Mikkelsten v P & D Mikkelsen Partnership
[2023] NZHC 1006
•11 May 2023
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2022-463-100
[2023] NZHC 1006
BETWEEN D H MIKKELSEN
Applicant
AND
P & D MIKKELSEN PARTNERSHIP
First Respondent
P L MIKKELSEN
Second Respondent
Hearing: 22 March 2023 Appearances:
Kate Cornegé for the Applicant
Peter Hardie for the Second Respondent
Judgment:
11 May 2023
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Set aside protest to jurisdiction]
This judgment was delivered by me on 11 May 2023 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Tompkins Wake (Olivia Morgan/Kate Cornegé), Tauranga, for the Plaintiff Jones Howden (Peter Hardie), Matamata, for the Respondents
D H MIKKELSEN v P & D MIKKELSEN PARTNERSHIP [2023] NZHC 1006 [11 May 2023]
Introduction
[1] Ms Deborah Anderson, formerly Mikkelsen (Ms Anderson), has applied to set aside a notice filed by the second respondent, Mr Phillip Mikkelsen (Mr Mikkelsen), protesting the jurisdiction of the High Court to hear and determine a wind up application of P & D Mikkelsen Partnership (the Partnership).
Background
[2] On 17 October 2022, Ms Anderson filed an originating application to appoint receivers to wind up the Partnership. It was subsequently served on Mr Mikkelsen on 9 November 2022.
[3] On 25 November 2022, Mr Mikkelsen filed a notice of appearance protesting the jurisdiction of the High Court to hear and determine the originating application (the notice). Instead, he asserted the proper forum was the Family Court or that the application was an abuse of process.
[4] On 13 December 2022, Ms Anderson then filed this interlocutory application to set aside the notice of appearance.
Ms Anderson’s application to set aside notice
[5] Ms Anderson seeks an order setting aside the notice of appearance protesting jurisdiction filed by the second respondent and costs against the second respondent.1
[6]The grounds on which the orders are sought are:2
(a)On 17 October 2022, the applicant filed an originating application in the High Court seeking the appointment of receivers to the Partnership (Application).
(b)On 25 November 2022:
(i) The Second Respondent filed:
1 Interlocutory application to set aside notice of appearance protesting jurisdiction dated 13 December 2022 at [1].
2 At [2].
(A) proceedings in the Family Court seeking the division and classification of relationship property (Second Respondent only);
(B) an interlocutory application in the Family Court for orders appointing a person to sell and divide property pursuant to the Property (Relationships) Act 1976; and
(ii)The First and Second Respondent filed a Notice of Appearance Protesting Jurisdiction in the High Court on the basis that:3
(A) the High Court has no jurisdiction because (inter alia) the property of the Partnership compromises relationship property and the separate property of the Second Respondent:
(B) the originating application is an abuse of process.
(c)The Property (Relationships) Act 1976 (PRA) does not preclude the Applicant from seeking orders in the High Court appointing a receiver to wind up the Partnership.
(d)Orders can be made appointing a receiver to wind up the Partnership with the net profits to be set aside for the Family Court to deal with as relationship property. At paragraph 1 (b)–(c) of the Application, the Applicant specifically sought that the receivers would apply the assets of the Partnership in accordance with s 84 (a)–(c) of the Partnership Law Act 2019 — and not s 84(d) — and the remainder (after payment of the receiver’s fees and expenses) would be held on trust pending resolution of the division of relationship property, thereby ensuring that jurisdiction of the Family Court in relation to division and application of relationship property would be preserved.
(e)If the Second Respondent contends that any part of the proceeds of the Partnership are his separate property, this can also be held in trust pending resolution of relationship property matters.
(f)The Partnership owns the Farm and runs a beef and sheep breeding and finishing business from it. The Partnership must continue to operate this business until the Farm can be sold and the sale settled, which could be some months from the date of sale (anticipated to be March/April 2023), and including managing its significant creditors while its bank accounts are frozen. The Family Court is unable to appoint a person to conduct the Partnership’s business in this way pending settlement of the sale.
