Nakhle v Karaka Estate Limited
[2025] NZHC 3359
•6 November 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-001547
[2025] NZHC 3359
BETWEEN HENRIETTE MICHELE NAKHLE
Plaintiff
AND
KARAKA ESTATE LIMITED
Defendant
CIV-2025-404-1548 BETWEEN
HENRIETTE MICHELE NAKHLE
PlaintiffAND
BYERLEY PARK LIMITED
Defendant
Hearing: 3 November 2025 Appearances:
R K P Stewart KC / J P Nolen for the Plaintiff
J M Sandelin / N R Frith for the Second Defendant
Judgment:
6 November 2025
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 6 November 2025 at 2 pm. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors/Counsel:
MinterEllisonRuddWatts, Auckland Nolen Walters, Auckland
R K P Stewart KC, Auckland Mills Lane, Auckland
NAKHLE v KARAKA ESTATE LTD [2025] NZHC 3359 [6 November 2025]
Introduction
[1] Henriette Nakhle (Mrs Nakhle) and her son, Daniel Nakhle (Mr Nakhle), are the directors of the defendant companies, Karaka Estate Ltd (KEL) and Byerley Park Ltd (BPL). KEL is the trustee of the Karaka Estate Trust, and BPL is the trustee of the Byerley Park Trust (together, the trusts).
[2] KEL and BPL are part of a complex group of companies and trusts (the group) associated with the Nakhle family. There is a significant dispute among the family members that has resulted in multiple proceedings in the High Court.
[3] Mrs Nakhle and Mr Nakhle are in deadlock regarding the management of KEL, BPL and the trusts. In these proceedings (the liquidation proceedings), Mrs Nakhle has applied for orders putting KEL and BPL into liquidation under the Companies Act 1993 (the Act), on the grounds that KEL and BPL are insolvent, and it is just and equitable for the companies to be liquidated.
[4] Mr Nakhle protests the jurisdiction of the Court to hear the liquidation proceedings. He applies for a stay of the proceedings and an order restraining advertising of the proceedings (referred to as the stay application), primarily relying on a clause in the trust deed for each of the trusts (the trust deeds) which provides for alternative dispute resolution (the ADR clauses). Mr Nakhle requires leave to bring the stay application in his capacity as a shareholder of KEL and BPL.
[5] Mrs Nakhle opposes the stay application and applies for Mr Nakhle’s protest to jurisdiction to be set aside.
[6]The issues are:
(a)Should leave be granted to Mr Nakhle to bring the stay application?
(b)Do the ADR clauses bar Mrs Nakhle from bringing these proceedings?
(c)If not, should the Court exercise its discretion to stay the liquidation proceedings and restrain advertising?
Background
[7] Mrs Nakhle and her husband operated a successful business during the 1980s and 1990s which enabled them to establish the group and generate significant wealth for the family.
[8] In 2004, the trusts were established to acquire land in Kingseat. BPL and KEL each acquired a neighbouring property and they entered into a joint venture. At present, BPL operates a horse breeding and training facility on both properties, which operates at a loss.
[9] In 2008, the Nakhle Treasury Trust was established to act as a treasury for the group. The sole trustee is Nakhle Treasury Ltd (NTL). Mr Nakhle and Mrs Nakhle are the directors of NTL. By this time, Mr Nakhle had primary responsibility for managing the group and operating NTL.
[10] Mr Nakhle fell out with his parents and the family in 2014. There was a period of reconciliation in 2015 and negotiations among the family members regarding a division of all assets of the group. Mr Nakhle’s position is that binding terms of settlement were agreed (the 2015 terms), and under those terms, he is now the beneficial owner of the assets of KEL and BPL. Mrs Nakhle and other parties deny that they are bound by the 2015 terms.
[11] NTL has made significant distributions and advances to KEL and BPL. In 2023, in her capacity as a director of NTL, Mrs Nakhle refused to approve any further advances from NTL to KEL or BPL. Mr Nakhle has been funding the operating costs of KEL and BPL since 2020, resulting in a related party loan account.
