McMillan v McMaster - [2020] NZHC 3065

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-345

[2020] NZHC 3065

UNDER the Companies Act 1993

IN THE MATTER

of

MARLBOROUGH COUNTRY LIMITED (IN LIQUIDATION)

BETWEEN

MARCUS JAMES McMILLAN and JOHN

HOWARD ROSS RISK, as liquidators of Marlborough Country Limited

(in liquidation) Applicants

AND

GARY RICHARD McMASTER, JAYNE MARIE GALE, PETER SCOTT MURPHY and STEPHEN JOHN GALE

First Respondents

AND

VUELTA INVESTMENTS LIMITED

Second Respondent

continued…2

Hearing:
19 November 2020

(By way of telephone conference)

Counsel:

K L B Eichelbaum for the Applicants

S A Barker for First, Second, Third and Fourth Respondents M Robinson for Fifth Respondent
A Low for Ninth and Tenth Respondents

Interim Judgment:

19 November 2020

INTERIM JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 19 November 2020 at 3.15 pm
pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 19 November 2020

McMILLAN v McMASTER [2020] NZHC 3065 [19 November 2020]

AND ANNIE CHAN and JACK CHAN

AND AND AND AND AND AND AND AND

AND

Third Respondents

H HAHN LIMITED
Fourth Respondent

FREDERICK PAUL PEREIRA
Fifth Respondent

DOMINIC CHANDRAN
Sixth Respondent

YOU SEO LIAN
Seventh Respondent

CHUAH KIM SENG
Eighth Respondent

SONIA JANE PEREIRA
Ninth Respondent

MARCUS PAUL PEREIRA
Tenth Respondent

YONG SIEW LENG
Eleventh Respondent

FRANCIS BRIGGED

Twelfth Respondent

[1] This proceeding is an application by the liquidators of Marlborough Company Limited (in liquidation) (Marlborough).

[2] The applicants, having completed their duties as liquidators, now hold a surplus which would, in the ordinary course of events, be distributed pro rata to the shareholders in Marlborough.

[3] A group of shareholders, being the first to fourth respondents, known by the parties as “the Wellington respondents”, opposed the liquidators distributing the surplus in accordance with the Companies Office Register, they taking the view

that some of the shareholders were not properly listed as shareholders on the company’s register and on the basis they have claims against the fifth respondent arising from events leading to them becoming shareholders. In short, the Wellington respondents seek a direction that the liquidators distribute all of the surplus to them (after liquidators’ costs).

[4] Part of the allegations made by the Wellington respondents against the fifth respondents are that the fifth respondent was involved in fraudulent activity in relation to the affairs of the company and/or the allocation of shares and/or the process by which the Wellington respondents became shareholders. The Wellington respondents seek to establish in this application, that improper conduct they claim occurred in order to support their claim is that the surplus should be paid only to them.

[5] In aid of that argument, counsel for the Wellington respondents has, by memorandum, sought three directions in relation to the conduct of the liquidators’ hearing.

[6] Firstly, a direction is sought that an affidavit filed at the time Marlborough was placed into liquidation be read in this proceeding, secondly, that the fifth respondent be summonsed to appear before the Court for…

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.

Continue reading McMillan v McMaster

Details

AGLC: McMillan v McMaster [2020] NZHC 3065
Case: [2020] NZHC 3065
Decision Date: 19 November 2020

CaseChat Overview and Summary

In the case of McMillan v McMaster, the applicants, who were the liquidators of Marlborough Country Limited, sought to distribute a surplus from the liquidation to the shareholders of the company. The Wellington respondents, shareholders of the company, opposed the distribution, arguing that some shareholders were not properly listed and that they had claims against one of the respondents. They sought to direct the liquidators to distribute the surplus only to them. Additionally, they requested that an affidavit filed at the time of liquidation be read, that the fifth respondent be summoned for cross-examination, and that the hearing of the liquidators' application be adjourned to allow time for the full issues to be explored.

The legal issues before the court were whether the liquidators' application was the appropriate forum for the Wellington respondents' claims and whether the allegations of improper conduct and fraud should be addressed in this proceeding. The court noted that allegations of fraud must be pleaded with care and particularity and that disputes between shareholders should be addressed through proper litigation, not under the liquidators' application. The court also considered whether the Wellington respondents were attempting to freeze the funds that would otherwise go to the other respondents.

The court decided that the liquidators' application was not the appropriate forum for the Wellington respondents' claims and that their allegations needed to be properly pleaded in separate proceedings. The court directed that the surplus be held by a stakeholder or paid into court, and the liquidators' involvement in the application would cease. The Wellington respondents were given time to issue their proceedings, with the deadline set for the end of January 2021. If the proceedings were not filed by that time, the surplus would be distributed according to the shareholders listed on the Companies Register. If the proceedings were filed before the deadline, the surplus would be held subject to further order of the court.

The final orders of the court were that the liquidators' appearance on 23 November 2020 was excused if they chose not to attend, and the surplus would be held by a stakeholder or paid into court, subject to further order of the court. The Wellington respondents were given time to issue their proceedings, with the deadline set for the end of January 2021. If the proceedings were not filed by that time, the surplus would be distributed according to the shareholders listed on the Companies Register. If the proceedings were filed before the deadline, the surplus would be held subject to further order of the court.

Orders