Tempest Litigation Funders Limited v Kamal - [2020] NZHC 827

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-504

[2020] NZHC 827

UNDER the Companies Act 1993

IN THE MATTER

of the liquidation of Peter Richards Builders Limited (in liq)

BETWEEN

TEMPEST LITIGATION FUNDERS LIMITED

Applicant

AND

IMRAN MOHAMMED KAMAL

Respondent

Hearing: 19 March 2020

Appearances:

Mr Botterill for applicant Mr Haig for respondent

Judgment:

19 March 2020

Reasons:

28 April 2020

Reissued:

20 May 2020

REASONS FOR JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1] This is an application made in the course of the liquidation of Peter Richards Builders Ltd. It is made by the applicant which is a creditor —albeit by assignment
— of Peter Richards Builders, Tempest Litigation Funders Ltd, against the liquidator, Mr Imran Mohammed Kamal. At the conclusion of the hearing I gave judgment and indicated that my reasons would follow.

TEMPEST LITIGATION FUNDERS LIMITED v KAMAL [2020] NZHC 827 [19 March 2020]

[2]There were three matters for determination:

(a)The admissibility of an email headed “Without Prejudice”;

(b)Tempest’s application to review Mr Kamal’s appointment; and

(c)Tempest’s application for the disclosure of certain documentation generated in the course of the liquidation.

[3] It was necessary to deal with the first issue concerning the admissibility of the email at the outset, because much of the argument which followed on the second and third issues turned on that email. I therefore heard counsel in relation to that, and, having done so, ruled that the email was admissible.

[4] The background can be summarised very briefly. Peter Richards Builders contracted to acquire three sections from a company by the name of Kahawai Point Developments Limited. It paid a deposit of $99,130.44, 10 per cent of the sale and purchase price. Peter Richards Builders was unable to settle the transaction. Kahawai subsequently obtained a judgment against Peter Richards Builders for $123,952.29 which I take to be the amount of the deposits together with interest and costs. I am told that it is this failed transaction which lead to the winding up of Peter Richards Builders.

[5] Kahawai commenced proceedings seeking Peter Richards Builders’ winding up. Within the 10-day period in which it was entitled to do so, Peter Richards Builders passed a resolution for its own winding up and appointed Mr Kamal as the liquidator. Shortly thereafter Tempest took an assignment of Kahawai’s entitlement pursuant to its judgment and has since stood in Kahawai’s shoes vis-à-vis Peter Richards Builders and of course the liquidator. Shortly after acquiring Kahawai’s entitlements under the judgment, Tempest exercised its right as a creditor pursuant to s 314 of the Companies Act 1993 to call for a creditors’ meeting. It cannot be accused of acting covertly in this. Tempest informed Mr Kamal that its purpose in doing so was to seek his removal as a liquidator and replacement by its own nominee.

[6] There followed some communication — by telephone and email — between Tempest’s Mr Damien Grant and Mr Kamal. In the course of…

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: [2020] NZHC 827
Decision Date: 19 March 2020

CaseChat Overview and Summary

In the High Court of New Zealand, Tempest Litigation Funders Limited applied for various orders against the liquidator of Peter Richards Builders Limited, Imran Mohammed Kamal. The primary dispute concerned the admissibility of a "without prejudice" email, Tempest's application to review Kamal's appointment as liquidator, and Tempest's application for disclosure of certain documentation generated in the course of the liquidation. The court ruled that the "without prejudice" email was admissible as it did not involve a dispute or difference between the parties. Regarding Kamal's appointment, the court found insufficient evidence to support a suspicion that Kamal was not acting impartially. Consequently, the application to remove and replace Kamal was dismissed. However, the court granted Tempest's application for disclosure of certain documents, subject to redacting any confidential information of third parties, to enable Tempest to assess the lawfulness of the creditors' meeting. The court also ordered Kamal to bear costs on a 2B basis but reduced by 50 percent.

This decision underscores the importance of maintaining the integrity of the liquidation process and ensuring that creditors have access to relevant information to assess the conduct of meetings and the actions of the liquidator. The court emphasised the need for liquidators to act impartially and in accordance with the law, while also recognising the rights of major creditors to seek reassurances about the process. The ruling sets a precedent for encouraging applications to review the conduct of liquidators, provided they are warranted and not made merely as a matter of course.

Orders