Lucas v Avetar Properties Limited - [2023] NZHC 2552

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-100

[2023] NZHC 2552

UNDER the Companies Act 1993

AND

IN THE MATTER

of an application for appointment of an

interim liquidator and an abridgment of time

BETWEEN

SCOTT ALUN LUCAS

Plaintiff

AND

AVETAR PROPERTIES LIMITED

Defendant

Hearing: (On the papers)

Counsel:

T M C Te Whaiti for Plaintiff S Caradus for Defendant

Judgment:

13 September 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

LUCAS v AVETAR PROPERTIES LIMITED [2023] NZHC 2552 [13 September 2023]

[1] This liquidation proceeding was commenced on 10 March 2023 relying on an unsatisfied statutory demand. The proceeding was served prior to 23 March 2023 as counsel for the director of Avetar Properties Limited (Avetar) sought by memorandum that the proceeding be struck out. The plaintiff and the director of Avetar (Ms Taylor) are involved in proceedings in another jurisdiction. As a result, Ms Taylor’s solicitor considered the liquidation proceedings were an abuse of process. This Court was not prepared to deal with a strike out application based on a memorandum. A statement of defence was filed on 30 March 2023.

[2] On 3 April 2023, the plaintiff, Mr Lucas, filed an application for the appointment of an interim liquidator to Avetar. The application was made on the basis that the assets of Avetar were in jeopardy. The application noted Avetar had, prior to November 2022, owned three properties in Ashburton (the properties) but that on 7 November 2022, one of the properties (property A) was transferred to another company whose director and shareholder is a relative of Ms Taylor’s.

[3] The application to appoint an interim liquidator was made on the basis that the status quo should be maintained, that is, Avetar still owned two of the properties, which should be safeguarded from being transferred away. It was said the interests of the creditors required the assets of Avetar not be disposed of pending the hearing of the liquidation application. The application to appoint an interim liquidator was made some five months after the disposal of property A by Avetar in November 2022.

[4] The application to appoint an interim liquidator was accompanied by an application for the abridgement of time. The filing of the opposition to that application was subject to a telephone conference with Associate Judge Paulsen on 5 April 2023. The Judge recorded the advice of counsel for Avetar (Mr Caradus), that he had only just received the application and had not had time to read Mr Lucas’ affidavit, but had taken instructions. The proposal made by Mr Caradus was that the application be resolved on the basis that Avetar provide an undertaking that the two remaining properties would not be sold without the consent of Mr Lucas or, further order of the Court.

[5] The application to appoint the interim liquidator was eventually resolved by the giving of undertakings. Costs were reserved.

Avetar’s submissions in support of costs

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: [2023] NZHC 2552
Decision Date: 13 September 2023

CaseChat Overview and Summary

In Lucas v Avetar Properties Limited, Scott Alun Lucas sought to have Avetar Properties Limited (Avetar) wound up under the Companies Act 1993. The proceeding was initiated based on an unsatisfied statutory demand and an application for an interim liquidator followed, arguing that Avetar’s assets were in jeopardy. Avetar contended that the application was an abuse of process and sought to have the proceedings struck out. The central legal issue before the court was whether Avetar’s assets were in immediate risk of dissipation, justifying the appointment of an interim liquidator.

The court examined the circumstances leading up to the application. The property in question had been transferred five months prior to the application, and the court noted that there was no immediate threat to the remaining assets. However, the court acknowledged that Avetar had not responded to inquiries about the transfer. The court concluded that while the application was premature, the resolution via undertakings achieved the desired preservation of assets. The court held that the costs should lie where they fell, as the factors were balanced and the immediate risk to the assets was not apparent. The court declined to reserve costs pending the outcome of the substantive liquidation application, as it would not provide an answer to the merits of the interim application.

Orders