Mulvaney v Distinctive Decorators Ltd

[2015] NZHC 2711

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2015-409-592 [2015] NZHC 2711

BETWEEN

DION PATRICK MULVANEY

First Plaintiff

TANIA REWA MULVANEY Second Plaintiff

AND

DISTINCTIVE DECORATORS LTD Defendant

Hearing:	3 November 2015
Counsel:	G D Jones for Plaintiffs No appearance by or on behalf of Defendant
Judgment:	3 November 2015

(ORAL) JUDGMENT OF HEATH J

Solicitors:

Brandts-Giesen McCormick, Rangiora
Counsel:

G Jones, Christchurch

MULVANEY v DISTINCTIVE DECORATORS LTD [2015] NZHC 2711 [3 November 2015]

[1]      Mr and Mrs Mulvaney have applied to put Distinctive Decorators Ltd into

liquidation, on the “just and equitable” ground.1

[2]      No steps have been taken to oppose the application.  It was called today and no appearance was entered.   I am satisfied that all formal steps that must be undertaken before the Court can make a liquidation order have been  taken and completed.

[3]      On 29 October 2015, Associate Judge Osborne adjourned the application for formal proof today.  I thank Mr Jones for the quality of the information put before the Court for today’s hearing.

[4]      The background is set out in an affidavit sworn by Ms Mulvaney.  In short, the company was incorporated in November 2012.  While taking corporate form, it was (in effect) a joint venture involving the Mulvaneys (on the one hand) and a friend, Mr Sugrue and his partner, Ms Edgington (on the other).

[5]      Both Mr Mulvaney and Mr Sugrue are painters and decorators by trade. Unfortunately, the working relationship between Mr Mulvaney and Mr Sugrue deteriorated.  The evidence satisfies me that, as from May 2014, they were unable to continue to work together.   In effect, each has gone his own way, creating individualised corporate vehicles through which they can operate.

[6]      The reason for the application to liquidate Distinctive Decorators Ltd is the loss of trust and confidence in each other, the deadlock that has occurred and the need for an orderly winding up of the company’s affairs.  It appears that the parties have been unable to achieve that goal through either negotiation or some form of mediation.  There are a number of issues concerning current accounts of one or other of the shareholders and the allocation of profits that require resolution.

[7]      One of the grounds upon which an order on the just and equitable basis may be made is if shareholders in a company have lost trust and confidence in each other.

Also, that ground can be evidenced by deadlock among 50 percent shareholders.  In

1      Companies Act 1993, s 241(4)(d).   As both Mr and Mrs Mulvaney are shareholders of the company they each have standing to bring the application: s 241(2)(c)(iii).

this case, Mr and Mrs Mulvaney, Mr Sugrue and Ms Edgington respectively, each hold 50 percent interests in the company.   Having regard to the principles that I discussed in Jenkins v Supscaf Ltd,2 I am satisfied that an order should be made.

[8]      Mr Vlasic and Mrs Smart have agreed to act as liquidators of the company. They have filed a consent to act and seek an order approving remuneration, on a prospective basis.  I am satisfied they are appropriate people to appoint and that the rates identified in their application are appropriate.

[9]      As a result, I make the following orders:

(a)      Distinctive Decorators Ltd is put into liquidation by the appointment of Mr Vlasic and Mrs Smart as liquidators.   The order is timed at

2.20pm on 3 November 2015.

(b)The  liquidators  are  authorised  to  exercise  powers  on  a  joint  and several basis.

(c)      An order for costs is made in favour of the plaintiffs on a 2B basis together with disbursements.  That translates into a sum of $2676 for costs and $913.11 for disbursements.

[10]     I make an order authorising (on a prospective basis) the liquidators to charge

at the rates set out in Mrs Smart’s affidavit.  That is subject to an application being

made to fix the total remuneration payable3 when the liquidation is finalised.

P R Heath J

2      Jenkins v Supscaf Ltd [2006] 3 NZLR 264 (HC) at paras [99], [110]–[115] and [117].

3      Companies Act 1993, s 284(1)(e).