Newman v Norrie - [2014] NZHC 648

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-4378 [2014] NZHC 648

IN THE MATTER of the Companies Act 1993

IN THE MATTER

of the liquidation of Pakiri Investments
Limited (in Liquidation)

BETWEEN

LARRIE WILLIAM NEWMAN Applicant

AND

MARK NORRIE AS LIQUIDATOR OF PAKIRI INVESTMENTS LIMITED Respondent

Hearing: 17 December 2013

Appearances:

R B Hucker/A P Prasad for applicant
B G Frowein/M C Kilham for respondent

Judgment:

2 April 2014

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on Wednesday 2 April 2014 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Hucker & Associates Ltd, Auckland
Lowndes Associates, Auckland

NEWMAN v NORRIE AS LIQUIDATOR OF PAKIRI INVESTMENTS LIMITED [2014] NZHC 648 [2 April
2014]

[1] The applicant, Mr Newman, is a director of Pakiri Investments Ltd (in liquidation) (Pakiri). The respondent, Mr Norrie, was appointed liquidator of Pakiri by this Court on 15 February 2013.

[2] Mr Newman has applied for removal of Mr Norrie as liquidator on the grounds that he was not qualified for appointment because he was effectively in control of, and his firm had continuing business relationship with, one of Pakiri’s secured creditors, Ablaze Ltd. In the alternative, Mr Newman says that Mr Norrie is in breach of an obligation to call a creditor’s meeting of Pakiri, and seeks an order directing him to do so.

[3] Mr Norrie disputes that he was not qualified to accept appointment, but says that in any event the Court has a discretion in the matter, and should exercise that discretion in favour of confirming his appointment and against calling a meeting, in the circumstances of this case.

[4] For the reasons I will give in this judgment, I decline Mr Newman’s

application and find that Mr Norrie can continue to act.

Background

[5] The application needs to be considered in the context of matters leading up to Pakiri’s liquidation, particularly relating to Pakiri’s relationship with Ablaze, and steps taken in the liquidation.

The relationship between Pakiri and Ablaze

[6] Pakiri was in the business of software development, either in its own right or through a number of related companies, operating under the general name Pakiri Group. A Mr Evan Read appears to have had a controlling interest in Pakiri through a family trust. Mr Read was a director of Pakiri at certain material times, but is now bankrupt.

[7] Ablaze is the owner of warehouse management and other software which it markets through resellers. Mr Norrie is, and at all material times was, a director of Ablaze.

[8] In 2009 entities within the Pakiri Group were engaged in developing software for a customer. Mr Read approached Ablaze about using its software in conjunction with or as part of the product that the Pakiri Group was developing. There appears to have been a difference between the parties as to how that was to occur, but it now seems to be common ground that they entered into an…

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 Newman v Norrie

Details

AGLC: Newman v Norrie [2014] NZHC 648
Case: [2014] NZHC 648
Decision Date: 2 April 2014

CaseChat Overview and Summary

The applicant, Mr. Newman, applied for the removal of the respondent, Mr. Norrie, as liquidator of Pakiri Investments Ltd (Pakiri) on the grounds that Mr. Norrie was not qualified for the position due to his relationship with Ablaze Ltd, a secured creditor of Pakiri. Alternatively, Mr. Newman sought an order directing Mr. Norrie to call a creditors' meeting. The court had to decide whether Mr. Norrie was qualified to be appointed as liquidator, and if not, whether the court should exercise its discretion to permit his appointment. The court also had to consider whether Mr. Norrie had breached his obligation to call a creditors' meeting.

The court found that Mr. Norrie was disqualified from acting as liquidator due to his continuing business relationship with a secured creditor, Ablaze Ltd. However, the court exercised its discretion under s 286(4) of the Companies Act 1993 to permit Mr. Norrie to continue acting as liquidator, as there was a significant risk that claims would not be investigated due to the lack of funds in the liquidation. The court also found that Mr. Newman's application for an order directing Mr. Norrie to call a creditors' meeting was dismissed as there was no jurisdiction to order such a meeting due to the lack of proper notice.

The court made the following orders:

1. Mr. Newman's application to remove Mr. Norrie was dismissed, but with leave reserved to bring the matter back before the Court if Mr. Norrie does not pursue a claim against Ablaze Ltd for interest on the recovered payment of $27,000, nor pay the costs ordered against him without derogation from any right to indemnity from the assets in the liquidation.
2. Mr. Norrie was permitted to continue to act as liquidator of Pakiri.
3. Mr. Newman's alternative application for an order that Mr. Norrie call a creditors' meeting was dismissed.
4. Mr. Sutich's application to be added as an applicant was dismissed.
5. The Registrar was to schedule a date and time for the examination ordered by this Court on 24 September 2013.
6. As the successful party, Mr. Norrie was entitled to costs.

Orders