(g)The Applicant filed this originating application in good faith and because of the lack of oversight she now has over the business of the Partnership, and because of the difficulties the parties were having in coming to an agreement on matters relating to the sale of the Farm and Partnership.
3 I note that the notice was filed on behalf of the second respondent only.
Affidavit of Deborah Helen Anderson dated 23 February 2023
[7] Ms Anderson has made an affidavit supporting her application to set aside the notice and responding to Mr Mikkelsen’s opposition.4 She deals with each of Mr Mikkelsen’s grounds of opposition in turn.
[8] Ms Anderson notes that the first ground Mr Mikkelsen raises is that the Partnership is relationship property. She accepts that their interests in the Partnership are relationship property, and that without agreement between the pair, the Family Court will need to make orders about the division of that property.
[9] Ms Anderson has filed a notice of opposition in response to Mr Mikkelsen’s application for interim orders in the Family Court. She says that the essence of her opposition is that such narrow orders would be insufficient to deal with the matters involved in winding up the Partnership.
[10] Ms Anderson feels that the most pressing issue in this dispute is the need to wind up the Partnership to preserve its value. She says that this is because:
(a)Since the separation, she has lost oversight of the management of the Partnership. She does not have access to the farm or to the financial information surrounding the operation of the farm.
(b)The property market is softening and the best time to sell is as soon as possible.
(c)Westpac have frozen all the Partnership’s accounts and have reduced the working overdraft. Currently, the pair have agreed to a costly process wherein all financial information is collated by the Partnership’s accountant, to be approved by each partner and their solicitors before it is submitted to the bank, who will then transfer funds for the agreed expenditure to the accountant. This is because
4 Affidavit of Deborah Helen Anderson in support of interlocutory application to set aside notice protesting jurisdiction dated 23 February 2023.
Mr Mikkelsen refuses to allow Ms Anderson to manage the farm’s finances — as she previously did.
(d)Since the accounts were frozen in June 2022, Mr Mikkelsen and Ms Anderson have not been able to draw takings from the Partnership to contribute to their living expenses. The couple have two children who primarily live with Ms Anderson. She says that she is currently experiencing financial difficulty because of the delay in winding up the Partnership.
(e)Westpac is becoming impatient with the length of time taken to wind up the Partnership. The bank has now insisted on the provision of a registered valuation of the farm.
[11] Ms Anderson deposes that the pair have been unable to agree on the process for winding up the Partnership. She says that although they have agreed the farm is to be sold, contrary to Mr Mikkelsen’s affidavit, they have not been able to agree on which real estate agent should be appointed.
[12] In response to Mr Mikkelsen’s comments about his unanswered solicitors’ letters, Ms Anderson says that she is unwilling to agree on his proposal that her preferred agent be appointed initially, and if he does not achieve a sale on the agreed terms, then Mr Mikkelsen’s agent, Jamie Proude, would be irrevocably appointed. Ms Anderson believes that Mr Proude would favour Mr Mikkelsen’s interests.
[13] Ms Anderson says that she has instructed her solicitors to respond to Mr Mikkelsen’s letters with a counter proposal.5 She suggests that in the event a sale is not reached, the agency will revert to a third agent who both parties have met and who neither of them has any objection to. Therefore, Ms Anderson says that they are accordingly still negotiating the issue of which agent should be appointed to handle the sale of the farm.
5 The letter from her solicitors is attached to the affidavit as exhibit “DA-3”.
[14] Against that background, Ms Anderson says that her current application relates only to the wind up process and the caretaking of the Partnership until such time as the sale of the farm is complete. It is not a claim that relates to the division of relationship property.
[15] Ms Anderson then goes on to address Mr Mikkelsen’s second ground of opposition, that her application is an abuse of process.
[16] Ms Anderson highlights that she filed her application to appoint receivers prior to Mr Mikkelsen filing for the division of relationship property in the Family Court. She says that at the time she made this application, the parties had only agreed that the farm and assets would be sold. She considers that the parties are not making progress in winding up the Partnership and instead they require external help to manage the farming business and the winding up of the Partnership.
