SPMAAH Pty Limited v ASJ Commodities LP - [2022] NZHC 1580

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2022-488-000014

[2022] NZHC 1580

BETWEEN
SPMAAH PTY LIMITED

Plaintiff

AND

ASJ COMMODITIES LP

Defendant

Hearing: 27 June 2022

Appearances:

P Murray for the Plaintiff

T Bowler for the Defendant

Judgment:

7 July 2022

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 7 July 2022 at 2.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

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

Solicitors:

Fortune Manning, Auckland Neilsons Lawyers, Auckland

P Murray, Auckland

SPMAAH PTY LTD v ASJ COMMODITIES LP [2022] NZHC 1580 [7 July 2022]

Introduction

[1] This decision concerns whether interim liquidators should be appointed to ASJ Commodities LP (ASJ LP), a limited partnership that imports and supplies meat products.

[2] One of the limited partners, SPMAAH Pty Limited (SPMAAH), says that the general partner and other limited partner have breached the partnership agreement by competing with the partnership, neglecting to keep accurate accounts, and failing to provide financial reports and disclosure. It also says that it is reasonably impracticable for the partners to carry on the business of the partnership as there has been a complete breakdown of their relationship. SPMAAH says that it is necessary and expedient for the Court to appoint interim liquidators because the assets of the partnership are in jeopardy and independent oversight is urgently required.

[3] ASJ LP opposes interim liquidators being appointed. It says that the Court does not have jurisdiction and the proceeding should be stayed because the partners agreed to resolve any disputes between them by alternative dispute resolution. It also says that there is no urgent need for a liquidator to be appointed.

[4] The essential question is whether I should exercise my discretion under s 246 of the Companies Act 1993 to appoint interim liquidators to the limited partnership. That involves these issues:

(a)Will SPMAAH’s liquidation application probably succeed?

(b)Is an interim liquidator necessary or expedient to preserve the limited partnership’s assets?

[5] I also need to decide on the effect of the dispute resolution clause in the partnership agreement. I consider this issue last, because it depends on facts that emerge out of my consideration of the first two issues.

Background

[6] SPMAAH (as trustee of the SMAH Asset Trust) and Jeff Putt decided to go into business together to import and sell meat products in New Zealand. SPMAAH is part of a group of Australian companies which imports, exports and trades in mainly meat products. The arrangement was for SPMAAH to supply meat products from Australia and other countries to Mr Putt, who would sell the products to butchers, restaurants and other retailers in New Zealand.

[7] They established ASJ LP as the vehicle for the business and signed a Limited Partnership Deed in early September 2020. ASJ Commodities NZ Limited (ASJ NZ Ltd) was incorporated to be the general partner, with Mr Putt its sole director and shareholder. SPMAAH became the…

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 1580
Decision Date: 7 July 2022

CaseChat Overview and Summary

The case of SPMAAH Pty Limited v ASJ Commodities LP involved a dispute over the management and financial disclosure of ASJ Commodities LP, a limited partnership that imports and supplies meat products. SPMAAH Pty Limited, one of the limited partners, sought the appointment of interim liquidators to ASJ Commodities LP, alleging that the general partner and other limited partner had breached the partnership agreement, neglected to keep accurate accounts, and failed to provide financial reports and disclosure. SPMAAH also argued that it was reasonably impracticable for the partners to carry on the business of the partnership due to a breakdown in their relationship. ASJ Commodities LP opposed the appointment of interim liquidators, arguing that the Court did not have jurisdiction and that the partners had agreed to resolve any disputes between them by alternative dispute resolution.

The High Court of New Zealand was required to decide whether to exercise its discretion under s 246 of the Companies Act 1993 to appoint interim liquidators to the limited partnership. This involved determining whether SPMAAH’s liquidation application was likely to succeed and whether an interim liquidator was necessary or expedient to preserve the limited partnership’s assets. The Court also needed to decide on the effect of the dispute resolution clause in the partnership agreement.

The Court found that there was a strong prima facie case for the liquidation of ASJ Commodities LP, as there were material breaches of the Partnership Deed by the general partner and other limited partner, and their conduct had prejudiced the business of the limited partnership. The Court also found that it was reasonably impracticable for the partners to carry on the business in partnership due to the complete breakdown of their relationship. The Court held that it was necessary and expedient to appoint interim liquidators to take stock of the financial position of the partnership, the partnership’s assets, and preserve the status quo. However, the substantive liquidation proceeding would be stayed while the parties made reasonable efforts to resolve the underlying dispute according to the dispute resolution procedures set out in the Limited Partnership Deed.

The Court ordered the appointment of Christopher Carey McCullagh and Stephen Mark Lawrence as interim liquidators of ASJ Commodities LP and set their rates of remuneration. The Court also directed the interim liquidators to prepare a report for the Court and the parties within 20 working days that summarised the financial position of the partnership, including the inventory. The substantive application for liquidation was stayed while the partners complied with the dispute resolution clause in the Limited Partnership Deed. The Court listed the substantive proceeding for review in a Chambers List on a date after 5 September 2022 and invited counsel to confer and agree on costs.

Orders