Mason v McKay - [2021] NZHC 1794

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1265

[2021] NZHC 1794

IN THE MATTER of Sacred Hill Marlborough Vineyard Limited (in Receivership and in
Administration) and Sacred Hill Vineyard Limited (in Receivership)

BETWEEN

DAVID HAMILTON MASON

Plaintiff

AND

ANDREW MCKAY and REES LOGAN

First defendants

WESTPAC NEW ZEALAND
Second defendant

LEONARD MAGINNESS and JARED WAIATA BOOTH

Third defendants

VINLINK MARLBOROUGH LIMITED

Fourth defendant

Hearing: 15 July 2021

Appearances:

B O’Callahan and A Cherkashina for plaintiff M Kersey and C F Butters first defendants SCDS Gollin for second defendant

E C Gellert and R A Morris for third defendants L H Scott for fourth defendant

M D O’Brien QC for Mach Flynt Inc

Date of judgment:

15 July 2021

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 15 July 2021 at 4.00pm.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

MASON v MCKAY [2021] NZHC 1794 [15 July 2021]

[1] The plaintiff — David Mason, sole director of the Sacred Hill Group (all but one of which five companies presently are in receivership and at least two in voluntary administration) — seeks by urgent interim injunction opportunity as guarantor to redeem security held by the third defendant (“Westpac”).

Background

[2] The companies are in serious default of the terms of that security. In addition to various acts of deemed insolvency, including a failure to comply with Customs’ statutory demand for some $4.304 million, Westpac’s demand for payment of some
$52.360 million remains unpaid. Property Law Act notices to remedy these defaults were to have expired on 13 July 2021,1 but this Court directed be extended until midnight tonight, 15 July 2021.2

[3] The first defendants (the “receivers”) have sold the companies’ assets to the fourth defendant (“Vinlink”), including conditionally on default not being remedied by the time of the notices’ expiry.3 Vinlink is to fund the companies’ continuing business to 30 July 2021 (but, if the sale is not then settled, for repayment by the receivers).

[4] Mr Mason alleges the sale agreement is at a gross undervalue, because it does not include the value of the companies’ long-term and renewable contract with the United States’ Mach Flynt Inc, in turn to supply the companies’ wine to a substantial United States supermarket chain. The interim orders sought are for the notices’ expiry to extend to 30 July 2021.

[5] In those urgent circumstances, the application was argued on a Pickwick basis, meaning other parties appeared only to assist the Court to the extent they could or wished to do, given the absence of notice.4 Such appearance alone is not submission

1      Property Law Act 2007, s 119.
2      Mason v McKay [2021] NZHC 1766.
3      Property Law Act, s 124.
4      Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd [1972] 1 WLR 1213 (Ch) at 1214–1215.

to this Court’s jurisdiction. Nonetheless, I direct the proceeding be served on Mach Flynt…

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: [2021] NZHC 1794
Decision Date: 15 July 2021

CaseChat Overview and Summary

In the High Court of New Zealand, David Mason sought an urgent interim injunction against Andrew McKay, Rees Logan, Westpac New Zealand, Leonard Maginness, Jared Waiata Booth, and Vinlink Marlborough Limited. Mr Mason, the sole director of the Sacred Hill Group, which comprises several companies, most of which are in receivership and some in voluntary administration, sought to redeem security held by Westpac. The companies had defaulted on their obligations, and Westpac had issued Property Law Act notices for their expiry on 13 July 2021, which the Court extended until midnight on 15 July 2021. The receivers had sold the companies' assets to Vinlink, subject to the defaults being remedied by the notices' expiry. Mr Mason argued that the sale agreement undervalued the companies due to the long-term and renewable contract with Mach Flynt Inc, a United States' company. The interim orders sought were for the notices' expiry to be extended to 30 July 2021.

The court had to decide whether Mr Mason had a serious question for trial, and if the balance of convenience and overall interests of justice favoured granting the injunction. The court held that Mr Mason's allegation that the receivers breached their duties offered a serious question for trial. However, the court found that the prospect of an investor clearing the companies' liabilities to Westpac and investing in the companies' continued operation was too uncertain to grant the injunction. The court also noted that the delayed expiry of the notices contributed to commercial uncertainty for third parties, but that it was not particularly weighty.

The court held that it saw no reason to intervene. The plaintiff's 14 July 2021 without notice interlocutory application for an interim injunction was dismissed, and the Court's 13 July 2021 order would lapse in its terms. In principle, Mr Mason was liable to pay the other parties' costs, but the court reserved costs for determination on short memoranda of no more than five pages if the parties could not agree on the costs. The court also confirmed its oral orders that the terms of the heads of agreement with Vinlink, the companies' contract with Mach Flynt, Inc, and the contract for sale with Vinlink were confidential to the parties to them, and that the Court's file of this proceeding could not be accessed without the permission of a Judge.

Orders