Mr Mikkelsen’s opposition
[17]Mr Mikkelsen opposes the application on the following grounds:6
2.1. The High Court lacks jurisdiction to determine the originating application by the applicant:
(a)the property of the first respondent partnership comprises relationship property and the separate property of the second respondent under the Property (Relationships) Act 1976 (“the Act”);
(b)the originating application is in substance an application in the wrong Court for the classification and division of property under the Act and in particular for interim orders and/or ancillary orders under subsections 25(4) and 33(3)(a) and (5) of the Act to appoint persons to sell and divide property comprising either relationship property or the separate property of the second respondent;
(c)On 25 November 2022 the second respondent filed proceedings in the Family Court at Taupo seeking orders for the classification and division of property under the Act, including interim orders under subsection 25(4) of the Act for the sale of property and ancillary orders under 33(3)(a) and (5) of the Act and to appoint a person to sell and divide it;
6 Notice of opposition by second respondent to application by applicant to set aside appearance protesting the jurisdiction of the High Court dated 2 February 2023 at [1] and [2].
AND/OR ALTERNATIVELY:
2.2.The originating application should be stayed as it is an abuse of the process of the Court in that:
(a) Proceedings have been filed by the second respondent in the Family Court at Taupo. In those proceedings the Family Court will have the necessary jurisdiction to determine, amongst other things, what may be due to the second respondent for advances and/or capital contributions to the first respondent, that is, to determine whether an item of property is relationship property or the separate property of the second respondent;
(b) A Receiver appointed to exercise a power under section 84(b) or
(c) of the Partnership Act 2019 to apply the assets of the first respondent in repayment of advances or capital contributions to a spouse cannot do so until after the Family Court has determined, amongst other things, whether the advance or capital contribution is separate property or relationship property;
(c) The applicant is not acting in good faith or for a proper purpose in applying to the High Court to appoint Receivers to sell the assets of the first respondent, given that the parties have agreed7 to the sale of the assets of the first respondent, to its winding up and to appoint a real estate agent to sell the assets by auction;
Affidavit of Phillip Leo Mikkelsen dated 16 February 2023
[18] Mr Mikkelsen has made an affidavit in support of his opposition to the set aside application.8 He deposes at the outset that Ms Anderson and he have proceedings before the Family Court in Taupō.9
[19] Regarding Ms Anderson’s application to appoint receivers to wind up the Partnership he believes it is entirely misconceived and an abuse of process because:
(a)The Partnership property is comprised of relationship property and property which Mr Mikkelsen claims is his separate property.
7 The second respondent has done so without prejudice to his right to claim in the relationship proceedings between the parties that the applicant was not entitled to dissolve the partnership in the manner she did, and the respondent has, as a consequence, suffered loss and damage for which the applicant is liable.
8 Affidavit of the second respondent in support of notice of opposition to interlocutory application dated 16 February 2023.
9 FAM-2022-069-140.
(b)There is currently an interlocutory application before the Family Court seeking directions to confirm the appointment of a real estate agent to sell the assets of the Partnership and to pay the proceeds of any sale to an independent solicitor’s trust account pending classification and division of relationship property.
(c)Ms Anderson and Mr Mikkelsen have already agreed to wind up the Partnership and to appointment the real estate agent to sell the assets and to preserve the proceeds.
(d)The subject matter of the orders sought by Ms Anderson concern the classification and division of relationship property, in particular the orders sought require the receivers:
(i)to determine what is due to Ms Anderson and Mr Mikkelsen for advances either of the couple have made to the Partnership; and
(ii)to ascertain what is due from the Partnership to each of the couple in respect of the capital of the Partnership.
[20] Mr Mikkelsen says that these proceedings are entirely unnecessary because although there are proceedings before the Family Court to have interim orders made about the sale of the Partnership’s property, the couple have agreed on the following:
(a)The Partnership’s land and assets are to be sold.
(b)The farmland will be marketed and sold by auction on or about 30 March 2023.
(c)Mr Greg Kellick and Property Brokers of Taupo have been appointed to manage this sale. This was the preferred agent of Ms Anderson.
