Mainzeal Property and Construction Limited (in receivership and in liquidation) v King Facade Limited (pk/a Richina Land Limited (in liquidation))

[2018] NZHC 1886

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-001094

[2018] NZHC 1886

BETWEEN

MAINZEAL PROPERTY AND CONSTRUCTION LIMITED (IN

RECEIVERSHIP AND IN LIQUIDATION)
First Plaintiff

KING FAÇADE LIMITED (PREVIOUSLY KNOWN AS RICHINA LAND LIMITED

(in liquidation) Second Plaintiff

…/2

Hearing:	(On the papers)
Judgment:	27 July 2018

JUDGMENT OF VENNING J

APPLICATION FOR LEAVE TO AMEND PLEADINGS

This judgment was delivered by me on 27 July 2018 at 2.15 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Minter Ellison Rudd Watts, Auckland

Lee Salmon Long, Auckland Chapman Tripp, Auckland K3 Legal Limited, Auckland Kensington Swan, Auckland

Copyto:            D Chisholm QC, Auckland J E Hodder QC, Auckland M D O’Brien QC, Auckland

G P Blanchard QC, Auckland

MAINZEAL PROPERTY AND CONSTRUCTION LTD (IN REC AND IN LIQ) v YAN [2018] NZHC 1886 [27

July 2018]

AND

MAINZEAL GROUP LIMITED (in

liquidation)
Third Plaintiff

ANDREW JAMES BETHELL, BRIAN MAYO-SMITH and STEPHEN JOHN

TUBBS as liquidators of MAINZEAL PROPERTY AND CONSTRUCTION
LIMITED (in receivership and in

liquidation), KING FAÇADE LIMITED (PREVIOUSLY KNOWN AS RICHINA

LAND LIMITED (in liquidation) and MAINZEAL GROUP LIMITED (in

lquidation) Fourth Plaintiffs

RICHARD CILIANG YAN
First Defendant

PETER GOMM
Second Defendant

RT HON JENNIFER MARY SHIPLEY
Third Defendant

CLIVE WILLIAM CHARLES TILBY
Fourth Defendant

SIR PAUL DAVID COLLINS
Fifth Defendant

SIEW MAY KWAN

Sixth Defendant

RICHINA GLOBAL REAL ESTATE

LIMITED (in liq) Seventh Defendant

ISOLA VINEYARDS LIMITED
(previously known as WAIHEKE VINEYARDS LIMITED) (in liq)

Eighth Defendant

Introduction

[1]The minute of 4 July 2018 refers.

[2]                The plaintiffs have now filed an application for leave to amend pleadings. Given the responses filed by the defendants I feel able to deal with the matter on the papers.

[3]                The first, second and fourth plaintiffs and the seventh and eighth defendants and the Registrar of Companies also seek an order varying undertakings previously given during the course of these proceedings.

Amendment

[4]                The plaintiffs seek leave to file a third amended statement of claim in the form annexed to the application.

[5]                The first defendant does not oppose. The second to fifth defendants consider it appropriate for a formal application to be made but abide the decision of the Court on the application. The sixth defendant does not oppose. The seventh and eighth defendants (now in liquidation) do not oppose.

[6]                I have reviewed the proposed third amended statement of claim and the difference between it and the existing claim. The principal amendments in relation to the third cause of action arise because of the differing views taken to the nature of the transfer of the debt of $15.15 million owing by the seventh defendant to the first plaintiff.

[7]                The effect of the amended pleadings is to clarify the plaintiffs’ contention as to the basis of their claim against and liability of, the second to fifth defendants.

[8]                The eighth cause of action seeks an order for payment of $4.41 million against the eighth defendant for knowing receipt. It seeks by way of alternative relief a declaration of constructive trust. As noted the seventh and eighth defendants do not oppose the amendments.

[9]                I accept counsel for the plaintiffs’ submission that the proposed amendments are confined. They do not introduce new causes of action but rather clarify and refine the existing claims. The other amendments are of detail, not substance.

[10]            There will be no significant prejudice to the defendants in granting leave. It is in the interests of justice for the amendments to be made.

Result - directions

[11]            Leave is granted to the plaintiffs to file and serve the third amended statement of claim.

[12]Any amended defences are to be filed and served by 17 August 2018.

Liquidators’ consent

[13]            I formally record that the liquidators of the seventh and eighth defendants consent to the continuation of the claims against those companies. The liquidators are excused from taking any further steps in the proceeding.

