Lucas v Avetar Properties Limited

[2023] NZHC 3232

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-100

[2023] NZHC 3232

UNDER

the Companies Act 1993

IN THE MATTER

of an application for putting a company into liquidation

BETWEEN

SCOTT ALUN LUCAS

Plaintiff

AND

AVETAR PROPERTIES LIMITED

Defendant

Hearing:

9 November 2023

Appearances:

G P Davis and for Plaintiff

S Caradus and C M G Sykes for Defendant

Judgment:

16 November 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 16 November 2023 at 11.30 am pursuant to rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

LUCAS v AVETAR PROPERTIES LIMITED [2023] NZHC 3232 [16 November 2023]

[1]    The plaintiff (Mr Lucas) applies for an order putting the defendant, Avetar Properties Ltd (Avetar), into liquidation. The application is made against the background of the breakdown in the domestic relationship of Mr Lucas and the sole director of Avetar, Julianne Taylor (Ms Taylor).

[2]Mr Lucas applies for an order for liquidation on the grounds that:

(a)Avetar is unable to pay its debts;1 and

(b)it is just and equitable that Avetar be put into liquidation.2

[3]    Avetar opposes the application. It says Mr Lucas is not a creditor, it is not insolvent and the Court should exercise its discretion to refuse to appoint a liquidator in any event. It also says there is no basis in fact or law to appoint a liquidator on the just and equitable ground.

[4]The issues that arise are:

(a)Is Mr Lucas a creditor of Avetar?

(b)Is Avetar insolvent?

(c)How should the Court’s residual discretion be exercised?

(d)Is it just and equitable to put Avetar into liquidation.

Background

[5]    Avetar is a landholding company which owns properties at 311 and 311A Tancred Street, Ashburton.

[6]    Ms Taylor is the sole director of Avetar and owns 99 of the 100 shares in the company.

1      Companies Act 1993, s 241(4)(a).

2      Section 241(4)(d).

[7]Mr Lucas and Ms Taylor met through mutual friends in around 2011.

[8]    Ms Taylor and a former business partner, Tony Farrow, had formed a company called Annona Holdings Ltd.

[9]    On 21 June 2012, Mr Lucas purchased shares in Annona Holdings Ltd from Mr Farrow pursuant to a share purchase agreement (the share agreement). The share agreement is relevant because Mr Lucas relies on it as the basis upon which he made advances to Avetar.

[10]   Mr Lucas and Ms Taylor began  a  de  facto  relationship  in  around  2013. Mr Lucas became a director of Avetar that same year.

[11]   Mr Lucas and Ms Taylor separated in 2019, and Mr Lucas resigned as a director of Avetar in November 2021.

[12]   Mr Lucas and Ms Taylor are currently engaged in proceedings in the Family Court for a division of their relationship property. Among the issues the Family Court will decide is whether Avetar owes a debt to Mr Lucas and, if so, the amount. The Family Court proceedings were set down for hearing in June 2023, but the hearing was vacated at a late stage when Mr Lucas sought new legal counsel. It is now scheduled to be heard later this month.

[13]   On 1 February 2023, Mr Lucas served Avetar with a statutory demand requiring payment of $225,599.34. No application was made by Avetar to set aside the statutory demand.

[14]   On 10 March 2023, Mr Lucas filed this proceeding seeking to liquidate Avetar. Avetar’s original statement of claim sought a liquidation order on the sole ground that Avetar was insolvent and unable to pay its debts.

[15]   Following service of the proceeding, Ms Taylor wrote to Mr Lucas’s counsel stating that the debt claimed by Mr Lucas was disputed, as follows:

Scott Lucas may not have made you aware but this company and the assets are part of a relationship pool and all matters are before the family court.

We are awaiting a final hearing date for the family court which is expected in July.

The so called outstanding debt is in dispute and is being dealt with during the hearing.

Scott has previously been advised that there are no grounds for liquidation of any of the companies as the assets and debts are in dispute and currently before the family court awaiting a hearing date.

…

Please advise that the matter has been withdrawn.

[16]   On 3 April 2023, Mr Lucas applied for the appointment of an interim liquidator to Avetar because he considered the assets of the company were in jeopardy. It was of concern to him that a property owned by Avetar had been recently sold to a company whose director and shareholder was related to Ms Taylor.

