McCloy v Titan Foundation Limited HC Auckland CIV 2008-404-2243

[2008] NZHC 2270

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2008-404-2243

UNDERPart IVA of the High Court Rules and section 280 of the Companies Act 1993

IN THE MATTER OF     of an application under section 280 of the Companies Act 1993 for an order that Colin Thomas McCloy and Vivian Judith

Fatupaito of PriceWaterhouse Coopers may be appointed as liquidators of Titan Foundation Limited.

BETWEEN  COLIN THOMAS MCCLOY AND VIVIAN JUDITH FATUPAITO Applicants

AND  TITAN FOUNDATION LIMITED Respondent

Hearing:         23 April 2008

Appearances: M V Robinson & M S Derocher for the Applicants

Judgment:      23 April 2008 at 9am

JUDGMENT OF ASSOCIATE JUDGE ROBINSON (On papers)

This judgment was delivered by me on 23 April 2008 at 9 am pursuant to Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

COLIN THOMAS MCCLOY AND VIVIAN JUDITH FATUPAITO V TITAN FOUNDATION LIMITED HC AK CIV 2008-404-2243  23 April 2008

Solicitors:           Simpson Grierson, Private Bag 92518, Auckland

[1]   Vivian Fatupaito is a senior insolvency practitioner and a director of PriceWaterhouse Coopers. She has been an insolvency practitioner for over twenty years and has regularly been appointed as a liquidator by the Courts.

[2]    Vivian Fatupaito together with Richard Dale Agnew also of PriceWaterhouse Coopers, are the joint and several liquidators of Lifestyle Orewa Limited (struck off and in liquidation).

[3]    As  liquidators  of  Lifestyle,  Vivian  Fatupaito  and  Richard  Agnew  have arranged for a notice under s 289 Companies Act 1993 to be served on Titan Foundation Limited demanding payment of $350,000. As that sum has not been paid within the required time and there being no contest brought by Titan Foundation Limited as to the claim for the $350,000, Lifestyle has now applied to put Titan Foundation  Limited  into  liquidation.  The  application  to  put  Titan  Foundation Limited into liquidation is set down for hearing in this Court on 24 April 2008.

[4]    At  the  hearing  of  the  application  to  put  Titan  Foundation  Limited  into liquidation, it is proposed that Vivian Judith Fatupaito and Colin Thomas McCloy be appointed liquidators of Titan Foundation Limited.

[5]    By virtue of s 280 (1) Vivian Fatupaito is precluded from being appointed as a liquidator of Titan Foundation Limited by virtue of the provisions of s 280 (1) (b) unless authorised by the court. Colin McCloy and Vivian Fatupaito apply to this court for a direction that they not be disqualified by s 280 (1) (b) Companies Act

1993 from being persons qualified to be liquidators of Titan Foundation Limited.

[6]    They also apply for orders directing service of the application for direction that they not be disqualified from persons qualified to be liquidators of Titan Foundation Limited on Titan Foundation Limited before 24 April 2008, on any creditor who contacts the petitioning creditor Lifestyle Orewa Ltd (in liquidation) or its solicitor prior to the first call of the liquidation proceedings against Titan Foundation Limited on 24 April 2008 and on the last known business address of each of the creditors of

Titan  Foundation  Limited  within  five  working  days  of  the  application  being appointed liquidators of Titan.

[7]    In support of the application it is pointed out that the court should exercise its discretion to permit the applicants to be appointed as liquidators of Titan Foundation Limited for the following reasons: -

a)      The applicants have detailed knowledge of companies, trusts and individuals associated with both Lifestyle Orewa Limitd in liquidation and Titan Foundation Limited and the transactions entered into by and between them.

b)The applicants background knowledge will enable them to discharge their duties as liquidators more quickly and efficiently than any other potential appointees.

c)       The relationship between Lifestyle and Orewa Limited (in liquidation) and Titan Foundation  Limited will not compromise  the  applicants independence,  competence  and  integrity  and  will  not  effect  their ability to carry out their task as liquidators professionally and efficiently.

d)The applicants are not creditors of Titan Foundation Limited in their personal capacity. One of the applicants, namely Vivian Fatupaito is a liquidator of the petitioning creditor. In the circumstances any conflict is more apparent than real.

e)       The creditors will obtain a right to challenge the appointment of the applicants as liquidators in court and may also vote to have them removed at a creditors meeting.

[8]    The application by Lifestyle Orewa Limited (in liquidation) to place Titan Foundation Limited into liquidation, results from information received by Vivian Judith Fatupaito in the course of her liquidation of Lifestyle Orewa Limited (in

liquidation). I accept that there appears no good reason for disqualifying the applicants  from  being  liquidators.  Indeed  on  the  evidence  available,  there  are obvious advantages in their appointment.

[9]    However, if any creditor considers the appointment to be inappropriate, then the orders being made preserve the right of the creditor to apply to the court and be heard in respect of the objection.

[10]  I adopt the procedure referred to by Associate Judge Abbott in Icon Digital

Entertainment Limited v Westpac New Zealand Limited HC Auckland CIV 2007-

404-007124 20 November 2007. In the circumstances there will be the following orders: -

a)       Leave  is   granted  to  commence  these  proceedings  by  way  of originating application.

b)Colin   Thomas   McCloy   and   Vivian   Judith   Fatupaito   are   not disqualified by s 280 (1) (b) Companies Act 1993 from being persons qualified to be liquidators of Titan Foundation Limited.

c)       That the originating application filed herein be served by serving a copy on:-

i)        Titan Foundation Limited before 24 April 2008

ii)       Any creditor who contacts the petitioning creditor Lifestyle

Orewa Limited (in liquidation) or its solicitor prior to 24 April

2008; and

iii)The last known business address of each of the creditors of Titan Foundation within five working days of the applicants being appointed liquidators of that company.

d)That the applicants solicitor and client costs of this application be an expense incurred by the applicants in carrying out their duties of Titan Foundation Limited.

[11]  That leave be reserved to any creditor to apply to vary or set aside the above orders within seven days of service of the application on them.

Associate Judge Robinson