(d)The timeline for the marketing campaign and auction.
(e)A reserve price of $6,000,000 plus GST.
(f)The proceeds of a sale are to be paid into an independent solicitor’s trust account.
[21] In Mr Mikkelsen’s view, Ms Anderson commenced these proceedings for the sole purpose of coercing him into agreeing to the appointment of her preferred real estate agent and to burden him with legal costs.
[22]Mr Mikkelsen then sets out the status of the Family Court Proceedings:
(a)On 25 November 2022, Mr Mikkelsen filed a substantive application under the PRA for orders to be made for the identification and division of relationship property.
(b)On the same day, he filed an interlocutory application under that legislation for interim orders for the appointment of a real estate agent and an independent solicitor to act on behalf of the couple should an agreement for the sale of the farm be entered into.10
(c)On 19 December 2022, Ms Anderson filed a notice of opposition to his interlocutory application in the Family Court.
(d)On 21 December 2022, the couple filed a joint memorandum with the Family Court agreeing on timetabling directions for the proceedings.
(e)On 31 January 2023, Ms Anderson filed a notice of defence to the substantive applications Mr Mikkelsen filed in the Family Court.
[23] Mr Mikkelsen then goes on to explain that he continues to manage the farm and it is still producing income in line with its historical performance.
[24] On 12 December 2022, there was a without prejudice meeting between Mr Mikkelsen, his solicitors and Ms Anderson. Following that meeting, the couple agreed on a system for the payment of the Partnership’s creditors and expenses.
10 A copy of the Interlocutory Application was attached to the Affidavit as exhibit PLM 2.
That system has been approved by Westpac, the Partnership’s bankers. This system has now been implemented and payments to creditors have begun.
[25] On 25 January 2023, Mr Mikkelsen sent a letter to Ms Anderson’s solicitors agreeing to the appointment of Mr Kellick and Property Brokers. Other than a short email response to a follow-up letter sent to Ms Anderson’s solicitors, Mr Mikkelsen did not receive a reply to his letter. On 13 February, Mr Mikkelsen instructed his solicitors to send a further letter to Ms Anderson’s solicitors.11
Legal principles
[26]Rule 5.49 of the High Court Rules 2016 relevantly provides:
5.49 Appearance and objection to jurisdiction
(1)A defendant who objects to the jurisdiction of the court to hear and determine the proceeding may, within the time allowed for filing a statement of defence and instead of so doing, file and serve an appearance stating the defendant’s objection and the grounds for it.
(2)The filing and serving of an appearance does not operate as a submission to the jurisdiction of the court.
(3)A defendant who has filed an appearance may apply to the court to dismiss the proceeding on the ground that the court has no jurisdiction to hear and determine it.
…
(5)At any time after an appearance has been filed, the plaintiff may apply to the court by interlocutory application to set aside the appearance.
(6)The court hearing an application under subclause (3) or (5) must,—
(a)if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss the proceeding; and
(b)if it does not dismiss the proceeding under paragraph (a), set aside the appearance.
…
(8) The court, in exercising its powers under this rule, may do so on any terms and conditions the court thinks just and, in particular, on setting aside the appearance it may extend the time within which the
11 A copy of each letter, and the email response of the applicant’s solicitors, are attached to Mr Mikkelsen’s affidavit as exhibits PLM 8, PLM 9, and PLM 10.
defendant may file and serve a statement of defence and may give any directions that appear necessary regarding any further steps in the proceeding.
[27] Section 76 of the Partnership Law Act 2019 (the Partnership Act) provides, so far as is relevant:
76 Application of partnership property
(1) When a partnership is dissolved, every partner is entitled as against the other partners, and all persons who claim through them in respect of their interests as partners, to have—
(a) the partnership property applied in payment of the debts and liabilities of the firm; and
(b) the surplus assets (after the payment of those debts and liabilities) applied in payment of what may be due to each of the partners (after deducting what may be due from them as partners).
(2) For the purpose of this section, a partner or the partner’s representatives may, on the dissolution of the partnership, apply to the court to wind up the business and affairs of the partnership.