[17]   The application was resolved by Ms Taylor providing undertakings on behalf of herself and Avetar that:

(a)two remaining properties owned by Avetar would not be sold, transferred or otherwise disposed of without the consent of Mr Lucas or order of the Court;

(b)rental payments received in respect of 311 Tancred Street would be paid to Avetar’s bank account and would not be used other than for Avetar’s ordinary course of business payments without the consent of Mr Lucas or order of the Court; and

(c)Avetar would not mortgage, charge or otherwise encumber any of its properties without the consent of Mr Lucas or further order of the Court.

[18]   Avetar filed an amended statement of claim on 31 July 2023, adding as an additional ground for seeking the liquidation of Avetar that it was just and equitable to put the company into liquidation.

[19]   At a teleconference with Judge Lester on 3 August 2023, Avetar sought to have this proceeding adjourned until the Family Court proceeding was heard. Judge Lester expressed the view that even if Mr Lucas was successful on his application to liquidate Avetar that was unlikely to advance resolution of the relationship property issues.3 Despite giving Mr Lucas’s counsel time to consider the matter, Mr Lucas wished to press on with his application and the matter was set down.

Companies Act 1993

[20]   Section 241(1) of the Companies Act 1993 (the Act) identifies who may apply to liquidate a company, and the grounds upon which the court may appoint a liquidator. It relevantly provides:

241     Commencement of liquidation

(1)A company may be put into liquidation by the appointment as liquidator of a named person or of an Official Assignee for a named district.

(2)A liquidator may be appointed by—

(a)…

(iv)a creditor (including any contingent or prospective creditor); 4

…

(4)The Court may appoint a liquidator if it is satisfied that—

(a)The company is unable to pay its debts; or

…

(d)It is just and equitable that the company be put into liquidation.

[21]   The most common method by which a creditor seeks to prove that a company is unable to pay its debts for the purposes of s 241(4)(a) is by issuing a statutory demand upon the company.5 In relation to this, s 287 of the Act provides:

3      Lucas v Avetar Properties Ltd HC Christchurch CIV-2023-409-100, 3 August 2023 (minute).

4      The term “creditor” is defined in s 240(1) of the Companies Act.

5      The requirements of a statutory demand are set out in s 289 of the Companies Act.

287     Meaning of “inability to pay debts”

Unless the contrary is proved, and subject to section 288 of this Act, a company is presumed to be unable to pay its debts if—

(a)       The company has failed to comply with a statutory demand; or

…

[22]   A company that is served with a statutory demand may apply under s 290(4) of the Act to set it aside upon grounds which include that there is a substantial dispute whether or not the debt demanded is owing or is due.

[23]   Finally in this survey of the relevant statutory provisions, I note that, under    s 288(4), in determining whether a company is unable to pay its debts its contingent or prospective liabilities may be taken into account. However, under s 288(5), an application to put a company into liquidation on the ground that it is unable to pay its debts may be made by a contingent or prospective creditor only with leave of the court.

The law

[24]   In respect to an application to put a company into liquidation on the ground it is unable to pay its due debts, the three main questions for consideration are:6

(a)Is the plaintiff a creditor?

(b)Is the company insolvent?

(c)How should the Court’s residual discretion whether to make or refuse to appoint a liquidator be exercised?

[25]   Where the defendant company opposes liquidation on the ground the debt claimed by the plaintiff is subject to a genuine and substantial dispute, the relevant principles to be applied were set out in Yan v Mainzeal Property and Construction Ltd (in rec & in liq):7

6      Cable Price (NZ) Ltd v Taimona Haulage Ltd [2016] NZHC 828 at [2].

7      Yan v Mainzeal Property and Construction Ltd (in rec & in liq) [2014] NZCA 190 (footnotes omitted).

[61]      It has long been established that, as a general rule, an order to put a company into liquidation will not be made where the application is founded upon a debt that is genuinely disputed. To apply to wind up a company in such circumstances is regarded as an abuse of the court’s process: Bateman Television Ltd (in liq) v Coleridge Finance Co Ltd. In such cases, the court has an inherent jurisdiction to prevent such an abuse of process. But the court also has power to consider disputed debts in the context of an opposed application for liquidation or upon applications for orders restraining advertising and staying proceedings. The relevant principles were recently summarised by Associate Judge Faire (now Faire J) in South Waikato Precision Engineering Ltd v Ahu Developments Ltd in these terms:

(a)A winding up order will not be made where there is a genuine and substantial dispute as to the existence of a debt such that it would be an abuse of the process of the Court to order a winding up;

(b)In such circumstances, the dispute, if genuine and substantially disputed, should be resolved through action commenced in the ordinary way and not in the Companies Court;

(c)The assessment of whether there is a genuine and substantial dispute is made on the material before the Court at the time and not on the hypothesis that some other material, which has not been produced might, nonetheless be available;

(d)The governing consideration is whether proceeding with an application savours of unfairness or undue pressure.

