Khov v Waitotara Farms Limited
[2025] NZHC 1750
•1 July 2025
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2025-419-074
[2025] NZHC 1750
IN THE MATTER OF
AND
an application for the liquidation of Waitotara Farms Limited UNDER
Part 16 of the Companies Act 1993
BETWEEN
STEVEN KHOV and KIERAN MICHAEL
JONES in their capacity as Receivers and managers of the GJ & EM STARK
PARTNERSHIP
PlaintiffsAND
WAITOTARA FARMS LIMITED
Defendant
Hearing: 17 April 2025 Appearances:
AJ Steel for the Plaintiffs
No appearance for the Defendant
Mr Stark, director and shareholder of the Defendant, in person.Judgment:
1 July 2025
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 1 July 2025 at 10 am pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Glaister Keegan, Auckland
KHOV v WAITOTARA FARMS LTD [2025] NZHC 1750 [1 July 2025]
Introduction
[1] The plaintiffs, Stephen Khov and Kieran Jones, as Receivers of the GJ & EM Stark Partnership (Receivers), have applied to liquidate the defendant company, Waitotara Farms Limited (WFL), on the basis there is serious dysfunction and deadlock impeding its operation. The Receivers submit there is no realistic alternative to liquidation.
[2]The shareholders of WFL are:
(a)Keilin Farms Limited (KFL), the majority shareholder holding
56.24 per cent;
(b)the Receivers of the GM & EJ Stark Partnership (the applicants in these proceedings), holding 43.74 per cent;
(c)Keith Stark and Linda Smiley, jointly holding one share; and
(d)Keith Stark, holding one share on his own.
[3] Mr Stark and Ms Smiley are the directors of both WFL and KFL and they each hold a 50 percent shareholding in KFL. Mr Stark and Ms Smiley were married but their marriage broke down in 2019.
[4] Ms Smiley (as both director and shareholder of WFL) supports the appointment of a liquidator.
[5] The Receivers record that with Ms Smiley’s support, the liquidation is effectively supported by a 72 per cent majority.
[6] WFL holds a single asset: approximately 70 hectares of farmland at Ohinewai, which contains three residential dwellings. It is referred to by the parties as “Top Farm”. The land was valued at $2.6 to $3 million in 2024.
[7] Following several years of dispute and dysfunction, the parties entered into a partial resolution and pre-mediation deed dated 30 October 2024 (Pre-Mediation Deed) agreeing to appoint Bayleys to sell the Top Farm and to attend a mediation before the Hon Raynor Asher KC. The mediation was held on 9 December 2024 and was successful with the parties signing a settlement deed on the same day (Settlement Deed). The Settlement Deed dealt with how the proceeds from the sale of Top Farm would be distributed and provided that WFL would then be liquidated. The Receivers say Mr Stark is now not complying with the terms of both the Pre Mediation and Settlement Deeds.
[8] No statement of defence had been filed by the time of the first call of the liquidation application on 7 April 2025. However, Mr Stark had filed a memorandum on 4 April 2025 recording that he is a “director and major shareholder” of WFL and confirming that he opposes the order for liquidation.
[9] Prior to the first call, the Receivers filed an affidavit of service confirming that Mr Stark was served with these proceedings on 14 March 2025. Rule 31.17 of the High Court Rules 2016 requires any statement of defence to liquidation proceedings to be filed within 10 working days from the date of service so by 28 March 2025.
[10] Mr Stark accepts that he was served at that time with all documents except Ms Smiley’s supporting affidavit. Even if, contrary to the process server’s evidence, Ms Smiley’s affidavit was not filed together with the other documents, that does not alter the date on which a statement of defence was due to be filed because the statement of claim, the notice of proceeding and the verifying affidavit were all served on Mr Stark on 14 March 2025.
[11] Because he had not filed a statement of defence in time, Mr Stark required leave to be heard at the hearing on 7 April 2025. I considered it was appropriate to grant leave because Mr Stark was acting for himself and had filed his memorandum in opposition prior to the call.