[28]Section 84 of the Partnership Act provides, so far as is relevant:
84 Application of assets
The assets of the firm, including the sums (if any) contributed by the partners to make up losses or deficiencies of capital, must be applied in the following manner and order:
(a)in paying the debts and liabilities of the firm to persons who are not partners in the firm:
(b)in paying to each partner rateably what is due from the firm to the partner for advances (as distinguished from capital):
(c)in paying to each partner rateably what is due from the firm to the partner in respect of capital:
(d)in dividing the remainder (if any) among the partners in the proportion in which they are entitled to share the profits.
[29] Section 11 of the Property (Relationships) Act 1976 (the PRA) provides, so far as is relevant:
11 Division of relationship property
(1) On the division of relationship property under this Act, each of the spouses or partners is entitled to share equally in—
(a)the family home; and
(b)the family chattels; and
(c)any other relationship property.
(2)This section is subject to the other provisions of this Part.
Analysis
[30] The issue to be determined in this judgment is whether this Court has jurisdiction to appoint a receiver to the Partnership or whether doing so would encroach on the Family Court’s exclusive jurisdiction to identify and distribute relationship property?
[31] Ms Corneg submits that partnerships are governed by a relevant partnership agreement and otherwise by the Partnership Act, which permits a partner to apply to the Court to wind up the business affairs of the partners after dissolution.12 She further submits the High Court has jurisdiction to hear any claims or applications to appoint receivers under the Senior Courts Act 2016 and its inherent jurisdiction,13 and has jurisdiction over the appointment of receivers under the Receiverships Act 1993.14 She submits that in relation to relationship property, unlike a company, each partner in the partnership has a beneficial interest in the assets of the partnership and she relies on the decision of Maw v Maw.15
[32]Ms Cornegé submits that while the Family Court has:
(a)exclusive jurisdiction over applications made under the PRA including for identification and distribution of relationship property;16
(b)power to appoint a person to sell property and divide, apply or settle the proceeds where it makes an order for sale of relationship property;17 and
12 Partnership Act 2019, s 76(2).
13 Senior Courts Act 2016, s 12; Re Tisco Holdings (NZ) Ltd (1995) 8 PRNZ 698; Kidd v van Heeren
[2019] NZCA 275.
14 Receiverships Act 1993, s 2(1); High Court Rules 2016, pt 7 sub-pt 4.
15 Maw v Maw [1981] 1 NZLR 25.
16 Family Court Act 1980, s 11; Property (Relationships) Act, s 22.
17 Property (Relationships) Act, s 33(5).
(c)power to make interim orders to preserve the value of relationship property, including assets owned in partnership;18
the Family Court does not have the inherent jurisdiction of the High Court to appoint a receiver, nor does it have power to supervise receivers.19
[33] Ms Cornegé relies on the decision in Bignell v Hayes where, while there were current proceedings in the Family Court, and that Court had not identified relationship property or made an order for its sale so as to be able to exercise its ancillary powers under s 33(5) of the PRA, the High Court accepted the appointment of a receiver was necessary for the partnership’s affairs to be wound up.20
[34]Ms Cornegé has also referred the Court to s 4(4) of the PRA which provides:
(4) Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act.
Ms Cornegé further referred the Court to the decision of Associate Judge Sussock in Lung v Liu where the Court reviewed authority to conclude that the PRA does not exclude the High Court’s jurisdiction, but instead requires the PRA to be applied where any relationship property question arises.21
[35] Ms Cornegé submits that the relevant background to this application is as follows:
(a)the Partnership was dissolved on 29 June 2022 and in due course the proceeds of the Partnership property need to be divided and distributed between the partners via the Family Court relationship property proceedings that were commenced by Mr Mikkelsen after the receivership application was filed;
18 Burmester v Burmester [2018] NZHC 47, [2018] NZFLR 206.
19 Receiverships Act 1993, s 34.
20 Bignell v Hayes HC Rotorua CIV-2010-463-838, 6 May 2011 at [25].
21 Lung v Liu [2022] NZHC 3074.
(b)there have been significant difficulties in bringing in and realising the Partnership assets, and with the running and management of the Partnership in the interim.
