Maginness v Connect Supporting Recovery Incorporated (in liquidation)

[2019] NZHC 3033

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2476

[2019] NZHC 3033

UNDER

Part 19 of the High Court Rules 2016, the Companies Act 1993 and the Incorporated Societies Act 1908

IN THE MATTER

of the liquidation of Connect Supporting Recovery Incorporated (in liquidation)

BETWEEN

TONY LEONARD MAGINNESS and JARED WAIATA BOOTH

First Applicants

AND

CONNECT SUPPORTING RECOVERY INCORPORATED (IN LIQUIDATION)

Second Applicant

Hearing:	20 November 2019
Appearances:	S J Nicolson for the first applicants and second applicant
Judgment:	20 November 2019

ORAL JUDGMENT OF PALMER J

Solicitors:

Lowndes Jordan, Auckland

MAGINNESS v CONNECT SUPPORTING RECOVERY INCORPORATED (IN LIQUIDATION) [2019] NZHC 3033 [20 November 2019]

[1]                 Mr Tony Maginness and Mr Jared Booth, the first applicants, are the liquidators of the second applicant, Connect Supporting Recovery Inc (the Society), a not-for- profit charitable incorporated society. The Society was established in 1990 to provide services and support to New Zealanders requiring mental health, addiction and intellectual disability support.

[2]                 In late 2018, the Society formed the intention to merge with the Framework Trust and take on the new trading name of Ember – Korowai Takitini. It carried out a careful consultation process. On 29 November 2018, at a Special General Meeting (SGM), members of the Society resolved to do so and appoint the liquidators to effect that. There were delays in completing the merger. The minutes of the second SGM noted that the winding up would not be effected until 30 June 2019 for pragmatic reasons. The Society’s employees and service users were migrated to the merged entity on that basis. The Society ceased to trade on 30 June 2019. On 30 July 2019, the Society’s Board resolved to extend the effect of the Society’s liquidation to 1 August 2019 to allow the liquidator’s control of the Society to follow the last transaction contemplated by the merger. The Society holds funds of over $1 million. They cannot be released to Ember – Korowai Takitini until the status of the Society is confirmed by the Court.

[3]                 The liquidators seek a declaration under s 284(1)(g) of the Companies Act 1993 (the Act) that they have been validly appointed as liquidators of the Society at 9 am on 1 August 2019 and a consequential extension under s 255(4)(b) of the requirement to file a liquidator’s report under s 255(2)(c)(ii). Ms Nicolson submits 1 August 2019 for liquidation is the date that best accords with: the intention of the Society; the former Society members’ intentions; the effecting of the merger transactions; the current wishes of the liquidators; the date the liquidators assumed control of the Society; the notice of appointment by the liquidators to the stakeholders and public. It also disrupts the Society’s service users and stakeholders the least. Alternatively, the applicants apply to immediately place the Society into liquidation under s 25(b) and/or s 25(e) of the Incorporated Societies Act 1908.

[4]                 Ms Nicolson advises me there are no disputed facts, all parties consent, there is no opposition and no party is envisaged to be negatively affected by the orders

sought. She has filed comprehensive affidavits by Ms Erica Hodgson, chair of the Board of the Society, and Mr Jared Booth, one of the liquidators. I consider there is good reason to declare the liquidators have been validly appointed as liquidators of the Society at 9 am on 1 August 2019. I do so and consequently extend the requirement to file a liquidator’s report under s 255(4)(b) of the Companies Act 1993 until 20 working days from today. Costs are payable by the Society.

Palmer J