Revis
[2022] NZHC 2650
•13 October 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-000438
[2022] NZHC 2650
UNDER Section 250 Companies Act 1993 and Part 18 High Court Rules 2016 IN THE MATTER
of an application to terminate the liquidation of Four Avenues Property Group Limited (in liquidation)
BY
MARK JOHN REVIS and CRAIG JOHN PICKETT
Plaintiffs
Hearing: 13 October 2022 Appearances:
T J McGuigan for Plaintiffs
Judgment:
13 October 2022
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 13 October 2022 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
RE REVIS [2022] NZHC 2650 [13 October 2021]
[1] This is an application to terminate the liquidation of Four Avenues Property Group Limited (in liq) (Four Avenues) pursuant to s 250 Companies Act 1993.
[2] The application is made by the directors of Four Avenues who are the beneficial owner of the shares in the company. The application is not opposed by the liquidator. All fees of the liquidator have been paid. All creditors of the company have also been paid or otherwise satisfied. In those circumstances, an order dispensing with service of the application was made on 29 September 2022.
[3] The application was listed before me today. Comprehensive submissions were filed by counsel for the plaintiffs, for which I am grateful. At the hearing, Mr McGuigan confirmed there were no other matters relevant to the application to draw to my attention.
Section 250
[4]Section 250 of the Companies Act relevantly provides:
(1)The Court may, at any time after the appointment of a liquidator of a company, if it is satisfied that it is just and equitable to do so, make an order terminating the liquidation of the company.
(2)An application under this section may be made by
…
(c) a director or shareholder of the company; or
…
(3)The Court may require the liquidator of the company to furnish a report to the Court with respect to any facts or matters relevant to the application.
(4)The Court may, on making an order under subsection (1), or at any time thereafter, make such other order as it thinks fit in connection with the termination of the liquidation.
…
(6) Where the Court makes an order under subsection (1), the company ceases to be in liquidation and the liquidator ceases to hold office with effect on and from the making of the order or such other date as may be specified in the order.
The background
[5] I adopt counsel’s summary of the facts which is in accordance with the affidavit evidence of the plaintiffs and the liquidator.
[6] On 18 July 2013, Four Avenues was incorporated for the purposes of undertaking a residential development project comprising 43 residential units and a commercial café premise at 282 Madras Street, Christchurch (Project).
[7] After the Project was completed, a dispute arose between Four Avenues and its principal contractor, Higgs Construction Limited (HCL). Having obtained legal advice, Four Avenues issued HCL with a final payment schedule that calculated it had no liability to HCL.
[8] The plaintiffs, as directors of Four Avenues, then determined that it was in the best interests of the company to proceed with a solvent liquidation of the company in order to distribute its surplus assets.
[9] On 13 September 2017, the plaintiffs, as shareholder of Four Avenues, passed a special resolution appointing Gordon Hansen of Goldsmith Fox GJC Limited as liquidator of Four Avenues. At the time of Mr Hansen’s first liquidator’s report, Four Avenues was recorded as having net assets totalling $153,588, whereby it was envisioned that all creditors would be paid in full.
[10] After Four Avenues was placed into liquidation, HCL disputed the validity of the final payment schedule, maintaining it was owed construction costs.
[11] In early 2020, Mr Hansen agreed to refer the dispute between Four Avenues and HCL to an expert for determination. The expert’s determination was issued on 25 June 2020 and found in favour of HCL on certain issues, including the issue relating to the validity of the payment schedule issued by Four Avenues, which meant that it owed a debt to HCL. Due to the size of that debt, Four Avenues became an insolvent liquidation because it was unable to meet its obligations to creditors.
[12] Following the expert’s determination, HCL commenced proceedings against the plaintiffs in their capacities as directors of Four Avenues.
[13] On 23 October 2020, Andrew Oorschot was appointed liquidator of Four Avenues, as Mr Hansen resigned from that position. The liquidation of Four Avenues endured for some time due to the length of time which was required to resolve HCL’s claim.
[14] In May 2022, HCL’s claim was settled on a full and final basis, which provided for the repayment and satisfaction of all remaining Four Avenues’ creditor claims. The terms of the settlement have been implemented and all creditor claims have been repaid/resolved, and all outstanding liquidator’s fees have been met. Specifically:
(a)A total of $233,877 has been repaid to the six unsecured creditors who lodged a claim in the liquidation of Four Avenues.
(b)Mr Oorschot’s fees have been paid and settled in full.
[15] Settlement was achieved, in part, by the plaintiffs advancing personal funds to Four Avenues to satisfy its debts.
[16] At present, there are outstanding income tax refunds due to Four Avenues that have not been realised in the liquidation. The plaintiffs wish to have the liquidation terminated to enable them to take steps to recover those credits.
Why it is appropriate to terminate the liquidation
[17] Under s 250(1) the question the Court must determine is whether it is just and equitable to terminate the liquidation of the company. The authorities suggest that the Court will generally only exercise its discretion to order termination of a liquidation if:1
1 Re Bell Block Lumber Ltd (in liq) (1992) 6 NZCLC 67,690
(a)all creditors have been paid in full or satisfactory provision has been made for them to be paid, or they have consented to the application;
(b)the liquidator’s costs have been paid; and
(c)the shareholders have consented or would be in no worse position if the liquidation had proceeded to its conclusion.
[18] However, the case law also shows that the Court is not constrained by these criteria. Additional considerations, including the public interest and a concern to protect the interests of the company’s present creditors and those parties who would, in future, have dealings with it if the liquidation were terminated, may be relevant matters.2
[19] Here, I am satisfied that it is just and equitable to terminate the liquidation because:
(a)the application is made for a genuine commercial reason; that is so tax credits that are available to the company can be realised;
(b)all unsecured creditors of the company were paid in full and there are no secured or preferential creditors;
(c)the liquidator’s costs have been paid and the liquidator has confirmed in his affidavit that he consents to the application;
(d)the plaintiffs, as shareholders of the company, have brought the application to terminate the liquidation and, obviously, consent to it;
(e)there do not appear to be any countervailing public interest factors suggesting that it would be improper for the liquidation to be terminated; and
2 Foundation Securities (NZ) Ltd v Direct Labour Services Ltd (In Liquidation) [2008] NZCCLR 1 at [21]-[22].
(f)there do not appear to be any persons who might be adversely affected by the termination of the liquidation.
Result
[20] I order the liquidation of Four Avenues Property Group Ltd (in liq) is terminated pursuant to s 250 of the Companies Act 1993.
[21]There shall be no orders in relation to costs.
O G Paulsen Associate Judge
Solicitors:
Wynn Williams, Christchurch
0
0
0