[36] Mr Hardie, for Mr Mikkelsen, submits that this Court has no jurisdiction to hear and determine the application to appoint receivers to the Partnership because:
(a)the Family Court has exclusive jurisdiction over the subject matter of the proceeding as the application is in substance an application under ss 22(1), 23(1), 25(1)(a), 25(4), 33(3)(a) and (5) of the PRA to classify and to divide property of the spouses (not the property of any third party);
(b)the parties have already agreed:
(i)to wind up the Partnership;
(ii)on the assets of the Partnership;
(iii)to a mechanism for payment of creditors of the Partnership during the winding-up process;
(iv)to appoint a person to sell the assets of the Partnership and to pay the proceeds of sale into a third party trust account.
[37] Mr Hardie submits that what has not been agreed are the matters the subject of s 84(b) and (c) of the Partnership Act, which is what is due to each of the spouses for advances to the Partnership and/or capital. He submits that such matters require determination of the shares of each spouse in the property owned by one or both of them and its division under s 25(1)(a) and (3)(a) of the PRA. Mr Hardie submits that in the present case, where the property which is the subject of the application to the High Court is owned entirely by the spouses and not by any third party, and where the orders sought were in substance the classification and division of that property, the Family Court has exclusive jurisdiction under the PRA to determine the matters in question in the proceedings.
[38] Mr Hardie relies on two decisions in Jew v Jew,22 and Bignell v Hayes,23 and submits the analysis of these decisions is as follows:
(a)In the High Court decision of Jew v Jew, the husband applied to the High Court for a declaration that property owned by a trust established by his father was not relationship property. Master Lang, as he then was, struck out the claim on the basis that the application in substance involved the classification and division of relationship property and, as such, the subject matter of the proceedings was within the exclusive jurisdiction of the Family Court.24 On review, Paterson J held that as the property in question was, as pleaded, owned by a third party (the father’s trust), the Family Court did not have exclusive jurisdiction and the High Court had jurisdiction to make the declaration sought.25
(b)In Bignell v Hayes, Woolford J, seemingly unadvised of Paterson J’s reversal of Master Lang, rejected Master Lang’s Jew v Jew decision on the basis that the application for the appointment of the receivers was necessary to wind up the affairs of the partnership (which entailed property owned by a third party) and was not an application for orders to classify or divide relationship property under the PRA.
[39] Mr Hardie submits that the circumstances in Bignell v Hayes are quite different from the present case in that the applicants were trustees of the S Bignell Family Trust, the respondents were trustees of the Charon Trust; the applicants and respondents were each partners in Awa-iti Partnership; and the partnership assets comprised of three properties owned by the respective trusts on a 50/50 basis. Consequently, as distinct from the present case, there were third party (namely the trusts) property interests involved, whereas in the present case the property the subject of this application is owned by one or both spouses.
22 Jew v Jew [2002] NZFLR 1093 (HC) [Master Lang’s Decision]; Jew v Jew [2003] 1 NZLR 708 (HC) [Justice Paterson’s Decision].
23 Bignell v Hayes HC Rotorua CIV-2010-463-838, 6 May 2011.
24 Master Lang’s Decision, above n 22, at [25] and [35].
25 Justice Paterson’s Decision, above n 22, at [40].
[40] In addition, Mr Hardie submits that a significant factor in Woolford J’s decision to appoint a receiver was the fact there was a deadlock between the parties which could not be resolved.
[41] The submissions of Mr Hardie at [7.2] to [7.4] and [8] relate more to the substantive issue of whether a receiver should be appointed, rather than the issue of the Court’s jurisdiction to appoint one, and I do not deal with them further here.