[26]   Importantly, the Court in Yan noted that a company is not prevented from showing that its indebtedness is disputed even if it has failed to set aside a statutory demand. Referring to Grant v Lotus Gardens Ltd,8 the Court said:9

… In such a case, the failure of the debtor to apply to set aside the statutory demand means that the creditor is entitled to rely on the presumption of insolvency under s 287(a) of the Act and the onus falls upon the debtor to establish that there is a genuine and substantial dispute as to its liability to pay. The mere assertion of a dispute is not sufficient to rebut the presumption. Cogent evidence, short of actual proof that the debt is not payable, is required. We note that a company seeking to dispute a debt that is not the subject of the statutory demand does not have the ability to apply to set aside the debt and must therefore take other steps to dispute the debt.

[27]   Mr Davis submits that a company that does not apply to set aside a statutory demand must show some exceptional reason for its failure to dispute the existence of the debt. He referred to Quantum Holdings NZ Ltd v United Recyclers NZ Ltd and St

8      Grant v Lotus Gardens Ltd [2013] NZHC 1135 at [92].

9      Yan v Mainzeal Property and Construction Ltd (in rec & in liq), above n 7, at [63].

Pauls Body Corporate 85,978 v Cow Power Investments Ltd as authorities for that submission.10

[28]   The failure by a company to apply to set aside a statutory demand means the onus will rest upon it to rebut the statutory presumption that it is unable to pay its debts. The reasons for the failure (or the absence of an explanation for it) may feature in an assessment of whether the debt is subject to a genuine and substantial dispute. However, the timeframe for applying to set aside a statutory demand is short and strictly applied. A company may fail to apply to set aside a statutory demand for entirely prosaic reasons. I do not accept there is a requirement on a company to demonstrate an exceptional factor justifying the failure before it can raise a dispute as to the existence of the debt upon which the demand is based.

[29]   In assessing whether a company is insolvent, it is cash flow solvency (that is the ability of the company to meet current financial demands), not balance sheet solvency that is in issue. In Re Tweeds Garages Ltd the position was described this way:11

In such [cases where a company is unable to meet the current demands on it] it is useless to say that if its assets are realised there will be ample to pay 20s in the pound: this is not the test. The company may be at the same time insolvent and wealthy. It may have wealth locked up in investments not presently realisable; but although this may be so, yet if it had not assets available to meet its current liabilities it is commercially insolvent and may be wound up.

[30]   However, 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.12

10   Quantum  Holdings  NZ  Ltd  v  United  Recyclers  NZ  Ltd  HC  Auckland  CIV-2008-404-4564, 20 November 2008; St Pauls Body Corporate 85,978 v Cow Power Investments Ltd [2023] NZHC 1559.

11 Re Tweeds Garages Ltd [1962] Ch 406 (Ch) cited in Yan  v Mainzeal Property and Construction  Ltd (in rec & in liq), above n 7, at [58].

12 Yan v Mainzeal Property and Construction Ltd (in rec & in liq), above n 7 at [59] citing Sandell v Porter (1966) 115 CLR 666 at 670.

[31]   While normally if the statutory requirements for making an order for liquidation are proven a creditor will be entitled to the order that it seeks,13 the court also retains a residual discretion as to whether it will make such an order.14

Issue one – Is Mr Lucas a creditor?

[32]   Mr Lucas’s statutory demand was issued for an amount of $225,599.34. This was described in the demand as:

1.Advances made by Scott Alun Lucas to Avetar Properties totalling

$211,689.55 as per clauses 3.1.1 and 3.1.2 of the Sale and Purchase Agreement of Annona Holdings Limited dated 21st June 2012.

2.Repayments totalling $22,103.04 made to Scott Alun Lucas by Avetar Properties Limited by way of drawings, leaving a total of $189,586.51 still owing as at December 1st, 2021.

3.A “Default Interest Rate” of 15% as per 1.1 of the Sale and Purchase agreement of Annona Holdings Limited compounding per month calculated from December 1st, 2021, when payment was first sought.