[12] In December 2022, Mr Nakhle filed a proceeding in the High Court against various members of the group and family, seeking to enforce the 2015 terms.1 That proceeding includes a pleading that Mr Nakhle is the beneficial owner of the assets of KEL and BPL, which is denied by Mrs Nakhle.
1 Nakhle v Nakhle HC Auckland CIV-2023-404-38.
[13] Four further proceedings followed in 2023,2 including CIV-2023-404-2844 (2844).3 This proceeding includes claims by NTL to recover distributions and advances made to BPL and KEL. The alleged loan advances to BPL exceed
$10 million and the alleged distributions to BPL exceed $7 million.
[14] Mr Nakhle is defending 2844 in his personal capacity. He says that the funds in dispute are not repayable by BPL or KEL. BPL and KEL have not taken any steps in 2844 because of a deadlock between Mrs Nakhle and Mr Nakhle as the directors.
[15] In February 2024, the Nakhle family members agreed to a facilitation process pursuant to a written facilitation agreement. The various proceedings were put on hold while the facilitation process was extant.
[16] The facilitation process ended in December 2024 without a resolution. Lawyers for Mrs Nakhle and Mr Nakhle have corresponded since regarding the issue of how KEL and BPL should respond to the claims in 2844. The deadlock remains.
[17] Mrs Nakhle says that the deadlock is fundamental and irretrievable, and she has lost all trust and confidence in Mr Nakhle. She says that she and her husband placed significant trust in Mr Nakhle to manage the group for the interests of the wider family and their trust was misplaced. She alleges that Mr Nakhle has misappropriated a significant amount of money.
[18] Mr Nakhle argues that Mrs Nakhle cannot commence a liquidation proceeding against KEL or BPL until the directors have met in good faith to attempt to resolve their dispute, and if that is unsuccessful, attended a mediation.
Should leave be granted to Mr Nakhle to bring the stay application?
[19]Rule 31.11 of the High Court Rules 2016 (HCR) provides:
2 Nakhle v Nakhle HC Auckland CIV-2023-404-2835; Nakhle v Nakhle HC Auckland CIV-2023- 404-2849; and Nakhle v Dalkara GP Limited HC Auckland CIV-2023-404-2858.
3 Nakhle v Nakhle HC Auckland CIV-2023-404-2844.
31.11 Power to stay liquidation proceedings
(1)If an application for putting a company into liquidation is made under rule 31.3, the defendant company, or, with the leave of the court, any creditor or shareholder of that company or the Registrar of Companies, may, within 5 working days after the date of the service of the statement of claim on the defendant company, apply to the court—
(a)for an order restraining publication of an advertisement required by rule 31.9 or any other information relating to that statement of claim; and
(b)for an order staying any further proceedings in relation to the liquidation.
(2)The court must treat an application under subclause (1) as if it were an application for an interim injunction and, if it makes the order sought, it may do so on whatever terms the court thinks just.
(3)The inherent jurisdiction of the court is not limited by this rule.
[20] As a shareholder of KEL and BPL, Mr Nakhle has a sufficient interest in the liquidation proceedings to be heard and to be given leave to apply under r 31.11. The stay application was filed out of time. The delay was not significant, and Mrs Nakhle abides the decision of the Court.
[21] This is an appropriate case to grant leave to Mr Nakhle to bring the stay application and to enlarge the time for doing so.
Do the ADR clauses bar Mrs Nakhle from bringing these proceedings?
The relevant terms of the deeds
[22] Clause 12.4 of the trust deeds provides that trustee’s decisions must be unanimous. The ADR clause is cl 12.2:
12.2Where there is any matter in dispute between the trustees or Directors of the Trustee, the matter must be resolved in accordance with the following dispute resolution procedure:
(a)If any of the Trustees or the Directors of the Trustee believe that a dispute between them has arisen regarding the affairs of the Trust Fund or the duties of the Trustees or the duties of the Directors of the Trustee as the case may be they may give written notice to the other Trustees or the other Directors of the Trustee as the case may be of the existence of such a dispute and the particulars of it.
