Schischka v Schischka Engineering Works Limited

[2015] NZHC 1112

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-298 [2015] NZHC 1112

UNDER

the Companies Act 1993

IN THE MATTER

of an application under s 241(2)(c)(ii) of the Companies Act 1993 for putting a company into liquidation

BETWEEN

GLENN LAWRENCE SCHISCHKA First Plaintiff

GREGORY ERROL BUCHAN SCHISCHKA

Second Plaintiff

SYLVIA PATRICIA SCHISCHKA Third Plaintiff

AND

SCHISCHKA ENGINEERING WORKS LIMITED

Defendant

Hearing:	21 May 2015
Appearances:	A A H Low for Plaintiffs and Defendants S McCarthy for Minor Shareholder
Judgment:	22 May 2015

JUDGMENT OF WHATA J

This judgment was delivered by Justice Whata on

22 May 2015 at 10.00 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Alexandra Low & Associates, Auckland

Galbraiths, Auckland
Copy to:

S McCarthy, Auckland

SCHISCHKA v SCHISCHKA ENGINEERING WORKS LIMITED [2015] NZHC 1112 [22 May 2015]

[1]      This is an application to put Schishchka Engineering Works Ltd (SEWL) into liquidation under s 241(2)(c)(ii) of the Companies Act 1993.   The application for liquidation is not opposed, but Mr Gunson, a 39 per cent shareholder of SEWL opposes the appointment of Peter Reginald Jollands and Catherine Jane Jollands of Jollands Callander (the Jollands) as liquidators. He believes they will not act impartially.

Background

[2]      It is not necessary to dwell on the history to this matter. In short, SEWL was established in 1965. From about 1989 until it ceased trading in March 2104 SEWL was operated by Laurie Schischka senior and Mr Gunson. Sadly Laurie senior passed away in October 2014 and the relationship between the Schischka family1  and Mr Gunson has broken down. Mr Gunson was removed as a director, his company car seized and there is a dispute between them about whether the company owes rates

and insurance to another Schischka family company, Bagley Ltd .  Laurie senior’s

two sons are the current directors of SEWL.

[3]      While the Schischka family and Mr Gunson agree that the company should be put into liquidation, they do not agree about who the liquidator should be. The Schischka family want to appoint the Jollands. Mr Gunson has nominated an alternative  or  suggests  that  President  of  the  Institute  of  Chartered Accountants nominate a liquidator.

[4]      Mr Gunson is concerned that the Schischka family have the sympathy of the Jollands and that they will effectively rubber stamp Bagley's rates and insurance claim. He also thinks they will not engage with him about, among other things,   the sale of the companies’ key assets which he managed for more than 25 years.   By contrast, the Schischka family say that the Jollands are well qualified to act as liquidators and that Mr Jolland’s is an acting Justice of the Peace whose integrity is beyond reproach. He also can use sign language which is important because the

current directors and their mother are deaf.

1      Who through their matriarch, Syliva Schischka, own 61 per cent of the company.

Jurisdiction

[5]      The power to appoint a liquidator is framed in simple terms in the Companies

Act 1993, namely:

241     Commencement of liquidation

(1)       A company  may  be  put  into  liquidation  by  the  appointment  as liquidator of a named person or of an Official Assignee for a named district.

…

(4)      The Court may appoint a liquidator if it is satisfied that—

(a)      ….

(d)      it  is  just  and  equitable  that  the  company  be  put  into liquidation.

Argument

[6]      As the parties agree that the company should be put into liquidation it is not necessary to discuss on the primary jurisdiction to do so any further.   The central contest is whether the Jollands should be appointed as liquidators.

[7]      Ms Low submits that all things being equal the plaintiffs’ nominee should be appointed where there is a contest as to the identity of the appropriate appointee and there is nothing to be said between the competing nominees as to their respective fitness, qualification or cost.2

[8]      Mr  McCarthy  responds  that  the  actual  or  apparent  impartiality  of  the proposed liquidator is a relevant factor. He contends that Mr Jolland “entered the fray” when he responded to an inquiry from the solicitors for Mr Gunson in the following terms:

3.With respect, Mr Gunson has no authority to demand that Mr Ron Craig “advise immediately” if there is any distribution from your trust account.    Following appointment of a liquidator, the shareholders cease to have power.  Refer section 248 of the Act.

2      Citing Glenwood Village Pty Ltd v Glen Alpine Construction Pty Ltd [2009] NSWSC 516 at [1]

and [5].

[9]      Ms Low retorts that Mr Jolland was simply responding to repeated demands from Mr Gunson’s solicitors for proof that the Jolland’s had no connection to the Schischka family.

Assessment

[10]     The nomination and appointment of a liquidator should be a straightforward matter.  Ordinarily  the  exercise  should  be  an  uncontested  one,  provided  the nominated person is suitably qualified.   I accept that a lack of independence is a relevant factor, but the mere assertion of partiality will not be enough.

[11] In this case, the most that Mr McCarthy can point to is Mr Jolland’s admittedly terse comment noted at [8] above. But this and the mere fact that the Schischka family approve of Mr Jolland, is not a sufficient basis for objection to his appointment on partiality grounds.

[12]     In any event, I have evidence before me that Mr Jolland is an experienced liquidation practitioner and is a Justice of the Peace, currently sitting on the bench at Auckland and Manukau District Courts.  Mr Gregory Schischka also deposes that Mr Jollands’ fees are considerably lower than some of the others that he has canvassed. I am therefore satisfied that Mr Jolland is not unsuitable for appointment.

[13]     Having said all of this, I am mindful that Mr Gunson, I think quite fairly, has the perception that the Schischka family have locked him out of the affairs of the company. They may have good reasons for this. But equally, Mr Gunson’s interest in the company is substantial and deserving of recognition. I also consider that given the depth of his working association with the company over many years, he may be able to usefully assist in its liquidation in a way that should save cost.

[14]     It seems to me therefore that I should take up Ms Low’s suggestion that I invite Mr Jolland to identify a liquidator that he considers most appropriate to the needs of the liquidation. This will serve two purposes. It accords, albeit indirectly with the legitimate wishes of the plaintiffs. It also should provide some incentive to Mr Gunson to co-operate with the liquidation process once it is properly underway.

Orders

[15]     Mr Jolland has ten working days to identify an appropriate liquidator for confirmation  by  the  Court,  at  which  time  the  company  will  be  placed  into liquidation.   The plaintiffs are to facilitate this process, including the payment of Mr Jolland’s reasonable costs and disbursements.

[16]     There shall be costs on a 2B basis in favour of the plaintiffs together with disbursements to be paid out of the company.

[17]     I make no cost award in favour or against Mr Gunson. He did not make out his opposition on lack of impartiality grounds which were not sustainable on the evidence. The result should not be seen to encourage this type of objection.