[12] Mr Stark submits that the Receivers are not able to apply to liquidate the company and that they “continue to exceed their authority” and “create massive bills
for [WFL]”. Mr Stark further alleges the Receivers have made false and misleading statements, filed false documents in Court and otherwise and that they are working directly against the best interests of WFL and its shareholders.
[13] Mr Stark also challenges the engagement of Bayleys Matamata by the Receivers to sell the “Top Farm.” In addition to being concerned about Bayleys’ conduct, including in relation to the earlier sale of the “Bottom Farm” (an asset of the GM & EJ Partnership), Mr Stark submits that an offer has been made to purchase the Top Farm and “[a]ll the Court is required to do is instruct the Sale and Purchase Agreement currently in hand be put forward and all monies be paid into the High Court and distributed according to shareholders’ [percentages].”
[14] Mr Stark further emphasises the need for WFL to seek independent legal advice, submitting that the lawyer acting for WFL at the mediation and otherwise was conflicted.
[15] Mr Stark filed a further memorandum after the hearing dated 8 April 2025 submitting that the Receivers and their counsel used intimidation tactics during and after the hearing. I accept that the hearing was relatively heated, revealing a level of frustration on both sides at the way in which matters are progressing. Currently the Receivers and Mr Stark have to deal with each other directly as co-shareholders of WFL. The difficulties in doing so were clearly evident in the hearing.
[16] Mr Stark made a number of serious allegations against the Receivers during the hearing and in his memoranda both before and after the hearing, including alleging backroom deals, theft of his wages preventing him seeking legal advice and attempts to sell the Top Farm at an undervalue to prevent him receiving any wages.
[17] I record at the outset that after considering the matters raised at the hearing and in Mr Stark’s memoranda, I do not consider that any of those matters provide a basis for an arguable defence to liquidation in this case. As a result, I do not grant leave to Mr Stark to file a statement of defence out of time. I set out my reasons for reaching this conclusion in detail below.
[18]I explain my reasoning by considering the following questions:
(a)Are the Receivers able to apply to liquidate the company?
(b)If they can, what must be established for the company to be liquidated on a just and equitable basis?
(c)Is there any prospect that it would not be just and equitable for WFL to be placed into liquidation?
Are the Receivers able to apply to liquidate the company?
[19] The Receivers were appointed to the GJ & EM Stark Partnership (Partnership) on 28 July 2023 by Isac J1. The Partnership was between George and Eileen Stark, Keith Stark’s parents. The Partnership dissolved automatically on George Stark’s death on 13 July 2020 but continues solely for the purpose of completing pending transactions and winding up its affairs.2
[20] Juliet Moses, the executor and trustee of George Stark’s estate, applied to the Court for Receivers to be appointed. At the time of the application, Keith Stark was acting pursuant to a power of attorney in relation to his mother Eileen’s property and had taken over the management of the Partnership’s “Bottom Farm”.
[21] After confirming the Partnership was dissolved on George Stark’s death, Isac J held that the evidence revealed that the legal representatives of the partners, being Ms Moses and Mr Stark, were not capable of exercising their limited authority, rights and obligations to wind up the affairs of the partnerships because of the dysfunction that existed.3
[22] As a result, his Honour made orders appointing the Receivers, Steven Khov and Keiran Jones, as permanent receivers to the Partnership.4
1 Moses v Stark [2023] NZHC 1955.
2 At [24] to [29].
3 At [36].
4 Moses v Stark, above n 1, at [35] to [41].
[23] The Receivers therefore hold the shares in WFL on behalf of the Partnership and so are entitled in the same way as other shareholders to file an application to liquidate WFL pursuant to s 241(2)(c)(iii) of the Companies Act 1993.
[24] I am satisfied therefore that the Receivers are able to apply to liquidate the Company.
What is required to be established for the company to be liquidated on a just and equitable basis?
