearsley Trust, was for unpaid rent, operating expenses, interest and associated legal costs owed by FUB. This claim was allowed in its entirety. The interlocutory application filed by the respondent, Mr Horton, sought orders confirming the validity of his appointment as liquidator and, alternatively, to continue to act as liquidator despite not complying with the requirements of the Act. The application was opposed by Just Beverages and the Bearsley Trust. The issues for determination were whether Mr Horton accepted appointment as liquidator of FUB in breach of s 280(1)(cb) of the Act, and if so, whether the Court should exercise its discretion to allow his appointment as liquidator of FUB to continue. The Court found that Mr Horton’s appointment as liquidator was in breach of s 280(1)(cb) of the Act. The Court declined the application to declare otherwise, pursuant to s 284(1)(b) of the Act. The Court was also not satisfied that there was no real risk that Mr Horton’s actions as liquidator would be free of the risk of conflict, such that it should exercise the court’s discretion to allow him to continue as liquidator. The application for an order under s 286(4)(b) was therefore also declined. The Court made ancillary orders removing Mr Horton from the office of liquidator, and appointing the Official Assignee as liquidator. The applicants were provisionally awarded costs on a 2B basis.

Orders