Ruapehu Alpine Lifts Limited - [2022] NZHC 3077

Defendant

AND [ ]

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-001993

[2022] NZHC 3077

UNDER Part 7 of the High Court Rules 2016 and Part 15A of the Companies Act 1993

IN THE MATTER OF

RUAPEHU ALPINE LIFTS LIMITED

(Administrators Appointed)

AND

JOHN HOWARD ROSS FISK and RICHARD JOHN NACEY as

Administrators of Ruapehu Alpine Lifts Limited (Administrators Appointed) Applicants

Hearing: On the papers

Counsel:

D T Broadmore / L C Sizer for the Applicants

Judgment:

24 November 2022

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 24 November 2022 at 2.15 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Buddle Findlay, Auckland

RE RUAPEHU ALPINE LIFTS LTD [2022] NZHC 3077 [24 November 2022]

[1] On 11 October 2022, John Fisk and Richard Nacey were appointed as administrators (Administrators) of Ruapehu Alpine Lifts Limited (in administration) (Company).

[2] The Administrators apply for orders under s 239ADO of the Companies Act 1993 (Act) that Part 15A of the Act operates in relation to the Administrators as if s 239ADH provides that:

(a)any liability incurred by the Administrators arising out of or in connection with a Term Loan Facility Deed dated 17 November 2022 (Facility) given by ANZ Bank New Zealand Limited (ANZ) and Crown Regional Holdings Limited (CRHL) is in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of the Company; and

(b)their personal liability for such debts is limited to the available assets of the Company and any available statutory and equitable indemnities of the Administrators in relation to those assets, except to the extent agreed under the Facility.

[3] The orders are necessary to permit the Administrators to draw down on the Facility, to meet the ongoing liabilities of the Company, and to enable the Administrators to develop a restructuring proposal. Mr Fisk deposes that without the Facility, the Company will have insufficient funds to continue trading up until the anticipated watershed meeting on or around 16 December 2022.

[4] ANZ and CRHL consent to the orders sought, as confirmed in a joint memorandum of counsel dated 18 November 2022.

[5] The orders are necessary to the Administrators because of the effect of s 239ADH(1) of the Act. This provision provides that an administrator is liable for debts that he or she incurs in the performance, exercise, or purported performance or exercise of any of his or her functions and powers as administrator, including for the purpose of funding the company.

[6] In turn, an administrator has an indemnity to the extent of the company’s property for such a personal liability,1 which is secured by a statutory lien.2 Accordingly, if the assets of the Company are insufficient to meet the Administrators’ personal liability under s 239ADH of the Act, then the Administrators…

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.

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Details

Case: [2022] NZHC 3077
Decision Date: 24 November 2022

CaseChat Overview and Summary

The High Court of New Zealand was asked to decide on the liability of the administrators of Ruapehu Alpine Lifts Limited, a company in administration. The administrators applied for orders under s 239ADO of the Companies Act 1993 to limit their personal liability for debts incurred in relation to a Term Loan Facility Deed given by ANZ Bank New Zealand Limited and Crown Regional Holdings Limited. The administrators sought to draw down on the facility to meet the ongoing liabilities of the company and develop a restructuring proposal. ANZ and CRHL consented to the orders sought. The court had to decide whether the orders were necessary to achieve the objectives of Part 15A of the Act, which are to maximise the chances of the company continuing in existence or to result in a better return for the company’s creditors and shareholders than an immediate liquidation. The court found that the orders were necessary because without them, the administrators would be required to satisfy their personal liability from their own assets if the assets of the company were insufficient. The court also found that the orders were in the interests of the company’s creditors and consistent with the objectives of Part 15A of the Act. The court granted the orders and limited the administrators’ personal liability to the available assets of the company and any available statutory and equitable indemnities of the administrators in relation to those assets. The court also reserved leave for the administrators and any other person who can demonstrate a sufficient interest in the administration of the company to apply for variation or discharge of these orders upon appropriate notice being given to the administrators.

Orders