(b)The Trustees or the Directors of the Trustee as the case may be shall then meet in good faith and seek to resolve the dispute and if it is not resolved within 14 days of the notice referred to in sub-paragraph (a) above, the Trustees or the Directors of the Trustee shall seek to agree on a process for resolving the dispute through means other than litigation or arbitration such as conciliation or independent expert determination. If they cannot reach agreement on such a process for resolving the dispute they shall refer the dispute to mediation and for that purpose they shall use the assistance of a dispute resolution person or organisation nominated by the president for the time being of the New Zealand Law Society.
(c)The Trustees or the Directors of the Trustee as the case may be may not use any information or documents obtained through the dispute resolution process for any person other than in an attempt to settle the dispute.
(d)No party to the dispute may refer the dispute to arbitration or commence proceedings in any Court unless the dispute has been referred to a dispute resolution person or organisation in accordance with sub-paragraph (b) above and the person or organisation certifies that the dispute has been so referred and there appears to be no likelihood of a resolution of the dispute by that process.
(e)If, following the procedures to resolve any dispute between the Trustees or the Directors of the Trustee as the case may be herein set out, the dispute has not been resolved, the dispute shall be referred to an arbitration held in New Zealand in accordance with the Arbitration Act 1996 or any enactment in substitution of that Act.
Mr Nakhle’s argument
[23] Mr Nakhle has not made an application under art 8(1) of sch 1 to the Arbitration Act 1996, which relevantly provides:
8 Arbitration agreement and substantive claim before court
(1)A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.
[24] Mr Nakhle does not contend that the ADR clauses compel the parties to arbitrate the primary issue in the liquidation proceedings, which is whether liquidation
orders should be made. Mr Nakhle is not arguing that the Court does not have jurisdiction to make liquidation orders.
[25] The substance of Mr Nakhle’s argument is that the Court ought not to exercise its jurisdiction to determine the liquidation proceedings until the prescribed dispute resolution process has been completed.
The statutory jurisdiction to liquidate
[26]Section 241(4) of the Act relevantly provides:
(4)The court may appoint a liquidator if it is satisfied that—
(a)the company is unable to pay its debts; or
…
(d)it is just and equitable that the company be put into liquidation.
[27] The Court’s jurisdiction under s 241(4)(d) is broad.4 It extends to situations where there is a justified lack of trust and confidence between the shareholders and directors of a company,5 often involving a deadlock in the management of the company.6 However, the deadlock must be so serious as to impede the continued operation of the company. The essential basis for relief is frustration by internal discord.7
[28] The liquidation of a company is a statutory process for the benefit of all creditors. It is therefore not itself amenable to arbitration. However, not all disputes arising in an insolvency context are per se non-arbitrable. Disputes as to the existence or quantum of a debt may fall within a valid arbitration agreement.8 But it is generally
4 Jenkins v Supscaf Ltd [2006] 3 NZLR 264 (HC) at [134]; and Ebrahimi v Westbourne Galleries Ltd
[1973] AC 360 (HL) at 379.
5 Ebrahimi v Westbourne Galleries Ltd, above n 4, at 379. See also Campbell v Marble Point Winery Ltd [2017] NZHC 1412 at [33]–[34]; and Hayes v Taniwha Buses Ltd [2014] NZHC 1965 at [59].
6 Strachan v Denbigh Property Ltd (2011) 10 NZCLC 264,813 (HC) at [28]; Sea Management Singapore Pte Ltd v Professional Service Brokers HC Auckland CIV-2011-404-5315, 25 January 2012 at [3]; Che v Nutri-Health Holdings Group New Zealand Ltd [2017] NZHC 2400 at [33].