[33]   Consistent with the statutory demand, the original and amended statements of claim both refer to the share purchase agreement. The amended statement of claim pleads as follows:

3.On or around 21 June 2012, the Plaintiff entered into a Sale and Purchase Agreement (the agreement) with Tony Leonard Farror [sic], Scott Lucas and Julianne Taylor. The agreement contained the following terms (inter alia):

3.1.1The Purchaser will advance $8,000.00 to Avetar Properties Limited by 22 June 2012 solely to clear outstanding debt (the parties acknowledge receipt of $3,200.00 to date from Purchaser in performance of this obligation with a further

$54,800.00 remaining payable)

3.1.2The Purchaser will then further advance $57,000.00 in instalments as necessary to Avetar Properties Limited and Annona Holdings Limited solely to enable completion of subdivision at 311 Tancred Street Ashburton. The said further advance shall be made from time to time on receipt by the Purchaser from the Continuing Shareholder of accounts relating to the subdivision at which time or times the Purchaser shall advance funds (as outlined above) to enable payment of such accounts in a timely manner.

13     Commissioner of Inland Revenue v Chester Trustee Services Ltd [2003] 1 NZLR 395 (CA).

14     Rathmore Properties Ltd v Hawk Packaging Ltd [2020] NZHC 323, [2020] 3 NZLR 134 at [36].

4.From 25 June 2012 until 5 June 2018, the Plaintiff made advances including advances under the agreement to the Defendant company totalling $211,688.55.15

[34]   The amended statement of claim then goes on to plead the amount owing by Avetar is $225,943.18 as follows:

7.The Defendant company is indebted to the Plaintiff in the sum of

$189,585.51 plus interest calculated at 15% compounded monthly in accordance with clause 1.1 and 3.3 of the agreement. A total outstanding amount of $225,943.18.

8.By statutory demand dated 1 February 2023, and served on the Defendant company on 1 February 2023 at 2:11 pm the Plaintiff served demand for the sum of $225,599.34 on the Defendant company pursuant to s 289 of the Companies Act 1993. This amount should correctly read $225,943.18 (total sum outstanding).

[35]   The matters Mr Lucas relies upon as evidence that he is a creditor of Avetar are the following:

(a)the failure by Avetar to respond to the statutory demand;

(b)the share purchase agreement, which counsel says was the basis upon which Mr Lucas made advances to Avetar;

(c)bank records showing payments made from his personal bank accounts to Avetar’s bank account between 2012 and 2019 totalling the following amounts:

(i)	2012	$23,593.55
(ii)	2013	$26,709.00
(iii)	2014	$32,297.00
(iv)	2015	$26,250.00
(v)	2016	$37,500.00
(vi)	2017	$43,689.00

15     Mr Lucas says in an affidavit of 22 September 2023 that this figure should be $211,889.55.

(vii)	2018	$21,850.00
$211,889.55

(d)Ms Taylor’s evidence that Mr Lucas advanced funds to Avetar.

[36]   There is no doubt Mr Lucas made payments to Avetar over a period of years, nor does there appear to be any challenge to the amounts paid. Where Ms Taylor and Mr Lucas disagree is the purpose for which those payments were made.

[37]   Ms Taylor’s evidence is that during their relationship she and Mr Lucas paid their personal incomes into the bank accounts of Avetar and Annona to meet personal expenditure including for groceries, mortgage payments, household and car repairs, Sky television, power, holidays, meals, furniture, veterinary bills and other household items. She says her salary went directly into the bank account of Anonna and:

…we initially agreed Scott would transfer an amount similar to what I was paid into the company accounts, however he did not always transfer an equal amount – it was sometimes less than my contribution. These funds were utilised for relationship property expenses.

[38]   Ms Taylor’s evidence is to the effect that there was an intermingling of the parties’ personal finances and the finances of Avetar and Annona, and while Mr Lucas made payments to Avetar they were not loans but contributions to shared living expenses. I am satisfied that Ms Taylor has raised a genuine and substantial dispute as to Mr Lucas’s status as a creditor of Avetar.

[39]   In relation to Mr Lucas’s reliance upon Avetar’s failure to apply to set aside the statutory demand, as I noted earlier this may reflect upon whether there is substantial or genuine dispute as to the existence of the debt. Here, Avetar did not apply to set aside the statutory demand and Ms Taylor has made no effort to explain why it failed to do so. However, the statutory demand was issued against the background of the Family Court proceeding in which the issues of whether Mr Lucas is a creditor of Avetar and, if so, in what amount have been identified by the parties as ones the court must determine. This is not a case where the dispute Ms Taylor now raises is a new one or is plainly without merit.