[25] Under s 241(4)(d) of the Companies Act, the Court may appoint a liquidator if it is satisfied that it would be just and equitable for it do so. The relevant principles in cases of deadlock or dysfunction, as is pleaded here, were summarised in McGehan v Te Hoe Dairies Ltd as follows:5
[15] The words “just and equitable” are words of “the widest significance”.6 They do not limit the jurisdiction of the Court to any case.7 Each case must be considered on its facts.
[16] As Bell AJ held in Sea Management Singapore Pte Ltd v Professional Service Brokers, “Because there is no limit to the kinds of cases where it may be just and equitable to order a liquidation, categorisation has been deprecated.”8 However, orders liquidating a company on the just and equitable ground may be justified in cases where serious deadlock has arisen between directors.9
[17] The deadlock must be impeding the operation of the company; the “essential basis” for the Court’s relief is “frustration by internal discord”.10 If the Court is satisfied there is no other means out of the impasse, it may exercise its discretion and order liquidation.11
5 McGehan v Te Hoe Dairies Ltd [2021] NZHC 1796, followed with approval in Young v Remarkable Exquisite Design Ltd [2022] NZHC 635.
6 Re Bleriot Manufacturing Aircraft Co Ltd (1916) 32 TLR 253,255. See also Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (HL) 374 and Jenkins v Supscaf Ltd [2006] 3 NZLR 264 (HC) at [93]–[99] and [109]–[114].
7 Jenkins v Supscaf Ltd, above n 6, at [93]-[99]
8 Sea Management Singapore Pte Ltd v Professional Service Brokers HC Auckland CIV-2011-404- 5313, 25 January 2012 at [3].
9 Re Yenidje Tobacco Co Ltd [1916] 2 Ch Chancery 426 (CA).
10 Sea Management Singapore Pte Ltd v Professional Service Brokers, above n 8, HC Auckland CIV- 2011-404-5313, 25 January 2012 at [3].
11 At [3]; Strachan v Denbigh Property Ltd (2011) 10 NZCLC 264,813 (HC); Vujnovich v Vujnovich
[1989] 3 NZLR 513 (PC) 518.
[26] In Re Rongo-Ma-Tane Farms Ltd the Court held that in cases where there is no clear cut apportionment of blame for the deadlock, the real determinant for granting relief is the existence of the breakdown.12
Is there any prospect that it would not be just and equitable for the defendant company to be placed into liquidation?
Background context
[27] I start by setting out the events leading up to entry into the Settlement Deed to provide context for the deadlock asserted.
[28] Mr Jones’ evidence for the Receivers is that, upon their appointment, he and Mr Khov conducted an investigation into the affairs of the Partnership. This led them to issue proceedings in relation to alleged related party lending from the Partnership to WFL and its majority shareholder, KFL, CIV-2023-419-286 (Receivers’ Proceeding).
[29] Ms Smiley successfully applied for leave to intervene to defend the Receivers’ Proceeding on behalf of both WFL and KFL on the basis that Mr Stark did not agree that WFL and KFL should defend the proceeding and had not engaged with the proceeding as a result. The Receivers did not oppose leave to intervene being granted. Orders were therefore made by Associate Judge Britain on 13 February 2024.13 The orders included that WFL and KFL would indemnify Ms Smiley for the legal costs incurred for KFL and WFL in defending the proceedings up to $50,000, subject to further order of the court.
[30] Due to their concerns about the operation of WFL, on 30 August 2024 the Receivers applied for orders for the liquidation of WFL for the first time (First Liquidation Proceeding).
[31] By 14 December 2024, Mr Stark and Ms Smiley had begun to work together on behalf of WFL and KFL to defend both the First Liquidation Proceeding and the
12 Re Rongo-Ma-Tane Farms Ltd (1987) 3 NZCLC 100,145 (HC) at 100,151.
13 Khov v Keilin Farms, CIV-2023-419-286, minute of Associate Judge Brittain, 13 Febrary 2024.
Receivers’ Proceeding, signing directors’ resolutions on behalf of both companies to do so on that date (Resolutions).