7 Sea Management Singapore Pte Ltd v Professional Service Brokers, above n 6, at [3].
8 Manchester Securities Ltd v Body Corporate 172108 [2018] NZCA 190, [2018] 3 NZLR 455 at [31]–[35].
accepted that the question of whether a company should be placed into liquidation can only be determined by the Court.9 Where the underlying debt is subject to arbitration, the Court may stay or adjourn the liquidation proceedings pending arbitral determination of that dispute.10
[29] In Jenkins v Supscaf Ltd,11 Heath J proceeded on the basis that an agreement to arbitrate in the company’s constitution did not preclude the Court’s jurisdiction to liquidate the company.12
[30] Heath J referred to the predecessor to the Act, the Companies Act 1955, which enjoined the Court not to make a liquidation order on just and equitable grounds if the Court was of the opinion that there was some other remedy available to the applicant, and the applicant was acting unreasonably in seeking liquidation instead of pursuing that remedy.13 The repeal of that provision removed the prohibition on the making of a liquidation order on just and equitable grounds when an alternative remedy exists and unreasonable conduct is made out.
[31] However, those factors remain cogent considerations when exercising the discretion to liquidate.14
[32] In Allan v Pelf Ltd,15 the High Court declined to liquidate a company where an agreement between the shareholders gave the shareholders a right to refer a dispute to mediation or arbitration and a right to require liquidation if mediation or arbitration was unsuccessful. The Court was not prepared to liquidate the company where one party wished to exercise those rights.16
9 Jenkins v Supscaf Ltd, above n 4, at [141]; and Larsen Oil and Gas Pte Ltd v Petropod Ltd (in liq) [2011] SGCA 21 at [21]. See also David A R Williams and Amokura Kawharu Williams & Kawharu on Arbitration (2nd ed, LexisNexis, Wellington 2017) at [7.2.10(c)].
10 TransDiesel Ltd v MTU America Ltd [2016] NZHC 280 at [47]; and Soil Research Ltd v Outdoors & Beyond Ltd [2017] NZHC 145 at [18]–[19].
11 Jenkins v Supscaf Ltd, above n 4.
12 At [141].
13 At [95].
14 At [98].
15 Allan v Pelf Ltd HC Christchurch CIV-2009-409-2263, 22 March 2010.
16 At [38(a)].
Discussion
[33] The ADR clauses must be considered in their entirety. The obligations to meet in good faith and to mediate cannot be severed from the next mandatory step in the process, which is referral of the dispute to arbitration under the Arbitration Act.
[34]I proceed on the basis that:
(a)an agreement to refer disputes between directors and/or shareholders to alternative dispute resolution does not prohibit the Court from putting a company into liquidation on just and equitable grounds where there is a dispute regarding the management of the company, irrespective of whether the clause requires the parties to arbitrate their disputes; and
(b)the existence of an alternative dispute resolution clause, and whether a party has acted unreasonably in seeking liquidation instead of following the alternative dispute resolution process, are factors to consider when the Court is exercising its discretions to put a company into liquidation or to stay a liquidation proceeding.
[35]Therefore, Mr Nakhle’s protest to jurisdiction must be set aside.
Should the Court exercise its discretion to stay the liquidation proceedings and restrain advertising?
Legal principles — staying liquidation proceedings
[36]The Court’s jurisdiction to stay a liquidation proceeding is exercised sparingly.
The relevant principles are:17
(a)The inherent jurisdiction to stay liquidation proceedings is to prevent an abuse of process.
(b)There is no inflexible rule as to when a stay will be granted.
17 Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 (HC) at 385; and Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297 (CA) at 299.
(c)The governing consideration is whether the proceedings savour of unfairness or undue pressure.
(d)The onus is on the applicant to establish a strong prima facie case of the existence of a genuine dispute on substantial grounds, or that there are clear and persuasive grounds for a stay.
[37] Like the jurisdiction to stay a liquidation proceeding, the basis for restraining advertising is to prevent an abuse of process.18 In such circumstances, the Court may intervene to prevent the serious harm which is likely to follow from the advertisement of liquidation proceedings.19 The likely consequence of advertising is serious commercial damage to the company.20 The Court’s assessment of whether there is an abuse of process must be made on the basis of the material actually before the Court
— not on the basis of material that might be put before the Court in the future.21
[38] It is a serious step to stay liquidation proceedings and restrain advertising. The onus is on the applicant, and it is normally necessary to demonstrate something more than the balance of convenience considerations that normally apply on an application for interim injunction.22
[39] In Strachan v Denbigh Property Ltd,23 the High Court declined an application for a stay. The company had two equal shareholders, each represented by a director. Associate Judge Gendall noted that there were elements of the case that were like those in other cases involving quasi-partnerships or joint ventures that had broken down irretrievably, and there were issues of trust and confidence as well as a clear deadlock.24 A full hearing of the liquidation proceeding was required. The company was subsequently placed into liquidation. The decision is distinguishable because there was no contractual right or obligation to engage in alternative dispute resolution.