Conclusion in respect of the Court’s jurisdiction
[42] In my view, the Court does have jurisdiction to appoint a receiver to the Partnership assets. Section 22 of the PRA makes clear that any application under that Act must be determined by the Family Court.26 However, the recent High Court case of Lung v Liu,27 which followed Campbell J’s approach in Kake v Napier are instructive in this area.28 Campbell J highlighted that the Family Court’s exclusive jurisdiction was under PRA applications, whereas the application before him in Kake was a contractual dispute, which could not have even been made under the PRA.29 Similarly, Associate Judge Sussock in Lung found that was an application under the Property Law Act 2007, which likewise was a separate application for which the High Court clearly had jurisdiction.30 The same jurisdictional proposition applies here. This is substantively an application to appoint a receiver under the Partnership Act, not a relationship property application under the PRA and not something that is possible under the PRA.
[43] As the substantive application is not one under the PRA, the Court has jurisdiction. However, s 4(4) of the PRA makes clear that if questions of relationship property do arise under this application, then such a question must be resolved in accordance with the PRA.31
26 See further Family Court Act 1980, s 11.
27 Lung v Liu, above n 21.
28 Kake v Napier [2022] NZHC 2395.
29 At [21]–[24]
30 At [71].
31 See further Lung v Liu, above n 21, at [71]; Kake v Napier, above n 28, at [26] and [27].
[44] My preliminary view on appointment of a receiver in these circumstances is that no relationship property questions would arise if the receiver’s powers, if appointed, were restricted as follows:
(a)The power to sell and bring in the Partnership assets pursuant to ss 76 and 84 of the Partnership Act; and
(b)The power to pay the liabilities of the Partnership to persons who are not partners in the firm as set out in s 84(a) of the Partnership Act.
[45] In my view, the additional powers sought in Ms Anderson’s application to be granted to the receiver under ss 84(b) and (c) of the Partnership Act would involve relationship property questions. These powers involve decisions as to payment of advances to partners and payment of capital to partners which, in my view, involves identification and division of relationship property. Accordingly, it may be that a determination of the Family Court may be most expedient course of action and avoid duplicative application of the PRA. Regardless, if such powers under s 84(b) and (c) were granted to the receiver and issues under ss 84(b) and (c) were brought before the High Court, the High Court would be required to apply the PRA in such a determination in accordance with s 4(4).
[46] As a result of the conclusions I have reached at [42]–[45], the best course of action would likely be for the receivers, if appointed, to complete the sale of the Partnership assets, to pay the liabilities to all creditors and third parties, and then pay the remaining balance of funds to an independent party to be held in trust pending resolution of Mr Mikkelsen’s relationship property claims in the Family Court.
Abuse of process
[47] For the sake of completeness, I briefly address the alternative ground in Mr Mikkelsen’s notice of opposition, that the originating application should be stayed as an abuse of process. This ground does not appear to be properly raised in a notice of appearance protesting jurisdiction as it presupposes the Court has jurisdiction and that nevertheless a stay should be granted. Such an application could be separately
made now that I have determined the High Court has jurisdiction. Nevertheless, a stay for abuse of process by Ms Anderson appears difficult when her application was first in time. Additionally, as I have said, the High Court will be sensitive to the Family Court’s jurisdiction and/or apply the PRA as required when determining any issues which are required by s 4(4) of the PRA to be determined as if the proceedings had been brought under the PRA, but this application is properly before me as one to determine a Partnership Act application.
Result
[48] As a result of the conclusion I have reached at [42]–[45] above, I am of the view that the Court does have jurisdiction to appoint a receiver, with due weight given to the ongoing Family Court proceedings when determining their powers, and therefore the notice should be set aside.
Orders
[49]I make the following orders:
(a)Ms Anderson’s application to set aside the notice of appearance protesting jurisdiction filed by Mr Mikkelsen is granted.
(b)As to costs, counsel are directed to agree costs within 20 working days of the date of this judgment. If no agreement is reached within the 20 working day period, counsel for the plaintiff shall submit a memorandum as to costs (not exceeding five pages) within five working days of the expiry of the 20 working day period, and counsel for the defendant shall submit a memorandum in reply (not exceeding five pages) within five working days of receipt of counsel for the plaintiff’s memorandum. Costs will then be determined on the papers.
…………………………….. Associate Judge Taylor
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