[32] The introduction to the Resolutions records that Ms Smiley and Mr Stark as directors of WFL and KFL “certify that the following is a true and correct record of a resolution adopted at a meeting of the directors [recorded as Mr Stark and Ms Smiley] and of barrister Suzie Abdale and solicitors from McKenna King held on 2 September 2024 (and a subsequent meeting on 13 September 2024)”… .
[33]The second unnumbered paragraph of the Resolutions further records:
The directors record their conflicts of interests in acting for both WFL and KFL; and their positions as shareholders of KFL, and KFL's majority shareholding interest in WFL. The directors consider that the interests of both KFL and WFL are presently aligned.
[34] The Resolutions set out included that WFL would defend the liquidation proceedings, McKenna King were instructed to continue to defend the Receivers’ Proceedings, various resolutions in respect of continuing business operations for both companies and finally resolving that a proposal be put to the Receivers with the intention of selling WFL’s land on or about 31 May 2025 and subsequently settling any claims. The written record of the Resolutions is signed by Ms Smiley and Mr Stark as directors of both WFL and KFL.
[35] On 17 September 2024 WFL and KFL's solicitors, Fraser King at McKenna King, sent an email to the solicitors for the Receivers setting out a proposal by which Top Farm might be sold. The Receivers’ solicitors responded on 24 September 2024, setting out the basis upon which they were prepared to agree to the sale of Top Farm and would be likely to agree to withdraw the liquidation proceeding.
[36] The parties then proceeded to negotiate the terms of a formal agreement to sell Top Farm and reached an agreement to mediate before the Hon Raynor Asher KC. Mr Jones’ evidence is that because of other issues between Mr Stark, WFL and KFL, and Mr Meltzer (as Eileen Stark’s property manager) and Ms Moses (on behalf of George Stark’s estate), it was agreed they would also participate in mediation. Accordingly KFL, WFL, Mr Meltzer, Ms Moses, Ms Smiley, Mr Stark, Mr Khov and Mr Jones
signed a Deed of Partial Resolution and Agreement to Mediate (the Pre-Mediation Deed) dated 30 October 2024.
[37] The Pre-Mediation Deed set out a comprehensive process for the sale of Top Farm through real estate agents, Bayleys Matamata, by 1 June 2025. The sale proceeds were to be held pending resolution of the Court proceedings or in accordance with such agreement as may be reached at the mediation.
[38] The Receivers discontinued the First Liquidation Application in respect of WFL in accordance with the Pre-Mediation Deed.
[39] Mediation took place on 9 December 2024 before the Hon Raynor Asher KC. A settlement was reached between all parties with a Settlement Deed signed on the same day. As a result, the Receivers discontinued the Receivers’ Proceeding in accordance with the settlement terms.
[40] Under both the Pre-Mediation and Settlement Deeds, all parties, including WFL and Mr Stark, agreed to do all things necessary to give effect to the transactions contemplated, and to co-operate to obtain the highest and best price reasonably obtainable for the Top Farm, including providing access to Top Farm to enable Bayleys to market it for sale. Clause 4 of the Settlement Deed records that in the event that WFL, Mr Stark or Ms Smiley are required to execute documents to give effect to the transactions contemplated and neglect to do so within five working days of written request then either or all of them irrevocably appoint the Receivers as their attorney to execute the necessary documents.
[41] In addition, the Settlement Deed included a further term that, following the sale of Top Farm, WFL would be placed into liquidation.
[42] The evidence of both Ms Smiley and Mr Jones for the Receivers is that since the Settlement Deed was signed, Mr Stark has used his position as a director of WFL to obstruct implementation of the settlement, contrary to both the Receivers and Ms Smiley’s view that the agreed settlement needs to be implemented.
Matters raised by Mr Stark
[43] Mr Stark asserts that the lawyer acting for WFL and KFL, Mr King of McKenna King, was employed by Ms Smiley and that Mr King was unable to represent both WFL and KFL as there was a serious conflict of interest.