18 Commissioner of Inland Revenue v Ben Nevis Forestry Ventures Ltd [2014] NZHC 1746 at [33(b)].
19 Anglian Sales Ltd v South Pacific Manufacturing Co Ltd [1984] 2 NZLR 24 (CA) at 251.
20 Taxi Trucks Ltd v Nicholson, above n 17, at 299; and Phonographic Performances (NZ) Ltd v Music Systems (Music) Ltd HC Wellington CIV-2005-485-1270, 11 August 2006 at [13].
21 Taxi Trucks Ltd v Nicholson, above n 17, at 299.
22 McVeagh v NZ Future Forest Products Ltd [2022] NZHC 777, [2022] NZCCLR 2 at [20], citing
Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd, above n 17, at 385.
23 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 25 August 2010.
24 At [30].
[40] In WDR Delaware Corporation v Hydrox Holdings Pty Ltd,25 the parties to a joint venture were in dispute resulting in claims of shareholder oppression. The relief claimed included a liquidation order, although the Court characterised the real controversy between the parties as an inter partes dispute.26 The Federal Court of Australia stayed the shareholder oppression proceedings while disputes related to the joint venture were referred to arbitration. The disputes referred to arbitration did not include whether the Court should exercise its discretion to make a liquidation order.
[41] The exercise of the discretion to stay a liquidation proceeding where there is a management deadlock and an alternative dispute resolution clause will depend on the facts of each case.
Mr Nakhle’s argument
[42] Mr Nakhle argues that the liquidation proceedings should be stayed until Mrs Nakhle and Mr Nakhle have attempted a meeting and mediation:
(a)The 2024 facilitation process did not extend to governance issues in respect of KEL and BPL.
(b)The dispute between the directors regarding the approach that KEL and BPL should take to their defence in 2844 has not been subjected to the dispute resolution process required by the ADR clauses. There is no certainty of a deadlock until that process has run its course.
(c)The solvency of KEL and BPL remains in issue and will be resolved by the extant High Court litigation between members of the group and the family, and Mr Nakhle will continue to fund KEL and BPL’s operating expenses in the interim.
(d)If the liquidation proceedings continue and advertising takes place, there will be adverse consequences for KEL and BPL’s relationship with lenders from outside of the group.
25 WDR Delaware Corporation v Hydrox Space Holdings Pty Ltd [2016] FCA 1164.
26 At [162].
Discussion
[43] Mrs Nakhle and Mr Nakhle are in a deadlock regarding how KEL and BPL should respond in 2844. An email from Mr Nakhle’s solicitors to Mrs Nakhle’s solicitors on 5 February 2025 confirms that this issue had been under discussion “at length” during 2024, even though a formal notice engaging the ADR clauses may not have been served and there was no formal mediation.
[44] The deadlock was not resolved by the 2024 facilitation process. The lawyers acting for Mrs Nakhle and Mr Nakhle have since exchanged correspondence regarding the deadlock, and there is no suggestion that any progress was made towards a resolution.
[45] The interests of Mrs Nakhle and Mr Nakhle in 2844 and the other High Court litigation are diametrically opposed:
(a)Mrs Nakhle’s position is that the claims by NTL in 2844 should be admitted.
(b)Mr Nakhle’s position is that he is the beneficial owner of the assets of KEL and BPL and the distributions and advances from NTL are valid and cannot be called up.