[40]   In the statutory demand, the statements of claim and counsel’s submissions for Mr Lucas the share agreement is relied upon as the basis upon which Mr Lucas made advances to Avetar. The parties to the share agreement are Mr Farrow, Mr Lucas and Ms Taylor. Avetar is not a party to the agreement. While the share agreement does provide that Mr Lucas will make advances to Avetar, this appears to be as consideration for Mr Farrow’s shares. Counsel did not refer me to anything in the share agreement requiring Avetar to repay advances.

[41]   In relation to Mr Lucas’s claim for interest, this too is said to arise under the share agreement but there is no explanation as to how Avetar could have any such obligation. Clause 3.3 of the share agreement provides for payment of interest but in respect to “any sum payable by that party under this agreement”. As Avetar is not a party to the share agreement, and there is no term requiring it to make payments under it, I cannot see how cl 3.3 has any application.

[42]   Adding to the lack of clarity concerning the basis for Mr Lucas’s demand, in his amended statement of claim he pleads that from 25 June 2012 to 5 June 2018 he “made advances including advances under the [share agreement]”. That is repeated in counsel’s written submissions. In his final affidavit Mr Lucas gives the following evidence:

15.… I am not relying on any entitlement to interest in relation to the establishment of any debt that is owed and remains outstanding.

16.… I accept that a significant amount of the sum owed to me was not paid under the Annona sale and purchase agreement but rather by way of regular, upon demand advances over many years as outlined in my previous affidavit.

[43]   However, at the hearing and after taking instructions from Mr Lucas, Mr Davis advised that Mr Lucas maintained he was entitled to interest and that the share agreement was the basis of his demand. Mr Lucas’s case is therefore advanced on a basis that is contrary to his evidence above.

[44]   The next matter is that Mr Lucas’s case that the payments he made were in effect loans to Avetar is not supported by the financial statements of the company. Mr Lucas was a director of Avetar between 2013 and 2021. He did, while a director,

sign the company’s accounts up until 2017. Those accounts do not record a debt owed to him. This is significant because the payments Mr Lucas made prior to 31 March 2017 make up $156,750.55 of the total of $211,889.55.

[45]   I note also that the company’s accounts record debts owed to Ms Taylor and entities she is associated with. It seems incongruous that Mr Lucas would approve accounts that record debts owed to Ms Taylor but not him if, in fact, he too was owed money by Avetar.

[46]   Mr Lucas says he made payments to Avetar upon request from Ms Taylor, who regularly asked him for funds for purposes including the renovation and subdivision of Avetar’s property at Tancred Street, Ashburton. However, Mr Lucas made payments monthly (with exceptions) and in regular amounts. There is no evidence that any of the payments related to a specific expense. That is consistent with Ms Taylor’s evidence that the payments were Mr Lucas’s contributions to personal and household expenses.

[47]   There is also no dispute as to whether Avetar’s bank account was used to meet personal and relationship expenditure. Both Mr Lucas and Ms Taylor had bank cards to draw money or make purchases from Avetar’s bank account. Ms Taylor states that in a period during 2018/2019 Mr Lucas spent or withdrew approximately $3,172.33 for alcohol and at various bars, $1,860 in cash, and in March 2019 paid for travel, food and expenses for a Wellington trip from the account. Mr Lucas acknowledges taking amounts by way of drawings totalling $22,103.04.

[48]   While I have not been provided with a full analysis of how the amounts paid by the parties into the bank accounts of Avetar and Annona were applied for personal or relationship expenses, that is an exercise with which the Family Court will grapple with the benefit of a good deal more evidence than is presently available to me. For present purposes, it is sufficient that I consider there is cogent evidence of a genuine and substantial dispute as to whether Mr Lucas is a creditor of Avetar.

Is Avetar insolvent?

[49]   As the Court of Appeal noted in Yan v Mainzeal Property and Construction Ltd (in rec & in liq), in this context the existence of a substantially disputed debt does not mean that the inquiry into the ability of the company to pay its debts is at end.16 The consequence of my finding that there is a genuine and substantial dispute as to whether Mr Lucas is a creditor of Avetar is:17

It simply means that the creditor will not generally be permitted to proceed on the basis of the disputed debt and will not be able to rely on the presumption of insolvency under s 287 of the Act. The ability of a company to pay its debts requires an overall assessment of its liabilities measured against the resources available to it in order to meet those liabilities when due.