[44] It is correct that Mr King’s representation was organised by Ms Smiley but, as set out above, Ms Smiley successfully applied for leave to intervene to defend the Receivers’ Proceeding on behalf of both WFL and KFL, and Mr King was instructed as a result. Furthermore, the Resolutions recorded on 14 September 2024 expressly referred to there being a conflict between WFL and KFL but determined that WFL and KFL’s interests were aligned. The Resolutions led to Mr King putting the proposal to Mr King on 17 September 2024 that the Top Farm be sold, followed by entry into first the Pre-Mediation and then the Settlement Deeds.
[45] Mr King's e-mail of 12 February 2025 in reply to a letter from Glaister Keegan (lawyers for the Receivers) to Mr King and Mr Stark makes it clear that Mr King continued to act for both WFL and KFL and that Mr Stark’s actions were not on behalf of either company.
[46] At the call of the liquidation application on 17 April 2025, Mr Stark sought an adjournment of the application to allow WFL to obtain its own legal advice. But Mr Stark is only one of the two directors, and it is because those directors are in deadlock that the liquidation application has been filed. Mr Stark has no authority to act on behalf of WFL unilaterally.
[47] If once the liquidator is appointed, the liquidator considers that further legal advice is necessary for WFL, then that will be a step that the liquidator can take.
[48] Furthermore, the best person to assess whether WFL needs to obtain its own separate advice would be an independent liquidator, rather than Mr Stark who has interests both as a WFL and KFL shareholder and personally.
[49] Mr Stark’s submission that the liquidation application needs to be adjourned to allow WFL to take legal advice does not therefore provide a proper basis for leave or an adjournment at this stage.
[50] Mr Stark makes serious allegations regarding Bayleys but Bayleys was first proposed as the sales agent by WFL and KFL's solicitors, and agreed upon by all parties, including Mr Stark, in the Pre-Mediation Deed.
[51] In clause 1 of that Deed, the parties agree to engage Bayleys specifically “to sell the Top Farm” and to “provide Bayleys with access to Top Farm on reasonable notice” and to “do all things necessary to achieve an orderly settlement of the sale of Top Farm on or before 1 June 2025 including, but not limited to, providing vacant possession, removing livestock and ensuring Top Farm is free of any other interests (such as leases)”.
[52] The Receivers say contrary to this Mr Stark has obstructed the sale, attempted to trespass Bayleys staff, obstructed access to the property and has insisted that an offer that Mr Stark says has been made is accepted. That offer is an offer made by Ms Kathy Reid, first made in December 2024 with a further offer on different terms made in March 2025.
[53] Mr Jones in his updating affidavit dated 2 April 2025 attaches a copy of a letter sent on 28 March 2025 by the Receivers’ solicitors to Mr Stark, Ms Smiley, Mr Meltzer and Ms Moses setting out the Receivers’ concerns with Ms Reid’s offers.
[54] The letter records that the Receivers were not unwilling to consider a sale outside the framework of the Pre-Mediation Deed but have the following reservations about Ms Reid’s offers:
(a)As you know, an offer was presented by Ms Reid in December 2024 (copy enclosed) which contained a number of highly irregular terms. For example, the offer provided for a deposit of $180,000 to be paid "from funds held by court", without any indication of which court was holding any funds or Ms Reid's involvement with any proceedings, and provided that the purchase price would be deposited "into the Court account". The Further Terms of Sale also made references to various statutory provisions of no obvious or apparent application, and to matters such as "equitable deeds of title". Although these
oddities do not appear in Ms Reid's revised offer, their inclusion in her prior offer give rise to concerns as to Ms Reid's bona fides.