[46] There is a broader dispute involving Mrs Nakhle and Mr Nakhle regarding the enforceability of the 2015 terms and the beneficial ownership of the assets of KEL and BPL, which has already been submitted to the Court. The deadlock regarding the defence of 2844 is ancillary to the broader dispute. The deadlock cannot be broken unless either Mrs Nakhle or Mr Nakhle are prepared to resile from the positions that they have taken in the other litigation.
[47] I do not consider that there is any reasonable prospect of Mrs Nakhle and Mr Nakhle resolving their deadlock by utilising the dispute resolution process prescribed in the ADR clauses. The last step in the process would be arbitration. An arbitral tribunal could not be expected to impose a governance decision on Mrs Nakhle and Mr Nakhle that would inevitably be contrary to the interests of at least one of
them. It is not clear how the issues would be defined for arbitration, and whether those issues would be arbitrable.
[48] The issues between Mrs Nakhle and Mr Nakhle go further than a management deadlock. There has been an irretrievable breakdown of trust between Mrs Nakhle and Mr Nakhle.
[49] Mrs Nakhle has filed expert evidence from Grant Graham (Mr Graham), an experienced chartered accountant and insolvency practitioner. Mr Graham has reviewed the last four years of completed financial statements for BPL and KEL, up to the year ended 31 March 2024. In his opinion, both companies were insolvent on the balance sheet limb and the liquidity limb of the solvency test.
[50] An insolvent trustee company should, as a general rule, almost invariably be put into liquidation to ensure that the trust is properly administered either by a liquidator or a replacement trustee.27
[51] Mr Nakhle’s assertion that KEL and BPL are solvent assumes his success in the other litigation and his willingness to continue to inject funds into KEL and BPL to meet their operating expenses and losses. However, his funding results in KEL and BPL incurring further debt to a related party that has not been approved by the boards.
[52] Mrs Nakhle’s applications for orders putting KEL and BPL into liquidation are tenable and may succeed. The liquidation proceedings do not savour of unfairness or undue pressure.
[53] It is not inevitable that KEL and BPL will be put into liquidation. Liquidation is a last resort. There may be other options for an interim holding position pending determination of the extant High Court litigation, including 2844. For example, a receiver and manager might be appointed to the companies, or the companies might be replaced as trustees of the trusts. There are various ways to deal with the defence of 2844. These are matters for the substantive hearing of the liquidation proceedings.
27 Commissioner of Inland Revenue v Newmarket Trustees Ltd [2012] NZCA 351, [2012] NZLR 207 at [75].
[54] If these proceedings continue and advertising occurs, there is inherent prejudice to KEL and BPL from the advertising. In addition, Mr Nakhle says that it will put the companies in a difficult position with their lenders from outside of the group. There is no evidence to support that assertion. The time for advertising can be delayed allowing Mr Nakhle an opportunity to explain matters to any affected financiers, to ameliorate any prejudice.
[55] Weighing the factors that I have discussed above, I am satisfied that the balance of convenience favours these proceedings continuing. This is not an appropriate case to stay the liquidation proceedings so that the parties can complete an alternative dispute resolution process.
Orders
[56] Daniel Nakhle’s protest to the jurisdiction of the Court to hear these proceedings is set aside.
[57] Leave is granted to Daniel Nakhle to bring applications for orders staying these proceedings and restraining advertising, and to enlarge the time for doing so.
[58] The applications by Daniel Nakhle for orders staying these proceedings and restraining advertising are declined.
[59] The plaintiff is prohibited from advertising these proceedings until at least 15 working days after delivery of this judgment.
[60] The steps taken by the plaintiff to set aside the protest to jurisdiction and to oppose the application for a stay in each proceeding were largely duplicated. My preliminary view is that the plaintiff should receive one award of costs for the applications in both proceedings, calculated on a 2B basis, together with disbursements in each proceeding. If the parties are unable to agree on costs, then:
(a)the plaintiff shall file and serve submissions on costs, of no more than five pages, by 20 November 2025;
(b)Daniel Nakhle shall file and serve written submissions on costs, of no more than five pages, by 4 December 2025; and
(c)I will then determine costs on the papers.
[61] The liquidation proceeding shall be called in the next available list for further directions.
Associate Judge Brittain
0
10
0