[50]Mr Lucas relies upon Ms Taylor’s statement in her evidence that:

While Avetar cannot currently pay its expenses as they fall due, this is because of Scott’s actions which prevent Avetar from repairing and leasing the property at 311 Tancred Street. When that occurs it will be able to meet its expenses as they fall due through rental.

[51]Mr Davis submits this is an admission of insolvency.

[52]   Mr Caradus submits Ms Taylor is simply referring to the fact that Avetar is not currently deriving income and has made the decision not to repair and lease its rental property in Ashburton while subject to undertakings given to the Court and this liquidation proceeding. He says Ms Taylor has not admitted Avetar is insolvent.

[53]   Given the totality of the evidence, I accept Mr Caradus’s submission. Elsewhere in her evidence Ms Taylor expressly states Avetar is not insolvent and is able to pay its debts. She supports that evidence in several ways. She provides corroborated evidence that Avetar has assets worth $420,532.00 and liabilities of

$352,966.94. Importantly, she says that Avetar’s mortgage payments are current. In addition, the company has more than $23,000 in the bank to pay debts if they arise.

[54]   Further, and importantly, Avetar is not presently incurring debt to renovate its Ashburton property. There are no other creditors supporting Mr Lucas’s application,

16     Yan v Mainzeal Property and Construction Ltd (in rec & in liq), above n 7.

17 At [72].

and no evidence that any creditors have not been paid as their debts fell due for payment.

[55]   I am satisfied that at the present time Avetar is able to pay its debts and is not insolvent.

The issue of discretion

[56]Given my findings above, I am not required to consider this issue.

Just and equitable ground

[57]   The argument that the Court should liquidate Avetar on the just and equitable ground is advanced on the basis that the relationship between Mr Lucas and Ms Taylor has totally broken down, and if the company is not liquidated the parties will be forced to continue with this dysfunctional commercial relationship. No authorities were cited to me in support of the argument.

[58]   Mr Lucas and Ms Taylor are not, on the evidence before me, in a commercial relationship. That ended when Mr Lucas resigned as a director of Avetar. I accept that where the breakdown of relationships results in a deadlock or imperils the operation of a company that may justify appointing a liquidator on the just and equitable ground. But this is not such a case. Mr Lucas is neither a shareholder nor a director of the company, and the breakdown of the relationship between him and Ms Taylor does not presently imperil the management or operation of Avetar.

[59]   The making of a liquidation order on this ground is an extreme response and regarded as a remedy of last resort. Here, fundamentally, Mr Lucas’s interest is in obtaining payment of a debt he says is owed to him. Counsel accept that it is likely the Family Court proceeding will resolve that matter between Mr Lucas and Ms Taylor. If it does not, Mr Lucas has the means of recovering anything owed to him in ordinary proceedings. That is the course he should pursue.

[60]I find there is no basis to appoint a liquidator on this ground.

Costs

[61]   Avetar has been successful and seeks indemnity or increased costs on the basis that this proceeding was duplicative of matters before the Family Court and the Family Court has exclusive jurisdiction  to  determine  whether  Avetar  was  indebted  to  Mr Lucas.

[62]   I agree with Mr Davis’s submission that the issues in this case were whether Avetar is unable to pay its debts and, if so, whether it should be liquidated. They are not issues that are before the Family Court, nor can the Family Court make an order for liquidation.18  There  was not,  as Mr Caradus  submits, a jurisdictional  bar to   Mr Lucas proceeding in this Court.

[63]That said, Avetar has been successful and is entitled to costs.

Result

[64]   Mr Lucas’s application for the appointment of a liquidator to Avetar is dismissed.

[65]   Avetar has been successful and is awarded costs on a 2B basis plus disbursements as fixed by the Registrar. If there is a dispute as to quantum, counsel may file memoranda.

[66]   Counsel did not address me in relation to the undertakings given by Avetar and Ms Taylor to the Court. Counsel should confer and file memoranda as to any orders sought in relation to them.

O G Paulsen Associate Judge

Solicitors:

Canterbury Legal, Christchurch Duncan Cotterill, Christchurch

18     Martin v Martin [2023] NZHC 2162; Fox v Jubilee Management Ltd HC Palmerston North CIV-2008-454-935, 6 March 2009.