(b)Our clients would wish to fully understand the nature of the relationship between Ms Reid and Geoffrey Martin Smith. Ms Reid, Mr Smith and another individual, Bruce Ian Crocombe, jointly own the property at 191 Main Street, Huntly, which is the address used on documents issued by the self-styled "Royal Crown Court of Equity in Exchequer" which has issued various notices, demands and summons to our clients and others involved in matters with the Stark Family. We further understand that Mr Smith and his wife, Barbara Smith, are presently in occupation of one of the residential dwellings on Top Farm and that Mr Smith has repeatedly engaged in "sovereign-citizen" style activities.
(c)The offer does not provide for any deposit to be paid until the agreement is declared unconditional (Further Term of Sales, clause 6). That being so, the agreement does little more than give Ms Reid an option to conduct due diligence for a period of one month, at no obligation or risk. The lack of a deposit payable upon execution is highly unusual. Assuming the offer is legitimate, our clients suspect that upon the conclusion of due diligence Ms Reid would likely look to further negotiate on price and terms, in circumstances where there are no other prospective purchasers in competition.
(d)Our clients have no evidence as to Ms Reid's financial capacity or ability to complete the purchase.
(e)On the latest offer Ms Reid's name appears to have initially been spelt "Cathy", and amended to read "Kathy", suggesting to us that Ms Reid herself was not the author of the offer.
(f)Further Term 5 requires WFL's shares to be sold to Ms Reid. That will not be possible, given the need for WFL to be liquidated to enable a distribution to its shareholders and is not something our clients will agree to, particularly given the complex history of WFL. The inclusion of that term also indicates to us that the offer has not been prepared with the benefit of any particular legal input or assistance.
[55] If a liquidator is appointed, there will be nothing to prevent Ms Reid from making a further offer as part of or outside the sale process adopted by Bayleys but the issues raised by the Receivers are likely to need to be addressed. Mr Stark takes exception to the fact that at the hearing, when counsel for the Receivers was describing the second offer, and the fact it proposed transfer of the WFL shares, counsel said something along the lines of “well that’s not happening” which Mr Stark describes as more intimidation and nonsense. But the reason counsel for the Receivers said that is set out in the letter above, that transfer of the shares is not possible given the need for WFL to be liquidated to enable a distribution to its shareholders.
[56] At the hearing Mr Stark appeared concerned about the price obtained for the sale of the Partnership asset, the “Bottom Farm”, which was also sold by Bayleys. Counsel for the Receivers indicated that after a liquidator is appointed the Receivers may be prepared to discuss a variation to the Settlement terms to allow an alternative agent to be employed but that a liquidator needs to be appointed in the interim to ensure WFL is independently represented in those discussions and Mr Stark does not continue to purport to act unilaterally for WFL as he has no right to do so.
[57] An affidavit has been filed by the real estate agent at Bayleys responsible for the listing, Colin Troughton, who is known as Sam Troughton. Mr Stark makes much of the fact that Mr Troughton is known by another name but many people are known by a name other than their legal name, and again this does not provide a basis for not complying with the terms of the Settlement Deed or opposing liquidation.
[58] Mr Troughton deposes that the level of interest in the property was initially very strong but that on the date of the open home scheduled for 26 February 2025, Mr Stark delivered trespass notices to Mr Troughton and other Bayleys’ staff, both at the Bayleys’ offices and on arrival at the Top Farm for the open day, with Mr Stark described as parking his ute so as to prevent access to the farm and ordering the Bayleys’ agents to leave the property.
[59] Following the events on 26 February 2025 as described above, Mr Troughton deposes:
Given the inability to show purchasers around and the lack of co-operation from Mr Stark regarding the sale, my view was that the auction scheduled for 6 March could not proceed and that the best course was to discontinue and recommence marketing once there was more certainty around the ability to market and deliver possession.
[60] During the course of marketing the property, Mr Troughton said he received numerous communications from Mr Stark purporting to prohibit Mr Troughton and his colleagues from accessing the Top Farm.
[61] Mr Troughton further deposes that when he asked Ms Smiley for access to one of the dwellings on the property he was advised that it was occupied by Mr Smith. Mr Troughton says he was concerned at this advice because Mr Smith is known to him
and his colleagues as a former liquidator and convicted fraudster and that he had sought to involve himself in the previous sale of one of the Stark Family properties (and had also been involved with previous sales carried out by Bayleys).