Amendment to undertakings

[14]            Given the change in the seventh and eighth defendants’ position following liquidation, by consent of the first plaintiff, second plaintiff and fourth plaintiffs and the seventh and eighth defendants and the Registrar of Companies the existing undertakings are varied as follows:

(a)The funds held in Russell McVeagh’s trust account be transferred into Deloitte’s trust account to be held on trust in accordance with the terms below. The Liquidators will provide to the Mainzeal liquidators monthly statements showing the funds held and all deposits and withdrawals made.

(b)The Liquidators may sell and realise:

(i)the Vineyard; and

(ii)the Wine stock.

(c)The Liquidators may pursue any claims against debtors of RGREL and/or Isola, and or any other liable parties, including any claims against the directors of RGREL and/or Isola (to the extent that their funds in each liquidation allow them to do so), and they shall, for the avoidance of any doubt, have the ability to compromise or settle any actions, claims, or proceeds, against any third parties. The Liquidators shall be entitled to deduct their reasonable fees and disbursements from the proceeds of any such recoveries, but for the avoidance of any doubt, the Liquidators may not use the proceeds of any sale of the Vineyard, and/or the Wine stock, or the funds transferred from Russell McVeagh’s trust account for this purpose.

(d)The Liqudiators shall be entitled to deduct the following from the funds held in their trust account or the sale proceeds of the Vineyard and Wine stock:

(i)The Liquidators’ reasonable fees and costs for their attendances in relation to administering, investigating, maintaining, protecting, securing, and selling the Vineyard and Wine Stock.

(ii)The Liquidators’ reasonable disbursements and expenses in relation to administering, investigating, maintaining, protecting, securing, and selling the Vineyard and Wine stock, including, but not limited to:

A        advertising and marketing costs; B           auctioneer’s commission and fees;

C        real estate agent’s commission and fees; D      sale agent’s commission and fees;

E        legal fees (on a solicitor-client basis); F           valuation expenses;

Ginsurance costs;

Hon-going maintenance costs, rates, and other outgoings in relation to the Vineyard;

Iduty to be paid in relation to sale of Wine stock;

Jstorage costs in relation to the Wine stock (including payment of any outstanding storage costs to clear any liens reasonably asserted by the storage facility);

Kremoving and using any Wine stock for sampling, testing, or marketing purposes;

Lsecurity costs;

Mdelivery, shipping, and transport costs in relation to moving or selling the Wine stock;

Nany reasonable costs incurred to enhance the value of the Vineyard or Wine stock for sale (including, if necessary, the costs involved with removing trespassing people or chattels from the Vineyard); and

Oany taxes, or other deductions required by law in relation to the sale of the Vineyard or Wine stock.

(e)With the exception of meeting any costs and expenses set out in paragraph [14](d) above, the proceeds from any sale of the Vineyard and Wine stock shall be held by the Liquidators in trust pending resolution of this proceeding, further order of the Court, or expiry of these orders, as set out in paragraph [14](h) below.

(f)If some or all of the Wine stock is unfit for consumption or is otherwise worthless, then the Liquidators may dispose of the Wine stock and use the funds held in their trust account to cover their costs and expenses in doing so.

(g)The Liquidators be granted leave to apply to the Court for further orders or to vary these orders on not less than five days’ notice to MPCL, KFL, the Mainzeal liquidators, and the Registrar of Companies.

(h)In the absence of any further order of the Court, these orders (and, for the avoidance of doubt, the Undertakings themselves) shall automatically expire on any of the following events:

(i)if the Mainzeal liquidators receive a final judgment and/or declaration (i.e. following the expiry of any appeal period and/or following determination of any appeal) that the relevant plaintiffs have no proprietary claim and/or no proprietary relief is granted in relation to some or all of the assets of RGREL and/or Isola, in which case the relevant assets, funds or proceeds will be available for the relevant estate/s in liquidation;

(ii)if the Mainzeal liquidators obtain a final judgment and/or declaration (in the sense referred to in [14](h)(i) above) that the relevant plaintiffs have a proprietary claim and/or a proprietary relief is granted over some or all of the assets of either RGREL and/or Isola, in which case the Liquidators shall comply with the terms of any judgment or order and disburse the relevant assets, funds, or proceeds to the Mainzeal liquidators as required; or

(iii)by an agreement between the Mainzeal liquidators and the Liquidators (in which case they and the Registrar of Companies shall file a memorandum with the Court confirming that these orders (and the Undertakings) have come to an end.)

[15]Costs reserved.

[16]The remaining directions in the minute of 4 July 2018 continue to apply.

[17]Counsel are advised that the trial Judge may now be Cooke J.

Venning J