[62] Ms Smiley supports this evidence in her affidavit saying that when Mr Stark brought Mr Smith to her house in November 2024, Mr Smith introduced himself as a liquidator and proceeded to tell Ms Smiley that he considered what the Receivers were doing was wrong. Ms Smiley deposes he also said he was with the Royal Crown Court in Huntly.
[63] Ms Smiley says sometime after this meeting she realised that Mr Smith was probably the husband of one of the tenants of the dwellings on the Top Farm, Barbara Smith. Ms Smiley deposes that as the marketing for Top Farm commenced in February 2025, Mr Troughton wanted access to the dwelling being occupied by Ms Smith to show buyers through. Ms Smiley says she telephoned Ms Smith to tell her the farm was on the market, and said they would need access. Ms Smith responded that she would think about the request for access.
[64] On 24 February 2025, Ms Smiley says she hand delivered a letter to Ms Smith advising that they needed access on 26 February 2025 (a copy of the letter is annexed to her affidavit). Mr Smith responded by email the next day, refusing access, denying that Ms Smiley existed as a legal entity, disputing that Ms Smiley was a director of KFL and accusing Ms Smiley of criminal behaviour. A copy of this email is also annexed to Ms Smiley’s affidavit.
[65] In her affidavit, Ms Smiley carefully sets out the history of the difficulties between the parties and confirms that Mr Stark and her relationship property proceedings, to which the Receivers were named as interested parties, remains adjourned in the Family Court. Ms Smiley sets out her concerns as follows:
36.As Mr Jones and Mr Troughton have explained, Keith has obstructed access to Top Farm for the purpose of marketing, against my wishes as a director of WFL, and contrary to the agreement WFL entered into in October 2024.
37.Because of Keith's refusal to co-operate, WFL is unable to provide access to prospective purchasers, and I have also been unable to get
WFL to carry out any of the recommendations that Bayleys have made regarding how Top Farm should be marketed for sale.
38.I am concerned that Keith is deliberately using his position as a director of WFL to prevent Top Farm being sold, or to drive down the price that can be attained, placing WFL in breach of its obligations and exposing it to claims by the other parties to the agreements, in particular because as part of the mediation agreement we agreed how the sale proceeds would be distributed among the parties to the agreement.
39.I am at a loss to understand what is motivating Keith in his behaviour, what he hopes to achieve, or how his actions are in the best interests of WFL (or indeed himself).
40.Because Keith and I are both directors there is nothing that either of us can do without the other's approval and it is apparent that Keith does not agree that WFL should proceed to sell Top Farm, despite us and its shareholders (KFL and the Partnership) agreeing that would occur.
41.Without Keith's co-operation, as I understand it, it will be extremely difficult, if not impossible, for example, for WFL to:
(a)Take steps to terminate Mrs Smith's tenancy and obtain vacant possession of Top Farm.
(b)Provide access to potential buyers.
(c)Implement Bayleys advice about how to maximise the sale price for Top Farm, if that involves work being carried out.
(d)Deal with the conveyancing aspects of the sale of Top Farm.
(e)Provide standard warranties as part of the sale process.
(f)Deal with the finalisation of WFL's accounting as part of the sale.
[66] The day after these liquidation proceedings were filed Mr Stark purported to call a special meeting of WFL shareholders by email dated 12 March 2025, although not copying the email to the Receivers but instead to Ms Moses and Mr Metzler. Ms Smiley comments in her affidavit as follows:
43 Most recently, Keith has purported to call a special shareholders meeting on 2 days' notice. I did not authorise the notice, and I understand Keith has no power to unilaterally call a meeting, nor do not (sic) see any point in a shareholders meeting being convened to discuss the matters referred to. KFL is the majority shareholder of WFL and, as I have said, Keith and I are both directors of KFL, so it is not apparent how any resolution could be passed given our
disagreement. I refer to the email correspondence annexed and marked as Exhibit "E".
[67] Finally I record that Mr Stark suggested in the hearing and in his memorandum following the hearing that both the Receivers and Ms Moses had done “a backdoor deal” because the Receivers and the executor, Ms Moses, have excluded their personal liability. After reviewing these clauses in the Pre Mediation and Settlement Deeds, I do not consider any concern arises. Exclusions of personal liability are not uncommon and all parties were represented by legal counsel before signing both Deeds.
[68] From all of the above, there is no question there is dysfunction and deadlock impeding the operation of the company. Ms Smiley’s evidence is that she fully supports the Receivers’ liquidation application, not because she has made any sort of deal with the Receivers as Mr Stark suggests, but to avoid further cost and delay, including for Mr Stark. It is clear that a liquidator needs to be appointed as soon as possible.
[69] This is particularly the case where under the Settlement Deed the parties have already agreed that the company will be put into liquidation following the sale of Top Farm. Appointing a liquidator now will allow the sale to proceed without further delay and will protect Mr Stark’s interests in circumstances where Mr Stark appears to consider the Receivers are acting outside their powers. The liquidator appointed, as an independent party acting solely for the benefit of WFL creditors and shareholders, will be able to ensure that the Receivers act within their powers.
[70] Furthermore, the liquidator appointed will be able to act as an intermediary between the Receivers and Mr Stark. Delaying the appointment of a liquidator by granting leave for a statement of defence to be filed out of time when appointment appears inevitable will only lead to further delay and difficulty for all parties.
[71] Mr Stark also raises concerns about the fees being charged by the Receivers. Any delay, including to allow a statement of defence to be filed by Mr Stark, will only lead to extra costs being incurred and further fees being charged. Any further adjournment or delay cannot therefore be justified.
Consent of liquidator to act
[72] The Receivers have filed a consent to act from Mr Thomas Lee Rodewald of Rodewald Consulting Limited dated 5 March 2025 confirming that he consents to being appointed as the liquidator. The letter of consent sets out the hourly rates for the liquidator and his staff which are within the usual bands.
[73] Mr Rodewald is a licensed insolvency practitioner and so is eligible for appointment. In his memorandum, Mr Stark suggests that there is a distinction between a liquidator’s eligibility for appointment depending on whether it is a solvent or insolvent liquidation, but there is no such distinction.
[74] I am satisfied it is appropriate for Mr Rodewald to be appointed on the terms directed below.
Advertising
[75] In addition, the Receivers have filed a statement of advertising, confirming that they have complied with the requirement in r 31.9 of the High Court Rules to advertise in the New Zealand Gazette on 24 March 2025 and in the Waikato Times on 25 March 2025.
Conclusion
[76] I am satisfied that all of the procedural requirements for liquidating a company have been met and that it is just and equitable for a liquidator to be appointed as there is serious dysfunction and deadlock impeding the operation of WFL. I therefore grant the Receivers’ application to appoint Thomas Lee Rodewald as the liquidator of WFL in accordance with s 241(4)(d) of the Companies Act on the basis that it is just and equitable to do so.
Costs
[77] I did not hear from the parties on costs and costs do not appear to be sought in the statement of claim. If an issue as to costs arises, a memorandum may be filed on
behalf of the Receivers by 25 July 2025. Mr Stark is to file and serve any response by 8 August 2025. Costs will then be determined on the papers.
Result
[78]I order:
(a)The Receivers’ application to appoint Thomas Lee Rodewald as the liquidator to WFL pursuant to s 241(1)(4)(d) of the Companies Act 1993 on the basis that it is just and equitable to do so, is granted.
(b)The rates of remuneration of the liquidator and staff working under his supervision and control are fixed at the rates set out in the liquidator’s consent dated 5 March 2025.
(c)The liquidator is to apply at the conclusion of the liquidation for approval of his overall remuneration.
(d)These orders are timed at 10 am today.
Associate Judge Sussock
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